AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y.

2018 - 2019

II. KINDS OF AGENCY CA – affirmed the RTC’s decision which dismissed the complaint for
specific performance and damages thereat commenced by the
petitioner against the herein respondents
Case #1 AAngeles
DOCTRINE: power v.
of Phil National
attorney mustRailways, (G.R.
be strictly No. 150128.
construed and pursued. The
instrument will be held to grantAugust 31, 2006)
only those powers which are specified ISSUE/S:
therein, and the agent may neither go beyond nor deviate from the power of  WON Lizette Angeles is considered as assignee of Romualdez.
attorney. (NO)
 WON the CA erred in affirming the trial court's holding that
Where agency exists, the third party's (in this case, PNR's) liability on a petitioner and his spouse, as plaintiffs a quo, had no cause of
contract is to the principal and not to the agent and the relationship of the action as they were not the real parties-in-interest in this case.
third party to the principal is the same as that in a contract in which there is (NO. – TN: It all boils down to the authorization letter given by Romualdez
no agent. Normally, the agent has neither rights nor liabilities as against the authorizing Lizette Angeles to withdrawal of scrap or unserviceable rails)
third party. He cannot thus sue or be sued on the contract. Since a contract
may be violated only by the parties thereto as against each other, the real RULING:
party-in-interest, either as plaintiff or defendant in an action upon that 1. Upon scrutiny of the subject Romualdez's letter to Atty. Cipriano
contract must, generally, be a contracting party. Dizon, it is at once apparent that Lizette was to act just as a
representative of Romualdez in the withdrawal of rails, and not an
FACTS: assignee.
2. The legal situation is, however, different where an agent is
constituted as an assignee. In such a case, the agent may, in his
own behalf, sue on a contract made for his principal, as an
1. The respondent Philippine National Railways (PNR) informed a assignee of such contract.
certain Gaudencio Romualdez (Romualdez) that it has accepted 3. The rule requiring every action to be prosecuted in the name of
the latters offer to buy the PNRs scrap/unserviceable rails located the real party-in-interest recognizes the assignment of rights of
in Pampanga. action and also recognizes that when one has a right assigned to
2. After paying the stated purchase price, Romualdez addressed a him, he is then the real party-in-interest and may maintain an
letter to Atty. Cipriano Dizon, PNRs Acting Purchasing Agent. action upon such claim or right.
4. If Lizette was without legal standing to sue and appear in this
Dear Atty. Dizon: case, there is more reason to hold that her petitioner husband,
either as her conjugal partner or her heir, is also without such
This is to inform you as President of San Juanico Enterprises, that I standing.
have authorized the bearer, LIZETTE R. WIJANCO xxx, to be my 5. In the absence of statute, no form or method of execution is
lawful representative in the withdrawal of the required for a valid power of attorney; it may be in any form
scrap/unserviceable rails awarded to me. clearly showing on its face the agents authority. A power of
attorney is only but an instrument in writing by which a person, as
For this reason, I have given her the ORIGINAL COPY of the principal, appoints another as his agent and confers upon him the
AWARD, xxx which will indicate my waiver of rights, interests and authority to perform certain specified acts on behalf of the
participation in favor of LIZETTE R. WIJANCO. principal.
6. The written authorization itself is the power of attorney, and this
Thank you for your cooperation. is clearly indicated by the fact that it has also been called a letter
of attorney. Its primary purpose is not to define the authority of
Very truly yours, the agent as between himself and his principal but to evidence
(Sgd.) Gaudencio Romualdez the authority of the agent to third parties with whom the agent
deals. The letter under consideration is sufficient to constitute a
3. The PNR granted said request and allowed Lizette to withdraw power of attorney. Except as may be required by statute, a power
scrap/unserviceable rails in Tarlac instead. However, the PNR of attorney is valid although no notary public intervened in its
subsequently suspended the withdrawal in view of what it execution.
considered as documentary discrepancies coupled by reported
pilferages of over P500,000.00 worth of PNR scrap properties in
Tarlac.
4. Consequently, the spouses Angeles demanded the refund of the DOCTRINE:CaseThe
#2 Jimenez
purpose vs.
in Rabot
giving (G.R. No. of
a power L-12579. Julyis27,
attorney to 1918)
substitute the
amount of P96,000.00. The PNR, however, refused to pay, alleging mind and hand of the agent for the mind and hand of the principal; and if the
that as per delivery receipt duly signed by Lizette, 54.658 metric character and extent of the power is so far defined as to leave no doubt as to
tons of unserviceable rails had already been withdrawn which, at the limits within which the agent is authorized to act, and he acts within
P2,100.00 per metric ton, were worth P114,781.80, an amount those limits, the principal cannot question the validity of his act.
that exceeds the claim for refund.
5. The spouses Angeles filed suit against the PNR and its corporate FACTS:
secretary, Rodolfo Flores, among others, for specific performance 1. This action was instituted by the plaintiff, Gregorio Jimenez, to
and damages before the RTC of Quezon City. recover from the defendant, Pedro Rabot, a parcel of land
situated in the municipality of Alaminos, in the Province of
RTC – Sps. Angeles are not the real parties-in-interest rendered Pangasinan.
judgment dismissing their complaint for lack of cause of action. As held 2. Jimenez wrote his sister a letter from Vigan in which he informed
by the court, Lizette was merely a representative of Romualdez in the her that he was pressed for money and requested her to sell one
withdrawal of scrap or unserviceable rails awarded to him and not an of his parcels of land and send him the money in order that he
assignee to the latter's rights with respect to the award. might pay his debts. This letter contains no description of the land

UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
to be sold other than is indicated in the words "one of my parcels
of land".
3. Acting upon this letter Nicolasa approached the defendant Pedro
Rabot, and the latter agreed to buy the parcel in question for the
sum of P500. Two hundred and fifty peso were paid at once, with
the understanding that a deed of conveyance would be executed
when the balance should be paid. Nicolasa admits having received
this payment of P250 at the time stated; but there is no evidence
that she sent any of it to her brother.
4. About one year later Gregorio came down to Alaminos and
demanded that his sister should surrender this piece of land to
him, it being then in her possession. She refused upon some
pretext or other to do so; and as a result Gregorio, in conjunction
with others of his brothers and sisters, whose properties were
also in the hands of Nicolasa, instituted an action in the CFI for the
purpose of recovering their land from her control. This action was
decided favorably to the plaintiffs (Jimenez) upon August 12,
1913; and no appeal was taken from the judgment.
5. Meanwhile, upon May 31, 1912, Nicolasa Jimenez executed and
delivered to Pedro Rabot a deed purporting to convey to him the
parcel of land which is the subject of this controversy. The deed
recites that the sale was made in consideration of the sum of
P500, the payment of which is acknowledged.
6. Pedro Rabot went into possession, and the property was found in
his hands at the time when final judgment was entered in favor of
the plaintiffs in the action above mentioned. It will thus be seen
that Pedro Rabot acquired possession under the deed from
Nicolasa during the pendency of the litigation appear that he was
at the time cognizant of that circumstance.
ISSUE/S:
 WON the authority conferred on Nicolasa by the letter was
sufficient to enable her to bind her brother. (YES. The authority
expressed in the letter is sufficient.)
 WON the act performed by Nicolasa Jimenez was within the scope
of the authority which had been conferred upon her (YES)
RULING:
1. There is ample authority to the effect that a person may by a
general power of attorney an agent to sell "all" the land possessed
by the principal, or all that he possesses in a particular city,
county, or state.
2. IN the present case the agent was given the power to sell either of
the parcels of land belonging to the plaintiff. We can see no
reason why the performance of an act within the scope of this
authority should not bind the plaintiff to the same extent as if he
had given the agent authority to sell "any or all" and she had
conveyed only one.
3. It is well-settled in the jurisprudence of England and the United
States that when the owner, or his agent, comes to make a
contract to sell, or a conveyance to effect a transfer, there must
be a description of the property which is the subject of the sale or
conveyance. This is necessary of course to define the object of the
contract.
4. The general rule here applicable is that the description must be
sufficiently definite to identify the land either from the recitals of
the contract or deed or from external facts referred to in the
document, thereby enabling one to determine the identity of the
land and if the description is uncertain on its face or is shown to
be applicable with equal plausibility to more than one tract, it is
insufficient.
5. The principle embodied in these decisions is not, in our opinion,
applicable to the present case, which relates to the sufficiency of
the authorization, not to the sufficiency of the contract or
conveyance.
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
Case #3 City-Lite vs. CA (G.R. No. 138639. February 10, 2000)
DOCTRINE: When the sale of a piece of land or any interest therein is
through an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void (Art. 1874).
FACTS:
1. Respondent F.P. HOLDINGS was the registered owner of a parcel
of land situated along E. Rodriguez Avenue, Quezon City (known
as the "Violago Property" or the "San Lorenzo Ruiz Commercial
Center,"). This property was offered for sale to the general public
through the circulation of a sales brochure indicating Meldin Al G.
Roy and Metro Drug Inc as “contact persons”.
2. CITY-LITE expressed its desire to purchase the entire front lot of
the said property. The following day, CITY-LITE's officers and Atty.
Mamaril (CITY-LITE’s counsel) met with Roy at the Manila
Mandarin Hotel (Makati) to consummate the transaction. After
some discussions, the parties finally reached an agreement and
Roy agreed to sell the property to CITY-LITE provided only that the
latter submit its acceptance in writing to the terms and conditions
of the sale. Such letter of acceptance was conveyed by Atty.
Mamaril and CITY-LITE that afternoon.
3. However, for some reason or another and despite demand,
respondent F.P. HOLDINGS refused to execute the corresponding
deed of sale in favor of CITY-LITE of the front lot of the property.
Hence, CITY-LITE instituted a complaint against F.P. HOLDINGS
originally for specific performance and damages. However, during
the pendency of the suit, the property was transferred to
VIEWMASTER and a new title was issued on its name.
RTC QC favored CITY-LITE and ordered F.P HOLDINGS to execute a deed
of sale in CITY-LITE’s favor.
CA - Reversed the ruling of the RTC.
ISSUE: WON a contract of sale was perfected between CITY-LITE and F.P.
HOLDINGS acting through its agent Meldin Al G. Roy of Metro Drug. (Simply,
WON Roy and Metro drug have the authority to sell the property)
RULING:
1. No, the Civil Code requires that an authority to sell a piece of land
shall be in writing. Art. 1874 of the Civil Code provides: "When the
sale of a piece of land or any interest therein is through an agent,
the authority of the latter shall be in writing; otherwise, the sale
shall be void”.
2. The absence of authority to sell can be determined from the
written memorandum issued by respondent F.P. HOLDINGS'
President requesting Metro Drug's assistance in finding buyers for
the property. Meldin Al G. Roy and/or Metro Drug, therefore, was
only a contact person with no authority to conclude a sale of the
property.
3. For lack of a written authority to sell the "Violago Property" on
the part of Meldin Al G. Roy and/or Metro Drug, the sale should
be declared null and void. Therefore, the sale could not produce
any legal effect as to transfer the subject property from its lawful
owner, F.P. HOLDINGS, to any interested party including
petitioner CITY-LITE.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
Case #4 Cosmic Lumber vs. CA (G.R. No. 114311 November 29,
1996)
DOCTRINE: When the sale of a piece of land or any interest thereon is
through an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void. Thus the authority of an agent to execute a contract
for the sale of real estate must be conferred in writing and must give him
specific authority. A special power of attorney is necessary to enter into any
contract by which the ownership of an immovable is transmitted or acquired
either gratuitously or for a valuable consideration.
FACTS:
1. COSMIC LUMBER CORPORATION (CLC), through its General
Manager, executed a Special Power of Attorney appointing Paz G.
Villamil-Estrada as attorney-in-fact “to initiate, institute and file
any court action for the ejectment of third persons and/or
squatters” on the lot that CLC owned and “to appear at the pre-
trial conference and enter into any stipulation of facts and/or
compromise agreement so far as it shall protect the rights and
interest of the corporation in the aforementioned lots”. By virtue
of the SPA, Villamil-Estrada, instituted an action for the ejectment
of private respondent Isidro Perez in RTC Dagupan.
2. Subsequently, Villamil-Estrada and Perez entered into a
Compromise Agreement stipulating that Perez will pay plaintiff
(CLC), through its attorney-in-fact (Villamil-Estrada), a sum
P26,640.00 and in turn, plaintiff will recognize the ownership and
possession of the Perez over a portion of the said lot. Such
compromise agreement was approved by the RTC.
3. Although the decision became final and executory, it was not
executed within the 5-year period from date of its finality. Thus,
respondent filed a complaint to revive the judgment.
4. CLC asserts that it was only when the summons for the revival of
judgment was served upon it that it came to know of the
compromise agreement entered into between Villamil-Estrada
and Perez. Thus, CLC sought the annulment of the decision of the
trial court before the CA on the ground that the compromise
agreement was void because Attorney-in-fact Villamil-Estrada did
not possess the authority to sell or was she armed with a Board
Resolution authorizing the sale of its property. She was merely
empowered to enter into a compromise agreement in the
recovery suit she was authorized to file against persons squatting
on the subject lot.
5. CA, however, dismissed the complaint on the basis of its finding
that not one of the grounds for annulment, namely, lack of
jurisdiction, fraud or illegality was shown to exist.
ISSUE: WON the compromise agreement entered by the Attorney-in-fact and
the respondent valid.
RULING:
1. No. The authority granted to Villamil-Estrada under the SPA was
explicit and exclusionary: for her to institute any action in court
to eject all persons found on CLC’s lots and for this purpose, to
appear at the pre-trial and enter into any stipulation of facts
and/or compromise agreement but only insofar as this was
protective of the rights and interests of petitioner in the property.
Nowhere in this authorization was Villamil-Estrada granted
expressly or impliedly any power to sell the subject property nor a
portion thereof.
2. When the sale of a piece of land or any interest thereon is
through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void. Thus the authority of an agent to
execute a contract for the sale of real estate must be conferred in
writing and must give him specific authority. A special power of
attorney is necessary to enter into any contract by which the
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration.
3. It is therefore clear that by selling to respondent Perez a portion
of petitioner's land through a compromise agreement, Villamil-
Estrada acted without or in obvious authority. The sale ipso jure is
consequently void. So is the compromise agreement. This being
the case, the judgment based thereon is necessarily void.
Case #5 San Juan Structural Steel vs. CA (G.R. No. 129459.
FACTS:
September 29, 1998)
- San Juan Structural and Steel Fabricators, Inc. alleged that it entered into an
agreement with Motorich Sales Corporation for the transfer to it of a parcel
of land, through the latter’s treasurer, Nenita Gruenberg. The subject of the
sale was a parcel of land owned by Motorich. San Juan advanced P100k to
Nenita as earnest money.
- On the day agreed upon on which Nenita was supposed to deliver the title
of the land to Motorich, Nenita did not show up. Nenita and Motorich did
not heed the subsequent demand of San Juan to comply with the contract
hence San Juan sued Motorich. Motorich, in its defense, argued that it is not
bound by the acts of its treasurer, Nenita, since her act in contracting with
San Juan was not authorized by the corporate board.
- San Juan raised the issue that Nenita was actually the wife of the President
of Motorich; that Nenita and her husband owns 98% of the corporation’s
capital stocks; that as such, it is a close corporation and that makes Nenita
and the President as principal stockholders who do not need any
authorization from the corporate board.
RTC Ruling: Dismissed both the Complaint and the Counterclaim filed by the
parties
CA Ruling: AFFIRMED WITH MODIFICATION ordering defendant-appellee
Nenita Lee Gruenberg to REFUND or return to plaintiff-appellant the
downpayment of P100,000.00 which she received from plaintiff-appellant
RULING:
No. A corporation is a juridical person separate and distinct from its
stockholders or members. Accordingly, the property of the corporation is not
the property of its stockholders or members and may not be sold by the
stockholders or members without express authorization from the
corporations board of directors. a corporation may act only through its board
of directors, or, when authorized either by its bylaws or by its board
resolution, through its officers or agents in the normal course of business.
The general principles of agency govern the relation between the
corporation and its officers or agents, subject to the articles of incorporation,
bylaws, or relevant provisions of law.
Thus, this Court has held that a corporate officer or agent may represent and
bind the corporation in transactions with third persons to the extent that the
authority to do so has been conferred upon him, and this includes powers
which have been intentionally conferred, and also such powers as, in the
usual course of the particular business, are incidental to, or may be implied
from, the powers intentionally conferred, powers added by custom and
usage, as usually pertaining to the particular officer or agent, and such
apparent powers as the corporation has caused persons dealing with the
officer or agent to believe that it has conferred. Articles 1874 and 1878 of the
Civil Code of the Philippines provides:
ART. 1874. When a sale of a piece of land or any interest therein is through
an agent, the authority of the latter shall be in writing; otherwise, the sale
shall be void.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
ART. 1878 Special powers of attorney are necessary in the following case:
xxxxxxxxx
(5) To enter any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration;
In the case at bar, Respondent Motorich categorically denies that it ever
authorized Nenita Gruenberg, its treasurer, to sell the subject parcel of land.
Consequently, petitioner had the burden of proving that Nenita Gruenberg
was in fact authorized to represent and bind Motorich in the transaction.
Petitioner failed to discharge this burden.
FACTS:
Case #6 Delos Reyes vs. CA (G.R. No. 129103. September 3, 1999)
- Daluyong Gabriel, the registered owner of a 5,010 square meter parcel of
land situated in Barrio Magugpo, Tagum, Davao del Norte, sent his son
Renato Gabriel to Tagum reportedly to take over from Maria Rita G. de Rey
as administrator of the said parcel of land.
- Upon agreement of the parties, the contract between de los Reyes and
Maria Rita was novated and replaced by a Contract of Lease executed by and
between RENATO GABRIEL and Lydia de los Reyes. The term of the lease was
changed to 6 years from and after June 15, 1985 or up to June 15, 1991;
receipt of the payment in advance of the total rental amount of 14,400.00
was acknowledged by Lessor Renato Gabriel.
- During the effectivity of the lease contract, Lydia verbally agreed to buy 300
square meters of Daluyong Gabriels registered property, at 300 per square
meter or for a total amount of P90,000.00. No deed of sale was executed
covering the transaction. Purchaser Lydia de los Reyes however proceeded
with the construction of a two-storey commercial building on the said 300
square meter lot after obtaining a building permit from the Engineers Office
in Tagum.
- Upon knowing that spouses Claudio and Lydia de los Reyes were
constructing a two-storey building on a portion of his land, Daluyong Gabriel,
through his lawyer, to the De los Reyes couple demanding that they cease
and desist from continuing with their construction and to immediately vacate
the premises, asserting that the construction was unauthorized and that
their occupancy of the subject portion was not covered by any lease
agreement.
- Claudio and Lydia de los Reyes explained that they are the innocent party
who entered into the lease agreement and subsequent sale of subject
portion of land in good faith and upon the assurance made by the former
administratrix, Maria Rita G. Rey, her nephew Tony Rey, Mrs. Fe S. Gabriel
and Mr. Daluyong Gabriel himself that Renato Gabriel is the new
administrator authorized to enter into such agreements involving the subject
property.
- Daluyong Gabriel commenced an action against spouses Claudio and Lydia
de los Reyes for the recovery of the subject portion of land before the RTC.
Daluyong maintained that his son Renato was never given the authority to
lease nor to sell any portion of his land as his instruction to him (Renato) was
merely to collect rentals.
RTC Ruling:
Daluyong Gabriel, Renato Gabriel, Maria Luisa Esteban and Maria Rita G.
Bartolome are hereby ordered to execute a Deed of Conveyance and other
necessary documents in favor of Claudio delos Reyes and Lydia delos Reyes.
The trial court held that the oral contract of sale was valid and enforceable
stating that while it is true that at the time of the sale, Renato Gabriel was
not the owner and that it was Daluyong Gabriel who was the registered
owner of the subject property, Daluyong Gabriel knew about the transaction
and tacitly authorized his son Renato Gabriel (whom he earlier designated as
administrator of his 5,010 square meter registered property) to enter into it.
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
CA Ruling:
Reversed and set aside the decision of the Regional Trial Court and rendered
a new one ORDERING appellee spouses Claudio and Lydia delos Reyes to
immediately vacate the 300 square meter portion of that land covered by
TCT No. T-17932 which they presently occupy and to turn over possession
thereof to the appellants.
The Court of Appeals ruled that the contract of sale cannot be upheld, mainly
because Renato Gabriel, as vendor, did not have the legal capacity to enter
and to give consent to the agreement, he, being neither the authorized agent
(of Daluyong Gabriel) nor the owner of the property subject of the sale.
ISSUE: Whether or not the sale of land through an agent is valid
RULING:
No. Renato Gabriel was neither the owner of the subject property nor a duly
designated agent of the registered owner (Daluyong Gabriel) authorized to
sell subject property in his behalf, and there was also no sufficient evidence
adduced to show that Daluyong Gabriel subsequently ratified Renatos act. In
this connection it must be pointed out that pursuant to Article 1874 of the
Civil Code, when the sale of a piece of land or any interest therein is through
an agent, the authority of the latter shall be in writing; otherwise the sale
shall be void. In other words, for want of capacity (to give consent) on the
part of Renato Gabriel, the oral contract of sale lacks one of the essential
requisites for its validity prescribed under Article 1318, supra and is therefore
null and void abinitio.
Case #7 AF Realty v. Dieselman Freight (G.R. No. 111448.
FACTS:
January
- Dieselman is a domestic corporation and16, 2002)
a registered owner of a parcel of
commercial lot located at Barrio Ugong, Pasig City, Metro Manila.
- Manuel C. Cruz, Jr., a member of the board of directors of Dieselman, issued
an Authority To Sell Real Estate" to Cristeta N. Polintan, a real estate broker,
authorizing Polintan "to look for a buyer/buyers and negotiate the sale" of
the lot at P3,000.00 per square meter. Cruz, Jr. has no written authority from
Dieselman to sell the lot.
- Cristeta Polintan authorized Felicisima Noble to sell the same lot. Felicisima
Noble then offered for sale the property to AF Realty) at P2,500.00 per
square meter.
- Zenaida Ranullo, board member and vice-president of AF Realty, accepted
the offer and issued a check in the amount of P300,000.00 payable to the
order of Dieselman. The amount of P300,000.00 represents the partial
payment of the property but refundable within two weeks should AF Realty
disapprove Ranullo's action on the matter.
- AF Realty confirmed its intention to buy the lot. Hence, Ranullo asked
Polintan for the board resolution of Dieselman authorizing the sale of the
property. However, Polintan could only give Ranullo the original copy of TCT
No. 39849, the tax declaration and tax receipt for the lot, and a photocopy of
the Articles of Incorporation of Dieselman.
- Manuel F. Cruz, Sr., president of Dieselman, acknowledged receipt of the
said P300,000.00 as "earnest money" but required AF Realty to finalize the
sale at P4,000.00 per square meter. AF Realty replied that it has paid an
initial down payment of P300,000.00 and is willing to pay the balance.
- However, on August 13, 1988, Mr. Cruz, Sr. terminated the offer and
demanded from AF Realty the return of the title of the lot earlier delivered
by Polintan.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
- Claiming that there was a perfected contract of sale between them, AF
Realty filed with the Regional Trial Court, Branch 160, Pasig City a complaint
for specific performance (Civil Case No. 56278) against Dieselman and Cruz,
Jr. Dieselman alleged that there was no meeting of the minds between the
parties in the sale of the property and that it did not authorize any person to
enter into such transaction on its behalf.
- Meanwhile, on July 30, 1988, Dieselman and Midas Development
Corporation (Midas) executed a Deed of Absolute Sale of the same property.
RTC Ruling: The lower court ruled that the acts of Cruz, Jr. bound Dieselman
in the sale of the lot to AF Realty.
CA Ruling: Court of Appeals reversed the judgment of the trial court holding
that since Cruz, Jr. was not authorized in writing by Dieselman to sell the
subject property to AF Realty, the sale was not perfected.
ISSUE: Whether or not the Dieselman is bound by the acts of Cruz, Jr.
RULING:
No. It is undisputed that respondent Cruz, Jr. has no written authority from
the board of directors of respondent Dieselman to sell or to negotiate the
sale of the lot, much less to appoint other persons for the same purpose.
Respondent Cruz, Jr.s lack of such authority precludes him from conferring
any authority to Polintan involving the subject realty. Necessarily, neither
could Polintan authorize Felicisima Noble. Clearly, the collective acts of
respondent Cruz, Jr., Polintan and Noble cannot bind Dieselman in the
purported contract of sale. Moreover, when a sale of piece of land or any
interest therein is through an agent, the authority of the latter shall be in
writing; otherwise, the sale shall be void. Considering that respondent Cruz,
Jr., Cristeta Polintan and Felicisima Ranullo were not authorized by
respondent Dieselman to sell its lot, the supposed contract is void. Being a
void contract, it is not susceptible of ratification.
DOCTRINE:
CaseImplied
#8 Yunagency is derived
Kwan Byung from the acts
vs. Philippine of the principal,
Amusement Gaming from his
silence or lack of action, or his failure to repudiate the 2009)
agency, knowing that
Corporation (G.R. No. 163553, Dec. 11,
another person is acting on his behalf without authority. In an agency by
estoppel, there is no agency at all, but the one assuming to act as agent has
apparent or ostensible, although not real, authority to represent another.
The law makes no presumption of agency and proving its existence, nature
and extent is incumbent upon the person alleging it.
FACTS:
1. PAGCOR launched its Foreign Highroller Marketing Program
(Program) to invite patrons from foreign countries to play at the
dollar pit of designated PAGCOR-operated casinos under specified
terms and conditions and industry practice.
2. The Korean-based ABS Corporation availed of the Program and in
a letter-agreement (Junket Agreement) agreed to bring in foreign
players to play at the designated casinos (Casino Filipino).
3. Petitioner (Yun), a Korean national was one of those brought into
the Philippines by ABS Corporation and is a junket player who
played in the dollar pit exclusively leased by ABS Corporation for
its junket players.
4. Yun alleges that he came to the Philippines four times to play for
high stakes at the Casino Filipino.
5. Yun was able to accumulate gambling chips worth US$2.1 million
but when he presented them to PAGCOR for encashment,
PAGCOR refused to redeem them.
6. Yun filed a complaint for a sum of money before the RTC Manila,
Branch 13.
7. Yun contends that an implied agency existed between PAGCOR
and ABS Corporation.
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RTC – Denied Yun’s complaint because based on PAGCORs charter, it
has no authority to lease any portion of the gambling tables to a private
party like ABS Corporation, therefore the Junket Agreement is void,
consequently, the mutual rights and obligations of the parties to this
case would be resolved based on agency and estoppel.
CA – Affirmed the RTC’s decision because the Junket Agreement, being
void from the beginning, cannot give rise to an implied agency case.
Article 1883 of the Civil Code applies only to a situation where the
agent is authorized by the principal to enter into a particular
transaction, but instead of contracting on behalf of the principal, the
agent acts in his own name. The CA concluded that no such legal fiction
existed between PAGCOR and ABS Corporation. Representation is the
basis of agency but unfortunately for petitioner none is found in this
case.
ISSUE/S:
1. WON there was an implied agency or agency by estoppel between
ABS Corp and PAGCOR?
RULING:
1. NEITHER. Article 1869 of the Civil Code states that implied agency
is derived from the acts of the principal, from his silence or lack of
action, or his failure to repudiate the agency, knowing that
another person is acting on his behalf without authority.
2. There is no implied agency in this case because PAGCOR did not
hold out to the public as the principal of ABS Corporation.
PAGCORs actions did not mislead the public into believing that an
agency can be implied from the arrangement with the junket
operators, nor did it hold out ABS Corporation with any apparent
authority to represent it in any capacity. The Junket Agreement
was merely a contract of lease of facilities and services.
3. In an agency by estoppel, there is no agency at all, but the one
assuming to act as agent has apparent or ostensible, although not
real, authority to represent another. Apparent authority is based
on estoppel and can arise from two instances. First, the principal
may knowingly permit the agent to hold himself out as having
such authority, and the principal becomes estopped to claim that
the agent does not have such authority. Second, the principal may
clothe the agent with the indicia of authority as to lead a
reasonably prudent person to believe that the agent actually has
such authority.
4. An agency by estoppel, which is similar to the doctrine of
apparent authority requires proof of reliance upon the
representations, and that, in turn, needs proof that the
representations predated the action taken in reliance There can
be no apparent authority of an agent without acts or conduct on
the part of the principal and such acts or conduct of the principal
must have been known and relied upon in good faith and as a
result of the exercise of reasonable prudence by a third person as
claimant, and such must have produced a change of position to its
detriment. Such proof is lacking in this case.
5. The basis for agency is representation, that is, the agent acts for
and on behalf of the principal on matters within the scope of his
authority and said acts have the same legal effect as if they were
personally executed by the principal. On the part of the principal,
there must be an actual intention to appoint or an intention
naturally inferable from his words or actions, while on the part of
the agent, there must be an intention to accept the appointment
and act on it. Absent such mutual intent, there is generally no
agency.
6. In the entire duration that petitioner played in Casino Filipino, he
was dealing only with ABS Corporation, and availing of the
privileges extended only to players brought in by ABS Corporation.
7. Furthermore, PAGCOR, in posting notices stating that the players
are playing under special rules, exercised the necessary
precaution to warn the gaming public that no agency relationship
exists.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
8. The law makes no presumption of agency and proving its
existence, nature and extent is incumbent upon the person
alleging it.
DOCTRINE: The#9principal
Case Siasat v.has
IACthe power
(G.R. to revoke
No. L-67889 the authority
October of his agent
10, 1985)
at will, in the absence of a contract fixing the duration of the agency
however, the principal cannot deprive his agent of the commission agreed
upon by canceling the agency and, thereafter, dealing directly with the
buyer.
FACTS:
1. Teresita convinced then Department of Education and Culture, to
purchase one million pesos worth of national flags for the use of
public schools throughout the country.
2. Respondent Teresita Nacianceno was authorized to represent
United Flag Industry to deal with any entity or organization,
private or government in connection with the marketing of their
products-flags and all its accessories and to be paid the
commission of 30%.
3. On October 16, 1974, the first delivery of 7,933 flags was made by
the United Flag Industry (United Flag).
4. On October 17, 1974, the respondent's authority to represent the
United Flag was revoked by petitioner Primitivo Siasat, Owner and
Gen. Manager of United Flag.
5. It was found out by the court that Siasat, after receiving the
payment of P469, 980 for the first delivery, tendered the amount
of P23,900.00 or five percent (5%) of the amount received, to the
Teresita as payment of her commission. Teresita protested but
was forced to accept it after Siasat assured her that they would
pay the commission in full after they delivered the other half of
the order.
6. Teresita 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
the 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.
7. Teresita filed an action in the Court of First Instance of Manila to
recover the following commissions: 25%, as balance on the first
delivery and 30%, on the second delivery.
8. Siasat contend that 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%; that there was no specific authorization for
the sale of 15,666 Philippine flags to the Department; and that the
revocation of agency effected by the parties with mutual consent
on October 17, 1974, therefore, forecloses the respondent's claim
of 30% commission on the second transaction.
RTC – Granted Teresita’s complaint.
IAC – Affirmed the RTC’s decision.
ISSUE/S:
1. WON Teresita is a general agent of United Flag?
2. WON Teresita is entitled to the commission for the second
delivery?
RULING:
1. YES. An agent may be (1) universal: (2) general, or (3) special. A
universal agent is one authorized to do all acts for his principal
which can lawfully be delegated to an agent. A general agent is
one authorized to do all acts pertaining to a business of a certain
kind or at a particular place, or all acts pertaining to a business of
a particular class or series. An agent who is empowered to
transact all the business of his principal of a particular kind or in a
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particular place, would be ordinarily deemed a general agent. A
special agent is one authorized to do some particular act or to act
upon some particular occasion. A scrutiny of the document
embodying the agreement between the petitioners and the
respondent deduce that the 'latter was instituted as a general
agent. The power granted to the respondent was so broad that it
practically covers the negotiations leading to, and the execution
of, a contract of sale of petitioners' merchandise with any entity
or organization.
2. YES. The revocation of agency could not prevent Teresita from
earning her commission because it came too late, the contract of
sale having been already perfected and partly executed. The
principal cannot deprive his agent of the commission agreed upon
by cancelling the agency and, thereafter, dealing directly with the
buyer.
3. The decision of the respondent court is hereby MODIFIED. The
petitioners are ordered to pay the respondent the amount of ONE
HUNDRED FOURTY THOUSAND NINE HUNDRED AND NINETY
FOUR PESOS (P140,994.00) as her commission on the second
delivery of flags with legal interest from the date of the trial
court's decision.
DOCTRINE: When
Case #10 a special
Dominion power ofv.attorney
Insurance CA (G.R. isNo.
required forFebruary
129919. the agent to do
a certain act, the agent, in the performance
6, 2002) of such act, must comply with
the specifications embodied in the special power of attorney giving him
authority to do such.
FACTS:
1. Rodolfo Guevarra instituted a civil case in RTC Pampanga, for the
recovery of a sum of money against Dominion Insurance. He
sought to recover P156,473.90, which he claimed to have
advanced in his capacity as manager of Dominion to satisfy claims
filed by Dominion’s clients.
2. Dominion denied any liability to Guevarra.
RTC – Granted Guevarra’s complaint and ordered Dominion was to pay
Guevarra the P156,473.90 claimed as the total amount advanced by the
latter in the payment of the claims of Dominion’s clients.
CA – Affirmed the RTC’s decision.
ISSUE/S:
1. WON Guevarra acted within his authority as agent for Dominion?
2. WON Guevarra is entitled to reimbursement of amounts he paid
out of his personal money in settling the claims of several
insured?
RULING:
A. NO.
1. A perusal of the “Special Power of Attorney” would show that Dominion
and Guevarra intended to enter into a principal-agent relationship.
2. Guevarra’s authority to settle claims is embodied in the Memorandum of
Management Agreement which enumerated the scope of Guevarra’s duties
and responsibilities including his authority to pay the claim of the insured,
but the payment shall come from the revolving fund or collection in his
possession. By advancing his own money to satisfy claims filed by Dominion’s
clients, Guevarra clearly acted outside of his authority.
B. YES.
1. Under the law on agency, Guevarra may not be reimbursed from
petitioner Dominion but his right to recovery may still be justified under the
general law on Obligations and Contracts.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019

2. Having deviated from the instructions of the Dominion, the expenses that
Guevarra incurred in the settlement of the claims of the insured may not be
reimbursed from petitioner Dominion. This conclusion is in accord with
Case #12 Bank of PI v. De Coster (G.R. No. L-23181. March 16, 1925)
Article 1918, Civil Code, which states that:
Principal - Respondent wife/Gabriela De Coster
The principal is not liable for the expenses incurred by the agent in the Agent - husband/Jean Poizat
following cases:
(1) If the agent acted in contravention of the principals instructions, FACTS:
unless the latter should wish to avail himself of the benefits 1. December 29, 1921, Husband, acting as agent of respondent wife
derived from the contract. via special power of attorney, made a promissory note for Php
292,000 to BPI payable within 1 year with a 9% interest per
3. The petition is DENIED and the decision of the CA and that of the RTC are annum.
MODIFIED in that petitioner is ordered to pay respondent Guevarra the 2. To secure payment, husband executed chattel mortgage to BPI
amount of P112,672.11 representing the total amount advanced by the latter over the steamers, machinery, and materials belonging to Poizat
in the payment of the claims of petitioners clients. Vegetable Oil Mills (company owned by husband) and also
delivered to BPI a mortgage on a real property situated in Manila.
3. Real property was subject to a prior mortgage in favor of La Orden
Principal - Defendant Sta Maria Siblings (emphasis on Valeriana)
Case #11 PNB v. Sta. Maria (G.R. No. L-24765. August 29, 1969) de Dominicos.
Agent - Dr. Maximo Sta Maria
4. Note in question is long past due and so, plaintiff filed an action in
CFI Manila to take immediate possession of the property
FACTS:
5. April 24, 1924, La Orden/Dominican Fathers appeared in the suit
1. Defendant Maximo obtained sugar crop loans from plaintiff PNB
and pleaded that husband and wife have also not paid the
under a special power of attorney executed in his favor by his 6
principal nor interests stipulated in December 1921.
brothers and sisters.
6. CFI Manila declared defendants in default and rendered opinion
2. Said loans were mortgaged with a 16-odd hectare land jointly
that both BPI and Dominican Fathers be paid by defendants.
owned by the defendant and siblings.
7. Respondent wife filed a suit praying that she be absolved;
3. Valeriana, one of the siblings, executed a special power of
contending that she has been residing in Paris from 1908 to April
attorney to Maximo authorizing him to borrow money and
1924 and that her husband executed the mortgage transactions
mortgage any real estate owned by her.
without her consent.
4. By virtue of 2 powers of attorney, Maximo applied for 2 separate
crop loans and as security of the loans, Maximo executed, in his
ISSUE: WON transactions entered by husband as agent of his wife were valid
name, two chattel mortgages guaranteed by surety bonds
executed Associated Insurance & Surety Co., in favor of plaintiff
RULING: NO.
PNB
5. Records show that securities included the land owned by the Sta
Paragraph 5 of the power of attorney authorizes the husband “to loan or
Maria siblings.
borrow any sums of money or fungible things, etc.” - This should be
6. Plaintiff Bank filed a case for collection if unpaid balances against
construed to mean that the husband had power only to loan his wife’s
Maximo and his siblings.
money and to borrow money for or on account of his wife as her agent and
7. RTC ruled in favor of PNB, ordering defendants to pay jointly and
attorney in fact. That does not carry with it or imply that he had the legal
SEVERALLY.
right to make his wife liable as surety for the pre-existing debt of a third
8. Siblings (except Maximo and his surety) appealed
person.
ISSUE: WON siblings can be held personally liable for the payment of
The foregoing are clauses in the power of attorney upon which the bank
Maximo’s obligations
relies for the authority of the husband to execute promissory notes for and
on behalf of his wife as her agent. No provision in either of them which
RULING: NO, siblings, except Valeriana, cannot be held liable.
authorizes or empowers him to make his wife liable as a surety for a pre-
existing debt.
Defendants, except Valeriana, only granted Maximo authority to mortgage
property owned by them and not the authority to contract for any other
The fact that an agent failed and neglected to perform his duties and to
loans in their names or behalf. Thus, defendants’ liability is that the real
represent the interests of his principal is not a bar to the principal obtaining
estate will be foreclosed and sold but they cannot be held personally liable.
legal relief for the negligence of her agent, provided that the application for
such a relief is duly and properly made under the provisions of section 113.
The Bank failed to require Maximo to present additional special power of
authority, from his other siblings, authorizing him to borrow money. He only
It is very apparent from the face of the instrument that the whole purpose
had additional SPA issued by Valeriana.
and intent of the power of attorney was to empower and authorize the
husband to look after and protect the interests of the wife and for her and in
Defendant siblings did not ratify nor benefit from the acts of Maximo which
her name to transact any and all of her business. But nowhere does it
means there can be NO ESTOPPEL.
provide or authorize him to make her liable as a surety for the payment of
the preexisting debt of a third person.
Thus, RTC judgment reversed and set aside. Defendant siblings’ liability is
only up to real estate foreclosure; Valeriana is declared jointly, not solidarily,
Thus, judgment of CFI, as to wife, is reversed and set aside. As to bank, case
liable.
is remanded to lower court. As to Dominican fathers, judgment cannot be
sustained.

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AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
Case #13 Hodges v. Salas (G.R. No. L-42958. October 21, 1936)
Principal - Defendant Salas
Agent - Yulo/Defendant’s brother in law
FACTS:
1. On September 2, 1923, the defendants executed a power of
attorney in favor of their brother-in-law Felix S. Yulo to enable
him to obtain a loan and secure it with a mortgage on the real
property described in transfer certificate of title No. 3335. The
power of attorney was registered in the registry of deeds of the
Province of Occidental Negros.
2. Acting under said power of attorney, Felix S. Yulo, on March 27,
1926, obtained a loan of P28,000 from the plaintiff, binding his
principals jointly and severally to pay it within ten (10) years,
together with interest thereon at 12 per cent per annum payable
annually in advance, to which effect he signed a promissory note
for said amount and executed a deed of mortgage of the real
property described in transfer certificate of title No. 3335 and the
improvements thereon consisting in concrete buildings.
3. The sum of P28,000 was not delivered to Felix S. Yulo, but by
agreement between him and the plaintiff, was applied to Yulo’s
personal debts to plaintiff Hodges (Php 10, 188.29)
4. The defendants failed to pay at maturity the interest stipulated,
which would have been paid one year in advance.
5. Action was brought by the plaintiff to foreclose the real estate
mortgage.
6. CFI Negros Occidental absolved defendants contending that held
that the loan and the mortgage were usurious and illegal for two
reasons: First, because the plaintiff charged compound interest
notwithstanding the fact that it had not been stipulated, and
second, because the plaintiff charged interest yearly in advance in
accordance with the agreement
ISSUE: WON agent was authorized to borrow money for personal use
RULING: NO.
The pertinent clauses of the power of attorney from which may be
determined the intention of the principals in authorizing their agent to
obtain a loan, securing it with their real property, were quoted at the
beginning of the decision. The terms thereof are limited; the agent was
thereby authorized only to borrow any amount of money which he deemed
necessary. There is nothing, however, to indicate that the defendants had
likewise authorized him to convert the money obtained by him to his
personal use. With respect to a power of attorney of special character, it
cannot be interpreted as also authorizing the agent to use the money as he
pleased, particularly when it does not appear that such was the intention of
the principals, and in applying part of the funds to pay his personal
obligations, he exceeded his authority. In cases like the present one, it should
be understood that the agent was obliged to turn over the money to the
principals or, at least, place it at their disposal
FACTS:
Case #14 Strong v. Gutierrez Rupide (G.R. No. L-7154
• Eleanor Erica Strong, was the owner of 800 shares of the capital stock of
February 21, 1912)
the Philippine Sugar Estates Development Company, Limited, that was
thereafter found to have been obtained fraudulently by Francisco Gutierrez
Repide.
• Plaintiff’s commenced an action asking that the fraudulent sale be declared
null and void and that they be returned to her, which was ruled in her favor.
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• This decision was reversed by the Supreme Court of the Philippines and
thereafter reversed by the Supreme Court of the United States and affirming
the judgment of the trial court and was thereafter satisfied by the defendant
by returning the shares evidenced by certificates.
• Subsequently, it was found out, that from the date of the Fraudulent sale,
the defendant collected the dividends earned by said shares amounting to a
total of P19,200, which sum the defendant retained and refused to pay over
to the plaintiff.
• After demand upon and refusal by the defendant, the plaintiff began this
action for the recovery of said sum.
• The plaintiff then again instituted a separate action which was ruled in
favor of the plaintiff for the said sum of P19,200, with interest thereon at the
rate of 6 per cent per annum from the date of the filing of the complaint.
• Both parties excepted to this judgment and filed motions for a new trial,
and the court upon the hearings modified its judgment by allowing
defendant to offset against plaintiff's judgment interest on P14,159.29 at the
rate of 6 per cent per annum from the 10th day of October, 1903, to the 12th
day of January, 1904.
Trial Court Ruling: The trial court found in favor of the plaintiff, declaring the
sale of the stock to have been fraudulently obtained and setting aside the
sale absolutely, as is indicated by that portion of its opinion heretofore
quoted. On the appeal to the Supreme Court of the United States the
fraudulent character of the representations by which the plaintiff had been
induced to part with her stock was fully affirmed after a thorough
consideration of the facts and circumstances of the case and the judgment of
the trial court setting aside the sale on the ground of fraud was affirmed in
every particular.
ISSUE:
Whether or Not the plaintiff had been deprived of the shares of stock in
question by false and fraudulent representations and fraudulent
concealment on the part of the defendant, or of his agents?
RULING:
• YES. The fraudulent sale having been made to him, it is unquestionable that
he became responsible to the plaintiff from that moment forward. So far as
the responsibility of the defendant was concerned, it is of no consequence
who actually collected and retained the dividends. The plaintiff had a right to
look to the defendant and to him alone.
• The judgment of the trial court, as affirmed by the Supreme Court of the
United States, set aside the sale as fraudulent, and, therefore, by necessary
result, the title to the shares of stock in question passed to the plaintiff if it
be conceded that the title ever legally passed from her.
• The delivery of those shares to her by the defendant under that judgment
was an admission of her title as declared by the court and was a delivery of
possession in pursuance of that declaration of ownership. Under the
decisions referred to, as between the parties thereto, the plaintiff was legally
the owner of said stock from the time when she was fraudulently deprived of
it until the time it was returned to her as fully and as completely as she was
after the adjudication of the title and return of the stock itself. Whoever,
therefore, during that period collected the dividends upon the said stock
took from the plaintiff something which belonged to her.
Case #15While
DOCTRINE: Katigbak
it is v.true
Tai that
HungaCo. (G.R.of
power No.attorney
L-29917.not
December
recorded in the
29, that
1928an agent or attorney-in-fact may
registry of deeds is ineffective in order
validly perform acts in the name of his principal, and that any act performed
by the agent by virtue of said power with respect to the land is ineffective
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019

against a third person who, in good faith, may have acquired a right thereto,
it does, however, bind the principal to acknowledge the acts performed by Barreto Po Ejap prevents the sale made by the latter of the litigated land in
his attorney-in-fact regarding said property favor of Jose M. Katigbak from being recorded in the registry of deeds, it is
not ineffective to compel Tecsi to acknowledge said sale.
FACTS:
Principal: Po Tecsi • The record contains many indications that Po Tecsi was not unaware of said
Agent: Gabino Barreto Po Ejap sale. His several letters complaining of the pressing demands of his brother
Buyer: Katigbak Gabino Barreto Po Ejap to send him the rents of the land, his promises to
send them to him, and the remittance of the same were a tacit
• Po Ejap was the owner of the land in litigation. acknowledgment that he occupied the land in question no longer as an
owner but only as lessee.
• In November 1921, Po Tecsi executed a general power of attorney in favour
of his brother Po Ejap. • The sale made on November 22, 1923, by Gabino Barreto Po Ejap, as
attorney-in-fact of Po Tecsi, in favor of Jose M. Katigbak of the land in
• In April 1923, Po Ejap sold the land in litigation with its improvements to his question is valid
brother Po Tecsi.
• By virtue whereof, and with the modifications above indicated, the
• In November 1923, Po Ejap, making use of the power conferred on him by judgment appealed from is affirmed, without special pronouncement as to
his brother Po Tecsi, sold absolutely the aforesaid land with its costs. So ordered.
improvements to herein plaintiff-appellee Katigbak.

• Notwithstanding said sale Po Tecsi remained in possession of said property Case #16 Chua v. IAC (G.R. No. 70909 January 5, 1994)
and leased a part of said land to Uy Chia for a period of five years from
Doctrine: Although the Civil Code expressly requires a special power of
October 1, 1923. The contract drawn up to that end was recorded in the
attorney in order that one may compromise an interest of another, it is
proper certificate of title
neither
Caseaccurate
#17 Dungonorvs.correct
Lopenato(G.R.
conclude that December
No. L-18377 its absence29,renders
1962) the
compromise agreement void. In such a case, the compromise is merely
• In February 1927, Po Tecsi’s son Po Sun Suy was appointed administrator of
unenforceable. This results from its nature is a contract. It must be governed
the estate of Po Tecsi.
by the rules and the law on contracts.
• In May 1927, Katigbak sold the property in question to Po Sun Boo, Po
FACTS:
Ejap’s son who then informed Po Sun Suy and Po Ching about the purchase
1. Petitioner Anastacio Duñgo and one Rodrigo S. Gonzales purchased 3
and that they were to deal with him concerning the payment of their rents:
parcel of land from the respondents Adriano Lopena and Rosa Ramos with
Po Sun Suy as administrator of Po Tecsi who continued renting the property
the agreement that the balance of P241,804.00 would be paid in 6 monthly
in which stood Po Ching’s store.
installments.To secure the payment, petitioners executed over the same 3
parcels of land Deed of Real Estate Mortgage in favor of the respondent
• As Po Tecsi had not paid part of the rent due until his death, and Po Sun
Adriano Lopena and Rosa Ramos.
Suy had not paid the rent due from his father's death until Katigbak
transferred the ownership of the property to Po Sun Boo on May 23, 1927,
2. Respondents Adriano Lopena and Rosa Ramos, filed a complaint for the
Katigbak filed an action in CFI-Manila for the recovery of said rent which
foreclosure of the aforementioned real estate mortgage with the Court of
amounts to P45,280, first against the commercial firm Tai Hing Company, and
First Instance of Rizal the Hon. Judge Andres Reyes, presiding. Meanwhile,
later against the members of said firm, Po Sun Suy and Po Ching, by an
there were 2 other civil cases filed in the same lower court against the same
amendment to the original complaint.
defendants Anastacio Duñgo and Rodrigo S. Gonzales.
• Po Sun Suy, as the judicial administrator of the estate of Po Tecsi, filed an
3. Before the cases could be tried, a compromise agreement dated January
intervention praying that judgment be rendered against plaintiff Katigbak,
15, 1960 was submitted to the lower court for approval. It was signed by
declaring him not to be the owner of the property and therefore, not entitled
herein respondents Adriano Lopena and Rosa Ramos on one hand, and
to the rents of the property in question
Rodrigo S. Gonzales, on the other. It was not signed by the herein petitioner.
However, Rodrigo S. Gonzales represented that his signature was for both
• Po Sun Suy and Po Ching contended that Po Ejap was not authorized under
himself and the herein petitioner. Moreover, Anastacio Duñgo's counsel of
the power executed by Po Tecsi to sell said land, for the reason that said
record, Atty. Manuel O. Chan, the same lawyer who signed and submitted for
power had been executed before Po Ejap sold said land to Po Tecsi.
him the answer to the complaint, was present at the preparation of the
compromise agreement and this counsel affixed his signature thereto.
COURT OF FIRST INSTANCE
• Question of Ownership being raised by the intervenors.
4. May 3, 1960, a so-called Tri-Party Agreement was drawn. The signatories
• The power is general and authorizes Gabino Po Ejap to sell any kind of
to it were Anastacio Duñgo (herein petitioner) and Rodrigo S. Gonzales as
realty "belonging" (pertenezcan) to the principal. The use of the subjunctive
debtors, Adriano Lopena and Rosa Ramos (herein respondents) as creditors,
"pertenezcan" (might belong) and not the indicative "pertenecen" (belong),
and, one Emma R. Santos as pay or.
means that Po Tecsi meant not only the property he had at the time of the
execution of the power, but also such as he might afterwards have during the
5. August 31, 1960, Anastacio Duñgo filed a motion to set aside all the
time it was in force.
proceedings on the ground that the compromise agreement dated January
15, 1960 was void ab initio with respect to him because he did not sign the
ISSUE: Whether or Not Po Ejap was authorized to sell the land in question
same. Upon denial of the said motion to set aside, Anastacio Duñgo filed a
given that the power of agency was executed before the said land was
Notice of Appeal from the order of August 31, 1960 approving the
owned by Po Tecsi ?
foreclosure sale of August 25, 1960, as well as the order of December 14,
RULING:
• YES. In the present case, while it is true that the non-registration of the
power of attorney executed by Po Tecsi in favor of his brother Gabino

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AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
1960, denying his motion to set aside. Soon thereafter, the lower court
dismissed the appeal. (CFI RIZAL)
ISSUE/S:
(1) Was the compromise agreement of January 15, 1960, the Order of the
same date approving the same, and, all the proceedings subsequent thereto,
valid or void insofar as the petitioner herein is concerned? YES
(2) Did the lower court abuse its discretion when it dismissed the appeal of
the herein petitioner? NO
RULING:
Although the Civil Code expressly requires a special power of attorney in
order that one may compromise an interest of another, it is neither accurate
nor correct to conclude that its absence renders the compromise agreement
void. In such a case, the compromise is merely unenforceable. This results
from its nature is a contract. It must be governed by the rules and the law on
contracts.
ART. 1403. The following contracts are unenforceable, unless they are
ratified:
(1) Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his
powers;
The ratification of the compromise agreement was conclusively established
by the Tri-Party Agreement of May 1960. It is to be noted that the
compromise agreement was submitted to and approved by the lower court
January 15, 1960. Now, the Tri-Party Agreement referred itself to that order
when it stipulated thus:
“WHEREAS, the MAYOR, hereby submits and binds herself to the force and
effect of the order dated January 15, 1960, of the Court of First Instance of
Pasig, Rizal, Branch which order is hereby made an integral part of this
agreement as Annex "A".l”
The Tri-Party Agreement was an instrument intended to render effective the
compromise agreement. It merely complemented an ratified the same. That
a third person was involved in it is inconsequential. Nowhere in the new
agreement may the release of the herein petitioner be even inferred.
The compromise agreement was validity and enforceable against the herein
petitioner, it follows that the lower court committed no abuse of discretion
when it dismissed the appeal of the herein petitioner.
DOCTRINE:
Case #18 Vicente vs. Geraldez (G.R. No. L-32473 July 31, 1973)
1. Special powers of attorney are necessary, among other cases, in the
following: to compromise and to renounce the right to appeal from a
judgment.1 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 clients' litigation, or receive anything in
discharge of their clients' claims but the full amount in cash.
2. The Rules "require, for attorneys to compromise the litigation of their
clients, a special authority. And while the same does not state that the
special authority be in writing the court has every reason to expect that, if
not in writing, the same be duly established by evidence other than the self-
serving assertion of counsel himself that such authority was verbally given
him."
3. Law specifically requires that "juridical persons may compromise only in
the form and with the requisites which may be necessary to alienate their
property."
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FACTS:
1. In 1967, HI Cement Corporation was granted authority to operate mining
facilities in Bulacan. However, the areas allowed for it to explore cover areas
which were also being explored by Ignacio Vicente, Juan Bernabe, and
Moises Angeles. And so a dispute arose between the three and HI Cement as
neither side wanted to give up their mining claims over the disputed areas.
2. Eventually, HI Cement filed a civil case before CFI Bulacan against the
three. During pre-trial, the possibility of an amicable settlement was
explored where HI Cement offered to purchase the areas of claims of Vicente
et al at the rate of P0.90 per square meter. Vicente et al however wanted
P10.00 per square meter.
3. In 1969, the lawyers of HI Cement agreed to enter into a compromise
agreement with the three whereby commissioners shall be assigned by the
court for the purpose of assessing the value of the disputed areas of claim.
An assessment was subsequently made pursuant to the compromise
agreement and the commissioners recommended a price rate of P15.00 per
square meter.
4. One of the lawyers of HI Cement, Atty. Francisco Ventura, then notified
the Board of Directors of HI Cement for the approval of the compromise
agreement. But the Board disapproved the compromise agreement hence
Atty. Ventura filed a motion with the court to disregard the compromise
agreement.
5. Vicente et al naturally assailed the motion. Vicente et al insisted that the
compromise agreement is binding because prior to entering into the
compromise agreement, the three lawyers of HI Cement declared in open
court that they are authorized to enter into a compromise agreement for HI
Cement; that one of the lawyers of HI Cement, Atty. Florentino Cardenas, is
an executive official of HI Cement; that Cardenas even nominated one of the
commissioners; that such act ratified the compromise agreement even if it
was not approved by the Board.
6. HI Cement, in its defense, averred that the lawyers were not authorized
and that in fact there was no special power of attorney executed in their
favor for the purpose of entering into a compromise agreement.
7. Judge Ambrosio Geraldez ruled in favor of HI Cement.
ISSUE: Whether or not a compromise agreement entered into by a lawyer
purportedly in behalf of the corporation is valid without a written authority.
RULING: NO.
1. The Compromise Agreement dated January 30, 1969 was signed only by
the lawyers for petitioners and by the lawyers for private respondent
corporation. It is not disputed that the lawyers of respondent corporation
had not submitted to the Court any written authority from their client to
enter into a compromise.
The Rules3 "require, for attorneys to compromise the litigation of their
clients, a special authority. And while the same does not state that the
special authority be in writing the court has every reason to expect that, if
not in writing, the same be duly established by evidence other than the self-
serving assertion of counsel himself that such authority was verbally given
him."
2. In private respondent's "Reply to Defendant Bernabe's Answer Dated
November 8, 1969," said counsels categorically denied that they ever
represented to the court that they were authorized to enter into a
compromise. In any event, assuming arguendo that they did, such a self-
serving assertion cannot properly be the basis for the conclusion that the
respondent corporation had in fact authorized its lawyers to compromise the
litigation.
3. Whatever authority the officers or agents of a corporation may have is
derived from the board of directors, or other governing body, unless
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
conferred by the charter of the corporation. A corporation officer's power as
an agent of the corporation must therefore be sought from the statute, the
charter, the by-laws, or in a delegation of authority to such officer, from the
acts of board of directors, formally expressed or implied from a habit or
custom of doing business. In the case at bar no provision of the charter and
by-laws of the corporation or any resolution or any other act of the board of
directors of HI Cement Corporation has been cited, from which We could
reasonably infer that the administrative manager had been granted expressly
or impliedly the power to bind the corporation or the authority to
compromise the case. Absent such authority to enter into the compromise,
the signature of Atty. Cardenas on the agreement would be legally
ineffectual.
4. In order to ratify the unauthorized act of an agent and make it binding on
the corporation, it must be shown that the governing body or officer
authorized to ratify had full and complete knowledge of all the material facts
connected with the transaction to which it relates.9 It cannot be assumed
also that Atty. Cardenas, as administrative manager of the corporation, had
authority to ratify. For ratification can never be made "on the part of the
corporation by the same persons who wrongfully assume the power to make
the contract, but the ratification must be by the officer or governing body
having authority to make such contract and, as we have seen, must be with
full knowledge."
Case #19 Insular Drug Co. v. National Bank (G.R. No. L-38816
DOCTRINE: The right of an agent to indorse commercial paper is a very
November 3, 1933)
responsible power and will not be lightly inferred. A salesman with authority
to collect money belonging to his principal does not have the implied
authority to indorse checks received in payment. Any person taking checks
made payable to a corporation, which can act only by agent does so at his
peril, and must same by the consequences if the agent who indorses the
same is without authority
FACTS:
1. The Insular Drug Co., Inc., is a Philippine corporation with offices in the City
of Manila.
2. U.E. Foerster was formerly a salesman of drug company for the Islands of
Panay and Negros. Foerster also acted as a collector for the company. He was
instructed to take the checks which came to his hands for the drug company
to the Iloilo branch of the Chartered Bank of India, Australia and China and
deposit the amounts to the credit of the drug company. Instead, the checks
were in that bank placed in the personal account of Foerster. Some of the
checks were drawn against the Bank of Philippine National Bank. After the
indorsement on the checks was written "Received payment prior
indorsement guaranteed by Philippine National bank, Iloilo Branch, Angel
Padilla, Manager. As a consequence of the indorsements on checks the
amounts therein stated were subsequently withdrawn by U. E., Foerster and
Carmen E. de Foerster.
3. The Insular Drug Company claims that it never received the face value of
132 checks here in the question covering a total of P18,285.92.
4. The Court of First Instance of Manila requiring bank to pay to the Insular
Drug Co., Inc., the sum of P18,285.92 with legal interest and costs.The record
consists of the testimony of Alfred Von Arend, President and Manager of the
Insular Drug Co., Inc., and of exhibits obtained from the Philippine National
Bank showing transactions of U.E. Foerster with the bank.
5. Bank argues that the drug company was never defrauded at all. Further,
bank, to the effect that Foerster had implied authority to indorse all checks
made out in the name of the Insular Drug Co., Inc., has even less force.
ISSUE: WON Philippine National Bank as agent, liable.
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
RULING: YES.
In this is a case where 132 checks made out in the name of the Insular Drug
Co., Inc., were brought to the branch office of the Philippine National Bank in
Iloilo by Foerster, a salesman of the drug company, Foerster's wife, and
Foerster's clerk. The bank could tell by the checks themselves that the money
belonged to the Insular Drug Co., Inc., and not to Foerster or his wife or his
clerk.
When the bank credited those checks to the personal account of Foerster
and permitted Foerster and his wife to make withdrawals without there
being made authority from the drug company to do so, the bank made itself
responsible to the drug company for the amounts represented by the checks.
The bank could relieve itself from responsibility by pleading and proving that
after the money was withdrawn from the bank it passed to the drug
company which thus suffered no loss, but the bank has not done so. Much
more could be said about this case, but it suffices to state in conclusion that
bank will have to stand the loss occasioned by the negligence of its agents.
Case #20 Equitable PCIBank vs. Ku (G.R. No. 142950. March 26,
FACTS:
2001)
1. Respondent Rosita Ku, as treasurer of Noddy Dairy Products, Inc., and Ku
Giok Heng, as Vice-President/General Manager of the same corporation
incurred a loan from Equitable PCI. As a security, they mortgaged their
property a residential house and lot located in La Vista, Quezon City.
2. When respondents failed to pay the loan, Equitable foreclosed the
property extrajudicially and was issued a certificate of sale after winning in
the foreclosure sale. On the other hand, respondent failed to redeem the
property.
3. Petitioner instituted an action before MeTC- decision in favor of them; RTC
dismissed the case for no merit; CA agreed with Rosita rendered a decision
enjoining the eviction of respondent from the premises.
4. Petitioner filed a motion for extension and it was granted by SC.
5. Rosita argued that the said petition is defective because the bank alleged
in its petition that it received a copy of the CA decision on April 25, 2000,
however, the copy "was duly delivered to and received by Joel Rosales
(Authorized Representative) on April 24, 2000."
ISSUE:
Whether Joel Rozales can be considered an agent of the bank counsel and
thus service to him is service to the Bank.
RULING:
Yes. An agency may be express but it may also be implied from the acts of
the principal, from his silence, or lack of action, or his failure to repudiate the
agency, knowing that another person is acting on his behalf without
authority. Likewise, acceptance by the agent may also be express, although it
may also be implied from his acts which carry out the agency, or from his
silence or inaction according to the circumstances.
In this case, Joel Rosales averred that "[o]n occasions when I receive mail
matters for said law office, it is only to help them receive their letters
promptly," implying that counsel had allowed the practice of Rosales
receiving mail in behalf of the former. There is no showing that counsel had
objected to this practice or took steps to put a stop to it.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
Case #21 Calibo vs. CA (G.R. No. 120528. January 29, 2001)
DOCTRINE: Article 1869, for an agency relationship to be deemed as implied,
the principal must know that another person is acting on his behalf without
authority.
FACTS:
1. Pablo U. Abella purchased an MF 210 agricultural tractor which he
used in his farm.
2. Pablo Abella’s son, Mike Abella rented for residential purposes
the house of defendant-appellant Dionisio R. Calibo, Jr.
3. Pablo Abella pulled out his aforementioned tractor from his farm
and left it in the safekeeping of his son, Mike Abella.
4. Calibo confronted Mike about his rental arrears and the unpaid
electric and water bills.
5. Mike also assured Calibo that he would be settling his account
with the latter, offering the tractor as security. Mike even asked
Calibo to help him find a buyer for the tractor so he could sooner
pay his outstanding obligation.
6. After a long while, or on November 22, 1988, Mikes father, Pablo
Abella, came to Tagbilaran City to claim and take possession of
the tractor.
7. Calibo, however, informed Pablo that Mike left the tractor with
him as security for the payment of Mikes obligation to him.
8. Calibo told Pablo that he would accept the P2,000.00-check only if
the latter would execute a promissory note in his favor to cover
the amount of the unpaid electric and water bills.
9. Pablo was not amenable to this proposal. The two of them having
failed to come to an agreement, Pablo left and went back to Cebu
City, unsuccessful in his attempt to take possession of the tractor.
10. On November 25, 1988, Pablo Abella instituted an action for
replevin, claiming ownership of the tractor and seeking to recover
possession thereof from petitioner (Atty. Calibo).
RTC – Favored Abella and against Calibo.
CA – Affirmed RTC’s decision declaring Abella as the lawful possessor of
a tractor subject of a replevin suit and ordering Calibo to pay private
respondent actual damages and attorneys fees.
The Court of Appeals sustained the ruling of the trial court that Mike
Abella could not have validly pledged the subject tractor to petitioner
since he was not the owner thereof, nor was he authorized by its owner
to pledge the tractor.
Calibo’s Argument: Maintains that even if Mike Abella were not the owner of
the tractor, a principal-agent relationship may be implied between Mike
Abella and private respondent.
He contends that the latter failed to repudiate the alleged agency, knowing
that his son is acting on his behalf without authority when he pledged the
tractor to petitioner.
ISSUE: WON there was an implied agency created between Pablo and Mike
Abella. (NO)
RULING:
1. There also does not appear to be any agency in this case.
As indicated in Article 1869, for an agency relationship to be
deemed as implied, the principal must know that another person
is acting on his behalf without authority. Here, Pablo Abella
categorically stated that the only purpose for his leaving the
subject tractor in the care and custody of Mike Abella was for
safekeeping, and definitely not for him to pledge or alienate the
same. If it were true that Mike pledged appellees tractor to
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
appellant, then Mike was acting not only without appellees
authority but without the latters knowledge as well.
2. Article 1911, on the other hand, mandates that the principal is
solidarily liable with the agent if the former allowed the latter to
act as though he had full powers. Again, in view of Pablo Abella
lack of knowledge of Mikes pledging the tractor without any
authority from him, it stands to reason that the former could not
have allowed the latter to pledge the tractor as if he had full
powers to do so.
3. There is likewise no valid deposit in this case.
4. Consequently, petitioner had no right to refuse delivery of the
tractor to its lawful owner. On the other hand, private
respondent, as owner, had every right to seek to repossess the
tractor, including the institution of the instant action for replevin.
SC – Affirmed CA’s decision.
Case #22 Conde vs. CA (G.R. No. L-40242 December 15, 1982)
DOCTRINE: An implied agency must be held to have been created from their
silence or lack of action, or their failure to repudiate the agency
FACTS:
1. On 7 April 1938. Margarita Conde, Bernardo Conde and the
petitioner Dominga Conde, as heirs of Santiago Conde, sold with
right of repurchase, within ten (10) years from said date, a parcel
of agricultural land to Casimira Pasagui, married to Pio Altera
(hereinafter referred to as the Alteras), for P165.00.
2. The "Pacto de Retro Sale" further provided:
... (4) if at the end of 10 years the said land is not
repurchased, a new agreement shall be made between the
parties and in no case title and ownership shall be vested in
the hand of the party of the SECOND PART (the Alteras).
3. On 17 April 1941, the Cadastral Court of Leyte adjudicated Lot No.
840 to the Alteras "subject to the right of redemption by Dominga
Conde, within ten (10) years counting from April 7, 1983, after
returning the amount of P165.00.
4. On 28 November 1945, private respondent Paciente Cordero, son-
in-law of the Alteras, signed a document in the Visayan dialect,
the English translation of MEMORANDUM OF REPURCHASE OVER
A PARCEL OF LAND SOLD WITH REPURCHASE WHICH DOCUMENT
GOT LOST.
5. To be noted is the fact that neither of the vendees-a-retro, Pio
Altera nor Casimira Pasagui, was a signatory to the deed.
Petitioner (Conde) maintains that because Pio Altera was very ill
at the time, Paciente Cordero executed the deed of resale for and
on behalf of his father-in-law. Petitioner (Conde) further states
that she redeemed the property with her own money as her co-
heirs were bereft of funds for the purpose.
6. The pacto de retro document was eventually found.
7. On 30 June 1965 Pio Altera sold the disputed lot to the spouses
Ramon Conde and Catalina T. Conde, who are also private
respondents herein. Their relationship to petitioner does not
appear from the records. Nor has the document of sale been
exhibited.
8. Contending that she had validly repurchased the lot in question in
1945, Dominga Conde filed a Complaint, against Paciente Cordero
and his wife Nicetas Altera, Ramon Conde and his wife Catalina T.
Conde, and Casimira Pasagui Pio Altera having died in 1966, for
quieting of title to real property and declaration of ownership.
9. There is no question that neither of the vendees-a-retro signed
the "Memorandum of Repurchase", and that there was no formal
authorization from the vendees for Paciente Cordero to act for
and on their behalf.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
RTC – dismissing the Complaint and the counterclaim and ordering
petitioner "to vacate the property in dispute and deliver its peaceful
possession to the defendants Ramon Conde and Catalina T. Conde".
CA – Affirming CFI’s decision which dismissed petitioner’s complaint for
Quieting of Title and ordered her to vacate the property in dispute and
deliver its possessin to private respondents Ramon Conde and Catalina
Conde.
ISSUE:
WON there is an implied agency created between Alteras and Cordero. (YES)
RULING:
1. 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. 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.
2. Cordero must be held bound by the clear terms of the
Memorandum of Repurchase that he had signed wherein he
acknowledged the receipt of P165.00 and assumed the obligation
to maintain the repurchasers in peaceful possession should they
be "disturbed by other persons". It was executed in the Visayan
dialect which he understood. He cannot now be allowed to
dispute the same. "... If the contract is plain and unequivocal in its
terms he is ordinarily bound thereby. It is the duty of every
contracting party to learn and know its contents before he signs
and delivers it."
3. In sum, although the contending parties were legally wanting in
their respective actuations, the repurchase by petitioner is
supported by the admissions at the pre-trial that petitioner has
been in possession since the year 1945, the date of the deed of
repurchase, and has been paying land taxes thereon since then.
The imperatives of substantial justice, and the equitable principle
of laches brought about by private respondents' inaction and
neglect for 24 years, loom in petitioner's favor.
SC – Reversed CA’s decision and Dominga Conde is hereby declared the
owner of the disputed property.
Case #23 Gozun vs. Mercado (G.R. No. 167812 December 19, 2006)
FACTS:
1. Respondent vied for the gubernational post in Pampanga and
requested the Petitioner, owner of JMG Publishing House, to
submit draft samples and quotations.
2. However, it was respondent’s wife who told him that respondent
already approved his quotation and that he could start printing.
Due to the urgency, petitioner availed of the services and facilities
of Metro Angeles Printing and of St. Joseph Printing Press.
3. Respondents’ sister in law Soriano, obtained from petitioner cash
advance of 253,000.00, allegedly for the allowances of poll
watchers who were attending a seminar and for other related
expenses.
4. Petitioner later sent respondent a Statement of Account in the
total amount of P2,177,906.
5. It was respondent’s wife who partially paid P1,000,000.
6. Despite repeated demands, respondent failed to pay balance.
7. Petitioner filed with the RTC to collect the remaining Php
1,177,906.00 plus inflationary adjustment and attorney’s fees;
Respondent denied entering into a contract with petitioner, or
giving Soriano the authority to receive the amount, and his wife to
enter into a contract with petitioner
RTC ruled in petitioner’s favor;
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CA reversed it, ruling that Lilian was not authorized to borrow
money on his behalf and was thus unenforceable and that
petitioner had not cause of action because he was not the real
party-in-interest because it was not shown he was authorized to
prosecute for Metro Angeles and St. Joseph.
ISSUE:
 WON Soriano had the special authority to borrow on behalf of
respondent. (NO)
 WON Petitioner is the real party-in-interest. (YES)
RULING:
1. NO. Generally, the agency may be oral, unless the law requires a
specific form.
2. The requirement of a special power of attorney refers to the
nature of the authorization and not to its form. If the special
authority is not written, then it must be duly established by
evidence.
3. However, Lilian signed in the receipt in her name alone, without
indicating therein that she was acting for and in behalf of
respondent. She thus bound herself in her personal capacity and
not as an agent of respondent or anyone for that matter
4. YES. Petitioner is the real party in interest in this case. One who is
not a party to a contract, and for whose benefit it was not
expressly made, cannot maintain an action on it. One cannot do
so, even if the contract performed by the contracting parties
would incidentally inure to one's benefit.
FACTS:Case #24 MCIAA vs. Unchuan (G.R. No. 182537, June 01, 2016)
1. Atanacio Godinez is the supposed attorney-in-fact and agent, of
the surviving heirs of the registered owner, Eugenio Godinez.
2. Unchuan moved for the declaration of nullity of the sale made by
Atanacio of their parcels of land to Civil Aeronautics
Administration (CAA) and later to Mactan-Cebu International
Airport Authority (MCIAA) on the grounds that the registered
owners and their heirs did not authorize him.
RTC ruled in favor of Unchuan, declaring it to be VOID insofar as the
shares of his co-owners are concerned because he was not legally
authorized to act as the attorney-in-fact for his siblings and he was not
clothed with a special power of attorney;
CA affirmed, stating that he had no authority to act as agent.
ISSUE:
 WON Atanacio Gomez was authorized to convey the said lots.
(NO)
RULING:
1. NO, the sale transaction executed by Anatacio and the appellants
is void insofar as the other registered owners are concerned.
2. Article 1874 provides that a sale of a piece of land or any interest
therein is through an agent, the authority of the latter shall be in
writing; otherwise, the sale shall be void.
3. Art. 1878. Special powers of attorney are necessary in the
following cases:
xxx
(5) To enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a
valuable consideration;
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019

4. Thus, the authority of an agent to execute a contract for the sale

of real estate must be conferred in writing and must give him
specific authority. Case #26 Yoshizaki vs. Joy Training Center of Aurora (G.R. No.
5. Atanacio's act of conveying Lot No. 4810-A and Lot No. 4810-B 174978, July 31, 2013)
cannot be a valid source of obligation to bind all the other DOCTRINE: As a general rule, a contract of agency may be oral. However, it
registered co-owners and their heirs because he was not clothed must be written when the law requires a specific form. Specifically, Article
with any authority to enter into a contract with CAA. 1874 of the Civil Code provides that the contract of agency must be written
6. By Atanacio and CAA, however, was not entirely void because the for the validity of the sale of a piece of land or any interest therein.
lack of consent by the other co-owners in the sale was with Otherwise, the sale shall be void. A related provision, Article 1878 of the Civil
respect to their shares only Code, states that special powers of attorney are necessary to convey real
rights over immovable properties.
FACTS: Case #25 Patrimonio vs. Gutierrez (G.R. No. 187769 June 4, 2014)
An agency couched in general terms comprises only acts of administration,
1. Alvin Patrimonio was the principal, while Respondent Guiterrez
even if the principal should state that he withholds no power or that the
was the agent.
agent may execute such acts as he may consider appropriate, or even though
2. Petitioner (Patrimonio) entrusted several pre-signed checks to
the agency should authorize a general and unlimited management.
answer for the expenses of their business venture, Slam Dunk, a
production outfit that produces mini shows and concerts related
FACTS:
to basketball, with the specific instruction not to fill them out
1. The alleged principal is Joy Training Center of Aurora Inc. and the
without previous notice to and approval by the petitioner.
alleged agent is the spouses Richard and Linda Johnson.
3. Without the petitioner’s knowledge and consent, Guiterrez
2. Joy Training is a non-stock, non-profit religious educational
secured a loan for Php 200,000.00 from Masarigan, a former
institution where the spouses Johnson are among the five (5)
teammate, telling the latter that petitioner needed the money to
board of trustees of the said institution.
construct his house.
3. Real properties of the institution, a Wrangler jeep, and other
4. Sometime later, he filled up the blank checks and paid Masarigan.
personal properties were sold in favor of the spouses Sally and
After the check was dishonored because the account was closed,
Yoshio Yoshizaki. Deed of Absolute Sale and a Deed of Sale of
Masarigan sought recovery and sent several demand letters, and
Motor Vehicle were executed on the same day.
filed a criminal case against petitioner. Petitioner filed a complaint
4. Reuben V. Rubio, the acting Chairperson of Joy Training filed an
for Nullity of Loan and Damages against Respondents Guiterrez
action for the Cancellation of Sales and Damages against the
and Masarigan.
spouses Yoshizaki and the spouses Johnson. Joy training alleged
that the properties were sold without the requisite authority from
RTC ruled in favor of Masarigan, finding him to be a holder in due
the Board of Directors.
course despite the specific instructions not to issue without his
5. The spouses Johnson assailed the validity of a board resolution
approval;
which granted the spouses the authority to sell its real properties.
However, it was averred that only a minority of the board,
CA affirmed and held that the check had been strictly filled out.
composed of the spouses Johnson and Alexander Abadayan,
authorized the sale through the resolution. Additionally, the
ISSUE:
Certificate of Transfer of Title states that the spouses Johnson are
 WON the Contract of Loan may be nullified because Respondent
Joy Training’s representative.
was not authorized. (YES)
6. After the presentation of their testimonial evidence, the spouses
Yoshizaki formally offered in evidence photocopies of the
RULING:
resolution and certification, among others. Joy Training objected
1. YES, Contracts of Agency may be oral, unless the law requires a
to the formal offer of the photocopied resolution and certification
specific form.
on the ground that they were not the best evidence of their
2. Under ARTICLE 1878, a special power of attorney is required: To
contents.
loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which are under
RTC: Ruled in favor of the spouses Yoshizaki. It found that Joy Training
administration.
owned the real properties. However, it held that the sale was valid
3. The provision does not state that the authority has to be in
because Joy Training authorized the spouses Johnson to sell the real
writing. As long as the mandate is express, such authority may be
properties. It recognized that there were only five actual members of
oral or written. It refers to the nature of the authorization, not its
the board of trustees; consequently, a majority of the board of trustees
form. Be that as it may, the authority must be duly established by
validly authorized the sale. It also ruled that the sale of personal
competent and convincing evidence other than the self-serving
properties was valid because they were registered in the spouses
assertion of the party claiming that such authority was verbally
Johnson's name.
given
4. Guiterrez was not authorized to borrow money in behalf of the
CA: Reversed its ruling with respect to the sale of real properties. It
petitioner. There was no showing that petitioner executed a
maintained that the present action is cognizable by the RTC because it
Special Power of Attorney, whether verbally or in writing, to
involves recovery of ownership from third parties. It also ruled that the
borrow money in his behalf.
resolution is void because it was not approved by a majority of the
5. Masarigan was thus bound by the risk accompanying his trust on
board of trustees. The CA did not also give any probative value to the
the mere assurances of Gutierrez. While there may be a meeting
certification. It stated that the certification failed to indicate the date
of the minds between Gutierrez and Marasigan, such agreement
and the names of the trustees present in the meeting. Moreover, the
cannot bind the petitioner whose consent was not obtained and
spouses Yoshizaki did not present the minutes that would prove that
who was not privy to the loan agreement. Hence, only Gutierrez is
the certification had been issued pursuant to a board resolution. The
bound by the contract of loan.
CA also denied the spouses Yoshizaki's motion for reconsideration,
prompting Sally to file the present petition.

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AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
ISSUE:
 Whether or not there was a contract of agency to sell the real
properties between Joy Training and the spouses Johnson. (NO)
RULING:
1. No. There is no contract of agency between Joy Training and the
spouses Johnson to sell the parcel of land with its improvements.
2. Article 1868 of the Civil Code defines a contract of agency as a
contract whereby a person "binds himself to render some service
or to do something in representation or on behalf of another,
with the consent or authority of the latter."
3. It may be express, or implied from the acts of the principal, from
his silence or lack of action, or his failure to repudiate the agency,
knowing that another person is acting on his behalf without
authority.
4. The special power of attorney mandated by law must be one that
expressly mentions a sale or that includes a sale as a necessary
ingredient of the authorized act. A special power of attorney must
express the powers of the agent in clear and unmistakable
language for the principal to confer the right upon an agent to sell
real estate.
5. The documents presented by the spouses Johnson did not
convince the Court the existence of the contract of agency to sell.
6. It merely gave them the representative capacity in land
registration.
7. Moreover, the certification presented by the spouses Johnson is a
mere general power of attorney which comprises all of Joy
Training's business.
Case #27 Sps. Alcantara vs. Nido (G.R. No. 165133, April 19, 2010)
DOCTRINE: Art. 1874 provides that when a sale of a piece of land or any
interest therein is through an agent, the authority of the latter shall be in
writing; otherwise, the sale shall be void.
FACTS:
1. The principal is Revelen N. Srivastava and the agent if Brigida L .
Nido.
2. Revelen, who is respondent’s daughter and of legal age, is the
owner of an unregistered land with an area of 1,939 square
meters located in Cardona, Rizal for which 200 meters portion
was sold to the spouses Alcantara.
3. Petitioners (Sps. Alcantara) paid P3,000 as down payment and the
balance was payable on installment and occupied additional 150
square meters of the lot.
4. Petitioners had already paid 17,500 before they defaulted on their
installment payments.
5. The respondent acting as administrator and attorney-in-fact of
Revelen, filed a complaint for recovery of possession with
damages and prayer for preliminary injunction against petitioners
with the RTC.
RTC: Revelen owns the lot and respondent was verbally authorized to
sell 200 square meters to petitioners. The RTC ruled that since
respondents authority to sell the land was not in writing, the sale was
void under Article 1876 of the Civil Code. The RTC ruled that rescission
is the proper remedy.
CA: The appellate court reversed the RTC decision and dismissed the
civil case. The appellate court explained that this is an unlawful
detainer case. The prayer in the complaint and amended complaint was
for recovery of possession and the case was filed within one year from
the last demand letter. Even if the complaint involves a question of
ownership, it does not deprive the Municipal Trial Court (MTC) of its
jurisdiction over the ejectment case. Petitioners raised the issue of lack
of jurisdiction in their Motion to Dismiss and Answer before the RTC.
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The RTC denied the Motion to Dismiss and assumed jurisdiction over
the case because the issues pertain to a determination of the real
agreement between the parties and rescission of the contract to sell
the property.
The appellate court also held that respondent, as Revelens agent, did
not have a written authority to enter into such contract of sale; hence,
the contract entered into between petitioners and respondent is void.
A void contract creates no rights or obligations or any juridical relations.
Therefore, the void contract cannot be the subject of rescission.
ISSUE:
 Whether or not the appellate court gravely erred in ruling that the
contract entered into by respondent, in representation of her
daughter, and former defendant Eduardo Rubi (deceased), is void.
(NO)
RULING:
1. No. Articles 1874 and 1878 of the Civil Code provide: Art. 1874.
When a sale of a piece of land or any interest therein is through
an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void.
2. Art. 1878. Special powers of attorney are necessary in the
following cases: (5) To enter into any contract by which the
ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration.
3. Article 1874 of the Civil Code explicitly requires a written
authority before an agent can sell an immovable property. Based
on a review of the records, there is absolutely no proof of
respondents written authority to sell the lot to petitioners.
4. In fact, during the pre-trial conference, petitioners admitted that
at the time of the negotiation for the sale of the lot, petitioners
were of the belief that respondent was the owner of lot.
5. Petitioners only knew that Revelen was the owner of the lot
during the hearing of this case. Consequently, the sale of the lot
by respondent who did not have a written authority from Revelen
is void.
6. A void contract produces no effect either against or in favor of
anyone and cannot be ratified.
7. A special power of attorney is also necessary to enter into any
contract by which the ownership of an immovable is transmitted
or acquired for a valuable consideration. Without an authority in
writing, respondent cannot validly sell the lot to petitioners.
Hence, any sale in favor of the petitioners is void.
8. Respondent did not have the written authority to enter into a
contract to sell the lot. As the consent of Revelen, the real owner
of the lot, was not obtained in writing as required by law, no
contract was perfected. Consequently, petitioners failed to validly
acquire the lot.
Case
Doctrine: #28 Estate
According toofthe
Lino Olaguer vs.
provisions of Ongjoco (G.R.ofNo.
Article 1874 the173312,
Civil Code on
Agency, when the sale of a pieceAugustof26, 2008)
land or any interest therein is made
through an agent, the authority of the latter shall be in writing. Absent this
requirement, the sale shall be void. Also, under Article 1878, a special power
of attorney is necessary in order for an agent to enter into a contract by
which the ownership of an immovable property is transmitted or acquired,
either gratuitously or for a valuable consideration.
FACTS:
1. The principal is Lino Olaguer and the agents are Olivia P. Olaguer
and Eduardo Olaguer.
2. The plaintiffs are the legitimate children of the spouses Olaguer.
Lino Olaguer died so Special Proceedings for probate of will was
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
filed and defendant Olivia P. Olaguer was appointed as
administrator pursuant to the will.
3. In the order of the probate court some properties of the estate
were authorized to be sold to pay obligations of the estate. A
subdivision agreement was entered into among Domingo
Candelaria, Olivia P. Olaguer, Domingo O. de la Torre and Emiliano
M. [Ongjoco]. Jose A. Olaguer claiming to be the attorney-in-fact
of his son Virgilio Olaguer under a general power of attorney,
those lot sold to defendant Emiliano M. Ongjoco. Thus, they filed
an action for the Annulment of Sales of Real Property and/or
Cancellation of Titles by the CFI of Albay.
4. An Amended Complaint was filed in order to implead respondent
Emiliano M. Ongjoco as the transferee of Virgilio Olaguer. In his
Answer with Counterclaim and Motion to Dismiss, respondent
Ongjoco denied the material allegations of the amended
complaint and interposed, as affirmative defenses the statute of
limitations, that he was a buyer in good faith, that plaintiffs had
no cause of action against him, and that the sale of property to
Pastor Bacani, from whom Ongjoco derived his title, was judicially
approved.
5. Plaintiffs filed a Re-Amended Complaint, in which the heirs of
Estanislao Olaguer were identified, namely, Maria Juan Vda. de
Olaguer, Peter Olaguer, Yolanda Olaguer and Antonio Bong
Olaguer.
6. The heirs of Estanislao Olaguer and petitioner Ma. Linda Olaguer
Montayre submitted a compromise agreement, which was
approved by the trial court. The RTC ruled in favor of the
plaintiffs. Both the petitioners and respondent filed their
respective Notices of Appeal to the CA.
RTC Ruling: The entirety of the evidence adduced clearly show that the
sale of the 12 lots to Pastor Bacani and the sale of the 10 lots to
Estanislao Olaguer were absolutely simulated sales and thus void ab
initio. The two deeds of sales are even worse than fictitious, they are
completely null and void for lack of consideration and the parties
therein never intended to be bound by the terms thereof and the
action or defense for the declaration of their inexistence does not
prescribe. (Art. 1410, Civil Code) Aside from being simulated they were
clearly and unequivocally intended to deprive the compulsory heirs of
their legitime.
The deeds of sale are void ab initio, they are deemed as non-existent
and the approval thereof by the probate court becomes immaterial and
of no consequence, because the approval by the probate court did not
change the character of the sale from void to valid.
CA Ruling - In denying the appeal interposed by petitioners, the
appellate court reasoned that the claim for the value of the lots
mortgaged with the PNB were not prayed for in the original Complaint,
the Amended Complaint or even in the Re-Amended Complaint. What
was sought therein was merely the declaration of the nullity of the
mortgage contract with PNB. As the relief prayed for in the appeal was
not contained in the complaint, the same was thus barred.
The Court of Appeals also ruled that the evidence of petitioners failed
to rebut the presumption that PNB was a mortgagee in good faith.
Contrarily, what was proven was the fact that Olivia Olaguer and Jose A.
Olaguer were the persons responsible for the fraudulent transactions
involving the questioned properties. Thus, the claim for restitution of
the value of the mortgaged properties should be made against them.
As regards the appeal of respondent Ongjoco, the appellate court
found the same to be meritorious. The said court ruled that when the
sale of real property is made through an agent, the buyer need not
investigate the principals title. What the law merely requires for the
validity of the sale is that the agents authority be in writing.
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Furthermore, the evidence adduced by petitioners was ruled to be
inadequate to support the conclusion that Ongjoco knew of facts
indicative of the defect in the title of Olivia Olaguer or Virgilio Olaguer.
ISSUE: WON respondent Ongjoco can be considered an innocent purchaser
for value.
RULING:
1. The court hold that respondent Emiliano M. Ongjoco was in bad
faith when he bought Lots Nos. 1 and 2 from Jose A. Olaguer, as
the latter was not proven to be duly authorized to sell the said
properties. However, respondent Ongjoco was an innocent
purchaser for value with regard to Lots Nos. 76-D, 76-E, 76-F and
76-G since it was entirely proper for him to rely on the duly
notarized written power of attorney executed in favor of Jose A.
Olaguer.
2. According to the provisions of Article 1874 of the Civil Code on
Agency, when the sale of a piece of land or any interest therein is
made through an agent, the authority of the latter shall be in
writing. Absent this requirement, the sale shall be void. Also,
under Article 1878, a special power of attorney is necessary in
order for an agent to enter into a contract by which the
ownership of an immovable property is transmitted or acquired,
either gratuitously or for a valuable consideration. The court
noted that the resolution of this case, therefore, hinges on the
existence of the written power of attorney upon which
respondent Ongjoco bases his good faith.
3. Unfortunately for respondent, the power of attorney that was
purportedly issued by Virgilio in favor of Jose Olaguer with respect
to the sale of Lots Nos. 1 and 2 was never presented to the trial
court. Neither was respondent able to explain the omission. Other
than the self-serving statement of respondent, no evidence was
offered at all to prove the alleged written power of attorney. This
of course was fatal to his case. As it stands, there is no written
power of attorney to speak of. The trial court was thus correct in
disregarding the claim of its existence. Accordingly, respondent
Ongjocos claim of good faith in the sale of Lots Nos. 1 and 2 has
no leg to stand on.
4. As regards Lots Nos. 76-D, 76-E, 76-F and 76-G, Ongjoco was able
to present a general power of attorney that was executed by
Virgilio Olaguer. While the law requires a special power of
attorney, the general power of attorney was sufficient in this case,
as Jose A. Olaguer was expressly empowered to sell any of
Virgilios properties; and to sign, execute, acknowledge and deliver
any agreement therefor. Even if a document is designated as a
general power of attorney, the requirement of a special power of
attorney is met if there is a clear mandate from the principal
specifically authorizing the performance of the act. The special
power of attorney can be included in the general power when the
act or transaction for which the special power is required is
specified therein.
5. On its face, the written power of attorney contained the signature
of Virgilio Olaguer and was duly notarized. As such, the same is
considered a public document and it has in its favor the
presumption of authenticity and due execution, which can only be
contradicted by clear and convincing evidence.
6. No evidence was presented to overcome the presumption in favor
of the duly notarized power of attorney. Neither was there a
showing of any circumstance involving the said document that
would arouse the suspicion of respondent and spur him to inquire
beyond its four corners, in the exercise of that reasonable degree
of prudence required of a man in a similar situation.
7. The court therefore rule that respondent Ongjoco had every right
to rely on the power of attorney in entering into the contracts of
sale of Lots Nos. 76-D to 76-G with Jose A. Olaguer.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
Case #29 Wee vs. Castro (G.R. No. 176405 August 20, 2008)
DOCTRINE: A power of attorney is an instrument in writing by which one
person, as principal, appoints another as his agent and confers upon him the
authority to perform certain specified acts or kinds of acts on behalf of the
principal.
DOCTRINE: When a sale of a piece of land or any interest therein is through
an agent, the authority of the latter shall be in writing; otherwise, the sale
FACTS:
shall be void (Art. 1874).
1. Respondents alleged that they are the registered owners of the
subject property, a two-storey building erected on a parcel of land
FACTS:
registered in the Registry of Deeds of Pangasinan.
1.
2. Both parties agreed that effective 1 October 2001, the rental
payment shall be increased from P9,000.00 to P15,000.00.
Petitioner failed to pay the increase on rent.
3. The rental dispute was brought to the Lupon Tagapagpamayapa
of Poblacion, Alaminos, Pangasinan, in an attempt to amicably
settle the matter but the parties failed to reach an agreement,
resulting in the issuance by the Barangay Lupon of a Certification
to file action in court.
4. Respondents George de Castro, together with his siblings and co-
owners, Annie de Castro, Felomina Peaches de Castro Uban and
Jesus de Castro, filed the Complaint for ejectment before the
MTC.
5. Although the Complaint stated that it was being filed by all of the
respondents, the Verification and the Certificate of Non-Forum
Shopping were signed by George de Castro alone. He
subsequently attached the Special Powers of Attorney (SPAs)
executed by his sisters Annie and Felomina, authorizing him to
institute the ejectment case against petitioner.
6. Petitioner defended that there was no agreement between the
parties to increase the rents demand for an increase was
exorbitant, and he was religiously paying P9,000.00 every month.
7. Petitioner said that respondents failed to comply with the
jurisdictional requirement of conciliation before the Barangay
Lupon prior to the filing before the courts. Also, he asserted that
MTC lacked jurisdiction over the ejectment suit, since resps'
Complaint was devoid of any allegation that there was an
"unlawful withholding" of the subject property by the petitioner.
MTC: Judgment is rendered ordering the dismissal of the case for
failure to comply with the prior conciliation requirement before the
Barangay Lupon, with costs against respondents.
RTC: Affirmed MTC’s decision in toto.
CA: Granted the respondents' Petition and ordering petitioner to vacate
the subject property and turn over the same to respondents.
ISSUE/S: WON respondent George de Castro cannot maintain an action for
ejectment for failure to attach the SPAs on the Complaint.
RULING:
1. Failure by respondent George de Castro to attach the said SPAs to
the Complaint is innocuous, since it is undisputed that he was
granted by his sisters the authority to file the action for ejectment
against petitioner prior to the institution of Civil Case No. 1990.
2. A power of attorney is an instrument in writing by which one
person, as principal, appoints another as his agent and confers
upon him the authority to perform certain specified acts or kinds
of acts on behalf of the principal. The written authorization itself
is the power of attorney, and this is clearly indicated by the fact
that it has also been called a "letter of attorney.”
3. Even then, the Court views the SPAs as mere surplusage, such that
the lack thereof does not in any way affect the validity of the
action for ejectment instituted by respondent George de Castro.
This also disposes of petitioner's contention that respondent
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George de Castro lacked the authority to sign the Verification and
the Certificate of Non-Forum Shopping.
Case #30 Oesmer vs. Paraiso Development Corporation (G.R.
No.
Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and
Enriqueta, all surnamed Oesmer, together with Adolfo Oesmer
(Adolfo) and Jesus Oesmer (Jesus), are brothers and sisters, and
the co-owners of undivided shares of two parcels of agricultural
and tenanted land situated in Barangay Ulong Tubig, Carmona,
Cavite, identified as Lot 720 and Lot 834 with a total land area of
55,276 sq. m.
2. Both lots are unregistered and originally owned by their parents,
Bibiano Oesmer and Encarnacion Durumpili, who declared the lots
for taxation purposes.
3. When the spouses Oesmer died, petitioners, together with Adolfo
and Jesus, acquired the lots as heirs of the former by right of
succession.
4. Respondent Paraiso Development Corporation is known to be
engaged in the real estate business.
5. Sometime in March 1989, Rogelio Paular, a resident and former
Municipal Secretary of Carmona, Cavite, brought along petitioner
Ernesto to meet with a certain Sotero Lee, President of
respondent Paraiso Development Corporation, at Otani Hotel in
Manila.
6. The said meeting was for the purpose of brokering the sale of
petitioners’ properties to respondent corporation.
7. Pursuant to the said meeting, a Contract to Sell was drafted by
the Executive Assistant of Sotero Lee, Inocencia Almo. On 1 April
1989, petitioners Ernesto and Enriqueta signed the aforesaid
Contract to Sell. A check in the amount of ₱100,000.00, payable to
Ernesto, was given as option money. Sometime thereafter,
Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said
Contract to Sell. However, two of the brothers, Adolfo and Jesus,
did not sign the document.
8. On 5 April 1989, a duplicate copy of the instrument was returned
to respondent corporation. On 21 April 1989, respondent brought
the same to a notary public for notarization.
9. In a letter dated 1 November 1989, addressed to respondent
corporation, petitioners informed the former of their intention to
rescind the Contract to Sell and to return the amount of
₱100,000.00 given by respondent as option money.
10. Respondent did not respond to the aforesaid letter. On 30 May
1991, herein petitioners, together with Adolfo and Jesus, filed a
Complaint for Declaration of Nullity or for Annulment of Option
Agreement or Contract to Sell with Damages before the RTC of
Bacoor, Cavite.
11. During trial, petitioner Rizalino died. Upon motion of petitioners,
the trial court issued an Order, dated 16 September 1992, to the
effect that the deceased petitioner be substituted by his surviving
spouse, Josefina O. Oesmer, and his children, Rolando O. Oesmer
and Fernando O. Oesmer. However, the name of Rizalino was
retained in the title of the case both in the RTC and the Court of
Appeals.
MTC: In favor of respondent. The assailed Contract to Sell is valid and
binding only to co-owner Ernesto Durumpili Oesmer. The latter is
hereby ordered to execute the Contract of Absolute Sale concerning his
1/8 share over the subject two parcels of land in favor of respondent,
and to pay the latter the attorney’s fees in the sum of ₱10,000.00 plus
costs of suit.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
RTC: Modified in favor of respondent. The assailed Contract to Sell is
valid and binding with respect to the undivided proportionate share of
the 6 signatories of this document, namely, Ernesto, Enriqueta, Librado,
Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The latter are
hereby ordered to execute the Deed of Absolute Sale concerning their
6/8 share over the subject two parcels of land and in favor of
respondent, and to pay the latter the attorney’s fees in the sum of
₱10,000.00 plus costs of suit.
CA: Modified in favor of respondent. Aside from the RTC decision,
respondent is likewise ordered to tender payment to the petitioners in
the amount of ₱3,216,560.00 representing the balance of the purchase
price of the subject two parcels of land.
ISSUE: WON the Contract to Sell is valid and binding among the five
petitioners despite lack of authority given to petitioner Ernesto as agent.
RULING:
1. As can be clearly gleaned from the contract itself, it is not only
petitioner Ernesto who signed the said Contract to Sell; the other
five petitioners also personally affixed their signatures thereon.
Therefore, a written authority is no longer necessary in order to
sell their shares in the subject parcels of land because, by affixing
their signatures on the Contract to Sell, they were not selling their
shares through an agent but, rather, they were selling the same
directly and in their own right.
2. It is well-settled that contracts are perfected by mere consent,
upon the acceptance by the offeree of the offer made by the
offeror. From that moment, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all
the consequences which, according to their nature, may be in
keeping with good faith, usage and law.
3. To produce a contract, the acceptance must not qualify the terms
of the offer. However, the acceptance may be express or implied.
For a contract to arise, the acceptance must be made known to
the offeror. Accordingly, the acceptance can be withdrawn or
revoked before it is made known to the offeror.
4. In the case at bar, the Contract to Sell was perfected when the
petitioners consented to the sale to the respondent of their
shares in the subject parcels of land by affixing their signatures on
the said contract. Such signatures show their acceptance of what
has been stipulated in the Contract to Sell and such acceptance
was made known to respondent corporation when the duplicate
copy of the Contract to Sell was returned to the latter bearing
petitioners’ signatures.
Case #31 Regina Dizon, et al. vs. CA (G.R. No. 122544, 28 January
DOCTRINE: When the sale of a piece of land or any interest thereon is
2003)
through an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void. A special power of attorney is necessary to enter into
any contract by which the ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable consideration.
FACTS:
1. There were 2 consolidated cases (G.R. No. 122544 and G.R. No.
124741) in which both cases involved the same parties: Regina P.
Dizon, Amparo D. Bartolome, Fidelina D. Balza, Ester Abad Dizon
and Joseph Anthony Dizon, Raymund A. Dizon, Gerard A. Dizon
And Jose A. Dizon, Jr. as Petitioners, and Court Of Appeals, Hon.
Maximiano C. Asuncion And Overland Express Lines, Inc. as
Respondents.
2. Private respondent filed a Motion for Reconsideration, Second
Motion for Reconsideration, and Motion to Suspend Procedural
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Rules in the Higher Interest of Substantial Justice, all of which
have been denied by SC after 1999.
3. The following facts were derived from the 1999 SC Decision (since
the 2003 SC Decision is already a Resolution):
Overland Express Lines, Inc. entered into a Contract of Lease with
Option to Buy with petitioners involving a 1,755.80 square meter
parcel of land situated at corner MacArthur Highway and South
“H” Street, Diliman, Quezon City. The term of the lease was for 1
year commencing from May 16, 1974 up to May 15, 1975. During
this period, Overland Express Lines was granted an option to
purchase for the amount of P3,000.00 per square meter.
Thereafter, the lease shall be on a per month basis with a monthly
rental of P3,000.00.
For failure of Overland Express Lines to pay the increased rental of
P8,000.00 per month effective June 1976, petitioners filed an
action for ejectment against it. The lower court rendered
judgment ordering Overland Express Lines to vacate the leased
premises and to pay the sum of P624,000.00 representing rentals
in arrears and/or as damages in the form of reasonable
compensation for the use and occupation of the premises during
the period of illegal detainer from June 1976 to November 1982
at the monthly rental of P8,000.00, less payments made, plus 12%
interest per annum from November 18, 1976, the date of filing of
the complaint, until fully paid, the sum of P8,000.00 a month
starting December 1982, until Overland Express Lines fully vacates
the premises, and to pay P20,000.00 as and by way of attorney’s
fees.
City Court (now Metropolitan TC) on 01/28/1999 Decision:
Rendered judgment ordering private respondent to vacate the
leased premises and pay for the rentals in arrears.
RTC: on 01/28/1999 Decision: Dismissed private respondent's
complaint.
CA: on 01/28/1999 Decision: Upheld the jurisdiction of the City
Court of Quezon City in the ejectment case. It also concluded that
there was a perfected contract of sale between the parties on the
leased premises and that pursuant to the option to buy
agreement, private respondent had acquired the rights of a
vendee in a contract of sale.
SC: Decision on 01/28/1999: Both petitions are granted, reversing
CA’s decision.
ISSUE: WON Alice Dizon was authorized to receive the sum of ₱300,000.00
on behalf of petitioners.
RULING:
1. It necessarily follows, therefore, that petitioners cannot be
deemed to have received partial payment of the supposed
purchase price for the land through Alice Dizon. It cannot even be
said that Alice Dizon’s acceptance of the money bound at least
the share of Fidela Dizon, in the absence of a written power of
attorney from the latter. It should be borne in mind that the
Receipt dated June 20, 1975, while made out in the name of
Fidela Dizon, was signed by Alice Dizon alone.
2. When the sale of a piece of land or any interest thereon is
through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void. Thus the authority of an agent to
execute a contract for the sale of real estate must be conferred in
writing and must give him specific authority, either to conduct the
general business of the principal or to execute a binding contract
containing terms and conditions which are in the contract he did
execute.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
3. A special power of attorney is necessary to enter into any contract
by which the ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable consideration.
4. The express mandate required by law to enable an appointee of
an agency (couched) in general terms to sell must be one that
expressly mentions a sale or that includes a sale as a necessary
ingredient of the act mentioned.
5. For the principal to confer the right upon an agent to sell real
estate, a power of attorney must so express the powers of the
agent in clear and unmistakable language. When there is any
reasonable doubt that the language so used conveys such power,
no such construction shall be given the document.
Case #32 Citylite Realty Corporation vs. CA (G.R. No. 138639.
DOCTRINE: When the sale ofFebruary
a piece10,
of 2000)
land or any interest therein is
through an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void.
FACTS:
1. F.P. Holdings and Realty Corporation engaged the assistance of
Metro Drug through Meldin Al G. Roy in selling a parcel of land
known as the “Violago Property” or the “San Lorenzo Ruiz
Commercial Center”
2. City-Lite conveyed its interest to purchase initially a ½ portion of
the front lot of the property but later on agreed to buy its
entirety.
3. City-Lite’s officers and Atty. Mamaril later met with Roy and
reached an agreement and Roy agreed to sell the property to City-
Lite provided that the latter submit its acceptance in writing to
the terms and conditions of the sale.
4. However, F.P Holdings refused to execute the corresponding deed
of sale in favor of City-Lite; City-Lite registered an adverse claim to
the title of the property
5. Property was later transferred to VIEWMASTER CONSTRUCTION
CORP; City-Lite filed a complaint for specific performance and
damages
RTC ordered to F.P. Holdings to execute a deed of sale of the
property in favor of City-Lite plus damages;
CA reversed the decision
ISSUE: WON a contract of sale was perfected between City-Lite and F.P.
Holdings through its agent Meldin Al G. Roy
RULING:
1. No. Art 1874 of the Civil Code provides: “When the sale of a piece
of land or any interest therein is through an agent, the authority
of the latter shall be in writing; otherwise, the sale shall be void.”
2. The absence of authority to sell can be determined from the
written memorandum issued by respondent F.P. Holdings’
President requesting Metro Drug’s assistance in referring to them
buyers for the property.
3. This meant that Meldin Al G. Roy and/or Metro Drug was only to
assist F.P. Holdings in looking for buyers and referring them to
possible prospects who they were supposed to endorse. They
were only contact person with no authority to conclude a sale of
the property.
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Case #33 Woodchild Holdings, Inc. vs. Roxas Electric and
Construction Co., Inc. (G.R. No. 140667. August 12, 2004)
DOCTRINE: Contracts entered into by corporate officers beyond the scope of
authority are unenforceable against the corporation unless ratified by the
corporation.
FACTS:
1. Roxas Electric and Construction Company, Inc (RECCI), through its
Board of Directors approved a resolution authorizing the
corporation, through its president, Roberto B. Roxas, to sell the
lots, at a price and under such terms and conditions which he
deemed most reasonable and advantageous to the corporation;
and to execute, sign and deliver pertinent sales documents and
receive the proceeds of the sale for and on behalf of the
company.
2. Woodchild Holdings, Inc. (WHI) bought said property and entered
into an agreement with Roxas granting them beneficial use of and
option to buy an adjacent property to be used as egress from and
ingress to the subject property
3. WHI filed a complaint for specific performance and damages
against RECCI but RECCI posits that it did not authorize Roxas to
impose a burden or to grant a right of way in favor of petitioner,
nor convey a portion thereof
RTC ruled in favor of WHI; CA reversed the decision
ISSUE: WON the respondent is bound by the provisions in the deed of
absolute sale granting the petitioner WHITE beneficial use and a right of way
over a portion of Lot accessing to the Sumulong Hwy and granting the option
to the petitioner to buy a portion thereof, and, if so, whether such
agreement is enforceable against the respondent.
HELD:
1. No. Generally, the acts of the corporate officers within the scope
of their authority are binding on the corporation. However, under
Art 1910, acts done by such officers beyond the scope of their
authority cannot bind the corporation unless it has ratified such
acts expressly or tacitly, or is estopped from denying them.
2. Roxas was not specifically authorized under the board resolution
to grant a right of way in favor of the petitioner or to agree to sell
a portion of the adjacent property.
3. There can be no apparent authority of an agent without acts or
conduct on the part of the principal and such acts or conduct of
the principal must have been known and relied upon in good faith
and as a result of the exercise of reasonable prudence by a third
person as claimaint and such must have produced a change of
position to its detriment.
4. For the principle of apparent authority to apply, the petitioner
was burdened to prove the following: (a) the acts of the
respondent justifying belief in the agency by the petitioner; (b)
knowledge thereof by the respondent is sought to be held; and,
(c) reliance thereon by the petitioner consistent with ordinary
care and prudence.
FACTS:
Case #34 Shopper’s Paradise Realty and Development
1. Petitioner
CorporationSPRDC, represented
vs. Efren Roque (G.R.by
No.its president,
148775. JanuaryVeredigno
Atienza, entered into a twenty-five year lease with Dr. Filepe C.
Roque over a parcel of land in Roque’s name and simultaneously
entered into a memorandum of agreement for the construction,
development and operation of a commercial building complex on
the properlty
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
2. The contract of lease and the MOA, both notarized, were not
annotated on the Certificate of title because of the death of
Roque.
3. The petitioner was constrained to deal with respondent Efren
Roque, one of the surviving sons of Dr. Roque, who later filed a
case for annulment of the contract of lease and the MOA, with a
prayer for the issuance of a preliminary injunction, alleging that
he had long been the absolute owner of the subject property by
virtue of a deed of donation inter vivos executed in his favor
which, nevertheless, was not registered.
RTC ruled in favor of petitioner and ordered respondent Efren
Roque to surrender TCT No. 109754 to the Register of Deeds of
QC for the annotation of the questioned Contract of Lease and
MOA;
CA reversed the decision holding to be invalid the Contract of
Lease and MOA
ISSUE: WON Dr. Roque had been an authorized agent of respondent, and if
so, whether the COL and MOA were valid.
RULING:
1. No. It was not shown that Dr. Roque had been an authorized
agent of respondent.
2. Art. 1878 expresses that a special power of attorney is necessary
to lease any real property to another person for more than one
year. The lease of real property for more than one year is
considered not merely an act of administration but an act of strict
dominion or of ownership. An SPA is thus necessary for its
execution.
3. Testimonial evidence showed that petitioner had prior knowledge
of the status of said property.
4. The non-registration of the deed of donation did not affect its
validity. Donation results in an effective transfer of title over the
property from the donor to the done. However, the law provides
that it must be registered in the registry of Property in order to
bind third persons. Knowledge of the third person of that prior
unregistered interest would have the effect of registration as
regards to him.
PARTIES:Case #35 Veloso vs. CA (G.R. No. 102737. August 21, 1996)
Petitioner = principal; his wife = agent with General PA including SPA to sell;
Respondent = third party who bought the lot from the agent
FACTS:
1. Petitioner Veloso was the owner of a parcel of land whose title
was canceled. A new one was issued in the name of respondent
Escario. The transfer of property was supported by a General
Power of Attorney and Deed of Absolute Sale executed by wife of
the petitioner (appearing as his attorney-in-fact), and defendant
Escario.
2. Veloso alleged that he was the absolute owner of the subject
property and he never authorized anybody, not even his wife, to
sell it. He denied having executed the power of attorney and
alleged that his signature was falsified.
3. Respondent in her answer alleged that she was a buyer in good
faith and denied any knowledge of the alleged irregularity. She
allegedly relied on the general power of attorney of petitioner’s
wife which was sufficient in form and substance and was duly
notarized.
RTC – in favor of respondent. Adjudged the lawful owner of the
property as she was deemed an innocent purchaser for value. The
assailed general power of attorney was held to be valid and
sufficient for the purpose. The trial court ruled that there was no
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need for an SPA when the special power was already mentioned
in the general one. It also declared that plaintiff failed to
substantiate his allegation of fraud.
CA affirmed in toto. Hence, petition for review.
ISSUES:
1. (Agency-related issue) Whether there is a need to execute a
separate and special power of attorney to sell the subject land.
2. (In case Atty asks) Whether respondent is a buyer in good faith
RULING:
1. No. Whether the instrument be denominated as general power of
attorney or special power of attorney, what matters is the extent
of the power or powers contemplated upon the agent or attorney
in fact. If the power is couched in general terms, then such power
cannot go beyond acts of administration. However, where the
power to sell is specific, it not being merely implied, much less
couched in general terms, there cannot be any doubt that the
attorney in fact may execute a valid sale.
While it is true that it was denominated as a general power of
attorney, a perusal thereof revealed that it stated an authority to
sell. Thus, there was no need to execute a separate and special
power of attorney since the general power of attorney had
expressly authorized the agent or attorney in fact the power to
sell the subject property. The special power of attorney can be
included in the general power when it is specified therein the act
or transaction for which the special power is required.
2. Yes. It has been consistently held that a purchaser in good faith is
one who buys property of another, without notice that some
other person has a right to, or interest in such property and pays a
full and fair price for the same, at the time of such purchase, or
before he has notice of the claim or interest of some other person
in the property.
Respondent was an innocent purchaser for value. The questioned
power of attorney and deed of sale, were notarized and
therefore, presumed to be valid and duly executed. Respondent
Aglaloma relied on the power of attorney presented by
petitioners wife, Irma. Being the wife of the owner and having
with her the title of the property, there was no reason for the
private respondent not to believe in her authority. Moreover, the
power of attorney was notarized and as such, carried with it the
presumption of its due execution.
Case #36 Sargasso Construction & Development Corp., et al., vs.
PARTIES:
PPA General
Respondent = principal; (G.R. No.Manager
170530. Dayan
July 5,=2010)
agent; Petitioner = third
party
FACTS:
1. Petitioner, a joint venture, was awarded the construction of R.C.
Pier 2 after a public bidding conducted by the defendant PPA.
Petitioner offered to undertake the reclamation between the
Timber Pier and Pier 2 of the Port of San Fernando, La Union, as
an extra work to its existing construction of R.C. Pier 2.
Respondent replied with a counteroffer.
2. A Notice of Award signed by PPA General Manager Dayan was
sent to petitioner for the phase I Reclamation Contract and
instructing it to enter into and execute the contract agreement
with PPA. Hence, then General Manager Agustin presented for
consideration by the PPA Board of Directors the contract proposal
for the reclamation project.
3. PPA did not formally advise the petitioner of the Boards action on
their contract proposal. As petitioner learned that the Board was
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
not inclined to favor its Supplemental Agreement, Petitioner
wrote General Manager Agustin requesting that the same be
presented again to the Board meeting for approval. However, no
reply was received by petitioner from respondent.
RTC - Petitioner filed a complaint for specific performance and
damages. Respondent PPA thru the Office of the Government
Corporate Counsel filed its Answer contending that the alleged
Notice of Award has already been properly revoked when the
Supplemental Agreement which should have implemented the
award was denied approval by defendants Board of Directors. RTC
in favor of petitioner - in the case of the PPA, the power to enter
into contracts is not only vested on the Board of Directors, but
also to the manager.
CA – reversed – In the execution of contracts, the general
manager only exercised a delegated power, in reference to which,
evidence was wanting that the PPA Board delegated to its general
manager the authority to enter into a supplementary contract for
the reclamation project.
Hence, this petition. Petitioner insists that the Notice of Award
itself already embodies a perfected contract having passed the
negotiation stage despite the clear absence thereon of a condition
requiring the prior approval of respondents higher authority.
ISSUE: WON PPA’s General Manager Dayan had the power to enter into a
contract with petitioner’s
RULING:
1. No. A government contract is perfected only upon approval by a
competent authority, where such approval is required. The
contracting official who gives his consent as to the subject matter
and the consideration ought to be empowered legally to bind the
Government and that his actuations in a particular contractual
undertaking on behalf of the government come within the ambit
of his authority. On top of that, the approval of the contract by a
higher authority is usually required by law or administrative
regulation as a requisite for its perfection.
2. P.D. 857 states that one of the corporate powers of respondents
Board of Directors is to reclaim any part of the lands vested in the
Authority. It also exercises all the powers of a corporation under
the Corporation Law. On the other hand, the law merely vests the
general manager the general power to sign contracts and to
perform such other duties as the Board may assign Therefore,
unless respondents Board validly authorizes its general manager,
the latter cannot bind respondent PPA to a contract.
3. The petitioner failed to prove that the respondent’s general
manager possessed such actual authority delegated either by the
Board of Directors, or by statutory provision. The authority of
government officials to represent the government in any contract
must proceed from an express provision of law or valid delegation
of authority. Without such actual authority being possessed by
PPAs general manager, there could be no real consent, much less
a perfected contract, to speak of.
Case #37 Professional Services, Inc. vs. CA (G.R. No. 126297, 11
PARTIES: Petitioner = principal; Dr. Ampil = agent; third party = private
February 2008)
respondent
FACTS:
1. RTC - Respondent alleged that PSI, Dr. Ampil, Medical City
Hospital, and Dr. Fuentes are liable for negligence for leaving two
pieces of gauze inside Natividad’s body and malpractice for
concealing their acts of negligence.
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2. RTC – in favor of respondent, Petitioner with others solidarily
liable
3. CA affirmed with modifications
4. PSI alleged in its petition with SC that the CA erred in holding that:
(1) it is estopped from raising the defense that Dr. Ampil is not its
employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not
entitled to its counterclaim against the Aganas. PSI contends that
Dr. Ampil is not its employee, but a mere consultant or
independent contractor. As such, he alone should answer for his
negligence.
ISSUE: WON PSI Is Liable for the Negligence of Dr. Ampil
RULING:
1. Yes. Apparent authority, or "holding out" theory, or doctrine of
ostensible agency or agency by estoppel – The principal is bound
by the acts of his agent with the apparent authority which he
knowingly permits the agent to assume, or which he holds the
agent out to the public as possessing. The question in every case
is whether the principal has by his voluntary act placed the agent
in such a situation that a person of ordinary prudence, conversant
with business usages and the nature of the particular business, is
justified in presuming that such agent has authority to perform
the particular act in question.
2. In this case, PSI publicly displays in the lobby of the Medical City
Hospital the names and specializations of the physicians
associated or accredited by it, including those of Dr. Ampil and Dr.
Fuentes. It "is now estopped from passing all the blame to the
physicians whose names it proudly paraded in the public directory
leading the public to believe that it vouched for their skill and
competence." By accrediting Dr. Ampil and Dr. Fuentes and
publicly advertising their qualifications, the hospital created the
impression that they were its agents, authorized to perform
medical or surgical services for its patients. As expected, these
patients, Natividad being one of them, accepted the services on
the reasonable belief that such were being rendered by the
hospital or its employees, agents, or servants.
PARTIES:
Case #38 Cosmic Lumber vs. CA (G.R. No. 114311. November 29,
Petitioner = principal; Estrada = general
1996) manager of petitioner; agent with
SPA to file action; Respondent = third party
FACTS:
1. Petitioner through its General Manager executed an SPA
appointing Estrada as attorney-in-fact to initiate, institute and file
any court action for the ejectment of third persons and/or
squatters of certain lots.
2. Estrada instituted an action for the ejectment of respondent
Perez and recover the possession of a portion of a certain lot. The
agent entered into a Compromise Agreement with respondent:
that to buy peace respondent pays thru agent the value of the
portion occupied by respondent and that petitioner hereby
recognizes ownership and possession of the respondent by virtue
of the compromise agreement over said portion of lot.
RTC approved the compromise agreement and rendered its
decision. But the decision was not executed. Thus respondent
filed a complaint to revive the judgment.
Petitioner asserts that it was only when the summons for the
revival of judgment was served upon it that it came to know of
the compromise agreement entered into between Estrada and
respondent. Petitioner sought annulment of the decision of the
RTC before CA.
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
CA denied. Petitioner challenges this verdict. It argues that the
decision of the trial court is void because the compromise
agreement upon which it was based is void. Estrada did not
possess the authority to sell or was she armed with a Board
Resolution authorizing the sale of its property. She was merely
empowered to enter into a compromise agreement in the
recovery suit she was authorized to file against persons squatting
on subject lots.
ISSUE: WON Estrada had the power to sell the property
RULING:
1. No. For the principal to confer the right upon an agent to sell real
estate, a power of attorney must so express the powers of the
agent in clear and unmistakable language. When there is any
reasonable doubt that the language so used conveys such power,
no such construction shall be given the document.
2. Nowhere in the authorization was Estrada granted expressly or
impliedly any power to sell the subject property nor a portion
thereof. Neither can a conferment of the power to sell be validly
inferred from the specific authority "to enter into a compromise
agreement" because of the explicit limitation fixed by the grantor
that the compromise entered into shall only be "so far as it shall
protect the rights and interest of the corporation in the
aforementioned lots."
3. Here, alienation by sale of an immovable certainly cannot be
deemed protective of the right of petitioner to physically possess
the same, more so when the land was being sold for a price of
P80.00 per square meter, very much less than its assessed value
of P250.00 per square meter, and considering further that
petitioner never received the proceeds of the sale.
4. Thus, by selling to respondent Perez a portion of petitioner's land
through a compromise agreement, Estrada acted without or in
obvious authority. The sale ipso jure is consequently void. So is
the compromise agreement. This being the case, the judgment
based thereon is necessarily void.
DOCTRINE: When
Case #39 a client,Aluminum
Philippine upon becoming aware
Wheels, Inc. of
vs.the compromise
FASGI (G.R. No. and the
judgment thereon, fails 137378.
to promptly repudiate
October the action of his attorney, he
12, 2000)
cannot afterwards be heard to complain about it.
FACTS:
1. FASGI Enterprises Inc. entered into a Distributorship Arrangement
with Philippine Aluminum Wheels, Inc. ("PAWI"), and Fratelli
Pedrini Sarezzo S.P.A. an Italian corporation for the purchase,
importation and distributorship in the United States of aluminum
wheels manufactured by PAWI.
2. PAWI shipped 8,594 wheels to FASGI. Later, it was found out that
the shipment was defective and in non-compliance of
requirements.
3. FASGI filed an action against PAWI and FPS for breach of contract
and recovery of damages before the US District Court for the
Central District of California. During the pendency of the case, the
parties entered into a settlement, entitled "Transaction",
stipulating the return of the wheels after restoring to FASGI of
thepurchase price via four (4) irrevocable letters of credit
4. PAWI failed to comply and open first Letters of Credit prompting
FASGI to pursue its complaint for damages before the California
district court.
5. Parties entered into a "Supplemental Settlement Agreement”
wherein FASGI was given the right to apply immediately for entry
of Judgment as well as enforce said judgment against PAWI and
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FPS in any other country where assets of FPS or PAWI may be
located.
6. The Supplemental Settlement Agreement, as well as the motion
for the entry of judgment, was executed by FASGI president Elena
Buholzer and PAWI counsel Mr. Thomas Ready.
7. PAWI again failed to comply. This FASGI filed an entry of judgment
in the District Court of the Central District of California.
8. Unable to obtain satisfaction of the final judgment within the
United States, FASGI filed a complaint for "enforcement of foreign
judgment” before the RTC Makati.
RTC - Dismissed on the ground that the Supplemental Settlement
Agreement and motion for entry of judgment were a nullity for
having been entered into by Mr. Thomas Ready, counsel for
PAWI, without authorization.
CA - Reversed the decision of the trial court and ordered the full
enforcement of the California judgment.
ISSUE: WON Mr. Ready as counsel of PAWI was authorized to execute the
Supplemental Settlement Agreement and Motion for Entry of Judgment.
RULING:
1. Yes. Mr. Ready was authorized to execute the Supplemental
Settlement Agreement and Motion for Entry of Judgment.
2. The supplemental settlement agreement was signed on October
1980. The agreement was lodged in the California case (2) days
after the pre-trial conference held on 24 November 1980. If
agreement, PAWI failed to signified to FASGI a disclaimer that Mr.
Ready was not authorized by PAWI to enter into the supplemental
settlement.
3. The PAWI President sent a communication to FASGI that failed to
mention Mr. Ready's supposed lack of authority. In fact, the letter
confirmed the terms of the agreement more than a year after its
execution.
4. From the time the stipulation for judgment was entered into until
the certificate of finality of judgment was issued by the California
court,no notification was issued by PAWI to FASGI regarding its
termination of Mr. Ready's services.
5. When a client, upon becoming aware of the compromise and the
judgment thereon, fails to promptly repudiate the action of his
attorney, he cannot afterwards be heard to complain about it.
Case A
DOCTRINE: #40Branch
Nichimen Corporation
Office liasing (Manila
with 3rdBranch) vs. CA,
parties and CTA
receiving
(G.R. No. 139674, 06 March
compensation in its own name is considered a broker. 2002)
FACTS:
1. Petitioner Nichimen Corporation is a resident foreign corporation,
that maintains a Manila branch in dealing with its Philippine
customers.
2. Petitioner received a demand letter with an accompanying notice
assessing it for deficiency income tax, fixed tax, expanded
withholding tax, and percentage tax from the Commissioner of
Internal Revenue in the aggregate amount of P1,092,459.94.
3. Petitioner agreed to pay its deficiency income tax, expanded
withholding tax, and withholding tax on compensation amounting
to P313,953.84; however, it opposed the assessment for
deficiency percentage tax amounting to P767,531.10.
4. Petitioner filed a petition for review with the Court of Tax
Appeals, arguing it was merely liasing for its own Head Office and
was not subject to broker’s tax. Respondent countered that the
assessment for deficiency percentage tax was based on receipts
showing sales between Philippine customers and foreign
manufacturers resulting from the liaising services of petitioner
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
therefore the branch office should be considered a commercial
broker.
CTA - Court of Tax Appeals sustained the Commissioner’s
assessment of tax.
CA - Sustained the findings of CTA holding petitioner to be a
commercial broker
ISSUE: WON The Manila Branch of Nichimen Corp is a commercial broker.
RULING:
1. Yes. The Manila Branch of Nichimen Corp. is a commercial broker.
2. A broker, in general, is a middleman who acts for others, on a
commission, negotiating contracts relative to property with the
custody of which he has no concern; he is, in more ways than one,
an agent of both parties. He acts not for himself, but for a third
person, regardless of whether the fee paid to him is a fixed
amount, regular or not, or whether the act performed by him can
be performed by the principal or not.
3. Petitioner received compensations and commissions from its
home office, over and above its fixed periodical subsidy. These
represented income from import-export transactions in the
Philippines of the petitioner and others, and import-export
transactions in the Philippines of certain affiliates of the Nichimen
Corporation (Japan) and other parties.
DOCTRINE:
CaseStipulations
#41 Tan vs. involving compensation
Heirs of Antonio Yamsonand
(G.R.performance
No. 163182 of an
agent must be in writing
October 24, 2012)
FACTS:
1. Petitioners issued an Authority to Look for Buyer/Buyers in favor
of Yamson to facilitate the selling of 7 parcels of land in Mandaue
City to pay their unpaid obligations to a certain Philip Lo. This
afforded Yamson with a 5% commission on sale.
2. 2 lots were sold through Yamson to Oscar Chua. The remaining 5
lots were transferred to Lo as payment for petitioners’
outstanding obligations.
3. Petitioners refused to pay Yamson, arguing that he was not
entitled to his commission because it was petitioners themselves
who introduced him to the buyer and that the agreement was to
sell all seven lots, which he failed to accomplish.
RTC – Ruled in favor of Yamson. Task to purchase all seven lots
was not put in writing. Also, the Authority to Look for
Buyer/Buyers did not reflect any such agreement.
CA - Affirmed RTC ruling. Nothing in the Authority to Look for
Buyer/Buyers mandated Yamson to find a buyer for all seven
parcels of land of petitioners.
ISSUE: WON Yamson was entitled to the payment by petitioners of his
broker’s commission.
RULING:
1. Yes. Yamson was entitled to the payment of broker’s commission.
2. Petition must be denied as it only raises questions of fact.
3. Nowhere in Authority to Look for Buyer/Buyers is it indicated that
the sale of all seven lots was a prerequisite for the payment of
commission.
4. If petitioners’ intention was to locate a buyer for all their
properties, it should have been reduced to writing and included in
the Authority to Look for Buyer/s. Since no such stipulation
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
appears, then it is fair to conclude that the petitioners had no
such intention.
DOCTRINE: An agency relationship could exist between an agent and two or
moreCase #42 Urban
principals Bank
for the vs. Peña,
purpose et al. (G.R.
of pursuing No. 145817.
a shared goal. October
19, 2011)
Agency is presumed to be for compensation. Unless the contrary intent is
shown, a person who acts as an agent does so with the expectation of
payment according to the agreement and to the services rendered or results
effected.
FACTS:
1. Isabel Sugar Company, Inc. (ISCI). ISCI sold it’s parcel of land in
Pasay to Urban Bank, executed a Contract to Sell, whereby the
latter would pay ISCI the amount of PhP241,612,000 in
instalments for the Pasay property. Both parties agreed that the
final installment of PhP25,000,000 would be released by the bank
upon ISCI’s delivery of full and actual possession of the land, free
from any tenants( as there are tenants in the property). In the
meantime, the amount of the final instalment would be held by
the bank in escrow.
2. ISCI then instructed Peña, who was its director and corporate
secretary, to take over possession of the Pasay property against
the tenants upon the expiration of the lease. ISCI’s president, Mr.
Enrique G. Montilla III (Montilla), faxed a letter to Peña,
confirming the latter’s engagement as the corporation’s agent to
handle the eviction of the tenants from the Pasay property. The
tenants questioned Peñas authority to take over the property,
prompting a representative of ISCI to fax a letter to the bank’s
Senior Vice-President and two days latter to its President
requesting the issuance of a formal authority for Peña. Later that
same day, Peña allegedly spoke over the phone with Borlongan
(Urban Banks President) where he was asked by the latter “to
maintain possession of the Pasay property and to represent Urban
Bank in any legal action that might be instituted relative to the
property” and he was allegedly promised with 10% of the market
value of the property. Later Peña received a banks letter which
asked him to “ the said property and/or interfere with your
possession of the said property for and in our behalf.”
3. Peña was able to clear the property from tenants and spend
P3,000,000.00, hence the bank was able to take actual possession
of the property. Afterwhich, Peña demanded from Urban Bank
the 10% compensation (or P24, 000 , 0000) plus reimbursement.
Urban Bank argued that it was ICSI as the original owners,
engaged the services of Peña, and not them. Peña filed for of
agent’s compensation and expenses, damages and attorney’s fees
in RTC-Bago City in the province of Negros Occidental.
RTC: Favored Peña (awarded him PhP28,500,000)
CA: Annulled decision, ruled that no agency relationship existed
between Peña and Urban Bank, awarded compensation for P3, 000,
000)
ISSUES:
1. WON an agency relationship between Urban Bank and Peña and
ICSI.
2. WON Peña is entitled to the compensation he asked for
(PhP28,500,000).
RULING:
1. YES, an agency relationship exist between Peña and Urban Bank
and ICSI. The Civil Code expressly acknowledged instances when
two or more principals have granted a power of attorney to an
agent for a common transaction. The agency relationship
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
between an agent and two principals may even be considered
extinguished if the object or the purpose of the agency is
accomplished. In this case, Peña’s services as an agent of both ISCI
and Urban Bank were engaged for one shared purpose or
transaction, which was to deliver the property free from
unauthorized sub-tenants to the new owner – a task that Peña
was able to achieve and is entitled to receive payment for.
Both sides readily admit that it was Peña who was responsible for
clearing the property of the tenants and other occupants, and
who turned over possession of the Pasay property to petitioner-
respondent bank. When the latter received full and actual
possession of the property from him, it did not protest or refute
his authority as an agent to do so. Neither did Urban Bank contest
Peña’s occupation of the premises, or his installation of security
guards at the site, starting from the expiry of the lease until the
property was turned over to the bank, by which time it had
already been vested with ownership thereof. Furthermore, when
Peña filed the Second Injunction Complaint in the RTC-Makati City
under the name of petitioner-respondent bank, the latter did not
interpose any objection or move to dismiss the complaint on the
basis of his lack of authority to represent its interest as the owner
of the property. When he successfully negotiated with the tenants
regarding their departure from its Pasay property, still no protest
was heard from it. After possession was turned over to the bank,
the tenants accepted PhP1,500,000 from Peña, in "full and final
settlement" of their claims against Urban Bank, and not against
ISCI.
In any case, the subsequent actions of Urban Bank resulted in the
ratification of Peña’s authority as an agent acting on its behalf
with respect to the Pasay property. By ratification, even an
unauthorized act of an agent becomes an authorized act of the
principal
2. NO, Peña is not entitled to the P28, 500, 000 of compensation.
Agency is presumed to be for compensation. Unless the contrary
intent is shown, a person who acts as an agent does so with the
expectation of payment according to the agreement and to the
services rendered or results effected. But because in this case we
find no evidence that Urban Bank agreed to pay Peña a specific
amount or percentage of amount for his services, we turn to the
principle against unjust enrichment and on the basis of quantum
meruit.
A stipulation on a lawyer’s compensation in a written contract for
professional services ordinarily controls the amount of fees that
the contracting lawyer may be allowed to collect, unless the court
finds the amount to be unconscionable.In the absence of a
written contract for professional services, the attorney’s fees are
fixed on the basis of quantum meruit, i.e., the reasonable worth
of the attorney’s services. When an agent performs services for a
principal at the latter’s request, the law will normally imply a
promise on the part of the principal to pay for the reasonable
worth of those services. The intent of a principal to compensate
the agent for services performed on behalf of the former will be
inferred from the principal’s request for the agents.
DOCTRINE:CaseWhen
#43 Philippine
the agent Health-Care Providerscause”
is the “procuring vs. Estrada (G.R.
of the No.he is
sale,
entitled to compensation. 171052. January 28, 2008)
FACTS:
1. Maxicare, a a domestic corporation engaged in selling health
insurance plans engaged the services of Carmela Estrada who was
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
doing business under the name of CARA HEALTH [SERVICES] to
promote and sell the prepaid group practice health care delivery
program called MAXICARE Plan with the position of Independent
Account Executive. [Maxicare] formally appointed her as its
"General Agent." In the compensation plan, it is stipulated that
“shall pay you a commission equivalent to 15 to 18% from
individual, family, group accounts; 2.5 to 10% on tailored fit plans;
and 10% on standard plans of commissionable amount on
corporate accounts from all membership dues collected and
remitted by you.”
2. Maxicare alleged that it followed a "franchising system" in dealing
with its agents whereby an agent had to first secure permission
from Maxicare to list a prospective company as client. Estrada
alleged that it did apply with Maxicare for the MERALCO account
and other accounts, and in fact, its franchise to solicit corporate
accounts, MERALCO account included, was renewed on February
11, 1991.
3. On November 28, 1991, MERALCO eventually subscribed to the
MAXICARE Plan and signed a Service Agreement directly with
Maxicare, but on the negotiation of the terms and conditions,
Estrada was left out.
4. Estrada demanded commissions for the Meralco account and nine
others, to which Maxicare denied because Maxicare directly
negotiated with MERALCO and the other accounts,and that no
agent was given the go signal to intervene in the negotiations for
the terms and conditions and the signing of the service agreement
with MERALCO and the other accounts. Estrade field a complaint
with the RTC Makati City.
RTC: Favored Estrada (found Maxicare liable for breach of contract and
ordered it to pay actual danages)
CA: Affirmed the decision in toto said that Estrada is the "efficient
procuring cause" in the execution of the service agreement.
ISSUE: WON Estrada is entitled to commission for the execution of the
service agreement between Meralco and Maxicare and the two (2)
consecutive renewals of the service agreement.
RULING:
1. YES, Maxicare is entitled to the to commission for the execution
of the service agreement . Estrada is the “procuring cause” or the
cause originating a series of events which, without break in their
continuity, result in the accomplishment of the prime objective of
the employment of the broker—producing a purchaser ready,
willing and able to buy on the owner’s terms,in the execution of
the service agreement.
2. There is no dispute as to the role that Estrada played in selling
Maxicare’s health insurance plan to Meralco. Plaintiff-appellee
Estrada’s efforts consisted in being the first to offer the Maxicare
plan to Meralco, using her connections with some of Meralco
Executives, inviting said executives to dinner meetings, making
submissions and representations regarding the health plan,
sending follow-up letters, etc. Estrada’s efforts were instrumental
in introducing the Meralco account to [Maxicare in regard to the
latter’s Maxicare health insurance plans. Plaintiff-appellee Estrada
was the efficient "intervening cause" in bringing about the service
agreement with Meralco. Without her intervention, no sale could
have been consummated.
Case #44 Sanchez vs. Medicard Phils., Inc., et al., (G.R. No.
DOCTRINE: In order for an agent to be entitled to a commission, he must be
141525.
the procuring cause of the sale, which simply means that the measures
employed by him and the efforts he exerted must result in a sale
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
FACTS:
1. Sometime in 1987, Medicard Philippines, Inc. (Medicard),
respondent, appointed petitioner as its special corporate agent,
whose commission is based on the cash brought in.
2. In September, 1988, through petitioners’ efforts, Medicard and
United Laboratories Group of Companies (Unilab) executed a
Health Care Program Contract, where Unilab is to pay
P4,148,005.00 representing the premium for one year.
Petitioners’ commission was 18% of said amount or P746,640.90.
Said contract was renewed the following year with an increase
premium to P7,456,896.00.
3. The following year, Unilab rejected petitioners proposal to renew
contract for the reason that it was too high, prompting Medicard’s
president to request petitioner to reduce his commission, but the
latter refused.
4. Meanwhile, Unilab negotiated with Dr. Montoya(Medicards
president) and other officers of Medicard, to discuss ways in order
to continue the insurance coverage of their personnel, which
consist of a new scheme where Unilab shall pay Medicard only
the amount corresponding to the actual hospitalization expenses
incurred by each personnel plus 15% service fee for using
Medicard facilities, which amount shall not be less than
P780,000.00. No commission was given to the petitioner,
prompting him to file with the RTC Makati City a complaint for
sum of money against Medicard.
RTC: Favored Medicard (Dismissed complaint)
CA: Affirm RTC
ISSUE: WON the contract of agency has been revoked by Medicard, hence,
petitioner is not entitled to a commission.
RULING:
1. YES, the contract of agency has been revoked by Medicare, and in
such, petitioner is not entitled to commission.
2. It is dictum that in order for an agent to be entitled to a
commission, he must be the procuring cause of the sale, which
simply means that the measures employed by him and the efforts
he exerted must result in a sale. In other words, an agent receives
his commission only upon the successful conclusion of a sale.
Conversely, it follows that where his efforts are unsuccessful, or
there was no effort on his part, he is not entitled to a commission.
Article 19224 of the Civil Code states that “The agency is revoked
if the principal directly manages the business entrusted to the
agent, dealing directly with third persons.”
3. It is clear that since petitioner refused to reduce his commission,
Medicard directly negotiated with Unilab, thus revoking its agency
contract with petitioner. Petitioner did not render services to
Medicard, his principal, to entitle him to a commission. There is
no indication from the records that he exerted any effort in order
that Unilab and Medicard, after the expiration of the Health Care
Program Contract, can renew it for the third time. In fact, his
refusal to reduce his commission constrained Medicard to
negotiate directly with Unilab. Obviously, he was not the agent or
the procuring cause of the third Health Care Program Contract
between Medicard and Unilab.
Case #45AInland
DOCTRINE: brokerRealty Investment
is not vs. CA (G.R.
automatically No. 76969.
entitled to theJune
stipulated
commission merely upon securing9,for, 1997)
and introducing to, the seller the
particular buyer who ultimately purchases from the former the object of the
sale, regardless of the expiration of the broker's contract of agency and
authority to sell. Where he is not the efficient procuring cause in bringing
about the sale, he is not entitled to commission.
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
FACTS:
1. On September 16, 1975, ROMAN M. DE LOS REYES (the general
manager of Inland Realty Investment) was granted by Araneta
Inc., through its Assistant General Manager J. Armando Eduque, a
30-day authority to sell its 9,800 shares of stock in Architects'
Bldg., Inc, which was renewed, last renewal of which was
December 2, 1975.
2. Inland sent proposal letters to prospective buyers, one of those
who responded was Stanford Microsystems, Inc. who sent a
counter-offer. Upon plaintiffs receipt thereof, it immediately
wrote Araneta a letter to register Stanford Microsystems, Inc. as
one of its prospective buyers. Araneta replied that the price
offered by Stanford was too low and suggested that plaintiffs see
if the price and terms of payment can be improved upon by
Stanford.
3. On July 8, 1977, plaintiffs finally sold the 9,800 shares of stock in
Architects' Bldg., Inc. to Stanford Microsystems, Inc. for
P13,500,000.00, the plaintiff demanded for payment of the 5%
brokers commission but was denied because their(de los Reyes an
Inland) authority to sell expired thirty (30) days from December 2,
1975, or on January 1, 1976.
RTC: Dismissed petitioners complaint
CA: Affirmed RTC decision(Dismissed appeal)
ISSUE: WON petitioner is entitled for commission.
RULING:
1. NO, petitioners are not entitled for commission. Petitioners did
not succeed in outrightly selling said shares under the
predetermined terms and conditions set out by Araneta, Inc., e.g.,
that the price per share is P1,500.00. They admit that they could
not dissuade Stanford from haggling for the price of P1,000.00 per
share with the balance of 50% of the total purchase price payable
in five (5) years at 12% interest per annum. From September 16,
1975 to January 1, 1976, when petitioners' authority to sell was
subsisting, if at all, petitioners had nothing to show that they
actively served their principal's interests, pursued to sell the
shares in accordance with their principal's terms and conditions,
and performed substantial acts that proximately and causatively
led to the consummation of the sale to Stanford of Araneta, Inc.'s
9,800 shares in Architects'.
2. Petitioners were not the efficient procuring cause[6] in bringing
about the sale in question on July 8, 1977 and are, therefore, not
entitled to the stipulated broker's commission of "5% on the total
price."
Case
DOCTRINE: The#46 Prats vs.
principal hasCA (G.R.
the No. L-39822
obligation to payJanuary 31, 1978)
commissions to his agent.
FACTS:
1. Respondent was the registered owner of a 300-ha parcel of land.
In 1967, he tried to sell this property with SSS but such sale was
not consummated.
2. Respondent, in 1968, gave Prats, a real estate broker, an exclusive
option and authority in writing to negotiate the sale of the
property. As stipulated in the authority:
This exclusive option and authority is good for a period of sixty
(60) days from the date of your conformity…
XXX
If no written offer is made to you until the last day of this
authorization, this option and authority shall expire and become
null and void;
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019

With the intervention of Prats, Doronilla and SSS once again

commenced with their negotiation.
3. However, before the sale was finalized, the exclusive option and
authority has expired. No written offer was made to Prats yet
hence, Doronilla sent him a letter that since no written offer was
made, the authority given to him now is considered null and void.
4. Doronilla continued with the negotiation with SSS and the land
was finally sold. Prats then asked for the respondent for the
payment of his professional fee as a real estate broker –
amounting to P138M.
5. When respondent declined to pay, Prats instituted against
Doronila and PNB a complaint for collection of sum of money in
CFI Rizal.
7. Summons could not be served upon Concepcion, Burgos moved to
drop her as a defendant – RTC granted
8. Rural Bank of El Salvador filed a Third-Party Complaint against
spouses Concepcion and Agnes Bucton Lugod (Lugod), the
daughter of petitioner. Respondent bank claimed that it would
not have granted the loan and accepted the mortgage were it not
for the assurance of Concepcion and Lugod that the SPA was valid.
Bank defense:
Denied the allegation of Bucton that the SPA was forged and
averred that Bucton went to the bank and promised to settle the
loan of Concepcion

RTC favored Prats and ordered Doronilla to pay the plaintiff the sum of As to the alleged irregularities in the foreclosure proceedings,
P138M as his professional fee. respondent bank asserted that it complied with the requirements
CA reversed the RTC decision. of the law in foreclosing the house and lot

ISSUE: WON Prats is entitled to receive his professional fee pursuant to the
written authority given to him.
RULING: No. It is clear that the offer of Doronila (in 1967) to sell the 300
hectares of land in question to the SSS was formally accepted by the System
only on June 20, 1968 after the exclusive authority in favor of the plaintiff
had expired. Prats, therefore, was not the procuring cause in bringing about
the sale proceeding from the fact of the expiration of his exclusive option.
In equity, however, the Court notes that petitioner had taken steps to bring
back together respondent Doronila and the SSS. Prats' efforts somehow were
instrumental in bringing them together again and finally consummating the
transaction, although such finalization was after the expiration of Prats'
extended exclusive authority
Relies on the presumption of regularity of the notarized SPA
Cause of Action: Annulment of Mortgage, Foreclosure, and Special
Power of Attorney (SPA) against Erlinda Concepcion (Concepcion)
and respondents Rural Bank of El Salvador, Misamis Oriental, and
Sheriff Reynaldo Cuyong
RTC Cagayan de Oro – spouses Concepcion were declared in
default for failing to file a responsive pleading sustaining the claim
of Bucton that the SPA was forged as the signatures appearing on
the SPA are different from the genuine signatures presented by
petitioner bank should have conducted a thorough inquiry on the
authenticity of the SPA considering that petitioner’s residence
certificate was not indicated in the acknowledgement of the SPA

The Court grants in equity the sum P100,000.00 by way of compensation for Court hereby declares null and void or annuls the following:
his efforts and assistance in the transaction, which however was finalized and
consummated after the expiration of his exclusive authority and sets aside The special power of attorney which was purportedly executed by
the P10,000.00 — attorneys' fees award adjudged against him by respondent [petitioner];
court.
The real estate mortgage

CaseA#47
DOCTRINE: Buctonexecuted
mortgage vs. Rural Bank
by anofauthorized
El Salvador, Inc.,who
agent Misamis
signed in his The sheriff’s sale of Lot No. 2078-B-1-E, and the certificate of title
Oriental
own name without (G.R. No.
indicating that179625,
he acted February
for and 24, 2014) of his principal
on behalf issued in favor of the Rural Bank of El Salavador [by] virtue
binds only the agent and not the principal. thereof, as well as the sheriff’s sale of the two-storey house
described in the real estate mortgage.
FACTS:
1. Nicanor Bucton (PRINCIPAL) alleged that she is the owner of a The certificate of title in the name of the Rural Bank of El Salvador
parcel of land, covered by Transfer Certificate of Title (TCT) No. T- if any, issued [by] virtue of the sheriff’s sale.
3838, located in Cagayan de Oro City
2. Concepcion (AGENT) borrowed the title on the pretext that she On reconsideration: rendered judgment on the Third-Party
was going to show it to an interested buyer Complaint filed by respondent bank against third-party
3. Concepcion obtained a loan in the amount of P30,000.00 from defendants Erlinda Concepcion and her husband: To indemnify or
Rural Bank of El Salvador (3rd PARTY) reimburse [respondent bank] all sums of money plus interests
4. As security for the loan, Concepcion mortgaged Bucton’s house thereon or damages that [respondent bank] has in this case been
and lot (without the latter’s knowledge) to respondent bank using forced to pay, disburse or deliver to [petitioner] including the
a SPA (signed as Nicanora Gabar, Bucton’s maiden name) costs
allegedly executed by Bucton in favor of Concepcion. Bucton also
denied appearing before the notary public, who notarized the SPA CA –
5. Both the Promissory Note and the Real Estate Mortgage, which
were dated June 11, 1982, were signed by Concepcion in her own CA reversed the findings of the RTC. The CA found no cogent
personal capacity reason to invalidate the SPA, the Real Estate Mortgage, and
6. Concepcion failed to pay the loan Bucton’s house and lot were Foreclosure Sale as it was not convinced that the SPA was forge
foreclosed by respondent sheriff without a Notice of Extra-Judicial
Foreclosure or Notice of Auction Sale and were sold in an auction Declared that although the Promissory Note and the Real Estate
sale in favor of respondent bank Mortgage did not indicate that Concepcion was signing for and on
behalf of her principal, petitioner is estopped from denying
liability since it was her negligence in handing over her title to
Concepcion that caused the loss

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AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019
Emphasized that under the Principle of Equitable Estoppel, where
one or two innocent persons must suffer a loss, he who by his
conduct made the loss possible must bear it.
ISSUE/S:
1. WHETHER THE [CA] WAS RIGHT IN DECLARING THE PETITIONER
LIABLE ON THE LITIGATED LOAN/MORTGAGE WHEN (i) SHE DID
NOT EXECUTE EITHER IN PERSON OR BY ATTORNE-IN-FACT
SUBJECT MORTGAGE; (ii) IT WAS EXECUTED BY CONCEPCION IN
HER PERSONAL CAPACITY AS MORTGAGOR, AND (iii) THE LOAN
SECURED BY THE MORTGAGE WAS CONCEPCION’S EXCLUSIVE
LOAN FOR HER OWN COCONUT PRODUCTION.
2. WHETHER THE [CA] WAS RIGHT WHEN IT FOUND THAT IT WAS
PETITIONER’S NEGLIGENCE WHICH MADE THE LOSS POSSIBLE,
DESPITE [THE FACT] THAT SHE HAS NO PART IN [THE] SUBJECT
LOAN/MORTGAGE, THE BANK’S [FAILURE] TO CONDUCT CAREFUL
EXAMINATION OF APPLICANT’S TITLE AS WELL AS PHYSICAL
INVESTIGATION OF THE LAND OFFERED AS SECURITY, AND TO
INQUIRE AND DISCOVER UPON ITS OWN PERIL THE AGENT’S
AUTHORITY, ALSO ITS INORDINATE HASTE IN THE PROCESSING,
EVALUATION AND APPROVAL OF THE LOAN.
3. WHETHER THE [CA] WAS RIGHT WHEN IT DISREGARDED
ESTABLISHED FACTS AND CIRCUMSTANCES PROVING THAT THE
[SPA] IS A FORGED DOCUMENT AND/OR INFECTED BY INFIRMITIES
DIVESTING IT OF THE PRESUMPTION OF REGULARITY CONFERRED
BY LAW ON NOTARIZED DEEDS, AND EVEN IF VALID, THE POWER
WAS NOT EXERCISED BY CONCEPCION.
RULING:
1. NO. Authorized agent failed to indicate in the mortgage that she
was acting for and on behalf of her principal. The Real Estate
Mortgage, explicitly shows on its face, that it was signed by
Concepcion in her own name and in her own personal capacity. In
fact, there is nothing in the document to show that she was acting
or signing as an agent of petitioner. Thus, consistent with the law
on agency and established jurisprudence, Burgos cannot be bound
by the acts of Concepcion.
2. NO. we find it significant to mention that respondent bank has no
one to blame but itself. Not only did it act with undue haste when
it granted and released the loan in less than three days, it also
acted negligently in preparing the Real Estate Mortgage as it
failed to indicate that Concepcion was signing it for and on behalf
of petitioner.
Words: as attorney-in-fact of, as agent of, or for and on behalf of,
are vital in order for the principal to be bound by the acts of his
agent. Without these words, any mortgage, although signed by
the agent, cannot bind the principal as it is considered to have
been signed by the agent in his personal capacity.
There is no need to delve on the issues of forgery of the SPA and
the nullity of the foreclosure sale.? For even if the SPA was valid,
the Real Estate Mortgage would still not bind petitioner as it was
signed by Concepcion in her personal capacity and not as an agent
of petitioner.? Simply put, the Real Estate Mortgage is void and
unenforceable against petitioner.
Concepcion, on the other hand, is liable to pay respondent bank
her unpaid obligation under the Promissory Note dated June 11,
1982, with interest.? As we have said, Concepcion signed the
Promissory Note in her own personal capacity; thus, she cannot
escape liability.? She is also liable to reimburse respondent bank
for all damages, attorneys? fees, and costs the latter is adjudged
to pay petitioner in this case.
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot |
Case #48 Bicol Savings Loan vs. CA (G.R. No. 85302 March 31, 1989)
DOCTRINE: The power to foreclose is not an ordinary agency that
contemplates exclusively the representation of the principal by the agent but
is primarily an authority conferred upon the mortgagee for the latter's own
protection
FACTS:
1. Juan de Jesus (PRINCIPAL) was the owner of a parcel of land,
containing an area of 6,870 sq. ms., more or less, situated in Naga
City.
2. Juan executed a Special Power of Attorney in favor of his son, Jose
de Jesus (AGENT) –
"To negotiate, mortgage my real property in any bank either
private or public entity preferably in the Bicol Savings Bank, Naga
City, in any amount that may be agreed upon between the bank
and my attorney-in-fact Jose de Jesus obtained a loan of twenty
thousand pesos (P20,000.00) from Bicol Savings Bank To secure
payment, Jose de Jesus executed a deed of mortgage on the real
property referred to in the Special Power of Attorney
Mortgage contract stipulation:“If at any time the Mortgagor shall
refuse to pay the obligations herein secured, or any of the
amortizations of such indebtedness when due, or to comply with
any of the conditions and stipulations herein agreed then all
the obligations of the Mortgagor secured by this Mortgage, all the
amortizations thereof shall immediately become due, payable and
defaulted and the Mortgagee may immediately foreclose this
mortgage in accordance with the Rules of Court, or extrajudicially
in accordance with Act No. 3135, as amended, or Act No. 1508.
For the purpose of extrajudicial foreclosure, the Mortgagor
hereby appoints the Mortgagee his attorney-in-fact to sell the
property mortgaged”
3. Juan de Jesus died
4. By reason of his failure to pay the loan obligation even during his
lifetime, petitioner bank caused the mortgage to be extrajudicially
foreclosed → public auction →Bicol Savings Bank highest bidder
→ issued with Provisional Cert of Sale
5. Jose de Jesus and heirs failed to redeem property after 1yr →
issued Definite Cert of Sale to Bicol Bank
6. De jesus negotiated with the bank for the repurchase of the
property. Offers and counter-offers were made, but no
agreement was reached so the bank sold the property instead to
other parties in instalments → conditional deed of sale between
bank ang other parties
7. De Jesus’ filed a Complaint with the then Court of First Instance of
Naga City for the annulment of the foreclosure sale or for the
repurchase by them of the property
Cause of action: seeking for reversal of CA decision which ruled against
Bicol Savings Loan
CFI Naga - dismissed the case, ruling that the title of the bank over the
mortgaged property had become absolute upon the issuance and
registration of the said deed in the favor of Bicol Bank
CA – reversed CFI. Applied Article 1879 of the Civil Code and stated that
since the special power to mortgage granted to Jose de Jesus did not
include the power to sell, it was error for the lower Court not to have
declared the foreclosure proceedings -and auction sale held in 1978
null and void because the Special Power of Attorney given by Juan de
Jesus to Jose de Jesus was merely to mortgage his property, and not to
extrajudicially foreclose the mortgage and sell the mortgaged property
in the said extrajudicial foreclosure. Bank should resorted to judicial
foreclosure - annulled the extrajudicial foreclosure sale, the Provisional
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019

and Definite Deeds of Sale, the registration thereof, and the Writ of
Possession issued to Bicol Bank

ISSUE/S: Validity of the extrajudicial foreclosure sale of the mortgaged

property instituted by petitioner bank which, in turn hinges on whether or
not the agent-son exceeded the scope of his authority in agreeing to a
stipulation in the mortgage deed that petitioner bank could extrajudicially
foreclose the mortgaged property.

RULING:
1. Art. 1879 cited by CA, not applicable in this case. Reversed CA’s
decision extrajudicial foreclosure of the subject mortgaged
property, as well as the Deeds of Sale, the registration thereof,
and the Writ of Possession in petitioner bank's favor, are hereby
declared VALID and EFFECTIVE.
2. The sale proscribed by a special power to mortgage under Article
1879 is a voluntary and independent contract, and not an auction
sale resulting from extrajudicial foreclosure, which is precipitated
by the default of a mortgagor. Absent that default, no foreclosure
results. The stipulation granting an authority to extrajudicially
foreclose a mortgage is an ancillary stipulation supported by the
same cause or consideration for the mortgage and forms an
essential or inseparable part of that bilateral agreement
3. The power to foreclose is not an ordinary agency that
contemplates exclusively the representation of the principal by
the agent but is primarily an authority conferred upon the
mortgagee for the latter's own protection. That power survives
the death of the mortgagor
4. In fact, the right of the mortgagee bank to extrajudicially foreclose
the mortgage after the death of the mortgagor Juan de Jesus,
acting through his attorney-in-fact, Jose de Jesus, did not depend
on the authorization in the deed of mortgage executed by the
latter.
5. That right existed independently of said stipulation and is clearly
recognized in Section 7, Rule 86 of the Rules of Court, which
grants to a mortgagee three remedies that can be alternatively
pursued in case the mortgagor dies, to wit:

a. to waive the mortgage and claim the entire debt from the
estate of the mortgagor as an ordinary claim;
b. to foreclose the mortgage judicially and prove any deficiency
as an ordinary claim; and
c. to rely on the mortgage exclusively, foreclosing the same at
any time before it is barred by prescription, without right to
file a claim for any deficiency

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