G.R. No.

76931 May 29, 1991

ORIENT AIR SERVICES & HOTEL REPRESENTATIVES v. COURT OF APPEALS and AMERICAN
AIR-LINES INCORPORATED

PADILLA, J.:

FACTS:

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. 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, American Air undertook the collection of the proceeds of tickets sold originally
by Orient Air and terminated the Agreement. American Air instituted a suit against Orient Air averring
the aforesaid basis for the termination of the Agreement.
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
commissions.

ISSUE:
1. Whether or not Orient Air is entitled to the 3% overriding commission?
2. Whether or not the CA erred in affirming the decision of the trial court in ordering American Air to
"reinstate
defendant as its general sales agent for passenger transportation in the Philippines in accordance
with said GSA Agreement."?

RULING:

YES. The Court AFFIRMS the decision and resolution of the respondent Court of Appeals with
modifications.

RATIO DECIDENDI:
1. 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 Agreement, when interpreted
in accordance with the foregoing principles, entitles Orient Air to the 3% overriding commission
based on total 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. Orient Air was to be paid commissions of two 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.
2. The CA in affirming the trial court’s decision, 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. 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.
RAMON RALLOS v. FELIX GO CHAN, GR No.L-24332, 1978-01-31
Facts:
Concepcion and Gerundia both surnamed Rallos were sisters and registered co-owners of
a parcel of land known as Lot No. 5983 of the Cadastral Survey of Cebu... the sisters
executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing
him to sell for and in their behalf
Concepcion Rallos died.
Simeon Rallos sold the undivided shares of his... sisters Concepcion and Gerundia in lot
5983 to Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90.
Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos filed a
complaint... praying (1) that the sale of the undivided share of the deceased Concepcion
Rallos in lot
5983 be declared unenforceable, and said share be reconveyed to her estate; (2) that the
Certificate of Title issued in the name of Felix Go Chan & Sons Realty Corporation be
cancelled and another title be issued in the names of the corporation and the "Intestate
estate of
Concepcion Rallos" in equal undivided shares; and (3) that plaintiff be indemnified by way
of attorney's fees and payment of costs of suit.
After trial, the court a quo rendered judgment
Declaring the deed of sale, Exh. 'C', null and void insofar as the one-half pro-indiviso share
of Concepcion Rallos in the property in question, - Lot 5983 of the Cadastral Survey of
Cebu - is concerned
Sentencing the co-defendant Juan T. Borromeo, administrator of the Estate of Simeon
Rallos, to pay to defendant Felix Go Chan & Sons Realty Corporation the sum of
P5,343.45, representing the price of one-half (1/2) share of lot 5983
The appellate tribunal, as adverted to earlier, resolved the appeal on
November 20, 1964 in favor of the appellant corpo-ration sustaining the sale in question.
Issues:
is the sale of the undivided share of Concepcion Rallos in lot 5983 valid although it was
executed by the agent after... the death of his principal?
Ruling:
Out of the above given principles, sprung the creation and acceptance of the relationship of
agency whereby one party, called the principal (mandante), authorizes another, called the
agent (mandatario), to act for and in his behalf in transactions... with third persons.
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.
By reason of the very nature of the relationship between principal and agent, agency is
extinguished by the death of the principal or of the agent. This is the law in this jurisdiction.
Articles 1930 and 1931 of the Civil Code provide the exceptions to the general rule
aforementioned.
Article 1931 is the applicable law. 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.
In the instant case, it cannot be questioned that the agent, 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. The knowledge of the death is clearly to be inferred from the pleadings filed by
Simeon Rallos before the trial court.
On the basis of the established knowledge of Simeon Rallos concerning the death of his
principal, Concepcion Rallos, Article 1931 of the Civil Code is inapplicable. The law
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.
In sustaining the validity of the sale to respondent corporation, the Court of Appeals
reasoned out that there is no provision in the Code which provides that whatever is done by
an agent having knowledge of the death of his principal is void even with respect to third...
persons who may have contracted with him in good faith and without knowledge of the
death of the principal.
We cannot see the merits of the foregoing argument as it ignores the existence of the
general rule enunciated in Article 1919 that the death of the principal extinguishes the
agency.
Another argument advanced by respondent court is that the 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
Although a revocation of a power of attorney to be effective must be communicated to the...
parties concerned,[18] 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."[19]
With death, the principal's will ceases or is terminated; the source of authority is
extinguished.
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.
Holding that the good faith of a third person in dealing with an agent affords the former
sufficient protection, respondent court drew a "parallel" between the instant case and that of
an innocent purchaser for value of a registered land... with the case before Us because
here We are confronted with one who admittedly was an agent of his sister and who sold
the property of the latter after her death with full knowledge of such death. The situation is...
expressly covered by a provision of law on agency the terms of which are clear and
unmistakable leaving no room for an interpretation contrary to its tenor
IN VIEW OF ALL THE FOREGOING, We set aside the decision of respondent appellate
court, and We affirm en toto the judgment rendered by... the Court of First Instance of Cebu
Principles:
"ART. 1403. The following contracts are unenforceable, unless they are ratified:

"(1) Those entered into in the name of another person by one who has been given no
authority or legal representation or who has acted beyond his powers; x x x."
"ART. 1919. Agency is extinguished:

"xx xx xx

"3. By the death, civil interdiction, insanity or insolvency of the principal or of the agent; x x
x."
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.

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.
Florentina Bautista-Spille represented by her Attorney-in-Fact, Manuel B. Flores, Jr.,
Petitioner, vs. NICORP Management and Development Corporation, Benjamin G. Bautista,
and International Exchange Bank, Respondents. (Gr. No. 214057, October 19, 2015.

MENDOZA, J,:

Facts:

Petitioner Florentina Bautista-Spille is the owner of a registered parcel of land in Imus

City, Cavite covered by TCT No.T-197. On June 2, 1996, petitioner and her spouse executed a
document denominated as General Power of Attorney in favour of her brother, respondent
Benjamin Bautista, authorizing the latter to administer all her business and properties in the
Philippines which document was notarized before the Consulate General of the Philippines,
New York, USA. On August 13, 2004, Benjamin and NICORP entered into a Contract to Sell
pertaining to TCT No.T-197. Pursuant to said contract, an Escrow Agreement was executed
designating IE Bank as the Escrow Agent, obliging the latter to hold and take custody of TCT No.
T-197, and to release said title to NICORP upon full payment of the subject property. However,
when petitioner found out about the sale, she opposed and contended that Benjamin was not
clothe with authority to enter into a contract to sell and thereafter demanded the return of the
subject title. A complaint was filed by petitioner against Banjamin, NICORP, and IE Bank for
declaration of nullity of the contract to sell, injunction, recovery of possession and damages
with prayer for issuance of TRO and/or preliminary injunction because NICORP has already
started development of the property. The RTC ruled in favour of petitioner which was reversed
by the CA on appeal.

Issue: Whether Benjamin is authorized to sell the subject property of petitioner by virtue of the
General Power of Attorney.

Ruling: No, Benjamin is not authorized to sell the subject property.

The well-established rule is when a sale of a parcel of land or any interest therein is
through an agent, the authority of the latter shall be in writing, otherwise the sale shall be void.
Articles 1874 and 1878 of the Civil Code explicitly provide:

Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void.

Art. 1878. Special powers of attorney are necessary in the following cases:

(1) x xx

(5) To enter into any contract by which the ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable consideration;
x x x . [Emphasis Supplied]

From the foregoing, it is clear that an SPA in the conveyance of real rights over immovable
property is necessary. xxx

xxx such authority must be conferred in writing and must express the powers of the agent in
clear and unmistakable language in order for the principal to confer the right upon an agent to
sell the real property.

It is a general rule that a power of attorney must be strictly construed, and courts will not infer
or presume broad powers from deeds which do not sufficiently include property or subject
under which the agent is to deal. Thus, when the authority is couched in general terms, without
mentioning any specific power to sell or mortgage or to do other specific acts of strict
dominion, then only acts of administration are deemed conferred.

Doubtless, there was no perfected contract to sell between petitioner and NICORP. Nowhere in
the General Power of Attorney was Benjamin granted, expressly or impliedly, any power to sell
the subject property or a portion thereof. The authority expressed in the General Power of
Attorney was couched in very broad terms covering petitioner's businesses and properties.
Time and again, this Court has stressed that the power of administration does not include acts
of disposition, which are acts of strict ownership. As such, an authority to dispose cannot
proceed from an authority to administer, and vice versa, for the two powers may only be
exercised by an agent by following the provisions on agency of the Civil Code.
SPS. FERNANDO AND LOURDES VILORIA v. CONTINENTAL AIRLINES, GR No.
188288, 2012-01-16
Facts:
While in the United States, Fernando purchased for himself and his wife, Lourdes, two (2)
round trip airline tickets from San Diego, California to Newark, New Jersey on board
Continental Airlines. Fernando purchased the tickets at US$400.00 each... from a travel
agency called "Holiday Travel" and was attended to by a certain Margaret Mager (Mager).
According to Spouses Viloria, Fernando agreed to buy the said tickets after Mager informed
them that there were no available seats at Amtrak, an intercity passenger train... service
provider in the United States. Per the tickets, Spouses Viloria were scheduled to leave for
Newark on August 13, 1997 and return to San Diego on August 21, 1997.
Fernando requested Mager to reschedule their flight to Newark to an earlier date or August
6, 1997. Mager informed him that flights to Newark via Continental Airlines were already
fully booked
Fernando opted to request for a refund. Mager, however, denied his request as the subject
tickets are non-refundable and the only option... is the re-issuance of new tickets within one
(1) year from the date the subject tickets were issued.
Fernando decided to reserve two (2) seats with Frontier Air.
Fernando made inquiries and was told that there are seats available and he can travel on
Amtrak anytime and any day he pleased. Fernando... then purchased two (2) tickets for
Washington, D.C.
From Amtrak, Fernando went to Holiday Travel and confronted Mager with the Amtrak
tickets, telling her that she had misled them into buying the Continental Airlines tickets
Fernando reiterated his demand for a refund
Fernando sent a letter to CAI... demanding a refund and alleging that Mager had deluded
them into purchasing the subject tickets.
Continental Micronesia denied Fernando's request for a refund
Fernando went to Continental's ticketing office at Ayala Avenue, Makati City to have the
subject tickets replaced by a single round trip ticket to Los Angeles, California under his
name. Therein, Fernando was informed that Lourdes' ticket was non-transferable,... thus,
cannot be used for the purchase of a ticket in his favor.
Fernando demanded for the refund of the subject tickets as he no longer wished to have
them replaced.
Spouses Viloria filed a complaint against CAI, praying that CAI be ordered to refund the
money
RTC rendered its... holding that Spouses Viloria are entitled to a refund
Mager's misrepresentation in obtaining their consent in the purchase of the subject tickets.
Mager is CAI's agent, hence, bound by her bad faith and misrepresentation. As far as the
RTC is concerned, there is no issue as to whether Mager was CAI's agent in view of CAI's
implied recognition of her status... a travel agency binds itself to render some service or to
do something in representation or on behalf of another, with the consent or authority of the
latter. This court takes judicial notice of the common services rendered by travel agencies
that... represent themselves as such, specifically the reservation and booking of local and
foreign tours as well as the issuance of airline tickets for a commission or fee
CA reversed the RTC
CAI cannot be held liable for Mager's act in the absence of any proof that a principal-agent
relationship existed between CAI and Holiday Travel
Viloria, who have the burden... of proof to establish the fact of agency, failed to present
evidence demonstrating that Holiday Travel is CAI's agent... refund is not available to
Spouses Viloria as the word "non-refundable" was clearly printed on the face of the subject
tickets, which constitute their contract with CAI
Issues:
Does a principal-agent relationship exist between CAI and Holiday Travel?
Assuming that an agency relationship exists between CAI and Holiday Travel, is CAI bound
by the acts of Holiday Travel's agents and employees such as Mager?
Ruling:
According to the CA, agency is never presumed and that he who alleges that it exists has
the burden of proof.
We disagree.
All the elements of an agency exist in this case. The first and second elements are present
as CAI does not deny that it concluded an agreement with Holiday Travel, whereby Holiday
Travel would enter into contracts of carriage with third... persons on CAI's behalf. The third
element is also present as it is undisputed that Holiday Travel merely acted in a
representative capacity and it is CAI and not Holiday Travel who is bound by the contracts
of carriage entered into by Holiday Travel on its behalf. The fourth... element is also present
considering that CAI has not made any allegation that Holiday Travel exceeded the
authority that was granted to it. In fact, CAI consistently maintains the validity of the
contracts of carriage that Holiday Travel executed with Spouses Viloria and that Mager was
not guilty of any fraudulent misrepresentation
CAI admits the authority of Holiday Travel to enter into contracts of carriage on its behalf
CAI did not deny that Holiday Travel is its authorized agent.
Article 1869 of the Civil Code, "[a]gency may be express, or implied from the acts 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.
That the... principal is bound by all the obligations contracted by the agent within the scope
of the authority granted to him is clearly provided under Article 1910 of the Civil Code and
this constitutes the very notion of agency.
Spouses Viloria's cause of action on the basis of Mager's alleged fraudulentm
isrepresentation is clearly one of tort or quasi-delict, there being no pre-existing contractual
relationship between them. Therefore, it was incumbent upon Spouses Viloria to prove that
CAI was... equally at fault.
Records are devoid of any evidence by which CAI's alleged liability can be substantiated...
a person's vicarious liability is anchored on his possession of control, whether absolute or
limited, on the tortfeasor. Without such control, there is nothing which could justify extending
the liability to a person other than the one who committed the tort.
Incumbent upon Spouses Viloria to prove that CAI exercised control or supervision over
Mager by preponderant evidence. The existence of control or supervision cannot be
presumed and CAI is under no obligation to prove its denial or nugatory assertion... no
liability can be imposed on CAI for Mager's supposed misrepresentation.
The fraud alleged by Spouses Viloria has not been satisfactorily established as causal in
nature to warrant the annulment of the subject contracts. In fact, Spouses Viloria failed to
prove by clear and convincing... evidence that Mager's statement was fraudulent.
As CAI correctly pointed out and as Fernando admitted, it was possible that during the...
intervening period of three (3) weeks from the time Fernando purchased the subject tickets
to the time he talked to said Amtrak employee, other passengers may have cancelled their
bookings and reservations with Amtrak, making it possible for Amtrak to accommodate
them. Indeed,... the existence of fraud cannot be proved by mere speculations and
conjectures. Fraud is never lightly inferred; it is good faith that is.
CAI's liability for damages for its refusal to accept Lourdes' ticket for the purchase of
Fernando's round trip ticket is offset by Spouses Viloria's liability for their refusal to pay the
amount, which is not covered by the subject tickets
Petition is DENIED.
Principles:
Distinctions between a sale and an agency are not difficult to discern... and this Court, as
early as 1970, had already formulated the guidelines that would aid in differentiating the two
(2) contracts. In Commissioner of Internal Revenue v. Constantino,[21] this Court
extrapolated that the primordial differentiating... consideration between the two (2) contracts
is the transfer of ownership or title over the property subject of the contract. In an agency,
the principal retains ownership and control over the property and the agent merely acts on
the principal's behalf and under his instructions... in furtherance of the objectives for which
the agency was established. On the other hand, the contract is clearly a sale if the parties
intended that the delivery of the property will effect a relinquishment of title, control and
ownership in such a way that the recipient may do... with the property as he pleases.