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NATURE, FORM AND KINDS OF AGENCY

Art. 1868. By the contract of agency a person binds himself to render some service or to do something in representationor on behalf of another, with the consent or authority of thelatter. (1709a)Art. 1869. Agency may be express, or implied from the actsof the principal, from his silence or lack of action, or hisfailure to repudiate the agency, knowing that another personis acting on his behalf without authority.Agency may be oral, unless the law requires a specific form.(1710a)Art. 1870. Acceptance by the agent may also be express, orimplied from his acts which carry out the agency, or from hissilence or inaction according to the circumstances. (n)Art. 1871. Between persons who are present, the acceptanceof the agency may also be implied if the principal delivers hispower of attorney to the agent and the latter receives itwithout any objection. (n)Art. 1872. Between persons who are absent, the acceptanceof the agency cannot be implied from the silence of theagent, except:(1) When the principal transmits his power of attorney to the agent, who receives it without anyobjection;(2) When the principal entrusts to him by letter ortelegram a power of attorney with respect to thebusiness in which he is habitually engaged as anagent, and he did not reply to the letter or telegram.Art. 1873. If a person specially informs another or states bypublic advertisement that he has given a power of attorneyto a third person, the latter thereby becomes a dulyauthorized agent, in the former case with respect to theperson who received the special information, and in the lattercase with regard to any person. The power shall continue to be in full force until thenotice is rescinded in the same manner in which it was given.Art. 1874. When a sale of a piece of land or any interesttherein is through an agent, the authority of the latter shallbe in writing; otherwise, the sale shall be void.Art. 1875. Agency is presumed to be for a compensation,unless there is proof to the contrary. (n)Art. 1876. An agency is either general or special. The former comprises all the business of theprincipal. The latter, one or more specific transactions.(1712)Art. 1877. An agency couched in general terms comprisesonly acts of administration, even if the principal should statethat he withholds no power or that the agent may executesuch acts as he may consider appropriate, or even thoughthe agency should authorize a general and unlimitedmanagement. (n)Art. 1878. Special powers of attorney are necessary in thefollowing cases:(1) To make such payments as are not usuallyconsidered as acts of administration;(2) To effect novations which put an end toobligations already in existence at the time theagency was constituted;(3) To compromise, to submit questionsto arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of anaction or to abandon a prescription already acquired;(4) To waive any obligation gratuitously;(5) To enter into any contract by which theownership of an immovable is transmitted oracquired either gratuitously or for a valuableconsideration;(6) To make gifts, except customary ones for charityor those made to employees in the businessmanaged by the agent;(7) To loan or borrow money, unless the latter act beurgent and indispensable for the preservation of thethings which are under administration;(8) To lease any real property to another person formore than one year;(9) To bind the principal to render some servicewithout compensation;(10) To bind the principal in a contract of partnership;(11) To obligate the principal as a guarantor orsurety;(12) To create or convey real rights over immovableproperty;(13) To accept or repudiate an inheritance;(14) To ratify or recognize obligations contractedbefore the agency;(15) Any other act of strict dominion. (n)Art. 1879. A special power to sell excludes the power tomortgage; and a special power to mortgage does not includethe power to sell. (n)Art. 1880. A special power to compromise does not authorizesubmission to arbitration. (1713a)Art. 1881. The agent must act within the scope of hisauthority. He may do such acts as may be conducive to theaccomplishment of the purpose of the agency. (1714a)Art. 1882. The limits of the agent's authority shall not beconsidered exceeded should it have been performed in amanner more advantageous to the principal than thatspecified by him. (1715)Art. 1883. If an agent acts in his own name, the principal hasno right of action against the persons with whom the agenthas contracted; neither have such persons against theprincipal.In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if thetransaction were his own, except when the contract involvesthings belonging to the principal. The provisions of this article shall be understood tobe without prejudice to the actions between the principal andagent.

SPOUSES YU ENG CHO & FRANCISCO TAO YU v. PANAMERICAN WORLD AIRWAYS, INC.(GR 123560, March 27, 2000)

FACTS:Plaintiff Yu Eng Cho is the owner of Young HardwareCo. and Achilles Marketing. In connection with [this] business,he travels from time to time to Malaysia, Taipei andHongkong. On July 10, 1976, plaintiffs bought plane tickets(Exhs. A & B) from defendant Claudia Tagunicar whorepresented herself to be an agent of defendant Tourist World

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Services, Inc. (TWSI). The destination[s] are Hongkong, Tokyo,San Francisco, U.S.A., for the amount of P25,000.00 percomputation of said defendant Claudia Tagunicar (Exhs. C &C-1). The purpose of this trip is to go to Fairfield, New Jersey,U.S.A. to buy to two (2) lines of infrared heating systemprocessing textured plastic articleA few days before the scheduled flight of plaintiffs,their son, Adrian Yu, called the Pan Am office to verify thestatus of the flight. According to said Adrian Yu, personnel of defendant Pan Am told him over the phone that plaintiffs'booking[s] are confirmed.On July 23, 1978, plaintiffs left for Hongkong andstayed there for five (5) days. They left Hongkong for Tokyoon July 28, 1978. Upon their arrival in Tokyo, they called upPan-Am office for reconfirmation of their flight to SanFrancisco. Said office, however, informed them that theirnames are not in the manifest. Since plaintiffs were supposedto leave on the 29th of July, 1978, and could not remain in Japan for more than 72 hours, they were constrained to agreeto accept airline tickets for Taipei instead, per advise of JALofficials. This is the only option left to them becauseNorthwest Airlines was then on strike, hence, there was nochance for the plaintiffs to obtain airline seats to the UnitedStates within 72 hours. Plaintiffs paid for these tickets.Upon reaching Taipei, there were no flight[s]available for plaintiffs, thus, they were forced to return backto Manila on August 3, 1978, instead of proceeding to theUnited States. [Japan] Air Lines (JAL) refunded the plaintiffsthe difference of the price for Tokyo-Taipei [and] Tokyo-SanFrancisco (Exhs. I & J) in the total amount of P2,602.00.In view of their failure to reach Fairfield, New Jersey,Radiant Heat Enterprises, Inc. cancelled Yu Eng Cho's optionto buy the two lines of infra-red heating system (Exh. K). Theagreement was for him to inspect the equipment and makefinal arrangement[s] with the said company not later thanAugust 7, 1978. From this business transaction, plaintiff YuEng Cho expected to realize a profit of P300,000.00 toP400,000.00.Defendant Tagunicar claims that on July 13, 1978, afew days before the scheduled flight, plaintiff Yu Eng Chopersonally went to her office, pressing her about their flight.She called up defendant Julieta Canilao, and the latter toldher "o sige Claudia, confirm na." She even noted this in herindex card (Exh. L), that it was Julieta who confirmed thebooking (Exh. L-1). It was then that she allegedly attachedthe confirmation stickers (Exhs. 2, 2-B TWSI) to the tickets. These stickers came from TWSI.Defendant Tagunicar alleges that it was only in thefirst week of August, 1978 that she learned from Adrian Yu,son of plaintiffs, that the latter were not able to take theflight from Tokyo to San Francisco, U.S.A. After a few days,said Adrian Yu came over with a gentleman and a lady, whoturned out to be a lawyer and his secretary. Defendant Tagunicar claims that plaintiffs were asking for her help sothat they could file an action against Pan-Am. Because of plaintiffs' promise she will not be involved, she agreed to signthe affidavit prepared by the lawyer.A complaint for damages was filed by petitionersagainst private respondents Pan American World Airways,Inc. (Pan Am), Tourist World Services, Inc. (TWSI), JulietaCanilao (Canilao), and Claudia Tagunicar (Tagunicar) forexpenses allegedly incurred such as costs of tickets and hotelaccommodations when petitioners were compelled to stay inHongkong and then in Tokyo by reason of the non-confirmation of their booking with Pan-Am. In a Decisiondated November 14, 1991, the Regional Trial Court of Manila,Branch 3, held the defendants jointly and severally liable,except defendant Julieta CanilaoOnly respondents Pan Am and Tagunicarappealed to the Court of Appeals. On 11 August 1995, theappellate court rendered judgment modifying the amount of damages awarded, holding private respondent Tagunicarsolely liable therefor, and absolving respondents Pan Am and TWSI from any and all liability.ISSUE:Whether here is no agency relationship among PAN-AM, TWSI and Tagunicar are contrary to the judicialadmissions of PAN-AM, TWSI and Tagunicar and likewisecontrary to the findings of fact of the trial court.HELD:By the contract of agency, a person binds himself torender some service or to do something in representation oron behalf of another, with the consent or authority of thelatter.

The elements of agency are: (1) consent, express orimplied, of the parties to establish the relationship; (2) theobject is the execution of a juridical act in relation to a thirdperson; (3) the agent acts as a representative and not forhimself; (4) the agent acts within the scope of his authority.

It is a settled rule that persons dealing with an assumedagent are bound at their peril, if they would hold the principalliable, to ascertain not only the fact of agency but also thenature and extent of authority, and in case either iscontroverted, the burden of proof is upon them to establishit.In the case at bar, petitioners rely on the affidavit of respondent Tagunicar where she stated that she is anauthorized agent of TWSI. This affidavit, however, has weakprobative value in light of respondent Tagunicar's testimonyin court to the contrary. Affidavits, being taken

ex parte

, arealmost always incomplete and often inaccurate, sometimesfrom partial suggestion, or for want of suggestion andinquiries. Their infirmity as a species of evidence is a matterof judicial experience and are thus considered inferior to thetestimony given in court.

Further, affidavits are notcomplete reproductions of what the declarant has in mindbecause they are generally prepared by the administeringofficer and the affiant simply signs them after the same havebeen read to her.

Respondent Tagunicar testified that heraffidavit was prepared and typewritten by the secretary of petitioners' lawyer, Atty. Acebedo, who both came withAdrian Yu, son of petitioners, when the latter went to see herat her office. This was confirmed by Adrian Yu who testifiedthat Atty. Acebedo brought his notarial seal and notarized theaffidavit of the same day.

The circumstances under whichsaid affidavit was prepared put in doubt petitioners' claimthat it was executed voluntarily by respondent Tagunicar. Itappears that the affidavit was prepared and was based onthe answers which respondent Tagunicar gave to thequestions propounded to her by Atty. Acebedo.

Theynever told her that the affidavit would be used in a case to befiled against her.

They even assured her that she wouldnot be included as defendant if she agreed to execute theaffidavit.

Respondent Tagunicar was prevailed upon bypetitioners' son and their lawyer to sign the affidavit despiteher objection to the statement therein that she was an agentof TWSI. They assured her that "it is immaterial"

and that"if we file a suit against you we cannot get anything fromyou."

This purported admission of respondent Tagunicarcannot be used by petitioners to prove their agencyrelationship. At any rate, even if such affidavit is to be givenany probative value, the existence of the agency relationshipcannot be established on its sole basis. The declarations of the agent alone are generally insufficient to establish the factor extent of his authority.

In addition, as between thenegative allegation of respondents Canilao and Tagunicar

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that neither is an agent nor principal of the other, and theaffirmative allegation of petitioners that an agencyrelationship exists, it is the latter who have the burden of evidence to prove their allegation,

failing in which, theirclaim must necessarily fail.We stress that respondent Tagunicar categorically denied inopen court that she is a duly authorized agent of TWSI, anddeclared that she is an independent travel agent.

We haveconsistently ruled that in case of conflict between statementsin the affidavit and testimonial declarations, the lattercommand greater weight.

As further proofs of agency, petitioners call ourattention to TWSI's Exhibits "7", "7-A", and "8" which showthat Tagunicar and TWSI received sales commissions fromPan Am. Exhibit "7"

is the Ticket Sales Report submitted by TWSI to Pan Am reflecting the commissions received by TWSIas an agent of Pan Am. Exhibit "7-A"

is a listing of theroutes taken by passengers who were audited to TWSI's salesreport. Exhibit "8"

is a receipt issued by TWSI covering thepayment made by Tagunicar for the tickets she bought from TWSI. These documents cannot justify the decision that Tagunicar was paid a commission either by TWSI or Pan Am.On the contrary, Tagunicar testified that when she pays TWSI,she already deducts in advance her commission and merelygives the net amount to TWSI.

From all sides of the legalprism, the transaction is simply a contract of sale wherein Tagunicar buys airline tickets from TWSI and then sells it at apremium to her clients.WHEREFORE, the decision appealed from is herebyAFFIRMED. Cost against petitioners. SO ORDERED.

CONSTANTE AMOR DE CASTRO v. CA(GR 115838, July 8 2002)

FACTS:Appellants

were co-owners of four (4) lots located atEDSA corner New York and Denver Streets in Cubao, QuezonCity. In a letter dated January 24, 1984 (Exhibit "A-1, p. 144,Records), appellee

was authorized by appellants to act asreal estate broker in the sale of these properties for theamount of P23,000,000.00, five percent (5%) of which will begiven to the agent as commission. It was appellee who firstfound Times Transit Corporation, represented by its presidentMr. Rondaris, as prospective buyer which desired to buy two(2) lots only, specifically lots 14 and 15. Eventually,sometime in May of 1985, the sale of lots 14 and 15 wasconsummated. Appellee received from appellants P48,893.76as commission.It was then that the rift between the contending parties soonemerged. Appellee apparently felt short changed becauseaccording to him, his total commission should beP352,500.00 which is five percent (5%) of the agreed price of P7,050,000.00 paid by Times Transit Corporation toappellants for the two (2) lots, and that it was he whointroduced the buyer to appellants and unceasinglyfacilitated the negotiation which ultimately led to theconsummation of the sale. Hence, he sued below to collectthe balance of P303,606.24 after having received P48,893.76in advance.On the other hand, appellants completely traverseappellee's claims and essentially argue that appellee isselfishly asking for more than what he truly deserved ascommission to the prejudice of other agents who were moreinstrumental in the consummation of the sale. Althoughappellants readily concede that it was appellee who firstintroduced Times Transit Corp. to them, appellee was notdesignated by them as their exclusive real estate agent butthat in fact there were more or less eighteen (18) otherswhose collective efforts in the long run dwarfed those of appellee's, considering that the first negotiation for the salewhere appellee took active participation failed and it wasthese other agents who successfully brokered inthe second negotiation. But despite this and out of appellants' "pure liberality, beneficence and magnanimity",appellee nevertheless was given the largest cut in thecommission (P48,893.76), although on the principle of

quantum meruit

he would have certainly been entitled toless. So appellee should not have been heard to complain of getting only a pittance when he actually got the lion's shareof the commission and worse, he should not have beenallowed to get the entire commission. Furthermore, thepurchase price for the two lots was only P3.6 million asappearing in the deed of sale and not P7.05 million asalleged by appellee. Thus, even assuming that appellee isentitled to the entire commission, he would only be getting5% of the P3.6 million, or P180,000.00."Private respondent Francisco Artigo ("Artigo" forbrevity) sued petitioners Constante A. De Castro ("Constante"for brevity) and Corazon A. De Castro ("Corazon" for brevity)to collect the unpaid balance of his broker's commission fromthe De Castros. The Trial Court finds defendants Constanteand Corazon Amor de Castro jointly and solidarily liable toplaintiff. The Court of Appeals affirmed in toto the decision of the RTC. Hence, this petition.ISSUE:Whether the complaint merits dismissal for failure toimplead other co-owners as indispensable partiesHELD: The De Castros argue that Artigo's complaint shouldhave been dismissed for failure to implead all the co-ownersof the two lots. The De Castros claim that Artigo always knewthat the two lots were co-owned by Constante and Corazonwith their other siblings Jose and Carmela whom Constantemerely represented. The De Castros contend that failure toimplead such indispensable parties is fatal to the complaintsince Artigo, as agent of all the four co-owners, would bepaid with funds co-owned by the four co-owners. The De Castros' contentions are devoid of legalbasis.An indispensable party is one whose interest will beaffected by the court's action in the litigation, and withoutwhom no final determination of the case can be had.

The joinder of indispensable parties is mandatory and courtscannot proceed without their presence.

Whenever it appearsto the court in the course of a proceeding that anindispensable party has not been joined, it is the duty of thecourt to stop the trial and order the inclusion of such party.

However, the rule on mandatory joinder of indispensableparties is not applicable to the instant case. There is no dispute that Constante appointed Artigo in ahandwritten note dated January 24, 1984 to sell theproperties of the De Castros for P23 million at a 5 percentcommission. The authority was on a first come, first servebasis.Constante signed the note as owner and asrepresentative of the other co-owners. Under this note, acontract of agency was clearly constituted betweenConstante and Artigo. Whether Constante appointed Artigoas agent, in Constante's individual or representativecapacity, or both, the De Castros cannot seek the dismissalof the case for failure to implead the other co-owners asindispensable parties.

The De Castros admit that theother co-owners are solidarily liable under thecontract of agency

citing Article 1915 of the Civil Code,which reads:Art. 1915. If two or more persons have appointed anagent for a common transaction or undertaking, they

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