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VII. What are the obligations and liabilities of agents to their principals?

Austria v. CA, 39 SCRA 527

- Robbery of the jewelry deemed a fortuitous event and therefore, agent
not responsible for the loss; however, in order to completely exonerate
her, she should also be free of any contributory fault or negligence
- Although her conduct of going home alone in the evening while
carrying valuable jewelry would have been negligent per se and would
not exempt her from responsibility, said rule is not applicable at the
point in time that the robbery took place; criminality at that time had
not reached the levels attained in the present day

PNB v. Manila Surety, 14 SCRA 776

- Bank (agent) answerable for its neglect in collecting the sums due to
the debtor (principal) contrary to its duty as holder of an exclusive and
irrevocable PoA to make such collections since an agent is required to
act with the care of a good father of a family
- By allowing the assigned funds to be exhausted without notifying the
surety, the Bank deprived it of any possibility of recoursing against
that security; therefore, surety is not liable

Domingo v. Domingo, 42 SCRA 131

- Contract of agency demands utmost good faith, fidelity, honesty,
candor and fairness on the part of the agent (real estate broker); agent
is obliged to make full disclosure to principal
- Agent who takes a secret profit without telling the principal is guilty of
breach of his loyalty and forfeits his right to collect commission from
the principal

Severino v. Severino, 44 Phil. 343

- Defendant came into possession of the land as agent of the deceased
(principal); he had been continuously in charge and occupation of the
land as administrator; he had always known that the land belonged to
the principal
- Since the property is the subject matter of agency, agent is estopped
from acquiring or asserting a title adverse to that of the principal
- Position analogous to that of a trustee and he cannot be allowed to
create in himself an interest in opposition to that of the principal

Green Valley Poultry v. IAC, 133 SCRA 697

- Contract may be considered as an agency to sell; therefore, agent is
liable for selling on credit without authority from the principal

Municipal Council of Iloilo v. Evangelista, 55 Phil. 290

- Soriano was a lawyer of Tan Toco, but he was not the lawyer in that
particular case and so the assignment of credit in his favor did not
violate the prohibition in an attorney-client relationship
- Also, one who is authorized to employ services of lawyers necessarily
implies authority to pay for the lawyer’s professional services

VIII. Responsibility for acts of substitutes – 1892, 1893

Del Rosario v. La Badenia, 33 Phil. 316

- Aragon was acting as a general agent since it was not shown what
limitations were placed upon his powers to act for the corporation; his
powers appear to have been very broad and no evidence that he acted
in excess of authority in extending credit on behalf of the agency
- Company was informed that the spouses were acting as sub-agents of
Aragon and recognized them as such, as proven by the letters of the
corp.; it was clear that the corp. did not consider them as independent

International Films v. Lyric Film, 63 Phil. 778

- Verbal agreement between former agent and the company was that
the film would remain deposited in their safety vault under
responsibility of said former agent; as sub-agent, company could show
it in their theaters
- Not insuring the film does not constitute fraud or negligence of the
company since it received no instruction to that effect from its

IX. What are the obligations and liabilities of agents to third parties?

PNB v. Agudelo, 58 Phil. 655

- Nothing in the mortgage deeds to show that Garrucho (mortgagor) is
agent of the owner or that he obtained the loan on behalf of the
- It appears that Garrucho acted in his personal capacity
- He executed the PNs under his own signature without authority from
the principal, therefore, PNs not binding upon them
- His SPA does not authorize him to constitute a mortgage to secure his
personal obligations, therefore he exceeded his authority
- Exception in Art. 1717 where agent contracts in his own name with
things belonging to the principal binds the latter requires that agent
did not exceed his authority

Philippine Products v. Primateria, 15 SCRA 301

- 3rd parties can’t recover from both the principal and the agent
- Art. 1897 provides that agents are personally liable in case they
exceed their authority; however, such law does not hold that in cases
of excess of authority, both the principal and the agent are liable to the
other contracting party

NPC v. National Merchandising, 117 SCRA 789

- Agent acted beyond authority for still contracting despite principal’s
- Agent who exceeds authority without giving 3rd party notice of his
powers is personally liable
- Unenforceability of the contract is against the principal only

National Bank & Welch Fairchild, 44 Phil. 780

- One who has intervened in the making of a contract in the character of
an agent cannot be permitted to intercept the thing which the principal
is bound to deliver
- Agent is precluded from doing act that could prevent performance on
the part of his principal

Tuazon v. Orosco, 5 Phil. 596

- Agent acted as such in securing the debt for his principal
- To secure payment, principal’s property was mortgaged; P’s wife even
took part in the execution of the mortgage
- Debt incurred by agent is binding upon P provided A acted within
scope of authority
- The fact that A also personally bound himself does not relieve P’s
liability; it was only a further security to the debt; such an act on the
part of A was valid

Cervantes v. CA, 304 SCRA 25

- 3rd party cannot use employees’ (agents) actions in confirming the
flight after expiration o his ticket to his advantage
- Agents acted outside their authority and did not bind PAL (principal)
- Since 3rd party knew of such excess in authority of the agents, P can’t
be held liable for their acts and 3rd party not entitled to recover
damages from such agents

Smith Bell v. Sotelo, 44 Phil. 874

- Agent signed the contracts in his individual capacity and his own
name, therefore, he is bound by them
- Undisclosed principal has no right of action against the 3rd party

Rural Bank of Bombon v. CA, 212 SCRA 25

- In order to bind P on mortgage, it must be made in behalf of P;
otherwise, it will bind agent only
- Agent’s act of signing mortgage deed in his own name bound himself
in his personal capacity as debtor
- Exception in Art. 1883 not applicable
- There is no principle of law by which one can become liable on a real
estate mortgage which he never executed either in person or by
attorney in fact

Sy-Juco v. Sy-Juco, 40 Phil. 634

- Property bought and registered in agent’s own name with P’s money
still P’s property; transaction was within the agency; question is not in
whose favor document of sale was made and registered but with
whose money said property was bought
- Exception in the Civil Code of agent acting in own name with things
belonging to P applicable since money that was used belonged to P

National Food Authority v. IAC, 184 SCRA 166

- It was undisputed that Medalla was a commission agent of the
- Art. 1883 applicable
- Agent’s apparent representation yields to the principal’s true
representation, therefore, contract considered to have been entered
into between the principal and the 3rd party

Gold Star Mining v. Lim Jimena, 25 SCRA 597

- When Lincallo (agent) transferred his mining claims to Gold Star, even
without disclosing that Jimena was part owner, he acted as agent of
Jimena with respect to Jimena’ share of the claims
- Art. 1883 applicable
- While there is no privity of contract between 3rd party (Gold Star) and
principal (Jimena) in this case, the common subject matter supplies the
juridical link

X. What are the obligations and liabilities of principals to agents?

Macondray v. Sellner
- purchaser has a perfect right to examine the documents; it was
understood that the purchaser should have a reasonable time; also,
time does not appear to be of the essence to the contract
- company’s letter demanding immediate payment under penalty of
cancellation of the agreement was an unreasonable attempt to deny
purchaser reasonable opportunity to inspect docs.
- Real estate agent already earned commissions and could not be
deprived thereof
- Company could not lawfully terminate negotiations at the time it
attempted to do so

Danon v. Brim & Co., 42 Phil. 133

- All that the agent had accomplished was that he found a person who
might have bought the factory
- His services did not in any way contribute towards consummating the
sale; he was not the efficient agent or procuring cause of the sale
- Duty of the broker is to bring the minds of the buyer and seller to an
agreement for a sale
- Broker never entitled to commissions for unsuccessful efforts;
limitation: if the efforts of the broker are rendered a failure by the fault
of the employer, then the broker does not lose his commissions.
Grounds: broker has done his duty to bring buyer and seller to an
agreement, but it is not consummated due to seller’s fault

Rocha v. Prats, 43 Phil. 397

- Broker never succeeded in his duty to bring buyer and seller to an
agreement; until that is done, his right to commission does not accrue

Inland Realty v. CA, 273 SCRA 70

- Agent did not but submit the name of prospective buyer; they had
nothing to show that they actively served principal’s interests
- After authority to sell expired, they abandoned the sales transaction
and were no longer privy to the consummation thereof
- Lapse of more than 1 year a significant index of agent’s non-
participation in critical events leading to consummation of the sale

Infante v. Cunanan, 93 Phil. 691

- Agents found a buyer who was willing to purchase at the terms
- Infante took advantage of the services rendered by the agents but
tricked them to be absolved from paying commission
- This cannot serve as a basis for Infante to escape payment of the
commission agreed upon

Prats v. CA, 81 SCRA 360

- Offer to sell was accepted after the authority had already expired
- Agent was not the procuring cause in bringing about the sale ;
therefore, not entitled to commission
- However, the court took into consideration that the agent was
responsible for bringing the buyer and seller back together (after a
previous failed negotiation) and finally consummating the transaction;
it is therefore entitled to P100,000 based on equity

Uniland Resources v. DBP, 200 SCRA 757

- Uniland was aware thnat it hd no express authority from DBP to find
buyers of its properties
- It was never able to acquire accreditation to transact business on
behalf of DBP
- Implied agency did not exist
- The court also granted P100,000 based on equity since it was Uniland
who informed DBP of the interested buyer

XI. What are the obligations of principals to third parties?

Gonzalez v. Haberes, 47 Phil. 380

- The husband, in negotiating the sale of wife’s property, acted as the
agent and representative of his wife
- Wife accepted the benefit of the representation so she can’t escape
liability for failing to comply with their obligation

XIII. How is agency extinguished?

Barreto v. Sta. Maria, 26 Phil. 440

- Agent made his intent to resign as manager known to his principal and
the principal later accepted it and appointed a new manager; he was
not unlawfully dismissed
- No period was fixed for the duration of manager’s position; even if
there was, principal still entitled to revoke if he no longer has
confidence on his agent even before expiration of the period

Dialosa v. CA, 130 SCRA 350

- Principal cannot lawfully terminate the agency at will without paying
- Intent to reserve lots for own use can’t prevail over the clear terms of
the agency agreement
- Agent allowed to sell the lots until all the subject property is fully
disposed of; authority to sell not extinguished until all the lots have
been sold
- Agency may be rescinded on the grounds specified in Arts. 1381 &
1382; none of them were present in this case

New Manila v. Republic, 107 Phil. 824

- Contractor (principal) already did what he had authorized agent to do
in his behalf which is to collect the amounts due him from the
government; therefore, agency was already revoked

Dy Buncio v. Ong Guan, 60 Phil. 606

- PoA was limited and does not include express power to alienate
- Making a new PoA, whether it enlarges or decreases the authority
under a previous PoA, must be held to supplant and revoke the
previous one when the two are inconsistent

Garcia v. De Manzano, 39 Phil. 577

- PoA given to son (1st) was not revoked by PoA given to mother (2nd)
because son had no knowledge of 2nd PoA
- PoA authorizes sale and purchase of real property and mortgaging the
same as well as borrowing of money; it is general and complete
- A power so full and complete must necessarily carry with it right to sell
half interest in a small boat, especially since sale was necessary to get
money or credit

Rallos v. Yangco, 20 Phil. 269

- Having given special notice to 3rd party of agency and inviting them to
deal with such agent, it is the principal’s duty to give due and timely
notice to such 3rd party upon termination of the agency
- Failing to do so, principal responsible to them for whatever goods may
have been in good faith and without negligence sent to the agent

Compania General de Tobacos v. Diabu, 20 Phil. 321

- Agent has been selling and buying goods on behalf of principal for
more than 8 years
- Upon termination of agency but without notice to 3rd party, 3rd party
had a perfect right to believe that agent was still representing the
- Evident here that principal was willing to ratify agent’s acts in selling
goods but unwilling to ratify acts in purchasing goods

Del Rosario v. Abad, 104 Phil. 648

- PoA does not create an agency coupled with an interest nor does it
clothe the agency with an irrevocable character; therefore, agency was
terminated upon death of principal
- A mere statement in PoA that agency is coupled with an interest is not
enough; such interest must be stated in the PoA
- Sale of the property was void since alienation of land acquired by free
patent is void

Caleongco v. Claparols, 10 SCRA 577

- Financing agreement already contained clauses for protection of
agent’s interest and did not call for the execution of any PoA
- PoA can be made irrevocable by contract only; however, agency
coupled with an interest can still be revoked for just cause, as when
the agent betrays the interest of the principal
- Agent acted in bad faith and did acts of deliberate sabotage to
principal’s business which justified the revocation

Valera v. Velasco, 51 Phil. 695

- The fact that the agent sued his principal more than proves for a
breach of the juridical relation between them; although the agency has
not been expressly renounced, neither dignity nor decorum permits
agent to continue representing such principal
- An agent who institutes an action against the principal, and renders a
final account of his operations, is equivalent to an express renunciation
of the agency and terminates the juridical relation between them
- Former agent’s purchase of principal’s right of usufruct is valid

Pasno v. Ravina, 54 Phil. 378

- Power of sale given in a mortgage is a power coupled with an interest
which survives the death of the grantor
- The creditor-mortgagee with a power of sale has 3 options (for
property under custody of a judicial administrator after owner-
principal’s death):
o Waive his security and prove his credit as an ordinary against the
o Foreclose mortgage by ordinary action in court at any time within
the period allowed by the statute of limitations, in accordance
with Code of Civil Procedure
o Foreclose the mortgage without action in accordance with Act
3135, which is less prejudicial to the estate

Ramos v. Caoibes, 94 Phil. 440

- Agent has the obligation to deliver amount y virtue of PoA to his
- There was no cession of rights made in favor of the agent in the PoA,
and the contract of agency is presumed to be gratuitous, unless the
agent is a professional agent
- When the agent made use of the PoA, principal was already dead;
agency was terminated upon the death of the principal; therefore, he
can’t keep the proceeds of the claim for himself
- Agent’s act of collecting the claim is not such a service as to require

Herrera v. Luy Kim Guan, 1 SCRA 406

- Date of death of the principal has not been satisfactorily proven,
therefore, documents are presumed to have been executed during the
lifetime of the principal
- Also, there was no proof that agent was aware of death of the
principal; death of the principal does not render th act of an agent
unenforceable, where the agent had no knowledge of such
extinguishment of the agency