Вы находитесь на странице: 1из 15

Rallos vs Felix Corp.

Person A and Person B are sisters

and registered co-owner of Land X. The sisters executed a special
power of attorney in their brother’s favor, Simeon Rallos. When
Person A died, Simeon Rallos sold Person A’s share in Land X to
Felix Corp. Rallos (complainant) as administrator of Person A’s
estate filed a complaint to declare Simeon’s sale of Person A’s
share unenforceable and to recover said share.
Was the sale of Person A’s share valid despite the agent
executing it after his principal’s death?
No. See Art. 1317, Art. 1403, Art. 1919, Art. 1930, Art.
In an agency the principal (mandante), authorizes another called
the agent (mandatario) to act for and in his behalf in transactions
with 3rd persons. The agency’s essential elements are (1) there is
consent, express or implied of the parties to establish the
relationship (2) object is to execute a juridical act in relation to a
3rd person (3) the agent acts as a representative and not for himself
(4) the agents acts within the scope of his authority.
Agency is basically personal representative and derivative in
nature. The agent’s authority to act emanates from the powers
granted to him by his principal, his act is the principal’s act if done
within the scope of his authority.
Agency is extinguished by the principal’s or agent’s death among
others. The general rule is: The principal’s death effects
instantaneous and absolute revocation of the agent’s authority by
operation of law. The agent’s act after the principal’s death is void
ab initio. The principal’s heirs don’t event need to notify the agent
of the principal’s death. There are exceptions to this general rule in
Art. 1930 and Art. 1931. No exception applies because (1) the
agency wasn’t coupled with an interest (2) Simeon knew of Person
A’s death at the time he sold the shares in Land X.
Urban Bank vs Pena
ISCI Corp. owns Property X which
it leased to Tenant A. Tenant A leased Property X to Sub- Tenants
in contravention of the lease agreement. ISCI Corp. eventually
moved to sell Property X t Urban Bank. Urban Bank agreed on the
condition that payment will be in installments and the final install
will be paid only when the Sub-Tenants have been removed from
Property X and Urban Bank can take possession. ISCI Corp. then
authorized its corporate secretary Pena to clear Property X of the
Sub-Tenants. Pena stationed guards around the property and filed a
case in court to keep the Sub-Tenants out. The court issued a TRO
in Pena’s favor When the lease agreement with Tenant A expired,
ISCI Corp. executed a deed of sale in Urban Bank’s favor. Without
authority from Urban Bank, the court revoked the TRO in Pena’s
favor. Pena then contacted Urban Bank and the latter agreed to
authorize Pena to clear Property X of the Sub-Tenants, such
authority was written. Urban Bank also promised to pay Pena
compensation if he clears Property X within a certain time period
but such promise was made over the telephone. Eventually, Pena
managed to force the Sub-Tenants out after paying them. Urban
Bank was able to take possession of Property X. Pena demanded
compensation but Urban Bank refused.
Is Pena entitled to compensation?
Yes. Pena should be paid for services rendered under the
agency relationship that existed between him and Urban Bank
based on the civil law principle against unjust enrichment and
quantum merit. Also, Pena is still ISCI’s principal and the latter is
also liable to pay Pena compensation.
Whether or not an agency has been created is determined by the
fact that one is representing and acting for another. The law makes
no presumption of agency; proving its existence, nature and extent
is incumbent upon the person alleging it.
In this case, the evidence shows Urban Bank constituted Pena as its
agent to secure possession of Property X. Union Bank gave Pena a
specific and special authority to act on its behalf with respect to the
latter’s claims of ownership over the property against the tenants.
Further, Urban Bank’s actions ratified Pena’s authority as its agent,
such as in the court actions and security guards.
Agency is presumed to be for compensation. Unless the contrary
intent is shown, a person who acts as an agent does so with the
expectation of payment according to the agreement and to the
services rendered or results effected.
Loadmaster Customs vs Glodel Brokerage Corp.
Insurance (respondent) insured Company A’s shipment of its
products against all risks. The products were shipped by sea and
arrived at the pier. From there, Company A contracted Glodel
(respondent) to deliver the products to its warehouse. Glodel in
turn contracted Loadmaster to use its delivery trucks in
transporting the products. Out of 12 trucks used, only 11 reached
the warehouse. Company A sought reimbursement from R&B
Insurance and the latter paid. R&B Insurance then went after
Loadmaster and Glodel.
Is there a principal-agent relationship between Glodel and
No. Loadmasters never represented Glodel because it was
never authorized to make such representation. The settled rule is
the basis for agency is representation, the agent acts for and on
behalf of the principal on matters within the scope of his authority
and said acts have the same legal effect as if they were personally
executed by the principal. On the principal’s part, there must be an
actual intention to appoint or an intention naturally inferable from
his words or actions, while on the part of the agent, there must be
an intention to accept the appointment and act on it. In this case,
there’s no mutual intent.
Bordador vs Luz
Bordador is engaged in the business of
purchase and sale of jewelry. Luz is their regular customer. On
several occasions, Deganos (respondent) received jewelry from
Bordador with the responsibility to sell the items at a profit and
remit the proceeds and return the unsold items to Bordador. The
jewerly and prices were indicated in receipts stating they were
received for Deganos’ niece and Luz. Deganos never returned the
sales proceeds or the unsold items. Luz appeared on Deganos
behalf and obligated himself to pay the amount due to Bordador on
an installment basis. Luz failed to comply with his obligation.
Is Deganos an agent of Luz?
No. The basis for agency is representation. In this case,
there’s no evidence to show Luz consented to Deganos acts or
authorized him to act on her behalf with respect to the particular
transactions involved. In fact, Bordador was grossly and
inexcusably negligent to entrust Deganos with the jewelry without
requiring a written authorization for his alleged principal. A person
dealing with an agent is put on inquiry and must discover upon his
peril the agent’s authority. There’s no express or implied agency
between Deganos and Luz.
Eurotech Industrial vs Cuizon
Eurotech is in the business
of importing and distributing various European industrial
equipment for customers in the Philippines. Eurotech has Impact
Systems (represented by Sales Manager Cuizon) as one of its
customers. Impact Systems bought equipment from Eurotech.
When the equipment arrived in the Philippines Eurotech refused to
give it to Impact Systems until it fully pays their indebtedness.
Impact Systems paid by way of a deed of assignment transferring
the receivables due it from Company A in Eurotech’s favor.
However, Impact Systems still collected on the receivables due
from Company A. When Eurotech discovered Impact Systems
actions, Eurotech demanded payment from Impact Systems which
it failed to do so.
Did Cuizon exceed his authority when he signed the Deed
of Assignment thereby making him personally liable to Eurotech?
No. The basis of agency is representation, the agents acts
for and on behalf of the principal on matters within the scope of his
authority and said acts have the same legal effect as if the principal
personally executed them. As a general rule an agent is not
personally liable to the party with whom he contracts. The
exception is if the agent binds himself to the obligation and if the
agent exceeds his authority. If the agent exceeds his authority, the
3rd person affected can’t recover from both agent and principal.
In this case, Cuizon is the agent while Erwin Cuizon (Impact
Systems owner) is the principal. Cuizon signed the deed of
assignment in his capacity as Impact System’s Sales Manager. An
agent’s powers are particularly broad in the case of one acting as a
general agent or manager. A high degree of confidence and liberal
powers are invested in such agent. Such agent may enter into any
contract he deems reasonably necessary or requisite to protect the
principal’s interest. Here, Cuizon acted within his authority
because Impact Systems had great need for the equipment and
negotiations were being held up.
EUROTECH INDUSTRIAL v. CUIZON – “ sludge pump/ Erwin, not Edwin, is the
defendant” Eurotech is engaged in the business of importing and distributing various
European industrial equipment for customers here in the Philippines. One of its
customers is Impact Systems, owned by Erwin Cuizon. Edwin Cuizon is the sales
manager of Impact Systems. From January to April 1995, Eurotech sold various
products to Impact. Subsequently, Impact bought from petitioner a sludge pump worth
P250K. When the pump arrived, Eurotech refused to deliver the pump until Impact fully
paid for it. As Impact Systems desperately needed the sludge pump for its business,
Edwin spent a significant amount of time negotiating with Eurotech for its delivery. As a
result of the negotiations, Edwin and Eurotech’s general manager, executed a Deed of
Assignment where Impact assigned receivables from the Toledo Power Corp. worth
365K to Eurotech. Two days after, Edwin paid a P50K downpayment for the pump.

Unknown to Eurotech, Impact collected the said receivables from Toledo. Alarmed by
this, Eurotech made several demands upon impact to pay its obligations. Impact made
partial payments, but ultimately, they were unable to comply. Hence, Eurotech sued
Impact and Edwin for specific performance, going even so far as to allege fraud on the
part of the defendants. As a defense, Edwin alleged that he is not a party in interest to
the case, as the contract of sale was between Impact Systems and Eurotech. As sales
manager for Impact, he is only an agent of the company, and Eurotech was fully aware
of such fact. Thus, he cannot be made liable for the company’s debts arising from the

Because of this defense, the trial court dropped Edwin as a party defendant from the
case. According to it, when Edwin executed the Deed of Assignment together with De
Jesus, he acted only for and in behalf of his principal, Erwin. In fact, Impact systems
ratified Edwin’s acts by paying the P50K downpayment. Thus, Edwin could not have
been said to have acted in excess of his authority. The CA affirmed the trial court’s

The underlying principle of the contract of agency is to accomplish results by

using the services of others – to do a great variety of things like selling, buying,
manufacturing, and transporting. Its purpose is to extend the personality of the
principal or the party for whom another acts and from whom she derives the
authority to act. By this legal fiction, the actual or real absence of the principal is
converted into this legal or juridical presence – qui facit per alium facit per se. In
the absence of any agreement between Edwin and his principal, he, as sales manager,
could enter into any contract that he deems reasonable necessary for the protection of
the interests of his principal which where entrusted to his management.

Since the existence of the agency relationship between Erwin and Edwin is not disputed,
the only question in this case is whether Edwin exceeded his authority by entering into
the Deed of Assignment. An agent who acts as such, is not personally liable with
whom he contracts, unless he expressly binds himself or exceeds the limits of his
authority without giving such party sufficient notice of his powers. Nowhere in the
Deed of Assignment does it say that Edwin bound himself personally liable for the
obligation. He signed thereon as the sales manager of Impact Systems. Said act was
ratified when Impact paid the P50K downpayment. By this ratification, Edwin could not
have been said to have acted beyond the scope of his authority. Thus, he cannot be
made liable for his principal’s obligations, and must be dropped from the case.

JD: In this case, the Court took notice of the time Edwin spent negotiating with Eurotech,
which resulted in the execution of the Deed of Assignment. This, according to the Court,
showed that Edwin persistently fought to defend the interests of his principal. Had he
done otherwise, the business of Impact would have suffered and he would have violated
his fiduciary relationship with his principal.


commission / revocation of agency”

American Airlines and Orient Air Services entered into a General Sales Agency
Agreement where the former authorized the latter to act as its exclusive general sales
agent within the Philippines for the sale of air passenger transportation. In a nutshell,
Orient would collect the proceeds of sales of American’s tickets, and American would
pay a commission for its services. The portion of the Agreement relevant to agency is
the termination clause, which states that ‘Either party may terminate the Agreement
without cause by giving the other 30 days’ notice by letter, telegram and cable.’

Alleging that Orient had reneged on its obligations under the agreement by failing to
promptly remit the net proceeds of sales for the months of January to March 1981 in the
amount of US$ 254K, American by itself undertook the collection of the proceeds, and
terminated the Agreement. Orient disputed the termination, claiming that American’s
conduct prejudiced its business interests. It also sought to recover unpaid commissions
by American. The trial court declared the termination illegal and reinstated Orient as
exclusive agent for American. It also ordered American to pay Orient the commissions
due it. The CA upheld the ruling, except for modifiying the manner of payment of the

By the contract of agency, a person binds itself to render some service or to do

something in behalf or in representation of the other, WITH THE CONSENT AND
AUTHORITY OF THE LATTER. In an agent-principal relationship, the personality of
the principal is extended through the facilty of the agent. In so doing, the agent,
by legal fiction, becomes the principal, authorized to perform all acts which the
latter would have him do. Such a relationship can only be effected with the
consent of the principal which must not be compelled in any way, by law or by any
court. The Agreement states that either party may terminate the relationship without
cause by giving 30 days’ notice. It simply means that the agency can be terminated at
any moment. By reinstating Orient Air, the lower courts in effect, compelled American to
extend its personality to Orient Air. Such reinstatement violates the principle that consent
must be freely given and not forced.

Domingo vs Domingo
Vicente Domingo (complainant)

granted Gregorio Domingo (respondent) the exclusive agency to
sell Vicente’s Property X. Gregorio would receive a 5%
commission if Property X is sold to a purchaser Gregorio
introduces. Gregorio authorized Person A to look for a buyer
promising Person A a share of the commission. Person A
introduced Oscar, a potential buyer to Gregorio. Negotiations took
place between Oscar and Vicente with Gregorio managing to
persuade Vicente to sell Property X at a lower price. Oscar gave
Gregorio a P1,000.00 gift for Gregorio’s success in lowering the
price. Gregorio didn’t disclose to Vicente the gift. After some time,
Oscar told Gregorio he was no longer buying the property and
didn’t meet Gregorio anymore. Gregorio sensed something fishy
and discovered that Vicente had actually sold Property X to
Oscar’s wife. When Gregorio demanded his commission, Vicente
refused arguing Property X was sold not to Gregorio’s buyer, but
to another buyer namely Oscar’s wife.
Is Gregorio still entitled to his commission?
No. The Civil code demands the utmost good faith, fidelity,
honesty, candor and fairness on the agent’s part to his principal.
The agent has an absolute obligation to make a full disclosure to
his principal of all his transactions and facts relevant to the agency.
An agent who takes a secret profit from the vendee without
revealing the same to his principal is guilty of a breach of his
loyalty to the principal and forfeits his right to collect the
commission from the principal.
In this case, Gregorio received a gift from Oscar but failed to
disclose it to Vicente. The gift corrupted Gregorio’s duty to serve
his principal’s interest by persuading Vicente to sell Property X at
a much lower price than he intended. Art. 1891 doesn’t apply if the
agent acted only as middleman with the task of bringing together
the vendor and vendee. The article also won’t apply if the agent
had informed his principal of the gift he received from the
purchaser and the principal didn’t object to it. Here, Gregorio
wasn’t merely a middleman because he served as broker and agent
of Vicente. Further, Gregorio didn’t disclose Oscar’s gift to
Vicente. As a consequence of such breach of trust, Gregorio has
forfeited his right to the commission.
See Art. 1891, Art. 1909
Schmid Inc. vs RJL Corp.
RJL needed 12 electric
generators and while canvassing for generators, Schmid sent RJL
its quotation for 12 Nagata-brand electric generators. Schmid
stipulated RJL will pay by opening a letter of credit in Nagata
Corp’s favor. Nagata sent the electric generators to RJL and
Schmid got its commission. Afterwards, the 12 generators broke
down and it turns out they were faulty. Some of the generators
were repaired but most were neither repaired nor replaced. RJL
demanded Schmid refund it but the latter refused arguing it wasn’t
the vendor of the Nagata-brand generators.
Is Schmid Inc. liable for the faulty electric generators?
No. Schmid was merely an indentor, and not a vendor.
Being an indentor, Schmid can’t be held liable for the implied
warrant for hidden defects under the Civil Code. Further, Schmid
never expressly bound itself to warrant the 12 generators as free of
any hidden defects.
An indentor is similar to a broker and in effecting a sale, they’re
merely middle-men and act in a certain sense as the agent of both
parties to the transaction.
A broker is generally defined as one who is engaged, for others, on
a commission, negotiating contracts relative to property with the
custody of which he has no concern; the negotiator between other
parties, never acting in his own name but in the name of those who
employed him; he is strictly a middleman and for some purpose the
agent of both parties.
Tan vs Gullas
Gullas owns Property X which he wants to
sell. Gullas authorized Tan, a real estate broker, to negotiate for the
sale of the land with a commission if Tan does sell it. Tan found a
buyer in Company A. After negotiations, Gullas agreed to sell
Property X to Company A. Gullas authorized Attorney A to sell,
transfer, and convey Property X. The transaction went smoothly
and title was issued in Company A’s favor. Afterwards, Tan went
to Gullas to collect his commission but Gullas refused reasoning
another broker introduced Company A to Gullas.
Is Tan entitled to the commission?
Yes. An agent receives a commission upon the sale's
successful conclusion. Meanwhile, a broker earns his commission
by merely bringing the buyer and seller together, even if no sale is
eventually made.
In this case, it was Tan who first introduced Company A to Gullas.
Gullas’ allegations that he hired another broker who first
introduced Company A to him is untenable because he failed to
provide evidence proving it. Gullas is merely avoiding paying Tan
his commission for Tan’s role in the transaction. Further, Tan
wasn't able to participate in the negotiations because of Gullas
Medrano vs CA
Vice-Chairman Medrano of Ibaan Rural
Bank was looking for a buyer of a foreclosed bank asset. Medrano
asked Flor (complainant) to look for a buyer. Borbon, Flor’s
associate and a real estate broker, knew of Buyer A. Medrano gave
Flor and Borbon written authority to negotiate the property’s sale.
The defendants arranged for the property’s ocular inspection with
Buyer A but was delayed for one reason or another. After a few
weeks, defendants discovered Medrano had already sold the
property to Buyer A. With the sale consummated, defendants
asked Medrano for their commission but Medrano refused to pay.
Are defendants entitled to their commission?
Yes. Procuring cause is meant to be the proximate cause.
Procuring cause, in a broker’s activity, refers to a cause originating
a series of events which, without break in their continuity, result in
accomplishment of prime object of the broker’s employment -
producing a purchaser ready, willing and able to buy real estate in
the owner’s terms. A broker will be regarded as the sale’s
procuring cause if his efforts are the foundation on which the
negotiations resulting in sale are begun. The means he employs
and his efforts must result in the sale. He must find the purchaser
and the sale must proceed from his efforts acting as broker.
In this case, defendants are the sale’s procuring cause because they
were the ones who informed Buyer A leading him to its
consummation. Even if defendants didn’t take part in the
negotiations, they are still entitled to the commission. A broker’s
conventional employment is merely to find a willing and able
buyer to purchase the property. There is no agreement to the
contrary that defendants also had to negotiate the sale to get paid
their commission.
MEDRANO v. CA – “mango plantation / efficient procuring cause” Medrano was the
Vice-Chairman of Ibaan Rural Bank. In 1986, Medrano asked Flor, his cousin-in-law, to
look for a buyer of an asset of the Bank – a 17-hectare mango plantation located in
Ibaan, Batangas. By way of Pacita Borbon, a real estate broker, Flor was zable to get in
touch with Lee, who was interested in buying land suitable for planting mango trees. As
such, Medrano issued a letter authorizing Flor and Borbon to negotiate with any
prospective buyer for the sale of the mango plantation. For their efforts in finding
one, they would receive a commission amounting to 5% of the purchase price. Flor
arranged for Lee to join them in an ocular inspection of the property, but this never
pushed through for various reasons.

After several postponed appointments, Lee called Flor up and told her that he was on his
way to Lipa City to inspect another property, and asked for the location of the mango
plantation so that he could give it a look. Since he was in a hurry and could not wait for
Flor to join him, he was told to get in touch with Ganzon, Medrano’s daughter, regarding
the property. Eventually, after a series of negotiations between Lee and the Bank,
Lee purchased the property for P1.2 M. When she heard of the successful sale, Flor
asked for her commission. Medrano refused, thus, she, together with Borbon, sued to
collect from him.

Flor and Borbon are entitled to the 5% commission, they being the efficient procuring
cause of the sale. Procuring cause, in describing a broker’s activity, refers to a
cause originating a series of events which, without break in their continuity, result
in the accomplishment of the broker’s prime objective – producing a purchaser
ready, willing and able to buy real estate on the owner’s terms. Simply put, a
broker will be regarded as the procuring cause of a sale, and will be entitled to his
commission, if his efforts are the foundation on which negotiations resulting in a
sale are begun. The means he employs and his efforts must bring about the sale.
Without the intervention of Flor and Borbon, Medrano would not have been able to come
into contact with Lee, and the sale would not have been consummated. When Flor
informed Borbon that Medrano was selling his mango plantation, Borbon lost no time in
informing Lee that they found a property suitable for his business needs. When they
could not meet him to inspect the property, they directed her to Ganzon. Even if the
letter of authority was non-exclusive – that they were not the only ones authorized to
look for purchasers – there was no evidence to prove that there was someone else
responsible for bringing Medrano and Lee together.

The fact that Flor and Borbon did not participate in the negotiations leading to the sale is
of no moment. The letter of authority states that they would receive 5% commission for
merely introducing a prospective buyer who eventually buys the property. The letter
serves as the law between the parties and the obligations arising therefrom
should be complied in good faith. Thus, Medrano cannot renege on his duty to pay
the 5% commission.

Litonjua vs Eternit Corp.
Eternit Corp. owns Property X

in the Philippines. ESAC Corp, a majority shareholder in Eternit
Corp. grew concerned about the Philippines’ political situation and
wanted to stop operations. ESAC Corp moved to sell Property X.
ESAC Corp, through Glanville and Delsaux engaged the services
of realtor/broker Lauro G. Marquez. Marquez later showed
Property X to Litonjua. Litonjua wanted to buy Property X and
negotiations went underway. Litonjua deposited the necessary fees
in the bank. Meanwhile, the Philippines political situation
improved with Cory Aquino’s assumption to Presidency. ESAC
Corp changed its mind and wanted to continue operations. ESAC
Corp decided no longer to sell Property X. Litonjua demanded
payment for damages from Eternit Corp. but the latter refused.
Did Marquez, Glanville, and Delsaux bind Eternit Corp. to
sell Property X?
No. Litonjua failed to prove Eternit Corp. allowed
Glanville, Delsaux, and Marquez to sell its property. Litonjua filed
to establish the agency by clear, certain, and specific proof.
Glanville, Delsaux, and Marquez had no authority to bind Eternit
Corp. in the transaction with Litonjua.
A corporation may act only through its board of directors or, when
authorized either by its by-laws or by its board resolution, through
its officers or agents in the normal course of business. While a
corporation may appoint agents to negotiate for the sale of its real
properties, the final say will have to be with the board of directors
through its officers and agents as authorized by a board resolution
or by its by-laws. An unauthorized act of an officer of the
corporation isn’t binding on it unless the latter ratifies the same
expressly or impliedly by its board of directors. Any sale of real
property of a corporation by a person purporting to be an agent
thereof but without written authority from the corporation is null
and void.
In creating or conveying real rights over immovable property, a
special power of attorney is necessary. In a sale of a piece of land
or any portion thereof through an agent, the latter’s authority shall
be in writing, otherwise the sale is void. Here, complainants failed
to provide in evidence the Board resolution of Eternit Corp.
empowering Marquez, Glanville, or Delsaux as its agents to sell,
let alone offer for sale, Property X. ESAC’s authorization is not
equal to Eternit’s authorization.
A real estate broker is one who negotiates the sale of real
properties. His business, generally speaking, is only to find a
purchaser who is willing to buy the land upon terms fixed by the
owner. He has no authority to bind the principal by signing a
contract of sale. Indeed, an authority to find a purchaser of real
property does not include an authority to sell.

LITONJUA v. ETERNIT CORP. – “Belgian-Swiss Decision / Agency by Estoppel”

Etroutemer S.A. Corporation (ESAC) is a corporation organized and registered in
Belgium, owned 90% of the shares of stock Eternit Corp. (EC), a Filipino corporation
engaged in the manufacture of roofing and piping materials. Delsaux was ESAC’s
Regional Director for Asia, while Glanville was EC’s General Manager and President.
Both had their offices in Belgium.

EC owned 8 parcels of land, on which it conducted its manufacturing operations. In

1986, ESAC, worried about the Phiippines’ political situation, decided to stop its
operations in the country. ESAC’s Asia Committee instructed Adams, a member of EC’s
Board of Directors, to sell the 8 parcels of land. Adams then enaged the services of
Marquez, a real-estate broker, to look for potential buyers of the property. Marquez
offered the parcels of Land to Litonjua. Through a letter addressed to Litonjua, Marquez
declared that he was authorized to sell the property for P27M, subject to negotiation.
Litonjua offered to buy the property for P20M. Delsaux sent word to Glanvile that “based
on the Belgian/Swiss decision,” the final offer was US$1M and P2.5M to cover all
existing obligations prior to liquidation. Litonjua accepted the offer, and then deposited
$1M with the Security Bank and drafted an escrow agreement to expedite the sale.

However, upon Pres. Aquino’s assumption of office, the political situation in the country
began to stabilize. Marquez received a letter from Glanville that the sale would no longer
proceed. A letter, addressed by Delsaux followed, confirming that ESAC had
decided not to proceed with the sale since it had decided to resume operations in
the Philippines. Litonjua sued to compel EC and ESAC to proceed with the sale of the
property. Litonjua argued that the sale is binding on ESAC and EC for the following
reasons: 1) ESAC and EC clothed Marquez with apparent authority to sell the property,
hence EC is estopped from denying the existence of an agency relationship; 2) Since
ESAC owned 90% of EC’s stock, a mere resolution by EC’s board of directors would be
merely ceremonial, the true authority coming from Delsaux, based on the “Belgian/Swiss
decision” to sell the property.
EC cannot be compelled to sell the property. A corporation is a juridical person
separate and distinct from its members or stockholders and is not affected by the
personal rights, obligation and transactions of the latter. It may act only through
its board of directiors or when authorized either by its by-laws or by its board
resolution, through its officers or agents in the normal course of business. Even if
ESAC owned 90% of EC’s stock, still, the property of a corporation is not the property of
the stockholders and members, and as such, may not be sold without express authority
from the board of directors. Any sale of real property of a corporation by a person
purporting to be an agent thereof but without written authority from the
corporation is null and void. Marquez did not have a written resolution from EC’s
Board of Directors authorizing him to sell the property. Therefore, any offer that he made
upon Litonjua could not bind EC.

Spouses Aggabao vs Parulan Jr.
Real Estate Broker

Atanacio offered to sell Land X and Land Y, owned by Elena and
Parulan Jr, to Spouses Aggabao. The Spouses Aggabao met with
Elena, the properties’ co-owner, where they discussed the sale and
payment terms. Elena presented a document to the spouses stating
Elena was authorized to sell on her husband's behalf. Afterwards,
Spouses Aggabao paid Elena as promised and received a TCT for
Land X. Elena failed to turn over the duplicate owner’s copy of the
TCT over Land Y. It turns out the duplicate copy was with
Parulan, Parulan Jr’s brother. Parulan demanded money in
exchange for the duplicate copy over Land Y. Spouses Aggabao
refused and when Parulan again demanded payment the Spouses
Aggabao explained they already fully paid Elena. Parulan Jr then
filed a case to declare the sale void.
Is the sale valid?
No. The power of administration doesn’t include acts of
disposition or encumbrance, which are acts of strict ownership. An
authority to dispose can’t proceed from an authority to administer,
and vice versa, for the 2 powers many only be exercised by an
agent following the provisions of agency in the Civil Code.
In this case, Parulan’s authority, as special agency, was limited to
selling the property, which didn’t include the power of
administration. The sale is void because Parulan Jr, as co-owner in
a conjugal property, never gave his consent. If the Spouses had
taken the time to verify the document Elena based her authority on,
they would've found out the same was fake and Elena and her
husband were already estranged.