AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.

I. Nature, Form and Kind

3.

/a i

A.

A!"ICLE #$%$

Art. 1!"!. By t#e contract of agency a erson binds #imself to render some service or to do somet#ing in re resentation or on be#alf of anot#er$ %it# t#e consent or a&t#ority of t#e latter.

!a--o ). Fe-i0 Go C1an (2AI) *an&ary @1$ 1(A! '&Bo6 )alma$ *. +AC,-. Conce cion and 5er&ndia 4allos %ere sisters and registered co?o%ners of a arcel of land kno%n as =ot ;o. C(!@. /n 1(CD$ t#ey exec&ted a s ecial o%er of attorney in favor of t#eir brot#er$ -imeon 4allos$ a&t#ori6ing #im to sell for and in t#eir be#alf t#e aforementioned arcel of land. 2n 'arc# 1(CC$ Conce cion 4allos died. 2n -e tember 1(CC$ -imeon 4allos sold t#e &ndivided s#ares of #is sisters in lot C(!@ to +elix 5o C#an and -ons 4ealty Cor oration. ,#e deed of sale %as registered and t#e revio&s ,C, %as cancelled. 2n 'ay 1(C"$ 4amos 4allos$ as administrator of t#e /ntestate 9state of Conce cion 4allos$ filed a com laint %it# t#e C+/ of Ceb&$ raying 011 t#at t#e sale of t#e &ndivided s#are of t#e deceased Conce cion 4allos be declared &nenforceable$ and said s#are be reconveyed to #er estateE 021 t#at t#e ,C, iss&ed in t#e name of +elix 5o C#an and -ons 4ealty Cor oration be cancelledE and 0@1 t#at t#e laintiff be indemnified by %ay of attorneyFs fees and ayment of costs of s&it. ,#e trial co&rt rendered j&dgment declaring t#e deed of sale n&ll and void$ insofar as t#e one?#alf ro?indiviso s#are of Conce cion 4allos in t#e ro erty in G&estion$ and sentencing *&an Borromeo$ t#e administrator of t#e estate of -imeon 4allos$ to ay +elix 5o C#an and -ons 4ealty Cor oration t#e s&m re resenting t#e rice of one?#alf of t#e lot. ,#e a ellate co&rt reversed t#e decision and s&stained t#e sale. /--89. :#et#er or not t#e sale of t#e agent of t#e rinci alFs ro erty after t#e latterFs deat# is valid 39=7. ;2. ,#e general r&le in Article 1(1( of t#e ;CC is t#at deat# is one of t#e ca&ses for t#e exting&is#ment of agency. ,#ere being an integration of t#e ersonality of t#e rinci al into t#at of t#e agent$ it is not ossible for t#e re resentation to contin&e once t#e deat# of eit#er is establis#ed. ,#ere are certain exce tions$ #o%ever$ Article 1(@1 being one of t#em. 8nder t#is rovision$ an act done by t#e agent after t#e deat# of t#e rinci al is valid and effective if t%o conditions conc&r. 011 t#e agent acted %it#o&t kno%ledge of t#e deat# of t#e rinci alE and 021 t#at t#e t#ird erson %#o contracted %it# t#e agent acted in good fait#. B&t beca&se it %as establis#ed t#at -imeon 4allos #ad kno%ledge of t#e deat# of #is rinci al %#en #e made t#e sale$ Article 1(@1 %ill not a ly. ,#e general r&le s#all a ly t#en t#at any act of an agent after t#e deat# of #is rinci al is void ab initio. -imeon 4allosF act

1. 2.

&e'inition Nature

(rient Air Ser)i*e + ,ote- !e.. ) CA (GEN) 'ay 2($ 1((1 )adilla$ *. +AC,-. American Airlines /nc. 0AA/1 and 2rient Air -ervices and 3otel 4e resentatives 02rient Air1 entered into a 5eneral -ales Agency Agreement a&t#ori6ing t#e latter to act as its excl&sive general sales agent %it#in t#e )#ili ines for t#e sale of air assenger trans ortation. 7&e to t#e alleged fail&re of 2rient Air to rom tly remit t#e net roceeds of sales for " mont#s$ AA/ &ndertook t#e collection of t#e roceeds of tickets sold originally by 2rient Air and terminated t#e agency agreement. AA/ t#en instit&ted s&it against 2rient Air %it# C+/ of 'anila for Acco&nting %it# )reliminary Attac#ment or 5arnis#ment$ 'andatory /nj&nction and 4estraining 2rder. ,#e C+/ of 'anila r&led in favor of 2rient Air and dismissed t#e com laint. /t t#en ordered AA/ to reinstated 2rient Air as its general sales agent for assenger trans ortation in t#e )#ili ines. ,#e /AC affirmed %it# modifications t#e findings of C+/ of 'anila. /--89. :2; t#e lo%er co&rt may com el AA/ to extend its ersonality to 2rient Air< 39=7. ;2. /t %o&ld be violative of t#e rinci les and essence of agency$ defined by la% as a contract %#ereby a erson binds #imself to anot#er to render some service or to do somet#ing in re resentation or on be#alf of anot#er :/,3 ,39 C2;-9;, 24 A8,324/,> 2+ ,39 =A,,94. /n an agent? rinci al relations#i $ t#e ersonality of t#e rinci al is extended t#ro&g# t#e facility of t#e agent. /n so doing$ t#e agent$ by legal fiction$ becomes t#e rinci al$ a&t#ori6ed to erform all acts %#ic# t#e latter %o&ld #ave #im do. -&c# a relations#i can only be effected %it# t#e consent of t#e rinci al$ %#ic# m&st not$ in any %ay$ be com elled by la% or by any co&rt.

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
of selling t#e s#are of Conce cion after #er deat# is t#erefore n&ll and void. AGENCY: ,#e relations#i of agency is %#ereby one arty$ called t#e rinci al 0mandante1$ a&t#ori6es anot#er$ called t#e agent 0mandatario1$ to act for and in #is be#alf in transactions %it# t#ird ersons. ,#e essential elements of agency are. 011 t#ere is consent$ ex ress or im lied of t#e arties to establis# t#e relations#i E 021 t#e object is t#e exec&tion of a j&ridical act in relation to a t#ird ersonE 0@1 t#e agents acts as a re resentative and not for #imself$ and 0D1 t#e agent acts %it#in t#e sco e of #is a&t#ority. Agency is basically ersonal re resentative$ and derivative in nat&re. ,#e a&t#ority of t#e agent to act emanates from t#e o%ers granted to #im by #is rinci alE #is act is t#e act of t#e rinci al if done %it#in t#e sco e of t#e a&t#ority. H&i facit er ali&m facit se. I3e %#o acts t#ro&g# anot#er acts #imselfI. 3i*toria 2i--in4 ). CA (!(G) /ordador ). Lu5 ("(FF) Caram ). Laureta (!EG) #9$# +AC,-. /n 1(DC$ 'ata conveyed a arcel of land in favor of =a&reta 0first vendee1. ,#e deed of absol&te sale %as &nregistered beca&se it %as not ackno%ledged before a notary &blic or any a&t#ori6ed officer. 3o%ever$ 'ata delivered ossession to =a&ereta$ as %ell as an 2%nerFs 7& licate 2riginal 0%t#J1 certificate of title. /n 1(DA$ t#e same land %as sold by 'ata to Caram t#ro&g# #is re resentatives /res e and A ortadera. ,#e deed of sale %as ackno%ledged by Attorney. A ortadera. A ortadera and Arcilla filed %it# t#e C+/ of 7avao a etition for t#e iss&ance of a ne% 2%nerFs 7& licate of 2riginal Certificate alleging as gro&nd t#e loss of said title. /t %as granted. ,#e second sale %as later registered in t#e 4egistry of 7eeds. )etitioner contends t#at /res e %as merely a broker or intermediary %it# t#e task to make t#e ayment to 'ataE and t#at A ortadera merely acted as a notary &blic. /--89-. 11 :2; /res e and A ortadera served as agents of Caram. 0>9-1 21 :2; t#e t%o %ere in bad fait#. 0>9-1 @1 :2; Caram$ as rinci al$ is deemed also in bad fait#. 0>9-1 39=7. 1. ,#e facts of record s#o% t#at 'ata$ t#e vendor$ and Caram$ t#e second vendee #ad never met. 7&ring t#e trial$ 'ata testified t#at #e kno%s Attorney. A ortadera b&t did not kno% Caram. ,#&s$ t#e sale of t#e ro erty co&ld #ave only been t#ro&g# CaramKs re resentatives$ /res e and A ortadera.

2.

:#en =eaning 'ansaca narrated to Attorney. A ortadera t#e circ&mstances &nder %#ic# #is ro erty #ad been sold to =a&reta$ #e m&st #ave incl&ded in t#e narration t#e sale of t#e land of 'ata$ for t#e t%o ro erties #ad been sold on t#e same occassion and &nder t#e same circ&mstances. /res e$ %#o %as t#e %itness in most of t#e cases filed by Attorney. A ortadera in #is ca acity as )rovincial +iscal of 7avao against =a&reta$ m&st #ave kno%n of t#e &rc#ases of lands made by =a&reta. 9ven if /res e and A ortadera did not #ave act&al kno%ledge of t#e first sale$ still t#eir actions #ave not satisfied t#e reG&irement of good fait#. Bad fait# is not based solely on t#e fact t#at a vendee #ad kno%ledge of t#e defect or lack of title of #is vendor. /res e and A ortadera #ad kno%ledge of circ&mstances %#ic# o&g#t to #ave &t t#em an inG&iry. Bot# of t#em kne% t#at 'ataKs certificate of title toget#er %it# ot#er a ers ertaining to t#e land %as taken by soldiers &nder t#e command of Col. =a&reta. Also$ at t#e time of t#e second sale$ =a&reta %as already in ossession of t#e land. /res e and A ortadera s#o&ld #ave investigated t#e nat&re of =a&retaKs ossession. Caveat emptor.

@.

A lying t#e rinci le of agency$ Caram as rinci al$ s#o&ld also be deemed to #ave acted in bad fait#.

9ffect. as if no t#ere %as no registration at all Air Fran*e ) CA, 6o e Gana (A//Y) 7ec. 2($ 1(!@ 'elencio 3errera +AC,-. ,#e 5anas &rc#ased from Air +rance t#ro&g# /m erial ,ravels$ a d&ly a&t#ori6ed agent$ ( o en dated tickets for a 'anilaL2sakaL,okyoL'anila. ,#e ex iry date %as 'ay !$ 1(A0. *ose 5ana so&g#t t#e assistance of ,eresita 'an&cdoc$ a secretary of t#e com any %#ere *ose 5ana %orked$ to roc&re t#e extension of t#e validity of t#eir tickets. 'an&cdoc talked %it# =ee 9lla$ 'anager of t#e )#ili ine ,ravel B&rea&. -#e %as told t#at t#ey %o&ld #ave to ay fare differentials and t#at t#e extension is im ossible. ,#e 5A;A- sc#ed&led t#eir de art&re for 'ay A and on 'ay "$ ,eresita again asked for =ee 9llaFs #el in t#e revalidation. -#e %as told t#at it %o&ld only be valid &ntil 'ay ! and no longer valid for t#e rest of t#e tri after t#at. 3o%ever$ 9lla attac#ed revalidation stickers on t#e

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
tickets 0revalidated by t#e )#ili ine ,ravel B&rea&1$ %it#o&t informing Air +rance. ,#e 5anas de arted and b&t t#e airlines ref&sed to #onor t#eir tickets at t#e start of t#e 2sakaL,okyo leg. ,#e 5A;A- #ad to &rc#ase ne% tickets at readj&sted rates and arrived at 'anila on different dates. ,C?Air +rance. CA? 5anas. -C?Air +rance /--89-. 1. :2; 9lla acted beyond #is o%ers as travel agent< >92. :2; notice to 'an&cdoc is notice to t#e 5anas< >939=7. ,#e 5A;A- cannot defend by contending lack of kno%ledge of t#ose r&les since t#e evidence bears o&t t#at ,eresita$ %#o #andled travel arrangements for t#e 5A;A-$ %as d&ly informed by travel agent 9lla of t#e advice of 4eno$ t#e 2ffice 'anager of Air +rance$ t#at t#e tickets in G&estion co&ld not be extended beyond t#e eriod of t#eir validity %it#o&t aying t#e fare differentials and additional travel taxes bro&g#t abo&t by t#e increased fare rate and travel taxes. ,o all legal intents and &r oses$ ,eresita %as t#e agent of t#e 5anas and notice to #er of t#e rejection of t#e reG&est for extension of t#e validity of t#e tickets %as notice to 5ana as #er rinci al. ,#e circ&mstances t#at A/4 +4A;C9 ersonnel at t#e ticket co&nter in t#e air ort allo%ed t#e 5A;Ato leave is not tantamo&nt to an im lied ratification of travel agent 9llaKs irreg&lar act&ations. ,#e validating stickers t#at 9lla affixed on #is o%n merely reflect t#e stat&s of reservations on t#e s ecified flig#t and co&ld not legally serve to extend t#e validity of a ticket or revive an ex ired one. ,#e concl&sion is inevitable t#at t#e 5A;Abro&g#t & on t#emselves t#e redicament t#ey %ere in for #aving insisted on &sing tickets t#at %ere d&e to ex ire in an effort$ er#a s$ to beat t#e deadline and in t#e t#o&g#t t#at by commencing t#e tri t#e day before t#e ex iry date$ t#ey co&ld com lete t#e tri even t#ereafter. /t s#o&ld be recalled t#at A/4 +4A;C9 %as even &na%are of t#e validating -A- and *A=. stickers t#at 9lla #ad affixed s &rio&sly. ConseG&ently$ *a an Air =ines and A/4 +4A;C9 merely acted %it#in t#eir contract&al rig#ts %#en t#ey dis#onored t#e tickets on t#e remaining segments of t#e tri and %#en A/4 +4A;C9 demanded ayment of t#e adj&sted fare rates and travel taxes for t#e ,okyoL'anila flig#t.

5.

entia- E-ement o' Contra*t o' A4en*7

!a--o ). Fe-i0 C1an, u.ra

6.

C1ara*teri ti* o' an A4en*7 Contra*t

Smit1 ) . Lo.e5 (EA!LA) -e tember @0$ 1(0C ,orres$ *. +AC,-. ;icasio =o e6$ as administrator of t#e #o&se o%ned by #is t%o da&g#ters$ contracted t#e services of )#ili ine 5as =ig#t Com any for t#e installation of a %ater system$ &rinals$ closets$ s#o%er bat#s$ and drain i es in t#e #o&se at 1D2 Calle 7&l&mbayan$ -anta Cr&6 'anila. ,#is %as done &rs&ant to t#e order of t#e Board of 3ealt#. ,#e Com any$ %it# -mit# and 4eyes as ro rietors$ inc&rred a total of )D020 'exican c&rrencyE )AC0 of %#ic# %as already aid$ leaving a balance of )@2A0. +ailing to ay$ -mit# and 4eyes instit&ted an action to recover t#e )@2A0 l&s interest$ from t#e sisters$ *acinta and /gnacia =o e6 de )ineda. As a defense$ t#e sisters claimed$ among ot#ers$ t#at t#ey are not liable for t#e s&m demanded since t#e %orks done by -mit# %ere done %it#o&t t#e a&t#ority or consent of t#e sisters. ,#e C+/ r&led in favor of -mit# and ordered t#e =o e6 sisters to ay )2A1A.D0 local c&rrency. /--89. :2; ;icasio =o e6 is t#e agent of #is t%o da&g#ters< >es. 39=7. ;icasio is t#e administrator of t#e ro erty of t#e defendant. )&rs&ant to t#e order of t#e Board of 3ealt#$ #e contracted t#e services of t#e )#il. 5as =ig#t Com any for t#e installation of certain fixt&res. Accordingly$ #e did all t#ese vol&ntarily. ,#&s$ alt#o&g# t#ere %as no ex ress consent given by t#e sisters$ t#ro&g# a valid o%er of attorney$ t#ere %as an /')=/97 o%er$ beca&se t#e sisters did not object to t#e %ork being done on t#e #o&se$ %#ic# benefited t#em in t#e end. ,#ere %as a G&asi?contract %#ic# created certain reci rocal obligations bet%een t#em and t#e laintiffs. 'oreover$ it is res&med from t#eir fail&re to object to t#e %ork being done t#at t#ey %ere a roving it$ t#ereby ratifying t#e act of t#eir fat#er$ as t#o&g# #e acted &nder an ex ress o%er from t#em. /t cannot also be denied t#at t#ey #ave benefited from t#e %ork done by -mit#$ et al. ,#e #o&se %as not im roved by said %ork. =ike%ise$ /f it %ere not &ndertaken by t#e laintiffs$ t#e Board of 3ealt# %o&ld #ave &ndertaken t#e same %ork at t#e

4.

Pur.o e

(rient Air Ser)i*e ) CA, u.ra

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
ex ense of t#e sisters. ,#&s$ it is only j&st t#at t#ey be ordered to ay t#e cost of t#e %ork and t#e val&e of t#e materials &sed. "1oma ). Pineda (6ANCES) Se)erino ). Se)erino (6ILL) *an&ary 1"$ 1(2@ 2strand$ *. +AC,-E 'elecio -everino o%ned a land$ by %#ic# brot#er 5&illermo served as administrator. 8 on t#e deat# of 'elecio$ 5&illermo contin&ed occ& ation of t#e land$ and in a cadastral roceeding s&ccessf&lly #ad t#e land ,itled in #is favor$ considering t#at #e #as ossessed it for @0 years. ,#is action no% is bro&g#t by t#e nat&ral da&g#ter and sole #eir of 'elecio$ +abiola -everino$ to com el defendant 5&illermo to convey t#e lands in #er favor. 'ean%#ile$ administratrix of 'elecioFs estate$ +elicitas Millan&eva$ also intervened so t#e land %ill be conveyed in t#e estateFs name. 7efendant arg&es t#at t#e land %as o%ned in common by t#eir fat#er and did not solely belong to 'elecio and t#at #is ,itle is indefeasible &nder t#e =and 4egistration Act. /--89. :2; defendant 5&illermo #as rig#ts over t#e ro erty< ;2. 39=7. ,#e relation of an agent to a rinci al is fid&ciary$ and t#e agent is esto ed from acG&iring or asserting ,itle adverse to t#e rinci al. 3is osition is analogo&s to a tr&stee$ and t#at %#atever #e does in&res to t#e benefit of t#e cest&i G&e vie. /n 5ilbert v. 3e%etson$ a tr&stee or agent is &tterly disabled from acG&iring for #is o%n any ro erty committed in #is c&stody. ,#is is entirely inde endent of t#e fact %#et#er any fra&d #as intervened. ;o fra&d in fact need be s#o%. ,#e r&le stands on moral obligation to refrain from lacing oneFs self in conflicts of self?interest and integrity. /t seeks to remove t#e tem tation t#at mig#t arise o&t of oneFs relation to serve anot#erFs interest for #is o%n benefit. 3ere$ %#ile t#e legal title of 5&illermo is not G&estioned$ it m&st be deemed as to in&re to t#e benefit of t#e estate of 'elecio -everino$ as t#e cest&i G&e vie %it# s& erior eG&itable rig#t. /t m&st be noted t#at t#e ro erty s#all in&re to t#e 9-,A,9F- benefit and not to t#e da&g#ter %#o bro&g#t t#e action since it is t#e estate %#o %ill a ortion all t#e claims. 'oreover$ t#e legitimacy of +abiola as a nat&ral c#ild is also being G&estioned. &uma4uin ). !e7no-d (ALAIN) Pa-ma ) Cri to8a- (GEN) 7ec. 11$ 1(D" )erfecto$ *. +AC,-. /n 1(0($ after registration roceedings$ 2C, %as iss&ed in t#e names of etitioner and #is %ife =&isa. After t#e latterFs deat#$ a ne% certificate of title %as iss&ed only in t#e name of etitioner. ,#e arcel of land is a comm&nity ro erty #eld by etitioner in tr&st for t#e real o%ners 0res ondent1. ,#e registration %as made in accordance %it# an &nderstanding bet%een t#e co?o%ners of t#e confidence t#ey re osed & on t#e etitioner and #is %ife. /t %as only after t#e deat# of =&isa and after etitionerFs s&bseG&ent marriage t#at tro&ble on religio&s matters arose bet%een etitioner and res ondent. )etitioner t#en so&g#t to eject res ondent from t#e land. ,#is %as dismissed and anot#er com laint %as filed$ %#erein t#e etitioner rays t#at #e be declared t#e o%ner of t#e land. /--89. :2; of t#e land< etitioner may be declared t#e o%ner

39=7. ;2. ,#e registration of t#e ro erty in t#e name of t#e tr&stees in ossession t#ereof$ m&st be deemed to #ave been effected for t#e benefit of t#e cest&i G&e tr&st. :#et#er or not t#ere is bad fait# or fra&d in obtaining a decree %it# res ect to a registered ro erty$ t#e same does not belong to t#e erson in %#ose favor it %as iss&ed$ and t#e real o%ners %o&ld be entitled to recover t#e o%ners#i of t#e ro erty so long as t#e same #as not been transferred to a t#ird erson %#o #as acG&ired it in good fait# and for val&able consideration. ,#&s$ t#e etitioner$ being a tr&stee$ does not acG&ire t#e land registered in #is name. Araneta ). de- Paterno (2AI) A&g&st 22$ 1(C2 ,&ason$ *. +AC,-. )a6 ,&ason de )aterno is t#e registered o%ner of a arcel of land$ %#ic# %as s&bdivided into lots. 'ost of t#ese lots %ere occ& ied by lessees %#o #ad contracts of lease t#at %o&ld ex ire at a certain time$ and carried a sti &lation giving t#e lessees a rig#t of first ref&sal in case t#e lots %ere to be sold. /n 1(D0 and 1(D1$ )a6 ,&ason obtained from *ose Midal several loans$ and constit&ted a mortgage on t#e ro erty to sec&re t#e debt. /n 1(D@$ s#e obtained additional loans & on t#e same sec&rity. -#e decided to sell t#e %#ole ro erty to 5regorio Araneta$ /nc. ,#e day after t#e agreement %as signed$ )a6 ,&ason offered to Midal a c#eck in f&ll

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
settlement of #er mortgage obligation b&t Midal ref&sed to acce t it or cancel t#e mortgage. 5regorio Araneta instit&ted t#e case to com el )a6 ,&ason to deliver to t#e former a clear title of t#e lots. 2ne of t#e objections made against t#e sale is t#at *ose Araneta$ resident of 5regorio Araneta /nc.$ %as also t#e agent of )a6 ,&ason. /--89. :#et#er or not 5regorio Araneta %as t#e agent of )a6 ,&ason 39=7. ;2. Article 1DC( of t#e - anis# Civil Code rovides. ,#e follo%ing ersons cannot take by &rc#ase$ even at a &blic or j&dicial a&ction$ eit#er in erson or t#ro&g# mediation of anot#er. 2. An agent$ any ro erty of %#ic# t#e management or sale may #ave been entr&sted to #imE 3o%ever$ in t#e o inion of 'anresa$ an agent 0in t#e sense of Article 1DC(1 is one %#o acce ts anot#erFs re resentation to erform in #is name certain acts of more or less transcendency. ,#e ban of aragra # 2 of Article 1DC( connotes t#e idea of tr&st and confidence. ,o come &nder t#is ro#ibition$ t#e agent m&st be in a fid&ciary relation %it# #is rinci al. ,ested by t#is standard$ *ose Araneta %as not an agent %it#in t#e meaning of Article 1DC(. 3e %as not#ing more t#an a go?bet%een or middleman bet%een )a6 ,&ason and 5regorio Araneta$ /nc. to bring t#em toget#er to make t#e contract t#emselves. *ose Araneta %as not a&t#ori6ed to make a binding contract for )a6 ,&ason. 3e #ad no o%er or discretion$ %#ic# #e co&ld ab&se to #is advantage and to t#e o%nerFs rej&dice. A--ied Free 9or:er (!(G) ). Com.ania 2aritima )11$DA"."". A com laint for damages re resenting difference in rice bet%een textile ordered and received$ &nreali6ed rofits and cost of s&it %as instit&ted against +99/C. +99/C set & t#at it only acted as broker in t#e transaction and took no f&rt#er action after lacement of order as defense. /t averred t#at t#e cargo %as directly taken by -&an from +renkel. ,#e trial co&rt acG&itted +99/C b&t t#e Co&rt of A eals reversed decision based on its r&ling on Melasco v. 8niversal ,rading Co. /--89. :2; +99/C co&ld act as agent of bot# -&an and +renkel. 39=7. ;2. An agent co&ld not serve t%o masters at t#e same time. ,#e same agent co&ld not very %ell act as agent for local b&yers beca&se t#e interest of its foreign rinci al and t#ose of t#e b&yer %o&ld be a direct conflict. +99/C %as clearly an agent of +renkel. As er t#e facts. -&an %as merely to be commissioning +99/C to roc&re for #im t#e merc#andise in G&estion. +&rt#ermore$ t#e rice of t#e merc#andise bo&g#t %as aid for by -&an by means of an irrevocable letter of credit in favor of +renkel. *&dgment of Co&rt of A eals affirmed.

7.

Partie ;Ca.a*it7

2endo5a ). &e Gu5man<

8.

&i tin4ui 1ed re-ation

'rom

ot1er

=uridi*a-

Se)i--a ). CA (!EG) #99$ FAC"S> ,o&rist :orld -ervice$ /nc. 0,:-1 leased t#e remises belonging to ;og&era for t#e formerFs &se as a branc# office. )etitioner -evilla #eld #erself solidarily liable %it# t#e arty of t#e art for t#e rom t ayment of t#e mont#ly rental. :#en t#e branc# office %as o ened$ it %as r&n by -evilla ayable to ,:- by any airline. +or any fare bro&g#t in on t#e efforts of -evilla$ DN %as to go to =ina -evilla and @N %as to be %it##eld by t#e ,:-. -evilla %as aid no salaries. -#e even s#ared in t#e ex enses of maintaining t#e office$ aid for t#e salary of an office secretary and ot#er s&ndry ex enses. =ater ,o&rist :orld considered closing do%n its office beca&se of b&siness losses and ne%s t#at -evilla %as t#en connected %it# a rival firm. ,#&s$ an em loyee of ,:- %ent to t#e branc# and adlocked its remises. -evilla filed a com laint claiming damages bro&g#t abo&t by ,:-Fs revocation of t#eir relations#i .

Far Ea tern E0.ort ). Lim "e*1 Suan ("(FF) 1(CC 'ontemayor$ *. +AC,-. +99/C agent 7eli6alde %ent to t#e store of -&an to sell textile %#ic# offer %as t#ereafter agreed & on. 7eli6alde later on ret&rned %it# b&yers order and a doc&ment signifying ayment be done by Confirmed /rrevocable =etter of Credit among ot#ers. /n accordance %it# t#is$ -&an establis#ed a letter of credit in favor of +renkel /nternational Cor oration. :#en t#e textile arrived at 'anila$ -&an com lained to +99/C of t#e inferior G&ality of t#e textile and #ad t#em examined$ %#ere a re ort %as s&bmitted by t#e examining body. 8 on instr&ctions by +99/C$ -&an de osited goods %it# t#e 8nited :are#o&se Cor . b&t s&bseG&ently %it#dre% 1C cases of textile to offer t#em for sale. ,#e net direct loss %as

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
,rent$ *. /--89. 11 :2; -evilla %as j&st an em loyee of ,:-$ and as s&c# %as bo&nd by t#e acts of #er em loyer. 0;21 21 :2; -evilla %as an agent of ,:- and t#&s entitled to damages beca&se ,:- revoked s&c# relations#i . 0>9-1 39=7. 1. -evilla %as not s&bject to control by t#e rivate res ondent ,:- eit#er as to t#e res&lt of t#e enter rise or as to t#e means &sed in connection t#ere%it#. +AC,-. 'erritt &ndertook and agreed %it# t#e defendant to b&ild for t#e defendant a costly edifice in t#e city of 'anila at t#e corner of Calle 4osario and )la6a del )adre 'oraga. /n t#e contract it %as agreed bet%een t#e arties t#ereto$ t#at 8y C#aco at any time$ & on certain contingencies$ before t#e com letion of said edifice co&ld take ossession of said edifice in t#e co&rse of constr&ction and of all t#e materials in and abo&t said remises acG&ired by 'erritt for t#e constr&ction of said edifice.+ressel delivered to 'erritt at t#e said edifice in t#e co&rse of constr&ction certain materials of t#e val&e of )1$@!1.218y C#aco took ossession of t#e incom lete edifice in co&rse of constr&ction toget#er %it# all t#e materials on said remises incl&ding t#e materials delivered. ;eit#er 'eritt nor 8y C#aco aid for t#e materials even after extraj&dicial demand. ,#e a ellants insist t#at t#e above G&oted allegations s#o% t#at 'erritt acted as t#e agent of t#e defendant in &rc#asing t#e materials in G&estion and t#at t#e defendant$ by taking over and &sing s&c# materials$ acce ted and ratified t#e &rc#ase$ t#ereby obligating itself to ay for t#e same. /--89. +resselFs allegation ,#at in &rs&ance of t#e contract bet%een 'erritt and t#e defendant$ 'erritt acted as t#e agent for defendant in t#e acG&isition of t#e materials from laintiffs. O:L; 'eritt acted as an agent for 8y C#aco and -ons 3eld. ;2. 'eritt is an inde endent contractor. :#ere one arty to a contract %as a&t#ori6ed to do %ork according to #is o%n met#od and %it#o&t being s&bject to t#e ot#er artyFs control$ exce t as to t#e res&lt of t#e %ork$ #e is an inde endent contractor and not an agent. ,#e fact t#at It#e defendant entered into a contract %it# one 9. 'erritt$ %#ere by t#e said 'erritt &ndertook and agreed %it# t#e defendant to b&ild for t#e defendant a costly edificeI s#o%s t#at 'erritt %as a&t#ori6ed to do t#e %ork according to #is o%n met#od and %it#o&t being s&bject to t#e defendantKs control$ exce t as to t#e res&lt of t#e %ork. 3e co&ld &rc#ase #is materials and s& lies from %#om #e leased and at s&c# rices as #e desired to ay. Again$ t#e allegations t#at t#e I laintiffs delivered t#e 'erritt . . . . certain materials 0t#e materials in G&estion1 of t#e val&e of )1$@!1.21$ . . . . %#ic# rice 'erritt agreed to ay$I s#o% t#at t#ere %ere no contract&al relations %#atever bet%een t#e sellers and t#e defendant. ,#e mere fact t#at 'erritt and t#e defendant #ad sti &lated in t#eir b&ilding contract t#at t#e latter co&ld$ I& on certain contingencies$I take ossession of t#e incom leted b&ilding and all materials on t#e gro&nd$ did not c#ange 'erritt from an inde endent contractor to an agent. /n t#e

8nder t#e contract of lease covering t#e ,o&rist :orlds 9rmita office$ s#e #ad bo&nd #erself in solidum as and for rental ayments. A tr&e em loyee cannot be made to art %it# #is o%n money in &rs&ance of #is em loyerKs b&siness$ or ot#er%ise$ ass&me any liability t#ereof. ? -evilla %as not &nder t#e control of ,:Ias to t#e means &sed.I -evilla in &rs&ing t#e b&siness$ obvio&sly relied on #er o%n gifts and ca abilities. ? -#e %as not in t#e com anyKs ayroll. +or #er efforts$ s#e retained DN in commissions from airline bookings$ t#e remaining @N going to ,o&rist :orld. 8nlike an em loyee t#en$ %#o earns a fixed salary &s&ally$ s#e earned com ensation in fl&ct&ating amo&nts de ending on #er booking s&ccesses. 2. -evilla solicited airline fares$ b&t s#e did so for and on be#alf of #er rinci al$ ,o&rist :orld -ervice$ /nc. As com ensation$ s#e received DN of t#e roceeds in t#e conce t of commissions.

An agency t#at #as been created for m&t&al interest$ of t#e agent and t#e rinci al cannot be revoked at %ill. -evilla is a bona fide travel agent #erself$ and as s&c#$ s#e #ad acG&ired an interest in t#e b&siness entr&sted to #er. 'oreover$ s#e #ad ass&med a ersonal obligation for t#e o eration t#ereof$ #olding #erself solidarily liable for t#e ayment of rentals. -#e contin&ed t#e b&siness$ &sing #er o%n name$ after ,o&rist :orld #ad sto ed f&rt#er o erations. 3er interest$ obvio&sly$ is not to t#e commissions s#e earned as a res&lt of #er b&siness transactions$ b&t one t#at extends to t#e very s&bject matter of t#e o%er of management delegated to #er. + Co.

Fre e- ) 2ariano U7 C1a*o Son (A//Y) 'arc# @$ 1(1"

"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
absence of a stat&te creating %#at is kno%n as mec#anicsK liens$ t#e o%ner of a b&ilding is not liable for t#e val&e of materials &rc#ased by an inde endent contractor eit#er as s&c# o%ner or as t#e assignee of t#e contractor. 3i*toria 2i--in4 ) CA, u.ra As a res&lt$ t#e com any instit&ted an estafa case against 7&ran for allegedly misre resenting #imself as t#e o%ner of t#e ro erty %#en #e sold t#e same to 5&tierre6. 7&ring trial$ t#e defense resented 2rense as %itness$ %#ere #e stated t#at t#e sale %as done %it# #is kno%ledge and consent. By virt&e of #is testimony$ confirming t#at #e gave #is ne #e% a&t#ority to convey t#e s&bject land$ 7&ran %as acG&itted of t#e criminal c#arges against #im. ,#e Com any t#en demanded t#at 2rense exec&te t#e ro er deed of conveyance of t#e ro erty sold. ,#e C+/ t#ereafter r&led in its favor and ordered t#at a delivery of t#e ro erty be done$ t#ro&g# a &blic instr&ment. /--89. :2; 7&ran is t#e agent of 2rense< >es. 39=7. ,#e s%orn statement of 2rense d&ring t#e trial of t#e estafa case confirmed and ratified t#e sale of #is ro erty effected by #is ne #e%. ,#e initial sale made by 7&ran %as indeed n&ll and void$ b&t it became erfectly valid and c&red of t#e defect of n&llity by t#e confirmation solemnly made by 2rense$ & on #is stating &nder oat# to t#e j&dge t#at #e #imself consented to t#e making of t#e said sale. ,#&s$ 2renseFs ratification rod&ced t#e effect of an ex ress a&t#ori6ation to make t#e said sale. Lo.e5 ). !o ario (6ANCES) 2a*1e ). Cam.o (6ILL) +ebr&ary 2A. 1(0A Carson$ *. +AC,-. )laintiffs B3 'acke P :3 C#andler sold to 4icardo +lores$ on t#e alleged order of #is rinci al 0defendant Cam s1$ several bills of goods at t#e :as#ington CafQ. +lores ackno%ledged recei t of goods and made aymentsE #o%ever$ #e reserved ayment of t#e balance & on t#e ret&rn of t#e rinci al Cam s. )laintiffs t#en investigated t#e tr&e stat&s of +lores and fo&nd o&t t#at #e is t#e b&siness manager of defendantFs CafQ. ,#at in t#e contract of lease of t#e b&ilding %#ere :as#ington CafQ is laced$ #e signed as t#e managing agent. 7efendant Cam s mean%#ile alleges t#at #e did not receive t#e goods and so %ill not ay t#e balance. /--89. :2; Cam s is liable for t#e balance< 39=7. >9-. /n t#e absence of roof$ -C fo&nd t#at +lores in t#e agent of Cam sE #e even signed as managing agent. 2ne %#o clot#es anot#er %it# a arent a&t#ority as #is agent$ and #olds #im o&t to t#e &blic as s&c#$ cannot be ermitted to deny t#e a&t#ority of s&c# erson to act as #is agent$ to

9.

Kno?-ed4e o' a4ent im.uted to .rin*i.a-

Art. 1!21. ;otice to any artner of any matter relating to artners#i affairs$ and t#e kno%ledge of t#e artner acting in t#e artic&lar matter$ acG&ired %#ile a artner or t#en resent to #is mind$ and t#e kno%ledge of any ot#er artner %#o reasonably co&ld and s#o&ld #ave comm&nicated it to t#e acting artner$ o erate as notice to or kno%ledge of t#e artners#i $ exce t in t#e case of fra&d on t#e artners#i $ committed by or %it# t#e consent of t#at artner.

B.

Arti*-e #$%9

Art. 1!"(. Agency may be ex ress$ or im lied from t#e acts of t#e rinci al$ from #is silence or lack of action$ or #is fail&re to re &diate t#e agency$ kno%ing t#at anot#er erson is acting on #is be#alf %it#o&t a&t#ority. #. (ra-, e0.re 2. Im.-ied a. a*t or *ondu*t o' .rin*i.aGutierre5 ,ermano ) . (ren e (EA!LA) 7ecember D$ 1(1D ,orres$ *. +AC,-. 9ngracio 2rense is t#e original o%ner of a arcel of land in 5&inobatan$ Albay. 2n +ebr&ary 1D$ 1(0A$ *ose 7&ran$ t#e ne #e% of 2rense$ sold t#e land for )1C00 to 5&tierre6 3ermanos$ %it# 2renseFs kno%ledge and consent. ,#e sale %as embodied in a &blic instr&ment$ and contained a rovision giving 7&ran a rig#t to re &rc#ase %it#in a eriod of D years. ,#ereafter$ by a contract of lease exec&ted bet%een 5&tierre6 and 7&ran$ 2rense contin&ed occ& ying t#e land. After t#e la se of D years sti &lated for t#e redem tion of t#e ro erty$ 5&tierre6 asked t#at 2rense deliver t#e ro erty to t#e com any and ay rentals for t#e &se of t#e ro erty. 2rense #o%ever$ ref&sed to do so. 2rense claimed t#at t#e sale %as void for #aving been done %it#o&t #is a&t#ority$ eit#er %ritten or verbal. 3e f&rt#er alleged t#at #e did not intentionally and deliberately erformed acts as %o&ld lead 5&tierre6 3ermanos t#at #e a&t#ori6ed #is ne #e% to enter into t#e contract of sale.

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
t#e rej&dice of innocent t#ird ersons. ,#e a&t#ority of t#e agent m&st be res&med to incl&de all t#e necessary and &s&al means of carrying #is agency into effect. 'oreover$ t#ere is s&fficient roof t#at +lores did receive t#e goods$ t#ereby making Cam s liable. Linan ). Puno (ALAIN) &ominion In uran*e Cor.. ) CA (GEN) +eb. "$ 2002 )ardo$ *. +AC,-. 4odolfo 5&evarra claimed to #ave advanced )1C"$ DA@.(0 in #is ca acity as a manager of 7ominion /ns&rance Cor . to satisfy certain claims filed by t#e etitionerFs clients. 3e t#en instit&ted a com laint for s&m of money against t#e etitioner. ,#e etitioner denied any liability to laintiff and asserted a co&nterclaim of )2D($"A2.C@$ re resenting remi&m t#at 5&evarra failed to ay. ,#e 4,C r&led in favor of 5&evarra and ordered t#e etitioner to ay #im t#e s&m #e claims. ,#e CA affirmed t#e decision of t#e 4,C. /--89. :2; 5&evarra acted %it#in #is a&t#ority as agent for etitioner< 39=7. ;2. ,#e - ecial )o%er of Attorney entered into by etitioner and 5&evarra %o&ld s#o% t#at t#ey intended to enter into a rinci al?agent relations#i . 7es ite t#e %ord s ecial in t#e doc&ment$ t#e contents reveal t#at %#at %as constit&ted %as act&ally a general agency. ,#e agency com rises all t#e b&siness of t#e rinci al b&t co&c#ed in general termsE #ence it is limited only to acts of administration. ,#&s$ t#e general agency constit&ted does not %arrant t#e ayment or settlement of claims as t#ey s ecifically reG&ire a - ecial )o%er of Attorney as rovided by Art. 1!A! of t#e Civil Code. B&t as rovided by t#e 'emorand&m of 'anagement Agreement$ 5&evarra %as a&t#ori6ed to ay t#e claim b&t t#e ayment s#all come from t#e revolving f&nd or collection in #is ossession. 3aving deviated from t#e instr&ctions of t#e rinci al$ t#e ex enses t#at 5&evarra inc&rred in t#e settlement of t#e claims of t#e ins&red may not be reimb&rsed from 7ominion in accordance %it# Art. 1(1! of t#e Civil Code. ;evert#eless$ &nder Art. 12@"$ to t#e extent t#at t#e obligation of t#e etitioner #as been exting&is#ed$ 5&evarra may demand for reimb&rsement from #is rinci al. 8. i-en*e or -a*: o' a*tion Conde ). CA (2AI) 7ecember C$ 1(!2 'elencio O 3errera$ *. +AC,-. A A ril 1(@!. 'argarita Conde$ Bernardo Conde and t#e etitioner 7ominga Conde$ as #eirs of -antiago Conde$ sold %it# rig#t of re &rc#ase$ %it#in ten 0101 years from said date$ a arcel of agric&lt&ral land to Casimira )asag&i$ married to )io for )1"C.00. I)acto de 4etro -aleI rovided t#at after 10 yrs. /f land is not re &rc#ased a ne% agreement s#all be made bet%een t#e arties and in no case title and o%ners#i s#all be vested in t#e #and of t#e arty of t#e -9C2;7 )A4, 0t#e Alteras1. ,#ree years after Cadastral Co&rt adj&dicated land to t#e Alteras Is&bject to t#e rig#t of redem tion by 7ominga Conde$ %it#in ten 0101 years co&nting from A ril A$ 1(!@$ after ret&rning t#e amo&nt of )1"C.00 and t#e amo&nts aid by t#e s o&ses in conce t of land tax R ;eit#er of t#e vendees?a?retro$ )io Altera nor Casimira )asag&i$ %as a signatory to t#e deed. Conde maintains t#at beca&se )io Altera %as very ill at t#e time$ )aciente Cordero exec&ted t#e deed of resale for and on be#alf of #is fat#er?in?la%. Conde f&rt#er states t#at s#e redeemed t#e ro erty %it# #er o%n money as #er co?#eirs %ere bereft of f&nds for t#e &r ose. @0 *&ne 1("C )io Altera sold lot to t#e - s 4amon Conde and Catalina ,. Conde 0 rivate res ondents1. 7ominga contends t#at land %as re &rc#ased in 1(DC and filed a case against )aciente Cordero and #is %ife ;icetas Altera$ 4amon Conde and #is %ife Catalina ,. Conde$ and Casimira )asag&i )io Altera #aving died in 1(""1$ for G&ieting of title to real ro erty and declaration of o%ners#i . 7omingaFs 9vidence. )aciente Cordero signed t#e 'emorand&m of 4e &rc#ase in re resentation of #is fat#er?in?la% )io Altera$ %#o %as serio&sly sick on t#at occasion$ and of #is mot#er?in?la% %#o %as in 'anila at t#e time$ and t#at Cordero received t#e re &rc#ase rice of )"C.00. ,C. 7ominga %as ordered to vacate ro erty CA. 8 #eld ,C? etitioner ;eit#er of t#e vendees?a?retro signed t#e I'emorand&m of 4e &rc#aseI$ and t#at t#ere %as no formal a&t#ori6ation from t#e vendees for )aciente Cordero to act for and on t#eir be#alf. /--89. :2; t#ere %as an im lied agency 39=7> >es. +rom t#e exec&tion of t#e re &rc#ase doc&ment in 1(DC$ ossession$ %#ic# #eretofore #ad been %it# t#e Alteras$ #as been in t#e #ands of 7ominga. =and taxes #ave also been aid for by 7ominga$ yearly from 1(DA to 1("( incl&sive. /f$ as

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
o ined by bot# t#e ,C and t#e A ellate Co&rt$ etitioner #ad done not#ing to formali6e #er re &rc#ase$ by t#e same token$ neit#er #ave t#e vendees?a?retro done anyt#ing to clear t#eir title of t#e enc&mbrance t#erein regarding etitionerKs rig#t to re &rc#ase. ;o ne% agreement %as entered into by t#e arties as sti &lated in t#e deed of pacto de retro$ if t#e vendors a retro failed to exercise t#eir rig#t of redem tion after ten years. /f$ as alleged$ etitioner exerted no effort to roc&re t#e signat&re of )io Altera after #e #ad recovered from #is illness$ neit#er did t#e Alteras re &diate t#e deed t#at t#eir son?in?la% #ad signed. ,#&s$ an im lied agency m&st be #eld to #ave been created from t#eir silence or lack of action$ or t#eir fail&re to re &diate t#e agency. )ossession of t#e lot in dis &te #aving been adversely and &ninterr& tedly %it# etitioner from 1(DC %#en t#e doc&ment of re &rc#ase %as exec&ted$ to 1("($ %#en s#e instit&ted t#is action$ or for 2D years$ t#e Alteras m&st be deemed to #ave inc&rred in lac#es. ,#at etitioner merely took advantage of t#e abandonment of t#e land by t#e Alteras d&e to t#e se aration of said s o&ses$ and t#at etitionerKs ossession %as in t#e conce t of a tenant$ remain bare assertions %it#o&t roof. Catalina is not b&yer in good fait# since t#e ten? year eriod #ad la sed in 1("C and t#ere %as no annotation of any re &rc#ase by 7omingo$ neit#er #ad t#e title been cleared of t#at enc&mbrance. ,#e &rc#asers %ere &t on notice t#at some ot#er erson co&ld #ave a rig#t to or interest in t#e ro erty. /t be#ooved 4amon Conde and Catalina Conde to #ave looked into t#e rig#t of redem tion inscribed on t#e title$ and artic&larly t#e matter of ossession$ %#ic#$ as also admitted by t#em at t#e re?trial$ #ad been %it# etitioner since 1(DC. Altera and CatalinaFs m&st be #eld bo&nd by t#e clear terms of t#e 'emorand&m of 4e &rc#ase t#at #e #ad signed %#erein #e ackno%ledged t#e recei t of )1"C.00 and ass&med t#e obligation to maintain t#e re &rc#asers in eacef&l ossession s#o&ld t#ey be Idist&rbed by ot#er ersonsI. ,#e im eratives of s&bstantial j&stice$ and t#e eG&itable rinci le of lac#es bro&g#t abo&t by rivate res ondentsK inaction and neglect for 2D years$ loom in etitionerKs favor. *. 'ai-ure to re.udiate a. A to nature ? Con)entiona? Le4aArt. 1!0@. :#en t#e manner of management #as not been agreed & on$ t#e follo%ing r&les s#all be observed. indorsed t%o c#ecks to H&eano amo&nting to )(C$000 eac#. ,o sec&re t#e loan$ H&eano exec&ted a 7eed of 4eal 9state 'ortgage and s&rrendered to ;ag&iat #er d& licates of titles covering t#e mortgage. ,#e mortgage %as notari6ed and a romissory note for )200$000 %it# interest of 12N er ann&m %as given by H&eano. -#e also iss&ed a -ec&rity Bank c#eck ayable to ;ag&iat. 8 on resentment of t#e c#eck$ t#e -ec&rity Bank c#eck %as dis#onored for ins&fficiency of f&nds. A mont# after$ H&eano received a letter from ;ag&iat demanding settlement of t#e loan. H&eano and a certain 4e&benfeldt 0%#o %as alleged to be ;ag&iatFs agent1 met %it# ;ag&iat to manifest t#at H&eano did not receive t#e roceeds of t#e loan as t#e c#ecks %ere retained by 4e&benfeldt. ;ag&iat a lied for extraj&dicial foreclos&re of t#e mortgage b&t t#e same %as declared n&ll and void. 2n a eal$ t#e CA affirmed t#e decision of t#e trial co&rt. Among t#e iss&es raised by ;ag&iat is t#e admissibility of t#e re resentations of 4e&bendfeldt insisting t#at s#e %as not #er agent. /--89. :2; 4e&benfeldt %as ;ag&iatFs agent. 39=7. >9-. 9vidence s#o%ed t#at ;ag&iat instr&cted 4e&benfeldt to %it##old t#e c#ecks ending t#e delivery of additional collateral by H&eano. 3e served as agent of ;ag&iat on t#e loan a lication of H&eanoFs friend as to %#om H&eano came to kno% of ;ag&iat. +&rt#ermore$ s#e also dre% a c#eck for t#e s&m of )220$000 ayable to ;ag&iat to cover for H&eanoFs liability. As a conseG&ence of t#e interaction bet%een ;ag&iat and 4e&benfeldt$ H&eano %as im ressed t#at s#e %as ;agiatFs agent and ;ag&iat did not do anyt#ing to correct t#at. ,#e r&le states t#at one %#o clot#es anot#er %it# a arent a&t#ority as #is agent and #olds #im o&t in t#e &blic as s&c# cannot be ermitted to deny t#e a&t#ority of s&c# erson to act as #is agent$ to t#e rej&dice of t#ird arties dealing in good fait#. ,#e CA correctly &sed t#e r&le on agency by esto el. *&dgment affirmed. Pro'e iona- Ser)i*e ). A4ana (!EG)

@. (t1er :ind &e-a !o a ). ,ida-4o (!(G) Na4uiat ). CA ("(FF) 200@ ,inga$ *. +AC,-. H&eano a lied %it# ;ag&iat a loan of )200$000 %#ic# %as event&ally granted. ;ag&iat

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
011 All t#e artners s#all be considered agents and %#atever any one of t#em may do alone s#all bind t#e artners#i $ %it#o&t rej&dice to t#e rovisions of Article 1!01. 021 ;one of t#e artners may$ %it#o&t t#e consent of t#e ot#ers$ make any im ortant alteration in t#e immovable ro erty of t#e artners#i $ even if it may be &sef&l to t#e artners#i . B&t if t#e ref&sal of consent by t#e ot#er artners is manifestly rej&dicial to t#e interest of t#e artners#i $ t#e co&rtKs intervention may be so&g#t. Art. 1!!D. ,#e agent is bo&nd by #is acce tance to carry o&t t#e agency$ and is liable for t#e damages %#ic#$ t#ro&g# #is non? erformance$ t#e rinci al may s&ffer. Art. 1!!C. /n case a erson declines an agency$ #e is bo&nd to observe t#e diligence of a good fat#er of a family in t#e c&stody and reservation of t#e goods for%arded to #im by t#e o%ner &ntil t#e latter s#o&ld a oint an agent or take c#arge of t#e goods. Art. 1(2(. ,#e agent$ even if #e s#o&ld %it#dra% from t#e agency for a valid reason$ m&st contin&e to act &ntil t#e rinci al #as #ad reasonable o ort&nity to take t#e necessary ste s to meet t#e sit&ation. Art. 1(@1. Anyt#ing done by t#e agent$ %it#o&t kno%ledge of t#e deat# of t#e rinci al or of any ot#er ca&se %#ic# exting&is#es t#e agency$ is valid and s#all be f&lly effective %it# res ect to t#ird ersons %#o may #ave contracted %it# #im in good fait#. Art. 1(@2. /f t#e agent dies$ #is #eirs m&st notify t#e rinci al t#ereof$ and in t#e meantime ado t s&c# meas&res as t#e circ&mstances may demand in t#e interest of t#e latter. 8. A to *on ideration ? Gratuitou ? S.e*ia-

d. A to mana4ement ? Cou*1ed in 4enera- term

Art. 1!AA. An agency co&c#ed in general terms com rises only acts of administration$ even if t#e rinci al s#o&ld state t#at #e %it##olds no o%er or t#at t#e agent may exec&te s&c# acts as #e may consider a ro riate$ or even t#o&g# t#e agency s#o&ld a&t#ori6e a general and &nlimited management. ? S.e*i'i* term attorney are

Art. 1!A!. - ecial o%ers of necessary in t#e follo%ing cases.

Art. 1!AC. Agency is res&med to be for a com ensation$ &nless t#ere is roof to t#e contrary. ? *. (nerou

011 ,o make s&c# ayments as are not &s&ally considered as acts of administrationE 021 ,o effect novations %#ic# &t an end to obligations already in existence at t#e time t#e agency %as constit&tedE 0@1 ,o com romise$ to s&bmit G&estions to arbitration$ to reno&nce t#e rig#t to a eal from a j&dgment$ to %aive objections to t#e ven&e of an action or to abandon a rescri tion already acG&iredE 0D1 ,o %aive any obligation grat&ito&slyE 0C1 ,o enter into any contract by %#ic# t#e o%ners#i of an immovable is transmitted or acG&ired eit#er grat&ito&sly or for a val&able considerationE 0"1 ,o make gifts$ exce t c&stomary ones for c#arity or t#ose made to em loyees in t#e b&siness managed by t#e agentE 0A1 ,o loan or borro% money$ &nless t#e latter act be &rgent and indis ensable for t#e reservation of t#e t#ings %#ic# are &nder administrationE 0!1 ,o lease any real ro erty to anot#er erson for more t#an one yearE 0(1 ,o bind t#e rinci al to render some service %it#o&t com ensationE 0101 ,o bind t#e rinci al in a contract of artners#i E 0111 ,o obligate t#e rinci al as a g&arantor or s&retyE 0121 ,o create or convey real rig#ts over immovable ro ertyE 01@1 ,o acce t or re &diate an in#eritanceE 01D1 ,o ratify or recogni6e obligations contracted before t#e agencyE 01C1 Any ot#er act of strict dominion. e. A to manner o' a..ointment ? &ire*t ? Indire*t, a..ointment t1rou41 anot1er '. A to nature and e''e*t

A to e0tent o' tran a*tion ? Genera-

Art. 1!A". An agency is eit#er general or s ecial.

10

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
? ? ( ten i8-e or re.re entati)e Sim.-e or *ommi ion

A. Form o' A4en*7 a. Contra*t Art. @!1. :#en a erson disa ears from #is domicile$ #is %#ereabo&ts being &nkno%n$ and %it#o&t leaving an agent to administer #is ro erty$ t#e j&dge$ at t#e instance of an interested arty$ a relative$ or a friend$ may a oint a erson to re resent #im in all t#at may be necessary. 8. Arti*-e ( ee 8e-o?) Art. 1!AD. :#en a sale of a iece of land or any interest t#erein is t#ro&g# an agent$ t#e a&t#ority of t#e latter s#all be in %ritingE ot#er%ise$ t#e sale s#all be void. Art. 1@CA. /f t#e la% reG&ires a doc&ment or ot#er s ecial form$ as in t#e acts and contracts en&merated in t#e follo%ing article$ t#e contracting arties may com el eac# ot#er to observe t#at form$ once t#e contract #as been erfected. ,#is rig#t may be exercised sim&ltaneo&sly %it# t#e action & on t#e contract.

011 ,#ose entered into in t#e name of anot#er erson by one %#o #as been given no a&t#ority or legal re resentation$ or %#o #as acted beyond #is o%ersE 021 ,#ose t#at do not com ly %it# t#e -tat&te of +ra&ds as set fort# in t#is n&mber. /n t#e follo%ing cases an agreement #ereafter made s#all be &nenforceable by action$ &nless t#e same$ or some note or memorand&m$ t#ereof$ be in %riting$ and s&bscribed by t#e arty c#arged$ or by #is agentE evidence$ t#erefore$ of t#e agreement cannot be received %it#o&t t#e %riting$ or a secondary evidence of its contents. 0a1 An agreement t#at by its terms is not to be erformed %it#in a year from t#e making t#ereofE 0b1 A s ecial romise to ans%er for t#e debt$ defa&lt$ or miscarriage of anot#erE 0c1 An agreement made in consideration of marriage$ ot#er t#an a m&t&al romise to marryE 0d1 An agreement for t#e sale of goods$ c#attels or t#ings in action$ at a rice not less t#an five #&ndred esos$ &nless t#e b&yer acce t and receive art of s&c# goods and c#attels$ or t#e evidences$ or some of t#em$ of s&c# t#ings in action or ay at t#e time some art of t#e &rc#ase moneyE b&t %#en a sale is made by a&ction and entry is made by t#e a&ctioneer in #is sales book$ at t#e time of t#e sale$ of t#e amo&nt and kind of ro erty sold$ terms of sale$ rice$ names of t#e &rc#asers and erson on %#ose acco&nt t#e sale is made$ it is a s&fficient memorand&mE 0e1 An agreement of t#e leasing for a longer eriod t#an one year$ or for t#e sale of real ro erty or of an interest t#ereinE 0f1 A re resentation as to t#e credit of a t#ird erson. 0@1 ,#ose %#ere bot# arties are inca able of giving consent to a contract. B. Pre um.tion o' A4en*7 a. Genera- ru-e ,arr7 Kee-er E-e*tri* (EA!LA) ;ovember 11$ 1(22 *o#ns$ *. Co. ) . !odri4ue5

Art. 1@C!. ,#e follo%ing m&st a doc&ment.

ear in a

&blic

011 Acts and contracts %#ic# #ave for t#eir object t#e creation$ transmission$ modification or exting&is#ment of real rig#ts over immovable ro ertyE sales of real ro erty or of an interest t#erein a governed by Articles 1D0@$ ;o. 2$ and 1D0CE 021 ,#e cession$ re &diation or ren&nciation of #ereditary rig#ts or of t#ose of t#e conj&gal artners#i of gainsE 0@1 ,#e o%er to administer ro erty$ or any ot#er o%er %#ic# #as for its object an act a earing or %#ic# s#o&ld a ear in a &blic doc&ment$ or s#o&ld rej&dice a t#ird ersonE 0D1 ,#e cession of actions or rig#ts roceeding from an act a earing in a &blic doc&ment. All ot#er contracts %#ere t#e amo&nt involved exceeds five #&ndred esos m&st a ear in %riting$ even a rivate one. B&t sales of goods$ c#attels or t#ings in action are governed by Articles$ 1D0@$ ;o. 2 and 1D0C Art. 1D0@. ,#e follo%ing contracts &nenforceable$ &nless t#ey are ratified. are

+AC,-. 3arry Seeler is engaged in t#e electrical b&siness and is selling t#e 'att#e%s lant in t#e )#ili ine /slands. 2ne day$ A.C 'ontelibano %ent to t#e office of 3arry Seeler and told #im t#at #e co&ld find &rc#asers of t#e 'att#e%s lant. Seeler agreed %it# t#e &nderstanding t#at for every c&stomer t#at #e co&ld find or any lant t#at #e co&ld sell$ #e %o&ld be given a 10N commission if t#e sale %as cons&mmated. )&rs&ant to t#is agreement$ 'ontelibano %as able to negotiate t#e sale of t#e t#e 'att#e%s lant bet%een Seeler and

11

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
4odrig&e6. After t#e mac#ine #ad been installed$ 4odrig&e6 aid t#e &rc#ase rice of )2C1@.CC to 'ontelibano$ %it#o&t t#e kno%ledge of Seeler. Seeler alleged t#at it %as #is em loyee Cenar %#o installed t#e eG&i ment in defendantFs remises. 'oreover$ Seeler also claimed t#at it %as Cenar %#o gave #im t#e statement of acco&nt totaling )2C"@.(C. Cenar did not make any effort to collect t#e money since #e %as ass&red by 4odrig&e6 t#at #e %ill ay it in 'anila. 2n t#e ot#er #and$ 4odrig&e6 alleged t#at #e aid t#e &rc#ase rice to 'ontelibano$ since #e %as t#e one %#o sold$ delivered and installed t#e electrical lantE t#at #e %as t#e one %#o resented t#e acco&ntE t#at #e %as ass&red by 'ontelibano t#at #e %as a&t#ori6ed to collect t#e val&e of t#e lant. ,#e lo%er co&rt decided in favor of 4odrig&e6$ #olding t#at 'ontelibano %as an agent a&t#ori6ed to collect t#e &rc#ase rice. /--89. :2; 'ontelibano %as t#e agent of 3arry Seeler. 39=7. ;o. According to t#e Co&rt$ t#ere is not#ing in t#e recei t iss&ed by 'ontelibano t#at %o&ld indicate t#at #e %as a&t#ori6ed by Seeler to collect t#e money. Accordingly$ %#at %as contained t#erein %ere #is ersonal recei t and ersonal signat&re. ,#ere %ere no more indications of #is a&t#ority. 'oreover$ t#e Co&rt also r&led t#at t#e recei t resented in evidence by 4odrig&e6 act&ally s#o%s t#at it %as Cenar %#o gave t#e statement of acco&nts to #imE ot#er%ise$ t#ere %o&ld #ave been no need to inc&r s#i ing costs of )!1."0 if it %as 'ontelibano %#o installed t#e lant in #is remises. /n s&m$ t#ere %as no evidence t#at Seeler ever delivered any statement to 'ontelibano or t#at #e %as ever a&t#ori6ed to receive t#e money. /t is a settled rinci le in agency t#at a erson dealing %it# an agent m&st be caref&l in ascertaining t#e fact of t#e agency and t#e nat&re and extent of a&t#ority of t#e agent. Accordingly$ /n a roac#ing t#e consideration of t#e inG&iry %#et#er an ass&med a&t#ority exists in a given case$ t#ere are certain f&ndamental rinci les %#ic# m&st not be overlooked. Among t#ese are$ as #as been seen$ 011 t#at t#e la% ind&lges in no bare res&m tions t#at an agency exists. it m&st be roved or res&med from factsE 021 t#at t#e agent cannot establis# #is o%n a&t#ority$ eit#er by t#e re resentations or by ass&ming to exercise itE 0@1 t#at an a&t#ority cannot be establis#ed by mere r&mor or general re &tationE 0D1 t#at even a general a&t#ority is not an &nlimited oneE and 0C1 t#at every a&t#ority m&st find its &ltimate so&rce in some act or omission of t#e rinci al. ,#&s$ %#en 4odrig&e6 aid to 'ontelibano$ #e did so at #is o%n eril. 3e is t#erefore$ still liable to ay Seeler t#e amo&nt of t#e electric lant. 8. E0*e.tion to t1e ru-e Art. 1!0@. :#en t#e manner of management #as not been agreed & on$ t#e follo%ing r&les s#all be observed. 011 All t#e artners s#all be considered agents and %#atever any one of t#em may do alone s#all bind t#e artners#i $ %it#o&t rej&dice to t#e rovisions of Article 1!01. 021 ;one of t#e artners may$ %it#o&t t#e consent of t#e ot#ers$ make any im ortant alteration in t#e immovable ro erty of t#e artners#i $ even if it may be &sef&l to t#e artners#i . B&t if t#e ref&sal of consent by t#e ot#er artners is manifestly rej&dicial to t#e interest of t#e artners#i $ t#e co&rtKs intervention may be so&g#t Com.ana 2aritima ). Lim on (6ANCES)

%. Aut1orit7 .re umed

o'

attorne7

to

a..ear

-ec. 21. Authority of attorney to appear. - An attorney is res&med to be ro erly a&t#ori6ed to re resent any ca&se in %#ic# #e a ears$ and no %ritten o%er of attorney is reG&ired to a&t#ori6e #im to a ear in co&rt for #is client$ b&t t#e residing j&dge may$ on motion of eit#er arty and on reasonable gro&nds t#erefor being s#o%n$ reG&ire any attorney %#o ass&mes t#e rig#t to a ear in a case to rod&ce or rove t#e a&t#ority &nder %#ic# #e a ears$ and to disclose$ %#enever ertinent to any iss&e$ t#e name of t#e erson %#o em loyed #im$ and may t#ere& on make s&c# order as j&stice reG&ires. An attorney %ilf&lly a earing in co&rt for a erson %it#o&t being em loyed$ &nless by leave of t#e co&rt$ may be &nis#ed for contem t as an officer of t#e co&rt %#o #as misbe#aved in #is official transactions.c#an robles virt&al la% library -ec. 22. Attorney who appears in lower court presumed to represent client on appeal. - An attorney %#o a ears de arte in a case before a lo%er co&rt s#all be res&med to contin&e re resenting #is client on a eal$ &nless #e files a formal etition %it#dra%ing #is a earance in t#e a ellate co&rt.

12

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/ss&e. :L; t#e 'otion for ;e% ,rial s#o&ld be granted since Attorney. 'analo %#o %as s& osed to defend A)C effectively denied said etitioner of its day in co&rt. ;2J 3eld. Axiomatic is t#e r&le t#at Inegligence of co&nsel binds t#e client.I ,#e basis is t#e tenet t#at an act erformed by co&nsel %it#in t#e sco e of a Igeneral or im lied a&t#orityI is regarded as an act of t#e client. :#ile t#e a lication of t#is general r&le certainly de ends & on t#e s&rro&nding circ&mstances of a given case$ t#ere are exce tions recogni6ed by t#is Co&rt. I011 %#ere reckless or gross negligence of co&nsel de rives t#e client of d&e rocess of la%E 021 %#en its a lication %ill res&lt in o&trig#t de rivation of t#e clientFs liberty or ro ertyE or 0@1 %#ere t#e interests of j&stice so reG&ire.I :oef&lly none of t#ese exce tions a ly #erein. ,#&s$ t#e Co&rt cannot Iste in and accord reliefI to etitioner$ even if it may #ave s&ffered by reason of its o%n arrant fat&ity. ,#e negligence of etitioner and t#at of its co&nsel are conc&rrent. Attorney. 'analo is an em loyee$ not an o&tsider #ired by etitioner on a retainer basis. /n fact$ #e is t#e officer?in?c#arge of its =egal 7e artment. ,#ere is no s#o%ing t#at #e %as not a&t#ori6ed to exercise t#e o%ers of t#e cor oration or to transact its b&siness$ artic&larly t#e #andling of its legal affairs. Besides$ it is res&med t#at t#e ordinary co&rse of b&siness #as been follo%ed. ,#erefore$ co&nselFs cor orate acts are s& osed to be kno%n and assented to by etitioner. +irst$ t#e 4ecei tLAgreement %as entered into by res ondent and etitioner$ %#ic# %as re resented by its agent Attorney. 'analo. As an agent$ #e rendered service to$ and did somet#ing in re resentation or on be#alf of$ #is rinci al and %it# its consent and a&t#ority. /t cannot be denied t#at$ on its art$ t#ere %as an act&al intent to a oint its co&nselE and$ on t#e latterFs art$ to acce t t#e a ointment and Iact on it.I ,#&s$ t#e general rinci les of agency govern its relations#i %it# its officers or agents$ s&bject to t#e articles of incor oration$ byla%s and ot#er relevant rovisions of la%. 'oreover$ t#e 4ecei tLAgreement is not a romise to ay t#at Iamo&nts to an offer to com romise and reG&ires a s ecial o%er of attorney or t#e ex ress consent of

-ec. 2@. Authority of attorneys to bind clients. Attorneys #ave a&t#ority to bind t#eir clients in any case by any agreement in relation t#ereto made in %riting$ and in taking a eals$ and in all matters of ordinary j&dicial roced&re. B&t t#ey cannot$ %it#o&t s ecial a&t#ority$ com romise t#eir clientKs litigation$ or receive anyt#ing in disc#arge of a clientKs claim b&t t#e f&ll amo&nt in cas#. Air P1i- Cor.. (ALAIN) )anganiban *. +acts. ). Internationa/u ine

A)C %as in need of t#e services of a b&siness establis#ment to ferry its B?A@A air lane. /t engaged t#e services of /BA)-/ as its agent to look for and engage$ for A)C$ a b&siness enter rise to ferry t#e air lane. /BA-)/ did engage t#e services of 8niversal :eat#er P Aviation$ /nc. 08:A/1. 8:A/ sent its TBillingsF to A)C$ t#ro&g# /BA-)/$ in t#e total amo&nt of 8-U"C$1@1.CC for its services for t#e ferry of t#e air lane. B&t A)C re eatedly failed to ay its acco&nt. 9xas erated$ 8:A/ blamed /BA-)/. /BA-)/ %as im elled to ay 8:A/. /BA-)/ demanded ref&nd of t#e amo&nt advanced to 8:A/. B&t still$ no ayment %as effected by A)/. /BA-)/ demanded t#e ayment of said amo&nt l&s 10N commission. A)C finally made its first artial ayment of )200$000.00 to /BA-)/ %it# a sim&ltaneo&s 4ecei tLAgreement exec&ted by /BA-)/ and A)C$ t#e latter$ t#ro&g# Attorney. 'anolito A. 'analo$ 2fficer?in?C#arge of t#e =egal 7e artment of A)C. After t#is artial ayment$ no ot#er ayments %ere exec&ted by A)C. A)C ref&sed to ay its balance %it# /BA-)/. /BA-)/ s&ed A)C in co&rt. 3o%ever$ t#e co&nsel of A)C filed at least t#ree motions to extend filing of etitionerFs Ans%erE did not a ear d&ring t#e sc#ed&led retrialsE and failed to file etitionerFs retrial Brief. Co&rt ordered /BA-)/ to ay t#e balance$ t#e 10N commission and attorneyFs fees. A)C s&bmits t#at CA erred in & #olding t#e r&ling of t#e 4,C des ite t#e fact t#at t#e gross negligence$ incom etence and dis#onesty of A)CFs former co&nsel$ Attorney. 'anolito A. 'anolo$ #ave effectively denied A)C of its day in co&rt. A)C f&rt#er contended t#at Attorney. 'analo %as not a&t#ori6ed to exec&te t#e 4ecei tLAgreement in be#alf of etitioner A)C. ,#&s A)C asked for 'otion for ;e% ,rial.

1@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
etitioner.I A com romise agreement is Ia contract %#ereby t#e arties$ by making reci rocal concessions$ avoid a litigation or &t an end to one already commenced.I ;o s&c# reci rocal concessions %ere made in t#is case. ,#&s$ t#e 4ecei tLAgreement is b&t an o&trig#t admission of etitioner of its obligation$ after making artial ayment$ to ay t#e balance of its acco&nt. And even if %e %ere to consider t#e same as a com romise$ from its nat&re as a contract$ t#e absence of an -)A does not render it void$ b&t merely &nenforceable. )9,/,/2; 79;/97. Pitt 8ur41 P-ate ). &ire*tor o' Patent (GEN) 'arc# 2($ 1(AD Castro$ *. +AC,-. 2n ;ov. C$ 1("2$ t#e la% firm of =ic#a&co$ )ica6o and Agcaoili filed %it# t#e )#ili ine )atent 2ffice a etition for extension of @0 days %it#in %#ic# to file in be#alf of t#e etitioner a notice of o osition to t#e res ondentKs a lication for registration of I-olex Bl&e aneI as trademark for its glass rod&cts. ,#e lea %as made &rs&ant to a cablegram from =angner$ )arry$ Card and =angner /nternational )atent and ,rademark Agents$ 8-A$ asking t#at t#e res ondentKs a lication be o osed. ,#e extension %as granted. An &nverified notice of o osition to t#e trademark a lication %as filed by =ic#a&co$ )ica6o and Agcaoili before t#e )atent 2ffice %#ic# a&t#ori6es t#e filing of s&c# a notice rovided it is verified by t#e o oser %it#in "0 days t#ereafter. 2n t#e same day$ t#e same co&nsel filed a d&ly a&t#enticated o%er of attorney exec&ted by t#e etitioner on ;ov. 12$ 1("2 in favor of t#e former for t#e rosec&tion of its o osition. ,#ereafter etitionerKs verified o osition to t#e res ondentKs a lication %as filed. ,#e 7irector of )atents iss&ed a resol&tion dismissing t#e etitionerKs o osition on t#e gro&nd t#at on ;ov. C$ 1("2 %#en etitionerKs co&nsel asked for an extension of time to file a notice of o osition$ t#e said co&nsel %as not yet a&t#ori6ed by t#e etitioner to file t#e said leading as t#e o%er of attorney %as exec&ted only on ;ov. 12$ 1("2. /--89. :2; t#e la% firm %as a&t#ori6ed to re resent t#e etitioner before t#e )#ili ine )atent 2ffice on ;ov. C$ 1("2 %#en t#e former leaded for an extension of time to register t#e etitionerFs o osition to t#e res ondentFs a lication< 39=7. >9-. )etitioner does not deny$ as in fact it asserted in %riting$ t#at t#e said la% firm %as a&t#ori6ed to re resent it by virt&e of t#e o%ers it #ad vested & on =angner$ et al., a corres ondent of =ic#a&co$ )ica6o and Agcaoili$ to #andle all foreign trademark matters affecting t#e etitioner. /t bears em #asis t#at t#e relations#i bet%een co&nsel and client is strictly a ersonal one. /t is a relations#i t#e creation of %#ic# co&rts and administrative trib&nals cannot b&t recogni6e on t#e fait# of t#e clientKs %ord$ es ecially %#en no s&bstantial rej&dice is t#ereby ca&sed to any t#ird arty. )etitioner$ %#o claims to be adversely affected by t#e res ondentKs trademark a lication$ seasonably informed t#e 7irector of )atents t#at its co&nsel #ad t#e a&t#ority to re resent it before t#e latterKs office. ,#ere is no valid reason to inter ose chevau -de frise! & on t#at claim and deny t#e etitioner its basic rig#t to be #eard. C. Arti*-e #$C0 to #$C2 Art. 1!A0. Acce tance by t#e agent may also be ex ress$ or im lied from #is acts %#ic# carry o&t t#e agency$ or from #is silence or inaction according to t#e circ&mstances. Art. 1!A1. Bet%een ersons %#o are resent$ t#e acce tance of t#e agency may also be im lied if t#e rinci al delivers #is o%er of attorney to t#e agent and t#e latter receives it %it#o&t any objection. Art. 1!A2. Bet%een ersons %#o are absent$ t#e acce tance of t#e agency cannot be im lied from t#e silence of t#e agent$ exce t. 011 :#en t#e rinci al transmits #is o%er of attorney to t#e agent$ %#o receives it %it#o&t any objectionE 021 :#en t#e rinci al entr&sts to #im by letter or telegram a o%er of attorney %it# res ect to t#e b&siness in %#ic# #e is #abit&ally engaged as an agent$ and #e did not re ly to t#e letter or telegram. #. *om.u- or7 a. E0.re 8. Im.-ied i.
1

A**e.tan*e,

not

'rom t1e a*t o' t1e a4ent ?1i*1 *arr7 out t1e a4en*7D

9tymology. +renc#$ literally$ #orse from +riesland # > a defense consisting ty ically of a timber or an iron barrel covered %it# rojecting s ikes and often str&ng %it# barbed %ire 2 > a rotecting line 0as of s ikes1 on to of a %all V &s&ally &sed in l&ral

1D

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
ii. 'rom 1i ? i-en*e or ina*tion .er on are +rom t#e 10t# day of 2ctober$ 1(0@$ t#e date of t#e said fra&d&lent &rc#ase by t#e defendant$ &ntil t#e 2At# day of *&ly$ 1(0($ t#e defendant retained said s#ares in #is ossession or &nder #is control and after t#e rendition of said j&dgment of A ril 2($ 1(0D$ collected t#e dividends earned by said s#ares for t#e years 1(0C$ 1(0"$ 1(0A$ and 1(0! at t#e rate of " er cent er ann&m$ amo&nting to a total of )1($200$ %#ic# s&m t#e defendant retained and ref&sed to ay over to t#e laintiff. /--89. :#et#er or not t#e agreement entered into bet%een #im and t#e laintiff t#ro&g# #er co&nsel released #im from all res onsibility in connection %it# t#e transaction relating to t#e stock 39=7. ;2. ,#ere is not#ing in t#e %ritten disc#arge %#ic# co&ld ro erly be given t#e legal effects %#ic# t#e a ellant in t#is case assigns to it. /t is a disc#arge of a j&dgment and not#ing more. Being s&c#$ it reac#es no f&rt#er t#an t#e terms of t#e j&dgment itself. It i to 8e .re umed t1at an in trument ati '7in4 a de8t or o8-i4ation mani'e ted in anot1er in trument e0tend no 'urt1er t1an t1e term o' t1e in trument ?1i*1 mani'e t t1e o8-i4ation to 8e di *1ar4ed, un-e , 'rom t1e term o' t1e in trument, it i *-ear t1at t1e .artie intended omet1in4 more. -o far as t#e record discloses$ at t#e time t#is satisfaction %as exec&ted not#ing %#atever occ&rred bet%een t#e arties relative to t#e dividends on t#e stock %#ic# formed t#e s&bject?matter of t#at j&dgment$ nor did anyt#ing trans ire as to any ot#er relations bet%een t#e arties t#an t#ose embraced %it#in t#e j&dgment itself. "1ere ?a not1in4 in t1e *ondu*t o' t1e .artie , or in t1eir re-ation or attitude , 'rom ?1i*1 it *ou-d 8e im.-ied or in'erred t1at t1e7 ?ere dea-in4 ?it1 au41t e- e t1an t1e =ud4ment it e-'. ,#ere is no basis$ t#en$ for t#e contention of t#e a ellant &nless it be fo&nd in t#e %ording of t#at instr&ment itself. A o%er of attorney is an instr&ment in %riting by %#ic# one erson$ as rinci al$ a oints anot#er as #is agent and confers & on #im t#e a&t#ority to erform certain s ecified acts on be#alf of t#e rinci al. 9xce t as may be reG&ired by stat&te$ a o%er of attorney is valid alt#o&g# no notary &blic intervened in its exec&tion. Lim Pin ). Liao "an (!(G) +AC,-> A com romise agreement bet%een =im )in re resented by son 5eorge 3&ng and =iao ,an %as made incident to an &nla%f&l detainer com laint filed by ,an against )in. 2n #earing$ =im )in %as absent. 3er son 5eorge 3&ng %#o attended %it# #is mot#er all revio&s #earings %as resent toget#er %it# co&nsel. =iao and co&nsel %ere also

?1ere t1e .re ent

Art. 1!A1. Bet%een ersons %#o are resent$ t#e acce tance of t#e agency may also be im lied if t#e rinci al delivers #is o%er of attorney to t#e agent and t#e latter receives it %it#o&t any objection. ? ?1ere a8 ent t1e .er on are

Art. 1!A2. Bet%een ersons %#o are absent$ t#e acce tance of t#e agency cannot be im lied from t#e silence of t#e agent$ exce t. 011 :#en t#e rinci al transmits #is o%er of attorney to t#e agent$ %#o receives it %it#o&t any objectionE 021 :#en t#e rinci al entr&sts to #im by letter or telegram a o%er of attorney %it# res ect to t#e b&siness in %#ic# #e is #abit&ally engaged as an agent$ and #e did not re ly to t#e letter or telegram. 2. Po?er o' attorne7D de'inition, .ur.o e ? Notari5ation needed Stron4 ). Gutierre5 !e.ide (2AI) +ebr&ary 21$ 1(12 'oreland$ *. +AC,-. )rior to 2ctober 10$ 1(0@$ t#e laintiff$ 9leanor 9rica -trong$ %as t#e o%ner of !00 s#ares of t#e ca ital stock of t#e )#ili ine -&gar 9states 7evelo ment Com any$ =imited$ of t#e ar val&e of )100 eac#. 2n 2ctober 10$ 1(0@$ t#e defendant$ +rancisco 5&tierre6 4e ide$ by means s&bseG&ently fo&nd and adj&dged to #ave been fra&d&lent$ obtained ossession of said s#ares and t#ereafter alleged to be t#e o%ner t#ereof. ,#e C+/ of 'anila s&bseG&ently #eld t#at t#e sale of t#ese s#ares %as made %it#o&t t#e a&t#ority of 'rs. -trong$ t#at s#e never ratified t#e sale b&t re &diated it as soon as s#e learned of it$ t#at t#is sale %as ind&ced by fra&d on t#e art of t#e defendant$ and t#erefore %as a fra&d&lent sale. ,#is j&dgment %as$ on a eal to t#e -& reme Co&rt of t#e )#ili ine /slands$ reversed$ and laintiffKs com laint dismissed on t#e merits. ,#ere& on$ laintiff rosec&ted an a eal to t#e -& reme Co&rt of t#e 8nited -tates$ %#ic# co&rt$ on t#e @rd of 'ay$ 1(0($ rendered its j&dgment$ reversing t#e decision of t#e -& reme Co&rt of t#e )#ili ine /slands and affirming t#e j&dgment of t#e trial co&rt.

1C

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
resent. ,#ro&g# co&rtKs initiative t#e com romise agreement %as form&lated and exec&ted. A motion for reconsideration %as filed by =im )in assailing t#e com romise agreement. 11 t#at s#e never a&t#ori6ed #er son nor #er co&nsel on record 0Attorney. )astor 'amaril1 to enter into s&c# com romise agreement and 21 t#at #ad s#e been resent %#en said agreement %as re aredE s#e %o&ld not #ave acceded t#ereto. ,an filed o osition to '4 and rayed t#at son 5eorge 3&ng and Attorney. )astor ). 'amaril be cited for contem tI in t#e event t#ey s#o&ld belatedly deny t#at 5eorge 3&ng %as d&ly a&t#ori6ed by #is mot#er to enter into t#e com romise agreement. ,C. '4 denied 5eorge 3&ng cited for contem t of co&rt. :rit to exec&te iss&ed. =im )in. *&dge s#o&ld not #ave allo%ed #er son 5eorge 3&ng and #er t#en co&nsel$ Attorney. )astor 'amaril in #er absence to enter into com romise agreement %it# ,an. Considering t#at s&c# com romise agreement %o&ld im ose onero&s obligations & on #er$ s&c# as a tremendo&s increase of rentals in t#e remises being leased from ,an from )1$C00.00 a mont# to )C$000.00 a mont# and t#at said agreement contained admissions by #er$ t#e res ondent *&dge s#o&ld #ave reG&ired a %ritten a&t#ority and o%er of attorney from #er son and co&nsel. /--89> :2; *&dge s#o&ldFve reG&ired %ritten a&t#ority and )o%er of attorney before allo%ing =imKs son and co&nsel to act on #er be#alf on com romise agreement< ;2 39=7. 11 )o%er of attorney need not be %ritten b&t a&t#ority m&st be d&ly establis#ed by evidence. Art. 1!A! ;CC. a s ecial o%er of attorney is necessary to com romise$ to s&bmit G&estions to arbitration$ to reno&nce t#e rig#t to a eal from a j&dgment$ to %aive objections to t#e ven&e of an action or to abandon a rescri tion already acG&ired. -ection 2@ of 4&le 1@! on Attorneys and Admission to t#e Bar governs t#e a&t#ority of attorneys to bind t#eir clients and rovides t#at IAttorneys #ave a&t#ority to bind t#eir clients in any case by any agreement in relation t#ereto made in %riting$ and in taking a eal$ and in an matters of ordinary *&dicial )roced&re$ b&t t#ey cannot$ %it#o&t s ecial a&t#ority$ com romise t#eir clientsK litigation or receive anyt#ing in disc#arge of t#eir clientsK claims b&t t#e f&ll amo&nt in cas#.I ,#e reG&irements of a s ecial o%er of attorney in Article 1!A! of t#e Civil Code and of a s ecial a&t#ority in 4&le 1@! of t#e 4&les of Co&rt refer to t#e nat&re of t#e a&t#ori6ation and not its form. ,#e reG&irements are met if t#ere is a clear mandate from t#e rinci al s ecifically a&t#ori6ing t#e erformance of t#e act. 'andate may be oral or %ritten B8, vital t#at it m&st be ex ress. /f t#e s ecial a&t#ority is not %ritten it m&st be d&ly establis#ed by evidence ot#er t#an mere assertion of co&nsel. 21 *&dge considered evidence before allo%ing son to exec&te agreement on momKs be#alf. 3ere$ it %as s#o%n t#at *&dge took necessary reca&tionary meas&res and acted on t#e basis of satisfactory evidence %#en #e allo%ed t#e com romise agreement to be exec&ted by 5eorge 3&ng t#e etitionerKs son. )rior to #earing$ =im )in #ad re eatedly asked co&rt to a rove #er ro osal for mont#ly increase of C00 # + t#at increases be egged at t#at rate till mont#ly rental reac#es Ck. on 7ec 1(AA. B&t at t#e time$ ,an not amenable to it$ b&t ,an later c#anged #er mind so co&rt later asked 5eorge to exec&te agreement. ,#ere %ere ot#er reasons %#ic# led t#e lo%er co&rt to a finding t#at 5eorge 3&ng #ad t#e f&ll a&t#ority to enter into t#e com romise. ,#e co&rt itself observed d&ring t#e earlier #earings and it is not dis &ted t#at ... defendant =im )in co&ld not decide on anyt#ing %it#o&t first cons&lting #er son.I 5eorge 3&ngKs later denial t#at #e never manifested #is a&t#ority to re resent #is mot#er %as rejected by t#e co&rt. As a matter of fact$ t#is s&dden t&rnabo&t of 5eorge 3&ng led t#e co&rt to cite #im for contem t. 3e %as fined ,%o 3&ndred )esos. ,#e citation for contem t %as never a ealed. @1 9ven ass&ming 5eorge acted %it#o&t a&t#ority$ agreement %o&ld not be void$ merely &nenforceable$ and ca able of being ratified. ,#e com romise agreement %as ratified by t#e etitioner %#en a fe% days after t#e rom&lgation of t#e G&estioned j&dgment and before t#e filing of a motion for reconsideration$ s#e filed a 'otion ,o :it#dra% 7e osits$ a consignation case ending before t#e same co&rt bet%een t#e same arties. -&c# motionKs ex ressly stated &r ose %as to %it#dra% de osit made in order im lement com romise agreement. Lim Pin ) . Liao "an (ALAIN) 1C *&ly 1(!2 +acts.

1"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
- o&ses Conc#ita =iao ,an and ,an C#o 3&a alleged in t#eir com laint for &nla%f&l detainer t#at t#e laintiff Conc#ita =iao ,an$ as o%ner of a arcel of registered land %it# im rovements located at +rancisco -treet$ Caloocan City$ #ad leased a ortion of it$ more artic&larly kno%n as (1 +rancisco -treet$ Caloocan City to defendant =im )in on a mont# to mont# basis b&t t#at t#e latter starting A ril$ 1(AA #ad not aid t#e agreed rental sti &lated for s&c# mont# and t#e s&cceeding mont#s t#ereafter. And t#at des ite demand$ t#e defendant ref&sed to vacate t#e leased remises. 7efendant =im )in$ filed #er Ans%er denying t#e material allegations of t#e com laint and rotesting t#e alleged #ig#ly I&nconscionable and &nreasonableI increase of rental demanded by laintiffs. 2n t#e sc#ed&led 2ctober 1($ 1(AA #earing$ defendant =im )in %as absent. 3er son 5eorge 3&ng %#o attended %it# #is mot#er all t#e revio&s #earings %as resent toget#er %it# t#e defendantKs co&nsel. )laintiff Conc#ita =iao ,an toget#er %it# #er co&nsel %as also resent. ,#ro&g# t#e initiative of t#e co&rt a G&o$ t#e s&bject com romise agreement %as form&lated and exec&ted and it finally became t#e basis of t#e 2ctober 1($ 1(AA j&dgment. ,#e aforesaid j&dgment %as t#e s&bject of a motion for reconsideration filed on 2ctober 2!$ 1(AA by defendant =im )in on t#e follo%ing gro&nds. 11 t#at s#e never a&t#ori6ed #er son nor #er co&nsel on record 0Attorney. )astor 'amaril1 to enter into s&c# com romise agreement and 21 t#at #ad s#e been resent %#en said agreement %as re ared$ s#e %o&ld not #ave acceded t#ereto. )etitioner arg&es t#at t#e res ondent *&dge s#o&ld not #ave allo%ed #er son 5eorge 3&ng and #er t#en co&nsel$ Attorney. )astor 'amaril in #er absence to enter into t#e 2ctober 1($ 1(AA com romise agreement %it# t#e rivate res ondent Conc#ita =iao ,an assisted by #er co&nsel. -aid agreement contained admissions by etitioner$ t#e res ondent *&dge s#o&ld #ave reG&ired a %ritten a&t#ority and o%er of attorney from #er son and co&nsel. 3er objections to t#e validity of t#e com romise agreement are remised on Article 1!A! of t#e Civil Code and 4&le 1@!$ -ection 2@ of t#e 4&les of Co&rt. 1($ 1(AA com romise agreement in t#e absence of t#e etitioner. ;2. 39=7. Article 1!A! is fo&nd in ,itle W of t#e Civil Code on Agency. /t states t#at a s ecial o%er of attorney is necessary to com romise$ to s&bmit G&estions to arbitration$ to reno&nce t#e rig#t to a eal from a j&dgment$ to %aive objections to t#e ven&e of an action or to abandon a rescri tion already acG&ired. -ection 2@ of 4&le 1@! on Attorneys and Admission to t#e Bar governs t#e a&t#ority of attorneys to bind t#eir clients and rovides t#at IAttorneys #ave a&t#ority to bind t#eir clients in any case by any agreement in relation t#ereto made in %riting$ and in taking a eal$ and in an matters of ordinary *&dicial )roced&re$ b&t t#ey cannot$ %it#o&t s ecial a&t#ority$ com romise t#eir clientsK litigation or receive anyt#ing in disc#arge of t#eir clientsK claims b&t t#e f&ll amo&nt in cas#.I

,#e reG&irements of a s ecial o%er of attorney in Article 1!A! of t#e Civil Code and of a s ecial a&t#ority in 4&le 1@! of t#e 4&les of Co&rt refer to t#e nat&re of t#e a&t#ori6ation and not its form. ,#e reG&irements are met if t#ere is a clear mandate from t#e rinci al s ecifically a&t#ori6ing t#e erformance of t#e act. As early as 1(0"$ t#is Court in "tron# v. Gutierre$-%epide 0" )#il. "!01 stated t#at s&c# a mandate may be eit#er oral or %ritten$ t#e one vital t#ing being t#at it s#all be ex ress. And more recently$ :e stated t#at$ if t#e s ecial a&t#ority is not %ritten$ t#en it m&st be d&ly establis#ed by evidence. ... t#e 4&les reG&ire$ for attorneys to com romise t#e litigation of t#eir clients$ a s ecial a&t#ority. And %#ile t#e same does not state t#at t#e s ecial a&t#ority be in %riting t#e Co&rt #as every reason to ex ect t#at$ if not in %riting$ t#e same be d&ly establis#ed by evidence ot#er t#an t#e self? serving assertion of co&nsel #imself t#at s&c# a&t#ority %as verbally given #im. :#ere& on t#e follo%ing took lace. 011 ,#e co&rt asked 5eorge 3&ng %#et#er #e %as %illing to enter into t#e com romise agreement and %#et#er #e #ad t#e a&t#ority of #is mot#er to enter into s&c# a com romise agreementE 021 ,#e defendantKs co&nsel confirmed in o en co&rt t#e ass&rance of 5eorge 3&ng t#at #e #ad t#e f&ll a&t#ority of #is mot#er to enter into a com romise agreement. 0@1

/ss&e. :#et#er t#e res ondent *&dge committed grave ab&se of discretion in allo%ing t#e 2ctober

1A

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
After t#e form&lation of t#e com romise agreement t#e *&dge ex lained in ,agalog to bot# arties$ incl&ding 5eorge 3&ng its terms and conditions after %#ic# t#e same %as red&ced into %ritingE 0D1 5eorge 3&ng %illingly signed t#e com romise agreement$ t#e terms and conditions of %#ic# %ere t#ose originally ro osed by t#e etitioner #erself. 3&ng %as all t#e %#ile assisted by t#eir co&nsel. )9,/,/2; 7/-'/--97. @. #$C2D E0*e.tion Generaru-e in Art. Ab&ella manifested t#at #eFll only stay in t#e #o&se &ntil end of t#e year 1(!" and offered t#e tractor as sec&rity. /n order for #im to ay #is obligations sooner$ #e asked Calibo to #el #im look for b&yers. /n *an&ary 1(!A$ a ne% tenant occ& ied t#e #o&se and Calibo moved t#e tractor to #is fat#erFs garage also in t#e same city. 9ven after demands$ 'ike failed to ay #is arrearsE #e only ass&red Calibo t#at t#e tractor %o&ld stand as g&arantee to #is ayment. :#en )ablo Ab&ella tried to get t#e tractor from Calibo$ #e tried to negotiate %it# #im and offered to %rite a c#eck in ayment of t#e rentals and ostdated c#ecks to cover t#e ot#er ex enses b&t still #ad to verify %it# 'ike. Calibo %o&ld only acce t t#e latter if )ablo %o&ld exec&te a romissory note in #is favor to cover t#e remaining ex enses. ,#e t%o did not agree. )ablo Ab&ella instit&ted an action for re levin$ claiming o%ners#i of t#e tractor and seeking to recover ossession t#ereof from etitioner Bot# t#e trial co&rt and t#e CA r&led in favor of Ab&ella. 'ike Ab&ella co&ld not #ave validly ledged t#e s&bject tractor to etitioner since #e %as not t#e o%ner t#ereof$ nor %as #e a&t#ori6ed by its o%ner to ledge t#e tractor. /--89. :2; t#ere %as an im lied rinci al?agent relations#i bet%een )ablo and 'ike 39=7. ;o. )ablo Ab&ella categorically stated t#at t#e tractor %as only left to 'ike for safekee ingE not to be ledged or alienated. 'ike acted %it#o&t a&t#ority or consent from )ablo. Article 1!"( states t#at t#ere %o&ld only be im lied agency is t#e erson is acting %it#in t#e a&t#ority granted to #im by t#e rinci al. Article 1(11 mandates t#at t#e rinci al is solidarily liable %it# t#e agent if t#e former allo%ed t#e latter to act as t#o&g# #e #ad f&ll o%ers. Again$ in vie% of )abloFs lack of kno%ledge of 'ikeFs ledging t#e tractor %it#o&t any a&t#ority from #im$ it s#o%s t#at )ablo co&ld not #ave allo%ed t#e 'ike to ledge t#e tractor as if #e #ad f&ll o%ers to do so. )etition denied. CA decision affirmed. Linan ). Puno (!EG) *o#nson$ *. 1(1C FAC"S> =inan %as t#e o%ner of a certain arcel of land. /n 1(0!$ #e exec&ted a doc&ment %#ic# conferred & on )&no t#e o%er$ d&ties and obligations to &rc#ase$ sell$ collect and ay$ as %ell as s&e and be s&ed before any a&t#ority$ a ear before t#e co&rts of j&stice and administrative officers in any roceeding or b&siness concerning t#e good administration and advancement of #is interests. /n 1(11$ )&no$ for t#e s&m of )!00$ sold and delivered said arcel of land to t#e ot#er defendants. )etitioner alleges

Art. 1!A2. Bet%een ersons %#o are absent$ t#e acce tance of t#e agency cannot be im lied from t#e silence of t#e agent$ exce t. 011 :#en t#e rinci al transmits #is o%er of attorney to t#e agent$ %#o receives it %it#o&t any objectionE 021 :#en t#e rinci al entr&sts to #im by letter or telegram a o%er of attorney %it# res ect to t#e b&siness in %#ic# #e is #abit&ally engaged as an agent$ and #e did not re ly to t#e letter or telegram. A. to Art. #$C2 &i''erentiate Art. #$C#

Art. 1!A1. Bet%een ersons %#o are resent$ t#e acce tance of t#e agency may also be im lied if t#e rinci al delivers #is o%er of attorney to t#e agent and t#e latter receives it %it#o&t any objection. Art. 1!A2. Bet%een ersons %#o are absent$ t#e acce tance of t#e agency cannot be im lied from t#e silence of t#e agent$ exce t. 011 :#en t#e rinci al transmits #is o%er of attorney to t#e agent$ %#o receives it %it#o&t any objectionE 021 :#en t#e rinci al entr&sts to #im by letter or telegram a o%er of attorney %it# res ect to t#e b&siness in %#ic# #e is #abit&ally engaged as an agent$ and #e did not re ly to t#e letter or telegram. B. Ca-i8o ). CA ("(FF) *. H&is&mbing +AC,-. 'ike Ab&ella$ rivate res ondentFs son leased t#e #o&se of Calibo for residential &r oses. )ablo Ab&ella left t#e tractor %it# #is son for safekee ing. 4ent and ot#er ex enses %ere initially aid b&t s&bseG&ently defa&lted in ayment t#ereof. :#en confronted by Calibo$ 'ike Ca e

1!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
t#at t#e said doc&ment #e exec&ted did not confer & on t#e )&no t#e o%er to sell t#e land and rayed t#at t#e sale be set asideE t#at t#e land be ret&rned to #im$ toget#er %it# damages. =o%er co&rt fo&nd for )&no. ISSUE> :2; t#e doc&ment did not give )&no a&t#ority to sell t#e land. ,EL&> YES. ,#ere seems to be no good reason for saying t#at )&no #ad a&t#ority to administer and not to sell %#en Ito sellI %as as advantageo&s to t#e laintiff in t#e administration of #is affairs as Ito administer.I ,o #old t#at t#e o%er %as Ito administerI only %#en t#e o%er Ito sellI %as eG&ally conferred %o&ld be to give to s ecial %ords of t#e contract a s ecial and limited meaning to t#e excl&sion of ot#er general %ords of eG&al im ort. :#enever it is ossible$ effect is to be given to every %ord and cla&se &sed by t#e arties. /t is to be res&med t#at t#e arties said %#at t#ey intended to say and t#at t#ey &sed eac# %ord or cla&se %it# some &r ose and t#at &r ose is$ if ossible$ to be ascertained and enforced. =ike%ise$ t#ere %as no allegation on roof t#at )&no acted in bad fait# or fra&d&lently in selling t#e land. /t %ill be res&med t#at #e acted in good fait# and in accordance %it# #is o%er as #e &nderstood it also t#e one %#o made t#e revio&s ayments. A %itness$ one 5almes$ t#e lessor of t#e b&ilding said t#at +lores also signed as a %itness on t#e s&blease contract as managing agent$ %#ic# *ose Cam s also signed. Cam s no% says t#at t#e foregoing facts are not s&fficient to establis# t#e fact t#at #e received t#e goods for %#ic# ayment is demanded. /--89. :o; Cam s is esto ed from t#at 4icardo +lores %as not #is agent roclaiming

39=7. >es. +lores %as a arently in c#arge of t#e b&siness$ erforming t#e d&ties &s&ally entr&sted to managing agent$ leave little room for do&bt t#at #e %as t#ere as a&t#ori6ed agent of t#e defendant. 2ne %#o clot#es anot#er a arent a&t#ority as #is agent$ and #olds #im o&t to t#e &blic as s&c#$ cannot be ermitted to deny t#e a&t#ority of s&c# erson to act as #is agent$ to t#e rej&dice of innocent t#ird arties dealing %it# s&c# erson in good fait# and in t#e follo%ing res&m tions or ded&ctions$ %#ic# t#e la% ex ressly directs to be made from artic&lar facts$ are deemed concl&sive. I:#enever a arty #as$ by #is o%n declaration$ act$ or omission$ intentionally and deliberately led anot#er to believe a artic&lar t#ing tr&e$ and to act & on s&c# belief$ #e cannot$ in any litigation arising o&t s&c# declaration$ act$ or omission$ be ermitted to falsify itI and &nless t#e contrary a ears$ t#e a&t#ority of an agent m&st be res&med to incl&de all t#e necessary and &s&al means of carrying #is agency into effect. !a--o ) . Yan4*o (EA!LA) -e t 2A$ 1(11 'oreland$ *. +AC,-. 2n ;ovember 2A$ 1(0A$ ,eodoro >angco sent a letter to +lorentino 4allos$ offering >angco #is services. Accordingly$ #e #as j&st o ened a s#i ing and commission de artment for b&ying and selling tobacco leaf and ot#er native rod&cts in #is steams#i office in 'anila. 3e ex ressly indicated in #is letter t#at +lorentino Collantes %ill act for and in #is be#alf in transacting %it# 4allos. 3e f&rt#er stated t#at #e #as given Collantes a o%er of attorney$ notari6ed by 'r. 4odrig&e6. 2n +ebr&ary 1(0($ 4allos sent to Collantes 21! b&ndles of tobacco in t#e leaf to be sold on commission. After ded&cting t#e commission 0)20".("1 from t#e total amo&nt of )1ADD$ 4allos is entitled to )1C@A.0!. /t a ears t#at at t#e time 4allos gave t#e tobacco to Collantes$ #e %as not t#e agent of >angco anymore$ >angco #aving severed #is relations#i %it# Collantes. ,#is fact #o%ever %as not kno%n to nor comm&nicated %it# 4allos. As a res&lt$ %#en

&. Arti*-e #$C@ Art. 1!A@. /f a erson s ecially informs anot#er or states by &blic advertisement t#at #e #as given a o%er of attorney to a t#ird erson$ t#e latter t#ereby becomes a d&ly a&t#ori6ed agent$ in t#e former case %it# res ect to t#e erson %#o received t#e s ecial information$ and in t#e latter case %it# regard to any erson. ,#e o%er s#all contin&e to be in f&ll force &ntil t#e notice is rescinded in t#e same manner in %#ic# it %as given. #. E''e*t o' .e*ia- in'ormation

2a*:e ). Cam. (A//Y) +eb 12$ 1(0A Carson$ *. +AC,-. B.3. 'acke and :.3. C#andler are artners and sold to *ose Cam s of t#e :as#ington CafQ vario&s bills of goods amo&nting to )@C1.C0 b&t #e only received )1AD. 'acke made a demand b&t Cam s failed to ay. 'acke said t#at 4icardo +lores t#e b&siness manager of t#e #otel bar resta&rant signed t#e recei t and t#at +lores %as

1(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
4allos tried to collect from >angco t#e )1C@A.0!$ >angco ref&sed to ay #im t#e amo&nt$ on t#e basis t#at Collantes %as already acting on #is be#alf at t#e time #e collected t#e 21! b&ndles of tobacco. /--89. :2; >angco is still liable to amo&nt of )1C@A. ay 4allos t#e +AC,-. Cosmic$ t#ro&g# its 5eneral 'anager$ exec&ted a - ecial )o%er of Attorney a ointing )a6 5. Millamil?9strada as attorney?in?fact. x x x to initiate$ instit&te and file any co&rt action for t#e ejectment of t#ird ersons andLor sG&atters of t#e entire lot (12A and DD@ and covered by ,C, ;os. @A"D! and @A"D($ for t#e said sG&atters to remove t#eir #o&ses and vacate t#e remises in order t#at t#e cor oration may take material ossession of t#e entire lot$ and for t#is &r ose$ to a ear at t#e re?trial conference and enter into any sti &lation of facts andLor com romise agreement so far as it s#all rotect t#e rig#ts and interest of t#e cor oration in t#e aforementioned lots. 9strada$ by virt&e of #er o%er of attorney$ instit&ted an action for t#e ejectment of rivate res ondent /sidro )ere6 and recover t#e ossession of a ortion of =ot ;o. DD@ before t#e 4,C of 7ag& an. =ater$ 9strada entered into a Com romise Agreement %it# )ere6$ %#erein t#e latter agreed to ay t#e ortion being occ& ied by #im and to deliver t#e s&m of )2"$"D0. ,#e 4,C a roved t#e Com romise Agreement. 3o%ever$ it %as not exec&ted %it#in t#e C?year eriod from date of t#e finality of t#e j&dgment allegedly d&e to t#e fail&re of etitioner to rod&ce t#e o%nerFs d& licate co y of t#e title needed to segregate from =ot ;o. DD@ t#e ortion sold by 9strada to )ere6 &nder t#e com romise agreement. Cosmic asserts t#at it %as only & on t#e revival of t#e j&dgment t#at it came to kno% of t#e com romise agreement bet%een 9strada and )ere6. 3ence$ it so&g#t to ann&l t#e decision of t#e trial co&rt alleging t#at it %as void beca&se 9strada #ad no a&t#ority to dis ose of t#e ro erty b&t merely confined to file an ejectment case in order t#at the corporation may ta&e material possession of the entire lot. 'oreover$ a board resol&tion %as needed for t#e dis osition of t#e ro erty. ,#e CA dismissed t#e com laint. /--89. :2; 9strada %as a&t#ori6ed to sell t#e ro erty< 39=7. ;2. ,#e a&t#ority granted 9strada &nder t#e s ecial o%er of attorney %as ex licit and excl&sionary. ;o%#ere in t#is a&t#ori6ation %as 9strada granted ex ressly or im liedly any o%er to sell t#e s&bject ro erty nor a ortion t#ereof. ;eit#er can a conferment of t#e o%er to sell be validly inferred from t#e s ecific a&t#ority 'to enter into a compromise a#reement( beca&se of t#e ex licit limitation fixed by t#e grantor t#at t#e com romise entered into s#all only be 'so far as it

39=7. >es. 3aving advertised t#e fact t#at Collantes %as #is agent and #aving given t#em a s ecial invitation to deal %it# s&c# agent$ it %as t#e d&ty of t#e defendant on t#e termination of t#e relations#i of rinci al and agent to give d&e and timely notice t#ereof to t#e laintiffs. +ailing to do so$ #e is res onsible to t#em for %#atever goods may #ave been in good fait# and %it#o&t negligence sent to t#e agent %it#o&t kno%ledge$ act&al or constr&ctive$ of t#e termination of s&c# relations#i . +or #is fail&re to inform 4allos of t#e termination of t#e agency relations#i %it# Collantes$ >angco is liable. 2. @. a4en*7 E''e*t o' Pu8-i* Ad)erti ement A4en*7 87 e to..e- ). im.-ied

2a*:e ). Cam. , u.ra Na4uiat ). CA (6ANCES) A. 2anner o' termination

E. Arti*-e #$CA> E0*e.tion to t1e 4enera- ru-e t1at a4entE aut1orit7 ma7 8e ora- or ?ritten Art. 1!AD. :#en a sale of a iece of land or any interest t#erein is t#ro&g# an agent$ t#e a&t#ority of t#e latter s#all be in %ritingE ot#er%ise$ t#e sale s#all be void. #. A..-i*a8i-it7D re-ate to Art. #A0@ (2e) Art. 1D0@. ,#e follo%ing contracts &nenforceable$ &nless t#ey are ratified. are

20e1. An agreement of t#e leasing for a longer eriod t#an one year$ or for t#e sale of real ro erty or of an interest t#ereinE 2. !e.ur*1a e @. Ca e > Lim ). CA (ALAIN) Co mi* Lum8er ). CA (GEN) ;ov. 2($ 1((" Bellosillo$ *.

20

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
shall protect the ri#hts and interest corporation in the aforementioned lots.( of the t#e latterKs son %as married to #er da&g#ter$ for t#e s&m of )AA$21".00. ;ieves Cr&6 s&bseG&ently so&g#t to rescind t#e contract of sale %it# t#e rivate res ondents. /--89. :#et#er or not t#e agreement enforceable or can be roved &nder t#e la% is

Alienation by sale of an immovable certainly cannot be deemed rotective of t#e rig#t of etitioner to #ysically ossess t#e same$ more so %#en t#e land %as being sold for a rice of )!0.00 er sG&are meter$ very m&c# less t#an its assessed val&e of )2C0.00 er sG&are meter$ and considering f&rt#er t#at etitioner never received t#e roceeds of t#e sale. By selling to )ere6 a ortion of etitionerFs land t#ro&g# a com romise agreement$ 9strada acted %it#o&t or in obvio&s a&t#ority. ,#e sale ipso )ure is conseG&ently void. -o is t#e com romise agreement. X2t#er iss&e on agency. /t may be arg&ed t#at etitioner kne% of t#e com romise agreement since t#e rinci al is c#argeable %it# and bo&nd by t#e kno%ledge of or notice to #is agent received %#ile t#e agent %as acting as s&c#. B&t t#e general r&le is intended to rotect t#ose %#o exercise good fait# and not as a s#ield for &nfair dealing. 3ence t#ere is a %ell? establis#ed exce tion to t#e general r&le as %#ere t#e cond&ct and dealings of t#e agent are s&c# as to raise a clear res&m tion t#at #e %ill not comm&nicate to t#e rinci al t#e facts in controversy. ,#e logical reason for t#is exce tion is t#at %#ere t#e agent is committing a fra&d$ it %o&ld be contrary to common sense to res&me or to ex ect t#at #e %o&ld comm&nicate t#e facts to t#e rinci al. !odri4ue5 ) . Court o' A..ea- (2AI) A&g&st 2($ 1("( Castro$ *. +AC,-. 2n 7ecember @1$ 1(C!$ by virt&e of a doc&ment denominated ISas&nd&anI %ritten in t#e vernac&lar and ratified before ;otary )&blic =a6aro C. /son of t#at locality$ ;ieves Cr&6$ a&t#ori6ed t#e s o&ses Atanacio Malen6&ela$ and 'aximina Mictorio and =iberate -antos to sell a certain arcel of land of abo&t DD$"@D sG&are meters belonging to #er. ;ieves Cr&6 and #er c#ildren$ #o%ever$ collected from t#e agents$ eit#er t#r& 'aximina Mictorio or t#r& -al&d 5. de =eon$ da&g#ter of =iberate -antos$ vario&s s&ms of money d&ring t#e eriod from *&ly @$ 1(C( & to -e tember @$ 1("1$ all of %#ic# %ere d&ly recei ted for by ;ieves Cr&6 andLor #er c#ildren and in %#ic# recei ts it is ex ressly stated t#at said amo&nts %ere Ibilan# &ara#da#an sa ipina#bili namin# lupa sa &anila 0additional ayments for t#e land %e sold to t#em1. ;ieves Cr&6 t#en sold t#e ro erty in G&estion to Barbara =ombos 4odrig&e6$ #er IbalaeI beca&se

39=7. >9-. ,#e fact t#at Atanacio Malen6&ela$ et al. %ere agents of ;ieves Cr&6 &nder t#e agency agreement of 7ecember @1$ 1(C! is not material$ for if it is tr&e t#at ;ieves Cr&6 did agree to sell to #er agents t#e real estate s&bject of t#e agency$ #er consent to t#e agreement took t#e transaction o&t of t#e ro#ibition contained in article 1D(1021 of t#e Civil Code. Neit1er are arti*-e #$CA and #$C$(B) and (#2) o' t1e Ci)i- Code re-e)ant, 'or t1e7 re'er to a-e made 87 an a4ent 'or a .rin*i.a- and not to a-e made 87 t1e o?ner .er ona--7 to anot1er, ?1et1er t1at ot1er 8e a*tin4 .er ona--7 or t1rou41 a re.re entati)e. "1u , t1e a4reement i )a-id. ,#e arties to t#e agency agreement s&bseG&ently entered into a ne% and different contract by %#ic# t#e lando%ner$ ;ieves Cr&6$ verbally agreed to sell #er interest in t#e litigated real estate to Atanacio Malen6&ela$ et al. and t1i ?a e ta8-i 1ed 87 *ertain 'a*t , s&c# as. Y1Z -al&d de =eon testified t#at it %as s#e %#o #ad t#e oral agreement %it# ;ieves Cr&6 for t#e &rc#ase by Atanacio Malen6&ela$ et al. of t#e litigated ro erty and$ as fo&nd by t#e res ondent Co&rt$ -al&d de =eon %as t#e re resentative of Atanacio Malen6&ela$ et al.$ not of ;ieves Cr&6E Y2Z Cr&6Fs acce tance of t#e s&ms of money given by t#e rivate res ondents and #er s&bseG&ent iss&ance of recei ts for t#ese s&msE Y@Z t#e sale %as establis#ed and recogni6ed in t#e land registration roceedings %#ere t#e certificates of title bear t#e annotation of t#e aforesaid rig#t of Atanacio Malen6&ela$ et al. )ertinent rovisions. Art. 1D(1. ,#e follo%ing ersons cannot acG&ire by &rc#ase$ even at a &blic or j&dicial a&ction$ eit#er in erson or t#ro&g# t#e mediation of anot#er. xxx 021 Agents$ t#e ro erty %#ose administration or sale may #ave been entr&sted to t#em$ &nless t#e consent of t#e rinci al #as been givenE Art. 1!AD. :#en a sale of a iece of land or any interest t#erein is t#ro&g# an agent$ t#e a&t#ority of t#e latter s#all be in %ritingE ot#er%ise$ t#e sale s#all be void. Kati48a: ). "ai ,in4 (!(G) 1(2!

21

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
+AC,-. 9ja %as o%ner of land %it# ,orrens ,itle t#at %as s&bject to a mortgage lien in favor of )#il ;ational Bank. )o ,ecsi exec&ted a general o%er of attorney in favor of brot#er 9ja em o%ering latter to erform on #is be#alf as #is la%f&l agent$ t#e follo%ing. Ito b&y$ sell$ or barter$ assign$ or admit in acG&ittance$ or in any ot#er manner to acG&ire or convey all sorts of ro erty$ real and ersonal$ b&sinesses and ind&stries$ credits rig#ts and actions... for %#atever rices and conditions #e may sti &late$ aying and receiving ayment in cas# or in instalments and exec&te t#e ro er instr&ments...I )o ,ecsi exec&ted instr&ment of indebtedness to #is brot#er 9ja for rice of ro erty %#ic# latter sold to #im. 9ja exec&ted a 2nd mortgage on s&c# land to =imjenco. =ater #e sold land to bot#er )o ,ecsi s&bject to same enc&mbrances. 9ja $ &sing o%er given by #is brot#er$ sold absolutely and forever to Satigbak t#e land$ mentioning only t#e mortgage to );B %it#o&t recording eit#er #is o%er of attorney or sale in ro er certificate of title. )o ,ecsi remained in ossession of land and leased land to 8y C#ia for C years. =ease %as recorded in title. )o ,ecsi com lained to #is brot#er t#at #e #ad been after #im so m&c# for t#e for%arding of #e rents of t#e ro erty and ex laining #is recario&s financial condition$ t#at #e did not collect t#e rents for #imself$ and romised to remit t#e balance after #aving aid all ex enses of re airs and cleaning & toget#er %it# vo&c#ers so #e co&ld not blame #im for anyt#ing. )o ,ecsi ans%ered t#at #e #ad sent a draft of )2k and %as s&r rised t#at 9ja claimed s&c# rent and t#at if 9ja %anted to lease ro erty to -mit# Bell #e s#o&ld not do so %it#o&t first cons&lting #im$ bec if someone offered a #ig#er rent #e %anted to exercise #is rig#t to lease it. 'ortgage on land %as cancelled. )o ,ecsi died. 3is son$ -&n -&y$ s&bmitted to 9ja a liG&idation of acco&nts s#o%ing rents collected on ro erty. -&n %as delayed in rental ayments and begged 9ja to let #im ay later. 9ja assigned credit against ,ecsi to #is son -&n Boo. Satigbak sold ro erty to -&n Boo. =atter notified -&n -&y. -&n Boo no% seeks recovery of rent against ,ai 3ing Co. And members of s&c# com any -&n -&y. -&n -&y. 9ja not a&t#ori6ed &nder o%er exec&ted by ,ecsi to sell land co6 it %as exec&ted before 9ja sold land to #is brot#er ,ecsi. /--89. :2; 9ja #ad a&t#ority to sell land to Satigbak &nder )2A exec&ted by ,ecsi even t#o&g# s&c# )2A %as exec&ted even before ,ecsi #ad bo&g#t land from 9ja < >939=7. 11 9ja #ad a&t#ority. )o%er #ere %as general and a&t#ori6es 9ja to sell any kind of realty IbelongingI 0 ertene6can1 to t#e rinci al. ,#e &se of s&bj&nctive I ertene6canI 0mig#t belong1 and not t#e indicative I ertenecenI 0belong1 means t#at )o ,ecsi meant not only t#e ro erty #e #ad at t#e time of exec&tion b&t also %#at #e mig#t after%ards #ave. 21 )o%er of attorney not recorded in registry still binds rinci al to ackno%ledge acts erformed by 9ja . :#ile itFs tr&e t#at o%er of attorney not recorded in registry of deeds is ineffective in order t#at an agent or attorney in fact may validly erform acts in t#e name of #is rinci al$ and any act erformed by agent by virt&e of o%er is ineffective against @rd erson %#o$ in good fait#$ may #ave acG&ired a rig#t$ it does #o%ever$ bind rinci al to ackno%ledge acts erformed by #is attorney in fact regarding said ro erty. 3ere$ %#ile itFs tr&e t#at non?registration of )2A by )o ,ecsi revents sale made by 9ja to Satigbak from being recorded in registry of deeds$ itFs not ineffective to com el ,ecsi to ackno%ledge said sale. -ale %as not fra&d&lent even if o%er and sale not recorded in registry. 4ecord s#o%s t#at )o ,ecsi %as a%are of sale as s#o%n by several letter com laining of ressing demands of #is bro 9ja to send #im rents of land$ #is romises to send t#em and remittance %ere tacit ackno%ledgment t#at #e occ& ied land no longer as o%ner b&t only as lessee. Linan, u.ra ("(FF) Stron4, u.ra (!EG) *. ,racey 1(0" FAC"S> 'rs. -trong %as t#e o%ner of !00 s#ares of ca ital stock of t#e )#il. -&gar 9states 7evelo ment Com any. ,#e s#ares %ere &rc#ased by t#e res ondent t#ro&g# a broker %#o dealt %it# -trongFs agent$ *ones$ %#o #ad t#e scri t on t#is ossession and %#o made t#e sale %it#o&t t#e kno%ledge of -trong. )revio&s to t#e sale %as a conversation bet%een etitioner and res ondent %#ere t#e former told t#e latter$ s eaking of #er s#ares$ not to art %it# t#em &ntil / got t#eir face val&e. *ones #ad been acting grat&ito&sly as agent of -trong$ not only &nder a %ritten o%er s ecial in terms to collect money$ b&t also as general agent managing all #er b&siness. 9ven before t#e sale

22

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
mentioned$ t#ere #ad been an occasion %#ere *ones %it#o&t s ecial instr&ction sold ot#er stocks o%ned by -trong$ &nderstanding t#at t#e act %as %it#in t#e sco e of #is general agency. -trong alleges t#at *ones$ as #er agent$ did not #ave t#e o%er to sell or deliver #er stocks. /--89. :2; selling t#e s#ares %as %it#in t#e a&t#ority of t#e agent *ones. 39=7. ;2. ,#e only evidence of t#e agency %as t#e conversation bet%een -trong and *ones. 5at#ering from it$ t#e o%er may #ave been general or s ecial$ ex ress or merely ass&med. ,#is %o&ld lead$ #o%ever$ to t#e ass&m tion ro#ibited by Art. 1A1@. ,#e general management of t#e ro erty did not necessitate incidentally t#e sale of stock. ,#erefore$ t#ere is no roof of an effective o%er given *ones to dis ose of t#e stock. Acts of agents beyond t#eir a&t#ority are n&ll. ,#ird ersons %#o deal %it# t#em at t#eir o%n eril and are bo&nd to inG&ire as to t#e extent of t#e o%er of t#e agent %it# %#om t#ey contract. /n t#is case$ defendant is not s#o%n to #ave made any inG&iry$ b&t a arently relied &nG&estioningly & on *onesFs ass&m tion of a&t#ority and took risk in so doing. Pa *ua- ) !ea-t7 In)e tment In*. (A//Y) 'ay 12$ 1(C2 *. Ba&tista ,#e &r ose of t#is action is to enforce an alleged verbal agreement to sell to t#e laintiff a arcel of land %#ic# is claimed to #ave been occ& ied by t#e laintiff as at tenant since 1(12$ it a earing t#at &nder t#e stat&te of fra&ds said verbal agreement cannot be enforced$ nor evidence t#ereon resented$ beca&se it #as not been made in %riting$ nor does it a ear in a note or memorand&m$ as reG&ired by said stat&te 04&le 12@$ section 21 0e1$ 4&les of Co&rt1.

/--89. :L; )asc&alFs allegation takes #is case o&t of t#e o eration of t#e stat&te of fra&ds. 0/f yes t#en 4ealty is com elled to exec&te t#e deed of sale1

39=7. ;o$ t#is is not one of t#e exce tions. :#ile it is alleged t#at laintiff #as occ& ied t#e land since 1(12$ t#ere is not#ing alleged t#erein to t#e effect t#at #e #as taken ossession t#ereof in vie% of a s& osed verbal contract #e #ad %it# t#e defendant to &rc#ase it$ nor is t#ere any allegation t#at #e #as made im rovements t#ereon beca&se and as a conseG&ence of said s& osed contract to sell. ,#is case #aving been dismissed on a mere motion to dismiss$ the merits of the order of the court can only be #au#ed upon a consideration of the alle#ations appearin# in the complaint, and upon no other.

+AC,-. 4amon )asc&al filed an action to com el 4ealty /nvestment to sell to #im t#e land t#at #e is occ& ying. 3e alleges t#at #e #as been occ& ying t#e DC0 sG.m. of land since 1(12 %#ile it %as still &nder Angela ,&asonFs administration. :#en it %as sold to 4ealty in 1(D1$ #e said t#at #e offered to b&y it at )1CLsGm. 3e failed to erfect t#e sale beca&se 4ealty increased t#e rice to )2C #ence t#is action. 4ealty filed a motion to dismiss and %as granted.

C+/ basis. An agreement to sell real ro erty s#o&ld be made in %riting$ or at least it s#o&ld a ear in a note or a memorand&m$ in order t#at a s&it based t#ereon may be enforceable$ t#e resent action cannot be maintained and s#o&ld be dismissed. O+or o&r &r oses a ly 1D0@ also. ,#e oint is :L; t#e sale to be enforceable$ m&st be in %ritingV>9-J

91ere a .aro- *ontra*t o' a-e i addu*ed not 'or t1e .ur.o e o' en'or*in4 it, 8ut a a 8a i o' t1e .o e ion o' t1e .er on *-aimin4 to 8e t1e o?ner o' t1e -and, t1e tatute o' 'raud i not a..-i*a8-e 0Almirol et al.$ vs. 'onserrat$ D! )#il.$ "A1$ in t#e same %ay t#at it does not a ly to contracts %#ic# are eit#er totally or artially erformed & on t#e t#eory t#at t#ere is a %ide field for t#e commission of fra&ds in exec&tory contracts %#ic# only revented by reG&iring t#em to be in %riting$ a fact %#ic# is red&ced to a minim&m in exec&ted contracts beca&se t#e intention of t#e arties become a arent by t#eir exec&tion1. )asc&alFs sit&ation does not #ere obtain for t#e reason t#at t#e com laint does not contain t#e reG&isite allegations. 2n t#e contrary$ it alleges t#at laintiff occ& ied t#e land as a tenant since 1(12. !aet ) . CA (EA!LA) -e tember 1A$ 1((! 'endo6a$ *.

2@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
+AC,-. /n 1(!D$ t#e - s. 4aet and - s. 'itra aid Am aro 5at&s )D0k and )@Ck$ res ectively$ after negotiations regarding t#e sale of 5at&sF rig#ts in certain &nits in =as Millas de -to ;ino in 'eyaca&ayan$ B&lacan. ,#is s&bdivision %as develo ed by t#e )#il?Mille 7evelo ment and 3o&sing Cor oration 0)M73C1$ rimarily for arties G&alified to obtain loans from 5-/-. /n 1(!C$ t#e t%o s o&ses a lied directly to )M73C for t#e &rc#ase of &nits in t#e s&bdivision. ,#ey t#en looked for 5-/- members %#o can act as accommodation arties by allo%ing t#em to &se t#eir olicies$ for t#e &r ose of enabling t#e t%o s o&ses to b&y &nits in t#e s&bdivision. ,#e )M73C %o&ld t#en allo% t#em to b&y &nits after t#e 5-/a roved t#e loan a lications of t#eir roxies. ,#e t%o s o&ses t#en resented t#e 5-/- olicies of 9rnesto Casidsid 0for 4aets1 and 9dna =im 0for 'itras1 and aid )7M3C )@2$"C@ and )2Ak$ res ectively. 3o%ever$ t#e loan a lications of Casidsid and =im %ere disa roved by 5-/-$ t#&s rom ting )M73C to inform etitioners to look for ot#er so&rces of financing. B&t in t#e meantime$ t#ey %ere allo%ed to occ& y t#e &nits initially granted to t#em. 2n ;ovember 10$ 1(!!$ for fail&re of t#e etitioners to look for alternative so&rces of financing$ )M73C ordered t#em to vacate t#e remises. ,#e s o&ses #o%ever ref&sed to #eed t#e order. An e=e*tment *a e %as t#en filed against t#em before t#e ',C 'eyca&ayan$ %#ic#$ in its decision dated 'ay 2D$ 1((1$ ordered t#em to vacate t#e remises. 2n t#e ot#er #and$ a com laint for e ta'a %as filed against 5at&s. ,#e com laint %as #o%ever dismissed on t#e gro&nd t#at 5at&s never re resented #erself to be t#e agent of )M73C. ,#e s o&ses filed anot#er com laint before t#e 4,C 'alolos for t#e re*o)er7 o' t1e u..-ementa- *o t t#ey #ad aid )M73C. ,#is %as #o%ever dismissed by t#e 4,C on t#e gro&nd of lack of j&risdiction. Anot#er case %as t#en filed to t#e 3=84B in 1((1 O a *om.-aint 'or .e*i'i* .er'orman*e and dama4e against 5at&s and )M73C. ,#e Arbiter t#en r&led in favor of t#e s o&ses and ordered t#em to reimb&rse t#e amo&nts aid by t#e s o&ses to t#em. ,#e Arbiter also fo&nd t#at 5at&s %as an agent of )M73C. 2n a eal$ t#e Board Commissioner r&led t#at t#e case #as already been decided by t#e ejectment case in t#e ',C. 8 on elevation to t#e Office of the President$ it s&stained t#e decision of t#e Arbiter. B&t on a eal to t#e CA$ t#e case %as dismissed %it#o&t rej&dice to t#eir rig#t to roceed against 5at&s. /--89. :2; 5at&s %as an agent of )M73C. 39=7. ;o. 5at&s %as not t#e agent of rivate res ondent )M73C. ,#e dismissal of t#e criminal case for estafa against 5at&s roves t#at s#e is not an agent of )M73C$ es ecially since it %as fo&nd t#erein t#at s#e never re resented #erself to be an agent of )M73C. 'oreover$ Art. 1!AD of t#e Civil Code reG&ires for t#e validity of a sale involving land t#at t#e agent s#o&ld #ave an a&t#ori6ation in %riting$ %#ic# 5at&s did not ossess. )etitioners kne% from t#e beginning t#at 5at&s %as negotiating %it# t#em in #er o%n be#alf$ and not as an agent of rivate res ondent )M73C. ,#ere is$ t#erefore$ no basis in fact for t#e finding of t#e 3o&sing and =and 8se Arbiter t#at 5at&s %as t#e agent of rivate res ondent )M73C %it# res ect to t#e transactions in G&estion. X/n t#is case$ t#e -C also said t#at t#ere %ere no erfected contracts of sale$ since t#e &rc#ase rice and t#e ayment sc#emes #ave not been agreed & on. At most$ t#ere %as only a ro osed contract to sell. 6imene5 ). !a8ot (6ANCES) Cit7FLite !ea-t7 Cor.. ). CA (6ILL) +ebr&ary 10$ 2000 *. Bellosillo +AC,-. 4es ondent +) 3oldings %as selling its land$ also kno%n as t#e Miolago )ro erty 0itFs a s&bdivision in HC no%1$ to t#e general &blic via sales broc#&res. /ts agent$ 'eldin 4oyL'etro 7r&g transacted %it# City?=ite for t#e sale of t#e front ortion of t#e land$ rovided t#at City?=ite %o&ld &t into %riting its acce tance %it# t#e terms and conditions. After City?=ite conveyed t#eir agreement into %riting$ +) 3oldings ref&sed to exec&te t#e corres onding 7eed of -ale$ rom ting City?=ite to register an adverse claim in t#e ,itle. +) 3oldings t#en filed a )etition for t#e cancellation of t#e adverse claim %it# t#e 4,C HC b&t t#is %as dismissed by a finding t#at t#ere is s&fficient gro&nd for t#e adverse claim. City?=ite no% s&ed +) 3oldings for s ecific erformance 0exec&tion of 7eed of -ale1. )ending t#is case$ +) 3oldings transferred t#e ro erty to Mie% 'aster$ forcing City?=ite to again annotate a notice of lis pendens over t#e ne% ,itle of Mie% 'aster. ,#e trial co&rt rendered a decision favorable to City?=ite$ b&t t#is %as reversed by t#e Co&rt of A eals on t#e gro&nd t#at t#ere %as no erfected contract of sale since t#ere %as no definite agreement as to t#e manner of ayment.

2D

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/--89. :2; a contract of sale %as erfected< ;2. 4A,/2. 8nder Art. 1!AD$ %#en a sale of a iece of land or any interest t#erein is made by an agent$ t#e a&t#ority of t#e latter m&st be made in %ritingE ot#er%ise$ t#e sale s#all be void. 3ere$ t#e a&t#ority of 'eldin 4oyL'etro 7r&g %as j&st establis#ed by testimonies and evidences. 011 admissions of 4oyL'etro 7r&gE 021 sales broc#&re s ecifying 4oy to be a contact ersonE 0c1 t#e g&ard at t#e ro erty saying 4oyL'etro 7r&g are a&t#ori6ed agentsE and 0d1 common kno%ledge among brokers. 4oyL'etro 7r&g t#erefore %as merely a contact erson. 'oreover$ t#e )resident of +) 3oldings$ in a memorand&m$ merely reG&ested 'etro 7r&gFs 'assistance in referrin# to us buyers for the property. *lease proceed to hold preliminary ne#otiations with interested buyers and endorse formal offers to us for final evaluation and appraisal.( ,#is only meant t#at t#e task of 4oyL'etro 7r&g %as to look for b&yers$ b&t t#e final eval&ation of t#e offers s#all be made only by +) 3oldings. /n t#is case$ t#e transaction %as finali6ed only by 4oy. 2t#er testimonies even said t#at 4oyL'etro 7r&g %as a mere broker %#ose task is to bring arties toget#er for a ossible transaction. 5iven t#ese circ&mstances$ t#e sale is declared n&ll and void$ %it# no legal effects. F. Genera- !u-e Arti*-e #$CB> "1e to negotiate t#e sale of ro erty to 7ominador =ee$ a client of Borbon. /n t#e a&t#ority given by 'edrano to Borbon it stated t#at. '+or your labor and effort in findin# a purchaser thereof, , hereby bind myself to pay you a commission of -. of the total purchase price to be a#reed upon by the buyer and seller.( 4es ondents +lor$ Borbon and *osefina Antonio arranged for an oc&lar ins ection of t#e ro erty toget#er %it# =ee %#ic# never materiali6ed. /nstead$ =ee %as instr&cted to get in to&c# %it# 'edranoFs da&g#ter$ ,eresa 5an6on$ regarding t#e ro erty. Antonio called =ee to make a follo%?& of t#e latterFs visit to t#e ro erty. =ee informed #er t#at #e already &rc#ased t#e ro erty and #ad made a do%n ayment of )1'. ,#e remaining balance %as to be aid & on a roval of t#e incor oration a ers. =ee f&rt#er %as s&r rised t#at t#e res ondents #ad not yet received t#eir commission. A deed of sale %as exec&ted. -ince its cons&mmation$ res ondents asked from t#e etitioners for t#eir commission or CN of t#e &rc#ase rice. ,#e etitioners ref&sed to ay and offered a measly s&m of )C$000 eac#. 3ence$ t#e res ondents filed an action against etitioners. ,#e trial co&rt r&led in favor of t#e res ondents. ,#e etitioners %ere ordered to ay jointly and severally t#e CN brokerFs commission to t#e res ondents. /t r&led t#at t#e sale of t#e ro erty co&ld not #ave been ossible %it#o&t t#e re resentation and intervention of t#e res ondents. ,#e Co&rt of A trial co&rt. eals affirmed t#e decision of t#e

Art. 1!AC. Agency is res&med to be for a com ensation$ &nless t#ere is roof to t#e contrary. #. E0*e.tion 2. 91en i an a4ent entit-ed to *om.en ation> Genera- ru-e @. 2ea ure o' *om.en ation> Genera!u-e A. &ou8-e A4en*7> Genera- !u-e B. Ca e 2edrano ) Court o' A..ea- 059;1 +eb. 1!$ 200C Callejo$ -r.$ *. FAC"S> Bienvenido 'edrano$ t#e Mice?C#airman of /baan of 4&ral Bank o%ned by t#e 'edrano family$ asked 9stela +lor$ a co&sin?in?la%$ to look for a b&yer of a foreclosed asset of t#e bank. ,#e ro erty %as a 1A?#a mango 0)2.2'1 located in /baan$ Batangas. lantation

ISSUE> :2; t#e res ondents are entitled to t#eir commission ,EL&. >9-. 4es ondents %ere instr&mental in t#e sale of t#e ro erty to =ee. :it#o&t t#eir intervention$ no sale co&ld #ave been cons&mmated. ,#e res ondents %ere t#e only ones %#o kne% abo&t t#e ro erty for sale and %ere res onsible in leading a b&yer to its cons&mmation. All t#ese circ&mstances lead to t#e inesca able concl&sion t#at t#e res ondents %ere t#e roc&ring ca&se of t#e sale. :#en t#ere is a close$ roximate and ca&sal connection bet%een t#e brokerFs efforts and t#e

+lor advised )acita Borbon$ a licensed real estate broker$ t#at 'edrano o%ned a mango lantation %#ic# %as & for sale. Borbon told +lor to confer %it# 'edrano and to give t#em a %ritten a&t#ority

2C

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
rinci alFs sale of #is entitled to a commission. ro erty$ t#e broker is /ss&e. :#et#er or not t#e &nion can file t#e action in be#alf of its members 3eld. >9-. ,#e com laint filed by t#e &nion comes &nder t#e j&risdiction of t#e co&rt a G&o for t#e same is based & on t#e collective bargaining agreement concl&ded bet%een t#e &nion and t#e com any and t#e basis of t#e rig#t %#ic# is so&g#t to be enforced is t#e agreement itself and not t#e %ages to be collected. ,#e %ages accr&ed mainly on t#e strengt# of an agreement entered into bet%een t#e &nion and t#e com any. ,#e action t#en may be bro&g#t in t#e name of t#e &nion t#at #as obliged itself to sec&re t#ose %ages for t#ese members. ,#e &nion is t#e arty %it# %#om or in %#ose name t#e collective bargaining agreement in G&estion #as been entered into for t#e benefit of its members and$ in line %it# t#e above r&le$ t#e &nion may s&e t#ereon %it#o&t joining t#e members for %#ose benefit t#e action #as been resented. 7is osition. roceedings. Case remanded for f&rt#er

'oreover$ des ite t#e lack of artici ation in t#e negotiations as reG&ired in t#e letter of a&t#ority$ res ondents are still entitled to t#eir commission. ,#e clear intention is to re%ard t#e res ondents for roc&ring a b&yer for t#e ro erty. Before negotiating a sale$ a broker m&st first bring in a ros ective b&yer. A bro&er earns his pay by merely brin#in# the buyer and the seller to#ether even if no sale is eventually made. ,#e essential feat&re of a brokerFs conventional em loyment is merely to roc&re a &rc#aser for a ro erty ready$ able$ and %illing to b&y at t#e rice and on t#e terms m&t&ally agreed & on by t#e o%ner and t#e &rc#aser. And it is not a rereG&isite to t#e rig#t to com ensation t#at t#e broker cond&ct t#e negotiations bet%een t#e arties after t#ey #ave been bro&g#t into contact %it# eac# ot#er t#ro&g# #is efforts. Note > Broker O one %#o is engaged$ for ot#ers$ on a commission negotiating contracts relative to ro erty %it# t#e c&stody of %#ic# #e #as no concernE t#e negotiatior bet%een ot#er arties$ never acting in #is o%n name b&t in t#e name of t#ose %#o em loyed #imE #e is strictly a middleman and for some &r oses t#e agent of bot# arties. Nationa- /re?er7 + A--ied Indu trie La8or Union ). San 2i4ue- /re?er7 In*. (2AI) 7ecember 2A$ 1("@ Ba&tista Angelo$ *. +acts. ,#e ;ational Bre%ery and Allied /nd&stries =abor 8nion of t#e )#ili ines 0)A+=81filed before t#e Co&rt of +irst /nstance of 'anila against t#e -an 'ig&el Bre%ery$ /nc. a com laint alleging t#at. as er t#eir CBA$ -an 'ig&el agreed to ay t#e basic daily rates of t#ose %orkers %it#in t#e bargaining &nit %#o may artici ate in t#e =abor 7ay arade #eld on 'ay 1st of every year. 3o%ever$ said com any ref&sed to ay t#e basic %ages for t#e day of t#e &nion members %#o artici ated in t#e arade. ,#e com laint rayed for t#e ayment of t#e %ages of t#ose &nion members$ and damages. ,#e com any in its ans%er set & s ecial and affirmative defenses. Among t#e latter$ t#e com any alleged t#at 0a1 t#e &nion #as no ca&se of action against t#e com any$ and 0b1 t#e co&rt #as no j&risdiction over t#e s&bject matter of t#e action. :it# res ect to t#e first gro&nd$ t#e com any contends t#at t#e &nion is not t#e real arty in interest b&t t#e individ&al members %#ose rig#t to recover t#e one dayKs %age is ersonal to t#em.

2a*ondra7 ). Se--ner (!(G) +eb. 2$ 1(1" *. Carson Fa*t > -ellner$ a real estate broker$ sold land to 'acondray. +ormal deed of sale not exec&ted &ntil delivery of a ,orrens title. /n t#e meantime$ land %as flooded by #ig# tides and 'acondray became #ig#ly dissatisfied %it# its &rc#ase. :#en final transfer %as made com any informed -ellner t#at land as %#olly &ns&ited for &se as a coal?yard$ for %#ic# it #ad been bo&g#t and reG&ested #im to find anot#er &rc#aser. Bot# arties #ad an &nderstanding t#at -ellner %as to #ave as commission for getting a &rc#aser anyt#ing over amo&nt %#ic# #e co&ld get. -ellner fo&nd anot#er b&yer Barretto. A formal deed of sale %as exec&ted toget#er %it# ,orrens %#ic# %as delivered to -ellner by Com any. Barretto agreed to acce t land if & on examination$ title and deed be satisfactory. -ellner retained t#e ,orrents title b&t left deed of sale %it# Barretto %it# &nderstanding t#at if bot# %ere satisfactory$ latter %o&ld j&st iss&ed c#eck to former. A fe% days later Barretto %as detained by ty #oon on #is %ay to ,ayabas so #is ret&rn %as delayed. 7&ring #is absence$ com any advised -ellner t#at latter m&st cons&mmate sale and collect money %it#o&t delay & on BarrettoKs ret&rn. All t#e %#ile com any ke t asking -ellner to s eed & in closing t#e deal b&t Barretto co&ld not immediately do so co6 #e %as indis osed from #is tri . Barretto arrived -at&rday and romised #eKd

2"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
get to c#ecking t#e docs in a day or t%o. By 'onday$ Com any gave an &ltimat&m. ?>o&ng$ Com anyKs general manager t#en formally notified -ellner t#at &nless &rc#ase rice %as aid before C m of t#at afternoon deal %as off. Barretto t#en asked -ellner to t&rn over t#e ,orrens title %#ic# latter did b&t latter %o&ld only receive t#e c#eck @"#rs later$ :ednesday morning. 8 on recei t of c#eck$ -ellner immediately tendered to Co b&t CoKs manager ref&sed to acce t and filed t#is action claiming t#at sale #ad been IcancelledI & on fail&re of -elner to t&rn over rice. I ue> :2; sale be cancelled on gro&nd of late delivery of &rc#ase rice< ;2 :2; 'acondray entitled to damages from real estate broker -ellner< ;2 ,e-d> CourtG .re-iminarie > ?;o reason given by Com any for delivery of rice at certain #o&r ot#er t#an t#at manager #ad been annoyed by delays or c#anged mind abo&t selling beca&se #e fo&nd a better deal or land %ort# more t#an #e offered. ?As to val&e of land??no real diff act&al and tr&e market val&e of land. :itness Com any rovided %as of a rival real estate broker$ %#o #ad never been on t#e land b&t claimed familiarity %it# general location. -&c# %itness ins&fficient to establis# s&c# fact. /t may be t#at land #as s ec&lative val&e #ig#er t#an act&al market val&e at time of sale b&t t#e G&estion of fact r&led & on is t#e act&al market val&e at time of sale and ;2, s ec&lative val&e. ?'arket val&e [ rice %#ic# ro erty %ill bring in a fair?market after fair and reasonable efforts #ave been made to find a &rc#aser %#o %ill give t#e #ig#est rice for it. 2. 2a*ondra7 no *au e o' a*tion to 'i-e 'or dama4e ) Se--ner it rea- e tate a4ent. ?'eas&re of damages recoverable from real estate agent [ act&al market val&e of ro erty$ title to %#ic# #ad been lost as a res&lt of t#e sale. ,#is is damages %#ic# com any #as a rig#t to s#o&ld #e c#oose to ratify sale and reco& from agent any loss res&lting from latterKs alleged &na&t#ori6ed cons&mmation of t#e sale. ?Com any still liable to real estate agent in event t#at former terminate negotiations$ for t#e amo&nt of commission$ %#ic# former agreed to ay latter & on #is agency contract. 'arket val&e of land [ 1!k of t#is com any received 1Ak leaving a bal of 1$A1A &n aid. ,#e commission agreed & on %as all over 1Ak %#ic# -ellner %o&ld sec&re from ro erty???allo%ing -ellner t#is commission$ and offsetting it against t#e &n aid balance$ 'acondray not entitled to money j&dgment against -ellner. ?At t#e time fixed by manager of Co for t#e termination of t#e negotiations$ -ellner #ad already earned t#e commissions agreed & on$ and co&ld not be de rived t#ereof by arbitrary action of Co in declining to exec&te t#e contract of sale for some reason ersonal to itself. @. !ea- e tate a4ent a-read7 entit-ed to *ommi ion at moment 1e 'ind a 8u7er ?i--in4 to ta:e t1e .ro.ert7. F,#e b&siness of a real estate broker or agent is generally only to find a &rc#aser$ and 48=9 /- in absence of an ex ress contract bet%een broker and #is rinci al$ t#e im lication generally is t#at t#e broker becomes entitled to t#e &s&al commissions %#enever #e brings to #is rinci al a arty %#o is able and %illing to take t#e ro erty and enter into a valid contract & on t#e terms t#en named by t#e rinci al alt#o&g# t#e artic&lars may be arranged and matter negotiated and com leted bet%een t#e rinci al and t#e &rc#aser directly. A. !i41t o' rea- e tate 8ro:er 1ou-d 8e .rote*ted 'rom ar8itrar7 re)o*ation o' a4en*7 ?it1out remuneration 'or 1i er)i*e rendered in 'indin4 a 8u7er prior to revocation. ?/t %o&ld be inj&stice to ermit rinci al to %it#dra% a&t#ority after efforts made by agent in finding a b&yer after rinci al rea s t#e benefit of t#e agentKs labors. ,#is %o&ld make t#e contract an &nconscionable one %o&ld offer a remi&m for fra&d by enabling one of t#e arties to take advantage of #is o%n %rong. B. 2a*ondra7 *annot *an*e- or re *ind a4reement 'or a-e on o-e 4round t1at .ri*e not .aid at 1our de i4nated in -etter. Com any co&ld not validly terminate negotiations at t#e time and t#en decline to sell land to Barretto$ %#o #ad acce ted offer of sale$ s&bject only to examination of docs of title and stood ready to ay rice & on delivery of deed of sale and ot#er necessary docs of title. F,ime does not a ear to be t#e essence of t#e contract. ,#e agreement to sell %as made %it#o&t any ex ress sti &lation as to time %it#in %#ic# &rc#ase rice %as to be aid$ exce t t#at &rc#aser reserved rig#t to examine docs of title before aying$ t#o&g# it %as &nderstood t#at sale %as for cas# & on delivery of docs of title exec&ted in d&e form. ?:#ile seller #as rig#t to co& le agreement %it# sti &lation to ay at certain day #o&r min&te 3949 t#ere %as no s&c# sti &lation. ,ime may be and often t#e essence of contract b&t absence of sti &lation #ere s#o%s t#at intention of arties %as to allo% reasonable time for examination of docs so

2A

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
vendor canFt no% arbitrarily demand s ecified time. ayment at /--89. :2; it is entitled to a tax ref&nd. 39=7. ;2. ,#e so?called administration fee corres onds to t#e incidental d&ties of a broker in t#e sale of real ro erty. ,#e only d&ty t#at is se arate and distinct from t#at of a broker is t#e obligation to b&ild roads$ arks$ se%age system$ etc. B&t all t#e ot#ers are necessary arts of t#e %ork of a broker. A broker engaged in t#e sale of real estate is not limited to bringing vendor and vendee toget#er and arranging t#e terms and conditions of a sale of real estate. As sales of real estate m&st be in %riting t#e re aration of t#e doc&ments is art of t#e f&nctions of t#e broker. -o t#e only f&nction entr&sted to etitioner &nder t#e contract %#ic# may not be embraced in t#ose of a broker$ is t#at of constr&cting t#e s&bdivision$ as above ex lained and detailed o&t. /t follo%s$ t#erefore$ t#at t#e arties #ave agreed on giving com ensation denominated administration fees for services %#ic# may %ell be incl&ded in t#e d&ties of a broker. B&t t#e d&ty of develo ing t#e s&bdivision$ %it# its lots$ streets$ laygro&nds$ se%age$ etc. is also a necessary incident to t#e d&ty of selling t#e lands s&bject of t#e contract. ,#e lands m&st be s&bdivided into residential lots$ %it# streets laid o&t$ before said lots can be sold. And %#ile t#is %ork may be entr&sted to anot#er$ t#e arties #ave seen fit to #ave t#e same entr&sted to t#e etitioner. 'oreover$ alt#o&g# *' ,&ason may be regarded as a contractor$ insofar as t#e b&ildings of infrastr&ct&res is concerned$ it failed #o%ever to s#o% %#ic# ortion of t#e administration fee is s ecifically designated for s&c# service. Peo.-e ) Ca ti--o (6ANCES) *&ne 1"$ 2000 *. )ardo +acts. ,#e victim engaged in real estate b&siness. ,#e s o&ses Castillo %ere bot# #er sales agents on commission basis. )rior to #er kidna ing$ a certain Albert 5&tierre6 called and re resented t#at #e %as interested in b&ying a ro erty sold by t#e victim. ,#e s o&ses Castillo %ere t#e ones %#o referred t#e ro erty to 'r. 5&tierre6. :#en t#e victim met %it# Albert 5&tierre6$ s#e fo&nd o&t t#at it %as really 'ala ayon. -#e %as bro&g#t to a safe #o&se$ %ere 5on6ales %as t#e one %#o %atc#ed over #er and #eld #er ca tive at g&n oint. ,#e s o&ses Castillo also %ent to t#e safe #o&se and %ere able to %alk t#e remises freely. ,C. 'ala ayon and 5on6ales g&ilty of illegal ossession of fire arms. A== g&ilty of kidna ing %it# ransom. 2nly t#e s o&ses Castillo$ Abello and 5on6ales a ealed.

?/; absence of sti &lation$ it %ill be im lied t#at time to ay [ reasonable time de endent on circ&mstances of case. ?t#is r&le also a lies to time %it#in %#ic# any condition recedent is to be erformed$ or %it#in %#ic# contingency & on %#ic# transaction de ends is to #a en and to erformance of vario&s acts by arties to recede conveyance or ayment. Lim ). Sa8an ("(FF) Pere5 de "a4-e ). Lu5on Suret7 (!EG) Hui=ano ). E 4uerra (A//Y) 62 "ua on ) . Co--e*tor o' Interna- !e)enue (EA!LA) *&ne @0$ 1("0 =abrador$ *. +acts. *' ,&ason and Marsity 3ills$ /nc.$ as o%ner of C arcels of land entered into a contract %#ereby it ceded t#e said lands to *' ,&ason for t#e &r ose of #aving it s&rveyed$ latted$ mon&mented$ and ot#er%ise develo ed into a s&bdivision. Aside from t#e c&stomary brokerFs d&ties 0recommending sales rices of lots 0-ec. @1$ signing contracts of sale or lease$ or contracts to sell$ releases of mortgage 0-ec. D1$ collecting sales rices or ot#er acco&nts d&e t#e 2%ner 0-ec. A1$ organi6ing offices and ersonnel to attend to t#e %ork relating to all t#e above 0-ec. !11$ it %as also tasked to &ndertake t#e laying o&t of arks$ laygro&nds$ t#e constr&ction of streets$ c&lverts$ avements$ se%age system$ drainage$ t#e installation of &tilities. As ayment for its service$ it %as sti &lated t#at it s#all be given !N administration fee$ in addition to t#e 10N commission it is entitled to. As a res&lt of t#is transaction$ t#e Collector of /nternal 4even&e assessed against t#e etitioner t#e brokerKs tax on t#e ! er cent received by t#e latter as Iadministration feeI in t#e amo&nt of )!$A2D.!D$ re resenting t#e brokerKs ercentage tax and s&rc#arge t#ereon. /t aid t#e amo&nt &nder rotest$ and immediately so&g#t ref&nd of t#e said amo&nt. ,#e C/4 #o%ever$ denied its reG&est$ %#ic# %as affirmed by t#e C,A. ,#e C,A ratiocinated t#at t#e restation is indivisible$ #ence$ t#e administration fee given to *' ,&ason is only art of t#e %#ole transaction ? t#at t#e activities of t#e etitioner of s&bdividing t#e ro erty or collecting acco&nts$ %#ic# etitioner denominated \acts of administrationK are not in fact detac#ed$ distinct$ nor transcendental to t#e brokerage relations#i created by aforesaid contract$ b&t rat#er acts %#ic# are merely incidental to t#e rimary &r ose for %#ic# t#e agreement %as entered into.

2!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/ss&e. :2; acc&sed?a cons irators ellants artici ated as ,#&s$ /nland and de los 4eyes formally demanded t#eir CN brokerFs commission$ %#ic# %as denied by Araneta$ /nc. on t#e gro&nd t#at t#e claim #as no fact&al or legal basis. /nland and de los 4eyes claimed t#at a letter dated 2ctober 2!$ 1(A" %as signed by Araneta //$ rene%ing t#eir a&t#ority to act as sales agent for a eriod of @0 days from said date. ,#ey also asserted t#at a broker is a&tomatically entitled to t#e sti &lated commission merely & on sec&ring for$ and introd&cing to$ t#e seller t#e artic&lar b&yer %#o &ltimately &rc#ases from t#e former t#e object of t#e sales$ regardless of t#e ex iration of t#e brokerFs contact of agency and a&t#ority to sell. ,rial co&rt and CA r&led in favor of Araneta$ /nc. ISSUE> :L; /nland and de los 4eyes are entitled to t#e brokerFs commission. N(. !A"I(> 1. ,#e alleged letter extending t#e a&t#ority @0 more days from 2ctober 2!$ 1(A" is a blatant lie. /nland and de los 4eyes failed to attac# a certified co y of t#is letter. ,#&s$ t#eir contract already ex ired t#irty days from its last rene%al on 7ecember 2$ 1(AC. 2. 2n t#e claim of a&tomatic brokerFs commission$ t#is is devoid of merit. +rom -e tember 1"$ 1(AC to *an&ary 1$ 1(A"$ %#en /nlandFs a&t#ority to sell %as s&bsisting$ if at all$ etitioners #ad not#ing to s#o% t#at t#ey actively served t#eir rinci alFs interests$ &rs&ed to sell t#e s#ares in accordance %it# t#eir rinci alFs terms and conditions$ and erformed s&bstantial acts t#at roximately and ca&satively led to t#e cons&mmation of t#e sale to -tanford of Araneta$ /nc.Fs s#ares. &anon ). /rimo (2A!K) -e t. 12$ 1(21 *. *o#nson FAC"S> 7efendant Antonio A. Brimo$ in a conversation %it# t#e laintiff *&lio 7anon$ informed t#e latter t#at #e 0Brimo1 desired to sell #is factory$ t#e 3olland American 2il Co.$ for t#e s&m of )1$200$000. 3e agreed and romised to ay to t#e laintiff a commission of C er cent rovided t#e latter finds a b&yer t#at %ill b&y said factory for t#e said amo&nt. ;o definite eriod of time %as fixed %it#in %#ic# t#e laintiff s#o&ld effect t#e sale. ,#ere %as like%ise anot#er broker 0-ellner1 %#o %as negotiating t#e sale of said ro erty. -ellner$ t#e ot#er broker referred to$ #ad fo&nd a &rc#aser %#o &ltimately bo&g#t t#e factory for )1$@00$000. +or t#at reason 'r. )rieto$ t#e

39=7. ,#e s o&ses Castillo %ere cons irators. 'ercedita %as t#e one %#o referred 'ala ayon to t#e victim. 3o%ever$ 'ala ayon never mentioned t#at #e %as referred by t#e Castillos$ %#ic# is s&s icio&s as it is common ractice for a b&yer to inform t#e seller %#o referred #im. Also$ t#e Castillos being agents %orking on commission$ s#o&ld #ave also informed t#eir rinci al of t#e referral$ t#em #aving to gain & on s&c# referral s#o&ld t#e b&yer roceed %it# t#e acG&isition. =astly$ bot# Castillos %ere able to freely enter and exit t#e safe #o&se. :it# regard to Abello$ #is ex lanation t#at #e %as t#ere to do a ainting job is tenable. 'ala ayon confirmed t#is by stating t#at at t#at time #e #ired #el ers to aint t#e a artment. ,#is defense %as also not reb&tted by t#e rosec&tion. Concerning 5on6ales$ #is defense t#at #e too %as #ired to do a ainting job cannot give %ay to #is acG&ittal. 3e %as t#e one %#o g&arded t#e victim. By doing so$ #e conc&rred %it# t#e criminal design of t#e rinci als and erformed an act indis ensable to t#e crimeFs commission. 7is osition. a eals of s o&ses 5on6ales denied. Abello acG&itted. Castillo and

In-and !ea-t7 In)e tment ). CA (ALAIN) *&ne ($ 1((A 3ermosisisima$ *r.$ *.. FAC"S> 2n -e tember 1"$ 1(AC$ defendant cor oration 0Araneta$ /nc.1 t#r& its co?defendant Asst. 5en. 'gr. 9d&G&e$ granted to /nland 4ealty /nvestment -ervice$ /nc. 0/nland1 re resented by one 4oman de los 4eyes 0entitled to ] of t#e claim asserted %#ic# is CN brokerFs commission1 a @0? day a&t#ority to sell its s#ares stock in anot#er cor oration. /nland %as able to find a ros ective b&yer$ t#e -tanford 'icrosystems$ /nc.$ b&t t#e offer of said b&yer %as rejected by Araneta$ /nc. ,#&s$ /nland looked for ot#er b&yers and fo&nd t%o more ros ective ones. ,#e a&t#ority %as extended several times. first on 2ct. 2$ 1(AC$ for @0 days from t#e said date$ t#e second on 2ct. 2!$ 1(AC for @0 days from said date$ and on 7ec. 2$ 1(AC for @0 days from t#e said date. 2n *&ly !$ 1(AA or 1 year and C mont#s after t#e last extension granted to /nland$ t#e s#ares of stock %ere finally sold to -tandford 'icrosystems$ /nc.

2(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
%o&ld be &rc#aser fo&nd by t#e laintiff$ never came to see 'r. Brimo to erfect t#e ro osed negotiation. 7anon filed an action to recover t#e s&m of )"0$000$ alleged to be t#e val&e of services rendered by #im$ as broker$ to t#e defendant. done roves of &se and benefit to t#e rinci al. o ,#e r&le #o%ever m&st be taken %it# one im ortant and necessary limitation. /f t#e efforts of t#e broker are rendered a fail&re by t#e fa&lt of t#e em loyerE if ca ricio&sly #e c#anges #is mind after t#e &rc#aser$ ready and %illing$ and consenting to t#e rescribed terms$ is rod&cedE or if t#e latter declines to com lete t#e contract beca&se of some defect of title in t#e o%ners#i of t#e seller$ some &nremoved inc&mbrance$ some defect %#ic# is t#e fa&lt of t#e latter$ t#en t#e broker does not lose #is commissions. And t#at & on t#e familiar rinci le t#at no one can avail #imself of t#e non erformance of a condition recedent$ %#o #as #imself occasioned its non erformance. ,#is limitation is not an e ception to t#e general r&le affecting t#e brokerKs rig#t for it goes on t#e gro&nd t#at t#e broker #as done #is d&ty$ t#at #e #as bro&g#t b&yer and seller to an agreement$ b&t t#at t#e contract is not cons&mmated and fails t#o&g# t#e after?fa&lt of t#e seller. o ;2 -,/)8=A,97 )94/27. :#ere no time for t#e contin&ance of t#e contract is fixed by its terms eit#er arty is at liberty to terminate it at %ill$ s&bject only to t#e ordinary reG&irements of good fait#. 8s&ally t#e broker is entitled to a fair and reasonable o ort&nity to erform #is obligation$ s&bject of co&rse to t#e rig#t of t#e seller to sell inde endently. B&t #aving been granted #im$ t#e rig#t of t#e rinci al to terminate #is a&t#ority is absol&te and &nrestricted$ exce t only t#at #e may not do it in bad fait#$ and as a mere device to esca e t#e ayment of t#e brokerKs commissions. Alt#o&g# 7anon co&ld robably #ave effected t#e sale of t#e defendantKs factory #ad not t#e defendant sold it to someone else$ #e is not entitled to t#e commissions agreed & on beca&se #e #ad no intervention %#atever t#e sale in G&estion. /t m&st be borne in mind t#at no definite eriod %as fixed by t#e defendant %it#in %#ic# t#e laintiff mig#t effect t#e sale of its factory. ;or %as t#e laintiff given by t#e defendant t#e excl&sive agency of s&c# sale. ,#erefore$ t#e laintiff cannot com lain of t#e defendantKs cond&ct in selling t#e ro erty t#ro&g# anot#er agent before t#e laintiffKs efforts %ere cro%ned %it# s&ccess. I2ne %#o #as em loyed a broker can #imself sell t#e

ISSUES :2; 7anon is entitled to t#e commission agreed & on. ;2. !A"I(NALE )laintiff is not entitled to t#e commission.,#e most t#at can be said as to %#at t#e laintiff #ad accom lis#ed is$ t#at #e #ad fo&nd a erson who mi#ht have bou#ht t#e defendantKs factory if t#e defendant #ad not sold it to someone else. ,#e evidence does not s#o% t#at t#e -anta Ana 2il 'ill #ad definitely decided to b&y t#e ro erty in G&estion at t#e fixed rice of )1$200$000. ,#e board of directors of said cor oration #ad not resolved to &rc#ase said ro ertyE and even if its resident co&ld legally make t#e &rc#ase %it#o&t revio&s formal a&t#ori6ation of t#e board of directors$ yet said resident does not retend t#at #e #ad definitely and formally agreed to b&y t#e factory in G&estion on be#alf of #is cor oration at t#e rice stated. /t is &ndis &ted t#at laintiffs services did not any %ay contrib&te to%ards bringing abo&t t#e sale of t#e factory in G&estion. 3e %as not It#e efficient agent or t#e roc&ring ca&se of t#e sale.I

Si88a-d ) /et-e1em Iron Co O o ,#e d&ty ass&med by t#e broker is to bring t#e minds of t#e b&yer and seller to an agreement for a sale$ and t#e rice and terms on %#ic# it is to be made$ and &ntil t#at is done #is rig#t to commissions does not accr&e. o /t follo%s$ as a necessary ded&ction from t#e establis#ed r&le$ t#at a broker is never entitled to commissions for &ns&ccessf&l efforts. ,#e risk of a fail&re is %#olly #is. ,#e re%ard comes only %it# #is s&ccess. ,#e broker may devote #is time and labor$ and ex end #is money %it# ever so m&c# of devotion to t#e interest of #is em loyer$ and yet if #e fails$ if %it#o&t effecting an agreement or accom lis#ing a bargain$ #e abandons t#e effort$ or #is a&t#ority is fairly and in good fait# terminated$ #e gains no rig#t to commissions. 3e loses t#e labor and effort %#ic# %as staked & on s&ccess. And in s&c# event it matters not t#at after #is fail&re$ and t#e termination of #is agency$ %#at #e #as

@0

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
ro erty to a &rc#aser %#om #e #as roc&red$ %it#o&t any aid from t#e broker.I Fie4e and /ro?n ) Smit1, /e-- + Co and Co?.er (GEN) 'arc# A$ 1((2 *o#ns$ *. FAC"S> Co% er %as an em loyee of -mit#$ Bell P Co. %#ic# %as engaged in t#e sale of mac#inery and eG&i ment for t#e &se of man&fact&rers of cocon&t oil. 8nder t#e terms of t#e 3arden Contract$ Co% er and laintiff +iege %ere entitled to receive #alf of t#e rofits received from t#e sale of mac#inery to 'r. -c#midt. =ater$ t#e laintiffs %ere associated %it# Co% er$ and t#ey entered into a contract %it# t#e Com any. ,#ey %ere to seek to b&yers for t#e mac#inery %#ic# %ere acce table to t#e Com any and t#at t#e rices %ere to be fixed by t#e laintiffs$ as brokers. /n t#e contract$ it %as sti &lated t#at t#e laintiffs as brokers %ere to receive one?#alf of t#e difference bet%een t#e cost of t#e mac#inery and eG&i ment laid do%n in 'anila and t#e rices at %#ic# t#ey %ere sold to b&yers sec&red by t#e brokers. ,#e laintiffs %ere able to sec&re orders for mac#inery and eG&i ment$ %#ic# %ere delivered to and acce ted by t#e Com any. ,#e defendant im orted all of t#e s ecified mac#inery b&t t#at it #as failed and ref&sed to make any settlement %it# t#e laintiffs or to render any acco&nting of t#e cost of t#e mac#inery$ or to make any ayment$ eit#er in f&ll or on acco&nt$ of t#e services rendered. ,#e laintiffs allege t#at %#en t#e contracts %ere signed by t#e Com any %it# t#e b&yers$ t#eir services %ere com leted and are entitled to recover )@C$000. ,#e defendants on t#e ot#er #and allege t#at aside from t#e )2$000 aid by one of t#e b&yers$ no ot#er ayments #ave been made on t#e res ective contracts by any of t#e ot#er &rc#asers %#ic# %ere sec&red by t#e laintiffs. 8ntil s&c# ayments #ave been made$ t#e Com any cannot ascertain net rofits. ,#e trial co&rt rendered a j&dgment for t#e laintiffs for )"$C11.1A$ t#e only amo&nt admitted by t#e defendant as commission for t#e sale of t#e mac#inery. ISSUES> :2; t#e laintiffs are entitled to t#eir com ensation ,EL&> ;2. ,#e laintiffs and Co% er and t#e Com any %ere to divide eG&ally t#e rofits of eac# contract$ and t#e laintiffs are entitled to one?#alf of t#e rofits o&t of eac# contract$ and &ntil s&c# time as t#e com any made a rofit on a given contract$ laintiffFs commission %as not earned as to t#at contract. ,#ere %as no rofit t#ro&g# t#e mere signing of t#e contract by t#e &rc#aser and its acce tance by t#e com any. ,#ere %o&ld not be any rofit &ntil t#e &rc#aser aid all t#e money and com lied %it# #is contract. 8ntil s&c# time as t#e com any reali6ed a rofit on t#e contracts$ t#ere %as not#ing to s#are or divide. ;o ayment %as tendered before 2ctober 1C$ 1(1($ t#e date of t#e filing of t#e com laint. !amo ) . CA and Ca-ano* (2AI) A ril 0D$ 1(AC 'akalintal$ C.*. +acts. +/'C2 entered into several contracts %it# local merc#ants for t#e resale to t#em of certain im orted goods. 2ne s&c# contract %as concl&ded %it# 'rs. -al&stiana 7ee$ or :ellington P Co.$ in t#e amo&nt of U1$@@@.000.00 or )2$"""$000.00. Cesario ). Calanoc instit&ted t#is action$ claiming t#at 9merito '. 4amos of +/'C2 #ad engaged #is services to roc&re &rc#asers for t#e im orted goods and t#at #e %as directly instr&mental in bringing abo&t t#e contracts in G&estion$ and t#&s$ #e %as entitled to t#e agreed commissions of 2N on t#e contract %it# :ellington P Co. and 1N on t#ose %it# t#e /nternational 'ercantile Co. *ose Ang 8co testified t#at #e introd&ced 'rs. -al&stiana 7ee to Calanoc as a ros ective b&yer of im orted merc#andise. ,oget#er$ t#e t#ree of t#em %ent to 'r. 4ecto of t#e 9G&itable Bank %#o ex lained to 'rs. 7ee abo&t t#e banking roced&re involved in t#e transaction. ,#ereafter$ #e and t#e laintiff Calanoc %ere in freG&ent comm&nication %it# 'rs. 7ee &ntil t#e latter %ent directly to 4amos and closed t#e contract in G&estion %it#o&t t#eir resence. 'rs. 7ee #ad agreed to ay #im a 2N commission on t#e transaction. /ss&e. :#et#er or not Calanoc %as entitled to a fixed commission 3eld. ;2. ,#e contract bet%een 4amos and Calanoc is G&ite ex licit. t#e arrangement %as for Calanoc to sell t#e merc#andise to any b&yer at a mark?& rice of 2@N over t#e invoice val&e of t#e im ortation and any over rice s&ccessf&lly collected above t#e stated 2@N %o&ld accr&e to Calanoc as #is commission. ,#e amo&nt of s&c# commission %as t#erefore fl&id$ de ending & on t#e over rice

@1

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
obtained above t#e 2@N mark?& invoice val&e set by 4amos. rice of t#e latter re lied t#at #e #ad not received any %ritten offer from --- d&ring t#e "0day eriod of t#e excl&sive a&t#ority nor d&ring its extension. 7oronilla %rote to --- rene%ing #is offer to sell revising #is original offer of )D er sGm to )@.2C. --- assed a resol&tion ;2. "@" making a co&nter offer of )# @.2C er sG m s&bject to an a raisal of t#e ro erty and to s&bmit a re ort t#ereon. After a favorable a raisal re ort of t#e ,o les P 3arding --assed 4es no. A@! a roving &rc#ase of t#e land for )# @.2C or for total of )(.Am. 7eed of -ale %as exec&ted. 7oronilla received t#e f&ll &rc#ase rice. )rats t#en demanded ayment of #is rofessional fee. ,C. ordered 7oronilla to ay CA. reversed. I ue> :2; )rats %as not t#e efficient roc&ring ca&se in bringing abo&t t#e sale of 7oronilaKs land to ---< >9,e-d> #. &oroni--aG o''er to e-- -and to SSS ?a 'orma--7 a**e.ted on-7 on 6une #9%$ after the exclusive authority in favor of Prats had expired. ,#e CAKs fact&al finding t#at )rats not t#e efficient roc&ring ca&se in bringing abo&t t#e sale are final. )rats %as not categorical t#at it %as t#ro&g# #is efforts t#at t#e meeting bet%een --Administrator ,eodoro and 7oronilla took lace. 3e refers to a #one call #e made a fe% days before 'ay 2($ 1("! b&t in t#e conversation #e #ad %it# 'r. ,eodoro$ t#e latter reG&ested #im ;2, to be resent in t#e meeting. /t is manifest t#at --officials never %anted to be in any %ay g&ided by$ or mediated by )rats relative to t#e negotiation for &rc#ase of ro erty. ,#e meeting %as done inde endently and not by virt&e of )ratKs efforts. 2. In eIuit7, *ourt note t1at Prat 1ad di-i4ent-7 ta:en te. to 8rin4 8a*: to4et1er &oroni--a and SSS and t1ere'ore 4rant 1im #00: 87 ?a7 o' *om.en ation 'or 1i e''ort and a i tan*e in t1e tran a*tion. . Among ot#ers. 3e %rote to t#e 2ffice of )residential 3o&sing Commission offering t#e land and %rote a follo% & letter %#ic# %as ans%ered by Commission s&ggesting t#at ro erty be offered directly to ---. -ale %as erfected only at t#e rice offered by 7oronila %#en #e alone %as dealing excl&sively %it# b&yer long before )rats came along b&t )rats efforts %ere instr&mental in bringing t#em toget#er again and finally cons&mmating t#e sale alt#o&g# sale finali6ed after ex iration of )ratsK extended excl&sive a&t#ority.

;ot#ing in t#e agreement g&aranteed Calanoc a fixed commission$ %#ic# de ended & on t#e over rice t#e b&yer %o&ld ay. And it is a fact$ &ndis &ted by Calanoc t#at %#at 4amos received in t#e :ellington P Co. transaction in excess of #is original 2@N mark?& rice %as only )1@$@@0.00 and not )C@$@20.00$ t#e amo&nt claimed and a%arded by t#e trial co&rt and t#e Co&rt of A eals. :#ile it is tr&e$ as Calanoc claims$ t#at #e informed etitioner t#at 'rs. 7ee #ad already agreed to ay t#e 2CN remi&m$ t#ere is absent in t#e records of t#e case any evidence to s#o% t#at 'rs. 7ee confirmed s&c# agreement %it# etitioner and t#at t#e latter co&ld #ave bo&nd #er to it. )etitioner #ad fixed for #imself a 2@N mark?& $ allo%ing anyt#ing over t#at amo&nt as commission. /f 'rs. 7ee c#anged #er mind and ref&sed to ay t#e 2CN remi&m$ and aid only 2@?1L2N$ t#at %as #er rerogativeE etitioner #ad neit#er t#e d&ty nor t#e rig#t to com el #er to contract for more t#an %#at s#e %as %illing to ay$ %#en s#e %as ready to meet #is rice.

Pratt ). CA (!(G) 1(A! Fa*t > ,#is com laint for s&m of money filed by )rats$ doing b&siness &nder name of )#ili ine 4eal 9state 9xc#ange$ against 7oronila and );B. 7oronila %as registered o%ner of @00#ectares of land. 3e %rote to --- C#air offering #is ro erty to --- at )D er sG&are meter 0 er sGm1. ,#ere %ere several co&nter offers made as to t#e rice. 7oronilla reG&ested certification from Board of 4ealtor regarding t#e act&al rices of #is real estate ra%?land ro erties. ,#e Board re lied t#at t#e fair market val&e of ra% land is )@?)@.C0 er sGm. C&rrent rices before reac#ing 7oronillaKs ro erty range from "?A er sGm. 7oronilla granted an excl&sive o tion and a&t#ority to )rats to sell formerKs ro erty. Commission %ill be 10N based on )2.10 er sGm or at any rice finally agreed & on. 7oronilla asked --- to ret&rn all a ers related to #is ro erty in vie% of t#e excl&sive o tion granted to )rats. --- asked for a meeting %it# 7oronilla b&t latter asked t#at --- meet %it# )#ili ine 4eal 9state 9xc#ange instead beca&se 7oronilla #ad given excl&sive o tion to it. )rats gave notice to 7oronilla t#at --- #ad agreed to &rc#ase t#e land. ,#e

@2

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
2anoto: /rot1er ). CA (2A!K) A ril A$ 1((@ *. Cam os$ *r. **Um Mark you. $orry% ! don"t recall assi#nin# this to 1(C2 FAC"S> =ora %as a&t#ori6ed by defendants Marela to negotiate t#e sale of t#eir s#are or interest in a arcel of land on )la6a 5oiti$ 'anila. 3e and real estate broker 'arG&e6 agreed to %ork toget#er for t#e sale of t#e ro erty. ,#ey fo&nd a ready$ %illing$ and able b&yer$ %#ic# acce ted defendantsK rice and terms$ b&t t#at t#ereafter defendants$ %it#o&t any j&stifiable reason$ ref&sed to carry o&t t#e sale and exec&te t#e necessary deed. As a conseG&ence$ etitioners failed to receive t#e commission %#ic# t#ey %ere entitled to receive. 7efendants arg&ed t#at etitioner 'arG&e6 #ad no ca&se of action beca&se t#ey never dealt %it# 'arG&e6$ directly or indirectly. ISSUE> :2; 'arG&e6 is entitled to be commission. >9-. aid #is

FAC"S> )etitoner 'anotok Brot#ers /nc %as t#e o%ner of a certain arcel of land and b&ilding %#ic# %ere formerly leased by t#e city of 'anila and &sed by Claro '. 4ecto 3ig# -c#ool. By means of lettter dated *&ly C$ 1(""$ etitioner a&t#ori6ed res ondent -alvador -alig&mba to negotiate %it# t#e city of 'anila t#e sale of aforementioned ro erty. /n t#e same %riting etitoner agreed to ay res ondent CN commisssion in t#e event t#e sale is cons&mmated. )etitoner exended res ondentFs a&t#ority to sell several times. :it#in t#e extended eriod$ t#e city of 'anila assed 2rdinace ;o. ""0@ a ro riating t#e s&m of )D10$!1" for t#e r&rc#ase of 'anotok Brot#ersF ro erty. -aid ordinance #o%ever %as signed by t#e mayor only on 'ay 1A$ 1("!$ t#ree days after t#e la se of res ondentFs extended a&t#ority. -ale %as cons&mmated. ;ot%it#standing t#e reali6ation of t#e sale$ -alig&mba never received any commission. ConseG&ently$ #e filed a com laint against etioner. ISSUES :2; -alig&mba is entitled to t#e CN agentFs commission. >9-. !A"I(NALE /n Prat ) CA, t#e -C a%arded a s&m of money to agent?claimant in vie% of #is assistance and efforts in t#e transaction$ alt#o&g# #e %as not t#e efficient roc&ring ca&se in bringing abo&t t#e sale and not%it#satnding t#e ex iration of #is a&t#ority. /n t#e case at bar$ res ondent -alig&mba is t#e efficient roc&ring ca&se for %it#o&t #is efforts t#e m&nici ality %o&ld not #ave anyt#ing to ass and t#e 'ayor %o&ld not #ave anyt#ing to a rove. /t is clear t#erefore from t#e foregoing a&t#ority t#at res ondent is entitled to t#e commission.

!ULING> =ora and 'arG&e6 acted jointly in rendering services to defendants &nder =oraKs contract 0of agency1$ and t#e same G&estions of la% and fact govern t#eir claims. ,#e 4&les of Co&rt do not reG&ire t#e existence of rivity of contract bet%een 'arG&e6 and t#e defendants as reG&ired &nder t#e common la%. All t#at etitioners demand is t#at 'arG&e6 #as a material interest in t#e s&bject of t#e action$ t#e rig#t to s#are in t#e brokerKs commission to be aid =ora &nder t#e latterKs contract$ %#ic# rig#t =ora does not deny. ,#is is s&fficient to j&stify t#e joinder of 'arG&e6 as a arty laintiff$ even in t#e absence of rivity of contract bet%een #im and t#e defendants. In'ante ). Cunanan, 2i=are , CA (A//Y) A&g. @1$ 1(C@ *. Ba&tista Angelo +acts. Consejo /nfante o%ned 2 arcels of land %it# a #o&se in ,aft 'anila. /nfante contracted t#e services of C&nanan and 'ijares to look for a b&yer. ,#e selling rice %as for )@0$000$ b&yer m&st ass&me mortgage on t#e ro ertyE CN commission on selling rice. C&nanan and 'ijares fo&nd a b&yer$ )io -. ;oc#e and introd&ced #im to /nfante. -#e informed t#em t#at s#e %as no longer interested in selling t#e ro erty and s&cceeded in making t#em sign a doc&ment stating t#erein t#at t#e %ritten a&t#ority s#e #ad given t#em %as already can?celled. /t t&rns o&t t#at /nfante dealt %it# ;oc#e directly and sold t#e ro erty for )@1$000. ,#e res ondents fo&nd o&t and instit&ted an action for recovery of t#e commission %#en s#e ref&sed to give t#e res ondents anyt#ing.

7isting&is#ed from 7anon vs Brimo. ,#e case of 7anon is not in oint. /n t#at case$ claimant? agent f&lly com re#ended t#e ossibility t#at #e may not reali6e t#e agentFs commission as #e %as informed t#at anot#er agent %as also negotiating t#e sale and t#&s$ com ensation %ill ertain to t#e one %#o finds a &rc#aser and event&ally effects t#e sale.

LG 2arIue5 ). 3a-era (!EG) *. =abrador

@@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/nfante said s#e roc&red t#eir services b&t only for )1$200$ only on condition t#at t#ey b&y #er a ro erty some%#ere in ,aft Aven&e to %#ere s#e mig#t transfer after selling #er ro erty. 7efendant avers t#at %#ile laintiffs took ste s to sell #er ro erty as agreed & on$ t#ey sold t#e ro erty at ,aft Aven&e to anot#er arty and beca&se of t#is fail&re it %as agreed t#at t#e a&t#ority s#e #ad given t#em be cancelled 4es ondents claim t#at %#ile t#ey agreed to cancel t#e %ritten a&t#ority given to t#em$ t#ey did so merely & on t#e verbal ass&rance given by etitioner t#at$ s#o&ld t#e ro erty be sold to t#eir own buyer$ )io -. ;oc#e$ t#ey %o&ld be given t#e commission agreed & on. ,r&e$ t#is verbal ass&rance does not a ear in t#e %ritten cancellation$ 9x#ibit 1$ and$ on t#e ot#er #and$ it is dis &ted by etitioner$ b&t res ondents %ere allo%ed to resent oral evidence to rove it$ and t#is is no% assigned as error in t#is etition for revie%. =C fo&nd for t#e C&nanan and 'ijares ordering /nfante to ay t#em )2$C00 %L legal interest. CA affirmed =C %it#o&t ac?cording to t#e arty rej&diced t#e re%ard %#ic# is d&e #im. ,#is is t#e sit&ation in %#ic# res ondents %ere laced by etitioner. )etitioner took advantage of t#e services rendered by res ondents$ b&t believing t#at s#e co&ld evade ayment of t#eir commission$ s#e made &se of a r&se by ind&cing t#em to sign t#e deed of cancellation 9x#ibit 1. ,#is act of s&bversion cannot be sanctioned and cannot serve as basis for etitioner to esca e ayment of t#e commission agreed & on. Godu*o ) . CA and 2aria Ca tro (EA!LA) +eb 2!$ 1("D )aredes$ *. +acts. 3erminia 5od&co instit&ted a com laint against 'aria Castro for recovery of s&ms of money as commission d&e #er for t#e sale of a land in )aranaG&e. -#e alleged t#at t#e b&yer indicated in t#e deed of sale$ -ostenes Cam illo$ %as a mere d&mmy$ and t#at Castro %as t#e real b&yer of t#e ro erty. -#e f&rt#er claimed t#at %#en t#e &rc#ase rice of )1C0k %as aid to t#e seller$ t#e amo&nt of )AC00 as #er commission %as ded&cted from it. ,#is artic&lar information %as allegedly given to #er by t#e son of t#e o%ner of t#e ro erty$ 7r. +rancisco. 2n t#e ot#er #and$ Castro alleged t#at s#e %as not t#e real b&yer in t#e transaction. -#e also alleged t#at 5od&co re eatedly offered #er certain ieces of ro erty to &rc#ase$ b&t s#e ref&sed since #er ro erties %ere already levied at t#at time. After trial$ t#e trial co&rt dismissed t#e com laint. ,#e CA t#ereafter affirmed t#is decision$ saying t#at t#e claims of 5od&co are merely based on conject&res and s&rmises. /--89. :2; 5od&co is entitled to t#e commission. 39=7. ;o. ,#e -C agreed %it# t#e CA t#at t#ere is not one iota of evidence resented to s& ort 5od&coFs claim. 3er reference to t#e case of 'arvel Bldg Cor vs. -at&rnino 7avid is mis laced. Alt#o&g# t#at case r&led t#at t#e stock#olders in t#e cor oration %ere mere d&mmies of 'aria Castro$ t#e same concl&sion co&ld not be a lied in t#e case at bar. ,#is is es ecially so$ since t#e deed of sale categorically states t#at t#e b&yer is Cam illo$ and not Castro. ,#e fact t#at t#e #eirs of Castro registered an adverse claim in t#e said ro erty co&ld not s& ort laintiffFs claim$ since t#is %as not &t in iss&e in t#is case and s#o&ld t#erefore be ventilated in t#e ro er for&m. Ass&ming ar#uendo t#at 5od&co %as a&t#ori6ed to sell t#e land$ it does not a&tomatically entitle #er to a commission from t#e b&yer. At most$ t#e o%ner of t#e ro erty and t#e one %#o romised to give #er a commission s#o&ld be t#e one liable to

/ss&e. :o; /nfante %as liable to ay C&nanan and 'ijares commission des ite t#e %ritten cancellation of a&t#ority signed by t#e res ondents. 3eld. >es. )etition denied ,#ere is eno&g# j&stification for t#e concl&sion reac#ed by t#e lo%er co&rt as %ell as by t#e Co&rt of A eals to t#e effect t#at res ondents are entitled to t#e commission originally agreed & on. /t is a fact fo&nd by t#e Co&rt of A eals t#at after etitioner #ad given t#e %ritten a&t#ority to res ondents to sell #er land for t#e s&m of )@0$000$ res ondents fo&nd a b&yer in t#e erson of one )io -. ;oc#e %#o %as %illing to b&y t#e ro erty &nder t#e terms agreed & on$ and t#is matter %as immediately bro&g#t to t#e kno%ledge of etitioner. B&t t#e latter$ er#a s by %ay of strategem$ advised res ondents t#at s#e %as no longer interested in t#e deal and %as able to revail & on t#em to sign a doc&ment agreeing to t#e cancellation of t#e %ritten a&t#ority. ,#at etitioner #ad c#anged #er mind even if res ondents #ad fo&nd a b&yer %#o %as %illing to close t#e deal$ is a matter t#at %o&ld not give rise to a legal conseG&ence if res ondents agree to call off t#e transaction in deference to t#e reG&est of t#e etitioner. B&t t#e sit&ation varies if one of t#e arties takes advantage of t#e benevolence of t#e ot#er and acts in a manner t#at %o&ld romote #is o%n selfis# interest. ,#is act is &nfair as %o&ld amo&nt to bad fait#. ,#is act cannot be sanctioned

@D

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
ay t#e same and to %#om t#e claim s#o&ld #ave been directed. And even ass&ming t#at Castro %as t#e real b&yer$ t#e claim did not accr&e a&tomatically against #er$ b&t against t#e erson %#o romised #er a commission. &omin4o ) &omin4o (6ANCES) 2ct. 2($ 1(A1 *. 'akasiar +acts. Micente 7omingo exec&ted an excl&sive contract of agency %it# 5regorio 7omingo. ,#e contract %as to last for @0 days. /t %as stated t#at Micente a&t#ori6ed 5regorio to sell #is lot %it# a commission of CN on t#e total rice. 5regorio %o&ld still be entitled to t#e commission if Micente or anyone else sold t#e ro erty %it#in t#e @0 day eriod or if t#e ro erty is sold by Micente %it#in @ mont#s from t#e termination of t#e agency to a &rc#aser revio&sly s&bmitted by 5regorio d&ring t#e contin&ance of t#e agency. 5regorio a&t#ori6ed )&risima to look for a b&yer$ romising ] of t#e CN commission. 5regorio t#en s&bmitted t#at 2scar de =eon %anted to b&y t#e ro erty. ,#e latter aid )1000 earnest money to Micente and gave )1000 as gift to 5regorio. 5regorio did not inform Micente of t#is )1000 ro inaLgift. 3o%ever$ Micente ers&aded 2scar to b&y t#e ro erty from #im directly at )10D$000 0as o osed to t#e )10($000 revio&sly agreed & on1. 5regorio fo&nd o&t t#at t#e ro erty %as sold t#e Am aro 7ia6$ %ife of 2scar de =eon. 3e t#en demanded t#e CN commission from Micente. ,C. Micente s#o&ld ay 5regorio and )&risima. CA affirmed. Am aro 7ia6 being t#e %ife of 2scar de =eon$ t#e sale by Micente of #is ro erty is ractically a sale to 2scar since #&sband and %ife #ave common interests. Micente #aving died$ #is #eirs a ealed. t#e vendee$ %it#o&t revealing t#e same to #is rinci al$ t#e vendor$ is g&ilty of a breac# of #is loyalty to t#e rinci al and forfeits #is rig#t to collect t#e commission from #is rinci al$ even if t#e rinci al does not s&ffer any inj&ry by reason of s&c# breac# of fidelity$ or t#at #e obtained better res&lts or t#at t#e agency is a grat&ito&s one$ or t#at &sage or c&stom allo%s itE beca&se t#e r&le is to revent t#e ossibility of any %rong$ not to remedy or re air an act&al damage. By taking s&c# rofit or bon&s or gift or ro ina from t#e vendee$ t#e agent t#ereby ass&mes a osition %#olly inconsistent %it# t#at of being an agent for #is rinci al$ %#o #as a rig#t to treat #im$ insofar as #is commission is concerned$ as if no agency #ad existed. ,#e fact t#at t#e rinci al may #ave been benefited by t#e val&able services of t#e said agent does not exc&l ate t#e agent %#o #as only #imself to blame for s&c# a res&lt by reason of #is treac#ery or erfidy. Art 1!(1 %ill not a ly if t#e agent acted only as a middleman %it# t#e task of merely bringing toget#er t#e vendor and t#e vendee$ %#o t#emselves %ill negotiate on t#e terms and conditions of t#e transaction. /n t#is case #o%ever$ 5regorio %as not merely a middleman of Micente and 2scar. 3e %as t#e broker of Micente 2;=>. G. Arti*-e #$C%, #$CC

Art. 1!A". An agency is eit#er general or s ecial. ,#e former com rises all t#e b&siness of t#e rinci al. ,#e latter$ one or more s ecific transactions. Art. 1!AA. An agency co&c#ed in general terms com rises only acts of administration$ even if t#e rinci al s#o&ld state t#at #e %it##olds no o%er or t#at t#e agent may exec&te s&c# acts as #e may consider a ro riate$ or even t#o&g# t#e agency s#o&ld a&t#ori6e a general and &nlimited management. #. C-a e o' A4en*7> Genera-, S.e*ia-, Uni)er aSia at ). IAC (2A!K) 2ct. 10$ 1(!C *. 5&tierre6$ *r. FAC"S -ometime in 1(AD$ res ondent ,eresita ;acianceno s&cceeded in convincing officials of t#e t#en 7e artment of 9d&cation and C&lt&re to &rc#ase %it#o&t &blic bidding$ one million esos %ort# of national flags for t#e &se of &blic sc#ools t#ro&g#o&t t#e co&ntry. ,#e res ondent %as able to ex edite t#e a roval of t#e &rc#ase by #and?carrying t#e different indorsements from one office to anot#er$ so

/ss&e. :2; t#e fail&re on t#e art of 5regorio to disclose to Micente t#e ayment to #im by 2scar of t#e )1000 gift constit&tes fra&d as to ca&se forfeit&re of #is commission. Y>9-Z 39=7. ,#e d&ties and liabilities of a broker to #is em loyer are t#ose %#ic# an agent o%es to #is rinci al. Art 1!(1 rovides t#at an agent is bo&nd to render an acct of #is transactions and to deliver to t#e rinci al %#atever #e may #ave received by virt&e of t#e agency$ even t#o&g# it may not be o%ing to t#e rinci al. Art 1(0( rovides t#at an agent is res onsible not only for fra&d b&t also for negligence. 3ence$ an agent %#o takes a secret rofit in t#e nat&re of a bon&s$ grat&ity or ersonal benefit from

@C

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
t#at by t#e first %eek of -e tember$ 1(AD$ all t#e legal reG&irements #ad been com lied %it#$ exce t t#e release of t#e &rc#ase orders. ,EL& >es. ;acianceno is a general agent. !A"I(NALE ,#ere are several kinds of agents. ,o G&ote a commentator on t#e matter. An a#ent may be 3!4 universal: 354 #eneral, or 314 special. A universal6 a#ent is one authori$ed to do all acts for his principal which can lawfully be dele#ated to an a#ent. "o far as such a condition is possible, such an a#ent may be said to have universal authority. 37ec. "ec. -84. A #eneral a#ent is one authori$ed to do all acts pertainin# to a business of a certain &ind or at a particular place, or all acts pertainin# to a business of a particular class or series. 9e has usually authority either e pressly conferred in #eneral terms or in effect made #eneral by the usa#es, customs or nature of the business which he is authori$ed to transact. An a#ent, therefore, who is empowered to transact all the business of his principal of a particular &ind or in a particular place, would, for this reason, be ordinarily deemed a #eneral a#ent. 37ec "ec. ,124. A special a#ent is one authori$ed to do some particular act or to act upon some particular occasion. lie acts usually in accordance with specific instructions or under limitations necessarily implied from the nature of the act to be done. 37ec. "ec. :!4 3*adilla, Civil ;aw <he Civil Code Annotated, =ol. =,, !>:> Edition, p. 52?4.

:#en ;acianceno %as informed by t#e C#ief of

t#e B&dget 7ivision t#at t#e &rc#ase orders co&ld not be released &nless a formal offer to deliver t#e flags in accordance %it# t#e reG&ired s ecifications %as first s&bmitted for a roval$ s#e contacted t#e o%ners of t#e 8nited +lag /nd&stry. ,#e next day$ after t#e transaction %as disc&ssed$ a do*ument %as dra%n & a&t#ori6ing ;acianceno to represent /nited +la# ,ndustry to deal with any entity or or#ani$ation, private or #overnment, in connection with the mar&etin# of /nited0s products-fla#s and its accessories, sub)ect to 12. commission. 2n 2ctober 1"$ 1(AD$ t#e first delivery of A$(@@ flags %as made by t#e 8nited +lag /nd&stry. ,#e follo%ing day t#e res ondentKs a&t#ority to re resent t#e 8nited +lag /nd&stry %as revoked by etitioner )rimitivo -iasat. After receiving t#e ayment for t#e first delivery$ tendered t#e amo&nt of )2@$(00.00 or five ercent 0CN1 of t#e amo&nt received to t#e res ondent as ayment of #er commission. ,#e latter ref&sed to acce t t#e said amo&nt insisting on t#e @0N commission agreed & on. ,#e res ondent$ #o%ever$ %as revailed & on to acce t t#e same beca&se of t#e ass&rance of t#e etitioners t#at t#ey %o&ld ay t#e commission in f&ll after t#ey delivered t#e ot#er #alf of t#e order. 4es ondent ;acianceno later on learned t#at etitioner -iasat #ad already received ayment for t#e second delivery of A$!@@ flags. :#en s#e confronted t#e etitioners$ t#ey ve#emently denied recei t of t#e ayment$ at t#e same time claiming t#at t#e res ondent #ad no artici ation %#atsoever %it# regard to t#e second delivery of flags and t#at t#e agency #ad already been revoked. ,#e res ondent originally filed a com laint %it# t#e Com laints and /nvestigation 2ffice in 'alacaBang b&t %#en not#ing came of t#e com laint$ s#e filed an action in t#e Co&rt of +irst /nstance of 'anila to recover t#e follo%ing commissions. 2CN$ as balance on t#e first delivery and @0N$ on t#e second delivery. C+/ r&led in favor of res ondent. CA affirmed.

2ne does not #ave to &ndertake a close scr&tiny of t#e doc&ment embodying t#e agreement bet%een t#e etitioners and t#e res ondent to ded&ce t#at t#e Klatter %as instit&ted as a general agent. /ndeed$ it can easily be seen by t#e %ay general %ords %ere em loyed in t#e agreement t#at no restrictions %ere intended as to t#e manner t#e agency %as to be carried o&t or in t#e lace %#ere it %as to be exec&ted. "1e .o?er 4ranted to t1e re .ondent ?a o 8road t1at it .ra*ti*a--7 *o)er t1e ne4otiation -eadin4 to, and t1e e0e*ution o', a *ontra*t o' a-e o' .etitioner G mer*1andi e ?it1 an7 entit7 or or4ani5ation. 2. Cou*1ed in 4enera- term D a*t admini tration o'

ISSUES :2; ;acianceno is entitled to t#e commission des ite t#e absence of s ecific a&t#ori6ation for t#e sale of 1C$""" )#ili ine flags to 79C-.

3e-o o ) CA (GEN)

@"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
A&g. 21$ 1((" ,orres$ *r.$ *. FAC"S> +rancisco Meloso o%ned a arcel of land in ,ondo$ 'anila. A ,C, %as iss&ed in #is name b&t later on it %as cancelled and anot#er one %as iss&ed in t#e name of t#e rivate res ondents. )etitioner alleged t#at #e %as t#e absol&te o%ner of t#e ro erty and t#at #e never a&t#ori6ed anybody$ not even #is %ife$ to sell it. 3e alleged t#at #e %as in ossession of t#e title b&t %#en #is %ife$ /rma$ left for abroad$ #e fo&nd o&t t#at #is co y %as missing. After verifying %it# t#e 4egister of 7eeds$ #e fo&nd t#at t#e transfer of ro erty %as s& orted by a 5eneral )o%er of Attorney. )etitioner denied exec&ting t#e o%er of attorney and alleged t#at #is signat&re %as falsified. 3e contends t#at t#e sale and transfer of t#e ro erty %as n&ll and void. )rivate res ondent$ Aglaloma 9scario$ on t#e ot#er #and alleged t#at s#e %as a b&yer in good fait# and denied any kno%ledge of irreg&larity. -#e relied on t#e general o%er of attorney of /rma %#ic# %as s&fficient in form and s&bstance and %as d&ly notari6ed. ,#e general o%er of attorney stated t#at. <o buy or sell, hire or lease, mort#a#e or otherwise hypothecate lands, tenements and hereditaments or other forms of real property, more specifically <C< No. ?>!18, upon such terms and conditions and under such covenants as my said attorney shall deem fit and proper. ,#e trial co&rt r&led t#at 9scario %as t#e la%f&l o%ner of t#e ro erty as s#e %as deemed an innocent &rc#aser for val&e. ,#e general o%er of attorney %as #eld to be valid and s&fficient for t#e &r ose. /t r&led t#at t#ere %as no need for a s ecial o%er of attorney %#en t#e s ecial o%er %as mentioned in t#e general one. ,#e Co&rt of A t#e trial co&rt. eals affirmed in toto t#e r&ling of o%er of attorney %as +acts. 'ax =eonard ,orno% is t#e sole o%ner of t#e b&siness carried on in Berlin and 'anila &nder t#e name of 5emann P Co. 2n +ebr&ary C$ 1(00$ #e exec&ted in Berlin an instr&ment$ constit&ting +ernando Sammer6ell as #is tr&e and la%f&l attorney %it# f&ll o%er to enter t#e firm name of 5ermann P Co. in t#e Commercial 4egistry of t#e city of 'anila as a branc# of t#e #o&se of 5ermann P Co. in Berlin$ it being t#e &r ose of t#is o%er to invest said attorney %ill f&ll legal o%ers and a&t#ori6ation to direct and administer in t#e city of 'anila for &s and in o&r name a branc# of o&r general commercial b&siness of im ortant and ex ortation$ for %#ic# &r ose #e may make contracts of lease and em loy s&itable assistants$ as %ell as sign every kind of doc&ments$ acco&nts$ and obligations connected %it# t#e b&siness %#ic# may be necessary$ take c#arge in general of t#e recei t and delivery of merc#andise connected %it# t#e b&siness$ i4n a-- re*ei.t 'or um o' mone7 and *o--e*t t1em and e0a*t t1eir .a7ment 87 -e4a- mean $ and in general exec&te all t#e acts and t#ings necessary for t#e erfect carrying on of t#e b&siness committed to #is c#arge in t#e same manner as %e co&ld do o&rselves if %e %ere resent in t#e same lace. 2n 2ctober 2A$ 1(00$ +ernando Sammer6ell exec&ted a general o%er for s&its$ &r ortedly as a s&bstit&tion to t#e instr&ment exec&ted by ,orno%. ,#is instr&ment %as a&t#enticated by a notary %it# t#e formalities reG&ired by t#e domestic la%s. ,#e ot#er %as not so a&t#enticated. t#erein t#e act or transaction for %#ic# t#e s ecial o%er is reG&ired. /t is not t#e denomination t#at matters b&t t#e extent of t#e o%erLs contem lated & on t#e agent or attorney?in?fact. 9scario %as an innocent &rc#aser for val&e. -#e relied on t#e o%er of attorney resented by /rma$ etitionerFs %ife. Being t#e %ife of t#e o%ner$ and #aving %it# #er t#e title of t#e ro erty$ t#ere %as no reason for 9scario not to believe in #er a&t#ority. 'oreover$ t#e o%er of attorney %as notari6ed and carried %it# t#e res&m tion of d&e exec&tion. A &rc#aser in good fait# is one %#o b&ys ro erty of anot#er$ %it#o&t notice t#at some ot#er erson #as a rig#t to$ or interest in s&c# ro erty and ays a f&ll and fair rice for t#e same$ at t#e time of s&c# &rc#ase$ or before #e #as notice of t#e claim or interest of some ot#er erson in t#e ro erty. 2a*:e ). Cam. , u.ra Germann + Co. ) . &ona-d on, Sim + Co. (2ai) ;ovember 11$ 1(01 =add$ *.

ISSUE> :2; t#e general valid and reg&lar

,EL&> >9-. :#ile t#e o%er of attorney %as denominated as general$ a er&sal revealed t#at it stated an a&t#ority to sell. ,#ere %as no need to exec&te a se arate and s ecial o%er of attorney since t#e general o%er of attorney #ad ex ressly a&t#ori6ed t#e agent or attorney?in?fact t#e o%er to sell t#e s&bject ro erty. ,#e s ecial o%er of attorney can be incl&ded in t#e general o%er %#en it is s ecified

@A

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/ss&e. :#et#er or not t#e original o%er can be constr&ed as conferring & on Sammer6ell a&t#ority to instit&te or defend s&its for t#e recovery of money 3eld. >9-. /t a ears to be ex ressly and s ecially a&t#ori6ed by t#e cla&se conferring t#e o%er to exact t#e ayment of s&ms of money by legal means. ,#is m&st mean t#e o%er to exact t#e ayment of debts d&e t#e concern by means of t#e instit&tion of s&its for t#eir recovery. ,#e main object of t#e instr&ment is clearly to make Sammer6ell t#e manager of t#e 'anila branc# of t#e laintiffFs b&siness$ %it# t#e same general a&t#ority %it# reference to its cond&ct %#ic# #is rinci al %o&ld #imself ossess if #e %ere ersonally directing it. /t can not be reasonably s& osed$ in t#e absence of very clear lang&age to t#at effect$ t#at it %as t#e intention of t#e rinci al to %it##old from #is agent a o%er so essential to t#e efficient management of t#e b&siness entr&sted to #is control as t#at to s&e for t#e collection of debts. Yu C1u*: ). Kon4 Li Po (!(G) Cited Cor &s *&ris. /n t#e absence of ex ress limitations$ a manager #as a&t#ority to #ire an em loyee for s&c# eriod as is c&stomary or ro er. B&t &nless #e is ex ressly a&t#ori6ed #e canFt make a contract of em loyment for a long f&t&re eriod$ s&c# as for @ years alt#o&g# contract not rendered invalid by mere fact t#at em loyment extends beyond term of managerKs o%n em loyment. :#ile C#en as general manager of Song =i )o$ #ad im lied a&t#ority to bind cor by a reasonable and &s&al contract of em loyment %it# >& C#&ck s&c# contract #ere cannot be so considered. ,#e term of em loyment is &n&s&ally long and conditions are so onero&s t#at ossibility of cor being t#ro%n into insolvency is ex ressly contem lated in contract. ,#is fact s#o&ld #ave &t >& C#&ck & on inG&iry as to extent of b&siness managerKs a&t#ority. 2. E)iden*e doe not u..ort *ontention t1at *ontra*t ?a im.-ied-7 rati'ied 87 *or.. /t is merely based on fact t#at Sim 3&a$ resident of cor for 1(20$ admitted on stand t#at #e sa% >& C#&ck %ork as rinters in t#e office b&t #e denied any kno%ledge of existence of contract and said it %as never resented to #im nor t#e Board. Before a contract may be ratified$ kno%ledge of its existence m&st be bro&g#t to arties %#o #ave a&t#ority to ratify it. ;o s&c# kno%ledge s#o%n #ere. A ratification by )res %o&ld #ave been no avail eit#er beca&se in order to validate a contract$ ratification by t#e board of directors %as necessary. +act t#at res %as reG&ired by by?la%s to sign docs evidencing contracts of t#e cor $ does not mean #e #ad o%er to make t#e contracts. @. Noti*e 4i)en 87 a C1en Yu 2an .o ted in t1e ne? .a.er ma:in4 nu-- and )oid a-*ontra*t not i4ned 87 "C C1en did not -ead Yu C1u*: to t1in: C1en 1ad aut1orit7 to ma:e *ontra*t. ;otice %as &blis#ed a mont# after contract %as entered into. 9vidence also s#o%s t#at C#en >& 'an and C#en is one and t#e same erson. ,#e notice confers no s ecial o%ers$ b&t is only an assertion by C#en t#at #e %o&ld recogni6e no contracts not d&ly signed by #im. ;2 evidence to s#o% t#at notice ever bro&g#t to attention of officers of cor . "ro.i*a- ,ome ). 3i--a-u5 ("(FF) In u-ar &ru4 ). PN/ (!EG) *. 'alcolm 1(@@ FAC"S> 8.9. +oerster$ a salesman and collector of /ns&lar 7r&g for t#e /slands of )anay and ;egros. %as instr&cted to take t#e c#ecks for t#e dr&g com any to t#e /loilo branc# of t#e C#artered Bank of /ndia$ A&stralia and C#ina and de osit t#e amo&nts to t#e credit of t#e dr&g com any. /nstead$ +oerster de osited t#e c#ecks$ incl&ding t#ose of fo&r eo le$ %it# t#e /loilo branc# of t#e );B$ in #is ersonal acco&nt. ,#e amo&nt of t#e c#ecks %ere s&bseG&ently %it#dra%n by 8. 9.$ +oerster and Carmen 9. de +oerster 0t#e formerFs %ife1. ,#e dr&g com any investigated t#e transactions of +oerster. 8 on t#e discovery of anomalies$ +oerster committed s&icide. ,#e bank arg&ed t#at t#e fra&d %as not roved$ and t#at +oerster #ad im lied a&t#ority to indorse all c#ecks made o&t in t#e name of t#e /ns&lar 7r&g Co. ISSUE> :2; );B is liable. >9-. !ULING> As to t#e first arg&ment$ no s&c# s ecial defense %as relied & on by t#e bank in t#e trial co&rt. As to t#e second$ a salesman %it# a&t#ority to collect money belonging to #is rinci al does not #ave t#e im lied a&t#ority to indorse c#ecks received in ayment. Any erson taking c#ecks made ayable to a cor oration$ %#ic# can act only

@!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
by agent does so at #is eril$ and m&st same by t#e conseG&ences if t#e agent %#o indorses t#e same is %it#o&t a&t#ority. ,#at t#e bank acted in good fait# does not relieve it from res onsibility. 9ven so$ t#e Bank %as not even in good fait#. ,#e bank co&ld tell by t#e c#ecks t#emselves t#at t#e money belonged to t#e /ns&lar 7r&g Co.$ /nc.$ and not to +oerster or #is %ife or #is clerk. :#en t#e bank credited t#ose c#ecks to t#e ersonal acco&nt of +oerster and ermitted +oerster and #is %ife to make %it#dra%als %it#o&t t#ere being made a&t#ority from t#e dr&g com any to do so$ t#e bank made itself res onsible to t#e dr&g com any for t#e amo&nts re resented by t#e c#ecks. Soriano ). Peo.-e (A//Y) 'arc# 1($ 1(C1 *. *&go +acts. +ederico -oriano %as c#arged and convicted %it# t#e crime of t#eft of 1 Cyclix electric motor$ 1 lantern slide rojector incl&ding accessories. Beca&se of t#e dist&rbance ca&sed by t#e %ar$ t#e 9agle Cinema Co.$0o%ner of t#e materials1 %as indebted to t#e -aen6 for rents d&e on acco&nt of t#e leaseE and t#at a ellant in t#e exercise of t#e o%ers conferred & on #im co&ld #ave s&ed said debtor to foreclose t#e mortgage exec&ted by t#e 9agle Cinema Co.$ /nc.$ in favor of #is rinci als. ,#e items %ere sei6ed by -oriano and later fo&nd at #is #o&se after #aving re eatedly denied any kno%ledge of t#e eG&i ment and accessories of t#e Cine and declined any res onsibility for t#eir loss. 7efense of -oriano ? :it# regard to t#e Itaking$I a ellant contends t#at #e did not exec&te t#is element of t#eft beca&se being an attorney?in?fact of t#e #eirs of -aen6$ #e acted for #is rinci als$ and for all intents and &r oses of t#e o%er conferred & on #im$ #e %as t#e rinci al #imself and$ nat&rally$ #e co&ld not steal somet#ing belonging to #im &nder t#e rinci le t#at I%ei nostrae furtum facera non pos sumusI. ,#e o%er of attorney clearly em o%ered t#e a ellant Ito ask$ demand$ s&e for$ recover$ collect and recei t for any and all s&ms of money . . . and ot#er t#ings of val&e of %#atever nat&re or kind$I and gave #im If&ll o%er to do anyt#ing reG&isite and necessary to be done in t#e remises as f&lly as / 09milia -aen61 co&ld if ersonally resent$ #ereby ratifying and confirming all t#at my said attorney and s&bstit&te attorney s#all la%f&lly do or ca&se to be done by virt&e #ereof.I B&t t#e CA affirmed t#e conviction for t#eft citing firstly$ t#at %#en #e too&$ as #e finally admitted to #ave taken$ t#e lantern slide rojector and t#e ICyclixI motor generator from t#e 9agle?,#eater$ #e did not really act in be#alf and re resentation of t#is rinci als$ for ot#er%ise #e %o&ld not #ave re eatedly denied #aving taken said ro erties and insin&ated t#at t#ey #ad been taken by t#e *a aneseE and secondly$ t#at even #is rinci als co&ld not #ave taken and a ro riated said ro erties for t#emselves %it#o&t revio&s and ro er action in co&rt$ beca&se no mortgage creditor can foreclose t#e ro erty mortgage to #im %it#o&t j&dicial roceedings. /ss&e. :o; t#e taking %as an act of administration 3eld. ;o$ it %as t#eft. Conviction affirmed. /t is clear t#at said o%er of attorney did not a&t#ori6e t#e etitioner to take a%ay t#e rojector and t#e generator$ #iding t#em in #is #o&se and denying to t#e o%ner and t#e olice a&t#orities t#at #e #ad t#em in #is ossessions$ %#ic# %as an illegal act$ not covered by #is o%er?of?attorney. 3e %as a&t#ori6ed only to ask$ take$ s&e for$ recover$ collect$ etc.$ s&ms of money$ debts$ d&es$ acco&nts and ot#er t#ings %#ic# %ere or mig#t t#ereafter be d&e$ etc.$ to #is rinci al 9milia -aen6. ,#is a&t#ority referred mainly to t#e collection of t#e rents of t#e b&ilding rented by t#e 9agle Cinema Co.$ /nc. ,#e rojector and t#e generator %ere not d&e or o%ing to 9milia -aen6. /t is not to be s& osed t#at -aen6 #erself %o&ld #ave denied t#e ossession of t#ose articles. /t is %as t#e &r ose of t#e etitioner only to rotect t#ose instr&ments from looting$ t#ere is o reason %#y #e s#o&ld #ave concealed t#em from t#e o%ner and denied #aving t#em. 9ven t#o&g# t#e eG&i ment$ incl&ding t#ose articles$ %ere mortgaged to -ane6 to g&arantee t#e ayment of t#e rents d&e on t#e b&ilding$ yet t#ere #ad been no foreclos&re and neit#er s#e nor t#e etitioner #ad t#e a&t#ority to take a%ay and conceal t#ose articles from t#e o%ner or t#e olice a&t#orities. ,#e 9agle Cinema Co.$ /nc.$ #ad t#e rig#t to ossess said articles. As to t#e element of intent$ it is clear t#at %#en t#e etitioner carried a%ay and concealed from t#e o%ner and t#e olice a&t#orities t#e above?mentioned articles$ #e acted %it# intent of gain. /ntent is a mental state$ t#e existence of %#ic# is s#o%n by t#e overt acts of a erson$ %#ic# in t#e resent case &nmistakably oint to t#at intent. ) . 9a 1in4ton S7*i.

Antonio GoIui-a7 (Ear-a) *&ly 2"$ 1("0

@(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
4eyes$ *B= +acts. Antonio 5oG&ilay and ,an -in An entered into a general commercial artners#i &nder t#e artners#i name ,an -in An and Antonio C. 5oG&ilay for t#e &r ose of dealing in real estate. 9mbodied in t#eir agreement is t#e sti &lation t#at ,an #as t#e excl&sive management of t#e artners#i $ %#ile 5oG&ilayFs role is limited to examining t#e book of acco&nts of t#e artners#i . /t %as f&rt#er sti &lated t#at t#e artners#i s#all #ave a life of 10 years$ and t#e deat# of eit#er one of t#e artners %ill not res&lt to t#e dissol&tion of t#e artners#i $ b&t bot# arties$ by m&t&al agreement$ can decide to terminate t#e artners#i before t#e ex iration of t#e eriod. ,#ereafter$ 5oG&ilay exec&ted in favor of ,an a general o%er of attorney sti &lating t#at ,an s#all act as #is 'anager in t#e artners#i for t#e %#ole eriod of t#e artners#i . ,#e artners#i event&ally bo&g#t @ arcels of lands$ %#ile ,an bo&g#t D" arcels. ,#ese D( lots %ere later mortgaged to Banco 3i otecario de +ili inas for t#e ayment of ^C@k obligation$ ayable %it#in ! years. 7&ring t#e lifetime of t#e artners#i $ ,an died$ and #e %as t#ereafter s&cceeded by #is %ife$ Song C#ai )in and #is D minor c#ildren. 9vent&ally$ a certain -ing >ee and C&an Co.$ & on reG&est of >&tivo -ons 3ard%are Co. 0%#ic# advanced t#e do%n ayment and t#e amorti6ation for t#e &rc#ase of t#e D( lots1$ aid t#e remaining balance of t#e mortgage debt. ,#ese t%o entities event&ally filed t#eir res ective claims in t#e robate co&rt$ as a res&lt of %#ic#$ Song C#ai )in so&g#t ermission from t#e Co&rt to sell t#ese lands for settling t#e debts of ,an and t#e artners#i . ,#ese lands %ere t#en sold to :as#ington -yci and Betty =ee$ %#o t#en exec&ted a 7eed of ,ransfer in favor of /ns&lar 7evelo ment Co.. After learning abo&t t#e sale$ 5oG&ilay$ as t#e s&rviving artner of t#e artners#i filed an action to ann&l t#e sale made to -yci and =ee. ,#e -C in a se arate decision ordered t#e case to be remanded for ne% trial d&e to non?incl&sion of indis ensable arties. 2n remand$ t#e lo%er co&rt dismissed t#e amended com laint. 3ence$ t#is etition. /--89. :2; t#e sale exec&ted in favor of -yci and =ee is valid. 39=7. >es. ,#e Co&rt reliminarily #eld t#at Song C#ai )in$ as t#e %ido% of t#e ,an$ did not s&cceed #er #&sband in t#e administration of t#e artners#i . Antonio 5oG&iolay conferred & on ,an -in An t#e excl&sive management of t#e b&siness$ s&c# o%er$ remised as it is & on tr&st and confidence$ %as a mere ersonal rig#t t#at terminated & on ,anKs demise. ,#e rovision in t#e articles stating t#at Iin t#e event of deat# of any one of t#e artners %it#in t#e 10?year term of t#e artners#i $ t#e deceased artner s#all be re resented by #is #eirsI$ co&ld not #ave referred to t#e managerial rig#t given to ,an -in AnE more a ro riately$ it related to t#e s&ccession in t#e ro rietary interest of eac# artner. ,#e covenant t#at Antonio 5oG&iolay s#all #ave no voice or artici ation in t#e management of t#e artners#i $ being a limitation & on #is rig#t as a general artner$ m&st be #eld coextensive only %it# ,anKs rig#t to manage t#e affairs$ t#e contrary not being clearly a arent. -ince t#e Articles of co? artners#i rovided for t#e contin&atin of t#e firm not%it#standing t#e deat# of one of t#e artners$ t#e #eirs of t#e deceased$ by never re &diating or ref&sing to be bo&nd &nder t#e said rovision in t#e articles$ became individ&al artners %it# Antonio 5oG&iolay & on ,anKs demise. Song C#ai )in$ by #er affirmative actions manifested #er intent to be bo&nd by t#e artners#i agreement not only as a limited artner$ b&t also as a limited artner as %ell. /n fact$ by selling t#e land$ s#e %as act&ally acting as a managing artner. ,#e Co&rt f&rt#er #eld t#at t#e sale %as valid$ inasm&c# as it %as made by a artner. Accordingly$ strangers dealing %it# a artners#i #ave t#e rig#t to ass&me$ in t#e absence of restrictive cla&ses in t#e co? artners#i agreement$ t#at every general artner #as o%er to bind t#e artners#i $ s ecially t#ose artners acting %it# ostensible a&t#ority. ,#e latter may rig#tf&lly ass&me t#at t#e contracting artner %as d&ly a&t#ori6ed to contract for and in be#alf of t#e firm and t#at$ f&rt#ermore$ #e %o&ld not ordinarily act to t#e rej&dice of #is co? artners. /n t#is case$ t#e records s#o% t#at 5oG&ilay did not contest t#e sale made to -yci and =eeE it %as only after t#e deed of conveyance %as exec&ted did #e make #is rotest kno%n. 3is o osition t#en came too late. ,. Arti*-e #$C$> a*t tri*t dominion or o?ner 1i. Art. 1!A!. - ecial o%ers of necessary in t#e follo%ing cases. attorney o'

are

011 ,o make s&c# ayments as are not &s&ally considered as acts of administrationE 021 ,o effect novations %#ic# &t an end to obligations already in existence at t#e time t#e agency %as constit&tedE 0@1 ,o com romise$ to s&bmit G&estions to arbitration$ to reno&nce t#e rig#t to a eal from a j&dgment$ to %aive objections to t#e ven&e of an

D0

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
action or to abandon a rescri tion already acG&iredE 0D1 ,o %aive any obligation grat&ito&slyE 0C1 ,o enter into any contract by %#ic# t#e o%ners#i of an immovable is transmitted or acG&ired eit#er grat&ito&sly or for a val&able considerationE 0"1 ,o make gifts$ exce t c&stomary ones for c#arity or t#ose made to em loyees in t#e b&siness managed by t#e agentE 0A1 ,o loan or borro% money$ &nless t#e latter act be &rgent and indis ensable for t#e reservation of t#e t#ings %#ic# are &nder administrationE 0!1 ,o lease any real ro erty to anot#er erson for more t#an one yearE 0(1 ,o bind t#e rinci al to render some service %it#o&t com ensationE 0101 ,o bind t#e rinci al in a contract of artners#i E 0111 ,o obligate t#e rinci al as a g&arantor or s&retyE 0121 ,o create or convey real rig#ts over immovable ro ertyE 01@1 ,o acce t or re &diate an in#eritanceE 01D1 ,o ratify or recogni6e obligations contracted before t#e agencyE 01C1 Any ot#er act of strict dominion #. 'orm 2. *a e ,ome In uran*e ). US Line (6ANCES) 3e-o o ). CA, u.ra Co mi* Lum8er ). CA (2A!K) ;ov. 2($ 1((" Bellosillo$ *. FAC"S C2-'/C =8'B94 C24)24A,/2; t#ro&g# its 5eneral 'anager exec&ted on 2! *an&ary 1(!C a - ecial )o%er of Attorney a ointing )a6 5. Millamil?9strada as attorney?in?fact ? x x x to initiate$ instit&te and file any co&rt action for t#e ejectment of t#ird ersons andLor sG&atters of t#e entire lot (12A and DD@ and covered by ,C, ;os. @A"D! and @A"D($ for t#e said sG&atters to remove t#eir #o&ses and vacate t#e remises in order t#at t#e cor oration may take material ossession of t#e entire lot$ and for t#is &r ose$ to a ear at t#e re?trial conference and enter into any sti &lation of facts andLor com romise agreement so far as it s#all rotect t#e rig#ts and interest of t#e cor oration in t#e aforementioned lots. Millamil?9strada$ by virt&e of #er o%er of attorney$ instit&ted an action for t#e ejectment of rivate res ondent /sidro )ere6 and recover t#e ossession of a ortion of =ot ;o. DD@ before t#e 4egional ,rial Co&rt of 7ag& an. 2n 2C ;ovember 1(!C$ s#e entered into a Com romise Agreement %it# res ondent )ere6$ t#e one of t#e terms of %#ic# follo%s. 5. <hat to buy peace said defendant pays unto the plaintiff throu#h herein attorney-in-fact the sum of *5:,:?2.22 computed at *82.22@sAuare meter6 2n 2A ;ovember 1(!C t#e Com romise Agreement %as a roved by t#e trial co&rt and j&dgment %as rendered in accordance t#ere%it#. Alt#o&g# t#e decision became final and exec&tory it %as not exec&ted %it#in t#e C? year eriod from date of its finality allegedly d&e to t#e fail&re of etitioner to rod&ce t#e o%nerFs d& licate co y of ,itle ;o. @A"D( needed to segregate from =ot ;o. DD@ t#e ortion sold by t#e attorney?in?fact$ )a6 5. Millamil?9strada$ to rivate res ondent &nder t#e com romise agreement. ,#&s on 2C *an&ary 1((@ res ondent filed a com laint to revive t#e j&dgment.

)etitioner asserts t#at it %as only %#en t#e

s&mmons for t#e revival of j&dgment %as served & on it t#at it came to kno% of t#e com romise agreement entered into bet%een )a6 5. Millamil?9strada and res ondent /sidro )ere6. +ort#%it#$ & on learning of t#e fra&d&lent transaction$ etitioner so&g#t ann&lment of t#e decision of t#e trial co&rt before res ondent Co&rt of A eals.

ISSUE :2; Millamil?9strada #as t#e a&t#ority to sell t#e ro erty of Cosmic. ;2. !A"I(NALE ,#e a&t#ority granted Millamil?9strada &nder t#e s ecial o%er of attorney %as ex licit and excl&sionary. for her to institute any action in court to e)ect all persons found on ;ots Nos. >!5B and ??1 so that petitioner could ta&e material possession thereof, and for this purpose, to appear at the pre-trial and enter into any stipulation of facts and@or compromise a#reement but only insofar as this was protective of the ri#hts and interests of petitioner in the property. ;o%#ere in t#is a&t#ori6ation %as Millamil?9strada granted ex ressly or im liedly any o%er to sell t#e s&bject ro erty nor a ortion t#ereof.

D1

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
;eit#er can a conferment of t#e o%er to sell be validly inferred from t#e s ecific a&t#ority to enter into a com romise agreement beca&se of t#e ex licit limitation fixed by t#e grantor t#at t#e com romise entered into s#all only be so far as it s#all rotect t#e rig#ts and interest of t#e cor oration in t#e aforementioned lots. /n t#e context of t#e s ecific investit&re of o%ers to Millamil? 9strada$ alienation by sale of an immovable certainly cannot be deemed rotective of t#e rig#t of etitioner to #ysically ossess t#e same$ more so %#en t#e land %as being sold for a rice of )!0.00 er sG&are meter$ very m&c# less t#an its assessed val&e of )2C0.00 er sG&are meter$ and considering f&rt#er t#at etitioner never received t#e roceeds of t#e sale. :#en t#e sale of a iece of land or any interest t#ereon is t#ro&g# an agent$ t#e a&t#ority of t#e latter s#all be in %ritingE ot#er%ise$ t#e sale s#all be void. ,#&s t#e a&t#ority of an agent to exec&te a contract for t#e sale of real estate m&st be conferred in %riting and m&st give #im s ecific a&t#ority$ eit#er to cond&ct t#e general b&siness of t#e rinci al or to exec&te a binding contract containing terms and conditions %#ic# are in t#e contract #e did exec&te. ,#e ex ress mandate reG&ired by la% to enable an a ointee of an agency 0co&c#ed1 in general terms to sell m&st be one t#at ex ressly mentions a sale or t#at incl&des a sale as a necessary ingredient of t#e act mentioned. +or t#e rinci al to confer t#e rig#t & on an agent to sell real estate$ a o%er of attorney m&st so ex ress t#e o%ers of t#e agent in clear and &nmistakable lang&age. :#en t#ere is any reasonable do&bt t#at t#e lang&age so &sed conveys s&c# o%er$ no s&c# constr&ction s#all be given t#e doc&ment. reasonable amo&nts. 3o%ever$ t#e etitioners ref&sed and t#reatened t#e %orkers %it# bodily #arm. 3ence$ t#e Cor oration filed %it# t#e C+/ of B&lacan a com laint for inj&nction and damages against t#e etitioners. ,#e trial co&rt directed t#e iss&ance of a %rit of inj&nction and s&ggested t#e relocation of t#e bo&ndaries of t#e Cor orationFs claims in relation to t#e ro erties of t#e etitioners. /t named a Commissioner to cond&ct a s&rvey lan on relocation and to s&bmit a re ort to t#e co&rt. ,#e trial co&rt also directed t#e arties to send t#eir re resentatives to t#e lace of t#e s&rvey. ,#e CommissionerFs re ort %as a roved by t#e trial co&rt. /n a s&bseG&ent amendment of t#e com laint of t#e Cor oration$ it alleged t#at t#e etitioners %ere %illing to sell t#eir ro erties for )10LsG.m. b&t %#en it offered to ay only )0.(0LsG.m.$ t#e etitioners stated t#at t#ey %ere %iling to go to trial on t#e iss&e of %#at %o&ld be t#e reasonable rice. ,#e co&nsels of t#e arties conferred among t#emselves on t#e ossibility of terminating t#e case by com romise$ as t#e defendants %ere %illing to sell t#e ro erties at reasonable rices. 3ence$ t#e co&nsels exec&ted a Com romise Agreement to determine t#e rices. ,#e trial co&rt a roved t#e Agreement and enjoined t#e arties to com ly %it# t#e terms and conditions. )&rs&ant to t#e terms$ t#e co&nsels of bot# arties s&bmitted t#e names of t#e ersons designated by t#em as t#eir commissioners. ,#e trial co&rt later a ointed t#e commissioners. ,#e Commissioners s&bmitted to t#e co&rt a Consolidated 4e ort regarding t#e a licable &nit rices. 3o%ever$ t#e Cor orationFs co&nsel$ Attorney. Ment&ra$ filed a manifestation in Co&rt stating t#at t#e Board of 7irectors did not a rove t#e Com romise Agreement entered into by t#e co&nsels. )etitioners filed an ans%er to Attorney. Ment&raFs manifestation raying t#at t#e co&rt ignore and disregard t#e manifestation. /t alleged t#at %#en t#e Co&rt inG&ired if t#e la%yers of t#e Cor oration %ere d&ly a&t#ori6ed to enter into a com romise agreement$ t#e la%yers ans%ered in t#e affirmative. ,#e trial co&rt rendered a decision & #olding t#e Agreement. ,#e etitioners t#en filed a motion for exec&tion %#ic# t#e trial co&rt granted. 3o%ever$ & on an o osition of t#e Cor oration$ t#e trial

3i*ente ) Gera-de5 (GEN) *&ly @1$ 1(A@ Antonio$ *. FAC"S> 3i Cement Cor oration acG&ired a )lacer =ease Contract from Bana#a% -#ale 'ining Association. ,#e lease contract covered t%o mining claims over C1 #a of land. /ncl&ded in t#e mining claims %ere t#e t#ree arcels of land o%ned by t#e etitioners. 2n several occasions$ t#e Cor oration informed t#e etitioners$ t#r& its re resentatives$ of t#e its acG&isition of t#e lacer mining claims. ,#e Cor oration reG&ested t#e etitioners to allo% its %orkers to enter t#eir lands to ex lore and develo t#e claims$ %it# t#e romise to ay t#e etitioners

D2

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
co&rt reversed its decision and set aside t#e motion for exec&tion. /t #eld t#at t#e Agreement %as contrary to la% beca&se t#e la%yers #ad no s ecial o%er of attorney as reG&ired by Art. 1!A! of t#e Civil Code. ISSUE> :2; t#e Com romise Agreement is valid ,EL&. ;2. Art. 1!A! of t#e Civil Code and 4&le 1@!$ -ec. 2@ of t#e 4&les of Co&rt s ecifically reG&ire t#at a s ecial o%er of attorney be #ad %#en entering into a com romise agreement. ,#e Com romise Agreement bet%een t#e arties %as signed only by t#e artiesF res ective la%yers b&t it %as not dis &ted t#at t#e la%yers of t#e Cor oration #ad not s&bmitted to t#e Co&rt any %ritten a&t#ority from t#eir client to enter into a com romise. Also$ it #as been #eld t#at an officer or an agent of t#e cor oration #as no o%er to com romise or settle a claim by or against t#e cor oration$ exce t to t#e extent t#at s&c# o%er is given to #im eit#er ex ressly or by reasonable im lication from circ&mstance. /t is t#&s necessary to ascertain %#et#er t#e Board of 7irectors of t#e Cor oration #ad a&t#ori6ed its la%yers to enter into t#e Com romise Agreement. B&t as resented by evidence$ t#e co&nsels categorically deny t#at t#ey ever re resented to t#e co&rt t#at t#ey %ere a&t#ori6ed to enter into a com romise. ;o%#ere does it a ear t#at t#e Cor orationFs la%yers ever made s&c# a re resentation. Also$ contrary to etitionerFs claims$ Attorney. Cardenas$ as administrative manager of t#e cor oration$ did not tacitly ratify t#e agreement entered into by t#e arties. 3e #ad no a&t#ority to ratify. /t #as been #eld t#at ratification m&st be by t#e officer or governing body #aving a&t#ority to make s&c# contract$ and m&st be %it# f&ll kno%ledge. =astly$ t#e co&nsels of t#e Cor oration #ave not demonstrated any act or declaration of t#e cor oration amo&nting to false re resentation or concealment of material facts calc&lated to mislead t#e etitioners. 3ence$ t#e doctrine of esto el cannot be &sed against t#em. *etition dismissed. PN/ ). 2a0imo Sta. 2aria (2AI) A&g&st 2($ 1("( ,ee#ankee$ *. +acts. ,%o s&gar cro loans %ere obtained by defendant 'aximo -ta. 'aria from laintiff bank &nder a s ecial o%er of attorney$ exec&ted in #is ,#e fact t#at 'aximo resented to t#e laintiff bank MalerianaKs additional s ecial o%er of attorney ex ressly a&t#ori6ing #im to borro% money$ aside from t#e a&t#ority to mortgage exec&ted by Maleriana toget#er %it# t#e ot#er defendants?a ellants also in 'aximoKs favor$ lends s& ort to o&r vie% t#at t#e bank %as not satisfied %it# t#e a&t#ority to mortgage alone. +or favor by #is six brot#ers and sisters to mortgage a 1"?odd #ectare arcel of land$ jointly o%ned by all of t#em. -aid -)A indicated t#at t#e sibling constit&te and a oint 7r. 'AW/'2 -,A. 'A4/A as t#eir tr&e and la%f&l attorney of and in t#eir lace$ name and stead to mortgage$ or convey as sec&rity to any bank$ com any or to any nat&ral or j&ridical erson$ t#eir &ndivided s#ares over a certain arcel of land toget#er %it# t#e im rovements t#ereon. /n addition$ Maleriana -ta. 'aria alone also exec&ted in favor of #er brot#er$ 'aximo$ a s ecial o%er of attorney to borro% money and mortgage any real estate o%ned by #er. By virt&e of t#e t%o above o%ers$ 'aximo -ta. 'aria a lied for t%o se arate cro loans %it# t#e laintiff bank. As sec&rity for t#e t%o loans$ 'aximo -ta. 'aria exec&ted in #is o%n name in favor of laintiff bank t%o c#attel mortgages on t#e standing cro s$ g&aranteed by s&rety bonds for t#e f&ll a&t#ori6ed amo&nts of t#e loans exec&ted by t#e Associated /ns&rance P -&rety Co.$ /nc. as s&rety %it# 'aximo -ta. 'aria as rinci al. ,#e trial co&rt r&led in favor of );B. /ss&e. :#et#er or not t#e s ecial o%er of attorney iss&ed by t#e siblings a&t#ori6ed -ta. 'aria to borro% money 3eld. ;2. )laintiff bank #as not made o&t a ca&se of action against defendants?a ellants 0exce t Maleriana1$ so as to #old t#em liable for t#e &n aid balances of t#e loans obtained by 'aximo &nder t#e c#attel mortgages exec&ted by #im in #is o%n name alone. /n t#e early case of Bank of )./. vs. 7e Coster$ t#e Co&rt$ in #olding t#at t#e broad o%er of attorney given by t#e %ife to t#e #&sband to look after and rotect t#e %ifeKs interests and to transact #er b&siness did not a&t#ori6e #im to make #er liable as a s&rety for t#e ayment of t#e re?existing debt of a t#ird erson$ cited t#e f&ndamental constr&ction r&le t#at ?1ere in an in trument .o?er and dutie are .e*i'ied and de'ined, t1at a-- o' u*1 .o?er and dutie are -imited and *on'ined to t1o e ?1i*1 are .e*i'ied and de'ined, and a-- ot1er .o?er and dutie are e0*-uded.J ,#is is b&t in accord %it# t#e disinclination of co&rts to enlarge an a&t#ority granted beyond t#e o%ers ex ressly given and t#ose %#ic# incidentally flo% or derive t#erefrom as being &s&al or reasonably necessary and ro er for t#e erformance of s&c# ex ress o%ers.

D@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
ot#er%ise$ s&c# a&t#ority to borro% %o&ld #ave been deemed &nnecessary and a s&r l&sage. And #aving failed to reG&ire t#at 'aximo s&bmit a similar a&t#ority to borro%$ from t#e ot#er defendants?a ellants$ laintiff bank$ %#ic# a arently %as satisfied %it# t#e s&rety bond for re ayment &t & by 'aximo$ cannot no% seek to #old said defendants?a ellants similarly liable for t#e &n aid loans. &ire*tor o' Pu8-i* 9or: ). Sin4 6u*o (!(G) 01(2(1 Fa*t > ,itle to land %as o%ned by de =a 4ama$ ,anbootien$ -ing *&co and -ing Bengco. 4amaKs interest %as s&bseG&ently transferred to 9c#a&s. 2%ners mortgaged t#e land to );B to sec&re credit of )1A0k. /ndebtedness #as not been satisfied. =and is located on )oint =lorente at mo&t# of /loilo 4iver and of so lo% level t#at it is s&bject to freG&ent flooding. /n 1(21 )#il 5ovt %as lanning #arbor im rovements in t#is vicinity$ reG&iring extensive dredging by B&rea& of )&blic :orks in mo&t# of said river. -&c# dredging made necessary for 7irector of )&blic :orks to find a lace of de osit for dirt and m&d taken from lace dredged. As land %as lo% and accessible t#e material de osited on s&c# ro erty. A contract %as made bet%een 7ir. )&blic :orks 0re resenting t#e )#il 5ovt1 and D o%ners 4ama$ -ing *&co$ ,anboontien and -ing Bengco %#ere o%ners %o&ld ay to #ave material to be de osited on t#eir land. 7ir )&blic :orks reG&ired a bond in enal amo&nt of )1C0k to be s& lied by o%ners$ conditioned for ayment of amo&nt d&e from o%ners. Bond %as exec&tedE one of names a earing on it %as Casa Mi&da de ,an ,oco &r orting to be signed by de la 4ama. After 7ir made s&bstantial com liance it demanded ayment b&t none %as made so no% it seeks t#e amo&nt d&e t#e 5overnment from t#e original o%ners and from s&reties. );B %as made a arty defendant as #aving interest &nder its rior mortgage & on ro erty$ %#ile 9c#a&s %as made defendant as s&ccessor in interest of 7e =a 4ama and tan 2ng %ido% of ,an ,oco. Com laint so&g#t to enforce t#e 5overnmentKs lien and t#at ro erty s#o&ld be sold Is&bject to t#e first mortgage in favor of t#e );BI. 2%ner. 5ovt #ad not com lied %it# contract in t#at dredged material de osited #ad not been s&fficient in G&antity to raise level of land above #ig# %ater t#erefore o%ners not obligated to ay for t#e filling o eration. I ue> :2; 5ovt #ad com lied %it# oblig t#erefore it is entitled to ayment for t#e filling< >9:2; :ido% of ,an ,oco is bo&nd by s&retys#i < ;2 ,e-d> #. Contra*t did not o8-i4ate 4o)ernment to rai e t1e -and on ?1i*1 t1e dred4ed materia?a de.o ited to an7 .e*i'ied -e)e-. /t only obligated itself to lace & on land t#e material %#ic# s#o&ld be dredged from mo&t# of /loilo 4iver in co&rse of im rovement done by 5ovt near t#at lace. /n indorsement of 7irector$ acce ted by o%ners$ it %as made clear t#at B&rea& did not &ndertake to f&rnis# material to com lete t#e filling of land to any s ecified level. Allegation t#at beca&se arts filled %ere still s&bject to flooding d&ring rains and t#at o%ners %ere &nable to sell land and t#erefore entitled to damages &ntenable beca&se no breac# done by 5ovt. 2. "an (n4 S5e not 8ound 87 *ontra*t o' uret7 1i.. Contract &r orts to be signed by de la 4ama$ acting for defendants &nder a o%er of attorney. B&t t#e 5ovt #as not s#o%n a o%er of attorney t#at %o&ld a&t#ori6e creation$ by attorney?in?fact$ of an obligation in nat&re of s&retys#i binding & on rinci al. 2 )o%ers of Attorney conferred by ,an 2ng -6e & on 7e =a 4ama resented by 5ovt does not confer & on de la 4ama t#e o%er to bind rinci al by a contract of s&retys#i . ,#e cla&ses relate more to t#e exec&tion of contracts relating to ro erty. ,#e more general %ords$ &nder r&le of ej&sdem generis$ refer to contracts of like c#aracter. )o%er to exec&te a contract of so exce tional a nat&re as a contract of s&retys#i or g&aranty canFt be inferred from general %ords contained in t#ese o%ers. /n Art. 1!2A. g&aranty not res&med b&t m&st be ex ress and canFt be extended beyond its s ecified limits. By analogy a o%er of attorney to exec&te a contract of g&aranty -328=7 ;2, B9 inferred from vag&e or general %ords$ es ecially %#en s&c# %ords #ave t#eir origin and ex lanation in artic&lar o%er of a %#olly different nat&re. ,C erred in j&dgment against ,an 2ng -6e & on bond. /A Finan*e ). CA ("(FF) 2e-endre5 ). CA (!EG) )er C&riam 1(!( FAC"S> ,#e com lainants 0 etitioners1 acc&sed a certain )ineda of estafa. ,#e res ondent Attorney. 7ecena %as t#e rivate rosec&tor of t#e said

DD

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
case. :it#o&t t#e kno%ledge and consent of com lainants$ t#e res ondent IsettledI t#e estafa case amicably for )2$000.00. 3e informed com lainants of t#e amicable IsettlementI and of t#e )C00.00 advance ayment #e received only after etitioner ;arciso 'elendre6 #ad confronted #im abo&t t#ese matters. And res ondent never t&rned over to com lainants t#e )C00.00. ISSUE> :2; a la%yer can enter into an amicable settlement %it# t#e ot#er arty %it#o&t t#e kno%ledge and consent of #is client. !ULING> ;2. 4es ondent$ as a la%yer$ is res&med to be a%are of t#e r&le t#at la%yers cannot I%it#o&t s ecial a&t#ority$ com romise t#eir clientsK litigation or receive anyt#ing in disc#arge of a clientKs claim$ b&t t#e f&ll amo&nt in cas#.. 4es ondentKs fail&re to t&rn over to com lainants t#e amo&nt given by acc&sed )ineda as artial IsettlementI of t#e estafa case &nderscores #is lack of #onesty and candor in dealing %it# #is clients. P1i-. A-uminum ). FASGI (A//Y) +acts. +A-5/ 9nter rises /ncor orated 0I+A-5/I1$ an American Cor oration entered into an agreement %#erein )A:/ +ratelli )edrini -are66o -.).A. 0I+)-I1$ an /talian cor oration and %o&d man&fact&re and deliver !$C(D %#eels to t#em for &rc#ase$ im ortation and distrib&tors#i . +A-5/ fo&nd t#e s#i ment to be defective and %as not in com liance %it# reG&irements. +A-5/ so&g#t for a rescission of t#e distrib&tors#i agreement and for ref&nd of ayments in t#e 8- Co&rts. ,#ey %on b&t )A:/ failed to o en =etters of Credit in favor of +A-5/ allegedly d&e to Central Bank IinG&iries and restrictions$I rom ting +A-5/ to &rs&e its com laint for damages against )A:/ before t#e California district co&rt. /n t#e interim$ t#e arties$ reali6ing t#e rotracted rocess of litigation$ resolved to enter into anot#er arrangement$ t#is time entitled I-& lemental -ettlement Agreement$I on 2" ;ovember 1(!0. ,#is %as entered into by t#e American la%yer for )A:/. Basically$ )A:/ %o&ld ref&nd and +A-5/ %o&ld ret&rn t#e s#i ments. +A-5/ ret&rned 2 s#i ments all t#e %#ile %aiting for =Cs from )A:/ b&t to no avail. +A-5/ so&g#t to enforce t#e j&dgement in t#e )#ili ine Co&rts in 4,C 'akati. )A:/ contends t#at t#e -& lemental -ettlement Agreement %as entered into by Attorney. 4eady %it#o&t a&t#ority and t#erefore is not enforceable. Merily$ in t#is j&risdiction$ it is clear t#at an attorney cannot$ %it#o&t a clientKs a&t#ori6ation$ settle t#e action or s&bject matter of t#e litigation even %#en #e #onestly believes t#at s&c# a settlement %ill best serve #is clientKs interest. /ss&e. :o; t#e --Agreement %as validly entered into by Attorney. 4eady. 3eld. >es. CA affirmed against )A:/ /n t#e instant case$ t#e s& lemental settlement agreement %as signed by t#e arties$ incl&ding 'r. ,#omas 4eady$ on 0" 2ctober 1(!0. ,#e agreement %as lodged in t#e California case on 2" ;ovember 1(!0 or t%o 021 days after t#e re?trial conference #eld on 2D ;ovember 1(!0. /f 'r. 4eady %as indeed not a&t#ori6ed by )A:/ to enter into t#e s& lemental settlement agreement$ )A:/ co&ld #ave fort#%it# signified to +A-5/ a disclaimer of t#e settlement. /nstead$ more t#an a year after t#e exec&tion of t#e s& lemental settlement agreement$ artic&larly on 0( 2ctober 1(!1$ )A:/ )resident 4omeo -. 4ojas sent a comm&nication to 9lena B&#ol6er of +A-5/ t#at failed to mention 'r. 4eadyKs s& osed lack of a&t#ority. 2n t#e contrary$ t#e letter confirmed t#e terms of t#e agreement %#en 'r. 4ojas so&g#t forbearance for t#e im ending delay in t#e o ening of t#e first letter of credit &nder t#e sc#ed&le sti &lated in t#e agreement. It i an a**e.ted ru-e t1at ?1en a *-ient, u.on 8e*omin4 a?are o' t1e *om.romi e and t1e =ud4ment t1ereon, 'aito .rom.t-7 re.udiate t1e a*tion o' 1i attorne7, 1e ?i-- not a'ter?ard 8e 1eard to *om.-ain a8out it. ;or co&ld )A:/ claim any rej&dice by t#e settlement. )A:/ %as s ared from ossibly aying +A-5/ s&bstantial amo&nts of damages and inc&rring #eavy litigation ex enses normally generated in a f&ll?blo%n trial. )A:/$ &nder t#e agreement %as afforded time to reimb&rse +A-5/ t#e rice it #ad aid for t#e defective %#eels. )A:/$ s#o&ld not$ after its o ort&nity to enjoy t#e benefits of t#e agreement$ be allo%ed to later diso%n t#e arrangement %#en t#e terms t#ereof &ltimately %o&ld rove to o erate against its #o ef&l ex ectations. Additional iss&e. )A:/ assailed not only 'r. 4eadyKs a&t#ority to sign on its be#alf t#e -& lemental -ettlement Agreement b&t deno&nced like%ise #is a&t#ority to enter into a sti &lation for j&dgment before t#e California co&rt on 0" A&g&st 1(!2 on t#e gro&nd t#at it #ad by t#en already terminated t#e formerKs services. +or #is art$ 'r. 4eady admitted t#at %#ile #e did receive a reG&est from 'an&el -ingson of )A:/ to %it#dra% from t#e motion

DC

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
of j&dgment$ t#e reG&est &nfort&nately came too late. /n an ex lanatory telex$ 'r. 4eady told 'r. -ingson t#at &nder American *&dicial )roced&res %#en a motion for j&dgment #ad already been filed a co&nsel %o&ld not be ermitted to %it#dra% &nilaterally %it#o&t a co&rt order. +rom t#e time t#e sti &lation for j&dgment %as entered into on 2" A ril 1(!2 &ntil t#e certificate of finality of j&dgment %as iss&ed by t#e California co&rt on 0A -e tember 1(!2$ no notification %as iss&ed by )A:/ to +A-5/ regarding its termination of 'r. 4eadyKs services. /f )A:/ %ere indeed #ood%inked by 'r. 4eady %#o &r ortedly acted in coll&sion %it# +A-5/$ it s#o&ld #ave a tly raised t#e iss&e before t#e for&m %#ic# iss&ed t#e j&dgment in line %it# t#e rinci le of international comity t#at a co&rt of anot#er j&risdiction s#o&ld refrain$ as a matter of ro riety and fairness$ from so ass&ming t#e o%er of assing j&dgment on t#e correctness of t#e a lication of la% and t#e eval&ation of t#e facts of t#e j&dgment iss&ed by anot#er trib&nal. Lim Pin ) . Liao "an (EA!LA) *&ly 20$ 1(!2 5&tierre6$ *r.$ *. +acts. - s =iao ,an and ,an C#o 3&a o%ned a certain real ro erty in Caloocan$ %#ic# it leased to =im )in for )# 1C00 er mont#. 7&e to =im )inFs ref&sal to ay Ck mont#ly rental$ t#e - s filed an &nla%f&l detainer case against =im )in. After several ost onements 0-e t 1$ -e t 1D$ -e t 2A1$ t#e arties$ in t#eir 2ct 1( #earing$ & on t#e initiative of t#e Co&rt a G&o$ a roved t#e Com romise Agreement entered into by t#e arties. =im )in %as not resent t#at time$ b&t s#e %as re resented by #er son$ 5eorge 3&ng$ %#o al%ays accom anied #er in revio&s #earings. 2n t#e ot#er #and$ =iao ,an and #er co&nsel %ere resent d&ring t#e said #earing and agreed %it# t#e terms of t#e Com romise Agreement$ %#ic# rovided t#at t#e mont#ly rental s#all increase by )C00 a mont#$ &ntil it reac#es )Ck. 3o%ever$ =im )in %as not agreeable to t#e Agreement. 3ence$ s#e instit&ted anot#er action$ asking t#at t#e Agreement be declared n&ll and void$ contending t#at #er son does not #ave t#e o%er to re resent #er$ considering t#e lack of %ritten o%er?of?attorney. /--89. :2; 5eorge 3&ng is t#e agent of =im )in. 39=7. >9-. ,#e reG&irement of s ecial o%er of attorney in Art 1!A! 0%it# regard to entering into com romise agreements$ etc for agents1 and -ec 2@$ 4&le 1@! 0%it# regard to com romising t#e clientFs litigation1 does not refer to t#e form$ b&t merely refer to t#e nat&re of a&t#ori6ation. ,#e reG&irements are met if t#ere is a clear mandate from t#e rinci al s ecifically a&t#ori6ing t#e erformance of t#e actE s&c# a mandate may be eit#er oral or %ritten$ t#e one vital t#ing being t#at it s#all be ex ress and d&ly establis#ed by evidence. ,#e records s#o% t#at *&dge Cancio took t#e necessary reca&tions in allo%ing 3&ng to enter into t#e Agreement %it# =iao ,an. 'oreover$ t#e fact t#at$ on revio&s #earings$ =iao co&ld not decide anyt#ing %it#o&t first cons&lting #er son clearly s#o%s t#at #e #ad f&ll a&t#ority to do so. 9ven ass&ming t#at t#e 3&ng %as not an a&t#ori6ed agent$ t#e contract$ being merely &nenforceable$ %as ratified by t#e act of filign t#e 9x?)arte 'otion to :it#dra% 7e osits$ alleging in #er etition t#at t#ere is anot#er case ending bet%een t#e same arties to %#ic# t#e arties #ave agreed to enter into a com romise agreement. San 6uan Stru*tura- and Stee- ) CA (6ANCES) +acts. -an *&an -tr&ct&ral and -teel +abricators /nc. entered into an agreement %it# 'otoric# -ales Cor oration for t#e transfer of t#e latterFs arcel of land to t#e former. ;enita 5r&enberg$ 'otoric#Fs treas&rer$ %as t#e one %#o entered t#e agreement for 'otoric#. -#e %as$ #o%ever$ not a&t#ori6ed by t#e board of directors. ,#ere is also no evidence t#at s#e re resented t#at s#e %as a&t#ori6ed. -an *&an -tr&ct&ral and -teel made a do%n ayment of )100$000. 3o%ever$ t#e transfer did not &s# t#ro&g# des ite re eated demands made by -an *&an -tr&ct&ral and -teel. 4&ling. 4,C O dismissed. CA O dismissed. ;enita to ref&nd t#e do%n ayment of 100$000 given by -an *&an -tr&ct&ral and -teel. /ss&e. :2; sale is valid Y;2Z 39=7. 'otoric# cannot be bo&nd by t#e contract beca&se it never a&t#ori6ed t#e sale. ,#e general rinci les of agency govern t#e relation bet%een t#e cor oration and its officers or agents$ s&bject to t#e article of incor oration$ byla%s$ or relevant rovisions of la%. ConseG&ently$ -elling is foreign to a cor orate treas&rerFs f&nction. ;eit#er is real estate sale s#o%n to be a normal b&siness activity of 'otoric# since itFs rimary &r ose is marketing$ distrib&tion$ ex ort and im ort in relation to a general merc#andising b&siness. 'oreover$ Art 1!AD states t#at a sale of a iece of land t#ro&g# an agent m&st be in %riting. ;enita %as not a&t#ori6ed. ;eit#er is t#ere any roof t#at 'otoric# ratified$ ex ressly or im liedly$ t#e contract.

D"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
!ura- /an: o' Ca-oo*an ). CA (ALAIN) A ril 21$ 1(!1 7e Catro$ *.. FAC"S> 'axima Castro$ a A0 year?old lady %#o can not read and %rite t#e 9nglis# lang&age since s#e only finis#ed 2nd grade$ needed money in t#e amo&nt of )@$000.00 to invest in t#e b&siness of s o&ses Malencia. Castro$ accom anied by s o&ses Malencia$ %ent to t#e 4&ral Bank of Caloocan to a ly for an ind&strial loan. -everino Malencia arranged everyt#ing abo&t t#e loan and also s& lied t#e ersonal data reG&ired for CastroFs a lication. +e% days later$ %#en t#e loan %as a roved$ Castro$ again accom anied by s o&ses Malencia$ signed a romissory note corres onding to #er loan in favor of t#e bank. 2n t#e same day$ Malencia s o&ses also obtained from t#e bank an eG&al amo&nt of )@$000.00. ,#ey signed a romissory note corres onding to t#eir loan in favor of t#e bank and #ad Castro affixed t#ereon #er signat&re as co?maker. ,#e t%o loans %ere also sec&red by a real?estate mortgage on CastroFs #o&se and lot. 8nable to satisfy t#e obligation covering t#e t%o romissory notes$ a notice of s#eriffFs sale on #er ro erty %as addressed to Castro. )roblems and iss&es started to come?o&t. Castro learned for t#e first time t#at t#e mortgage contract %as for )"$000.00 and not only )@$000.00 O t#e amo&nt s#e loaned. /t %as also #er first time to reali6e t#at s#e %as made to sign as co?maker of t#e romissory note and claimed t#at t#is %as done %it#o&t #er being consent. 9vent&ally$ #er ro erty %as s&ccessf&lly sold by t#e s#eriff. Castro filed a s&it. ,rial co&rt$ affirmed by CA$ declared t#e romissory note making Castro as co? maked invalid beca&se t#is %as obtained by fra&d er etrated on #er by t#e Malencias %#o #as ab&sed #er confidence$ taking advantage of #er old age and ignorance of #er financial need. ,#e decision relieved Castro of any liability to t#e romissory note 0 artially1 and t#e mortgage contract %as deemed valid & to t#e amo&nt of )@$000.00 only 0#er ersonal loan to t#e bank1. /t %as also declared t#at t#e 4&ral Bank ret&rn to t#e #ig#est bidder t#e &rc#ase rice it aid for t#e mortgaged ro erty at t#e &blic a&ction. ISSUE> 0for o&r &r oses1 :#o bet%een Castro and t#e bank s#o&ld s&ffer t#e conseG&ences of t#e fra&d er etrated by t#e Malencias. ,EL&> ,#e bank %as as m&c# g&ilty$ as Castro %as$ of negligence in giving consent to t#e contracts. !A"I(> ,#e Bank arg&e t#at CastroFs act of #olding t#e Malencias as #er agent led t#e bank to believe t#at t#ey %ere a&t#ori6ed to s eak and bind #er. -#e cannot no% be ermitted to deny t#e a&t#ority of t#e Malencias to act as #er agent. ,#e a&t#ority of t#e Malencias %as only to follo%? & CastroFs loan a lication %it# t#e bank. ,#ey %ere not a&t#ori6ed to borro% for #er. ,#is is a arent from t#e fact t#at Castro %ent to t#e bank to sign t#e romissory note for #er loan of )@$000.00. if #er act #ad been &nderstood by t#e Bank to be a grant of an a&t#ority to t#e Malencias to borro% in #er be#alf$ it s#o&ld #ave reG&ired a s ecial o%er of attorney exec&ted by Castro in t#eir favor. -ince t#e bank did not$ :e can rig#tly ass&me t#at it did not entertain t#e notion$ t#at t#e Malencia s o&ses %ere in any manner acting as an agent of Castro. ,#e bank s#o&ld #ave exercised d&e care and r&dence by making ro er inG&iry if CastroFs consent to t#e mortgage %as %it#o&t taint or defect. I. Arti*-e #$C9, #$$0

Art. 1!A(. A s ecial o%er to sell excl&des t#e o%er to mortgageE and a s ecial o%er to mortgage does not incl&de t#e o%er to sell. Art. 1!!0. A s ecial o%er to com romise does not a&t#ori6e s&bmission to arbitration. #. *a e Nationa- /an: ) "an (n4 S5e (GEN) -e t. 2$ 1(2( *o#ns$ *. FAC"S> ,an 2ng -6e vested ,an B&co$ attorney?in?fact$ t#e o%er for me and in name to sign$ seal and exec&te$ and as my act deed$ deliver any lease$ any ot#er deed conveying 0of1 any real or ersonal ro erty. #er my and for

,an B&co loaned )@00$000 from t#e ;ational Bank. 3e t#en exec&ted a romissory note and a real estate mortgage over a ro erty in /loilo o%ned by t#e defendant to sec&re t#e loan. :#en no art of t#e defendant #as been aid$ t#e Bank filed a com laint and rayed t#at t#e ro erty be foreclosed and t#at t#e roceeds be a lied to t#e satisfaction of t#e debt. ,#e lo%er co&rt rendered j&dgment in favor of t#e Bank. 8 on a eal$ t#e defendant alleged t#at ,an

DA

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
B&co #ad no a&t#ority to borro% money and mortgage #er ro erties. ISSUE> :2; ,an B&co #ad t#e a&t#ority to borro% money and exec&te t#e romissory note and mortgage defendantFs real ro erty ,EL&> ;2. 8nder t#e American *&ris r&dence. 1. Cyclo edia of =a% and )roced&re. ? t#at t#e a&t#ority to borro% money$ conferred on an agent$ m&st be created by ex ress terms or necessarily im lied from t#e nat&re of t#e agency$ for a&t#ority to borro% money is one of t#e most dangero&s o%ers a rinci al can confer & on an agent 2. 3a%x#&rst v 4at#geb. ? ,#e %ords Tsell and transferF are of no broader signification t#at t#e %ords Tsell and conveyF &sed %it# reference to a conveyance of real estateE and t#e latter$ em loyed as t#e o erative %ords in a o%er to convey land$ do not carry a&t#ority to mortgage or ot#er%ise dis ose of t#e ro erty. @. Cam bell v +oster 3ome Association. ? A o%er to mortgage land is not incl&ded in a o%er of attorney to sell and convey$ &nco& led %it# any interest in t#e land or t#e f&nd. D. 5olinsky v Allison ? A o%er of attoney$ like any ot#er instr&ment$ is to be constr&ed according to t#e nat&ral im ort of its lang&ageE and t#e a&t#ority %#ic# t#e rinci al #as conferred & on #is agent is not to be extended by im lication beyond t#e nat&ral and ordinary significance of t#e terms in %#ic# t#at a&t#ority #as been given. ;o a&t#ority of any co&rt #as been cited and none %ill ever be fo&nd #olding t#at a o%er to sign$ seal and exec&te$ and as my act and deed$ deliver$ any lease$ any ot#er deed for conveying 0of1 any real or ersonal ro erty or any similar lang&age$ standing alone and %it#in itself$ carries %it# it or im lies t#e o%er to borro% money or to exec&te a real mortgage to sec&re t#e ayment of a debt. Appeal #ranted. Cecision reversed and set aside. of the lower court ;egros$ consisting in lots ;os. "1 and 20A of t#e cadastral s&rvey of Bacolod$ 2ccidental ;egros$ toget#er %it# t#e im rovement t#ereon. 2n 7ecember 22$ 1(20$ Am aro A. 5arr&c#o exec&ted a doc&ment %#ereby s#e conferred & on #er brot#er 'a&ro A 5arr&c#o a s ecial o%er of attorney s&fficiently broad in sco e to enable #im to sell$ alienate$ mortgage or ot#er%ise enc&mber$ in t#e manner and form #e mig#t deem convenient$ all #er real estate sit&ated in t#e m&nici alities of '&rcia and Bago$ 2ccidental ;egros. ;ot#ing in t#e aforesaid o%ers of attorney ex ressly a&t#ori6ed 'a&ro A. 5arr&c#o to contract any loan nor to constit&te a mortgage on t#e ro erties belonging to t#e res ective rinci als$ to sec&re #is obligations. -&bseG&ently$ 'a&ro A. 5arr&c#o exec&ted in t#e favor of t#e )#ili ine ;ational bank several mortgages on Ag&deloFs ro erties to sec&re t#e ayment of credits$ loans$ commercial overdrafts$ etc.$ toget#er %it# interest t#ereon$ %#ic# #e mig#t obtain from t#e bank$ iss&ing t#e corres onding romissory notes to t#at effect. ,#e mortgage deeds$ as %ell as t#e corres onding romissory notes$ %ere exec&ted in 'a&ro A. 5arr&c#oKs o%n name and signed by #im in #is ersonal ca acity$ a&t#ori6ing t#e mortgage creditor$ t#e )#ili ine ;ational Bank$ to take ossession of t#e mortgaged ro erties$ by means of force if necessary$ in case #e failed to com ly %it# any of t#e conditions sti &lated t#erein /ss&e. :#et#er or not 5arr&c#o acted %it#in t#e a&t#ority given to #im in obtaining t#e mortgages 3eld. ;2. A romissory note and t%o mortgages exec&ted by t#e agent for and on be#alf of #is rinci al$ in accordance %it# a o%er of attorney exec&ted by t#e rinci al in favor of t#e agent$ are valid$ and as rovided by article 1A2A of contracted by t#e agentE b&t a mortgage on real ro erty of t#e rinci al not made and signed in t#e name of t#e rinci al is not valid as to t#e rinci al. ,#e records do not s#o% t#at t#e loan obtained by 'a&ro A. 5arr&c#o$ evidenced by t#e romissory note$ %as for #is rinci al )a6 Ag&delo y 5on6aga. ,#e s ecial o%er of attorney$ does not a&t#ori6e 'a&ro A. 5arr&c#o to constit&te a mortgage on t#e real estate of #is rinci al to sec&re #is ersonal obligations. ,#erefore$ in doing so by virt&e of t#e doc&ment$ #e exceeded t#e sco e if #is a&t#ority and #is rinci al is not liable for #is acts PN/ ). Sta. 2aria, u.ra

PN/ ). Pa5 A4ude-o 7 Gon5a4a, et a-. (2AI) Millareal$ *. +acts. 2n ;ovember ($ 1(20$ )a6 Ag&delo y 5on6aga exec&ted in favor of #er ne #e%$ 'a&ro A. 5arr&c#o$ a doc&ment conferring & on #im a s ecial o%er of attorney s&fficiently broad in sco e to enable #im to sell$ alienate and mortgage in t#e manner and form #e mig#t deem convenient$ all #er real estate sit&ated in t#e m&nici alities of '&rcia and Bacolod$ 2ccidental

D!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
!odri4ue5 ). Pamintuan + &e 6e u (!(G) /i*o- Sa)in4 ). CA ("(FF) of )D2$D(0.(C$ it filed claims for ayments on t#e said fidelity g&arantee bond b&t Ser P Co. denied and ref&sed indemnification and ayment. ,o enforce its claims$ Bay Mie% instit&ted its com laint at t#e ,C Ser P Co. j&stified its denial of t#e claims of laintiff?a ellant on vario&s reasons$ s&c# as non?com liance %it# t#e conditions sti &lated in t#e ins&rance olicyE non? resentation of evidence regarding t#e vario&s c#arges of dis#onesty and misre resentation against ,omas 9. Abla6a and non? rod&ction of t#e doc&ments to rove t#e alleged loss. Ser P Co. like%ise averred t#at it %as merely an agent and? as s&c# it %as not liable &nder t#e olicy. 05&ys t#is is roced&re so itFs sort of com licated if %e are not t#ere yet1 Ser filed a reG&est for admission t#at it %as )#oenix Ass&rance t#at act&ally iss&ed and rene%ed t#e olicy$ and later denied t#e claim. :#en Bay Mie% 'ai-ed to ma:e an7 an ?er to t1e reIue t 'or admi ion %it#in t#e eriod rescribed by t#e r&les$ Ser P Co. filed a 2otion to &i mi on A''irmati)e &e'en e$ dated *&ly "$ 1(""$ insisting t#at since &nder -ec. 2$ 4&le 2" of t#e 4&les of Co&rt$ .-ainti''F a..e--ant ?a deemed to 1a)e im.-ied-7 admitted ea*1 o' t1e matter enumerated in t1e reIue t 'or admi ion, it 'o--o?ed t1at t1e .ro.er .art7 in intere t a4ain t ?1om .-ainti''Fa..e--ant mi41t 1a)e a *-aim ?a t1e .rin*i.aP1oeni0 A uran*e Co. (P1oeni0) and not t1e a4ent Ker + Co. Bay Mie% filed an o osition arg&ing t#at t#e ro er remedy$ &nder t#e circ&mstances %as not to dismiss t#e com laint b&t to amend it in order to bring t#e necessary or indis ensable arties to t#e s&it. Ser P Co. filed a re ly to t#e o osition reiterating its stand t#at since it merely acted as an agent$ t#e case s#o&ld be dismissed and laintiff?a ellant s#o&ld file t#e necessary action against t#e rinci al )#oenix. )laintiff. Bay Mie% filed a 'otion for =eave to Admit Amended Com laint$ attac#ing co y of t#e com laint$ as amended$ t#is time im leading )#oenix as arty defendant. 2n A&g&st 1"$ 1(""$ Ser filed t#eir joint ans%er to t#e amended com laint. Again$ Ser P Co.$ =td.$ arg&ed t#at it %as merely an agent and t#erefore not liable &nder t#e olicy. 2n t#e ot#er #and$ )#oenix$ averred t#at &nder Condition ! of t#e ins&rance olicy$ laintiff? a ellant %as deemed to #ave abandoned its claim in vie% of t#e fact t#at it did not ask for an arbitration of its claim %it#in t%elve 0121 mont#s from *&ne 22$ 1("C t#e date of recei t of t#e denial of t#e claim.

6.

Arti*-e #$$#, #$$2

Art. 1!!1. ,#e agent m&st act %it#in t#e sco e of #is a&t#ority. 3e may do s&c# acts as may be cond&cive to t#e accom lis#ment of t#e &r ose of t#e agency. Art. 1!!2. ,#e limits of t#e agentKs a&t#ority s#all not be considered exceeded s#o&ld it #ave been erformed in a manner more advantageo&s to t#e rinci al t#an t#at s ecified by #im. #. di tin4ui 1 8et?een .o?er 2. :ind o' aut1orit7 @. *a e "an "ion4 "e*: ). SEC (!EG) AvanceBa 1(@( FAC"S> ,an ,iong 5ong &rc#ased and sold s#ares of stock t#ro&g# res ondent C&a 2# P Co. as #is broker. /t %as alleged t#at t#e res ondent &rc#ased s#ares of stock for )@$"D(.!" and sold ot#ers for )2$@!C$ %it#o&t t#e consent or a&t#ority of t#e etitioner ISSUE> :2; transactions effected by t#e res ondent are n&ll and void %it# res ect to t#e etitioner beca&se t#ey %ere not consented or a&t#ori6ed by t#e latter. !ULING> ;2. ,#e -ec&rities and 9xc#ange Commission$ after going into evidence$ reac#ed t#e concl&sion t#at t#e etitioner failed to establis# #is contention. ,#e a eal from t#e resol&tion of t#e Commission is based & on a &re G&estion of fact$ and t#e fact&al findings of t#e commission is final &nder section @C of Common%ealt# Act ;o. !@. /a7 3ie? ,ote- ). Ker + Co., and P1onei0 A uran*e Co. Ltd. (A//Y) +acts. Bay Mie% 3otel sec&red a fidelity g&arantee bond from Ser P Co.$ =td.$ for its acco&ntable em loyees against acts of fra&d and dis#onesty %#ose rinci al is )#oenix Ass&rance. 2ne of t#e 99-$ ,omas 9. Abla6a$ %#ile acting in #is ca acity as cas#ier$ %as discovered by laintiff?a ellant to #ave #ad a cas# s#ortage and &nremitted collections in t#e total amo&nt aut1orit7 and

/ss&e. :o; t#e ,C %as rig#t to dismiss t#e case against bot# Ser P Co.$ and )#oenix Ass&rance

D(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
3eld. 7ismissed against Ser P Co. 4emanded as to )#oenix Ass&rance Admission is in t#e nat&re of evidence and its legal effects %ere already art of t#e records of t#e case and t#erefore co&ld be availed of by any arty even by one s&bseG&ently im leaded. ,#e amendment of t#e com laint er se cannot set aside t#e legal effects of t#e reG&est for admission since its materiality #as not been affected by t#e amendment. /f a fact is admitted to be tr&e at any stage of t#e roceedings$ it is not stricken o&t t#ro&g# t#e amendment of t#e com laint. ,o allo% a arty to alter t#e legal effects of t#e reG&est for admission by t#e mere amendment of a leading %o&ld constit&te a dangero&s and &ndesirable recedent. ,#e legal effects of laintiff? a ellantKs fail&re to ans%er t#e reG&est for admission co&ld and s#o&ld #ave been corrected belo% by its filing a motion to be relieved of t#e conseG&ences of t#e im lied admission %it# res ect to res ondent )#oenix. -ince an agent may do s&c# acts as may be cond&cive to t#e accom lis#ment of t#e &r ose of t#e agency$ admissions sec&red by t#e agent %it#in t#e sco e of t#e agency o&g#t to favor t#e rinci al. ,#is #as to be t#e r&le$ for t#e act or declarations of an agent of t#e arty %it#in t#e sco e of t#e agency and d&ring its existence are considered and treated in t&rn as t#e declarations$ acts and re resentations of #is rinci al and may be given in evidence against s&c# arty. B&t t#e motion for s&mmary j&dgment %as filed after t#e com laint #ad been amended and ans%er t#ereto #ad been filed. ,#e iss&es$ t#erefore$ %it# res ect to )#oenix #ad already been like%ise joined. 'oreover$ a reading of t#e said motion for s&mmary j&dgment$ more artic&larly t#e rayer t#ereof$ s#o%s t#at )#oenix did join Ser P Co. in moving for t#e dismissal of t#e case and rayed It#at t#e resent action be dismissed as against Ser P Co.$ =td.$ beca&se being &rely and sim ly t#e agent of t#e ins&rer$ it is not liable &nder t#e olicy and as against t#e )#oenix Ass&rance Co.$ =td. beca&se by failing to seek an arbitration %it#in t%elve mont#s from t#e date of its recei t of t#e denial of its claim on *&ne 22$ 1("C$ laintiff Bay Mie% 3otel$ /nc.$ is deemed &nder condition ! of $$ t#e olicy$ to #ave abandoned its claim against said defendant #oenix Ass&rance Co.$ =td.I B&t &nder Condition !$ arbitration is only as to amo&nt of t#e claim so t#e Co&rt #eld t#at t#e action may roceed against )#oenix. As to a ellee Ser P Co.$ =td.$ #o%ever$ t#ere a ears to be no serio&s contradiction as to t#e fact t#at it merely acted as t#e agent of its rinci al$ )#oenix. Considering t#at t#ere %as f&ll disclos&re of s&c# agency since t#e ins&rance olicy %as act&ally iss&ed by )#oenix$ :e find no error in t#e dismissal of t#e case against said defendant Ser P Co.$ =td. E .eran5a ) . Catindin4 (EA!LA) 'arc# @0$ 1(1D Carson$ *. +acts. ,#e land s&bject of t#is litigation %as originally t#e o%ner and ossessor of t#e land. :#en #e died$ t#is land %as given to #is da&g#ter$ Menancia Catmon$ %#o toget#er %it# #er #&sband$ 4amon Catinding and D c#ildren 0Andrea$ et al1 lived in t#e ro erty for many years. :#en Menancia died$ 4amon married -abina B&tron and came to live in t#e ro erty for several years. /n 1!(!$ t#ey sold t#e land to Balta6ar B&llo %#o %as b&ying t#e land in favor of #is grandson$ +lorentino 9s eran6a. ,o rectify t#e mistakes made in t#e original deed$ t#ey %ent before t#e *&stice of t#e )eace in 1(0D and exec&ted anot#er deed of sale. Beca&se t#ey co&ld not take ossession of t#e said ro erty$ =&is 9s eran6a and Balta6ar B&llo as a oderados 0attorneys?in?fact1 of +lorentino 9s eran6a filed an action to recover a certain iece of land in -&rigao. ,#ey alleged t#at Andrea Catinding %as &nla%f&lly de riving t#em of +lorentinoFs ro erty. ,#ey f&rt#er assert t#at t#e land %as entered & on by 4amon Catinding and -abina B&tron %#ile it %as yet &nclaimed and &nc&ltivated landE t#at it %as first c&ltivated by t#em and t#at t#eir title in t#e land %as by reason of t#is original occ& ancy. ,#e trial co&rt dismissed t#eir com laint on t#e gro&nd t#at t#e evidence resented failed to rove t#e claim of t#e laintiffs. 9ven t#e %itnesses t#ey resented contradicted t#eir claim t#at Catinding and B&tron %ere t#e original occ& ant of t#e ro erty. As a matter of fact$ t#eir %itnesses categorically stated t#at t#e land in G&estion formerly belonged to *&lian Catmon. /--89. :2; t#ey can recover t#e land. 39=7. ;o. ,#e -C agreed %it# t#e concl&sions of fact reac#ed by t#e trial co&rt$ saying t#at t#e laintiffs %ere not even able to rove by a re onderance of evidence t#e claims ventilated in t#e action. ,#e record strongly revealed t#at 4amon only came into ossession of t#e land by reason of #is %ifeFs o%ners#i $ and not t#ro&g# original occ& ancy. 3o%ever$ it modified t#e decision of t#e trial co&rt$ dismissing it$ not based on merits b&t based on roced&ral gro&nds. Accordingly$ t#e case %as not bro&g#t in t#e name of t#e real arty in interest$ b&t only in t#e name of t#e a oderados.

C0

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
An4 ) Fu-ton Fire In uran*e (6ANCES) +acts. -ally Ang ins&red #er ) P - 7e artment -tore to +&lton +ire /ns&rance. 3er store consisted mainly of dry goods. -oon after$ t#e goods %ere destroyed by fire. ,#e laintiffs exec&ted a claim form. ,#eir claim %as #o%ever denied s&bseG&ent to t#e filing of c#arge for arson against )a&lo Ang. ,#ere received t#e denial of t#e claim on A ril 1($ 1(C". 'r. Ang %as$ #o%ever$ acG&itted of t#e crime. ,#e s o&ses Ang$ t#en bro&g#t an action against t#e )aramo&nt -&rety P /ns&rance Com any on 'ay 11$ 1(C". /t %as dismissed %it#o&t rej&dice on -e tember @$ 1(CA. ,#ey t#en bro&g#t an action against +&lton +ire /ns&rance on 'ay C$ 1(C!. +&lton +ire /ns&rance alleges t#at since aragra # 1@ of t#e olicy states t#at if t#e claim is made and rejected b&t no action is commenced %it#in 12 mont#s after s&c# rejection$ all benefits &nder t#e olicy %o&ld be forfeited$ t#e s o&ses Ang can no longer claim t#e benefits of t#e olicy. 4&ling. C+/ O )laintiffs committed a roced&ral mistake in first s&ing t#e agent instead of rinci al b&t t#e mistake being merely roced&ral$ decision %as rendered in favor of laintiffs. /ss&e. :2; t#e action s#o&ld be dismissed Y>9-Z 39=7. ,#e condition contained in t#e ins&rance olicy is not merely a roced&ral reG&irement. ,#e condition is an im ortant matter$ essential to a rom t settlement of claims against ins&rance com anies$ as it demands t#at ins&rance s&its be bro&g#t by t#e ins&red %#ile t#e evidence as to t#e origin and ca&se of destr&ction #ave not yet disa eared. /t is in t#e nat&re of a condition recedent to t#e liability of t#e ins&rer$ or in ot#er terms$ a resol&tory ca&se$ t#e &r ose of %#ic# is to terminate all liabilities in case t#e action is not filed by t#e ins&red %it#in t#e eriod sti &lated. ,#e bringing of t#e action against )aramo&nt -&rety cannot #ave legal effect exce t t#at of notifying t#e agent of t#e claim. 7is osition. *&dgment set aside. Case dismissed. K. Arti*-e #$$@ #. di *-o ed ). undi *-o ed .artia--7 di *-o ed .rin*i.a2. 4enera ru-eD e0*e.tion @. *a e .rin*i.a-,

Commer*ia- /an: ). !e.u8-i* Armored Car Ser)i*e Cor.. a- (2A!K) FAC"S 7efendants %ere given credit accommodation by Commercial Bank in t#e form of an overdraft line to %#ic# t#ey dre% reg&larly certain amo&nts. 7emands %ere made for t#e ayment of t#e dra%ings b&t defendants #ave failed to ay t#e amo&nts demanded. Commercial Bank t#&s filed com laints against t#em.

7efendants in t#eir ans%er admit t#e o ening

of t#e credit line in t#eir favor and t#at demands for t#e indebtedness %ere made & on t#em$ 8ut a--e4e a .e*ia- de'en e t#at t#e directors and officers of t#e defendant cor oration deliberately defra&ded and mismanaged t#e said cor oration breac# of tr&st in order to de rive 7amaso )ere6 of #is control and majority interest in t#e defendant cor oration$ as a res&lt of %#ic# fra&d$ mismanagement and breac# of tr&st t#e defendants s&ffered tremendo&s lossesE t#at t#e amo&nts dra%n by defendant cor oration & on t#e credit line %ere received and &sed by t#e former directors and officers and same constit&te art of t#e f&nds of t#e defendant cor oration misa lied and mismanaged by said former officers and directors of said cor oration.

ISSUES :2; t#e obligation of t#e defendants?a ellants to ay for t#e amo&nt d&e &nder t#e overdraft line ceases d&e to t#e misa ro riations on mismanagement of t#e f&nds of t#e cor oration by t#e directors and em loyees t#ereof. ;2. !A"I(NALE ,#e obligation of t#e defendants?a ellants to ay for t#e amo&nt d&e &nder t#e overdraft line is not in any %ay G&alifiedE t#ere is no statement t#at t#e res onsibility of t#e defendants?a ellants for t#e amo&nt taken on overdraft %o&ld cease or be defeated or red&ced & on misa ro riations on mismanagement of t#e f&nds of t#e cor oration by t#e directors and em loyees t#ereof. ,#e s ecial defense is$ t#erefore$ a s#am defense.

Art. 1!!@. /f an agent acts in #is o%n name$ t#e rinci al #as no rig#t of action against t#e ersons %it# %#om t#e agent #as contractedE neit#er #ave s&c# ersons against t#e rinci al. /n s&c# case t#e agent is t#e one directly bo&nd in favor of t#e erson %it# %#om #e #as contracted$ as if t#e transaction %ere #is o%n$ exce t %#en t#e contract involves t#ings belonging to t#e rinci al. ,#e rovisions of t#is article s#all be &nderstood to be %it#o&t rej&dice to t#e actions bet%een t#e rinci al and agent.

C1

Under 4enera- ru-e and .rin*i.-e o' -a? t1e mi mana4ement o' t1e 8u ine o' a

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
.art7 87 1i a4ent doe not re-ie)e aid .art7 'rom t1e re .on i8i-it7 t1at 1e 1ad *ontra*ted to t1ird .er on $ es ecially in t#e case at bar %#ere t#e %ritten agreement contains no limitation to defendants?a ellantsK liability. (rte4a ) /auan4 Farmer Coo.erati)e (GEN) 7ec. 2($ 1(C( 'ontemayor$ *. FAC"S> 2rtega sold and delivered to defendant 2$"D@ kilos of fl&e?c&red Mirginia leaf tobacco at )A$1@".10. ,#e defendant aid 2rtega 2 installments leaving a balance of )@$1@".10. /n s ite of re eated demands made$ t#e defendant #as failed and ref&sed to ay. 2rtega filed an action against t#e defendant to collect ayment. ,#e defendant admitted t#e allegations of t#e com laint b&t set & t#e affirmative defense. ,#at t#e tobacco leaf it bo&g#t %as s#i ed and delivered to and received by t#e ACC+A 0Agric&lt&ral Credit and Coo erative +inancing Administration1$ in accordance %it# an agency contract entered into bet%een ACC+A as rinci al$ and t#e defendant Ba&ang +AC2'A$ as agent$ for t#e &rc#ase of local Mirginia leaf tobaccoE and ,#at final liG&idation #ad not been made bet%een rinci al and agent. -#ortly after filing its ans%er$ defendant filed a I'otion to Bring in ,#ird )arty 7efendant$I attac#ing t#ereto its I,#ird )arty Com laintI against t#e ACC+A raying t#at j&dgment be rendered against it for all s&ms t#at may be adj&dged against defendant in favor of t#e laintiff. ,#e trial co&rt$ finding t#e ACC+A to be a necessary arty in t#e case$ granted t#e motion to bring it as a t#ird? arty defendant. 3o%ever$ it later ordered t#at t#e t#ird? arty com laint be stricken o&t beca&se it %as filed %it#o&t leave of co&rt. ,#e C+/ of =a 8nion ordered t#e defendant to ay 2rtega t#e s&m of )@$1@".10$ %it# legal interest from t#e date of t#e filing of t#e com laint$ l&s costs. ISSUE> :2; t#e defendant acted in be#alf of ACC+A< ,EL&> >9-. Alt#o&g# at t#e time of t#e &rc#ase of t#e tobacco in G&estion$ t#e attention of t#e laintiff %as not called to t#e existence of t#e agency agreement bet%een t#e ACC+A and t#e Ba&ang +AC2'A$ t#ere is reason to believe t#at #e act&ally kne% t#at agency and t#at t#e tobacco leaf %as &rc#ased not on acco&nt of t#e Ba&ang +AC2'A$ b&t act&ally for t#e ACC+A$ %#ic# is t#e agency of t#e 5overnment c#arged %it# t#e &rc#ase of Mirginia leaf tobacco$ in t#e im lementation of t#e olicy of t#e 5overnment to b&y all Mirginia leaf tobacco gro%n locally$ for &r oses of aiding Mirginia tobacco gro%ers and to foster t#e tobacco ind&stry. ,#e +AC2'A 0+armers Coo erative and 'arketing Association1 as its name im lies$ is concerned mainly$ if not excl&sively$ in t#e sale and marketing of t#e agric&lt&ral rod&ce of t#e farmers. /t is not engaged in t#e b&y and sell b&siness for rofit. ,#e )D$000.00 s&m total of t#e t%o installments of )1$@2C.00 and )2$"AC.00 delivered to laintiff on acco&nt of t#e total &rc#ase rice of )A$1@".10 %as act&ally aid by ACC+A itself. Art. 1!!@ is not a licable beca&se t#e agent$ t#e defendant$ did not act in its name$ b&t rat#er acted in be#alf of t#e rinci al$ ACC+A. Appealed decision set aside. PN/ ). A4ude-o, u.ra S7 6u*o ). S7 6u*o (2AI) *an&ary 12$ 1(20 AvanceBa$ *. +acts. /n 1(02$ -antiago -y?j&co %as a ointed by t#e Micente and Ci riane -y?j&co as administrator of t#eir ro erty and t#e former acted as s&c# &ntil *&ne @0$ 1(1"$ %#en #is a&t#ority %as cancelled. ,#e laintiffs are defendantKs fat#er and mot#er %#o allege t#at d&ring #is administration t#e defendant -antiago acG&ired t#e ro erty claimed in t#e com laint in #is ca acity as laintiffsK administrator %it# t#eir money and for t#eir benefit. ,#e trial co&rt ordered -antiago to ret&rn t#e ro erties in G&estion$ %#ic# #e bo&g#t in #is name. /ss&e. :#et#er or not t#e laintiffs #ave a ca&se of action 3eld. >9-. +rom t#e r&le establis#ed in article 1A1A of t#e Civil Code t#at$ ?1en an a4ent a*t in 1i o?n name, t1e .rin*i.a- 1a-- 1a)e no ri41t o' a*tion a4ain t t1e .er on ?it1 ?1om t1e a4ent 1a *ontra*ted, *a e in)o-)in4 t1in4 8e-on4in4 to t1e .rin*i.a- are e0*e.ted. According to t#is exce tion 0%#en t#ings belonging to t#e rinci al are dealt %it#1 the a#ent is bound to the principal althou#h he does not assume the character of such a#ent and appears actin# in his own name 07ecision of t#e -& reme Co&rt of - ain$ 'ay 1$ 1(001. ,#is means t#at in t#e case of t#is exce tion t#e agentKs a arent re resentation yields to t#e rinci alKs tr&e re resentation and t#at$ in reality and in effect$ t#e contract m&st be

C2

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
considered as entered into bet%een t#e rinci al and t#e t#ird ersonE and$ conseG&ently$ if t#e obligations belong to t#e former$ to #im alone m&st also belong t#e rig#ts arising from t#e contract. "1e mone7 ?it1 ?1i*1 t1e -aun*1 ?a 8ou41 1a)in4 *ome 'rom t1e .-ainti'', t1e e0*e.tion e ta8-i 1ed in arti*-e #C#C i a..-i*a8-e to t1e in tant *a e. 7is osition. -& reme Co&rt affirms t#e a ealed decision. All t#e ro erties in G&estion$ exce t t#e casco ;o. 2CDC %#ic# is o%ned by t#e defendant by virt&e of a sale$ m&st be ret&rned to t#e laintiffs$ %#o are t#e o%ners of s&c# ro erties. P1i-. /an: o' Commer*e ). Arue4o (!(G) 01(!11 Fa*t > )BC filed action for s&m of money )@Ck l&s interest &ntil f&lly aid and commission of @L!N for every @0d l&s attorneyKs fees 10N of total amo&nt. Com laint contains 22 ca&ses of action referring to 22 transactions bet%een t#em. -&m re resents cost of rinting of I:orld C&rrent 9ventsI$ a eriodical &blis#ed by Ar&ego. Ar&ego #ad a credit accommodation from )BC. +or every rinter$ t#e rinter$ 9ncal )ress collected cost by dra%ing draft against )BC$ draft being sent later to Ar&ego for acce tance. As added sec&rity$ )BC also reG&ired Ar&ego to exec&te a tr&st recei t in favor of bank. ?',7 filed by Ar&ego. %#en bills of exc#ange %ere resented to #im for acce tance$ t#e amo&nts #ad already been aid by )BC to 9ncal %it#o&t formerKs kno%ledge or consent. ?Ar&egoKs defense. a1 #e signed t#e bills of exc#ange in a re resentative ca acity as )res of )#il. 9d&cation +o&ndation Com any$ &blis#er of :orld C&rrent 9vents and 7ecision =a% *o&rnal. b1 3e signed not as rinci al debtor b&t as accommodation or additional arty. I ue> :2; Arg&egoKs defense is valid< ;2 )#ili ine 9d&cation +o&ndation. 3e is t#erefore ersonally liable for t#e drafts #e acce ted. 2. ?Accommodation arty [ one %#o signed t#e instr&ment as maker$ dra%er$ indorser$ %it#o&t receiving val&e and for &r ose of lending #is name to some ot#er erson. /n lending #is name to accommodated arty$ accommodation arty is in effect a s&rety for latter. 3e lends name to enable accommodated arty to obtain credit ?A dra%ee is rimarily liable. Ar&ego s#o&ld not #ave signed as an acce tor L dra%ee. /n doing so$ #e became rimarily liable for draft. Ni*o-a ). /orma*1e*o ("(FF) Arro7o ). Granada (!EG) *. 'oreland 1(11 FAC"S> +elix 5ranada %as indebted to Blas 5erona$ %it# t#e debt made %#ile bot# %ere still alive. A s&it %as commenced by /gnacio Arroyo as t#e administrator of 5erona of t#e recovery of t#is debt$ and t#at final and amicable settlement %as arranged bet%een #im and defendants. %as not com lied %it# by 'atias 5ranada$ and as a settlement of t#at$ an arrangement %as made bet%een #im and /gnacio Arroyo$ %#ereby 'atias 5ranada exec&ted a mortgage as sec&rity for t#e ayment. 3o%ever$ 5ranada failed to com ly again. /n 1(0A$ *ose '. Arroyo$ son of /gnacio and a la%yer$ and %it# t#e f&ll o%er of attorney from #is fat#er to transact #is affairs$ entered into a settlement %it# 5ranada %#ereby t#e latter %o&ld$ instead of aying money$ %o&ld transfer a iece of land$ %#ic# 5ranada said %as first G&ality land$ good for t#e raising of s&gar cane and rice. 9x erts testified later t#at t#e lands %ere of lo% G&ality. ,rial co&rt fo&nd t#at t#e doc&ments in G&estion %ere exec&ted by means of false and fra&d&lent re resentations of t#e defendants in t#is case and ordered t#eir ann&lment and cancellation. ISSUE> :2; etitioner *ose '. Arroyo #ad an interest in t#e case. !ULING> ;2. *ose '. Arroyo$ as apoderado$ #as absol&tely no interest in t#is litigation. 3e #as absol&tely no rig#t to bring t#e defendant into co&rt or &t #im to t#e ex ense of a litigation. ,#e real and only arty in interest is /gnacio Arroyo. 8nder articles 11D and 122 of t#e Code of Civil )roced&re #e s#o&ld be laintiff. A j&dgment for or against *ose '. Arroyo ersonally or as apoderado in no %ay binds or affects /gnacio.

,e-d> #. Ffirst defense. sec. 20 ;egotiable /nstr&ments =a%. :#ere instr&ment contains or a erson adds #is signat&re %ords indicating #e signs for or on be#alf of a rinci al or in a re resentative ca acity$ #e is not liable on t#e instr&ment if #e %as d&ly a&t#ori6edE b&t t#e mere addition of %ords describing #im as an agent or as filing a re resentative c#aracter$ %it#o&t disclosing #is rinci al$ does not exem t #im from ersonal liability. ?7raft #ere s#o%s t#at no%#ere #as #e disclosed t#at #e %as signing as a re resentative of t#e

C@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
As a necessary res&lt a decision in t#is case is &tterly f&tile. ,#e rendering of s&c# service did not make t#em arties to t#e contracts of sale exec&ted in be#alf of t#e latter. -ince a contract may be violated only by t#e arties t#ereto as against eac# ot#er$ t#e real arties?in?interest$ eit#er as laintiff or defendant$ in an action & on t#at contract m&st$ generally$ eit#er be arties to said contract. An agent$ in #is o%n be#alf$ may bring an action fo&nded on a contract made for #is rinci al$ as an assignee of s&c# contract. )etitioners$ #o%ever$ #ave not s#o%n t#at t#ey are assignees of t#eir rinci als to t#e s&bject contracts. :#ile t#ey alleged t#at t#ey made advances and t#at t#ey s&ffered loss of commissions$ t#ey #ave not establis#ed any agreement granting t#em It#e rig#t to receive ayment and o&t of t#e roceeds to reimb&rse Yt#emselvesZ for advances and commissions before t&rning t#e balance over to t#e rinci alYsZ.I 4estatement. 8nless ot#er%ise agreed$ an agent %#o #as or %#o acG&ires an interest in a contract %#ic# #e makes on be#alf of #is rinci al can$ alt#o&g# not a romisee$ maintain s&c# action t#ereon maintain s&c# action t#ereon as mig#t a transferee #aving a similar interest. /t does not a ear t#at etitioners are beneficiaries of a sti &lation o&r a&tr&i &nder t#e second aragra # of Article 1@11 of t#e Civil Code. /ndeed$ t#ere is no sti &lation in any of t#e 7eeds of Absol&te -ale Iclearly and deliberatelyI conferring a favor to any t#ird erson. ,#at etitioners did not obtain t#eir commissions or reco& t#eir advances beca&se of t#e non? erformance of t#e contract did not entitle t#em to file t#e action belo% against res ondent ;3A. As etitioners are not arties$ #eirs$ assignees$ or beneficiaries of a sti &lation o&r a&tr&i &nder t#e contracts of sale$ t#ey do not$ &nder s&bstantive la%$ ossess t#e rig#t t#ey seek to enforce. ,#erefore$ t#ey are not t#e real arties?in?interest in t#is case. )etitioners not being t#e real arties?in? interest$ any decision rendered #erein %o&ld be ointless since t#e same %o&ld not bind t#e real arties?in? interest. ;o%$ on t#e merits of t#e case ;3A. ,#e cancellation %as based on t#e negation of t#e ca&se arising from t#e reali6ation t#at t#e lands$ %#ic# %ere t#e object of t#e sale$ %ere not s&itable for #o&sing. ,#e ;3A %as j&stified in canceling t#e contract. ,#e reali6ation of t#e mistake as regards t#e G&ality of t#e land res&lted in t#e negation of t#e motiveLca&se t#&s rendering t#e contract inexistent.

U7 + !o0a (A//Y)

). CA, ,on. !o8ert /a-ao, N,A

+acts. :illiam 8y and 4odel 4oxas are agents a&t#ori6ed to sell eig#t arcels of land by t#e o%ners t#ereof. By virt&e of s&c# a&t#ority$ etitioners offered to sell t#e lands$ located in ,&ba$ ,adiangan$ Beng&et to res ondent ;ational 3o&sing A&t#ority 0;3A1 to be &tili6ed and develo ed as a #o&sing roject. ,#e ;3A aid for t#e C arcels b&t after a test %as done$ t#e remaining @ arcels %ere fo&nd to be &ns&itable for #o&sing or any civil str&ct&res. ,#e ;3A cancelled t#e contract and offered )1.22C' to t#e lando%ners. 8y and 4oxas fo&nd a com laint for damages and t#e 4,C said t#e cancellation of t#e contract %as j&stified b&t still a%arded t#e )1.22C' damages. ,#e CA reversed t#e 4,C since t#ere %as Is&fficient j&stifiable basisI in cancelling t#e sale$ Iit sa% no reasonI for t#e a%ard of damages. ,#e CA also noted t#at etitioners %ere mere attorneys?in?fact and$ t#erefore$ not t#e real arties?in?interest in t#e action before t#e trial co&rt. ,#e damages rayed for %ere intended not for t#e benefit of t#eir rinci als b&t to indemnify etitioners for t#e losses t#ey t#emselves allegedly inc&rred as a res&lt of s&c# termination. ,#ese damages consist mainly of I&nearned incomeI and advances. ,#ey bro&g#t t#e action in t#eir o%n name and in t#eir o%n be#alf.

/ss&e. :o; t#e agents #ave a ca&se of action against t#e ;3A s&ing in t#eir o%n name.

3eld. ;o. )etition dismissed. )etitioners are not arties to t#e contract of sale bet%een t#eir rinci als and ;3A. ,#ey are mere agents of t#e o%ners of t#e land s&bject of t#e sale. As agents$ t#ey only render some service or do somet#ing in re resentation or on be#alf of t#eir rinci als.

CD

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
Ass&ming t#at etitioners are arties$ assignees or beneficiaries to t#e contract of sale$ t#ey %o&ld not be entitled to any a%ard of damages. being reverse.I 3ence$ #e can #ave no rig#t of action against t#e b&yer. 'oreover$ A%adFs claim t#at +ilma is not a b&yer in good fait# and #ad kno%ledge of t#e condition &nder %#ic# t#e merc#andise %as entr&sted to C#&a =ioc$ %as not s& orted by evidence. A?ad ). Fi-ma 2er*anti-e (2A!K) D7ar&, promise hindi ito assi#ned sayo dun sa email &o. "orryE FAC"S 9arly in t#e mont# of -e tember$ 1(2D$ t#e laintiff$ doing b&siness in t#e )#ili ine /slands &nder t#e name of 9. A%ad P Co.$ delivered certain merc#andise of t#e invoice val&e of )11$1D0 to C#&a =ioc$ a merc#ant o erating &nder t#e name of 3ang C#&a Co. in 'anila$ said merc#andise to be sold on commission by C#&a =ioc. 4e resenting #imself as being t#e o%ner of t#e merc#andise$ C#&a =ioc sold it to t#e defendant +ilma 'ercantile. ,#e merc#andise so &rc#ased %as delivered to t#e defendant$ %#o immediately offered it for sale. 7. *. A%ad$ in be#alf of 9. A%ad P Co.$ %rote a letter to t#e defendant cor oration advising it t#at$ inasm&c# as t#e merc#andise belonged to 9. A%ad P Co.$ t#e &rc#ase rice s#o&ld be aid to t#em. +ilma in its ans%er stated t#at t#ey received t#e goods from C#&a =ioc #ence ayment is d&e to C#&a =ioc. ,#e com laint in t#e resent action %as filed on ;ovember 2"$ 1(2D$ t#e laintiff demanding ayment of t#e same s&m of )11$1D0 for %#ic# action #ad already been bro&g#t against C#&a =ioc. ,#e defendant$ its ans%er$ set & as s ecial defense t#at it bro&g#t t#e merc#andise in good fait# and %it#o&t any kno%ledge %#et#er of t#e erson from %#om or t#e condition &nder %#ic# t#e said merc#andise #ad been acG&ired by C#&a =ioc or 3ang C#&an Co.E t#at t#e defendant t#erefore #ad acG&ired title to t#e merc#andise &rc#asedE t#at t#e balance of )"$"CA.C2$ no% in t#e #ands of t#e defendant #ad been attac#ed in t#e t%o actions bro&g#t on -e tember 1!$ and 2ctober A$ res ectively$ and garnis#ment served & on t#e defendant$ %#o t#erefore$ #olds t#e money s&bject to t#e orders of t#e co&rt in t#e cases above? mentioned$ b&t %#ic# s&m t#e defendant is able and %illing to ay at any time %#en t#e co&rt decides to %#om t#e money la%f&lly ertains.

A?ad). Fi-ma 2er*anti-e (EA!LA) 7ec 2D$ 1(2" 2strand$ *. +acts. 9. A%ad P Co. delivered to C#&a =ioc 0o erating &nder t#e name of 3ang C#&an Co.1 certain merc#andise in t#e amo&nt of )11$1D0. C#&a =ioc$ re resenting #imself as t#e o%ner of t#e merc#andise sold t#em to +ilma 'ercantile for a total of )12$1CC."0. After ded&cting C#&a =ioc debts to +ilma and to t#e )#il. 'an&fact&ring Co. 0%#ic# +ilma agreed to ay1$ +ilma is still indebted to C#&a =ioc in t#e amo&nt of )"$"CA.C2. ,#ereafter$ 9. A%ad obtained a&t#ori6ation from C#&a =ioc to collect t#e )11$1D0 d&e it. +ilma #o%ever ref&sed to directly ay to 9. A%ad t#e &rc#ase rice. -&bseG&ently$ t#e )#il. ,r&st Com any bro&g#t an action against C#&a =ioc for t#e ayment of )1$0@".@". As a res&lt$ t#e balance d&e from +ilma %as attac#ed in t#at action. ,#is balance %as f&rt#er attac#ed in anot#er action instit&ted by 9. A%ad for t#e ayment of )11$1D0. 9. A%ad t#en filed a se arate action against +ilma$ for t#e ayment of t#e &rc#ase rice. +ilma #o%ever averred t#at it %as a b&yer in good fait#. /t f&rt#er alleged t#at it %as #olding t#e balance of )""CA.C2 0#aving been attac#ed in t%o se arate cases1 s&bject to t#e orders of t#e co&rt. ,#e trial co&rt dismissed t#e com laint on t#e gro&nd t#at t#e laintiff %as only entitled to ayment of t#e s&m of )"$"CA.C2$ b&t %#ic# s&m t#e defendant #ad t#e rig#t to retain s&bject to t#e orders of t#e co&rt in t#e t%o se arate cases. /--89. :2; 9. A%ad can collect from +ilma. 39=7. ;o. According to t#e Co&rt$ t#e la% a licable to t#e case is %ell settled. Article 2D" of t#e Code of Commerce reads as follo%s. I:#en t#e agent transacts b&siness in #is o%n name$ it s#all not be necessary for #im to state %#o is t#e rinci al and #e s#all be directly liable$ as if t#e b&siness %ere for #is o%n acco&nt$ to t#e ersons %it# %#om #e transacts t#e same$ said ersons not #aving any rig#t of action against t#e rinci al$ not t#e latter against t#e former$ t#e liabilities of t#e rinci al and of t#e agent to eac# ot#er al%ays

CC

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
ISSUES :2; A%ad 'ercantile. ;2. can recover from +ilma all t#at %as in #is o%er$ even if t#e condition #as not been f&lfilled in reality. -mit#$ Bell P Co %as able to deliver t#e goods even t#o&g# t#e conditions for delivery %ere not com letely f&lfilled. YNo a#ency concept e pressly discussed in case. 7y #uess why 7r. "otelo was the one ordered to accept and receive the #oods: 3!4 he was notified by "mith Fell of the arrival of the #oods and yet he did not inform 7anila Gil Co. H it is his duty as the mana#er of the company to inform his principal. 354 he was the only one who appealed )ud#ment, intervenor 7anila Gil Co. did notI 7is osition. 'r. -otelo 'atti is sentenced to acce t and receive from laintiff t#e tanks$ ex ellers$ and motors in G&estion. Smit1 /e-- ). Sotto 2atti (2A!K) D7A%JE Ci rin ito assi#ned sayo. Andami mon# #inawa :4 FAC"S /n A&g&st$ 1(1!$ t#e laintiff cor oration and t#e defendant$ 'r. Micente -otelo$ entered into contracts %#ereby t#e former obligated itself to sell$ and t#e latter to &rc#ase from it$ t%o steel tanks$ t%o ex ellers$ and t%o electric motors. As to t#e delivery of %#ic# sti &lation %as made$ co&c#ed in t#ese %ords. IA roximate delivery %it#in ninety days. V ,#is is not g&aranteed.I ,#e tanks arrived at 'anila on A ril 2A$ 1(1($ t#e ex ellers on 2ct 1!$ 1(1!$ and motors on +ebr&ary 2A$ 1(1(. ,#e laintiff cor oration notified 'r. -otelo of t#e arrival of t#e goods b&t 'r. -otelo ref&sed to receive t#em. -mit#$ Bell and Co. bro&g#t s&it against 'r. -otelo. ,#e latterFs defense %as t#at #e made t#e contracts in G&estion as manager of t#e 'anila 2il 4efining and By?)rod&cts Co. 'anila 2il Co. intervened and alleged t#at it %as notified by -mit# Bell of t#e arrival only in 'ay 1(1(. 4&ling. C+/. absolved defendants insofar as t#e tanks and motors %ere concerned b&t ordered t#em to receive t#e ex ellers. -mit# Bell and -otelo 'atti a ealed t#e j&dgment. /ss&e. :2; -otelo 'atti can be ordered to receive and ay for t#e goods Y>9-Z 39=7. ,#e term %#ic# t#e arties attem ted to fix %ere so &ncertain t#at one cannot tell j&st %#et#er t#ose articles co&ld be bro&g#t to 'anila or not. ,#e obligations %ere conditional. /n cases like t#is$ t#e obligor %ill be deemed to #ave s&fficiently erformed #is art of t#e obligation$ if #e #as done ,#e tanks arrived at 'anila on t#e 2At# of A ril$ 1(1(. t#e ex ellers on t#e 2"t# of 2ctober$ 1(1!E and t#e motors on t#e 2At# of +ebr&ary$ 1(1(. ,#e laintiff cor oration notified t#e defendant$ 'r. -otelo$ of t#e arrival of t#ese goods$ b&t 'r. -otelo ref&sed to receive t#em and to ay t#e rices sti &lated. ,#e laintiff defendant. bro&g#t s&it against t#e

4A,/2;A=9 Article 2D" of t#e Code of Commerce reads as follo%s. :#en t#e agent transacts b&siness in #is o%n name$ it s#all not be necessary for #im to state %#o is t#e rinci al and #e s#all be directly liable$ as if t#e b&siness %ere for #is o%n acco&nt$ to t#e ersons %it# %#om #e transacts t#e same$ said ersons not #aving any rig#t of action against t#e rinci al$ nor t1e -atter a4ain t t1e 'ormer$ t#e liabilities of t#e rinci al and of t#e agent to eac# ot#er al%ays being reserved. Smit1 /e-- + Co. ) Sote-o 2atti (6ANCES) +acts. /n A&g&st 1(1!$ -mit#$ Bell P Co and -otelo 'atti entered into contracts %#ereby t#e former obligated itself to sell and deliver 2 steel tanks$ 2 ex ellers and 2 electric motors. ,#e tanks %ere to be delivered %it#in @?D mont#s$ t#e ex ellers -e t 1! or as soon as ossible$ and t#e motors %it#in (0 days 0b&t not g&aranteed1. /n all t#e contracts$ it %as stated t#at t#e seller %as not res onsible for delays ca&sed by fires$ riots on land or on sea$ strikes or ot#er ca&ses kno%n as force maje&re. ;ote also t#at t#e contracts %ere exec&ted at t#e time of t#e %orld %ar.

/n t#eir ans%er$ t#e defendant$ 'r. -otelo$ and

t1e inter)enor, t1e 2ani-a (i- !e'inin4 and /7FProdu*t Co., In*.$ denied t#e laintiffKs allegations as to t#e s#i ment of t#ese goods and t#eir arrival at 'anila$ t#e notification to t#e defendant$ 'r. -otelo$ t#e latterKs ref&sal to receive t#em and ay t#eir rice$ and t#e good condition of t#e ex ellers and t#e motors$ alle#in# as special defense that 7r. "otelo had made the contracts in Auestion as mana#er of the intervenor, the 7anila Gil %efinin# and Fy-*roducts Co., ,nc which fact was &nown to the plaintiff$ and t#at Iit %as only in 'ay$ 1(1($ t#at it notified t#e intervenor t#at said tanks #ad arrived$ t#e motors and t#e ex ellers #aving arrived incom lete and long after t#e date sti &lated.I

C"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
A a *ounter*-aim or etFo'', t1e7 a- o a--e4e t1at, a a *on eIuen*e o' t1e .-ainti''G de-a7 in ma:in4 de-i)er7 o' t1e 4ood , ?1i*1 t1e inter)enor intended to u e in t1e manu'a*ture o' *o*oanut oi-, t1e inter)enor u''ered dama4e 3ongkong /sland Com any$ =td.$ 'aritime Agencies P -ervices /nc$ and 'acondray Com any$ /nc. Prin*i.a- I ue> :#o s#o&ld be #eld liable for t#e loss or damaged cargos< /n order to ans%er t#is$ t#e nat&re of t#e c#arter m&st first be identified O %#et#er it is a demise or bareboat c#arter$ a time c#arter or a voyage c#arter. According to t#e co&rt$ t#e agreement entered into 08niform 5eneral C#arter1 in t#e cases at bar s#o&ld be considered. A voyage c#arter being a rivate carriage$ t#e arties may freely contract res ecting liability for damage to t#e goods and ot#er matters. ,#e basic rinci le is t#at t#e res onsibility for cargo loss falls on t#e one %#o agreed to erform t#e d&ty involved. ,#is is tr&e in t#e resent cases %#ere t#e c#arterer %as res onsible for loading$ sto%age and disc#arging at t#e orts visited$ %#ile t#e o%ner %as res onsible for t#e care of t#e cargo d&ring t#e voyage. As t#e bags %ere in good order %#en received in t#e vessel$ t#e res&m tion is t#at t#ey %ere damaged or lost d&ring t#e voyage as a res&lt of t#eir negligent im ro er sto%age. +24 ,3/- ,39 -3/) 2:;94 -328=7 B9 =/AB=9 0so its agent$ 'acondray is liable$ b&t action #as rescribed1. Se*ondar7 ISSUE 0for o&r &r oses1. :L; t#e c#artererFs agent is liable considering t#e finding of t#e co&rt t#at t#e ot#er goods %ere damaged or lost d&ring t#e &nloading$ and &nloading %as t#e rinci al d&ty of t#e c#arterer according to t#e 8niform 5eneral C#arter< N(. !atio> ,#e c#arterer ass&med t#is activity &nder t#e c#arter arty. 3o%ever$ t#e liability im osable against ,ranscontinental cannot be borned by 'aritime$ %#ic# as a mere agent$ is not ans%erable for inj&ry ca&sed by its rinci al. /t is a %ell?settled rinci le t#at t#e agent s#all be liable for t#e act or omission of t#e rinci al only if t#e latter is &ndisclosed. ,#e agent may be #eld liable if it re resented t#e vessel %#en it took c#arge of t#e &nloading of t#e cargo and iss&ed cargo recei ts in its o%n name. /t s#o&ld #ave also received and rocessed claims against t#e vessel for t#e lossesLdamages s&stained by t#e cargo. /f t#is is t#e case$ t#e c#artererFs agent is also considered a s#i agent and so s#o&ld be #eld to be solidarily liable %it# its rinci al. ,#e c#arterer in t#is case did not re resent itself as a carrier and indeed ass&med res onsibility only for t#e &nloading of t#e cargo$ i.e. after t#e goods %ere already o&tside t#e c&stody of t#e vessel. /n s& ervising t#e &nloading of t#e cargo and iss&ing

ISSUES :2; t#e intervenor #as a ca&se of action against laintiff d&e to t#e alleged delay in t#e delivery of t#e mac#ineries. ;2. !A"I(NALE :#en an agent acts in #is o%n name$ t#e rinci al #as no rig#t of action against t#e ersons %it# %#om t#e agent #as contracted$ or u*1 .er on a4ain t t1e .rin*i.a-. /n s&c# case$ t#e agent is directly liable to t#e erson %it# %#om #e #as contracted$ as if t#e transaction %ere #is o%n 0Art. 1A1A$ Civil Code1.

2aritime A4en*ie + Ser)i*e ). CA (ALAIN) *&ly 12$ 1((0 *. Cr&6 FAC"S> "ran a*tion. s#i ment of bagged &rea from 8--4 to t#e )#ili ines$ so need to c#arter a motor vessel 2otor )e e-> named 3ongkong /sland (?ner o' )e e-. 3ongkong /sland -#i ing Co. C1arterer> ,ranscontinental +ertili6er Com any of =ondon Con i4nee in t#e )#ili ines. Atlas +ertili6er Com any 0'anila and Ceb&1 In urer of goods. 8nion /ns&rance -ociety of Canton$ =td 0against all risks1 C1artererE a4ent> 'aritime Agencies P -ervices$ /nc. (?nerE a4ent> 'acondray Com any$ /nc. ,#e arties signed for t#is &r ose a 8niform 5eneral C#arter. B&t roblem occ&rred in t#e transaction. ,rial co&rt fo&nd o&t t#at & on recei t of goods$ 1$@!@ bags %ere damaged or lost on board t#e vessel before &nloading of t#e s#i ment. ,#ere %ere also goods t#at %ere damaged or lost d&ring &nloading. Consignee filed a formal claim$ and after its claims rejected$ %ent to /ns&rer 8nion$ %#ic# on demand aid t#e total indemnity &rs&ant to t#e ins&rance contract. ,#&s$ as s&brogee of t#e consignee$ 8nion filed com laint for reimb&rsement against

CA

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
7aily 2 erations 4e ort and -tatement of +acts indicating and describing t#e day?to?day disc#arge of t#e cargo$ 'aritime acted in re resentation of t#e c#arterer and not of t#e vessel. /t t#&s cannot be considered a s#i agent. As a mere c#artererFs agent$ it cannot be #eld solidarily liable %it# t#e ,ranscontinental for t#e lossesLdamages to t#e cargo o&tside t#e c&stody of t#e vessel. ;otably$ ,ranscontinental %as disclosed as t#e c#artererFs rinci al and t#ere is no G&estion t#at 'aritime acted %it#in t#e sco e of its a&t#ority. II. (8-i4ation o' t1e A4ent 2nly -&rety Co erfected its a eal. Central Bank did not a eal %#ile A,AC2 failed to erfect its a eal. CA. r&led against Bank and modified j&dgment as to s&retyKs liability #ence t#is a eal by bank to -C. CA fo&nd Bank negligent in #aving sto ed collecting from B&rea& t#e moneys falling d&e in favor of rinci al debtor A,AC2 before t#e debt %as f&lly collected$ t#ereby allo%ing s&c# f&nds to be taken and ex#a&sted by ot#er creditors to t#e rej&dice of t#e s&rety$ and #eld t#at BankKs negligence res&lted in exoneration of 'anila -&rety. );B. )o%er of attorney obtained from A,AC2 %as merely an additional sec&rity in its favor and it %as t#e d&ty of s&rety$ and not that of the creditor, to see to it t#at obligor f&lfills #is obligation$ and t#at t#e creditor o%ed t#e s&rety no d&ty of active diligence to collect any s&m from t#e rinci al debtor. I ue> :2; );B exercised d&e diligence in collecting from B&rea& of )&blic :orks< ;2 ,e-d> #. /an: -ia8-e 'ro ne4-e*t in *o--e*tin4 mone7 due to .rin*i.a- de8tor. );BKs arg&ment totally misses t#e oint. CA did not #old it liable for negligence for failing to collect from the principal debtor b&t for its neglect in collecting t#e s&ms d&e to debtor from t#e B&rea&$ contrary to its d&ty as #older of an excl&sive and irrevocable o%er of attorney to make s&c# collections$ since an agent is reG&ired to act %it# t#e care of a good fat#er of a family and becomes liable for t#e damages %#ic# t#e rinci al may s&ffer t#ro&g# #is non erformance. BankKs o%er %as ex ressly made irrevocable s&c# t#at B&rea& co&ld very %ell ref&se to ay to rinci al debtor itself$ and a fortiori reject any demands by s&rety. 2. E)en a umin4 .o?er o' attorne7 ?a mere additiona- e*urit7, /an: ti-- .re*-uded 'rom re*o)erin4 'rom uret7. By allo%ing assigned f&nds to be ex#a&sted %it#o&t notifying t#e s&rety$ );B de rived s&rety of any ossibility of reco&rsing against t#at sec&rity. );B t#ereby exonerated s&rety &rs&ant to Art. 20!0 of CC. =etter of demand no bearing #ere since letter %as addressed to A,ACo and f&nds %ere to come from else%ere. As to letter of demand on B&rea&$ it does not a ear t#at any re ly %as made nor t#at demand %as ressed nor t#at debtor or t#e s&rety %ere ever a rised t#at aymnet %as not being made. +act remains t#at beca&se of );BKs inactivity t#e ot#er creditors %ere enabled to

A.

Arti*-e #$$A> Generao8-i4ation (GEN)

and

.e*i'i*

Art. 1!!D. ,#e agent is bo&nd by #is acce tance to carry o&t t#e agency$ and is liable for t#e damages %#ic#$ t#ro&g# #is non? erformance$ t#e rinci al may s&ffer. 3e m&st also finis# t#e b&siness already beg&n on t#e deat# of t#e rinci al$ s#o&ld delay entail any danger. #. E''e*t a4en*7 PN/ ). 2ani-a Suret7 (!(G) 1("C Fa*t > );B #ad o ened a letter of credit and advanced t#ereon U120k to 9dgington 2il for !k tons of #ot as #alt. 2f t#is amo&nt$ 2k tons %ort# U2A(k %ere released and delivered to Adams P ,ag&ba Cor 0A,AC21 &nder a tr&st recei t g&aranteed by 'anila -&rety & to amo&nt of )ACk. ,o ay for t#e as #alt$ A,AC2 constit&ted t#e Bank its assignee and attorney?in?fact to receive and collect from t#e B&rea& of )&blic :orks t#e amo&nt o&t of f&nds ayable to t#e assignor &nder )&rc#ase 2rder ;o. A1(DA. Ataco delivered to t#e B&rea& of )&blic :orks and t#e latter acce ted as #alt %ort# )D@1k. 2f t#is amo&nt t#e Bank reg&larly collected b&t t#e bank s&bseG&ently ceased to collect for &nex lained reasons$ &ntil its investigators fo&nd t#at more moneys %ere ayable to A,AC2 from t#e )&blic :orks office$ beca&se latter #ad allo%ed anot#er creditor to collect f&nds d&e to A,AC2 &nder t#e same &rc#ase order$ to a total of )@11k. /ts demands on t#e rinci al debtor and t#e -&rety #aving been ref&sed$ t#e bank s&ed bot# in C+/ to recover balance of )1C!k l&s interest and costs. C+/. r&led for );B. o' a**e.tan*e o'

C!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
collect )1A@k %#en balance d&e to );B %as only )1C!k. +inding of negligence by CA is not only concl&sive on -C b&t also f&lly s& orted by evidence. /riti 1 Air?a7 ) . Court o' A..ea- (2ai) *an&ary 2($ 1((! 4omero$ *. +acts. 2n A ril 1"$ 1(!($ 'a#tani decided to visit #is relatives in Bombay$ /ndia. /n antici ation of #is visit$ #e obtained t#e services of a certain 'r. 5&mar to re are #is travel lans. ,#e latter$ in t&rn$ &rc#ased a ticket from Britis# Air%ays. -ince Britis# Air%ays #ad no direct flig#ts from 'anila to Bombay$ 'a#tani #ad to take a flig#t to 3ongkong via )A=$ and & on arrival in 3ongkong #e #ad to take a connecting flig#t to Bombay on board Britis# Air%ays. )rior to #is de art&re$ 'a#tani c#ecked in at t#e )A= co&nter in 'anila #is t%o ieces of l&ggage containing #is clot#ing and ersonal effects$ confident t#at & on reac#ing 3ongkong$ t#e same %o&ld be transferred to t#e Britis# Air%ays flig#t bo&nd for Bombay. t#at t#e contract %as one of contin&o&s air trans ortation from 'anila to Bombay. :ell?settled is t#e r&le t#at an agent is also res onsible for any negligence in t#e erformance of its f&nction and is liable for damages %#ic# t#e rinci al may s&ffer by reason of its negligent act. 3ence$ t#e Co&rt of A eals erred %#en it o ined t#at Britis# Air%ays$ being t#e rinci al$ #ad no ca&se of action against )A=$ its agent or s&b?contractor.

Also$ it is %ort# mentioning t#at bot# Britis# Air%ays and )A= are members of t#e /nternational Air ,rans ort Association 0/A,A1$ %#erein member airlines are regarded as agents of eac# ot#er in t#e iss&ance of t#e tickets and ot#er matters ertaining to t#eir relations#i . ,#erefore$ in t#e instant case$ t#e contract&al relations#i bet%een Britis# Air%ays and )A= is one of agency$ t#e former being t#e rinci al$ since it %as t#e one %#ic# iss&ed t#e confirmed ticket$ and t#e latter t#e agent. A carrier like )A=$ acting as an agent of anot#er carrier$ is also liable for its o%n negligent acts or omission in t#e erformance of its d&ties. Accordingly$ to deny Britis# Air%ays t#e roced&ral remedy of filing a t#ird? arty com laint against )A= for t#e &r ose of &ltimately determining %#o %as rimarily at fa&lt as bet%een t#em$ is %it#o&t legal basis.

8nfort&nately$ %#en 'a#tani arrived in Bombay #e discovered t#at #is l&ggage %as missing and t#at & on inG&iry from t#e Britis# Air%ays re resentatives$ #e %as told t#at t#e same mig#t #ave been diverted to =ondon. After atiently %aiting for #is l&ggage for one %eek$ Britis# Air%ays finally advised #im to file a claim by accom lis#ing t#e )ro erty /rreg&larity 4e ort.

B.

Arti*-e #$$B> E''e*t ?1en .er on de*-ine a4en*7 (A//Y)

'a#tani s&bseG&ently filed a com laint for damages and attorneyFs fees against Britis# Air%ays and 'r. 5&mar. Britis# Air%ays$ in t&rn$ filed a t#ird? arty com laint against )A=. ,#e trial co&rt r&led in favor of 'a#tani and dismissed t#e t#ird? arty com laint against )A=. ,#e Co&rt of A eals affirmed t#e decision$ stating t#at Britis# Air%ays #ad no ca&se of action against )A=. /ss&e. :#et#er or not t#e dismissal of t#e t#ird? arty com laint against )A= %as valid 3eld. ;2. ,#e contract of air trans ortation %as excl&sively bet%een 'a#tani and Britis# Air%ays$ t#e latter merely endorsing t#e 'anila to 3ongkong leg of t#e formerFs jo&rney to )A=$ as its s&bcontractor or agent. /n fact$ t#e fo&rt# aragra # of t#e Conditions of Contracts of t#e ticket iss&ed by Britis# Air%ays to 'a#tani confirms

Art. 1!!C. /n case a erson declines an agency$ #e is bo&nd to observe t#e diligence of a good fat#er of a family in t#e c&stody and reservation of t#e goods for%arded to #im by t#e o%ner &ntil t#e latter s#o&ld a oint an agent or take c#arge of t#e goods. 2bligation. Bo&nd to observe t#e diligence of a good fat#er of a family in t#e c&stody and reservation of t#e goods for%arded to #im by t#e o%ner. 2%ner m&st as far as racticable. 1. a oint an agent 2. take c#arge of t#e goods

C.

Arti*-e #$$%> E0*e.tion to t1e 4eneraru-e t1at t1e .rin*i.a- mu t ad)an*e to t1e a4ent t1e um ne*e ar7 'or t1e e0e*ution o' t1e a4en*7 (EA!LA)

C(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
Art. 1!!". -#o&ld t#ere be a sti &lation t#at t#e agent s#all advance t#e necessary f&nds$ #e s#all be bo&nd to do so exce t %#en t#e rinci al is insolvent. ? E0*e.tion e0*e.tion to t1e arties from t#e year 1(00$ laintiff transmitted %eekly or fortnig#tly$ according to circ&mstances$ a s ecific statement of t#e transactions effected$ as %ell as$ semiann&ally$ a general acco&nt of t#e b&siness done d&ring t#e six mont#s last ela sed$ and t#at defendant$ after an examination of s&c# semiann&al acco&nt toget#er %it# its details and vo&c#ers$ and after some objections t#ereto #ad been ex lained$ %as acc&stomed to rove t#e same. ,#is %as t#e rod&re carried on for more t#an nine years d&ring %#ic# 2ria 3ermanos P Co. from time to time a roved eac# one of t#e 1A acco&nt t#at %ere resented to it$ and & on 5&tierre6 3ermanos closing t#e c&rrent acco&nt from *an&ary to *&ne$ 1(0($ it also resented to defendant a general detailed acco&nt$ %#ic#$ not#%it#standing t#at no objection %#atever %as made to it$ %as not a roved. ,#erefore t#e com laint %as filed t#at initiated t#is litigation. ISSUE. :#et#er or ;ot 5&tierre6 3ermanos act&ally bo&nd itself to resent to 2ria 3ermanos and Co.$ besides t#e semiann&al acco&nts rendered$ a general acco&nt com rising all t#e b&siness &ndertaken bet%een 1(00 and *&ne$ 1(0($ on %#ic# latter date it %as considered by 5&tierre6 3ermanos as terminated. ,EL&> ,#e allegation made by defendant relative to t#is oint #ad not been s&bstantiated by any evidence %#atever$ and t#erefore t#ere is no reason nor legal gro&nd %#ereby laintiff co&ld be com elled to resent t#at general acco&nt reG&ested in t#e first cross?com laint. /t is$ in o&r o inion$ a ro riate it insert #ereinafter %#at t#e trial co&rt$ in t#e j&dgment rendered$ says %it# res ect to t#is matter. I/f commission agents be obliged to render to t#eir rinci als itemi6ed acco&nts$ s& orted by vo&c#ers$ of t#e s&ms t#ey collect as commission and of t#e transactions effected by t#em in relation %it# t#eir rinci als$ as often as t#e latter may desire$ in cases %#ere t#ere arises some tro&ble$ some difference of o inion or a conflict of interests$ or %#ere t#e commission agents close t#e acco&nt$ as occ&rs in t#e case at bar beca&se t#e rinci als did not ay %#at t#ey %ere o%ing or beca&se$ instead of t#e debt being diminis#ed$ it %as increased$ t#e commission contract %o&ld become an inex#a&stible and never ending so&rce of litigation and of claims %it#o&t n&mber$ a formidable arm for s itef&l rinci als against %#ic# it %o&ld be ins&fficient to o ose an arsenal of vo&c#ers s&c# as mig#t be treas&red by t#e most rescient commission agent$ beca&se t#ere co&ld be avoided neit#er t#e brot#er res&lting from t#eir necessary examination$ nor t#e #eavy ex enses and loss of time t#at are t#e inevitable accom animent of t#is class of %ork.I

D.

Arti*-e #$$C (6ANCES)

Art. 1!!A. /n t#e exec&tion of t#e agency$ t#e agent s#all act in accordance %it# t#e instr&ctions of t#e rinci al. /n defa&lt t#ereof$ #e s#all do all t#at a good fat#er of a family %o&ld do$ as reG&ired by t#e nat&re of t#e b&siness. #. E''e*t o' )io-ation o' .rin*i.a-E in tru*tion 2. In tru*tion ). aut1orit7 @. !u-e in a8 en*e o' in tru*tion A. 91en de.arture i =u ti'ied B. Ca e Gutierre5 ,ermano ). (ria ,ermano (ALAIN) 'arc# @0$ 1(1C ,orres$ *.. FAC"S. ALLEGA"I(NS 87 de'endant (!IA ,E!2AN(S + C(.> By reason of mercantile relations and t#e o ening of a m&t&al c&rrent acco&nt from 'ay 1$ 1(00$ t#e laintiff 05&tierre6 3ermanos1 #ad obligated itself eriodically to send to t#e defendant firm a memorand&m or statement of t#e c&rrent acco&nt$ and f&rt#er obligated itself$ in case t#e said mercantile relations s#o&ld be finally terminated$ to resent a general and com lete acco&nt$ d&ly s& orted by vo&c#ers and ot#er roofsE t#at laintiff$ 5&tierre6 3ermanos$ #ad contended itself by sending to 2ria 3ermanos and Co. some memoranda or abstracts of acco&nt$ acce ted by defendant as s&c# Iabstract of acco&nt$I %it#o&t t#e latterKs #aving %aived its rig#t to demand t#e resentation$ as agreed & on$ of t#e vo&c#ers and ot#er roofs & on t#e closing of t#e c&rrent acco&nt$ a sti &lation %#ic# 5&tierre6 3ermanos #ad failed to com ly %it#. 7efendant t#erefore rayed t#at t#e laintiff$ 5&tierre6 3ermanos$ be sentenced to render and resent t#e said final acco&nt$ d&ly accom anied by vo&c#ers$ in conformity %it# t#e agreement made. PLAIN"IFFES ALLEGA"I(NS. 5&tierre6 3ermanos denied in its ans%er t#e allegations made by 2ria 3ermanos P Co. in its cross? com laint$ and set fort# t#at$ in conseG&ence of t#e m&t&al c&rrent acco&nt o ened bet%een t#e

"0

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
:#en an acco&nt #as been resented or rendered and #as been a roved by t#e arty %#om it concerns or interests$ it is not ro er to revise it$ &nless it s#o&ld be roved t#at in its a roval t#ere %as deceit$ fra&d$ or error serio&sly rej&dicial to t#e arty %#o gave s&c# a roval. Arts. 12"C and 12""$ Civil Code.1 /n t#e decision rendered in t#e case of *astor vs. Nicasio$ 0" )#il. 4e .$ 1C21$ t#e follo%ing doctrine %as laid do%nE :#en acco&nts of t#e agent to t#e rinci al are once a roved by t#e rinci al$ t#e latter #as no rig#t to ask after%ards for a revision of t#e same or for a detailed acco&nt of t#e b&siness$ &nless #e can s#o% t#at t#ere %as fra&d$ deceit$ error or mistake in t#e a roval of t#e acco&nts V facts not roven in t#is case. ,#e record does not s#o% it to #ave been d&ly roven t#at & on 2ria 3ermanos P Co. giving its a roval to t#e 1A acco&nts resented by 5&tierre6 3ermanos t#ere %as deceit$ fra&d$ or mistake rej&dicial to t#e formerKs interests. +or t#e sole reason t#at 5&tierre6 3ermanos$ & on closing t#e c&rrent acco&nt %it# 2ria 3ermanos P Co. %as obliged$ certainly an &n%arranted obligation$ to render a general acco&nt com re#ensive of all t#e b&siness transacted bet%een bot# arties d&ring more t#an nine years$ and t#ere being no roof of t#e alleged agreement bet%een t#em$ it %o&ld be im ro er to #old t#at t#e laintiff is obliged to render and resent a general acco&nt in t#e sense reG&ested by 2ria 3ermanos P Co. in its first cross? com laint. PN/ ). 2ani-a Suret7 + Fide-it7 Co., u.ra

F.

Arti*-e #$$9 (6ILL)

Art. 1!!(. ,#e agent s#all be liable for damages if$ t#ere being a conflict bet%een #is interests and t#ose of t#e rinci al$ #e s#o&ld refer #is o%n #. !u-e on *on'-i*t o' intere t ,#e r&le is t#at t#e agent is not ermitted$ %it#o&t t#e kno%ledge and consent of t#e rinci al$ to ass&me t%o distinct c#aracters in t#e same transaction O for #imself and retending to act for t#e rinci al. ,#e agent %ill be liable for damages if$ t#ere being a conflict$ #e c#ooses #is o%n t#an t#ose of t#e rinci al. 3o%ever$ if t#e rinci al c#ooses to %aive t#e benefit and #e does so %it# kno%ledge of facts$ t#e r&le %ill not a ly. ,#e r&le %ill not also a ly if t#e agentFs interests are s& erior 0e.g. #e #as a sec&rity interest in t#e goodsE #e %ill be ex osed to great #ysical risks1. ,#e r&le does not disting&is# %#et#er t#e agency is onero&s or grat&ito&s. ,#e basis for t#e r&le is t#e fid&ciary relations#i bet%een t#e rinci al and agent$ %it# t#e latter ex ected to observe &tmost good fait# and loyalty to%ards #is rinci al. ,#e r&le s#o&ld also recl&de an agent from tem tations 0to engage in self? dealing1. ,#is r&le is reventive$ not remedial j&stice. 2. Ca e A8oiti5 ). &e Si-)a (2A!K) +acts. Aboiti6 sold #is s#ares in 5. P 4. Aboiti6 and Mi&da e 3ijos de ). Aboiti6$ artners#i to t#e 7e -ilvas. ,#ere %as an &n aid balance of 1C($000. Aboiti6 filed a com laint to recover said amo&nt. 7efendants maintains t#at t#eir liability &nder t#e I3i oteca?MentaI #ad$ %it# t#e laintiffKs im lied consent$ been transferred to Aboiti6 P Co. /--89. :2; defendantsF liability &nder t#e I3i oteca?MentaI #ad$ %it# t#e laintiffKs im lied consent$ been transferred to Aboiti6 P Co. 3eld. ;o ,#ere is not#ing in t#is contention. /t is tr&e t#at t#e t#ree defendants transferred all t#e assets and liabilities of 5. P 4. Aboiti6 to t#e cor oration Aboiti6 P Co.$ and t#at at t#e time at least t%o of t#e defendants$ 5&illermo and Midal Aboiti6$ #eld a general o%er of attorney

E.

Arti*-e #$$$> 91en a4ent out a4en*7 (6ILL)

1a-- not *arr7

Art. 1!!!. An agent s#all not carry o&t an agency if its exec&tion %o&ld manifestly res&lt in loss or damage to t#e rinci al. 0n1 ,#e agent s#o&ld not carry o&t t#e agency if its exec&tion %ill mani'e t-7 res&lt in a loss or damage to t#e rinci al. ,#e reason is t#at t#e agent is a mere extension of t#e ersonality of t#e rinci al. 3is d&ty is to render service +24 ,39 B9;9+/, of t#e rinci al and not to act to #is detriment. 'oreover$ agent m&st exercise d&e diligence in carrying o&t t#e agency.

"1

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
from t#e laintiff. B&t$ in t#e first lace$ t#e defendants a ear to #ave acted for t#emselves only and none of t#em retended to act on be#alf of 4amon Aboiti6E in t#e second lace$ t#e defendantKs liability &nder t#e I3i oteca?MentaI %as a ersonal and individ&al liability$ %#ile t#e transfer in G&estion related to t#e b&siness of t#e artners#i of 5. P 4. Aboiti6E and$ in t#e t#ird lace$ t#e defendants %#o #eld o%ers of attorney co&ld not re resent bot# t#emselves and t#eir rinci al in a transaction involving t#e s#ifting of t#e liability from t#emselves to anot#er arty. ;eit#er does t#e fact t#at t#e laintiff s&bseG&ently acce ted ayments on t#e I3i oteca?Menta Acco&ntI from Aboiti6 P Co. %ork a novation. ;ovation is never res&med. 8nless it is clearly s#o%n eit#er by ex ress agreement of t#e arties or by acts of eG&ivalent im ort$ t#is defense %ill never be allo%ed. ot#er eo le #ave given t#e com any ass&rances t#at t#ey can #andle t#e *a anese sales$ t#erefore$ t#e com any #ave decided to leave t#e agency for t#at com any o en for a time.

'ean%#ile$

Barton embarked for -an +rancisco and & on arriving at t#at ort$ #e entered into an agreement %it# =&dvigsen P 'cC&rdy$ %#ereby t#e said firm %as *on tituted a u8a4ent and given t#e sole selling rig#ts for t#e bit&mino&s limestone rod&cts of t#e com any for a eriod of 1 year. on an earlier voyage d&ring t#e same year to A&stralia$ Barton #ad already made an agreement %it# +rank B. -mit# of -ydney$ %#ereby t#e latter %as to act as t1e .-ainti''E a-e a4ent for limestone rod&cts of t#e com any. =ater$ t#e same agreement %as extended for a eriod of one year.

/n

Se)erino ). Se)erino, u.ra /arton ) . Le7te A .1a-t + 2inera- (i- Co. (AN6 S.) 0;ote. ,#e case #as too many facts irrelevant to o&r to ic. / decided not to incl&de in t#e digest t#e facts t#at are irrelevant so as not to conf&se &s. ,#anks.1 Fa*t > *ames 7. Barton$ an American citi6en residing in t#e City of 'anila$ %as given by =eyte As #alt P 'ineral 2il Co. t#e sole and excl&sive sales agency for t#e sale of t#eir bit&mino&s limestone and ot#er as #alt rod&cts in t#e co&ntries of A&stralia$ ;e% _ealand$ ,asmania$ -aigon$ /ndia$ -&matra$ *ava$ C#ina and 3ong Song &ntil 'ay 1$ 1(22$ and &ntil 'ay 1$ 1(21 in -iam and t#e -traits -ettlements of 8-. /t %as also sti &lated in t#e letter of a&t#ority t#at s#o&ld t#e sales of Barton in t#e 8- reac# C$000 tons on or before 'ay 1$ 1(21$ #e %o&ld be a%arded t#e sole rig#ts for t#e said territory for an additional 1 year and s#o&ld #is sales in t#e second year reac# or exceed 10$000 tons$ #e %o&ld be given t#e o tion to rene% t#e agreement for t#e said territory on t#e same terms for an additional 2 years. +&rt#er$ it %as stated t#at s#o&ld #is sales eG&al or exceed 10$000 in t#e year ending 2ctober 1$ 1(21$ or 20$000 tons by 'ay 1$1(22$ t#en t#e contract %ill a&tomatically be contin&ed for an additional of @ years. Mery soon after t#e contract became effective$ Barton reG&ested t#e com any to give #im a similar selling agency for *a an. ,o t#is reG&est$ t#e com any t#ro&g# its resident$ Anderson$ re lied t#at at t#at moment$ t#ey do not feel like giving #im t#e same a&t#ority &ntil #e can make some large si6ed sales t#ere$ beca&se some

,okio$ *a an$ Barton came in contact %it# 3. 3i%atari. /n a letter$ 3i%atari s eaks of #imself as if #e #ad been a ointed e0*-u i)e a-e a4ent for Barton in *a an$ b&t no doc&ment ex ressly a ointing #im s&c# is in evidence. Barton t#en received a letter from =&dvigsen P 'cC&rdy t#at it mig#t enter an order for "$000 tons of bit&mino&s limestone. /n t&rn$ Barton informed t#e com any to be re ared to s#i t#e rod&cts. Anderson$ #o%ever$ informed #im t#at t#e com any$ %it# its c&rrent facilities$ %o&ldnFt be able to #andle big contracts. Barton ex ressed s&r rise at t#is and told Anderson t#at #e #ad not only t#at artic&lar order from -an +rancisco b&t ot#er orders for large G&antities to be s#i ed to A&stralia and -#ang#ai. -&bseG&ently$ Barton informed t#e com any at different dates to re are s#i ments to 8- and A&stralia$ and later on$ to *a an.

/t %ill be noted t#at in connection %it# t#e letters

0totaling to D1 sent by Barton to t#e com any informing t#e latter to re are s#i ments$ no mention %as made of t#e names of t#e ersons$ or firms$ for %#om t#e s#i ments %ere really intended. ,#e obvio&s ex lanation t#at occ&rs in connection %it# t#is is t#at t#e laintiff did not care to reveal t#e fact t#at t1e order ori4inated 'rom 1i o?n u8a4ent in San Fran*i *o and S7dne7. ,#e com any$ in its re ly to one of BartonFs letter$ stated t#at no orders can be entertained &nless cas# #as been act&ally de osited %it# eit#er t#e /nternational Banking Cor oration or t#e C#artered Bank of /ndia$ A&stralia$ and C#ina$ at Ceb&. ,o t#is$ Barton$ in t&rn$ re lied G&estioning t#e rig#t of t#e com any to insist & on cas# de osit in Ceb& rior to t#e filling of t#e orders. /n concl&sion$ Barton gave some more orders for s#i ment to A&stralia in t#e G&antities of C$000

"2

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
tons$ and 10$000$ and stated t#at #e %o&ld arrange for de osits to be made on t#ese additional s#i ments if t#e com any %ill signify its ability to f&lfill t#e orders. Again$ no name %as mentioned as t#e &rc#aser$ or &rc#asers$ of t#ese intended consignments. Barton t#en instit&ted in t#e C+/ of 'anila$ an action to recover from =eyte As #alt P 'ineral 2il Co.$ =td.$ as damages for breac# of contract$ t#e s&m of U@1!$C"@.@0 and to sec&re a j&dicial rono&ncement to t#e effect t#at t#e laintiff be entitled to an extension of t#e terms of t#e sales agencies s ecified in t#e contract. ,#e ,rial Co&rt absolved t#e com any from D of t#e " ca&ses of action set fort# in t#e com laint. +or t#e t%o remaining ca&ses of action$ t#e co&rt adj&dged t#e com any liable to ay Barton t#e s&m of U202$C00 0eG&ivalent to D0C$000 # 1 as damages. +rom t#is j&dgment$ t#e com any a ealed. I ue> :2; t#e com any is liable to ay Barton damages for breac# of contract. ,e-d;!atio> ;o.

G.

Arti*-e #$90 (6ESSA)

Art. 1!(0. /f t#e agent #as been em o%ered to borro% money$ #e may #imself be t#e lender at t#e c&rrent rate of interest. /f #e #as been a&t#ori6ed to lend money at interest$ #e cannot borro% it %it#o&t t#e consent of t#e rinci al. #. !ea on 'or a--o?in4 a4ent to 8e t1e -ender

,#e original contract by %#ic# t#e laintiff %as a ointed sales agent for a limited eriod of time in A&stralia and t#e 8- contem lated t#at #e s#o&ld find reliable and solvent b&yers %#o s#o&ld be re ared to obligate t#emselves to take t#e G&antity of bit&mino&s limestone contracted for & on terms consistent %it# t#e contract. "1e e *ondition ?ere not met 87 t1e ta:in4 o' t1e e order 'rom /artonE o?n u8a4ent , ?1i*1 ?a a i' t1e .-ainti'' 1ad 8ou41t 'or 1im e-' t1e *ommodit7 ?1i*1 1e ?a aut1ori5ed to e-- to ot1er .

,#e agent cannot$ ?it1out .e*ia- .o?er o' attorne7$ loan or borro% money 0-ee Art 1!A!YAZ1. /f t#e agent is ex ressly em o%ered to 8orro? money$ #e may #imself be t#e lender at t#e c&rrent rate of interest o 49A-2;. ,#ere is no danger of t#e rinci al s&ffering any damage since t#e c&rrent rate of interest %o&ld #ave to be aid in any case if t#e loan %ere obtained from a t#ird erson /f t#e agent is a&t#ori6ed to lend money at interest$ #e cannot be t#e borro%er %it#o&t t#e consent of t#e rinci al o 49A-2;-. t#e agent may rove to be a bad debtorE ossible conflict of interestE rej&dicial to t#e rinci al

H.

Arti*-e #$9# (/A2/I)

Article 2"A of t#e Code of Commerce declares t#at no agent s#all &rc#ase for #imself or for anot#er t#at %#ic# #e #as ordered to sell. "1e -a? 1a .-a*ed it 8an u.on a 8ro:erE .ur*1a in4 'rom 1i .rin*i.a- un-e t1e -atter ?it1 'u-- :no?-ed4e o' a-- t1e 'a*t and *ir*um tan*e a*Iuie *e in u*1 *our eD and e)en t1en t1e 8ro:erE a*tion mu t 8e *1ara*teri5ed 87 utmo t 4ood 'ait1. A a-e made 87 a 8ro:er to 1im e-' ?it1out t1e *on ent o' t1e .rin*i.a- i ine''e*tua- ?1et1er t1e 8ro:er 1a 8een 4ui-t7 o' 'raudu-ent *ondu*t or not. &i .o iti)e> *&dgment 4eversed. 2a-*o-m, &. di entin4> ;o%#ere in t#e contract %as t#e laintiff ro#ibited to sec&re s&bagents. ,#e majority decision misses o&t on t#e oint t#at t#e only objection of t#e com any %#en t#e orders %ere comm&nicated %as related to t#e manner of ayment.

Art. 1!(1. 9very agent is bo&nd to render an acco&nt of #is transactions and to deliver to t#e rinci al %#atever #e may #ave received by virt&e of t#e agency$ even t#o&g# it may not be o%ing to t#e rinci al. 9very sti &lation exem ting t#e agent from t#e obligation to render an acco&nt s#all be void. 01A20a1 !ULE> /t is t#e d&ty of t#e agent to ACC28;, +24 and to 79=/M94 to t#e rinci al A== money and ro erty %#ic# may #ave come into #is #ands or of a s&b?agent a ointed by #im B> M/4,89 2+ or AA 49-8=, of t#e agency. #. &ut7 to render a**ount 2. Crimina- -ia8i-it7 o' a4ent "?o o8-i4ation o' an a4ent under Art. #9$# Obli#ation to render accounts Agent m&st disclose to t#e rinci al t#e follo%ing.

"@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
1. -o&rce of rofits of agency All rofits of t#e agency belong to t#e rinci al$ regardless of %#et#er rofit is t#e res&lt of t#e erformance or violation of t#e agency. o %ationale for rule. /t is t#e rinci al %#o ass&mes res onsibility for t#e transaction. Also$ t#e agent cannot be ermitted to derive advantage from #is o%n defa&lt -ecret rofit agent may #ave received An agent %#o takes secret rofit is g&ilty of breac# of #is loyalty to t#e rinci al and forfeits #is rig#t to collect commission. o 4egardless of benefitLinj&ry to t#e rinci al$ &sageLc&stom$ or grat&ito&s nat&re of t#e agency. o 8nlike a servant or messenger %#o only #as #ysical ossession

Agent #as autonomous ri#ht to retain ossession of goodsL roceeds 0i.e.$ %#en rinci al fails to reimb&rse #im for advances or indemnify #im for damages s&ffered %it#o&t #is fa&lt1 o 8nlike a bank teller %#o$ as mere a c&stodianLkee er of f&nds received$ #as no inde endent rig#t to retain.

2.

Other notes Any sti &lation exem ting t#e agent from #is obligation to render acco&nts 0 ar. 1 of 1!(11 is )oid. 0 ar 2. of 1!(11. %ationale for rule. -ti &lation contrary to ar. 1 enco&rages fra&d and is contrary to &blic olicy. /t is in t#e nat&re of a %aiver of an action for f&t&re fra&d$ t#&s void. /f agent fails to deliver and instead converts for #is o%n &se t#e money of ro erty belonging to t#e rinci al$ t#e agent is liable for e ta'a. Agent also cannot s&btract from #is collections t#e commission d&e #im.

9xem tions to obligation to acco&nt. /f agent acted only as a middleman %it# t#e task of merely bringing toget#er t#e vendor and vendee$ %#o t#emselves t#ereafter %ill negotiate t#e terms and conditions of t#e transaction. /f agent informed rinci al of giftLbon&sL rofit #e received from vendee and rinci al did not object t#ereto. :#en rig#t of lien exists in favor of agent 0i.e. Article 1(1D2E -ec. @A$ 4&le 1@!$ 42C@1 Obli#ation to turn over proceeds 2bligation to render an acco&nting and re ort of collections res& oses t#e d&ty of sim&ltaneo&sly t&rning over collections. 'ature of a#ent"s possession #oods(proceeds received in a#ency of

&omin4o ). &omin4o (!EK) FAC"S 2n *&ne 2$ 1(C" Micente 7omingo granted 5regorio 7omingo$ a real estate broker$ t#e excl&sive agency to sell a lot %it# an area of abo&t !!k sG&are meters at t#e rate of 2 esos er sGm$ %it# a CN commission of t#e total rice if sold by Micente or anyone else d&ring t#e @0 day d&ration of t#e agency or if t#e ro erty is sold by Micente %it#in t#ree mont#s from t#e agencyFs termination to a b&yer s&bmitted by 5regorio d&ring t#e contin&ance of t#e agency %it# notice to Micente. ,#is contract %as in tri licate$ 1 co y given to Micente$ t#e original and anot#er co y %it# 5regorio. ,#e next day$ 5regorio a&t#ori6ed one ,eofilo )&risima to look for a b&yer$ romising #im #alf of t#e CN commission. )&risima later t#en introd&ced 2scar de =eon to 5regorio as a ros ective b&yer. 7e =eon s&bmitted a %ritten offer m&c# lo%er t#an 2 esos er sGm$ at 1.2 esos er sGm. Micente directed 5regorio to ask 7e =eon to raise #is offer. After several conferences bet%een 5regorio and 7e =eon$ t#e latter raised #is offer to 10(k$ to %#ic# Micente agreed by signing on it. 8 on demand of Micente$ 2scar iss&ed a 1k c#eck as earnest money$ after %#ic# Micente gave @00 esos to 5regorio.

Agent #as physical and )uridical ossession

Art. 1(1D. ,#e agent may retain in ledge t#e t#ings %#ic# are t#e object of t#e agency &ntil t#e rinci al effects t#e reimb&rsement and ays t#e indemnity set fort# in t#e t%o receding articles. 01A@01
3

-ec. @A. AttorneysK liens. - An attorney s#all #ave a lien & on t#e f&nds$ doc&ments and a ers of #is client %#ic# #ave la%f&lly come into #is ossession and may retain t#e same &ntil #is la%f&l fees and disb&rsements #ave been aid$ and may a ly s&c# f&nds to t#e satisfaction t#ereof. 3e s#all also #ave a lien to t#e same extent & on all j&dgments for t#e ayment of money$ and exec&tions iss&ed in &rs&ance of s&c# j&dgments$ %#ic# #e #as sec&red in a litigation of #is client$ from and after t#e time %#en #e s#all #ave ca&sed a statement of #is claim of s&c# lien to be entered & on t#e records of t#e co&rt rendering s&c# j&dgment$ or iss&ing s&c# exec&tion$ and s#all #ave ca&sed %ritten notice t#ereof to be delivered to #is client and to t#e adverse artyE and #e s#all #ave t#e same rig#t and o%er over s&c# j&dgments and exec&tions as #is client %o&ld #ave to enforce #is lien and sec&re t#e ayment of #is j&st fees and disb&rsements.

"D

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
7e =eon confirmed #is former offer to ay for 1.20 esos er sGm$ and Micente asked for an additional 1k as earnest money$ %#ic# 7e =eon romised to deliver. ,#e original 10(k offer signed by Micente %as amended to t#e effect t#at 7e =eon %ill vacate abo&t -e tember #is #o&se and lot at HC %#ic# is art of t#e &rc#ase rice$ and again amended to 7ecember. )&rs&ant to #is romise to 5regorio$ 7e =eon gave #im a gift or propina of 1k for s&cceeding in ers&ading Micente to sell #is lot at a lo%er rice. "1i 4i't ?a not di *-o ed 87 Gre4orio to 3i*ente. 7e =eon also never aid t#e additional 1k earnest money. By A&g&st t#e deed of sale still #adnFt been exec&ted. 7e =eon t#en told 5regorio t#at #e did not receive #is money from #is brot#er in t#e 8-$ for %#ic# reason #e %as giving & t#e negotiations and t#e amo&nts #e #ad already aid and given. 5regorio t#en sensed somet#ing fis#y$ so #e %ent to Micente and read t#e CN commission art of t#e contract. Micente grabbed t#e contract and tore it to ieces$ b&t 5regorio did not react as #e still #ad anot#er co y. 5regorio t#en roceeded to t#e HC 4egister of 7eeds %#ere #e learned t#at a deed of sale #ad been exec&ted by Am aro 7ia6$ 7e =eonFs %ife$ over t#eir #o&se and lot on t#e &rc#ase rice of MicenteFs ro erty. 8 on learning t#is$ #e demanded in %riting #is commission on t#e sale rice of 10(k. 3e talked to 7e =eon %#o told #im t#at Micente %ent to #im and asked #im to eliminate 5regorio in t#e transaction and t#at #e %o&ld sell #is ro erty for 10Dk only. 5regorio t#en %ent to co&rt$ %#ere t#e CA$ in affirming t#e ,C$ sentenced Micente to ay 5regorio and )&risima t#eir commissions$ l&s moral and exem lary damages %it# attorneyFs fees and costs. MicenteFs #eirs no% seek t#e reversal of t#is decision. /--891. :2; t#e fail&re of 5regorio to disclose t#e gift by 7e =eon constit&tes fra&d as to ca&se forfeit&re of t#e commission 2. :2; Micente s#o&ld be liable to )&risima 39=7L4A,/2 #. YES. ,#e CA %as %rong in not finding t#is fra&d&lent. Article 1!(1Fs second aragra # is a ne% addition designed to stress t#e #ig#est loyalty reG&ired of an agent$ voiding any sti &lation exem ting t#e agent from t#e d&ty and liability of rendering an acco&nt of transactions received by virt&e of t#e agency$ even if t#e amo&nt is not d&e to t#e rinci al. Article 1(0( of t#e CC makes t#e agent liable not only for fra&d$ b&t also negligence$ %#et#er t#e agency %as grat&ito&s or for rice or re%ard. ,#ese rovisions demand t#e &tmost good fait# by t#e agent to #is rinci al. An agent %#o takes a secret rofit %it#o&t revealing t#is to #is rinci al is g&ilty of a breac# of loyalty$ and forfeits #is rig#t to collect t#e commission$ even if t#e rinci al does not s&ffer any inj&ry by reason of s&c# breac# of fidelity$ or even gains from it. t#e r&le is to revent ossible damage. By taking s&c# rofit or bon&s$ t#e agent ass&mes a osition %#olly inconsistent %it# t#at of being an agent for #is rinci al. 5regorioFs acce tance of 7e =eonFs monetary gift corr& ted #is d&ty to serve MicenteFs interests only$ and #e s&cceeded in ers&ading Micente in selling t#e ro erty at a m&c# lo%er rice t#an t#e original. ,#e d&ty of t#e agent in 1!(1 %ill not a ly if t#e agent acted only as middleman$ tasked only %it# bringing t#e vendor and vendee toget#er. ;eit#er %ill it a ly if #e informs #is rinci al of t#e bon&s or gift #e received and #is rinci al did not object. 3ere$ 5regorio %as not merely a middleman$ and Micente %as not told of t#e gift. ,#e fact t#at t#e %ife of 7e =eon is no% t#e b&yer in t#e deed of sale does not matter$ since 7e =eon #imself %o&ld still be t#e b&yer bot# in la% and in fact$ #is consent being needed as administrator of t#e conj&gal assets of t#e #o&se %#ic# %as art of t#e &rc#ase rice.

2. No. 2nly 5regorio %o&ld be liable$ since

)&risima is #is s&b?agent alone. 3e s#o&ld get #is #alf s#are of %#atever amo&nts 5regorio received from t#e agency %it# Micente 0@00 from Micente$ 1000 from de =eon$ 1$@00 total1$ %#ic# amo&nts to "C0 esos. ,#e -C also re%ards moral damages to Micente by 1k and attorneyFs fees in t#e same amo&nt. CA re)er ed. Se)erino ). Se)erino, u.ra (=ina4a ). E tate o' Pere5 (E3A) U.S. ). Kiene ("(PE) 1(0A +acts. Siene %as an ins&rance agent.

2n acco&nt of #is em loyers$ C#ina '&t&al =ife /ns&rance Com any$ )1$C@(.20$ %as aid to #im$ %#ic# 1e 'ai-ed and re'u ed to turn o)er to t1em.

"C

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.

3ence$ #e %as *on)i*ted o' t1e *rime o' e ta'a in t#e C+/ %#ic# sentenced #im to be im risoned in Bilibid. 7&ring t#e trial$ acc&sed offered no evidence on #is o%n be#alf and rest #is a eal s&bstantially & on t#e a--e4ed 'ai-ure o' t1e .ro e*ution to e ta8-i 1 t1e e0i ten*e o' a dut7 or o8-i4ation im.o ed on t1e de'endant to turn o)er 1i .rin*i.a- t1e 'und %#ic# #e is c#arged %it# a ro riating to #is o%n &se. 7efendant contends t#at t#e trial co&rt erroneo&sly admitted in evidence a certain doc&ment &r orting to be a contract of agency signed by t#e defendant. ,#e name of t#e acc&sed is attac#ed to t#is doc&ment$ and one of t#e %itnesses$ t#e district agent of t#e /ns&rance Com any$ stated t#at it %as t#e contract of agency it &r orted to be$ b&t failed to state s ecifically t#at t#e signat&re attac#ed t#ereto %as t#e signat&re of t#e defendant$ t#o&g# #e declared t#at #e kne% #is signat&re and #ad seen #im %rite it on vario&s occasions.

Co&rt fo&nd rej&dicial to and it is assignments objections.

no error in t#e roceedings t#e real rig#ts of t#e acc&sed$ &nnecessary to disc&ss t#e of error based on t#ese

Gu5man ) Court o' A..ea- (GEN) *&ly @1$ 1(C" 4eyes$ *.B.=.$ * FAC"S> *onat#an 5&6man %as a traveling sales agent of ;e% =ife Commercial$ selling vario&s =a ,ondena %ine in a tr&ck toget#er %it# a driver and a #el er. 3e made cas# sales amo&nting to )D$!A@."2 in A arri$ Cagayan. 3e informed t#e driver t#at )2$!D0.C0 %as stolen and re orted t#e matter to t#e olice. 'ean%#ile$ on t#eir %ay #ome$ t#ey %ere sto ed by a&t#orities reG&esting 5&6man to exec&te an affidavit regarding t#e alleged t#eft. 5&6man instr&cted t#e driver to deliver )1$"@0 in cas# and )D0@.12 in c#eck to t#e manager$ 9nriG&e 5o. 5o re orted t#e matter to t#e olice and 5&6man %as s&bseG&ently G&estioned. ,#e latter reG&ested t#at 5o defer t#e filing of t#e com laint and t#at #e romised to ref&nd t#e amo&nt lost. 3o%ever$ 5&6man %as still rosec&ted for t#eft for t#e &nret&rned amo&nt of )!0D.A0. ISSUE> :2; 5&6man %as liable for t#eft ,EL&> ;2. An agent$ &nlike a servant or messenger$ #as bot# t#e #ysical and j&ridical ossession of t#e goods received in agency$ or t#e roceeds t#ereof$ %#ic# takes t#e lace of t#e goods after t#eir sale by t#e agent. 3is d&ty to t&rn over t#e roceeds of t#e agency de ends & on #is disc#arge$ as %ell as t#e res&lt of t#e acco&nting bet%een #im and t#e rinci alE and #e may set & #is rig#t of ossession as against t#at of t#e rinci al &ntil t#e agency is terminated. As t#e acc&sed converted to #is o%n &se roceeds of sales of merc#andise delivered to #im as agent$ %#ic# #e received in tr&st for and &nder obligation to deliver and t&rn over to #is rinci al$ #e is g&ilty of t#e crime of estafa. ,#is #as been t#e consistent r&ling of t#e Co&rt in cases %#ere a sales agent misa ro riates or fails to t&rn over to #is rinci al roceeds of t#ings or goods #e %as commissioned or a&t#ori6ed to sell for t#e latter. ,#e information failed to allege t#e essential element of misa ro riation or conversion to t#e rej&dice of anot#erE #ence t#e acc&sed m&st be acG&itted of t#e crime of t#eft. C1uaF/ur*e ) . Court o' A..ea- (2AI) A ril 2A$ 2000 H&is&mbing$ *.

ISSUE> :o; defendant is obliged to ret&rn t#e amo&nt in G&estion to #is rinci al. ,EL&> YES.

Co&rt. itFs not anymore necessary to revie% t#e action of t#e co&rt in admitting t#e alleged doc&ment in evidence$ beca&se t#e o8-i4ation o' t1e de'endant to de-i)er t1e 'und in Iue tion to 1i em.-o7er i determined 87 t1e .ro)i ion o' arti*-e #C20 o' t1e Ci)i- Code. I9very agent is bo&nd to give an acco&nt of #is transactions and to ay to t#e rinci al all t#at #e may #ave received by virt&e of t#e agency$ even t#o&g# %#at #as been received is not o%ed to t#e rinci al.I -ince not#ing to t#e contrary a ears in t#e record$ and t#e e0i ten*e o' t1e a4en*7 and t#e collection of t#e f&nds on acco&nt of t#e rinci al #aving been e ta8-i 1ed$ t1e o8-i4ation to de-i)er t1e e 'und to t1e .rin*i.a- mu t 8e 1e-d to 1a)e 8een im.o ed u.on t1e a4ent 87 )irtue o' t1e *ontra*t o' a4en*7. A ellant$ #o%ever$ contented t#at t#e co&rt erred in admitting in evidence a certain letter %ritten by t#e defendant %#erein #e admitted t#e collection of certain f&nds on acco&nt of #is rinci al. Co&rt said t#at t#e exec&tion of t#is letter %as concl&sively establis#ed$ and t#at it %as ro erly admitted$ being ertinent and material to t#e iss&e in t#e case. ,#ere %ere ot#er objections to t#e admission of certain testimony at t#e trial of t#e case$ b&t

""

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
+acts. 2n A&g&st 1"$ 1(!C$ 4amon 4ocamora$ t#e 'anager of 'etrobank$ reG&ested +r&ct&oso )eBaflor$ Assistant Cas#ier$ to cond&ct a #ysical b&ndle co&nt of t#e cas# inside t#e va&lt$ %#ic# s#o&ld total )D$000$000.00$ more or less. 7&ring t#is initial cas# co&nt$ t#ey discovered t#at t#ere %as a s#ortage of )1C0$000.00. ,#e 2ne 3&ndred )eso bills act&ally co&nted %as )@$!C0$000.00 as against t#e balance of )D$000$000.00 in t#e Cas# in Ma&lt 0C/M1 -&mmary -#eet$ or a total s#ortage of )1C0$000.00. ,#e next day$ to determine if t#ere %as act&ally a s#ortage$ a re?verification of t#e records and doc&ments of t#e transactions in t#e bank %as cond&cted. ,#ere %as still a s#ortage of )1C0$000.00. +o&r investigations %ere cond&cted and t#ese investigations concl&ded t#at t#ere %as a s#ortage of )1C0$000.00$ and t#e erson rimarily res onsible %as t#e bankFs Cas# C&stodian$ Cristeta C#&a?B&rce. A criminal case for estafa %as filed against C#&a? B&rce$ %#ile a civil case for s&m of money and damages %L reliminary attac#ment and garnis#ment %as filed against etitioner and #er #&sband. ,#e trial co&rt rendered a consolidated decision finding etitioner 0a1 g&ilty of estafa &nder Article @1C 011 0b1 of t#e 4evised )enal Code in t#e criminal case$ and 0b1 liable for t#e amo&nt of )1C0$000.00 in t#e civil case. /ss&e. :#et#er or not t#e elements of estafa t#ro&g# conversion or misa ro riation %ere roven beyond reasonable do&bt 3eld. ;2. ,#e first element Ythat personal property is received in trust, on commission, for administration or under any other circumstance involvin# the duty to ma&e delivery of or to return the same, even thou#h the obli#ation is #uaranteed by a bondZ is absent. :#en t#e money$ goods$ or any ot#er ersonal ro erty is received by t#e offender from t#e offended arty 011 in tr&st or 021 on commission or 0@1 for administration$ t#e offender acG&ires bot# material or #ysical ossession and j&ridical ossession of t#e t#ing received. *&ridical ossession means a ossession %#ic# gives t#e transferee a rig#t over t#e t#ing %#ic# t#e transferee may set & even against t#e o%ner. /n t#is case$ etitioner %as a cas# c&stodian %#o %as rimarily res onsible for t#e cas#?in?va&lt. 3er ossession of t#e cas# belonging to t#e bank is akin to t#at of a bank teller$ bot# being mere bank em loyees. ,#ere is an essential distinction bet%een t#e ossession by a receiving teller of f&nds received from t#ird ersons aid to t#e bank$ and an agent %#o receives t#e roceeds of sales of merc#andise delivered to #im in agency by #is rinci al. /n t#e former case$ ayment by t#ird ersons to t#e teller is ayment to t#e bank itselfE t#e teller is a mere c&stodian or kee er of t#e f&nds received$ and #as no inde endent rig#t or title to retain or ossess t#e same as against t#e bank. An a4ent, on t1e ot1er 1and, *an e)en a ert, a a4ain t 1i o?n .rin*i.a-, an inde.endent, autonomou , ri41t to retain mone7 or 4ood re*ei)ed in *on eIuen*e o' t1e a4en*7D a ?1en t1e .rin*i.a- 'ai- to reim8ur e 1im 'or ad)an*e 1e 1a made, and indemni'7 1im 'or dama4e u''ered ?it1out 1i 'au-t. )etitioner #erein being a mere cas# c&stodian #ad no j&ridical ossession over t#e missing f&nds. 3ence$ t#e element of j&ridical ossession being absent$ etitioner cannot be convicted of t#e crime of estafa &nder Article @1C$ ;o. 1 0b1 of t#e 4evised )enal Code.

I.

Arti*-e #$92, #$9@ (!(G)

Art. 1!(2. ,#e agent may a oint a s&bstit&te if t#e rinci al #as not ro#ibited #im from doing soE b&t #e s#all be res onsible for t#e acts of t#e s&bstit&te. 011 :#en #e %as not given t#e o%er to a oint oneE 021 :#en #e %as given s&c# o%er$ b&t %it#o&t designating t#e erson$ and t#e erson a ointed %as notorio&sly incom etent or insolvent. All acts of t#e s&bstit&te a ointed against t#e ro#ibition of t#e rinci al s#all be void. 01A211 Art. 1!(@. /n t#e cases mentioned in ;os. 1 and 2 of t#e receding article$ t#e rinci al may f&rt#ermore bring an action against t#e s&bstit&te %it# res ect to t#e obligations %#ic# t#e latter #as contracted &nder t#e s&bstit&tion. #. !e-ation amon4 .rin*i.a-, a4ent, and u8Fa4ent 2. Generaru-e> A4ent ma7 a..oint u8 titute @. Con eIuen*e o' -a*: o' .ro1i8ition A. E''e*t o' u8 titution -&b?agent defined. a erson to %#om agent delegates as #is agent$ t#e erformance of an act for t#e rinci al %#ic# t#e agent #as been em o%ered to erform t#ro&g# #is re resentative.

"A

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
)o%er of agent to a oint s&b?agent or s&bstit&te allo%ed. Agent #ere is a rinci al %it# res ect to t#e s&bstit&te. =a% allo%s s&c# s&bstit&tion for reasons of convenience and ractical &tility. )rinci al need not fear rej&dice as #e #as rig#t of action not only against agent b&t also against s&bstit&te %it# res ect to obligation %#ic# latter #as contracted &nder t#e s&bstit&tion. ,#is rig#t of action against s&bstit&te is an exce tion to general r&le t#at contracts are binding only bet%een t#e contracting arties. 4elation among rinci al$ agent and s&b?agent. 1. -&b?agent a ointed by agent on latterKs sole acco&nt? s&b agent a stranger to rinci al %#o originally gave life to agency. 2. -&b?agent a ointed by agent %it# a&t#ority from rinci al? %#ere agent a&t#ori6ed to a oint s&b?agent$ relation of rinci al and agent$ exists bet%een rinci al and s&b?agent. @. 9ffect of deat# of rinci alLagent ? if a&t#ority of s&b?agent roceeds from rinci al$ deat# of agent %#o a ointed #im does not affect #is a&t#ority. 9ffects of s&bstit&tion -&bstit&tion ro#ibited ? %#en s&bstit&tion is a ointed by agent against t#e ex ress ro#ibition of rinci al agent exceeds limits of #is a&t#ority t#&s acts of s&bstit&te %ill be void. -&bstit&tion a&t#ori6ed ? if agent given o%er to a oint$ s&bstit&tion #as effect of releasing agent from res onsibility &nless erson a ointed is notorio&sly incom etent or insolvent beca&se t#is %o&ld be ab&se of rinci alKs confidence. -&bstit&tion not a&t#ori6ed$ b&t not ro#ibited ? s&bstit&tion valid if it is beneficial to rinci al beca&se agency #as been exec&ted. B. Ca e 2a*ia + Co. ). 9arner /ro . (!EG) *. *o#ns 1(22 FAC"S> 4es ondent %as t#e resident agent of ins&rance com anies ,#e C#ina fire /ns&rance Com any$ =td.$ ,#e >ang?,s6e /ns&rance Association$ =td.$ and ,#e -tate Ass&rance Co.$ =td. %#ic# are all foreign com anies. 4es ondent served as t#e agent of etitioner for t#e acG&isition of several ins&rance olicies. +ire occ&rred sometime in 1(1($ in t#e b&ilding in %#ic# t#e goods covered by t#e ins&rance olicies %ere stored. )etitioner made a claim for damages &nder its olicies against res ondent. 3eld. +o&nd ;ot 5&ilty on t#e 9stafa c#arge b&t sentenced to ay t#e civil liability of t#e val&e of t#e &nret&rned je%elry. )etitioner did not i so facto commit t#e crime of estafa t#ro&g# conversion or misa ro riation by delivering t#e je%elry to a s&b?agent for sale on commission basis. :e are &nable to agree %it# t#e lo%er co&rtsF concl&sion t#at t#is fact alone is s&fficient gro&nd for #olding t#at etitioner dis osed of t#e je%elry Ias if it %ere #ers$ t#ereby committing conversion and a clear breac# of tr&st.I ,#e la% on agency in o&r j&risdiction allo%s t#e a ointment by an agent of a s&bstit&te or s&b? agent in t#e absence of an ex ress agreement to t#e contrary bet%een t#e agent and t#e rinci al. ISSUE> :2; res ondent %as a mere agent and t#&s not liable for t#e loss. !ULING> >9-. :arner$ Barnes P Co.$ %as j&st an agent of t#e ins&rance com anies. /t did not make any contract %it# t#e etitioner$ and is not liable to t#e laintiff on any contract$ eit#er as rinci al or agent. +or s&c# reason$ etitioner is not entitled to recover its losses from :arner$ Barnes P Co.$ eit#er as rinci al or agent. ,#ere is no breac# of any contract %it# t#e laintiff by :arners$ Barnes P Co.$ eit#er as agent or rinci al$ for t#e sim le reason t#at :arner as agent or rinci al$ never made any contract$ oral or %ritten$ %it# t#e laintiff. Serona ). CA (A//Y) 2002 *. >nares?-antiago +acts. =eonida H&ilatan delivered ieces of je%elry to etitioner Mirgie -erona to be sold on commission basis. By oral agreement of t#e arties$ -erona s#all remit ayment or ret&rn t#e ieces of je%elry if not sold to H&ilatan$ bot# %it#in @0 days from recei t of t#e items. -erona #ad earlier entr&sted t#e je%elry to one 'aric#& =abrador for t#e latter to sell on commission basis. )etitioner %as not able to collect ayment from =abrador$ %#ic# ca&sed #er to like%ise fail to ay #er obligation to H&ilatan. H&ilatan sent a demand letter to -erona b&t s#e failed to ay t#e rinci al. =abrador says t#at s#e sold some of t#e je%elry to a @rd erson %#o did not ay #er. -erano is c#arged %it# estafa and is no% a ealing to #ave t#e decision of t#e ,C reversed. /ss&e. :o; -erona is liable for t#e acts of #er s&b? agent =abrador

"!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/n t#e case at bar$ t#e a ointment of =abrador as etitionerFs s&b?agent %as not ex ressly ro#ibited by H&ilatan$ as t#e ackno%ledgment recei t$ does not contain any s&c# limitation. ;eit#er does it a ear t#at etitioner %as verbally forbidden by H&ilatan from assing on t#e je%elry to anot#er erson before t#e ackno%ledgment recei t %as exec&ted or at any ot#er time. ,#&s$ it cannot be said t#at etitionerFs act of entr&sting t#e je%elry to =abrador is c#aracteri6ed by ab&se of confidence beca&se s&c# an act %as not roscribed and is$ in fact$ legally sanctioned. /n t#e case at bar$ it %as establis#ed t#at t#e inability of etitioner as agent to com ly %it# #er d&ty to ret&rn eit#er t#e ieces of je%elry or t#e roceeds of its sale to #er rinci al H&ilatan %as d&e$ in t&rn$ to t#e fail&re of =abrador to abide by #er agreement %it# etitioner. ;otably$ =abrador testified t#at s#e obligated #erself to sell t#e je%elry in be#alf of etitioner also on commission basis or to ret&rn t#e same if not sold. /n ot#er %ords$ t#e ieces of je%elry %ere given by etitioner to =abrador to ac#ieve t#e very same end for %#ic# t#ey %ere delivered to #er in t#e first lace. ConseG&ently$ t#ere is no conversion since t#e ieces of je%elry %ere not devoted to a &r ose or &se different from t#at agreed & on. -imilarly$ it cannot be said t#at etitioner misa ro riated t#e je%elry or delivered t#em to =abrador I%it#o&t rig#t.I Aside from t#e fact t#at no condition or limitation %as im osed on t#e mode or manner by %#ic# etitioner %as to effect t#e sale$ it is also consistent %it# &s&al ractice for t#e seller to necessarily art %it# t#e val&ables in order to find a b&yer and allo% ins ection of t#e items for sale. ,#e agents to %#om ersonal ro erty %as entr&sted for sale$ concl&sively roves t#e inability to ret&rn t#e same is solely d&e to malfeasance of a s&bagent to %#om t#e first agent #ad act&ally entr&sted t#e ro erty in good fait#$ and for t#e same &r ose for %#ic# it %as receivedE t#ere being no ro#ibition to do so and t#e c#attel being delivered to t#e s&bagent before t#e o%ner demands its ret&rn or before s&c# ret&rn becomes d&e$ %e #old t#at t#e first agent can not be #eld g&ilty of estafa by eit#er misa ro riation or conversion. ,#e ab&se of confidence t#at is c#aracteristic of t#is offense is missing &nder t#e circ&mstances. An agent %#o is not ro#ibited from a ointing a s&b?agent b&t does so %it#o&t ex ress a&t#ority is res onsible for t#e acts of t#e s&b?agent. Considering t#at t#e civil action for t#e recovery of civil liability arising from t#e offense is deemed instit&ted %it# t#e criminal action$ etitioner is liable to ay com lainant H&ilatan t#e val&e of t#e &n aid ieces of je%elry. Peo.-e ). F-ore (EA!LA) Lor*a ). &inero (6ANCES) +ebr&ary 2!$ 1(C! *. Beng6on +acts. /n anot#er civil case$ 7ineros as 7e &ty -#eriff and in name of s#eriff$ &rs&ant to t#e %rit of exec&tion$ sold t#e ro erty involved in t#at case$ disregarding t#ird arty claim of =orca. =orca t#en instit&ted action for damages against 7ineros. 4&ling. C+/ ? action dismissed. 4es onsibility s#o&ld be attrib&ted to t#e s#eriff$ not #is de &ty. /ss&e. :2; 7ineros as 7e &ty -#eriff is liable for damages 39=7. -ec @@D of t#e 4evised Admin Code$ %#ic# states t#at de &ties may be reG&ired to give adeG&ate ersonal bond as sec&rity against lossR$ is a licable only %#en t#e de &ty acts in #is o%n name or is g&ilty of active malfeasance or %#ere #e exceeds t#e limits of #is agency. /n t#is case$ t#e certificate of sale clearly s#o%s t#at 7ineros acted in t#e name of t#e 9x?2fficio )rovincial -#eriff. ,#e -#eriff is t#e one liable to t#ird ersons on t#e acts of #is de &ty$ in t#e same manner t#at t#e rinci al is res onsible for t#e acts of #is agent$ t#at is %#y #e is reG&ired to ost a bond for t#e benefit of %#om it may concern &nder -ec @@0 of t#e 4evised Admin Code. 7is osition. *&dgment affirmed. 2arIue5 ). 3are-a (ALAIN) 7ecember 2D$ 1(C2 =abrador$ *.. FAC"S> )laintiff 5&tierre6 =ora %as a&t#ori6ed by defendants 0s o&ses Marela1 to negotiate t#e sale of t#eir s#are or interest in a arcel of land on )la6a 5oiti$ 'anila$ and #aving meet #is co? laintiff =. 5. 'arG&e6$ a real estate broker$ bot# of t#em agreed to %ork toget#er for t#e sale of defendantKs ro ertyE t#at t#ey fo&nd a ready$ %illing$ and able b&yer$ %#ic# acce ted defendantsK rice and terms$ b&t t#at t#ereafter defendants$ %it#o&t any j&stifiable reason$ ref&sed to carry o&t t#e sale and exec&te t#e necessary deed t#ereforeE and t#at as a conseG&ence laintiffs failed to receive t#e commission %#ic# t#ey %ere entitled to receive. ,#&s$ laintiffs filed com laint. 2bjection %as filed by t#e defendants. 2bjection to t#e com laint$ #o%ever$ is not t#at 'arG&e6 #as no rig#t to s#are in t#e com ensation to be aid =ora$ %#om defendants #ad directly engaged$ b&t t#at 'arG&e6 can not join in t#is action and enforce t#erein #is rig#ts directly

"(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
against t#e defendants$ evidently beca&se defendants never dealt %it# 'arG&e6$ directly or indirectly$ or$ in ot#er %ords$ t#at bot# 'arG&e6 and #is services %ere not kno%n to dismiss s#o% t#at s&c# in fact %as t#e objection ISSUE> /s t#ere a ca&se of action in favor of 'arG&e6 against t#e defendants< ,e-d> /t is not denied t#at =ora$ if #e rendered t#e service alleged in t#e com laint$ %o&ld #ave a rig#t to be aid com ensation for t#e service #e rendered jointly %it# 'arG&e6. 3e acted as a broker$ and a broker is entitled to a commission for #is services. ,#ere is no ro#ibition in la% against t#e em loyment of a com anion to look for a b&yerE neit#er is it against &blic olicy. ;eit#er %as t#ere even any im lied &nderstanding bet%een =ora and t#e defendants t#at no art of t#e com ensation to %#ic# =ora %o&ld be entitled to receive co&ld be aid to any com anion or #el er of =ora. 'arG&e6Ks rig#t to com ensation can not$ t#erefore$ be dis &ted &nder t#e o erative facts set fort# in t#e com laint. 8nder section " of 4&le @$ IAll ersons in %#om . . . any rig#t to relief in res ect to or arising o&t of t#e same transaction . . . is alleged to exist$ %#et#er jointly$ severally$ or in t#e alternative$ may$ . . . join as laintiffs . . . %#ere any G&estion of la% or fact common to all s&c# laintiffs . . . may arise in t#e actionE )laintiff 'arG&e6$ in t#e case at bar$ clearly falls &nder t#e above r&le. 3e is entitled to be aid #is commission o&t of t#e very contract of agency bet%een =ora and t#e defendantsE =ora and #e acted jointly in rendering services to defendants &nder =oraKs contract$ and t#e same G&estions of la% and fact govern t#eir claims. ,#e r&les do not reG&ire t#e existence of rivity of contract bet%een 'arG&e6 and t#e defendants as reG&ired &nder t#e common la%E all t#at t#ey demand is t#at 'arG&e6 #as a material interest in t#e s&bject of t#e action$ t#e rig#t to s#are in t#e brokerKs commission to be aid =ora &nder t#e latterKs contract$ %#ic# rig#t =ora does not deny. ,#is is s&fficient to j&stify t#e joinder of 'arG&e6 as a arty laintiff$ even in t#e absence of rivity of contract bet%een #im and t#e defendants. fello% agents acted beyond t#e sco e of t#eir a&t#ority. #. !u-e ?1en 2 a4ent inde.endent-7 a..ointed

2uni*i.a- Coun*i- o' I-oi-o ) . E)an4e-i ta (AN6 S.) Fa*t > ,an 2ng -6e Mda. 7e ,an ,oco %as a%arded by t#e C+/ of /loilo D2$("".D0 # for t#e stri of land belonging to #er t#at %as taken by t#e '&nici al Co&ncil to %iden a &blic street.

After

t#e case %as remanded to t#e co&rt of origin$ and t#e j&dgment rendered t#erein #ad become final and exec&tory$ Attorney. *ose 9vangelista 0,an 2ng -6eFs co&nsel in t#e ex ro riation case1$ in #is o%n be#alf and as co&nsel for t#e administratrix of Attorney. *ose 'a. ArroyoFs intestate estate 0%#o %as t#e revio&s co&nsel of ,an 2ng -6e in t#is case1$ filed a claim in t#e same case for rofessional services rendered by t#em$ %#ic# t#e co&rt$ acting %it# t#e consent of ,an 2ng -6e$ fixed at 1CN of t#e amo&nt of t#e j&dgment. At t#e #earing of t#e said claim$ )#ili ine ;ational Bank 0);B1 and a re resentative of t#e late Antero -oriano a eared. );B rayed t#at t#e amo&nt of t#e j&dgment be t&rned over to it beca&se t#e land taken over #ad been mortgaged to t#e bank. ,#e re resentative of t#e late Antero 0 revio&s co&nsel of ,an 2ng in ot#er cases concerning #er ot#er ro erties1$ on t#e ot#er #and$ claimed t#e amo&nt of t#e j&dgment as it #ad been assigned to Antero by t#e attorney?in?fact of ,an 2ng -6e$ ,an Boon ,iong. Antero$ in t&rn$ assigned t#e said credit to 'a&rico Cr&6 P Co.$ /nc.

After

J.

Arti*-e #$9A, #$9B (2A!K)

#earing all t#e adverse claims on t#e amo&nt of t#e j&dgment$ t#e co&rt ordered t#at t#e attorneyFs lien in t#e amo&nt of 1CN of t#e j&dgment$ be recorded in favor of Attorney *ose 9vangelista$ in #is be#alf and as co&nsel for t#e administratrix of Attorney. *ose 'a. Arroyo$ and directed t#e '&nici ality of /loilo to file an action of inter leading against t#e adverse claimants$ );B$ Antero -oriano$ 'a&ricio Cr&6 P Co.$ *ose 9vangelista and *ose Arroyo at t#e C+/ of /loilo. I-oi-o> declared t#e deed of assignment of credit exec&ted by ,an 2ng -6e$ t#ro&g# #er attorney?in?fact ,an Boon ,iong$ in favor of t#e late Antero -oriano %as validE like%ise$ t#e assignment exec&ted by Antero -oriano in favor of 'a&ricio Cr&6 P Co %as declared valid. ,an 2ng -6e %as also ordered to de osit said s&m in a local bank %it#in t#e eriod of (0 days from t#e time t#e j&dgment s#all become final$ at t#e dis osal of 'a&ricio Cr&6 P Co.$ and in case t#at ,an 2ng s#all not make s&c# de osit in t#e

CFI

Art. 1!(D. ,#e res onsibility of t%o or more agents$ even t#o&g# t#ey #ave been a ointed sim&ltaneo&sly$ is not solidary$ if solidarity #as not been ex ressly sti &lated. 01A2@1 Art. 1!(C. /f solidarity #as been agreed & on$ eac# of t#e agents is res onsible for t#e non?f&lfillment of agency$ and for t#e fa&lt or negligence of #is fello%s agents$ exce t in t#e latter case %#en t#e

A0

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
manner indicated$ said amo&nt s#all bear t#e legal interest of "N er ann&m from t#e date %#en ,an 2ng s#all fail to make t#e de osit %it#in t#e eriod set fort#$ &ntil f&lly aid. ,an 2ng filed an a eal. I ue> K. Arti*-e #$9% (6ESSA) inde endently$ t#e consent of one %ill not be reG&ired to validate t#e acts of t#e ot#er &nless t#at a ears ositively to #ave been t#e rinci alFs intention. &i .o iti)e> 7ecision Affirmed in its entirety.

1.

:2; ,an Boon ,iong$ as attorney?in?fact of ,an 2ng$ %as em o%ered by #is rinci al to make an assignment of credits$ rig#ts$ and interests$ in ayment of debts for rofessional services rendered by la%yers for ,an 2ng. 2. 9(N t1e 'ai-ure o' t1e ot1er attorne7FinF'a*t o' "an (n4, "an 2ontano, to *on ent to t1e deed o' a i4nment, t1e -atter 8ein4 a- o aut1ori5ed to .a7 in t1e name and 8e1a-' o' t1e .rin*i.a-, a-- 1er de8t and t1e -ien and en*um8ran*e on 1er .ro.ert7, in)a-idate t1e a i4nment o' *redit 87 "an /oon "ion4 to t1e -ate Antero. ,e-d ; !atio> 1.>es$ #e %as em o%ered. /n )aragra # M/ of t#e o%er of attorney exec&ted by ,an 2ng in favor of ,an Boon ,iong$ ,an Boon ,iong is a&t#ori6ed to em loy and contract t#e services of la%yers & on s&c# conditions as #e may deem convenient$ to take c#arge of any actions necessary or ex edient for t#e interests of #is rinci al$ and to defend s&its bro&g#t against #er. ,#is o%er necessarily im lies t#e a&t#ority to ay for t#e rofessional services t#&s engaged. /n t#e resent case$ t#e assignment made by ,an Boon ,iong in favor of Attorney Antero for rofessional services rendered in ot#er cases in t#e interest of ,an 2ng and #er co#eirs$ %as t#at credit %#ic# s#e #ad against t#e m&nici ality of /loilo$ and s&c# assignment %as eG&ivalent to t#e ayment of t#e amo&nt of said credit to Antero for rofessional services.

Art. 1!(". ,#e agent o%es interest on t#e s&ms #e #as a lied to #is o%n &se from t#e day on %#ic# #e did so$ and on t#ose %#ic# #e still o%es after t#e exting&is#ment of t#e agency. ,%o distinct cases contem lated #ere. 11 s&ms belonging to t#e rinci al %#ic# t#e agent a lied to #is o%n &se agent is liable for interest by %ay of com ensation or indemnity 0not to be conf&sed %it# interest for delay1 interest s#all be com &ted from t#e day on %#ic# t#e agent did so 0a lied to o%n &se1 agentFs liability is %it#o&t rej&dice to a criminal action t#at may be bro&g#t against #im beca&se of conversion 21 s&ms %#ic# t#e agent still o%es t#e rinci al after t#e ex iration of t#e agency general r&le. t#ere is no liability for interest on s&ms %#ic# #ave not been converted for agentFs &se exce tion. t#e agent %#o is fo&nd to o%e t#e rinci al s&ms after t#e exting&is#ment of t#e agency is liable for interest interest s#all be com &ted from t#e date t#e agency is disting&is#ed 2ende5ona ). C. 3iuda de Goitia (/A2/I) 'arc# 11$ 1(@0 Millamor$ *. +acts. Benigno 5oitia %as re resentative and attorney?in?fact of laintiffs =eonor 'ende6ona and Malentina /6ag&irre > ;a6abal in t#e joint? acco&nt artners#i kno%n as t#e I,ren de Ag&adas.I As #e %as also manager of t#e artners#i at t#at time and beca&se laintiffs lived in - ain$ 5oitia collected t#e dividends d&e laintiffs. )rior to 1(1C$ Benigno 5oitia remitted to laintiffs t#eir dividends every year.

2.

:it# regard to t#e fail&re of t#e ot#er attorney?in?fact of ,an 2ng$ ,an 'ontano$ to consent to t#e deed of assignment$ t#e latter being also a&t#ori6ed to ay$ in t#e name and be#alf of t#e rinci al$ all #er debts and t#e liens and enc&mbrances on #er ro erty$ t#e very fact t#at different letters of attorney %ere given to eac# of t#ese t%o re resentatives s#o%s t#at it %as not t#e rinci alFs intention t#at t#ey s#o&ld act jointly in order to make t#eir acts valid. +&rt#ermore$ t#e a ellant %as a%are of t#at assignment and s#e not only did not re &diate it$ b&t s#e contin&ed em loying Attorney. Antero -oriano to re resent #er in co&rt. ,#e Co&rt is of t#e o inion and so #olds t#at %#en a erson a oints t%o attorneys?in?fact

A1

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
3o%ever$ from 1(1C &ntil #is deat# in 1(2"$ #e failed to remit any dividends to laintiffs. :#en 5oitia died$ co&nsel for bot# laintiffs filed t#eir claims %it# t#e committee of claims and a raisal of 5oitiaFs estate. C2''/,,99 disa roved laintiffsFclaims. )laintiffs a ealed to trial co&rt. 7&ring trial$ it %as fo&nd t#at from 1(1C to 1(2"$ Benigno 5oitia indeed failed to remit and acco&nt for t#e dividends #e received in be#alf of laintiffs. ,#&s$ trial co&rt directed res ondent 9ncarnacion C. Mda$ de 5oitia$ %#o %as j&dicial administratrix of #er #&sbandFs estate$ to render a j&dicial acco&nt of. 1. ,#e intestate estate of t#e deceased Benigno 5oitia and 2. ,#e amo&nts collected by #er #&sband as attorney?in?fact and re resentative of t#e laintiffs. After #earing$ ,4/A= C284, ordered res ondent to ay t#e )1@$1D0 to 'ende6ona and )C$2C" to /6ag&irre$ not# amo&nts %it# legal interest from t#e date of filing of t#e com laint. ,#e amo&nts %ere based c#iefly on t#e testimonies of 4& erto -antos$ Benigno 5oitiaFs s&ccessor as manager of t#e artners#i $ and 4amon -alinas$ a stock#older of t#e com any. /ss&esDL3eld. 1. 9(N tria- *ourt 1ad =uri di*tion to admit t1e amended *om.-aint , ?1i*1 *-aimed a 4reater amount t1an ?a *-aimed 8e'ore t1e *ommittee.B >9-. -ection AA" of t#e Code of Civil )roced&re rovides t#at & on t#e lodging of s&c# a eal %it# t#e clerk$ t#e dis &ted claim s#all stand for trial in t#e same manner as any other action in the Court of +irst ,nstance$ t#e creditor being deemed to be t#e laintiff$ and t#e estate t#e defendant$ and leading as in ot#er actions s#all be filed. Considering t#e distance t#at se arated t#e laintiffs from t#eir attorney?in?fact and t#at t#e latter failed to s& ly t#em %it# data from 1(1C to 1(2"$ it is nat&ral t#at t#ey #ad to resort to calc&lating t#e amo&nts d&e t#em from t#eir stocks in I,ren de Ag&adas.I ,o deny t#em t#e rig#t to amend t#eir com laint in accordance %it# section AA"$ %#en t#ey #ad sec&red more definite information as to t#e amo&nts d&e t#em$ %o&ld be an inj&stice$ es ecially since t#is action
4 5

arises from tr&st relations bet%een laintiffs and t#e deceased 5oitia.

t#e

2. 9(N .-ainti''

are t1e rea- .artie in intere t. >9-. Benigno 5oitia recogni6ed t#at laintiffs o%ned s#ares in t#e artners#i . ,#e com anyFs balance s#eet also contains laintiffsFnames are s#are#olders. +&rt#ermore$ res ondent failed to file a dem&rrer on t#e gro&nd of misjoinder of arties. /n accordance %it# -ec. (@ of t#e Code of Civil )roced&re$ res ondent is deemed to #ave %aived any objection on t#is gro&nd.

3. 9(N tria- *ourt 1ad .o?er to order

de'endant to render an a**ount o' di)idend u..o ed to 1a)e 8een re*ei)ed 87 1er de*ea ed 1u 8and. >9-. ,#e &r ose of t#e order %as to give res ondent an o ort&nity of s#o%ing %#at amo&nts #er #&sband received on acco&nt of t#e a elleesK stock. ,#e com laint demanded t#e ret&rn of t#ese amo&nts alleged to #ave been received by res ondentFs deceased #&sband so it %as necessary to determine %#et#er s&c# amo&nts %ere really received or not.

4. 9(N re .ondent i

-ia8-e 'or intere t on t1e amount a--e4ed-7 due. >9-. According to Article1A2D of t#e 02ld1 Civil Code$ an agent s#all be liable for interest & on any s&ms #e may #ave a lied to #is o%n &se$ from t#e day on %#ic# #e did so$ and & on t#ose %#ic# #e still o%es$ after t#e ex iration of t#e agency$ from t#e time of #is defa&lt. A.L. Ammen "ran .ortation 2ar4a--o (!EK) Co. ) &e

+AC,-. /n +ebr&ary 1(2"$ A.=. Ammen ,rans ortation Com any a lied for a certificate of &blic convenience %it# t#e )&blic -ervice Commission 0)-C1 to o erate an a&totr&ck service bet%een all rinci al oints of Albay$ Camarines$ and -orsogon. At t#e time of t#e decision$ Ammen %as already lying a ro&te bet%een =egas i and BanG&ero#an. =ater$ t#e )-C granted a similar certificate to +eli e =otivio to o erate an a&totr&ck service bet%een =egas i and 'anito$ a fart#er destination. ,#is %as a roved$ alt#o&g# t#e road %as not constr&cted yet. +or val&e and consent and a roval of t#e )-C$ Ammen &rc#ased and acG&ired t#e rig#ts %#ic# #ad been granted to =otivio for t#e said service. A mont# before =otivio a lied for #is certificate$ 'aria de 'argallo 07e 'argallo1 a lied for t#e same certificate to o erate an a&tob&s line

9xcl&des 9vidence?related iss&es. )laintiffs only asked for ann&al dividends before t#e committee %#ereas t#e amended com laint in t#e trial co&rt asked for ordinary and extraordinary dividends.

A2

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
bet%een =egas i and 'anito. ,#is a lication %as set for #earing ;ovember of t#at year. :#en t#e case %as called & on$ it %as ost oned$ t#e reason being t#at t#e road over %#ic# t#e license %as so&g#t %as not yet constr&cted. ;otably$ #o%ever$ in =otivioFs a lication$ %#ic# %as a roved$ t#e road #ad also not yet been constr&cted. /t %o&ld take more t#an 2 years for #er a lication to be finally granted. :#at #a ened %as t#at$ alt#o&g# 7e 'argalloFs a lication %as earlier t#an =otivioFs by one mont#$ =otivio %as granted #is certificate more t#an t%o years before 7e 'argallo %as granted #ers. ,#is is com o&nded by t#e fact t#at 7e 'argallo %as not notified or a arty of =otivioFs #earing. ;o% =otivioFs rig#ts on #is certificate are no% #eld by Ammen$ %#ic# in any case #ad already been granted a certificate lying a ro&te D0 ercent of t#e %ay bet%een =egas i and 'anito 0=egas i and BanG&ero#an1$ and %as rendering good and efficient services %it#o&t com laint from t#e &blic. Ammen no% contests t#e license granted to de 'argallo by t#e )-C. ISSUE> :2; =otivioFs license is legally binding on de 'argallo ,EL&;!A"I( N(. Alt#o&g# t#e co&rt gives Ammen t#e rig#t to o erate bet%een =egas i and BanG&ero#an$ as t#ey #ad t#e earliest a lication and service$ t#e story is different on t#e road bet%een BanG&ero#an and 'anito #ad not yet been constr&cted. Idea--7, &e 2ar4a--o ?i-- 1a)e a*Iuired ri41t 8e'ore Loti)io 87 )irtue o' 1er .rior 'i-in4 to o.erate 8et?een /anIuero1an and 2anito. Sin*e 1e ?a not a .art7 to Loti)ioE 1earin4 and ?a not er)ed noti*e, none o' 1er ri41t ?i-- 8e di)e ted on t1e 4rantin4 o' Loti)ioE *erti'i*ate. 3o%ever t#e co&rt is not dis osed to define t#e legal rig#ts of eit#er arty beca&se t#e roads #ad not yet been constr&cted bet%een BanG&ero#an and 'anito. As for t#e =egas i and BanG&ero#an ro&te$ an excl&sive certificate s#o&ld be iss&ed to Ammen to o erate bet%een t#ese t%o oints. &e*i ion re)er ed. exceeds t#e limits of #is a&t#ority %it#o&t giving s&c# arty s&fficient notice of #is o%ers. #. Genera- ru-eD e0*e.tion &utie and -ia8i-itie o' a4ent to t1ird .er on ,#e r&le is t#at t#e rinci al is res onsible for t#e acts of t#e agent done %it#in t#e sco e of #is a&t#ority and s#o&ld bear any damage ca&sed to t#ird ersons 0Art 1(101 1. In 4enera,#e d&ties of an agent to t#ird ersons and #is corres onding liabilities m&st be considered %it# reference to t#e c#aracter of #is act as to %#et#er it is a&t#ori6ed or &na&t#ori6ed$ and also %it# reference to t#e nat&re of liability %#ic# it so&g#t to assert as being in contract or tort. 2. Unaut1ori5ed a um.tion o' a4en*7 2ne %#o &na&t#ori6edly ass&me to act for anot#er is g&ilty of a %rong$ and is liable for t#e damage to t#ose dealing %it# #im in reliance on #is ass&med a&t#ority in t#at t#ey are de rived of t#e benefit of t#e rinci al. 2f co&rse$ if no damages #ave been s&stained$ no liability for t#e agentFs false ass&m tion of a&t#ority exists. 3. Nature o' -ia8i-it7 A &r orted agent %ill be #eld ersonally liable as rinci al on a contract exec&ted %it#o&t a&t#ority if the contract contains apt words to bind him personally$ or if s&c# %as t#e intention of t#e arties. 32:9M94$ in t#e absence of an a t ex ression or intention$ t#e nat&re of #is liability is t#e s&bject of some divergence in j&dicial o inion. a. /n some j&risdictions$ in t#e absence of stat&te$ t#e &r orted agent is #eld liable as rinci al on t#e contract itself$ based$ it #as been said on t#e t#eory t#at since t#e contact %as intended to bind someone$ it m&st necessarily bind t#e &r orted agent even if t#e rinci al is &naffected. b. According to t#e %eig#t of a&t#ority$ t#e &r orted agent is not liable on t#e contract itself$ for t#e reason t#at t#ere #as been no intention to bind t#e agent$ and to #old t#at #e is bo&nd %o&ld$ in effect$ create a ne% contract for t#e arties. 2f co&rse$ if t#ere is a stat&te$ t#e &r orted agent %ill be #eld liable on t#e contract itself. "ort *a e Agency is no defense to action against an agent based & on commission of tort$ #is

L.

Arti*-e #$9C ("(PE)

Art. 1!(A. ,#e agent %#o acts as s&c# is not ersonally liable to t#e arty %it# %#om #e contracts$ &nless #e ex ressly binds #imself or

4.

A@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
liability being neit#er increased nor decreased by t#e fact of #is agency. /f t#e tort is committed by t#e agent %it#in t#e sco e of #is a&t#ority$ bot# t#e rinci al and t#e agent are liable. 5. 91ere dut7 )io-ated o?ed o-e-7 to t1e .rin*i.aAn agent is liable to t#ird ersons for inj&ry res&lting from #is misfeasance or malfeasance$ meaning by t#ese terms$ t#e breac# of a d&ty o%ed to t#ird ersons generally inde endent of t#e artic&lar d&ties im osed by #is agency. B&t an agent is generally not liable to t#ird ersons for inj&ry res&lting to nonfeasance$ meaning by t#at term$ t#e omission of t#e agent to erform a d&ty o%ed solely to #is rinci al by reason of #is agency. 91en a4ent ma7 in*ur .er ona- -ia8i-it7 An agent %#o acts as s&c# %it#in t#e sco e of #is a&t#ority re resents t#e rinci al so t#at #is contract is really t#e rinci alFs. 3ence$ t#e agent is not ersonally liable to t#e arty %it# %#om #e contracts &nless #e ex ressly binds #imself or #e exceeds t#e limits of #is a&t#ority %it#o&t giving s&c# arty s&fficient notice of #is o%ers or by #is acts inc&rs liabilities of a rinci al &nder t#e contract. :#en t#e agent ex ressly binds #imself$ #e t#ereby obligates #imself ersonally and by #is o%n act. :#en t#e agent exceeds a&t#ority$ #e really acts %it#o&t a&t#ority and$ t#erefore$ t#e contract is &nenforceable against t#e rinci al &nless t#e latter ratifies t#e act. o ,#e agent becomes ersonally liable beca&se by #is %rong or omission$ #e de rives t#e t#ird erson %it %#om #e contracts of any remedy against t#e rinci al. o /nasm&c# as t#e non?disclos&re of t#e limits agency carries %it# it t#e im lication t#at a dece tion %as er et&ated on t#e &ns&s ecting client$ t#e rovisions on Arts. 1($ 20$ and 21 come into lay. o ,#at t#e agent exceeded #is a&t#ority m&st be roved by t#e rinci al if #e denies liability$ or by t#ird erson if #e %ants to #old t#e agent ersonally liable$ on t#at gro&nd. "1ird .art7E -ia8i-itie to?ard a4ent. +o&r main instances in %#ic# a t#ird arty s&bjects #imself to liability at t#e #ands of an agent. o :#ere t#e agent contracts in #is o%n name for an &ndisclosed rinci al$ in %#ic# case$ t#e agent may s&e t#e t#ird arty to enforce t#e contractE :#ere t#e agent ossesses a beneficial interest in t#e s&bject matter of t#e agency. :#ere t#e agent ays money of #is rinci al to t#ird arty by mistake or &nder t#e contract %#ic# roves s&bseG&ently to be illegal$ t#e agent being ignorant %it# res ect to its illegal nat&reE and :#ere t#e t#ird arty commits a tort against t#e agent. 2. Ca e &/P ). CA (E3A) 1((D H&aison$ L. +acts. *&an B. 7ans$ toget#er %it# #is %ife Candida$ #is son and da&g#ter?in?la%$ a lied for a loan of )C00S %it# 7B) Basilan. As t#e rinci al mortgagor$ 7ans$ t#en A" years of age$ %as advised by 7B) to obtain a mortgage redem tion ins&rance 0'4/1 %it# t#e 7B) 'ortgage 4edem tion /ns&rance )ool 07B) '4/ )ool1. ,#e '4/ remi&m %as ded&cted by 7B) from t#e a roved loan of )@00S and credited t#is Yless 10N service feeZ to t#e '4/ )ool Acco&nt on A&g. 20$ 1(!A. 7ans %as also made to accom lis# and s&bmit t#e I'4/ A lication for /ns&ranceI and t#e I3ealt# -tatement for 7B) '4/ )ool.I 2n -e t. @$ 1(!A 7ans died of cardiac arrest. 2n -e t. 2@$ 1(!A t#e 7B) '4/ )ool notified 7B) t#at 7ans %as not eligible for '4/ coverage$ being over t#e acce tance age limit of "0 years at t#e time of a lication.

7B) a rised Candida 7ans of t#e disa roval of #er late #&sbandKs '4/ a lication. ,#e 7B) offered to ref&nd t#e remi&m of )1$DA".00 %#ic# t#e deceased #ad aid$ b&t Candida 7ans ref&sed to acce t t#e same$ demanding ayment of t#e face val&e of t#e '4/ or an amo&nt eG&ivalent to t#e loan. -#e$ like%ise$ ref&sed to acce t an e #ratia: settlement of )@0S$ %#ic# t#e 7B) later offered. 4es ondent 9state$ t#ro&g# Candida 7ans as administratrix$ filed a com laint for Collection of -&m of 'oney %it# 7amages against 7B) and 7B) '4/ )ool ,C rendered a decision in favor of t#e 9state and against 7B). ,#e 7B) '4/ )ool$ #o%ever$ %as absolved from liability$ after t#e trial co&rt fo&nd no rivity of contract bet%een it and t#e deceased. ,#e trial co&rt declared 7B) in

0;atin1 as a favor

AD

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
esto el for #aving led 7ans into a lying for '4/ and act&ally collecting t#e remi&m and t#e service fee$ des ite kno%ledge of #is age ineligibility. t#e necessary license$ its agents #ere are ersonally liable &nder Art. 1!(A for contracts made in be#alf. ISSUE> :2; )rimateria )#ils$ Baylin and Crame may be #eld ersonally liable ,EL&> ;2. ,#ere is no roof t#at as agents t#ey exceeded t#e limits of t#eir a&t#ority. ,#e rinci al$ %#o s#o&ld be t#e one to raise t#e oint$ never raised it$ denied its liability on t#e gro&nd of excess of a&t#ority. Art. 1!(A does not #old t#at in cases of excess of a&t#ority$ bot# t#e agent and t#e rinci al are liable to t#e ot#er contracting arty. /en4uet Con o-idated Union (2AI) 'arc# 2A$ 1("! Beng6on$ *.).$ *. ). /CI Em.-o7ee

CA affirmed ,C decision in toto.

/--89. :2; 7B) s#o&ld be #eld liable< 39=7. YES$ b&t for a red&ced amo&nt. /n dealing %it# 7ans$ 7B) %as %earing t%o legal #ats. t#e first as a lender$ and t#e second as an ins&rance agent. As an ins&rance agent$ 7B) is not a&t#ori6ed to acce t a lications for '4/ %#en its clients are more t#an "0 years of age. Sno%ing all t#e %#ile t#at 7ans %as ineligible for '4/ coverage beca&se of #is advanced age$ 7B) exceeded t#e sco e of its a&t#ority %#en it acce ted 7anKs a lication for '4/ by collecting t#e ins&rance remi&m$ and ded&cting its agentKs commission and service fee. Art. 1!(A a lies. ,#e liability of an agent %#o exceeds t#e sco e of #is a&t#ority de ends & on %#et#er t#e t#ird erson is a%are of t#e limits of t#e agentKs o%ers. ,#ere is no s#o%ing t#at 7ans kne% of t#e limitation on 7B)Ks a&t#ority to solicit a lications for '4/. /f t#e t#ird erson dealing %it# an agent is &na%are of t#e limits of t#e a&t#ority conferred by t#e rinci al on t#e agent and #e 0t#ird erson1 #as been deceived by t#e non? disclos&re t#ereof by t#e agent$ t#en t#e latter is liable for damages to #im. P1i-i..ine Produ*t ) Primateria Anon7me Pour Le Commer*e (GEN) ;ov. 2($ 1("C Beng6on$ C.*. So*iete

Fa*t > Beng&et Consolidated$ /nc.$ is a domestic cor oration engaged in t#e mining ind&stry %it# res ondents -tanley :illimont$ 9&gene Sneebone$ C.:. 3erold$ 5.;. :rig#t$ 2.'. :esterfield$ A.). 7avidson and :illiam *o#nson as its officers. 4es ondent BC/ 9m loyees and :orkers 8nion 0)A+=81 is a legitimate labor &nion %#ile res ondent 7onaciano Andrada is a member t#ereof. 2n A&g&st 2!$ 1(CD$ Andrada and several ot#ers etitioned t#e res ondent com any t#at t#ey be given t#e rates of ay as rescribed in t#e collective bargaining contrac$ and etitioner com any$ in com liance t#ereto made t#e necessary salary adj&stment %it# t#e exce tion of com lainant Andrada %#o$ alt#o&g# #e %as reclassified from clerk second class to clerk first class$ did not receive any corres onding increase in #is ay. Andrada also declared t#at on or abo&t A&g&st 2"$ 1("A$ on t#e occasion of a grievance meeting concerning t#e adj&stment of #is %ages$ 9&gene Sneebone$ one of t#e res ondent #erein$ said to #im$ Iam s ending m&c# of my time for yo&r com laint. 'y time is recio&s. / tell yo& t#at as long as / am still connected %it# Beng&et Consolidated$ /nc.$ t#is office cannot give yo& any c#ange of classification %#atsoeverIE ,#at 'r. Sneebone f&rt#er said$ MFy representin# your #rievance to the union, you are cuttin# your nec& entirely, and , tell you to thin& it over or retract your complaintM6 that complaint a#ain met 7r. Jneebone who said to him, M<he Auestion with you is, you are too vocal of your union activities. 9ad you shut your mouth, your case should not have happened li&e that.M ,#e lo%er co&rt ordered t#e etitioners to im lement t#e salary scale %it# res ect to t#e

FAC"S> )rimateria _&ric# 0res ondent1$ t#ro&g# Alexander Baylin$ entered into an agreement %it# )#ili ine )rod&cts Com any 0))C1 %#ereby t#e latter &ndertook to b&y Co ra in t#e )#ili ines for t#e acco&nt of )rimateria _&ric#. ))C s#i ed co ra to foreign co&ntries &rs&ant to t#e instr&ctions of )rimateria _&ric#$ t#ro&g# )rimateria )#ils$ %it# Baylin and *ose Crame as officers. ,#e total amo&nt d&e to etitioner %as )@1$00(.A1. ))C filed a com laint against )rimateria _&ric#$ )rimateria )#ils$ Baylin and Crame to recover t#e amo&nt d&e. ,#e trial co&rt rendered a j&dgment #olding _&ric# liable b&t absolved Baylin and Crame. ))C a ealed t#e decision as regards t#e dismissal of t#e t#ree defendants. ))C alleges t#at _&ric# is a foreign cor oration &nder -ec. "! of t#e Cor oration =a%E and since it #as transacted b&siness in t#e )#ili ines %it#o&t

AC

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
daily %age of com lainant 7onaciano -. Andrada from 1(CD &ntil #is %age reac#es t#e level as embodied in t#e collective bargaining agreements bet%een t#e Beng&et?Balatoc :orkers 8nion$ t#e com lainant labor organi6ation$ and t#e res ondent com any.I /ss&e. :#et#er or not etitioners %ere liable for discriminating against Andrada 3eld. >9-. +irst$ %#at %as c#arged %as not discrimination committed in 1(CD alone b&t rat#er contin&ing acts of discrimination committed Istarting 1(CDI as alleged in ar. @ of t#e com laint for &nfair labor ractice. ,#e c#arge of discrimination$ consisting in etitionersK ref&sal to im lement t#e ro er salary scale as to res ondent Andrada is adeG&ately s& orted by t#e follo%ing findings of t#e co&rt a G&o. /n A&g&st$ 1(CD$ AndradaKs category %as c#anged to clerk first class b&t #e received no salary adj&stment &nlike t#e ot#er em loyees. /n 1(CC$ after #e %as transferred to t#e )&rc#asing 7e artment and %as assigned to erform t#e %ork done by one 4amon Alvia %#o #eld t#e category of bodeg&ero 0%it# a #ig#er ay rate1 res ondent Andrada still received no corres onding ay increase. /n *&ly$ 1("2$ t#ere %as a general ay #ike b&t Andrada %as not benefitted. -econd$ t#e militant &nion activity$ involved is not AndradaKs #aving been elected as 8nion 7istrict 5overnor and -te%ard and #is act&ations as s&c#$ b&t rat#er AndradaKs #aving so&g#t t#e #el of #is &nion in &rs&ing %#at #e believed %as #is rig#t to salary adj&stment. /t s#o&ld be noted t#at t#e damaging statement on t#is score im &ted to co? etitioners -tanley :illimont and 9&gene Sneebone by res ondent Andrada in #is testimony to %#ic# t#e co&rt a G&o gave credence$ %ere never denied or controverted by t#em. And it is &nG&estionable t#at t#e seeking of t#e &nionKs #el by one of its members in connection %it# t#e latterKs correct %ages constit&tes ro er &nion activity. Agency related. 0j&st a g&ess beca&se t#ereFs really not#ing in t#is case abo&t agency1 'r. :illimont and 'r. Sneebone are agents of t#e etitioner com any. :#atever t#ey said is considered to be acts of discrimination by t#e etitioner com any$ beca&se t#ey are acting as mere agents. ,#erefore$ t#ey are not ersonally liable for t#ose statements. NPC ). Nationa- 2er*1andi in4 Cor. (!(G) 1(!2 Fa*t > ,#is case is abo&t t#e recovery of liG&idated damages from a sellerKs agent t#at allegedly exceeded its a&t#ority in negotiating t#e sale. ;)C and ;ational 'erc#andising Cor 0;amerco1 of 'anila$ as t#e re resentative of t#e /nternational Commodities Cor of ;e% >ork City$ exec&ted in 'anila a contract for t#e &rc#ase by ;)C from t#e ;e% >ork firm of Dk long tons of cr&de s&lf&r for it s 'aria Cristina +ertili6er )lant in /ligan City. 2n t#at same date a erformance bond for )(0k %as exec&ted by 7omestic /ns&rance C2 in favor of ;)C to g&arantee t#e sellerKs obligations. /t %as sti &lated in t#e contract of sale t#at seller %o&ld deliver s&lf&r at /ligan City %it#in "0days from notice of establis#ment in its favor of a letter of credit for U212k and t#at fail&re to effect delivery %o&ld s&bject seller and it s&rety to ayment of liG&idated damages at rate of 2LC of 1N of t#e f&ll contract rice for t#e first @0 days of defa&lt and DLC of 1N for every day t#ereafter &ntil com lete delivery is made. ;)C advised *o#n -yci $ resident of ;amerco of t#e o ening of a letter of credit in favor of /nter Commodities %#ic# %o&ld ex ire on *an @1$ 1(CA. ;otice of t#e letter of credit %as received by cable by t#e ;e% >ork firm on ;ov 1C$ 1(C". ,#&s t#e deadline for t#e delivery of t#e s&lf&r %as *an 1C$ 1(CA. ,#e ;e% >ork s& lier %as not able to deliver t#e s&lf&r d&e to its inability to sec&re s#i ing s ace. 7&ring eriod from *an20?2"$ 1(CA t#ere %as a s#&tdo%n of t#e ;)CKs fertili6er lant beca&se t#ere %as no s&lf&r. ;or fertili6er %as rod&ced. ;)CKs general manager advised ;amerco and 7omestic /ns&rance t#at &nder Art. ( of t#e contract of sale Inonavailability of bottom or vesselI %as not a fort&ito&s event t#at %o&ld exc&se non? erformance and t#at ;)C %o&ld resort to legal remedies to enforce its rig#ts. 5ovt Cor orate Co&nsel in #is letter to -yci rescinded t#e contract of sale d&e to ;e% >ork s& lierKs non? erformance of its obligations. 3e also demanded from ;amerco ayment of )@"0k as liG&idated damages. 3e ex lained t#at time %as of t#e essence of t#e contract. A similar demand also made & on t#e s&rety. ;)C s&ed t#e ;e% >ork firm$ ;amerco and 7omestic /ns&rance Co for recovery of sti &lated liG&idated damages. ,C. dismissed case as to ;e% >ork firm for lack of j&risdiction co6 it %as not doing b&siness in t#e )#ili ines. ;amerco and 7omestic /ns&rance contend t#at delivery of s&lf&r %as conditioned on availability of a vessel to carry t#e s#i ment and t#at ;amerco acted %it#in sco e of its a&t#ority as agent in signing t#e contract of sale.

A"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
I ue> :2; ;amerco and 7omestic /ns&rance liable for liG&idated damages< >9,e-d> #. Namer*o a*ted 8e7ond it aut1orit7 a a4ent o' Ne? Yor: 'irm. 7oc&mentary evidence belies t#ese contentions. ,#e invitation to bid iss&ed by ;)C rovides t#at nonavailability of a steamer to trans ort t#e s&lf&r is a gro&nd for ayment of liG&idated damages in case of non? erformance by seller. ;amercoKs bid or offer is even more ex licit. /t rovides t#at it %as Ires onsible for availability of bottom or vesselI and t#at it Ig&arantees t#e availability of bottom or vessel to s#i t#e G&antity of s&lf&r %it#in t#e time s ecified in t#is bidI. /n t#e contract of sale itself$ item 1C of t#e invitation to bid is re rod&ced in Art. ( %#ic# rovides t#at Iit is clearly &nderstood t#at in no event s#all seller be entitled to an extension of time or be exem t from ayment of liG&idated damages #erein s ecified fro reason of lack of bottom or vesselI. /t is tr&e t#at ;e% >ork cor in its cable to ;amerco stated t#at sale %as s&bject to availability of a steamer. 3o%ever$ ;amerco did not di *-o e t1at *a8-e to NPC and *ontrar7 to it .rin*i.a-G in tru*tionD it a4reed t1at nona)ai-a8i-it7 o' a teamer ?a not a =u ti'i*ation 'or non.a7ment o' -iIuidated dama4e . ,C rig#tly concl&ded t#at ;amerco acted beyond bo&nds of its a&t#ority beca&se it violated its rinci alKs cabled instr&ctions. 2. Namer*o -ia8-e to NPC 'or dama4e . 7efendants. it %as inc&mbent & on ;)C to inG&ire into extent of agentKs a&t#ority and for its fail&re to do so$ it co&ld not claim any liG&idated damages %#ic# %ere rovided for merely to make seller more diligent in looking for a steamer to trans ort t#e s&lf&r. ;)C. ;amerco s#o&ld #ave advised ;)C of t#e limitations on its a&t#ority to negotiate t#e sale. -C. ,C correct t#at ;amerco liable for damages beca&se &nder Art. 1(!A of ;CC t#e agent %#o exceeds t#e limits of #is a&t#ority %it#o&t giving t#e arty %it# %#om #e contracts s&fficient notice of #is o%ers is ersonally liable to s&c# arty. ,#e tr&t# is t#at even before t#e contract of sale %as signed ;amerco %as already a%are t#at its rinci al %as #aving diffic&lties in booking s#i ing s ace. /n a cable one day before t#e contract of sale %as signed$ t#e ;e% >ork s& lier advised ;amerco t#at latter s#o&ld not sign t#e contract &nless ;amerco %is#ed to res onsibility for t#e s#i ment. ass&me sole

-yci $ ;amercoKs resident re lied t#at #e #ad no c#oice b&t to finali6e t#e contract of sale beca&se t#e ;)C %o&ld forfeit ;amercoKs bidderKs bond of )DCk osted by 7omestic /ns&rance if t#e contract %as not formali6ed. ,#ree days later t#e ;e% >ork firm cabled ;amerco t#at it did not consider itself bo&nd by contract t#at ;amerco signed on its o%n res onsibility. /t informed ;amerco in its letters t#at since latter acted contrary to its instr&ctions$ former disclaimed res onbility for t#e contract and t#at res onsibility for t#e sale rested on ;amerco. @. !u-e t1at e)er7 .er on dea-in4 ?it1 an a4ent i .ut u.on inIuir7 and mu t di *o)er u.on 1i .eri- t1e aut1orit7 o' a4ent ?ou-d a..-7 i' .rin*i.a- i ou41t to 8e 1e-d -ia8-e on t1e *ontra*t entered into 87 t1e a4ent /U" It i not o in t1i *a e. 3ere it is t#e agent t#at is so&g#t to be #eld liable on a contract of sale %#ic# %as ex ressly re &diated by t#e rinci al beca&se t#e agent took c#ances$ it exceeded its a&t#ority and in effect$ it acted in its o%n name. Agent %#o exceeds limits of #is a&t#ority is ersonally liable and t#e t#ird erson %#o contracts %it# t#e agent in s&c# a case %o&ld be defra&ded if #e %o&ld not be allo%ed to s&e t#e agent @. Sti.u-ation 'or -iIuidated dama4e i en'or*ea8-e e)en i' e0e*uted 87 a4ent in e0*e o' 1i aut1orit7. Art. 1D0@ Icontract entered into in name of anot#er erson by one %#o #as acted beyond #is o%ers is &nenforceableI refers to &nenforceability against t#e rinci al. 3949$ t#e contract containing sti &lation not being enforced against rinci al b&t against agent and its s&rety. ;amerco never disclosed to ;)C t#e cabled instr&ctions of its rinci al. +or t#at reason and beca&se ;amerco exceeded its a&t#ority$ it virt&ally acted in its o%n name and not as agent and is t#erefore bo&nd by contract of sale %#ic# #o%ever is not enforceable against rinci al. /f ;amerco is bo&nd &nder contract of sale$ t#en it follo%s it is bo&nd by sti &lation for liG&idated damages. Nationa- /an: ). 9e-*1 (!EG) *. -treet 1(2@

AA

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
FAC"S> =a Com aB`a ;aviera$ a s#i ing com any$ %as instit&ted in 'anila in 1(1!. Among its s#are#olders %as res ondent :elc#$ +airc#ild P Co. =a Com aBia ;aviera a lied to t#e )#ili ine ;ational Bank for a loan of U12C$000. %it# %#ic# to &rc#ase a boat called Fenito Luare$. /t %as t#e resident of :elc# %#ic# #el ed in t#e transfer of t#e Fenito Luare$ to )#ili ine registry. 3o%ever$ t#e vessel needed re airs before it co&ld be dis atc#edE and it became im racticable to deliver t#e bill of sale and ins&rance olicy t#at %ere reG&ired by );B in -an +rancisco at t#e time t#e money %as needed to effect t#e transfer. -o$ :elc# in 'anila$ addressed a letter on A&g&st !$ 1(1!$ to t#e );B$ reG&esting it to cable its corres ondent in -an +rancisco to release t#e money and make ayment for t#e vessel %it#o&t reG&iring t#e delivery of t#e bill of sale or olicy of ins&rance$ and t#at =a Com aBia %o&ld j&st deliver t#e bill of sale and ins&rance olicy later. ,#e Bank acceded. After t#e re air of t#e Fenito Luare$$ it %as ins&red by :elc# P Co. for U1C0$000 and %as dis atc#ed to t#e )#ili ines. A fe% mont#s after$ t#e vessel enco&ntered a storm off 3a%aii and became a total loss. ,#e roceeds of t#e ins&rance came to t#e #ands of :elc#$ +airc#ild P Co. in 'anila and #as been a lied by :elc#$ +airc#ild P Co. in art satisfaction of indebtedness inc&rred by =a Com aB`a to it 0instead of aying t#e bank1. ,#is dis osition of t#e ins&rance money %as made %it# t#e tacit a roval of =a Com aB`a. ISSUE> :2; );B #as a ca&se of action against res ondent. !ULING> >9-. :#ile it is tr&e t#at an agent %#o acts for a revealed rinci al in t#e making of a contract does not become ersonally bo&nd to t#e ot#er arty in t#e sense t#at an action can ordinarily be maintained & on s&c# contract directly against t#e agent$ yet t#at r&le clearly does not control in t#is caseE for even conceding t#at t#e obligation created by t#e letter of A&g&st !$ 1(1!$ %as directly binding only on t#e rinci al$ and t#at in la% t#e agent may stand a art t#erefrom$ yet one %#o #as intervened in t#e making of a contract in t#e c#aracter of agent cannot be ermitted to interce t and a ro riate t#e t#ing %#ic# t#e rinci al is bo&nd to deliver$ and t#ereby make erformance by t#e rinci al im ossible. ,#e agent in any event m&st be recl&ded from doing any ositive act t#at co&ld revent erformance on t#e art of #is rinci al. ,#is m&c#$ ordinary good fait# to%ards t#e ot#er contracting arty reG&ires. ,#e sit&ation before &s in effect is one %#ere$ not%it#standing t#e romise #eld o&t jointly by rinci al and agent in t#e letter of A&g&st !$ t#e t%o #ave cons ired to make an a lication of t#e roceeds of t#e ins&rance entirely contrary to t#e tenor of said letters. A-8ert ). Uni)er it7 Pu8-i 1n4 (A//Y) 1("C *. Beng6on +acts. 'ariano Albert s&ed 8niversity )&blis#ing alleged inter alia t#at defendant %as a cor oration d&ly organi6ed and existing &nder t#e la%s of t#e )#ili inesE t#at on *&ly 1($ 1(D!$ defendant$ t#ro&g# *ose '. Ar&ego$ its )resident$ entered into a contract %it# laintififE t#at defendant #ad t#ereby agreed to ay laintiff )@0$000.00 for t#e excl&sive rig#t to &blis# #is revised Commentaries on t#e 4evised )enal Code and for #is s#are in revio&s sales of t#e bookKs first editionE t#at defendant #ad &ndertaken to ay in eig#t G&arterly installments of )@$AC0.00 starting *&ly 1C$ 1(D!E t#at er contract fail&re to ay one installment %o&ld render t#e rest d&eE and t#at defendant #ad failed to ay t#e second installment. 8)C admitted its cor orate existence$ t#e exec&tion and terms of t#e contract$ b&t t#at it %as Albert %#o breac#ed t#e contract by failing to deliver #is man&scri t and filed a co&nterclaim. /t is not #ard to deci #er %#y I8niversity )&blis#ing Co.$ /nc.$I t#ro&g# co&nsel$ %o&ld not %ant *ose '. Ar&ego to be considered a arty to t#e resent case. s#o&ld a se arate action be no% instit&ted against *ose '. Ar&ego$ t#e laintiff %ill #ave to reckon %it# t#e stat&te of limitations. Cor oration by esto els not invoked nor a licable. ,#e estate of Albert 0dead already1 say t#at 8)C %as not registered %it# t#e -9C and t#at #e acted not on be#alf of 8)C b&t on #is o%n and t#at #e s#o&ld be t#e real arty defendant. /ss&e. :o; t#e real arty defendant is Ar&ego or 8)C 3eld. Ar&ego *ose '. Ar&ego$ acting as re resentative of a non?existent rinci al$ %as t#e real arty to t#e contract s&ed & onE t#at #e %as t#e one %#o rea ed t#e benefits res&lting from it$ so m&c# so t#at artial ayments of t#e consideration %ere made by #imE t#at #e violated its terms$ t#ereby reci itating t#e s&it in G&estionE and t#at in t#e litigation #e %as t#e real defendant. A erson acting or &r orting to act on be#alf of a cor oration %#ic# #as no valid existence assumes such privile#es and obli#ations and

A!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
becomes personally liable for contracts entered into or for ot#er acts erformed as s&c# agent. )arties to a s&it are I ersons %#o #ave a rig#t to control t#e roceedings$ to make defense$ to add&ce and cross?examine %itnesses$ and to a eal from a decisionI 0"A C.*.-. !!A1 V and Ar&ego %as$ in reality$ t#e erson %#o #ad and exercised t#ese rig#ts. Clearly$ t#en$ Ar&ego #ad #is day in co&rt as t#e real defendantE and d&e rocess of la% #as been s&bstantially observed. %o&ld be entitled to @0N of t#e net income accr&ing from t#e #arvest of any cro . ,#e alleged cor oration did not com ly %it# said obligation. -alvatierra filed %it# t#e C+/ a com laint against )+)C for acco&nting$ rescission and damages. ,#e cor oration defa&lted and t#e co&rt rendered j&dgment in favor of -alvatierra. ,#e co&rt iss&ed a %rit of exec&tion and t#e t#ree arcels of land &nder t#e name of 4&f&er6o %ere attac#ed beca&se no ro erty of )+)C %as fo&nd available. 4&f&er6o filed a motion claiming t#at t#e decision %as n&ll and void since t#ere %as no allegation of #is ersonal liability. ,#e co&rt granted t#e motion and released #is land from attac#ment. 3ence$ t#is etition by -alvatierra. ,e-d. ,#e fail&re of -alvatierra to s ecify 4&f&er6oFs ersonal liability %as d&e to t#e fact t#at -alvatierra %as &nder t#e im ression t#at )+)C$ re resented by 4&f&er6o %as a d&ly registered cor oration$ b&t s&bseG&ently$ inG&iry %it# t#e -9C yielded ot#er%ise. :#ile as a general r&le$ a erson %#o #as contracted of dealt %it# an association in s&c# a %ay as to recogni6e its existence as a cor orate body is esto ed from denyng t#e same in an action arising o&t of s&c# transaction or dealing. >et$ t#is doctrine is ina licable %#ere fra&d takes a art in said transaction. 3ere 4&f&er6o gave no confirmation of denial as to )+)CFs j&ridical ersonality and -alvatierra %as made to believe t#at t#e cor oration %as d&ly organi6ed. ,#e grant of se arate j&ridical ersonality to cor orations refer merely to registered cor orations and cannot be made a licable to t#e liability of members of an &nincor orated association. -ince an organi6ation %#ic#$ before la%$ in non?existent and #as no ersonality and %o&ld be incom etent to act and a ro riate for itself t#e o%er and attrib&tes of a cor oration$ it cannot create agents or confer a&t#ority on anot#er to act in its be#alf$ t#&s$ t#ose %#o act or &r ort to act as its re resentatives or agents do so %it#o&t a&t#ority and at t#eir o%n risk. A erson acting or &r orting to act in be#alf of a cor oration %#ic# #as no valid existence ass&mes s&c# rivileges and obligations and becomes ersonally liable for contracts entered into or for ot#er acts erformed as s&c# agent. 3ere$ 4&f&er6o as resident of t#e &nregistered cor oration %as t#e s irit be#ind t#e cons&mmation of t#e lease contract. ,#&s$ #is liability cannot be limited or restricted to t#at im osed & on cor orate -3Fs. /n acting on be#alf of a cor oration$ %#ic# #e kne% to be &nregistered$ #e ass&mes t#e risk of rea ing t#e conseG&ential

&7 Pe1 ). CI! (EA!LA) PN/ ). !itratto Grou. (6ANCES) *&ly @1$ 2001 *. Sa &nan +acts. );B?/+=$ s&bsidiary of );B extended a letter of credit in favor of 4itratto /nc. to sec&red real estate mortgages constit&ted over D arcels of land in 'akati. 4itratto %as not able to ay$ t#&s );B?/+= moved to foreclose t#e mortgages. 4itratto filed com laint for inj&nction %it# rayer for iss&ance of %rit of reliminary inj&nction. )etitioner filed a motion to dismiss com laint for inj&nction on gro&nds of fail&re to state a ca&se of action and absence of any rivity bet%een t#e etitioner and res ondents. 4&ling. 4,C O iss&ed %rit of reliminary inj&nctionE denied motion to dismiss. );B?/+= is a %#olly o%ned s&bsidiary of defendant )#ili ine ;ational Bank$ t#e s&it against t#e defendant );B is a s&it against );B?/+=. CA O affirmed /ss&e. :2; );B is t#e real arty?in?interest Y;2Z 39=7. );B %as s&ed beca&se it acted as an attorney?in?fact of );B?/+= in initiating t#e foreclos&re roceedings. A s&it against an agent cannot %it#o&t com elling reasons be considered a s&it against t#e rinci al. 4es ondents committed t#e mistake of filing t#e case against t#e %rong arty. ,#ey do not #ave a ca&se of action against t#e etitioner as t#e latter is not rivy to t#e contract t#e rovisions of %#ic# res ondents seek to declare void. 7is osition. etition granted. 2a*ia + Co. ). 9arner /ro ., u.ra Sa-)atierra ). Gar-ito (ALAIN) Fa*t > -alvatierra o%ned a arcel of land in =eyte. -#e entered into a contract of lease %it# )#ili ine +ibers )rod&cers Co.$ /nc. allegedly a cor oration d&ly organi6ed and existing &nder t#e )#ili ine la%s$ as re resented by its )resident 4&f&er6o. ,#e land %ill be leased for ten years and t#e lessor

A(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
damages or res&ltant rig#ts$ if any arising from t#e transaction. -ec. 21 Cor oration by esto el O All ersons %#o ass&me to act as a cor oration kno%ing it to be %it#o&t a&t#ority to do s#all be liable as general artners for all debts$ liabilities and damages inc&rred or arising as a res&lt t#ereofE )rovided$ #o%ever$ t#at %#en any s&c# ostensible cor oration is s&ed on any transaction entered by it as a cor oration or any tort committed by it as s&c#$ it s#all not be allo%ed to &se a defense its lack of cor orate ersonality. "ua on ). (ro5*o (2A!K) +acts. *&an de Margas y Amaya$ t#e defendantKs #&sband$ exec&ted a o%er of attorney to 9nriG&e 5r& e$ a&t#ori6ing #im$ among ot#er t#ings$ to dis ose of all #is ro erty$ and artic&larly of a certain #o&se and lot kno%n as ;o. 2D Calle ;&eva$ 'alate$ 'anila. 3e %as also a&t#ori6ed to mortgage t#e #o&se for t#e &r ose of sec&ring t#e ayment of any amo&nt advanced to #is %ife$ 7olores 2ro6co de 4ivero$ %#o$ inasm&c# as t#e ro erty #ad been acG&ired %it# f&nds belonging to t#e conj&gal artners#i $ %as a necessary arty to its sale or inc&mbrance. 2n t#e 21st of *an&ary$ 1!(0$ 9nriG&e 5r& e and 7olores 2ro6co de 4ivero obtained a loan from laintiff ,&a6on sec&red by a mortgage on t#e ro erty referred to in t#e o%er of attorney. /n t#e ca tion of t#e instr&ment evidencing t#e debt it is stated t#at 5r& e and 7olores 2ro6co a eared as t#e arties of t#e first art and 5on6alo ,&ason$ t#e laintiff$ as t#e arty of t#e second artE t#at 5r& e acted for #imself and also in be#alf of *&an Margas by virt&e of t#e o%er granted #im by t#e latter$ and t#at 7olores 2ro6co a eared merely for t#e &r ose of com lying %it# t#e reG&irement contained in t#e o%er of attorney. -aid instr&ment %as d&ly recorded in t#e 4egistry of )ro erty$ ,&a6on filed an action to recover t#e debt. /ss&e. :2; 2ro6co is liable. 3eld. >es. ,#e a ellant claims t#at t#e instr&ment is evidence of a debt ersonally inc&rred by 9nriG&e 5r& e for #is o%n benefit$ and not inc&rred for t#e benefit of #is rinci al$ Margas$ as alleged in t#e com laint. As a matter of fact$ 5r& e$ by t#e terms of t#e agreement$ bo&nd #imself ersonally to ay t#e debt. ,#e a ellantKs contention #o%ever$ can not be s&stained. ,#e agreement$ so far as t#at amo&nt is concerned$ %as signed by 5r& e as attorney in fact for Margas. )&rs&ant to instr&ctions contained in t#e o%er of attorney t#e money %as delivered to MargaKs %ife$ t#e defendant in t#is case. ,o sec&re t#e ayment of t#e debt$ MargaKs ro erty %as mortgaged. 3is %ife like%ise took art in t#e exec&tion of t#e mortgage as reG&ired in t#e o%er of attorney. A debt t#&s inc&rred by t#e agent is binding directly & on t#e rinci al$ rovided t#e former acted$ as in t#e resent case$ %it#in t#e sco e of #is a&t#ority. ,#e fact t#at t#e agent #as also bo&nd #imself to ay t#e debt does not relieve from liability t#e rinci al for %#ose benefit t#e debt %as inc&rred. ,#e individ&al liability of t#e agent constit&tes in t#e resent case a f&rt#er sec&rity in favor of t#e creditor and does not affect or recl&de t#e liability of t#e rinci al. /n t#e resent case t#e latterKs liability %as f&rt#er g&aranteed by a mortgage & on #is ro erty. ,#e la% does not rovide t#at t#e agent can not bind #imself ersonally to t#e f&lfillment of an obligation inc&rred by #im in t#e name and on be#alf of #is rinci al. 2n t#e contrary$ it rovides t#at s&c# act on t#e art of an agent %o&ld be valid.

M.

Arti*-e #$9$ (AN6)

Article 1!(!. /f t#e agent contracts in t#e name of t#e rinci al$ exceeding t#e sco e f #is a&t#ority$ and t#e rinci al does not ratify t#e contract$ it s#all be void if t#e arty %it# %#om t#e agent contracted is a%are of t#e limits of t#e o%ers granted by t#e rinci al. /n t#is case$ #o%ever$ t#e agent is liable if #e &ndertook to sec&re t#e rinci alFs ratification. #. !ea on ?17 a4ent i -ia8-e Article 1(10$ ar.2 states t#at if t#e agent acts in excess of #is a&t#ority$ even if #e contracts in t#e name of t#e rinci al$ t#e agent is t#e one ersonally liable &nless t#ere is s&bseG&ent ratification by t#e rinci al. 2. Statu o' *ontra*t entered into 87 an a4ent in e0*e o' 1i aut1orit7 ,#e r&le t#at a contract entered into by one %#o #as acted beyond #is o%ers s#all be &nenforceable 0Arts.1@1A$ ar 2E 1D0@ Y1Z1$ refers to t#e &nenforceability of t#e contract against t#e rinci al$ and does not a ly %#ere t#e action is against t#e agent #imself$ for contracting in excess of t#e limits of #is a&t#ority. ,#e contract$ %#ic# is &nenforceable as against t#e rinci al$ is void as bet%een t#e agent and t#e t#ird erson$ and conseG&ently$ not legally binding. @. E''e*t o' rati'i*ation

!0

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/f ratification is becomes liable. obtained$ t#en t#e rinci al ?1en 1e from :arner$ Barnes and Co.$ =td.$ as agent of t#e ins&rance com any in t#e )#ili ines :arner #aving ref&sed to ay t#e claim$ on A ril 1A$ 1(DA$ laintiff instit&ted t#e resent action. American )resident =ines$ in a letter dated ;ovember 2C$ 1(D"$ agreed to ay to t#e laintiff t#e amo&nt of )DA".1A &nder its liability in t#e bill of lading :#en t#is offer %as rejected$ t#e claim %as finally settled in t#e amo&nt of )1$021.2C As a res&lt$ t#e amo&nt claimed in t#e com laint as t#e &ltimate liability of :arner &nder t#e ins&rance contract %as red&ced to )A1A.!2 only. CFI> ordered :arner$ as agent of :estc#ester +ire /ns&rance Com any of ;e% >ork$ to ay to t#e laintiff t#e s&m of )A2A. !2 %it# legal interest t#ereon from t#e filing of t#e com laint &ntil aid$ and t#e costs

A. Lia8i-it7 o' a4ent e0*eed aut1orit7

,#e liability of an agent %#o exceeds t#e sco e of #is a&t#ority de ends & on :2; t#e t#ird erson is a%are of t#e limits of t#e agentFs o%er. ,#e agent is not bo&nd or liable for damages in case #e gave notice of #is o%ers to t#e t#ird erson$ nor in a case %#ere t#e t#ird erson is a%are of t#e limits of t#e o%ers granted by t#e rinci al. /f t#e agent romised or &ndertook to sec&re t#e rinci alFs ratification and failed$ #e is ersonally liable. /f ratification is becomes liable. obtained$ t#en t#e rinci al

B. Ca e Lor*a ). &inero , u.ra Sa-on4a ). 9arner (6ESSA) *an&ary @1$ 1(C1 Ba&tista Angelo$ L. +acts. 2n A&g&st 2!$ 1(D"$ :estc#ester +ire /ns&rance Com any of ;e% >ork entered into a contract %it# 5amboa %#ereby said com any ins&red one case of rayon yardage %#ic# said 5amboa s#i ed from -an +rancisco$ California$ on steamer Clovis =ictory$ to 'anila and consigned to -alonga. According to t#e contract of ins&rance$ t#e ins&rance com any &ndertook to ay to t#e sender or #er consignee t#e damages t#at may be ca&sed to t#e goods s#i ed s&bject to t#e condition t#at t#e liability of t#e com any %ill be limited to t#e act&al loss %#ic# t#e ins&red may s&ffer not to t#e exceed t#e s&m of )2$000 ,#e s#i arrived in 'anila on -e tember 10$ 1(D". 2n 2ctober A$ t#e s#i ment %as examined by C. B. ;elson and Co.$ marine s&rveyors$ at t#e reG&est of t#e laintiff$ and in t#eir examination t#e s&rveyors fo&nd a s#ortage in t#e s#i ment in t#e amo&nt of )1$A2@$12. 2n 2ctober ($ laintiff filed a claim for damages in t#e amo&nt of )1$A2@.12 against t#e American )resident =ines$ agents of t#e s#i Clovis =ictory$ demanding settlement :#en a arently no action %as taken on t#is claim$ laintiff demanded ayment t#ereof

/ss&e. 'ain iss&e. :2; t#e trial co&rt erred in #olding t#at :arner$ as agent of :estc#ester +ire /ns&rance Com any of ;e% >ork$ 8nited -tates of America$ is res onsible & on t#e ins&rance claim s&bject to t#e s&it -&b?iss&es. 011 :2; :arner #as no contract&al relation %it# eit#er t#e laintiff or #is consignor 021 :2; :arner is not t#e real arty in interest against %#om t#e s&it s#o&ld be bro&g#t 0@1 :2; a j&dgment for or against an agent in no %ay binds t#e real arty in interest. 3eld. YES 0t#e main iss&e ans%ering t#e s&b?iss&es1 is ans%ered by

1. >9-. /t is a %ell kno%n r&le t#at a contract&al

obligation or liability$ or an action e -contractu$ m&st be fo&nded & on a contract$ oral or %ritten$ eit#er ex ress or im lied. /f t#ere is no contract$ t#ere is no corres onding liability$ and no ca&se of action may arise t#erefrom. ,#is is %#at is rovided for in article 12CA of t#e Civil Code. ,#is article rovides t#at contracts are binding & on t#e arties %#o make t#em and t#eir #eirs$ exce ting$ %it# res ect to t#e latter$ %#ere t#e rig#ts and obligations are not transmissible$ and %#en t#e contract contains a sti &lation in favor of a t#ird erson$ #e may demand its f&lfillment if #e gives notice of #is acce tance before it is revoked. :arner #as not taken art$ directly or indirectly$ in t#e contract in G&estion. ,#e evidence s#o%s t#at :arner did not enter into any contract eit#er %it# t#e laintiff or #is consignor 5amboa. ,#e contract of marine ins&rance %as made and exec&ted only by and bet%een t#e :estc#ester +ire /ns&rance Com any of ;e% >ork and 5amboa. ,#e contract %as entered in ;e% >ork. ,#ere is not#ing t#erein

!1

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
%#ic# may affect$ in favor or adversely$ :arner$ t#e f&lfillment of %#ic# may be demanded by or against it. ,#at contract is &rely bilateral$ binding only & on 5amboa and t#e ins&rance com any. :#en t#e lo%er co&rt$ t#erefore$ im osed & on :arner an obligation %#ic# it #as never ass&med$ eit#er ex ressly or im liedly$ or %#en it extended to :arner t#e effects of a contract %#ic# %as entered into excl&sively by and bet%een t#e :estc#ester +ire /ns&rance Com any of ;e% >ork and 5amboa$ t#e error it #as committed is evident. ,#is is contrary to la%. ,#ere is no material variance bet%een t#is case and t#e case of 9. 'acias and Co. vs. :arner$ Barnes and Co. in so far as t#e rinci le #erein considered is concerned. Bot# cases involve similar facts %#ic# call for t#e a lication of a similar r&ling. /n bot# cases t#e iss&e is %#et#er an agent$ %#o acts %it#in t#e sco e of #is a&t#ority$ can ass&me ersonal liability for a contract entered into by #im in be#alf of #is rinci al. And in t#e 'acias case %e said t#at t#e agent did not ass&me ersonal liability beca&se t#e only arty bo&nd %as t#e rinci al. And in t#is case t#is rinci le acG&ires added force and effect %#en %e consider t#e fact t#at :arner did not sign t#e contract as agent of t#e foreign ins&rance com any as :arner did in t#e 'acias case. ,#e 'acias case$ t#erefore$ is on all fo&rs %it# t#is case and is decisive of t#e G&estion &nder consideration. 2. >9-. -ection 2$ 4&le @ of t#e 4&les of Co&rt reG&ires t#at Ievery action m&st be rosec&ted in t#e name of t#e real arty in interest.I A corollary ro osition to t#is r&le is t#at an action m&st be bro&g#t against t#e real arty in interest$ or against a arty %#ic# may be bo&nd by t#e j&dgment to be rendered t#erein. ,#e real arty in interest is t#e arty %#o %o&ld be benefited or inj&red by t#e j&dgment$ or t#e I arty entitled to t#e avails of t#e s&itI. /n t#e case at bar$ :arner is s&ed & on in its ca acity as agent of :estc#ester +ire /ns&rance Com any of ;e% >ork in s ite of t#e fact t#at t#e ins&rance contract #as not been signed by it. :arner did not ass&me any obligation t#ere&nder eit#er as agent or as a rinci al. /t cannot$ t#erefore$ be made liable &nder said contract$ and #ence it can be said t#at t#is case %as filed against one %#o is not t#e real arty in interest. :#ile :arner is a settlement and adj&stment agent of t#e foreign ins&rance com any and t#at as s&c# agent it #as t#e a&t#ority to settle all t#e losses and claims t#at may arise &nder t#e olicies t#at may be iss&ed by or in be#alf of said com any in accordance %it# t#e instr&ctions it may receive from time to time from its rinci al$ it cannot be t#at as s&c# adj&stment and settlement agent$ :arner #as ass&med ersonal liability &nder said olicies$ and$ t#erefore$ it can be s&ed in its o%n rig#t. An adj&stment and settlement agent is no different from any ot#er agent from t#e oint of vie% of #is res onsibility$ for #e also acts in a re resentative ca acity. :#enever #e adj&sts or settles a claim$ #e does it in be#alf of #is rinci al$ and #is action is binding not & on #imself b&t & on #is rinci al. And #ere again$ t#e ordinary r&le of agency a lies. /t$ t#erefore$ clearly a ears t#at t#e sco e and extent of t#e f&nctions of an adj&stment and settlement agent do not incl&de ersonal liability. 3is f&nctions are merely to settle and adj&sts claims in be#alf of #is rinci al if t#ose claims are roven and &ndis &ted$ and if t#e claim is dis &ted or is disa roved by t#e rinci al$ like in t#e instant case$ t#e agent does not ass&me any ersonal liability. ,#e reco&rse of t#e ins&red is to ress #is claim against t#e rinci al. @. >9-. An action is bro&g#t for a ractical &r ose$ nay to obtain act&al and ositive relief. /f t#e arty s&ed & on is not t#e ro er arty$ any decision t#at may be rendered against #im %o&ld be f&tile$ for it cannot be enforced or exec&ted. ,#e effort t#at may be em loyed %ill be %asted. -&c# %o&ld be t#e res&lt of t#is case if it %ill be allo%ed to roceed against :arner$ for even if a favorable j&dgment is obtained against it$ it cannot be enforced beca&se t#e real arty is not involved. :arner cannot be made to ay for somet#ing it is not res onsible. PN/ ) /a4ama .ad and Ferrer (/A2/I) *&ne 2($ 1(C1 'ontemayor$ *. Fa*t > 7&e to t#e ac&te food s#ortage res&lting from t#e )acific :ar$ )resident 4oxas instr&cted );B to extend cro loans to farmers to enable t#em to re#abilitate t#eir farms.

/n com liance$ );B assed a resol&tion a&t#ori6ing t#e granting of s ecial cro loans to bona fide food rod&cers$ lando%ners or t#eir tenants$ &nder s ecial conditions. ,#ereafter$ r&les and reg&lations in t#e granting of said loans %ere iss&ed. ,%o circ&lars abo&t t#e r&les %ere distrib&ted and a conference %as #eld for t#e bankFs em loyees$ %#ic# incl&ded defendants Bernardo Bamas ad and Bienvenido +errer. Bagams ad and +errer %ere t#en Agent and Assistant Agent$ res ectively$ of );BFs Cotabato Agency. +errer ersonally received t#e circ&lars and attended t#e conference. +rom *&ly 1(D" to 'arc# 1(DA$ t#e Cotabato Agency$ &nder t#e management of defendants$ granted loans to C$000 borro%ers in t#e total amo&nt of )!.C million.

!2

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
7&e to #eavy loan disb&rsements and ex#a&stion of f&nds$ t#e Cotabato Agency$ on several ocassions$ #ad to obtain additional cas# from t#e _amboanga Agency ,#e central office re eatedly em #asi6ed to defendants strict com liance %it# t#e r&les and reg&lations in granting loans$ es ecially in making s&re t#at t#e borro%ers %ere G&alified. Central office also informed defendants t#at t#e additional f&nds from t#e _amboana Agency is for t#e second installments of cro loans only and not for granting ne% loans. 3o%ever$ defendants$ according to );B$ violated s&c# instr&ctions and even acted negligently by releasing loans to &nG&alified borro%ers. ,#&s$ );B instr&cted defendants %ere to discontin&e granting ne% cro loans in a telegram dated ;ovember 2"$ 1(D". ;ot%it#standing s&c# instr&ction$ defendants still extended ne% s ecial cro loans. /n 1(D!$ );B s&ed defendants to recover t#e &ncollected balance of cro loans alleged to #ave been im ro erly released by defendants. );B also s&ed t#e defa&lting borro%ers. ,4/A= C284, ordered defendants to ay );B t#e &ncollected balance of cro loans$ %#ic# amo&nted to )"(($ !0@.CA. CA certified case to -C in vie% of t#e amo&nt involved. 7efendants allo%ed intermediaries to intervene in t#e granting of s ecial cro loans$ contrrary to );BFs r&les. 7efendants released loans %it#o&t t#e a roval of t#e loan board.

@. 9(N PN/, in uin4 t1e de'au-tin4 8orro?er , rati'ied de'endant E a*t . ;2. 2rdinarily$ a rinci al %#o collects eit#er j&dicially or extraj&dicially a loan made by an agent %it#o&t a&t#ority$ t#ereby ratifies t#e said act of t#e agent. /n t#e resent case$ #o%ever$ in filing s&its against some of t#e borro%ers to collect at least art of t#e &na&t#ori6ed loans$ t#ere %as no intention on t1e .art o' PN/ to rati'7 t#e acts of a ellants. -&c# act of t#e bankFs %ill even benefit defendants beca&se t#eir financial liability %ill be decreased if t#e bank can recover from t#e defa&lting borro%ers. A. 9(N t1e a*tion ?a .remature 8e*au e t1ere i no 1o?in4 t1at t1e de'au-tin4 8orro?er are in o-)ent. ;2. /t is not necessary for t#e laintiff Bank to first go against t#e individ&al borro%ers$ ex#a&st all remedies against t#em and t#en #old t#e defendants liable only for t#e balance %#ic# cannot be collected. Air Fran*e ). CA, u.ra Cer)ante ). CA ("(FF) &/P ). CA, u.ra

I ue and ,e-d> #. 9(N de'endant )io-ated 8an:E in tru*tion in e0tendin4 ne? .e*ia- *ro. -oan a'ter re*ei)in4 PN/E te-e4ram o' No)em8er 2%, #9A%. >9-. /t may be t#at t#ere %as no s&c# ex ress instr&ction directly ordering t#e defendants to sto granting ne% s ecial cro loans. 3o%ever$ defendants s#o&ld #ave gat#ered t#at idea from t#e central officeFs letters. ,#at defendant &nderstood t#is clearly %as evidenced by t#e fact t#at Bagamas ad$ in one of #is letters to t#e central office$ asked still entertain ne% a licants on - ecial Cro =oans. 2. 9(N de'endant a*ted ?it1 e0treme -a0it7, ne4-i4en*e, and *are-e ne in 4rantin4 aid ne? .e*ia- *ro. -oan . >9-. -C agrees %it# t#e trial co&rt t#at all reca&tions to rotect t#e interest of t#e )#ili ine ;ational Bank as t#e rinci al of t#e defendants %ere t#ro%n overboard. ,#is is evidenced by t#e follo%ing facts. 7efendants released large loans to 10@ borro%ers %#o %ere neit#er lando%ners or tenants b&t %ere merely a licants for t#e &rc#ase of &blic lands.

N.

Arti*-e #$99 (!EK)

Article 1!((. /f a d&ly a&t#ori6ed agent acts in accordance %it# t#e orders of t#e rinci al$ t#e latter cannot set & t#e ignorance of t#e agent as to circ&mstances %#ereof #e #imself %as$ or o&g#t to #ave been$ a%are. Ne.omu*eno ). ,eredia ("(FF)

O.

Arti*-e #900 ("(PE)

Art. 1(00. -o far as t#ird ersons are concerned$ an act is deemed to #ave been erformed %it#in t#e sco e of t#e agentKs a&t#ority$ if s&c# act is %it#in t#e terms of t#e o%er of attorney$ as %ritten$ even if t#e agent #as in fact exceeded t#e limits of #is a&t#ority according to an &nderstanding bet%een t#e rinci al and t#e agent. S*o.e o' .er on a4entE aut1orit7 a to t1ird

!@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/ncl&des not only t#e act&al a&t#ori6ation conferred & on t#e agent by #is rinci al b&t also t#at %#ic# #as a arently or im liedly been delegated to #im. 1. ? :#ere t#e a&t#ority not in %riting 9very erson dealing %it# an agent is &t in inG&iry and m&st discover & on #is eril$ if #e %o&ld #old t#e rinci al liable$ not only t#e fact of t#e agency b&t t#e nat&re and extent of a&t#ority of t#e agent. 2ne m&st act %it# ordinary r&dence and reasonable diligence to ascertain %#et#er t#e agent is acting and dealing %it# #im %it#in t#e sco e of #is o%ers. ,#e fact t#at one is dealing %it# an agent %#et#er t#e agency be general or s ecial$ s#o&ld be a danger signal. ,#e mere o inion of an agent as to t#e extent of #is o%ers %ill not bind t#e rinci al %#o may act on t#e res&m tion t#at t#ird ersons dealing %it# #is agent %ill not be negligent to ascertain t#e extent of #is a&t#ority as %ell as t#e existence of t#e agency. r&le of la% or to dis ense %it# a formality reG&ired 0as in -tat&te of +ra&ds1 :#ere it is so&g#t to vary an essential G&ality of t#e agency relations#i ,#e general r&le reG&ires t#at t#e rinci al m&st #ave notice of t#e alleged c&stom before t#e agentFs acts$ in accordance t#ere%it#$ may bind t#e rinci al. B&t in t#e ff cases$ rinci al deemed to #ave notice of a given &sage$ even t#o&g# #e did not in fact #ave s&c# notice. :#ere t#e rinci al and t#e agent reside in t#e same comm&nity$ t#e &sage is definite and %ell?kno%n$ and t#e agent #as no notice t#at #e is to act to t#e contraryE and :#ere t#e agent is a&t#ori6ed to deal in a artic&lar market or exc#ange 0& on t#e gro&nd t#at t#e rinci al $ as a reasonable man$ m&st #ave antici ated t#at s&c# &sages %ere likely to revail and$ t#erefore$ in t#e absence of any contrary intention$ m&st #ave a&t#ori6ed t#e dealing in contem lation of t#em1. /7 ne*e it7 Act&ally$ an agency can never be created by necessityE %#at is created is additional a&t#ority in agent a ointed and a&t#ori6ed before t#e emergency arose. ,#e existence of an emergency or ot#er &n&s&al conditions may o erate to invest in an agent a ointed and a&t#ori6ed to meet t#e agency$ rovided. ,#e emergency really existsE ,#e agent is &nable to comm&nicate %it# t#e rinci alE

? ?

2et1od o' 8roadenin4 and re tri*tin4 a4entE aut1orit7 A rinci al may ass&me rig#ts and inc&r liabilities in res ect of #is agentFs acts or transactions ot#er t#an t#ose for %#ic# ex ress a&t#ori6ation #as been given and an agentFs a&t#ority may be enlarged or restricted in a n&mber of %ays. o /7 im.-i*ation A&t#ority extends to acts and transactions incidental to %#at #ave been ex ressly a&t#ori6ed. o /7 u a4e and *u tom (ma7 en-ar4e a ?e-- a re tri*t) AgentFs a&t#ori6ation may not$ #o%ever$ be enlarged t#ro&g# &sage and c&stom in t#e follo%ing fo&r classes of cases. :#ere it is so&g#t to vary t#e terms of an ex ress a&t#ori6ation$ as %#ere t#e agent a ointed to sell for creditE :#ere it is so&g#t t#ereby to dis ense %it# a legal reG&irement enacted for t#e rinci alFs benefitE :#ere it is so&g#t t#ereby to c#ange a

!D

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
,#e agentFs enlarged a&t#ority is exercised for t#e rinci alFs rotectionE and ,#e means ado ted are reasonable &nder t#e circ&mstances /7 *ertain do*trine 2f a arent a&t#ority 0Art. 1(111 2f liability by esto el 0ibid1 2f ratification 0Art. 1(101 are additional met#ods by %#ic# a&t#ori6ation may be created. /7 t1e ru-e o' e=u dem 4eneri .F A met#od for stating t#e r&le t#at %#ere in an instr&ment of any kind$ an en&meration of s ecific matters is follo%ed by a general #rase$ t#e general #rase is #eld to be limited in sco e by t#e s ecific matters. +or t#e agentFs o%n benefit.? o As to t#is as ect$ t#e %eig#t of a&t#ority says >9-$ rinci al is liable$ if t#e agent acted for #is o%n benefit and even if t#e agent acted %it#in t#e a&t#ority given.

Eu4enio ) CA and Pe. i Co-a /ott-in4 Co. (E3A) 1((D 4egalado$ L. +AC,-

!e .on i8i-it7 o' .rin*i.a- ?1ere a4ent a*ted ?it1 im.ro.er moti)e . General rule ,#e motive of t#e agent in entering into a contract %it# a t#ird erson is immaterial. :#ere a %ritten a&t#ority given to an agent covers t#e t#ing done by #im on be#alf of t#e rinci al$ it is not com etent to t#e co&rt to look into t#e mind of t#e agent$ and if #e #ad a lied #is a&t#ority for #is o%n ends$ to #old t#at t#e rinci al is not bo&nd. E ceptions :#ere t#e t#ird erson kne% t#at t#e agent %as acting for #is rivate benefit 0t#at t#e rinci al is not liable1 :#ere t#e o%ner is seeking recovery of ersonal ro erty %#ic# #e #as been &nla%f&lly de rived. Prin*i.a-E re .on i8i-it7 'or a4entE mi re.re entation. :it#in t#e sco e of agentFs a&t#ority.? o A rinci al is s&bject to liability for loss ca&sed to anot#er by t#e ot#erFs reliance & on a deceitf&l re resentation of an agent in t#e co&rse of #is em loyment if t#e re resentation is a&t#ori6ed$ or %it#in t#e im lied a&t#ority of t#e agent to make for t#e rinci al$ or a arently a&t#ori6ed by #im or not to make t#e re resentation Beyond t#e sco e of agentFs a&t#ority.? o )rinci al not bo&nd by t#e misre resentation of t#e agent.

;ora 9&genio %as a dealer of t#e softdrinks rod&ct of res ondent com any %#ile #er #&sband Alfredo &sed to be a ro&te manager of )e siA. )e si filed a com laint for a collection of s&m of money against t#e 9&genio s o&ses alleging an o&tstanding acco&nt of )(D$"C1 re resenting balances bot# from t#e H&e6on City and '&ntinl& a lants %#ere ;ora maintains a reg&lar c#arge acco&nt %it# t#em. 7&ring trial$ t#e 9&genio s o&ses resented fo&r ,rade )rovisional 4ecei ts 0,)4s1 allegedly iss&ed and received by t#em from )e siFs c&rrent ro&te manager *ovencio 9strada of its 'alate :are#o&se s#o%ing ayments in t#e total amo&nt of )!0$C00. ,#e 9&genios contend t#at #ad t#e amo&nts in t#e ,)4s been credited on t#eir favor$ t#ey %o&ld not be indebted to )e si b&t it is t#e latter %#o %o&ld be indebted to t#em in t#e s&m of )@$CD" re resenting over ayment. ,C r&led for )e si. CA affirmed. /--89. :2; t#e ,)4s are s&fficient evidence to rove - s 9&genioFs ayment of t#eir acco&ntabilities to )e si< 39=7. YES. CA j&dgment ann&lled and set asideE )e si ordered to ay back etitioners over ayment. 4A,/2

,#e ,)4s resented in evidence are dis &tably res&med as evidence of ayments made on t#e acco&nts of t#e 9&genios. ,#ere are res&m tions )uris tantum in la% t#at rivate transactions #ave been fair and reg&lar and t#at t#e ordinary co&rse of b&siness #as been follo%ed. /n t#is case$ )e si failed to reb&t t#e aforestated res&m tions. 0)e si failed to resent 9strada as %itnessE it also s&bmitted in evidence falsified doc&ments1.

9ven ass&ming ar#uendo t#at )e siFs cas#ier never received t#e amo&nts reflected
)rior to t#e instant case$ Alfredo filed an illegal dismissal case against )e si %#ic# %as decided in #is favor.

!C

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
in t#e ,)4s$ it still failed to rove t#at 9strada$ %#o is d&ly a&t#ori6ed agent %it# res ect to t#e 9&genio s o&ses$ did not receive t#ose amo&nts from t#e latter. /n so far as t#e c&stomers are concerned$ for as long as t#ey ay t#eir obligations to t#e sales re resentative of t#e rivate res ondent &sing t#e latterKs official recei t$ said ayment exting&is#es t#eir obligations. 2t#er%ise$ it %o&ld &nreasonably cast t#e b&rden of s& ervision over its em loyees from )e si to its c&stomers. ,#e s&bstantive la% is t#at ayment s#all be made to t#e erson in %#ose favor t#e obligation #as been constit&ted$ or #is s&ccessor?in?interest or any erson a&t#ori6ed to receive it YArt. 12D0$CCZ. As far as t#ird ersons are concerned$ an act is deemed to #ave been erformed %it#in t#e sco e of t#e agentKs a&t#ority$ if s&c# is %it#in t#e terms of t#e o%er of attorney$ as %ritten$ even if t#e agent #as in fact exceeded t#e limits of #is a&t#ority according to an &nderstanding bet%een t#e rinci al and #is agent. C1. 3e-o o and !o a-e 2ar (GEN) ;ov. @$ 1(@@ /m erial$ *. ) La Ur8ana and &einasm&c# as t#e a ellant %as f&lly a%are of t#e fact t#at it %as dealing %it# #im on t#e strengt# of t#e alleged o%ers of attorney &r orting to #ave been conferred & on #im by t#e laintiff$ it %as #is d&ty to ascertain t#e gen&ineness of t#e instr&ments and not rely absol&tely and excl&sively & on t#e fact t#at t#e o%ers of attorney a eared to #ave been registered. /n vie% of its fail&re to roceed in t#is manner$ it acted negligently and s#o&ld s&ffer t#e conseG&ences and damages res&lting from t#e transactions. Sa'i* A-*an ) . Im.eria- 3e4eta8-e (i- Co. In*. (2AI) 'arc# 2!$ 2001 >nares O -antiago$ *. +acts. 2n *&ly 1$ 1(!" and -e tember 2C$ 1(!"$ -afic Alcan laced &rc#ase orders %it# /M20/m erial1 for 2$000 long tons of cr&de cocon&t oil$ val&ed at 8-U222.C0 er ton$ covered by )&rc#ase Contract ;os. A"01DD" and A"01"CC$ res ectively$ to be delivered %it#in t#e mont# of *an&ary 1(!A. )rivate res ondent$ #o%ever$ failed to deliver t#e said cocon&t oil and$ instead$ offered a I%as# o&tI settlement$ %#ereby t#e cocon&t oil s&bject of t#e &rc#ase contracts %ere to be Isold backI to /M2 at t#e revailing rice in t#e international market at t#e time of %as# o&t. ,#&s$ /M2 bo&nd itself to ay to -afic t#e difference bet%een t#e said revailing rice and t#e contract rice of t#e 2$000 long tons of cr&de cocon&t oil$ %#ic# amo&nted to 8-U2(@$C00.00. /M2 failed to ay t#is amo&nt des ite re eated oral and %ritten demands. ,#e contracts erformed in 1(!C$ on one #and$ and t#e 1(!" contracts s&bject of t#is case$ on t#e ot#er #and$ differed in t#at &nder t#e 1(!C contracts$ deliveries %ere to be made %it#in t%o mont#s. ,#is$ as alleged by -afic$ %as t#e time needed for milling and b&ilding & oil inventory. 'ean%#ile$ t#e 1(!" contracts sti &lated t#at t#e cocon&t oil %ere to be delivered %it#in eriod ranging from eig#t mont#s to eleven to t%elve mont#s after t#e lacing of orders. ,#e cocon&ts t#at %ere s& osed to be milled %ere in all likeli#ood not yet gro%ing %#en 7ominador 'onteverde sold t#e cr&de cocon&t oil. As s&c#$ t#e 1(!" contracts constit&ted trading in f&t&res or in mere ex ectations. /ss&e. :#et#er or not /M2Ks )resident$ 7ominador 'onteverde$ validly entered into t#e 1(!" contracts for and on be#alf of /M2 3eld. ;2. /t can be clearly seen from /M2Ks By?la%s t#at 'onteverde #ad no blanket a&t#ority to bind /M2 to any contract. 3e m&st act according to t#e instr&ctions of t#e Board of 7irectors. 9ven in instances %#en #e %as a&t#ori6ed to act according

FAC"S> )etitioner Cora6on C#. Meloso o%ned &ndivided ortions of C arcels of land in 'anila. 7efendant 7el 'ar forged 2 o%ers of attorney &r orting to #ave been exec&ted by t#e etitioner s o&ses conferring & on #im a&t#ority to mortgage t#e etitionerFs artici ation in t#e ro erties. ,#ese o%ers of attorney %ere d&ly registered in t#e office of t#e 4egister of 7eeds. 7el 'ar roceeded in mortgaging t#e etitionerFs artici ations to =a )revisora +ili ina. -&bseG&ently$ #e cancelled t#e mortgage and transferred it to =a 8rbana %#ic# granted #im a loan of )1@$DAC. 3e delivered t#e o%nerFs d& licates of t#e certificates of title to =a 8rbana. 3o%ever$ 7el 'ar violated t#e conditions of t#e mortgage %#ic# rom ted =a 8rbana to foreclose t#e mortgages. )etitioners filed a criminal action against 7el 'ar for t#e fra&d&lent transactions %#ic# res&lted into #is event&al conviction. ,#e trial co&rt also #eld t#at &rs&ant to Art. 1A1D 02ld Civil Code1 and ,orrens Act$ t#e forged o%ers of attorney %ere n&ll and void and co&ld not rej&dice t#e rig#ts of t#e etitioners. ISSUE> :2; =a 8rbana s#o&ld be liable for damages ,EL&> >9-. /nasm&c# as 7el 'ar is not t#e registered o%ner of t#e mortgaged ro erties and

!"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
to #is discretion t#at discretion m&st not conflict %it# rior Board orders$ resol&tions and instr&ctions. ,#e evidence s#o%s t#at t#e /M2 Board kne% not#ing of t#e 1(!" contracts and t#at it did not a&t#ori6e 'onteverde to enter into s ec&lative contracts. /n fact$ 'onteverde #ad earlier ro osed t#at t#e com any engage in s&c# transactions b&t t#e /M2 Board rejected #is ro osal. -ince t#e 1(!" contracts marked a s#ar de art&re from ast /M2 transactions$ -afic s#o&ld #ave obtained from 'onteverde t#e rior a&t#ori6ation of t#e /M2 Board. -afic can not rely on t#e doctrine of im lied agency beca&se before t#e controversial 1(!" contracts$ /M2 did not enter into identical contracts %it# -afic. ,#e basis for agency is re resentation and a erson dealing %it# an agent is &t & on inG&iry and m&st discover & on #is eril t#e a&t#ority of t#e agent. /n t#e case of Bacaltos Coal 'ines v. Co&rt of A eals$ %e el&cidated t#e r&le on dealing %it# an agent t#&s. Every person dealin# with an a#ent is put upon inAuiry and must discover upon his peril the authority of the a#ent. ,f he does not ma&e such inAuiry, he is char#eable with &nowled#e of the a#entKs authority, and his i#norance of that authority will not be any e cuse. *ersons dealin# with an assumed a#ent, whether the assumed a#ency be a #eneral or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the a#ency but also the nature and e tent of the authority, and in case either is controverted, the burden of proof is upon them to establish it. ,#e most r&dent t#ing etitioner s#o&ld #ave done %as to ascertain t#e extent of t#e a&t#ority of 7ominador 'onteverde. Being remiss in t#is regard$ etitioner can not seek relief on t#e basis of a s& osed agency. ,arr7 Kee-er ). !odri4ue5, u.ra /PI ). &e Co ter (!(G) 1(2C Fa*t > B)/ alleges t#at for val&e$ 5abriela de Coster #aving consent and ermission of #er #&sband$ and #e acting as #er agent$ defendants made romissory note to B)/ for )2(2k %#ic# also rovided t#at in t#e event of a s&it or action$ defendants s#o&ld ay f&rt#er s&m of )10k$ as attorneyKs fees. ,o sec&re ayment t#ereof$ *ean )oi6at and *' )oi6at P Co. exec&ted a c#attel mortgage to B)/ on t#e steamers 4oger )oi6at and 5abrielle )oi6at$ %it# mac#inery and materials belonging to )oi6at Megetable 2il 'ills. 5abriela Coster and #&sband ackno%ledged and delivered to B)/ a mortgage on real ro erty and s&c# real ro erty %as s&bject to a rior mortgage in favor of =a 2rden de 7omincios or )) )redicadores dela )rovincia del -anitsimo 4osario 0=a 2rden1 #ence it is made a arty defendant. )romissory is long ast d&e and o%ing. C+/. r&led against 5abriela$ )oi6at to be solidarily liable for )2(2k b&t s&c# amo&nt defendants #ave not aid. B)/ no% rays for an order to direct s#eriff to take immediate ossession of ro erty described in t#e c#attel mortgage and sell it. ?=a 2rden. rays t#at its credit be also taken into acco&nt %#en 2nd mortgage is foreclosed. 5abriela$ )oi6at and )oi6at Co declared in defa&lt for fail&re to a ear or ans%er. C+/. granted B)/ and t#at 7ominican +at#ers s#o&ld #ave j&dgment for amo&nt of t#eir claim and ro erty be sold and roceeds a lied. ,#ro&g# #er attorney$ 5abriela filed motion alleging. s#e is legit %ife of )oi6at$ s#e #ad been absent from )#ils and living in )aris till 1(2D %#en s#e ret&rned to 'anilaE at tiem of filing of com laint and iss&ance of s&mmons s#e %as not in t#e )#ilsE t#at s&mmons %ere delivered by s#eriff to #er #&sband and t#at t#ro&g# latterKs malicio&s negligence$ defa&lt %as taken and j&dgment enteredE t#at s#e never #ad any kno%ledge for t#e amo&ntsE no kno%ledge of act&al facts till 1(2D %#en t#ro&g# t#e local ne%s a ers$ s#e learned t#at a defa&lt j&dgment been made against #erE %#en s#e first fo&nd o&t$ s#e %as &nable to obtain rendition of acco&nts$ beca&se #er #&sband #ad left t#e )#ils 2 days revio&s and gone to 3ong SongE t#at s#e %ent to 3S and learned t#at #er #&bby #ad left t#ere &nder a false name and #ad gone to -inga ore from %#ence #e %ent to ot#er laces &nkno%n to #erE t#at s#e t#en ret&rned to 'anilaE and t#at in 1(2D$ s#e came into ossession of docs s#o%ing t#e illegality of t#e notes and mortgage in G&estion. 5abrielaKs defense. involves validity of order of 7ominican +at#ers in t#is$ t#at t#eir mortgage does not g&arantee any loan made to #erE it is a sec&rity only given for a credit of a @rd ersonE mortgage exec&ted %it#o&t marital consent of %ifeE 3&sband no a&t#ority to make #er liable as s&rety on debt of a @rd erson. As to notes to B)/. a1 it does not re resent any money aid to 5abriela by B)/ b1 it is excl&sively t#e ersonal debt of *ena )oi6at and #is com any$ c1 it %as exec&ted by #er #&sband$ beca&se B)/ desired more sec&rity for ayment of #er #&sbandKs debt to t#e bank$ d1 it %as exec&ted in excess of o%ers given to #&sband &nder #is o%er of attorney$ e1 it %as exec&ted as a res&lt of coll&sion bet%een bank and #er #&sband for &r ose of making #er liable for oblig of @rd erson.

!A

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
As to mortgage. a1 it %as exec&ted to sec&re a void oblig b1it does not g&arantee any loan made to #er c1it %as exec&ted %it#o&t ex ress marital consent %#ic# la% reG&ires$ d1 exec&ted t#ro&g# coll&sion. )rayer. ann&l j&dgment and case be reo ened and be ermitted to file ans%er and case be tried on t#e merits. ??79;/97. I ue> :2; 5abriala bo&nd by romissory notes and mortgage signed by #er #&sband on #er be#alf< ;2 ,e-d> #. Ser)i*e o' Ga8rie-aG ummon made to 1u 8andG re iden*e N(" )a-id t1ere'ore *ourt ne)er a*Iuired =uri di*tion. /t is ex ressly admitted by B)/ t#at since 1(0! to 1(2D$ %ife %as residing in City of )aris. 4esidence of %ife in )aris %as for 1" years. 4esidence of %ife %o&ld contin&e to remain to be t#at of #&sbandKs if where in the ordinary course of business wife is absent from husbandKs residence on a pleasure trip or for business or to visit friends or relatives. B&t 3949$ t#at is not so. +or 1" years residence of #&sband %as in City of 'anila and residence of %ife %as in City of )aris. -ince residence of #&bby not t#e &s&al lace of residence of %ife$ t#e s&bstit&ted service made is n&ll and void and by s&c# service co&rt never acG&ired j&risdiction over 5abrielaKs erson. 2. "1e *ontention t1at under 1u 8andG .o?er o' attorne7, 1e ?a t1e 4enera- a4ent o' ?i'e ?it1 aut1roit7 to a**e.t er)i*e o' .ro*e 'or 1er and in 1er name not )a-id. ;ot#ing in record to s#o% t#at #&sband acce ted service of nay rocess for %ife or as her a#ent, or that he was actin# for or representin# her in his failure and ne#lect to appear or answer. @. ,u 8and ?a ?it1 no aut1orit7 to i4n t1e .romi or7 note on 8e1a-' o' ?i'e Ga8rie-a. 5abriel. 8nder t#e o%er of attorney$ #&sband #ad no a&t#ority for and on be#alf of %ife to exec&te a joint and several note or to make #er liable as an accommodation maker. 7ebt %as a reexisting debt of #&sband and Com any to %#ic# s#e %as not a arty and so s#e #ad no legal oblig to ay. -#e never borro%ed any money from B)/ nor ever #ad dealing %it# it nor %as s#e indebted to B)/. 4ecord s#o%s t#ere is no evidence to s#o% %ife %as a arty to notes nor %as s#e &nder any legal liability to ay t#em. ;otes %ere merely additional sec&rity for t#e different debts of #&sband. At t#e time notes %ere exec&ted$ #&sband %as attorney in fact for %ife and bank kne% or s#o&ld #ave kno%n nat&re and extent of #is a&t#ority and limitation & on #is o%er. )o%er of attorney does not contain any rovisions giving #&sband a&t#ority to make %ife liable as s&rety for ayment of reexisting debt of a @rd erson. )ar C of )o%er of attorney a&t#ori6es #&sband for and in name of %ife Ito loan or borro% s&ms of money or f&ngible t#ings$ etcI. [ s#o&ld be constr&ed to mean t#at #&sband #ad o%er only to loan #is %ifeKs money and to borro% money for or on acco&nt of #is %ife as #er agent and attorney in fact. ,#at does not carry %it# it or im ly t#at #e #ad legal rig#t to make %ife liable as s&rety for reexisting debt of @rd erson. A. 91i-e .o?er o' attorne7 aut1ori5e 1u 8and toL a**e.t noti*e and ummon , t1ere i no .roo' to 1o? 1u 8and a**e.ted er)i*e o' an7 noti*e or ummon in t1e a*tion on 8e1a-' o' 8an: and e)en o, i' 1e 1ad, it ?ou-d not 8e a de'en e to o.en u. and )a*ate a =ud4ment. +act t#at agent failed and neglected to erform #is d&ties and to re resent t#e interests of #is rinci al is not a bar to t#e rinci al obtaining legal relief for t#e negligence of #er agent$ rovided t#at a lication s&c# a relief is d&ly and ro erly made. <<<:#ole &r ose and intent of o%er of attorney %as to em o%er and a&t#ori6e #&sband to look after and rotect %ifeKs interests and for #er and in #er name to transact any and all of #er b&siness. B&t no%#ere does it rovide or a&t#ori6e #im to make #er liable as a s&rety for t#e ayment of t#e reexisting debt of a @rd erson. 3&sband no a&t#ority to sign note on be#alf of %ife t#erefore$ as to #er$ t#e note is void for %ant of o%er of #er #&sband to exec&te it. -ame is tr&e for t#e real mortgage to t#e bank. 6ud4ment> =o%er co&rt decision vacated and as to bank case remanded to lo%er co&rt %it# leave for %ife to file ans%er to B)/Ks ca&se of action and #ave case tried on merits. /a*a-to Coa- 2ine ). CA (!EG) *. 7avide 1((C FAC"S> /n an A&t#ori6ation$ etitioner Bacaltos a&t#ori6ed -avellon$ to &se t#e coal o erating contract of Bacaltos Coal 'ine of %#ic# #e is t#e ro rietor$ for any legitimate &r ose t#at it may serve and artic&larly. 011 to acG&ire &rc#ase ordersE 021 to engage in tradingE 0@1 to collect all receivables d&e or in arrearsE 0D1 to extend to any erson or com any by s&bstit&tion t#e same extent of a&t#ority t#at is granted to 4ene

!!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
-avellonE 0C1 in connection %it# t#e receeding aragra #s to exec&te and sign doc&ments$ contracts$ and ot#er ertinent a ers. /n 1(!!$ a ,ri C#arter )arty %as exec&ted bet%een Bacaltos Coal 'ines 0re resented by -avellon1 and -an 'ig&el. ,#e agreement %as t#at for )# "C0$000 to be aid %it#in seven days after t#e exec&tion of t#e contract$ it Ilets$ demisesI t#e vessel to c#arterer -'C Ifor t#ree ro&nd tri s to 7avao.I ,#e vessel %as able to make only one tri $ so -'C filed an action for s ecific erformance. )etitioners alleged t#at -avellon %as not t#eir C#ief 2 erating 2fficer and t#at t#e o%ers granted to #im are only t#ose clearly ex ressed in t#e A&t#ori6ation %#ic# do not incl&de t#e o%er to enter into any contract %it# -'C. ISSUE> :2; -avellon %as d&ly a&t#ori6ed by t#e etitioners to enter into t#e ,ri C#arter )arty. !ULING> ;2. ,#e broadest sco e of -avellonKs a&t#ority is limited to t#e &se of t#e coal o erating contract and t#e cla&se cannot contem late any ot#er o%er not incl&ded in t#e en&meration or %#ic# are &nrelated eit#er to t#e o%er to &se t#e coal o erating contract or to t#ose already en&merated. /n s#ort$ %#ile t#e cla&se allo%s some room for flexibility$ it can com re#end only additional rerogatives falling %it#in t#e rimary o%er and %it#in t#e same class as t#ose en&merated. ,#ere is no evidence at all t#at Bacaltos Coal 'ines as a coal mining com any o%ns and o erates vessels$ and even if it o%ned any s&c# vessels$ t#at it %as allo%ed to c#arter or lease t#em. Also$ t#e A&t#ori6ation is not a general o%er of attorney. /t is a s ecial o%er of attorney for it refers to a clear mandate s ecifically a&t#ori6ing t#e erformance of a s ecific o%er and of ex ress acts s&bs&med t#erein. +&rt#ermore$ #ad -'C exercised d&e diligence and r&dence$ it s#o&ld #ave kno%n in no time t#at t#ere is absol&tely not#ing on t#e face of t#e A&t#ori6ation t#at confers & on -avellon t#e a&t#ority to enter into any ,ri C#arter )arty. #. E''e*t e0.re rati'7 o' rati'i*ation ion o' ?i--in4ne and to

/f t#e rinci al does not ratify t#e acts of t#e agent it is &nenforceable and #e is not bo&nd by it. /f t#e rinci al ratifies t#e acts of t#e agent$ i.e. a&t#ori6es$ receives benefits$ t#e ,3/47 )94-2; cannot set & t#e fact t#at t#e agent #as exceeded #is a&t#ority. ,#e ,34/7 )94-2; may be com elled to abide by #is contract. ,#e ratification s#all #ave a retroactive effect. /t is only t#e )4/;C/)A= ;2, ,39 A59;, %#o may stam t#e im rimat&r of ratification. Before ratification by t#e rinci al or ex ression of %illingness on #is art to ratify$ t#e t#ird erson may re &diate t#e acts of t#e agent. 2. Im.-ied rati'i*ation

:#ere a erson acts for anot#er %#o acce ts or retains t#e benefits or roceeds of #is effort %it# kno%ledge of t#e material facts s&rro&nding t#e transaction$ t#e latter m&s be 799'97 to #ave ratified t#e met#ods em loyed. )rinci le of )rinci al may not acce t t#e benefits of t#e transaction and re &diate t#e b&rdens. @. Ca e

Commi ion on Pu8-i* ,i41?a7 (EA!LA)

) San &ie4o

!a''ert7 ). Pro)in*e o' Ce8u (6ANCES) 7ecember 2($ 1(2! *o#ns +acts. An instr&ment %as exec&ted by laintiff$ by and t#ro&g# #is agent and attorney?in?fact$ in %#ic# t#e said agent &ndertook to convey title of t#e laintiff to "A00 sG. meters of a lot for a consideration of )22". ,#e art of t#e lot %as to be ex ro riated %it#in t#e rovincial ark. )laintiff received and acce ted t#e )22" consideration. )laintiff$ #o%ever$ contends t#at t#e agent #ad no a&t#ority to exec&te t#e instr&ment in G&estion. 4&ling. C+/ O dismissed laintiffFs com laintE j&dgment for defendantsF cross?com laint. /ss&e. :2; t#e instr&ment exec&ted is valid Y>9-Z 39=7. /f it be tr&e t#at t#e agent #ad no a&t#ority to exec&te t#e instr&ment$ t#e laintiff o&g#t not to #ave acce ted and recei ted for its consideration. 3aving received t#e consideration$ #e co&ld not %ait for fifteen years to rescind and

P.

Arti*-e #90# (A//Y)

Art. 1(01. A t#ird erson cannot set & t#e fact t#at t#e agent #as exceeded #is o%ers$ if t#e rinci al #as ratified$ or #as signified #is %illingness to ratify t#e agentKs acts.

!(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
set it aside & on t#e gro&nd of fra&d. ,#e actions of t#e defendant after t#e instr&ment %as exec&ted in taking ossession of t#e land and making im rovements t#ereon %ere o en and notorio&s and %ere a matter of common kno%ledge and %ere kno%n or legally s#o&ld #ave been kno%n to t#e laintiff. 7is osition. j&dgment of lo%er co&rt affirmed. Sta. Cata-ina ). E .itero (ALAIN) CA. t#e alleged G&estion of %#et#er etitioner %as granted an extension of t#e o tion to b&y t#e ro ertyE %#et#er s&c# o tion$ if any$ extended t#e lease or %#et#er etitioner act&ally aid t#e alleged )@00$000.00 to +idela 7i6on$ as re resentative of rivate res ondents in consideration of t#e o tion and$ %#et#er etitioner t#ereafter offered to ay t#e balance of t#e s& osed &rc#ase rice$ are all merely incidental and do not remove t#e &nla%f&l detainer case rivate res ondent filed before t#e 4,C an action for - ecific )erformance and +ixing of )eriod for 2bligation %it# rayer for t#e iss&ance of a restraining order ending #earing on t#e rayer for a %rit of reliminary inj&nction 0it so&g#t to com el t#e exec&tion of a deed of sale &rs&ant to t#e o tion to &rc#ase and t#e recei t of t#e artial ayment$ and to fix t#e eriod to ay t#e balance1 8nable to sec&re an inj&nction$ rivate res ondent also filed a com laint for Ann&lment of and 4elief from *&dgment %it# inj&nction and damages dismissed t#e com laint for ann&lment on t#e gro&nd of res )udicata$ and t#e %rit of reliminary inj&nction revio&sly iss&ed %as dissolved t%o cases %ere t#e after consolidated before t#e 4,C 0bot# dismissed1 CA. concl&ded t#at t#ere %as a erfected contract of sale bet%een t#e arties on t#e leased remises and t#at &rs&ant to t#e o tion to b&y agreement$ rivate res ondent #ad acG&ired t#e rig#ts of a vendee in a contract of sale o ined t#at ayment by rivate res ondent of )@00$000.00 as artial ayment for t#e leased ro erty$ %#ic# etitioners acce ted 0t#ro&g# Alice A. 7i6on1 and for %#ic# an official recei t %as iss&ed$ %as t#e o erative act t#at gave rise to a erfected contract of sale$ and t#at for fail&re of etitioners to deny recei t t#ereof$ rivate res ondent can t#erefore ass&me t#at Alice A. 7i6on$ acting as agent of etitioners$ %as a&t#ori6ed by t#em to receive t#e money in t#eir be#alf erfected

Q.

Arti*-e #902 (2A!K)

Art. 1(02. A t#ird erson %it# %#om t#e agent %is#es to contract on be#alf of t#e rinci al may reG&ire t#e resentation of t#e o%er of attorney$ or t#e instr&ctions as regards t#e agency. )rivate or secret orders and instr&ctions of t#e rinci al do not rej&dice t#ird ersons %#o #ave relied & on t#e o%er of attorney or instr&ctions s#o%n t#em. #. E''e*t o' .ri)ate or e*ret in tru*tion u.on t1ird .er on &i5on ) CA (6ESSA) *an&ary 2!$ 200@ >nares?-antiago$ *. +acts.

,#ese involve t%o consolidated etitions seeking to set aside and ann&l t#e decisions and resol&tions of res ondent Co&rt of A eals essentially$ t#e facts are. 2verland 9x ress =ines$ /nc. 0lessee1 entered into a Contract of =ease %it# 2 tion to B&y %it# etitioners 0lessors1 involving a 1$ACC.!0 sG&are meter arcel of land term of t#e lease %as for one 011 year commencing from 'ay 1"$ 1(AD & to 'ay 1C$ 1(AC.

7&ring t#is eriod$ rivate res ondent %as granted an o tion to &rc#ase for t#e amo&nt of )@$000.00 er sG&are meter. t#e lease s#all be on a er mont# basis %it# a mont#ly rental of )@$000.00 +or fail&re of rivate res ondent to ay t#e increased rental of )!$000.00 er mont# effective$ etitioners filed an action for ejectment ',C. rivate res ondent to vacate t#e leased remises and to ay t#e s&m of )"2D$000.00 re resenting rentals in arrears andLor as damages in t#e form of reasonable com ensation for t#e &se and occ& ation of t#e remises d&ring t#e eriod of illegal detainer

/ss&e 0relevant1. :2; t#ere %as a contract of sale

3eld. ;2;9. ,#ere %as no erfected contract of sale bet%een etitioners and rivate res ondent. )rivate res ondent arg&ed t#at it delivered t#e

(0

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
c#eck of )@00$000.00 to Alice A. 7i6on %#o acted as agent of etitioners &rs&ant to t#e s& osed a&t#ority given by etitioner +idela 7i6on$ t#e ayee t#ereof. )rivate res ondent f&rt#er contended t#at etitionersK filing of t#e ejectment case against it based on t#e contract of lease %it# o tion to b&y #olds etitioners in esto el to G&estion t#e a&t#ority of etitioner +idela 7i6on. /t insisted t#at t#e ayment of )@00$000.00 as artial ayment of t#e &rc#ase rice constit&ted a valid exercise of t#e o tion to b&y. 8nder Article 1DAC of t#e ;e% Civil Code$ It#e contract of sale is erfected at t#e moment t#ere is a meeting of minds & on t#e t#ing %#ic# is t#e object of t#e contract and & on t#e rice. +rom t#at moment$ t#e arties may reci rocally demand erformance$ s&bject to t#e rovisions of t#e la% governing t#e form of contracts.I ,#&s$ t#e elements of a contract of sale are consent$ object$ and rice in money or its eG&ivalent. /t bears stressing t#at t#e absence of any of t#ese essential elements negates t#e existence of a erfected contract of sale. -ale is a consens&al contract and #e %#o alleges it m&st s#o% its existence by com etent roof. /n an attem t to res&rrect t#e la sed o tion$ rivate res ondent gave )@00$000.00 to etitioners 0t#r& Alice A. 7i6on1 on t#e erroneo&s res&m tion t#at t#e said amo&nt tendered %o&ld constit&te a erfected contract of sale &rs&ant to t#e contract of lease %it# o tion to b&y. ,#ere %as no valid consent by t#e etitioners 0as co?o%ners of t#e leased remises1 on t#e s& osed sale entered into by Alice A. 7i6on$ as etitionersK alleged agent$ and rivate res ondent. ,#e basis for agency is re resentation and a erson dealing %it# an agent is &t & on inG&iry and m&st discover & on #is eril t#e a&t#ority of t#e agent. As rovided in Article 1!"! of t#e ;e% Civil Code$ t#ere %as no s#o%ing t#at etitioners consented to t#e act of Alice A. 7i6on nor a&t#ori6ed #er to act on t#eir be#alf %it# regard to #er transaction %it# rivate res ondent. ,#e most r&dent t#ing rivate res ondent s#o&ld #ave done %as to ascertain t#e extent of t#e a&t#ority of Alice A. 7i6on. Being negligent in t#is regard$ rivate res ondent cannot seek relief on t#e basis of a s& osed agency. /n Facaltos Coal 7ines vs. Court of Appeals$ -C ex lained t#e r&le in dealing %it# an agent. 9very erson dealing %it# an agent is &t & on inG&iry and m&st discover & on #is eril t#e a&t#ority of t#e agent. /f #e does not make s&c# inG&iry$ #e is c#argeable %it# kno%ledge of t#e agentKs a&t#ority$ and #is ignorance of t#at a&t#ority %ill not be any exc&se. )ersons dealing %it# an ass&med agency$ %#et#er t#e ass&med agency be a general or s ecial one$ are bo&nd at t#eir eril$ if t#ey %o&ld #old t#e rinci al$ to ascertain not only t#e fact of t#e agency b&t also t#e nat&re and extent of t#e a&t#ority$ and in case eit#er is controverted$ t#e b&rden of roof is & on t#em to establis# it. "o7ota S1a?, In*. 3 CA (/A2/I) 'ay 2@$ 1((C 7avide$ *r.$ *. Fa*t > =&na =. -osa %anted to &rc#ase a ,oyota =ite Ace so #e and #is son$ 5ilbert$ %ent to ,oyota -#a%Fs office and met )o ong Bernardo$ a sales re resentative of ,oyota. -osa em #asi6ed to Bernardo t#at #e needed t#e =ite Ace not later t#an *&ne 1A$ 1(!( beca&se #e$ #is family$ and a balikbayan g&est %o&ld &se it on *&ne 1! for a tri to 'arind&G&e %#ere #e %o&ld celebrate #is birt#day. 3e added t#at if #e does not arrive in #is #ometo%n %it# t#e ne% car$ #e %o&ld become a la&g#ing stock. Bernardo ass&red -osa t#at a &nit %o&ld be ready for ick & at 10.00 a.m. on *&ne 1A.

Bernardo t#en signed a doc&ment entitled A#reement Fetween 7r. "osa N *opon# Fernardo of <oyota "haw, ,nc$ sti &lating t#at. o All necessary doc&ments %ill be s&bmitted to ,oyota -#a% 0)o ong Bernardo1 & on arrival of 'r. -osa from 'arind&G&e. o ,#e do%n ayment of )100$000.00 %ill be aid by 'r. -osa on *&ne 1C. o ,#e ve#icle %ill be released for ick?& on *&ne 1A. o /t %as also agreed & on by t#e arties t#at t#e balance of t#e &rc#ase rice %o&ld be aid by credit financing t#ro&g# B.A. +inance. 2n *&ne 1C$ -osa and 5ilbert %ent to ,oyota to deliver t#e do%n ayment of )100$000.00.

,#ey met Bernardo %#o t#en accom lis#ed a rinted =ehicle "ales *roposal 3="*4 >58$ on %#ic# 5ilbert signed &nder t#e s&b#eading conforme. /n t#is doc&ment$ t#e s aces rovided for delivery terms %ere not filled? & . 4odrigo H&irante$ t#e -ales -& ervisor of Bernardo$ c#ecked and a roved said M-). 2n *&ne 1A$ Bernardo called 5ilbert to inform #im t#at t#e ve#icle %o&ld not be ready for ick & at 10.00 a.m. b&t instead at 2.00 .m. t#at same day.

At 2.00 .m.$ -osa and 5ilbert met Bernardo at t#e latterFs office. After %aiting for abo&t an #o&r$ Bernardo told t#em t#at t#e car

(1

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
co&ld not be delivered beca&se nasulot an# unit n# iban# mala&as. ,oyota contends. o ,#e =ite Ace %as not delivered to -osa beca&se B.A. +inance disa roved -osaFs credit financing a lication. o A artic&lar &nit #ad already been earmarked for -osa b&t co&ld not be released d&e to t#e &ncertainty of ayment of t#e balance of t#e &rc#ase rice. o ,oyota gave -osa t#e o tion to &rc#ase t#e &nit by aying t#e f&ll &rc#ase rice in cas# b&t -osa ref&sed. o ,oyota ret&rned t#e do%n ayment to -osa & on #is reG&est. ,#ereafter$ -osa sent t%o letters to ,oyota demanding t#e ref&nd of do%n ayment as %ell as t#e ayment of damages. ,oyota ref&sed to accede to t#e -osaFs demands. -osa filed a com laint against ,oyota for damages &nder Articles 1( and 21 of t#e Civil Code in t#e total amo&nt of )1$2@0$000.00. ,4/A= C284, #eld t#at o ,#e A#reement between 7r. "osa and *opon# Fernardo$ %as a valid erfected and contract of sale ,oyota %#ic# bo&nd ,oyota to deliver t#e ve#icle to -osa. o ,oyota acted in bad fait# in selling t#e car to anot#er erson. o Bernardo$ as an a&t#ori6ed sales exec&tive of ,oyota -#a%$ %as t#e latterFs agent and t#&s bo&nd ,oyota -#a%. o ,#erefore$ ,oyota s#o&ld ay -osa moral and exem lary damages as %ell as attorneyFs fees$ com ensation for -osa and #is la%yerFs trans ortation fare$ and t#e costs of t#e s&it. CA affirmed in toto. I ue and ,e-d> #. 9(N t1ere ?a a .er'e*ted *ontra*t o' a-e. N(. Article 1DAC of t#e Civil Code s ecifically rovides t#at t#e contract of sale is erfected at t#e moment t#ere is a meeting of minds & on t#e t#ing %#ic# is t#e object of t#e contract and & on t#e rice. +rom t#at moment$ t#e arties may reci rocally demand erformance$ s&bject to t#e rovisions of t#e la% governing t#e form of contracts. ,#e Agreement is not a contract of sale beca&se it im osed no obligation on t#e art of ,oyota to transfer o%ners#i and no correlative obligation on t#e art of -osa to ay t#erefor a rice certain. ,#is is tr&e not%it#standing t#e rovision on t#e do%n ayment of )100$000.00 beca&se s&c# rovision made no s ecific reference to a sale of a ve#icle. ,f it %as intended for a contract of sale$ it co&ld only refer to a sale on installment basis. ;ot#ing %as mentioned abo&t t#e f&ll &rc#ase rice and t#e manner t#e installments %ere to be aid. ,#e r&le is t#at a definite agreement on t#e manner of ayment of t#e rice is an essential element in t#e formation of a binding and enforceable contract of sale. ,#is is so beca&se disagreement on t#e manner of ayment is tantamo&nt to a fail&re to agree on t#e rice. 'oreover$ t#e IAgreementI s#o%s t#e absence of a meeting of minds bet%een ,oyota and -osa. +or one t#ing$ -osa did not even sign it. /t %as clear from t#e title of t#e doc&ment$ MAgreement bet%een 'r. -osa P *opon# Fernardo of <oyota "haw, ,ncJ t#at -osa %as not dealing %it# ,oyota b&t %it# Bernardo %#o not misre resent t#at #e #ad a&t#ority to sell ,oyota ve#icles.. -osa kne% Bernardo %as only an agent and it %as inc&mbent & on -osa to act %it# ordinary r&dence and reasonable diligence to kno% t#e extent of BernardoKs a&t#ority as an agent. A erson dealing %it# an agent is &t & on inG&iry and m&st discover & on #is eril t#e a&t#ority of t#e agent. At most$ t#e transaction only reac#ed t#e negotiation stage of a contract of sale %it# t#e exec&tion of t#e M-). ,#e M-) %as a mere ro osal %#ic# %as aborted %#en BA +inance disa roved -osaFs credit financing a lication. /t created no demandable rig#t in favor of -osa for t#e delivery of t#e ve#icle to #im$ and its non?delivery did not ca&se any legally indemnifiable inj&ry. Sired7 Enter.ri e , In*. ) . CA (!EK) +AC,-. -iredy 9nter rises$ /nc. 0-iredy1 is t#e o%ner and develo er of >smael Millage$ a s&bdivision in B&lacan. /ts resident is /smael >anga. /n its Articles of /ncor oration$ -iredyFs rimary cor orate r& ose is to acG&ire and develo lands$ erect b&ildings and #o&ses t#ereon$ and sell$ lease$ or ot#er%ise dis ose t#e said ro erties to b&yers. -ometime before 2ctober 1(A!$ >anga exec&ted an &ndated =etter of A&t#ority in favor of 3ermogenes -antos. /n t#is letter$ >anga constit&ted in -antos to do and exec&te$ among ot#er t#ings$ t#e a&t#ority of negotiating and entering into contractLs to b&ild 3o&sing 8nits in >smael Millage.

(2

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
2n 2ctober 1C$ 1(A!$ -antos entered into a deed of agreement %it# Conrado de 5&6man. /n t#is deed$ it ex ressly stated t#at -antos %as re resenting -iredy$ %#ile 7e 5&6man %as referred to as t#e contractor and -iredy %as t#e rinci al. +or almost 12 years$ &ntil A ril 1((0$ 7e 5&6man constr&cted 2" residential &nits in >smael Millage. 1@ %ere f&lly aid$ b&t t#e ot#er 1@ remained &n aid. ,#e total rice exceeded D00k$ verified correct and signed by -antos. 7e 5&6man t#en tried to collect t#is from -iredy$ b&t failed. ,#&s #e instit&ted an action for s ecific erformance against -iredy$ >anga$ and -antos$ %#o all denied liability. 7&ring t#e trial$ -antos disa eared. -iredy in its defense resented testimonial evidence t#at -iredy #ad no contract %it# 7e 5&6man and #ad not a&t#ori6ed -antos to enter into a contract %it# anyone to b&ild #o&ses in t#e said village. ,#e ,C r&led in favor of -iredy$ saying t#at t#e deed of agreement %as bet%een 7e 5&6man and -antos only$ and #eld t#at -iredy and >anga cannot be #eld liable. -antos %as ordered to ay t#e amo&nt and t#e case against -iredy and >anga %as dismissed. 8 on a eal$ t#e CA reversed$ saying t#at t#e =etter of A&t#ority clearly constit&ted -antos as -iredyFs agent. ConseG&ently -iredy cannot deny liability for t#e contract bet%een -antos and 7e 5&6man$ and t#ere %as no need for >anga #imself to be a signatory to it$ in order to be bo&nd. -iredy no% a eals to t#e -C$ t1e re-e)ant ar4ument in t1i *a e t1at Santo E in tru*tion ?ere on-7 to SELL t1e -ot and not 8ui-d 1ou e . ISSUE> :2; t#ere %as an agency 0>9-1 9(N a umin4 Santo ?a an a4ent, Sired7 i -ia8-e under t1e &eed o' A4reement (YES) ,EL&;!A"I( A reading of t#e =etter of Agreement bet%een >anga and -antos &ndo&btedly constit&tes -antos as an agent. ,#ere are ex ress sti &lations contained t#erein$ and it %as on t#e a&t#ority of t#is doc&ment t#at 7e 5&6man transacted b&siness %it# -antos in t#e first lace. As to -iredyFs defense t#at it %as only interested in selling t#e lots$ it does not matter. +irst of all$ its Articles of /ncor oration s#o% t#at it &ndertakes constr&ction of b&ildings and #o&ses. -&c# Articles$ co& led %it# t#e =etter of A&t#ority$ is s&fficient to #ave given 7e 5&6man reason to believe t#at -antos %as d&ly a&t#ori6e to re resent -iredy. Se*ond-7, e)en a umin4 t1at Santo E mandate ?a on-7 to e-- t1e -ot a Sired7 a ert , Sired7 i ti-- 8ound to .a7 &e Gu5man. &e Gu5man i a t1ird .art7 to t1e a4en*7 ?1o 1ad no :no?-ed4e o' t1e .e*i'i* in tru*tion 8et?een .rin*i.a- and a4ent. 91at &e Gu5man a? ?a t1e Letter o' Aut1orit7, and t1e *o.e o' t1e a4entE aut1orit7 i ?1at a..ear ?ritten t1erein. "1ird .er on ma7 8e 8ound to inIuire into t1e e0tent or *o.e o' t1e a4entE aut1orit7, 8ut t1e7 are not reIuired to 4o 8e7ond t1e term o' t1e ?ritten .o?er o' attorne7. "1ird .er on *annot 8e ad)er e-7 a''e*ted 87 an under tandin4 8et?een .rin*i.a- and a4ent o' -imit o' t1at aut1orit7. In t1e ame ?a7, t1ird .er on need not *on*ern t1em e-)e ?it1 in tru*tion 4i)en 87 t1e .rin*i.a- to 1i a4ent out ide o' t1e ?ritten .o?er o' attorne7. As to t#e contention t#at t#e =etter of A&t#ority %as defective and needed reformation$ t#is does not %arrant consideration$ es ecially %it# >anga being an '7 and a b&sinessman. ,#at t#e resent case is in effect a revocation of t#e =etter of A&t#ority is also erroneo&s. As for an alleged violation by 7e 5&6man of t#e 7eed of Agreement$ it %as only bro&g#t as an iss&e on a eal and %as not raised in t#e co&rts belo%. )9,/,/2; 79;/97$ CA A++/4'97.

R.

Arti*-e #90@ ("(PE)

Art. 1(0@. ,#e commission agent s#all be res onsible for t#e goods received by #im in t#e terms and conditions and as described in t#e consignment$ &nless & on receiving t#em #e s#o&ld make a %ritten statement of t#e damage and deterioration s&ffered by t#e same. &e'inition +actor or commission agent 2ne %#ose b&siness is to receive and sell goods for a commission 9ntr&sted by t#e rinci al %it# t#e ossession of goods to be sold$ and &s&ally selling in #is o%n name. 'ay act on #is o%n name or in t#at of t#e rinci al Lia8i-it7 o' *ommi re*ei)ed

2rdinary agent ;eed not #ave t#e ossession of t#e goods of #is rinci al$ %#ile t#e commission agent m&st be in ossession

ion a4ent a to 4ood

(@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/f t#e commission agent received goods consigned to #im$ #e is res onsible for any damage or deterioration s&ffered by t#e same in t#e terms and conditions and as described in t#e consignment. ,#e #rase in t#e terms and conditions and as described in t#e consignment refers to t#e G&antity$ G&ality$ and #ysical condition of t#e goods. ,o avoid liability$ t#e commission agent s#o&ld make a %ritten statement of t#e damage or deterioration if t#e goods received by #im do not agree %it# t#e descri tion in t#e consignment. /ss&e. :#et#er or not )ablo ,iongson can claim t#e entire (2D cavans and @1 ] kilos of alay 3eld. ;2. ,#e AA! cavans and @! kilos of alay belonging to t#e laintiff 8rbano -antos$ #aving been mixed %it# t#e 1$02" cavans and ( kilos of alay belonging to t#e defendant )ablo ,iongson in *ose C. BernabeKs %are#o&seE t#e s#eriff #aving fo&nd only (2D cavans and @1 1L2 kilos of alay in said %are#o&se at t#e time of t#e attac#ment t#ereofE and t#ere being no means of se arating form said (2D cavans and @1 1L2 of alay belonging to 8rbano -antos and t#ose belonging to )ablo ,iongson$ t#e follo%ing r&le rescribed in article @!1 of t#e Civil Code for cases of t#is nat&re$ is a licable. Art. 18!. ,f, by the will of their owners, two thin#s of identical or dissimilar nature are mi ed, or if the mi ture occurs accidentally, if in the latter case the thin#s cannot be separated without in)ury, each owner shall acAuire a ri#ht in the mi ture proportionate to the part belon#in# to him, accordin# to the value of the thin#s mi ed or commin#led. ,#e n&mber of kilos in a cavan not #aving been determined$ %e %ill take t#e ro ortion only of t#e (2D cavans of alay %#ic# %ere attac#ed and sold$ t#ereby giving 8rbano -antos$ %#o de osited AA! cavans$ @(!.D( t#ereof$ and )ablo ,iongson$ %#o de osited 1$02" cavans$ C2C.C1$ or t#e val&e t#ereof at t#e rate of )@ er cavan. 2onte-i8ano ). /a*o-odF2ur*ia 2i--in4 (!(G) 1(CD Fa*t > 'ontelibano et al are s&gar lanter$ member of Bacolod '&rcia or assignees of s&gar lanter. ,#ey #ave contracts %it# Bacolod 0Central1 for t#e delivery of t#eir s&gar cane to t#e s&gar mill of Central for milling and rocessing into s&gar. -&gar cane delivered by eac# lanter %as to be divided bet%een lanter and Central t#is %ay. "0N for lanter$ D0N for Central. Central %as to rovide lanter from time to time as t#e milling rogressed %it# info as to s#are of s&gar t#at lanter %as entitled to receive$ give lanter G&edans or %are#o&se recei ts t#erefor. After t#e milling$ and for eriod of (0days$ Central %as to kee s&gar in its %are#o&se free of c#arge$ and lanter to ay Ccentavos er ic&l Lmont# for storage aside. At time of *a anese occ& ation of ;egros 2ccidental on 'ay 1(D2 t#ere %ere on de osit at CentralKs %are#o&se ""Dk ic&ls of s&gar$ of %#ic# 12!k belonged to 'ontelibano et al$ 2!Dk to Central and t#e balance to lanters not arties #ere. /n KD@$ *a anese 'ilitary Admin designated +idel 3enares resident of -&gar )lantersK Assoc %it# a&t#ority to Mcontract, deliver, to receive

S.

Arti*-e #90A (GEN)

Art. 1(0D. ,#e commission agent %#o #andles goods of t#e same kind and mark$ %#ic# belong to different o%ners$ s#all disting&is# t#em by co&ntermarks$ and designate t#e merc#andise res ectively belonging to eac# rinci al. Santo ). /erna8e (2AI) ;ovember "$ 1(2( Millareal$ *. Fa*t > 8rbano -antos de osited in *ose BernabeFs %are#o&se AA! cavans and @! kilos of alay %#ile )ablo ,iongson de osited in t#e same %are#o&se 1$02" cavans and ( kilos of t#e same grain. 2n 'arc# 20$ 1(2!$ )ablo ,iongson filed %it# t#e Co&rt of +irst /nstance of B&lacan a com laint against *ose C. Bernabe$ to recover from t#e latter t#e 1$02" cavans and ( kilos of alay de osited in t#e defendantKs %are#o&se. At t#e same time$ t#e a lication of )ablo ,iongson for a %rit of attac#ment %as granted$ and t#e attac#able ro erty of *ose C. Bernabe$ incl&ding (2D cavans and @1 1L2 kilos of alay fo&nd by t#e s#eriff in #is %are#o&se$ %ere attac#ed$ sold at &blic a&ction$ and t#e roceeds t#ereof delivered to said defendant )ablo ,iongson$ %#o obtained j&dgment in said case. /t does not a ear t#at t#e sacks of alay of 8rbano -antos and t#ose of )ablo ,iongson$ de osited in *ose C. BernabeKs %are#o&se$ bore any marks or signs$ nor %ere t#ey se arated one from t#e ot#er. 8rbano -antos contends t#at )ablo ,iongson cannot claim t#e (2D cavans and @1 ] kilos of alay attac#ed by t#e defendant s#eriff as art of t#ose de osited by #im in *ose C. BernabeKs %are#o&se$ beca&se$ in asking for t#e attac#ment t#ereof$ #e im liedly ackno%ledged t#at t#e same belonged to *ose C. Bernabe and not to #im.

(D

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
payments, to pay various accounts to members of Assoc6 to open accounts, to contract overdraft accounts with ban& of <aiwan, and perform such other powers as may be necessary in the premises. *a anese 'ilitary Admin iss&ed reg&lation governing &rc#ases of s&gar by 'ilitary Admin by virt&e of %#ic#$ & on &rc#ase of s&gar by Admin$ any claim of );B or any ot#er enemy cor t#ereto s#all a&tomatically be cancelled$ and s&gar t#&s &rc#ased de osited as ne% I4egenesis aLcI in t#e name of b&yer$ Bank of ,ai%an. )lanters or o%ners of s&gar %ere a&t#ori6ed$ if t#ey c#ose$ to borro% f&nds from t#e Bank of ,ai%an. As er Admin reg&lations$ c#ecks in ayment of s&gar bo&g#t s#all be Bank of ,ai%an c#ecks %#ic# #o%ever %ere to be de osited %it# said bank and set off against mortgages on old cro loans of lanters as +armer 4e#abilitation +&nds. ;e% cro loans co&ld be granted %it#in limits of t#e roceeds of t#eir s&gar sold. 'its&i B&ssan Sais#a =td. notified resident of )lantersK Assoc t#at it %as b&ying all t#e s&gar of t#e lanters$ %#et#er t#ey co&ld be located or not. :are#o&se orders for release of s&gar #e #ad sold %ere iss&ed at t#e reG&est of t#e resident of t#e )lantersK Assoc. +rom t#e time Sais#a made &rc#ases$ it began %it#dra%ing s&gar from Central in sacks. :it#dra%als %ere made b&t %it#o&t indication as to %#ose s&gar eac# %it#dra%al %as being made. As t#e s&gar belonging to t#e lanters and t#at of Central %ere mixed & $ and t#ere being not#ing to s#o% %#at b&yer %as %it#dra%ing$ it co&ld not be determined %#ose s&gar #ad been act&ally sold or %it#dra%n. At time of liberation$ t#ere %ere abo&t 1C0k ic&ls s&gar b&t s&c# %as im o&nded by 8- 9nemy )ro erty C&stodian b&t %as finally released. )arties agreed t#at "0N be rovisionally assigned to t#em to be rorated among t#em accdg to s&gar t#ey #ad on de osit %it# Central rior to military occ& ation. After liberation and before t#is roration$ 'ontelibano %it#dre% from %are#o&se some 12k ic&ls. 'ontelibano. ,#is resent action no% is redicated on claim t#at Central #as already been f&lly aid for its s#are of s&gar as it #ad sold d&ring 1(D@ to 1(DC some 2!Dk ic&ls in excess of 1AC ic&ls of its o%n s#are and #ad received total rice of )2.Dm so t#at s&gar remaining ertained excl&sively t#em. ,C. s&gar remaining at time of liberation %as already &rc#ased by 'ilitary Admin b&t it co&ld not %it#dra% same co6 of advent of liberationE as s&gar %ere all mixed & $ none of o%ners co&ld claim excl&sive o%ners#i . ,#is t#e arties #ad already acce ted and carried o&t by t#e roration. ,#e taking of s&gar belonging to 'ontelibano and Central %as an act of confiscation by *a anese %#ic# %as legal valid from %#ic# no reco&rse may be #ad against *a 5ovt or against Central. Action %as dismissed I ue> %#o are t#e legal o%ners of t#e s&gar remaining at CentralKs %are#o&se at time of liberation< ,e-d> ,#e determination of nat&re or validity of act of *a anese 'ilitary Admin in &rc#asing 'ontelibanoKs s&gar from resident of t#e lanters %#om it a ointed %it#o&t t#e lanters or o%ners consent is absol&tely immaterialE %#et#er t#e act of &rc#ase %as an act of confiscation of enemy ro erty by military occ& ant or one of reG&isition$ or one of vol&ntary sale$ is beside t#e f&ndamental iss&e$ %#ic# is stated above. /rres ective of t#e legality or illegality of &rc#ase of laintiffKs s&gar 0by *a anese 'ilitary Admin1 t#e fact remains t#at in conseG&ence t#ereof of %are#o&se orders for release of 'ontelibanoKs s&gar %ere iss&ed and s&gar act&ally taken from t#e %are#o&se. Also by sale of CentralKs s&gar$ release %ere a&t#ori6ed to t#e &rc#ase and %it#dra%als made. As to t#e s&gar remaining$ title t#ereto remained in t#e original o%ners$ beca&se o%ners#i of ersonal ro erty sold is not transferred &ntil act&al delivery??non n&dis actis$ sed traditione dominia rer&m transfer&nt&r. As s&gar of t#e lanters and of Central %ere stored toget#er in a single mass itKs absol&tely im ossible #ysically or legally$ to determine %#ose s&gar it %as t#at remained after t#e %it#dra%als. ,#ere is no legal basis for lantersK osition t#at as taking of s&gar %as %it#o&t t#eir consent$ and t#at of CentralKs %as %it# its consent$ all t#at remained %as t#eirs. ,#e only sol&tion is t#at t#e mass remaining m&st ertain to original o%ners in ro ortion of t#e original amo&nts o%ned by eac# of t#em.

T.

Arti*-e #90B (!EG)

Art. 1(0C. ,#e commission agent cannot$ %it#o&t t#e ex ress or im lied consent of t#e rinci al$ sell on credit. -#o&ld #e do so$ t#e rinci al may demand from #im ayment in cas#$ b&t t#e commission agent s#all be entitled to any interest or benefit$ %#ic# may res&lt from s&c# sale. /f sale is made %it#o&t a&t#ority$ t#e rinci al is given t%o alternatives. 1. reG&ire ayment in cas#E b&t t#e interest or benefit from t#e sale on credit s#all belong to t#e agent since

(C

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
t#e rinci al cannot be allo%ed to enric# #imself at t#e agentFs ex ense ratify t#e sale on credit and #ave all t#e risks and advantages to #imself Art. 1(0". -#o&ld t#e commission agent$ %it# a&t#ority of t#e rinci al$ sell on credit$ #e s#all so inform t#e rinci al$ %it# a statement of t#e names of t#e b&yers. -#o&ld #e fail to do so$ t#e sale s#all be deemed to #ave been made for cas# insofar as t#e rinci al is concerned. 0n1 Art. 1(0A. -#o&ld t#e commission agent receive on a sale$ in addition to t#e ordinary commission$ anot#er called a g&arantee commission$ #e s#all bear t#e risk of collection and s#all ay t#e rinci al t#e roceeds of t#e sale on t#e same terms agreed & on %it# t#e &rc#aser. 0n1 Art. 1(0!. ,#e commission agent %#o does not collect t#e credits of #is rinci al at t#e time %#en t#ey become d&e and demandable s#all be liable for damages$ &nless #e roves t#at #e exercised d&e diligence for t#at &r ose.

2.

Green 3a--e7 Pou-tr7 ). IAC + SIui88 (A//Y) 1(!D *. Abad -antos +acts. 5reen Malley %as a ointed as t#e noexcl&sive distrib&tor of verinary rod&cts of -G&ibb in nort#ern =&6on. -G&ibb filed a s&it to collect on goods delivered b&t &n aid. 5reen Malley claimed t#at t#e contract %it# -G&ibb %as a mere agency to sellE t#at it never &rc#ased goods from -G&ibbE t#at t#e goods received %ere on consignment only %it# t#e obligation to t&rn over t#e roceeds$ less its commission$ or to ret&rn t#e goods ff not sold$ and since it #ad sold t#e goods b&t #ad not been able to collect from t#e &rc#asers t#ereof$ t#e action %as remat&re. 8 on t#e ot#er #and$ -G&ibb claimed t#at t#e contract %as one of sale so t#at 5reen Malley %as obligated to ay for t#e goods received & on t#e ex iration of t#e "0?day credit eriod. 5reen Malley %as ordered by t#e CA to ay t#e s&m of )D!$@AD.AD l&s )(".00 %it# interest at "N er ann&m from t#e filing of t#is actionE l&s attorneyKs fees in t#e amo&nt of )C$000.00 and to ay t#e costs to -G&ibb. /ss&e. 1.:o; it is a contract of sale or a contract to sell. 2. :o; 5reen Malley is liable to ay t#e &nsold rod&cts 3eld. According to t#e -C. :e do not #ave to categori6e t#e contract. :#et#er vie%ed as an agency to sell or as a contract of sale$ t#e liability of 5reen Malley is ind&bitable. Ado ting 5reen MalleyKs t#eory t#at t#e contract is an agency to sell$ it is liable beca&se it sold on credit %it#o&t a&t#ority from its rinci al. ,#e Civil Code #as a rovision exactly in oint. /t reads. Art. 1(0C. ,#e commission agent cannot$ %it#o&t t#e ex ress or im lied consent of t#e rinci al$ sell on credit. -#o&ld #e do so$ t#e rinci al may demand from #im ayment in cas#$ b&t t#e commission agent s#all be entitled to any interest or benefit$ %#ic# may res&lt from s&c# sale.

3.

Arti*-e #909 (6ANCES)

Art. 1(0(. ,#e agent is res onsible not only for fra&d$ b&t also for negligence$ %#ic# s#all be j&dged %it# more or less rigor by t#e co&rts$ according to %#et#er t#e agency %as or %as not for a com ensation. 2/"C ) . CA (ALAIN) +eb 1!$ 1((1 Cr&6$ *. FAC"S> /n *an&ary 1(A($ a certain 9d&ardo 5ome6 o ened an acco&nt %it# 5olden -avings and de osited over a eriod of t%o mont#s @! treas&ry %arrants %it# a total val&e of )1$ACC$22!.@A. ,#ey %ere all dra%n by t#e )#ili ine +is# 'arketing A&t#ority and &r ortedly signed by its 5eneral 'anager and co&ntersigned by its A&ditor. -ix of t#ese %ere directly ayable to 5ome6 %#ile t#e ot#ers a eared to #ave been indorsed by t#eir res ective ayees$ follo%ed by 5ome6 as second indorser. 2n vario&s dates bet%een *&ne 2C and *&ly 1"$ 1(A($ all t#ese %arrants %ere s&bseG&ently indorsed by 5loria Castillo as Cas#ier of 5olden -avings and de osited to its -avings Acco&nt ;o. 2D(! in t#e 'etrobank branc# in Cala an$ 'indoro. ,#ey %ere t#en sent for clearing by t#e branc# office to t#e rinci al office of 'etrobank$ %#ic# for%arded t#em to t#e B&rea& of ,reas&ry for s ecial clearing. 'ore t#an t%o %eeks after t#e de osits$ 5loria Castillo %ent to t#e Cala an branc# several times to ask %#et#er t#e %arrants #ad been cleared. -#e %as told to %ait. Accordingly$ 5ome6 %as mean%#ile not allo%ed to %it#dra% from #is acco&nt. =ater$ #o%ever$ Iexas eratedI over

U.

Arti*-e #90%F#90$ (EA!LA)

("

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
5loriaKs re eated inG&iries and also as an accommodation for a Ival&ed client$I t#e etitioner says it finally decided to allo% 5olden -avings to %it#dra% from t#e roceeds of t#e %arrants. :it#dra%als %ere made on *&ly ($ 1(A($ *&ly 1@$ 1(A($ and *&ly 1"$ 1(A(. /n t&rn$ 5olden -avings s&bseG&ently allo%ed 5ome6 to make %it#dra%als from #is o%n acco&nt$ event&ally collecting t#e total amo&nt of )1$1"A$C00.00 from t#e roceeds of t#e a arently cleared %arrants. 2n *&ly 21$ 1(A($ 'etrobank informed 5olden -avings t#at @2 of t#e %arrants #ad been dis#onored by t#e B&rea& of ,reas&ry on *&ly 1($ 1(A($ and demanded t#e ref&nd by 5olden -avings of t#e amo&nt it #ad revio&sly %it#dra%n$ to make & t#e deficit in its acco&nt. ,#e demand %as rejected. 'etrobank t#en s&ed 5olden -avings in t#e 4egional ,rial Co&rt of 'indoro. ISSUE> :L; &ntil s&c# time as 'etrobank is act&ally aid$ its obligation is t#at of a mere collecting agent %#ic# cannot be #eld liable for its fail&re to collect on t#e %arrants. ,EL&> 'etrobank ex#ibited extraordinary carelessness. ,#e amo&nt involved %as not trifling V more t#an one and a #alf million esos 0and t#is %as 1(A(1. ,#ere %as no reason %#y it s#o&ld not #ave %aited &ntil t#e treas&ry %arrants #ad been clearedE it %o&ld not #ave lost a single centavo by %aiting. >et$ des ite t#e lack of s&c# clearance V and not%it#standing t#at it #ad not received a single centavo from t#e roceeds of t#e treas&ry %arrants$ as it no% re eatedly stresses V it allo%ed 5olden -avings to %it#dra% V not once$ not t%ice$ b&t thrice O from t#e uncleared treas&ry %arrants in t#e total amo&nt of )("!$000.00. /tFs reason< /t %as Iexas eratedI over t#e ersistent inG&iries of 5loria Castillo abo&t t#e clearance and it also %anted to IaccommodateI a val&ed client. /t I res&medI t#at t#e %arrants #ad been cleared sim ly beca&se of It#e la se of one %eek.I ,o gloss over its carelessness$ 'etrobank %o&ld invoke t#e conditions rinted on t#e dorsal side of t#e de osit sli s t#ro&g# %#ic# t#e treas&ry %arrants %ere de osited by 5olden -avings %it# its Cala an branc#. ,#e conditions read as follo%s. Jindly note that in receivin# items on deposit, the ban& obli#ates itself only as the depositorKs collectin# a#ent, assumin# no responsibility beyond care in selectin# correspondents, and &ntil s&c# time as act&al ayment s#all #ave come into ossession of t#is bank$ the ri#ht is reserved to char#e bac& to the depositorKs account any amount previously credited, whether or not such item is returned. <his also applies to chec&s dra%n on local banks and bankers and t#eir branc#es as %ell as on t#is bank$ which are unpaid due to ins&fficiency of f&nds$ forgery$ &na&t#ori6ed overdraft or any other reason. 09m #asis s& lied.1 According to 'etrobank$ t#e said conditions clearly s#o% t#at it %as acting only as a collecting agent for 5olden -avings and give it t#e rig#t to Ic#arge back to t#e de ositorKs acco&nt any amo&nt revio&sly credited$ %#et#er or not s&c# item is ret&rned. ,#is also a lies to c#ecks I. . . %#ic# are &n aid d&e to ins&fficiency of f&nds$ forgery$ &na&t#ori6ed overdraft of any ot#er reason.I /t is claimed t#at t#e said conditions are in t#e nat&re of contract&al sti &lations and became binding on 5olden -avings %#en 5loria Castillo$ as its Cas#ier$ signed t#e de osit sli s. 7o&bt may be ex ressed abo&t t#e binding force of t#e conditions$ considering t#at t#ey #ave a arently been im osed by t#e bank &nilaterally$ %it#o&t t#e consent of t#e de ositor. /ndeed$ it co&ld be arg&ed t#at t#e de ositor$ in signing t#e de osit sli $ does so only to identify #imself and not to agree to t#e conditions set fort# in t#e given ermit at t#e back of t#e de osit sli . :e do not #ave to r&le on t#is matter at t#is time. At any rate$ t#e Co&rt feels t#at even if t#e de osit sli %ere considered a contract$ t#e etitioner co&ld still not validly disclaim res onsibility t#ere&nder in t#e lig#t of t#e circ&mstances of t#is case. /n stressing t#at it %as acting only as a collecting agent for 5olden -avings$ 'etrobank seems to be s&ggesting t#at as a mere agent it cannot be liable to t#e rinci al. ,#is is not exactly tr&e. 2n t#e contrary$ Article 1(0( of t#e Civil Code clearly rovides t#at V Art. 1(0(. V ,#e agent is res onsible not only for fra&d$ b&t also for negligence$ %#ic# s#all be j&dged K%it# more or less rigor by t#e co&rts$ according to %#et#er t#e agency %as or %as not for a com ensation. "an "ion4 "e*: ). SEC (2A!K) /riti 1 Air?a7 ). CA, u.ra &omin4o ). &omin4o, u.ra Au tria ) . CA (AN6) Fa*t > 'aria 5. Abad received from 5&illermo A&stria one endant %it# diamonds val&ed at D$C00 # # to be sold on commission basis or to be ret&rned

(A

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
on demand. -aid transaction %as ackno%ledged in a recei t dated *an @0$ 1("1. 2n +eb 1$1("1$ %#ile %alking #ome to #er residence in 'andal&yong$ Abad %as said to #ave been accosted by t%o men$ one of %#om #it #er on t#e face$ %#ile t#e ot#er snatc#ed #er &rse containing cas# and ieces of je%elry$ %#ic# incl&ded t#e endant. ,#e incident became a s&bject of a criminal case for robbery filed in t#e C+/ of 4i6al. As Abad failed to ret&rn t#e je%elry or ay its val&e des ite demands$ A&stria filed an action against #er and #er #&sband for recovery of t#e endant or of its val&e$ and damages before t#e C+/ of 'anila. ,#e Abads set & t#e defense t#at t#e alleged robbery #ad exting&is#ed t#eir obligation. obligor m&st be free of artici ation in$ or aggravation of$ inj&ry to t#e creditor.

/t

m&st be noted t#at in Article 11AD!$ t#e em #asis of t#e rovision is on t#e event$ not on t#e factors res onsible for t#em. ,o avail of t#e exem tion granted in la%$ it is not necessary t#at t#e ersons res onsible for t#e occ&rrence s#o&ld be fo&nd or &nis#edE it %o&ld only be s&fficient to establis# t#at t#e &nforeseeable event$ t#e robbery in t#is case$ did take lace %it#o&t any conc&rrent fa&lt on t#e debtorFs art$ and t#is can be done by re onderant evidence. ,o reG&ire in t#e resent action for t#e rior conviction of t#e c&l rits in t#e criminal case in order to establis# t#e robbery as a fact$ %o&ld be to demand roof beyond reasonable do&bt.

"ria- Court r&led in favor of A&stria$ ordering t#e

Abads to jointly and severally ay t#e s&m of D$C00$ %it# legal interests$ l&s DC0 for attorneyFs fees$ and costs. /t %as #eld t#at t#e Abads failed to rove t#e fact of t#e robbery$ or$ if indeed it %as committed$ t#at 'aria Abad %as 4ui-t7 o' ne4-i4en*e %#en s#e %ent #ome %it#o&t any com anion$ given t#at it %as already getting dark and s#e %as carrying a large amo&nt of cas# and val&ables on t#e day in G&estion$ and s&c# negligence did not free #er from liability for damages. Abads a ealed to t#e Court o' A..ea- $ %#ic# rendered a decision in favor of t#e defendants$ r&ling t#at t#e facts of t#e robbery and 'aria AbadFs ossession of t#e endant on t#at day #ad been d&ly establis#ed. ,#e CA declared t#e Abads %ere not res onsible for t#e loss of t#e je%elry on acco&nt of a 'ortuitou e)ent$ and relieved t#em from liability for damages.

2. ;o$ 'aria Abad is not g&ilty of conc&rrent or contrib&tory fa&lt or negligence.

As stated

in Article 11A0($ in order to com letely exonerate t#e obligor from liabilities$ s&c# obligor m&st be free of any conc&rrent or contrib&tory fa&lt or negligence. 1("1$ %#en t#e robbery in G&estion did take lace$ criminality #ad not by far reac#ed t#e level attained in t#e resent day 01(A11. 5iven t#is$ 2aria A8ad *ou-d not 8e 1e-d ne4-i4ent. -#o&ld t#e incident #ad #a en at resent time$ %#ere t#ere is #ig# incidence of crimes against ersons and ro erty$ t#at renders travel after nig#tfall a matter to be sed&lo&sly avoided %it#o&t s&itable reca&tion and rotection$ t#e cond&ct of 'aria$ carrying je%elry of considerable val&e$ %o&ld be negligent per se and %o&ld not exem t #er from res onsibility in t#e case of a robbery.

/n

,#e

I ue > 1.:2; t#e alleged robbery falls &nder t#e category of fort&ito&s event and relieved t#e obligor from #is obligation &nder t#e contract of agency 0consignment of goods for sale1$ &rs&ant to Article 11AD of t#e Civil Code$ even t#o&g# t#ere #as been no final j&dgment of conviction in t#e robbery case. 2.:2; Abad$ as an agent$ is g&ilty of conc&rrent or contrib&tory fa&lt or negligence$ making #er liable for damages. ,e-d;!atio> 1. >es$ t#e robbery %as a fort&ito&s event t#at relieved t#e Abads from liability. ,o constit&te a fort&ito&s event t#at %o&ld exem t a erson from res onsibility$ it is necessary t#at 011 t#e event m&st be inde endent of t#e #&man %ill 0or rat#er$ of t#e debtorFs or obligorFs1E 021 t#e occ&rrence m&st render it im ossible for t#e obligor to f&lfill t#e obligation in a normal mannerE and t#at 0@1 t#e

&i .o iti)e> )etition for revie% 7/-'/--97. III. A. (8-i4ation o' Prin*i.aArti*-e #9#0 (E3A)

Article 1(10. ,#e rinci al may revoke t#e agency at %ill$ and com el t#e agent to ret&rn t#e doc&ment evidencing t#e agency. -&c# revocation may be ex ress or im lied.

Art. 11AD. 9xce t in cases ex ressly s ecified by la%$ or %#en it is ot#er%ise declared by sti &lation$ or %#en t#e nat&re of t#e obligation reG&ires t#e ass&m tion of risk$ no erson s#all be res onsible for t#ose events %#ic# co&ld not be foreseen$ or %#ic#$ t#o&g# foreseen$ %ere inevitable. 9 Art. 11A0. ,#ose %#o in t#e erformance of t#eir obligations are g&ilty of fra&d$ negligence$ or delay$ and t#ose %#o in any manner contravene t#e tenor t#ereof$ are liable for damages.

(!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
59;94A= 2B=/5A,/2;-. 1. Contract&al obligations O d&ties and liabilities of t#e rinci al are rimarily based & on t#e contract and t#e validity of t#e contract bet%een t#em. 2. ,o deal %it# t#e agent fairly and in good fait#. -)9C/+/C 2B=/5A,/2;-. 1. ,o com ly %it# t#e obligations %#ic# t#e agent may #ave contracted %it#in t#e sco e of #is a&t#ority and in t#e name of t#e rinci alE 2. ,o advance to t#e agent$ s#o&ld t#e latter so reG&est$ t#e s&ms necessary for t#e exec&tion of t#e agencyE @. ,o reimb&rse t#e agent of all t#e advances made by #im$ rovided t#e agent is free from fa&ltE D. ,o indemnify t#e agent for all t#e damages %#ic# t#e exec&tion of t#e agency may #ave ca&sed t#e latter %it#o&t t#e fa&lt or negligence on #is artE and C. ,o ay t#e agent t#e com ensation agreed & on$ or if no com ensation %as s ecified$ t#e reasonable val&e of t#e agentFs services. Note> 9ven if t#e agent #as exceeded #is a&t#ority$ t#e rinci al is solidarily liable %it# t#e agent if t#e former allo%ed t#e latter to act as t#o&g# #e #ad f&ll o%ers Y9sto elZ. =/AB/=/,> 2+ ,39 )4/;C/)A= ,2 ,3/47 )94-2;)eneral *ule+ :#ere t#e relation of agency legally exists$ t#e rinci al %ill be liable to t#ird ersons for A== t#e acts committed by t#e agent in #is be#alf in t#e co&rse and %it#in t#e act&al or a arent sco e of #is a&t#ority$ and t#is is not altered by t#e fact t#at t#e agent also may be liable$ nor by t#e fact t#at some of t#e acts are to t#e rinci alFs advantage %#ile t#e ot#ers to #is disadvantage. *eason for the *ule o +or e press and implied a#ency H t#e act of agent is t#e act of rinci al o +or apparent authority and a#ency by estoppel H to revent fra&d & on innocent t#ird arties =/AB/=/,> 2+ ,3/47 )94-2;- ,2 )4/;C/)A= An agent is t#e instr&mentality of t#e rinci al %#ose rimary design is to obtain rig#ts against t#ird arties. ,#e rinci alFs rig#ts are t#e t#ird artiesF liabilities.

2.

3.

!n tort. O ,#e t#ird ersonFs tort liability to t#e rinci al$ insofar as t#e agent is involved in tort$ arises in t#ree fact&al sit&ations. 0a1 :#ere t#e t#ird erson damages or inj&res ro erty or interest of t#e rinci al in t#e ossession of t#e agentE 0b1 :#ere t#e t#ird erson coll&des %it# t#e agent to inj&re or defra&d t#e rinci alE and 0c1 :#ere t#e t#ird erson ind&ces t#e agent to violate t#e contract %it# t#e rinci al to betray t#e tr&st re osed b #im by t#e rinci al.E !n respect to property received. O An agent does not #ave legal title to ro erty entr&sted to #is ossession by t#e rinci al. /n t#e absence of la% or t#e ossession of t#e agent of a arent a&t#ority or circ&mstances %orking on esto els against t#e rinci al$ t#e latter may recover ro erty from t#e agentFs transferee. fide #olders of negotiable

9xce tion. bona instr&ments.

=/AB/=/,> 2+ )4/;C/)A= +24 ,24, 2+ A59;, )eneral *ule+ ,#e rinci al is civilly liable to t#ird ersons for torts of an committed at t#e rinci alFs direction or in t#e co&rse of within the scope of the a#ent0s employment. *eason for liability+ based on t#e rinci le t#at #e %#o acts t#ro&g# anot#er does it #imself. ;ote. Agent is also liable O #e is -2=/7A4/=> liable %it# t#e rinci la to t#ird ersons and so s&c# t#ird ersons may s&e bot#. ,-$, of liability .Motivation/deviation test0 ,#e bo&nds of t#e agentFs a&t#ority are not t#e limits of t#e rinci alFs tort liability$ b&t rat#er t#e sco e of em loyment %#ic# may or may not be %it#in t#e bo&nd of a&t#orityE #ence$ %ider in sco e. B&t an act is not necessarily done %it#in t#e sco e of em loyment by reason merely of t#e fact t#at it is done d&ring t#e em loyment. ,%o factors m&st conc&r for liability to be im osed. 1. satisfactory evidence t#at t#e em loyee in doing t#e act$ in doing of %#ic# t#e tort %as committed$ %as motivated in art$ at least$ by desire to serve #is em loyerE A;7 2. satisfactory evidence t#at t#e act$ in doing of %#ic# t#e tort is committed$ %as not an extreme deviation from t#e normal cond&ct of t#e em loyee. Article 1213 par. 1+ :#en agent acts in a re resentative ca acity$ t#e rinci al is evidently liable

1.

!n contract. O A t#ird erson is liable to t#e rinci al & on contracts entered into by #is agent$ in t#e same manners as t#o&g# t#e contract %ere entered into by t#e rinci al #imself. ,#is ro osition res&lts from t#e re resentative nat&re of agency.

((

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
Article 1213 par. 4+ :#en agent exceeded #is a&t#ority$ t#e rinci al is not bo&nd &nless #e 4A,/+/9- t#at act of t#e agent ex ressly or im liedly. !A"IFICA"I(N is t#e ado tion or t#e affirmance by a erson of a rior act %#ic# did not bind #im$ b&t %#ic# %as done or rofessed to be done on #is acco&nt t#&s giving effect to t#e acts as if originally a&t#ori6ed. Act of ratification purely voluntary: o tion to ratify or not. rinci al #as )etitioner ;orma 7omingo and #er #&sband$ Malentino 7omingo o%ned a arcel of lot in a s&bdivision in 'arikina. Beca&se #er #&sband failed to come & %it# eno&g# money to finis# t#e constr&ction of a #o&se on t#e said lot$ etitioner decided to dis ose of t#e ro erty. +lor Bacani$ etitionerFs friend$ vol&nteered to act as etitionerFs agent in selling t#e lot. )etitioner gave Bacani t#eir o%nerFs co y of t#e ,C,$ %#ic# %as later said to #ave been lost. /n t#e etition for its reconstit&tion$ etitioner gave Bacani all #er recei ts of ayment for real estate taxes. At t#e same time$ Bacani asked etitioner to sign %#at s#e recalled %as a record of ex#ibits. ,#ereafter$ etitioner never sa% Bacani again. :#en etitioner visited t#e lot$ s#e %as s&r rised to see res ondent >olanda 4obles and #er family starting to b&ild a #o&se on t#e s&bject lot. 8 on verification %it# t#e 4egister of 7eeds$ s#e fo&nd o&t t#at t#e reconstit&ted ,C, #ad alread7 been cancelled %it# t#e registration of a 7eed of Absol&te -ale in favor of t#e 4obleses. 2n t#e 7eed %ere t#e signat&res of etitioner and #er #&sband. Claiming t#at s#e did not kno% t#e 4obleses and t#at t#e signat&res on t#e 7eed %ere forged$ etitioner filed a case to #ave t#e 7eed of Abosl&te -ale n&llified and for t#e reconveyance of t#e ro erty. ,#e 4obleses$ for t#eir art claimed t#at t#ey %ere b&yers in good fait#. According to t#em. o ,#e s&bject lot %as offered to t#em by +lor Bacani$ as t#e agent of t#e o%nersE o :#en t#ey %ere already re ared to b&y t#e lot$ Bacani introd&ced to t#em t#e s& osed o%ners and agreed on t#e saleE o ,#ereafter$ Bacani resented a 7eed of Absol&te -ale %#ic# #ad t#e signat&res of etitioner and #er #&sband$ and t#e o%nerFs co y of t#e ,C,. o At t#at meeting$ 4obles aid f&ll &rc#ase rice. o -ometime later$ 4obles contracted to sell t#e lot for )2C0$000. :#en only )20$000 remained &n aid$ #er b&yers sto ed ayment beca&se 4obles %as notified t#at etitioner is s&ing #er. 4,C dismissed t#e com laint. CA affirmed in toto and #eld t#at etitioner failed to dis rove t#at t#e 4obleses %ere &rc#asers in good fait#.

Conditions for ratification 011 ,#e rinci al m&st #ave t#e ca acity or o%er to ratifyE 021 3e m&st #ave kno%ledge of material factsE o kno%ledge m&st be f&ll$ com lete and act&al. o material facts are t#ose %#ic# reasonably o&g#t to be kno%n by t#e rinci al$ #aving in mind t#e time$ lace$ circ&mstances and t#e sit&ation of t#e arties. 0@1 3e m&st ratify t#e acts in its entiretyE 0D1 ,#e act m&st be ca able of ratificationE and o t#ose %#ic# may be a&t#ori6ed 0i.e. valid1$ voidable acts$ and &nrevoked acts 0ratification of &na&t#ori6ed contract m&st be done before it is revoked by t#e ot#er contracting arty. o acts %#ic# are absol&tely void cannot be ratified. 0C1 ,#e act m&st be done in be#alf of t#e rinci al. )eneral rule+ !ati'i*ation 1a !E"!(AC"I3E e''e*t. E ceptions: (1 :#ere to do so %o&ld be to defeat t#e ri41t o' t1ird .artie %#ic# #ave accr&ed bet%een t#e time of t#e making of t#e &na&t#ori6ed contract and t#e time of ratification. (2 :#ere to do so %o&ld be to render ?ron4'uan ot1er?i e ri41t'u- a*t or omission %#ic# #as taken lace d&ring t#e intervening eriod. (3 :#ere to do so %o&ld be to allo% t#e *ir*um)ention o' a ru-e o' -a? form&lated for t#e interest of &blic olicy. (4 /f t#e t#ird erson #as ?it1dra?n from t#e contract. &omin4o ). !o8-e (/am8i) 'arc# 1!$ 200C )anganiban$ *. +acts.

/ss&es and 3eld.

100

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
1. :2; t#e sale in favor of t#e 4obleses %as valid. >9-. A notari6ed instr&ment enjoys a rima facie res&m tion of a&t#enticity and d&e exec&tion. ,o overcome t#at res&m tion$ clear and convincing evidence m&st be resented. +orgery cannot be res&med. 3ence$ it %as inc&mbent & on etitioner to rove it. ,#is etitioner failed to do. )etitioner also failed to convince t#e trial co&rt t#at t#e erson %it# %#om 4obles transacted %as in fact not #er #&sband. -#e only alleged t#at #er #&sband %as o&t of t#e co&ntry at t#e time of t#e sale. 3o%ever$ bare allegations$ &ns&bstantiated by evidence$ are not eG&ivalent to roof. +&rt#ermore$ t#e sale %as admittedly made %it# t#e aid of Bacani$ etitionerFs agent$ %#o #ad %it# #im t#e original of t#e o%nerFs d& licate Certificate of ,itle to t#e ro erty$ free from any liens or enc&mbrances. ,#e registered o%ner %#o laces in t#e #ands of anot#er an exec&ted doc&ment of transfer of registered land effectively re resents to a t#ird arty t#at t#e #older of s&c# doc&ment is a&t#ori6ed to deal %it# t#e ro erty. 2. :2; t#e 4obleses are b&ers in good fait#. )49-8'97 ,2 B9 >9-. /n t#e absence of a finding of fra&d and a conseG&ent finding of a&t#enticity and d&e exec&tion of t#e 7eed of Absol&te -ale$ a disc&ssion of %#et#er res ondents %ere &rc#asers in good fait# is %#olly &nnecessary. :it#o&t a clear and ers&asive s&bstantiation of bad fait#$ a res&m tion of good fait# in t#eir favor stands.

Lim:et:ai + Son 2i--in4 ). CA (!EK) !ura- /an: o' 2i-aor ). (*'emia, @2B SC!A 99 (6ESSA) Fa*t > 2n A ril 10$ 1(("$ 4&ral Bank %as declared in defa&lt on motion of t#e res ondents for fail&re to file an ans%er %it#in t#e reglementary? eriod after it %as d&ly served %it# s&mmons 2n A ril 2"$ 1(("$ bank filed a motion to set aside t#e order of defa&lt %it# objection t#ereto filed by res ondents 2n *&ne 1A$ 1(("$ an order %as iss&ed denying bankKs motion to set aside t#e order of defa&lt 2n *&ly @1$ 1(("$ res ondents filed a motion to set case for #earing.

,#e bank did not file any o osition and so res ondents %ere allo%ed to resent t#eir evidence e -parte.

A certiorari case %as filed by t#e bank %it# t#e Co&rt of A eals b&t t#e etition %as denied in a decision and t#e same is no% final. ,#e evidence resented by t#e res ondents t#ro&g# t#e testimony of ;iBo$ one of t#e res ondents in t#is case$ s#o%s t#at. s#e is t#e da&g#ter of +rancisca 2cfemia$ a co?res ondent in t#is case$ and t#e late 4enato 2cfemia 0deceased1 t#e arents of #er fat#er$ 4enato 2cfemia$ %ere *&anita Arellano 2cfemia and +elicisimo 2cfemia #er ot#er co?res ondents 4o%ena 2. Barrogo$ +elicisimo 2cfemia$ 4enato 2cfemia$ *r. and :inston 2cfemia are #er brot#ers and sisters ;iBo kno%s t#e five 0C1 arcels of land %#ic# are located in Bombon$ Camarines -&r and t#at t#ey are t#e ones ossessing t#em %#ic# %ere originally o%ned by #er grand arents$ *&anita Arellano 2cfemia and +elicisimo 2cfemia. 7&ring t#e lifetime of #er grand arents$ res ondents mortgaged t#e said five 0C1 arcels of land and t%o 021 ot#ers to t#e bank as s#o%n by t#e 7eed of 4eal 9state 'ortgage and t#e )romissory ;ote ,#e s o&ses +elicisimo 2cfemia and *&anita Arellano 2cfemia %ere not able to redeem t#e mortgaged ro erties consisting of seven 0A1 arcels of land and so t#e mortgage %as foreclosed and t#ereafter o%ners#i t#ereof %as transferred to t#e bank. 2&t of t#e seven 0A1 arcels t#at %ere foreclosed$ five 0C1 of t#em are in t#e ossession of t#e res ondents beca&se t#ese five 0C1 arcels of land %ere sold by t#e bank to t#e arents of ;iBo as evidenced by a 7eed of -ale exec&ted in *an&ary 1(!! ,#e aforementioned five 0C1 arcels of land s&bject of t#e deed of sale$ #ave not been$ #o%ever transferred in t#e name of t#e arents of ;iBo after t#ey %ere sold to #er arents by t#e bank beca&se according to t#e AssessorKs 2ffice t#e five 0C1 arcels of land$ s&bject of t#e sale$ cannot be transferred in t#e name of t#e b&yers as t#ere is a need to #ave t#e doc&ment of sale registered %it# t#e 4egister of 7eeds of Camarines -&r. ;iBo %ent to t#e 4egister of 7eeds of Camarines -&r %it# t#e 7eed of -ale in order to #ave t#e same registered. ,#e 4egister of 7eeds$ #o%ever$ informed #er t#at t#e doc&ment of sale cannot be registered %it#o&t a board resol&tion of bank. ;iBo t#en %ent to t#e bank$ s#o%ed to if t#e 7eed of -ale$ t#e tax declaration and recei t of tax ayments and reG&ested t#e

101

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
bank for a board resol&tion so t#at t#e ro erty can be transferred to t#e name of 4enato 2cfemia t#e #&sband of etitioner +rancisca 2cfemia and t#e fat#er of t#e ot#er res ondents #aving died already. ,#e bank ref&sed #er reG&est for a board resol&tion and made many alibis. -#e %as told t#at t#e bank #ad a ne% manager and it #ad no record of t#e saleE -#e %as asked and s#e com lied %it# t#e reG&est of t#e bank for a co y of t#e deed of sale and recei t of aymentE ,#e resident of t#e bank told #er to get an a&t#ority from #er arents and ot#er res ondents and recei ts evidencing ayment of t#e consideration a earing in t#e deed of saleE -#e com lied %it# said reG&irements and after s#e gave all t#ese doc&ments$ ;iBo %as again told to %ait for t%o 021 %eeks beca&se t#e bank %o&ld still st&dy t#e matter. After t%o 021 %eeks$ ;iBo ret&rned to t#e bank and s#e %as told t#at t#e resol&tion of t#e board %o&ld not be released beca&se t#e bank #ad no records from t#e old manager. Beca&se of t#is$ ;iBo %rote to t#e bank inG&iring %#y no action %as taken by t#e board of t#e reG&est for t#e iss&ance of t#e resol&tion considering t#at t#e bank %as already f&lly aid for t#e consideration of t#e sale since *an&ary 1(!! as s#o%n by t#e deed of sale itself After several days from recei t of t#e letter %#en ;iBo %ent to t#e bank again and reiterated #er reG&est$ t#e manager of t#e bank told #er t#at t#ey co&ld not iss&e t#e reG&ired board resol&tion as t#e bank #ad no records of t#e sale. Beca&se of t#is$ t#is etition is filed ,#e res ondents are interested in #aving t#e ro erty transferred to t#eir names beca&se t#eir mot#er and co? etitioner$ +rancisca 2cfemia$ is very sickly and t#ey %ant to mortgage t#e ro erty for t#e medical ex enses of +rancisca 2cfemia. ,#e illness of +rancisca 2cfemia began after #er #&sband died and #er s&ffering from art#ritis and &lmonary disease already became serio&s before 7ecember 1((C. ;iBo declared t#at #er mot#er is no% in serio&s condition and t#ey co&ld not #ave #er #os itali6ed for treatment as t#ey do not #ave any money and t#is is ca&sing t#e family slee less nig#ts and mental ang&is#$ t#inking t#at t#eir mot#er may die beca&se t#ey co&ld not s&bmit #er for medication as t#ey do not #ave money. !"C> 4ranted t1e .etition CA> a''irmed I ue> :2; t#e bank manager %as a&t#ori6ed by t#e bank to sign on its be#alf ,e-d> YES. /n failing to file its ans%er s ecifically denying &nder oat# t#e 7eed of -ale$ t#e bank admitted t#e d&e exec&tion of t#e said contract. -&c# admission means t#at it ackno%ledged t#at t#e manager %as a&t#ori6ed to sign t#e 7eed of -ale on its be#alf. ,#e bank ackno%ledged$ by its o%n acts or fail&re to act$ t#e a&t#ority of t#e manager to enter into binding contracts. After t#e exec&tion of t#e 7eed of -ale$ res ondents occ& ied t#e ro erties in dis &te and aid t#e real estate taxes d&e t#ereon. /f t#e bank management believed t#at it #ad title to t#e ro erty$ it s#o&ld #ave taken some meas&res to revent t#e infringement or invasion of its title t#ereto and ossession t#ereof. =ike%ise$ t#e manager #ad revio&sly transacted b&siness on be#alf of t#e bank$ and t#e latter #ad ackno%ledged #er a&t#ority. A bank is liable to innocent t#ird ersons %#ere re resentation is made in t#e co&rse of its normal b&siness by an agent like t#e manager$ even t#o&g# s&c# agent is ab&sing #er a&t#ority. Clearly$ ersons dealing %it# #er co&ld not be blamed for believing t#at s#e %as a&t#ori6ed to transact b&siness for and on be#alf of t#e bank.

2n *an&ary 1C$ 1((" t#e bank ans%ered res ondentsK la%yerKs letter informing t#e latter t#at t#e reG&est for board resol&tion #ad already been referred to t#e board of directors of t#e bank %it# anot#er reG&est t#at t#e latter s#o&ld be f&rnis#ed %it# a certified mac#ine co y of t#e recei t of ayment covering t#e sale bet%een t#e res ondents and t#e bank ,#is reG&est of t#e bank %as already com lied %it# by ;iBo even before s#e bro&g#t t#e matter to #er la%yer. 2n *an&ary 2@$ 1((" res ondentFs la%yer %rote back t#e branc# manager of t#e bank informing t#e latter t#at t#ey %ere already f&rnis#ed t#e recei ts t#e bank %as asking for and t#at t#e res ondents %anted already to kno% t#e stand of t#e bank %#et#er t#e board %o&ld iss&e t#e reG&ired board resol&tion as t#e deed of sale itself already s#o%ed t#at t#e res ondents %ere clearly entitled to t#e land s&bject of t#e sale ,#e manager of t#e bank received t#e letter %#ic# %as served ersonally to #im and t#e latter told ;iBo t#at since #e %as t#e one #imself %#o received t#e letter #e %o&ld not sign anymore a co y s#o%ing #im as #aving already received said letter

102

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
Board of 5i6uidators v. 7ala8. -ettled j&ris r&dence #as it t#at %#ere similar acts #ave been a roved by t#e directors as a matter of general ractice$ c&stom$ and olicy$ t#e general manager may bind t#e com any %it#o&t formal a&t#ori6ation of t#e board of directors. /n varying lang&age$ existence of s&c# a&t#ority is establis#ed$ by roof of t#e co&rse of b&siness$ t#e &sages and ractices of t#e com any and by t#e kno%ledge %#ic# t#e board of directors #as$ or m&st be res&med to #ave$ of acts and doings of its s&bordinates in and abo&t t#e affairs of t#e cor oration. -o also$ a&t#ority to act for and bind a cor oration may be res&med from acts of recognition in ot#er instances %#ere t#e o%er %as in fact exercised. ,#&s$ ?1en, in t1e u ua*our e o' 8u ine o' a *or.oration, an o''i*er 1a 8een a--o?ed in 1i o''i*ia*a.a*it7 to mana4e it a''air , 1i aut1orit7 to re.re ent t1e *or.oration ma7 8e im.-ied 'rom t1e manner in ?1i*1 1e 1a 8een .ermitted 87 t1e dire*tor to mana4e it 8u ine . ;ot%it#standing t#e &tative a&t#ority of t#e manager to bind t#e bank in t#e 7eed of -ale$ t#e bank #as failed to file an ans%er to t#e etition belo% %it#in t#e reglementary eriod. ,#&s$ t#e bank is esto ed from G&estioning t#e a&t#ority of t#e bank manager to enter into t#e contract of sale. /f a cor oration kno%ingly ermits one of its officers or any ot#er agent to act %it#in t#e sco e of an a arent a&t#ority$ it #olds t#e agent o&t to t#e &blic as ossessing t#e o%er to do t#ose actsE t#&s$ t#e cor oration %ill$ as against anyone %#o #as in good fait# dealt %it# it t#ro&g# s&c# agent$ be esto ed from denying t#e agentKs a&t#ority. 8nG&estionably$ .etitioner 1a aut1ori5ed "ena to enter into t1e &eed o' Sa-e. Accordingly$ it #as a *-ear -e4a- dut7 to i ue t1e 8oard re o-ution ou41t 87 re .ondentG . C1ina Air-ine ). C1io: (2A!K) +acts. 2n -e tember 1!$ 1(!1$ 7aniel C#iok &rc#ased from C#ina Airlines a assenger ticket for air trans ortation covering 'anila? ,ai ei?3ongkong?'anila. -aid ticket %as excl&sively endorseable to )#ili ine Airlines. -&bseG&ently$ on ;ovember 21$ 1(!1$ C#iok took #is tri from 'anila to ,ai ei &sing Yt#eZ CA= ticket. Before #e left for said tri $ t#e tri s covered by t#e ticket %ere re?sc#ed&led and confirmed by t#e former. :#en #e arrived in ,ai ei$ #e %ent to t#e CA= office and confirmed #is 3ongkong to 'anila tri on board )A= +lig#t ;o. )4 @11. ,#e CA= office attac#ed a yello% sticker a ro riately indicating t#at #is flig#t stat&s %as 2S. :#en C#iok reac#ed 3ongkong$ #e %ent to t#e )A= office and so&g#t to reconfirm #is flig#t back to 'anila. ,#e )A= office confirmed #is ret&rn tri on board +lig#t ;o. )4 @11 and attac#ed its o%n sticker. o 2n ;ovember 2D$ 1(!1$ C#iok roceeded to 3ongkong /nternational Air ort for #is ret&rn tri to 'anila. 3o%ever$ & on reac#ing t#e )A= co&nter$ C#iok sa% a oster stating t#at )A= +lig#t ;o. )4 @11 %as cancelled beca&se of a ty #oon in 'anila. 3e %as t#en informed t#at all t#e confirmed ticket #olders of )A= +lig#t ;o. )4 @11 %ere a&tomatically booked for its next flig#t$ %#ic# %as to leave t#e next day. o 2n ;ovember 2C$ 1(!1$ C#iok %ent to t#e air ort. =ok called t#e attention of Carmen C#an$ )A=Fs terminal s& ervisor$ and informed t#e latter t#at C#iokFs name %as not in t#e com &ter list of assengers. -&bseG&ently$ Carmen informed C#iok t#at #is name did not a ear in )A=Fs com &ter list of assengers and t#erefore co&ld not be ermitted to board )A= +lig#t ;o. )4 @0A. o C#iok t#en decided to &se anot#er CA= ticket %it# ;o. 2(A.DD02.00D.@A0.C and asked if t#is ticket co&ld be &sed to book #im for t#e said flig#t. 3e %as$ once again$ booked and confirmed$ t#is time on board )A= +lig#t ;o. )4 @11 sc#ed&led to de art t#at evening. =ater$ C#iok %ent to t#e )A= c#eck?in co&nter and it %as Carmen %#o attended to #im. As t#is j&nct&re$ C#iok #ad already laced #is travel doc&ments$ incl&ding #is cl&tc# bag$ on to of t#e )A= c#eck?in co&nter. ,#ereafter$ Carmen directed )A= ersonnel to transfer co&nters. /n t#e ens&ing commotion$ C#iok some of #is ersonal belongings. -&bseG&ently$ #e %as laced on stand?by and at aro&nd A.@0 .m.$ )A= ersonnel informed #im t#at #e co&ld no% c#eck?in. C#iok filed a com laint for damages.

/--89. :2; CA= is liable. 3eld. >es. /t is significant to note t#at t#e contract of air trans ortation %as bet%een etitioner and res ondent$ %it# t#e former endorsing to )A= t#e 3ong Song?to?'anila segment of t#e jo&rney. -&c# contract of carriage #as al%ays been treated in t#is j&risdiction as a single o eration. ,#is j&ris r&dential r&le is s& orted by t#e :arsa% Convention$ to %#ic# t#e )#ili ines is a arty$ and by t#e existing

10@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
ractices of t#e /nternational Air ,rans ort Association. /n American Airlines v. Co&rt of A eals$ t#e co&rt #ave noted t#at &nder a general ool artners#i agreement$ t#e ticket?iss&ing airline is t#e rinci al in a contract of carriage$ %#ile t#e endorsee?airline is t#e agent. /n t#e instant case$ follo%ing t#e j&ris r&dence cited above$ )A= acted as t#e carrying agent of CA=. /n t#e same %ay t#at %e r&led against Britis# Air%ays and =&ft#ansa in t#e aforementioned cases$ %e also r&le t#at CA= cannot evade liability to res ondent$ even t#o&g# it may #ave been only a ticket iss&er for t#e 3ong Song?'anila sector. /t is a %ell?establis#ed r&le t#at one %#o clot#es anot#er %it# a arent a&t#ority as #is agent and #olds #im o&t to t#e &blic as s&c# cannot be ermitted to deny t#e a&t#ority of s&c# erson to act as #is agent$ to t#e rej&dice of innocent t#ird arties dealing %it# s&c# erson in good fait# and in t#e #onest belief t#at #e is %#at #e a ears to be. /t is evident from t#e records t#at by #is o%n acts and admission$ etitioner #eld o&t ,i& 3&y ,iac to t#e &blic as t#e manager of #is store. 'ore artic&larly$ etitioner ex licitly introd&ced ,i& 3&y ,iac to Bernardino Millan&eva$ res ondentKs manager$ as #is 0 etitionerKs1 branc# manager as testified to by Bernardino Millan&eva. -econdly$ =ilian ,an$ %#o #as been doing b&siness %it# etitioner for G&ite a %#ile$ also testified t#at s#e kne% ,i& 3&y ,iac to be t#e manager of etitionerKs -to. Cristo$ Binondo branc#. ,#is general erce tion of ,i& 3&y ,iac as t#e manager of etitionerKs -to. Cristo store is even made manifest by t#e fact t#at ,i& 3&y ,iac is kno%n in t#e comm&nity to be t#e Ikinaka atidI 0godbrot#er1 of etitioner. )etitionerKs &nex lained delay in diso%ning t#e transactions entered into by ,i& 3&y ,iac des ite several attem ts made by res ondent to collect t#e amo&nt from #im$ roved all t#e more t#at etitioner %as a%are of t#e G&estioned commission %as tantamo&nt to an admission by silence. /n a f&tile attem t to discredit Millan&eva$ etitioner alleges t#at t#e formerKs testimony is clearly self?serving inasm&c# as Millan&eva %orked for rivate res ondent as its manager. Co&rt said$ ,#e arg&ment t#at Millan&evaKs testimony is self?serving and t#erefore inadmissible on t#e lame exc&se of #is em loyment %it# rivate res ondent &tterly misconstr&es t#e nat&re of IKself?serving evidenceI and t#e s ecific gro&nd for its excl&sion. )etitioner cites Millan&evaKs fail&re$ des ite #is commitment to do so on cross?examination$ to rod&ce t#e very first invoice of t#e transaction bet%een etitioner and rivate res ondent as anot#er gro&nd to discredit Millan&evaKs testimony. Co&rt. it %as etitionerKs co&nsel #imself %#o %it#dre% t#e reservation to #ave Millan&eva rod&ce t#e doc&ment in co&rt. /n t#e same manner$ etitioner assails t#e credibility of =ilian ,an by alleging t#at ,an %as art of an intricate lot to defra&d #im. 3o%ever$ etitioner failed to s&bstantiate or rove t#at t#e s&bject transaction %as designed to defra&d #im. 'oreover$ etitionerKs &nex lained delay in diso%ning t#e transactions entered into by ,i&

Cui on ). CA, 22C SC!A @9# ("(PE) Fa*t > )etitioner S&e C&ison is a sole ro rietors#i engaged in t#e &rc#ase and sale of ne%s rint$ bond a er and scra %#ile )rivate res ondent Maliant /nvestment Associates$ on t#e ot#er #and$ is a artners#i d&ly organi6ed and existing &nder t#e la%s. +rom 7ecember D$ 1(A( to +ebr&ary 1C$ 1(!0$ res ondent delivered vario&s kinds of a er rod&cts amo&nting to )2(A$D!A.@0 to a certain =ilian ,an of =, ,rading. ,#e deliveries %ere made by res ondent &rs&ant to orders allegedly laced by ,i& 3&y ,iac %#o %as t#en em loyed in t#e Binondo office of etitioner. /t %as like%ise &rs&ant to ,iacKs instr&ctions t#at t#e merc#andise %as delivered to =ilian ,an. 8 on delivery$ =ilian ,an aid for t#e merc#andise by iss&ing several c#ecks ayable to cas# at t#e s ecific reG&est of ,i& 3&y ,iac. /n t&rn$ ,iac iss&ed ( ostdated c#ecks to rivate res ondent as ayment for t#e a er rod&cts. 8nfort&nately$ sad c#ecks %ere later dis#onored by t#e dra%ee bank. 4es ondent made several demands & on etitioner to ay for t#e merc#andise in G&estion$ claiming t#at ,i& 3&y ,iac %as d&ly a&t#ori6ed by etitioner as t#e manager of #is Binondo office$ to enter into t#e G&estioned transactions %it# rivate res ondent and =ilian ,an. 4es ondent filed an action against etitioner for t#e collection of )2(A$D!A.@0 re resenting t#e rice of t#e merc#andise. ,rial co&rt dismissed. Co&rt of A eals reversed. I ue> :#et#er or not ,i& 3&y ,iac ossessed t#e reG&ired a&t#ority from etitioner s&fficient to #old t#e latter liable for t#e dis &ted transaction. ,e-d> YES.

10D

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
3&y ,iac des ite several attem ts made by res ondent to collect t#e amo&nt from #im$ roved all t#e more t#at etitioner %as a%are of t#e G&estioned commission %as tantamo&nt to an admission by silence &nder 4&le 1@0 -ection 2@ of t#e 4&les of Co&rt. All of t#ese oint to t#e fact t#at at t#e time of t#e transaction ,i& 3&y ,iac %as admittedly t#e manager of etitionerKs store in -to. Cristo$ Binondo. ConseG&ently$ t#e transaction in G&estion as %ell as t#e concomitant obligation is valid and binding & on etitioner. By #is re resentations$ etitioner is no% esto ed from disclaiming liability for t#e transaction entered by ,i& 3&y ,iac on #is be#alf. /t matters not %#et#er t#e re resentations are intentional or merely negligent so long as innocent$ t#ird ersons relied & on s&c# re resentations in good fait# and for val&e. ,i& 3&y ,iac$ t#erefore$ by etitionerKs o%n re resentations and manifestations$ became an agent of etitioner by esto el$ an admission or re resentation is rendered concl&sive & on t#e erson making it$ and cannot be denied or dis roved as against t#e erson relying t#ereon 0Article 1D@1$ Civil Code of t#e )#ili ines1. )etitioner is liable for t#e transaction entered into by ,i& 3&y ,iac on #is be#alf. ,#&s$ even %#en t#e agent #as exceeded #is a&t#ority$ t#e rinci al is solidarily liable %it# t#e agent if t#e former allo%ed t#e latter to fact as t#o&g# #e #ad f&ll o%ers 0Article 1(11 Civil Code1$ as in t#e case at bar. )etition 79;/97 :3/ constr&cted a %are#o&se. -aid %are#o&se %as leased by )onderosa =eat#er 5oods Com any s&bject to a mont#ly rental of @00$000 # . /n t#e meantime$ :3/ com lained to 4oberto 4oxas t#at t#e ve#icles of 49CC/ %ere arked on a ortion of t#e ro erty over %#ic# :3/ #ad been granted a rig#t of %ay. 4oxas romised to look into t#e matter. 7y and 4oxas disc&ssed t#e need of :3/ to b&y a C00?sG&are?meter ortion of t#e ot#er b&t 4oxas died soon t#ereafter. ,#e :3/ demanded t#at t#e 49CC/ sell a ortion of t#e ot#er lot for its beneficial &se ot#er%ise t#e a ro riate action %o&ld be filed against it. 49CC/ rejected t#e demand of :3/. 2n *&ne 1A$ 1((2$ t#e :3/ filed a com laint against t#e 49CC/ %it# t#e 4egional ,rial Co&rt of 'akati$ for s ecific erformance and damages.

/--89. :2; 4oxas 9lectric is bo&nd by t#e rovisions of t#e deed of absol&te sale granting to t#e :3/ beneficial &se and a rig#t of %ay over a ortion of t#e ot#er lot. 3eld. ;o. 5enerally$ t#e acts of t#e cor orate officers %it#in t#e sco e of t#eir a&t#ority are binding on t#e cor oration. 3o%ever$ &nder Article 1(10 10of t#e ;e% Civil Code$ acts done by s&c# officers beyond t#e sco e of t#eir a&t#ority cannot bind t#e cor oration &nless it #as ratified s&c# acts ex ressly or tacitly$ or is esto ed from denying t#em. 9vidently$ 4oxas %as not s ecifically a&t#ori6ed &nder t#e said resol&tion to grant a rig#t of %ay agree to sell to t#e etitioner a ortion t#ereof. ;eit#er may s&c# a&t#ority be im lied from t#e a&t#ority granted to 4oxas to sell on s&c# terms and conditions %#ic# #e deems most reasonable and advantageo&s. 8nder aragra # 12$ Article 1!A! of t#e ;e% Civil Code$ a s ecial o%er of attorney is reG&ired to convey real rig#ts over immovable ro erty. Article 1@C! of t#e ;e% Civil Code reG&ires t#at contracts %#ic# #ave for t#eir object t#e creation of real rig#ts over immovable ro erty m&st a ear in a &blic doc&ment. ,#e etitioner cannot feign ignorance of t#e need for 4oxas to #ave been s ecifically a&t#ori6ed in %riting by t#e Board of 7irectors to be able to validly grant a rig#t of %ay and agree to sell a ortion of t#e adjacent lot. ,#e r&le is t#at if t#e act of t#e agent is one %#ic# reG&ires
10

9ood*1i-d ,o-din4 ). !o0a E-e*tri* (2A!K) +acts. ,#e res ondent 4oxas 9lectric and Constr&ction Com any$ /nc. 049CC/1$ formerly t#e 4oxas 9lectric and Constr&ction Com any$ %as t#e o%ner of t%o arcels of land. 2n 'ay 1A$ 1((1$ t#e res ondentFs Board of 7irectors a roved a resol&tion a&t#ori6ing t#e cor oration$ t#ro&g# its resident$ 4oberto B. 4oxas$ to sell t#e lots at a rice$ and &nder s&c# terms and conditions$ %#ic# #e deemed most reasonable and advantageo&s to t#e cor oration. 3e %as like%ise a&t#ori6ed to exec&te$ sign$ and deliver t#e ertinent sales doc&ments and receive t#e roceeds of t#e sale for and on be#alf of t#e com any. )etitioner :3/ bo&g#t one of t#e lots and a ortion of t#e ot#er. /t %as sti &lated in t#e 7eed of -ale t#at the vendor a#rees, in the event that the ri#ht of way is insufficient for the vendee0s use 3e entry of a ?--foot container4, to sell additional sAuare meters from its current ad)acent property.

Art. 1(10. ,#e rinci al m&st com ly %it# all t#e obligations %#ic# t#e agent may #ave contracted %it#in t#e sco e of #is a&t#ority. As for any obligation %#erein t#e agent #as exceeded #is o%er$ t#e rinci al is not bo&nd exce t %#en #e ratifies it ex ressly or tacitly.

10C

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
a&t#ority in %riting$ t#ose dealing %it# #im are c#arged %it# notice of t#at fact. +or t#e rinci le of a arent a&t#ority to a ly$ t#e etitioner %as b&rdened to rove t#e follo%ing. 0a1 t#e acts of t#e res ondent j&stifying belief in t#e agency by t#e etitionerE 0b1 kno%ledge t#ereof by t#e res ondent %#ic# is so&g#t to be #eldE and$ 0c1 reliance t#ereon by t#e etitioner consistent %it# ordinary care and r&dence. /n t#is case$ t#ere is no evidence on record of s ecific acts made by t#e res ondent s#o%ing or indicating t#at it #ad f&ll kno%ledge of any re resentations made by 4oxas to t#e etitioner t#at t#e res ondent #ad a&t#ori6ed #im to grant to t#e res ondent an o tion to b&y a ortion of t#e ot#er lot or to create a b&rden or lien t#ereon$ or t#at t#e res ondent allo%ed #im to do so. defendants are willin# to sell their respective properties6 5. <hat this 9onorable Court authori$es the plaintiff and the defendants to appoint their respective commissioners, that is, one for the plaintiff and one for each defendant6 ,C a roved t#e Com romise Agreement and enjoined t#e arties to com ly %it# its terms and conditions. ,#e Commissioners t#&s a ointed s&bmitted a Consolidated 4e ort regarding t#e recommended &nit rices %#ic# t#e co&rt a roved. 3o%ever$ Atty. Ment&ra$ one of Cor orationFs co&nsel$ filed a manifestation to t#e co&rt t#at t#e Board of 7irectors did not a rove of t#e Com romise Agreement. )etitioner Bernabe asked t#e co&rt to ignore Atty. Ment&raFs manifestation$ saying t#at %#en t#e co&rt inG&ired from t#e arties and t#eir res ective la%yers if all t#e attorneys a earing in t#e case #ad been d&ly a&t#ori6ed andLor em o%ered to enter into a com romise agreement$ and t#e t#ree la%yers for t#e Cor oration ans%ered in t#e affirmative it %as Atty. Ment&ra #imself %#o re ared t#e draft of t#e Com romise Agreement in #is o%n #and%riting and %as t#e first to sign t#e agreement one of t#e t#ree la%yers for t#e laintiff$ Atty. +lorentino M. Cardenas$ %#o also signed t#e Com romise Agreement$ %as t#e official re resentative and exec&tive official$ of cor oration t#at t#e nomination laintiff of 'r. =arry 5. 'arG&e6 as its Commissioner &rs&ant to t#e Com romise Agreement$ %as a clear indication of t#e Cor orationKs tacit a roval of t#e terms and conditions of t#e Com romise Agreement$ if not an im lied ratification of Atty. Ment&raKs acts. 2n '4$ t#e ,C declared t#e Agreement contrary to la%. /--89. :2; t#e Com romise Agreement is valid 39=7. N( +irst$ t#e la%yers %#o entered t#e Com romise Agreement #ave no -)A in violation of Art. 1!A! CC and 4&le 1@!$ -ec. 2@ 42C. Contrary to t#e etitionersF contention$ Atty. Cardenas$ as administrative manager of t#e Cor oration$ did not tacitly ratify t#e agreement entered into by t#e arties as #e #as no a&t#ority to do so.

PN/ ). /a4ama .ad, $9 P1i- @%B (I3Y) 3i*ente ). Gera-de5, B2 SC!A 2#0 (E3A) 1(A@ Antonio$ L. %elate rulin# to: ;iability of principal to thirdpersons@principal ratified the unauthori$ed acts of his a#ent@full and complete &nowled#e by ratifier of material facts essential +AC,-. 3/ Cement Cor oration acG&ired from Bana#a% -#ale 'ining Association a )lacer =ease Contract covering 2 mining claimsE t#is incl&ded t#ree arcels of land o%ned by )etitioners Micente$ Bernabe and Angeles. ,#e Cor oration$ several occasions$ informed t#e etitioners$ of its acG&isition aforesaid lacer mining claims %#ic# incl&ded t#e areas occ& ied by t#em. /t also reG&ested t#em to allo% its %orkers to enter t#e area in G&estion for ex loration$ develo ment and extraction of minerals t#erefrom$ romising to ay t#em reasonable amo&nts as damages$ b&t t#ey ref&sed to allo% entry of t#e Cor orationFs re resentatives. 3ence$ t#e Cor oration filed a com laint for inj&nction and damages against etitioners. ,C iss&ed a %rit of inj&ction and named Commissioners to cond&ct a s&rvey and lan on t#e s&ggested relocation of t#e bo&ndaries of t#e Cor orationFs claim. -&bseG&ently$ t#e res ective co&nsels conferred among t#emselves t#e ossibility of terminating t#e case by com romise. +or t#is &r ose$ t#ey exec&ted and s&bmitted for co&rt a roval a Com romise Agreement %#ic# contains. !. <hat the plaintiff is willin# to buy the properties sub)ect of liti#ation, and the

10"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
"o rati'7 t1e unaut1ori5ed a*t o' an a4ent and ma:e it 8indin4 on t1e *or.oration, it mu t 8e 1o?n t1at t1e 4o)ernin4 8od7 or o''i*er aut1ori5ed to rati'7 1ad 'u-- and *om.-ete :no?-ed4e o' a-- t1e materia- 'a*t *onne*ted to t1e tran a*tion. ,#e etitioner failed to do t#is. !ati'i*ation 87 a *or.oration *annot 8e made 87 t1e ame .er on ?1o ?ron4'u--7 a umed t1e .o?er to ma:e t1e *ontra*t. 2ani-a Par: Cemeter7 ). Lin an4an (6ESSA) +acts. -ometime in 1(!D$ +lorencia Bal&yot offered Atty. )edro =. =insangan a lot called 5arden -tate at t#e 3oly Cross 'emorial )ark o%ned by '')C/ According to Bal&yot$ a former o%ner of a memorial lot %as no longer interested in acG&iring t#e lot and #ad o ted to sell #is rig#ts s&bject to reimb&rsement of t#e amo&nts #e already aid. ,#e contract %as for )(C$000.00. Bal&yot reass&red Atty. =insangan t#at once reimb&rsement is made to t#e former b&yer$ t#e contract %o&ld be transferred to #im. Atty. =insangan agreed and gave Bal&yot )@C$2(C.00 re resenting t#e amo&nt to be reimb&rsed to t#e original b&yer and to com lete t#e do%n ayment to '')C/. Bal&yot iss&ed #and%ritten and ty e%ritten recei ts for t#ese ayments. -ometime in 'arc# 1(!C$ Bal&yot informed Atty. =insangan t#at #e %o&ld be iss&ed a ne% contract covering t#e s&bject lot in t#e name of t#e latter. Atty. =insangan rotested$ b&t Bal&yot ass&red #im t#at #e %o&ld still be aying t#e old rice of )(C$000.00 %it# )1($!@!.00 credited as f&ll do%n ayment leaving a balance of abo&t )AC$000.00. -&bseG&ently$ on ! A ril 1(!C$ Bal&yot bro&g#t an 2ffer to )&rc#ase a lot for t#e amo&nt of )1($!@!.00. Contract #as a listed rice of )1@2$2C0.00. Atty. =insangan objected to t#e ne% contract rice$ as t#e same %as not t#e amo&nt revio&sly agreed & on. ,o convince Atty. =insangan$ Bal&yot exec&ted a doc&ment confirming t#at %#ile t#e contract rice is )1@2$2C0.00$ Atty. =insangan %o&ld ay only t#e original rice of )(C$000.00 Bal&yot %rote Atty =insangan saying t#at %#ile t#e offer to &rc#ase &nder t#e contract states t#at t#e total rice of )1@2$2C0.00$ t#e &ndertaking is to ay only t#e total s&m of )(C$000.00 &nder t#e old rice By virt&e of t#is letter$ Atty. =insangan signed t#e contract As reG&ested by Bal&yot$ Atty. =insangan iss&ed 12 ostdated c#ecks of )1$!00.00 eac# in favor of '')C/. ,#e next year$ Atty. =insangan again iss&ed 12 ostdated c#ecks in favor of '')C/. Bal&yot verbally advised Atty. =insangan t#at t#e contract %as cancelled for reasons t#e latter co&ld not ex lain$ and resented to #im anot#er ro osal for t#e &rc#ase of an eG&ivalent ro erty. 3e ref&sed t#e ne% ro osal and insisted t#at Bal&yot and '')C/ #onor t#eir &ndertaking. +or t#e alleged fail&re of '')C/ and Bal&yot to conform to t#eir agreement$ Atty. =insangan filed a Com laint for Breac# of Contract and 7amages against t#e former. ,C. '')C/ and Bal&yot jointly and severally liable Bal&yot %as an agent of '')C/ and t#at t#e latter %as esto ed from denying t#is agency$ #aving received and enc#ased t#e c#ecks iss&ed by Atty. =insangan and given to it by Bal&yot. :#ile '')C/ insisted t#at Bal&yot %as a&t#ori6ed to receive only t#e do%n ayment$ it allo%ed #er to contin&e to receive ostdated c#ecks from Atty. =insangan$ %#ic# it in t&rn consistently encas#ed. CA. affirmed 4,C & #eld t#e trial co&rtKs finding t#at Bal&yot %as an agent of '')C/ at t#e time t#e dis &ted contract %as entered into$ #aving re resented '')C/Ks interest and acting on its be#alf in t#e dealings %it# clients and c&stomersE if an agent misre resents to a &rc#aser and t#e rinci al acce ts t#e benefits of s&c# misre resentation$ #e cannot at t#e same time deny res onsibility for s&c# misre resentation

/ss&e. 1. :2; ''C/ is liable 2. :2; t#ere is ratification @. :2; t#e contract %as validly entered into by ''C/ and Atty =insangan 3eld. 1. ;2. By t#e contract of agency$ a erson binds #imself to render some service or to do somet#ing in re resentation or on be#alf of anot#er$ %it# t#e consent or a&t#ority of t#e latter. ,#&s$ t#e elements of agency are 0i1 consent$ ex ress or im lied$ of t#e arties to establis# t#e relations#i E 0ii1 t#e object is t#e exec&tion of a j&ridical act in relation to a t#ird ersonE 0iii1 t#e agent acts as a re resentative and not for #imselfE and 0iv1 t#e agent acts %it#in t#e sco e of #is a&t#ority. As ro erly fo&nd bot# by t#e trial co&rt and t#e Co&rt of A eals$ Bal&yot %as an agent of '')C/$ #aving re resented t#e interest of t#e latter$ and #aving been allo%ed by '')C/ to re resent it in #er dealings %it# its clientsL ros ective b&yers.

10A

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
;evert#eless$ contrary to t#e findings of t#e Co&rt of A eals$ 22PCI *annot 8e 8ound 87 t1e *ontra*t .ro*ured 87 Att7. Lin an4an and o-i*ited 87 /a-u7ot. Bal&yot %as a&t#ori6ed to solicit and remit to '')C/ offers to &rc#ase interment s aces obtained on forms rovided by '')C/. ,#e terms of t#e offer to &rc#ase$ t#erefore$ are contained in s&c# forms and$ %#en signed by t#e b&yer and an a&t#ori6ed officer of '')C/$ becomes binding on bot# arties. ,#e 2ffer to )&rc#ase d&ly signed by Atty. =insangan$ and acce ted and validated by '')C/ s#o%ed a total list rice of )1@2$2C0.00. =ike%ise$ it %as clearly stated t#erein t#at I)&rc#aser agrees t#at #e #as read or #as #ad read to #im t#is agreement$ t#at #e &nderstands its terms and conditions$ and t#at t#ere are no covenants$ conditions$ %arranties or re resentations ot#er t#an t#ose contained #erein.I By signing t#e 2ffer to )&rc#ase$ Atty. =insangan signified t#at #e &nderstood its contents. "1at 1e and /a-u7ot 1ad an a4reement di''erent 'rom t1at *ontained in t1e (''er to Pur*1a e i o' no moment, and 1ou-d not a''e*t 22PCI, a it ?a o8)iou -7 made out ide /a-u7otG aut1orit7. "o re.eat, /a-u7otG aut1orit7 ?a -imited on-7 to o-i*itin4 .ur*1a er . S1e 1ad no aut1orit7 to a-ter t1e term o' t1e ?ritten *ontra*t .ro)ided 87 22PCI. "1e do*ument;-etter N*on'irmin4N t1e a4reement t1at Att7. Lin an4an ?ou-d 1a)e to .a7 t1e o-d .ri*e ?a e0e*uted 87 /a-u7ot a-one. No?1ere i t1ere an7 indi*ation t1at t1e ame *ame 'rom 22PCI or an7 o' it o''i*er . /t is a settled r&le t#at ersons dealing %it# an agent are bo&nd at t#eir eril$ if t#ey %o&ld #old t#e rinci al liable$ to ascertain not only t#e fact of agency b&t also t#e nat&re and extent of a&t#ority$ and in case eit#er is controverted$ t#e b&rden of roof is & on t#em to establis# it. ,#e basis for agency is re resentation and a erson dealing %it# an agent is &t & on inG&iry and m&st discover & on #is eril t#e a&t#ority of t#e agent. /f #e does not make s&c# an inG&iry$ #e is c#argeable %it# kno%ledge of t#e agentKs a&t#ority and #is ignorance of t#at a&t#ority %ill not be any exc&se. ,#e ignorance of a erson dealing %it# an agent as to t#e sco e of t#e latterKs a&t#ority is no exc&se to s&c# erson and t#e fa&lt cannot be t#ro%n & on t#e rinci al. A erson dealing %it# an agent ass&mes t#e risk of lack of a&t#ority in t#e agent. 3e cannot c#arge t#e rinci al by relying & on t#e agentKs ass&m tion of a&t#ority t#at roves to be &nfo&nded. ,#e .rin*i.a-, on t1e ot1er 1and, ma7 a*t on t1e .re um.tion t1at t1ird .er on dea-in4 ?it1 1i a4ent ?i-- not 8e ne4-i4ent in 'ai-in4 to a *ertain t1e e0tent o' 1i aut1orit7 a a4en*7. ?e-- a t1e e0i ten*e o' 1i

/n t#e instant case$ it #as not been establis#ed t#at Atty. =insangan even bot#ered to inG&ire %#et#er Bal&yot %as a&t#ori6ed to agree to terms contrary to t#ose indicated in t#e %ritten contract$ m&c# less bind '')C/ by #er commitment %it# res ect to s&c# agreements. 9ven if Bal&yot %as Atty. =insanganKs friend and kno%n to be an agent of '')C/$ #er declarations and actions alone are not s&fficient to establis# t#e fact or extent of #er a&t#ority. Atty. =insangan as a racticing la%yer for a relatively long eriod of time %#en #e signed t#e contract s#o&ld #ave been &t on g&ard %#en t#eir agreement %as not reflected in t#e contract. 'ore im ortantly$ Atty. =insangan s#o&ld #ave been alerted by t#e fact t#at Bal&yot failed to effect t#e transfer of rig#ts earlier romised$ and %as &nable to make good #er %ritten commitment$ nor convince '')C/ to assent t#ereto$ as evidenced by several attem ts to ind&ce #im to enter into ot#er contracts for a #ig#er consideration. As ro erly ointed o&t by '')C/$ as a la%yer$ a greater degree of ca&tion s#o&ld be ex ected of Atty. =insangan es ecially in dealings involving legal doc&ments. 3e did not even bot#er to ask for official recei ts of #is ayments$ nor inG&ire from '')C/ directly to ascertain t#e real stat&s of t#e contract$ blindly relying on t#e re resentations of Bal&yot. A la%yer by rofession$ #e kne% %#at #e %as doing %#en #e signed t#e %ritten contract$ kne% t#e meaning and val&e of every %ord or #rase &sed in t#e contract$ and more im ortantly$ kne% t#e legal effects %#ic# said doc&ment rod&ced. 3e is bo&nd to acce t res onsibility for #is negligence. 2. ;2;9. 4atification in agency is t#e ado tion or confirmation by one erson of an act erformed on #is be#alf by anot#er %it#o&t a&t#ority. ,#e s&bstance of t#e doctrine is confirmation after cond&ct$ amo&nting to a s&bstit&te for a rior a&t#ority. 2rdinarily$ t#e rinci al m&st #ave f&ll kno%ledge at t#e time of ratification of all t#e material facts and circ&mstances relating to t#e &na&t#ori6ed act of t#e erson %#o ass&med to act as agent. ,#&s$ if material facts %ere s& ressed or &nkno%n$ t#ere can be no valid ratification and t#is regardless of t#e &r ose or lack t#ereof in concealing s&c# facts and regardless of t#e arties bet%een %#om t#e G&estion of ratification may arise. ;evert#eless$ t#is rinci le does not a ly if t#e rinci alKs ignorance of t#e material facts and circ&mstances %as %illf&l$ or t#at t#e rinci al c#ooses to act in ignorance of t#e facts. 3o%ever$ in t#e absence of circ&mstances &tting a reasonably r&dent man on inG&iry$ ratification cannot be im lied as against t#e rinci al %#o is ignorant of t#e facts.

10!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
A er&sal of Bal&yotKs Ans%er reveals t#at t#e real arrangement bet%een #er and Atty. =insangan %as for t#e latter to ay a mont#ly installment of )1$!00.00 %#ereas Bal&yot %as to s#o&lder t#e co&nter art amo&nt of )1$DCC.00 to meet t#e )@$2CC.00 mont#ly installments as indicated in t#e contract. ,#&s$ every time an installment falls d&e$ ayment %as to be made t#ro&g# a c#eck from Atty. =insangan for )1$!00.00 and a cas# com onent of )1$DCC.00 from Bal&yot. 3o%ever$ it a ears t#at %#ile Atty. =insangan iss&ed t#e ost? dated c#ecks$ Bal&yot failed to come & %it# #er art of t#e bargain. ,#is %as s& orted by Bal&yotKs statements in #er letter to 'r. Clyde :illiams$ *r.$ -ales 'anager of '')C/$ t%o days after s#e received t#e co y of t#e Com laint. /n t#e letter$ s#e admitted t#at s#e %as remiss in #er d&ties %#en s#e consented to Atty. =insanganKs ro osal t#at #e %ill ay t#e old rice %#ile t#e difference %ill be s#o&ldered by #er. -#e like%ise admitted t#at t#e contract s&ffered arrearages beca&se %#ile Atty. =insangan iss&ed t#e agreed c#ecks$ s#e %as &nable to give #er s#are of )1$DCC.00 d&e to #er o%n financial diffic&lties. Bal&yot even asked for com assion from '')C/ for t#e error s#e committed. Atty. =insangan failed to s#o% t#at '')C/ #ad kno%ledge of t#e arrangement. As far as '')C/ is concerned$ t#e contract rice %as )1@2$2C0.00$ as stated in t#e 2ffer to )&rc#ase signed by Atty. =insangan and '')C/Ks a&t#ori6ed officer. ,#e do%n ayment of )1($!@!.00 given by Atty. =insangan %as in accordance %it# t#e contract as %ell. )ayments of )@$2@C.00 for at least t%o installments %ere like%ise in accord %it# t#e contract$ albeit made t#ro&g# a c#eck and artly in cas#. /n vie% of Bal&yotKs fail&re to give #er s#are in t#e ayment$ '')C/ received only )1$!00.00 c#ecks$ %#ic# %ere clearly ins&fficient ayment. /n fact$ Atty. =insangan %o&ld #ave inc&rred arrearages t#at co&ld #ave ca&sed t#e earlier cancellation of t#e contract$ if not for '')C/Ks a lication of some of t#e c#ecks to #is acco&nt. 3o%ever$ t#e c#ecks alone %ere not s&fficient to cover #is obligations. /f '')C/ %as a%are of t#e arrangement$ it %o&ld #ave ref&sed t#e latterKs c#eck ayments for being ins&fficient. /t %o&ld not #ave a lied to #is acco&nt t#e )1$!00.00 c#ecks. 'oreover$ t#e fact t#at Bal&yot #ad to ractically ex lain to '')C/Ks -ales 'anager t#e details of #er IarrangementI %it# Atty. =insangan and admit to #aving made an error in entering s&c# arrangement confirm t#at ''C)/ #ad no kno%ledge of t#e said agreement. /t %as only %#en Bal&yot filed #er Ans%er t#at s#e claimed t#at ''C)/ %as f&lly a%are of t#e agreement. "1e a*t o' t1e a4ent 8e7ond t1e *o.e o' 1i aut1orit7 do not 8ind t1e .rin*i.a- un-e t1e -atter rati'ie t1e ame. /t also bears em #asis t#at ?1en t1e t1ird .er on :no? t1at t1e a4ent ?a a*tin4 8e7ond 1i .o?er or aut1orit7, t1e .rin*i.a- *annot 8e 1e-d -ia8-e 'or t1e a*t o' t1e a4ent. /f t#e said t#ird erson %as a%are of s&c# limits of a&t#ority$ #e is to blame and is not entitled to recover damages from t#e agent$ &nless t#e latter &ndertook to sec&re t#e rinci alKs ratification. @. >9-. ,#e contract %as validly entered into bot# by '')C/ and Atty. =insangan. By affixing #is signat&re in t#e contract$ Atty. =insangan assented to t#e terms and conditions t#ereof. :#en Atty. =insangan inc&rred delinG&encies in ayment$ ''C)/ merely enforced its rig#ts &nder t#e said contract by canceling t#e same. Being a%are of t#e limits of Bal&yotKs a&t#ority$ Atty. =insangan cannot insist on %#at #e claims to be t#e terms of contract. ,#e agreement$ insofar as t#e )(C$000.00 contract rice is concerned$ is void and cannot be enforced as against '')C/. ;eit#er can #e #old Bal&yot liable for damages &nder t#e same contract$ since t#ere is no evidence s#o%ing t#at Bal&yot &ndertook to sec&re '')C/Ks ratification. At best$ t#e IagreementI bet%een Bal&yot and Atty. =insangan bo&nd only t#e t%o of t#em. As far as '')C/ is concerned$ it bo&nd itself to sell its interment s ace to Atty. =insangan for )1@2$2C0.00 &nder contract$ and #ad in fact received several ayments in accordance %it# t#e same contract. /f t#e contract %as cancelled d&e to arrearages$ Atty. =insanganKs reco&rse s#o&ld only be against Bal&yot %#o ersonally &ndertook to ay t#e difference bet%een t#e tr&e contract rice of )1@2$2C0.00 and t#e original ro osed rice of )(C$000.00. ,o s&rmise t#at Bal&yot %as acting on be#alf of '')C/ %#en s#e romised to s#o&lder t#e said difference %o&ld be to concl&de t#at '')C/ &ndertook to ay itself t#e difference$ a concl&sion t#at is very illogical$ if not antit#etical to its b&siness interests. /. Arti*-e #9## (!EK)

Article 1(11. 9ven %#en t#e agent #as exceeded #is a&t#ority$ t#e rinci al is solidarily liable %it# t#e agent if t#e former allo%ed t#e latter to act as t#o&g# #e #ad f&ll o%ers. Lu tan ). CA, 2%% SC!A %%@ (6ESSA) +acts. =&stan is t#e registered o%ner of a arcel of land etitioner leased t#e ro erty to )arangan for a term of 10 years and an ann&al rent of )1$000.00 7&ring t#e eriod of lease$ )arangan %as reg&larly extending loans in small amo&nts to

10(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
etitioner to defray #er daily ex enses and to finance #er da&g#terKs ed&cation etitioner exec&ted an -)A in favor of )arangan to sec&re an agric&lt&ral loan from );B %it# t#e aforesaid lot as collateral a second -)A %as exec&ted by etitioner$ by virt&e of %#ic#$ )arangan %as able to sec&re D additional loans t#e last t#ree loans %ere %it#o&t t#e kno%ledge of #erein etitioner and all t#e roceeds t#erefrom %ere &sed by )arangan for #is o%n benefit 0b&t t#ese enc&mbrances %ere d&ly annotated on t#e certificate of title1 etitioner signed a 7eed of *acto de %etro -ale in favor of )arangan %#ic# %as s& erseded by t#e 7eed of 7efinite -ale %#ic# etitioner signed & on )aranganKs re resentation t#at t#e same merely evidences t#e loans extended by #im &nto t#e former +or fear t#at #er ro erty mig#t be rej&diced by t#e contin&ed borro%ing of )arangan$ etitioner demanded t#e ret&rn of #er certificate of title. /nstead of com lying %it# t#e reG&est$ )arangan asserted #is rig#ts over t#e ro erty %#ic# allegedly #ad become #is by virt&e of t#e aforementioned 7eed of 7efinite -ale. Y8nder said doc&ment$ etitioner conveyed t#e s&bject ro erty and all t#e im rovements t#ereon &nto )arangan absol&tely for and in consideration of t#e s&m of -eventy +ive ,#o&sand 0)AC$000.001 )esosZ Aggrieved$ etitioner filed an action for cancellation of liens$ G&ieting of title$ recovery of ossession and damages against )arangan and );B !"C> 7eeds of -ale 0%it# acto de retro and absol&te1 are n&ll and void eG&itable mortgage CA> reversed at benc#$ t#e evidence is s&fficient to %arrant a finding t#at etitioner and )arangan merely intended to consolidate t#e formerKs indebtedness to t#e latter in a single instr&ment and to sec&re t#e same %it# t#e s&bject ro erty. 9ven %#en a doc&ment a ears on its face to be a sale$ t#e o%ner of t#e ro erty may rove t#at t#e contract is really a loan %it# mortgage by raising as an iss&e t#e fact t#at t#e doc&ment does not ex ress t#e tr&e intent of t#e arties. /n t#is case$ arol evidence t#en becomes com etent and admissible to rove t#at t#e instr&ment %as in tr&t# and in fact given merely as a sec&rity for t#e re ayment of a loan. Art. 1"02$ 0"1$ in relation to Art 1"0D rovides t#at a contract of sale is res&med to be an eG&itable mortgage in any ot#er case %#ere it may be fairly inferred t#at t#e real intention of t#e arties is t#at t#e transaction s#all sec&re t#e ayment of a debt or t#e erformance of any ot#er obligation. ,#at t#e case clearly falls &nder t#is category can be inferred from t#e circ&mstances s&rro&nding t#e transaction as #erein set fort#. )etitioner #ad no kno%ledge t#at t#e contract s#e signed is a deed of sale. ,#e contents of t#e same %ere not read nor ex lained to #er so t#at s#e may intelligibly form&late in #er mind t#e conseG&ences of #er cond&ct and t#e nat&re of t#e rig#ts s#e %as ceding in favor of )arangan. )etitioner is illiterate and #er condition constrained #er to merely rely on )aranganKs ass&rance t#at t#e contract only evidences #er indebtedness to t#e latter. :#en one of t#e contracting arties is &nable to read$ or if t#e contract is in a lang&age not &nderstood by #im$ and mistake or fra&d is alleged$ t#e erson enforcing t#e contract m&st s#o% t#at t#e terms t#ereof #ave been f&lly ex lained to t#e former. -ettled is t#e r&le t#at %#ere a arty to a contract is illiterate or cannot read or cannot &nderstand t#e lang&age in %#ic# t#e contract is %ritten$ t#e b&rden is on t#e arty interested in enforcing t#e contract to rove t#at t#e terms t#ereof are f&lly ex lained to t#e former in a lang&age &nderstood by #im. ,#is b&rden #as not been satisfactorily disc#arged.

/ss&es. A. :2; t#e 7eed of 7efinite -ale is in reality an eG&itable mortgage /. 9(N .etitionerG .ro.ert7 i -ia8-e to PN/ 'or t1e -oan *ontra*ted 87 Paran4an 87 )irtue o' t1e .e*ia- .o?er o' attorne7 3eld.

1. YES. A contract is

erfected by mere consent. 'ore artic&larly$ a contract of sale is erfected at t#e moment t#ere is a meeting of minds & on t#e t#ing %#ic# is t#e object of t#e contract and & on t#e rice. ,#is meeting of t#e minds s eaks of t#e intent of t#e arties in entering into t#e contract res ecting t#e s&bject matter and t#e consideration t#ereof. /f t#e %ords of t#e contract a ear to be contrary to t#e evident intention of t#e arties$ t#e latter s#all revail over t#e former. /n t#e case

2. YES. ,#ird ersons %#o are not arties to a

loan may sec&re t#e latter by ledging or mortgaging t#eir o%n ro erty. -o long as valid consent %as given$ t#e fact t#at t#e loans %ere solely for t#e benefit of )arangan %o&ld not

110

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
invalidate t#e mortgage %it# res ect to etitionerKs ro erty. /n consenting t#ereto$ even granting t#at etitioner may not be ass&ming ersonal liability for t#e debt$ #er ro erty s#all nevert#eless sec&re and res ond for t#e erformance of t#e rinci al obligation. C. /t is admitted t#at etitioner is t#e o%ner of t#e arcel of land mortgaged to );B on five 0C1 occasions by virt&e of t#e - ecial )o%ers of Attorney exec&ted by etitioner in favor of )arangan. )etitioner arg&es t#at t#e last t#ree mortgages %ere void for lack of a&t#ority. -#e totally failed to consider t#at said S.e*iaPo?er o' Attorne7 are a *ontinuin4 one and a8 ent a )a-id re)o*ation du-7 'urni 1ed to t1e mort4a4ee, t1e ame *ontinue to 1a)e 'or*e and e''e*t a a4ain t t1ird .er on ?1o 1ad no :no?-ed4e o' u*1 -a*: o' aut1orit7 as rovided in Article 1(21 of t#e Civil Code YArt. 1(21. /f t#e agency #as been entr&sted for t#e &r ose of contracting %it# s ecified ersons$ its revocation s#all not rej&dice t#e latter if t#ey %ere not given notice t#ereof.Z ,#e -)A by etitioner in favor of )arangan d&ly a&t#ori6ed t#e latter to re resent and act on be#alf of t#e former. 3aving done so$ etitioner clot#ed )arangan %it# a&t#ority to deal %it# );B on #er be#alf and in t#e absence of any roof t#at t#e bank #ad kno%ledge t#at t#e last t#ree loans %ere %it#o&t t#e ex ress a&t#ority of etitioner$ it cannot be rej&diced t#ereby. As far as t#ird ersons are concerned$ an act is deemed to #ave been erformed %it#in t#e sco e of t#e agentKs a&t#ority if s&c# is %it#in t#e terms of t#e o%er of attorney as %ritten even if t#e agent #as in fact exceeded t#e limits of #is a&t#ority according to t#e &nderstanding bet%een t#e rinci al and t#e agent. ,#e -)A artic&larly rovides t#at t#e same is good not only for t#e rinci al loan b&t also for s&bseG&ent commercial$ ind&strial$ agric&lt&ral loan or credit accommodation t#at t#e attorney?in?fact may obtain and &ntil t#e o%er of attorney is revoked in a &blic instr&ment and a co y of %#ic# is f&rnis#ed to );B. 9ven %#en t#e agent #as exceeded #is a&t#ority$ t#e rinci al is solidarily liable %it# t#e agent if t#e former allo%ed t#e latter to act as t#o&g# #e #ad f&ll o%ers 0Article 1(11$ Civil Code1. ,#e mortgage directly and immediately s&bjects t#e ro erty & on %#ic# it is im osed. ,#e ro erty of t#ird ersons %#ic# #as been ex ressly mortgaged to g&arantee an obligation to %#ic# t#e said ersons are foreign$ is directly and jointly liable for t#e f&lfillment t#ereofE it is t#erefore s&bject to exec&tion and sale for t#e &r ose of aying t#e amo&nt of t#e debt for %#ic# it is liable. 3o%ever$ etitioner #as an &nG&estionable rig#t to demand ro ortional indemnification from )arangan %it# res ect to t#e s&m aid to );B from t#e roceeds of t#e sale of #er ro erty in case t#e same is sold to satisfy t#e &n aid debts. Arti*-e #9#2, #9#@, #9#A (ANGELA)

Art. 1(12. ,#e rinci al m&st advance to t#e agent$ s#o&ld t#e latter so reG&est$ t#e s&ms necessary for t#e exec&tion of t#e agency. -#o&ld t#e agent #ave advanced t#em$ t#e rinci al m&st reimb&rse #im t#erefor$ even if t#e b&siness or &ndertaking %as not s&ccessf&l$ rovided t#e agent is free from all fa&lt. ,#e reimb&rsement s#all incl&de interest on t#e s&ms advanced$ from t#e day on %#ic# t#e advance %as made. (8-i4ation o' .rin*i.a- to t1e a4ent under t1i Arti*-e>

1.

Obli#ation to advance funds. O ,#e agent is bo&nd by #is acce tance to carry o&t t#e agencyE on t#e ot#er #and$ t#e rinci al is &nder obligation to rovide t#e means %it# %#ic# it exec&te t#e agency. /n t#e absence of sti &lation t#at t#e agent s#all advance t#e necessary f&nds$ t#e rinci al m&st advance to t#e agent t#e s&ms necessary for t#e exec&tion of t#e agencyE ot#er%ise$ #e cannot #eld t#e liable for damages %#ic# #e may inc&rred by t#e latterFs non? erformance.

2.

Obli#ation to reimburse a#ent for funds advance by latter. 9 An agency is for t#e rinci alFs benefit. /n case t#e agent advanced t#e s&ms necessary for t#e exec&tion of t#e agency$ %#et#er in #is o%n initiative or by sti &lation$ t#e said advances m&st be reimb&rsed by t#e rinci al %it# /;,949-, from t#e day t#e advance %as made. 7emand is not necessary in order t#at delay on art of t#e rinci al s#all exist. -&c# obligation is fo&nded on the implied promise to repay since t#e ro er exec&tion of t#e agency involves an im lied reG&est on art of t#e rinci al to inc&r t#e necessary ex enses.

'oreover$ t#e obligation is NG< affected even if the underta&in# turns out to be unsuccessful. Art. 1(1@. ,#e rinci al m&st also indemnify t#e agent for all t#e damages %#ic# t#e exec&tion of t#e agency may #ave ca&sed t#e latter$ %it#o&t fa&lt or negligence on #is art. 01A2(1

111

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.

A. C. D.

Phere dama#es caused by the e ecution of the a#ency O rinci al is liable. Phere dama#es is caused by wron#ful acts of third persons O rinci al not liable if #e is not res onsible for s&c# t#ird ersons. Phere a#ent acted upon his own account O no obligation to indemnify since no agency exists in t#e legal sense.

Art. 1(1D. ,#e agent may retain in ledge t#e t#ings %#ic# are t#e object of t#e agency &ntil t#e rinci al effects t#e reimb&rsement and ays t#e indemnity set fort# in t#e t%o receding articles. *i#ht of a#ent to retain in pled#e ob:ect of a#ency O an exam le of a le#al ledge 0i.e. im osed by la%$ as o osed to contract&al ledges1. 'A,U*- of a#ent"s ri#ht of lien+ (1 4ig#t -imited to t1e u8=e*t matter of t#e agency O it is a s ecific$ not a general lien. (2 4ig#t reG&ires t#e .o e ion$ c&stody$ control or dis osing o%er of t#e agent of t#e s&bject matter. (3 4ig#t generally on-7 in 'a)or o' a4ent 0not to be extended to a s&b?agent in t#e absence of ratification by t#e rinci al of s&b? agentFs acts1. A-8a-ade=o ). P1i-. !e'inin4, A$ P1i- BB% ("(PE) FAC"S> Albaladejo y Cia. %as engaged in t#e b&ying and selling of co ra. Misayan 4efining Co %as engaged in man&fact&re cocon&t oil. 2n A&g&st 2!$ 1(1!$ t#e laintiff made a contract %it# t#e Misayan %#erein t#e former bind itself to sell to t#e latter 0Misayan1 all t#e Co ra it %ill b&y in Albay. )&rs&ant to t#is agreement t#e laintiff$ d&ring t#e year t#erein contem lated$ bo&g#t co ra extensively for t#e Misayan 4efining Co. At t#e end of said year bot# arties fo&nd t#emselves satisfied %it# t#e existing arrangement$ and t#ey t#erefore contin&ed by tacit consent to govern t#eir f&t&re relations by t#e same agreement. ,#is sit&ation affairs remained &ntil *&ly ($ 1(20$ %#en t#e Misayan 4efining Co. closed do%n its factory at 2 on$ Ceb& and %it#dre% from t#e co ra market. :#en t#e contract %as originally made$ Albaladejo y Cia. a arently #ad only one commercial establis#ment$ i.e.$ t#at at =egas iE

b&t t#e large reG&irements of t#e Misayan 4efining Co. for co ra a eared so far to j&stify t#e extension of t#e laintiffKs b&siness t#at d&ring t#e co&rse of t#e next t%o or t#ree years it establis#ed some 20 agencies$ or s&bagencies$ in vario&s orts and laces of t#e )rovince of Albay and neig#boring rovinces. After t#e Misayan 4efining Co. #ad ceased to b&y co ra$ as above stated$ of %#ic# fact t#e laintiff %as d&ly notified$ t#e s& lies of co ra already &rc#ased by t#e laintiff %ere grad&ally s#i ed o&t and acce ted by t#e Misayan 4efining Co. /n t#e co&rse of t#e next ! or 10 mont#s t#e acco&nts bet%een t#e t%o arties %ere liG&idated. ,#e last acco&nt rendered by t#e Misayan 4efining Co. to t#e laintiff %as for t#e mont# of A ril$ 1(21$ and it s#o%ed a balance of )2!! in favor of t#e defendant. 8nder date of *&ne 2C$ 1(21$ t#e laintiff com any addressed a letter from =egas i to t#e )#ili ine 4efining Co. 0%#ic# #ad no% s&cceeded to t#e rig#ts and liabilities of t#e Misayan 4efining Co.1$ ex ressing its a roval of said acco&nt. /n t#is letter no dissatisfaction %as ex ressed by t#e laintiff as to t#e state of affairs bet%een t#e artiesE b&t abo&t six %eeks t#ereafter t#e resent action %as beg&n. ,#e ca&se of action %as #inged from t#e cla&se in t#e contract %#ic# says t#at Misayan %as obligated to rovide trans ortation for t#e co ra collected by t#e laintiff and de osited for s#i ment at vario&s laces. ,o G&ote t#e allegation. ,#at$ from t#e mont# of -e tember$ 1(1!$ &ntil t#e mont# of *&ne$ 1(20$ t#e laintiff o ort&nely advised t#e Misayan of t#e stocks t#at t#e former #ad for s#i ment$ and$ from time to time$ reG&ested t#e Misayan to send vessels to take & said stocksE b&t t#at t#e Misayan c&l ably and negligently allo%ed a great n&mber of days to ela se before sending t#e boats for t#e trans ortation of t#e co ra to 2 on$ Ceb&R ,C said t#ereFs no negligence on art of Misayan in roviding for t#e trans ortation$ #ence t#ey did not ca&se t#e s#rinkage of t#e co ra. Co&rt said Misayan %as still liable and t#e fact t#at it aid an amo&nt of )1C$"10.D1 does not mean it already aid its liability for t#e amo&nt %as for anot#er claim. )laintiff t#en claimed t#at its ex ense in maintaining and extending its organi6ation for t#e &rc#ase of co ra in t#e eriod bet%een *&ly$ 1(20$ to *&ly$ 1(21$ %ere inc&rred at t#e instance and reG&est of t#e defendant$ or & on

112

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
any romise of t#e defendant to make t#e ex endit&re good. Co&rt said a caref&l examination of t#e evidence$ mostly of a doc&mentary c#aracter$ is$ in o&r o inion$ convincing t#at t#e s& osed liability does not exist. )laintiff t#en advanced its contention is advanced t#at t#e contract bet%een t#e laintiff and t#e Misayan 4efining Co. created t#e relation of rinci al and agent bet%een t#e arties$ and t#e reliance is laced & on article 1A2( of t#e Civil Code %#ic# reG&ires t#e rinci al to indemnify t#e agent for damages inc&rred in carrying o&t t#e agency. I ue> 9a an a4en*7 re-ation 1i. *reatedO ,e-d> N(. ,#e relation bet%een t#e arties %as not t#at of rinci al and agent in so far as relates to t#e &rc#ase of co ra by t#e laintiff. /t is tr&e t#at t#e Misayan 4efining Co. made t#e laintiff one of its instr&ments for t#e collection of co raE b&t it is clear t#at in making its &rc#ases from t#e rod&cers t#e laintiff %as b&ying & on its o%n acco&nt and t#at %#en it t&rned over t#e co ra to t#e Misayan 4efining Co.$ &rs&ant to t#at agreement$ a second sale %as effected. /n aragra # @ of t#e contract it is declared t#at d&ring t#e contin&ance of t#is contract t#e Misayan 4efining Co. %o&ld not a oint any ot#er agent for t#e &rc#ase of co ra in =egas iE and t#is gives rise indirectly to t#e inference t#at t#e laintiff %as considered its b&ying agent. Co&rt said t#at t#e &se of t#is term in one cla&se of t#e contract cannot dominate t#e real nat&re of t#e agreement as revealed in ot#er cla&ses$ no less t#an in t#e ca tion of t#e agreement itself. /n some of t#e trade letters also t#e vario&s instr&mentalities &sed by t#e Misayan 4efining Co. for t#e collection of co ra are s oken of as agents. Co&rt said t#at t#is designation %as evidently &sed for convenienceE and it is very clear t#at in its activities as a b&yer t#e laintiff %as acting & on its o%n acco&nt and not as agents$ in t#e legal sense$ of t#e Misayan 4efining Co. ,#e title to all of t#e co ra &rc#ased by t#e laintiff &ndo&btedly remained in it &ntil it %as delivered by %ay of s&bseG&ent sale to said com any. A ealed j&dgment %ill t#erefore be affirmed &. Arti*-e (2A!K) #9#B, #9#%, #9#C, #9#$

Art. 1(1C. /f t%o or more ersons #ave a ointed an agent for a common transaction or &ndertaking$ t#ey s#all be solidarily liable to t#e agent for all t#e conseG&ences of t#e agency. 01A@11 Art. 1(1". :#en t%o ersons contract %it# regard to t#e same t#ing$ one of t#em %it# t#e agent and t#e ot#er %it# t#e rinci al$ and t#e t%o contracts are incom atible %it# eac# ot#er$ t#at of rior date s#all be referred$ %it#o&t rej&dice to t#e rovisions of Article 1CDD. 0n1 Art. 1(1A. /n t#e case referred to in t#e receding article$ if t#e agent #as acted in good fait#$ t#e rinci al s#all be liable in damages to t#e t#ird erson %#ose contract m&st be rejected. /f t#e agent acted in bad fait#$ #e alone s#all be res onsible. 0n1 Art. 1(1!. ,#e rinci al is not liable for t#e ex enses inc&rred by t#e agent in t#e follo%ing cases. 011 /f t#e agent acted in contravention of t#e rinci alKs instr&ctions$ &nless t#e latter s#o&ld %is# to avail #imself of t#e benefits derived from t#e contractE 021 :#en t#e ex enses %ere d&e to t#e fa&lt of t#e agentE 0@1 :#en t#e agent inc&rred t#em %it# kno%ledge t#at an &nfavorable res&lt %o&ld ens&e$ if t#e rinci al %as not a%are t#ereofE 0D1 :#en it %as sti &lated t#at t#e ex enses %o&ld be borne by t#e agent$ or t#at t#e latter %o&ld be allo%ed only a certain s&m. &e Ca tro ). CA, @$A SC!A %0C (I3Y) Sta. !omana ). Im.erio, #B SC!A %2B (I3Y) I3. A. 2ode o' E0tin4ui 1ment Arti*-e #9#9, #920 (I3Y)

Art. 1(1(. Agency is exting&is#ed. 011 By its revocationE 021 By t#e %it#dra%al of t#e agentE 0@1 By t#e deat#$ civil interdiction$ insanity or insolvency of t#e rinci al or of t#e agentE 0D1 By t#e dissol&tion of t#e firm or cor oration %#ic# entr&sted or acce ted t#e agencyE 0C1 By t#e accom lis#ment of t#e object or &r ose of t#e agencyE 0"1 By t#e ex iration of t#e eriod for %#ic# t#e agency %as constit&ted. 01A@2a1 Art. 1(20. ,#e rinci al may revoke t#e agency at %ill$ and com el t#e agent to ret&rn t#e doc&ment evidencing t#e agency. -&c# revocation may be ex ress or im lied. Pere5 ). PN/, #C SC!A $@@ (I3Y)

11@

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
/i*o- Sa)in4 and Loan A 'arc# @1$ 1(!( 'elencio?3errera$ *. o*. ) CA (GEN) ,EL&> ;2. ,#e sale roscribed by a s ecial o%er to mortgage &nder Article 1!A( is a vol&ntary and inde endent contract$ and not an a&ction sale res&lting from extraj&dicial foreclos&re$ %#ic# is reci itated by t#e defa&lt of a mortgagor. Absent t#at defa&lt$ no foreclos&re res&lts. ,#e sti &lation granting an a&t#ority to extraj&dicially foreclose a mortgage is an ancillary sti &lation s& orted by t#e same ca&se or consideration for t#e mortgage and forms an essential or inse arable art of t#at bilateral agreement ,#e o%er to foreclose is not an ordinary agency t#at contem lates excl&sively t#e re resentation of t#e rinci al by t#e agent b&t is rimarily an a&t#ority conferred & on t#e mortgagee for t#e latterKs o%n rotection. ,#at o%er s&rvives t#e deat# of t#e mortgagor. ,#e rig#t of t#e mortgagee bank to extraj&dicially foreclose t#e mortgage after t#e deat# of t#e mortgagor *&an de *es&s$ acting t#ro&g# #is attorney?in?fact$ *ose de *es&s$ did not de end on t#e a&t#ori6ation in t#e deed of mortgage exec&ted by t#e latter. ,#at rig#t existed inde endently of said sti &lation and is clearly recogni6ed in -ection A$ 4&le !" of t#e 4&les of Co&rt$ %#ic# grants to a mortgagee t#ree remedies t#at can be alternatively &rs&ed in case t#e mortgagor dies$ to %it. 011 to %aive t#e mortgage and claim t#e entire debt from t#e estate of t#e mortgagor as an ordinary claimE 021 to foreclose t#e mortgage j&dicially and rove any deficiency as an ordinary claimE and 0@1 to rely on t#e mortgage excl&sively$ foreclosing t#e same at any time before it is barred by rescri tion$ %it#o&t rig#t to file a claim for any deficiency. /t matters not t#at t#e a&t#ority to extraj&dicially foreclose %as granted by an attorney?in?fact and not by t#e mortgagor ersonally. ,#e sti &lation in t#at regard$ alt#o&g# ancillary$ forms an essential art of t#e mortgage contract and is inse arable t#erefrom. ;o creditor %ill agree to enter into a mortgage contract %it#o&t t#at sti &lation intended for its rotection. /arretto ). Santa 2arina, 20 P1i- AA0 (2AI) &io-o a ). CA, #@0 SC!A @B0 F !(G &anon ). /rimo, AA P1i- #@@, u.ra 97-ie ). 2arine Nationa- /an:, A2 P1i- #@@ F "(FF Se)i--a ). CA, #%0 SC!A #C#, u.ra 3a-en5ue-a ). CA, #90 SC!A # F !EG F-orentino ). Sandi4an8a7an, 202 SC!A @09 FEA!LA C2S Lo44in4 ). CA, 2## SC!A @CA, u.ra 3a-era ). 3e-a *o, B# P1i- %9B F 6ANCES 'arc# 1@$ 1(2! *. Milla?4eal

FAC"S> *&an de *es&s %as t#e o%ner of a arcel of land in ;aga City. 3e exec&ted a - ecial )o%er of Attorney in favor of #is son$ *ose de *es&s. I,o negotiate$ mortgage my real ro erty in any bank eit#er rivate or &blic entity referably in t#e Bicol -avings Bank$ ;aga City$ in any amo&nt t#at may be agreed & on bet%een t#e bank and my attorney?in?fact.I *ose de *es&s obtained a loan of )20$000 from etitioner bank. ,o sec&re ayment$ #e exec&ted a deed of mortgage on t#e real ro erty referred to in t#e - ecial )o%er of Attorney. ,#en$ *&an de *es&s died. *ose failed to ay t#e loan. 3ence t#e bank extraj&dicially foreclosed t#e mortgage. /n t#e s&bseG&ent &blic a&ction$ t#e mortgaged ro erty %as sold to t#e bank as t#e #ig#est bidder to %#om a )rovisional Certificate of -ale %as iss&ed. )rivate res ondents failed to redeem t#e ro erty %it#in one year from t#e date of t#e registration of t#e )rovisional Certificate of -ale. 3ence$ a 7efinite Certificate of -ale %as iss&ed in favor of t#e bank. ,#ey negotiated %it# t#e bank for t#e re &rc#ase of t#e ro erty. B&t no agreement %as reac#ed. ,#e bank s&bseG&ently sold t#e ro erties to t#ird arties. )rivate res ondents filed a Com laint %it# t#e C+/ of ;aga City for t#e ann&lment of t#e foreclos&re sale or for t#e re &rc#ase by t#em of t#e ro erty. /t dismissed t#e case$ r&ling t#at t#e title of t#e bank over t#e mortgaged ro erty #ad become absol&te & on t#e iss&ance and registration of t#e said deed in its favor. CA reversed t#e r&ling of t#e C+/. /t a lied Article 1!A( and stated t#at since t#e s ecial o%er to mortgage granted to *ose de *es&s did not incl&de t#e o%er to sell$ t#e foreclos&re roceedings and a&ction sale #eld %ere n&ll and void beca&se t#e - ecial )o%er of Attorney given by *&an de *es&s to *ose de *es&s %as merely to mortgage #is ro erty$ and not to extraj&dicially foreclose t#e mortgage and sell t#e mortgaged ro erty in t#e said extraj&dicial foreclos&re. ,#e bank s#o&ld #ave resorted to j&dicial foreclos&re. ISSUE> :2; t#e agent?son exceeded t#e sco e of #is a&t#ority in agreeing to a sti &lation in t#e mortgage deed t#at etitioner bank co&ld extraj&dicially foreclose t#e mortgaged ro erty.

11D

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
+acts. )laintiff a ointed defendant as #is attorney?in?fact %it# a&t#ority to manage #is ro erty consisting of &s&fr&ct of real ro erty in 'anila. /n t#e liG&idation of t#e acco&nts made my defendant$ laintiff %as revealed to o%e defendant )1100. 'is&nderstanding arose bet%een t#em$ t#&s t#e defendant bro&g#t s&it against t#e laintiff. *&dgment %as rendered in favor of defendant. ,#e s#eriff t#en levied & on t#e laintiffKs rig#t of &s&fr&ct$ sold it at &blic a&ction and adj&dicated it to t#e defendant in ayment of all of #is claim. )laintiff sold #is rig#t of redem tion to a erson b&t recovered t#e same after some time. After %#ic#$ #is rig#t of redem tion %as sold by t#e s#eriff at a &blic a&ction to Mallejo d&e to j&dgment rendered against laintiff in anot#er civil case. Mallejo t#en sold t#is rig#t to defendant Melasco. )laintiff t#en filed a com laint against Melasco alleging t#at t#e sale of t#e rig#t to redem tion to Melasco %as n&ll and void since Melasco %as still #is agent$ t#ere being no ex ress ren&nciation. 4&ling. C+/ O dismissed com laintE no rig#t of action. /ss&e. :2; t#e agency %as terminated des ite lack of ex ress ren&nciation Y>9-b 39=7. :#en t#e agent filed a com laint against #is rinci al for recovery of a s&m of money arising from t#e liG&idation of t#e acco&nts bet%een t#em in connection %it# t#e agency$ +ederico Malera co&ld not #ave &nderstood ot#er%ise t#an t#at 'ig&el Melasco reno&nced t#e agencyE beca&se #is act %as more ex ressive t#an %ords and co&ld not #ave ca&sed any do&bt. ,#e fact t#at an agent instit&tes an action against #is rinci al for t#e recovery of t#e balance in #is favor res&lting from t#e liG&idation of t#e acco&nts bet%een t#em arising from t#e agency$ and renders and final acco&nt of #is o erations$ is eG&ivalent to an ex ress ren&nciation of t#e agency$ and terminates t#e j&ridical relation bet%een t#em. 7is osition. *&dgment a /. ealed from affirmed. agency from t#e day on %#ic# notice t#ereof %as given to t#e former agent$ %it#o&t rej&dice to t#e rovisions of t#e t%o receding articles. 9ffect of revocation in relation to t#ird ersons.

1.

2.

A#ent authori$ed to contract with specified persons 3!>5!4 H ,#e reason for t#e la% is obvio&s. -ince t#e t#ird ersons #ave been made to believe by t#e rinci al t#at t#e agent is a&t#ori6ed to deal %it# t#em$ t#ey #ave a rig#t to res&me t#at t#e re resentation contin&es to exist in t#e absence of notification by t#e rinci al. 2f co&rse$ notice is not reG&ired if t#e t#ird ersons already kno% of t#e revocation. A#ent authori$ed to contract with public in #eneral O /n case t#e agent #as general o%ers 0as %#en t#e agent #as been a ointed to manage a b&siness1$ innocent t#ird ersons dealing %it# t#e agent %ill not be rej&diced b t#e revocation before t#ey #ad kno%ledge t#ereof. /n t#is case$ #o%ever$ t#e fact t#at t#e revocation %as advertised in a ne%s a er of general circ&lation %o&ld be s&fficient %arning to t#ird ersons.

8nder Article 1(21$ t#e notice of revocation m&st be ersonalE &nder Article 1(22$ it may be ersonal. 4evocation by a ointment of ne% agent.

1.

,mplied revocation of previous a#ency. O ,#ere is im lied revocation of t#e revio&s agency %#en t#e rinci al a oints a ne% agent for t#e same b&siness or transaction rovided t#ere is no incom atibility. B&t t#e revocation does not become effective as bet%een t#e rinci al and t#e agent &ntil it is in some %ay comm&nicated to t#e latter. ,#ere is no im lied revocation %#ere t#e a ointment of anot#er agent is not incom atible %it# t#e contin&ation of a like a&t#ority in t#e first agent$ or t#e first agent is not given notice of t#e a ointment of t#e ne% agent.

Arti*-e #92#, #922, #92@ P ALAIN

Art. 1(21. /f t#e agency #as been entr&sted for t#e &r ose of contracting %it# s ecified ersons$ its revocation s#all not rej&dice t#e latter if t#ey %ere not given notice t#ereof. 01A@D1 Art. 1(22. /f t#e agent #ad general o%ers$ revocation of t#e agency does not rej&dice t#ird ersons %#o acted in good fait# and %it#o&t kno%ledge of t#e revocation. ;otice of t#e revocation in a ne%s a er of general circ&lation is a s&fficient %arning to t#ird ersons. 0n1 Art. 1(2@. ,#e a ointment of a ne% agent for t#e same b&siness or transaction revokes t#e revio&s

2.

"ubstitution of counsel of record. O ;o s&bstit&tion of co&nsel of record is allo%ed &nless t#e follo%ing essential reG&isites of a valid s&bstit&tion of co&nsel conc&r. a. ,#ere m&st be a %ritten reG&est for s&bstit&tionE b. /t m&st be filed %it# t#e %ritten consent of t#e clientE c. /t m&st be %it# t#e %ritten consent of t#e attorney to be s&bstit&tedE and

11C

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
d. /n case$ t#e consent of t#e attorney to be s&bstit&ted cannot be obtained$ t#ere m&st be at least a roof of notice$t#at t#e motion for s&bstit&tion %as served on #im in t#e manner rescribed by t#e 4&les of Co&rt. Lu tan ). CA, 2%% SC!A %$@, u.ra !ammani ). CA, #9% SC!A C@# P ALAIN Centra- Suret7 ) ,od4e (6ESSA) +acts. )rior to *an&ary 1C$ 1(CD$ lots #ad been sold by C. ;. 3odges to Micente '. =ayson$ for t#e s&m of )D@$000.(0$ ayable on installments. As of *an&ary 1C$ 1(CD$ t#e o&tstanding balance of =aysonKs debt$ after ded&cting t#e installments aid by #im rior t#ereto$ amo&nted to )1C$C1".00. /n order t#at #e co&ld &se said lots as sec&rity for a loan #e intended to a ly from a bank$ =ayson ers&aded 3odges to exec&te in #is favor a deed of absol&te sale over t#e ro erties$ %it# t#e &nderstanding t#at #e %o&ld &t & a s&rety bond to g&arantee t#e ayment of said balance. Accordingly$ =ayson exec&ted$ in favor of 3odges$ a romissory note for )1C$C1".00$ %it# interest t#ereon at t#e rate of 1N er mont#$ and t#e s&m of )1$CC1."0$ for attorneyKs fees and costs$ in case of defa&lt in t#e ayment of t#e rinci al or interest of said note. ,o g&arantee t#e same$ on *an&ary 2@$ 1(CD$ t#e etitioner t#ro&g# t#e manager of its branc# office in /loilo$ 'rs. 4osita 'esa$ exec&ted in favor of 3odges t#e s&rety bond$ %#ic# %as good for 12 mont#s from t#e date t#ereof. :#en =ayson defa&lted in t#e disc#arge of #is aforesaid obligation$ 3odges demanded ayment from t#e etitioner$ %#ic#$ des ite re eated extensions of time granted t#ereto$ at its reG&est$ failed to #onor its commitments &nder t#e s&rety bond. 2n 2ctober 2D$ 1(CC$ 3odges commenced$ t#e resent action against =ayson and etitioner #erein$ to recover from t#em$ jointly and severally$ t#e s&ms of )1A$!2".0!$ re resenting t#e rinci al and interest d&e & to said date$ and )1$CC1."0$ as attorneyKs fees. 3aving failed to file its ans%er %it#in t#e reglementary eriod$ t#e etitioner %as$ on *an&ary 1!$ 1(C"$ declared in defa&lt. :#en t#e case %as called for trial$ insofar as =ayson %as concerned$ t#e latter did not a ear$ and 3odges %as allo%ed to introd&ce #is evidence. ,#ereafter$ said motion %as denied$ and & on resentation of t#e evidence of 3odges against #erein etitioner$ j&dgment %as rendered against t#e latter as rayed for in t#e com laint. ,#ere& on$ etitioner filled a motion for reconsideration and a motion for relief &nder 4&le @!. 4,C later set aside its decision against t#e etitioner and admitted its ans%er$ attac#ed to t#e motion to set aside t#e order of defa&lt. /n its ans%er$ etitioner disclaimed liability &nder t#e s&rety bond in G&estion$ & on t#e gro&nd 0a1 t#at t#e same is n&ll and void$ it #aving been iss&ed by 'rs. 4osita 'esa after #er a&t#ority t#erefor #ad been %it#dra%n on 'arc# 1C$ 1(C2E 0b1 t#at even &nder #er original a&t#ority 'rs. 'esa co&ld not iss&e s&rety bonds in excess of )!$000.00 %it#o&t t#e a roval of etitionerKs main office %#ic# %as not given to t#e s&rety bond in favor of 3odgesE and 0c1 t#at t#e resent action is barred by t#e rovision in t#e s&rety bond to t#e effect t#at all claims and actions t#ereon s#o&ld be filed %it#in t#ree 0@1 mont#s from t#e date of its ex iration on *an&ary 2@$ 1(CC 4,C. Central -&rety ordered to ay 3odges )!000 3odges a ealed insofar as limiting #is a%ard to )!000 and & on t#e gro&nd t#at t#e trial co&rt #ad erred in #olding etitioner liable &nder a contract entered into by its agent in excess of #er a&t#ority CA. etitioner %as liable on a bond iss&ed by an agent etitioner #as a ealed to -C$ alleging t#at t#e CA #as erred in finding t#at etitioner %as liable on a bond iss&ed by an agent %#ose a&t#ority #ad already been %it#dra%n and revoked 0t#is is redicated & on t#e fact t#at rior to %#en t#e s&rety bond involved in t#is case %as exec&ted$ etitioner #erein #ad %it#dra%n t#e a&t#ority of its branc# manager 'rs. 4osita 'esa$ to iss&e s&rety bonds1

/ss&es. 1. :2; t#e s&rety bond iss&ed by 'esa is valid 2. :2; Article 1(22 is a licable 3eld. 1. >9-aid s&rety bond is valid. /n t#e first lace$ t#ere a ears to be no 1o?in4 t1at t1e re)o*ation o' aut1orit7 ?a made :no?n to t1e .u8-i* in 4enera- 87 .u8-i*ation, nor ?a ,od4e noti'ied o' u*1 re)o*ation de .ite t1e 'a*t t1at 1e ?a a re4u-ar *-ient o' t1e 'irm. -econdly$ some s&rety bonds iss&ed by 'rs. 'esa in favor of 3odges after #er a&t#ority #ad allegedly been c&rtailed$ %ere #onored by t#e Central -&rety des ite t#e fact t#at t#ese %ere not re orted to t#e

4,C. rendered a artial decision against =ayson 0 etitioner #aving$ in t#e meantime$ filed a motion to set aside t#e order of defa&lt$ %#ic# motion %as still ending resol&tion1

11"

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
main office at t#e time of t#eir iss&ance. ,#ese acco&nts %ere aid and by t#ese acts$ Central -&rety ratified 'rs. 'esaKs &na&t#ori6ed acts and as s&c# it is no% esto ed from setting fort# 'rs. 'esaKs lack of a&t#ority to iss&e s&rety bonds. It 1a 8een 1e-d t1at a-t1ou41 t1e a4ent ma7 1a)e a*ted 8e7ond t1e *o.e o' 1i aut1orit7, or ma7 1a)e a*ted ?it1out aut1orit7 at a--, t1e .rin*i.a- ma7 7et u8 eIuent-7 ee 'it to re*o4ni5e and ado.t t1e a*t a 1i o?n. !ati'i*ation 8ein4 a matter o' a ent to and a..ro)a- o' t1e a*t a done on a**ount o' t1e .er on rati'7in4 an7 ?ord or a*t ?1i*1 1o? u*1 a ent and a..ro)a- are ordinari-7 u''i*ient. 'oreover$ t#e re-o*ation o' a4en*7 doe not .re=udi*e t1ird .er on ?1o a*ted in 4ood 'ait1 ?it1out :no?-ed4e o' t1e re)o*ation. 2. >9/ndeed$ Article 1(22 of o&r Civil Code rovides. /f t#e agent #ad general o%ers$ revocation of t#e agency does not rej&dice t#ird ersons %#o acted in good fait# and %it#o&t kno%ledge of t#e revocation. ;otice of t#e revocation in a ne%s a er of general circ&lation is a s&fficient %arning to t#ird ersons. /t is not dis &ted t#at etitioner #as not ca&sed to be &blis#ed any notice of t#e revocation of 'rs. 'esaKs a&t#ority to iss&e s&rety bonds on its be#alf$ not%it#standing t#e fact t#at t#e o%ers of 'rs. 'esa$ as its branc# manager in /loilo$ %ere of a general nat&re$ for s#e #ad excl&sive a&t#ority$ to re resent etitioner #erein$ not %it# a artic&lar erson$ b&t %it# t#e &blic in general$ Iin all t#e negotiations$ transactions$ and b&siness in %#erein t#e Com any may la%f&lly transact or engage on s&bject only to t#e restrictions s ecified in t#eir agreement$ co y of %#ic# %as attac#ed to etitionerKs ans%er. Contrary to etitionerKs claim$ Arti*-e #922 a..-ie ?1ene)er an a4ent 1a 4enera- .o?er , not mere-7 ?1en t1e .rin*i.a- 1a .u8-i 1ed t1e ame, a art from t#e fact t#at t#e o ening of etitionerKs branc# office amo&nted to a &blication of t#e grant of o%ers to t#e manager of said office. ,#en$ again$ by #onoring several s&rety bonds iss&ed in its be#alf by 'rs. 'esa$ etitioner ind&ced t#e &blic to believe t#at s#e #ad a&t#ority to iss&e s&c# bonds. As a conseG&ence$ etitioner is no% esto ed from leading$ artic&larly against a reg&lar c&stomer t#ereof$ like 3odges$ t#e absence of said a&t#ority. &7 /un*io + Co., In*. ) (n4 Guan Can (6ESSA) +AC, 2ng 5&an Can *4. as agent of 2ng 5&an Can sells t#e rice mill and camarin for 1@$000 and gives as o%er of attorney dated 2a7 2@, #92$. A co y of t#is &blic instr&ment is attac#ed to t#e deed and recorded %it# t#e deed in t#e office of t#e 4egistry of 7eeds in Ca i6 7y B&ncio 0as creditor1 claims t#at t#at t#e ro erty belongs to its j&dgment creditor$ 2ng 5&an Can$ t#&s can be s&bject to exec&tion. 7efendants *&an ,ong and )&an 5iok 9ng claim as o%ner and lessee of t#e o%ner by virt&e of a deed dated 6u-7 @#, #9@#$ by 2ng 5&an Can$ *r. C+/ Ca i6 #eld t#at t#e deed %as invalid and t#at t#e ro erty %as s&bject to t#e exec&tion %#ic# #as been levied on said ro erties by t#e j&dgment creditor of t#e o%ner. *&an ,ong and )&a 5iok a ealed.

/--89. :2; t#e deed of *&ly @1$ 1(@1 is valid. 39=7. N(. ,#e 1(2! o%er of attorney is not a general o%er of attorney b&t a limited one and does not give t#e ex ress o%er to alienate t#e ro erties in G&estion. )etioners claim t#at t#e t#at t#is defect is c&red by 9x#.1$ %#ic# &r orts to be a general o%er of attoney given to t#e same agent in 1(20. "1e ma:in4 and a**e.tin4 o' a ne? .o?er o' attorne7, ?1et1er it en-ar4e or de*rea e t1e .o?er an a4ent under a .rior .o?er o' attorne7, mu t 8e 1e-d to u..-ant and re)o:e t1e -atter .ro)ided t1ere i INC(NSIS"ENCY or in*om.ati8i-it7. /f t#e ne% a ointment %it# t#e limited o%ers does not revoke t#e general o%er of attorney$ t#e exec&tion of t#e second o%er of attorney %o&ld be a mere f&tile gest&re. ,#e title of 2ng 5&an Can not #aving been divested by t#e so?called deed of *&ly @1$ 1(@1$ #is ro erties are s&bject to attac#ment and exec&tion. Gar*ia ). de 2an5ano, @9 P1i- BCC P ANGELA 1(1( 'oir$ L. +AC, ;arciso gave a general o%er of attorney to #is son$ Angel =. 'an6ano on t#e (t# of +ebr&ary$ 1(10$ and on t#e 2Ct# of 'arc# a second general o%er?of?attorney to #is %ife$ *osefa -amson.

Angel$ acting &nder #is 5)A sold ;arcisoFs #alf interest to t#e steamer "an Nicolas$ and mortgaged @ arcels of land in Antimonan to *&an 5arcia. 8 on ;arcisoFs deat#$ *osefa %as named administratrix to ;arcisoFs ro erties.

11A

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
5arcia bro&g#t action against ;arcisoFs 9state to foreclose t#e mortgage. /--89- Qas raised in Losefa0s counterclaimI 1. :2; t#e o%er of attorney of *osefa revoked t#at of Angel< 2. :2; AngelFs 5)A a&t#ori6e #er to sell t#e boat < 39=7L4A,/2. 1. N( Art. 1A@C Yno% 1(2@aZ rovides. <he appointment of a new a#ent for the same business produces a revocation of the previous a#ency from the day on which notice was #iven to the former a#ent, e ceptin# the provisions of the ne t precedin# article. ,#ere is no roof in t#e record t#at t#e first agent$ t#e son$ kne% of t#e o%er?of?attorney to #is mot#er. /t %as necessary for t#e defendants to rove t#at t#e son #ad notice of t#e second o%er?of?attorney. As t#ey #ave not done so$ and it m&st be considered t#at Angel =. 'an6ano %as acting &nder a valid o%er?of? attorney from #is fat#er %#ic# #ad not been legally revoked on t#e date of t#e sale of t#e #alf interest in t#e steamer to t#e 5arcia. 2. YES. ,#e o%er?of?attorney does not ex ressly state t#at t#e agent may sell t#e boat$ b&t a o%er so f&ll and com lete a&t#oring t#e sale of real ro erty$ m&st necessarily carry %it# it t#e rig#t to sell a #alf interest in a small boat. ,#e record f&rt#er s#o%s t#e sale %as necessary in order to get money or a credit %it#o&t %#ic# it %o&ld be im ossible to contin&e t#e b&siness %#ic# %as being cond&cted in t#e name of ;arciso =. 'an6ano and for #is benefit. SantanaFCru5 ). CA, @%# SC!A B20 F 6ESSA +acts. *&anson?C&i6on$ re resenting rivate res ondents 0t#e #eirs of t#e late Maleriana 'arilao1$ filed against etitioner and Conce cion$ a Com laint for 4evivalL9xec&tion of *&dgment After =a se of +ive >ears 4,C.in favor of t#e laintiffs and against t#e defendants +rancisco -antana and t#e 3eirs of Catalina 4eyes$ ordering t#e latter to reconvey in favor of t#e laintiffs$ as 3eirs of Maleriana 'arilao CA. affirmed in toto etitioner filed an 2mnib&s 'otion$ raying t#at t#e Com laint be dismissed on t#e gro&nd t#at it failed to state a ca&se of action$ t#at it %as barred by t#e stat&te of limitations$ and t1at it 8e e0.un4ed 'rom t1e re*ord o' t1e *a e 'or 1a)in4 8een 'i-ed 87 a .er on not aut1ori5ed to .ra*ti*e -a? 4,C. denied modified. 4egister of 7eeds is ordered to cancel t#e ,ransfer Certificate of ,itle and all t#e res&ltant titles derived t#erein and in lie& t#ereof$ t#e corres onding ne% transfer certificates of title be iss&ed in t#e name of t#e etitioners etitioner filed a )etition for Certiorari and )ro#ibition %it# a )rayer for t#e /ss&ance of a ,em orary 4estraining 2rder %it# t#e Co&rt of A eals alleging t#at t#e co&rt a Auo acted %it# grave ab&se of discretion CA. granted etition s&bseG&ently reversed and set aside 4,CFs orders Atty. *&lian -. >a %#o filed #is a earance as co&nsel for rivate res ondents$ also filed a 'otion for 4econsideration$ %#ic#$ among ot#ers$ stated t#at rivate res ondents$ some of %#om #ave died and are s&cceeded by t#eir #eirs$ #ad revoked t#e a&t#ority of t#eir Attorney?in?+act$ )atrocinia *. C&i6on$ to re resent t#em CA received anot#er 'otion for 4econsideration filed by t#e co&nsel of record$ Atty. 4a&l A. 'ora$ for rivate res ondents etitioner filed #er 2 osition stating among ot#ers$ t#at s#e received t%o 021 motions for reconsideration of rivate res ondents filed by different co&nsels$ and t#at s#e %as bo&nd to treat Atty. 4a&l A. 'ora as rivate res ondentsK co&nsel of record as s#e #ad not received any notice of ro er s&bstit&tion of rivate res ondentsK co&nsel CA. denied t#e motion for reconsideration filed by Atty 'ora s&bseG&ently granted

/ss&es. 1. :2; Atty 'ora may be s&bstit&ted by Atty. *&lian -. >a merely from t#e filing of a formal a earance by t#e latter 2. :2; CA erred in granting t#e motion for reconsideration of Atty 'ora 3eld. 1. ,#e rivate res ondents filed %it# t#e CA 2 se arate motions for reconsideration t#ro&g# 2 co&nsels$ namely$ Atty. 4a&l A. 'ora and Atty. *&lian -. >a . ,#e motion for reconsideration filed by Atty. >a stated$ among ot#ers$ t#at d&e to acts inimical to t#eir interests$ t#e rivate res ondents #ad revoked t#e a&t#ority of Attorney?in?+act )atrocinia *&anson?C&i6on to re resent t#em and t#ro&g# t#eir ne%ly designated Attorneys?in?+act decided to take over from #er t#e cond&ct of t#e instant case and to retain Atty. *&lian -. >a as t#eir co&nsel considering t#at Atty. 4a&l A. 'ora

11!

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
%as t#e ersonal co&nsel of )atrocinia *&anson? C&i6on.CA stated t#at It#ere is no s#o%ing t#at all t#e rivate res ondents #ave revoked t#e a&t#ority granted to )atrocinia *&anson?C&i6on.I Be t#at as it may$ a revocation of a&t#ority of )atrocinia *&anson?C&i6on as Attorney?in?+act of rivate res ondents #eirs of Maleriana 'arilao$ %#o are recogni6ed as t#e real arties in interest in t#is case$ s#o&ld not affect Att7. !au- A. 2ora$ %#o remain *oun e- o' re*ord o' .ri)ate re .ondent a8 ent a )a-id u8 titution o' *oun e-. Att7. !au- A. 2ora ma7 not 8e .re umed u8 tituted 87 Att7. 6u-ian S. Ya. mere-7 'rom t1e 'i-in4 o' a 'orma- a..earan*e 87 t1e -atter. No u8 titution o' *oun e- o' re*ord i a--o?ed un-e t1e 'o--o?in4 e entia- reIui ite o' a )a-id u8 titution o' *oun e- *on*ur> (#) t1ere mu t 8e a ?ritten reIue t 'or u8 titutionD (2) it mu t 8e 'i-ed ?it1 t1e ?ritten *on ent o' t1e *-ientD (@) it mu t 8e ?it1 t1e ?ritten *on ent o' t1e attorne7 to 8e u8 titutedD and (A) in *a e t1e *on ent o' t1e attorne7 to 8e u8 tituted *annot 8e o8tained, t1ere mu t 8e at -ea t a .roo' o' noti*e t1at t1e motion 'or u8 titution ?a er)ed on 1im in t1e manner .re *ri8ed 87 t1e !u-e o' Court. /n t#e -& lemental 'otion for 4econsideration filed by Atty. 4a&l A. 'ora %it# t#e Co&rt of A eals$ #e stated t#at t#e #eirs of Maleriana 'arilao never dismissed #im nor re laced #im as t#eir co&nsel$ t#&s$ t#e a earance of Atty. *&lian -. >a %as im ro er. /n etitionerKs 2 osition$ s#e stated t#at s#e received 2 motions for reconsideration from rivate res ondents filed by different co&nsels$ and %as bo&nd to treat Atty. 4a&l A. 'ora as rivate res ondentsK co&nsel of record as s#e #ad not received any notice of ro er s&bstit&tion of rivate res ondentsK co&nsel. In t1e a8 en*e o' *om.-ian*e ?it1 t1e e entia- reIuirement 'or )a-id u8 titution o' t1e *oun e- o' re*ord, Att7. 2ora, t1e *ourt *an a'e-7 .re ume t1at 1e i re .on i8-e 'or t1e *ondu*t o' t1e *a e. ,#e r&le is intended to ens&re t#e orderly dis osition of cases. 2. N(. CA did not err in acting on t#e motion for reconsideration of rivate res ondents$ %#ic# %as seasonably filed t#ro&g# t#eir co&nsel of record$ Atty. 4a&l A. 'ora and received by t#e Co&rt. /n fact$ t#e res ondent co&rt s#o&ld #ave acted only on t#e said motion for reconsideration. ,#e inadvertence on t#e art of t#e res ondent co&rt and t#e delay in se%ing t#e original co y of said motion for reconsideration in t#e rollo of t#e case s#o&ld not rej&dice t#e legal interest of rivate res ondents %#o %ere &nder t#e ro er re resentation and c#arge of t#eir co&nsel of record$ Atty. 4a&l A. 'ora. ,o set t#ings straig#t$ inasm&c# as Att7. Ya. 1ad no aut1orit7 to re.re ent .ri)ate re .ondent , a8 ent a )a-id u8 titution o' t1eir *oun e-, t1e motion 'or re*on ideration 'i-ed 87 1im i deemed a mere *ra. o' .a.er. C. Art*i-e #92A, #92B F !EK

Art. 1(2D. ,#e agency is revoked if t#e rinci al directly manages t#e b&siness entr&sted to t#e agent$ dealing directly %it# t#ird ersons. 0n1 Art. 1(2C. :#en t%o or more rinci als #ave granted a o%er of attorney for a common transaction$ any one of t#em may revoke t#e same %it#o&t t#e consent of t#e ot#ers C2S Lo44in4 ). CA ("(PE) 1((2 *. ;ocon +acts. )etitioner C'- is a forest concessionaire engaged in t#e logging b&siness$ %#ile rivate res ondent 74AC24 is engaged in t#e b&siness of ex orting and selling logs and l&mber. 2n A&g&st 2!$ 1(CA$ C'- and 74AC24 entered into a contract of agency %#ereby t#e former a ointed t#e latter as its excl&sive ex ort and sales agent for all logs t#at t#e former may rod&ce$ for a eriod of five 0C1 years. 2ne of t#e rovisions indicated t#at 74AC24 %as to #andle all negotiations. " mont#s before t#e CoAgency %as abo&t to ex ire C'-F resident %ent to ,okyo and fo&nd o&t t#at 74AC24 sold C'- logs t#ro&g# -#inko ,rading and earned a commission of U1 er 1000 bd. +t. of logs. C'- claimed t#at t#is commission aid to -#inko %as in violation of t#e agreement and t#at it 0C'-1 is entitled to t#is amo&nt as art of t#e roceeds of t#e sale of t#e logs. C'contended t#at since 74AC24 #ad been aid t#e CN commission &nder t#e agreement$ it is no longer entitled to t#e additional commission aid to -#inko as t#is tantamo&nt to 74AC24 receiving do&ble com ensation for t#e services it rendered. C'- later s#i ed and sold directly to *a anes b&yers %it#o&t t#e #el of 74AC24. 74AC24 co&nterclaims for t#e commissions on t#ese transactions. CA fo&nd no evidence t#at -#inko collected t#e commissions /ss&e. 1. :o; -#inko received t#e commissions 2. :o; 74AC24 is entitled to t#e commissions on t#e 7irect -ales of C'- to *a anese b&yers 3eld.

11(

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
1. )etition &nmeritorio&s$ no evidence. ,#e finding of fact %as only based on a s&mmary from C'- itself. 'oreover$ even if it %as s#o%n t#at -#inko did in fact receive t#e commissions in G&estion$ C'- is not entitled t#ereto since t#ese %ere a arently aid by the buyers to -#inko for arranging t#e sale. ,#is is t#erefore not art of t#e gross sales of C'-Ks logs. 2. ;o. :e find merit in C'-Ks contention t#at t#e a ellate co&rt erred in #olding t#at 74AC24 %as entitled to its commission from t#e sales made by C'- to *a anese firms. ,#e rinci al may revoke a contract of agency at %ill$ and s&c# revocation may be ex ress$ or im lied$ and may be availed of even if t#e eriod fixed in t#e contract of agency as not yet ex ired. As t#e rinci al #as t#is absol&te rig#t to revoke t#e agency$ t#e agent can not object t#eretoE neit#er may #e claim damages arising from s&c# revocation$ &nless it is s#o%n t#at s&c# %as done in order to evade t#e ayment of agentKs commission. /n t#e case at bar$ C'- a ointed 74AC24 as its agent for t#e sale of its logs to *a anese firms. >et$ d&ring t#e existence of t#e contract of agency$ 74AC24 admitted t#at C'- sold its logs directly to several *a anese firms. ,#is act constit&ted an im lied revocation of t#e contract of agency &nder Article 1(2D of t#e Civil Code$ %#ic# rovides. Art. 1(2D ,#e agency is revoked if t#e rinci al directly manages t#e b&siness entr&sted to t#e agent$ dealing directly %it# t#ird ersons. -ince t#e contract of agency %as revoked by C'%#en it sold its logs to *a anese firms %it#o&t t#e intervention of 74AC24$ t#e latter is no longer entitled to its commission from t#e roceeds of s&c# sale and is not entitled to retain %#atever moneys it may #ave received as its commission for said transactions. ;eit#er %o&ld 74AC24 be entitled to collect damages from C'-$ since damages are generally not a%arded to t#e agent for t#e revocation of t#e agency$ and t#e case at bar is not one falling &nder t#e exce tion mentioned$ %#ic# is to evade t#e ayment of t#e agentKs commission. &. Arti*-e #92% F 2A!K FAC"S> 2ng 5&an Can$ *r. exec&ted on be#alf of t#e 2ng 5&an Can$ t#e deed covering t#e sale of a rice?mill and camarin$ in favor of b&yers %#o relied & on a 1(2! o%er of attorney attac#ed to t#e deed$ b&t %#ic# t&rned o&t %as not a general o%er of attorney b&t a limited one and YdidZ not give t#e ex ress o%er to alienate t#e ro erties in G&estion. ,#e creditors of 2ng 5&an Can so&g#t to #ave t#e sale declared void. B&t t#e b&yers$ defendants *&an ,ong and )&a 5iok 9ng claimed t#at t#ey %ere t#e o%ners and lessees of t#e ro erty. 7efendants claimed t#at t#e defect in t#e sonFs a&t#ority to sell on be#alf of t#e fat#er %as c&red by an earlier 1(20 general o%er of attorney given to t#e same agent YsonZ by t#e fat#er. ,#e C+/ of Ca i6 #eld t#at t#e deed %as invalid and t#at t#e ro erty %as s&bject to t#e exec&tion %#ic# #as been levied on t#e ro erties by t#e j&dgment creditor of t#e o%ner. ISSUE> :2; t#e deed of sale %as invalid ,EL&> >9-. ,#e sale is void. ,#e making and acce ting of a ne% o%er of attorney$ %#et#er it enlarges or decreases t#e o%er of t#e agent &nder a rior o%er of attorney$ m&st be #eld to s& lant and revoke t#e latter %#en t#e t%o are inconsistent. /f t#e ne% a ointment %it# limited o%ers does not revoke t#e general o%er of attorney$ t#e exec&tion of t#e second o%er of attorney %o&ld be a mere f&tile gest&re. -ince t#e title of 2ng 5&an Can #as not been divested by deed of sale$ #is ro erties are s&bject to attac#ment and exec&tion. Gar*ia ). de 2an5ano, @9 P1i- BCC F 2AI E. Arti*-e #92C F !(G

Art. 1(2A. An agency cannot be revoked if a bilateral contract de ends & on it$ or if it is t#e means of f&lfilling an obligation already contracted$ or if a artner is a ointed manager of a artners#i in t#e contract of artners#i and #is removal from t#e management is &nj&stifiable. Ne? 2ani-a Lum8er Co. ). !e.u8-i* F "(FF /a*a-in4 ). 2u7a, @$0 SC!A C#A F !EG Nationa- Su4ar "radin4 ). PN/, @9% SC!A B2$ F EA!LA Se)i--a, u.ra &e- !o ario ). A8ad, #0A P1i- %A$ F A//Y 1(C!E )adilla +acts.

Art. 1(2". A general o%er of attorney is revoked by a s ecial one granted to anot#er agent$ as regards t#e s ecial matter involved in t#e latter. &7 /un*io + Co., In*. ) (n4 Guan Can (GEN) 2ct. 2$ 1(@D 3&ll$ *.

120

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
)laintiffs are t#e c#ildren and #eirs of ,ib&rcio del 4osario. 7el 4osario %as a grantee of a #omestead atent in ;&eva 9cija. ,#e Certificate %as iss&e +eb 11$ 1(@A. 3e obtained a loan from )rimitivo Abad +eb 2D$ 1(@A 0remember t#e C yr ro#ibition from enc&mbrance r&le1 for )2000 at 12N a ayable 7ec 1(D1. ,#e sec&rity for t#e ayment %as t#e im rovement on t#e arcel of land. An irrevocable s ecial o%er of attorney %as also exec&ted a&t#ori6ing Abad to sell and convey t#e arcel of land. 7ecember 1(DC ,ib&rcio died leaving t#e mortgage debt &n aid. =ater$ )rimitivo sold t#e land to #is son ,eodorico Abad for )1. ,itle no% registered in ,eodoricoFs name. 7el 4osario #eirs filed s&it for recovery and ossession of t#e land. o ort&nity to take t#e necessary ste s to meet t#e sit&ation. 4ig#t of t#e agent to %it#dra%. *&st as t#e rinci al may revoke generally t#e agency at %ill$ t#e agent may like%ise reno&nce or %it#dra% from t#e agency at any time$ %it#o&t t#e consent of t#e rinci al$ even in violation of t#e latterFs contract&al rig#tsE s&bject to liability for breac# of contract or for tort.

1.

2.

/ss&e. 1. :o; )o%er of Attorney created an agency co& led %it# an interest 2. :o; t#e land %as sold validly 3eld. ;o. ,#e o%er of attorney exec&ted by t#e #omesteader in favor of Abad did not create an agency nor did it clot#e t#e agency %it# irrevocable c#aracter. A mere statement in t#e o%er of attorney t#at it is co& led %it# an interest is not eno&g#. /n %#at does s&c# interest consist m&st be stated in t#e o%er of attorney. ,#e mortgage #as not#ing to do %it# t#e o%er of attorney and may be foreclosed by t#e mortgagee & on t#e fail&re of t#e mortgagor to com ly %it# #is obligation. As t#e agency %as not co& led %it# an interest$ it %as terminated & on t#e deat# of t#e rinci al$ and t#e agent co&ld no longer validly convey t#e land. 3ence$ t#e sale %as n&ll and void. 5ranting t#at t#e )oA in G&estion %as valid it %o&ld s&bject t#e land to an enc&mbrance. 0exec&ted %it#in C yrs after iss&ance of t#e atent$ t#e same is n&ll and void.1 2a*ondra7, u.ra Co-eon4*o ). C-a.aro- , #0 SC!A BCC F 6ANCES F#. Arti*-e #92$, #929 P ALAIN

Pithout )ust cause O ,#e reason for t#e indemnity im osed by la% is t#at t#e agent fails in #is obligation and as s&c#$ #e ans%ers for losses and damages occasioned by t#e non? f&lfillment. Pith )ust cause O /f t#e agent %it#dra%s from t#e agency for a valid reason$ as %#en t#e %it#dra%al is based on t#e im ossibility of contin&ing %it# t#e agency %it#o&t grave detriment to #imself$ or is d&e to a fort&ito&s event$ t#e agent cannot be #eld liable.

2bligation of agent to contin&e to act after %it#dra%al. ,#e &r ose of t#e la% is to revent damage or rej&dice to t#e rinci al. ,#e la% reconciles t#e interests of t#e agent %it# t#ose of t#e rinci al$ and if ermits t#e %it#dra%al of t#e agent$ it is on t#e condition t#at no damage res&lts to t#e rinci al$ and if t#e agent desires to be relieved of t#e obligation of making re aration %#en #e %it#dra%s for a j&st ca&se$ #e m&st contin&e to act so t#at no inj&ry may be ca&sed to t#e rinci al. F2. Arti*-e #9@0, #9@#, #9@2 P E3A

&e-a Pena ). ,ida-4o (ANGELA) 3<his case is supra and rather complicated so ,0ll )ust include the relevant details4 ,#e CA-9 %as instit&ted by t#e #eirs of *ose 5omi6 y 7ela )eBa to recover s&ms of money from +ederico 3idalgo %#ic# #e allegedly o%es t#e estate of *ose re resenting &nremitted acco&nts d&ring t#e administration of +ederico of t#e ro erties of *ose 5omi6 y 7ela )eBa. +AC, /n 1!!A$ +ederico 3idalgo took c#arge of administration of *ose 5omi6 y 7ela )eBaFs ro erties by virt&e of a o%er of attorney exec&ted by t#e latter in favor of D agents 0+ederico incl&ded1 before #e embarked for - ain. After several years of agency$ +ederico 3idalgo %rote to *ose 5omi6 reG&esting #im to designate a erson to s&bstit&te #im in t#e

Art. 1(2!. ,#e agent may %it#dra% from t#e agency by giving d&e notice to t#e rinci al. /f t#e latter s#o&ld s&ffer any damage by reason of t#e %it#dra%al$ t#e agent m&st indemnify #im t#erefor$ &nless t#e agent s#o&ld base #is %it#dra%al & on t#e im ossibility of contin&ing t#e erformance of t#e agency %it#o&t grave detriment to #imself. 01A@"a1 Art. 1(2(. ,#e agent$ even if #e s#o&ld %it#dra% from t#e agency for a valid reason$ m&st contin&e to act &ntil t#e rinci al #as #ad reasonable

121

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
osition beca&se one of t#ose a ointed in t#e o%er of attorney #ad died and t#e ot#ers did not %is# to take c#arge of t#e administration of 5omi6F ro erties. 5omi6 did not ans%er +edericoFs letters nor did #e a rove or object to +edericoFs acco&nts nor did #e a oint or designate anot#er erson to s&bstit&te +ederico. /n 1!(D$ +ederico %as obliged to embark for - ain for #ealt# reasons. 2n re aring for #is de art&re$ #e rendered t#e acco&nts of t#e administration. +ederico also informed 5omi6 of #is intended de art&re from t#e )#ili ines and of #is t&rning over t#e administration to #is co&sin Antonio 3idalgo$ & on %#om #e conferred a 5)A. B&t beca&se #e deemed s&c# 5)A to be ins&fficient$ #e also asked 5omi6 to send a ne% -)A in favor or Antonio. :#en Antonio died$ +rancisco 3idalgo took AntonioFs lace. 5omi6 died %it#o&t #aving said anyt#ing regarding t#e s&bstit&tion of agents /--89. :2; t#ere %as valid ren&nciation of t#e agency. 39=7. YES. 8nder t#e circ&mstances of t#e case$ it is reasonable to concl&de t#at t#e agency %as d&ly terminated. Alt#o&g# +ederico did not &se t#e %ords reno&ncing t#e agency$ s&c# %ords %ere &ndo&btedly &nderstood and acce ted by t#e rinci al beca&se if t#e la se of nearly ( years & to time of rinci alFs deat#$ #e never interrogated t#e reno&ncing agent and disa roved %#at #e #ad done nor t#e o%er conferred to t#e s&bstit&ting agent. ,#e agent %#o %as obliged to leave #is c#arge for a legitimate ca&se and %#o d&ly informed #is rinci al$ is released and freed from t#e res&lts and t#e conseG&ences of t#e s&bstit&te agent it %as %it# t#e consent$ even tacit of t#e rinci al. ,#e agent is not reG&ired to sacrifice #is #ealt#$ life$ and #is o%n interests$ if it is s#o%n t#at it %as im ossible for #im to contin&e t#e disc#arge of #is d&ties. !a--o ). Fe-i0 Go C1an, u.ra /-ondeau ). Nano (/A2/I) Fa*t > An action %as bro&g#t in t#e Co&rt of +irst /nstance of 'anila to foreclose a mortgage alleged to #ave been made by t#e defendants Ag&stin ;ano and *ose Mallejo to t#e laintiff Angela Blondea&$ bearing date ;ovember C$ 1(@1$ to sec&re t#e ayment of t#e s&m of )12$000$ and covering ro erty sit&ated on Calle 5eorgia$ 'anila. ;ano$ &r orting to re resent bot# defendants$ after filing an ans%er$ %as fo&nd in contem t of co&rt. ,#e ot#er defendant MallejoFs defense %as t#at #is signat&re to t#e mortgage %as a forgery. +ollo%ing t#e trial$ j&dgment %as rendered against ;ano b&t not against Mallejo. 3ence$ t#is a eal.

I ue> 9oN t1ere ?a a )a-id mort4a4e *ontra*t e0e*uted in 'a)or o' /-ondeau. YES. ,#e &r orted signat&re of t#e defendant Mallejo to t#e mortgage %as not a forgery. /t needs to be recalled t#at t#e mortgage %as exec&ted in t#e #ome of t#e laintiffs$ and t#at of t#ose resent$ t#e rinci al laintiff Angela Blondea& and #er #&sband +ernando de la Cantera$ toget#er %it# t#e instr&mental %itness )edro *imene6 _oboli$ identified Mallejo as t#e erson %#o signed t#e doc&ment. 8 on its face$ t#e mortgage a ears to be reg&lar and to #ave been d&ly exec&ted and acce ted by Mallejo on ;ovember C$ 1(@1. 'oreover$ A#ustin Nano had possession of Lose =alle)oKs title papers. :it#o&t t#ose title a ers #anded over to ;ano %it# t#e acG&iescence of Mallejo$ a fra&d co&ld not #ave been er etrated. :#en +ernando de la Cantera$ a la%yer and t#e #&sband of Blondea&$ t#e rinci al laintiff$ searc#ed t#e registration records$ #e fo&nd t#em in d&e form$ incl&ding t#e o%er of attorney of Mallejo$ in favor of ;ano. /f t#is #ad not been so and if t#ereafter t#e ro er notation of t#e enc&mbrance co&ld not #ave been made$ Angela Blondea& %o&ld not #ave lent )12$000 to t#e defendant Mallejo. ,#e ,orrens system is intended for t#e registration of title$ rat#er t#an t#e m&niments of title. /t re resents a de art&re from t#e ort#odox rinci les of ro erty la%. 8nder t#e common la%$ if t#e retended signat&re of t#e mortgagor is a forgery$ t#e instr&ment is invalid for every &r ose and %ill ass on t#e title or rig#ts to anyone$ &nless t#e s &rio&s doc&ment is ratified and acce ted by t#e mortgagor. ,#e ,orrens Act on t#e contrary ermits a forged transfer$ %#en d&ly entered in t#e registry$ to become t#e root of a valid title in a bona fide &rc#aser. ,#e act erects a safeg&ard against a forged transfer being registered$ by t#e reG&irement t#at no transfer s#all be registered &nless t#e o%nerKs certificate %as rod&ced along %it# t#e instr&ment of transfer. An e ecuted transfer of re#istered lands placed by the re#istered owner thereof in the hands of another operates as a representation

122

AGENCY 2009 (PASCUAL)

vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain Afriends mark.eva.jessa.anj.bambi.rex.to e.
to a third party that the holder of the transfer is authori$ed to deal with the lands. :it# res ect to t#e concl&siveness of t#e ,orrens title and t#e binding force and effect of annotations t#ereon even %#en t#ro&g# a forged deed t#e land asses into t#e ossession of an innocent &rc#aser for val&e$ t#e basic r&le is fo&nd in t#e o inion delivered by 'r. C#ief *&stice Arellano in 7e la Cr&6 vs. +abie %#ic# sates t#at innocent b&yers may still #ave valid title. Co&rt mentions Margas P 'aBalac in t#eir treatise on t#e )#ili ine =and 4egistration =a% G&ote %it# a roval t#e comment of 'r. )o%ell in #is book on =and 4egistration$ section 21@. ,#e G&estion %#ic# t#e a&t#or ro o&nded %as. :#y does t#e la% say t#at t#e erson %#o #ad no title at all and only a forged deed as a color of title s#o&ld become t#e tr&e o%ner of t#e land by merely contin&ing to occ& y and enjoy t#e land %#ic# in fact does not belong to #im$ b&t %#ic# belongs to t#e victim of t#e forgery< R)&blic olicy$ ex ediency$ and t#e need of re ose and certainty as to land titles demand t#at t#e bona fide &rc#aser of a certificate of title to registered land$ %#o$ t#o&g# #e b&ys on a forged transfer$ s&cceeds in #aving t#e land registered in #is name$ s#o&ld nevert#eless #old an &nim eac#able title. R/n t#e first lace$ a forger cannot effect&ate #is forgery in t#e case of registered land by exec&ting a transfer %#ic# can be registered$ &nless t#e o%ner #as allo%ed #im$ in some %ay$ to get ossession of t#e o%nerKs certificate. .,#e Act #as erected in favor of t#e o%ner$ as a safeg&ard$ against a forged transfer being er etrated against #im$ t#e reG&irement t#at no vol&ntary transfer s#all be registered &nless t#e o%nerKs certificate is rod&ced along %it# t#e instr&ment of transfer. ,#erefore$ if t#e o%ner #as vol&ntarily or carelessly allo%ed t#e forger to come into ossession of #is o%nerKs certificate #e is to be j&dged according to t#e maxim$ t#at %#en one of t%o innocent ersons m&st s&ffer by t#e %rongf&l act of a t#ird erson t#e loss fall on #im %#o &t it into t#e o%er of t#at t#ird erson to er etrate t#e %rong. +&rt#ermore$ even if t#e forger stole t#e o%nerKs certificate$ t#e o%ner is & against no greater #ards#i t#an is ex erienced by one %#ose money or negotiable a er ayable to bearer is stolen and transferred by t#e t#ief to an innocent &rc#aser. )laintiffKs mortgage s&stained.

"errado ). CA, #@# SC!A @C# F !EK

12@