WEEK 1-Ratification the principal a material factor in determining the legal effect of an act performed after such

death? YES. 3. Is the sale of the undivided share of Concepcion Rallos in the Lot valid
RALLOS v FELIX GO CHAN G.R. No. L-24332 January 31, 1978 although it was executed by the agent after the death of his principal? NO.

Facts: This is a case of an attorney-in-fact, Simeon Rallos, who after of the death of his
principal, Concepcion Rallos, sold the latter's undivided share in a parcel of land pursuant to
a power of attorney which the principal had executed in favor. The administrator of the estate Ratio: 1. General Rule: Death extinguishes agency.
of the went to court to have the sale declared unenforceable and to recover the disposed
share. The trial court granted the relief prayed for, but upon appeal the Court of Appeals
upheld the validity of the sale and the complaint. SC ruled for the plaintiff and held the sale
as void. The general rule is
Agency is basically personal representative, and derivative in nature. The authority of the
agent to act emanates from the powers granted to him by his principal; his act is the act of
the principal if done within the scope of the authority. Qui facit per alium facit se. "He who
acts through another acts himself". 6
Facts: Concepcion and Gerundia both surnamed Rallos were sisters and registered co-
owners of a parcel of land. They executed a special power of attorney in favor of their
brother, Simeon Rallos, authorizing him to sell for and in their behalf lot 5983. On March 3,
1955, Concepcion Rallos died. On September 12, 1955, Simeon Rallos sold the undivided
ART. 1919. Agency is extinguished. xxx xxx xxx By the death, civil interdiction, insanity
shares of his sisters Concepcion and Gerundia in lot 5983 to Felix Go Chan & Sons Realty
or insolvency of the principal or of the agent; ... (Emphasis supplied)
Corporation for the

sum of P10,686.90. The deed of sale was registered in the Registry of Deeds of Cebu, TCT
No. 11118 was cancelled, and a new transfer certificate of Title No. 12989 was issued in the
name of the vendee. By reason of the very nature of the relationship between Principal and agent, agency is
extinguished by the death of the principal or the agent.

On May 18, 1956 Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos
filed a complaint docketed as Civil Case No. R-4530 of the Court of First Instance of Cebu, Manresa: commenting on Art. 1709 of the Spanish Civil Code explains that the rationale for
praying that the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 the law is found in the juridical basis of agency which is representation, them being an
be declared unenforceable, and said share be reconveyed to her estate, certificate of title be integration of the personality of the principal
reissued in their name, and for damages and attorney’s fees. Named party defendants were
Felix Go Chan & Sons Realty Corporation, Simeon Rallos, and the Register of Deeds of integration that of the agent it is not possible for the representation to continue to exist once
Cebu, but subsequently, the latter was dropped from the complaint. RTC declared the sale the death of either is establish.
of the ½ part of the land that belonged to Concepcion as null and void. CA upheld the validity
of the sale.

2. Exceptions: Articles 1930 and 1931 of the Civil Code provide the exceptions to the
general rule afore-mentioned. Article 1931 is the one applicable to the case at bar.
Issue/Held: 1. What is the legal effect of an act performed by an agent after the death of his
principal? DEATH EXTINGUISHES AGENCY. 2. Is the fact of knowledge of the death of
Page 1 of 14
ART. 1930. The agency shall remain in full force and effect even after the death of the
principal, if it has been constituted in the common interest of the latter and of the agent, or
in the interest of a third person who has accepted the stipulation in his favor. NOT
APPLICABLE as the special power of attorney executed in favor of Simeon Rallos was not
coupled with an interest.
ART. 1931. Anything done by the agent, without knowledge of the death of the principal or
of any other cause which extinguishes the agency, is valid and shall be fully effective with
respect to third persons who may have contracted with him in good faith.
Under this provision, an act done by the agent after the death of his principal is valid and
effective only under two conditions, viz: (1) that the agent acted without knowledge of the
death of the principal and (2) that the third person who contracted with the agent himself
acted in good faith.
Good faith here means that the third person was not aware of the death of the principal at the
time he contracted with said agent. These two requisites must concur the absence of one will
render the act of the agent invalid and unenforceable.
3. The sale is invalid as the case does not comply with first requisite.
Simeon Rallos, knew of the death of his principal at the time he sold the latter's share in Lot
No. 5983 to respondent corporation. Yet he proceeded with the sale of the lot in the name of
both his sisters Concepcion and Gerundia Rallos without informing appellant (the realty
corporation) of the death of the former.
On the basis of the established knowledge of Simon Rallos concerning the death of his
principal Concepcion Rallos, Article 1931 of the Civil Code is inapplicable. The law
Page 2 of 14
expressly requires for its application lack of knowledge on the part of the agent of the death
of his principal; it is not enough that the third person acted in good faith.
Other relevant information:
Article 1931, being an exception to the general rule, is to be strictly construed, it is not to be
given an interpretation or application beyond the clear import of its terms for otherwise the
courts will be involved in a process of legislation outside of their judicial function.
Vendee acting in good faith relied on the power of attorney which was duly registered on the
original certificate of title recorded in the Register of Deeds of the province of Cebu, that no
notice of the death was aver annotated on said certificate of title by the heirs of the principal
and accordingly they must suffer the consequences of such omission. The agent acted
fraudulently. When he transacted with vendee, he already knew the certificate of title was in
the name of a dead person and without personality. If the agency has been granted for the
purpose of contracting with certain persons, the revocation must be made known to them.
But if the agency is general in nature, without reference to particular person with whom the
agent is to contract, it is sufficient that the principal exercise due diligence to make the
revocation of the agency publicity known.
In case of a general power which does not specify the persons to whom represents' on should
be made, it is the general opinion that all acts, executed with third persons who contracted
in good faith, Without knowledge of the revocation, are valid. In such case, the principal
may exercise his right against the agent, who, knowing of the revocation, continued to
assume a personality which he no longer had. The above discourse however, treats of
revocation by an act of the principal as a mode of terminating an agency which is to be
distinguished from revocation by operation of law such as death of the principal which
obtains in this case. On page six of this Opinion By reason of the very nature of the
relationship between principal and agent, agency is extinguished ipso jure upon the death of
either principal or agent. Although a revocation of a power of attorney to be effective must
be communicated to the parties concerned, yet a revocation by operation of law, such as by
death of the principal is, as a rule, instantaneously effective inasmuch as "by legal fiction the
agent's exercise of authority is regarded as an execution of the principal's continuing will.
The Civil Code does not impose a duty on the heirs to notify the agent of the death of the
principal What the Code provides in Article 1932 is that, if the agent dies, his heirs must
notify the principal thereof, and in the meantime adopt such measures as the circumstances
may demand in the interest of the latter. Hence, the fact that no notice of the death of the
principal was registered on the certificate of title of the property in the Office of the Register
of Deeds, is not fatal to the cause of the estate of the principal
LEASE OF WORK Art. 1644. In the lease of work or service, one of the parties binds himself
to execute a piece of work or to render to the other some service for a price certain, but the
relation of principal and agent does not exist between them. (1544a) Orient Air Services v
CA - GR 76931 - 197 SCRA 645
Orient Air Services vs CA 197 SCRA 645 May 29, 1991 Padilla,J;
1. On 15 January 1977, American Airlines, Inc. an air carrier offering passenger and air cargo
transportation in the Philippines, and Orient Air Services and Hotel Representatives , entered
into a General Sales Agency Agreement whereby the former authorized the latter to act as
its exclusive general sales agent within the Philippines for the sale of air passenger
transportation. 2. On 11 May 1981, alleging that Orient Air had reneged on its obligations
under the Agreement by failing to promptly remit the net proceeds of sales for the months of
January to March 1981 in the amount of US $254,400.40, American Air by itself undertook
the collection of the proceeds of tickets sold originally by Orient Air and terminated
forthwith the Agreement. 3. Four (4) days later, or on 15 May 1981, American Air instituted
suit against Orient Air with the CFI of Manila, Branch 24, for Accounting with Preliminary
Attachment or Garnishment, Mandatory Injunction and Restraining Order averring the
aforesaid basis for the termination of the Agreement as well as therein defendant's previous
record of failures "to promptly settle past outstanding refunds of which there were available
funds in the possession of the defendant, . . . to the damage and prejudice of plaintiff."
4. defendant Orient Air:
- denied the material allegations of the complaint with respect to plaintiff's
entitlement to alleged unremitted amounts, contending that after
application thereof to the commissions due it under the Agreement,
plaintiff in fact still owed Orient Air a balance in unpaid overriding
Page 3 of 14
commissions - . Further, the defendant contended that the actions taken by
American Air in the course of terminating the Agreement as well as the
termination itself were untenable, Orient Air claiming that American Air's
precipitous conduct had occasioned prejudice to its business interests.
5. TC ruled in favor of ORIENT AIR
- dismissing the complaint and holding the termination made by the
plaintiff American Airlines as affecting the GSA agreement illegal and
improper and - order the plaintiff American Airlines to reinstate defendant
as its general sales agent for passenger tranportation in the Philippines in
accordance with said GSA agreement; - plaintiff is ordered to pay
defendant the balance of the overriding commission on total flown revenue
covering the period from March 16, 1977 to December 31, 1980 in the
amount of US$84,821.31 plus the additional amount of US$8,000.00 by
way of proper 3% overriding commission per month commencing from
January 1, 1981 until such reinstatement or said amounts in its Philippine
peso equivalent legally prevailing at the time of payment plus legal interest
to commence from the filing of the counterclaim up to the time of payment.
6. Intermediate Appellate Court (now Court of Appeals) in a decision
promulgated on 27 January 1986, affirmed the findings of the court a quo
on their material points but with some modifications with respect to the
monetary awards granted. 7. Both appealed the decision of the CA
ISSUE #1 WON American Air can be ordered by the court to "reinstate
defendant as its general sales agent for passenger transportation in the
Philippines in accordance with said GSA Agreement.
HELD. NO
RATIO:
- By affirming this ruling of the trial court, respondent appellate court, in
effect, compels American Air to extend its personality to Orient Air. -
Such would be violative of the principles and essence of agency, defined
by law as a contract whereby "a person binds himself to render some
service or to do something in representation or on behalf of another, WITH
THE CONSENT OR AUTHORITY OF THE LATTER . - In an agent-
principal relationship, the personality of the principal is extended through
the facility of the agent. In so doing, the agent, by legal fiction, becomes
 the principal, authorized to perform all acts which the latter would have
him do. Such a relationship can only be
effected with the consent of the principal, which must not, in any way, be
compelled by law or by any court. - The Agreement itself between the
parties states that "either party may terminate the Agreement without cause
by giving the other 30 days' notice by letter, telegram or cable."
ISSUE#2 WON Orient Air is entitled to the 3% overriding commission. YES and it must be
based on TOTAL REVENUE.
HELD: YES
RATIO:
- paragraph 5(b) of the Agreement which, in reiteration, is quoted as
follows:
5. Commissions
a) . . .
b) Overriding Commission
In addition to the above commission, American will pay Orient Air
Services an overriding commission of 3% of the tariff fees and charges for
all sales of transportation over American's services by Orient Air Services
or its sub-agents.
- AMERICAN AIR: Since Orient Air was allowed to carry only the ticket
stocks of American Air, and the former not having opted to appoint any
sub-agents, it is American Air's contention that Orient Air can claim
entitlement to the disputed overriding commission based only on ticketed
sales This is supposed to be the clear meaning of the underscored portion
of the above provision. Thus, to be entitled to the 3% overriding
commission, the sale must be made by Orient Air and the sale must be
done with the use of American Air's ticket stocks. - Orient Air: contends
that the contractual stipulation of a 3% overriding commission covers the
total revenue of American Air and not merely that derived from ticketed
sales undertaken by Orient Air. The latter, in justification of its
submission, invokes its designation as
Page 4 of 14
the exclusive General Sales Agent of American Air, with the
corresponding obligations arising from such agency, such as, the
promotion and solicitation for the services of its principal. In effect, by
virtue of such exclusivity, "all sales of transportation over American Air's
services are necessarily by Orient Air."
- SC: It is a well settled legal principle that in the interpretation of a
contract, the entirety thereof must be taken into consideration to ascertain
the meaning of its provisions. The various stipulations in the contract must
be read together to give effect to all. After a careful examination of the
records, the Court finds merit in the contention of Orient Air that the
Agreement, when interpreted in accordance with the foregoing principles,
entitles it to the 3% overriding commission based on total revenue, or as
referred to by the parties, "total flown revenue." - As the designated
exclusive General Sales Agent of American Air, Orient Air was
responsible for the promotion and marketing of American Air's services
for air passenger transportation, and the solicitation of sales therefor. - In
return for such efforts and services, Orient Air was to be paid commissions
of two (2) kinds: first, a sales agency commission, ranging from 7-8% of
tariff fares and charges from sales by Orient Air when made on American
Air ticket stock; and second, an overriding commission of 3% of tariff
fares and charges for all sales of passenger transportation over American
Air services. - It is immediately observed that the precondition attached
to the first type of commission does not obtain for the second type of
commissions. The latter type of commissions would accrue for sales of
American Air services made not on its ticket stock but on the ticket stock
of other air carriers sold by such carriers or other authorized ticketing
facilities or travel agents. - To rule otherwise, i.e., to limit the basis of
such overriding commissions to sales from American Air ticket stock
would erase any distinction between the two (2) types of commissions and
would lead to the absurd conclusion that the parties had entered into a
contract with meaningless provisions. Such an interpretation must at all
times be avoided with every effort exerted to harmonize the entire
Agreement.
RE: contract of adhesion
An additional point before finally disposing of this issue. It is clear from
the records that American Air was the party responsible for the preparation
of the Agreement. Consequently, any ambiguity in this "contract of
adhesion" is to be taken "contra proferentem", i.e., construed against the
party who caused the ambiguity and could have avoided it by the exercise
of a little more care. Thus, Article 1377 of the Civil Code provides that the
interpretation of obscure words or stipulations in a contract shall not favor
the party who caused the obscurity. 14 To put it differently, when several
interpretations of a provision are otherwise equally proper, that
interpretation or construction is to be adopted which is most favorable to
the party in whose favor the provision was made and who did not cause
the ambiguity.
UY vs CA September 9, 1999
1. Petitioners William Uy and Rodel Roxas are agents authorized to sell
eight parcels of land by the owners thereof. 2. By virtue of such authority,
petitioners offered to sell the lands, located in Tuba, Tadiangan, Benguet
to respondent National Housing Authority (NHA) to be utilized and
developed as a housing project. 3. On February 14, 1989, the NHA Board
passed Resolution No. 1632 approving the acquisition of said lands, with
an area of 31.8231 hectares,
at the cost of P23.867 million, pursuant to which the parties executed a
series of Deeds of Absolute Sale covering the subject lands. 4. Of the eight
parcels of land, however, only five were paid for by the NHA because of
the report 1 it received from the Land Geosciences Bureau of the
Department of Environment and Natural Resources (DENR) that the
remaining area is located at an active landslide area and therefore, not
suitable for development into a housing project. 5. On 22 November 1991,
the NHA issued Resolution No. 2352 cancelling the sale over the three
parcels of land. The NHA, through Resolution No. 2394, subsecguently
offered the amount of P1.225 million to the landowners as daños
perjuicios. 6. On 9 March 1992, petitioners filed before the Regional Trial
Court (RTC) of Quezon City a Complaint for Damages against NHA and
its General Manager Robert Balao. 7. After trial, the RTC rendered a
decision declaring the cancellation of the contract to be justified. The trial
court nevertheless awarded damages to plaintiffs in the sum of P1.255
million, the same amount initially offered by NHA to petitioners as
damages 8. Court of Appeals reversed the decision of the trial court and
entered a new one dismissing the complaint. It held that since there was
"sufficient justifiable basis" in cancelling the sale, "it saw no reason" for
the award of damages. The Court of Appeals also noted that petitioners
were mere attorneys-in-fact and, therefore, not the real parties-in-interest
in the action before the trial court
Issue#1 WON petitioners can recover damages
Page 5 of 14
Petitioners: -claim that they lodged the complaint not in behalf of their
principals but in their own name as agents directly damaged by the
termination of the contract. -The damages prayed for were intended not
for the benefit of their principals but to indemnify petitioners for the losses
they themselves allegedly incurred asa result of such termination. These
damages consist mainly of "unearned income" and advances. 4 -
Petitioners, thus, attempt to distinguish the case at bar from those
involving agents or apoderedos instituting actions in their own name but
in behalf of their principals. Petitioners in this case purportedly brought
the action for damages in their own name and in their own behalf
HELD. NO. Petitioners are not parties to the contract of sale between their
principals and NHA. They are mere agents of the owners of the land
subject of the
sale. As agents, they only render some service or do something in
representation or on behalf of their principals. 8 The rendering of such
service did not make them parties to the contracts of sale executed in behalf
of the latter. Since a contract may be violated only by the parties thereto
as against each other, the real parties-ininterest, either as plaintiff or
defendant, in an action upon that contract must, generally, either be parties
to said contract.
- Neither has there been any allegation, much less proof, that petitioners
are the heirs of their principals.
RATIO:
- Sec. 2, Rule 3 of the Rules of Court requires that every action must be
prosecuted and defended in the name of the real party-in-interest. The real
party-in-interest is the party who stands to be benefited or injured by the
judgment or the party entitled to the avails of the suit. "Interest, within the
meaning of the rule, means material interest, an interest in the issue and to
be affected by the decree, as distinguished from mere interest in the
question involved, or a mere incidental interest. 6 Cases construing the real
party-in-interest provision can be more easily understood if it is borne in
mind that the true meaning of real party-in-interest may be summarized as
follows: An action shall be prosecuted in the name of the party who, by
the substantive law, has the right sought to be enforced. 7
Do petitioners, under substantive law, possess the right they seek to
enforce? We rule in the negative.
- The applicable substantive law in this case is Article 1311 of the Civil
Code, which states:
Contracts take effect only between the parties, their assigns, and heirs,
except in case where the rights and obligations arising from the contract
are not transmissible by their nature, or by stipulation, or by provision of
law. . . .
If a contract should contain some stipulation in favor of a third person, he
may demand its fulfillment provided he communicated his acceptance to
the obligor before its revocation. A mere incidental benefit or interest of a
person is not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person.
Are petitioners assignees to the rights under the contract of sale? In
McMicking vs. Banco Español-Filipino, 10 we held that the rule requiring
every action to be prosecuted in the name of the real party-in-interest.
- Thus, an agent, in his own behalf, may bring an action founded on a
contract made for his principal, as an assignee of such contract. We find
the following declaration in Section 372 (1) of the Restatement of the Law
on Agency (Second): 11
Sec. 372. Agent as Owner of Contract Right (1) Unless otherwise agreed,
an agent who has or who acquires an interest in a contract which he makes
on behalf of his principal can, although not a promisee, maintain such
action thereon maintain such action thereon as might a transferee having a
similar interest.
-Petitioners, however, have not shown that they are assignees of their
principals to the subject contracts. While they alleged that they made
advances and that they suffered loss of commissions, they have not
established any agreement granting them "the right to receive payment and
Page 6 of 14
out of the proceeds to reimburse [themselves] for advances and
commissions before turning the balance over to the principal[s]."
Finally, it does not appear that petitioners are beneficiaries of a stipulation
pour autrui under the second paragraph of Article 1311 of the Civil Code.
Indeed, there is no stipulation in any of the Deeds of Absolute Sale "clearly
and deliberately" conferring a favor to any third person.
That petitioners did not obtain their commissions or recoup their advances
because of the non-performance of the contract did not entitle them to file
the action below against respondent NHA. Section 372 (2) of the
Restatement of the Law on Agency (Second) states:
(2) An agent does not have such an interest in a contract as to entitle him
to maintain an action at law upon it in his own name merely because he is
entitled to a portion of the proceeds as compensation for making it or
because he is liable for its breach.
- As petitioners are not parties, heirs, assignees, or beneficiaries of a
stipulation pour autrui under the contracts of sale, they do not, under
substantive law, possess the right they seek to enforce. Therefore, they are
not the real parties-in-interest in this case.
-Petitioners not being the real parties-in-interest, any decision rendered
herein would be pointless since the same would not bind the real parties-
in- interest.
Issue#2 WON NHA had legal basis to "rescind" the sale of the subject
three parcels of land.
Held: NHA was justified in canceling the contract. The realization of the
mistake as regards the quality of the land resulted in the negation of the
motive/cause thus rendering the contract inexistent.
Ratio:
- Petitioners confuse the cancellation of the contract by the NHA as a
rescission of the contract under Article 1191 of the Civil Code. The right
of rescission or, more accurately, resolution, of a party to an obligation
under Article 1191 is predicated on a breach of faith by the other party that
violates the reciprocity between them. 16 The power to rescind, therefore,
is given to the injured party. 17 Article 1191 states: - The power to rescind
obligations is implied in reciprocal ones, in case one of the obligors should
not comply with what is incumbent upon him.Art 1191 states:
The injured party may choose between the fulfillment and the rescission
of the obligation, with the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if the latter should
become impossible.
- In this case, the NHA did not rescind the contract. Indeed, it did not have
the right to do so for the other parties to the contract, the vendors, did not
commit any breach, much less a substantial breach, 18 of their obligation.
Their obligation was merely to deliver the parcels of land to the NHA, an
obligation that they fulfilled. The NHA did not suffer any injury by the
performance thereof. - The cancellation, therefore, was not a rescission
under Article 1191. Rather, the cancellation was based on the negation of
the cause arising from the realization that the lands, which were the object
of the sale, were not suitable for housing. - Cause is the essential reason
which moves the contracting parties to enter into it. 19 In other words, the
cause is the immediate, direct and proximate reason which justifies the
creation of an obligation through the will of the contracting parties. 20
Cause, which is the essential reason for the contract,
should be distinguished from motive, which is the particular reason of a
contracting party which does not affect the other party. - Ordinarily, a
party's motives for entering into the contract do not affect the contract.
However, when the motive predetermines the cause, the motive may be
regarded as the cause. - In this case, it is clear, and petitioners do not
dispute, that NHA would not have entered into the contract were the lands
not suitable for housing. In other words, the quality of the land was an
implied condition for the NHA to enter into the contract. On the part of the
NHA, therefore, the motive was the cause for its being a party to the sale.
- Were the lands indeed unsuitable for housing as NHA claimed? We deem
the findings contained in the report of the Land Geosciences Bureau dated
15 July 1991 sufficient basis for the cancellation of the sale - Therefore,
assuming that petitioners are parties, assignees or beneficiaries to the
contract of sale, they would not be entitled to any award of damages.
Republic of the Philippines
SUPREME COURT
Manila
Page 7 of 14
EN BANC
G.R. No. 2962 February 27, 1907
B. H. MACKE, ET AL., plaintiffs-appellees,
vs.
JOSE CAMPS, defendant-appellant.
Manuel G. Gavieres for appellant.
Gibbs & Gale for appellees.
CARSON, J.:
The plaintiffs in this action, B. H. Macke and W. H. Chandler, partners doing business under
the firm name of Macke, Chandler & Company, allege that during the months of February
and March, 1905, they sold to the defendant and delivered at his place of business, known
as the "Washington Cafe," various bills of goods amounting to P351.50; that the defendant
has only paid on account of said accounts the sum of P174; that there is still due them on
account of said goods the sum of P177.50; that before instituting this action they made
demand for the payment thereof; and that defendant had failed and refused to pay the said
balance or any part of it up to the time of the filing of the complaint.
B. H. Macke, one of the plaintiffs, testified that on the order of one Ricardo Flores, who
represented himself to be agent of the defendant, he shipped the said goods to the defendants
at the Washington Cafe; that Flores later acknowledged the receipt of said goods and made
various payments thereon amounting in all to P174; that on demand for payment of balance
of the account Flores informed him that he did not have the necessary funds on hand, and
that he would have to wait the return of his principal, the defendant, who was at that time
visiting in the provinces; that Flores acknowledged the bill for the goods furnished and the
credits being the amount set out in the complaint; that when the goods were ordered they
were ordered on the credit of the defendant and that they were shipped by the plaintiffs after
inquiry which satisfied the witness as to the credit of the defendant and as to the authority of
Flores to act as his agent; that the witness always believed and still believes that Flores was
the agent of the defendant; and that when he went to the Washington Cafe for the purpose of
collecting his bill he found Flores, in the absence of the defendant in the provinces,
apparently in charge of the business and claiming to be the business manager of the
defendant, said business being that of a hotel with a bar and restaurant annexed.
A written contract dated May 25, 1904, was introduced in evidence, from which it appears
that one Galmes, the former owner of the business now know as the "Washington Cafe,"
subrented the building wherein the business was conducted, to the defendant for a period of
one year, for the purpose of carrying on that business, the defendant obligating himself not
to sublet or subrent the building or the business without the consent of the said Galmes. This
contract was signed by the defendant and the name of Ricardo Flores appears thereon as a
witness, and attached thereto is an inventory of the furniture and fittings which also is signed
by the defendant with the word "sublessee" (subarrendatario) below the name, and at the
foot of this inventory the word "received" (recibo) followed by the name "Ricardo Flores,"
with the words "managing agent" (el manejante encargado) immediately following his
name.
That Flores, as managing agent of the Washington Cafe, had authority to buy such reasonable
quantities of supplies as might from time to time be necessary in carrying on the business of
hotel bar may fairly be presumed from the nature of the business, especially in view of the
fact that his principal appears to have left him in charge during more or less prolonged
periods of absence; from an examination of the items of the account attached to the
complaint, we are of opinion that he was acting within the scope of his authority in ordering
these goods are binding on his principal, and in the absence of evidence to the contrary,
furnish satisfactory proof of their delivery as alleged in the complaint.

Galmes was called to the stand and identified the above- described document as the contract The judgment of the trial court is affirmed with the costs of his instance against the appellant.
and inventory delivered to him by the defendant, and further stated that he could not tell After expiration of twenty days judgment will be rendered in accordance herewith, and ten
whether Flores was working for himself or for some one else — that it to say, whether Flores days thereafter the case remanded to the lower court for proper action. So ordered.
was managing the business as agent or sublessee.
Arellano, C.J., Torres and Willard, JJ., concur.
The defendant did not go on the stand nor call any witnesses, and relies wholly on his Tracey, J., dissents.
contention that the foregoing facts are not sufficient to establish the fact that he received the
goods for which payment is demanded. Republic of the Philippines
SUPREME COURT
In the absence of proof of the contrary we think that this evidence is sufficient to sustain a Manila
finding that Flores was the agent of the defendant in the management of the bar of the
Washington Cafe with authority to bind the defendant, his principal, for the payment of the FIRST DIVISION
goods mentioned in the complaint.

The contract introduced in evidence sufficiently establishes the fact that the defendant was
the owner of business and of the bar, and the title of "managing agent" attached to the
G.R. No. 108957 June 14, 1993
signature of Flores which appears on that contract, together with the fact that, at the time the
purchases in question were made, Flores was apparently in charge of the business,
performing the duties usually entrusted to managing agent, leave little room for doubt that PRUDENTIAL BANK, petitioner,
he was there as authorized agent of the defendant. One who clothes another apparent vs.
authority as his agent, and holds him out to the public as such, can not be permitted to deny THE COURT OF APPEALS, AURORA CRUZ, respondents.
the authority of such person to act as his agent, to the prejudice of innocent third parties
dealing with such person in good faith and in the following preassumptions or deductions, Monique Q. Ignacio for petitioner.
which the law expressly directs to be made from particular facts, are deemed conclusive:
Eduardo C. Tutaan for private respondent.
(1) "Whenever a party has, by his own declaration, act, or omission, intentionally and
deliberately led another to believe a particular thing true, and to act upon such belief, he can
not, in any litigation arising out such declaration, act, or omission, be permitted to falsify it"
(subsec. 1, sec. 333, Act no. 190); and unless the contrary appears, the authority of an agent CRUZ, J.:
must be presumed to include all the necessary and usual means of carrying his agency into
effect. (15 Conn., 347; 90 N. C. 101; 15 La. Ann, 247; 43 Mich., 364; 93 N. Y., 495; 87 Ind.,
We deal here with another controversy involving the integrity of a bank.
187.)

Page 8 of 14
The complaint in this case arose when private respondent Aurora F.
Cruz, * with her sister as co-depositor, invested P200,000.00 in Central Bank bills with the
Prudential Bank at its branch in Quezon Avenue, Quezon City, on June 23, 1986. The
placement was for 63 days at 13.75% annual interest. For this purpose, the amount of
P196,122.88 was withdrawn from the depositors' Savings Account No. 2546 and applied to
the investment. The difference of P3,877.07 represented the pre-paid interest.
The transaction was evidenced by a Confirmation of Sale1 delivered to Cruz two days later,
together with a Debit Memo2 in the amount withdrawn and applied to the confirmed sale.
These documents were issued by Susan Quimbo, the employee of the bank to whom Cruz
was referred and who was apparently in charge of such transactions.3
Upon maturity of the placement on August 25, 1986, Cruz returned to the bank to "roll-
over" or renew her investment. Quimbo, who again attended to her, prepared a Credit
Memo4 crediting the amount of P200,000.00 in Cruz's savings account passbook. She also
prepared a Debit Memo for the amount of P196,122.88 to cover the re-investment of
P200,000.00 minus the prepaid interest of P3,877.02. 5
This time, Cruz was asked to sign a Withdrawal Slip6 for P196,122.98, representing the
amount to be re-invested after deduction of the prepaid interest. Quimbo explained this was
a new requirement of the bank. Several days later, Cruz received another Confirmation of
Sale7 and a copy of the Debit Memo.8
On October 27, 1986, Cruz returned to the bank and sought to withdraw her P200,000.00.
After verification of her records, however, she was informed that the investment appeared
to have been already withdrawn by her on August 25, 1986. There was no copy on file of
the Confirmation of Sale and the Debit Memo allegedly issued to her by Quimbo. Quimbo
herself was not available for questioning as she had not been reporting for the past week.
Shocked by this information, Cruz became hysterical and burst into tears. The branch
manager, Roman Santos, assured her that he would look into the matter. 9
Every day thereafter, Cruz went to the bank to inquire about her request to withdraw her
investment. She received no definite answer, not even to the letter she wrote the bank
which was received by Santos himself. 10 Finally, Cruz sent the bank a demand letter dated
November 12, 1986 for the amount of P200,000.00 plus interest. 11 In a reply dated
November 20, 1986, the bank's Vice President Lauro J. Jocson said that there appeared to
be an anomaly
and requested Cruz to defer court action as they hoped to settle the matter amicably. 12
Increasingly worried, Cruz sent another letter reiterating her demand. 13 This time the reply
of the bank was unequivocal and negative. She was told that her request had to be denied
because she had already withdrawn the amount she was claiming. 14
Page 9 of 14
Cruz's reaction was to file a complaint for breach of contract against Prudential Bank in the
Regional Trial Court of Quezon City. She demanded the return of her money with interest,
plus damages and attorney's fees. In its answer, the bank denied liability, insisting that
Cruz had withdrawn her investment. The bank also instituted a third-party complaint
against Quimbo, who did not file an answer and was declared in default. 15 The bank,
however, did not present any evidence against her.
After trial, Judge Rodolfo A. Ortiz rendered judgment in favor of the plaintiffs and
disposed as follows:
ACCORDINGLY, judgment is hereby rendered ordering the
defendant/third-party plaintiff to pay to the plaintiffs the following
amounts:
1. P200,000.00, plus interest thereon at the rate of 13.75% per annum
from October 27, 1986, until fully paid;
2. P30,000.00, as moral damages;
3. P20,000.00, as exemplary damages; and
4. P25,000.00, as reasonable attorney's fees.
The counterclaim and the third-party complaint of the defendant/third-
party plaintiff are dismissed.
With costs against the defendant/third-party plaintiff.
The decision was affirmed in toto on appeal to the respondent court.
The judgment of the Court of Appeals 16 is now faulted in this petition, mainly on the
ground that the bank should not have been found liable for a quasi-delict when it was sued
for breach of contract.
The petition shall fail. The petitioner is quibbling. It appears to be merely temporizing to
delay enforcement of the liability clearly established against it.
The basic issues are factual. The private respondent claims she has not yet collected her
investment of P200,000.00 and has submitted in proof of their contention the Confirmation
of Sale and the Debit Memo issued to her by Quimbo on the official forms of the bank. The
petitioner denies her claim and points to the Withdrawal Slip, which it says Cruz has not
denied having signed. It also contends that the Confirmation of Sale and the Debit Memo
are fake and should not have been given credence by the lower courts.
The findings of the trial court on these issues have been affirmed by the respondent court
and we see no reason to disturb them. The petitioner has not shown that they have been
reached arbitrarily or in disregard of the evidence of record. On the contrary, we find
substantial basis for the conclusion that the private respondents signed the Withdrawal Slip
only as part of the bank's new procedure of re-investment. She did not actually receive the
amount indicated therein, which she was made to understand was being re-invested in her
name. The bank itself so assured her in the Confirmation of Sale and the Debit Memo later
issued to her by Quimbo.
Especially persuasive are the following observations of the trial court: 17
What is more, it could not be that plaintiff Aurora F. Cruz withdrew only
the amount of P196,122.98 from their savings account, if her only
intention was to make such a withdrawal. For, if, indeed, it was the desire
of the plaintiffs to withdraw their money from the defendant/third-party
plaintiff, they could have withdrawn an amount in round figures.
Certainly, it is unbelievable that their withdrawal was in the irregular
amount of P196,122.98 if they really received it. On the contrary, this
amount, which is the price of the Central Bank bills rolled over, indicates
that, as claimed by plaintiff Aurora F. Cruz, she did not receive this
money, but it was left by her with the defendant/third-party plaintiff in
order to buy Central Bank bills placement for another sixty-three (63)
days, for which she signed a withdrawal slip at the instance of third-party
defendant Susan Quimbo who told her that it was a new bank
requirement for the roll-over of a matured placement which she
trustingly believed.
Indeed, the bank has not explained the remarkable coincidence that the amount indicated in
the withdrawal slip is exactly the same amount Cruz was re-investing after deducting
therefrom the pre-paid interest.
The bank has also not, succeeded in impugning the authenticity of the Confirmation of Sale
and the Debit Memo which were made on its official, forms. These are admittedly not
available to the general public or even its depositors and are handled only by its personnel.
Even assuming that they were not signed by its authorized officials, as it claims, there was
no obligation on the part of Cruz to verify their authority because she had the right to
presume it. The documents had been issued in the office of the bank itself and by its own
employees with whom she had previously dealt. Such dealings had not been questioned
Page 10 of 14
before, much leas invalidated. There was absolutely no reason why she should not have
accepted their authority to act on behalf of their employer.
It is also worthy of note — and wonder — that although the bank impleaded Quimbo in a
third-party complaint, it did not pursue its suit even when she failed to answer and was
declared in default. The bank did not introduce evidence against her although it could have
done so under the rules. No less remarkably, it did not call on her to testify on its behalf,
considering that under the circumstances claimed by it, she would have been the best
witness to show that Cruz had actually withdrawn her P200,000.00 placement. Instead, the
bank chose to rely on its other employees whose testimony was less direct and categorical
than the testimony Quimbo could have given.
We do not find that the Court of Appeals held the bank liable on a quasi-delict. The
argument of the petitioner on this issue is pallid, to say the least, consisting as it does only
of the observation that the article cited by the respondent court on the agent's liability falls
under the heading in the Civil Code on quasi-delicts. On the other hand, the respondent
court clearly declared that:
The defendant/third-party plaintiff being liable for the return of the
P200,000.00 placement of the plaintiffs, the extent of the liability of the
defendant/third-party plaintiff for damages resultant thereof, which is
contractual, is for all damages which may be reasonably attributed to the
non-performance of the obligation, . . .
xxx xxx xxx
Because of the bad faith of the defendant/third-party plaintiff in its
breach of its contract with the plaintiffs, the latter are, therefore, entitled
to an award of moral damages . . . (Emphasis supplied)
There is no question that the petitioner was made liable for its failure or refusal to deliver
to Cruz the amount she had deposited with it and which she had a right to withdraw upon
its maturity. That investment was acknowledged by its own employees, who had the
apparent authority to do so and so could legally bind it by its acts vis-a-vis Cruz. Whatever
might have happened to the investment — whether it was lost or stolen by whoever — was
not the concern of the depositor. It was the concern of the bank.
As far as Cruz was concerned, she had the right to withdraw her P200,000.00 placement
when it matured pursuant to the terms of her investment as acknowledged and reflected in
the Confirmation of Sale. The failure of the bank to deliver the amount to her pursuant to
the Confirmation of Sale constituted its breach of their contract, for which it should be held
liable.
The liability of the principal for the acts of the agent is not even debatable. Law and
jurisprudence are clearly and absolutely against the petitioner.
Such liability dates back to the Roman Law maxim, Qui per alium facit per seipsum facere
videtur. "He who does a thing by an agent is considered as doing it himself." This rule is
affirmed by the Civil Code thus:
Art. 1910. The principal must comply with all the obligations which the
agent may have contracted within the scope of his authority.
Art. 1911. Even when the agent has exceeded his authority, the principal
is solidarily liable with the agent if the former allowed the latter to act as
though he had full powers.
Conformably, we have declared in countless decisions that the principal
is liable for obligations contracted by the agent. The agent's apparent
representation yields to the principal's true representation and the
contract is considered as entered into between the principal and the third
person. 18
A bank is liable for wrongful acts of its officers done in the interests of
the bank or in the course of dealings of the officers in their representative
capacity but not for acts outside the scope of their authority. (9 c.q.s. p.
417) A bank holding out its officers and agent as worthy of confidence
will not be permitted to profit by the frauds they may thus be enabled to
perpetrate in the apparent scope of their employment; nor will it be
permitted to shirk its responsibility for such frauds, even though no
benefit may accrue to the bank therefrom (10 Am Jur 2d, p. 114).
Accordingly, a banking corporation is liable to innocent third persons
where the representation is made in the course of its business by an agent
acting within the general scope of his authority even though, in the
particular case, the agent is secretly abusing his authority and attempting
to perpetrate a fraud upon his principal or some other person, for his own
ultimate benefit (McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW
818, 40 ALR 1021.)
Application of these principles in especially necessary because banks have a fiduciary
relationship with the public and their stability depends on the confidence of the people in
Page 11 of 14
their honesty and efficiency. Such faith will be eroded where banks do not exercise strict
care in the selection and supervision of its employees, resulting in prejudice to their
depositors.
It would appear from the facts established in the case before us that the petitioner was less
than eager to present Quimbo at the trial or even to establish her liability although it made
the initial effort — which it did not pursue — to hold her answerable in the third-party
complaint. What ever happened to her does not appear in the record. Her absence from the
proceedings feeds the suspicion of her possible misdeed, which the bank seems to have
studiously ignored by its insistence that the missing money had been actually withdrawn by
Cruz. By such insistence, the bank is absolving not only itself but also, in effect and by
extension, the disappeared Quimbo who apparently has much to explain.
We agree with the lower courts that the petitioner acted in bad faith in denying Cruz the
obligation she was claiming against it. It was obvious that an irregularity had been
committed by the bank's personnel, but instead of repairing the injury to Cruz by
immediately restoring her money to her, it sought to gloss over the anomaly in its own
operations.
Cruz naturally suffered anxious moments and mental anguish over the loss of the
investment. The amount of P200,000.00 is not small even by present standards. By unjustly
withholding it from her on the unproved defense that she had already withdrawn it, the
bank violated the trust she had reposed in it and thus subjected itself to further liability for
moral and exemplary damages.
If a person dealing with a bank does not read the fine print in the contract, it is because he
trusts the bank and relies on its integrity. The ordinary customer applying for a loan or
even making a deposit (and so himself extending the loan to the bank) does not bother with
the red tape requirements and the finicky conditions in the documents he signs. His feeling
is that he does not have to be wary of the bank because it will deal with him fairly and
there is no reason to suspect its motives. This is an attitude the bank must justify.
While this is not to say that bank regulations are meaningless or have no binding effect,
they should, however, not be used for covering up the fault of bank employees when they
blunder or, worse, intentionally cheat him. The misdeeds of such employees must be
readily acknowledged and rectified without delay. The bank must always act in good faith.
The ordinary customer does not feel the need for a lawyer by his side every time he deals
with a bank because he is certain that it is not a predator or a potential adversary. The bank
should show that there is really no reason for any apprehension because it truly deserves
his faith in it.
WHEREFORE, the petition is DENIED and the appealed decision is AFFIRMED, with 15 Rollo, p. 36.
costs against the petitioner. It is so ordered.
16 Rollo, pp. 39-46.
Griño-Aquino, Bellosillo and Quiason, JJ., concur.
17 Decision of RTC Judge Rodolfo A. Ortiz, pp. 7-8.

18 National Food Authority vs. Intermediate Appellate Court, 184 SCRA

# Footnotes 166.

* The petitioner is not related to the ponente.

1 Decision of RTC Judge Rodolfo A. Ortiz, p. 3. LITONJUA, JR. v. ETERNIT CORP. G.R. No. 144805 June 8, 2006

2 Decision of RTC Judge Rodolfo A. Ortiz, p. 3.

3 Rollo, p. 28. Quick Summary: EC engaged the services of Marquez to dispose its eight parcels of land
(sites used to manufacture their roofing materials and pipe products) in 1986 when it decided
4 Decision of RTC Judge Rodolfo A. Ortiz, p. 4. to stop operations due to the political instability of the country. Marquez was able to find a
buyer, the Litonjua brothers, who accepted the counteroffer price offered to them by
5 Rollo, p. 29. Delsaux, head of ESAC which owns 90% of EC and conferred to Marquez by Glanville,
President and General Manager of EC.
6 Rollo, p. 29.

7 Rollo, p. 29.
Litonjua deposited US$1,000,000.00 with the Security Bank & Trust Company, Ermita
Branch, and drafted an Escrow Agreement to expedite the sale. EC backed out of the sale
8 Rollo, p. 29. compelling Litonjua to file for specific performance and damages. SC ruled that there was
no valid sale as the officers (Glanville and
9 Rollo, p. 30.
Delsaux) acted on behalf of ESAC and not on behalf of EC, which owns the properties. EC
10 Rollo, p. 30. never ratified their agreement with any board resolution.

11 Rollo, p. 30.

12 Rollo, p. 31. EC did not knowingly allow its officers to assume such authority. No board resolution
designating them as agent. Litonjua cannot invoke good faith and doctrine of apparent
13 Rollo, p. 31. authority. He should have exercised due diligence in checking for the authorization papers
of Marquez, Glanville and Delsaux.
14 Rollo, p. 31.

Page 12 of 14
Agency by estoppel (Requisites): 1. Principal manifested a representation of the agent’s ratified by the principal. In any event, such ratification cannot be given any retroactive effect.
authority / knowingly allowed agent to assume such authority 2. Third person in Good Faith Plaintiffs could not assume that defendants had agreed to sell the property without a clear
relied upon such representation 3. 3rd person has changed its position to its detriment. authorization from the corporation concerned, that is, through resolutions of the Board of
Directors and stockholders.

Facts: Eternit Corporation (EC) is a corporation engaged in the manufacture of roofing

materials and pipe products in the Philippines. Its manufacturing operations were conducted Issues: 1. Whether or not Marquez, Glanville, and Delsaux were authorized by respondent
on eight parcels of land with a total area of 47,233 square meters. In 1986, the management EC to act as its agents relative to the sale of the properties of EC and could represent the
of ESAC grew concerned about the political situation in the Philippines and wanted to stop company in a contract of sale of real property of EC.
its operations in the country. Michael Adams, a member of EC’s Board of Directors engaged
the services of realtor/broker Lauro G. Marquez so that the eight parcels of land could be
offered for sale to prospective buyers.
2. Whether an agency by estoppel was created or whether a person acted within the bounds
of his apparent authority, and whether the principal is estopped to deny the apparent authority
of its agent are, likewise, questions of fact to be resolved on the basis of the evidence on
Marquez offered the parcels of land and the improvements to Eduardo B. Litonjua, Jr. of the record
Litonjua & Company, Inc. In a Letter dated September 12, 1986, Marquez declared that he
was authorized to sell the properties for P27,000,000.00 and could negotiate the terms of the
sale. Litonjua, along with brother, offered to buy the property for P20,000,000.00 cash.
Marquez apprised Glanville (President and General Manager of EC) of the Litonjua siblings’
Held: No.
offer and relayed the same to Delsaux (Head of ESAC, which owns 90% of EC) in Belgium,
but the latter did not respond. On February 12, 1987 that Delsaux sent a telex to Glanville
stating that, based on the "Belgian/Swiss decision," the final offer was "US$1,000,000.00
and P2,500,000.00 to cover all existing obligations prior to final liquidation." Litonjua
accepted the counter-proposal of Glanville which was conferred to them in a letter. Within While Glanville was the President and General Manager of respondent EC, and Adams and
90 days as provided in their agreement, the Litonjua brothers deposited the amount of Delsaux were members of its Board of Directors, the three acted for and in behalf of
US$1,000,000.00 with the Security Bank & Trust Company, Ermita Branch, and drafted an respondent ESAC, and not as duly authorized agents of respondent EC; a board resolution
Escrow Agreement to expedite the sale. evincing the grant of such authority is needed to bind EC to any agreement regarding the
sale of the subject properties. Such board resolution is not a mere formality but is a condition
EC backed out of the sale. They wanted to continue operations in the Philippines since by sine qua non to bind respondent EC. The mere fact that a corporation owns a majority of the
then, in 1987, Marcos had left and the political situation had already improved. Delsaux shares of stocks of another (respondent ESAC owned 90% of the shares of stocks of
himself later sent a letter dated May 22, 1987, confirming that the ESAC Regional Office respondent EC), or even all of such shares of stocks, taken alone, will not justify their being
had decided not to proceed with the sale of the subject land. Litonjua filed for specific treated as one corporation.
performance and damages.

In an agent-principal relationship, the personality of the principal is extended through the

RTC ruled that EC was not liable for damages since there was no valid and binding sale facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized
between the plaintiffs and said defendants. Since the authority of the agents/realtors was not to perform all acts which the latter would have him do. Such a relationship can only be
in writing, the sale is void and not merely unenforceable, and as such, could not have been effected with the consent of the principal, which must not, in any way, be compelled by law
or by any court. It was the duty of the petitioners to prove that respondent EC had decided
Page 13 of 14
to sell its properties and that it had empowered Adams, Glanville and Delsaux or Marquez
to offer the properties for sale to prospective buyers and to accept any counter-offer.
Petitioners likewise failed to prove that their counter-offer had been accepted by respondent
EC, through Glanville and Delsaux.
When specific performance is sought of a contract made with an agent, the agency must be
established by clear, certain and specific proof.
the performance of authorized duties of such director, are not binding on the corporation.
While a corporation may appoint agents to negotiate for the sale of its real properties, the
final say will have to be with the board of directors through its officers and agents as
authorized by a board resolution or by its by-laws. An unauthorized act of an officer of the
corporation is not binding on it unless the latter ratifies the same expressly or impliedly by
its board of directors. Any sale of real property of a corporation by a person purporting to be
an agent thereof but without written authority from the corporation is null and void. The
declarations of the agent alone are generally insufficient to establish the fact or extent of
his/her authority.

A corporation is a juridical person separate and distinct from its members or stockholders
and is not affected by the personal rights, obligations and transactions of the latter. It may
act only through its board of directors or, when authorized either by its by-laws or by its
board resolution, through its officers or agents in the normal course of business. The general
principles of agency govern the relation between the corporation and its officers or agents,
subject to the articles of incorporation, by-laws, or relevant provisions of law. Under Section
36 of the Corporation Code, a corporation may sell or convey its real properties, subject to
the limitations prescribed by law and the Constitution, as follows:
SEC. 36. Corporate powers and capacity. – Every corporation incorporated under this Code
has the power and capacity: x x x x 7. To purchase, receive, take or grant, hold, convey, sell,
lease, pledge, mortgage and otherwise deal with such real and personal property, including
securities and bonds of other corporations, as the transaction of a lawful business of the
corporation may reasonably and necessarily require, subject to the limitations prescribed by
the law and the Constitution.
By the contract of agency, a person binds himself to render some service or to do something
in representation on behalf of another, with the consent or authority of the latter. Consent of
both principal and agent is necessary to create an agency. The principal must intend that the
agent shall act for him; the agent must intend to accept the authority and act on it, and the
intention of the parties must find expression either in words or conduct between them.
An agency may be expressed or implied from the act of the principal, from his silence or
lack of action, or his failure to repudiate the agency knowing that another person is acting
on his behalf without authority. Acceptance by the agent may be expressed, or implied from
his acts which carry out the agency, or from his silence or inaction according to the
circumstances. Agency may be oral unless the law requires a specific form. However, to
create or convey real rights over immovable property, a special power of attorney is
necessary. Thus, when a sale of a piece of land or any portion thereof is through an agent,
the authority of the latter shall be in writing, otherwise, the sale shall be void.

The property of a corporation, however, is not the property of the stockholders or members,
and as such, may not be sold without express authority from the board of directors. Physical
acts, like the offering of the properties of the corporation for sale, or the acceptance of a
counter-offer of prospective buyers of such properties and the execution of the deed of sale
covering such property, can be performed by the corporation only by officers or agents duly
authorized for the purpose by corporate by-laws or by specific acts of the board of directors.
Absent such valid delegation/authorization, the rules is that the declarations of an individual
director relating to the affairs of the corporation, but not in the course of, or connected with,
Page 14 of 14