1. Rallos v. Felix Go Chan & Sons Realty Corp., 81 SCRA property right in his own name.
n his own name. The children of Anatolio
251 (see separate page)
2. Orient Air Services & Hotel Representatives vs. Court of
Appeals, 197 SCRA 645 (see separate page)
3. Air France vs. Court of Appeals, 126 SCRA 448 (see separate
page)
4. IN RE: PETITION FOR ISSUANCE OF SEPARATE
CERTIFICATE OF TITLE.
JOSE A. SANTOS Y Diaz vs. ANATOLIO BUENCONSEJO, ET
AL.
G.R. No. L-20136, June 23, 1965
FACTS: Petitioner Jose A. Santos y Diaz seeks the reversal of an
order of the Court of First Instance of Albay, denying his petition,
filed in Cadastral Case No. M-2197, LRC Cad. Rec. No. 1035, for the
cancellation of original certificate of title No. RO-3848 (25322),
issued in the name of Anatolio Buenconsejo, Lorenzo Bon and
Santiago Bon and covering Lot No. 1917 of the Cadastral Survey of
Tabaco, Albay, and the issuance, in lieu thereof, of a separate transfer
certificate of title in his name, covering part of said Lot No. 1917,
namely, Lot No. 1917-A of Subdivision Plan PSD-63379. The
aforementioned Lot No. 1917 covered by Original Certificate of Title
No. RO-3848 (25322) was originally owned in common by Anatolio
Buenconsejo to the extent of ½ undivided portion and Lorenzo Bon
1 and Santiago Bon to the extent of the other ½ ; that Anatolio
Buenconsejo's rights, interests and participation over the portion
above mentioned were on January 3, 1961 and by a Certificate of
Sale executed by the Provincial Sheriff of Albay, transferred and
conveyed to Atty. Tecla San Andres Ziga, awardee in the
corresponding auction sale conducted by said Sheriff in connection
with the execution of the decision of the Juvenile Delinquency and
Domestic Relations Court in Civil Case No. 25267, entitled "Yolanda
Buenconsejo, et al. vs. Anatolio Buenconsejo"; that on December 26,
1961 and by a certificate of redemption issued by the Provincial
Sheriff of Albay, the rights, interest, claim and/or or participation
which Atty. Tecla San Andres Ziga may have acquired over the
property in question by reason of the aforementioned auction sale
award, were transferred and conveyed to the herein petitioner in his
capacity as Attorney-in-fact of the children of Anatolio Buenconsejo,
namely, Anastacio Buenconsejo, Elena Buenconsejo and Azucena
Buenconsejo. It would appear, also, that petitioner Santos had
redeemed the aforementioned share of Anatolio Buenconsejo, upon
the authority of a special power of attorney executed in his favor by
the children of Anatolio Buenconsejo; that relying upon this power of
attorney and redemption made by him.
ISSUE: Whether or not the said power of attorney authorized him to
act on behalf of the children of Anatolio Buenconsejo.
RULING: No.
A Power of attorney cannot vest property right in attorney’s own
name. A special power of attorney authorizing a person to act on
behalf of the children of another cannot vest in the said attorney any
Buenconsejo had no authority to execute said power of attorney,
because their father is still alive and, in fact, he and his wife opposed
the petition of Santos.
5. ALBALADEJO Y CIA., S. en C. vs. The PHILIPPINE
REFINING CO., as successor to The Visayan Refining Co.
G.R. No. L-20726, December 20, 1923
FACTS: Albaladejo y Cia was engaged in the buying and selling of
copra in Albay, while Visayan Refining Corp. (VRC) was engaged in
the manufacture of coconut oil, for which purpose it must continually
purchase large quantities of copra. Pursuant to an agreement which
both parties made, Albaladejo y Cia, as VRC's agent, bought copra
extensively for VRC. During the years that they contracted with each
other, VRC required large quantities of copra which compelled
Albaladejo y Cia to extend its business by establishing some 20
agencies or sub agencies in various ports and places in Albay and
neighboring provinces. Affairs between them remained until 1920
when VRC closed down its factory in Opon, Cebu and withdrew
from the copra market. Upon the liquidation of their accounts, VRC
rendered the last account to Albaladejo y Cia amounting to a balance
of P288 in favor of VRC as of April 1921. This account was
approved by Albaladejo. This time, Philippine Refining Co. (PRC)
succeeded to the rights and liabilities of VRC. Six weeks after,
Albaladejo alleged that VRC negligently failed to provide opportune
transportation for the copra it collected and deposited for shipment at
various places, pursuant to their agreement that VRC obligated itself
to provide transportation by sea to Opon, Cebu. Due to VRC's failure,
the copra diminished in weight and valueAGENCY: IN GENERAL
due to its shrinkage through
excessive drying. The total value of these copra was P201,599.53, in
which amount Albaladejo y Cia was damaged and injured. However,
the lower court ruled that VRC was not negligent in the delay of the
transportation but the occasional irregularities were due at times to
the condition of the weather as to the transportation by sea.
Albaladejo also sought to recover P110,000, the amount it expended
in maintaining and extending its organization, on the basis that VRC
requested such, with repeated assurances that it would resume its
activity as a purchaser of copra.
ISSUE: Whether Albaladejo y Cia, as agent of VRC, is entitled to
reimbursement for the expenses in maintaining and extending its
organization for the purchase of copra in the period when VRC was
closed which it incurred at the instance and request of VRC or upon
any promise of the defendant to make that expenditure good.
RULING: No.
Albaladejo y Cia presented several trade letters of VRC and PRC as
evidence that PRC hoped that it would soon re-enter the copra
market. But nothing in these letters held PRC liable for the expenses
incurred by Albaladejo y Cia in keeping its organization intact.
Further, the contract between VRC/PRC and Albaladejo y Cia is
actually one of purchase, and not of agency. Although VRC/PRC
used "agents" in its trade letters to refer to Albaladejo y Cia and other
suppliers, it was only used for convenience and it is very clear that in
its activities as a buyer, Albaladejo y Cia was acting upon its own
account and not as agent of VRC. When it turned over the copra to
VRC, a second sale was effected. Not having a contract of agency
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 with VRC, Albaladejo y Cia is NOT entitled to reimbursement, as
contemplated under Art. 1729, now Art. 1913, for the
damages/expenses it incurred in maintaining and extending VRC's
organization.
Art. 1913. The principal must also indemnify the agent for all the
damages which the execution of the agency may have caused the
latter, without fault or negligence on his part. (1729)
6. JESUS MA. CUI, ET AL. v. ANTONIO MA. CUI, ET AL.,
G.R. No. L-7041. February 21, 1957
FACTS: Jesus and Antonio are the legitimate children of Don
Mariano Cui and Dorla Antonia Perales who died intestate in1939.
Jesus alleged that during the marriage of Don Mariano and Dona
Antonia, their parents acquired certain properties in the City of Cebu,
namely, Lots Nos. 2312, 2313 and 2319. Upon the death of their
mother, the properties were placed under the administration of their
dad.that while the latter was 84 years of age, Antonio by means of
deceit, secured the transfer to themselves the said lot without any
pecuniary consideration; that in the deed of sale executed on March
8, 1946, Rosario Cui appeared as one of the vendees, but on learning
of this fact she subsequently renounced her rights under the sale and
returned her portion toDon Mariano Cui by executing a deed of resale
in his favor on October 11, 1946; that defendants, fraudulently and
with the desire of enriching themselves unjustly at the expense of
their father, Don Mariano Cui, and of their brothers and co-
heirs,secured a loan of P130,000 from the Rehabilitation properties,
and with the loan thus obtained, defendants constructed thereon an
2 apartment building of strong materials consisting of 14 doors, valued
at approximately P130,000 and another building on the same parcels
of land, which buildings were leased to some Chinese commercial
firms a monthly rental of P7,600, which defendants have collected
and will continue to collect to the prejudice of the plaintiffs;Jesus
alleged that the sale should be invalidated so far as the portion of the
property sold to Antonio Cui is concerned, for the reason that when
that sale was effected, Antonio was then acting as the agent or
administrator of the properties of DonMariano Cui.Jesus lays stress
on the power of attorney Exhibit L which was executed by Don
Mariano in favor of Antonio Cui on March 2,1946, wherein the
former has constituted the latter as his "true and lawful attorney" to
perform in his name and that of the intestate heirs of Dorla Antonia
Perales.
ISSUE: Whether or not the sale of the property to Antonio was valid.
RULING: Yes.
While under article 1459 of the old Civil Code an agent or
administrator is disqualified from purchasing property in his hands
for sale or management, and, in this case, the property in question
was sold to Antonio Cui while he was already the agent or
administrator of the properties of Don Mariano Cui, we however
believe that this question cannot now be raised or invoked. The
prohibition of the law is contained in article 1459 of the old Civil
Code, but this prohibition has already been removed.
Under the provisions of article 1491, section 2, of the new Civil
Code, an agent may now buy property placed in his hands for sale or
administration, provided that the principal gives his consent thereto.
While the new Code came into effect only on August 30, 1950,
however, since this is a right that is declared for the first time, the
same may be given retroactive effect if no vested or acquired right is
impaired (Article 2253, new Civil Code). During the lifetime Don
Mariano, and particularly on March 8, 1946, the herein appellants
could not claim any vested or acquired right in these properties, for,
as heirs, the most they had was a mere expectancy. We may,
therefore, invoke now this practical and liberal provision of our new
Civil Code even if the sale had taken place before its effectivity.
7. Allied Free Worker’s Union [PLUM] vs. Compania Maritima,
19 SCRA
258 (see separate page)
8. Far Eastern Export & Import Co. vs. Lim Teck Suan, 97
Phil. 171 (see separate page)
9. Nielson & Co., Inc. vs. Lepanto Consolidated Mining Co.,
26 SCRA 540 (see separate page)
10. THE SHELL COMPANY OF THE PHILIPPINES, LTD.,
petitioner,
vs.
FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW
JERSEY COMMERCIAL CASUALTY INSURANCE CO.,
SALVADOR SISON, PORFIRIO DE LA FUENTE and THE
COURT OF APPEALS (First Division), respondents.
G.R. No. L-8169 January 29, 1957
PADILLA, J.: AGENCY: IN GENERAL
FACTS: This is an action for recovery of sum of money, based on
alleged negligence of the defendants. A Plymounth car owned by
Salvador R. Sison was brought, on September 3, 1947 to the Shell
Gasoline and Service Station, for washing, greasing and spraying.
The operator of the station, having agreed to do service upon
payment of P8.00, the car was placed on a hydraulic lifter under the
direction of the personnel of the station. The job of washing and
greasing was undertaken by defendant Porfirio de la Fuente through
his two employees, Alfonso M. Adriano, as greaseman and one
surnamed de los Reyes, a helper and washer. To perform the job the
car was carefully and centrally placed on the platform of the lifter in
the gasoline and service station aforementioned before raising up said
platform to a height of about 5 feet and then the servicing job was
started. After more than one hour of washing and greasing, the job
was about to be completed except for an ungreased portion
underneath the vehicle which could not be reached by the greasemen.
So, the lifter was lowered a little by Alfonso M. Adriano and while
doing so, the car for unknown reason accidentally fell and suffered
damage.
The insurance companies after paying the sum for the damage have
filed this action together with said Salvador Sison for the recovery of
the total amount of the damage from the defendants on the ground of
negligence.
The defendant Porfirio de la Fuente denied negligence in the
operation of the lifter in his separate answer and contended further
that the accidental fall of the car was caused by unforseen event.
The trial the Court dismissed the complaint. The plaintiffs appealed.
The Court of Appeals reversed the judgment and sentenced the
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 defendant to pay the amount sought to be recovered, legal interest
and costs, as stated at the beginning of this opinion.
ISSUE: WON the acts of De la Fuente as an employee/agent can
bind the company
RULING: YES.
De la Fuente was the operator of the station "by grace" of the
Defendant Company which could and did remove him as it pleased;
that all the equipment needed to operate the station was owned by the
Defendant Company which took charge of their proper care and
maintenance, despite the fact that they were loaned to him; that the
Defendant company did not leave the fixing of price for gasoline to
De la Fuente; on the other hand, the Defendant company had
complete control thereof; and that Tiongson, the sales representative
of the Defendant Company, had supervision over De la Fuente in the
operation of the station, and in the sale of Defendant Company's
products therein.
To determine the nature of a contract courts do not have or are not
bound to rely upon the name or title given it by the contracting
parties, should there be a controversy as to what they really had
intended to enter into, but the way the contracting parties do or
perform their respective obligation stipulated or agreed upon may be
shown and inquired into, and should such performance conflict with
the name or title given the contract by the parties, the former must
prevail over the latter.
As the act of the agent or his employees acting within the scope of his
authority is the act of the principal, the breach of the undertaking by
3 the agent is one for which the principal is answerable. Moreover, the
company undertook to "answer and see to it that the equipment are in
good running order and usable condition;" and the Court of Appeals
found that the Company's mechanic failed to make a thorough check
up of the hydraulic lifter and the check up made by its mechanic was
"merely routine" by raising "the lifter once or twice and after
observing that the operator was satisfactory, he (the mechanic) left
the place." The latter was negligent and the company must answer for
the negligent act of its mechanic which was the cause of the fall of
the car from the hydraulic lifter.
The judgment under review is affirmed, with costs against the
petitioner.
11. DR. CARLOS L. SEVILLA and LINA O. SEVILLA,
petitioners-appellants, vs. THE COURT OF APPEALS,
TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO,
and SEGUNDINA NOGUERA, respondents-appellees.
G.R. No. L-41182-3 April 16, 1988
SARMIENTO , J.:
FACTS: On the strength of a contract entered into on Oct. 19, 1960
by and between Mrs. Segundina Noguera, party of the first part; the
Tourist World Service, Inc., represented by Mr. Eliseo Canilao as
party of the second part, and hereinafter referred to as appellants, the
Tourist World Service, Inc. leased the premises belonging to the
party of the first part at Mabini St., Manila for the former-s use as a
branch office. In the said contract the party of the third part held
herself solidarily liable with the party of the part for the prompt
payment of the monthly rental agreed on.
When the branch office was opened, the same was run by the herein
appellant Una 0. Sevilla payable to Tourist World Service Inc. by any
airline for any fare brought in on the efforts of Mrs. Lina Sevilla, 4%
was to go to Lina Sevilla and 3% was to be withheld by the Tourist
World Service, Inc.
Tourist World Service, Inc. appears to have been informed that Lina
Sevilla was connected with a rival firm, the Philippine Travel Bureau,
and, since the branch office was anyhow losing, the Tourist World
Service considered closing down its office. This was firmed up by
two resolutions of the board of directors of Tourist World Service,
Inc.
It further appears that on Jan. 3, 1962, the contract with the appellees
for the use of the Branch Office premises was terminated and while
the effectivity thereof was Jan. 31, 1962, the appellees no longer used
it. As a matter of fact, appellants used it since Nov. 1961. Because of
this, and to comply with the mandate of the Tourist World Service,
the corporate secretary Gabino Canilao went over to the branch
office, and, finding the premises locked, and, being unable to contact
Lina Sevilla, he padlocked the premises on June 4, 1962 to protect
the interests of the Tourist World Service. When neither the appellant
Lina Sevilla nor any of her employees could enter the locked
premises, a complaint wall filed by the herein appellants against the
appellees with a prayer for the issuance of mandatory preliminary
injunction. Both appellees answered with counterclaims. For apparent
lack of interest of the parties therein, the trial court ordered the
dismissal of the case without prejudice. AGENCY: IN GENERAL
The appellee Segundina Noguera sought reconsideration of the order
dismissing her counterclaim which the court a quo, in an order dated
June 8, 1963, granted permitting her to present evidence in support of
her counterclaim.
ISSUES:
1. WON the petitioner was an employee of TWS
2. WON there was a joint venture entered into by and between
her and appellee TWS
RULING: (1) NO.
To determine the evidence of an employer-employee relation. In
general, we have relied on the so-called right of control test, "where
the person for whom the services are performed reserves a right to
control not only the end to be achieved but also the means to be used
in reaching such end." Subsequently, however, we have considered,
in addition to the standard of right-of control, the existing economic
conditions prevailing between the parties, like the inclusion of the
employee in the payrolls, in determining the existence of an
employer-employee relationship.
The records will show that the petitioner, Lina Sevilla, was not
subject to control by the private respondent Tourist World Service,
Inc., either as to the result of the enterprise or as to the means used in
connection therewith. In the first place, under the contract of lease
covering the Tourist Worlds Ermita office, she had bound herself in
solidum as and for rental payments, an arrangement that would be
like claims of a master-servant relationship. True the respondent
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 Court would later minimize her participation in the lease as one of
mere guaranty, that does not make her an employee of Tourist World,
since in any case, a true employee cannot be made to part with his
own money in pursuance of his employer's business, or otherwise,
assume any liability thereof. In that event, the parties must be bound
by some other relation, but certainly not employment.
In the second place, and as found by the Appellate Court, '[w]hen the
branch office was opened, the same was run by the herein appellant
Lina O. Sevilla payable to Tourist World Service, Inc. by any airline
for any fare brought in on the effort of Mrs. Lina Sevilla. Under
these circumstances, it cannot be said that Sevilla was under the
control of Tourist World Service, Inc. "as to the means used." Sevilla
in pursuing the business, obviously relied on her own gifts and
capabilities.
It is further admitted that Sevilla was not in the company's payroll.
For her efforts, she retained 4% in commissions from airline
bookings, the remaining 3% going to Tourist World. Unlike an
employee then, who earns a fixed salary usually, she earned
compensation in fluctuating amounts depending on her booking
successes.
The fact that Sevilla had been designated 'branch manager" does not
make her, ergo, Tourist World's employee. As we said, employment
is determined by the right-of-control test and certain economic
parameters. But titles are weak indicators.
(2) It is the Court's considered opinion, that when the petitioner, Lina
Sevilla, agreed to (wo)man the private respondent, Tourist World
Service, Inc.'s Ermita office, she must have done so pursuant to a
4 contract of agency. It is the essence of this contract that the agent
renders services "in representation or on behalf of another.
In the case at bar, Sevilla solicited airline fares, but she did so for and
on behalf of her principal, Tourist World Service, Inc. As
compensation, she received 4% of the proceeds in the concept of
commissions. And as we said, Sevilla herself based on her letter of
November 28, 1961, pre-assumed her principal's authority as owner
of the business undertaking. We are convinced, considering the
circumstances and from the respondent Court's recital of facts, that
the ties had contemplated a principal agent relationship, rather than a
joint managament or a partnership.
But unlike simple grants of a power of attorney, the agency that we
hereby declare to be compatible with the intent of the parties, cannot
be revoked at will. The reason is that it is one coupled with an
interest, the agency having been created for mutual interest, of the
agent and the principal. 19 It appears that Lina Sevilla is a bona fide
travel agent herself, and as such, she had acquired an interest in the
business entrusted to her. Moreover, she had assumed a personal
obligation for the operation thereof, holding herself solidarily liable
for the payment of rentals. She continued the business, using her own
name, after Tourist World had stopped further operations. Her
interest, obviously, is not to the commissions she earned as a result of
her business transactions, but one that extends to the very subject
matter of the power of management delegated to her. It is an agency
that, as we said, cannot be revoked at the pleasure of the principal.
Accordingly, the revocation complained of should entitle the
petitioner, Lina Sevilla, to damages.
12. Lourdes Valerio Lim vs. People of the Philippines
GR No. L-34338, November 21, 1984
FACTS: An agreement was drawn between the petitioner and Maria
Ayroso to sell her tobacco at P 1.30 a kilo, with the petitioner
receiving the overprice as a result of the sale. The receipt, made in
the presence of plaintiff’s sister and her maid, was as follows:
This is to certify that I have received from Mrs.
Maria de Guzman Vda. de Ayroso, of Gapan, Nueva
Ecija, six hundred fifteen kilos of leaf tobacco to be
sold at P1.30 per kilo. The proceed in the amount of
Seven Hundred Ninety Nine Pesos and 50/100
(P799.50) will be given to her as soon as it was
sold.’
Since then, petitioner was only able to pay P240, paid on three
different times.
Multiple demands were made, including a letter, but the petitioner did
not comply.
Ayroso filed against petitioner a complaint for estafa.
The lower court charged petitioner as guilty of the crime of estafa.
Court of Appeals - Affirmed the decision but reduced the penalty.
Petitioner posed the question:
● AGENCY:
Whether or not the honorable Court IN GENERAL
of Appeals was legally
right in holding that the foregoing receipt is a contract of
agency to sell as against the theory of the petitioner that it
is a contract of sale.
ISSUE: Whether the receipt was a contract of agency to sell?
RULING: Yes.
Anent the argument that petitioner was not an agent because Exhibit
“A” does not say that she would be paid the commission if the goods
were sold, the Court of Appeals correctly resolved the matter as
follows:
” . . . Aside from the fact that Maria Ayroso testified that the
appellant asked her to be her agent in selling Ayroso’s tobacco,
the appellant herself admitted that there was an agreement that
upon the sale of the tobacco she would be given something. The
appellant is a businesswoman, and it is unbelievable that she
would go to the extent of going to Ayroso’s house and take the
tobacco with a jeep which she had brought if she did not intend to
make a profit out of the transaction. Certainly, if she was doing a
favor to Maria Ayroso and it was Ayroso who had requested her
to sell her tobacco, it would not have been the appellant who
would have gone to the house of Ayroso, but it would have been
Ayroso who would have gone to the house of the appellant and
deliver the tobacco to the appellant.” (p. 19, Rollo)
The fact that appellant received the tobacco to be sold at P1.30 per
kilo and the proceeds to be given to complainant as soon as it was
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 sold, strongly negates transfer of ownership of the goods to the
petitioner. The agreement (Exhibit “A”) constituted her as an agent
with the obligation to return the tobacco if the same was not sold.
Dismissed for lack of merit.
13. San Diego, Sr. vs. Nombre
11 SCRA 165
FACTS: Adelo Nombre as the duly constituted judicial administrator
in a special Proceedings leased one of the properties of the estate (a
fishpond), to Pedro Escanlar. The terms of the lease was for three (3)
years, with a yearly rental of P3, 000.00 to expire on 1963, the
transaction having been done, admittedly, without previous authority
or approval of the Court where the proceedings was pending.
In 1961, Nombre was removed as administrator by Order of the court
and one Sofronio Campillanos was appointed in his stead. The appeal
on the Order of Nombre's removal is supposedly pending with the
Court of Appeals. Escanlar was cited for contempt, allegedly for his
refusal to surrender the fishpond to the newly appointed
administrator.
Campillanos, the new administrator filed a motion asking for
authority to execute a lease contract of the same fishpond, in favor of
Moises San Diego, Sr., for 5 years from 1961, at a yearly rental of
P5,000.00. Escanlar was not notified of such motion.
Nombre presented a written opposition to the motion of Campillanos,
pointing out that the fishpond had been leased by him to Escanlar for
5 3 years. In a supplemental opposition, he also invited the attention of
the Court that to grant the motion of the new administrator would in
effect nullify the contract in favor of Escanlar, a person on whom the
Court had no jurisdiction. He also intimated that the validity of the
lease contract entered into by a judicial administrator must be
recognized unless so declared void in a separate action.
The Court on April 8, 1961, in effect declared that the contract in
favor of Escanlar was null and void, for want of judicial authority.
Nombre moved to reconsider the Order of April 8, stating that
Escanlar was willing to increase the rental of P5, 000.00, but only
after the termination of his original contract. The motion was denied
prompting Nombre to file a petition for Certiorari asking for the
annulment of the Orders of April 8 and A Writ of preliminary
injunction was likewise prayed for to restrain the new administrator
Campillanos from possessing the fishpond and from executing a new
lease contract covering it.
ISSUES:
A) Whether a judicial administrator can validly lease property of the
estate without prior judicial authority and approval. YES.
B) Whether the provisions of the New Civil Code on Agency should
apply to judicial administrators. No.
RULING:
A.) No such limitation on the power of a judicial administrator to
grant a lease of property placed under his custody is provided for in
the present law. Under Article 1647 of the present Civil Code, it is
only when the lease is to be recorded in the Registry of Property that
it cannot be instituted without special authority. Thus, regardless of
the period of lease, there is no need of special authority unless the
contract is to be recorded in the Registry of Property.
On the contrary, Rule 85, Section 3, of the Rules of Court authorizes
a judicial administrator, among other things, to administer the estate
of the deceased not disposed of by will. Commenting on this Section
in the light of several Supreme Court decisions (Jocson de Hilado v.
Nava, 69 Phil. 1; Gamboa v. Gamboa, 68 Phil. 304; Ferraris v.
Rodas, 65 Phil. 732; Rodriguez v. Borromeo, 43 Phil. 479), Moran
says: "Under this provision, the executor or administrator has the
power of administering the estate of the deceased for purposes of
liquidation and distribution. He may, therefore, exercise all acts of
administration without special authority of the Court. For instance, he
may lease the property without securing previously any permission
from the court. And where the lease has formally been entered into,
the court cannot, in the same proceeding, annul the same, to the
prejudice of the lessee, over whose person it had no jurisdiction. The
proper remedy would be a separate action by the administrator or the
heirs to annul the lease.
B.) The provisions of the New Civil Code on Agency do not apply to
judicial administrators.
While it may be admitted that the duties of a judicial administrator
and an agent (petitioner alleges that both act in representative
capacity), are in some respects, identical, the provisions on agency
(Art. 1878, C.C.), should not apply to a judicial administrator. A
judicial administrator is appointed by the Court. He is not only the
representative of said Court, but also the heirs and creditors of the
estate (Chua Tan v. Del Rosario, 57 Phil. 411). A judicial
administrator before entering into his duties, is required to file a
bond. These circumstances are not true in AGENCY: IN GENERAL
case of agency. The agent
is only answerable to his principal. The protection which the law
gives the principal, in limiting the powers and rights of an agent,
stems from the fact that control by the principal can only be thru
agreements, whereas the acts of a judicial administrator are subject to
specific provisions of law and orders of the appointing court
14. FLORENTINO RALLOS, ET AL.vs. TEODORO R.
YANGCO
G.R. No. 6906 September 27, 1911
Having advertised the fact that Collantes was his agent and having
given them a special invitation to deal with such agent, it was the
duty of the defendant on the termination of the relationship of
principal and agent to give due and timely notice thereof to the
plaintiffs. Failing to do so, he is responsible to them for whatever
goods may have been in good faith and without negligence sent to the
agent without knowledge, actual or constructive, of the termination
of such relationship.
FACTS: The plaintiffs proceeded to do a considerable business with
the defendant through the saidCollantes, as his factor, sending to him
as agent for the defendant a good deal of produce to be sold on
commission. Later, and in the month of February, 1909, the plaintiffs
sent to the said Collantes, as agent for the defendant, 218 bundles of
tobacco in the leaf to be sold on commission, as had been other
produce previously. The said Collantes received said tobacco and
sold it for the sum ofP1,744. The charges for such sale were P206.96.
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 leaving in the hands of said Collantes the sum ofP1,537.08 belonging
to the plaintiffs. This sum was, apparently, converted to his own use
by been other appears, however, that prior to the sending of said
tobacco the defendant had severed his relations with Collantes and
that the latter was no longer acting as his factor. This fact was not
known to the plaintiffs; and it is conceded in the case that no notice
of any kind was given by the defendant to the plaintiffs of the
termination of the relations between the defendant and his agent. The
defendant refused to pay the said sum upon demand of the plaintiffs,
placing such refusal upon the ground that at the time the said tobacco
was received and sold by Collantes he was acting personally, and not
as agent of the defendant. This action was brought to recover said
sum.
ISSUE: Whether the plaintiffs, acting in good faith and without
knowledge, having sent produce to sell on commission to the former
agent of the defendant, can recover of the defendant under the
circumstances above set forth.
RULING: Yes.
We are of the opinion that the defendant is liable. Having advertised
the fact that Collantes was his agent and having given them a special
invitation to deal with such agent, it was the duty of the defendant on
the termination of the relationship of principal and agent to give due
and timely notice thereof to the plaintiffs. Failing to do so, he is
responsible to them for whatever goods may have been in good faith
and without negligence sent to the agent without knowledge, actual
or constructive, of the termination of such relationship.
6 15. Macke v. Camps
7 Phil 357 February 5, 1907
FACTS: The plaintiffs in this action, B. H. Macke and W.H.
Chandler, partners doing business under the firm name of Macke,
Chandler & Company. They sold to the defendant and delivered at
his place of business, known as the "Washington Cafe," various bills
of goods; 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 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. A written contract was introduced from
which it appears that one Games, the former owner of the business
now known as the "Washington Cafe," sub rented 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 sub rent the
building or the business without the consent of the sidles.
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"
(defendant with)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.
ISSSUE: WON Flores is considered an agent of the
defendant Camps.
RULING: One who clothes another with apparent authority as
his agent and holds him out to the public as such, cannot be permitted
to deny the authority of such person to act as his agent tithe prejudice
of innocent third parties dealing with such agent in good faith and in
the honest belief that he is what he appears to be. Unless the contrary
appears, the authority of an agent must be presumed to include all the
necessary and usual means of carrying his agency into effect. Flores,
as managing agent of the Washington Café, had authority to buy
such reasonable quantities. of supplies as might from time to
time be necessary in carrying on the business of a 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, and that his admissions as to the receipt of
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 satisfactory proof judgment of the trial
AGENCY:
court is affirmed with the costs of this instance INthe
against GENERAL
appellant.
16. DOMINGA CONDE vs. THE HONORABLE COURT OF
APPEALS, MANILA PACIENTE CORDERO, together with his
wife, NICETAS ALTERA, RAMON CONDE, together with his
wife, CATALINA T. CONDE
G.R. No. L-40242, December 15, 1982
MELENCIO-HERRERA, J.:
FACTS: On April 7, 19311, Margarita, Bernardo and petitioner
Dommga, all surnamed Conde, (the vendors-a-retro) sold with right
of repurchase within ten years from said date, an unregistered parcel
of agricultural land, to the spouses Casimira Pasagui and Pio Altera
(the vendees-a-retro).
Three years later, Original Certificate of Title No. N-534 covering the
land was issued in the name of the vendees-a-retro subject to the
stipulated right of redemption of the vendors-a-retro. Within the
repurchase period, particularly on November 28, 1943, Paciente
Cordero, son-in-law of and representing the vendees-a-retro signed a
Memorandum of Repurchase declaring therein that he received from
Eusebio Amarille, a representative of the vendors-a-retro, the full
amount of the repurchase price.
Petitioner Dominga, claiming that she redeemed the property with her
own money, immediately took possession of the land in 1945 and
paid the land taxes thereon since then. On June 30, 1965, however,
the vendees-a-retro sold the land to the private respondent spouses,
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 the Condes. Consequently, in 1969, petitioner filed with the Court of
First Instance a complaint for quieting of title and declaration of
ownership against all the private respondents.
The Trial Court dismissed the Complaint and ordered petitioner to
vacate the disputed property and to deliver its peaceful possession to
the Conde spouses. The Court of Appeals affirmed the decision and
held that petitioner failed to validly exercise her tight of repurchase
because the Memorandum of Repurchase was not signed by the
vendees-a-retro but by Cordero who was not formally authorized to
sign for said vendees-a-retro.
ISSUE: Whether there was an implied agency when Cordero signed
the Memorandum of Repurchase.
RULING: Yes.
Of significance, however, is the fact that from the execution of the
repurchase document in 1945, possession, which heretofore had been
with the Alteras, has been in the hands of petitioner as stipulated
therein. Land taxes have also been paid for by petitioner yearly from
1947 to 1969 inclusive.
If, as opined by both the Court a quo and the Appellate Court,
petitioner had done nothing to formalize her repurchase, by the same
token, neither have the vendees-a-retro done anything to clear their
title of the encumbrance therein regarding petitioner’s right to
repurchase.
No new agreement was entered into by the parties as stipulated in the
7 deed of pacto de retro, if the vendors a retro failed to exercise their
right of redemption after ten years. If, as alleged, petitioner exerted
no effort to procure the signature of Pio Altera after he had recovered
from his illness, neither did the Alteras repudiate the deed that their
son-in-law had signed. Thus, an implied agency must be held to have
been created from their silence or lack of action, or their failure to
repudiate the agency. (Art. 1869, Civil Code.) Wherefore, a new
Transfer Certificate of Title was issued in the name of petition
Dominga Conde.
17. MANOTOK BROTHERS, INC., vs. THE HONORABLE
COURT OF APPEALS, THE HONORABLE JUDGE OF THE
REGIONAL TRIAL COURT OF MANILA (Branch VI), and
SALVADOR SALIGUMBA
G.R. No. 94753. April 7, 1993
CAMPOS, JR., J.:
FACTS: The facts as found by the appellate court, revealed that
petitioner herein (then defendant-appellant) is the owner of a certain
parcel of land and building which were formerly leased by the City of
Manila and used by the Claro M. Recto High School, at M.F. Jhocson
Street, Sampaloc Manila. By means of a letter 5 dated July 5, 1966,
petitioner authorized herein private respondent Salvador Saligumba
to negotiate with the City of Manila the sale of the aforementioned
property for not less than P425,000.00. In the same writing, petitioner
agreed to pay private respondent a five percent (5%) commission in
the event the sale is finally consummated and paid.
Finally, through another letter dated November 16, 1967, the
corporation with Rufino Manotok, its President, as signatory,
authorized private respondent to finalize and consummate the sale of
the property to the City of Manila for not less than P410,000.00. With
this letter came another extension of 180 days.
The Municipal Board of the City of Manila eventually, on April 26,
1968, passed Ordinance No. 6603, appropriating the sum of
P410,816.00 for the purchase of the property which private
respondent was authorized to sell. Said ordinance however, was
signed by the City Mayor only on May 17, 1968, one hundred eighty
three (183) days after the last letter of authorization. Notwithstanding
the realization of the sale, private respondent never received any
commission, which should have amounted to P20,554.50. This was
due to the refusal of petitioner to pay private respondent said amount
as the former does not recognize the latter’s role as agent in the
transaction.
Private respondent filed a complaint against petitioner, alleging that
he had successfully negotiated the sale of the property. He claimed
that it was because of his efforts that the Municipal Board of Manila
passed Ordinance No. 6603 which appropriated the sum for the
payment of the property subject of the sale.
Petitioner claimed otherwise. It denied the claim of private
respondent on the following grounds: (1) private respondent would
be entitled to a commission only if the sale was consummated and the
price paid within the period given in the respective letters of
authority; and (2) private respondent was not the person responsible
for the negotiation and consummation AGENCY:
of the sale,INinstead
GENERALit was
Filomeno E. Huelgas, the PTA president of the Claro M. Recto High
School.
Thereafter, the then Court of First Instance (now, Regional Trial
Court) rendered judgment sentencing petitioner and/or Rufino
Manotok to pay unto private respondent the sum of P20,540.00 by
way of his commission fees with legal interest thereon. Petitioner
appealed said decision, but to no avail. Respondent Court of Appeals
affirmed the said ruling of the trial court. Hence this petition.
ISSUE: The sole issue to be addressed in this petition is whether or
not private respondent is entitled to the five percent (5%) agent’s
commission.
RULING: It is petitioner’s contention that as a broker, private
respondent’s job is to bring together the parties to a transaction.
Accordingly, if the broker does not succeed in bringing the minds of
the purchaser and the vendor to an agreement with respect to the sale,
he is not entitled to a commission.
Private respondent, on the other hand, opposes petitioner’s position
maintaining that it was because of his efforts that a purchase actually
materialized between the parties.
We rule in favor of private respondent.
At first sight, it would seem that private respondent is not entitled to
any commission as he was not successful in consummating the sale
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 between the parties, for the sole reason that when the Deed of Sale
was finally executed, his extended authority had already expired. By
this alone, one might be misled to believe that this case squarely falls
within the ambit of the established principle that a broker or agent is
not entitled to any commission until he has successfully done the job
given to him.
In the case at bar, private respondent is the efficient procuring
cause for without his efforts, the municipality would not have
anything to pass and the Mayor would not have anything to
approve. This Court ruled in another case that when there is a
close, proximate and causal connection between the agent’s
efforts and labor and the principal’s sale of his property, the
agent is entitled to a commission.
We agree with respondent Court that the City of Manila ultimately
became the purchaser of petitioner’s property mainly through the
efforts of private respondent. Without discounting the fact that
when Municipal Ordinance No. 6603 was signed by the City
Mayor on May 17, 1968, private respondent’s authority had
already expired, it is to be noted that the ordinance was approved
on April 26, 1968 when private respondent’s authorization was
still in force. Moreover, the approval by the City Mayor came
only three days after the expiration of private respondent’s
authority. It is also worth emphasizing that from the records, the
only party given a written authority by petitioner to negotiate the
sale from July 5, 1966 to May 14, 1968 was private respondent.
While it may be true that FilomenoHuelgas followed up the matter
8 with Councilor Magsalin, the author of Municipal Ordinance No.
6603 and Mayor Villegas, his intervention regarding the purchase
came only after the ordinance had already been passed — when the
buyer has already agreed to the purchase and to the price for which
said property is to be paid. Without the efforts of private respondent
then, Mayor Villegas would have nothing to approve in the first
place. It was actually private respondent’s labor that had set in
motion the intervention of the third party that produced the sale,
hence he should be amply compensated. WHEREFORE, in the light
of the foregoing and finding no reversible error committed by
respondent Court, the decision of the Court of Appeals is hereby
AFFIRMED.
18. DOMINGO vs. DOMINGO
GR No. L-30573 Oct. 29, 1971
Makasiar, J.
Petitioners: Vicente Domingo represented by his heirs
Respondents: Gregorio Domingo (Vicente Domingo’s agent &
broker)
Intervenor: Teofilo Purisima (Gregorio Domingo’s sub-agent)
FACTS: Vicente Domingo granted Gregorio Domingo, a real estate
broker, the exclusive agency to sell his lot No. 883 of Piedad Estate
for a price of P2.00 per square meter (or P176,954.00) with a
commission of 5% on the total price, if the property is sold by
Vicente or by anyone else during the 30-day duration of the agency
or if the property is sold by Vicente within three months from the
termination of the agency to a purchaser to whom it was submitted by
Gregorio during the continuance of the agency with notice to
Vicente.
In June 1956 Gregorio authorized the intervenor Teofilo P. Purisima
to look for a buyer, promising him one-half of the 5% commission.
Teofilo Purisima then introduced Oscar de Leon to Gregorio as a
prospective buyer.
After several conferences between Gregorio and Oscar de Leon, the
latter raised his offer to P109,000.00 or 1.20 per sqm to which
Vicente agreed.
Upon demand of Vicente, Oscar issued to him a check in the amount
of P1,000.00 as earnest money, after which Vicente advanced to
Gregorio the sum of P300.00. Oscar confirmed his former offer to
pay for the property at P1.20 per square meter in another letter.
Subsequently, Vicente asked for an additional amount of P1,000.00
as earnest money, which Oscar de Leon promised to deliver to him.
Pursuant to his promise to Gregorio, Oscar gave him as a gift or
propina (tip) the sum of P1,000.00 for succeeding in persuading
Vicente to sell his lot at P1.20 per square meter or a total of
P109,000.00. This gift was not disclosed by Gregorio to Vicente.
Neither did Oscar pay Vicente the additional amount of P1,000.00.
In August 1,1956 Oscar told Gregorio that he did not receive his
money from his brother in the United States, for which reason he was
giving up the negotiation including the amount of P1,000.00 given as
earnest money to Vicente and the P1,000.00 given to Gregorio as
propina or gift.
AGENCY: IN GENERAL
When Oscar did not see him after several weeks, Gregorio sensed
something fishy. So, he went to Vicente and read a portion of the
agency contract to the effect that Vicente was still committed to pay
him 5% commission, when Vicente grabbed the original of the
contract and tore it to pieces. Gregorio held his peace, not wanting to
antagonize Vicente further, because he had still duplicate of the
agency contract. From his meeting with Vicente, Gregorio proceeded
to the ROD of Quezon City, where he discovered a deed of sale
executed on September 17, 1956 by Amparo Diaz, wife of Oscar de
Leon, in favor of Vicente as downpayment by Oscar on the purchase
price of Vicente's lot No. 883 of Piedad Estate.
Upon learning this, he demanded in writing payment of his
commission. He also conferred with Oscar, who told him that Vicente
went to him and asked him to eliminate Gregorio in the transaction
and that he would sell his property to him for P104,000.00.
In Vicente's reply to Gregorio's letter, Vicente stated that Gregorio is
not entitled to the 5% commission because he sold the property not to
Gregorio's buyer, Oscar de Leon, but to another buyer, Amparo Diaz,
wife of Oscar de Leon.
Lower Court Finding: On the evidence that the exclusive agency
contract, is genuine; that Amparo Diaz, the vendee, being the wife of
Oscar de Leon the sale by Vicente of his property is practically a sale
to Oscar de Leon since husband and wife have common or identical
interests; that Gregorio and intervenor Teofilo Purisima were the
efficient cause in the consummation of the sale in favor of the
spouses Oscar de Leon and Amparo Diaz; that Oscarde Leon paid
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 Gregorio P1,000.00 as "propina" or gift and not as additional earnest
money to be given to the plaintiff.
ISSUES:
(1) Whether the failure on the part of Gregorio to disclose to Vicente
the payment to him by Oscar de Leon of the amount of P1,000.00 as
gift or "propina" for having persuaded Vicente to reduce the purchase
price from P2.00 to P1.20 per square meter, so constitutes fraud as to
cause a forfeiture of his commission on the sale price;
(2) Whether Vicente or Gregorio should be liable directly to the
intervenor Teofilo Purisima for the latter's share in the expected
commission of Gregorio by reason of the sale.
RULING:
First Issue: An agent who takes a secret profit in the nature of a
bonus, gratuity or personal benefit from the vendee, without
revealing the same to his principal, the vendor, is guilty of breach of
his loyalty to the principal and forfeits his right to collect the
commission from his principal, even if the principal does not suffer
any injury by reason of such breach of fidelity, or that he obtained
better results or that the agency is a gratuitous one, or that usage or
custom allows it. The fact that the principal may have been benefited
by the valuable services of the said agent does not exculpate the agent
who has only himself to blame for such a result by reason of his
treachery or perfidy.
The fact that the buyer appearing in the deed of sale is Amparo Diaz,
the wife of Oscar deLeon, does not materially alter the situation;
because the transaction, to be valid, must necessarily be with the
9 consent of the husband Oscar de Leon, who is the administrator of
their conjugal assets. Hence, both in law and in fact, it was stillOscar
de Leon who was the buyer.
As a necessary consequence of such breach of trust, Gregorio
Domingo must forfeit his right to the commission and must return the
part of the commission he received from his principal.
Consequently, the decisive legal provisions are in found Articles
1891 and 1909 of the New Civil Code:
Art. 1891. Every agent is bound to render an account of his
transactions and to deliver to the principal whatever he may have
received by virtue of the agency, even though it may not be owing to
the principal. Every stipulation exempting the agent from the
obligation to render an account shall be void.xxx xxx xxx
Art. 1909. The agent is responsible not only for fraud but also for
negligence, which shall be judged with more less rigor by the courts,
according to whether the agency was or was not for a compensation.
Second Issue: Teofilo Purisima, the sub-agent of Gregorio Domingo,
can only recover from Gregorio Domingo his one-half share of
whatever amounts Gregorio Domingo received by virtue of the
transactions his sub-agency contract was with Gregorio Domingo
alone and not with Vicente Domingo,who was not even aware of
such sub-agency. Since Gregorio Domingo received from Vicente
and Oscar de Leon respectively the amounts of P300.00 and
P1,000.00 or a total of P1,300.00, one-half of the same, or P650.00,
should be paid by Gregorio Domingo to Teofilo Purisima
19. PRIMITIVO SIASAT and MARCELINO SIASAT,
petitioners,
vs. INTERMEDIATE APPELLATE COURT and TERESITA
NACIANCENO, respondents.
G.R. No. L-67889, 10 October 1985
FACTS: Respondent Nacianceno succeeded in convincing officials
of then DECS to purchase, without public bidding, one million pesos
worth of national flags for the use of public schools throughout the
country. And for her service, she was entitled to a commission of
thirty (30%) percent.
The first delivery was made by the United Flag Industry. The
following day, the respondent’s authority to represent the United Flag
Industry was revoked by petitioner Primitivo Siasat.
According to the findings of the lower court, Siasat, after receiving
the payment for the first delivery, tendered only 5% of the amount
received, to the respondent as payment of her commission. The latter
allegedly protested. She refused to accept the said amount insisting
on the 30% commission agreed upon. The respondent was prevailed
upon to accept the same because of the assurance of the petitioners
that they would pay the commission in full after they delivered the
other half of the order. The respondent stated that she later on learned
that petitioner Siasat had already received payment for the second
delivery of 7,833 flags. When she confronted the petitioners, they
vehemently denied receipt of her payment, at the same time claiming
that the respondent had no participation whatsoever with regard to the
second delivery of flags and that the agency had already been
revoked. AGENCY: IN GENERAL
The trial court decided in favor of the respondent.
In assailing the appellate court’s decision, the petition tenders the
following arguments: first, the authorization making the respondent
the petitioner’s representative merely states that she could deal with
any entity in connection with the marketing of their products for a
commission of 30%. There was no specific authorization for the sale
of 15,666 Philippine flags to the Department; second, there were two
transactions involved evidenced by the separate purchase orders and
separate delivery receipts. The revocation of agency effected by the
parties with mutual consent, therefore, forecloses the respondent’s
claim of 30% commission on the second transaction; and last,
regarding damages and attorneys fees.
ISSUE: Whether respondent is authorized to act as agent.
RULING: The Court found respondent’s argument regarding
respondent’s incapacity to represent them in the transaction with the
Department untenable.
There is no merit in petitioners’ allegations that the contract of
agency between the parties was entered into under fraudulent
representation because respondent “would not disclose the agency
with which she was supposed to transact and made the petitioner
believe that she would be dealing with The Visayas”, and that “the
petitioner had known of the transactions and/or project for the said
purchase of the Philippine flags by the Department of Education and
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 Culture and precisely it was the one being followed up also by the
petitioner.”
If the circumstances were as claimed by the petitioners, they would
have exerted efforts to protect their interests by limiting the
respondent’s authority. There was nothing to prevent the petitioners
from stating in the contract of agency that the respondent could
represent them only in the Visayas. Or to state that the Department of
Education and Culture and the Department of National Defense,
which alone would need a million pesos worth of flags, are outside
the scope of the agency. As the trial court opined, it is incredible that
they could be so careless after being in the business for fifteen years.
If the contracts were separate and distinct from one another, the
whole or at least a substantial part of the government’s supply
procurement process would have been repeated. In this case, what
were issued were mere indorsements for the release of funds and
authorization for the next purchase.
Since only one transaction was involved, we deny the petitioners’
contention that respondent Nacianceno is not entitled to the stipulated
commission on the second delivery because of the revocation of the
agency effected after the first delivery. The revocation of agency
could not prevent the respondent from earning her commission
because as the trial court opined, it came too late, the contract of sale
having been already perfected and partly executed.
20. Municipal Council of Iloilo vs. Evangelista
10 GR No. 32977, November 17, 1930
FACTS: In March 1924, Tan Ong Vda. De Tantoco (Tantoco) won
in Civil Case 3154 that she filed against the Municipality of Iloilo
wherein she sought to recover from the latter the value of strip of
land that she owned which was taken by the Municipality of Iloilo to
widen a public street.
The judgment entitled Tantoco to recover P42,966.40 from the
Municipality of Iloilo . The CA affirmed the trial court’s decision and
the case was remanded to the trial court which rendered judgment as
final and executory.
Adverse claimants then appeared: PNB, Antero Soriano, Mauricio
Cruz & Co, Jose Evangelista and Jose Arroyo. They all stated their
claim over the judgment money recovered by Tantoco.
The court directed the Municipality of Iloilo to file an action of
interpleading against the adverse claimants PNB, Antero Soriano,
Mauricio Cruz & Co, Jose Evangelista and Jose Arroyo.
The trial court rendered judgment declaring valid and binding the
deed of assignment of the credit executed by Tantoco, through her
attorney-in-fact Tan Boon Tiong, in favour of Antero Soriano. Also,
that the assignment of Soriano during his lifetime in favour of
defendant Mauricio Cruz & Co was declared valid and binding.
Tantoco was ordered to pay Mauricio Cruz & Co, the balance of
P30,966.40.
ISSUES:
(1) Whether Tan Boon Tiong, as attorney-in-fact of the
appellant; was empowered by his principal to make an
assignment of credits, rights, and interests, in payment of
debts for professional services rendered by lawyers.
(2) Whether the failure of Tan Montano, the other attorney-in-
fact of Tantoco, to consent to the deed of assignment done
by Tan Boon Tiong would invalidate the said assignment.
RULING:
1. Yes.
In paragraph VI of the power of attorney, Tan Boon Tiong is
authorized to employ and contract for the
services of lawyers upon such conditions as he may deem convenient,
to take charge of any actions necessary or expedient for the interests
of his principal, and to defend suits brought against her. This power
necessarily implies the authority to pay for the professional services
thus engaged.
In the present case, Tantoco had to pay Atty. Soriano for services
rendered in other cases, for her interests and her other co-heirs. Since
the judgment money that was recovered in Civil case 3154 belongs to
Tantoco, such credit can be used to pay Atty. Soriano by way of
assignment.
Being authorized to take charge of any action necessary for the
interest of Tantoco, Tan Boon Tiong has the power to assign
Tantoco’s credits to Atty. Soriano.
AGENCY: IN GENERAL
2. No.
When a person appoints two attorneys-in-fact independently, the
consent of the one will not be
required to validate the acts of the other unless that appears positively
to have been the principal's intention.
In the present case, Tantoco gave each of her attorneys-in-fact
separate letters of attorney, which shows that it was not the
principal's intention that the two representatives should act jointly in
order to make their acts valid.
Thus, the act of Tan Boon Tiong in assigning credits to Soriano
without Tan Montano’s consent remains valid.
21. ANTONIO CABALLERO and CONCORDIA CABALLERO
vs. ALMA DEIPARINE et al
G.R. No. L-39059 September 30, 1974
FACTS: Plaintiffs Antonio Caballero and Concordia Caballero are
the children by the first marriage, and the defendants, Tomas Raga,
Olimpio Raga, Adriano Raga and Magdalena Raga, are the children
by second marriage of VicentaBucao, now deceased, who died
sometime in February, 1943 in Tabunoc, Talisay, Cebu.
Vicenta Bucao in her lifetime and Tomas Raga acquired by joint
purchase a parcel of land from the Talisay-Minglanilla Friar Lands
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 Estate identified as Lot 2072 situated in Tabunoc, Talisay, Cebu and
now more particularly described in Transfer Certificate of Title No.
Rt-2485 (T-17232) of the Registry of Deeds of Cebu and further
declared for taxation purposes under Tax Declaration No. 15954 and
at P100.00;
Defendant Tomas Raga and Vicenta Bucao jointly sold 1/4 of said
Lot 2072 to plaintiff Antonio Caballero, which sale was evidenced by
a deed of sale; and since the title to said lot at the time of the
conveyance to him had not as yet been issued to them they held the
subject portion in trust for said Antonio Caballero until its title could
be delivered to the latter
Long before the death of Vicenta Bucao in 1943, plaintiff Antonio
Caballero had been, paying the yearly land tax and asking the former
to deliver the title to the portion sold to him, but he was told by his
mother to wait, as after all, according to her, he (plaintiff) was
already in possession thereof and, besides, his mother was then still
living
After the death of Vicenta Bucao in 1943, plaintiff Antonio
Caballero asked defendant Tomas Raga to deliver the title to the
portion sold to him from Lot 2072, but he (Tomas Raga) told him to
wait until it could be segregated and that there was no hurry since he
(Antonio) was already in possession thereof.
Plaintiff Antonio Caballero received from defendant Alma Deiparine
a letter demanding that he vacate the portion of Lot 2072 which he
was holding for she had bought it from defendant Tomas Raga, and
as the new owner she would like to construct a house thereon and
11 would further improve said lot;
Upon refusal of the plaintiff to vacate the portion in question
defendant Alma Deiparine brought an action for ejectment against
him in the Municipal Court of Talisay, and after trial said Court
rendered judgment in favor of Antonio Caballero, the plaintiff.
Before the case was called for hearing, the parties through counsel
entered into a stipulation of facts on March 13, 1968.
The trial court on April 30, 1968, rendered a decision based on the
stipulation of facts, against the plaintiffs. Plaintiffs filed a motion for
reconsideration and/or new trial and for leave of court to admit an
amended complaint which the lower court in its order of August 26,
1968, denied. Hence, this appeal to the Court of Appeals by Antonio
Caballero and Concordia Caballero, which was certified to this Court.
ISSUE: Whether the written stipulation of facts entered into by the
counsel for both parties without the signature of the latter is valid and
binding.
RULING: No.
The conduct of the counsel for plaintiffs-appellants in entering into a
compromise agreement or stipulation of facts which practically
confesses judgment, without the consent and conformity of his
clients, is not in keeping with the sworn duty of a lawyer to protect
the interest of his clients. It is a grossly reprehensible act which
amounts to fraud. The stipulation of facts should not have been
tolerated by the trial court by giving its seal of approval thereto. And
to top it all, plaintiffs-appellants' counsel made the unauthorized
admission therein that principal defendant Alma Deiparine acquired
in good faith with a just title and for a valuable consideration the
whole of Lot 2072. Their counsel even admitted also in said
document that during the lifetime of VicentaBucao, she, with the
conformity of her husband, sold her undivided ½ of Lot 2072 to her
co-owner Tomas Raga. No document was ever shown to him by the
Ragas in support of this claim and the record do not disclose that
there was such document.
(Note: No agency-related provision was cited, only the following
provision from the Rules of Court)
Rule 138, Section 23 of the Rules of Court specifically
provides that:
Authority of attorneys to bind clients. — Attorneys
have authority to bind their clients in any case by any agreement in
relation thereto made in writing, and in taking appeals, and in
all matters of ordinary judicial procedure. But they cannot,
without special authority, compromise their client's litigation, or
receive anything in discharge of a client's claim but the
full amount in cash.
It may be true that during the pre-trial hearing held on February 3,
1968, the parties concerned agreed to execute a stipulation of facts
but it does not mean that the respective counsels of the contending
parties can prepare a stipulation of facts the contents of which is
prejudicial to the interest of their clients and sign it themselves
without the intervention of their clients. In the case at bar, the then
AGENCY:
counsel for plaintiffs-appellants, Atty. Melecio IN GENERAL
C. Guba, agreed that
defendant-appellee Alma Deiparine bought the land in question in
good faith and for a valuable consideration; that during the lifetime of
their mother VicentaBucao, she, with the conformity of her husband,
sold her undivided ½ of the land in question to her co-owner and son,
Tomas Raga. All these adverse facts were made the basis of the
appealed decision against the plaintiffs. No further evidence was
presented as there was no hearing. The attorney for the plaintiffs in
making such admission went beyond the scope of his authority as
counsel and practically gave away the plaintiffs' case. The admission
does not refer to a matter of judicial procedure related to the
enforcement of the remedy. It related to the very subject matter of the
cause of action, or to a matter on which the client alone can make the
admission binding on him.
22. PHILIPPINE NATIONAL BANK vs. MAXIMO STA.
MARIA, ET AL., defendant,
G.R. No. L-24765 August 29, 1969
Tomas Besa and Jose B. Galang for plaintiff-appellee.
G.P. Nuguid, Jr. for defendants-appellants.
TEEHANKEE, J.:
FACTS: Plaintiff bank filed this action on February 10, 1961 against
defendant Maximo Sta. Maria and his six brothers and sisters,
defendants-appellants, Valeriana, Emeteria, Teofilo, Quintin, Rosario
and Leonila, all surnamed Sta. Maria, and the Associated Insurance
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 & Surety Co., Inc. as surety, for the collection of certain amounts
representing unpaid balances on two agricultural sugar crop loans due
allegedly from defendants. 1
The said sugar crop loans were obtained by defendant Maximo Sta.
Maria from plaintiff bank under a special power of attorney, executed
in his favor by his six brothers and sisters, defendants-appellants
herein, to mortgage a 16-odd hectare parcel of land, jointly owned by
all of them, the pertinent portion of which reads as follows:
“That we, VALERIANA, EMETERIA, TEOFILO,
QUINTIN, ROSARIO and LEONILA all surnamed STA.
MARIA, sole heirs of our deceased parents CANDIDO
STA. MARIA and FRANCISCA DE LOS REYES, all of
legal age, Filipinos, and residents of Dinalupihan, Bataan,
do hereby name, constitute and appoint Dr. MAXIMO
STA. MARIA, of legal age, married, and residing at
Dinalupihan, Bataan to be our true and lawful attorney of
and in our place, name and stead to mortgage, or convey as
security to any bank, company or to any natural or
juridical person, our undivided shares over a certain
parcel of land together the improvements thereon which
parcel of land is more particularly described as follows…..
“ that all of such powers and duties are limited andconfined to those
In addition, Valeriana Sta. Maria 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, granting him the following
authority:
12 For me and in my name to borrow money and make,
execute, sign and deliver mortgages of real estate now
owned by me standing in my name and to make, execute,
sign and deliver any and all promissory notes necessary in
the premises. (Exh. E-I)3
By virtue of the two above powers, Maximo Sta. Maria applied for
two separate crop loans was actually extended by plaintiff. As
security for the two loans, Maximo Sta. Maria executed in his own
name in favor of plaintiff bank two chattel mortgages on the standing
crops, guaranteed by surety bonds for the full authorized amounts of
the loans executed by the Associated Insurance & Surety Co., Inc. as
surety with Maximo Sta. Maria as principal.
RTC: “judgment in favor of plaintiff and against defendants“
(Defendant Maximo Sta. Maria and his surety, defendant Associated
Insurance & Surety Co., Inc. who did not resist the action, did not
appeal the judgment. This appeals been taken by his six brothers and
sisters )
Defendants-appellants’ contention:
“that under this special power of attorney, Exh. E, they had not 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 at all, their liability should not go beyond the value of the
property which they had authorized to be given as security for the
loans obtained by Maximo. In their answer, defendants-appellants
had further contended that they did not benefit whatsoever from the
loans, and that the plaintiff bank's only recourse against them is to
foreclose on the property which they had authorized Maximo to
mortgage.
Plaintiff’s Contention:
"a mortgage is simply an accessory contract, and that to effect the
mortgage, a loan has to be secured”
ISSUE: WON Defendants-appellants are liable to the plaintiff as
surety of Maximo Sta. Maria
RULING: No.
We hold that a special power of attorney to mortgage real estate is
limited to such authority to mortgage and does not bind the grantor
personally to other obligations contracted by the grantee, in the
absence of any ratification or other similar act that would estop the
grantor from questioning or disowning such other obligations
contracted by the grantee.
In the early case of Bank of P.I. vs. De Coster, this Court ruled that
"where in an instrument powers and duties are specified and defined,
which are specified and defined, and all other powers and duties are
excluded." 7 This is but in accord with the disinclination of courts to
enlarge an authority granted beyond the powers expressly given and
those which incidentally flow or derive therefrom as being usual or
reasonably necessary and proper for the performance of such express
powers.
AGENCY: IN GENERAL
Even before the filing of the present action, this Court in the similar
case of De Villa vs. Fabricante 8 had already ruled that 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.
The authority granted by defendants-appellants (except Valeriana)
unto their brother, Maximo, was merely to mortgage the property
jointly owned by them. They did not grant Maximo any authority to
contract for any loans in their names and behalf. Maximo alone, with
Valeriana who authorized him to borrow money, must answer for
said loans and the other defendants-appellants' only liability is that
the real estate authorized by them to be mortgaged would be subject
to foreclosure and sale to respond for the obligations contracted by
Maximo. But they cannot be held personally liable for the payment of
such obligations, as erroneously held by the trial court.
Plaintiff's argument that "a mortgage is simply an accessory contract,
and that to effect the mortgage, a loan has to be secured" 10 falls, far
short of the mark. Maximo had indeed, secured the loan on his own
account and the defendants-appellants 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. It is not unusual in
family and business circles that one would allow his property or an
undivided share in real estate to be mortgaged by another as security,
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 either as an accommodation or for valuable consideration, but the
grant of such authority does not extend to assuming personal liability,
much less solidary liability, for any loan secured by the grantee in the
absence of express authority so given by the grantor.
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. But the burden of establishing such ratification or
estoppel falls squarely upon plaintiff bank. It has not only failed to
discharge this burden, but the record stands undisputed that
defendant-appellant Quintin Sta. Maria testified that he and his co-
defendants executed the authority to mortgage "to accommodate (my)
brother Dr. Maximo Sta. Maria ... and because he is my brother, I
signed it to accommodate him as security for whatever he may apply
as loan. Only for that land, we gave him as, security" and that "we
brothers did not receive any centavo as benefit." 11 The record further
shows plaintiff bank itself admitted during the trial that defendants-
appellants "did not profit from the loan" and that they "did not
receive any money (the loan proceeds) from (Maximo)." 12 No
estoppel, therefore, can be claimed by plaintiff as against defendants-
appellants.
23. BA FINANCE CORPORATION, petitioner, vs. HON.
COURT OF APPEALS and TRADERS ROYAL BANK,
respondents.
G.R. No. 94566 July 3, 1992
MEDIALDEA, J.:
13
FACTS: On December 17, 1980, Renato Gaytano, doing business
under the name Gebbs International, applied for and was granted a
loan with respondent Traders Royal Bank in the amount of
P60,000.00. As security for the payment of said loan, the Gaytano
spouses executed a deed of suretyship whereby they agreed to pay
jointly and severally to respondent bank the amount of the loan
including interests, penalty and other bank charges.
In a letter dated December 5, 1980 addressed to respondent bank,
Philip Wong as credit administrator of BA Finance Corporation for
and in behalf of the latter, undertook to guarantee the loan of the
Gaytano spouses.
Partial payments were made on the loan leaving an unpaid balance in
the amount of P85,807.25. Since the Gaytano spouses refused to pay
their obligation, respondent bank filed with the trial court complaint
for sum of money against the Gaytano spouses and petitioner
corporation as alternative defendant.
Petitioner corporation, on the other hand, raised the defense of lack of
authority of its credit administrator (Philip H. Wong) to bind the
corporation. (Agency TOPIC)
RTC: judgment is hereby rendered in favor of plaintiff and against
defendants/Gaytano spouses, ordering the latter to jointly and
severally pay the plaintiff
CA: rendered judgment modifying the decision of the trial
ISSUES:
1. THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN RULING THAT PETITIONER IS JOINTLY AND
SEVERALLY LIABLE WITH GAYTANO SPOUSES DESPITE
ITS FINDINGS THAT THE LETTER GUARANTY (EXH. "C") IS
"INVALID AT ITS INCEPTION";
2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN RULING THAT THE PETITIONER WAS GUILTY OF
ESTOPPEL DESPITE THE FACT THAT IT NEVER KNEW OF
SUCH ALLEGED LETTER-GUARANTY;
RULING:
We find the petitioner's contentions meritorious.
It is a settled rule that persons dealing with an assumed agent,
whether the assumed agency be a general or special one 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 (Harry Keeler v. Rodriguez, 4 Phil. 19). Hence, the
burden is on respondent bank to satisfactorily prove that the credit
administrator with whom they transacted acted within the authority
given to him by his principal, petitioner corporation. The only
evidence presented by respondent bank was the testimony of Philip
Wong, credit administrator, who testified that he had authority to
issue guarantees as can be deduced from the wording of the
memorandum given to him by petitioner corporation on his lending
authority. The said memorandum whichAGENCY: IN GENERAL
allegedly authorized Wong
not only to approve and grant loans but also to enter into contracts of
guaranty in behalf of the corporation.
Although Wong was clearly authorized to approve loans even up to
P350,000.00 without any security requirement, which is far above the
amount subject of the guaranty in the amount of P60,000.00, nothing
in the said memorandum expressly vests on the credit administrator
power to issue guarantees.
The sole allegation of the credit administrator in the absence of any
other proof that he is authorized to bind petitioner in a contract of
guaranty with third persons should not be given weight. The
representation of one who acts as agent cannot by itself serve as proof
of his authority to act as agent or of the extent of his authority as
agent (Velasco v. La Urbana, 58 Phil. 681). Wong's testimony that he
had entered into similar transactions of guaranty in the past for and in
behalf of the petitioner, lacks credence due to his failure to show
documents or records of the alleged past transactions.
The rule is clear that an agent who exceeds his authority is personally
liable for damages (National Power Corporation v. National
Merchandising Corporation, Nos. L-33819 and L-33897, October 23,
1982, 117 SCRA 789).
Anent the conclusion of respondent appellate court that petitioner is
estopped from alleging lack of authority due to its failure to cancel or
disallow the guaranty, We find that the said conclusion has no basis
in fact. Respondent bank had not shown any evidence aside from the
testimony of the credit administrator that the disputed transaction of
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 guaranty was in fact entered into the official records or files of
petitioner corporation, which will show notice or knowledge on the
latter's part and its consequent ratification of the said transaction. In
the absence of clear proof, it would be unfair to hold petitioner
corporation guilty of estoppel in allowing its credit administrator to
act as though the latter had power to guarantee.
24. THE DIRECTOR OF PUBLIC WORKS, vs. SING JUCO,
ET AL.,SING JUCO, SING BENGCO and PHILIPPINE
NATIONALBANK,
G.R. No. L-30181 July 12, 1929
STREET, J.:
FACTS: From Torrens certificate of title No. 1359 relating to land
int he municipality of Iloilo, it appears that on September 28,1920,
the title of the property described therein was owned, in undivided
shares, by Mariano de la Rama, Gonzalo Mariano Tanboontien, Sing
Juco and Sing Bengco. The interest vested by said certificate in
Mariano de la Rama was subsequently transferred to sale to Enrique
Enchaus. It further appears that on November 23, 1020, the owners of
the property covered by the said certificate conveyed it by way of a
mortgage to the Philippine National Bank for the purpose of securing
a credit in current account in an amount not in excess of P170, 000,
with interest at a rate of 12percent per annum. The indebtedness
covered by this mortgage has not been satisfied, and upon the date of
the decision of the court below it amounted to the sum of P170,000,
plus interest at 12 percent per annum from November24, 1920.
14 The land above referred to contains an area of nearly 16hectares, or
to be exact, 158,589.44 square meters according to the certificate. It
is located on "Point Llorente" near the City of Iloilo, and it is of so
low a level that, prior to the improvement to which reference is to be
made, it was subject to frequent flooding. In 1921, the Government
was planning extensive harbor improvements in this vicinity,
requiring extensive dredging by the Bureau of Public Works in the
mouth of said river. The conduct of these dredging operations made it
necessary for the Director of Public Works to find a place of deposit
for the dirt and mud taken from the place, or places, dredged. As the
land already referred to was low and easily accessible to the spot
where dredging was to be conducted, it was obviously for the interest
of the Government and the said owners of the land that the material
taken out by the dredges should be deposited on the said property.
Accordingly, after preliminary negotiations to this effect have been
conducted, a contract was made between the Director of Public
Works, representing the Government of the Philippine Islands, and
the four owners, M. de la Rama, SingJuco, G. M. Tanboontien, and
Seng Bengco, of which, as modified by some respects by subsequent
agreement, the following features are noteworthy: (1) The Bureau of
Public Works agreed to deposit the material to be dredged by it from
the Iloilo River upon the lot of the land; and (2) With respect to the
compensation it was agreed that the amount due should be
determined by the Director of Public Works, under certain conditions
mentioned in the contract, of an amount of not less than 20 nor more
than 75 centavos per cubic meter. In connection with the making of
the contract abovementioned, the, Director of Public Works required
a bond to be supplied by the owners in the penal amount ofP150,000,
approximately twice the estimated cost of the filling, conditioned for
the payment of the amount due from the owners. This bond was
executed contemporaneously with the main contract; and in
connection therewith it should be noted that one of the names
appearing upon said contract was that of "Casa Viuda de Tan Toco,"
purporting to be signed by M. de la Rama.
The dredging operation were conducted by the Bureau of Public
Works in substantial accomplice with the terms of said agreement;
and after the account with the owners were liquidated and the amount
due from them determined, demand was made upon them for the
payment of the first installment. No such payment was made, as a
consequence, this action was instituted by the Director of Public
Works on October 14, 1926, for the purpose of recovering the
amount due to the Government under the contract from the original
owners of the property from the sureties whose names were signed to
the contract of surety ship, and to enforce the obligation as a real lien
upon the property.
In said action the Philippine National Bank was made ap arty
defendant, as having an interest under its prior mortgage upon the
property, while Enrique Enchaus was made defendant as successor in
interest of M. de la Rama, and Tan Ong Sze widow of Tan Toco, was
also made defendant by reason of her supposed liability derived from
the act of De la Rama in signing the firm "Casa Viuda de TanToco"
as a surety on bond. It was noteworthy that in the complaint it was
asked that, in the enforcement of the government's lien, the property
should be sold "subject to the first mortgage in favor of the Philippine
National Bank."
Upon hearing the cause the trial court made pronouncement,
declaring: (1) Sing Juco, Sing Bengco,AGENCY:
M. de la IN GENERAL
Rama and G.M.
Tanboontien indebted to the Government and requiring them to pay
the said sum to the plaintiff; and (2) Tan OngSze, Viuda de Tan
Toco, personally liable upon the contract of suretyship, in case the
four principal obligors should not satisfy their indebtedness to the
Government, or if the land should not sell enough to satisfy the same.
All of the defendants, except the Philippine National Bank, appealed
from so much of the decision as held that the defendant owners and
signatories to the contract of surety ship has not been released by
non-performance of the contract on the part of the Bureau of Public
Works, and from the refusal of the court to give to the defendant
owners damages for breach of contract on the part of the
Government.
ISSUE: Whether or not Tan Ong Sze, widow of Tan Toco, is bound
by a contract of surety ship made by Mariano de laRama under power
of attorney.
RULING: No.
It is true that the Government introduced in evidence 2 documents
exhibiting powers of attorney, conferred by these documents (Exhibit
K, identical with Exhibit 5) Mariano de la Rama was given the power
which reads as follows: “. . . and also for me and in my name to sign,
seal and execute, and as my act and deed deliver, any lease or any
other deed for the conveying any real or personal property or the
other matter or thing wherein I amor may be personally interested or
concerned. And I do hereby further authorize and empower my said
attorney to substitute and point any other attorney or attorneys under
him for the purposes aforesaid, and the same again and pleasure to
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 revoke; and generally for me and in my name to do, perform, and
execute all and any other lawful and reasonable acts and things
whatsoever as fully and effectually as I, the said Tan Ong Sze might
or could do if personally present.”
In another document, (Exhibits L and M), executed in favor of the
same Mariano de la Rama by his uncle Tan Lien Co, attorney-in-fact
of Tan Ong Sze, with power of substitution, there appears the
following:
“. .and also for her and for her name to sign, seal and execute, and as
her act and deed deliver, any lease, release, bargain, sale, assignment,
conveyance or assurance, any other deed for the conveying any real
or personal property or other matter or thing wherein she or may be
personally interested or concerned.”
Neither of these powers officially confers upon Mariano de la Rama
the power to bind a principal by a contract of surety ship. The clauses
noted relate more specifically to the execution of contracts relating to
property; and the more general words at the close of the quoted
clauses should be interpreted, under the general rule ejusdem generis,
as referring to the contracts of like character. Power to execute a
contract so exceptional a nature as a contract of suretyship or
guaranty cannot be inferred from the general words contained in
these powers. In article 1827 of the Civil Code itis declared that
guaranty shall not be presumed; it must be expressed and cannot be
extended beyond its specified limits. By analogy a power of attorney
to execute a contract of guaranty should not be inferred from vague
or general words, especially when such words have their origin and
explanation in particular powers of a wholly different nature. It
15 results that the trial court was in error in giving personal judgment
against Tan Ong Sze upon the bond upon which she was sued in this
case. From what it has been said it results that the appealed judgment
must be affirmed, and the same is hereby affirmed, in dismissing, in
effect, the cross-complaint filed by some of the defendants against
the plaintiff, the Director of Public Works. Said judgment, however,
must be reversed and the same is being reversed in so far as it holds
that Tan OngSze, Viuda de Tan Toco, is liable upon the contract of
suretyship, and she is hereby absolved from the complaint.
For further proceedings in conformity with this opinion, the cause is
hereby remanded to the cause of origin, without pronouncements as
to costs. So ordered
25. THE PHILIPPINE SUGAR ESTATES DEVELOPMENT
CO., LTD., INC., vs. JUAN M. POIZAT, ET AL, GABRIELA
ANDREA DE COSTER
G.R. No. L-23352 December 31, 1925
JOHNS, J.:
FACTS: It is in this case where Gabriela Andrea de Coster (Coster)
executed a general power of attorney authorizing her husband, Juan
Poizat (Poizat), to obtain a loan and to secure the same with
mortgage, pledge or personal securities. Although the real estate
mortgage mentioned that it was entered also in Poizat’s capacity as
attorney-in-fact of Coster, Poizat signed the contract in his own name
without any indication that he also signed it as the attorney-in-fact of
his wife.
ISSUE: Whether or not Poizat may have had the authority to borrow
money and mortgage the real property of his wife.
RULING: Under his power of attorney, Juan M. Poizat may have
had authority to borrow money and mortgage the real property of his
wife, but the law specifies how and in what manner it must be done,
and the stubborn fact remains that, as to the transaction in question,
that power was never exercised. The mortgage in question was
executed by him and him only, and for such reason, it is not binding
upon the wife, and as to her, it is null and void. It follows that the
whole decree against her and her paraphernal property and the sale of
that property to satisfy the mortgage are null and void, and that any
title she may have had in or to her paraphernal property remains and
is now vested in the wife as fully and as absolutely as if the mortgage
had never been executed, the decree rendered or the property sold. As
to DonJuan M. Poizat, the decree is valid and binding, and remains in
full force and effect. It is an undisputed fact, which appears in the
mortgage itself, that the land in question was the paraphernal
property of the wife, but after the marriage the old buildings on the
property were torn down and a new building constructed and, in the
absence of evidence to the contrary, it must be presumed that the new
building is conjugal property of the husband and wife. As such, it is
subject of the debts of the conjugal partnership for the payment or
security of which the husband has the power to mortgage or
otherwise encumber the property. It is very probable that his
particular question was not fully presented to or considered by the
lower court. The mortgage as to the paraphernal property of the wife
is declared null and void ab initio , and as to her personally, the
decree is declared null and void, and as to her paraphernal property,
the sale is set aside and vacated, and held for naught, leaving it free
and clear from the mortgage, decree AGENCY: IN GENERAL
and sale, and in the same
condition as if the mortgage had never been executed, with costs in
favor of the appellant. So ordered
26. RURAL BANK OF BOMBON (CAMARINES SUR), INC.,
petitioner,
vs.
HON. COURT OF APPEALS, EDERLINDA M. GALLARDO,
DANIEL MANZO and RUFINO S. AQUINO, respondents.
G.R. No. 95703 August 3, 1992
PRINCIPLE: To create or convey real rights over immovable
(Article 1898) (see book of de Leon):
An agent cannot create or convey real rights like mortgage, usufruct,
easement, etc., over immovable property belonging to his principal
without special power. That is an act of strict ownership. There is no
principle of law by which a person can become liable on a real estate
mortgage which he never executed either in person or by attorney-in-
fact.
Although the agent was given a special power of attorney to
mortgage the property of the principal, nonetheless, when he signed
the Deed of Real Estate Mortgage in his name alone as mortgagor,
without any indication that he was signing for and in behalf of the
property owner, the mortgage was declared void for being entered
into by one who had no ownership over the property mortgaged, and
the agent bound himself as the only debtor under the loan obtained
from the bank.
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 FACTS: On January 12, 1981, Ederlinda M. Gallardo, married to
Daniel Manzo, executed a special power of attorney in favor of
Rufina S. Aquino authorizing him: – To secure a loan from any
institution for any amount or mortgage the property at Las Pinas,
Rizal. On August 26, 1981, a Deed of Real Estate Mortgage was
executed by Rufino S. Aquino in favor of the Rural Bank of Bombon
(Camarines Sur), Inc. The property was secured for a loan in the total
sum of Three Hundred Fifty Thousand Pesos only (P350,000.00),
plus interest at the rate of fourteen (14%) per annum. Spouses
Gallardo filed an action against Rufino Aquino and Rural Bank. They
alleged that Aquino mortgaged the property to pay for his personal
loans, from the same Bank.
The trial court temporarily restrained the Rural Bank “from enforcing
the real estate mortgage and from foreclosing it either judicially or
extrajudicially until further orders from the court.” Aquino, in his
answer, alleged that the spouses allowed him to mortgage the
property and use the use the proceeds thereof to compensate for the
pre-existing obligation of P350,000 that the spouse owed him. The
trial court lifted the TRO against the bank and ordered the foreclosure
proceeding against the mortgaged property. The Spouses Gallardo
appealed to the Court of Appeals (CA). The CA reversed the trial
court and held that Rufino Aquino had no authority to mortgage the
land. Thus, this appeal against the decision.
ISSUE: Whether the Deed of Real Estate Mortgage executed by
Aquino, as attorney-in-fact of Ederlinda Gallardo, in favor of the
Rural Bank of Bombon is valid.
RULING: No.
16
In order to bind the principal by a mortgage on real property
executed by an agent, it must upon its face purport to be made, signed
and sealed in the name of the principal, otherwise, it will bind the
agent only. It is not enough merely that the agent was in fact
authorized to make the mortgage, if he has not acted in the name of
the principal. Neither is it ordinarily sufficient that in the mortgage
the agent describes himself as acting by virtue of a power of attorney,
if in fact the agent has acted in his own name and has set his own
hand and seal to the mortgage.
In view of this rule, Aquino’s act of signing the Deed of Real Estate
Mortgage in his name alone as mortgagor, without any indication that
he was signing for and in behalf of the property owner, Ederlinda
Gallardo, bound himself alone in his personal capacity as a debtor of
the petitioner Bank and not as the agent or attorney-in-fact of
Gallardo. Petitioner claims that the Deed of Real Estate Mortgage is
enforceable against Gallardo since it was executed in accordance
with Article 1883 which provides: “If an agent acts in his own name,
the principal has no right of action against the persons with whom the
agent has contracted; neither have such persons against the
principal.” In such case the agent is the one directly bound in favor of
the person with whom he has contracted, as if the transaction were
his own, except when the contract involves things belonging to the
principal.
The above provision of the Civil Code relied upon by the petitioner
Bank, is not applicable to the case at bar. Herein respondent Aquino
acted purportedly as an agent of Gallardo, but actually acted in his
personal capacity. Involved herein are properties titled in the name of
respondent Gallardo against which the Bank proposes to foreclose the
mortgage constituted by an agent (Aquino) acting in his personal
capacity. Under these circumstances, we hold, as we did in Philippine
Sugar Estates Development Co. vs. Poizat, supra, that Gallardo’s
property is not liable on the real estate mortgage that there is no
principle of law by which a person can become liable on a real
mortgage which she never executed either in person or by attorney in
fact.
27. COMMERCIAL BANK & TRUST COMPANY OF THE
PHILIPPINES, Plaintiff-Appellee vs. REPUBLIC ARMORED
CAR SERVICE CORPORATION and DAMASO PEREZ, ET
AL., Defendants-Appellants
G.R. Nos. L-18223-24 June 29, 1963
PRINCIPLE: Liability of principal for mismanagement of business
by his agent (Art. 1910) (see book of De Leon): Under general rules
and principles of law, the mismanagement of the business of a party
by his agents does not relieve said property from the responsibility
that he had contracted to third persons.
Said alleged mismanagement and the action pending in court
regarding the same are merely internal affairs of Republic Armored
which cannot affect or diminish its liability to Commercial Bank.
Having admitted the indebtedness, Republic Armored ‘s liability is
beyond question. This is especially so in the case at bar where the
written agreement of credit in current account between plaintiff and
defendant contains no limitation about the liability of defendant, nor
an express agreement that the responsibility of defendant should be
conditioned upon the lawful management of the business.
AGENCY: IN GENERAL
Disclosed principal (Art. 1883) (see book of De Leon): The principal
may be disclosed if at the time of the transaction contracted by the
agent, the other party thereto has known that the agent is acting for a
principal and of the principal’s identity.
FACTS: In G.R. No. L-18224, Republic Armored Car Service
Corporation (defendant) was granted by Commercial Bank & Trust
Co. of the Philippines credit accommodations in the form of overdraft
line not exceeding p150,000.00. Defendants in their answer admit the
opening of the credit line in their favor and that demands for the
indebtedness were made upon them, but allege as special defenses
that the directors and officers of the defendant corporation
deliberately defrauded and mismanaged the said corporation breach
of trust in order to deprive Damaso Perez of his control and majority
interest in the defendant corporation, as a result of which fraud,
mismanagement and breach of trust the defendants suffered
tremendous losses; that the amounts drawn by defendant corporation
upon the credit line were received and used by the former directors
and officers and same constitute part of the funds of the defendant
corporation misapplied and mismanaged by said former officers and
directors of said corporation. Defendant also claims that it has
instituted actions against its former officers who had defrauded it and
misapplied the amounts drawn.
ISSUE: Is the mismanagement and fraud of the former officers of
Republic Armored Car Service Corp. a defense against its liability to
B?
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 RULING: No.
The defendants having admitted the indebtedness in question, its
liability to pay the plaintiff the amount of the said indebtedness is
beyond question. The alleged fact that the money borrowed from the
plaintiff was misappropriated or misapplied by some officers of the
defendant corporation is no defense against the liability of the
defendants to the plaintiff. It is an internal matter of the defendant
corporation in which the plaintiff has no concern or participation
whatsoever. This is specially so with respect to the defendant
Damaso Perez who appears to have executed the agreement in his
own personal capacity and not as an officer of the defendant Republic
Credit Corporation. The allegation that the defendants have a right to
claim indemnity or contribution from the erring directors and officers
of the defendant corporation is a matter which may be the subject of a
separate action, and in which the plaintiff is not concerned.
Furthermore, under general rules and principles of law the
mismanagement of the business of a party by his agents does not
relieve said party from the responsibility that he had contracted to
third persons, especially in the case at bar where the written
agreement contains no limitation to defendants-appellants' liability.
The so-called special defense contained in the answer is, therefore, no
special defense to the liability of the defendants-appellants, nor to the
action, and the court's action or judgment on the pleadings was
properly taken. The argument contained in the brief of the
defendants-appellants that the defendants contemplated a third-party
complaint is of no weight, because a third-party complaint was not
available to the defendants under the facts of the case. A third-party
17 complaint is, under the Rules, available only if the defendant has a
right to demand contribution, indemnity, subrogation or any other
relief from the supposed third-party defendants in respect to the
plaintiff's claim. (Sec. 1, Rule 12, Rules of Court). The supposed
parties defendants or alleged officers of the defendant corporation
had nothing to do with the overdraft account of defendant corporation
with the plaintiff-appellee. Consequently, they cannot be made
parties defendants in a third party complaint. Anyway the filing of a
third party complaint is no hindrance to the issuance of the order of
the court declaring that the defendants' answer presented no issue or
defense and that, therefore, plaintiff-appellee was entitled to
judgment.
Again we declare that the written agreement for credit in current
account contains no limitation about the liability of the defendants-
appellants, nor an express agreement that the responsibility of the
defendants-appellants should be conditioned upon the lawful
management of the business of the defendant corporation.
28. THE PHILIPPINE NATIONAL BANK, plaintiff-appellee,
vs. PAZ AGUDELO Y GONZAGA, ET AL., defendants.
PAZ AGUDELO Y GONZAGA, appellant
G.R. No. L-39037 October 30, 1933
Hilado and Hilado and Norberto Romualdez for appellant.
Roman J. Lacson for appellee.
VILLA-REAL, J.:
FACTS: The defendant Paz Agudelo y Gonzaga appeals to this court
from the judgment rendered by the Court of First Instance of
Occidental Negros absolving the defendant Mauro A. Garrucho
from the complaint and ordering the defendant Paz Agudelo y
Gonzaga to pay to the plaintiff.
The following pertinent facts, which have been proven without
dispute during the trial, are necessary for the decision of the questions
raised in the present appeal, to wit:
The defendant-appellant Paz Agudelo y Gonzaga executed in favor of
her nephew, Mauro A. Garrucho, the document conferring upon him
a special power of attorney sufficiently broad in scope to enable him
to sell, alienate and mortgage in the manner and form he might deem
convenient, all her real estate situated in the municipalities of Murcia
and Bacolod, Occidental Negros, consisting in lots Nos. 61 and 207
of the cadastral survey of Bacolod, Occidental Negros, together with
the improvement thereon.
Also in another occasion, Amparo A. Garrucho executed the
document whereby she conferred upon her brother Mauro A
Garrucho a special power of attorney sufficiently broad in scope to
enable him to sell, alienate, mortgage or otherwise encumber, in the
manner and form he might deem convenient, all her real estate
situated in the municipalities of Murcia and Bago, Occidental
Negros.
Nothing in the aforesaid powers of attorney expressly authorized
Mauro A. Garrucho to contract any loan nor to constitute a
mortgage on the properties belonging toAGENCY: IN GENERAL
the respective principals, to
secure his obligations.
Mauro A. Garrucho executed in the favor of the plaintiff entity, the
Philippine National Bank, the document whereby he constituted a
mortgage on lot No. 878 of the cadastral survey of Murcia,
Occidental Negros, with all the improvements thereon issued in the
name of Amparo A. Garrucho, to secure the payment of credits,
loans, commercial overdrafts, etc., not exceeding P6,000, together
with interest thereon, which he might obtain from the aforesaid
plaintiff entity, issuing the corresponding promissory note to that
effect.
The said Mauro A. Garrucho executed in favor of the plaintiff entity,
the Philippine National Bank, the document whereby he constituted a
mortgage on lots Nos. 61 and 207 of the cadastral survey of Bacolod
together with the buildings and improvements thereon, issued in the
name of Paz Agudelo y Gonzaga, to secure the payment of credits,
loans and commercial overdrafts which the said bank might furnish
him to the amount of P16,00 executing the corresponding promissory
note to that effect.
The mortgage deeds as well as the corresponding promissory notes
for P6,000 and P16,000, respectively, were executed in Mauro A.
Garrucho's own name and signed by him in his personal capacity,
authorizing the mortgage creditor, the Philippine National Bank, to
take possession of the mortgaged properties, by means of force if
necessary, in case he failed to comply with any of the conditions
stipulated therein.
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 Months later, the manager of the Iloilo branch of the Philippine
National Bank notified Mauro A. Garrucho that his promissory note
for P6,000 of 10 days within which to make payment.
At another date, the said manager requested him to liquidate his
account amounting to P15,148.15, at the same time notifying him that
his promissory note for P16,000 giving as security for the
commercial overdraft in question, had fallen due some time since.
Mauro A. Garrucho then executed in favor of the plaintiff entity
(PNB) the deed whereby he constituted a mortgage on lots Nos. 61
and 207issued in the name of Paz Agudelo y Gonzaga, and on lot
No. 878 issued in the name of Amparo A. Garrucho. In connection
of the credits, loans, and commercial overdrafts amounting to
P21,000 which had been granted him, Mauro A. Garrucho, executed
the promissory note for P21,000as a novation of the former
promissory notes for P6,000 and P16,000, respectively.
In view of the aforesaid consolidated mortgage, the Philippine
National Bank cancelled the mortgages constituted on lots Nos. 61,
207 and 878.
Then after, Amparo A. Garrucho sold lot No. 878 to Paz Agudelo y
Gonzaga.
ISSUE: WON Paz Agudelo y Gonzaga is liable for the payment of
the loans of P21,000 obtained by Mauro A. Garrucho from the
Philippine National Bank for the security of which he constituted a
18
mortgage on the aforesaid real estate belonging to the defendant-
appellant Paz Agudelo y Gonzaga?
RULING: No.
The promissory notes executed by Mauro A. Garrucho in favor of the
Philippine National Bank, evidencing loans of P6,000 and P16,000
have been novated by the promissory notes for P21,000 executed by
Mauro A. Garrucho, not only without express authority from his
principal Paz Agudelo y Gonzaga but also under his own
signature.
Aside from the phrases "attorney in fact of his sister, Amparo A.
Garrucho, as evidenced by the power of attorney" and "attorney in
fact of Paz Agudelo y Gonzaga" written after the name of Mauro A.
Garrucho in the mortgage deeds, respectively, there is nothing in the
said mortgage deeds to show that Mauro A. Garrucho is attorney in
fact of Amparo A. Garrucho and of Paz Agudelo y Gonzaga, and that
he obtained the loans mentioned in the aforesaid mortgage deeds and
constituted said mortgages as security for the payment of said loans,
for the account and at the request of said Amparo A. Garrucho and
Paz Agudelo y Gonzaga.
The above-quoted phrases which simply described his legal
personality, did not mean that Mauro A. Garrucho obtained the
said loans and constituted the mortgages in question for the
account, and at the request, of his principals.
From the titles as well as from the signatures therein, Mauro A.
Garrucho, appears to have acted in his personal capacity. In the
aforesaid mortgage deeds, Mauro A. Garrucho, in his capacity as
mortgage debtor, appointed the mortgage creditor Philippine National
Bank as his attorney in fact so that it might take actual and full
possession of the mortgaged properties by means of force in case of
violation of any of the conditions stipulated in the respective
mortgage contracts. If Mauro A. Garrucho acted in his capacity as
mere attorney in fact of Amparo A. Garrucho and of Paz Agudelo y
Gonzaga, he could not delegate his power, in view of the legal
principle of "delegata potestas delegare non potest" (a delegated
power cannot be delegated), inasmuch as there is nothing in the
records to show that he has been expressly authorized to do so.
Article 1709 of the Civil Code provides the following:
ART. 1709. By the contract of agency, one person binds
himself to render some service, or to do something for the
account or at the request of another.
And article 1717 of the same Code provides as follows:
ART. 1717. When an agent acts in his own name, the
principal shall have no right of action against the persons
with whom the agent has contracted, or such persons
against the principal.
In such case, the agent is directly liable to the person with
AGENCY: IN GENERAL
whom he has contracted, as if the transaction were his own.
Cases involving things belonging to the principal are
excepted.
The provisions of this article shall be understood to be
without prejudice to actions between principal and agent.
It is further claimed that inasmuch as the properties mortgaged by
Mauro A. Garrucho belong to Paz Agudelo y Gonzaga, the latter is
responsible for the acts of the former although he acted in his own
name, in accordance with the exception contained in article 1717
of the Civil Code. It would be an exception with the properties of
his own name in connection with the properties of his principal, does
so within the scope of his authority.
It is noted that Mauro A. Garrucho was not authorized to execute
promissory notes even in the name of his principal Paz Agudelo y
Gonzaga, nor to constitute a mortgage on her real properties to secure
such promissory notes. The plaintiff Philippine National Bank should
know this inasmuch as it is in duty bound to ascertain the extent of
the agent's authority before dealing with him.
Therefore, Mauro A. Garrucho and not Paz Agudelo y Gonzaga
is personally liable for the amount of the promissory note Exhibit
B. (2 Corpus Juris, pp. 563-564.)
In the case of National Bank vs. Palma Gil (55 Phil., 639),
this court laid down the following doctrine:
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 A promissory note and two mortgages executed by the
agent for and on behalf of his principal, in accordance with
a power of attorney executed by the principal in favor of
the agent, are valid, and as provided by article 1727 of
contracted by the agent; but a mortgage on real property of
the principal not made and signed in the name of the
principal is not valid as to the principal.
Though it has been intimated, and the trial judge so stated that it was
the intention of the parties that Mauro A. Garrucho would execute the
promissory note and the mortgage deed in his capacity as attorney in
facts of Paz Agudelo y Gonzaga, and that although the terms of the
aforesaid documents appear to be contrary to the intention of the
parties, such intention should prevail in accordance with article
1281 of the Civil Code.
Commenting on article 1281 of the Civil Code, Manresa, in his
Commentaries to the Civil Code, says the following:
IV. Intention of the contracting parties; its appreciation. —
In order that the intention may prevail, it is necessary that
the question of interpretation be raised, either because the
words used appear to be contrary thereto, or by the
existence of overt acts opposed to such words, in which the
intention of the contracting parties is made manifest.
Furthermore, in order that it may prevail against the terms
of the contract, it must be clear or, in other words, besides
the fact that such intention should be proven by admissible
evidence, the latter must be of such charter as to carry in
the mind of the judge an unequivocal conviction. This
19
requisite as to the kind of evidence is laid down in the
decision relative to the Mortgage Law of September 30,
1891, declaring that article 1281 of the Civil Code gives
preference to intention only when it is clear. When the
aforesaid circumstances is not present in a document, the
only thing left for the register of deeds to do is to suspend
the registration thereof, leaving the solution of the problem
to the free will of the parties or to the decision of the courts.
However, the evident intention which prevails against
the defective wording thereof is not that of one of the
parties, but the general intent, which, being so, is to a
certain extent equivalent to mutual consent, inasmuch as it
was the result desired and intended by the contracting
parties. (8 Manresa, 3d edition, pp. 726 and 727.)
The records do not show that the loan obtained by Mauro A.
Garrucho, evidenced by the promissory note, was for his
principal Paz Agudelo y Gonzaga. The special power of attorney
does not authorize Mauro A. Garrucho to constitute a mortgage on
the real estate of his principal to secure his personal obligations.
Therefore, in doing so by virtue of the document, he exceeded the
scope if his authority and his principal is not liable for his acts. (2
Corpus Juris, p. 651; article 1714, Civil Code.)
29. VICENTE SY-JUCO and CIPRIANA VIARDO, plaintiffs-
appellants,
vs.SANTIAGO V. SY-JUCO, defendant-appellant.
G.R. No. L-13471 January 12, 1920
Sumulong and Estrada for plaintiffs and appellants.
Delgado and Delgado for defendant and appellant.
AVANCEÑA, J.:
FACTS: The defendant, Santiago Sy-juco, was appointed by the
plaintiffs administrator of their property. The plaintiffs, Vicente Sy-
juco and Cipriano Viardo are defendant's father and mother who
allege that during his administration the defendant acquired the
property claimed in the complaint in his capacity as plaintiffs'
administrator with their money and for their benefit.
It appears from the facts that the defendant bought the launch
Malabon in his own name from the Pacific Commercial Co., and
afterwards registered it at the Custom House. But this does not show
that the defendant bought it for himself and with his own money, as
he claims.
After hearing the case the trial court rendered his decision ordering
the defendant to return to the plaintiffs the launch Malabon, in
question, and execute all the necessary documents and instruments
for such delivery and the registration in the records of the Custom
House of said launch as plaintiffs' property.
During the appeal, the defendant assigns error from this judgment of
the lower court.
ISSUE: WON the launch Malabon bought by the defendant in his
own name was within the agency which the defendant had received
AGENCY: IN GENERAL
from the plaintiffs ?
RULING: Yes.
The Court is of the opinion that the evidence sufficiently justifies the
judgment against the defendant.
This transaction was within the agency which the defendant had
received from the plaintiffs. The fact that he has acted in his own
name may be only, as we believe it was, a violation of the agency on
his part.
From the rule established in article 1717 of the Civil Code that,
when an agency acts in his own name, the principal shall have no
right of action against the person with whom the agent has
contracted, cases involving things belonging to the principal are
excepted. According to this exception (when things belonging to
the principal are dealt with) the agent is bound to the principal
although he does not assume the character of such agent and
appears acting in his own name (Decision of the Supreme Court of
Spain, May 1, 1900). This means that in the case of this exception the
agent's apparent representation yields to the principal's true
representation and that, in reality and in effect, the contract must be
considered as entered into between the principal and the third
person; and, consequently, if the obligations belong to the former, to
him alone must also belong the rights arising from the contract. The
money with which the launch was bough having come from the
plaintiff, the exception established in article 1717 is applicable to
the instant case.
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino

As the plaintiffs' counsel truly say, the question is not in whose favor
the document of sale of the launch is executed nor in whose name
same was registered, but with whose money was said launch
bought. The plaintiffs' testimony that it was bought with their money
and for them is supported by the fact that, immediately after its
purchase, the launch had to be repaired at their expense, although
said expense was collected from the defendant. If the launch was not
bought for the plaintiffs and with their money, it is not explained why
they had to pay for its repairs.
Here, the defendant invokes the decision of this Court in the case of
Martinez vs. Martinez (1 Phil. Rep., 647), which we do not believe is
applicable to the present case. In said case, Martinez, Jr., bought a
vessel in his own name and in his name registered it at the Custom
House. This court then said that although the funds with which the
vessel was bought belonged to Martinez Sr., Martinez Jr. is its sole
and exclusive owner. But in said case the relation of principal and
agent, which exists between the plaintiffs and the defendant in the
present case, did not exist between Martinez, Sr., and Martinez,
Jr.
By this agency the plaintiffs herein clothed the defendant with
their representation in order to purchase the launch in question.
However, the defendant acted without this representation and
bought the launch in his own name thereby violating the agency.
If the result of this transaction should be that the defendant has
acquired for himself the ownership of the launch, it would be
equivalent to sanctioning this violation and accepting its
20 consequences. But not only must the consequences of the violation
of this agency not be accepted, but (also) the effects of the agency
itself must be sought. If the defendant contracted the obligation to but
the launch for the plaintiffs and in their representation, but virtue of
the agency, notwithstanding the fact that he bought it in his own
name, he (defendant) is obliged to transfer to the plaintiffs the
rights he received from the vendor, and the plaintiffs are entitled
to be subrogated in these rights.
30. NATIONAL FOOD AUTHORITY, (NFA), petitioner,
vs.
INTERMEDIATE APPELLATE COURT, SUPERIOR (SG)
SHIPPING CORPORATION, respondents.
G.R. No. 75640 April 5, 1990
FACTS: On September 6, 1979 Gil Medalla, as commission agent of
the plaintiff Superior Shipping Corporation, entered into a contract
for hire of ship known as "MV Sea Runner" with defendant National
Grains Authority. Under the said contract Medalla obligated to
transport on the "MV Sea Runner" 8,550 sacks of rice belonging to
defendant National Grains Authority from the port of San Jose,
Occidental Mindoro, to Malabon, Metro Manila.
Upon completion of the delivery of rice at its destination, plaintiff on
October 17, 1979, wrote a letter requesting defendant NGA that it be
allowed to collect the amount stated in its statement of account
(Exhibit "D"). The statement of account included not only a claim for
freightage but also claims for demurrage and stevedoring charges
amounting to P93,538.70.
On November 5, 1979, plaintiff wrote again defendant NGA, this
time specifically requesting that the payment for freightage and other
charges be made to it and not to defendant Medalla because plaintiff
was the owner of the vessel "MV Sea Runner" (Exhibit "E"). In
reply, defendant NGA on November 16, 1979 informed plaintiff that
it could not grant its request because the contract to transport the rice
was entered into by defendant NGA and defendant Medalla who did
not disclose that he was acting as a mere agent of plaintiff (Exhibit
"F"). Thereupon on November 19, 1979, defendant NGA paid
defendant Medalla the sum of P25,974.90, for freight services in
connection with the shipment of 8,550 sacks of rice (Exhibit "A").
On December 4, 1979, plaintiff wrote defendant Medalla demanding
that he turn over to plaintiff the amount of P27,000.00 paid to him by
defendant NFA. Defendant Medalla, however, "ignored the demand."
Plaintiff was therefore constrained to file the instant complaint.
Defendant-appellant National Food Authority admitted that it entered
into a contract with Gil Medalla whereby plaintiffs vessel "MV Sea
Runner" transported 8,550 sacks of rice of said defendant from San
Jose, Mindoro to Manila. For services rendered, the National Food
Authority paid Gil Medalla P27,000.00 for freightage.
Judgment was rendered in favor of the plaintiff. Defendant appealed.
The appellate court affirmed the judgment of the lower court, hence,
this appeal by way of certiorari.
ISSUE: WON the instant case falls within the exception of the
general rule provided for in Art. 1883 of the Civil Code of the
Philippines.
CONTENTION OF THE PETITIONER
It is contended by petitioner NFA that it is not liable under the
exception to the rule (Art. 1883) since it had no knowledge of the fact
of agency between respondent Superior Shipping and Medalla at the
time when the contract was entered into between IN
AGENCY: them (NFA and
GENERAL
Medalla). Petitioner submits that "(A)n undisclosed principal cannot
maintain an action upon a contract made by his agent unless such
principal was disclosed in such contract. One who deals with an agent
acquires no right against the undisclosed principal."
RULING: Petitioner NFA's contention holds no water. It is an
undisputed fact that Gil Medalla was a commission agent of
respondent Superior Shipping Corporation which owned the vessel
"MV Sea Runner" that transported the sacks of rice belonging to
petitioner NFA. The context of the law is clear.
Art. 1883, which is the applicable law in the case at bar provides:
Art. 1883. If an agent acts in his own name, the principal has no right
of action against the persons with whom the agent has contracted;
neither have such persons against the principal.
In such case the agent is the one directly bound in favor of the person
with whom he has contracted, as if the transaction were his own,
except when the contract involves things belonging to the principal.
The provision of this article shall be understood to be without
prejudice to the actions between the principal and agent.
Consequently, when things belonging to the principal (in this case,
Superior Shipping Corporation) are dealt with, the agent is bound to
the principal although he does not assume the character of such agent
and appears acting in his own name. In other words, the agent's
apparent representation yields to the principal's true representation
and that, in reality and in effect, the contract must be considered as
entered into between the principal and the third person (Sy Juco and
Viardo v. Sy Juco, 40 Phil. 634). Corollarily, if the principal can be
obliged to perform his duties under the contract, then it can also
demand the enforcement of its rights arising from the contract.
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 31. AWAD vs. FILMA MERCANTILE CO.
GR 25950
FACTS: Early  in the  month of  September, 1924,  the plaintiff,
doing business in the Philippine  Islands under the name of E. Awad
& Co., delivered certain merchandise  of the invoice value of P11,140
to Chua Lioc, a  merchant operating under  the name of Hang Chuan
Co. in  Manila, said merchandise to be sold on commission by  Chua
Lioc.  Representing himself as being the owner of the  merchandise,
Chua Lioc, on September 8, 1924, sold it to the  defendant for the
sum of P12,155.60.  He owed the Philippine Manufacturing Co.,  the  The  rule laid down in the article quoted is contrary to the general
sum of P3,480, which the  defendant agreed to pay, and was  also
indebted to the defendant  itself in the sum of P2,017.98.  The total
amount of the two debts,  P5,497.98, was  deducted from the  cases and is  the law in this jurisdiction.  (Pastells & Regordosa vs.
purchase  price, leaving a balance of P6,657.52 which the defendant
promised to pay to Chua Lioc on or before  October 9, 1924.
The merchandise so  purchased on September 9, was delivered  to the
defendant, who immediately offered it for sale.  Three days later D.
J.  Awad, the representative  of the plaintiff in the Philippine Islands,
having ascertained that the goods entrusted to Chua Lioc was being
offered for sale by the defendant, obtained authorization from  Chua
Lioc to collect the sum  of P11,707 from  said  defendant and
informed  the latter's treasurer of the  facts  above set forth.   On
September 15, D. J. Awad, in behalf of E. Awad & Co.,  wrote a
letter to the defendant corporation advising it that, inasmuch as the
merchandise belonged to E. Awad & Co.,  the purchase price should
be paid to them, to which letter,  the defendant,  on September 18, 
1924 refusing to grant the request.
On the same date,  September  18, 1924,  the Philippine Trust 
Company, brought an action,  civil case No. 26934, against Chua
Lioc for the recovery of the sum of P1,036.36 and under a writ of
21 attachment garnished the balance due Chua Lioc  from the
defendant.   On October 7, E.  Awad also brought an action, civil case
No. 27016, against  Chua Lioc for the recovery of the sum of
P11,140, the invoice value of the merchandise above-mentioned and
also obtained a writ of attachment under which notice of garnishment
of the aforesaid balance was served upon the herein defendant.
The complaint in the present action was filed on November 26, 1924,
the plaintiff demanding payment of the same sum of P11,140 for
which action  had already been brought against Chua Lioc. The
defendant,  in its answer, set up as special defense that it bought the
merchandise in good faith and without any knowledge whatever of
the person from  whom or the condition under  which the said  Assignment with Special Power of Attorney stating that the
merchandise had been acquired by Chua Lioc or  Hang Chuan Co.;
that the defendant therefore had acquired title to the merchandise
purchased; that the balance of P6,657.52, now in the hands of the
defendant had been attached in the two actions brought on September
18, and October 7, respectively,  and garnishment served upon the
defendant, who, therefore, holds  the money subject to the orders  of
the court in the cases above-mentioned, but which sum the defendant
is able and willing to pay at any time when the court  decides to 
whom the money lawfully  pertains.
Upon trial, the court below dismissed the case without costs on the
ground that the plaintiff was only entitled to payment of the sum of
P6,657.52, but which sum the defendant had the right to retain
subject to the orders of the court in cases Nos. 26134 and 27016.  petitioner received confirmation of the information from BMW
From this judgment the plaintiff appealed.
ISSUE: WON defendant is liable to plaintiff.
RULING: No.
The law applicable to the case is well settled.  Article 246 of the
Code of Commerce reads as follows:
7
"When  the agent transacts business in his own name, it shall not be
necessary for him to state  who is the principal and he shall be
directly liable, as if the business were for his own account, to the
persons with whom he transacts the same,  said persons  not having
any right  of action against the principal, nor  the latter against the 
former, the liabilities of  the principal and  of the  agent  to  each
other always being reserved."
rule in the United  States as to purchases of merchandise  from agents
with  undisclosed principal, but it has  been followed in a number of
Hollman & Co., 2  Phil., 235;  Castle Bros.,  Wolf & Sons vs. Go-
Juno, 7 Phil., 144; Lim Tiu  vs.  Ruiz y Rementeria, 15  Phil., 367.)
But the appellant points out several circumstances which, in his
opinion, indicate that the defendant-appellee was aware of the
condition under which  the merchandise was entrusted to the agent
Chua Lioc and therefore did not purchase the goods in good  faith. 
This, if true, would, of course, lead to a decision of the  case in favor
of the plaintiff, but there is, in our opinion, nothing conclusive about
the circumstances referred  to and they are not sufficient to overcome
the presumption of good faith.
The appealed judgment is in accordance with the law and the facts
and is affirmed with the costs against the appellant.  So ordered.
32. ALFRED HAHN, Petitioner, v. COURT OF APPEALS and
BAYERISCHE MOTOREN WERKE
AKTIENGESELLSCHAFT (BMW), Respondents.
AGENCY: IN GENERAL
G.R. No. 113074 January 22, 1997
FACTS: Petitioner Alfred Hahn is a Filipino citizen doing business
under the name and style "Hahn-Manila". On the other hand, private
respondent Bayerische Motoren Werke Aktiengesellschaft (BMW) is
a nonresident foreign corporation existing under the laws of the
former Federal Republic of Germany, with principal office at
Munich, Germany.
Petitioner executed in favor of private respondent a "Deed of
ASSIGNOR is the present owner and holder of the BMW trademark
and device in the Philippines and for which ASSIGNOR is the
authorized exclusive Dealer of the ASSIGNEE in the Philippines.
The ASSIGNOR has agreed to transfer and consequently record said
transfer of the said BMW trademark and device in favor of the
ASSIGNEE and shall continue business relations as has been usual in
the past without a formal contract.
Petitioner was informed that BMW was arranging to grant the
exclusive dealership of BMW cars and products to CMC, which had
expressed interest in acquiring the same. On February 24, 1993,
which, in a letter, expressed dissatisfaction with various aspects of
petitioner’s business. BMW expressed willingness to continue
business relations with the petitioner on the basis of a "standard
BMW importer" contract, otherwise, it said, if this was not acceptable
to petitioner, BMW would have no alternative but to terminate
petitioner’s exclusive dealership.
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 Petitioner protested, claiming that the termination of his exclusive
dealership would be a breach of the Deed of Assignment. 3 Hahn
insisted that as long as the assignment of its trademark and device
subsisted, he remained BMW’s exclusive dealer in the Philippines
because the assignment was made in consideration of the exclusive
dealership. BMW withdrew on March 26, 1993 its offer of a
"standard importer contract" and terminated the exclusive dealer
relationship. Hahn was surprised to find Alvarez among those invited
from the Asian region. On April 29, 1993, BMW proposed that Hahn
and CMC jointly import and distribute BMW cars and parts. Hahn
found the proposal unacceptable. On May 14, 1993, he filed a
complaint for specific performance and damages against BMW to
compel it to continue the exclusive dealership.
The Regional Trial Court issued a temporary restraining order and
writ of preliminary injunction.
BMW moved to dismiss the case, contending that the trial court did
not acquire jurisdiction over it through the service of summons on the
Department of Trade and Industry, because it (BMW) was a foreign
corporation and it was not doing business in the Philippines. It
contended that the execution of the Deed of Assignment was an
isolated transaction; that Hahn was not its agent because the latter
undertook to assemble and sell BMW cars and products without the
participation of BMW and sold other products; and that Hahn was an
indentor or middleman transacting business in his own name and for
his own account.
Petitioner argued that BMW was doing business in the Philippines
through him as its agent, as shown by the fact that BMW invoices
22 and order forms were used to document his transactions; that he gave
warranties as exclusive BMW dealer; that BMW officials
periodically inspected standards of service rendered by him; and that
he was described in service booklets and international publications of
BMW as a "BMW Importer" or "BMW Trading Company" in the
Philippines.
The CA ruled that Hahn acted in his own name and for his own
account and independently of BMW, based on Alfred Hahn’s
allegations that he had invested his own money and resources in
establishing BMW’s goodwill in the Philippines and on BMW’s
claim that Hahn sold products other than those of BMW. It held that
petitioner was a mere indentor or broker and not an agent through
whom private respondent BMW transacted business in the
Philippines.
ISSUE: whether petitioner Alfred Hahn is the agent or distributor in
the Philippines of private respondent BMW – Agent
DOCTRINE: INVESTMENT OF MONEY DOES NOT
NECESSARILY DISPROVE ONE IS NOT AN AGENT
RULING: There is nothing to support the appellate court’s finding
that Hahn solicited orders alone and for his own account and without
"interference from, let alone direction of, BMW." (p. 13) To the
contrary, Hahn claimed he took orders for BMW cars and transmitted
them to BMW. Upon receipt of the orders, BMW fixed the down
payment and pricing charges, notified Hahn of the scheduled
production month for the orders, and reconfirmed the orders by
signing and returning to Hahn the acceptance sheets. Payment was
made by the buyer directly to BMW. Title to cars purchased passed
directly to the buyer and Hahn never paid for the purchase price of
BMW cars sold in the Philippines. Hahn was credited with a
commission equal to 14% of the purchase price upon the invoicing of
a vehicle order by BMW. Upon confirmation in writing that the
vehicles had been registered in the Philippines and serviced by him,
Hahn received an additional 3% of the full purchase price. Hahn
performed after-sale services, including, warranty services. for which
he received reimbursement from BMW. All orders were on invoices
and forms of BMW.
This arrangement shows an agency. An agent receives a
commission upon the successful conclusion of a sale. On the other
hand, a broker earns his pay merely by bringing the buyer and
the seller together, even if no sale is eventually made.
BMW periodically inspected the service centers to see to it that
BMW standards were maintained. Indeed, it would seem from
BMW’s letter to Hahn that it was for Hahn’s alleged failure to
maintain BMW standards that BMW was terminating Hahn’s
dealership.
The fact that Hahn invested his own money to put up these
service centers and showrooms does not necessarily prove that he
is not an agent of BMW. For as already noted, there are facts in the
record which suggest that BMW exercised control over Hahn’s
activities as a dealer and made regular inspections of Hahn’s
premises to enforce compliance with BMW standards and
specifications.
AGENCY:Materials,
This case fits into the mould of Communications IN GENERAL Inc. v.
Court of Appeals 12 in which the foreign corporation entered into a
"Representative Agreement" and a "Licensing Agreement" with a
domestic corporation, by virtue of which the latter was appointed
"exclusive representative" in the Philippines for a stipulated
commission. Pursuant to these contracts, the domestic corporation
sold products exported by the foreign corporation and put up a
service center for the products sold locally. This Court held that these
acts constituted doing business in the Philippines. The arrangement
showed that the foreign corporation’s purpose was to penetrate the
Philippine market and establish its presence in the Philippines.
In addition, BMW held out private respondent Hahn as its exclusive
distributor in the Philippines. even as it announced in the Asian
region that Hahn was the "official BMW agent" in the Philippines.
33. MANUEL B. TAN, GREGG M. TECSON and ALEXANDER
SALDAÑA, Petitioners, v. EDUARDO R. GULLAS and NORMA
S. GULLAS, Respondents.
G.R. No. 143978 December 3, 2002
FACTS: Private respondents, Spouses Eduardo R. Gullas and Norma
S. Gullas, were the registered owners of a parcel of land. They
executed a special power of attorney 5 authorizing petitioners Manuel
B. Tan, a licensed real estate broker, 6 and his associates Gregg M.
Tecson and Alexander Saldaña, to negotiate for the sale of the land at
Five Hundred Fifty Pesos (P550.00) per square meter, at a
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 commission of 3% of the gross price. The power of attorney was non-
exclusive and effective for one month.
Petitioner Tan contacted Engineer Edsel Ledesma, construction
manager of the Sisters of Mary of Banneaux, Inc. Tan and Ledesma
accompanied Sisters Michaela Kim and Azucena Gaviola,
representing the Sisters of Mary, to see private respondent Eduardo
Gullas in his office at the University of Visayas. The Sisters, who had
already seen and inspected the land, found the same suitable for their
purpose and expressed their desire to buy it. 8 However, they
requested that the selling price be reduced to Five Hundred Thirty
Pesos (P530.00) per square meter instead of Five Hundred Fifty
Pesos (P550.00) per square meter. It was the first time that the buyers
came to know that private respondent Eduardo Gullas was the owner
of the property.
Private respondents agreed to sell the property to the Sisters of Mary,
and subsequently executed a special power of attorney 9 in favor of
Eufemia Cañete, giving her the special authority to sell, transfer and
convey the land at a fixed price of Two Hundred Pesos (P200.00) per
square meter. attorney-in-fact Eufemia Cañete executed a deed of
sale in favor of the Sisters of Mary for the price of Twenty Million
Eight Hundred Twenty Two Thousand Eight Hundred Pesos
(P20,822.800.00), or at the rate of Two Hundred Pesos (P200.00) per
square meter.
Petitioners went to see private respondent Eduardo Gullas to claim
their commission, but the latter told them that he and his wife have
already agreed to sell the property to the Sisters of Mary. Private
respondents refused to pay the broker’s fee and alleged that another
23 group of agents was responsible for the sale of land to the Sisters of
Mary.
Petitioners filed a complaint 13 against the defendants for recovery of
their broker’s fee. They alleged that they were the efficient procuring
cause in bringing about the sale of the property to the Sisters of Mary,
but that their efforts in consummating the sale were frustrated by the
private respondents who, in evident bad faith, malice and in order to
evade payment of broker’s fee, dealt directly with the buyer whom
petitioners introduced to them.
Private respondents countered that they were not the efficient
procuring cause in bringing about the consummation of the sale
because another broker, Roberto Pacana, introduced the property to
the Sisters of Mary ahead of the petitioners. 14 Private respondents
maintained that when petitioners introduced the buyers to private
respondent Eduardo Gullas, the former were already decided in
buying the property through Pacana, who had been paid his
commission.
Petitioners alleged that although the Sisters of Mary knew that the
subject land was for sale through various agents, it was petitioners
who introduced them to the owners thereof.
The lower court rendered judgment in favor of petitioners.
ISSUE: Whether or not the petitioners are entitled to the brokerage
commission – YES
If yes, at what rate?
RULING: Manuel B. Tan is a licensed real estate broker, and
petitioners Gregg M. Tecson and Alexander Saldaña are his
associates. In Schmid and Oberly v. RJL Martinez Fishing
Corporation, 20 we defined a "broker" as "one who is engaged, for
others, on a commission, negotiating contracts relative to property
with the custody of which he has no concern; the negotiator between
other parties, never acting in his own name but in the name of those
who employed him. . . . a broker is one whose occupation is to bring
the parties together, in matters of trade, commerce or navigation."
The authority given to petitioners was non-exclusive, which meant
that private respondents were not precluded from granting the same
authority to other agents with respect to the sale of the same property.
In fact, private respondent authorized another agent in the person of
Mr. Bobby Pacana to sell the same property. There was nothing
illegal or amiss in this arrangement, per se, considering the non-
exclusivity of petitioners’ authority to sell. The problem arose when
it eventually turned out that these agents were entertaining one and
the same buyer, the Sisters of Mary.
It was the petitioners who were responsible for the introduction of the
representatives of the Sisters of Mary to private respondent Eduardo
Gullas. Private respondents failed to prove their contention that
Pacana began negotiations with private respondent Norma Gullas
way ahead of petitioners. They failed to present witnesses to
substantiate this claim.
There was nothing on record which established the existence of a
previous negotiation among Pacana, Mrs. Gullas and the Sisters of
Mary. The only piece of evidence that the private respondents were
AGENCY:Special
able to present is an undated and unnotarized IN GENERAL
Power of
Attorney in favor of Pacana. While the lack of a date and an oath do
not necessarily render said Special Power of Attorney invalid, it
should be borne in mind that the contract involves a considerable
amount of money. Hence, it is inconsistent with sound business
practice that the authority to sell is contained in an undated and
unnotarized Special Power of Attorney. Petitioners, on the other
hand, were given the written authority to sell by the private
respondents.
Indeed, it is readily apparent that private respondents are trying to
evade payment of the commission which rightfully belong to
petitioners as brokers with respect to the sale. There was no dispute
as to the role that petitioners played in the transaction. At the very
least, petitioners set the sale in motion. They were not able to
participate in its consummation only because they were prevented
from doing so by the acts of the private respondents. In the case of
Alfred Hahn v. Court of Appeals and Bayerische Motoren Werke
Aktiengesellschaft (BMW) 22 we ruled that, "An agent receives a
commission upon the successful conclusion of a sale. On the other
hand, a broker earns his pay merely by bringing the buyer and
the seller together, even if no sale is eventually made." (Emphasis
ours). Clearly, therefore, Petitioners, as brokers, should be
entitled to the commission whether or not the sale of the property
subject matter of the contract was concluded through their
efforts.
Petitioners are entitled to however, the actual purchase price for
which the land was sold was only P200.00 per square meter.
Therefore, equity considerations dictate that petitioners’ commission
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 must be based on this price. To rule otherwise would constitute unjust
enrichment on the part of petitioners as brokers.
34. ANDRES QUIROGA, plaintiff-appellant,
vs.
PARSONS HARDWARE CO., defendant-appellee.
G.R. No. L-11491 August 23, 1918
PRINCIPLE: This case involves a Contract of Purchase and Sale.
There was the obligation on the part of the plaintiff to supply the
beds, and, on the part of the defendant, to pay their price. These
features exclude the legal conception of an agency or order to sell
whereby the mandatory or agent received the thing to sell it, and does
not pay its price, but delivers to the principal the price he obtains
from the sale of the thing to a third person, and if he does not succeed
in selling it, he returns it. By virtue of the contract between the
plaintiff and the defendant, the latter, on receiving the beds, was
necessarily obliged to pay their price within the term fixed, without
any other consideration and regardless as to whether he had or had
not sold the beds.
FACTS: Plaintiff(Quiroga) and Defendant(Parsons) entered into a
contract wherein the former(plaintiff-Quiroga) grants the exclusive
right to sell his beds in the Visayan Islands to the latter(defendant-
Parsons).
Under such contract, it contained the following conditions:
· Defendant Parsons must not sell the beds at a
higher prices than those of the invoices(Article1, Sec 1
of the contract)
24
· Defendant shall pay Plaintiff for the beds
received, within a period of sixty (60) days from the
date of their shipment(Article 1, Sec 2)
· In compensation for the expenses of
advertisement which, for the benefit of both
contracting parties, Mr. Parsons may find himself
obliged to make, Mr. Quiroga assumes the
obligation to offer and give the preference to Mr.
Parsons in case anyone should apply for the
exclusive agency for any island not comprised with
the Visayan group. (Article 2)
· Mr. Parsons may sell, or establish branches
of his agency for the sale of "Quiroga" beds in all
the towns of the Archipelago where there are no
exclusive agents, and shall immediately report such
action to Mr. Quiroga for his approval.(Article 3)
Argument of Plaintiff – Defendant violated its obligation not to sell
the beds at higher prices than those of the invoices; itself to conduct
the agency. The plaintiff alleged that the defendant was his agent for
the sale of his beds in Iloilo, and that said obligations are implied in a
contract of commercial agency.
ISSUE: WON the defendant was a purchaser of an agent of the
plaintiff for the sale of his beds.
RULING: Defendant is a PURCHASER of the plaintiff and NOT
AN AGENT.
In order to classify a contract, due regard must be given to its
essential clauses.
In the contract in question, the plaintiff was to furnish the defendant
with the beds which the latter might order, at the price stipulated, and
that the defendant was to pay the price. Payment was to be made at
the end of sixty days, or before, at the plaintiff's request, or in cash, if
the defendant so preferred, and in these last two cases an additional
discount was to be allowed for prompt payment. These are precisely
the essential features of a contract of purchase and sale. There was
the obligation on the part of the plaintiff to supply the beds, and,
on the part of the defendant, to pay their price. These features
exclude the legal conception of an agency or order to sell whereby
the mandatory or agent received the thing to sell it, and does not pay
its price, but delivers to the principal the price he obtains from the
sale of the thing to a third person, and if he does not succeed in
selling it, he returns it. By virtue of the contract between the plaintiff
and the defendant, the latter, on receiving the beds, was necessarily
obliged to pay their price within the term fixed, without any other
consideration and regardless as to whether he had or had not sold the
beds.
It would be enough to hold, as we do, that the contract by and
between the defendant and the plaintiff is one of purchase and sale, in
order to show that it was not one made on the basis of a commission
on sales, as the plaintiff claims it was, for these contracts are
incompatible with each other. The words commission on sales used in
clause (A) of article 1 mean nothing else, as stated in the contract
itself, than a mere discount on the invoice price. The word agency,
also used in articles 2 and 3, only expresses that the defendant was
AGENCY: IN GENERAL
the only one that could sell the plaintiff's beds in the Visayan Islands.
With regard to the remaining clauses, the least that can be said is that
they are not incompatible with the contract of purchase and sale.
The contract by and between the plaintiff and the defendant was
one of purchase and sale.
35. DOMINION INSURANCE CORPORATION vs. COURT OF
APPEALS, RODOLFO S. GUEVARRA, and FERNANDO
AUSTRIA
G. R. No. 129919 February 6, 2002
FACTS: On January 25, 1991, plaintiff Rodolfo S. Guevarra
instituted a civil case for collection of sum of money against
defendant Dominion Insurance Corporation. Plaintiff sought to
recover the sum of P156,473.90 which he claimed to have advanced
in his capacity as manager of defendant to satisfy certain car
insurance claims filed by defendant’s clients. The CA affirmed trial
court’s decision for Dominion to pay plaintiff Guevarra. Dominion
filed a motion for reconsideration with the Court of Appeals which
was denied, hence, this appeal.
ISSUE: WON Guevarra acted within his authority as agent for
petitioner, and whether respondent Guevarra is entitled to
reimbursement of amounts he paid out of his personal money in
settling the claims of several insured.
Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino
 RULING: No. reimbursement from his principal. To rule otherwise would result in
unjust enrichment of petitioner.
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 basis for agency is
representation. On the part of the principal, there must be an actual
intention to appoint or an intention naturally inferable from his words
or actions; and on the part of the agent, there must be an intention to
accept the appointment and act on it, and in the absence of such
intent, there is generally no agency.

A perusal of the Special Power of Attorney would show that

petitioner Dominion and respondent Guevarra intended to enter into a
principal-agent relationship. Despite the word “special” in the title of
the document, the contents reveal that what was constituted was
actually a general agency. The agency comprises all the business of
the principal, but, couched in general terms, it is limited only to acts
of administration. A general power permits the agent to do all acts for
which the law does not require a special power. Thus, the acts
enumerated in or similar to those enumerated in the Special Power of
Attorney do not require a special power of attorney.

Article 1878, Civil Code, enumerates the instances when a special

power of attorney is required.

The payment of claims is not an act of administration. The settlement

of claims is not included among the acts enumerated in the Special
Power of Attorney, neither is it of a character similar to the acts
enumerated therein. A special power of attorney is required before
respondent Guevarra could settle the insurance claims of the insured.
25 AGENCY: IN GENERAL
Nevertheless, Guevarra’s authority to settle claims is embodied in the
Memorandum of Management Agreement which enumerates the
scope of respondent Guevarra’s duties and responsibilities as agency
manager for San Fernando, Pampanga. In settling the claims
mentioned, Guevarra’s authority is further limited by the written
standard authority to pay, which states that the payment shall come
from Guevarra’s revolving fund or collection.

Therefore, the instruction of Dominion as the principal could not be

any clearer. Respondent Guevarra was authorized to pay the claim of
the insured, but the payment shall come from the revolving fund or
collection in his possession. Having deviated from the instructions of
the principal, the expenses that respondent Guevarra incurred in the
settlement of the claims of the insured may not be reimbursed from
petitioner Dominion. This conclusion is in accord with Article 1918,
Civil Code, which states that:

“The principal is not liable for the expenses incurred by the agent in
the following cases:
“(1) If the agent acted in contravention of the
principal’s instructions, unless the latter should
wish to avail himself of the benefits derived from
the contract;”

However, while the law on agency prohibits respondent Guevarra

from obtaining reimbursement, his right to recover may still be
justified under the general law on obligations and contracts (on unjust
enrichment). Thus, to the extent that the obligation of the petitioner
has been extinguished, respondent Guevarra may demand for

Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino