Вы находитесь на странице: 1из 34

ART 1868.

CONCEPT AND DEFINITION OF AGENCY

RALLOS VS. FELIX GO CHAN & SONS REALTY


G.R. NO. L-24332, JANUARY 31, 1978

FACTS

An SPA was executed by sisters Concepcion and Gerundia in favor of their brother Simeon for the sale of a parcel of
land co-owned by the two. Months after Conception died, Simeon sold the undivided shares of his sisters to herein
respondent Felix Go Chan & Realty Corp. Petitioner Ramon Rallos, administrator of the late Concepcion’s estate,
prayed that the sale of the undivided share of the deceased be invalidated and a new certificate be issued in the
name of respondent corporation and Concepion’s intestate estate, plus damages. CFI ruled in favor of petitioner and
granted the payers but CA reversed the decision. Respondent’s MR was further denied.

ISSUE

Whether the sale entered into by an agent is valid although executed after death of the principal.

HELD

No, the sale is void because Simeon’s authority as an agent of Concepcion was extinguished upon her death.

Article 1317 provides that no one may contract in the name of another without being authorized or unless he has, by
law, a right to represent him. Article 1919 furthers that the death of the principal terminates the agency.

The case at bar is also not among the exceptions whereby an agent’s acts bind the principal even after the latter’s
death because of Simeon’s knowledge of Concepion’s death is material. Hence, the sale was null and void.

ORIENT-AIR SERVICES AND HOTEL REPRESENTATIVES VS. COURT OF APPEALS


MAY 29, 1991

FACTS

American Air entered into a General Sales Agency Agreement between Orient Air Services and Hotel Representatives
(Orient Air) whereby the former authorized the latter to act as its exclusive general sales agent within the Philippines for
the sale of air passenger transportation.

In 1981, Orient Air reneged in its obligations by failing to promptly remit the net proceeds of sales for the months of
January to March 1981 amounting to $254,400.

American Air instituted a suit against Orient Air with CFI Manila for Accounting with Preliminary
Attachment/Garnishment, Mandatory Injuction and Restraining Order.

Orient Air answered with counterclaim denying the material allegation and contends the following:
- American Air still owed Orient Air a balance in unpaid overriding commission. Orient Air contends that the
contractual stipulation of a 3% overriding commission covers the total revenue of American Air and not merely that
derived from the ticketed sales undertaken by the former.
- The termination of the contract is untenable
- American Air’s precipitous conduct had occasioned prejudice to its business interests.

Trial Court ruled in favor of Orient Air ordering American Air to “reinstate defendant as its general sales agent for
passenger transportation in the Philippines in accordance with the said GSA Agreement.”

Court of Appeals affirmed the decision of the Trial Court.

ISSUE
Whether the respondent appellate court correctly ruled that Orient Air be reinstated again as sales agent of American
Air?

RULING
SC affirmed the decision of the CA however, set aside the portion of the ruling by the appellate court reinstating Orient
Air as the General Sales Agent of American Air.

By affirming this ruling of the trial court, respondent appellate court, in effect, compels American Air to extend its
personality to Orient Air. Such would be violative of the principles and essence of agency, defined by law as a contract
whereby “a person binds himself to render some service or to do something in representation or on behalf of another,
WITH THE CONSENT OR AUTHORITY OF THE LATTER.”

In an agent-principal relationship, the personality of the principal is extended through the facility 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, in any way, be
compelled by law or by any court.

EUROTECH INDUSTRIAL TECHNOLOGIES, INC. V. CUIZON


G.R. NO. 167552; APRIL 23, 2007
PONENTE: J. CHICO-NAZARIO

FACTS
From January to April 1995, petitioner sold to Impact Systems various products allegedly amounting to P91,338.00 pesos.
Subsequently, respondents sought to buy from petitioner one unit of sludge pump valued at P250,000.00 with
respondents making a down payment of P50,000.00. When the sludge pump arrived from the United Kingdom,
petitioner refused to deliver the same to respondents without their having fully settled their indebtedness to petitioner.
Thus, on 28 June 1995, respondent EDWIN and Alberto de Jesus, general manager of petitioner, executed a Deed of
Assignment of receivables in favor of petitioner. Impact systems is owed by ERWIN Cuizon.

Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo Power Company the
amount of P365,135.29. Alarmed by this development, petitioner made several demands upon respondents to pay their
obligations. As a result, respondents were able to make partial payments to petitioner. On 7 October 1996, petitioner's
counsel sent respondents a final demand letter wherein it was stated that as of 11 June 1996, respondents' total
obligations stood at P295,000.00 excluding interests and attorney's fees. Because of respondents' failure to abide by said
final demand letter, petitioner instituted a complaint for sum of money, damages, with application for preliminary
attachment against herein respondents

By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party in interest in this case.
According to him, he was acting as mere agent of his principal, which was the Impact Systems, in his transaction with
petitioner and the latter was very much aware of this fact.

ISSUE
Whether the act of Edwin in signing the Deed of Assignment binds his principal Impact Systems

HELD

Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems

The Supreme Court held that in a contract of agency, a person binds himself to render some service or to do something
in representation or on behalf of another with the latter's consent. Its purpose is to extend the personality of the principal
or the party for whom another acts and from whom he or she derives the authority to act. It is said that the basis of
agency is representation, that is, 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.

In this case at hand, the parties do not dispute the existence of the agency relationship between respondents ERWIN as
principal and EDWIN as agent.

BORDADOR V. LUZ
G.R. NO. 130148 DECEMBER 15, 1997 J. REGALADO

PETITIONERS Jose and Lydia Bordador


RESPONDENTS Sps. Brigida and Ernesto Luz, Narciso Deganos
SUMMARY The Bordadors, who were running a jewelry business, entrusted pieces of jewelry to Degnos, who
was obliged to sell them. Deganos failed to account for them. A civil and criminal case were filed against him, which
prayed that Brigida Luz, who was puported to be his principal, be held solidarily liable. The Court ruled that Deganos
was not the agent of Luz, as there was no evidence that Luz consented to, or authorized Deganos to act on her behalf.

FACTS
The Bordador's were in the business of purchase and sale of jewelry, and Brigida Luz was their regular customer.
Deganos, the brother of Luz, received pieces of jewelry worth P382,816.00, covered by seventeen receipts, eleven of
them indicating that they were received on behalf a certain Evelyn Aquino, and six indicated that they were receive
don behalf of Luz.

Deganos was supposed to sell the items, remit the proceeds, and return the unsold ones to the Bordadors. However, he
was only able to remit P53,207.00, failing to pay the balance of the sales proceeds and returning any unsold items. The
Bordadors filed a complaint before the barangay court, where Deganos along with the Sps. Luz signed a compromise
agreement promising to pay the unpaid account of P765,463.98. Deganos, however, failed to comply.

A civil case for the recovery of sum of money was instituted against Deganos and Brigida Luz in the Malolos RTC. Her
husband Ernesto was impleaded as well. Four years later in 1994, a criminal case for estafa was filed, which was still
pending when this decision was promulgated.

Petitioners claimed that Deganos was acting as the agent of Brigida Luz and because he failed to pay for the pieces of
jewelry, the Sps. Luz, as principals, are solidarily liable. The respondents countered that only Deganos was liable, that
Brigida never authorized him to receive jewelry on her behalf, neither did she receive the articles in question.

The RTC ruled that there was no agency between Brigida Luz and Deganos. It was Bordador who indicated that the
items were received on behalf of Luz. Even if there was a contract of agency, there was no memorandum to this effect
and was therefore unenforceable.

CA affirmed the judgment.


ISSUE
Was there a contract of agency between Luz and Deganos? NO.

RATIO
Petitioners presented as evidence several letters sent by Luz to the Bordadors to prove that she recognized her liability
but the court had pointed out that such letters were for previous obligations and did not include the jewelries involved in
the present case. As for the statement of Brigida Luz that she received pieces of gold jewelry, there was no proof that
the said jewelry were the same items in question.

While it was shown in the findings of fact that Deganos had ostensibly acted as an agent of Luz, there was no showing
that Luz authorized him to act on her behalf regarding the transaction questioned in this case. The basis for agency is
representation, and there is no showing that Luz consented or authorized Deganos to act on her behalf.

It was inexcusably negligent of the Bordados to entrust Deganos with several pieces of jewelry without requiring a written
authorization from the supposed principal. A person dealing with an agent is put upon inquiry and must discover upon
his peril the authority of the agent. There was no express or implied agency between Deganos and Luz.

Petitioners also assail the validity of the CA's ruling, as it will be in conflict with the criminal case of estafa. This will not be
the case as Article 33 of the Civil Code provides that action for damages arising from fraud may proceed
independently of the criminal case and will need only a preponderance of evidence.

DIZON V CA

SUMMARY: Upon non-payment of rental, petitioners filed an action for ejectment against Overland which was granted
by the City Court. However, Overland argues that it has exercised its option to buy the land when it paid P300,000 to
Alice Dizon, petitioners’ agent, as partial payment for the land. Thus, it filed an action for Specific Performance and
Fixing of Period for Obligation to compel the execution of a deed of sale pursuant to the option to purchase and the
receipt of the partial payment, and to fix the period to pay the balance which was dismissed by the RTC but was
granted by the CA. In a subsequent petition, CA also recognized the perfection of the contract of sale between
petitioners and Overland. SC: No perfected contract of sale. Alice Dizon was not authorized to accept such payment.
There was no showing that the co-owners authorized her to enter into a contract of sale with Overland. Latter should
have ascertained the extent of her authority.
DOCTRINE: A co-owner does not become an agent of the other co-owners, and therefore any exercise of an option to
buy a piece of land transacted with one co-owner does not bind the other co-owners of the land. The basis for agency
is representation and a person dealing with an agent is put upon inquiry and must discover upon his own peril the
authority of the agent. Since there was no showing that the other co-owners consented to the act of one co-owner nor
authorized her to act on their behalf with regard to her transaction with purported buyer, the most prudent thing the
purported buyer should have done was ascertain the extent of the authority of said co-owner. Being negligent in this
regard, the purported buyer cannot seek relief on the basis of a supposed agency. (AS cited in Villanueva)

FACTS
G. R. NO. 122544:
 May 23, 1974: Overland Express Lines, Inc. (lessee) entered into a Contract of Lease with Option to Buy with Dizon et.
al. (lessors) involving a 1,755.80 square meter parcel of land
o Situated at corner MacArthur Highway and South "H" Street, Diliman, Quezon City.
o For 1 year commencing from May 16, 1974 up to May 15, 1975.
o During this period, Overland was granted an option to purchase for P3,000 per square meter. Thereafter, the
lease shall be on a per month basis with a monthly rental of P3,000
 June 20, 1975: Overland allegedly paid P300,000 as partial payment for the leased property, which an Alice A. Dizon
accepted and for which an official receipt was issued
 June 1976: Increased rental of P8,000 per month was made effective. Overland failed to pay.
 Dizon et. al. filed an action for ejectment before City Court (MeTC) of QC.
 City Court: Ordered Overland to vacate the leased premises and to pay the sum of P624,000 representing rentals in
arrears and/or as damages in the form of reasonable compensation for the use and occupation of the premises
during the period of illegal detainer from June 1976 to Nov. 1982
 Overland filed a certiorari petition praying for the issuance of a restraining order enjoining the enforcement of said
judgment and dismissal of the case for lack of jurisdiction of the City Court.
 IAC: City Court has jurisdiction. Overland to vacate.
o Questions of whether Overland was granted an extension of the option to buy the property; whether such
option, if any, extended the lease or whether Overland actually paid the alleged P300k to Fidela Dizon, and,
whether Overland thereafter offered to pay the balance of the supposed purchase price, are all merely
incidental and do not remove the unlawful detainer case from the jurisdiction of City Court.
o Teodoro, Jr. vs. Mirasol: The above matters may be raised and decided in the unlawful detainer suit as, to rule
otherwise, would be a violation of the principle prohibiting multiplicity of suits.
o MR denied.
 SC: Dismissed the petition in a resolution and denied subsequent MR
 Oct. 7, 1985: Overland filed before RTC QC an action for Specific Performance and Fixing of Period for Obligation
with prayer for the issuance of a restraining order pending hearing on the prayer for a writ of preliminary injunction.
o Compel the execution of a deed of sale pursuant to the option to purchase and the receipt of the partial
payment, and to fix the period to pay the balance.
 RTC: Denied the issuance of a writ of preliminary injunction on the ground that City Court decision for the ejectment
of Overland, having been affirmed by IAC and SC, has become final and executory.
 Nov. 15, 1985: Unable to secure an injunction, Overland also filed before RTC QC, Br. 102 a complaint for Annulment
of and Relief from Judgment with injunction and damages.
 RTC: Dismissed the complaint for annulment on the ground of res judicata, and the writ of preliminary injunction
previously issued was dissolved. Overland to pay P3,000.00 as attorney's fees.
 However, upon MR, the preliminary injunction was reinstated, thereby restraining the execution of the City Court's
judgment on the ejectment case.
 2 cases were consolidated before RTC QC
 RTC: Dismissed complaint for specific performance case and denied MR in annulment of the ejectment case.
 MR denied
 CA: In favor of Overland. Dizon et. al ordered to execute the deed of absolute sale of the property in question, free
from any lien or encumbrance whatsoever and to deliver deed of sale, as well as the owner's duplicate of the
certificate of title to said property upon payment of the balance of the purchase price by Overland.
o There was a perfected contract of sale between the parties on the leased premises and that pursuant to the
option to buy agreement, Overland had acquired the rights of a vendee in a contract of sale.
o The payment by Overland of P300,000 as partial payment for the leased property, which Dizon et. al
accepted (through Alice A. Dizon) and for which an official receipt was issued, was the operative act that
gave rise to a perfected contract of sale
o For failure of Dizon et. al. to deny receipt thereof, Overland can therefore assume that Alice A. Dizon, acting
as agent of petitioners, was authorized by them to receive the money in their behalf.
o What was entered into was a "conditional contract of sale" wherein ownership over the leased property shall
not pass to the private respondent until it has fully paid the purchase price.
o Since Overland did not consign to the court the balance of the purchase price and continued to occupy
the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full
payment of the purchase price.
 Upon denial of the motion for partial reconsideration, Dizon et. al elevated the case via petition for certiorari :
o Questioned the authority of Alice A. Dizon as agent of Dizon et. al in receiving Overland's partial payment
amounting to P300,000pursuant to the Contract of Lease with Option to Buy.
o Assail propriety of Overland's exercise of the option when it tendered the said amount on June 20, 1975
which purportedly resulted in a perfected contract of sale.
G. R. NO. 124741
 Dizon et. al filed with CA a motion to remand the records of ejectment case to MTC for execution of the judgment
which was granted in a resolution. Overland filed a motion to reconsider said resolution which was denied.
 Overland thus filed a petition for certiorari, prohibition with preliminary injunction and/or restraining order with SC
which was dismissed in a resolution on the ground that the same was a refiled case previously dismissed for lack of
merit. Entry of judgment was issued by this Court.
 July 14, 1993: Dizon et. al filed an urgent ex-parte motion for execution of the decision with the MTC
 MTC: Ordered the issuance of a third alias writ of execution.
 MR filed, denied. MTC ordered the immediate implementation of the third writ of execution without delay.
 Overland thus filed with RTC-QC a petition for certiorari and prohibition with preliminary injunction/restraining order
challenging the enforceability and validity of the MTC judgment as well as the order for its execution.
 RTC: Granted the issuance of a writ of preliminary injunction upon posting of an injunction bond of P50k
 Dizon et. al filed a petition for certiorari and prohibition with a prayer for a TRO and/or preliminary injunction with
CA.
 CA: Dismissed petition. Purpose of petition is to enjoin RTC from restraining the ejectment of Overland. To grant the
petition would be to allow the ejectment of the Overland which CA cannot do. Right to eject Overland has been
demonstrated to be without basis in the said civil case.
 CA: MR filed, denied.
o Overland acquired the rights of a vendee in a contract of sale, in effect, recognizing the right of Overland to
possess the subject premises.
o CA cannot not allow ejectment as it would disturb the status quo of the parties since Dizon et. al. are not in
possession of the subject property.
o It would be unfair and unjust to deprive Overland of its possession of the subject property after its rights have
been established in a subsequent ruling.
 2 consolidated petitions were filed before SC seeking to set aside and annul CA decisions and resolutions
o There was no perfected contract of sale. Alice Dizon was not authorized to receive payment.
ISSUE: Whether there was a perfected contract of sale between Overland and Dizon et. al upon delivery of partial
payment to Dizon’s agent? (NO)
RATIO:
NO AUTHORITY OF AGENT/NO PERFECTED CONTRACT OF SALE
 There was no perfected contract of sale between Overland and Dizon et. al.
 Overland: It delivered the check of P300,000 to Alice A. Dizon who acted as agent of petitioners pursuant to the
supposed authority given by Fidela Dizon, the payee thereof. Dizons’ filing of the ejectment case against it, based
on the contract of lease with option to buy, holds them in estoppel to question the authority of Fidela Dizon. The
payment of P300,000 as partial payment of the purchase price constituted a valid exercise of the option to buy.
 SC: No meeting of minds. There was no consent on the part of the co-owners. There was no valid consent by the
petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners’
alleged agent.
 The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover
upon his peril the authority of the agent (Bordador vs. Luz).
 As provided in Article 1868, there was no showing that petitioners consented to the act of Alice A. Dizon nor
authorized her to act on their behalf with regard to her transaction with overland.
o Article 1868. By the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter.”
 The most prudent thing Overland should have done was to ascertain the extent of the authority of Alice A.
Dizon. Being negligent in this regard, Overland cannot seek relief on the basis of a supposed agency.
 Rule in dealing with an agent: “Every person dealing with an agent is put upon inquiry and must discover upon his
peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agent’s
authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agent,
whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal,
to ascertain not only the fact of the agency but also the nature and extent of the authority, and in case either is
controverted, the burden of proof is upon them to establish it.” (Bacaltos Coal Mines vs. CA)
As to Finality of Ejectment
 Petitioners have established a right to evict Overland from the subject premises for non-payment of rentals. When
Overland failed to pay the increased rental of P8,000.00 per month in June 1976, the petitioners had a cause of
action to institute an ejectment suit against the former with the then City Court.
 In this regard, the City Court (now MTC) had exclusive jurisdiction over the ejectment suit. The filing by Overland of a
suit with the RTC for specific performance to enforce the option to purchase did not divest the then City Court of its
jurisdiction to take cognizance over the ejectment case. Of note is the fact that the decision of the City Court was
affirmed by both IAC and SC.
As to Validity of Option to Buy
 Having failed to exercise the option within the stipulated one-year period, Overland cannot enforce its option to
purchase anymore. Even assuming that the right to exercise the option still subsists at the time Overland tendered
the amount on June 20, 1975, the suit for specific performance to enforce the option to purchase was filed only on
October 7, 1985 or more than 10 years after accrual of the cause of action as provided under Article 1144.
 The contract of lease expired without Overland, as lessee, purchasing the property but remained in possession
thereof. Hence, there was an implicit renewal of the contract of lease on a monthly basis. However, an implied new
lease does not ipso facto carry with it any implied revival of Overland's option to purchase (as lessee thereof) the
leased premises because it is alien to the possession of the lessee.
 Overland’s right to exercise the option to purchase expired with the termination of the original contract of lease for
one year.
 “This is a reasonable construction of the provision, which is based on the presumption that when the lessor allows the
lessee to continue enjoying possession of the property for fifteen days after the expiration of the contract he is willing
that such enjoyment shall be for the entire period corresponding to the rent which is customarily paid – in this case
up to the end of the month because the rent was paid monthly.
 Necessarily, if the presumed will of the parties refers to the enjoyment of possession the presumption covers the other
terms of the contract related to such possession, such as the amount of rental, the date when it must be paid, the
care of the property, the responsibility for repairs, etc.
 But no such presumption may be indulged in with respect to special agreements which by nature are foreign to the
right of occupancy or enjoyment inherent in a contract of lease.(Villanueva vs. CA)

DISPOSITIVE: Both petitions GRANTED. CA decisions and resolutions REVERSED and SET ASIDE. Remanded to the trial
court for immediate execution of City Court (MeTC) judgment as affirmed in IAC (CA) and in SC resolution (Overland to
vacate). However, Dizon et. al/ are ordered to REFUND to Overland P300,000 which they received through Alice A. Dizon
on June 20, 1975.

VICTORIAS MILLING CO. vs. COURT OF APPEALS

FACTS
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co (VMC). In the course of their dealings,
VMC issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases. Among these was SLDR No.
1214M. SLDR No. 1214M, dated October 16, 1989, covers 25,000 bags of sugar. Each bag contained 50 kg and priced at
P638.00 per bag. The transaction covered was a “direct sale”.

On October 25, 1989, STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in the same SLDR
for P14,750,000.00. CSC issued checks in payment. That same day, CSC wrote petitioner that it had been authorized by
STM to withdraw the sugar covered by the said SLDR. Enclosed in the letter were a copy of SLDR No. 1214M and a letter
of authority from STM authorizing CSC to “withdraw for and in our behalf the refined sugar covered by the SLDR” 
 On
Oct. 27, 1989, STM issued checks to VMC as payment for 50,000 bags, covering SLDR No. 1214M. 
 CSC surrendered the
SLDR No. 1214M and to VMC’s NAWACO Warehouse and was allowed to withdraw sugar. But only 2,000 bags had been
released because VMC refused to release the other 23,000 bags.

Therefore, CSC informed VMC that SLDR No. 1214M had been “sold and endorsed” to it. But VMC replied that it could
not allow any further withdrawals of sugar against SLDR No. 1214M because STM had already withdrawn all the sugar
covered by the cleared checks. VMC also claimed that CSC was only representing itself as STM’s agent as it had
withdrawn the 2,000 bags against SLDR No. 1214M “for and in behalf” of STM. Hence, CSC filed a complaint for specific
performance against Teresita Ng Sy (doing business under STM's name) and VMC. However, the suit against Sy was
discontinued because later became a witness. RTC ruled in favor of CSC and ordered VMC to deliver the 23,000 bags
left. CA concurred. Hence this appeal.
ISSUE
W/N CA erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon SLDR No. 1214M as
assignee.

HELD
NO. CSC was not an agent of STM. VMC heavily relies on STM’s letter of authority that said CSC is authorized to withdraw
sugar “for and in our behalf”. It is clear from Art. 1868 that the: basis of agency is representation. On the part of the
principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, and
on the part of the agent, there must be an intention to accept the appointment and act on it, and in the absence of such
intent, there is generally NO agency. One factor, which most clearly distinguishes agency from other legal concepts,
is control; one person – the agent – agrees to act under the control or direction of another – the principal. Indeed, the
very word “agency” has come to connote control by the principal. The control factor, more than any other, has caused
the courts to put contracts between principal and agent in a separate category. Where the relation of agency is
dependent upon the acts of the parties, the law makes no presumption of agency and it is always a fact to be proved,
with the burden of proof resting upon the persons alleging the agency, to show not only the fact of its existence but also
its nature and extent. It appears that CSC was a buyer and not an agent of STM. CSC was not subject to STM’s control.
The terms “for and in our behalf” should not be eyed as pointing to the existence of an agency relation. Whether or not
a contract is one of sale or agency depends on the intention of the parties as gathered from the whole scope and effect
of the language employed. Ultimately, what is decisive is the intention of the parties. (In fact, CSC even informed VMC
that the SLDR was sold and endorsed to it.)
Agency distinguished from sale.

In an agency to sell, the agent, in dealing with the thing received, is bound to act according to the instructions of his
principal, while in a sale, the buyer can deal with the thing as he pleases, being the owner. The elementary notion of
sale is the transfer of title to a thing from one to another, while the essence of agency involves the idea of an
appointment of one to act for another. Agency is a relationship which often results in a sale, but the sale is a subsequent
step in the transaction. (Teller, op. cit., p. 26; see Commissioner of Internal Revenue vs. Manila Machinery & Supply Co.,
135 SCRA 8 [1985].) An authorization given to another containing the phrase “for and in our behalf’’ does not necessarily
establish an agency, as ultimately what is decisive is the intention of the parties. Thus, the use of the words “sold and
endorsed’’ may mean that the parties intended a contract of sale, and not a contract of agency.

TUAZON V. HEIRS OF BARTOLOME RAMOS


463 SCRA 408

FACTS
Respondents alleged that on a relevant date, spouses Tuazon purchased from their predecessor-in-interest cavans
of rice. That on the total number of cavans, only a certain portion has been paid for. In payment thereof, checks have
been issued but on presentment, the checks were dishonored. Respondents alleged that since spouses anticipated
the forthcoming suit against them, they made fictitious sales over their properties. As defense, the spouses averred that
it was the wife of Bartolome who effected the sale and that Maria was merely her agent in selling the rice. The true
buyer of the cavans was Santos. The spouses further averred that when Ramos got the check from Santos, she took it in
good faith and didn't knew that the same were unfunded.

HELD
First, there is no contract of agency.

If it was truly the intention of the parties to have a contract of agency, then when the spouses sued Santos on a
separate civil action, they should have instituted the same on behalf and for the respondents. They didn't do so. The
filing in their own names negate their claim that they acted as
mere agents in selling the rice.

Second, the spouses are liable on the check.

As indorser, Tuazon warranted that upon due presentment, according to their tenor, and that in case they
were dishonored, she would pay the corresponding amount. After the instrument is dishonored by non-
payment, indorsers cease to be merely secondarily liable. They became principal debtors whose liability
becomes identical to that of the original obligor. The holder of a negotiable instrument need not even
proceed against the maker before suing the indorser. Santos is not an indispensable party to the suit
against the spouses.
ALVIN PATRIMONIO V. NAPOLEON GUTIERREZ, GR NO. 187769, 2014-06-04

FACTS

The petitioner and the respondent Napoleon Gutierrez (Gutierrez) entered into a business venture under the name of
Slam Dunk Corporation (Slum Dunk), a production outfit that produced mini-concerts and shows related to basketball.
Petitioner was already then a... decorated professional basketball player while Gutierrez was a well-known sports
columnist.

In the course of their business, the petitioner pre-signed several checks to answer for the expenses of Slam Dunk.
Although signed, these checks had no payee's name, date or amount.

The blank checks were entrusted to Gutierrez with the specific instruction not to fill them out... without previous
notification to and approval by the petitioner.

According to petitioner, the arrangement was made so that he could verify the validity of the payment and make the
proper arrangements to fund the account.

In the middle of 1993, without the petitioner's knowledge and consent, Gutierrez went to Marasigan (the petitioner's
former teammate), to secure a loan in the amount of P200,000.00 on the excuse that the petitioner needed the money
for the construction of his house.

In addition... to the payment of the principal, Gutierrez assured Marasigan that he would be paid an interest of 5% per
month from March to May 1994.

On May 24, 1994, Marasigan deposited the check but it was dishonored for the reason "ACCOUNT CLOSED."

It was later revealed that petitioner's account with the bank had been closed since May 28, 1993.

On September 10, 1997, the petitioner filed before the Regional Trial Court (RTC) a Complaint for Declaration of Nullity of
Loan and Recovery of Damages against Gutierrez and co-respondent Marasigan.

Only Marasigan filed his answer to the complaint.

In the RTC's order dated December 22, 1997, Gutierrez was declared in default.

ISSUES

 Whether there is basis to hold the petitioner liable for the payment of the P200,000.00 loan
 Whether respondent Gutierrez has completely filled out the subject check strictly under the authority given by
the petitioner; and
 Whether Marasigan is a holder in due course.

RULING

The petition is impressed with merit.

The rule that questions of fact are not the proper subject of an appeal by certiorari, as a petition for review under Rule
45 is limited only to questions of law, is not an absolute rule that admits of no exceptions.

Section 14 of the Negotiable Instruments Law (NIL) which states:

Sec. 14. Blanks; when may be filled. - Where the instrument is wanting in any material particular, the person in possession
thereof has a prima facie authority to complete it by filling up the blanks therein. And a signature on a blank paper
delivered by the... person making the signature in order that the paper may be converted into a negotiable instrument
operates as a prima facie authority to fill it up as such for any amount. In order, however, that any such instrument when
completed may be enforced against any person who became a... party thereto prior to its completion, it must be filled
up strictly in accordance with the authority given and within a reasonable time. But if any such instrument, after
completion, is negotiated to a holder in due course, it is valid and effectual for all... purposes in his hands, and he may
enforce it as if it had been filled up strictly in accordance with the authority given and within a reasonable time.

This provision applies to an incomplete but delivered instrument. Under this rule, if the maker or drawer delivers a pre-
signed blank paper to another person for the purpose of converting it into a negotiable instrument, that person is
deemed to have prima facie authority... to fill it up. It merely requires that the instrument be in the possession of a person
other than the drawer or maker and from such possession, together with the fact that the instrument is wanting in a
material particular, the law presumes agency to fill up the... blanks.

In order however that one who is not a holder in due course can enforce the instrument against a party prior to the
instrument's completion, two requisites must exist: (1) that the blank must be filled strictly in accordance with the
authority given; and (2) it must be filled up... within a reasonable time. If it was proven that the instrument had not been
filled up strictly in accordance with the authority given and within a reasonable time, the maker can set this up as a
personal defense and avoid liability. However, if the holder is a holder in due... course, there is a conclusive presumption
that authority to fill it up had been given and that the same was not in excess of authority.

SALLY YOSHIZAKI, PETITIONER, VS. JOY TRAINING CENTER OF AURORA, INC., RESPONDENTS
G.R. NO. 174978; JULY 31, 2013

FACTS
Richard and Linda Johnson were members of Joy Training’s Board of Trustees who sold the real properties, a wrangler
jeep, and other personal properties in favor of the spouses Sally and Yoshio Yoshizaki. Joy Training filed an action for
cancellation of sales alleging that the spouses Johnson is without the requisite authority from the Board of Directors. The
RTC ruled in favor of the spouses Yoshizaki. It found that Joy Training owned the real properties and it authorized he
spouses Johnson to sell the real properties. It recognized that there were only five actual members of the board of
trustees; consequently, a majority of the board of trustees validly authorized the sale. It also ruled that the sale of
personal properties was valid because they were registered in the spouses Johnson’s name. The CA upheld the RTC’s
jurisdiction over the case but reversed its ruling with respect to the sale of real properties. It also ruled that the resolution
is void because it was not approved by a majority of the board of trustees.

ISSUE
Was there a contract of agency to sell the real properties between Joy Training and the spouses Johnson?

RULING
The SC ruled that there was no contract of agency between Joy Training and the spouses Johnson to sell the parcel of
land with its improvements. Art. 1868 of the Civil Code defines a contract of agency as a contract whereby a person
“binds himself to render some service or to do something in representation or on behalf of another, with the consent or
authority of the latter.” It may be express, or implied from the acts of the principal, from his silence or lack of action, or
his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. In this case,
the presented evidence did not convince the SC of the existence of the contract of agency to sell the real properties.
The certification is a mere general power of attorney which comprises all of Joy training. Art. 1877 of CC clearly states
that an agency couched in general terms comprises only acts of administration, even if the principal should state that
he withholds no power or that the agent may execute such acts as he may authorize as general and unlimited
management.

MANUEL JUSAYAN, ALFREDO JUSAYAN, AND MICHAEL JUSAYAN VS JORGE SOMBILLA


G.R. NO. 163928 JANUARY 21, 2015

FACTS
Wilson entered into an agreement with respondent Jorge Sombilla, wherein Wilson designated Jorge as his agent to
supervise the tilling and farming of his rice land in crop year 1970-1971. On August 20, 1971, before the expiration of the
agreement, Wilson sold the four parcels of land to Timoteo Jusayan. Jorge and Timoteo verbally agreed that Jorge
would retain possession of the parcels of land and would deliver 110 cavans of palay annually to Timoteo without need
for accounting of the cultivation expenses provided that Jorge would pay the irrigation fees. From 1971 to 1983, Timoteo
and Jorge followed the arrangement. In 1975, the parcels of land were transferred in the names of Timoteo’s sons,
namely; Manuel, Alfredo and Michael. In 1984, Timoteo sent several letters to Jorge terminating his administration and
demanding the return of the possession of the parcels of land. Due to the failure of Jorge to render accounting and to
return the possession of the parcels of land despite demands, Timoteo filed a complaint for recovery of possession and
accounting against Jorge in the RTC. Following Timoteo’s death on October 4, 1991, the petitioners substituted him as
the plaintiffs.

Jorge asserted that he enjoyed security of tenure as the agricultural lessee of Timoteo, and that he could not be
dispossessed of his landholding without valid cause. The RTC upheld the contractual relationship of agency between
Timoteo and Jorge; and ordered Jorge to deliver the possession of the parcels of land to the petitioners.

On appeal, the CA reversed the RTC’s ruling and dismissed the case, declaring that the contractual relationship
between the parties was one of agricultural tenancy; and that the demand of Timoteo for the delivery of his share in the
harvest and the payment of irrigation fees constituted an agrarian dispute that was outside the jurisdiction of the RTC,
and well within the exclusive jurisdiction of the Department of Agriculture (DAR) pursuant to Section 3(d) of Republic Act
No. 6657 (Comprehensive Agrarian Reform Law of 1988).

ISSUE
Whether or not the relationship between the petitioners and respondent is that of agency or agricultural leasehold

HELD
AGRICULTURAL TENANCY. Jorge presented handwritten receipts indicating that the sacks of palay delivered to and
received by one Corazon Jusayan represented payment of rental. In this regard, rental was the legal term for the
consideration of the lease. Consequently, the receipts substantially proved that the contractual relationship between
Jorge and Timoteo was a lease. While in possession of the land, therefore, Jorge was acting for himself instead of for
Timoteo. Unlike Jorge, Timoteo did not benefit whenever the production increased, and did not suffer whenever the
production decreased. Timoteo’s interest was limited to the delivery of the 110 cavans of palay annually without any
concern about how the cultivation could be improved in order to yield more produce. In the agricultural lease, also
termed as a leasehold tenancy, the physical possession of the land devoted to agriculture is given by its owner or legal
possessor (landholder) to another (tenant) for the purpose of production through labor of the latter and of the members
of his immediate farm household, in consideration of which the latter agrees to share the harvest with the landholder, or
to pay a price certain or ascertainable, either in produce or in money, or in both. Specifically, in Gabriel v. Pangilinan,
the Court differentiated between a leasehold tenancy and a civil law lease in the following manner, namely: (1) the
subject matter of a leasehold tenancy is limited to agricultural land, but that of a civil law lease may be rural or urban
property; (2) as to attention and cultivation, the law requires the leasehold tenant to personally attend to and cultivate
the agricultural land; the civil law lessee need not personally cultivate or work the thing leased; (3) as to purpose, the
landholding in leasehold tenancy is devoted to agriculture; in civil law lease, the purpose may be for any other lawful
pursuits; and (4) as to the law that governs, the civil law lease is governed by the Civil Code, but the leasehold tenancy
is governed by special laws.

In agency, the agent binds himself to render some service or to do something in representation or on behalf of the
principal, with the consent or authority of the latter. The basis of the civil law relationship of agency is representation, the
elements of which are, namely: (a) the relationship is established by the parties’ consent, express or implied; (b) the
object is the execution of a juridical act in relation to a third person; (c) the agent acts as representative and not for
himself; and (d) the agent acts within the scope of his authority. Whether or not an agency has been created is
determined by the fact that one is representing and acting for another.

ART 1869. KINDS OF AGENCY, FORMS OF AGENCY

VICENTE LIM v. CA, GR No. 118347, 1996-10-24

FACTS
Private respondent Liberty Luna is the owner of a piece of land located at the corner of G. Araneta Avenue and
Quezon Avenue in Quezon City.
On September 2, 1988 private respondent sold the land to petitioners Vicente and Michael Lim for P3,547,600.00.
As prepared by petitioners' broker, Atty. Rustico Zapata of the Zapata Realty Company, the receipt embodying the
agreement[1]... read as follows:
3. The seller assumes full responsibility to eject the squatters/occupants within a period of sixty (60) days from the
date of receipt of the earnest money; and in case the seller shall fail in her commitment to eject the
squatters/occupants within said period, the seller shall... refund to the buyer this sum of P200,000.00 [plus another
sum of ONE HUNDRED THOUSAND (P100,000.00) PESOS as liquidated damages];
Private respondent Luna failed to eject the squatters from the land despite her alleged efforts to do so.
On January 17, 1989, the parties met at the office of Edmundo Kaimo to negotiate a price increase to facilitate the
ejectment of the squatters.
After a few days, private respondent tried to return the earnest money alleging her failure to eject the squatters.
She claimed that as a result of her failure to remove the squatters from the land, the contract of sale ceased to exist and
she no longer had the obligation... to sell and deliver her property to petitioners.
The appellate court described the sale in this case as a "contract with a conditional obligation" whereby the private
respondent's obligation to sell and deliver and the petitioners' obligation to... pay the balance of the purchase price
depended on the fulfillment of the condition that the squatters be removed within 60 days.

ISSUE
The first question is whether as a result of private respondent's failure to eject the squatters from the land, petitioners, as
the Court of Appeals ruled, lost the right to demand that the land be sold to them.

RULING
We hold that they did not... and that the appellate court erred in holding otherwise. The agreement, as quoted, shows
a perfected contract of sale.
Indeed, the earnest money given is proof of the perfection of the contract. As Art. 1482 of the Civil Code states,
"Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the
perfection of the contract."
Private respondent Luna contends that as the condition of ejecting the squatters was not met, she no longer has an
obligation to proceed with the sale of her lot.
Private respondent fails to distinguish between a condition imposed... on the perfection of the contract and a condition
imposed on the performance of an obligation.
Failure to comply with the first condition results in the failure of a contract, while failure to comply with the second
condition only gives the other party the option either to... refuse to proceed with the sale or to waive the condition.
In this case, there is already a perfected contract. The condition was imposed only on the performance of the
obligation.
Hence, petitioners have the right to choose whether to demand the return of P200,000.00 which they have paid as
earnest money or to proceed with... the sale. They have chosen to proceed with the sale and private respondent
cannot refuse to do so.

PRINCIPLES
Private respondent fails to distinguish between a condition imposed... on the perfection of the contract and a condition
imposed on the performance of an obligation. Failure to comply with the first condition results in the failure of a
contract, while failure to comply with the second condition only gives the other party the option either to... refuse to
proceed with the sale or to waive the condition.
In this case, there is already a perfected contract. The condition was imposed only on the performance of the
obligation. Hence, petitioners have the right to choose whether to demand the return of P200,000.00 which they have
paid as earnest money or to proceed with... the sale. They have chosen to proceed with the sale and private
respondent cannot refuse to do so.

EQUITABLE PCI V KU

SUMMARY
Litigation ensued between Rosita Ku and Equitable. When CA ruled in favor of Rosita, Equitable filed a motion for an
extension of 30 days to file its petition for review as it allegedly received the CA decision on April 25, 2000. However,
Rosita argues that the petition is defective because Bank actually received CA decision on April 24, 2000 when Joel
Rosales, an employee of Bank’s law firm received it from the Post office and thus Equitable should have filed motion for
extension on May 9, 2000 not May 10. Equitable replied that Joel is not an agent of the bank as expressly mentioned in
his affidavit. HELD: Bank filed petition beyond reglementary period. There was perfection of the agency as Joel Rosales
averred in his affidavit that “on occasions when I receive mail matters for said law office, it is only to help them receive
their letters promptly,” implying that counsel had allowed the practice of Rosales receiving mail in behalf of the
former. There is no showing that counsel had objected to this practice or took steps to put a stop to it. However, in the
interest of justice, the petition was still given due course.
DOCTRINE
PERFECTION FROM SIDE OF PRINCIPAL: An agency may be express but it may also be implied from the acts of the
principal, from his silence, or lack of action, or his failure to repudiate the agency, knowing that another person is acting
on his behalf without authority.
PERFECTION FROM SIDE OF AGENT: Likewise, acceptance by the agent may also be express, although it may also be
implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances (Art.
1870).
FACTS
 Noddy Dairy Products Inc. incurred a loan from Equitable Banking Corporation (now Equitable PCI Bank)
 As security, Rosita Ku, treasurer of Noddy, Inc., and Ku GiokHeng, VP/GM of Noddy Inc. and Rosita’s father,
mortgaged a residential house and lot located in La Vista, QC which is registered in Rosita’s name
 When Noddy, Inc. failed to pay the loan, Equitable foreclosed the property extrajudicially and was issued a
certificate of sale after winning in the foreclosure sale. Rosita failed to redeem the property so the Register of Deeds
canceled the TCT in her name and a new one was issued in Equitable’s name.
 May 10, ‘89: Equitable instituted an action for ejectment before MeTC QC against Rosita’s father Ku GiokHeng.
o It allowed Ku GiokHeng to remain in the property on the condition that the latter pay rent. However, Ku
GiokHeng’s failed to pay rent thus this action.
 Ku GiokHeng denied that there was any lease agreement over the property.
 MeTC (Dec. 8, ‘94): In favor of Equitable and ordered Ku Giok Heng to vacate the premises.
o No right for his continued possession of or stay as title had been duly transferred to Equitable. Buyer in
foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the
period of 1 year after the registration of the sale
 Ku GiokHeng did not appeal the decision of the MeTC.
 Dec. 20, ‘94: Instead, he and Rosita Ku, filed an action before RTC QC to nullify the decision of the MeTC.
 RTC (Sept. 13, ‘99): No merit; Dismissed complaint and ordered the execution of the MeTC decision.
 Rosita filed in CA a special civil action for certiorari assailing the decision of the RTC as she was not made a party to
the ejectment suit and was, therefore, deprived of due process.
 CA (Mar. 31, 2000): Agreed with Rosita. Enjoined the eviction of Rosita from the premises.
 May 10, 2000: Equitable filed in SC a motion for an extension of 30 days from May 10, 2000 or until June 9, 2000 to file
its petition for review of the CA decision as the Bank has received the CA decision on April 25, 2000.
o April 25, 2000 – Received CA Decision (15 days reglementary period to file petition for review OR file motion
for extension)
o May 10,2000 – Filed motion for extension for 30 days
o June 9, 2000 – w/n 30 days
 SC: Granted the motion for a 30-day extension “counted from the expiration of the reglementary period” and
“conditioned upon the timeliness of the filing of the motion for extension.”
 June 13, 2000: Equitable Bank filed its petition, contending that there was no need to name Rosita Ku as a party in
the action for ejectment since she was not a resident of the premises nor was she in possession of the property.
o FOOTNOTE: The last day to file the petition was on June 9, 2000 but because of the Court’s 99 th Anniversary
Celebration, business transactions were suspended on said date per Memorandum Circular No. 03-2000.
 Rosita argues that the petition is defective because of non-compliance with reglementary period.
o Bank received CA decision not on April 25, 2000 but on April 24, 2000
o April 24, 2000 - copy “was duly delivered to and received by Joel Rosales (Authorized Representative)” as
evidenced by a Certification issued by the Manila Central Post Office
o May 10, 2000 – When Equitable filed its motion for extension to file petition for review, it was 1 day beyond the
reglementary period for filing the petition for review OR motion to extend w/c must be filed on May 9, 2000 -
15 days from the receipt of CA decision
 Bank’s Reply: Reiterates “its honest representation of having received a copy of CA decision on April 25, 2000.”
Receipt on April 24, 2000 by Joel Rosales, who was not an agent of its counsel’s law office cannot be considered
receipt of the CA Decision by the Bank (or its counsel).
 Rosales’ Affidavit
o Employee of Unique Industrial & Allied Services, Inc. and assigned with the Equitable PCI Bank, Mail and
Courier Department w/ official duty and responsibility to receive and pick-up from the Manila Central Post
Office the various mails, letters, correspondence, and other mail matters intended for the bank’s various
departments and offices at Equitable Bank Building
o I am not the constituted agent of “Curato-Divina-Mabilog-Nedo-Magturo-Pagaduan Law Office” for purposes
of receiving their incoming mail matters; neither am I any such agent of the various other tenants of the said
Building. On occasions when I receive mail matters for said law office, it is only to help them receive their
letters promptly.
o April 24, 2000: Received CA Decision together with other mail matters, and brought them to the Mail and
Courier Department;
o April 25, 2000: After sorting out mail matters, erroneously recorded them on page 422 of logbook as having
been received on April 25, 2000
o April 27, 2000: Decision was sent by the Mail and Courier Department to said Law Office whose receiving
clerk opened the letter and stamped on the “Notice of Judgment” their actual date of receipt: “April 27,
2000”
o May 8, 2000: Atty. Roland A. Niedo of said law office inquired as to actual date of receipt of letter, and
informed him that based on logbook, it was received on April 25, 2000.
o Error was caused by an honest mistake.
 Bank also argues such receipt did not constitute notice to its counsel, as required by Sec. 2 and 10, Rule 13 of ROC.
CA decision actually received on April 27, 2000.
o SEC. 2. Filing and service defined. – Filing is the act of presenting the pleading or other paper of the clerk of
court. Service is the act of providing a party with a copy of the pleading or paper concerned. If any party
has appeared by counsel, service upon him shall be made upon his counsel or one of them, unless service
upon the party himself is ordered by the court. Where one counsel appears for several parties, he shall only
be entitled to one copy of any paper served upon him by the opposite side.
o PLDT vs. NLRC: It was only when the Legal Services Division actually received a copy of the decision that a
proper and valid service may be deemed to have been made.
o Actual receipt by its counsel was actually on April 27, 2000, not April 25, 2000. The motion for extension to file
the petition for review was even filed 2 days before the lapse of the 15-day reglementary period
 Assuming the motion for extension was indeed one day late, Bank urges SC to suspend its rules and admit the
petition in the interest of justice.
ISSUES
1) Whether Joel Rosales can be considered the agent of Bank’s counsel and thus service to him was considered service
to Bank? (YES) [Whether the act of the law firm in allowing its employee to occasionally receive its mail can be
construed to mean an agency relationship? YES]
2) Whether, in the interest of justice, the rules on reglementary periods can be suspended in this case? (YES)
3) Whether a person can be evicted by virtue of a decision rendered in an ejectment case where she was not joined as
a party? (YES)

RATIO
1) Joel Rosales is an agent of Bank’s counsel.
 Although the Affidavit of Joel Rosales states that he is “not the constituted agent of ‘Curato-Divina-Mabilog-Nedo-
Magturo-Pagaduan Law Office”, an agency may be express but it may also be implied from the acts of the
principal, from his silence, or lack of action, or his failure to repudiate the agency, knowing that another person is
acting on his behalf without authority. (Art. 1869)
 Likewise, acceptance by the agent may also be express, although it may also be implied from his acts which carry
out the agency, or from his silence or inaction according to the circumstances (Art. 1870).
 CASE AT BAR: Joel Rosales averred that “on occasions when I receive mail matters for said law office, it is only to
help them receive their letters promptly,” implying that counsel had allowed the practice of Rosales receiving mail in
behalf of the former. There is no showing that counsel had objected to this practice or took steps to put a stop to it.
2) Court gives due course to petition in spite of noncompliance with periods in light of the merits of the petition.
 The perfection of an appeal within the period fixed by the rules is mandatory and jurisdictional. But, it is always in the
power of this Court to suspend its own rules, or to except a particular case from its operation, whenever the purposes
of justice require it. Strong compelling reasons such as serving the ends of justice and preventing a grave
miscarriage thereof warrant the suspension of the rules.
 The Court proceeded to enumerate cases where the rules on reglementary periods were suspended (6 days; 13
days; 1 day; 7 days; 2 days; tardy appeal).
3) Even if Rosita were a resident of the property, she is nevertheless bound by the judgment of the MeTC in the action for
ejectment despite her being a non-party thereto as the daughter of Ku GiokHeng, the defendant in the action for
ejectment.
 Generally, no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not
bound by judgment rendered by the court. (Matuguina vs. CA) Nevertheless, a judgment in an ejectment suit is
binding not only upon the defendants in the suit but also against those not made parties thereto, if they are:
o a) trespassers, squatters or agents of the defendant fraudulently occupying the property to frustrate the
judgment;
o b) guests or other occupants of the premises with the permission of the defendant;
o c) transferees pendente lite;
o d) sub-lessees;
o e) co-lessees; or
o f) members of the family, relatives and other privies of the defendant. (Oro Cam Enterprises, Inc. vs. CA)
DISPOSITIVE
Petition GIVEN DUE COURSE and GRANTED. CA decision REVERSED.

DOMINGA CONDE vs. CA

FACTS
On 7 April 1938, Margarita Conde, Bernardo Conde and Dominga Conde, as heirs of Santiago Conde, sold with right to
repurchase, within 10 years from said date, a 1 hectare parcel of agricultural land situated in Burauen, Leyte to Casimira
Pasagui and Pio Altera for P165. Three years later, Original Certificate of Title No. N-534 covering the land in question was
issued in the name of the Alteras subject to the stipulated right of repurchase by the Condes. On 28 November 1945,
Paciente Cordero, son-in-law of the Alteras and their representative, signed a document in Bisaya stating that the
Memorandum of Repurchase got lost during World War II despite all diligent searches being made; that the two parcels
of land were inherited by the Condes; that Eusebio Amarille was authorized by the Condes to repurchase the land; that
they received P165 in consideration of the sale; and that the Condes, by virtue of the repurchase, shall repossess the
said parcels of land. Neither the vendees-a-retro, Pio Altera nor Casimira Pasagui, were signatories to that document.
Many years later, the pacto de retro document was found. In June 1965, Pio Altera sold the disputed lot to Ramon and
Catalina Conde, whose relationship to Dominga does not appear on record. Consequently, in 1969, Dominga filed with
the CFI of Leyte a complaint for quieting of title and declaration of ownership against all the respondents. The trial court
dismissed the complaint and ordered Dominga to vacate the premises and to deliver the disputed land to respondents.
The Court of Appeals affirmed the decision and ruled that Dominga failed to validly exercise her right to repurchase
because the Memorandum of Repurchase was not signed by the Alteras but by Paciente, who was not authorized to
sign for the said vendees-a-retro.

ISSUE
Whether or not there was an implied agency when Cordero signed the Memorandum of Repurchase.

HELD

Yes. Although the contending parties were legally wanting in their respective actuations, for example Dominga did
nothing to formalize her repurchase while the Alteras did nothing to clear their title of the encumbrance therein
regarding Dominga’s right to repurchase, the repurchase by Dominga is supported by her admission that she had been
in possession since 1945, the date of the repurchase, and has been paying land taxes thereon since then. No new
agreement was entered into by the parties as stipulated in the deed of pacto de retro, if the vendors-a-retro failed to
exercise their right of redemption within 10 years. If, as alleged, Dominga did not exert an effort to procure Pio Altera’s
signature after he had recovered from illness, neither did the Alteras repudiate the deed signed by their son-in-law for 24
years, from which the Alteras are deemed to have incurred in laches. Thus, an implied agency must have been held to
have been created by their silence or lack of action, or their failure to repudiate the agency created. (Art. 1869, New
Civil Code). Wherefore, Dominga is declared the owner of the land in question.

SPOUSES VILORIA VS. CONTINENTAL AIRLINES


GR NO. 188288

FACTS
On or about July 21, 1997 and while in the United States, Fernando purchased for himself and his wife, Lourdes, two (2)
round trip airline tickets from San Diego, California to Newark, New Jersey on board Continental Airlines. Fernando
purchased the tickets from a travel agency called “Holiday Travel” and was attended by Maragret Mager (Mager).
According to Spouses Viloria, Fernando agreed to buy the said tickets after Mager informed them that there were no
available seats at Amtrak.

Subsequently, Fernando requested to reschedule their flight to an earlier date but Mager informed him that flights to
Newark was fully booked and offered flight via Frontier Air but it was a higher fare so Fernando opted to request a
refund. Mager denied his request as the subject tickets are non-refundable and the only option that Continental Airlines
can offer is the re-issuance of new tickets within one (1) year from the date the subject tickets were issued and
consequently reserved two seats with Frontier Air.

As he was having second thoughts on traveling via Frontier Air, Fernando went to the Greyhound Station where he saw
an Amtrak station nearby and made inquiries. Amtrak told Fernando that there are seats available and he can travel on
Amtrak anytime and any day he pleased so he purchased two tickets for Washington.

Upon returning to Philippines, Fernando sent a letter to CAI demanding a refund but was denied and was advised for re-
issuance of ticket within two years from the date they were issued. Fernando availed of re-issuance of Lourdes’ ticket but
was informed that it was non-transferable.

Spouses Viloria filed a complaint against CAI praying for their refund, moral and exemplary damages. They claim that
the misrepresentation of Mager, agent of CAI, lead him to avail the ticket and that CAI is liable for her
misrepresentation. Trial Court rendered an order in favor of the Spouses declaring that Mager of Holiday Ticket is an
agent of CAI and was in bad faith when she was less candid and diligent in presenting to plaintiffs spouses their booking
option. On appeal CA reversed RTC’s decision, holding that CIA cannot be liable to be held liable for Mager’s act in
the absence of any proof that a principal-agent relationship existed between them. Hence this petition for review.

ISSUE
Whether or not Mager is an agent of CAI and CAI should be held liable for her negligent act.

HELD
Holiday Travel is one of the agent of CAI. All the elements of agency exist. The first and second elements are present as
CAI does not deny that it concluded an agreement with Holiday Travel, whereby Holiday Travel would enter into
contracts of carriage with third persons on CAI’s behalf. The third element is also present as it is undisputed that Holiday
Travel merely acted in a representative capacity and it is CAI 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 CAI has not
made any allegation that Holiday Travel exceeded the authority that was granted to it. In fact, CAI consistently
maintains the validity of the contracts of carriage that Holiday Travel executed with Spouses Viloria and that Mager was
not guilty of any fraudulent misrepresentation.
Considering that Holiday Travel is CAI’s agent, does it necessarily follow that CAI is liable for the fault or negligence of
Holiday Travel’s employees? If the passenger’s cause of action against the airline company is premised on culpa
aquiliana or quasi-delict for a tort committed by the employee of the airline company’s agent, there must be an
independent showing that the airline company was at fault or negligent or has contributed to the negligence or tortuous
conduct committed by the employee of its agent. The mere fact that the employee of the airline company’s agent has
committed a tort is not sufficient to hold the airline company liable. There is no vinculum juris between the airline
company and its agent’s employees and the contractual relationship between the airline company and its agent does
not operate to create a juridical tie between the airline company and its agent’s employees. Article 2180 of the Civil
Code does not make the principal vicariously liable for the tort committed by its agent’s employees and the principal-
agency relationship per se does not make the principal a party to such tort; hence, the need to prove the principal’s
own fault or negligence.

Spouses Viloria’s cause of action on the basis of Mager’s alleged fraudulent misrepresentation is clearly one of tort or
quasi-delict, there being no pre-existing contractual relationship between them. Therefore, it was incumbent upon
Spouses Viloria to prove that CAI was equally at fault. The records are devoid of any evidence by which CAI’s alleged
liability can be substantiated. A person’s vicarious liability is anchored on his possession of control, whether absolute or
limited, on the tortfeasor. Without such control, there is nothing which could justify extending the liability to a person
other than the one who committed the tort. It is incumbent upon Spouses Viloria to prove that CAI exercised control or
supervision over Mager by preponderant evidence. The existence of control or supervision cannot be presumed and
CAI is under no obligation to prove its denial or nugatory assertion. Therefore, without a modicum of evidence that CAI
exercised control over Holiday Travel’s employees or that CAI was equally at fault, no liability can be imposed on CAI for
Mager’s supposed misrepresentation. Wherefore, the instant petition is denied.

ART. 1873 COMMUNICATION OF EXISTENCE OF AGENCY

NAGUIAT V. CA

FACTS
Queao applied with Naguiat for a loan in the amount of P200,000.00, which Naguiat granted. On 11 August 1980,
Naguiat indorsed to Queao Associated Bank Check No. 090990 dated 11 August 1980 for the amount of P95,000.00,
which was earlier issued to Naguiat by the Corporate Resources Financing Corporation. She also issued her own
Filmanbank Check No. 065314, to the order of Queao, also dated 11 August 1980 and for the amount of P95,000.00. The
proceeds of these checks were to constitute the loan granted by Naguiat to Queao.

To secure the loan, Queao executed a Deed of Real Estate Mortgage dated 11 August 1980 in favor of Naguiat, and
surrendered to the latter the owners duplicates of the titles covering the mortgaged properties. On the same day, the
mortgage deed was notarized, and Queao issued to Naguiat a promissory note for the amount of P200,000.00, with
interest at 12% per annum, payable on 11 September 1980. Queao also issued a Security Bank and Trust Company
check, postdated 11 September 1980, for the amount of P200,000.00 and payable to the order of Naguiat.

Upon presentment on its maturity date, the Security Bank check was dishonored for insufficiency of funds. On the
following day, 12 September 1980, Queao requested Security Bank to stop payment of her postdated check, but the
bank rejected the request pursuant to its policy not to honor such requests if the check is drawn against insufficient
funds.
On 16 October 1980, Queao received a letter from Naguiats lawyer, demanding settlement of the loan. Shortly
thereafter, Queao and Ruebenfeldt met with Naguiat. At the meeting, Queao told Naguiat that she did not receive the
proceeds of the loan, adding that the checks were retained by Ruebenfeldt, who purportedly was Naguiats agent.

Naguiat applied for the extrajudicial foreclosure of the mortgage with the Sheriff of Rizal Province, who then scheduled
the foreclosure sale on 14 August 1981.Three days before the scheduled sale, Queao filed the case before the Pasay
City RTC, seeking the annulment of the mortgage deed. The trial court eventually stopped the auction sale.

On 8 March 1991, the RTC rendered judgment, declaring the Deed of Real Estate Mortgage null and void, and ordering
Naguiat to return to Queao the owners duplicates of her titles to the mortgaged lots. Naguiat appealed the decision
before the Court of Appeals, making no less than eleven assignments of error. CA promulgated the decision now
assailed before us that affirmed in toto the RTC decision.

ISSUES
I. Whether or not Queao had actually received the loan proceeds which were supposed to be covered by the two
checks Naguiat had issued or indorsed
II. Whether or not there is the admissibility of various representations and pronouncements of Ruebenfeldt, invoking the
rule on the non-binding effect of the admissions of third persons.

HELD
The Court held that the presumption of truthfulness engendered by notarized documents is rebuttable, yielding as it
does to clear and convincing evidence to the contrary, as in this case.

On the other hand, absolutely no evidence was submitted by Naguiat that the checks she issued or endorsed were
actually encashed or deposited. The mere issuance of the checks did not result in the perfection of the contract of loan.
For the Civil Code provides that the delivery of bills of exchange and mercantile documents such as checks shall
produce the effect of payment only when they have been cashed. It is only after the checks have produced the effect
of payment that the contract of loan may be deemed perfected. Art. 1934 of the Civil Code provides:
An accepted promise to deliver something by way of commodatum or simple loan is binding upon the parties, but the
commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract.

A loan contract is a real contract, not consensual, and, as such, is perfected only upon the delivery of the object of the
contract. The objects of the contract are the loan proceeds which Queao would enjoy only upon the encashment of
the checks signed or indorsed by Naguiat. If indeed the checks were encashed or deposited, Naguiat would have
certainly presented the corresponding documentary evidence, such as the returned checks and the pertinent bank
records. Since Naguiat presented no such proof, it follows that the checks were not encashed or credited to Queaos
account.

On the second issue, CA rejected the argument, holding that since Ruebenfeldt was an authorized representative or
agent of Naguiat the situation falls under a recognized exception to the rule.

The existence of an agency relationship between Naguiat and Ruebenfeldt is supported by ample evidence. Naguiat
instructed Ruebenfeldt to withhold from Queao the checks she issued or indorsed to Queao, pending delivery by the
latter of additional collateral. Ruebenfeldt served as agent of Naguiat on the loan application of Queaos friend, Marilou
Farralese, and it was in connection with that transaction that Queao came to know Naguiat. It was also Ruebenfeldt
who accompanied Queao in her meeting with Naguiat and on that occasion, on her own and without Queao asking
for it, Reubenfeldt actually drew a check for the sum of P220,000.00 payable to Naguiat, to cover for Queaos alleged
liability to Naguiat under the loan agreement.

The Court of Appeals recognized the existence of an agency by estoppel citing Article 1873 of the Civil Code.
Apparently, it considered that at the very least, as a consequence of the interaction between Naguiat and
Ruebenfeldt, Queao got the impression that Ruebenfeldt was the agent of Naguiat, but Naguiat did nothing to correct
Queaos impression. In that situation, the rule is clear. One who clothes another with apparent authority as his agent, and
holds him out to the public as such, cannot be permitted to deny the authority of such person to act as his agent, to the
prejudice of innocent third parties dealing with such person in good faith, and in the honest belief that he is what he
appears to be. CA is correct in invoking the said rule on agency by estoppel.
More fundamentally, whatever was the true relationship between Naguiat and Ruebenfeldt is irrelevant in the face of
the fact that the checks issued or indorsed to Queao were never encashed or deposited to her account of Naguiat.

YUN KWAN BYUNG VS. PHILIPPINE AMUSEMENT AND GAMING CORPORATION


G.R. NO. 163553 DECEMBER 11, 2009

FACTS
PAGCOR launched its Foreign Highroller Marketing Program. The Program aims to invite patrons from foreign countries to
play at the dollar pit of designated PAGCOR-operated casinos under specified terms and conditions and in
accordance with industry practice. Petitioner, a Korean national, alleges that he came to the Philippines four times to
play for high stakes at the Casino Filipino; that in the course of the games, he was able to accumulate gambling chips
worth US$2.1 million. Petitioner contends that when he presented the gambling chips for encashment with PAGCORs
employees or agents, PAGCOR refused to redeem them.

PAGCOR claims that petitioner, who was brought into the Philippines by ABS Corporation, is a junket player who played
in the dollar pit exclusively leased by ABS Corporation for its junket players. PAGCOR alleges that it provided ABS
Corporation with distinct junket chips. ABS Corporation distributed these chips to its junket players. At the end of each
playing period, the junket players would surrender the chips to ABS Corporation. Only ABS Corporation would make an
accounting of these chips to PAGCORs casino treasury.

ISSUE
Whether the CA erred in holding that PAGCOR is not liable to petitioner, disregarding the doctrine of implied agency, or
agency by estoppels

RULING
Petitioner alleges that there is an implied agency. Alternatively, petitioner claims that even assuming that no actual
agency existed between PAGCOR and ABS Corporation, there is still an agency by estoppel based on the acts and
conduct of PAGCOR showing apparent authority in favor of ABS Corporation. Petitioners argument is clearly
misplaced. The basis for agency is representation, that is, 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 part of the principal, there must be an actual intention to appoint or an intention naturally infera ble
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. Absent such mutual intent, there is generally no agency.

There is no implied agency in this case because PAGCOR did not hold out to the public as the principal of ABS
Corporation. PAGCORs actions did not mislead the public into believing that an agency can be implied from the
arrangement with the junket operators, nor did it hold out ABS Corporation with any apparent authority to represent it in
any capacity. The Junket Agreement was merely a contract of lease of facilities and services.

ART 1874 SALE OF LAND THROUGH AGENT; REQUIREMENT

PURITA PAHUD VS. CA


[ G.R. NO. 160346, AUGUST 25, 2009 ]
FACTS
Spouses Pedro San Agustin and Agatona Genil were able to acquire a 246-square meter parcel of land situated in
Barangay Anos, Los Baños, Laguna and covered by Original Certificate of Title . Agatona Genil and Pedro San Agustin
died ,( both died intestate) survived by their eight (8) children: respondents, Eufemia, Raul, Ferdinand, Zenaida,
Milagros, Minerva, Isabelita and Virgilio.

Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of Undivided Shares conveying in favor of petitioners
(the Pahuds, for brevity) their respective shares . Eufemia also signed the deed on behalf of her four (4) other co-heirs,
namely: Isabelita on the basis of a special power of attorney , and also for Milagros, Minerva, and Zenaida but without
their apparent written authority. The deed of sale was also not notarized.

The Pahuds paid the accounts into the Los Baños Rural Bank where the subject property was mortgaged. The bank
issued a release of mortgage and turned over the owner's copy of the OCT to the Pahuds, the Pahuds made more
payments to Eufemia and her siblings. When Eufemia and her co-heirs drafted an extra-judicial settlement of estate to
facilitate the transfer of the title to the Pahuds, Virgilio refused to sign it.
Virgilio's co-heirs filed a complaint for judicial partition of the subject property before the RTC of Calamba, Laguna.In
the course of the proceedings for judicial partition, a Compromise Agreement was signed with seven (7) of the co-heirs
agreeing to sell their undivided shares to Virgilio .. The compromise agreement was, however, not approved by the trial
court because Atty. Dimetrio Hilbero, lawyer for Eufemia and her six (6) co-heirs, refused to sign the agreement because
he knew of the previous sale made to the Pahuds.

Eufemia acknowledged having received the payments from Virgilio. Virgilio then sold the entire property to spouses
Isagani Belarmino and Leticia Ocampo (Belarminos) . The Belarminos immediately constructed a building on the subject
property.

Alarmed and bewildered by the ongoing construction on the lot they purchased, the Pahuds immediately confronted
Eufemia who confirmed to them that Virgilio had sold the property to the Belarminos.Then the Pahuds filed a complaint
in intervention in the pending case for judicial partition.
ISSUE

1. Whether or not the sale of the subject property by Eufemia and her co-heirs to the Pahuds is valid and enforceable.
2. Whether or not the sale by co-heirs to Virgilio is void.
3. Whether or not the sale of Virgilio to Belarminos is valid.

RULING

1. The transaction needs for qualification:

First: the sale made by Eufemia, Isabelita and her two brothers to the Pahuds should be valid only with respect to the
4/8 portion of the subject property. Second; the sale with respect to the 3/8 portion, representing the shares of Zenaida,
Milagros, and Minerva, is void because Eufemia could not dispose of the interest of her co-heirs in the said lot absent
any written authority from the latter, as explicitly required by law. It is true also there is no special power, they can file an
annulment of the sale, but the true facts of which the seven admitted that they sold their shares to pahuds, they cannot
assail the validity of the transaction. Instead, they just remain silent , because by allowing them to do so would be
tantamount to giving premium to their three (3) sisters” dishonest and fraudulent deed. Thus their silence of the issue
bars from a making for a contrary claim and they are stopped from impugning the validity of the sale.
While the sale with respect to the 3/8 portion is void by express provision of law and not susceptible to ratification. The
validity of the said transaction cannot be corrected on the basis of common law principle of estoppel.

The law provides:


When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void.

A special power of attorney is necessary for an agent to enter into a contract by which the ownership of an immovable
property is transmitted or acquired, either gratuitously or for a valuable consideration.
The authority of an agent to execute a contract of sale of real estate must be conferred in writing and must give him
specific authority, either to conduct the general business of the principal or to execute a binding contract containing
terms and conditions which are in the contract he did execute. A special power of attorney is necessary to enter into
any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable
consideration. The express mandate required by law to enable an appointee of an agency in general terms to sell must
be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the act mentioned. For the
principal to confer the right upon an agent to sell real estate, a power of attorney must so express the powers of the
agent in clear and unmistakable language. When there is any reasonable doubt that the language so used conveys
such power, no such construction shall be given the document. In the absence of a written authority to sell a piece of
land is, ipso jure, void, precisely to protect the interest of an unsuspecting owner from being prejudiced by the
unwarranted act of another.

2. The subsequent sale made by the seven co-heirs to Virgilio was void because they no longer had any interest over
the subject property which they could alienate at the time of the second transaction. Nemo dat quod non habet.
Virgilio, however, could still alienate his 1/8 undivided share to the Belarminos.

3. The sale to Bilarminos is not valid, they did not purchased the property from Virgilio in good faith. the Belarminos were
fully aware that the property was registered not in the name of the immediate transferor, Virgilio, but remained in the
name of the mother title. This fact alone is sufficient impetus to make further inquiry and, thus, negate their claim that
they are purchasers for value in good faith.
They knew that the property was still subject of partition proceedings before the trial court, and that the compromise
agreement signed by the heirs was not approved by the RTC following the opposition of the counsel for Eufemia and
her six other co-heirs.

As a general rule, a purchaser of a real property is not required to make any further inquiry beyond what the certificate
of title indicates on its face. But the rule excludes those who purchase with knowledge of the defect in the title of the
vendor or of facts sufficient to induce a reasonable and prudent person to inquire into the status of the property. Such
purchaser cannot close his eyes to facts which should put a reasonable man on guard, and later claim that he acted in
good faith on the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect
exists, or his obvious neglect by closing his eyes to the possibility of the existence of a defect in the vendor's title, will not
make him an innocent purchaser for value, if afterwards it turns out that the title was, in fact, defective. In such a case,
he is deemed to have bought the property at his own risk, and any injury or prejudice occasioned by such transaction
must be borne by him.

The Belarminos, being transferees pendente lite, are deemed buyers in mala fide, and they stand exactly in the shoes of
the transferor and are bound by any judgment or decree which may be rendered for or against the transferor.
Furthermore, had they verified the status of the property by asking the neighboring residents, they would have been
able to talk to the Pahuds who occupy an adjoining business establishment and would have known that a portion of the
property had already been sold.

The supreme court reversed and set aside the ruling of the CA and reinstated of the RTC with modification.

AF REALTY & DEVELOPMENT, INC. VS DIESELMAN FREIGHT SERVICES

FACTS
- Respondent Dieselman Freight Services is the owner of a lot with TCT No. 39849;
- Manuel Cruz Jr., a member of Dieselman board of directors issued an “Authority to Sell Real Estate” to Cristeta
Polintan, authorizing her to look for buyers and negotiate the sale of the said property;
- Cruz Jr. had no written authority from Dieselman to sell the property;
- Polintan authorized Mimi Noble to sell the same property;
- Noble offered the sale of the lot to petitioners AF Realty. Zenaida Ranullo, vice president of AF Realty, accepted
the offer and issued a check payable to the order of Dieselman;
- Polintan received the check and signed an Acknoledgment Receipt indication that the P300k represents the
partial payment of the property;
- Manuel Cruz Sr., president of Dieselman, acknowledge the receipt of the of the said P300k as earnest money but
required AF Realty to finalize sale at P4,000/sqm.;
- The problem occurred when Mr. Cruz Sr. terminated the offer and demanded the return of the title. AF Realty
then filed a complaint for specific performance because they claimed that there was already a perfected sale;
- Dieselman alleged that there was no meeting of the minds between the parties in the sale of the property and it
did not authorize any person to enter into such transaction on its behalf;
- AF Realty said that the sale of land by an unauthorized agent was ratified when Dieselman president accepted
the earnest money.
-
ISSUE
Whether the sale of land by an unauthorized agent may be ratified where there is acceptance of benefits involved
RULING
No, it cannot be ratified.

LEGAL BASIS
Art. 1874 – When a sale of piece of land is through an agent, the authority of the latter shall be in writing; otherwise, the
sale shall be void;
Art. 1409 – The following contracts are inexistent and void from the very beginning: (7) those expressly prohibited or
declared void by law.

APPLICATION TO FACTS
Contracts or acts of a corporation must be made either by the board of directors or by a corporate agent duly
authorized by the board. Absent such valid authorization, the rule is that the declarations of an individual director
relating to the affairs of the corporation are not binding on the corporation.
In this case, Cruz Jr. had no written authority from the Dieselman board of directors to sell or negotiate the sale of the
land, much less to appoint other persons for the same purpose. Cruz Jr.’s lack of authority precludes him from conferring
any authority to Polintan. Neither could Polintan authorize Noble (Art. 1874). Their acts cannot bind Dieselman in the
contract of sale, thus the supposed contract is void from the beginning and not susceptible of ratification (Art. 1409).

COSMIC LUMBER CORPORATION VS. COURT OF APPEALS AND ISIDRO PEREZ,


G.R. NO. 114311. NOVEMBER 29, 1996 BELLOSILLO, J.

FACTS
Cosmic Corporation, through its General Manager executed a Special Power of Attorney appointing Paz G. Villamil-
Estrada as attorney-in-fact to initiate, institute and file any court action for the ejectment of third persons and/or
squatters of the entire lot 9127 and 443 for the said squatters to remove their houses and vacate the premises in order
that the corporation may take material possession of the entire lot. Villamil-Estrada then instituted an action for the
ejectment of private respondent Isidro Perez and recover the possession of a portion of lot 443 before the RTC.

Subsequently, Estrada entered into a Compromise Agreement with Perez, the terms and conditions such as: “ In order
for Perez to buy the said lot he is presently occupying, he has to pay to plaintiff through Estada the sum of P26,640
computed at P80/square meter and that Cosmic Lumber recognizes ownership and possession of Perez by virtue of this
compromise agreement over said portion of 333 sqm of lot 443 and whatever expenses of subdivision, registration and
other incidental expenses shall be shouldered by Perez.

Although the agreement was approved by the trial court and the decision became final and executory it was not
executed within the 5 year period from date of its finality allegedly due to the failure of Cosmic Lumber to produce the
owner's duplicate copy of Title No. 37649 needed to segregate from Lot No. 443 which is the portion sold by Villamil-
Estrada, to private respondent under the compromise agreement. Upon learning of the fraudulent transaction,
petitioner sought annulment of the decision of the trial court before respondsent Court of Appeals on the ground that
the compromise agreement was void.

ISSUE
Whether there the acts of Paz Estrada are binding to Cosmic Lumber

RULING
No. The authority granted Villamil-Estrada under the special power of attorney was explicit and exclusionary: for her to
institute any action in court to eject all persons found on lots number 9127 and 443 so that Cosmic Lumber could take
material possession thereof and for this purpose, to appear at the pre-trial and enter into any stipulation of facts and/or
compromise agreement but only insofar as this was protective of the rights and interests of Cosmic Lumber in the
property.

Nowhere in this authorization was Villamil-Estrada granted expressly or impliedly any power to sell the subject property
nor a portion thereof. Neither can a conferment of the power to sell be validly inferred from the specific authority “to
enter into a compromise agreement” because of the explicit limitation fixed by the grantor that the compromise
entered into shall only be “so far as it shall protect the rights and interest of the corporation in the aforementioned lots”.

In the context of special investiture of powers to Villamil-Estrada, alienation by sale of an immovable certainly cannot be
deemed protective of the right of Cosmic Lumber to physically possess the same, more so when the land was being sold
for a price of P80/sqm , very much less than its assessed value of P250/sqm and considering further that plaintiff never
received the proceeds of the sale.

When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing;
otherwise, the sale should be void. Thus, the authority of an agent to execute a contract for the sale of real estate must
be conferred in writing and must give him specific authority, either to conduct the general business of the principal or to
execute a binding contract containing terms and conditions which are in the contract he did execute.

For the principal to confer the right upon an agent to sell real estate, a power of attorney must so express the powers of
the agent in clear and unmistakable language. It is therefore clear that by selling to Perez a portion of Cosmic Lumber’s
land through a compromise agreement, Villamil-Estrada acted without or in obvious authority. The sale ipso jure is
consequently void and so is the compromise agreement. This being the case, the judgment based thereon is necessarily
void.
When an agent is engaged in the perpetration of a fraud upon his principal for his own exclusive benefit, he is not really
acting for the principal but is really acting for himself, entirely outside the scope of his agency.

BAUTISTA VS. SPOUSES JALANDONI, GR NO. 171464, 27 NOVEMBER 2013

FACTS
In May 1997, the Spouses Jalandoni applied for a loan with a commercial bank and, as a security thereof, they offered
to constitute a real estate mortgage over the two lots they were allegedly the absolute owners of.
After a routine credit investigation, it was discovered that their titles over the two lots had been cancelled and new TCTs
were issued in the names of Spouses Baustista. Upon further investigation, they found out that the bases for the
cancellation of their titles were two deeds of absolute sale,7 dated April 4, 1996 and May 4, 1996, purportedly executed
and signed by them in favor of Spouses Baustista.

Spouses Bautista claimed that in March 1996, a certain Teresita Nasino (Nasino) offered to Eliseo Baustista (Eliseo) two
parcels of land located in Muntinlupa City; that the parcels of land were sold at a bargain price because the owners
were in dire need of money; that upon their request, Nasino showed them the photocopies of the titles covering the
subject lands; that Nasino told them that she would negotiate with the Spouses Jalandoni, prepare the necessary
documents and cause the registration of the sale with the Register of Deeds; and that since Nasino was a wife of a
friend, Spouses Baustista trusted her and gave her the authority to negotiate with Spouses Jalandoni on their behalf.

On December 17, 2004, the RTC rendered judgment declaring the sale of the subject lots void.

The RTC explained that Nasino had no authority to negotiate for the Spouses Jalandoni, much less to receive the
consideration of the sale. Spouses Bautista were not innocent purchasers in good faith and for value for their failure to
personally verify the original copies of the titles of the subject properties and to ascertain the authority of Nasino since
they were not dealing with the registered owner.

The RTC, nonetheless, found MCC a mortgagee in good faith and upheld the validity of the mortgage contract
between Spouses Bautista and MCC.

ISSUE
Whether or not Nasino has the authority to negotiate for the Spouses Jalandoni in the contract of sale made to Spouses
Bautista?

RULING
No. Article 1874 and Aritcle 1875 (5) explicitly require a written authority when the sale of a piece of land is through an
agent, whether the sale is gratuitously or for a valuable consideration.
Articles 1874 of the Civil Code provides: When a sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void.
Likewise, A1iicle 1878 paragraph 5 of the Civil Code specifically mandates that the authority of the agent to sell a real
property must be conferred in writing, to wit:
Art. 1878. Special powers of attorney are necessary in the following cases:
(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or
for a valuable consideration;

Absent such authority in writing, the sale is null and void.

In the case at bar, it is undisputed that the sale of the subject lots to Spouses Bautista was void. Based on the records,
Nasino had no written authority from Spouses Jalandoni to sell the subject lots. The testimony of Eliseo that Nasino was
empowered by a special power of attorney to sell the subject lots was bereft of merit as the alleged special power
attorney was neither presented in co urt nor was it referred to in the deeds of absolute sale. Bare allegations,
unsubstantiated by evidence, are not equivalent to proof under the Rules of Court.

In additon Spouses Bautista cannot be deemed purchasers in good faith. There were several circumstances that should
have placed them on guard and prompted them to conduct an investigation that went beyond the face of the title of
the subject lots. Their failure to take the necessary steps to determine the status of the subject lots and the extent of
Nasino’s authority puts them into bad light.
Spouses Bautista’s claim of good faith is negated by their failure to verify the extent and nature of Nasino’s authority.
Since Spouses Bautista did not deal with the registered owners but with Nasino, who merely represented herself to be
their agent, they should have scrutinized all factual circumstances necessary to determine her authority to insure that
there are no flaws in her title or her capacity to transfer the land. They should not have merely relied on her verbal
representation that she was selling the subject lots on behalf of Spouses Jalandoni.
Moreover, Eliseo’s claim that he did not require Nasino to give him a copy of the special power of attorney because he
trusted her is unacceptable. Well settled is the rule that persons dealing with an assumed agency are bound at their
peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of
authority, and in case either is controverted, the burden of proof is upon them to establish it.

As stated, Spouses Bautista’s failure to observe the required degree of caution in ascertaining the genuineness and
extent of Nasino’s authority is tantamount to bad faith that precludes them from claiming the rights of a purchaser in
good faith.

SARILI VS. LAGROSA G.R. NO. 193517 JANUARY 15, 2014

FACTS
Respondent is the owner of a certain parcel of land which he has been religiously paying the real estate taxes for since
its acquisition. Respondent is a resident of California, USA, and during his vacation in the Philippines, he discovered that
a new certificate of title to the subject property was issued by the RD in the name of Victorino married to Isabel
Amparoby virtue of a falsified Deed of Absolute Sale dated February 16, 1978 (February 16, 1978 deed of sale)
purportedly executed by him and his wife, Amelia U. Lagrosa.

In their answer, Sps. Sarili maintained that they are innocent purchasers for value, having purchased the subject property
from Ramon B. Rodriguez, who possessed and presented a Special Power of Attorney to sell/dispose of the same, and, in
such capacity, executed a Deed of Absolute Sale dated November 20, 1992 conveying the said property in their favor.
In this relation, they denied any participation in the preparation of the February 16, 1978 deed of sale, which may have
been merely devised by the "fixer" they hired to facilitate the issuance of the title in their names.

ISSUE
Whether there is a valid conveyance of the property?

RULING
The strength of the buyer’s inquiry on the seller’s capacity or legal authority to sell depends on the proof of capacity of
the seller. If the proof of capacity consists of a special power of attorney duly notarized, mere inspection of the face of
such public document already constitutes sufficient inquiry. If no such special power of attorney is provided or there is
one but there appears to be flaws in its notarial acknowledgment, mere inspection of the document will not do; the
buyer must show that his investigation went beyond the document and into the circumstances of its execution.
Settled is the rule that a defective notarization will strip the document of its public character and reduce it to a private
instrument, and the evidentiary standard of its validity shall be based on preponderance of evidence.
Since Sps. Sarili’s claim over the subject property is based on forged documents, no valid title had been transferred to
them.

ART 1875 AGENCY PRESUMED TO BE WITH COMPENSATION

GENEVIEVE LIM V. FLORENCIO SABAN


G.R. NO. 163720 DECEMBER 16, 2004
TINGA, J.

FACTS

Eduardo Ybañez, owner of a 1,000-square meter lot in Cebu City, entered into an Agreement and Authority to
Negotiate and Sell with Florencio Saban. Under the Agency Agreement, Ybañez authorized Saban to look for a buyer of
the lot for P200,000.00 and to mark up the selling price to include the amounts needed for payment of taxes, transfer of
title and other expenses incident to the sale, as well as Saban’s commission for the sale.

Through Saban’s efforts, Ybañez and his wife were able to sell the lot to Genevieve Lim and the spouses Benjamin and
Lourdes Lim. The price of the lot as indicated in the Deed of Absolute Sale is P200,000.00. The vendees agreed to
purchase the lot at the price of P600,000.00, inclusive of taxes and other incidental expenses of the sale. After the sale,
Lim remitted to Saban the amounts of P113,257.00 for payment of taxes due on the transaction as well as P50,000.00 as
broker’s commission.

Saban received checks in payment of his commission but all of them were dishonored upon presentment. Thus, he filed
a complaint for collection of sum of money and damages against Ybañez and Lim. Saban alleged that Ybañez told Lim
that he (Saban) was not entitled to any commission for the sale since he concealed the actual selling price of the lot
from Ybañez and because he was not a licensed real estate broker.

ISSUES
(1) WON Saban is entitled to receive his commission from the sale;
(2) if in the affirmative, WON it is Lim who is liable to pay Saban his sales commission

HELD
(1) Yes. The agency was not revoked since Ybañez requested that Lim make stop payment orders for the checks
payable to Saban only after the consummation of the sale. At that time, Saban had already performed his obligation as
Ybañez’s agent when, through his (Saban’s) efforts, Ybañez executed the Deed of Absolute Sale of the lot with Lim and
the Spouses Lim.

To deprive Saban of his commission subsequent to the sale which was consummated through his efforts would be a
breach of his contract of agency with Ybañez which expressly states that Saban would be entitled to any excess in the
purchase price after deducting the P200,000.00 due to Ybañez and the transfer taxes and other incidental expenses of
the sale.

Saban’s agency was not one coupled with an interest. an agency is deemed as one coupled with an interest where it is
established for the mutual benefit of the principal and of the agent, or for the interest of the principal and of third
persons, and it cannot be revoked by the principal so long as the interest of the agent or of a third person subsists. In an
agency coupled with an interest, the agent’s interest must be in the subject matter of the power conferred and not
merely an interest in the exercise of the power because it entitles him to compensation. When an agent’s interest is
confined to earning his agreed compensation, the agency is not one coupled with an interest, since an agent’s interest
in obtaining his compensation as such agent is an ordinary incident of the agency relationship. (See Art. 1927)

(2) Yes. It is just and proper for Lim to pay Saban the balance of P200,000.00. Furthermore, since Ybañez received a total
of P230,000.00 from Lim, or an excess of P30,000.00 from his asking price of P200,000.00, Saban may claim such excess
from Ybañez’s estate, if that remedy is still available, in view of the trial court’s dismissal of Saban’s complaint as against
Ybañez, with Saban’s express consent, due to the latter’s demise when the case was still pending.

ART 1878 NECESSITY OF SPECIAL POWERS OF ATTORNEY; INSTANCES

LITONJUA V. FERNANDEZ

FACTS

- Mrs. Lourdes Alimario and Agapito Fisico who worked as brokers, offered to sell to the petitioners, Antonio K.
Litonjua and Aurelio K. Litonjua, Jr., the parcels of land.
- the owners of the properties were represented by Mary Mediatrix Fernandez and Gregorio T. Eleosida,
respectively. The brokers told the petitioners that they were authorized by respondent Fernandez to offer the
property for sale.
- The petitioners and respondent Fernandez agreed that the petitioners would buy the property consisting of
36,742 square meters, for the price of P150 per square meter, or the total sum of P5,098,500. They also agreed
that the owners would shoulder the capital gains tax, transfer tax and the expenses for the documentation of the
sale.
- The petitioners and respondent Fernandez also agreed to meet on December 8, 1995 to finalize the sale. It was
also agreed upon that on the said date, respondent Fernandez would present a special power of attorney
executed by the owners of the property, authorizing her to sell the property for and in their behalf, and to
execute a deed of absolute sale thereon. The petitioners would also remit the purchase price to the owners,
through respondent Fernandez. However, only Agapito Fisico attended the meeting. He informed the
petitioners that respondent Fernandez was encountering some problems with the tenants and was trying to work
out a settlement with them.[7] After a few weeks of waiting, the petitioners wrote respondent Fernandez on
January 5, 1995, demanding that their transaction be finalized by January 30, 1996.
- When the petitioners received no response from respondent Fernandez, the petitioners sent her another
Letter[9] dated February 1, 1996, asking that the Deed of Absolute Sale covering the property be executed in
accordance with their verbal agreement dated November 27, 1995. The petitioners also demanded the
turnover of the subject properties to them within fifteen days from receipt of the said letter; otherwise, they would
have no option but to protect their interest through legal means.
- Fernandez, however rejected the claims of the petitioner.
- On April 12, 1996, the petitioners filed the instant Complaint for specific performance with damages[13] against
respondent Fernandez and the registered owners of the property.
- After trial on the merits, the trial court rendered judgment in favor of the petitioners .
- the appellate court promulgated its decision reversing and setting aside the judgment of the trial court and
dismissing the petitioners’ complaint, as well as the respondents’ counterclaim.
ISSUE
WHETHER OR NOT THERE WAS A PERFECTED CONTRACT OF SALE BETWEEN THE PARTIES.
WHETHER OR NOT THE CONTRACT FALLS UNDER THE COVERAGE OF THE STATUTE OF FRAUDS.
HELD
- the petitioners assert that there was a perfected contract of sale between the petitioners as buyers and the
respondents-owners, through respondent Fernandez, as sellers. The petitioners contend that the perfection of
the said contract is evidenced by the January 16, 1996 Letter of respondent Fernandez.
- The petitioners argue that the letter is a sufficient note or memorandum of the perfected contract, thus,
removing it from the coverage of the statute of frauds. The letter specifically makes reference to a sale which
respondent Fernandez agreed to initially, but which the latter withdrew because of the emergence of some
people who claimed to be tenants on both parcels of land.
- The petitioners’ contention is bereft of merit. In its decision, the appellate court ruled that the Letter of
respondent Fernandez dated January 16, 1996 is hardly the note or memorandum contemplated under Article
1403(2)(e) of the New Civil Code.
- In this case, we agree with the findings of the appellate court that there was no perfected contract of sale
between the respondents-owners, as sellers, and the petitioners, as buyers.
- There is no documentary evidence on record that the respondents-owners specifically authorized respondent
Fernandez to sell their properties to another, including the petitioners. Article 1878 of the New Civil Code
provides that a special power of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable consideration,[37] or to create or
convey real rights over immovable property,[38] or for any other act of strict dominion.[39] Any sale of real
property by one purporting to be the agent of the registered owner without any authority therefor in writing from
the said owner is null and void.[40] The declarations of the agent alone are generally insufficient to establish the
fact or extent of her authority.[41] In this case, the only evidence adduced by the petitioners to prove that
respondent Fernandez was authorized by the respondents-owners is the testimony of petitioner Antonio Litonjua
that respondent Fernandez openly represented herself to be the representative of the respondents-owner.
PATRIMONIO VS. GUTIERREZ
(G.R. NO. 187769, JUNE 4, 2014)

DOCTRINES
In order however that one who is not a holder in due course can enforce the instrument against a party prior to the
instrument’s completion, two requisites must exist: (1) that the blank must be filled strictly in accordance with the
authority given; and (2) it must be filled up within a reasonable time. If it was proven that the instrument had not been
filled up strictly in accordance with the authority given and within a reasonable time, the maker can set this up as a
personal defense and avoid liability. However, if the holder is a holder in due course, there is a conclusive presumption
that authority to fill it up had been given and that the same was not in excess of authority.

FACTS
The petitioner and the respondent Napoleon Gutierrez (Gutierrez) entered into a business venture under the name of
Slam Dunk Corporation (Slum Dunk), a production outfit that produced mini-concerts and shows related to basketball. In
the course of their business, the petitioner pre-signed several checks to answer for the expenses of Slam Dunk; however,
these checks had no payee’s name, date or amount. The blank checks were entrusted to Gutierrez with the specific
instruction not to fill them out without previous notification to and approval by the petitioner. Without the petitioner’s
knowledge and consent, Gutierrez went to Marasigan to secure a loan in the amount of ₱200,000.00 and Gutierrez
simultaneously delivered to Marasigan one of the blank checks the petitioner pre-signed with Pilipinas Bank in the
amount of "₱200,000.00. When Marasigan deposited the check, it was dishonored for the reason "ACCOUNT CLOSED"
and so Marasigan sought recovery from Gutierrez and petitioner asking for the payment of ₱200,000.00.

ISSUE
Whether or not Marasigan is a holder in due course thus may hold petitioner liable.

HELD
No, Marasigan is not a holder in due course. Section 52(c) & (d) of the NIL states that a holder in due course is one who
takes the instrument “in good faith and for value" and that it is necessary that at the time it was negotiated to him he
had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. In the present case,
Gutierrez was only authorized to use the check for business expenses; thus, he exceeded the authority when he used the
check to pay the loan he supposedly contracted for the construction of petitioner's house. Marasigan’s knowledge that
the petitioner is not a party or a privy to the contract of loan, and correspondingly had no obligation or liability to him,
renders him dishonest, hence, in bad faith. Considering that Marasigan is not a holder in due course, the petitioner can
validly set up the personal defense that the blanks were not filled up in accordance with the authority he gave; hence,
Marasigan has no right to enforce payment against the petitioner and the latter cannot be obliged to pay the face
value of the check.

ART 1879 SCOPE OF AUTHORITY TO SELL/MORTGAGE

HERNANDEZ VS. HERNANDEZ | GR 158576 645 SCRA 24 | 9 MARCH 2011

FACTS

On 11 November 1993, the owners of the Hernandez property, which includes petitioner Cornelia Hernandez, executed
a letter indicating: (1) respondent Cecilio Hernandez as the representative of the owners of the land; and (2) the
compensation he gets in doing such job. Such property was subject of an expropriation case for a DPWH project. During
the course of the expropriation proceedings, an Order was issued by the RTC, Cecilio was appointed as one of the
commissioners in the expropriation case. On 18 October 1996, Cornelia, and her other co-owners who were also
signatories of the 11 November 1993 letter, executed an irrevocable Special Power of Attorney (SPA) appointing Cecilio
Hernandez as their "true and lawful attorney" with respect to the expropriation of the subject property. There was no
mention of the compensation scheme for Cecilio, the attorney-in-fact. The just compensation for the condemned
properties was fixed subsequently, with Cornelias share amounting to P7,321,500.00the amount a pro-indiviso owner is to
receive. At this point, Cecilios SPA was revoked by Cornelia. On 7 February 2000, however, Cornelia received from
Cecilio a check amounting to P1,123,000.00. The check was accompanied by a Receipt and Quitclaim document in
favor of Cecilio. In essence it states that: (1) the amount received will be the share of Cornelia in the just compensation
paid by the government in the expropriated property; (2) in consideration of the payment, it will release and forever
discharge Cecilio from any action, damages, claims or demands; and (3) Cornelia will not institute any action and will
not pursue her complaint or opposition to the release to Cecilio or his heirs or assigns.

In a Letter dated 22 June 2000 after she learned of her true share in the expropriation proceedings Cornelia demanded
the accounting of the proceeds.The letter was left unanswered. She then decided to have the courts settle the issue.A
Complaint for the Annulment of Quitclaim and Recovery of Sum of Money and Damages was filed before the RTC.
Cecilio was declared in default, but this was reversed by the CA.
ISSUE
Whether or not the agent exceeded the scope of her authority?

HOLDING AND RATIO DECIDENDI


A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. In
determining whether consent is vitiated by any of the circumstances mentioned, courts are given a wide latitude in
weighing the facts or circumstances in a given case and in deciding in their favor what they believe to have actually
occurred, considering the age, physical infirmity, intelligence, relationship, and the conduct of the parties at the time of
the making of the contract and subsequent thereto. Here, the service contract of 11 November 1993 (appointing
Cecilio as representative), as well as the quitclaim and receipt, are voidable the first due to mistake, the second due to
fraud. First, the service contract gave Cecilio compensation based on "1998 skyrocketing" prices that essentially will give
Cecilio 83.07% of the just compensation due Cornelia as the co-owner of the land. No evidence on record would show
that Cornelia agreed, by way of the 11 November 1993 letter, to give Cecilio 83.07% of the proceeds of the sale of her
land. Second, quitclaims are also contracts and can be voided if there was fraud or intimidation that leads to lack of
consent. The facts show that a simple accounting of the proceeds of the just compensation will be enough to satisfy the
curiosity of Cornelia. However, Cecilio did not disclose the truth and instead of coming up with the request of his aunt,
he made a contract intended to bar Cornelia from recovering any further sum of money from the sale of her property.
Moreover, when Cecilio accepted the position as commissioner, he created a barrier that prevented his performance
of his duties under the SPA. Cecilio could not have been a hearing officer and a defendant at the same time. Indeed,
Cecilio foisted fraud on both the Court and the Hernandez’s when, after his appointment as commissioner, he
accepted the appointment by the Hernandez to "represent" and "sue for" them.

ART 1883 ACTS OF AGENT IN HIS OWN NAME; RIGHT OF ACTION OF PARTIES

G.R. NO. 77638 JULY 12, 1990


MARITIME AGENCIES & SERVICES, INC., PETITIONER,
VS.
COURT OF APPEALS, AND UNION INSURANCE SOCIETY OF CANTON, LTD., RESPONDENTS.
G.R. NO. 77674 JULY 12, 1990

UNION INSURANCE SOCIETY OF CANTON, LTD., PETITIONER,


VS.
COURT OF APPEALS, HONGKONG ISLAND CO., LTD., MARITIME AGENCIES & SERVICES, INC., AND/OR VIVA CUSTOMS
BROKERAGE, RESPONDENTS.

FACTS
Transcontinental Fertilizer Company of London chartered from Hongkong Island Shipping Company of Hongkong the
motor vessel named "Hongkong Island" for the shipment of 8073.35 MT (gross) bagged urea from Novorossisk, Odessa,
USSR to the Philippines, the parties signing for this purpose a Uniform General Charter dated August 9, 1979. Of the total
shipment, 5,400.04 MT was for the account of Atlas Fertilizer Company as consignee, 3,400.04 to be discharged in Manila
and the remaining 2,000 MT in Cebu. The goods were insured by the consignee with the Union Insurance Society of
Canton, Ltd. for P6,779,214.00 against all risks. Maritime Agencies & Services, Inc. was appointed as the charterer's agent
and Macondray Company, Inc. as the owner's agent. The vessel arrived in Manila and unloaded part of the consignee's
goods, then proceeded to Cebu to discharge the rest of the cargo. On October 31, 1979, the consignee filed a formal
claim against Maritime, copy furnished Macondray, for the amount of P87,163.54, representing C & F value of the 1,383
shortlanded bags. The consignee filed another formal claim, this time against Viva Customs Brokerage, for the amount
of P36,030.23, representing the value of 574 bags of net unrecovered spillage. These claims having been rejected, the
consignee then went to Union, which on demand paid the total indemnity of P113,123.86 pursuant to the insurance
contract. As subrogee of the consignee, Union then filed a complaint for reimbursement of this amount, with legal
interest and attorney's fees, against Hongkong Island Company, Ltd., Maritime Agencies & Services, Inc. and/or Viva
Customs Brokerage. The complaint was amended to drop Viva and implead Macondray Company, Inc. as a new
defendant.

TC rendered judgment holding the defendants liable to pay the plaintiff the sum of P87,163.54 plus 12% interest from April
20, 1981 until the whole amount is fully paid, P1,000.00 as attorney's fees and to pay one-half (1/2) of the costs; and
defendant Maritime Agencies & Services, Inc., to pay the plaintiff the sum of P36,030.23, plus 12% interest from April 20,
1981 until the whole amount is fully paid, P600.00 as attorney's fees and to pay one-half (1/2) of the costs.

CA which rendered a decision on November 28, 1986 modified the TC decision, finding the charterer Transcontinental
Fertilizer Co., Ltd. represented by its agent Maritime Agencies & Services, Inc. for the same liability but held that
Hongkong Island Co., Ltd. represented by Macondray Co., Inc. are accordingly exempted from any liability.

In G.R. No. 77638, Maritime pleads non-liability on the ground that it was only the charterer's agent and should not
answer for whatever responsibility might have attached to the principal. It also argues that the respondent court erred in
applying Articles 1734 and 1735 of the Civil Code in determining the charterer's liability. In G.R. No. 77674, Union asks for
the modification of the decision of the respondent court so as to make Maritime solidarily and solely liable, its principal
not having been impleaded and so not subject to the jurisdiction of our courts. These two cases were consolidated and
given due course, the parties being required to submit simultaneous memoranda.

ISSUE
WON defendants are liable for the cargo

RULING
A demise involves the transfer of full possession and control of the vessel for the period covered by the contract, the
charterer obtaining the right to use the vessel and carry whatever cargo it chooses, while manning and supplying the
ship as well. A time charter is a contract to use a vessel for a particular period of time, the charterer obtaining the right
to direct the movements of the vessel during the chartering period, although the owner retains possession and control. A
voyage charter is a contract for the hire of a vessel for one or a series of voyages usually for the purpose of transporting
goods for the charterer. The voyage charter is a contract of affreightment and is considered a private carriage. Tested
by those definitions, the agreement entered into in the cases at bar should be considered. This brings us to the basic
question of who, in this kind of charter, shall be liable for the cargo. A voyage charter being a private carriage, the
parties may freely contract respecting liability for damage to the goods and other matters. The basic principle is that
"the responsibility for cargo loss falls on the one who agreed to perform the duty involved" in accordance with the terms
of most voyage charters. This is true in the present cases where the charterer was responsible for loading, stowage and
discharging at the ports visited, while the owner was responsible for the care of the cargo during the voyage. The ruling
in Home Insurance Co. v. American Steamship Agencies, Inc. cannot benefit Hongkong, because there was no showing
in that case that the vessel was at fault. In the cases at bar, the trial court found that 1,383 bags were shortlanded,
which could only mean that they were damaged or lost on board the vessel before unloading of the shipment. It is not
denied that the entire cargo shipped by the charterer in Odessa was covered by a clean bill of lading. 16 As the bags
were in good order when received in the vessel, the presumption is that they were damaged or lost during the voyage
as a result of their negligent improper stowage. For this the ship owner should be held liable vessel.

As the charterer was itself the carrier, it was made liable for the acts of the ship captain who was responsible for the
cargo while under the custody of the vessel. As for the charterer's agent, the evidence showed that it represented the
vessel when it took charge of the unloading of the cargo and issued cargo receipts (or tally sheets) in its own name.
Claims against the vessel for the losses/damages sustained by that cargo were also received and processed by it. As a
result, the charterer's agent was also considered a ship agent and so was held to be solidarily liable with its principal. The
facts in the cases at bar are different. The charterer did not represent itself as a carrier and indeed assumed
responsibility ability only for the unloading of the cargo, i.e, after the goods were already outside the custody of the
vessel. In supervising the unloading of the cargo and issuing Daily Operations Report and Statement of Facts indicating
and describing the day-to-day discharge of the cargo, Maritime acted in representation of the charterer and not of the
vessel. It thus cannot be considered a ship agent. As a mere charterer's agent, it cannot be held solidarily liable with
Transcontinental for the losses/damages to the cargo outside the custody of the vessel. Notably, Transcontinental was
disclosed as the charterer's principal and there is no question that Maritime acted within the scope of its authority. We
affirm the factual findings but must modify the legal conclusions. As previously discussed, the liability of Macondray can
no longer be enforced because the claim against it has prescribed; and as for Maritime, it cannot be held liable for the
acts of its known principal resulting in injury to Union. The interest must also be reduced to the legal rate of 6%,
conformably to our ruling in Reformina v. Tomol 24 and Article 2209 of the Civil Code, and should commence, not on
April 20, 1981, but on September 19, 1980, date of the filing of the original complaint. The decision of the respondent
court is SET ASIDE and that of the trial court is REINSTATED. The parties shall bear their respective costs.

JESUS M. GOZUN VS. JOSE TEOFILO T. MERCADO a.k.a.‘DON PEPITO MERCADO, GR No. 167812 (511 SCRA 305), 19
DECEMBER 2006

FACTS
During the local elections of 1995, Don Pepito, the respondent, vied for gubernatorial post in Pampanga. Upon Gozun’s
request, the petitioner, owner of JMG Publishing House, a printing shop located in San Fernando, Pampanga, submitted
to Don Pepito draft samples and price quotation of campaign materials. By petitioner’s (Gozun) claim, respondent’s
wife had told him that respondent (Don Pepito) already approved his price quotation, and thus, Gozun could start
printing the campaign materials, hence, he did print campaign materials like posters bearing respondent’s
photograph, leaflets containing the slate of party candidates, sample ballots, poll watcher identification cards, and
stickers. However, petitioner availed of the services and facilities of Metro Angeles Printing and of St. Joseph Printing
Press, owned by his daughter Jennifer Gozun and mother Epifania Macalino Gozun, due to the urgency and limited time
to do said job order.

In the meantime, on March 31, 1995, respondent’s sister-in-law, Lilian Soriano obtained from petitioner "cash advance" of
P253,000 purportedly for the allowances, seminars and for other related expenses of poll watchers. It was acknowledged
on petitioner’s 1995 diary receipt of the amount said Lilian’s cash advance.

However, aside from the partial payment amounting to Php 1 million, Mercado failed to settle the total amount of Php
2,177,906 he owed to Gozun. The debt included the cash advance obtained by Lilian.

This prompted the Gozun to file a complaint for collection of sum of money. In his defense, Don Pepito claimed that he
was not aware of the said liability. He purportedly thought that the campaign materials printed were donations from
third parties.

The trial court ruled in favour of Gozun, however, reversed by the Court of Appeals.

As to the cash advance obtained by Lilian, the court ruled that there was no evidence that she was authorized by Don
Pepito to scrounge money on his behalf. Even on the acknowledgement receipt, which she signed, she did not specify
in what capacity she received the money. Therefore, it held that the Gozun‘s claim for Php 253,000 was unenforceable.

ISSUE
WON Lilian R. Soriano was sanctioned by Don Pepito to receive the cash advance from Gozun?

RULING
No. Lilian was not empowered to receive the cash advance from Gozun. (Art. 1868 of the Civil Code) By the contract of
agency a person binds himself to render some service or to do something in representation or on behalf of another, with
the consent or authority of the latter. (Art. 1898 of the Civil Code) Contracts entered into in the name of another person
by one who has been given no authority or legal representation or who has acted beyond his powers are classified as
unauthorized contract sand are declared unenforceable, unless they are ratified.

Generally, the agency may be oral, unless the law requires a specific form. However, a special power of attorney is
necessary for an agent to, as in this case, borrow money, unless it be urgent and indispensable for the preservation of
the things which are under administration (Art. 1878 of the Civil Code). Since nothing in this case involves the
preservation of things under administration, a determination of whether Soriano had the special authority to borrow
money on behalf of respondent is in order.

It is a settled rule that in order to bind the principal by a mortgage on real property executed by an agent, it must upon
its face purport to be made, signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is
not enough merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the
principal.

RURAL BANK OF BOMBON v. CA 212 SCRA 25

FACTS
Ederlinda M. Gallardo, married to Daniel Manzo, executed a special power of attorney in favor of Rufina S. Aquino
authorizing him to secure a loan from any bank or lending institution for any amount or otherwise mortgage the property
and in that connection, to sign, or execute any deed of mortgage and sign other document requisite and necessary in
securing said loan and to receive the proceeds thereof in cash or in check and to sign the receipt therefor and
thereafter endorse the check representing the proceeds of loan

Deed of Real Estate Mortgage was executed by Rufino S. Aquino in favor of the Rural Bank of Bombon (Camarines Sur),
Inc. (hereafter, defendant Rural Bank) over the three parcels of land

Allegations of plaintiffs: o they were surprised to discover that the property was mortgaged to pay personal loans
obtained by Aquino from the Bank solely for personal use and benefit of Aquino; o the mortgagor in the deed was
defendant Aquino instead of plaintiff Gallardo o correspondence relative to the mortgage was sent to Aquino's address
at "Sta. Isabel, Calabanga, Camarines Sur" instead of Gallardo's postal address at Las Piñas, Metro Manila; o defendant
Aquino, in the real estate mortgage, appointed defendant Rural Bank as attorney in fact, and in case of judicial
foreclosure as receiver with corresponding power to sell and that although without any express authority from Gallardo,
defendant Aquino waived Gallardo's rights under Section 12, Rule 39, of the Rules of Court and the proper venue of the
foreclosure suit

.Argument of Aquino: the plaintiff authorized him to mortgage her property to a bank so that he could use the proceeds
to liquidate her obligation of P350,000 to him. The obligation to pay the Rural Bank devolved on Gallardo. Argument of
the Bank: the real estate mortgage executed by respondent Aquino is valid because he was expressly authorized by
Gallardo to mortgage her property under the special power of attorney she made in his favor which was duly registered
and annotated on Gallardo's title. Since the Special Power of Attorney did not specify or indicate that the loan would
be for Gallardo's benefit, then it could be for the use and benefit of the attorney-infact, Aquino.

ISSUE
Validity of the Deed of Real Estate Mortgage dated August 26, 1981, executed by Rufino S. Aquino, as attorney-in-fact
of Ederlinda Gallardo, in favor of the Rural Bank of Bombon (Cam. Sur), Inc.

HELD
Aquino's act of signing the Deed of Real Estate Mortgage in his name alone as mortgagor, without any indication that
he was signing for and in behalf of the property owner, Ederlinda Gallardo, bound himself alone in his personal capacity
as a debtor of the petitioner Bank and not as the agent or attorney-in-fact of Gallardo.

RATIO
Defendant Aquino in executing the deed of Real Estate Mortgage in favor of the rural bank over the three parcels of
land covered by Gallardo's title named himself as the mortgagor without stating that his signature on the deed was for
and in behalf of Ederlinda Gallardo in his capacity as her attorney-in-fact.
The three (3) promissory notes respectively dated August 31, 1981, September 23, 1981 and October 26, 1981, were
each signed by Rufino Aquino on top of a line beneath which is written "signature of mortgagor" and by Bibiana P.
Aquino on top of a line under which is written "signature of spouse," without any mention that execution thereof was for
and in behalf of the plaintiff as mortgagor. It results, borne out from what were written on the deed, that the amounts
were the personal loans of defendant Aquino. As pointed out by the appellant, Aquino's wife has not been appointed
co-agent of defendant Aquino and her signature on the deed and on the promissory notes can only mean that the
obligation was personally incurred by them and for their own personal account.

IN order to bind the principal by a mortgage on real property executed by an agent, it must upon its face purport to be
made, signed and sealed in the name of the principal, otherwise, it will bind the agent only. Agent’s act of signing
mortgage deed in his own name bound himself in his personal capacity as debtor Argument of Petitioner: the Deed of
Real Estate Mortgage is enforceable against Gallardo since it was executed in accordance with Article 1883 which
provides (Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom
the agent has contracted; neither have such persons against the principal. In such case the agent is the one directly
bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the
contract involves things belonging to the principal.)

SC: Exception in Art. 1883 not applicable to the case at bar. Herein respondent Aquino acted purportedly as an agent
of Gallardo, but actually acted in his personal capacity. Involved herein are properties titled in the name of respondent
Gallardo against which the Bank proposes to foreclose the mortgage constituted by an agent (Aquino) acting in his
personal capacity. Under these circumstances, Gallardo's property is not liable on the real estate mortgage:

There is no principle of law by which one can become liable on a real estate mortgage which he never executed
either in person or by attorney in fact.

ART 1884 GENERAL OBLIGATION OF AN AGENT TO PRINCIPAL

BA FINANCE VS. CA GR NO. 82040 (201 SCRA 157) 27 AUGUST 1991

FACTS
Private respondents Manuel Cuady and Lilia Cuady acquired from Supercars, Inc. a credit of P39,574.80, which covered
the cost of a unit of four-door sedan, Ford Escort 1300 on July 15, 1977. A promissory note was executed by private
respondents in favor of Supercars, Inc., obligating themselves to pay the latter or order the sum of P39,574.80, inclusive of
interest at 14% per annum, payable on monthly installments of P1,098.00 starting August 16, 1977, and on the 16th day of
the next 35 months from September 16, 1977 until full payment thereof. It was also stipulated that a penalty of P10.00 for
every month of late installment will be paid. To incur no delays in payment and secure compliance of the obligation,
said spouses constituted a chattel mortgage.

On July 25, 1977, the promissory note, together with the chattel mortgage were assigned to B.A. Finance Corporation.
The Cuadys paid a total of P36,730.15 to the B.A. Finance Corporation, thus leaving an unpaid balance of P2,344.65 as
of July 18, 1980. In addition thereto, the Cuadys owe B.A. Finance Corporation P460.00 representing penalties or
surcharges for tardy monthly installments.

When the Cuadys failed to renew insurance coverage of said motor vehicle, the B.A. Finance Corporation, as the
assignee of the mortgage, obtained the renewal of its insurance coverage for the year 1980 with Zenith Insurance
Corporation. Under the terms and conditions of the said insurance coverage, any loss under the policy shall be payable
to the B.A. Finance Corporation. On April 18, 1980, the motor vehicle met an accident and was badly damaged. It was
reported to the B.A. Finance Corporation and to the insurer, Zenith Insurance Corporation.

The Cuadys asked the B.A. Finance Corporation to consider the same as a total loss, and to claim from the insurer the
face value of the car insurance policy and apply the same to the payment of their remaining account and give them
the surplus thereof, if any. But instead of heeding the request of the Cuadys, B.A. Finance Corporation prevailed upon
the former to just have the car repaired. Not long thereafter, however, the car bogged down.

The Cuadys wrote B.A. Finance Corporation requesting the latter to pursue their prior instruction of enforcing the total
loss provision in the insurance coverage. When B.A. Finance Corporation did not respond favorably to their request, the
Cuadys stopped paying their monthly installments on the promissory note .
ISSUE
WON B.A. Finance Corporation is bound by its acceptance to carry out the agency, and is liable for damages which,
through its non-performance, the principal may suffer?

RULING
Yes. B.A. Finance Corporation is bound by its acceptance to carry out the agency, and is liable for damages which,
through its non-performance, the Cuadys, the principal may suffer. B.A. Finance Corporation was subrogated to the
rights and obligations of Supercars, Inc. when the Supercars assigned the promissory note, together with the chattel
mortgage constituted on the motor vehicle in question in favor of B.A.. Consequently, B.A. Finance Corporation is bound
by the terms and conditions of the chattel mortgage executed between the Cuadys and Supercars, Inc.

Under the deed of chattel mortgage, B.A. Finance was constituted attorney-in-fact with full power and authority to file,
follow-up, prosecute, compromise or settle insurance claims; to sign execute and deliver the corresponding papers,
receipts and documents to the Insurance Company as may be necessary to prove the claim, and to collect from the
latter the proceeds of insurance to the extent of its interests, in the event that the mortgaged car suffers any loss or
damage.

In granting B.A. Finance Corporation said powers and prerogatives, the Cuady spouses created in the former's favor an
agency. When the finance company executes a mortgage contract that contains a provision that in the event of
accident or loss, it shall make a proper claim against the insurance company, was in effect an agency relation, and
that under Article 1884, the finance company was bound by its acceptance to carry out the agency, and in spite of the
instructions of the borrowers to make such claims instead insisted on having the vehicle repaired but eventually resulting
in loss of the insurance coverage, the finance company had breached its duty of diligence, and must assume the
damages suffered by the borrowers, and consequently can no longer collect on the balance of the mortgage loan
secured thereby.

ART 1892 APPOINTMENT OF SUB-AGENT; SUB AGENT DEFINED

ESCUETA VS LIM. G.R. NO. 137162 JANUARY 24, 2007.

FACTS
This case involves 10 lots owned by Ignacio Rubio and the Heirs of Baloloy allegedly sold by Virginia Rubio Lim to Rufina
Lim. Rufina avers that she paid Ᵽ102, 169.86 and Ᵽ450, 000 respectively to Rubio and the heirs of Baloloy as partial
payment for these lots with the understanding that the Certificate of Title will be delivered to her upon payment of the
balance.
However both Rubio and the heirs refused her payment and did not deliver the Certificate of Title. Thus, Rufina was
constrained to file an action which originally sought to remove cloud or quiet title to real property with a prayer for the
issuance of Preliminary Injunction and a hold-departure order against Rubio which was later amended to include
Specific Performance and Damages.

Corazon Escueta was impleaded for allegedly purchasing the same lots in spite of her knowledge that the same were
already sold and for executing a simulated Deed of Sale which raised doubts and cloud over Rufina’s title. The heirs of
Baloloy and Rubio denied the allegations and claimed among others, that Virginia Lim was never authorized to sell the
lots as it was in fact Patricia Lllamas, Rubio’s daughter, who had this authority.
The Baloloy’s and Rubio failed to appear at the pre-trial and were declared in default. Their motion to lift the order of
default having been denied, they appealed to the Court of Appeals which was likewise denied. Hence this petition.

ISSUE
Whether or not Rubio is bound by the contract of sale considering that he did not authorize Virginia to transact on his
behalf?

RULING

Yes, Rubio is bound by the Contract of Sale. The Court cited Art. 1892 which provides that “an agent may appoint a
substitute if the principal has not prohibited him from doing so, but he shall be responsible for the acts of the substitute
when he has not given the power to appoint one”Applying this provision to the special power of attorney executed by
Ignacio

Rubio in favor of Patricia Llamas, it is clear that she is not prohibited from appointing a substitute. By authorizing Virginia
Lim to sell the subject properties Patricia merely acted within the limits of her authority. However, she will be held
responsible for the act of the sub-agent, among which is precisely the sale in favor of the Rufina.

SERONA VS CA, G.R. NO. 130423. NOVEMBER 18, 2002.

FACTS
Leonida Quilatan delivered several pieces of jewelry to Virginia Serona to be sold on commission basis. It was agreed
upon that the jewelry will be returned within 30 days if not sold. Virginia failed to pay for the sold items, thus Leonida
required her to execute an acknowledgment receipt indicating their agreement and the total amount due which was
later signed by Virginia, and a certain Rufina Navarete as witness.

Unknown to Leonida, Virginia entrusted the jewelries to Marichu Labrador also to be sold on commission basis. Virginia
failed to collect from Marichu as the person whom she sold these jewelries to absconded. Consequently, Virginia failed
to pay Leonida. Thus, an information for Estafa was filed against the former alleging that she misappropriated the
proceeds of the jewelries and converted the same for her personal use and benefit. The Trial Court subsequently found
Virginia guilty of Estafa and upon appeal, the Court of Appeals merely affirmed this decision. Hence this petition.

ISSUE
Whether or not there was abuse of confidence when Virginia entrusted the jewelry to Marichu?

RULING
No, the Court held that Virginia did not ipso facto commit Estafa through conversion or misappropriation by delivering
the jewelries to Marichu, her sub-agent and that it must be pointed out that the law on agency allows the appointment
by an agent of a substitute or sub-agent in the absence of express agreement to the contrary between the agent and
the principal under the provisions of Art. 1892. The appointment of Marichu as sub-agent was not expressly prohibited by
Leonida as the acknowledgment receipt does not contain any such limitation. Neither does it appear that Virginia was
verbally forbidden.

Thus, the act of entrusting the jewelry is not characterized by abuse of confidence, was not proscribed and is in fact
legally sanctioned.

SPOUSES MAY S. VILLALUZ AND JOHNNY VILLALUZ, JR. VS. LAND BANK OF THE PHILIPPINES AND THE REGISTER OF DEEDS FOR
DAVAO CITY
G.R. NO. 192602, JANUARY 18, 2017, J. JARDELEZA

An agent may appoint a substitute if the principal has not expressly prohibited him from doing so.

FACTS
Paula Agbisit, the mother of May Villaluz, requested the latter to provide her a collateral for a loan. May and her
husband Johnny agreed to allow Agbisit to use their property in Davao as collateral for a loan. For such purpose, they
executed an SPA in favor of Agbisit. Notably, the SPA did not expressly prohibit Agbisit from appointing a substitute.

Agbisit later executed an SPA, appoint Milflores Cooperative as attorney-in-fact in obtaining a loan from Land Bank.
Milflores Cooperative then executed a Real Estate Mortgage in favor of Land Bank in consideration for a loan.

Milflores Cooperative was not able to pay the loan to Land Bank. Hence, the latter foreclosed the property. Land Bank
won the auction sale of the property as the highest bidder.

The Spouses Villaluz filed a complaint for annulment of the foreclosure sale, claiming that Agbisit could no have validly
delegated her authority as attorney-in-fact to Milflores Cooperative. The RTC, however, ruled in favor of Land Bank and
held that the delegation of Agbisit to Milflores Cooperative was valid because the SPA executed by the Spouses Villaluz
had no specific prohibition againt Agbisit appointing a substitute. The CA affirmed the RTC’s ruling.

ISSUE
Whether the mortgage contract executed by the substitute (Milflores Cooperative) is valid and binding upon the
principal (Spouses Villaluz).

RULING
The mortgage contract executed by the substitute (Milflores Cooperative) is valid and binding upon the principal
(Spouses Villaluz).

The law creates a presumption that an agent has the power to appoint a substitute. The consequence of the
presumption is that, upon valid appointment of a substitute by the agent, there ipso jure arises an agency relationship
between the principal and the substitute. As a result, the principal is bound by the acts of the substitute as if these acts
had been performed by the principal's appointed agent. Concomitantly, the substitute assumes an agent's obligations
to act within the scope of authority, to act in accordance with the principal's instructions, and to carry out the agency,
among others. In order to make the presumption inoperative and relieve himself from its effects, it is incumbent upon the
principal to expressly prohibit the agent from appointing a substitute.

Although the law presumes that the agent is authorized to appoint a substitute, it also imposes an obligation upon the
agent to exercise this power conscientiously. To protect the principal, Article 1892 allocates responsibility to the agent for
the acts of the substitute when the agent was not expressly authorized by the principal to appoint a substitute; and, if so
authorized but a specific person is not designated, the agent appoints a substitute who is notoriously incompetent or
insolvent. In these instances, the principal has a right of action against both the agent and the substitute if the latter
commits acts prejudicial to the principal.

In this case, the SPA executed by the Spouses Villaluz contains no restrictive language indicative of an intention to
prohibit Agbisit from appointing a substitute or sub-agent.

ART 1897 DUTIES AND LIABILITIES OF AGENT TO THIRD PERSONS

EUROTECH INDUSTRIAL TECHNOLOGIES, INC., - VERSUS –EDWIN CUIZON AND ERWIN CUIZON,
G.R. NO. 167552 APRIL 23, 2007

FACTS
From January to April 1995, petitioner sold to Impact Systems various products allegedly amounting to P91, 338.00 pesos.
Subsequently, respondents sought to buy from petitioner one unit of sludge pump valued at P250, 000.00 with
respondents making a down payment of P50, 000.00. When the sludge pump arrived from the United Kingdom,
petitioner refused to deliver the same to respondents without their having fully settled their indebtedness to petitioner.
Thus, on 28 June 1995, respondent Edwin and Alberto de Jesus, general manager of petitioner, executed a Deed of
Assignment of receivables in favor of petitioner. Impact systems are owed by Erwin Cuizon.

Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo Power Company the
amount of P365, 135.29. Alarmed by this development, petitioner made several demands upon respondents to pay
their obligations. As a result, respondents were able to make partial payments to petitioner. On 7 October 1996,
petitioner's counsel sent respondents a final demand letter wherein it was stated that as of 11 June 1996, respondents'
total obligations stood at P295, 000.00 excluding interests and attorney's fees. Because of respondents' failure to abide
by said final demand letter, petitioner instituted a complaint for sum of money, damages, with application for
preliminary attachment against herein respondents

By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party in interest in this case.
According to him, he was acting as mere agent of his principal, which was the Impact Systems, in his transaction with
petitioner and the latter was very much aware of this fact.

ISSUE
Whether or not the act of Edwin Cuizon as sales manager in signing the Deed of Assignment binds his principal Impact
Systems?

RULING
Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems

The Supreme Court held that in a contract of agency, a person binds himself to render some service or to do something
in representation or on behalf of another with the latter's consent. Its purpose is to extend the personality of the principal
or the party for whom another acts and from whom he or she derives the authority to act. It is said that the basis of
agency is representation, that is, 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.

In this case at hand, the parties do not dispute the existence of the agency relationship between respondents ERWIN as
principal and EDWIN as agent.Respondent Edwin Cuizon acted within his authority as an agent, who did not acquire
any right nor incur any liability arising from the Deed of Assignment, it follows that he is not a real party in interest who
should be impleaded in this case. A real party in interest is one who stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit. In this respect, we sustain his exclusion as a defendant in the suit
before the court a quo.

Вам также может понравиться