Panlilio v. Citibank, N.A. (LTCPs, withdrawal upon news about of stock crash) Doctrines:

Principals in an agency relationship are solely obliged to observe the solemnity of the transaction entered by the agent on their behalf, absent any proof that the latter acted beyond its authority

Concomitant to this, the principal also assumes the risks that may arise from the transaction Bank regulations prohibit banks from guaranteeing profits or the principal in an investment management account.

Facts:

Amalia Panlilio deposited in Citibanks Makati branch Php1M into a Citihi account, which is a fixed-term savings account with a higher-than-average interest. She initially wanted to invest the money in a Peso Repriceable Promissory Note (PRPN), which yielded higher interest, but it wasnt available on that day. On the same day (Oct. 10, 1997), she also opened a checking account, to which the interests of the Citihi account will be credited. Jinky Suzara Lee was assigned to personally transact w/ Amalia and handle the accounts. These accounts were ITF or in trust for accounts. This means that they were intended to benefit her minor children in case she would meet an untimely death. In order to open them, she had to sign 2 documents: a Relationship Opening Form (ROF) and a Invester Profiling and Suitability Questionnaire (Questionnaire).

About a month later, on Nov. 28, Amalia phoned Citibank saying she wanted to place another investment for Php3M. She brought a PCIB check worth that amount to Citibank. Php2,134,635 was placed in a Long-Term Commercial Paper (LTCP) issued by Camella and Palmera Homes (C&P Homes). Essentially, an LTCP is a debt of indebtedness with a maturity period of more than 365 days, and is issued by a corporation to any person or entity. Its a higher-risk long-term investment that can yield higher pay-offs. In effect, Amalia loaned C&P Homes money, and the latter pays it over a long periodin this case, the maturity period was in 2003 (five years later), with a gross interest rate of 16.25% per annum. Invesment banks are authorized to buy such documents for investment purposes on behalf of their clients upon the latters express instructions. The remaining money from the Php3M was put in two PRPN accounts in trust for Amalias 2 children. That day, she signed the ff. documents: a Directional Investment Management Agreement (DIMA), Term Investment Application (TIA), and a Directional Letter, which served as Amalias specific instructions to Citibank regarding the investment of her money.

The DIMA and Directional Letter both contain specific provisions that state that clear Citibank of any obligation to guarantee the principal and interest of the investment absent fraud or negligence on its part, and that all risks shall be assumed by Amalia. Pursuant to these investments, Citibank regularly sent Amalia confirmations of investment (COI), which is a 1-page computer generated document that stated where her money went. Amalia received the first COI on December 9, 1997. According to her, it was the first time she learned that her money was put into an LCTP and that she never instructed the bank to do so but only to open a trust account with an interest of around 16.25% w/ a term of 91 days. She claims that upon receipt of the 1st COI, she immediately called Lee and asked that the investment in the LTCP be withdrawn. However, according to Amalia, Lee convinced her not to withdraw her investments immediately because C&P Homes is owned by Ayala Corp. and is therefore secure, and that in any case, she could easily withdraw them at a later date. She also claims that she signed blank documents and that the bank only made unauthorized intercalations.

Around August 1998, newspaper reports about the plummeting of C&P Homes stocks and Ayalas subsequent withdrawal of its investments in the company hit the public. On Aug. 6, Amalia met with Lizza Colet, another Citibank employee, to preterminate the LTCP and their other investments. However, in order for the LTCP to be preterminated before maturity, there must be another willing buyer for it. It was very hard to find buyers then because of the economic crisis. Still, petitioner spouses signed 3 sets of Sales Order Slips to sell the LTCP and left these with Colet. On Aug. 18, Amalia sent their first formal, written demand to Citibank for the withdrawal of her investment ASAP. In its response, Citibank says that the investment was not a deposit so its return to the investor was not guaranteed by the bank and that its sale is still subject to the availability of other buyers. Also, Citibank denies that Amalia immediately called them upon her receipt of the 1st COI, and they also deny that they just convinced her not to withdraw her investments immediately.

Thus, petitioners filed a case with the RTC for the recovery of a sum of money and damages. The Panlilios won. However, upon appeal, the CA reversed the RTC decision.

Issues:

1. W/N Citibank is liable to return to Amalia the Php2,134,635.

Held/Ratio:

1. No. As evidenced by the DIMA and Directional Letter, Amalia opned an investment managing account. In essence, Amalia constituted Citibank as an investment manager, which gave birth to a principal-agent relationship and NOT a creditor-debtor or trustee-trustor one. Thus, the money invested was the sole and exclusive obligation of C&P Homes. Under Sec. 4 of the DIMA, it explicitly states that the agreement is one of agency and not trust. As such, the principal shall at all times retain legal title to the fundssubject of the agreement. Under Sec. 6, the investment manager (in this case, Citibank), is absolved of any liability in the absence of fraud, bad faith, or gross or willful negligence on its part. The same terms are contained within the Directional Letter. Thus, they generally extricate Citibank from responsibility in case the investment is lost. The DIMA, Directional Letter, TIA and COIs, read together, establish that the agreement between the parties, as an investment management agreement, created a principal-agent relationship. Citibank purchased the LTCPs only as agent of petitioners. Amalias proper recourse is against C&P Homes and only upon maturity. As principals, they are bound by the provisions of the contracts entered into by their agents absent any proof that the latter acted beyond its authority. Its the principal who assumes the risks that may arise from the transaction. The Court ruled that theres no merit to petitioners claim that they signed blank documents. Amalia testified that she didnt ordinarily sign blank documents. Evidence shows that Amalia is a smart businesswoman. She wouldnt just sign any document without first reviewing it. The rule that any ambiguity in a contract of adhesion shall be strictly construed against the one who wrote the contract cant apply in this case because there is no evidence of any ambiguity, obstruction or doubt. The construction only applies when the ambiguity, obstruction or doubt is present in the contract. The word TRUST in the TIA merely indicates that it was to be handled by the trust department. The fact that it was handled by the trust department of the bank is immaterial because the trust department also handles other fiduciary and investment management services. Also, the fact that the ROF and Questionnaire contradict the other documents is immaterial because they were filled up for a different investmentnot the one in question here. Also, when they first demanded the withdrawal of the investment, the Panlilios only questioned the maturity period and not the validity of the purchase of the LTCPs themselves.

Petitioners acts and omissions strongly indicate that they conformed to the agreement in the months after the signing. In that period, they received several banks statements and earned interest from their investments. In fact, C&P continued paying interest up to when this case was on trial. Suspiciously, it was only when news reports about C&P Homes stock crash got out that the Panlilios decided to withdraw their investment.

Manila Memorial Park Cemetery v. Linsangan (2004) (See Compilation 3)

Air France v. Court of Appeals (1983) (Japan Trip, Ganas, expired ticket, knowledge ) Doctrines:

From Agency Outline: Under the principle that knowledge of the agent is considered knowledge by the principle, the Court ruled that the spouses cannot defend by contending lack of knowledge of the rules upon which they received their tickets from the airline company since the evidence bore out that their travel agent who handled their travel arrangements, was duly informed by proper representatives of the airline company.

Facts:

Sometime in February, 1970, the late Jose G. Gana and his family (Ganas) purchased from Air France through Imperial Travels 9 (nine) open-dated tickets for the Manila/Osaka/Tokyo/Manila route. Ganas were booked for Manila/Osaka May 8, 1970 and Tokyo/Manila May 22, 1970. The expiry date was May 8. 1971. The Ganas, however, did not depart on May 8, 1970.

Sometime in January 1971, Jose Gana asked the assitance of Teresita Manucdoc (Secretary of Sta Clara Lumber - where Jose Gana is working as Director and Treaurer) for the extension of the validity of their tickets (which again due to expire on May 8, 1971). Teresita asked for help from Lee Ella, Manager of the Philippine Travel Bureau. She used to handle travels of Sta. Clara Lumber. She then sent the tickets to Cesar Rillo who is the Office Manager of Air France. Tickets were returned to Ella. Ella was informed that extension was NOT possible, unless the following are paid first (1) fare differentials resulting from the increase in fares triggered by an increase of the exchange rate of the USD to PHP and (2) the increased travel tax.

Ella returned the tickets to Manucdoc and informed the impossibility of extension. Meanwhile, Ganas scheduled their departure on May 7, 1971 (ONE DAY BEFORE expiry). Manucdoc requested Ella to arrange the tickets but Ella warned her that the tickets can be used May 7, but they would NO longer be valid for the rest of the trip because it will expire next day. Manucdoc said that Ganas will make the arrangements (This was verified through the Q&A. It was even asked if Tagalog or in English. It was in English).

Assured, Ella ON HIS OWN, attached to the tickets revalidating stickers (Japan Airlines and Scandinavian Airways System (SAS) sticker). The SAS indicates that it was Reevaluated by: the Philippine Travel Bureau, Branch No.2 (as shown by a circular rubber stamp) and signed "Ador", and the date is handwritten in the center of the circle. Then appear under printed headings the notations: JL. 108 (Flight), 16 May (Date), 1040 (Time), OK (status). Ella made no more attempt to contact Air France as there was no more time. Come Osaka/Tokyo Flight on May 17, 1971 - Japan Airlines refused to honor the tickets and the Ganas had to purchase new tickets. Same difficulty happened in their return trip to Manila - Air France also refused the tickets. They were only able to return only after pre-payment in Manlia, through their relatives , of the adjusted rates. The family flew separate flights.

Issues:

1. W/N notice to Manucdoc is notice to the Ganas 2. W/N Ella acted beyond his powers as travel agent

Held/Ratio:

1. YES. To all legal intents and purposes, Manucdoc was the agent of the Ganas and notice to her of the rejection of the request for extension of the validity of the tickets was notice to the Ganas, her principal. There are IAT (Intl Air Transportation Assoicatoin) Rules about ticket expiry and fare differentials (adjustment for increase and decrease). The GANAS cannot defend by contending lack of knowledge of those rules since the evidence bears out that Manucdoc was duly informed by Ella of the advice of Reno, the Office Manager of Air

France, that the tickets in question could not be extended beyond the period of their validity without paying the fare differentials and additional travel taxes brought about by the increased fare rate and travel taxes. This is the topic for the Agency class

2. YES. The circumstances that AIR FRANCE personnel at the ticket counter in the airport allowed the Ganas to leave is not tantamount to an implied ratification of travel agent Ella's irregular actuations. It should be recalled that the Ganas left in Manila the day before the expiry date of their tickets and that "other arrangements" were to be made with respect to the remaining segments. Besides, the validating stickers that Ella affixed on his own merely reflect the status of reservations on the specified flight and could not legally serve to extend the validity of a ticket or revive an expired one. It should be recalled that AIR FRANCE was even unaware of the validating SAS and JAL. stickers that Ella had affixed spuriously. Consequently, Japan Air Lines and AIR FRANCE merely acted within their contractual rights when they dishonored the tickets on the remaining segments of the trip and when AIR FRANCE demanded payment of the adjusted fare rates and travel taxes for the Tokyo/Manila flight.

Emergency Facts: Tickets cost USD 2,528.58, exchange rate was P3.90/USD1, travel tax is P100 for each passenger,

Cuison vs. CA (1993) (manager, holds him out to the public, kinakapatid) Doctrines:

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 third parties dealing with such person in good faith and in the honest belief that he is what he appears to be

Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed to latter to act as though he had full powers

The fact that the agent defrauded the principal in not turning over the proceeds of the transactions to the latter cannot in any way relieve or exonerate such principal from liability to the third persons who relied on his agents authority.

Equitable maxim that as between two innocent parties, the one who made it possible for the wrong to be done should be the one to bear the resulting loss.

Facts:

Case is for a sum of money. Kue Cuison (petitioner) is a sole proprietorship (stores: Baesa, QC and Binondo, Manila) engaged in the buy and sell of newsprint, bond paper, and scrap. Valiant Investment Associates VIA (respondent) delivered paper products amounting to 297k to a certain Lillian Tan of LT Trading. The deliveries were made pursuant to orders allegedly placed by Tiu Huy Tiac who was then employed at Binondo of Cuison. It was likewise pursuant to Tiacs instructions that the merchandise be delivered to Lillian Tan. Upon delivery, Lillian paid by issuing several checks payable to cash at the specific request of Tiac. In turn, Tiac issued 9 postdated checks to VIA. Unfortunately, these 9 checks were dishonored.

VIA made several demands to Kue Cuison to pay for the merchandise, claiming that Tiu Huy Tiac was duly authorized by Cuison as the manager of his Binondo office, to enter into transactions with VIA and Lillian Tan. Cusion denied any involvement and refused to pay.

Issues:

1. W/N Cuison is liable for Tiu Huy Tiacs transactions

Held/Ratio:

1. YES By Cuisons own acts and admission, he held out Tiu Huy Tiac to the public as the manager of his store

in Binondo, Manila. More particularly, Cuison explicitly introduced Tiu Huy Tiac to Villanueva, VIAs manager, as his (petitioners) branch manager as testified to by Villanueva.

Secondly, Lillian Tan (who has been doing business with Cuison for quite a while) also testified that she knew Tiu Huy Tiac to be the manager of the store. The general perception of Tiu Huy Tiac as the manager is even made manifest by the fact that Tiu Huy Tiac is known in the community to be the kinakapatid of Cuison. Even petitioner admitted his close relationship in open court that they are like brothers.

Petitioners unexplained delay in disowning the transactions entered into by Tiu despite several attempts made by VIA to collect the amount from him proved all the more that he was aware of the questioned transactions. Also, 3 months after Tui Huy Tiac left petitioners employ, Cuison sent communications to its customers notifying them that Tiu is no longer connected with his business. Such undertaking spoke unmistakenly of Tius valuable position as manager. Cuison is now estopped from disclaiming liability for the transaction entered into by Tiu Huy Tiac on his behalf because innocent third persons relied upon such representations in good faith and for value.

Pleasantville Development v. CA (lot mix-up) Doctrine:

The principal cannot absolve itself from the damages sustained by its buyer on the premise that the fault was primarily caused by its agent if the agent was acting within his authority, even if such agent has acted negligently. The liability of the principal for acts done by its agent within the scope of his authority does not exclude those done negligently.

Facts:

A certain Robillo purchased from Pleasantville Development a parcel of land located in Pleasantville Subdivision in Bacolod City. This lot was designated as Lot 9. Subsequently in 1975, a certain Jardinico bought the rights to the lot from Robillo. At that time, the lot was vacant. Upon completing payment in 1978, Jardinico applied for registration of the land under his name. It was then that he learned that a certain Wilson Kee had already introduced improvements and took possession of Lot 9.

FLASHBACK! Apparently, in 1974, Kee bought on installment Lot 8 in the same subdivision from CT Torres, the exclusive real estate agent of Pleasantville. Unfortunately, when Kees wife conducted an inspection with a CT Torres employee, the employee mistakenly pointed to Lot 9, instead of Lot 8. Thereafter, sometime after 1975, Kee constructed his residence and other improvements on the lot.

Jardinico and Kee tried to settle to no avail. Jardinico filed for ejectment and Kee countered with a third-party complaint. The CA eventually ruled that the erroneous delivery was due to the negligence of CT Torres, and that Kee was a builder in good faith as he was unaware of the mix-up when he began construction on Lot 9. The Court also said that the wrong delivery was likewise imputable to the principal, Pleasantville. Issues:

1. W/N Pleasantville is liable as principal for the negligent acts of its agent.

Held/Ratio:

1. YES. Pleasantville is liable for the damages sustained by its buyer primarily caused by its agent if the agent was acting within his authority, even if such agent has acted negligently.

The rule is that the principal is responsible for the acts of the agent, done within the scope of his authority, and should bear the damage caused to third persons. On the other hand, the agent who exceeds his authority is personally liable for damages. In this case, CT Torres, the agent, was acting within its authority when it made the delivery to Kee. In acting within the authority, it was, however, negligent. It is this negligence that is the basis of Pleasantvilles liability, per Articles 1909 and 1910 of the Civil Code.

Therefore, Pleasantville and CT Torres are declared solidarity liable for damages due to negligence.

Rural Bank of Milaor v. Ocfemia (2000) Bank foreclosure, Board Resolution, Managers authority for conduct in the normal course of business.

Doctrine:

When a bank, by its acts and failure to act, has clearly clothed its manager with apparent authority to sell an acquired asset in the normal course of business, it is legally obliged to confirm the transaction by issuing a board resolution to enable the buyers to register the property in their names. It has a duty to perform necessary and lawful acts to enable the other parties to enjoy all benefits of the contract which it had authorized.

Facts:

Several parcels of land were mortgaged by the respondents during the lifetime of the respondents grandparents to the Rural Bank of Milaor as shown by the Deed of Real Estate Mortgage and the Promissory Note. Spouses Felicisimo Ocfemia and Juanita Ocfemia, one of the respondents, were not able to redeem the mortgaged properties consisting of seven parcels of land and so the mortgage was foreclosed and thereafter ownership was transferred to the petitioner bank. Out of the seven parcels of land that were foreclosed, five of them are in the possession of the respondents because these five parcels of land were sold by the petitioner bank to the respondents as evidenced by a Deed of Sale. However, the five parcels of land cannot be transferred in the name of the parents of Merife Nino, one of the respondents, because there is a need to have the document of sale registered. The Register of deeds, however, said that the document of sale cannot be registered without the board resolution of the petitioner bank confirming both the Deed of sale and the authority of the bank manager, Fe S. Tena, to enter such transaction.

The petitioner bank refused her request for a board resolution and made many alibis. Respondents initiated the present proceedings so that they could transfer to their names the subject five parcel of land and subsequently mortgage said lots and to use the loan proceeds for the medical expenses of their ailing mother.

Issue: (Focusing on the case doctrine on the outline, di ko na isasama yung remedial part)

1. W/N the board of directors of a rural banking corporation may be compelled to confirm a deed of absolute sale of real property owned by the corporation which deed of sale was executed by the bank manager without prior authority of the board of directors of the rural banking corporation?

Held:

1. YES. The bank acknowledges, by its own acts or failure to act, the authority of Fe S. Tena (bank manager) to enter into binding contracts. After the execution of the Deed of Sale, respondents occupied the properties in dispute and paid the real estate taxes. If the bank management believed that it had title to the property, it should have taken measured to prevent the infringement and invasion of title thereto and possession thereof. Likewise, Tena had previously transacted business on behalf of the bank, and the latter had acknowledged her authority. A bank is liable to innocent third persons where representation is made in the course of its normal business by an agent like Manager Tena even though such agent is abusing her authority. Clearly, persons dealing with her could not be blamed for believing that she was authorized to transact business for and on behalf of the bank. The bank is estopped from questioning the authority of the bank to enter into contract of sale. If a corporation knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, it holds the agent out to the public as possessing the power to do those acts; thus, the corporation will, as against anyone who has in good faith dealt with it through such agent, be estopped from denying the agents authority.

Filipinas Life Assurance Co. V. Pedroso (2008) (Insurance, investment) Doctrines:

The general rule is that the principal is responsible for the acts of its agent done within the scope of its authority and should bear the damage caused to third persons. When the agent exceeds his authority, the agent becomes personally liable for the damage. But even when the agent exceeds his authority, the principal is still solidarily liable together with the agent if the principal allowed the agent to act as though the agent had full powers. In other words, the acts of an agent beyond the scope of his authority do not bind the principal, unless the principal ratifies them, expressly or implied. Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority.

Innocent third persons should not be prejudiced if the principal failed to adopt the needed measures to prevent misrepresentation, much more so if the principal ratified his agents acts beyond the latters authority

Facts:

Teresita O. Pedroso is a policyholder of a 20-year endowment life insurance issued by Filipinas Life. Pedroso claims that Renato Valle was her insurance agent since 1972. Valle collected her monthly premiums. In January 1977, Valle informed Pedroso that Filipinas Life Escolta Office was holding a promo investment program for policyholders: 8% prepaid interest a month for certain amounts deposited on a monthly basis. Pedroso invested and issued a post-dated check dated January 7, 1977 for P10,000. In return, Valle issued his personal check for P800 for the 8% prepaid interest and a Filipinas Life Agents Receipt No. 807838.

Pedroso, through employees of the Escolta Office Alcantra (administrative assistant) and Apertrior (branch manager), confirmed that there was such a promo. She was even told that she could push through with the check she issued. The check she issued was, with endorsement of Alcantara at the back, deposited in the account of Filipinas Life with Commercial Bank and Trust Company.

Relying on the representations made by Filipinas representatives, Pedroso waited for maturity of the investment. After a month, her P10,000 investment was returned to her after she requested for its refund. After the initial investment, she proceeded to make 7 to 8 more, totaling P37,000 but at a lower rate of 5% interest. Upon maturity of the subsequent investments, Valle would take back from Pedroso the corresponding agents receipt he issued to the latter.

Pedroso later told Palacio, another Filipinas insurance policyholder of the investment plan. Palacio made a total P49,550 investment but at 5% interest. When Pedroso subsequently tried to withdraw her investment, Valle didnt want to return P17,000. Palacio also tried but was refused by Filipinas. Pedroso and Palacio went to Filipinas Escolta to collect their investments and look for Valle (who they had not seen for some time). Hence, Pedroso and Palacio filed a case for recovery of sum of money.

RTC ruled that Filipinas Life, Valle, Apertrior and Alcantara jointly and solidarily liable to the respondents. CA affirmed.

Issues:

1. W/N the CA err in holding Filipinas and its employees jointly and severally liable to Pedroso and Palacio?

Held/Ratio:

1. NO

Filipinas does not dispute that Valle was its agent. But it claims that it was only a life insurance company and not engaged in the business of collecting investment money. Filipinas says that the investment scheme offered to Pedroso/Palacio by Valle/Apertrior/Alcantara was outside the scope of their authority as agents. And as such, Filipinas claims that it cant be liable to Pedroso/Palacio.

It is indisputable that Pedroso/Palacio invested P47,000 and P49,550 respectively. Such amounts were received by Valle and remitted to Filipinas Life thru its official receipts. When Pedroso sought confirmation, Alcantara and Apertrior confirmed that Valle had authority. While it is true that a person dealing with an agent is put upon inquiry and must discover at his own peril the agents authority, in this case, respondents did exercise due diligence in removing all doubts and in confirming the validity of the representations made by Valle.

Filipinas Life, as principal, is liable for obligations contracted by its agent, Valle. The general rule is that the principal is responsible for the acts of its agent done within the scope of its authority and should bear the damage caused to third persons. When the agent exceeds his authority, the agent becomes personally liable for the damage. But even when the agent exceeds his authority, the principal is still solidarily liable together with the agent if the principal allowed the agent to act as though the agent had full powers. In other words, the acts of an agent beyond the scope of his authority do not bind the principal, unless the principal ratifies them, expressly or implied. Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority.

Filipinas Life cant profess ignorance of Valles acts. Even if Valles representations were beyond his authority as a debit/insurance agent, Filipinas Life thru Alcantara and Apetrior expressly and knowingly ratified Valles acts. In fact, Filipinas even benefitted from the investments deposited by Valle in the account of Filipinas. Filipinas Life had clothed Valle with apparent authority, hence it is now estopped to deny said authority. Innocent third persons should not be prejudiced if the principal failed to adopt the needed measures to prevent misrepresentation, much more if the principal ratified his agents acts beyond the latters authority. Act of the agent is hence, considered that of the principal.

Professional Service Inc. vs. CA (2008) (2 gauzes) Doctrine:

It must be stressed that under the doctrine of apparent authority, the question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question.

Facts:

In 1984 Natividad Agana was suffering from "cancer of the sigmoid". She had a surgery(hysterectomy) in Medical City, performed by Drs. Ampil(Aganas Neighbor) and Fuentes. After the operation the attending nurses remarked that sponge count 2 lacking.

After a couple of days Natividad complained of pain to the Drs.. The Drs. advised her to see an oncologist. As a consequence she went to the states for consultation, and there she was told she was fee of cancer. When she came back to the Phil. still suffering from pains, her daughter found a piece of gauze protruding from her vagina. Then Dr. Ampil went to the Agans and removed from Natividad a gauze measuring 1.5 in.

After Natividad pains intensified, despite the assurance of Dr. Ampil that the pain would soon go away. Then Natividad went to Polymedic General Hospital, where it was detected a presence of a gauze measuring 1.5 inches in width. The gauze had badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organ which forced stool to excrete through the vagina. Therefore Natividad underwent another surgery.

Natividad filed with the RTC, a complaint for damages against PSI (owner of Medical City), Dr. Ampil and Dr. Fuentes. During the pendency of the case Natividad died and was substituted by her children.

The Aganas won in the RTC and CA.

Issue:

1. W/N there was an employee-employer relationship between PSI and Dr. Ampil under the principle of respondeat superior?

2. W/N Dr. Ampil was an agent of PSI under the doctrine of ostensible agency?

3. W/N PSI was liable to Natividad under the doctrine of corporate negligence?

Held:

1. YES, there existed between PSI and Dr. Ampil an employer-employee relationship as contemplated in Ramos v. Court of Appeals that "for purposes of allocating responsibility in medical negligence cases, an employer-employee relationship exists between hospitals and their consultants." Although the Court in Ramos later issued a Resolution reversing its earlier finding on the existence of an employment relationship between hospital and doctor, a similar reversal was not warranted in the present case because the defense raised by PSI consisted of a mere general denial of control or responsibility, maintaining that consultants, like Dr. Ampil, are independent contractors, not employees of the hospital. Even assuming that Dr. Ampil is not an employee of Medical City, but an independent contractor, still the said hospital is liable to the Aganas.

2. YES, Dr. Ampil was an agent of PSI, because PSI is estopped from passing the blame solely to Dr. Ampil. Its act of displaying his name and those of the other physicians in the public directory at the lobby of the hospital amounts to holding out to the public that it offers quality medical service through the listed physicians. This justifies Atty. Aganas belief that Dr. Ampil was a member of the hospitals staff. It must be stressed that under the doctrine of apparent authority, the question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question.

3. YES, Under the Doctrine of Corporate Responsibility, PSI is responsible for the proper supervision of the members of its medical staff. Accordingly, the hospital has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the physicians practicing in its premises. PSI committed a serious breach of its corporate duty when it failed to conduct an immediate investigation into the reported missing gauzes.

Professional Service Inc. vs. CA (2010) (2 gauzes) Doctrine:

The two factors that determine apparent authority: first, the hospital's implied manifestation to the patient which led the latter to conclude that the doctor was the hospital's agent; and second, the patients reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence.

Facts:

Same as the previous case of the same title because this is 2nd motion for reconsideration of the previous case this time Manila Medical Services, Inc. (MMSI), Asian Hospital, Inc. (AHI), and Private Hospital Association of the Philippines (PHAP) all sought to intervene in the case because it might affect the financial side of health care.

Issue:

1. W/N there was an employee-employer relationship between PSI and Dr. Ampil under the principle of respondeat superior?

2. W/N Dr. Ampil was an agent of PSI under the doctrine of ostensible agency?

3. W/N PSI was liable to Natividad under the doctrine of corporate negligence?

Held:

1. NO, the Court holds that, the concurrent finding of the RTC and the CA that PSI was not the employer of Dr. Ampil is correct. Control as a determinative factor in testing the employer-employee relationship between doctor and hospital under which the hospital could be held vicariously liable to a patient in medical negligence cases is a requisite fact to be established by preponderance of evidence. Here, there was insufficient evidence that PSI exercised the power of control or wielded such power over the means and the details of the specific process by which Dr. Ampil applied his skills in the treatment of Natividad. Consequently, PSI cannot be held liable for the negligence of Dr. Ampil under the principle of respondeat superior.

2. YES, the hospital (PSI) held out to the patient (Natividad) that the doctor (Dr. Ampil) was its agent. Present are the two factors that determine apparent authority: first, the hospital's implied manifestation to the patient which led the latter to conclude that the doctor was the hospital's agent; and second, the patients reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence.

It was Dr. Ampil, after the first meeting, who asked Natividad to go to Medical City to be examined by Dr. Ampil there. The decision made by Enrique for Natividad to consult Dr. Ampil was significantly influenced by the impression that Dr. Ampil was a staff member of Medical City General Hospital. Enrique looked upon Dr. Ampil not as independent of but as integrally related to Medical City.

It is of record that PSI required a "consent for hospital care" to be signed preparatory to the surgery of Natividad. The form reads:

Permission is hereby given to the medical, nursing and laboratory staff of the Medical City General Hospital to perform such diagnostic procedures and to administer such medications and treatments as may be deemed necessary or advisable by the physicians of this hospital for and during the confinement of xxx. (emphasis supplied)

By such statement, PSI reinforced the public impression that Dr. Ampil was a physician of its hospital, rather than one independently practicing in it; that the medications and treatments he prescribed were necessary and desirable; and that the hospital staff was prepared to carry them out.

3. Yes, PSI admitted that, Natividad only complained to Drs. Ampil and Fuentes, and if only she "informed the hospital of her discomfort and pain, the hospital would have been obliged to act on it.", by such admission, PSI defined the standards of its corporate conduct under the circumstances of this case, specifically: (a) that it had a corporate duty to Natividad even after her operation to ensure her safety as a patient; (b) that its corporate duty

was not limited to having its nursing staff note or record the two missing gauzes and (c) that its corporate duty extended to determining Dr. Ampil's role in it, bringing the matter to his attention, and correcting his negligence.

PSI violated its standard of conduct, by not reviewing what happened in the operation in connection with the gauzes, Rather, it evaded its responsibility and passed it on to others to Dr. Ampil whom it expected to inform Natividad, and to Natividad herself to complain before it took any meaningful step. By its inaction, therefore, PSI failed its own standard of hospital care. It committed corporate negligence.

Sargasso Construction (Joint Venture) v. PPA (Philippine Ports Authority) (2010) (jumped the gun/ doctrine of apparent authority)

Doctrines:

- Under the law on agency, however, "apparent authority" is defined as the power to affect the legal relations of another person by transactions with third persons arising from the other's manifestations to such third person such that the liability of the principal for the acts and contracts of his agent extends to those which are within the apparent scope of the authority conferred on him, although no actual authority to do such acts or to make such contracts has been conferred.

Facts:

Plaintiffs Sargasso Construction and Development Corporation, Pick and Shovel, Inc. and Atlantic Erectors, Inc. (a joint venture now referred to as "the Consortium") was awarded by the Philippine Ports Authority (PPA) the construction of Pier 2 and the rock causeway (R.C. Pier 2) for the port of San Fernando, La Union. Adjacent to Pier 2 is an area intended for the reclamation project as part of the port development plan.

On Oct. 1, the Consortium through its director Mr. Melecio Go, offered to work on the reclamation between Pier 2 and Timber Per. Extra work for a price amounting to Php 36 million. Defendant PPA, through Asst. General Manager Mr. Landicho, denied plaintiffs proposal and made a counter-offer lowering the Php 36M to Php 30M, but approval of such is subject to the approval of higher authority.

On Aug 26, PPA General Manager Mr. Rogelio Dayan sent the approved Notice of Award for Php 30M Supplemental Agreement with several conditions:

- Fendering of Pier No. 2 Port of San Fernando and the Port of Tobacco is completed before approval of the reclamation contract.

- Acceptance by the contractor that mobilization/demobilization cost shall not be included in the contract and that escalation shall be reckoned upon approval of the Supplemental Agreement.

The purpose of awarding the contract as a supplemental project was to save on mobilization costs.

On September 9, the PPA board advised the management to have the reclamation project for bidding, which rejected the proposal, "since there is no strong legal basis to award the supplemental contract through negotiation." The terms of the original contract, which was for construction of Pier 2, cannot be compared with a totally different project, which was the reclamation project.

Apparently, the rejection of the supplemental agreement was not properly communicated to the consortium. Through Mr. Go, the consortium sent a letter requesting a review of the agreement but no reply was received from the defendant.

June 30, the consortium filed a complaint for specific performance against the PPA for unjust refusal of the Supplemental Agreement. They claim that such refusal lead to the delay of their other projects and prayed for a reconsideration of the Aug 9 decision. They allocated resources and man power in accordance with the Notice of Award approved by PPAs general manager. They also claim that because of the late notice of the bidding, they were not able to join the bidding for lack of a permit. Their other companies have undertaken projects similar to what is specified in the Supplemental Agreement.

Defendant PPA, through the OGCC, filed its answer with Compulsory Counterclaim contending that the Notice of Award was revoked when the board rejected such proposal. The consortium's cannot hold defendant PPA

liable for their lack of a permit to bid for the project. And their act of allocating men and resources for the reclamation project was due to them "jumping the gun" prior to the PPA's approval.

The trial court sided with the plaintiff, claiming that the higher authority referred to in the counter-offer refers to the approval of the General Manager, Mr. Dayan, was deemed sufficient enough to perfect the contract based on PD 857, amending PD 505 which created the PPA. CA sided with the trial court, but later on reversed its decision claiming that the authority of the General Manager to sign contracts is overpowered by the PPA Board's power to enter into contracts. The CA held that the Notice of Award signed by the General Manager was only a part of the contract, not an acceptance thereof.

Hence this petition.

Issues:

1. W/N the Notice of Award has perfected the contract between the consortium and the PPA.

2. W/N the general manager of PPA is vested with the authority to enter into a contract for and on behalf of PPA.

Held/Ratio:

1. NO. The higher authority contemplated is the PPA's board.

The Notice of Award signed by the general manager was a mere supporting document, not an evidence of perfection. EO 380 is clear when it stated that approval of entering into contracts with GOCCs requires the governing board's approval.

Since the contract between the Consortium and the General Manager lacked an important requisite to perfect contracts, which is the consent from the board of PPA. 2. NO. The doctrine of apparent authority invoked by the petitioners is misplaced, because this doctrine is intended only to mean that the government is NOT bound by unauthorized acts of its agents, even though within the apparent scope of their authority. Furthermore, Sec. 51 of the Revised Administrative Code states that "contracts in behalf of the political subdivisions and corporate agencies shall be approved by their respective boards." The indicators of apparent authority is seen through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. It requires presentation of evidence of similar act(s) executed either in its favor or in favor of other parties. Not a single act of respondent PPA, acting through its Board of Directors, was cited as having clothed its general manager with apparent authority to execute the contracts with petitioner.

Banate v. PCRB (2010) (Cross collateral stipulation / apparent authority) Doctrine:

The existence of apparent authority may be ascertained through: a) The general manner in which the corporation holds out an officer or agent as having the power to act. b) The acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, within or

beyond the scope of his ordinary powers. . The principals liability, however, is limited only to third persons who have been led reasonably to believe by the

conduct of the principal that such actual authority exists, although none was given. In other words, apparent authority is determined only by the acts of the principal and not by the acts of the agent. The present case failed to show the manner by which PCRB, as supposed principal, has "clothed" or "held out" its branch manager as having the power to enter into an agreement, as claimed by petitioners.

Facts:

On July 1997, Spouses Rosendo Maglasang and Patrocinia Monilar (Spouses Maglasang) obtained from PCRB a loan (subject loan) worth P1,070,000.00. The loan was evidenced by a promissory note payable on January 1998 and secured by a real estate mortgage over the spouses property (subject properties), including the house constructed thereon which is also owned by spouses Melgrid and Bonifacio Cortel, the spouses Maglasangs daughter and son-in-law, respectively. Aside from the abovementioned loan, the spouses Maglasang obtained two other loans from PCRB which were evidenced by separate promissory notes and secured by mortgages on their other properties.

Sometime in November 1997, the spouses Maglasang asked PCRBs permission to sell the subject properties. They likewise requested that the subject properties be released from mortgage since the two other loans were adequately secured by the other mortgages. Mondigo, PCRB branch manager, verbally agreed to their requested but required first the full payment of the subject loan. The spouses Maglasang and Cortel thereafter sold to Banate the subject properties for P1,750,000.00 and such amount was used to settle the subject loan. Banate was able to secure a title in her name, however, the title still carried the mortgage lien in favor of PCRB. Banate, along with spouses Maglasang and Cortel requested from PCRB a deed of release of mortgage but PCRB refused to comply. PCRB invoked the cross collateral stipulation in the mortgage deed which states that:

That as security for the payment of the loan or advance in principal sum of one million seventy thousand pesos only (P1,070,000.00) and such other loans or advances already obtained, or still to be obtained by the MORTGAGOR(s) as MAKER(s), CO-MAKER(s) or GUARANTOR(s) from the MORTGAGEE plus interest at the rate of _____ per annum and penalty and litigation charges payable on the dates mentioned in the corresponding promissory notes, the MORTGAGOR(s) hereby transfer(s) and convey(s) to MORTGAGEE by way of first mortgage the parcel(s) of land described hereunder, together with the improvements now existing for which may hereafter be made thereon, of which MORTGAGOR(s) represent(s) and warrant(s) that MORTGAGOR(s) is/are the absolute owner(s) and that the same is/are free from all liens and encumbrances;

PCRB claims that full payment of the 3 loans obtained from the bank must be fulfilled before the subject properties may be released from mortgage. The settlement of the subject loan merely constituted partial payment of the total obligation. On the other hand, petitioners claim that the contract was novated by the subsequent agreement with Mondigo that upon full payment of the subject loan, subject properties may be released from mortgage.

Issue:

1. W/N Mondigos verbal agreement to the petitioners request novated the mortgage contract.

Held:

1. NO.

Section 23 of the Corporation Code states that the powers of all corporations shall be exercised by the board of directors. In the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation. However, the board of directors may validly delegate some of its functions and powers to its officers, committees or agents. The authority of a corporate officer or agent in dealing with third persons may be actual or apparent. Actual authority is either express or implied. The extent of an agents express

authority is to be measured by the power delegated to him by the corporation, while the extent of his implied authority is measured by his prior acts which have been ratified or approved, or their benefits accepted by his principal. The doctrine of apparent authority on the other hand, with special reference to banks, had long been recognized in this jurisdiction. The existence of apparent authority may be ascertained through:

a) The general manner in which the corporation holds out an officer or agent as having the power to act. b) The acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof,

within or beyond the scope of his ordinary powers.

The petitioners, in failing to prove that Mondigo had actual authority to novate the mortgage contract, base their claim on Mondigos apparent authority. The petitioners claim is misplaced.

Under the doctrine of apparent authority, acts and contracts of the agent, as are within the apparent scope of the authority conferred on him, although no actual authority to do such acts or to make such contracts has been conferred, bind the principal. The principals liability, however, is limited only to third persons who have been led reasonably to believe by the conduct of the principal that such actual authority exists, although none was given. In other words, apparent authority is determined only by the acts of the principal and not by the acts of the agent. The present case failed to show the manner by which PCRB, as supposed principal, has "clothed" or "held out" its branch manager as having the power to enter into an agreement, as claimed by petitioners. Neither was there any allegation, much less proof, that PCRB ratified Mondigos act or is estopped to make a contrary claim. Being a mere branch manager alone is insufficient to support the conclusion that Mondigo has been clothed with "apparent authority" to verbally alter terms of written contracts. Also, it is a settled rule that persons dealing with an agent 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 the agents authority, and in case either is controverted, the burden of proof is upon them to establish it.

Being that Mondigo did not have the authority to bind PCRB, then novation cannot take place. The requisites of novation are: (1) a previous valid obligation; (2) an agreement of all parties concerned to a new contract; (3) the extinguishment of the old obligation; and (4) the birth of a valid new obligation. The second requisite is lacking in this case because the consent of both parties was never obtained.

Manila Remnant Co v. CA (garnishment)

(Disclaimer: Im not sure how this is related to Agency since its mainly about Garnishment but its in the syllabus and theres a supposed doctrine included.)

Doctrine:

Even when the agent of the real estate company acts unlawfully and outside the scope of authority, the principal can be held liable when by its own act it accepts without protest the proceeds of the sale of the agents which came from double sales of the same lots, as when learning of the misdeed. It failed to take necessary steps to protect the buyers and failed to prevent further wrong from being committed when it did not advertise the revocation of the authority of the culprit agent. In such case, the liabilities of both principal and the agent is solidary.

Facts:

Manila Remnant Co, Inc.(MRCI) owned parcels of land in Quezon City which became the subject of its agreement with A.U. Valencia and Co., Inc., (AUVCI) by virtue of which the latter was to act as the petitioner's agent in the development and sale of the property. For a stipulated fee, AUVCI was to convert the lands into a subdivision, manage the sale of the lots, execute contracts and issue official receipts to the lot buyers. At the time of the agreement, the president of both MRCI and AUVCI was Valencia.

AUVCI executed two contracts to sell in favor of spouses Oscar C. Ventanilla and Carmen Gloria Diaz for the combined contract price of P66,571.00. Without the knowledge of the Ventanilla couple, Valencia, as president of MRCI, resold the same parcels to Carlos Crisostomo, one of his sales agents, without any consideration. Upon orders of Valencia, the monthly payments of the Ventanillas were remitted to the MRCI as payments of Crisostomo, for which receipts were issued in his name. The receipts were kept by Valencia without the knowledge of the Ventanillas and Crisostomo. The Ventanillas continued paying their monthly installment.

MRCI informed AUVCI that it was terminating their agreement because of discrepancies discovered in the latter's collections and remittances and removed Valencia as MRCI president. The Ventanilla spouses, having learned of the supposed sale of their lots to Crisostomo, commenced an action for specific performance, annulment of deeds, and damages against Manila Remnant Co., Inc., A.U. Valencia and Co., Inc., and Carlos Crisostomo.

The trial court rendered a decision declaring the contracts to sell in favor of the Ventanillas valid and subsisting, and annulling the contract to sell in favor of Crisostomo and ordered the MRCI to execute an absolute deed of sale in favor of the Ventanillas, free from all liens and encumbrances. MRCI, AUVCI, and Crisostomo were held solidarily liable for damages amounting to P210,000.

MRCI alleged that the subject properties could not be delivered to the Ventanillas because they had already been sold to Samuel Marquez on February 7, 1990, while their petition was pending in this Court. Nevertheless, MRCI offered to reimburse the amount paid by the respondents.

The Ventanillas accepted the amount of P210,000.00 as damages and attorney's fees but opposed the reimbursement offered by MRCI in lieu of the execution of the absolute deed of sale. They contended that the alleged sale to Marquez was void, fraudulent, and in contempt of court and that no claim of ownership over the properties in question had ever been made by Marquez..

While the petitioners have readily complied with the order of the trial court for the payment of damages to the Ventanillas, they have, however, refused to execute the absolute deed of sale. It was for the purpose of ensuring their compliance with this portion of the judgment that the trial court issued the garnishment order which by its term could be lifted only upon the filling of a cash bond of P500,000.00.

Issue:

1. W/N the Trial Court and the Court of Appeals committed reversible errors to the prejudice of MRCI?

2. W/N the trial court gravely abused its discretion when it arbitrarily fixed the amount of the cash bond for the lifting of the garnishment order at P500,000.

Held:

1. NO. No legal impediment exists to the execution, either by the petitioner or the trial court, of an absolute deed of sale of the subject property in favor of the respondent Ventanillas.

Garnishment is a species of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation. It is an attachment by means of which the plaintiff seeks to subject to his claim property of the defendant in the hands of a third person or money owed by such third person or garnishee to the defendant. As the main obligation of the petitioner is to execute the absolute deed of sale in favor of the Ventanillas, its unjustified refusal to do so warranted the issuance of the garnishment order. Partial execution of the judgment is not included in the above enumeration of the legal grounds for the discharge of a garnishment order. Neither does the petitioner's willingness to reimburse render the garnishment order unnecessary.

2. NO. The lower court did not abuse its discretion when it required the posting of a P500,000.00 cash bond for the lifting of the garnishment order. As correctly pointed out by the respondent court, that amount corresponds to the current fair market value of the property in litigation and was a reasonable basis for determining the amount of the counterbond.

Litonjua v. Eternit (2006) (See compilation 1) Yu Kwuan Byung v. PAGCOR (2009) (Junket Agreement) Doctrines:

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, 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.

Facts:

The Korean-based ABS Corporation was one of the international groups that availed of PAGCORs Foreign Highroller Marketing Program. In a letter-agreement dated 25 April 1996 (Junket Agreement), ABS Corporation agreed to bring in foreign players to play at the five designated gaming tables of the Casino Filipino Silahis at the Grand Boulevard Hotel in Manila (Casino Filipino). The relevant stipulations of the Junket Agreement state:

1. PAGCOR will provide ABS Corporation with separate junket chips. The junket chips will be distinguished from the chips being used by other players in the gaming tables.

ABS Corporation will distribute these junket chips to its players and at the end of the playing period, ABS Corporation will collect the junket chips from its players and make an accounting to the casino treasury.

2. ABS Corporation will assume sole responsibility to pay the winnings of its foreign players and settle the collectibles from losing players.

Petitioner, a Korean national, alleges that from November 1996 to March 1997, he came to the Philippines four times to play for high stakes at the Casino Filipino. Petitioner claims 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. Petitioner sues for the sum of money.

In its essence, PAGCOR claims that the petitioner is dealing, not with them, but with ABS. Thus, PAGCOR should not be held liable as according to their agreement. In addition, PAGCOR posted a notice that ABS will solely be liable for the playing chips used gaming rooms occupied exclusively by ABS clients.

Trail Court dismisses complaint of the petitioner. On appeal, one of the contentions of the petitioner is that there is an implied agency between PAGCOR and ABS. Court of Appeals said it was never PAGCORs intention to deal with the junket players. Neither did PAGCOR intend ABS Corporation to represent PAGCOR in dealing with the junket players. Thus, there can be no implied agency between PAGCOR and ABS.

Issues:

1. Was there an implied agency between PAGCOR and ABS.

Held/Ratio:

1. No. 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, 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.

The players brought in by ABS Corporation were covered by a different set of rules in acquiring and encashing chips. The players used a different kind of chip than what was used in the regular gaming areas of PAGCOR, and that such junket players played specifically only in the third floor area and did not mingle with the regular patrons of PAGCOR. Furthermore, PAGCOR, in posting notices stating that the players are playing under special rules, exercised the necessary precaution to warn the gaming public that no agency relationship exists.

Manotok Brothers v. CA (1993) (authority expired / efficient procuring cause) Doctrines:

When there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission.

Efficient procuring cause: when there is a close proximate and causal connection between the efforts and labor of the agent and the principals sale of property.

Facts:

Manotok Brothers Inc is the owner of a certain parcel of land and building which were formerly leased by the City of Manila and used by the Claro M. Recto High School. Manotok Brothers authorized Salvador Saligumba to negotiate with the City of Manila the sale of the aforementioned property for not less than P425,000.00. 5% commission would be paid to him in the event the sale is finally consummated and paid. Manotok executed a 2nd and 3rd letter, each for 120 days, extending the authority of Saligumba. Finally, the 4th letter dated November 16, 1967, ManotoK with Rufino Manotok, its President, as signatory, authorized Saligumba to finalize and consummate the sale of the property to the City of Manila for not less than P410,000.00. With this letter came another extension of 180 days.

The Municipal Board of the City of Manila, on April 26, 1968, passed Ordinance No. 6603, appropriating the sum of P410,816.00 for the purchase of the aforementioned property. Said ordinance however, was signed by the City Mayor only on May 17, 1968, 183 days after the last letter of authorization. On January 14, 1969, the parties signed the deed of sale.

Saligumba never received any commission (should have been P20,540.00). He filed a complaint against Manotok Brothers, alleging that he had successfully negotiated the sale of the property. He claimed that it was because of his efforts that the Municipal Board of Manila passed Ordinance No. 6603 which appropriated the sum for the payment of the property subject of the sale.

Manotok Borthers claimed (1) a broker is only entitled to a commission if the sale was consummated and the price paid within the period given in the respective letters of authority; and (2) that Filomeno E. Huelgas, the PTA president of the Claro M. Recto High School was responsible for the negotiation and consummation of the sale.

Issues:

1. W/N Saligumba is entitled to the five percent (5%) agent's commission.

Held/Ratio:

1. YES, Saligumba is entitled to the 5% agents commission because it was through his efforts that a purchase actually materialized between the parties.

It would seem that Saligumba is not entitled to any commission because when the Deed of Sale was finally executed, his extended authority had already expired. Going deeper however into the case would reveal that it is within the coverage of the exception rather than of the general rule.

In an earlier case, this Court ruled that when there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission. We agree that the City of Manila ultimately became the purchaser of petitioner's property mainly through the efforts of Saligumba. Without discounting the fact that when Municipal Ordinance No. 6603 was signed by the City Mayor on May 17, 1968, Saligumbas authority had already expired, it is to be noted that the ordinance was approved on April 26, 1968 when Saligumbas authorization was still in force. Moreover, the approval by the City Mayor came only 3 days after the expiration of Saligumbas authority. It is also worth emphasizing that from the records, the only party given a written authority by Manotok Brothers Inc. to negotiate the sale from July 5, 1966 to May 14, 1968 was Saligumba.

In the case at bar, private respondent is the efficient procuring cause for without his efforts, the municipality would not have anything to pass and the Mayor would not have anything to approve.

Note: Although Filomeno Huelgas followed up the matter with Councilor Magsalin (author of Ordinance) and Mayor Villegas, his intervention regarding the purchase came only after the ordinance had already been passed when the buyer has already agreed to the purchase and to the price for which said property is to be paid.

Hahn v. CA (1997) (See compilation 1) Dominion Insurance v. CA (2002) (See compilation 2) Albaladejo Y Cia., S en C. v. The Philippine Refining Co. (as successor to the Visayan Refining Co.) (1923) (copra + not agency) Doctrines:

1. Art 1913: The principal must also indemnify the agent for all the damages which the executive of the agency may have caused the latter, without fault or negligence on his part.

2. When the purchase by one company from another is by way of a contract of purchase rather than an agency to purchase, the former is not liable to reimburse the latter for expenses incurred by the latter.

Facts:

Albaladejo Y Cia is a limited partnership organized under Philippine laws for the purpose of buying and selling Copra. They operate in Legazpi, Albay. Respondent Philippine Refining Co. is the successor of The Visayan Refining Co., a business in Cebu, engaged in the manufacture of coconut oil, for which copra products are needed. In 1918, The Visayan contracted with Albaladejo to buy all the copra products which the latter would purchase from all over Albay, for a period of one year. The Visayan would provide transportation from Albay to Cebu. The parties were happy with the arrangement and they allowed the same terms to govern their transactions until 1920, when the Visayan closed down its factory and withdrew from the copra market. Over the next 8-10 months, the two companies liquidated their accounts. Petitioner showed no sign of dissatisfaction against respondent during this time. However, 6 weeks later petitioner instituted the present action in the Trial Court.

Petitioner relied on two causes of action, the first is that it suffered considerable damages when the Visayan, allegedly, failed to send the ships which will carry the copra to Cebu on time, pursuant to its contract. Petitioner alleges that the Visayan was negligent and due to their delay, the copras suffered shrinkages which diminished its value (value of the copra was determined by weight). On this first cause of action, the trial court decided in favor of Philippine Refining Co.

(Agency Issue) The second cause of action was based on the fact that petitioner, during the subsistence of the contract, expanded its organization and created offices and sub-agencies all over Albay. This was done in view of future purchases to be made by Visayan. However, as stated above, Visayan closed down. Petitioner alleged that the expansion was maintained and extended at the express request of Visayan, coupled with constant reassurances that the defendant would soon get back to the business of buying copra. Petitioner seeks to recover 110,00 Php from the defendant the amount allegedly spent for the expansion and its maintenance. The trial court rendered a decision in favor of the petitioners but awarded only 49, 626 on the basis that the Visayan constituted only 30% of Albaladejos business.

Both parties appealed the decisions on both causes of action. Hence this petition.

In their appellants brief, petitioners argued that the contract created a principal-agent relationship between them and the respondents and that pursuant to article 1729 of the civil code (now 1913) the principal should be liable for damages incurred by the agent in the execution of the agency.

Issues:

1. W/N there was negligence on the part of The Visayan in sending ships to transport the copra products and therefore W/N they should pay for the shrinkage.

2. W/N The Visayan should be liable for damages on account of the petitioner companys expansion. 3. W/N the contract created an agent-principal relationship between the petitioner and respondent.

Held:

1. NO. The Visayan was not negligent. Firstly, the delays were caused by violent weather and the inability to dispatch boats to more remote ports. The SC agreed with the Trial Court that these do not constitute negligence. Secondly, the shrinkage suffered by the copra products was average/normal at 8.187 per centum, this fact goes to show that there was really no undue delay. Thirdly, their contract specified that the shrinkage, before it reaches The Visayan in Cebu, should be shouldered by the petitioner, showing the intention of the parties that the price to be paid by the Visayan should depend on the weight of the copra upon arrival in Cebu.

AGENCY ISSUES:

2. NO. Pursuant to Par. 4 of their contract, the defendant should keep Albaladejo advised regarding the current market rates of copra in Cebu. For this reason, the Visayan, through its GM, sent trade letters to Albaladejo. In considering these letters, the SC held that nothing that is contained therein indicated that Visayan mandated the expansion of Albaladejo. At most, what the letters contained were mere hopes that the Visayan would reopen and purchase copras extensively. The fact that the General Manager stated that if the various purchasing agents of the Visayan would continue to open their agencies they would endeavor to see that the agents would not lose their transactions is not sufficient to bind the Visayan to pay for the expansion.

3. NO. It is true that Visayan made Albaladejo one of its instruments in buying copra, but a perusal of the agreement shows that when Albaladejo bought copras all over Albay, it is buying on its own account and not on behalf of the Visayan. The sale to Visayan was, in effect, a second sale. Moreover, even though the contract and the letters constantly use the word agent when referring to Albaladejo, the nature of the agreement does not support the existence of an agency in its legal sense. The mere use of the word agent does not make the contract one of agency. The word agent was used merely for convenience. The contract is one of sale and not of agency. Art 1729 (1913) would not apply.

De Castro v. CA & Artigo (2002) (EDSA property, 5% commission) Doctrine:

Art. 1915 provides that if 2 or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for the consequences of agency.

The solidarity arises from the common interest of the principals, and not from the act of constituting the agency. By virtue of this solidarity, the agent can recover from any principal the whole compensation and indemnity owing to him by the others.

Facts:

Petitoners Constante and Corazon De Castro (with 2 other co-owners not made parties to the suit) were co-owners of 4 parcels of land in EDSA corner New York Cubao, which they undertook to sell through their private respondent Artigo (for a 5% commission of the total selling price as agents fee).

This is to state that Mr. Artigo is authorized as our real estate broker in connection with the sale or our property in EDSA. Asking price: 23 million with 5% commission as agents fee C. de Castro owner and representing co-owners

This authority is on a first come first serve basis

2 parcels of the respective property were sold to Times Transit at the price of 7,050,000php through the brokerage of Artigo. Artigo was subsequently paid by De Castro only 48, 893.76php while he was, under the above agreement, entitled to 353,500php (5% of selling price. He brings this suit to collect the unpaid balance of his commission. The De Castros contend that Artigo had already been given his proportionate share and that he was only one among other agents also entitled to a proportionate share.

Issues:

1. W/N dismissal is proper for not impleading the other co-owners

2. W/N artigos claim has been extinguished by full payment, waiver or abandonment

Held:

1. No. Constante De Castro signed as owner and as representative of other owners. The de Castros admit that other co-owners are solidarily liable under the above contract of agency. Art. 1915 provides that if 2 or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for the consequences of agency. 2. No. it was proved that the other agents the de Castros were referring to were agents of Times Transit. The fact that other agents intervened cannot vary the terms of the contract of agency granting Artigo 5% commission. He is not estopped from claiming the balance as the mere receipt of partial payment is not equivalent to the required acceptance of performance as would extinguish the whole obligation under article 1235 (when obligee accepts performance, knowing its incompleteness or irregularity, and without protest, the obligation is deemed complied with).

Garcia vs. de Manzano (1919) (GPA to both his son and wife) Doctrines:

The appointment of a new agent for the same business produces revocation of the previous agency from the day on which notice was given to the former agent, excepting the provisions of the next preceding article.

Facts:

Narciso Manzano was a Filipino merchant who went to Spain in May 1910 and died there on 08 September 1913. He gave a general power of attorney to his son, Angel Manzano and a second general power of attorney to

his wife, Josefa Samson Narciso was a partner of Ocejo, Perez & Co.(OPC) in running a small steamer. When the period expired, OPC

refused to continue the contract and demanded that Narciso buy or sell. Angel, by virtue of the GPA from his father:

o sold the other half of the boat to Garcia (registered in his son's name since he was a Spaniard and cannot register the same at the Custom House)

o Executed a contract of loan where Garcia agreed to lend Narciso P12,000.00. This was secured by a mortgage over 3 parcels of land (registration though was refused by registrar)

Josefa was assigned as the administratix of the property of Narciso. CFI then ordered the partition of Narciso's property among his heirs.

Garcia filed his action to foreclose the so-called mortgage. Josefa stated that the estate had already been divided to Narciso's heirs.

Josefa alleged that: o The GPA given to Josefa revoked the one given to Angel o Garcia took advantage of the youth and inexperience of Angel to falsely and maliciously make him

believe that he had the authority under the GPA to sell the interest of his father. CFI: judgment against Josefa Samson only

Issues:

1. W/N the GPA to Josefa revoked the GPA of Angel 2. W/N the GPA authorized the sale by Angel of the half interest in the steamer to Garcia

Held/Ratio:

1. NO. According to Article 1753, the appointment of a new agent for the same business produces revocation of the previous agency from the day on which notice was given to the former agent, excepting the provisions of the next preceding article.

Defendants failed to prove that notice of the subsequent GPA was given to Angel. He did not know of the GPA given to his mother.

Thus, it must be considered to prove that he was acting under a valid GPA when he sold the half interest in the steamer.

2. YES. The GPA given to Angel is general and complete, terms of which authorize the sale, buying and mortgaging of real property and the borrowing of money.

Although it does not state that the agent may sell the steamer, since it is so full and complete as to authorize sale of real property, it must necessarily carry with it the right to sell the half interest.

The record further shows the sale was necessary in order to get money or a credit without it would be impossible to continue the business which was being conducted in the name of Narciso and for his benefit.

CMS Logging vs. Court of Appeals (1992) (Alleged separate commissions for logs) Doctrines:

The principal may revoke a contract of agency at will, and such revocation may be express or implied, and may be availed of even if the period fixed in the contract of agency has not yet expired.

Damages are generally not awarded to the agent for the revocation of the agency, except if the revocation was done precisely to avoid payment of the agents commission.

Facts:

On August 28, 1957, CMS Logging and private respondent Dr. Aguinaldo Corporation (DRACOR), entered into a contract of agency for a period of five years, in which DRACOR is appointed as CMSs exclusive export and sales agent for all logs CMS may produce. Pertinent to the case at bar is the following provision of their contract:

xxx xxx xxx

9. It is expressly agreed by the parties hereto that DRACOR shall receive five (5%) per cent commission of the gross sales of logs of SISON (herein petitioner CMS) based on F.O.B. invoice value which commission shall be deducted from the proceeds of any and/or all moneys received by DRACOR for and in behalf and for the account of SISON;

CMS was able to sell thru DRACOR a total of 77, 264, 672 board feet of logs. Then, about six months prior to the expiration of the agreement, CMS President Atty. Carlos Moran Sison and legal counsel Atty. Teodoro Dominguez , while on a trip to Tokyo discovered that DRACOR used Shinko Trading as agent, representative and liaison officer in selling CMSs logs in Japan, for which Shinko earned $1.00 per 1,000 board feet from the buyer of the logs. Under this arrangement, Shinko earned a total of $77, 264.77.

CMS claimed that this commission paid to Shinko was in violation of the agreement and that it (CMS) is entitled to this amount as part of the proceeds of the sale of the logs. CMS contended that since DRACOR had been paid the 5% commission under the agreement, it is no longer entitled to the additional commission paid to Shinko as this tantamount to DRACOR receiving double compensation for the services it rendered. After this discovery, CMS sold and shipped logs valued at $739,321.13 or P2,883,351.90, directly to several firms in Japan without the aid or intervention of DRACOR.

CMS then sued DRACOR for the commission received by Shinko and damages. DRACOR in turn counterclaimed for its commission amounting to 144, 679.59 pesos. The trial court dismissed the complaint of CMS, explaining that it received no evidence that Shinko did receive the disputed amount by way of commission from DRACOR. The CA also affirmed the dismissal in a 3-2 decision, saying that the trial court could not have made a categorical finding that Shinko did receive commission for sale of CMSs logs in Japan. Aggrieved, CMS filed the present petition.

Issues:

1. W/N Shinko Trading did receive the disputed amount for commission. 2. W/N DRACOR was still entitled to its commission from CMS. 3. W/N DRACOR committed acts of fraud and bad faith against CMS.

Held/Ratio:

1. NO. The SC explained that while it was undisputed that DRACOR enlisted the services of Shinko as its agent, representative and liaison officer in Japan, there was no evidence that clearly established the fact that the said amounts received by Shinko were from the sale of CMSs logs to various firms in Japan. The testimony of Atty Teodoro Dominguez failed to establish the receipt of those amounts by Shinko, as it was hearsay. A certain letter

from Mr. K. Shibata of Tokyo Menka Kaisha (one of the companies Shinko sold the logs to) nor Mr. K. Shibata himself was not presented in court to establish the contested fact about the commissions. The SC also took note the conclusion reached by the CA that even if it was shown that Shinko did in fact receive the commissions in question, CMS is not entitled thereto since these were apparently paid by the buyers to Shinko for arranging the sale. This is therefore not part of the gross sales of CMS's logs.

2. NO. In the case at bar, CMS appointed DRACOR as its agent for the sale of its logs to Japanese firms. Yet, during the existence of the contract of agency, DRACOR admitted that CMS sold its logs directly to several Japanese firms. This act constituted an implied revocation of the contract of agency under Article 19241 of the Civil Code. Since the contract of agency was revoked by CMS when it sold its logs to Japanese firms without the intervention of DRACOR, the latter is no longer entitled to its commission from the proceeds of such sale and is not entitled to retain whatever moneys it may have received as its commission for said transactions. Neither would DRACOR be entitled to collect damages from CMS, since damages are generally not awarded to the agent for the revocation of the agency, and the case at bar is not one falling under the exception mentioned, which is to evade the payment of the agent's commission.

3. NO. Like the matter on the alleged commissions received by Shinko, CMS failed to clearly establish evidence regarding this matter.

1 Art. 1294 - The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.

Dy Buncio & Co. vs. Ong Guan Can (1934) (rice-mill case) Doctrines:

Art. 1926- General power of Attorney is revoked by a special one granted to another agent as regards the special matter involved in the later

A special power of attorney giving the son the authority to sell the principals properties is deemed revoked by a subsequent general power of attorney that does not give such power to the son, and any sale effected thereafter by the son in the name of the father would be void.

Facts:

On July 31, 1931, Ong Guan Can Jr. as agent of Ong Guan Can, the proprietor of the commercial firm of Ong Guan Can & Sons, sells the rice mill and camarin situated at Dao, Province of Capiz for P 13,000 and gives as his authority the power of attorney dated May 23, 1928, a copy of this public instrument being attached to the deed and recorded with the deed in the office of the register of deeds in Capiz. The receipt of the money acknowledged in the deed was to the agent and was signed by the agent in his own name and without any words indicating he was signing it for the principal.

Dy Buncio & Company as the judgement creditor of Ong Guan Can claims that the properties in question still belongs to the latter alleging that the sale executed on July 31, 1931 is void for not being in accordance with the limited power given to Ong Guan Can Jr. Being a limited power of attorney and not a general one, it does not give him the express power to alienate the properties in question.

Defendants Juan Tong and Pua Giok Eng as owner and lessee of the owner by a virtue of the deed executed by Ong Guan Can Jr. on July 31, 1931 claims that the said defect in the power of attorney is cured by Exhibit 1 (no description) which purports to be a general power of attorney given to the same agent in 1920.

The trial court of First Instance of Capiz held that the deed was invalid and that the property was subject to the execution of the judgement creditor hence, this petition.

Issues:

1. W/N the deed is valid Held/Ratio: 1. NO

The Civil Code is silent over the partial termination of an agency. The making and accepting of a new power of attorney, whether it enlarges or decreases the power of the agent under a prior power of attorney, must be held to supplant and revoke the latter when the two are inconsistent. If the new appointment with limited powers does not revoke the general power of attorney, the execution of the second power of attorney would be a mere futile gesture.

Republic vs. Evangelista (2005) (treasure hunt in bulacan) Doctrines:

An exception to the revocability of a contract of agency is when it is coupled with interest such as in a bilateral contractwhich depends upon the agency. The reason for its irrevocability is because the agency becomes part of another obligation or agreement. It is not solely the rights of the principal but also that of the agent and the thirds persons which are affected. Hence, the law provides that in such cases, the agency cannot be revoked at the sole will of the principal.

Art. 1868 of the Civil Code provides that by the contract of agency, an agent binds himself to render some service or do something in representation or on behalf of another, known as the principal, with the consent or authority of the latter

Facts:

Legaspi is the owner of a land located in Bigte, Norzagaray, Bulacan. In November 1999, Petitioner Calimlim, representing the Republic of the Philippines, and as then head of the Intelligence Service of the Armed Forces of the Philippines and the Presidential Security Group, entered into a Memorandum of Agreement (MOA) with one named Ciriaco Reyes. The MOA granted Reyes a permit to hunt for treasure in a land in Bigte, Norzagaray, Bulacan.

It was alleged that, Reyes, together with the Petitioners, started, digging, tunneling and blasting works on the said land of Legaspi. The complaint also alleged that petitioner Calimlim assigned about 80 military personnel to guard the area and encamp thereon to intimidate Legaspi and other occupants of the area from going near the subject land.

On February 15, 2000, Legaspi executed a special power of attorney (SPA) appointing his nephew, private respondent Gutierrez, as his attorney-in-fact. Gutierrez was given the power to deal with the treasure hunting activities on Legaspi's land and to file charges against those who may enter it without the latter's authority. Legaspi agreed to give Gutierrez 40% of the treasure that may be found in the land.

On February 29, 2000, Gutierrez filed a case for damages and injunction against petitioners for illegally entering Legaspis land. He hired the legal services of Atty. Homobono Adaza. Their contract provided that as legal fees, Atty. Adaza shall be entitled to 30% of Legaspis share in whatever treasure may be found in the land. In addition, Gutierrez agreed to pay Atty. Adaza P5,000.00 as appearance fee per court hearing and defray all expenses for the cost of the litigation

On March 14, 2000, Petitioners filed a Motion to dismiss contending first that there is no real party-in-interest as the SPA of Gutierrez to bring the suit was already revoked by Legaspi on March 7, 2000, as evidenced by a Deed of Revocation, second Gutierrez failed to establish that the armed men was acting under the orders of the petitioners and third that the respondent judge on the ground of alleged partiality favored the private respondent.

Issues:

1. W/N the contract of agency between Legaspi and Gutierrez has been effectively revoked by Legaspi Held/Ratio:

1. NO. Gutierrezs unilateral revocation last March 7 is invalid as his agency is coupled with interest. Art. 1868 of the Civil Code provides that by the contract of agency, an agent binds himself to render some service or do something in representation or on behalf of another, known as the principal, with the consent or authority of the latter. A contract of agency is generally revocable as it is a personal contract of representation based on trust and confidence reposed by the principal on his agent. As the power of the agent to act depends on the will and license of the principal he represents, the power of the agent ceases when the will or permission is withdrawn by the principal. Thus, generally, the agency may be revoked by the principal at will. However, an exception to the revocability of a contract of agency is when it is coupled with interest, i.e., if a bilateral contract depends upon the agency. The reason for its irrevocabili