SPOUSES YU ENG CHO & FRANCISCO

PANAMERICAN WORLD AIRWAYS, INC.

(GR 123560, March 27, 2000)

TAO

YU

v.

FACTS:
Plaintiff Yu Eng Cho is the owner of Young Hardware Co. and
Achilles Marketing.
In connection with this business, he travels from time to time to
Malaysia, Taipei and Hongkong.
On July 10, 1976, plaintiffs bought plane tickets (Exhibits A & B)
from defendant Claudia Tagunicar who represented herself to be
an agent of defendant Tourist World Services, Inc. (TWSI).
The destination[s] are Hongkong, Tokyo, San Francisco, and
USA for the amount P25,000.00 per computation of said
defendant Claudia Tagunicar (Exhs. C &C-1). The purpose of this
trip is to go to Fairfield, New Jersey, U.S.A. to buy to two (2) lines
of infrared heating system processing textured plastic article.
A few days before the scheduled flight of plaintiffs, their son,
Adrian Yu, called the Pan Am office to verify the status of the
flight. According to said Adrian Yu, personnel of defendant Pan
Am told him over the phone that plaintiffs' booking[s] are
confirmed.
On July 23, 1978, plaintiffs left for Hongkong and stayed there
for five (5) days. They left Hongkong for Tokyo on July 28, 1978.
Upon their arrival in Tokyo, they called up Pan-Am office for
reconfirmation of their flight to San Francisco.
Said office, however, informed them that their names are not in
the manifest. Since plaintiffs were supposed to leave on the
29th of July, 1978, and could not remain in Japan for more than
72 hours, they were constrained to agree to accept airline
tickets
for
Taipei
instead,
per
advise
of
JAL
officials. This is the only option left to them because Northwest
Airlines was then on strike, hence, there was no chance for
the plaintiffs to obtain airline seats to the United States within
72 hours.
Plaintiffs paid for these tickets.
Upon reaching Taipei, there were no flight[s]
available
for
plaintiffs, thus, they were forced to return back to Manila on
August 3, 1978, instead of proceeding to the United States.

[Japan] Air Lines (JAL) refunded the plaintiffs the difference of

the price for Tokyo-Taipei [and] Tokyo-San Francisco (Exhs. I & J)
in the total amount of P2,602.00.
In view of their failure to reach Fairfield, New Jersey, Radiant
Heat Enterprises, Inc. cancelled Yu Eng Cho's option to buy the
two lines of infra-red heating system (Exh. K).
The agreement was for him to inspect the equipment
and make final arrangement[s] with the said company
not later than August 7, 1978.
From this business transaction, plaintiff Yu Eng Cho
expected to realize a profit of P300,000.00 to
P400,000.00.
Defendant Tagunicar claims that on July 13, 1978, a few
days before the scheduled flight, plaintiff Yu Eng Cho
personally went to her office, pressing her about their
flight.
She called up defendant Julieta Canilao, and the latter
told her "o sige Claudia, confirm na." She even noted
this in heri ndex card (Exh. L), that it was Julieta who
confirmed the booking (Exh. L-1).
It was then that she allegedly attached the confirmation
stickers (Exhs. 2, 2-B TWSI) to the tickets. These stickers
came from TWSI.
Defendant Tagunicar alleges that it was only in the first
week of August, 1978 that she learned from Adrian Yu,
son of plaintiffs, that the latter were not able to take the
flight from Tokyo to San Francisco, U.S.A. After a few
days, said Adrian Yu came over with a gentleman and a
lady, who turned out to be a lawyer and his secretary.
Defendant Tagunicar claims that plaintiffs were asking
for her help so that they could file an action against
Pan-Am. Because of plaintiffs' promise she will not be
involved, she agreed to sign the affidavit prepared by
the lawyer.
A complaint for damages was filed by petitioners
against
private
respondents
Pan
Amerian World Airways, Inc. (Pan Am), Tourist World
Services, Inc. (TWSI), Julieta Canilao (Canilao) and
Claudia Tagunicar (Tagunicar) for expenses allegedly
incurred
such
as
costs
of tickets
and
hotel
accommodations when petitioners were compelled to

stay
in
Hongkong and then in Tokyo by reason of the nonconfirmation of their booking with Pan-Am.
RTC: held the defendants jointly and severally liable,
except defendant Julieta Canilao.
*Only respondents Pan Am and Tagunicar appealed to the Court
of Appeals.
Appellate court: modified the amount of damages
awarded, holding private respondent Tagunicar solely
liable therefor, and absolving respondents Pan Am
and TWSI from any and all liability.

ISSUE: Whether there is no agency relationship among PANAM, TWSI and Tagunicar?

HELD: YES.
By the contract of agency, a person binds himself to render
some service or to do something in representation or on behalf
of another, with the consent or authority of the latter.
The elements of agency are: (1) consent, express or implied, of
the parties to establish the relationship; (2) the object is the
execution of a juridical act in relation to a third person; (3) the
agent acts as a representative and not for himself; (4) the
agent acts within the scope of his authority.
It is a settled rule that persons dealing with an assumed agent
are bound at their peril, if they would hold the principal liable,
to ascertain not only the fact of agency but also the nature and
extent of authority, and in case either is controverted, the
burden of proof is upon them to establish it.
In the case at bar, petitioners rely on the affidavit of
respondent
Tagunicar
where
she stated that she is an
authorized agent of TWSI.
This affidavit, however, has weak probative value in light of
respondent Tagunicar's testimony n court to the contrary.
Affidavits, being taken ex parte, are almost always incomplete
and often inaccurate, sometimes from partial suggestion, or for
want of suggestion and inquiries.
Their infirmity as a species of evidence is a matter of judicial
experience and are thus considered inferior to the
testimony given in court.

Further, affidavits are not complete reproductions of what the

declarant has in mind because they are generally prepared by
the administering officer and the affiant simply signs them after
the same have been read to her.
Respondent Tagunicar testified that her affidavit was prepared
and typewritten by the secretary of petitioners lawyer, Atty.
Acebedo, who both came with Adrian Yu, son of petitioners,
when the latter went to see her at her office. This was
confirmed by Adrian Yu who testified that Atty. Acebedo brought
his notarial seal and notarized the affidavit of the same day.
The circumstances under which said affidavit was prepared put
in doubt petitioners' claim that it was executed voluntarily by
respondent Tagunicar.
It appears that the affidavit was prepared and was based on
the answers which respondent Tagunicar gave to the
questions propounded to her by Atty. Acebedo.
They never told her that the affidavit would be used in a case
to be filed against her.
They even assured her that she would not be included as
defendant if she agreed to execute the affidavit.
Respondent Tagunicar was prevailed upon by petitioners' son
and their lawyer to sign the affidavit despite her objection to
the statement therein that she was an agent of TWSI. They
assured her that "it is immaterial" and that "if we file a suit
against you we cannot get anything from you."
This purported admission of respondent Tagunicar cannot be
used by petitioners to prove their agency relationship.
At any rate, even if such affidavit is to be given any probative
value, the existence of the agency relationship cannot be
established on its sole basis.
The declarations of the agent alone are generally insufficient to
establish the factor extent of his authority.
In
addition,
as
between
the
negative allegation of respondents Canilao and Tagunicar that
neither is an agent nor principal of the other, and the
affirmative allegation of petitioners that an agency relationship
exists, it is the latter who have the burden of evidence to prove
their allegation, failing in which, their claim must necessarily
fail.

We stress that respondent Tagunicar categorically denied in

open court that she is a duly authorized agent of TWSI, and
declared that she is an independent travel agent.
We have consistently ruled that in case of conflict between
statements
in the affidavit and testimonial declarations, the latter
command greater weight.
As further proofs of agency, petitioners call our attention to
TWSI's Exhibits "7", "7-A", and "8" which show that Tagunicar
and TWSI received sales commissions from Pan Am.
Exhibit "7" is the Ticket Sales Report submitted by TWSI to Pan
Am reflecting the commissions received by TWSI as an agent of
Pan Am.
Exhibit "7-A" is a listing of th eroutes taken by passengers who
were audited to TWSI's sales report.
Exhibit "8" is a receipt issued by TWSI covering the payment
made by Tagunicar for the tickets she bought from TWSI.
These documents cannot justify the decision that Tagunicar was
paid a commission either by TWSI or Pan Am.
On the contrary, Tagunicar testified that when she pays TWSI,
she already deducts in advance her commission and merely
gives the net amount to TWSI.
From all sides of the legal prism, the transaction is simply a
contract of sale wherein Tagunicar buys airline tickets from
TWSI and then sells it at a premium to her clients.
WHEREFORE, the decision appealed from is hereby AFFIRMED.
Cost against petitioners. SO ORDERED

Philippine National Bank v. Sta. Maria, 29 SCRA 303

Doctrine: Art. 1207. The concurrence of two or more creditors
or of two or more debtors in one and the same obligation does
not imply that each one of the former has a right to demand, or
that each one of the latter is bound to render, entire
compliance with the prestation. There is a solidary liability only
when the obligation expressly so states, or when the law or the
nature of the obligation requires solidarity

Facts:

Special power of the attorney to mortgage real estate is limited

to such authority and does not bind the grantor personally to
other obligations contracted by the grantee
The sugar crop loans were obtained by Maximo from the
plaintiff bank under the power of the attorney, executed in his
favor by his brothers and sisters to mortgage a 16-odd hectare
parcel of land, jointly owned by all of them
Valeriana the sister of Maximo, alone also executed in favor of
her brother Maximo a special power of attorney to borrow
money and mortgage any real estate owned by her.
Maximo applied for two separate crop loans with the PNB, one
in the amount of P15,000 but only P13,216.11 was extended by
the PNB and the other for P23,000 but only P12,427.57 was
extended by the PNB
As security for the two loans, Maximo executed it in his own
name in favor of PNB two chattel mortgages, guaranteed by the
surety bonds for the full authorized amounts of loans executed
by the Associated Insurance & Surety Co., Inc.
Plaintiff Bank filed the case on February 10,1961 against
Defendant Maximo Sta. Maria and his six brothers and sisters
and the Associated Insurance & Surety Co., Inc. for the
collection of unpaid balances of two sugar crop loans
The Trial Court rendered judgement in favor of the PNB
Maximo did not appeal but his siblings appealed and contended
that they had given their brother Maximo the authority to
borrow money but only to mortgage the real estate jointly
owned by them and that if they are liable, the liability should
not go beyond the value of the property which9 they had
authorized to be given as security of the loans obtained by
Maximo. They further contended that they did not benefit
whatsoever from the loans.
Issue: W/N the siblings are only liable for the value of the land?
Held:
Yes, except for Valeriana who issued a separate Special Power
of Attorney authorizing Maximo to borrow money.
In Bank of P. I. v. De Coster, "where in an instrument powers
and duties are specified and defined, that all of such powers

and duties are limited and confined to those which are specified
and defined, and all other powers and duties are excluded.
In De Villa vs. Fabricante, where the power of attorney given to
the husband by the wife was limited to a grant of authority to
mortgage a parcel of land titled in the wife's name, the wife
may not be held liable for the payment of the mortgage debt
contracted by the husband, as the authority to mortgage does
not carry with it the authority to contract obligation.
Maximo and Valeriana are the only ones liable for the loans and
that the other siblings liability only correspond to real estate
mortgage and the foreclosure and sale of mortgage.
Maximos argument that "a mortgage is simply an accessory
contract, and that to effect the mortgage, a loan has to be
secured" falls, far short of the mark. Maximo had indeed,
secured the loan on his own account and the defendantsappellants had authorized him to mortgage their respective
undivided shares of the real property jointly owned by them as
security for the loan. But that was the extent of their authority
land consequent liability, to have the real property answer for
the loan in case of non-payment.
The outcome might be different if there had been an express
ratification of the loans by defendants-appellants or if it had
been shown that they had been benefited by the crop loans so
as to put them in estoppel.
Under the Art. 1207, Valeriana is only jointly liable with Maximo

Facts:
In 1923, defendants executed a power of attorney in favor of
their brother-in-law Felix S. Yulo to enable him to obtain a loan
and secure it with a mortgage on the real property described in
transfer certificate of title No. 3335.
The power of attorney was registered in the registry of deeds of
the Province of Occidental Negros.
Acting under said power of attorney, Felix S. Yulo, obtained a
loan of P28,000 from the plaintiff, binding his principals
jointly and severally, to pay it within ten (10) years, together
with interest thereon at 12% per annum payable annually in
advance, to which effect he signed a promissory note for said
amount and executed a deed of mortgage of the real property.
It was stated in the deed that in case the defendants failed to
pay the stipulated interest and the taxes on the real property
mortgaged and if the plaintiff were compelled to bring an action
to recover his credit, said defendants would be obliged to pay
10% more on the unpaid capital, as fees for the plaintiff's
attorneys.
However, the P28,000 loan was not delivered to agent Yulo.
Instead, an agreement between him and Hodges indicate that
the P28,000 loan was applied to pay his personal debts to
Hodges, amounting to P10,188.29
The defendants failed to pay at maturity the interest stipulated
which should have been paid one year in advance.
Plaintiff therefore brought an action for foreclosure of the
mortgage.
The trial court ordered in favor of the defendants and held that
the loan and the mortgage were illegal.
Issue: W/N agent Yulo was authorized to borrow money and
invest it as he wished, without being obliged to apply it
necessarily for the benefit of the principals, by virtue of the
authority conferred by the defendants

Hodges v. Salas and Salas

63 Phil. 567

Ruling:
NO. The terms of the power of attorney are limited. The
agent was thereby authorized only to borrow any
amount of money, which he deemed necessary.

There is nothing, however, to indicate that the

defendants had authorized him to convert the money
obtained by him to his personal use. With respect to a
power of attorney of a special character, it cannot be
interpreted as authorizing the agent to use the money
as he pleased, particularly when it does not appear that
such was the intention of the principals, and in applying
such funds to pay his personal obligations, he exceeded
his authority.
Moreover, there is nothing in the document, which
implied that the defendants ratified or approved the
agents acts, contrary to what the Hodges contended.
The loan obtained and the mortgage executed by Yulo
was valid and therefore defendants are bound to pay for
it.
As to the payment of the loan, the Court ordered that
defendants pay Hodges the balance of P17,811.71,
since P10,188.29 was applied by agent Yulo to the
payment of his personal debt to Hodges.
As to the interest, since defendants already paid to
Hodges a total of P18,138.77, which includes a usurious
interest, they are still indebted to pay P4,321.79
(defendants have to pay P22, 460.56 interest12% p.a.
from 1926 to 1936less P3,000 attorneys fees).

STRONG v RUPIDE (1909)