Orient Air services & Hotel Representatives v CA & American Airlines Inc. GR No.

76931, May 29, 1991 Padilla, J. (Panopio, Leanne) FACTS: Respondent American Air, an air carrier offering passenger and air cargo transportation in the Philippines, and petitioner Orient Air, entered into a General Sales Agency Agreement, whereby the former authorized the latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation. Alleging that Orient Air had reneged on its obligations by failing to remit the net proceeds of sales, American terminated the Agreement. American further instituted suit against Orient Air. However, the trial court ruled in favor of the defendant Orient Air holding that the termination of the agreement is illegal and ordered American to reinstate Orient Air as its general sales agent for passenger transportation in the Philippines. ISSUE: WON the order of the court in reinstating respondent as the general sales agent for petitioner is proper. HELD: The Court ruled that the trail court and respondent appellate court erred in its decision ordering American Air to reinstate respondent as its general sales agent for passenger transportation in the Philippines. The court, in effect, compels American Air to extend its personality to Orient Air. Such would be violative of the principles and essence of agency, defined by law as a contract whereby a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. An Agent-principal 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. CARAM v. LAURETA 103 SCRA 7

the plaintiff was not registered because it was not acknowledged before a notary public or any other authorized officer. At the time the sale was executed, there was no authorized officer before whom the sale could be acknowledged inasmuch as the civil government in Tagum, Davao was not as yet organized. However, the defendant Marcos Mata delivered to Laureta the peaceful and lawful possession of the premises of the land together with the pertinent papers thereof such as the Owner's Duplicate Original Certificate of Title No. 3019, sketch plan, tax declaration, tax receipts and other papers related thereto. Since June 10, 1945, the plaintiff Laureta had been and is stin in continuous, adverse and notorious occupation of said land, without being molested, disturbed or stopped by any of the defendants or their representatives. In fact, Laureta had been paying realty taxes due thereon and had introduced improvements worth not less than P20,000.00 at the time of the filing of the complaint. On May 5, 1947, the same land covered by Original Certificate of Title No. 3019 was sold by Marcos Mata to defendant Fermin Z. Caram, Jr., petitioner herein. The deed of sale in favor of Caram was acknowledged before Atty. Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys. Abelardo Aportadera and Gumercindo Arcilla, filed with the Court of First Instance of Davao a petition for the issuance of a new Owner's Duplicate of Original Certificate of Title No. 3019, alleging as ground therefor the loss of said title in the evacuation place of defendant Marcos Mata in Magugpo, Tagum, Davao. On June 5, 1947, the Court of First Instance of Davao issued an order directing the Register of Deeds of Davao to issue a new Owner's Duplicate Certificate of Title No. 3019 in favor of Marcos Mata and declaring the lost title as null and void. On December 9, 1947, the second sale between Marcos Mata and Fermin Caram, Jr. was registered with the Register of Deeds. On the same date, Transfer Certificate of Title No. 140 was issued in favor of Fermin Caram Jr. On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed their answer with counterclaim admitting the existence of a private absolute deed of sale of his only property in favor of Claro L. Laureta but alleging that he signed the same as he was subjected to duress, threat and intimidation for the plaintiff was the commanding officer of the 10th division USFIP operating in the unoccupied areas of Northern Davao with its headquarters at Project No. 7 (Km. 60, Davao Agusan Highways), in the Municipality of Tagum, Province of Davao; that Laureta's words and requests were laws; that although the defendant Mata did not like to sell his property or sign the document without even understanding the same, he was ordered to accept P650.00 Mindanao Emergency notes; and that due to his fear of harm or danger that will happen to him or to his family, if he refused he had no other alternative but to sign the document. The defendants Marcos Mata and Codidi Mata also admit the existence of a record in the Registry of Deeds regarding a document allegedly signed by him in

FACTS: On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of Davao an action for nullity, recovery of ownership and/or reconveyance with damages and attorney's fees against Marcos Mata, Codidi Mata, Fermin Z. Caram, Jr. and the Register of Deeds of Davao City. On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land covered by Original Certificate of Title No. 3019 in favor of Claro Laureta, plaintiff, the respondent herein. The deed of absolute sale in favor of

favor of his co-defendant Fermin Caram, Jr. but denies that he ever signed the document for he knew before hand that he had signed a deed of sale in favor of the plaintiff and that the plaintiff was in possession of the certificate of title; that if ever his thumb mark appeared in the document purportedly alienating the property to Fermin Caram, did his consent was obtained through fraud and misrepresentation for the defendant Mata is illiterate and ignorant and did not know what he was signing; and that he did not receive a consideration for the said sale. The defendant Fermin Caram Jr. filed his answer on October 23, 1959 alleging that he has no knowledge or information about the previous encumbrances, transactions, and alienations in favor of plaintiff until the filing of the complaints. The trial court rendered a decision declaring that the deed of sale, Exhibit A, executed by Marcos Mata in favor of Claro L. Laureta stands and prevails over the deed of sale, in favor of Fermin Caram, Jr. The defendants appealed from the judgment to the Court of Appeals which promulgated its decision affirming the judgment of the trial court.

together with other papers pertaining to the land was taken by soldiers under the command of Col. Claro L. 16 Laureta. Added to this is the fact that at the time of the second sale Laureta was already in possession of the land. Irespe and Aportadera should have investigated the nature of Laureta's possession. If they failed to exercise the ordinary care expected of a buyer of real estate they must suffer the consequences. The rule of caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendor's title takes all the risks and losses consequent to such failure. The principle that a person dealing with the owner of the registered land is not bound to go behind the certificate and inquire into transactions the existence of which is not there intimated should not apply in this case. It was of common knowledge that at the time the soldiers of Laureta took the documents from Mata, the civil government of Tagum was not yet established and that there were no officials to ratify contracts of sale and make them registerable. Obviously, Aportadera and Irespe knew that even if Mata previously had sold t he Disputed such sale could not have been registered. There is no doubt then that Irespe and Aportadera, acting as agents of Caram, purchased the property of Mata in bad faith. Applying the principle of agency, Caram as principal, should also be deemed to have acted in bad faith. Since Caram was a registrant in bad faith, the situation is as if there was no registration at all. The question to be determined now is, who was first in possession in good faith? A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. Laureta was first in possession of the property. He is also a possessor in good faith. It is true that Mata had alleged that the deed of 21 sale in favor of Laureta was procured by force. Such defect, however, was cured when, after the lapse of four years from the time the intimidation ceased, Marcos Mata lost both his rights to file an action for annulment or to set up nullity of the contract as a defense in an action to enforce the same. Anent the fourth error assigned, the petitioner contends that the second deed of sale, Exhibit "F", is a voidable contract. Being a voidable contract, the action for annulment of the same on the ground of fraud must be brought within four (4) years from the discovery of the fraud. In the case at bar, Laureta is deemed to have discovered that the land in question has been sold to Caram to his prejudice on December 9, 1947, when the Deed of Sale, Exhibit "F" was recorded and entered in the Original Certificate of Title by the Register of Deeds and a new Certificate of Title No. 140 was issued in the name of Caram. Therefore, when the present case was filed on June 29, 1959, plaintiff's cause of action had long prescribed. The petitioner's conclusion that the second deed of sale, "Exhibit F", is a voidable contract is not correct. I n

ISSUE: Whether there is a valid sale of the property was made through his representatives, Pedro Irespe and Atty. Abelardo Aportadera.

HELD: The contention of the petitioner has no merit. The facts of record show that Mata, the vendor, and Caram, the second vendee had never met. During the trial, Marcos Mata testified that he knows Atty. Aportadera but did not know Caram. Thus, the sale of the property could have only been through Caram's representatives, Irespe and Aportadera. The petitioner, in his answer, admitted that Atty. Aportadera acted as his notary public and attorney-in-fact at the same time in the purchase of the property. The petitioner contends that he cannot be considered to have acted in bad faith because there is no direct proof showing that Irespe and Aportadera, his alleged agents, had knowledge of the first sale to Laureta. This contention is also without merit. Even if Irespe and Aportadera did not have actual knowledge of the first sale, still their actions have not satisfied the requirement of good faith. Bad faith is not based solely on the fact that a vendee had knowledge of the defect or lack of title of his vendor. In the instant case, Irespe and Aportadera had knowledge of circumstances which ought to have put them an inquiry. Both of them knew that Mata's certificate of title

order that fraud can be a ground for the annulment of a contract, it must be employed prior to or simultaneous to the, consent or creation of the contract. The fraud or dolo causante must be that which determines or is the essential cause of the contract. Dolo causante as a ground for the annulment of contract is specifically described in Article 1338 of the New Civil Code of the Philippines as "insidious words or machinations of one of the contracting parties" which induced the other to enter into a contract, and "without them, he would not have agreed to". The second deed of sale in favor of Caram is not a voidable contract. No evidence whatsoever was shown that through insidious words or machinations, the representatives of Caram, Irespe and Aportadera had induced Mata to enter into the contract. Since the second deed of sale is not a voidable contract, Article 1391, Civil Code of the Philippines which provides that the action for annulment shall be brought within four (4) years from the time of the discovery of fraud does not apply. Moreover, Laureta has been in continuous possession of the land since he bought it in June 1945. A more important reason why Laureta's action could not have prescribed is that the second contract of sale, having been registered in bad faith, is null and void. Article 1410 of the Civil Code of the Philippines provides that any action or defense for the declaration of the inexistence of a contract does not prescribe. In a Memorandum of Authorities submitted to this Court on March 13, 1978, the petitioner insists that the action of Laureta against Caram has prescribed because the second contract of sale is not void under Article 1409 23 of the Civil Code of the Philippines which enumerates the kinds of contracts which are considered void. Moreover, Article 1544 of the New Civil Code of the Philippines does not declare void a second sale of immovable registered in bad faith. The fact that the second contract is not considered void under Article 1409 and that Article 1544 does not declare void a deed of sale registered in bad faith does not mean that said contract is not void. Article 1544 specifically provides who shall be the owner in case of a double sale of an immovable property. To give full effect to this provision, the status of the two contracts must be declared valid so that one vendee may contract must be declared void to cut off all rights which may arise from said contract. Otherwise, Article 1544 win be meaningless. The first sale in favor of Laureta prevails over the sale in favor of Caram. WHEREFORE, the petition is hereby denied and the decision of the Court of Appeals sought to be reviewed is affirmed, without pronouncement as to costs. SO ORDERED VICTORIAS MILLING VS CA 333 SCRA 663, June 19, 2000

QUISUMBING, J.: (Respicio, Russell) FACTS: St. Therese Merchandising (hereafter STM) regularly bought sugar from petitioner Victorias Milling Co., Inc., (VMC). In the course of their dealings, petitioner issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases. Among these was SLDR No. 1214M, it covers 25,000 bags of sugar. Each bag contained 50 kilograms and priced at P638.00 per bag as "per sales order VMC Marketing No. 042 dated October 16, 1989." The transaction it covered was a "direct sale." The SLDR also contains an additional note which reads: "subject for (sic) availability of a (sic) stock at NAWACO (warehouse)." On October 25, 1989, STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in SLDR No. 1214M for P 14,750,000.00. CSC issued one check dated October 25, 1989 and three checks postdated November 13, 1989 in payment. That same day, CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by SLDR No. 1214M. Enclosed in the letter were a copy of SLDR No. 1214M and a letter of authority from STM authorizing CSC "to withdraw for and in our behalf the refined sugar covered by Shipping List/Delivery Receipt-Refined Sugar (SDR) No. 1214 dated October 16, 1989 in the total quantity of 25,000 bags." On October 27, 1989, STM issued 16 checks in the total amount of P31,900,000.00 with petitioner as payee. The latter, in turn, issued an acknowledging receipt of the said checks in payment of 50,000 bags. Aside from SLDR No. 1214M, said checks also covered SLDR No. 1213. Private respondent CSC surrendered SLDR No. 1214M to the petitioner's NAWACO warehouse and was allowed to withdraw sugar. However, after 2,000 bags had been released, petitioner refused to allow further withdrawals of sugar against SLDR No. 1214M. CSC then sent petitioner a letter dated January 23, 1990 informing it that SLDR No. 1214M had been "sold and endorsed" to it but that it had been refused further withdrawals of sugar from petitioner's warehouse despite the fact that only 2,000 bags had been withdrawn.5 CSC thus inquired when it would be allowed to withdraw the remaining 23,000 bags. On January 31, 1990, petitioner replied that it could not allow any further withdrawals of sugar against SLDR No. 1214M because STM had already withdrawn all the sugar covered by the cleared checks.6 On March 2, 1990, CSC sent petitioner a letter demanding the release of the balance of 23,000 bags. Seven days later, petitioner reiterated that all the sugar corresponding to the amount of STM's cleared checks had been fully withdrawn and hence, there would be no more deliveries of the commodity to STM's account. Petitioner also noted that CSC had represented itself to be STM's agent as it had withdrawn the 2,000 bags against SLDR No. 1214M "for and in behalf" of STM.

CSC filed a complaint for specific performance. Defendants were Teresita Ng Sy (doing business under the name of St. Therese Merchandising) and herein petitioner.

CSC's allegations: that STM had fully paid petitioner for the sugar covered by SLDR No. 1214M. Therefore, the latter had no justification for refusing delivery of the sugar. It prayed that petitioner be ordered to deliver the 23,000 bags covered by SLDR No. 1214M and sought the award of P1,104,000.00 in unrealized profits, P3,000,000.00 as exemplary damages, P2,200,000.00 as attorney's fees and litigation expenses.

most clearly distinguishes agency from other legal concepts is control; one person - the agent - agrees to act under the control or direction of another - the principal. Indeed, the very word "agency" has come to connote control by the principal. The control factor, more than any other, has caused the courts to put contracts between principal and agent in a separate category.

Petitioner's primary defense: it was an unpaid seller for the 23,000 bags. Since STM had already drawn in full all the sugar corresponding to the amount of its cleared checks, it could no longer authorize further delivery of sugar to CSC. Petitioner also contended that it had no privity of contract with CSC; the SLDRs, which it had issued, were not documents of title, but mere delivery receipts issued pursuant to a series of transactions entered into between it and STM. The SLDRs prescribed delivery of the sugar to the party specified therein and did not authorize the transfer of said party's rights and interests; that CSC did not pay for the SLDR and was actually STM's co-conspirator to defraud it through a misrepresentation that CSC was an innocent purchaser for value and in good faith.

In the instant case, it appears plain to us that private respondent CSC was a buyer of the SLDFR form, and not an agent of STM. Private respondent CSC was not subject to STM's control. The question of whether a contract is one of sale or agency depends on the intention of the parties as gathered from the whole scope and effect of the language employed.That the authorization given to CSC contained the phrase "for and in our (STM's) behalf" did not establish an agency. Ultimately, what is decisive is the intention of the parties.That no agency was meant to be established by the CSC and STM is clearly shown by CSC's communication to petitioner that SLDR No. 1214M had been "sold and endorsed" to it.The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale, and not an agency. Hence, on this score, no error was committed by the respondent appellate court when it held that CSC was not STM's agent and could independently sue petitioner. LIM vs CA Facts: On October 8, 1987, Rosa Lim who had come from Cebu received from private respondent Victoria Suarez the following two pieces of jewelry; one 3.35 carat diamond ring worth P169K and one bracelet worth P170K, to be sold on commission basis. The agreement was reflected in a receipt. On December 15, 1987, Lim returned the bracelet to Suarez, but failed to return the diamond ring or to turn over the proceeds thereof if sold. As a result, private complainant, aside from making verbal demands, wrote a demand letter to petitioner asking for the return of said ring or the proceeds of the sale thereof. Lims contention: She was not an agent of Suarez. In fact, she was a prospective buyer of the pieces of jewelry. She told Mrs. Suarez that she would consider buying the pieces of jewelry for her own use and that she would inform the private complainant of such decision before she goes back to Cebu. She cannot be liable for estafa since she never received the jewelries in trust or on commission basis from Vicky Suarez. The real agreement between her and the private respondent was a sale on credit with Mrs. Suarez as the owner-seller and petitioner as the buyer, as indicated by the bet that petitioner did not sign on the blank space provided for the signature of the person receiving the jewelry but at the upper portion thereof immediately below the description of the items taken. Issue: WON the real transaction between Lim and Suarez was that of sale or that of contract of agency to sell? Contract of Agency. Held:

ISSUE: Whether or not the Court of Appeals erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon SLDR No. 1214M as an assignee.

HELD: No. Petitioner heavily relies upon STM's letter of authority allowing CSC to withdraw sugar against SLDR No. 1214M to show that the latter was STM's agent.

The Civil Code defines a contract of agency as follows: "Art. 1868. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter." It is clear from Article 1868 that the basis of agency is representation. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions; and on the part of the agent, there must be an intention to accept the appointment and act on it, and in the absence of such intent, there is generally no agency.21 One factor which

Receipt contains the following provisions: XXX I received from Vicky Suarez the following jewelries XXX XXX if I could not sell, I shall return all the jewelry within the period mentioned above; if I would be able to sell, I shall immediately deliver and account the whole proceeds of sale thereof to the owner of the jewelries at his/her residence XXX Materiality of the location of Lims signature: Rosa Lims signature indeed appears on the upper portion of the receipt immediately below the description of the items taken. This does not have the effect of altering the terms of the transaction from a contract of agency to sell on commission basis to a contract of sale. Contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. There are some provisions of the law which require certain formalities for particular contracts. It is required for for the validity of the contract; to make the contract effective as against third parties and; for the purpose of proving the existence of the contract. A contract of agency to sell on commission basis does not belong to any of these three categories, hence it is valid and enforceable in whatever form it may be entered into. FYI: There is only one type of legal instrument where the law strictly prescribes the location of the signature which is in notarial wills found in Article 805 NCC. In the case before us, the parties did not execute a notarial will but a simple contract of agency to sell on commission basis, thus making the position of petitioners signature thereto immaterial. Contention of Lim that Suarez authorized Nadera to receive the ring: Suarez testified that Aurelia Nadera is highly indebted to her, so if she gave authority for Nadera to get possession of it she will be exposing herself to a high risk. Yu Eng Cho vs. Pan American World Airways 328 SCRA 717, March 27, 2000 PUNO, J.: (Sarcilla, Johanne)

(PAA) Flight 002 from Tokyo to San Francisco was on "RQ" status meaning "on request". Per instruction of defendant Claudia Tagunicar, plaintiffs returned after a few days for the confirmation of the Tokyo-San Francisco segment of the trip. After calling up Canilao of TWSI, Tagunicar told the Yus that their flight was now confirmed all the way. Thereafter, she attached the confirmation stickers on the plane tickets. A few days before the scheduled flight, their son, Adrian Yu, called the Pan Am office to verify the status of the flight. According to said Adrian Yu, a personnel of Pan Am told him over the phone that the Yus' bookings are confirmed. On July 23, 1978, the Yus left for HongKong and stayed there for 5 days. They left HongKong for Tokyo on July 28, 1978. Upon their arrival in Tokyo, they called up Pan-Am office for reconfirmation of their flight to San FRancisco. Saic office, however, informed them that their names are not in the manifest. Since they were supposed to leave o July 29th, and could not remain in japan for more than 72 hours, they were constrained to agree to accept the airline tickets for Taipei instead, per advise of JAL officials. This is the only option left to them because Northwest Airlines was then on strike, hence, there was no chance fo r them to obtain airline seats to the United States within 72 hours. They paid for these tickets. Upon reaching Taipei, there were no flights available for them, thus, they were forced to return back to Manila on 3 August 1978, instead of proceeding to the United States. Japan Air Lines (JAL) refunded them the difference of the price for Tokyo-Taipei [and] Tokyo-San Francisco in the total amount of P2,602.00. In view of their failure to reach Fairfield, New Jersey, Radiant Heat Enterprises, Inc. cancelled Yu Eng Chos option to buy the 2 lines of infra-red heating system. The agreement was for him to inspect the equipment and make final arrangements with the said company not later than 7 August 1978. From this business transaction, Yu Eng Cho expected to realize a profit of P300,000.00 to P400,000.00.

Facts: Yu Eng Cho is the owner of Young Hardware Co. and Achilles Marketing. In connection with his business, he travels from time to time to Malaysia, Taipei and HongKong. On July 10, 1976, Yu Eng Cho and Francisco Tao Yu bought plane tickets from Claudia Tagunicar who represented herself to be an agent of Tourist World Services, Inc. (TWSI). The destinations were Hongkong, Tokyo, San Francisco, USA, for the amount of P25,000.00 per computation of said Tagunicar. The purpose of this trip is to go to Fairfield, New Jersey USA to buy 2 lines of infrared heating system processing textured plastic article. On said date, only the passage from Manila to Hongkong, then to Tokyo, were confirmed. Pan American Airwars

A complaint for damages was filed by Yu Eng Cho, et. al. against Pan American World Airways, Inc. (Pan Am), Tourist World Services, Inc. (TWSI), Julieta Canilao (Canilao), and Claudia Tagunicar (Tagunicar) for expenses allegedly incurred such as costs of tickets and hotel accommodations when Yu Eng Cho, et. al. were compelled to stay in Hongkong and then in Tokyo by reason of the non-confirmation of their booking with PanAm. In a Decision dated 14 November 1991, the RTC Manila, Branch 3, held PAN AM, TWSI, and Tagunicar, except Julieta Canilao, jointly and severally liable to pay Yu Eng Cho for damages.

Issue: Whether or not there was agency relationship among PanAm, TWSI and Tagunicar.

Held: No. There is no agency relationship among Pan-Am, TWSI and Tagunicar.

Petitioners assert that Tagunicar is a sub-agent of TWSI while TWSI is a duly authorised ticketing agent of Pan-Am. And because of this, they contend that TWSI and Pan-Am should be held liable as principals for the acts of Tagunicar. The petitioners insist that an agency relationship has been established as per the judicial admissions allegedly made by the respondents to wit: (1) the admission made by Pan-Am in its answer that TWSI is its authorised ticket agent; (2) the affidavit executed by Tagunicar where she admitted that she is a duly authorised agent of TWSI; and (3) the admission made by Canilao that TWSI received commissions from ticket sales made by Tagunicar.

relationship. At any rate, even if such affidavit is to be given any probative value, the existence of the agency relationship cannot be established on its sole basis. The declarations of the agent alone are generally insufficient to establish the fact or extent of his authority. In addition, as between the negative allegation of respondents Canilao and Tagunicar that neither is an agent nor principal of the other, and the affirmative allegation of petitioners that an agency relationship exists, it is the latter who have the burden of evidence to prove their allegation, failing in which, their claim must necessarily fail. Rural Bank of Milaor vs. Francisca Ocfemia et. al G.R. No 137686, February 8, 2000 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 fiveparcels 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.

The court does not agree with this contention. In the case at bar, petitioners rely on the affidavit of respondent Tagunicar where she stated that she is an authorized agent of TWSI. This affidavit, however, has weak probative value in light of respondent Tagunicars testimony in court to the contrary. Affidavits, being taken ex parte, are almost always incomplete and often inaccurate, sometimes from partial suggestion, or for want of suggestion and inquiries. Their infirmity as a species of evidence is a matter of judicial experience and are thus considered inferior to the testimony given in court. Further, affidavits are not complete reproductions of what the declarant has in mind because they are generally prepared by the administering officer and the affiant simply signs them after the same have been read to her. Respondent Tagunicar testified that her affidavit was prepared and typewritten by the secretary of petitioners lawyer, Atty. Acebedo, who both came with Adrian Yu, son of petitioners, when the latter went to see her at her office. This was confirmed by Adrian Yu who testified that Atty. Acebedo brought his notarial seal and notarized the affidavit of the same day. The circumstances under which said affidavit was prepared put in doubt petitioners claim that it was executed voluntarily by respondent Tagunicar. It appears that the affidavit was prepared and was based on the answers which respondent Tagunicar gave to the questions propounded to her by Atty. Acebedo. They never told her that the affidavit would be used in a case to be filed against her. They even assured her that she would not be included as defendant if she agreed to execute the affidavit.

ISSUE: May the Board of Directors of a rural banking corporationbe 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 ruralbanking corporation?

Respondent Tagunicar was prevailed upon by petitioners son and their lawyer to sign the affidavit despite her objection to the statement therein that she was an agent of TWSI. They assured her that "it is immaterial" and that "if we file a suit against you we cannot get anything from you." This purported admission of respondent Tagunicar cannot be used by petitioners to prove their agency

HELD: YES. The bank acknowledges, by its own acts or failure to act, the authority of Fe S. Tena 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.

Inland Realty Investment vs CA Facts: Private respondent Gregorio Araneta Inc through its Assistant General Manager Eduque granted to Inland Realty and Mr. de los Reyes 1 30 day authority to sell its 9,800 shares of stock in Architects' Bldg. Inc. as evidenced by a special power of attorney. Inland Realty is a corporation engaged among others in the real estate business and brokerages, duly licensed by the Bureau of Domestic Trade. Inland Realty planned their sales campaign sending proposal letters to prospective buyers. One such prospective buyer to whom a proposal letter was sent to was Stanford Microsystem Inc, that counter-proposed to buy 9,800 shares offered at P1,000 per share or for a total of P9,800,888, P4,900,000 payable in 5 years at 12% per annum interest until fully paid. Upon petitioner's receipt of the said counter-proposal, it immediately wrote defendant a letter to register Stanford Microsystems Inc as one of its prospective buyers. Respondent Araneta Inc, through Enduque, replied that the price offered by Stanford was too low and suggested that plaintiffs see if the price and terms of payment can be improved upon by Stanford. Other prospective buyers were submitted to respondents among whom were Atty Belmonte and Mr. Hernandez. The authority to sell given to plaintiffs by defendants was extended several times. De los Reyes manager of Inland Realty's brokerage division, who by contract with Inland Realty would be entitled to 1/2 of the claim asserted herein, testified that when his company was initially granted the authority to sell, he asked for an exclusive authority and for a longer period but Eduque would not give Finally, on July 8, 1977 the petitioners finally sold the 9,800 shares of stock in Architects' Bldg Inc to Stanford Microsystems, Inc for P13,500.00. A few months after, petitioner demanded formally from defendants, through a letter of demand, for payment of their 5% broker's commission at P13,500,000 or a total amount of P675,000 which was declined by the defendants on the ground that the claim has no factual or legal basis. That after their authority to sell expired on Jan 1, 1976, petitioners abandoned the sales transaction and were no longer privy to the consummate and documentation thereof. The TC dismissed the petitioner's complaint for collection of unpaid broker's commission. The CA affirmed. Issue: Whether or not, petitioner is entitled to collect the unpaid broker's commission from private respondent Held: No. The petitioner failed to prove that the respondents extended the agency contract and authority to sell in favour of the petitioners after it expired on January 1, 1976.

Finally, petitioners asseverate that, regardless of whether or not their agency contract and authority to sell had expired, they are automatically entitled to their broker's commission merely upon securing for and introducing to private respondent Araneta, Inc. the buyer in the person of Stanford which ultimately acquired ownership over Araneta, Inc.'s 9,800 shares in Architects'. Petitioners' asseverations are devoid of merit. The Court of Appeals cannot be faulted for emphasizing the lapse of more than one (1) year and five (5) months between the expiration of petitioners' authority to sell and the consummation of the sale to Stanford, to be a significant index of petitioners' non-participation in the really critical events leading to the consummation of said sale, i.e., the negotiations to convince Stanford to sell at Araneta, Inc.'s asking price, the finalization of the terms and conditions of the sale, the drafting of the deed of sale, the processing of pertinent documents, and the delivery of the shares of stock to Stanford. Certainly, when the lapse of the period of more than one (1) year and five (5) months between the expiration of petitioners' authority to sell and the consummation of the sale, is viewed in the context of the utter lack of evidence of petitioners' involvement in the negotiations between Araneta, Inc. and Stanford during that period and in the subsequent processing of the documents pertinent to said sale, it becomes undeniable that the respondent Court of Appeals did not at all err in affirming the trial court's dismissal of petitioners' claim for unpaid brokerage commission. Petitioners were not the efficient procuring cause in bringing about the sale in question on July 8, 1977 and are, therefore, not entitled to the stipulated broker's commission of "5% on the total price." Siredy Enterprises, Inc. vs. Court of Appeals G.R. No. 129039. September 17, 2002.* QUISUMBING, J.: (Puti, Mary Elizabeth S.) FACTS: Private respondent Conrado De Guzman is an architectcontractor doing business under the name and style of Jigscon Construction. Herein petitioner Siredy Enterprises, Inc. (hereafter Siredy) is the owner and developer of Ysmael Village, a subdivision in Sta. Cruz, Marilao, Bulacan. The president of Siredy is Ismael E. Yanga. As stated in its Articles of Incorporation, the primary corporate purpose of Siredy is to acquire lands, subdivide and develop them, erect buildings and houses thereon, and sell, lease or otherwise dispose of said properties to interested buyers. Yanga executed an undated Letter of Authority for HERMOGENES B. SANTOS to 1. To negotiate and enter into contract or contracts to build Housing Units on our subdivision lots in Ysmael Village, Sta. Rosa, Marilao, Bulacan. x x x; 2. To sell lots on our subdivisions and; 3. To represent us, intercede and agree for or make agreements for all payments in our favor, provided that actual receipts thereof shall be made by the undersigned. Thereafter, Santos entered into a Deed of Agreement with

De Guzman. The deed expressly stated that Santos was representing Siredy Enterprises, Inc. Private respondent was referred to as contractor while petitioner Siredy was cited as principal. From October 1978 to April 1990, De Guzman constructed 26 residential units at Ysmael Village. Thirteen (13) of these were fully paid but the other 13 remained unpaid. The total contractual price of these 13 unpaid houses is P412,154.93 which was verified and confirmed to be correct by Santos, per an Accomplishment Billing that the latter signed. De Guzman tried but failed to collect the unpaid account from petitioner. Thus, he instituted the action below for specific performance against Siredy, Yanga, and Santos who all denied liability. During the trial, Santos disappeared and his whereabouts remain unknown. Moreover, petitioner denies any liability by stating that: (1) the nature of Siredys business did not involve the construction of housing units since it was merely engaged in the selling of empty lots; (2) the Letter of Authority is defective, and hence needed reformation; (3) Santos entering into the Deed of Agreement was invalid because the same was in excess of his authority; and (4) there is now implied revocation of such Letter of Authority. ISSUE: 1. Whether or not Hermogenes B. Santos was a duly constituted agent of Siredy, with authority to enter into contracts for the construction of residential units; and 2. Assuming arguendo that Siredy was bound by the acts of Santos, WHETHER OR NOT under the terms of the Deed of Agreement, Siredy can be held liable for the amount sought to be collected by private respondent De Guzman.

HELD: We find that a valid agency was created between Siredy and Santos, and the authority conferred upon the latter includes the power to enter into a construction contract to build houses such as the Deed of Agreement between Santos and De Guzmans Jigscon Construction. Hence, the inescapable conclusion is that Siredy is bound by the contract through the representation of its agent Santos. The basis of agency is representation, that is, the agent acts for and in behalf of the principal on matters within the scope of his authority (Art, 1881) and said acts have the same legal effect as if they were personally done by the principal. By this legal fiction of representation, the actual or legal absence of the principal is converted into his legal or juridical presence. Aside from the Letter of Authority, Siredys Articles of Incorporation, duly approved by the Securities and Exchange Commission, shows that Siredy may also undertake to erect buildings and houses on the lots and sell, lease, or otherwise dispose of said properties to interested buyers. Such Articles, coupled with the Letter of Authority, is sufficient to have given De Guzman reason to believe that Santos was duly authorized to represent Siredy for the purpose stated in the Deed of Agreement. Petitioners theory that it merely sold lots is effectively debunked. Thus, it was error for the trial court to have ignored the

Letter of Authority. As correctly held by the Court of Appeals: There is absolutely no question that the Letter of Authority executed by appellee Yanga constituted defendant Santos as his and appellee Siredys agent. As agent, he was empowered inter alia to enter into a contract to build housing units in the Ysmael Village. This was in furtherance of appellees business of developing and subdividing lands, erecting houses thereon, and selling them to the public. Moreover, even if arguendo Santos mandate was only to sell subdivision lots as Siredy asserts, the latter is still bound to pay De Guzman. De Guzman is considered a third party to the agency agreement who had no knowledge of the specific instructions or agreements between Siredy and its agent. What De Guzman only saw was the written Letter of Authority where Santos appears to be duly authorized. Article 1900 of the Civil Code provides: Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agents authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. The scope of the agents authority is what appears in the written terms of the power of attorney. While third persons are bound to inquire into the extent or scope of the agents authority, they are not required to go beyond the terms of the written power of attorney. Third persons cannot be adversely affected by an understanding between the principal and his agent as to the limits of the latters authority. In the same way, third persons need not concern themselves with instructions given by the principal to his agent outside of the written power of attorney. The essence of agency being the representation of another, it is evident that the obligations contracted are for and on behalf of the principal. This is what gives rise to the juridical relation. A consequence of this representation is the liability of the principal for the acts of his agent performed within the limits of his authority that is equivalent to the performance by the principal himself who should answer therefore. 1. 2. 3. 4. 5. 6. 7. 8. 9. Orient Siredy Caram Victorias Lim Inland Caoile Spouses yu Eng Cho Rural Bank of Milaor