NIELSON & CO INC VS LEPANTO CONSOLIDATED MINING CO

26 SCRA 540, December 28, 1968

Zaldivar, J.
Facts:
A contract for the management and operation of mines was entered by herein petitioner
Nielson & Company, Inc. and respondent Lepanto Consolidated Mining Company.
The same was, however, terminated by the latter, contending that it has the right to
revoke and terminate the contract as it is one of agency pursuant to Article 1733 of the
Old Civil Code (Article 1920 of the New Civil Code).
Issue:
Whether the management contract is a contract of agency or a contract of lease of
services.
Held:
Article 1709 of the Old Civil Code, defining contract of agency, provides: By the
contract of agency, one person binds himself to render some service or do something
for the account or at the request of another. On the other hand, Article 1544, defining
contract of lease of service, provides: In a lease of work or services, one of the parties
binds himself to make or construct something or to render a service to the other for a
price certain. In both agency and lease of services one of the parties binds himself to
render some service to the other party. Agency, however, is distinguished from lease of
work or services in that the basis of agency is representation, while in the lease of work
or services the basis is employment. The lessor of services does not represent his
employer, while the agent represents his principal. There is another obvious distinction
between agency and lease of services. Agency is a preparatory contract, as agency
"does not stop with the agency because the purpose is to enter into other contracts."
The most characteristic feature of an agency relationship is the agent's power to bring
about business relations between his principal and third persons. "The agent is
destined to execute juridical acts (creation, modification or extinction of relations with
third parties). Lease of services contemplate only material (non-juridical) acts."
Under the contract, Nielson had agreed, for a period of five years, with the right to
renew for a like period, to explore, develop and operate the mining claims of Lepanto,
and to mine, or mine and mill, such pay ore as may be found therein and to market the
metallic products recovered therefrom which may prove to be marketable, as well as to
render for Lepanto other services specified in the contract. We gather from the contract
that the work undertaken by Nielson was to take complete charge subject at all times to
the general control of the Board of Directors of Lepanto, of the exploration and
development of the mining claims, of the hiring of a sufficient and competent staff and of

sufficient and capable laborers, of the prospecting and development of the mine, of the
erection and operation of the mill, and of the benefication and marketing of the minerals
found on the mining properties; and in carrying out said obligation Nielson should
proceed diligently and in accordance with the best mining practice. In connection with
its work Nielson was to submit reports, maps, plans and recommendations with respect
to the operation and development of the mining properties, make recommendations and
plans on the erection or enlargement of any existing mill, dispatch mining engineers and
technicians to the mining properties as from time to time may reasonably be required to
investigate and make recommendations without cost or expense to Lepanto. Nielson
was also to "act as purchasing agent of supplies, equipment and other necessary
purchases by Lepanto, provided, however, that no purchase shall be made without the
prior approval of Lepanto; and provided further, that no commission shall be claimed or
retained by Nielson on such purchase"; and "to submit all requisition for supplies, all
constricts and arrangement with engineers, and staff and all matters requiring the
expenditures of money, present or future, for prior approval by Lepanto; and also to
make contracts subject to the prior approve of Lepanto for the sale and marketing of the
minerals mined from said properties, when said products are in a suitable condition for
marketing."
It thus appears that the principal and paramount undertaking of Nielson under the
management contract was the operation and development of the mine and the
operation of the mill. All the other undertakings mentioned in the contract are necessary
or incidental to the principal undertaking these other undertakings being dependent
upon the work on the development of the mine and the operation of the mill. In the
performance of this principal undertaking Nielson was not in any way executing juridical
acts for Lepanto, destined to create, modify or extinguish business relations between
Lepanto and third persons. In other words, in performing its principal undertaking
Nielson was not acting as an agent of Lepanto, in the sense that the term agent is
interpreted under the law of agency, but as one who was performing material acts for an
employer, for a compensation.
It is true that the management contract provides that Nielson would also act as
purchasing agent of supplies and enter into contracts regarding the sale of mineral, but
the contract also provides that Nielson could not make any purchase, or sell the
minerals, without the prior approval of Lepanto. It is clear, therefore, that even in these
cases Nielson could not execute juridical acts which would bind Lepanto without first
securing the approval of Lepanto. Nielson, then, was to act only as an intermediary, not
as an agent.
Moreover, a proviso in the management contract provides: Both parties to this
agreement fully recognize that the terms of this Agreement are made possible only
because of the faith or confidence that the Officials of each company have in the other;
therefore, in order to assure that such confidence and faith shall abide and continue,
NIELSON agrees that LEPANTO may cancel this Agreement at any time upon ninety
(90) days written notice, in the event that NIELSON for any reason whatsoever, except
acts of God, strike and other causes beyond its control, shall cease to prosecute the

operation and development of the properties herein described, in good faith and in
accordance with approved mining practice.
It is thus seen, from the above-quoted provision of paragraph XI of the management
contract, that Lepanto could not terminate the agreement at will. Lepanto could
terminate or cancel the agreement by giving notice of termination ninety days in
advance only in the event that Nielson should prosecute in bad faith and not in
accordance with approved mining practice the operation and development of the mining
properties of Lepanto. Lepanto could not terminate the agreement if Nielson should
cease to prosecute the operation and development of the mining properties by reason
of acts of God, strike and other causes beyond the control of Nielson.
The phrase "Both parties to this agreement fully recognize that the terms of this
agreement are made possible only because of the faith and confidence of the officials of
each company have in the other" in paragraph XI of the management contract does not
qualify the relation between Lepanto and Nielson as that of principal and agent based
on trust and confidence, such that the contractual relation may be terminated by the
principal at any time that the principal loses trust and confidence in the agent. Rather,
that phrase simply implies the circumstance that brought about the execution of the
management contract.
We can gather from the foregoing that the employment by Lepanto of Nielson to operate
and manage its mines was principally in consideration of the know-how and technical
services that Nielson offered Lepanto. The contract thus entered into pursuant to the
offer made by Nielson and accepted by Lepanto was a "detailed operating contract." It
was not a contract of agency. Nowhere in the record is it shown that Lepanto
considered Nielson as its agent and that Lepanto terminated the management contract
because it had lost its trust and confidence in Nielson.
It is Our considered view that by express stipulation of the parties, the management
contract in question is not revocable at the will of Lepanto. We rule that this
management contract is not a contract of agency as defined in Article 1709 of the old
Civil Code, but a contract of lease of services as defined in Article 1544 of the same
Code. This contract can not be unilaterally revoked by Lepanto.

SHELL CO OF THE PHIL LTD VS FIREMEN'S INSURANCE OF NEWARK NJ

100 Phil 755, January 29, 1957
Padilla, J.
Facts:
On September 3, 1947, a Plymounth car owned by Salvador Sison was brought to
petitioner Shell Gasoline and Service Station, located at the corner of Marques de
Comillas and Isaac Peral Streets, Manila, for washing, greasing and spraying. The job
was undertaken by Porfirio De la Fuente through his two employees, Alfonso Adriano,
as grease man, and one surnamed de los Reyes, as helper and washer, in
consideration of P8.00 as payment. Said car was placed on a hydraulic lifter, raised up
to six feet high and, thereafter, washed and greased. Before greasing was finished,
Alfonso Adriano loosened the lifter just a few feet lower, so as to grease a part near the
shelf of the right front fender that he cannot reach. He pushed and pressed the valve in
its gradual pressure and while the air escaped, the car swayed and after a few seconds
fell.
Herein defendants Firemen's Insurance Company of Newark, New Jersey, and the
Commercial Casualty Insurance Company, after paying the sum of P1,651.38 for the
damage and charging the balance of P100.00 to Salvador Sison in accordance with the
terms of the insurance contract, filed this action for the recovery of sum of money from
the petitioner on the ground of negligence.
Issue:
Whether Porfirio De la Fuente is an agent of petitioner Shell Company and, therefore,
liable for his acts.
Held:
Yes. Porfirio De la Fuente owned his position to the Shell Company which could
remove him or terminate his services at will. He undertook to sell Shell Company's
products exclusively at the said Station, in which the latter, having complete control
thereof, did not leave the fixing of price of the products sold to the former. For this
purpose, De la Fuente was placed in possession of the gasoline and service station, but
the same belonged to the company and bore its tradename, and was provided with all
the equipments needed to operate it on a so-called loan basis. The Shell Company
took charge of its care and maintenance for the proper functioning of the equipment.
Witness Antonio Tiongson, who was sales superintendent of the Shell Company, and
witness Augusto Sawyer, foreman of the same Company, supervised the operators and
conducted periodic inspection of the Company's gasoline and service station.
Moreover, a receipt acknowledging the delivery of equipments of the gasoline and
service station in question was signed by De la Fuente above the words: "Agent's
signature." The finding of the Court of Appeals that the operator was an agent of the

company and not an independent contractor should not be disturbed.

As the act of the agent or his employees acting within the scope of his authority is the
act of the principal, the breach of the undertaking by the agent is one for which the
principal is answerable. Furthermore, the company undertook to "answer and see to it
that the equipments are in good running order and usable condition;" and the Court of
Appeals found that the Company's mechanic failed to make a thorough check up of the
hydraulic lifter and the check up made by its mechanic was "merely routine" by raising
"the lifter once or twice and after observing that the operator was satisfactory, he (the
mechanic) left the place." The latter was negligent and the company must answer for
the negligent act of its mechanic which was the cause of the fall of the car from the
hydraulic lifter.

SEVILLA VS CA
160 SCRA 171, April 16, 1988
Sarmiento, J.
Facts:
On October 19, 1960, a contract was entered into by and between Mrs. Segundina
Noguera and herein respondent Tourist World Service, Inc., wherein the latter leased
the premises belonging to the former at Mabini St., Manila for its use as a branch office.
When the branch office was opened, the same was run by Una Sevilla payable to
Tourist World Service Inc. by any airline for any fare brought in on the efforts of
petitioner Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be withheld by
the respondent. On or about November 24, 1961 the Tourist World Service, Inc.
appears to have been informed that petitioner was connected with a rival firm, the
Philippine Travel Bureau, and, since the branch office was anyhow losing, respondent
considered closing down its office. The corporate secretary Gabino Canilao went over
to the branch office, and, finding the premises locked, and, being unable to contact Lina
Sevilla, he padlocked the premises on June 4, 1962 to protect the interests of the
Tourist World Service. When neither petitioner nor any of her employees could enter
the locked premises, a complaint was filed.
The trial court held for the respondent on the premise that the Tourist World Service,
Inc., being the true lessee, it was within its prerogative to terminate the lease and
padlock the premises. It likewise found Lina Sevilla, to be a mere employee of said
respondent and as such, she was bound by the acts of her employer. The Court of
Appeals rendered an affirmance. This is now questioned by petitioner, on the ground
that her relationship with Tourist World Service, Inc. was a joint business venture.
Issue:
Whether the relation between the parties was one of joint venture.
Held:
No, because a joint venture, including a partnership, presupposes generally of a
standing between the joint co-venturers or partners, in which each party has an equal
proprietary interest in the capital or property contributed and where each party exercises
equal rights in the conduct of the business. Furthermore, the parties did not hold
themselves out as partners, and the building itself was embellished with the electric sign
"Tourist World Service, Inc. in lieu of a distinct partnership name.
Also, when the petitioner, Lina Sevilla, agreed to man the respondent, Tourist World
Service, Inc.'s Ermita office, she must have done so pursuant to a contract of agency. It
is the essence of this contract that the agent renders services "in representation or on
behalf of another. In the case at bar, Sevilla solicited airline fares, but she did so for and

on behalf of her principal, Tourist World Service, Inc. As compensation, she received
4% of the proceeds in the concept of commissions. Additionally, petitioner herself
based on her letter of November 28, 1961, pre-assumed her principal's authority as
owner of the business undertaking. Considering the circumstances, it is evident that the
ties had contemplated a principal agent relationship, rather than a joint managament or
a partnership.
But unlike simple grants of a power of attorney, the agency that we hereby declare to be
compatible with the intent of the parties, cannot be revoked at will. The reason is that it
is one coupled with an interest, the agency having been created for mutual interest, of
the agent and the principal. It appears that Lina Sevilla is a bona fide travel agent
herself, and as such, she had acquired an interest in the business entrusted to her.
Moreover, she had assumed a personal obligation for the operation thereof, holding
herself solidarily liable for the payment of rentals. She continued the business, using
her own name, after Tourist World had stopped further operations. Her interest,
obviously, is not to the commissions she earned as a result of her business
transactions, but one that extends to the very subject matter of the power of
management delegated to her. It is an agency that, as we said, cannot be revoked at
the pleasure of the principal. Accordingly, the revocation complained of should entitle
the petitioner, Lina Sevilla, to damages.

LIM VS PEOPLE
133 SCRA 333, November 21, 1984
Relova, J.
Facts:
On January 10, 1966, petitioner Lourdes Valerio Lim, a businesswoman, went to the
house of Maria Ayroso and proposed to sell the latter's tobacco, consisting of 615 kilos
at P1.30 a kilo. The petitioner was to receive the overprice for which she could sell the
tobacco. The agreement was drawn in a document, which reads:
To Whom It May Concern:
This is to certify that I have received from Mrs. Maria de Guzman Vda. de Ayroso. of
Gapan, Nueva Ecija, six hundred fifteen kilos of leaf tobacco to be sold at Pl.30 per kilo.
The proceed in the amount of Seven Hundred Ninety Nine Pesos and 50/100 (P799.50)
will be given to her as soon as it was sold.
This was signed by Lourdes Valerio Lim and witnessed by the complainant's sister,
Salud Bantug, and the latter's maid, Genoveva Ruiz. Of the total value of P799.50,
petitioner had paid to Ayroso only P240.00, and this was paid on three different times.
Demands for the payment of the balance of the value of the tobacco were made, but to
no avail. As no further amount was paid, a complaint was filed against Lourdes Valerio
Lim for estafa.
Petitioner was found guilty of the crime of estafa and was sentenced "to suffer an
imprisonment of four (4) months and one (1) day as minimum to two (2) years and four
(4) months as maximum, to indemnify the offended party in the amount of P559.50, with
subsidize imprisonment in case of insolvency, and to pay the costs." From this
judgment, appeal was taken to the then Court of Appeals which affirmed the decision of
the lower court but modified the penalty imposed by sentencing her "to suffer an
indeterminate penalty of one (1) month and one (1) day of arresto mayor as minimum to
one (1) year and one (1) day of prision correccional as maximum, to indemnify the
complainant in the amount of P550.50 without subsidiary imprisonment, and to pay the
costs of suit."
Issue:
Whether the receipt is a contract of agency to sell or a contract of sale of the subject
tobacco between petitioner and the complainant, Maria de Guzman Vda. de Ayroso,
thereby precluding criminal liability of petitioner for the crime charged.
Held:
The fact that Lourdes Valerio Lim received the tobacco to be sold at P1.30 per kilo and

the proceeds to be given to complainant as soon as it was sold, strongly negates

transfer of ownership of the goods to the petitioner. The agreement constituted her as
an agent with the obligation to return the tobacco if the same was not sold.
Aside from the fact that Maria Ayroso testified that the petitioner asked her to be her
agent in selling Ayroso's tobacco, Lourdes Valerio Lim herself admitted that there was
an agreement that upon the sale of the tobacco she would be given something. The
petitioner is a businesswoman, and it is unbelievable that she would go to the extent of
going to Ayroso's house and take the tobacco with a jeep which she had brought if she
did not intend to make a profit out of the transaction. Certainly, if she was doing a favor
to Maria Ayroso and it was Ayroso who had requested her to sell her tobacco, it would
not have been Lourdes Valerio Lim who would have gone to the house of Ayroso, but it
would have been Ayroso who would have gone to the house of the petitioner and deliver
the tobacco to her.

SAN DIEGO SR VS NOMBRE

11 SCRA 165, May 29, 1964
Paredes, J.
Facts:
On May 1, 1960, respondent Adelo Nombre, in his capacity as judicial administrator of
the intestate estate subject of the Special Proceedings No. 7279, leased one of the
properties of (a fishpond identified as Lot No. 1617 of the cadastral survey of
Kabankaban, Negros Occidental), to Pedro Escanlar, the other respondent. The terms
of the lease was for three (3) years, with a yearly rental of P3,000.00 to expire on May
1, 1963, the transaction having been done, admittedly, without previous authority or
approval of the Court where the proceedings was pending. As a result of which,
Nombre was removed on January 17, 1961 as administrator by Order of the court and
one Sofronio Campillanos was appointed in his stead, while respondent Escanlar was
cited for contempt, allegedly for his refusal to surrender the fishpond to the newly
appointed administrator.
On March 20, 1961, Campillanos filed a motion asking for authority to execute a lease
contract of the same fishpond, in favor of petitioner Moises San Diego, Sr. for 5 years
from 1961, at a yearly rental of P5,000.00. Escanlar was not notified of such motion.
Nombre, the deposed administrator, presented a written opposition to the motion of
Campillanos on April 11, 1964, pointing out that the fishpond had been leased by him to
Escanlar for 3 years, the period of which was going to expire on May 1, 1963. In a
supplemental opposition, he also invited the attention of the Court that to grant the
motion of the new administrator would in effect nullify the contract in favor of Escanlar, a
person on whom the Court had no jurisdiction. He also intimated that the validity of the
lease contract entered into by a judicial administrator, must be recognized unless so
declared void in a separate action. The opposition notwithstanding, the Court on April 8,
1961, in effect declared that the contract in favor of Escanlar was null and void, for want
of judicial authority and that unless he would offer the same as or better conditions than
the prospective lessee, San Diego, there was no good reason why the motion for
authority to lease the property to San Diego should not be granted. Nombre moved to
reconsider the Order of April 8, stating that Escanlar was willing to increase the rental of
P5,000.00, but only after the termination of his original contract. The motion for
reconsideration was denied on April 24, 1961, the trial judge stating that the contract in
favor of Escanlar was executed in bad faith and was fraudulent because of the
imminence of Nombre's removal as administrator.
The Court of Appeals, thereafter, sustained the validity of the contract of lease in favor
of Escanlar, notwithstanding the lack of prior authority and approval. This was opposed
by herein petitioner, contending that No. 8, Article 1878, is the limitation to the right of a
judicial administrator to lease real property without prior court authority and approval, if
it exceeds one year. The lease contract in favor of Escanlar being for 3 years and
without such court approval and authority is, therefore, null and void.

Issue:
Whether the provisions of the New Civil Code on Agency should apply to judicial
administrators.
Held:
No. While it may be admitted that the duties of a judicial administrator and an agent,
are in some respects, identical, the provisions on agency (Art. 1878), should not apply
to a judicial administrator. A judicial administrator is appointed by the Court. He is not
only the representative of said Court, but also the heirs and creditors of the estate. A
judicial administrator before entering into his duties, is required to file a bond. These
circumstances are not true in case of agency. The agent is only answerable to his
principal. The protection which the law gives the principal, in limiting the powers and
rights of an agent, stems from the fact that control by the principal can only be thru
agreements, whereas the acts of a judicial administrator are subject to specific
provisions of law and orders of the appointing court.
Moreover, the Court of Appeals was correct in sustaining the validity of the contract of
lease in favor of Escanlar, notwithstanding the lack of prior authority and approval. The
law and prevailing jurisprudence on the matter militates in favor of this view.
Notes:
New Civil Code, on Agency, states:
Special powers of attorneys are necessary in the following cases:
(8) To lease any real property to another person for more than one year. (Art. 1878)
Rule 85, Section 3, of the Rules of Court authorizes a judicial administrator, among
other things, to administer the estate of the deceased not disposed of by will.
Commenting on this Section in the light of several Supreme Court decisions, Moran
says:
"Under this provision, the executor or administrator has the power of
administering the estate of the deceased for purposes of liquidation and distribution. He
may, therefore, exercise all acts of administration without special authority of the Court.
For instance, he may lease the property without securing previously any permission
from the court. And where the lease has formally been entered into, the court cannot, in
the same proceeding, annul the same, to the prejudice of the lessee, over whose
person it had no jurisdiction. The proper remedy would be a separate action by the
administrator or the heirs to annul the lease. In addition, even in the absence of such
special powers, a contract or lease for more than 6 years is not entirely invalid; it is
invalid only in so far as it exceeds the six-year limit.

DE LA PEA VS HIDALGO
16 Phil 450, August 17, 1910
Torres, J.
Facts:
Defendant Federico Hidalgo, pursuant to the power of attorney executed in his favor,
had possession of and administered from November 12, 1887 to January 7, 1904 the
following properties belonging to his principal, Jose de la Pea y Gomiz, to wit; one
house and lot at No. 48 Calle San Luis; another house and lot at No. 6 Calle Cortada;
another house and lot at 56 Calle San Luis, and a fenced lot on the same street, all of
the district of Ermita, and another house and lot at No. 81 Calle Looban de Paco. The
defendant, as such agent, collected the rents and income from the said properties,
amounting to P50,244, which sum, he should have deposited but failed to do so, in
accordance with the verbal agreement between the deceased and himself, in the
general treasury of the Spanish Government at an interest of 5 per cent per annum.
The defendant, in his answer, alleged that on November 18, 1887, by virtue of the
powers conferred upon him by Jose de la Pea y Gomiz, he took charge of the
administration of the latter's property and administered the same until December 31,
1893, when for reasons of health he ceased to discharge the duties of said position. As
a result of such condition, Federico Hidalgo continually by letter, during the years 1889,
1890, 1891, and 1892, requested Jose de la Pea y Gomiz, his principal, to appoint a
person to substitute him in the administration of the latter's property. On March 22,
1894, the defendant, because of serious illness, was absolutely obliged to leave these
Islands and embarked on the steamer Isla de Luzon for Sapin, on which date he notified
his principal that, for the reason aforestated, he had renounced his powers and turned
over the administration of his property to Antonio Hidalgo.
Issue:
Whether defendant Federico Hidalgo is liable.
Held:
From the procedure followed by the agent, Federico Hidalgo, it is logically inferred that
he had definitely renounced his agency and the same was duly terminated, according to
the provisions of Article 1732 of the Civil Code, because, although in the said letter of
March 22, 1894, the word "renounce" was not employed in connection with the agency
or power of attorney executed in his favor, yet when the agent informs his principal that
for reasons of health and by medical advice he is about to depart from the place where
he is exercising his trust and where the property subject to his administration is situated,
abandons the property, turns it over a third party, without stating when he may return to
take charge of the administration, renders accounts of its revenues up to a certain date,
December 31, 1893, and transmits to his principal a general statement which

summarizes and embraces all the balances of his accounts since he began to exercise
his agency to the date when he ceased to hold his trust, and asks that a power of
attorney in due form in due form be executed and transmitted to another person who
substituted him and took charge of the administration of the principal's property, it is
then reasonable and just to conclude that the said agent expressly and definitely
renounced his agency.
This renouncement was confirmed since the principal Jose de la Pea y Gomiz did not
disapprove the designation of Antonio Hidalgo, nor did he appoint another, nor send a
new power of attorney to the same, as he was requested to by the previous
administrator who abandoned his charge; and the trial record certainly contains no proof
that the defendant, since he left these Islands in March, 1894, until January, 1904, when
he returned to this city, took any part whatever, directly or even indirectly, in the said
administration of the principal's property, while Antonio Hidalgo was the only person who
was in charge of the aforementioned administration of Jose de la Pea y Gomiz 's
property and the one who was to represent the latter in his business affairs, with his
tacit consent. From all of which it is perfectly concluded that Antonio Hidalgo acted in
the matter of the administration of the property of Jose de la Pea y Gomiz by virtue of
an implied agency derived from the latter, in accordance with the provisions of Article
1710 of the Civil Code.
Antonio Hidalgo administered the aforementioned property of De la Pea y Gomiz, not
in the character of business manager, but as agent by virtue of an implied agency
vested in him by its owner who was not unaware of the fact, who knew perfectly well
that the said Antonio Hidalgo took charge of the administration of that property on
account of the obligatory absence of his previous agent for whom it was an impossibility
to continue in the discharge of his duties. The administration and management, by
virtue of an implied agency, is essentially distinguished from that management of
another's business, in this respect, that while the former originated from a contract, the
latter is derived only from a quasi-contract. Also, the implied agency is founded on the
lack of contradiction or opposition, which constitutes simultaneous agreement on the
part of the presumed principal to the execution of the contract, while in the management
of another's business there is no simultaneous consent, either express or implied, but a
fiction or presumption of consent because of the benefit received.
The defendant Federico Hidalgo, having ceased in his administration of the property
belonging to Pea y Gomiz, on account of physical impossibility, which cessation he
duly reported to his principal and for whom he had requested a new power of attorney,
is only liable for the results and consequences of his administration during the period
when the said property was in his charge, and therefore his liability can not extend
beyond the period of his management, as his agency terminated by the tacit or implied
approval of his principal, judging from the latter's silence in neither objecting to nor in
anywise prohibiting Antonio Hidalgo's continuing to administer his property,
notwithstanding the lapse of the many years since he learned by letter of the action
taken by his previous agent, Federico Hidalgo.

CONDE VS CA
119 SCRA 245, December 15, 1982
Melencio Herrera, J.
Facts:
On 7 April 1938, Margarita Conde, Bernardo Conde and the petitioner Dominga Conde,
as heirs of Santiago Conde, sold with right of repurchase, within ten (10) years from
said date, a parcel of agricultural land located in Maghubas Burauen Leyte, (Lot 840),
with an approximate area of one (1) hectare, to Casimira Pasagui, married to Pio Altera
(hereinafter referred to as the Alteras), for P165.00. The "Pacto de Retro Sale" further
provided: if at the end of 10 years the said land is not repurchased, a new agreement
shall be made between the parties and in no case title and ownership shall be vested in
the hand of the party of the SECOND PART (the Alteras). On 28 November 1945,
private respondent Paciente Cordero executed and signed a Memorandum of
Repurchase, acknowledging the receipt of P165.00, for and on behalf of his father-inlaw Pio Altera, who at that time was very ill. Neither of the vendees-a-retro, nor
Casimira Pasagui, was a signatory to the said deed.
On 30 June 1965 Pio Altera sold the disputed lot to the spouses Ramon Conde and
Catalina Conde. Contending that she had validly repurchased the lot in question in
1945, as evidenced by the abovementioned Memorandum of Repurchase, petitioner
filed, on 16 January 1969, in the Court of First Instance of Leyte a Complaint against
Paciente Cordero and his wife Nicetas Altera, Ramon Conde and his wife Catalina
Conde, and Casimira Pasagui (Pio Altera having died in 1966), for quieting of title to real
property and declaration of ownership. The lower court dismissed the case and the
same was affirmed by the Court of Appeals, ruling that Dominga Conde had failed to
validly exercise her right of repurchase in view of the fact that the Memorandum of
Repurchase was signed by Paciente Cordero and not by Pio Altera, the vendee-a-retro,
and that there is nothing in said document to show that Cordero was specifically
authorized to act for and on behalf of the vendee a retro, Pio Altera.
Issue:
Whether the subject lot was validly repurchased by petitioner Dominga Conde.
Held:
No. There is no question that neither of the vendees-a-retro signed the "Memorandum
of Repurchase", and that there was no formal authorization from the vendees for
Paciente Cordero to act for and on their behalf. Furthermore, of significance is the fact
that from the execution of the repurchase document in 1945, possession, which
heretofore had been with the Alteras, has been in the hands of Dominga Conde as
stipulated therein. Land taxes have also been paid for by petitioner yearly from 1947 to
1969 inclusive. If Dominga Conde had done nothing to formalize her repurchase, by the

same token, neither have the vendees-a-retro done anything to clear their title of the
encumbrance therein regarding petitioner's right to repurchase. No new agreement was
entered into by the parties as stipulated in the deed of pacto de retro, if the vendors a
retro failed to exercise their right of redemption after ten years. If, as alleged, Dominga
Conde exerted no effort to procure the signature of Pio Altera after he had recovered
from his illness, neither did the Alteras repudiate the deed that their son-in-law had
signed. Thus, an implied agency must be held to have been created from their silence
or lack of action, or their failure to repudiate the agency.
In sum, although the contending parties were legally wanting in their respective
actuations, the repurchase by petitioner is supported by the admissions at the pre-trial
that Dominga Conde has been in possession since the year 1945, the date of the deed
of repurchase, and has been paying land taxes thereon since then. Additionally, private
respondent Paciente Cordero must be held bound by the clear terms of the
Memorandum of Repurchase that he had signed, as it is the duty of every contracting
party to learn and know its contents before he signs and delivers it. The imperatives of
substantial justice, and the equitable principle of laches brought about by private
respondent's inaction and neglect for 24 years, loom in petitioner's favor.