agency cases reviewer

7/29/2019 agency cases reviewer

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AGENCY // Prof. D. Sanchez // Block B 2015

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Rallos v. Felix Go Chan SUMMARY: This is a case of an attorney-in-fact, Simeon Rallos, who after of his death of his principal,Concepcion Rallos, sold the latter's undivided share in a parcel of land pursuant to a power of attorney which theprincipal had executed in favor. The administrator of the estate of Concepcion went to court to have the saledeclared uneanforceable and to recover the disposed share. The trial court granted the relief prayed for, andnullified the sale with respect to the pro indiviso share of Concepcion is concerned, but upon appeal the Courtof Appeals uphold the validity of the sale and the complaint. SC reversed CA ruling and reinstate that of the trial

court. The agency was extinguished by operation of law by the death of the principal and this case does not fallunder the exceptions.

DOCTRINE: General Rule: Agency is extinguished by the death of the principalException:

ART. 1930. The agency shall remain in full force and effect even after the death of the principal, if it hasbeen constituted in the common interest of the latter and of the agent, or in the interest of a third personwho has accepted the stipulation in his favor.

ART. 1931. Anything done by the agent, without knowledge of the death of the principal or of any othercause which extinguishes the agency, is valid and shall be fully effective with respect to third personswho may have contracted with him in good faith.

Requisites: (1) that the agent acted without knowledge of the death of the principal and (2) thatthe third person who contracted with the agent himself acted in good faith. Good faith here means that the third person was not aware of the death of the principal at the time

he contracted with said agent.These two requisites must concur the absence of one will render the act of the agent invalid and unenforceable.

Orient Air Services v. CA SUMMARY: American Air and Orient Air entered into a General Sales Agency Agreement whereby the formerauthorized the latter to act as its exclusive general sales agent within the Philippines for the sale of airpassenger transportation. American Air sued Orient Air for having allegedly reneged on its obligations under theAgreement by failing to promptly remit the net profits of sales for several months. The trial court ruled in favorof Orient Air which CA affirmed. Both CFI and IAC ordered American Air to reinstate Orient Air as its generalsales agent for passenger transportation in the Philippines.

DOCTRINE: In an agent-principal relationship, the personality of the principal is extended through the facility ofthe agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts whichthe latter would have him do. Such a relationship can only be effected with the consent of the principal, whichmust not, in any way, be compelled by law or by any court.

Uy v. CA SUMMARY: Uy and Roxas are agents authorized by the owner to sell 8 parcels of land. They contracted withNational Housing Authority for the latter to buy the lands. NHA cancelled the sale of 3 out of 8 lands because ofa government report declaring the 3 lands unsuitable for housing projects. Uy and Roxas then filed suit fordamages against NHA. RTC ruled in favor of NHA, but awarded damages in favor of Uy and Roxas. CA dismissedthe case since Uy and Roxas were not the real parties-in-interest. SC affirmed CA.

DOCTRINE: Section 372 (2) of the Restatement of the Law on Agency (Second) states:


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(2) An agent does not have such an interest in a contract as to entitle him to maintain an action atlaw upon it in his own name merely because he is entilted to a portion of the proceeds ascompensation for making it or because he is liable for its breach.

Macke v. Camps SUMMARY: Flores, representing himself as agent of Camps ordered certain goods amounting to P351.50 fromMacke, Chandler and Co. He received the said goods at the place of business, Washington Caf. There was anunpaid balance of P177.50. Camps asserted that facts are not sufficient to establish the fact that he received the

goods for which payment is demanded. Testimony and Evidence of a written contract signed by Flores asmanaging agent was presented in court.

DOCTRINE: One who clothes another apparent authority as his agent, and holds him out to the public as such,can not be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent thirdparties dealing with such person in good faith and in the following presumptions or deductions, which the lawexpressly directs to be made from particular facts, are deemed conclusive:

(1)subsec. 1, sec. 333, Act no. 190"Whenever a party has, by his own declaration, act, or omission,intentionally and deliberately led another to believe a particular thing true, and to act upon such belief,he can not, in any litigation arising out such declaration, act, or omission, be permitted to falsify it andunless the contrary appears, the authority of an agent must be presumed to include all the necessary

and usual means of carrying his agency into effect.Prudential Bank v. CA SUMMARY: Aurora F. Cruz, with her sister as co-depositor, invested P200,000.00 in Central Bank bills with the

Prudential Bank. The transaction was evidenced by a Confirmation of Sale delivered to Cruz, together with aDebit Memo in the amount withdrawn and applied to the confirmed sale. These documents were issued by SusanQuimbo, an employee of the bank. Upon maturity of the placement, Cruz returned to the bank to renew herinvestment. Quimbo, who again attended to her, prepared a Credit Memo crediting the amount of P200,000.00in Cruz's savings account passbook. She also prepared a Debit Memo for the amount of P196,122.88 to coverthe re-investment of P200,000.00 minus the prepaid interest of P3,877.02.

Cruz was asked to sign a Withdrawal Slip for P196,122.98, representing the amount to be re-invested afterdeduction of the prepaid interest. Quimbo explained this was a new requirement of the bank. Several days later,Cruz received another Confirmation of Saleand a copy of the Debit Memo.

Cruz returned to the bank and sought to withdraw her P200,000.00She was informed that the investmentappeared to have been already withdrawn by her. There was no copy on file of the Confirmation of Sale and theDebit Memo allegedly issued to her by Quimbo. Quimbo herself was not available for questioning.

DOCTRINE: The liability of the principal for the acts of the agent is not even debatable. Qui per alium facit perseipsum facere videtur. "He who does a thing by an agent is considered as doing it himself." This is affi rmed inthe Civil Code through Articles 1910 and 1911.

The agent's apparent representation yields to the principal's true representation and the contract is considered


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as entered into between the principal and the third person.

A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of dealings ofthe officers in their representative capacity but not for acts outside the scope of their authority.

Litonjua, Jr. v. EternitCorp.

SUMMARY: EC, a corporation, owned 90% of the stocks of Belgian corporation ESAC. During the Marcos regime,ESAC became concerned about the political situation of the Philippines so it instructed EC to dispose of 8 parcels

of land. EC sought the services of a broker Marquez who found the buyers Litonjua. Negotiations were made viatelex, from the Marquezs offer to the buyers to the buyer and sellers counter-proposal. The buyers eventuallyaccepted the counter-proposal so the broker communicated this acceptance to an officer of EC who informed anofficer of ESAC. The buyers deposited the purchase price in a bank and drafted an escrow agreement.

However, when the political scene in the Philippines improved, ESAC decided to cancel the sale. Because of this,the Litonjuas demanded payment of damages. ESAC refused, hence, the suit by the Litonjuas.

The primary issue in this case is the authority of the broker, the officer of EC and the officer of ESAC to bind theowner of the property, ESAC. If they didnt have authority, then the Litonjuas have to bear their own damagesbecause of their negligent reliance on the representation of the officers. If it is proven that they acted with

authority, ESAC will be liable for its cancellation of the sale.

The SC ruled that said people did not have the authority to bind ESAC, absent any written authority orresolution by its ESACs Board of directors through which, the corporation acts.

DOCTRINE: While a corporation may appoint agents to negotiate for the sale of its real properties, the final saywill have to be with the board of directors authorized by a board resolution. An unauthorized act of an officer ofthe corporation is not binding on it unless the latter ratifies the same expressly or impliedly by its board ofdirectors. Any sale of real property of a corporation by a purported agent without written authority from thecorporation is null and void. The declarations of the agent alone are generally insufficient to establish the fact orextent of his/her authority.

By the contract of agency, a person binds himself to render some service or to do something in representationon behalf of another, with the consent or authority of the latter. Consent of both principal and agent isnecessary to create an agency. The principal must intend that the agent shall act for him; the agent must intendto accept the authority and act on it, and the intention of the parties must find expression either in words orconduct between them

An agency may be expressed or implied from the act of the principal, from his silence or lack of action, or hisfailure to repudiate the agency knowing that another person is acting on his behalf without authority.Acceptance by the agent may be expressed, or implied from his acts which carry out the agency, or from hissilence or inaction according to the circumstances.Agency may be oral unless the law requires a specific form.

However, to create or convey real rights over immovable property, a special power of attorney is necessary.


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Thus, when a sale of a piece of land or any portion thereof is through an agent, the authority of the latter shallbe in writing, otherwise, the sale shall be void.

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 latterwould 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

A person dealing with a known agent is not authorized, under any circumstances, blindly to trust the agents;statements as to the extent of his powers; such person must not act negligently but must use reasonablediligence and prudence to ascertain whether the agent acts within the scope of his authority. The settled rule isthat, persons dealing with an assumed agent are bound at their peril, and 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 iscontroverted, the burden of proof is upon them to prove it.

Angeles v. PhilippineNational Railways

SUMMARY: Lizette was assigned as representative in the withdrawal of the scrap/unserviceable rails awardedto Romualdez. PNR suspended the withdrawal. Lizette and Angeles sued for specific performance. TC and CAdismissed as Lizette was only an agent w/o right to sue on behalf of Romualdez, the one who contracted with

PNR.

DOCTRINE: The words principal and agent, are not the only terms used to designate the parties in an agencyrelation. The agent may also be called an attorney, proxy, delegate or, as here, representative.

In the absence of statute, no form or method of execution is required for a valid power of attorney; it may be inany form clearly showing on its face the agents authority.

Jimenez v. Rabot SUMMARY: Gregorio, through a letter (private document), requested her sister Nicolasa to sell one of the 3parcels of land he owned, because he needed money. Nicolasa sold one to Rabot for P500 and the deed ofconveyance was executed and delivered. A year later, Gregorio sued to recover the land from Rabot. The SCheld that the letter complied sufficiently with the Civil Code and the Code of Civil Procedure as regards the formof authority. Thus, he is bound by the actions of Nicolasa.

DOCTRINE: Inasmuch as it is an established doctrine that a private document is competent to create, transmit,modify, or extinguish a right in real property, it follows that a power of attorney to convey such property, eventhough in the form of a private document, will operate with effect.

City-Lite v. CA SUMMARY: City-Lite filed a case for specific performance and damages because FP holdings refused to conveythe TCT of the Violago property. FP Holdings said that the agreement entered into with Roy was not validbecause the latter had no authority to conclude the sale, being a mere contact person of the company andbecause Art. 1874 of the Civil Code provides that When the sale of a piece of land or any interest therein isthrough an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.

DOCTRINE: Article 1874 provides: When the sale of a piece of land or any interest therein is through an agent,


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the authority of the latter shall be in writing, otherwise the sale shall be void.Cosmic Lumber v. CA SUMMARY: Petitioner executed a special power of attorney appointing Paz Villamil-Real as attorney in fact in

order to initiate, institute and file any court action for the ejectment of third persons and/or squatters. However,she entered into a compromise agreement with one of the illegal settlers and sold a portion of the sale withoutthe knowledge of petitioner.

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

San Juan Structural Steelv. CA

SUMMARY: San Juan Structural entered an agreement with Motorich, through its treasurer, Nenita Gruenberg,for the transfer to San Juan of a parcel of land. An earnest money was paid but come the date of the payment ofthe balance, Motorich refused to push through with the agreement. San Juan, then, filed a complaint againstMotorich to compel it to comply with the agreement. Mototrich, in its defense argued that they are not bound bythe contract for Nenita was not an authorized agent. San Juan argues that the Gruenberg spouses are the99.87% owner of Motorich thus, piercing the corporate veil, their actions would bind Motorich. SC ruled thatNenita was not an authorized agent thus her acts do not bind Motorich.DOCTRINE: When a sale of a piece of land or any interest therein is through an agent, the authority of the lattershall be in writing: otherwise, the sale shall be void.

As a general rule, the acts of corporate officers within the scope of their authority are binding on thecorporation. But when these officers exceed their authority, their actions "cannot bind the corporation, unless ithas ratified such acts or is estopped from disclaiming them."

Delos Reyes v. CA SUMMARY: Daluyong owns a parcel of land in Tagum, Davao which was being leased to several lessees. He senthis son Renato to collect the rentals from the land. One of the lessees is Lydia Delos Reyes. Lydia, thinking thatRenato was an authorized agent of Daluyong, subsequently entered into an oral contract of sale with Renato for300 sqm of Daluyongs land for which she paid the full purchase price of P90,000. She used the lot to build atwo-storey building. When Daluyong discovered of the building, he filed an action for recovery of the said land.TC ordered Daluyong to execute a deed of conveyance to Lydia. CA reversed and asked Lydia to vacate. SCaffirmed CA saying that Renato was not an authorized agent of Daluyong hence there was no valid contract ofsale.

DOCTRINE: Art. 1874 of the CC points out that when the sale of a piece of land or any interest therein isthrough an agent, the authority of the latter shall be in writing, otherwise the sale shall be void.

AF Realty v. DieselmanFreight

SUMMARY: Cruz, Jr, a member of the board of directors of Dieselman, authorized Noble to sell a lot owned bythe company even if he did not have any authority to sell the property. Noble then authorized Polintan to sellthe property. Polintan was able to sell it to AF Realty which paid P300,000 earnest money. The earnest moneywas initially accepted by Cruz, Sr., the president of Dieselman but the company later rejected the sale. AF Realyfiled a case for specific performance to enforce the contract of sale. Meanwhile, Dieselman sold the lot to Midas.The TC ruled in favor of AF Realty. The CA reversed, saying that there was no perfected contract of sale sinceCruz, Jr. and Polintan did not have any authority to sell the property. The SC affirmed the CA decision.

DOCTRINE: Sale of land through an agent without any written authority is void. The law on agency under the


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Civil Code takes precedence. In Yu Ka Sin Trading v. CA, it was held that Since a corporation... can act onlythrough its officers and agents, all acts within the powers of said corporation may be performed by agents of itsselection... the same general principles of law which govern the relations of agency for a natural person governthe officer or agent of a corporation... and agents when once appointed, or members acting in their stead, aresubject to the same rules, liabilities, and incapacities as are agents of individuals and private persons.

When a sale 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 (Art. 1874, NCC). Void contracts cannot be ratified (Art. 1409, NCC).

Keeler Electric Co. v.Rodriguez

SUMMARY: Plaintiff sold a Matthews plant to the defendant through the efforts of Montelibano. The defendantpaid the purchase price to Montelibano without the knowledge of the plaintiff. The latter filed an action for thepayment of the plant. The SC held that Montelibano was not authorized to receive the payment and that thedefendant made the payment to him at his own risk.

DOCTRINE: 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 thenature and extent of the authority, and in case either is controverted, the burden of proof is upon them toestablish it.

Yu Eng Cho. v. PanAmerican

SUMMARY:An independent travel agent sold plane tickets to petitioners. However, petitioners were not able to get to theirfinal destination as it turned out that the last leg of their trip was unconfirmed, contrary to the representationsmade by the travel agent. The Court found no agency relationship among the travel agent, the travel agencyand the airline.

DOCTRINE: The declarations of the agent alone are generally insufficient to establish the fact or extent of hisauthority.

By the contract of agency, a person binds himself to render some service or to do something in representationor on behalf of another, with the consent or authority of the latter. The elements of agency are: (1) consent,express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act inrelation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts withinthe scope of his authority.

It is a settled rule that persons dealing with an assumed agent are bound at their peril, if they would hold theprincipal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in caseeither is controverted, the burden of proof is upon them to establish it.

Sevilla v. CA SUMMARY: A travel agency closed down which was started by Tourist World Service and Lina Sevilla. TW claimsthat Sevilla was connected with a rival firm and since the business was losing anyway closed it down. Sevillaavers that TW cannot on its own just close the agency because it is a joint venture and she must have damagespaid to her as recompense.


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There was the obligation on the part of Quiroga to supply the beds, and, on the part of Parsons Hardware, topay their price. These features exclude the legal conception of an agency or order to sell whereby themandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the pricehe obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it.

Gonzalo Puyat & Sons v.Acro Amusement Co.

SUMMARY: Arco filed a complaint seeking reimbursement for alleged overpayments it made to Gonzalo (agent ofStarr Piano in USA) for the sale of sound reproducing equipment. SC held that the contract entered into between

the parties was one of purchase and sale and not one of agency. As such, Gonzalo as vendor is not bound toreimburse Arco as vendee for any difference between the cost price and the sales price which represents theprofit realized by the vendor

DOCTRINE: Whatever unforeseen events might have taken place unfavorable to Gonzalo, Arco might still legallyhold Gonzalo to the prices fixed. This is incompatible with the pretended relation of agency between the parties.

In agency, the agent is exempted from all liability in the discharge of his commission provided that he acts inaccordance with the instructions received from his principal (Sec. 254, Code of Commerce). Principal mustindemnify the agent for all damages which the latter may incur in carrying out the agency without fault orimprudence on his part (Art. 1729)

While the letters state that Gonzalo was to receive 10% commission, this does not necessarily make Gonzalo anagent of Arco. Said provision is only an additional price which Arco bound itself to pay and is not incompatiblewith the contract of purchase and sale.

To hold Gonzalo as an agent of Arco is incompatible with the admitted fact that Gonzalo is the exclusive agent ofStarr. It is out of the ordinary for one to be agent of both the vendor and purchaser.

Lim v. People SUMMARY: An agreement is reached whereby Lim would sell Ayrosos tobacco, and the proceeds will be given toher (Ayroso) upon sale. Only P240 of the total value of P799.50 was remitted. Ayroso sues for estafa. Lim: theagreement is not of agency but a sale, hence there can be no estafa. SC: agreement is of agency- Lim guilty ascharged.

DOCTRINE: The determination of whether an agreement is of a sale or of an agency to sell is a question of fact.Pacific Commercial v. Yatco SUMMARY: PCC was taxed from the sale of sugar. They alleged that there was double taxation because Victorias

Milling, for whom they sold the sugar, was already taxed in its capacity as manufacturer and owner of the sugar.The court said that the 2nd tax was for industry or occupation. There was no double taxation, and it ruled thatPCC acted as commission merchant, and as broker in its different ways of selling the sugar.

DOCTRINE: A commission merchant is one engaged in the purchase or sale for another of personal propertywhich, for this purpose, is placed in his possession and at his disposal. He maintains a relation not only with hisprincipal and the purchasers or vendors, but also with the property which is the subject matter of thetransaction.


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The broker, unlike the commission merchant, has no relation with the thing he sells or buys. He is merely anintermediary between the purchaser and the vendor. He acquires neither the possession nor the custody of thethings sold. His only office is to bring together the parties to the transaction.

Ker v. Lingad SUMMARY: CIR assessed the sum of P20,272.33 as the commercial brokers percentage tax, surcharge, andcompromise penalty against Ker & Co. There was a request on the part of petitioner for the cancellation of such

assessment, which request was turned down. As a result, it filed a petition for review with the Court of TaxAppeals. CTA ruled that that Ker & Co is liable as a commercial broker under Section 194 (t) of the NationalInternal Revenue Code.

DOCTRINE: The difficulty in distinguishing between contracts of sale and the creation of an agency to sell hasled to the establishment of rules by the application of which this difficulty may be solved. The decisions say thetransfer of title or agreement to transfer it for a price paid or promised is the essence of sale. If such transferputs the transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor forthe agreed price, and not merely as an agent who must account for the proceeds of a resale, the transaction is asale; while the essence of an agency to sell is the delivery to an agent, not as his property, but as the propertyof the principal, who remains the owner and has the r ight to control sales, fix the price, and terms, demand and

receive the proceeds less the agent's commission upon sales made.Hahn v. CA SUMMARY: Hanh claims to be the exclusive dealer of BMW in the Philippines so it protested when an exclusivedealership agreement was granted to CMC. Hanh filed a complaint for specific performance and damages againstBMW to compel it to continue the exclusive dealership. BMW filed a motion to dismiss claiming that Hanh wasnot its agent but is only a broker. Also,BMW also allege lack of jurisdiction of the RTC claiming to be a foreigncorporation not doing business in the Philippines. RTC deferred ruling over the motion to dismiss. CA held thatRTC has no jurisdiction and that Hanh is a mere broker and not an agent. SC ruled that Hanh is an agent andreversed CA ruling and remanded the case to the trial court for further proceedings.

DOCTRINE: An agent receives a commission upon the successful conclusion of a sale. On the other hand, abroker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made.

Yun Kwan Byung v.PAGCOR

SUMMARY: PAGCOR launched its Foreign Highroller Marketing Program. The Program aims to invite patrons fromforeign countries to play at the dollar pit of designated PAGCOR-operated casinos under specified terms andconditions and in accordance with industry practice. The Korean-based ABS Corporation was one of theinternational groups that availed of the Program. In a letter-agreement (Junket Agreement), ABS Corporationagreed to bring in foreign players to play at five designated gaming tables at the Casino Filipino Silahis at theGrand Boulevard Hotel in Manila. Petitioner Yu Kwan Byung, a Korean national, alleges that he came to thePhilippines 4 times to play for high stakes at the Casino Filipino. In the course of the games, he was able toaccumulate gambling chips worth $2.1 million. Petitioner contends that when he presented the gambling chipsfor encashment with PAGCORs employees or agents, PAGCOR refused to redeem them. Petitioner brought thisaction against PAGCOR seeking redemption of gambling chips valued at $2.1 million.

DOCTRINE: Implied agency is derived from the acts of the principal, from his silence or lack of action, or his


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failure to repudiate the agency, knowing that another person is acting on his behalf without authority. Impliedagency, being an actual agency, is a fact to be proved by deductions or inferences from other facts.

On the other hand, apparent authority is based on estoppel and can arise from two instances. First, the principalmay knowingly permit the agent to hold himself out as having such authority, and the principal becomesestopped to claim that the agent does not have such authority. Second, the principal may clothe the agent with

the indicia of authority as to lead a reasonably prudent person to believe that the agent actually has suchauthority. In an agency by estoppel, there is no agency at all, but the one assuming to act as agent hasapparent or ostensible, although not real, authority to represent another. The law makes no presumption ofagency and proving its existence, nature and extent is incumbent upon the person alleging it.

Siasat v. IAC SUMMARY: Teresita Nacianceno arranged for the sale of national flags by the United Flag Industry to theDepartment of Education and Culture. Pursuant to this, a contract was drawn up between Nacianceno and Siasat(UFI manager), formalizing an agreement for her to represent United Flag Industry to deal with any entity ororganization, private or government in connection with the marketing of our products-flags and all itsaccessories. After the first delivery of flags, the agency was revoked and Siasat refused to pay commission forthe second half of the delivery. Nacianceno filed a claim for the commission, but Siasat alleged thatNaciancenos authority does not cover the transaction with the Department, and that that latter had no part in

the second half of orders. TC and IAC rule in favor of Nacianceno. SC affirms with modifications (not somaterial).

DOCTRINE: There are several kinds of agents:An agent may be (1) universal: (2) general, or (3) special.

A universal agent is one authorized to do all acts for his principal which can lawfully be delegated to an agent.So far as such a condition is possible, such an agent may be said to have universal authority.

A general agent is one authorized to do all acts pertaining to a business of a certain kind or at a particular place,or all acts pertaining to a business of a particular class or series. He has usually authority either expresslyconferred in general terms or in effect made general by the usages, customs or nature of the business which he

is authorized to transact. An agent, therefore, who is empowered to transact all the business of his principal ofa particular kind or in a particular place, would, for this reason, be ordinarily deemed a general agent.

A special agent is one authorized to do some particular act or to act upon some particular occasion. He actsusually in accordance with specific instructions or under limitations necessarily implied from the nature of theact to be done.

Dominion Insurance v. CA SUMMARY: Guevarra instituted a civil case for the recovery of a sum of money against Dominion Insurance. Hesought to recover sums he had advanced in his capacity as manager. Dominion denied any liability to Guevarra.RTC ruled that Dominion was to pay Guevarra. CA affirmed. SC also ruled that Dominion should pay Guevarra,but not under the law on agency, but the law on obligations and contracts. This is because Guevarra deviatedfrom the instructions of Dominion under which he would have had authority to settler the latters claims, i.e. to


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pay through the revolving fund. Nevertheless, recovery may be made under Art. 1236.

DOCTRINE: When a special power of attorney is required for the agent to do a certain act, the agent, in theperformance of such act, must comply with the specifications embodied in the special power of attorney givinghim authority to do such.

For example, here, a special power of attorney was needed for Guevarra to settle the claims of Dominionsclients. And for this purpose, there was a memorandum. However, the memorandum stated that Guevarra wasto settle the claims using the money in a revolving fund. Guevarra did not comply with this, so e expensesGuevarra incurred in the settlement of the claims of the insured my not be reimbursed from Dominion, at leastunder the law of agency.

PNB v. Sta. Maria SUMMARY: 6 brothers and sisters of Maximo Sta Maria granted him a special power of attorney to mortgage a16hectare parcel of land in Bataan jointly owned by all of them. In addition, Valeriana Sta. Maria, Maximos sister,granted him authority to borrow money. Maximo obtained 2 sugar crop loans from PNB secured by the jointlyowned by them. PNB sued Maximo, his siblings and Associated Insurance and Surety Company for collection ofthe unpaid balance on sugar crop loans. RTC held them jointly and severally liable to PNB. The siblingsappealed.

DOCTRINE: A special power of attorney to mortgage real estate is limited to such authority to mortgage anddoes not bind the grantor personally to other obligations contracted by the grantee, in the absence of anyratification or other similar act that would estop the grantor from questioning or disowning such otherobligations contracted by the grantee. The authority granted by 6 siblings (except Valeriana) unto their brother,Maximo, was merely to mortgage the property jointly owned by them. They did not grant Maximo any authorityto contract for any loans in their names and behalf. Maximo alone, with Valeriana who authorized him to borrowmoney, must answer for said loans and the other siblings only liability is that the real estate authorized by themto be mortgaged would be subject to foreclosure and sale to respond for the obligations contracted by Maximo.They cannot be held personally liable for the payment of such obligations, as erroneously held by the trial court.

BPI v. De Coster SUMMARY: Jean M. Poizat is the agent of his wife, Gabriela Andrea de Coster y Roxas. With Poizat's consent andpermission as husband, Poizat, acting for his wife as agent, made to BPI a promissory note for P292,000. To

secure it, the defendants Jean M. Poizat and J. M. Poizat and Co. executed a chattel mortgage to BPI.

For the same purpose of securing the loan, Poizat acknowledged and delivered to BPI a mortgage on certain realproperty in the City of Manila. The real property was subject to a prior mortgage in favor of La Orden deDominicos (Dominican Friars), who was impleaded as a defendant in this case.

Since the note had long become due and owing, BPI brought action against De Coster in the CFI of the City ofManila. BPI prays for an order of the court to direct the sheriff of the City of Manila to take immediatepossession of the property and sell the same. La Orden de Dominicos was impleaded as an additional defendant,who had a claim in its own right against de Coster.


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The CFI determined that BPI should have judgment as prayed for in its complaint, and also that the DominicanFathers should have judgment for the amount of their claim, and that the property should be sold and theproceeds applied to satisfy the respective judgments.

Gabriela Andrea de Coster y Roxas filed a motion where she stated that under the power of attorney, the Poizathad no authority for and on behalf of her to execute a joint and several note or to make her liable as an

accommodation maker

DOCTRINE: It will be noted that there is no provision in either of them which authorizes or empowers him tosign anything or to do anything which would make his wife liable as a surety for a preexisting debt.

It is fundamental rule of construction that where in an instrument powers and duties are specified and defined,that all of such powers and duties are limited and confined to those which are specified and defined, and that allother powers and duties are excluded.

Hodges v. Salas SUMMARY: Principals Salas executed a power of attorney conferring authority to Agent Yulo toobtain xxx aloan in any amount which our said brother-in-law may deem necessary.The loan was secured by a real estatemortgage. Upon receipt of the loaned amount from the creditor Hodges, the agent applied almost half of the

amount received as payment for his personal debt to the same creditor. Hence, the principals Salas receivedonly a part of the loaned amount.

When the principals Salas defaulted, creditor Hodges filed an action for foreclosure of the real estate mortgage.Creditor Hodges insists that the principals Salas should be liable for the entire amount of the loan. One of theissues discussed by the SC is the extent of the liability of the principals Salas given that they didnt receive theentire amount of the loan. In resolving the issue, the SC looked into the interpretation of the authority conferredto the agent through the power of attorney. It ruled that the principals are only liable for the amount which theyreceived, including the interest thereon and the attorneys fees.

DOCTRINE:If the terms of the power of attorney to obtain a loan are limited and the agent is authorized only to borrow any

amount of money which he deemed necessary, the principals can only be held liable for the amount theyactually received from their agent.With respect to a power of attorney of special character, it cannot be interpreted as authorizing the agent todispose of the money as he pleased, particularly when it does not appear that such was the intention of theprincipals. If the agent applied part of the funds to pay his personal obligations, he exceeds his authority. (Art.1714, CC)In a case where there was a power of attorney to borrow any amount of money, the agent exceeded his

Strong v. Gutierrez Rupide SUMMARY: Plaintiff owned 800 shares of the capital stock of the Phil. Sugar Estates Devt Co. which werepurchased by defendant through a broker who dealt with plaintiffs agent, who was acting gratuitously as agentfor the plaintiff not only under a written power special in terms to collect money but also as general agentmanaging all her business under a parol employment. Such sale was not known to plaintiff, hence the complaint


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to recover said shares. In an interview, plaintiff told Jones not to part with the stock until I got their facevalue. The SC held that plaintiffs agent had no authority to sell the shares and that, as principal, she is notbound by the sale.

DOCTRINE: Art. 1713, CC: An agency stated in general terms only includes acts of administration. In order tocompromise, alienate, mortgage, or to execute any other act of strict ownership, an express mandate is

required.

Such mandate may be oral or written, may stand by itself or may be included in the general power, the one vitalthing being that the right to sell shall be express or shall be a necessary ingredient of the power that isexpressed.

While the statement cannot operate as a grant of power, the words have their effect as evidence of a preexistingpower understood between the parties, to which they plainly refer. However, when taken in connection withother facts of the case, they do not sufficiently define the power or reveal the terms of the preexisting power: itcould be general or special, or express or merely assumed by plaintiff and Jones to follow as a matter of course,from his general power of administration. But this assumption is prohibited by Art. 1713.

The acts of an agent beyond his limited powers are null. 3 qualifications whereby the principal is held bound:1.Where his acts have contributed to deceive a 3rd person in good faith;2.Where the limitations upon the power created by him could not have been known by a 3rd person;Where he has placed in the hands of the agent instruments signed by him in blank.

Katigbak v. Tai Hung Co. SUMMARY: The agent, whose power of atty was not registered, sold a parcel of land that the principal acquiredafter the power of atty was executed. The heirs of the Principal are assailing the validity of the sale and extentof the power of the agent to sell such land. SC ruled that the agent was authorized to sell the land.

DOCTRINE: The power is general and authorizes Gabino to sell any kind of realty belonging (pertenezcan) tothe principal. The use of the subjunctive pertenezcan (might belong) and not the indicative pertenecen(belong), means that Po Tecsi meant not only the property he had at the time of the execution of the power, but

also such as the might afterwards have during the time it was in force.

A power of attorney not recorded in the registry of deeds is ineffective in order that an agent or attorney-in-factmay validly perform acts in the name of his principal, and that any act performed by the agent by virtue of saidwith respect to the land is ineffective against a third person who, in good faith, may have acquired a rightthereto, it does, however, bind the principal to acknowledge the acts performed by his attorney-in-factregarding said property.

Chua v. IAC SUMMARY: Chua Bok and Herminigilda Herrera, through her alleged attorney-in-fact Vicenta de Reynesexecuted a new Contract of Lease. This new contract of lease had a stipulation stating that the Party of theSecond Part is given an option to buy the said leased premises if he is qualified and when the Party of the FirstPart decides to sell the same and that the Party of the second Part is also given the option to renew the Contract


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of Lease upon terms and conditions to be agreed by both parties. This contract was valid for 5 years.

DOCTRINE: The lease contract involves the lease of real property for a period of more than one year. Thecontract was entered into by the agent of the lessor and not the lessor herself. In such a case, the law requiresthat the agent be armed with a special power of attorney to lease the premises. This is apparent in Article 1878of the Civil Code.

Since Herrera allowed the petitioners to occupy the leased premises after the expiration of the lease contractand under Article 1670 of the Civil Code, a tacit renewal of the lease is deemed to have taken place. However,as held in Dizon vs. Magsaysay, a tacit renewal is limited only to the terms of the contract which are germane tothe lessee's right of continued enjoyment of the property and does not extend to alien matters, like the optionto buy the leased premises.

Dungo v. Lopena SUMMARY: Foreclosure proceedings were commenced against Dugo and Gonzales for failing to settle theirobligations, secured by a mortgage. A compromise agreement was executed, but Dugo did not sign.Subsequently, a "Tri-Party Agreement" was executed, reiterating the stipulations in the compromise agreement,as well as providing for another person to pay. The obligations, however, were not settled. The mortgage wasforeclosed. When Dugo assailed the validity of the compromise agreement against him, the CFI and the SC

dismissed his claim. He was held to have ratified the compromise agreement in the subsequent "Tri-PartyAgreement."

DOCTRINE: While a special power of attorney is required to compromise an interest of another [Article 1878(3)],compromise agreement is a contract. As such, it is governed by the rules on contract. Under Article 1403(1), acontract "entered into in the name of another person by one who has been given no authority or legalrepresentation, or who has acted beyond his powers" is unenforceable, but it susceptible to ratification.

Vicente v. Geraldez SUMMARY: The lawyers of the plaintiffs and the defendant corporation entered into a Compromise Agreementto settle the price of the lands in dispute. The agreement was approved by the trial court. Before the result ofthe agreement came into effect, the corporation informed its lawyer that the Board does not wish to enter into acompromise. The plaintiffs moved for the execution of the agreement. The court ruled that the agreement is notbinding to the corp for lack of authority of the lawyers who signed in behalf of the corp.

DOCTRINE: Special powers of attorney are necessary, among other cases, in the following: to compromise andto renounce the right to appeal from a judgment. As a general rule, an officer or agent of the corporation has nopower to compromise or settle a claim by or against the corporation, except to the extent that such power isgiven to him (by the Board of Directors) either expressly or by reasonable implication from the circumstances.

Insular Drug Co. v.National Bank

SUMMARY: U.E. Foerster was formerly a salesman of the petitioner drug company. He also acted as a collectorfor the company. He was instructed by petitioner to deposit the amount to the companys account at the Iloilobranch of the Chartered Bank of India, Australia, and China. However, he deposited it in his personal accountwith the Iloilo branch of the Philippine National Bank instead of the companys account in the Chartered Bank.

DOCTRINE: Any person taking checks made payable to a corporation, which can act only by agents does so at


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his peril, and must abide by the consequences if the agent who indorses the same is without authority.Austria v. CA SUMMARY: Abad received a pendant with diamonds from Austria to be sold on commission basis or to be

returned on demand (consignment of goods for sale). The pendant was taken from Abad when she fell victim toa robbery. Austria sued for the return of the pendant or its value. Abads defense was one for fortuitous event.The CFI found in favor of Austria. The CA reversed. The SC affirmed saying that the fact of robbery wasestablished and Abad is not guilty of negligence.

DOCTRINE: The emphasis of Art. 1174 is on the EVENTS, and not on the agents or factors responsible for them.To avail of the exemption, it is not necessary that the persons responsible for the occurrence should be found orpunished. It would only be sufficient that the unforeseeable event (robbery) did take place without anyconcurrent fault on the debtors part which can be proven by preponderance. To require prior conviction of theculprits would be to demand proof beyond reasonable doubt in a civil case.

In order to completely exonerate the debtor for reason of a fortuitous event, such debtor must, in addition tothe casus itself, be free of any concurrent or contributory negligence. This is apparent in the language of Art.1170.

PNB v. Manila Surety SUMMARY: PNB extended a credit to ATACO which was secured by Manila Surety. As additional security to the

loan, ATACO constituted PNB as its assignee and attorney-in-fact to collect from the Bureau of Public Works theamount receivables by ATACO. PNB collected from the Bureau for some time but eventually stopped in itscollection. PNB found that there was still balance on the debt of ATACO, so the former demanded from ATACOand Manila Surety its payment. TC ordered ATACO and Manila Surety to pay. Upon appeal by Manila Surety, CAreleased it from its obligation. SC affirmed CA and ruled in favor of Manila Surety.

DOCTRINE: An agent is required to act with the care of a good father of a family (Civ. Code, Art. 1887) andbecomes liable for the damages which the principal may suffer through his non-performance (Civ. Code, Art.1884)

Domingo v. Domingo SUMMARY: Vicente authorized Gregorio to sell his land for P2 per square meter. A buyer (Oscar de Leon) giftedGregorio P1,000 to sell to him at a lower price. Gregorio accepted the gift without knowledge of his principal and

convinced his principal to sell at only P1.20 per sq. meter. SC: Gregorio forfeits his right to the commission.

DOCTRINE: The law imposes upon the agent the absolute obligation to make a full disclosure or completeaccount to his principal of all his transactions and other material facts relevant to the agency. An agent whotakes a secret profit in the nature of a bonus from the vendee, without revealing the same to his principal, isguilty of a breach of his loyalty and forfeits his right to collect the commission from his principal, even if theprincipal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or thatthe agency is a gratuitous one, or that usage or custom allows it; because the rule is to prevent the possibility ofany wrong, not to remedy or repair an actual damage.

Severino v. Severino SUMMARY: Guillermo is the administrator of Melecios property. Melecio died. Guillermo continued to be inpossession of Melecios property. Cadastral proceedings took place that ended with Guillermo obtaining legal


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title to the said property. The Administratrix ofMelecios property now goes to court asking that the said land bereverted back to Melecios estate. TC ordered Guillermo to give the land back to Melecios estate. SC affirmedTC.

DOCTRINE: The relations of an agent to his principal are fiduciary. Its is an elementary rule that in regard toproperty forming the subject-matter of the agency, the agent is estopped from acquiring or asserting a title

adverse to that of the principal. His position is analogous to that of a trustee and he cannot consistently, withthe principle of good faith, be allowed to create in himself an interest in opposition to that of his principal orcestui que trust.

Green Valley Poultry v. IAC SUMMARY: A contract was entered into between Squibb and Green Valley, the latter being awarded non-exclusive distributorship. When Green Valley failed to pay for products bought, Squibb filed a collection case.Green Valley avers that the agreement was an agency, since the goods were by consignment, and hence theaction was premature since it has yet to collect from the purchasers. Squibb on the other hand says that it is acontract of sale, and hence the 60-day period in the agreement should be followed. RTC and CA upheld Squibb.SC said that there is no need to categorize the agreement, as Green Valley was liable under both types ofcontracts, particulary under agency because he sold the items on credit without consent from principal.

DOCTRINE: If it is an agency to sell, then it is liable because it sold on credit without authority from theprincipal, as provided under Art 1905 of the New Civil Code.: SUMMARY: Vda. De Tan Toco filed a case against the Municipality of Iloilo to recover the value of a strip of land

taken by the Municipality. Tan Ong Sze won and the decision became final and executory. Atty. Soriano wascounsel for Vda. De Tan Toco in other cases. Tan Boon Tiong, the attorney-in-fact of Vda. De Tan Toco, assignedthe amount of the judgment in the recovery case to Atty. Soriano. Atty. Soriano assigned this to Mauricio Cruz &Co. Inc. Atty. Soriano died.

Mauricio Cruz & Co., Inc. was claiming the amount of the judgment in the recovery case, saying that it was inconsideration for the professional services of the late Atty. Soriano. The lower court ruled that minus theattorneys lien, the amount of the judgment in the recovery case will be given to Mauricio Cruz & Co., Inc.

Vda. De Tan Taco contends that the assignment to Atty. Soriano was only to help her collect the judgmentfaster, and that such assignment was not in consideration of the lawyers professional fees. The SC upheld thevalidity of the assignment.

DOCTRINE:An agent of attorney-in-fact empowered to pay the debts of the principal, and to employ lawyers to defend thelatters interest, is impliedly empowered to pay lawyers fees for services rendered in the interest of theprincipal, and may satisfy them by an assignment of a judgment rendered in favor of the principal.

When a person appoints two attorneys-in-fact independently, the consent of the one will not be required tovalidate the acts of the other unless that appears positively to have been the principals intention.


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Del Rosario v. La Badenia SUMMARY: La Badenia began a selling campaign for its products. Celestino Aragon was appointed the generalagent of the company to some of the provinces in Luzon. As general agent, he established a depot at Legaspiwith Teofila del Rosario de Costa, who was nominally in charge of the depot, and her husband Bernardino Costa,who appeared to have been the actual manager. From the arrangement between Aragon and the SpousesCosta, the business in Legaspi seemed to have been in charge of the spouses over which Aragon, as generalagent, kept close supervision. In the final settlement of accounts, Aragon acknowledged that the Spouses had,

in their favor, a balance of P1,795.25, However, La Badenia refused to pay the balance, saying that they hadbeen improperly allowed a credit which represented unpaid accounts due the business in Legaspi for some itemssold by it. The lower court ruled that no the Spouses Costa were not agents, considering that the goods sold tothe delinquent debtors, whose unpaid accounts form the basis of the claim, had already been paid by the saidspouses. The SC reversed, saying that the spouses were, in fact, agents, and thus should be paid the balanceowed to it by La Badenia.

DOCTRINE: An agent may lawfully appoint a substitute if the principal has not prohibited him from doing such.The principal shall be bound by the acts of the sub-agent if it is shown that the agent who appointed such sub-agent did not act in excess of his authority in doing so.

International Films v. Lyric

Film

SUMMARY: International Film (lessor) and Lyric Film (lessee) entered into a lease contract for the showing of the

film Monte Carlo Madness. Upon expiration of the contract, Gabelman, an agent of International Film,requested that the film be kept in Lyric Films vault since International Film had no vault of its own. Gabelmanassumed responsibility for the film. The vault burned down. The Court held that Lyric Film was not liable toInternational Film for the destruction by fire of the film.

DOCTRINE: As a mere submandatory or subagent, Lyric Film was not obliged to fulfill more than the contents ofthe mandate and to answer for damages caused to the principal by his failure to do so

The fact that the film was not insured against fire does not constitute fraud or negligence on the part of LyricFilm. As a subagent, it received no such instruction from its principal and the insurance film does not form a partof the obligation imposed upon it by law.

PNB v. Agueldo SUMMARY: Mauro was the attorney in fact of his sister and aunt. On his transactions with PNB he initially

acquired loans and secured it with the property of the two. When the loans matured, he issued promissory notesnovating the mortgage in his own name. PNB now wants to hold the aunt liable for the debts incurred by thenephew since he was her agent. The court held that 1. he signed the debts in his capacity, 2. there was noshowing that they were contracted for his principal, 3. the mortgage was novated, hence could no longer bebinding on the aunt.

DOCTRINE: When an agent negotiates a loan in his personal capacity and executes a promissory note under hisown signature, without express authority from his principal, giving as security therefore real estate belonging tothe letter, also in his own name and not in the name and representation of the said principal, the obligation doconstructed by him is personal and does not bind his aforesaid principal.

Philippine Products v. SUMMARY: PPC file a case for delivery of money against Primateria Zurich, and its agents Primateria Philippines,


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Primateria Baylin, and Crame. Lower court ordered Primateria Zurich to pay the amount claimed and dismissed the case asto the 3 agents. PPC appeal claiming that since Primateria Zurich is a foreign corporation not licensed in thePhils., then its agents must be personally liable. SC held that PPC cannot recover both from principal and agent.Principal Primateria Zurich has already been ordered to pay and this was not appealed.

DOCTRINE: A plaintiff could not recover from both the principal and its agents.

In case of foreign corporation not licensed in the Philippines where agents can be held personally liable, theliability of the agent is necessarily premised on the inability to sue the principal or non-liability of such principal.Instances where agents can be held personally liable (own note)

1. The principal is a foreign corporation which is not licensed to transact business in the Philippines2. Agent expressly binds himself3. Agent exceeds the limits of his authority

NPC v. NationalMerchandising

SUMMARY: The National Power Corporation and National Merchandising Corporation (Namerco), as therepresentative of the International Commodities Corporation (New York City), executed in Manila a contract forthe purchase by the NPC from the New York firm of four thousand long tons of crude sulfur for its Maria CristinaFertilizer Plant. It was stipulated in the contract of sale that the seller would deliver the sulfur at Iligan Citywithin 60 days from notice of the establishment in its favor of a letter of credit and that failure to effect delivery

would subject the seller and its surety to the payment of liquidated damages. The New York supplier was notable to deliver the sulfur within the stipulated period due to its inability to secure shipping space. Hence, NPCfiled this action for the recovery of liquidated damages.

DOCTRINE: The agent who exceeds the limits of his authority without giving the party with whom he contractssufficient notice of his powers is personally liable to such party.

National Bank v. WelchFairchild

SUMMARY: La Compaa Naviera Inc. (LCN) was a new corporation established for the business of marineshipping. Welch, Fairchild & Co (WFC), another corporation, was a stockholder of LCN. LCN applied to thePhilippine National Bank (PNB) for a loan of $125,000 to purchase a vessel called Benito Juarez which was in theUnited States.

WCF acted as an agent for LCN for purposes of arranging the sale and transfer of the vessel. The arrangement

was for PNB to furnish money in exchange for the delivery by WCF/LCN of the insurance policies taken out onthe vessel. A problem arose in the arrangements and so WCF in Manila, wrote a letter on August 8, 1918, toPNB requesting for the money to be paid with the promise of delivering the insurance policies at a later time.PNB agreed and gave money, but WCF and LCN never gave the insurance policies to PNB. On the way to thePhils., the ship sank. WCF collected the insurance proceeds, and applied the money to LCNs loans to it (LCNs

loans to WCF, consisting of expenses for arranging for the sale/ transfer/ repairs of the vessel).

LCNs loan was left unpaid and it became insolvent, so PNB went after the insurance proceeds collected by WCF.

WCF refused since it already considered the insurance proceeds as payment for LCNs loans to it, and it alsoalleged that as an agent, it could not be personally liable for the contract between their principal (LCN) and thethird person (PNB).


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SC agreed with their argument but said that it does not apply here. WCF is liable to PNB because it interferedwith the performance of the principals contractual obligations.DOCTRINE: While it is true that an agent who acts for a revealed principal in the making of a contract does notbecome personally bound to the other party [an action cannot be maintained directly against the agent (art.1725, Civ. Code)], it is manifest upon the simplest principles of jurisprudence that one who has intervened in

the making of a contract as an agent cannot be permitted to intercept and appropriate the thing which theprincipal is bound to deliver, and thereby make performance by the principal impossible. The agent in any eventmust be precluded from doing any positive act that could prevent performance on the part of his principal. Thismuch, ordinary good faith towards the other contracting party requires.

Tuason v. Orozco SUMMARY: Vargas, husband of Dolores Orozco, executed a Power of Attorney in favor of Enrique Grupe,authorizing the latter: (1) to dispose of all his property, particularly, a house and lot; and (2) to mortgage thehouse for the purpose of securing the payment of any amount advanced to Dolores. Grupe and Orozco obtaineda loan from Gonzalo Tuason. The instrument evidencing the debt was duly recorded in the Registry of Property,and it appears therefrom that Grupe, as attorney in fact for Vargas, received from Tuason a loan of P2,200 anddelivered the same to the Orozco; and that to secure its payment, he mortgaged the property of Vargas withOrozcos consent. But Orozco denies having received the loan.

DOCTRINE: A debt this incurred by the agent is binding directly upon the principal, provided the former acted,as in the present case, within the scope of his authority. (Art. 1727) The fact that the agent has also boundhimself to pay the debt does not relieve from liability the principal for whose benefit the debt was incurred. Theindividual liability of the agent constitutes only a further security in favor of the creditor. The law does notprovide that the agent cannot bind himself personally to the fulfillment of an obligation incurred by him in thename and on behalf of his principal. (Art. 1725)

Cervantes v. CA SUMMARY: PAL issued a roundtrip plane ticket for Manila-Honolulu-Los Angeles-Honolulu-Manila to Cervanteswhich provided for an expiry date until March 27 1990. He used the ticket 4 days before the expiry date. Palagents also confirmed the April 2 flight to Manila but when he was bound to return he was not allowed to board.The PAL personnel concerned marked his ticket: " NOT ACCEPTED DUE EXPIRATION OF VALIDITY." He filed acomplaint for damages which was denied by the RTC, CA. SC affirmed

DOCTRINE Both employees of PAL had no authority to extend the period of validity. Cervantes knew this fromthe very start when he called up the Legal Department of appellee in the Philippines before he left for the UnitedStates of America. He had first hand knowledge that the ticket in question would expire on March 27and that tosecure an extension, he would have to file a written request for extension at the PAL's office in the PhilippinesDespite this knowledge, he persisted to use the ticket in question. Since the PAL agents are not privy to the saidAgreement and petitioner knew that a written request to the legal counsel of PAL was necessary, he cannot usewhat the PAL agents did to his advantage. The said agents, according to the Court ofAppeals,acted withoutauthority when they confirmed the flights of the petitioner.Under Article 1989 the acts an agent beyond the scope of his authority do not bind the principal, unless thelatter ratifies the same expressly or impliedly. Furthermore, when the third person knows that the agent was


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acting beyond his power or authority, the principal cannot be held liable for the acts of the agent. If the saidthird person is aware of such limits of authority, he is to blame, and is not entitled to recover damages from theagent, unless the latter undertook to secure the principal's ratification.

Smith Bell v. Sotelo SUMMARY: Smith, Bell and Vicente Sotelo Matti entered int ocontracts whereby the former obligated itself tosell, and the latter to purchase from it, two steel tanks, two expellers, and two electric motors.

Smith, Bell sued Sotelo based on four separate causes of action, alleging, among other facts, that it 1)immediately notified Sotelo of 2) the arrival of the goods, and asked instructions from him as to the deliverythereof, and that 3) the Sotelo refused to receive any of them and to pay their price, and that 4) the expellersand the motors were in good condition.

Sotelo, and the intervenor, Manila Oil, denied such allegations. Furthermore, they allege as special defense thatMr. Sotelo had made the contracts in question as manager of the intervenor. As a counterclaim or set-off, theyalso allege that, as a consequence of Smith, Bell's delay in making delivery of the goods, which the Manila Oilintended to use in the manufacture of coconut oil, Manila Oil suffered damages on account of the expellers andthe motors not having arrived in due time.

DOCTRINE: When an agent acts in his own name, the principal shall have no right of action against he personswith whom the agent contracted.Rural Bank of Bombon v.CA

SUMMARY: The principal Gallardo executed a special power of attorney in favor of agent Aquino authorizing himto obtain loans and to mortgage. However, the principal later discovered that the properties were mortgaged forthe agents personal loans and that the agent ran away and was nowhere to be found. So the principal filed acase to annul the mortgage executed by his agent. Meanwhile, the creditor sought to foreclose the properties ofthe principal. The principal Gallardo insists that his properties should not be answerable for the loan obtained bythe agent because while the body of the documents described Aquino as an agent, the agents signature waswritten on top of a line that says mortgagor. According to the principal, this shows that the agent executedthe mortgage in his personal capacity, and not in representative capacity. The SC agree upheld this argument,saying that the agent acted in his personal capacity. Hence, the principals properties should not be answerablefor the loans.

DOCTRINE: It is a general rule in the law of agency that, in order to bind the principal by a mortgage on realproperty executed by an agent, it must upon its face purport to be made, signed and sealed in the name of theprincipal, otherwise, it will bind the agent only. It is not enough merely that the agent was in fact authorized tomake the mortgage, if he has not acted in the name of the principal. Neither is it ordinarily sufficient that in themortgage the agent describes himself as acting by virtue of a power of attorney, if in fact the agent has acted inhis own name and has set his own hand and seal to the mortgage. This is especially true where the agenthimself is a party to the instrument. However clearly the body of the mortgage may show and intend that it shallbe the act of the principal, yet, unless in fact it is executed by the agent for and on behalf of his principal and asthe act and deed of the principal, it is not valid as to the principal.


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Diway: In other words, the agent must sign the document in his capacity as agent. He must sign on a line underwhich it says In behalf of [principals name], or something to that effect. If he signs on a l ine under which itsays mortgagor or something else without mentioning that he is acting on behalf of someone, then he is actingon his own capacity.

It is not enough that the body describes the person signing the document as an agent of a certain person. That

he is an agent must be under the line on which he signs.Sy-Juco v. Sy-Juco SUMMARY: Plaintiffs, defendants parents, sought to recover from the defendant, certain properties, alleging

that the latter acquired said properties in his capacity as plaintiffs administrator with their money and for their

benefit. The SC held plaintiffs are entitled to said properties except for Casco No. 2545.

DOCTRINE: The question is not in whose favor the document of sale of the launch is executed nor in whosename the same was registered, but with whose money was said launch bought. Rule in Art. 1717, Old CC: whenan agent acts in his own name, the principal shall have no right of action against the person with whom theagent has contracted, cases involving things belonging to the principal are excepted. When things belonging tothe principal are dealt with, the agent is bound to the principal although he does not assume the character ofsuch agent and appears acting in his own name. In the case of this exception, the agents apparent

representation yields to the principals true representation and that, in reality and in effect, the contract must beconsidered as entered into between the principal and the 3rd person; and, consequently, if the obligationsbelong to the former to, to him alone must also belong the rights arising from the contract. The money withwhich the launch was bought having come from the plaintiff, the exception is applicable to this case.

National Food Authority v.IAC

SUMMARY: The Commission Agent contracted with NFA without disclosing he was acting merely as an agent ofSSG. The contract involved the use of SSGs vessel to transport goods of NFA. SSG sued NFA and the agent

when NFA paid the agent despite demands from SSG that payment be sent to it directly.

DOCTRINE: When things belonging to the principal, in this case, SSG, are dealt with, the agent is bound to theprincipal although he does not assume the character of such agent and appears acting in his own name.

Gold Star Mining v. LimJimenez

SUMMARY: Lincallo and Jimena were co-owners of mining claims. Lincallo bound himself to give to Jimena 50%of the proceeds from the claims in exchange for Jimena providing capital. However, Lincallo entered into several

contracts wherein he did not disclose to the other contracting parties that he had a co-owner. He also failed toforward to Jimena his rightful share in the proceeds.

DOCTRINE: Under Article 1883, the principal may sue the person with whom the agent dealt with in the agentsown name when the transaction involves things belonging to the principal.

Far East Bank v. Sps.Cayetano

SUMMARY: Authorized to obtain a loan and execute a mortgage by her mother (Cayetano), Tabing borrowedfrom Far East Bank. In the real estate mortgage, however, Tabing and her husband signed in their individualcapacities. The mortgage was eventually foreclosed for failure to pay. After more than 5 years, SpousesCayetano assailed the foreclosure. The RTC and the CA ruled in their favor, holding that Cayetano was notbound by the mortgage, since Tabing signed in her individual capacity. The SC affirmed their ruling on thismatter, but ordered that the complaint be dismissed on the ground that the action is already barred by laches.


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DOCTRINE: It is a general rule in the law of agency that, in order to bind the principal by a mortgage on realproperty executed by an agent, it must upon its face purport to be made, signed and sealed in the name of theprincipal, otherwise, it will bind the agent only [Philippine Sugar Estates v. Poizat]

Macondray v. Sellner SUMMARY: Defendant SELLNER, a real estate broker, sold a parcel of land for the price of 17, 175 toMACONDRAY, plaintiff company. The land was flooded by high tides. As a result of this event, MACONDRAY

became dissatisfied with the land as it could no longer serve its purpose as a coal-yard. MACONDRAY orderedSELLNER to find another purchaser. At that time it was agreed that the land would be sold for 17, 175 and thatSELLNER was to have as his commission for securing a purchaser anything over that amount which he could get.SELLNER found BARRETTO, who was willing to buy the land for 18, 892.50. MACONDRAY prepared a deed ofconveyance which it subsequently gave to SELLNER. Also, the Torrens certificate was given to SELLNER.BARRETTO would only give the purchase price to SELLNER after examining the deed of conveyance and theTorrens certificate. MACONDRAY informed SELLNER that unless the purchase price was paid before 5pm ofSeptember 2 (Monday), the deal would be off. SELLNER received the check on Wednesday morning.MACONDRAY refused to accept the check and filed the present action, claiming that the sale had beencancelled upon the failure of SELLNER to turn over the purchase price on the afternoon of Monday. TheSupreme Court held that MACONDRAY could not rescind the agreement on the sole ground that the price was

not paid at the designated hour in the letter. Also, the Court held that MACONDRAY was liable to SELLNER forthe amount of the commission which it agreed to pay should he find a purchaser for the land.

DOCTRINE: The business of a real estate broker or agent, generally, is only to find a purchaser, and the settledrule as stated by the courts is that, in the absence of an express contract between the broker and his principal,the implication generally is that the broker becomes entitled to the usual commissions whenever he brings to hisprincipal a party who is able and willing to take the property and enter into a valid contract upon the terms thennamed by the principal, although the particulars may be arranged and the matter negotiated and completedbetween the principal and the purchaser directly.

A sale of real property entitling a broker to his commissions, was an agreement by the vendor for a certainvaluable consideration then or thereafter to be paid, and was complete without conveyance, although the legal

title remained in the vendor.

The act of the agent in finding a purchaser required time and labor for its completion, and prior to its revocation,the agent had placed the matter in the position that success was practically certain and immediate, and it wouldbe the height of injustice to permit the principal then to withdraw the authority and terminate the agency asagainst an express provision of the contract, and perchance reap the benefit of the agents labors, without beingliable to him for his commissions. This would be to make the contract an unconscionable one, and would offer apremium for fraud by enabling one of the parties to take advantage of his own wrong and secure the labor ofthe other without remuneration.

Danon v. Brim & Co. SUMMARY: Brimo contracted the services of Danon to look for a purchaser of its factor. Danon was able to find apurchaser but Brimo did not proceed with the sale and sold it to another buyer. Danon filed the present suit to


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recover the reasonable value of the services he rendered.

DOCTRINE:1. A broker is never entitled to commissions for unsuccessful efforts2. It is a principle that one who has employed a broker can himself sell the property to a purchaser whom

he has procured, without any aid from the broker

3. Exception 1: When the seller himself has prevented the sale from consummating.4. Exception 2: The seller terminated the services of the broker so that he may deal with the person foundby the broker himself.

Rocha v. Prats SUMMARY: Prats & Company, through its manager Brimo, authorized Mencarini and Rocha to negotiate the saleof the companys building and lot. Rocha was able to secure an offer from Madrigal. Brimo gave a writtenauthority to Rocha to close the sale in the companys behalfprovided, among other conditions, that the balanceof the purchase price be secured by bank credits. However, the sale failed to materialize. Madrigal wanted tosecure the payment with a mortgage on the property but Brimo insisted on the bank credits as security. Rochanow claims his brokers commission, arguing that he secured an oral approval from Brimo that he could strikeout the security clause in the written authority. Brimo denies such allegation. The CFI dismissed the complaint.The SC affirmed. Rocha is not entitled to the commission since the sale was not perfected.

DOCTRINE: There is no doubt that if The Document, the authorization, correctly states the terms of theproposed sale, Rocha cannot recover. Rocha never succeeded in bringing the minds of the buyer and seller toagreement.

In all cases, under all and varying forms of expression, the fundamental and correct doctrine is, that the dutyassumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the priceand terms on which it is to be made. Until that is one, his right to commission does not accrue.

It may be conceded that if it were clearly established that Prats & Company (through Brimo) waived thecondition that the deferred payments of the purchase price were to be secured by bank credits, plaintiff wouldbe entitled to a recovery. But the oral evidence presented by Rocha is not sufficient to vary the terms written in

The Document.Inland Realty v. CA SUMMARY: Araneta authorized Inland as its broker in the sale of 9800 shares of stock of Architect Bldg for

P1500 per share. Inland informed Araneta of Standfords offer to buy the shares of stocks for P1000. Aranetaasked Inland to negotiate for a better price but the agency expired without the sale being consummated. Thesale was consummated 1 year and 5 months after the expiration of the agency for P13.5M (more thanP1000/share). Now, Inland is claiming from Araneta its commission. Araneta refused on the ground that Inlandabandoned the transaction immediately after its agency expired and that it has no participation in the haggling,the consummation of the sale and preparation of documents. TC ruled in favor of Araneta. CA took notice of thelapse of time from expiration of agency to consummation of sale thus ruling for Araneta. SC affirmed CA ruling.

DOCTRINE: When the acts of the broker were not the efficient procuring cause in bringing about the sale, he is


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not entitled to the commission.The period from the expiration of the agency to the consummation of the sale (which is in this case 1 year and 5months) may be viewed as an evidence of the lack of the agents involvement in the negotiation between thebuyer and the seller.

Infante v. Cunanan SUMMARY: Cunanan and Mijares (the two) were authorized by Infante to find a buyer for her property. Infantewould pay them 5% commission. The two eventually found a buyer, Pio Noche. Infante then said that she was

no longer interested to push through w the sale and made the two execute a deed of cancellation of authority tofind a buyer. Later on, Infante sold the property to Pio Noche. Cunanan and Mijares now demand payment oftheir commission. LC, CA and SC all ruled that Infante should pay Cunanan and Mijares.

DOCTRINE: If the principal changes his mind on selling a certain property after the agent has found a buyer forit, the principal would not be forced to sell his property or give the agent hidscommission. But if the principalcancels the sale in bad faith (in the case at bar because he wanted to get rid of the agents commission), then

the principal wouldnt by allowed to escape payment of the commission agreed upon.Prats v. CA SUMMARY: This is a petition for certiorari to review the decision of CA, dismissing Prats case for recovery of

sum of money. Doronilla was ordered in the RTC to pay Prats P1.380M based on an alleged exclusive option andauthority to negotiate the sale of Doronillas property. CA reversed. SC said that there was no evidence that

shows that Prats was the efficient procuring cause in bringing about the sale, hence he is not entitled to thecommission which was awared by the RTC. However, he was awarded an amount in the interest of equity.

DOCTRINE: The principal has the obligation to pay commissions to his agent, subject to the limitations of thestipulations in the agency. Based on equity, however, in this case, it is but proper to give compensation to theefforts of the agent which helped further the principals interest.

Uniland Resources v. DBP SUMMARY: DBP was able to sell its properties through the unsolicited help of Uniland in acting as broker. Whenthe sale was consummated, Uniland demanded for its brokers fees. DBP denied its claim so Uniland filed a case.The Court held that there was no agency relationship in this case that will entitle Uniland to brokers fees but

awarded P100,000 based purely on equity considerations.

DOCTRINE: When a sale is eventually consummated between parties introduced by a middleman who, in the

first place, had no authority, express or implied, from the seller to broker the transaction, the interloper is notentitled to a commission from a contract of agency, but the Court may grant it a sum for equity considerations.

Domingo v. Domingo(supra)

SUMMARY: Vicente authorized Gregorio to sell his land for P2 per square meter. A buyer (Oscar de Leon) giftedGregorio P1,000 to sell to him at a lower price. Gregorio accepted the gift without knowledge of his principal andconvinced his principal to sell at only P1.20 per sq. meter. SC: Obligation of principal to pay commissions isextinguished.

DOCTRINE: The obligation of the principal to pay commissions to the agent is extinguished when the agent isunfaithful. When the agent was already paid by the principal while ignorant of the fact that the former has beenunfaithful, the principal may recover back the commission.The principal is not liable to pay commissions to a sub-agent, as when the sub-agency contract was with the


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agent alone and not with the principal, who was not even aware of such sub-agency.Gonzalez v. Haberes SUMMARY: The SC ruled that Gomez, husband of Gonzalez, is guilty of misrepresentation in the contract of sale

with Haberer. However, it also held Gonzalez liable because Gomez acted as her agent in the transaction.

DOCTRINE: It is sufficient to say that the latter in negotiating for the sale of the land acted as the agent andrepresentative of the other plaintiff, his wife; having accepted the benefit of the representations of her agent

she cannot, of course, escape liability for them.Tuason v. Orosco (supra) SUMMARY: Vargas, husband of Dolores Orozco, executed a Power of Attorney in favor of Enrique Grupe,

authorizing the latter: (1) to dispose of all his property, particularly, a house and lot; and (2) to mortgage thehouse for the purpose of securing the payment of any amount advanced to Dolores. Grupe and Orozco obtaineda loan from Gonzalo Tuason. The instrument evidencing the debt was duly recorded in the Registry of Property,and it appears therefrom that Grupe, as attorney in fact for Vargas, received from Tuason a loan of P2,200 anddelivered the same to the Orozco; and that to secure its payment, he mortgaged the property of Vargas withOrozcos consent. But Orozco denies having received the loan.

DOCTRINE: A debt this incurred by the agent is binding directly upon the principal, provided the former acted,as in the present case, within the scope of his authority. (Art. 1727) The fact that the agent has also bound

himself to pay the debt does not relieve from liability the principal for whose benefit the debt was incurred. Theindividual liability of the agent constitutes only a further security in favor of the creditor. The law does notprovide that the agent cannot bind himself personally to the fulfillment of an obligation incurred by him in thename and on behalf of his principal. (Art. 1725)

Barreto v. Sta. Marina SUMMARY: Jose Santa Marina (principal) was then the owner and proprietor of La Insular Cigar and CigaretteFactory, which was in the business of buying leaf tobacco and other materials. Antonio Barretto (agent) was anagent of the said business. According to Barretto, in violation of their contract, he was dismissed by SantaMarina without justifiable cause, and is now claiming damages and his unpaid salary. Santa Marina, on the otherhand, claimed that he revoked the power conferred upon Barretto for just cause. Therefore, he claims that itwas within his power to appoint another agent to replace Barretto. The SC agreed with Santa Marina, though itordered him to pay Barretto the unpaid portion of his salary. The SC also denied Barrettos claim for damages.

DOCTRINE: The time during which the agent may hold his position is indefinite or undetermined, when no periodhas been fixed in his commission and so long as the confidence reposed in him by the principal exists; but assoon as this confidence disappears the principal has a right to revoke the power he conferred upon the agent,especially when the latter has resigned his position for good reasons.

From the mere fact that the principal no longer had confidence in the agent, he is entitled to withdraw it and torevoke the power he conferred upon the latter, even before the expiration of the period of the engagement or ofthe agreement made between them.

Dialosa v. CA SUMMARY: Sps. Diolosa, owners of Villa Alegre Subdivision, entered into an agreement with Baterna,constituting him as their exclusive sales agents until all the properties in the subdivision has been disposed of.Subsequently, the Sps. Diolosa terminated the agreement for the reason that they wanted to reserve the


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remaining lots for their grandchildren. The Court held that the intention of the Sps. Diolosa cannot prevail overthe clear terms of the agreement. The Sps. Diolosa were held liable for damages for breach of contract.

DOCTRINE: The agency agreement is a valid contract. It may be rescinded only on grounds specified in Art 1381and 1382 of the Civil Code.

ART. 1381. The following contracts are rescissible:(1) Those which are entered in to by guardians whenever thewards whom they represent suffer lesion by more than one fourth of the value of the things which arethe object thereof;(2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in thepreceding number;(3) Those undertaken in fraud of creditors when the latter cannot in any other name collect the claimsdue them;(4) Those which refer to things under li tigation if they have been entered into by the defendant withoutthe knowledge and approval of the litigants or of competent judicial authority;(5) All other contracts specially declared by law to be subjectto rescission.

ART. 1382. Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not becompelled at the time they were effected, are also rescissible.

New Manila v. Republic SUMMARY: New Manila got assigned as the agent of the contractor to collect the sums payable to the latter insatisfaction of the debt of the contractor incurred for materials used in the construction of two school housesmade in the order of the Republic. Despite said assignment, the sums were still paid to the contractor and thedebt to New Manila was left unpaid. New Manila then seeks to collect said sums from respondent Republic. Thecourt however said that the remedy of New Manila was not to collect the sum of money from the Republic but tointervene in the case of the contractor vs. republic as its now in the position of an unpaid supplier based onPublic Act 3688.

DOCTRINE: Under the facts alleged in the complaint, the powers of attorney in question made plaintiff thecontractor's agent in the collection of whatever amounts may be due the contractor from the defendant. Andsince it is also alleged that, after the

agency cases reviewer

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