Codal provisions with case digests | Law Of Agency | Mortgage Law

Agency Homework for February 8, 2013 (1) Classifications of Agency (Cont.) MAGSUMBOL-Dominion Insurance v. CA, G.R. No.

129919, 6 February 2002 FACTS: This is an appeal via certiorari from the decision of the Court of Appeals affirming the decision of the Regional Trial Court, Branch 44, San Fernando, Pampanga, which ordered petitioner Dominion Insurance Corporation (Dominion) to pay Rodolfo S. Guevarra (Guevarra) the sum of P156,473.90 representing the total amount advanced by Guevarra in the payment of the claims of Dominion’s clients. The terms of the agreement read: That we, FIRST CONTINENTAL ASSURANCE COMPANY, INC., a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, xxx represented by the undersigned as Regional Manager, xxx do hereby appoint RSG Guevarra Insurance Services represented by Mr. Rodolfo Guevarra xxx to be our Agency Manager in San Fdo., for our place and stead, to do and perform the following acts and things: 1. To conduct, sign, manager (sic), carry on and transact Bonding and Insurance business as usually pertain to a Agency Office, or FIRE, MARINE, MOTOR CAR, PERSONAL ACCIDENT, and BONDING with the right, upon our prior written consent, to appoint agents and subagents. 2. To accept, underwrite and subscribed (sic) cover notes or Policies of Insurance and Bonds for and on our behalf. 3. To demand, sue, for (sic) collect, deposit, enforce payment, deliver and transfer for and receive and give effectual receipts and discharge for all money to which the FIRST CONTINENTAL ASSURANCE COMPANY, INC., may hereafter become due, owing payable or transferable to said Corporation by reason of or in connection with the abovementioned appointment. 4. To receive notices, summons, and legal processes for and in behalf of the FIRST CONTINENTAL ASSURANCE COMPANY, INC., in connection with actions and all legal proceedings against the said Corporation. ISSUES: The issues raised are: (1) whether respondent Guevarra acted within his authority as agent for petitioner, and (2) whether respondent Guevarra is entitled to reimbursement of amounts he paid out of his personal money in settling the claims of several insured. HELD: The petition is without merit. By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. The basis for agency is representation. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferrable from his words or actions; and on the part of the agent, there must be an intention to accept the appointment and act on it, and in the absence of such intent, there is generally no agency.

a.

Universal, general and special

Article 1878 Art. 1878. Special powers of attorney are necessary in the following cases: (1) To make such payments as are not usually considered as acts of administration; (2) To effect novations which put an end to obligations already in existence at the time the agency was constituted; (3) To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired; (4) To waive any obligation gratuitously; (5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration; (6) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent; (7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration; (8) To lease any real property to another person for more than one year; (9) To bind the principal to render some service without compensation; (10) To bind the principal in a contract of partnership; (11) To obligate the principal as a guarantor or surety; (12) To create or convey real rights over immovable property; (13) To accept or repudiate an inheritance; (14) To ratify or recognize obligations contracted before the agency; (15) Any other act of strict dominion. (n)

A perusal of the Special Power of Attorney would show that petitioner (represented by third-party defendant Austria) and respondent Guevarra intended to enter into a principalagent relationship. Despite the word “special” in the title of the document, the contents reveal that what was constituted was actually a general agency. The agency comprises all the business of the principal, but, couched in general terms, it is limited only to acts of administration. A general power permits the agent to do all acts for which the law does not require a special power. Thus, the acts enumerated in or similar to those enumerated in the Special Power of Attorney do not require a special power of attorney. Article 1878, Civil Code, enumerates the instances when a special power of attorney is required. The pertinent portion that applies to this case provides that: Article 1878. Special powers of attorney are necessary in the following cases: (1) To make such payments as are not usually considered as acts of administration; xxx xxx xxx (15) Any other act of strict dominion. The payment of claims is not an act of administration. The settlement of claims is not included among the acts enumerated in the Special Power of Attorney, neither is it of a character similar to the acts enumerated therein. A special power of attorney is required before respondent Guevarra could settle the insurance claims of the insured. Respondent Guevarra’s authority to settle claims is embodied in the Memorandum of Management Agreement dated February 18, 1987 which enumerates the scope of respondent Guevarra’s duties and responsibilities as agency manager for San Fernando, Pampanga, as follows: “xxx xxx xxx 1. You are hereby given authority to settle and dispose of all motor car claims in the amount of P5,000.00 with prior approval of the Regional Office. 2. Full authority is given you on TPPI claims settlement. “xxx xxx xxx” In settling the claims mentioned above, respondent Guevarra’s authority is further limited by the written standard authority to pay, which states that the payment shall come from respondent Guevarra’s revolving fund or collection. The authority to pay is worded as follows: “This is to authorize you to withdraw from your revolving fund/collection the amount of PESOS _________________ (P ) representing the payment on the _________________ claim of assured _______________ under Policy No. ______ in that accident of ___________ at ____________. “It is further expected, release papers will be signed and authorized by the concerned and attached to the corresponding claim folder after effecting payment of the claim. “(sgd.) FERNANDO C. AUSTRIA Regional Manager” The instruction of petitioner as the principal could not be any clearer. Respondent Guevarra was authorized to pay the claim of the insured, but the payment shall come from the revolving fund or collection in his possession. Having deviated from the instructions of the principal, the expenses that respondent Guevarra incurred in the settlement of the claims of the insured may not be reimbursed from petitioner Dominion. This conclusion is in accord with Article 1918, Civil Code, which states that: The principal is not liable for the expenses incurred by the agent in the following cases:

(1) If the agent acted in contravention of the principal’s instructions, unless the latter should wish to avail himself of the benefits derived from the contract; “xxx xxx xxx” However, while the law on agency prohibits respondent Guevarra from obtaining reimbursement, his right to recover may still be justified under the general law on obligations and contracts. Article 1236, second paragraph, Civil Code, provides: Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor. In this case, when the risk insured against occurred, petitioner’s liability as insurer arose. This obligation was extinguished when respondentGuevarra paid the claims and obtained Release of Claim Loss and Subrogation Receipts from the insured who were paid. Thus, to the extent that the obligation of the petitioner has been extinguished, respondent Guevarra may demand for reimbursement from his principal. To rule otherwise would result in unjust enrichment of petitioner. The extent to which petitioner was benefited by the settlement of the insurance claims could best be proven by the Release of Claim Loss and Subrogation Receipts which were attached to the original complaint as Annexes C-2, D-1, E-1, F1, G-1, H-1, I-1 and J-l, in the total amount of P116,276.95. However, the amount of the revolving fund/collection that was then in the possession of respondent Guevarra as reflected in the statement of account dated July 11, 1990 would be deducted from the above amount. The outstanding balance and the production/remittance for the period corresponding to the claims was P3,604.84. Deducting this from P116,276.95, we get P112,672.11. This is the amount that may be reimbursed to respondent Guevarra.

b.

Durable agency

Art. 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. (n)

c.

Agency couched in general terms v. agency couched in specific terms

Art. 1877. An agency couched in general terms comprises only acts of administration, even if the principal should state that he withholds no power or that the agent may execute such acts as he may consider appropriate, or even though the agency should authorize a general and unlimited management.

Art. 1879. A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell. (n) Art. 1880. A special power to compromise does not authorize submission to arbitration.

(14) To ratify or recognize obligations contracted before the agency; (15) Any other act of strict dominion. (n)

MANALAYSAY-Veloso v. CA, G.R. No. 102737, 21 August 1996 Doctrines: • Documents acknowledged before a notary have the evidentiary weight with respect to their due execution. • There was no need to execute a separate and special power of attorney since the general power of attorney had expressly authorized the agent of attorney in fact the power to sell the subject property. • The separate power of attorney can be included in the general power of attorney when the act of transaction for which the special power is required is specified therein. • 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 conferred upon the agent or attorney-in-fact. If the power is couched in general terms, then only acts of administration may be deemed granted although the instrument may be captioned as “special power of attorney”; but where the power, for example, to sell or mortgage, is specified, there can be no doubt that the agent may execute the act, although the instrument is denominated as a general power of attorney. (Veloso vs. CA) A notarized power of attorney, however, carries the evidentiary weight conferred upon it with respect to its due execution. Facts: (innocent purchaser for value; wife; general power of attorney) - Francisco Veloso is the owner of a parcel of land (177 square meters) located in Tondo, Manila. The land was covered by a TCT and registered under his name. However, the TCT was cancelled a new one was issued in the name of Aglaloma Escaro. - Veloso claimed that he was the sole owner of the property and he never authorized anyone to sell the land, not even his wife. He further alleged that he was in possession of the title but when his wife, Irma, left for abroad, he found out his copy was missing. He went to the Register of Deeds to verify and he found out that his TCT was cancelled and is now under the name of Escario. - A general power of attorney and a deed of absolute sale executed by his wife, Irma as his attorney-in-fact supported the TCT. However, Veloso denied executing the power of attorney. He prayed that a temporary restraining order be issued over the land. Issues: W/N there was a valid sale of the subject property. Is a general power of attorney sufficient for the sale of the petitioner’s house? Held/Ratio: YES. The assailed power of attorney was valid and regular on its face. It was notarized and therefore has evidentiary weight with regard to its due execution. Furthermore, if the General Power of Attorney expressly granted the power to sell the property to the agent/ attorney in fact, there is no need to execute a separate and special power of attorney. 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.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, to wit: “To buy or sell ---- lands, tenements and hereditaments or

i. Transactions Covered Art. 1878. Special powers of attorney are necessary in the following cases: (1) To make such payments as are not usually considered as acts of administration; (2) To effect novations which put an end to obligations already in existence at the time the agency was constituted; (3) To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired; (4) To waive any obligation gratuitously; (5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration; (6) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent; (7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration; (8) To lease any real property to another person for more than one year; (9) To bind the principal to render some service without compensation; (10) To bind the principal in a contract of partnership; (11) To obligate the principal as a guarantor or surety; (12) To create or convey real rights over immovable property; (13) To accept or repudiate an inheritance;

pledges or personal guaranty.000 payable one year after date with interest of 9 per cent per annum. In the second place.” Even assuming that the General Power of Attorney and Deed of Sale is void. then such power cannot go beyond acts of administration. acting as the agent with a power of attorney of his wife. who were the real parties in interest. and against whom a judgment was rendered for the full amount of the note and the foreclosure of the mortgage. there can not be any doubt that the attorney in fact may execute a valid sale. La Orden Dominicos was a religious corporation duly registered under Philippine Laws. no copy of the plea was ever served upon either of the defendants. it would then be a valid exercise of the power given to the husband. Aglaloma Escaro is still the lawful owner of the property. That the mortgagors Jean M. Poizat and Gabriela Andrea de Coster y Roxas have not paid the principal or the stipulated interest from December 16. 29 SCRA 303 PEREZ-Bank of Philippine Islands v. Irma. Poizat. De Coster. Paragraph 5 of the power of attorney specifically authorizes him to borrow money for and on account of his wife and her name. However. much less couched in general terms. 1924. a defendant has a legal right to service of process.925. to his day in court and to be heard in his defense. 594 Art 1878 (12) SPA necessary in creating real rights over immovables FACTS • Jean M. have the right to to borrow money for and on account of his wife and her name? RULING: 1) No the plea of La Orden Dominicos is not sufficient. Unless waived. Also no copy of the plea was ever served upon either of the defendants.000 was actually loaned at the time the note and mortgage were executed and the money was in good faith delivered to the husband as the agent and attorney in fact of the wife. that out of such sales plaintiff shall be paid the amount due and owing it. Apparently the agent husband acting as attorney in fact loaned this sum of money from them. Mortgage Article 1878(12): Special powers of attorney are necessary in the following cases: (12) To create or convey real rights over immovable property. 2) Yes. It does not even ask for a judgment of the foreclosure of its mortgage. To secure the note they acknowledged and delivered to BPI a mortgage on certain real property lying and being situated in the City of Manila. If the power is couched in general terms. would not be sufficient to sustain a judgment. In the first place. They prayed that this sum of money be taken into account when the second mortgage is foreclosed. amounts to P27. 1921. where the power to sell is specific. . An instrument may be captioned as “special power of attorney” but if the powers granted are couched in general terms without mentioning any specific power to sell or mortgage or to do other specific acts of strict dominion. There was no reason for Escaro not to believe in Irma’s authority as she is the wife of Veloso and was in possession of the title of the land. She is a buyer in good faith. She is deemed an innocent purchaser for value because she relied on the General Power of Attorney presented by Veloso’s wife. "and making all these transactions with or without mortgages. 1924." PABALAN-PNB v. Such a proceeding cannot be sustained on any legal principle. to date.” what matters is the extent of the power or powers contemplated upon the agent or attorney in fact. The Spouses were not able to pay BPI so the latter prayed for an order of the court to sell the property described in the real mortgage or so much thereof as may be required to pay the amount due the plaintiff be sold according to law. upon such terms and conditions and under such covenants as my said attorney shall deem fit and proper. regardless of the question as to what he may have done with the money. • • i. The records show that the plea was only given to the plaintiff bank BPI. Sta. it not being merely implied.000 with interest at 10 per cent per annum. • Because of this La Orden Dominicos filed a plea saying that they have a first mortgage on the property described in paragraph IV of the complaint for P125. more specifically TCT No. payable monthly. which up to the 30th day of April.other forms of real property. Poizat acting as the agent of his wife Gabriela de Coster loaned money from BPI and made a promissory note in the amount of P292.” “Whether the instrument be denominated as “general power of attorney” or “special power of attorney. ISSUE: 1) Is the plea of La Orden Dominicos sufficient to grant them the sum of money after the second mortgage is foreclosed? 2) Did Jean M. • . If the transaction between the Dominican Fathers and Jean M. 47 Phil. Maria. However the plea of the La Orden Dominicos did not even ask for a judgment of the foreclosure of its mortgage. Poizat as attorney in fact for his wife was an original one and the P125. the plea above quoted filed on April 24.34. the judgment in favor of the Dominican Fathers cannot be sustained. 49138. then in that case only acts of administration may be deemed conferred.

There was also nothing in the language of the SPA which we could deduce the INTENTION of Perla to include the subject property. Julian defaulted and Allied Bank initiated extra-judicial foreclosure. Predicadores de la Provincia del Santisimo Rosario is reversed. 1993. Also. alienante. . without prejudice to its right to either file an original suit to foreclose its mortgage or to file a good and sufficient plea as intervenor in the instant suit. CA reversed. Muntinlupa. and compel the agent to return the document evidencing the agency. cars. the principal may revoke the agency at will. He obtained another loan worth 5M again secured by another REM.) Husband Julian then obtained a loan from Allied Bank worth 3M pesos. secured by a REM over a property registered in the Registry of Deeds in QC. Loan/Borrowings ISSUES: W/N there was a valid mortgage constituted over the subject property? W/N there was a valid revocation of the SPA? Article 1878(7): Special powers of attorney are necessary in the following cases: (7) To loan or borrow money. Perla executed a SPA in favor of her husband allowing him to sell. SC stated that as per Article 1999. since the mortgagee is a banking institution. The law is that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties. They are the heirs of Perla Mercado who owned sevel pieces of land during her lifetime. TABAG-Mercado v.Presently Article 1878(7) of the Civil code also states that special powers of attorney are also required in loaning or borrowing money subject to an urgent and indispensable matter for the preservation of the things under administration. a SPA is necessary where real rights over immovable property are created or conveyed. setting forth the facts upon which it relies for a judgment on its note and the foreclosure of its mortgage. Equally relevant is the rule that a power of attorney must be strictly construed and pursued. However. it is not binding on third persons. The controversy arose when it was stated that the TCT no. Allied Banking Corporation. Such revocation may be expressed or implied. etc. Cynthia Fekaris and Julian Mercado. G. copies of which should be served upon the defendants. and deal otherwise over SPECIFIED pieces of property (the SPA enumerates. deciding Perla intended to include the subject property in SPA. including those involving registered lands. As for the validity of revocation. There is no question that Julian was vested with the power to mortgage pieces of property identified in the SPA. TC declared the REM over the property as null and void since Julian did not have the authority. 171460. Jr represented by Atty In Fact Alfredo Perez.R. mortgage. - - - - - - - - I. Respondent Allied Bank is a banking institution in the Philippines. 27 July 2007 W/N the respondent was a mortgagee in good faith? HELD: NO to all issues! Essential requisites for validity of mortgage (Article 2085 of Civil Code): o o o That they be constituted to secure the fulfillment of a principal obligation That the pledgor or mortgagor be the absolute owner of the thing That the persons constituting the pledge or mortgage have the free disposal of their property. specified in the REM executed by Julian was NOT INCLUDED in the list of properties in the SPA executed by the owner. No. 1993 through a Revocation of SPA signed by her. the SC held it to be valid because it was EXPRESS and in a PUBLIC DOCUMENT executed on March 10. however. The agent may not go beyond nor deviate from the power of attorney. and in the absence thereof. since the revocation of the SPA was not in a public instrument. the literal meaning of its stipulation must control. - - Under Article 1878. his wife Perla. unless the latter act be urgent and indispensable for the preservation of the things which are under administration. It must be noted also that Perla revoked the SPA on March 10. There was an EXCLUSIVE enumeration. eg: land in Mindoro. And finally. that they may be legally authorized for the purpose (THE THIRD REQ IS CRUCIAL IN THIS CASE) FACTS: Petitioners are Lilian Mercado. it is clear that the subject property is NOT included in the list. The judgment of the lower court in favor of La Orden de Dominicos or PP. property in REM was sold at a public auction. it is expected to exercise GREATER care and prudence in its dealings.

In it the defendants confined themselves to stating that they would notify their agent of the maturity of the obligation contracted by him. With respect to a power of attorney of special character. it was not inconsistent with the office of Jones as the general administrator and the adviser of Strong. were quoted at the beginning. The terms thereof are limited. mortgage. o He claims that negotiations for the stock started when his own agent. to pay it within 10 years. The plaintiff contends that the agent's act of employing part of the loan to pay his personal debts was ratified by the defendants in their letter to him This court has carefully read the contents of said document and has found nothing implying ratification or approval of the agent's act. The power of attorney was registered in the RD. binding his principals jointly and severally. she told him not to part with them until she got their face value. securing it with their real property. sold to Francisco Gutierrez Repide (Respondent). He signed a promissory and executed a deed of mortgage. Issue: WON the terms of the power of attorney are limited. Gutierrez Rupide. It had been provided in the case.• YAP-Hodges v. he exceeded his authority. claiming: o That Jones had no power to sell or deliver her stock in the Philippine Sugar Estates Development Company. a third party is not protected without such inquiry. Article 1878(5): 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 valuable consideration. Defendants failed to pay the amount hence plaintiff filed an action for the foreclosure of the mortgage. inquired whether the shares were for sale. particularly when it does not appear that such was the intention of the principals. to indicate that the defendants had likewise authorized him to convert the money obtained by him to his personal use. an anonymous society formed to hold the Dominican friar lands. which her agent. to have been a direction to consult – not negotiate. Sell • • Eleanor Rica Strong (Petitioner) was the owner of 800 shares of the capital stock of the Philippine Sugar Estates Development Company. Ruling: Yes. • However. that the script was payable to bearer and had. while the reference may have been made with a view to a sale. There is nothing. the one vital thing being that the right to sell shall be express or shall be a necessary ingredient of the power that is expressed. They said nothing about whether or not their agent was authorized to use the funds obtained by him in the payment of his personal obligations. 680 Facts: . with whom he was directed to consult. In order to compromise. 6 Phil. • Gutierrez Repide further urges that the doctrine of estoppel should be applied. the agent was thereby authorized only to borrow any amount of money which he deemed necessary. ever since its issue been in the possession of Jones. through her agent. o Gutierrez Repide was not shown to have made any inquiry as to the extent of Jones power as an agent. Issue: Whether Jones sale of the shares were valid. Limited. o Where neither the actual power nor the appearance of it. the only express commission in evidence to dispose of this is found in an interview between Strong and Jones wherein. • The acts of agents beyond the limitation of their power are null and third persons deal with them at their peril and are bound to inquire to the extent of the power of the agent with whom they contract. however. Salas. it cannot be interpreted as also authorizing the agent to dispose of the money as he pleased. and o That its sale. where by a party creating an appearance of fact which is not true is held bound by that appearance as against another person who has acted on the faith of it. i. who was acting gratuitously as agent of Strong. The court fails to find proof of an effective power given to Jones to dispose of the stock. Yulo obtained a loan of P28. to which Strong’s husband referred him to Jones. speaking of her shares. o Such mandate may be either oral or written. was procured by fraud on the part of Gutierrez Repide. Ruling: No.000 from the plaintiff. • An agency stated in general terms only includes acts of administration. 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. 63 Phil 567 Defendants executed a power of attorney in favor of their brother-in-law Yulo to enable him to obtain a loan and secure it with a mortgage on a real property. alienate. for which the principal is responsible exists. Jones. BISNAR-Strong v. or to execute any other act of strict ownership an express mandate is required. She filed the current action to recover the said shares. Limited. not only under a written power special in terms to collect money but also as general agent managing all her business under a parol employment. Acting under said power of attorney. may stand by itself or may be included in the general power. o However. and in applying part of the funds to pay his personal obligations.

Edward was contending that the Deed of Sale was void as it was simulated. as long as such document authorizes the agent to sell. appointing Mauricio as his attorney-in-fact. another grandchild of Mauricio and son of Roland Sr. Mauricio executed a Deed of Sale with Assumption of Real Estate Mortgage conveying both properties to his son. assign and dispose of any and all of her property. filed an action for the judicial partition of the lots. sell. credits. even though Art 1878 states that a SPA is needed for an agent to be able to sell real property of the principal. hence they are co-owners of the lots by succession. Therefore. wherein new discovered evidence was presented. ISSUE: W/N the Deed of Sale is void. Hence he was charged by monthly rental of P1500. later a rehearing was conducted.usinesses and industries. and his grand children. although the document executed by Simona was a GPA. The newly admitted evidence after the decision of this court. Roland Sr. such document authorized Mauricio to sell the lots. G. both surnamed Bravo. • HELD: No. No. barter. SC holds that Katigbak was the absolute owner of the property and ordered defendants to pay rent. 52 Phil. Po Sun Boo filed an action for recovery of said rent totaling to P45. Ofelia and Elizabeth. authorizing him to “sell. • • • • And because the rent was still unpaid. In the case at bar.. justifies the seeting aside of the original decision  They alleged that the sale was not valid because Po Ejap was not authorized to sell the land because the said SPA was granted BEFORE the sale And that the SPA not having been registered is ineffective  Issue: BOMBALES-Katigbak v. (GPA was considered as SPA) (Deed of Sale was valid) The SC ruled that: . together with his wife. Simona executed a GPA. real and personal. the title of the document is not important. Although an SPA that was not recorded in the registry of deeds prevents the sale made by Po Ejap it does however bind the principal (Po Tecsi) to acknowledge the acts done by Po Ejap o o  • Acting on behalf of Po Tecsi and with SPA granted to him he sold above subject land to KATIGBAK. Notwithstanding the sale Po Tecsi continued to to be in possession of the property. 622 Facts: • Po Tecsi instituted SPA infavor of his brother Po Ejap authorizing him to perform in his behalf as his lawful agent to:  Buy. As the three vendees in the Deed of Sale is not sharing the rental income of the lots. 29 July 2005 FACTS: Spouses Mauricio and Simona owned 2 parcels of land. Po Ejap assigned his son Po Sun Boo all his rights and actions against Po Tecsi And Katigbak eventually sold the property to Po Sun Boo  Po Sun Boo notified Po Sun Suy that he had already purchased the land hence he will deal with him concerning the payment of the rent • CHING-Bravo-Guerrero v. 152658. Po Tecsi died and his son Po Sun Suy was appointed as administrator of Po Tecsi’s estate and he included the land as one of his dad’s properties Meanwhile. Thereafter... Bravo. consisting of a power of attorney expressly authorizing the disposal of property and the receipt of proceeds of the sale by the agent. BUT this registered SPA however was not Was the land validly acquired by Katigbak? Ruling: o Yes.assign or admit acquittance an instrument or in any other manner to acquire or convey all sorts of property. Tai Hung Co.• However. rights and actions belonging to him or might belong to him…. The SPA granted by Po Tecsi to Po Ejap refers not only to the property he had at the time the power was conferred but also to such as he might afterwards have during the time it was in force. Edward.R.280 Po Sun Suy filed an intervention praying that the court should declare that Katigbak was NOT the owner of the property hence was not entitled of rent.” Mauricio then mortgaged the lots to PNB and DBP.

The contract of lease contains a stipulation giving the lessee an option to buy the leased property and that the lessor guarantees to leave the possession of said property to the lessee for a period of ten (10) years or as long as the lessee faithfully fulfills the terms and conditions of their contract In accordance with the said contract of lease. whereby the former sold to the latter the aforesaid residential house for and in consideration of the sum of P8.00 readjusted to P2. FERNANDEZ-Chua v. for a term of ten (10) years. de Reynes. alleging that the conveyance was in violation of the plaintiffs' right of option to buy the leased premises Petitioners rely on the contract of lease entered into by and between Chua Bok and Vicenta R. therefore. The lease contract the linchpin of petitioners' cause of action. for these expenses. or within four (4) years from the execution of the said contract of lease. Lease Article 1878(8): Special powers of attorney are necessary in the following cases: (8) To lease any real property to another person for more than one year. who was authorized with a special power of attorney. the heirs of Roland Sr. executed a Deed of Absolute Sale of Building in favor of Chua Bok. 620 and 7549. the lessee. de Reynes was not armed with a special power of attorney to enter into a lease contract for a period of more than one year. The contract was entered into by the agent of the lessor and not the lessor herself. provides: Special Power of Attorney are necessary in the following cases: xxx xxx xxx (8) To lease any real property to another person for more than one year. incurred expenses in securing the release of the lots from being mortgaged. 229 SCRA 99 Principal: Defendant Herrera Agent: Vicenta Reynes Agent executed 10 year lease contract without SPA. > 1 year lease needs SPA Facts: Sometime in 1950. as well as on the tacit renewal thereof by respondent Herrera In declaring the contract of lease void. Nos. erected a residential house on the leased premises. Tian On. On February 2. the predecessor-in-interest of the plaintiffs herein. later b. Mrs. Sy Tian On. Compromise Article 1878(3): Special powers of attorney are necessary in the following cases: .a. Luz Tormis. However. involves the lease of real property for a period of more than one year. Petitioner OFELIA BRAVO-QUIESTAS is entitled to one-third (1/3) of the Properties. 1977. Dizon v. On July 26. a tacit renewal is limited only to the terms of the contract which are germane to the lessee's right of continued enjoyment of the property and does not extend to alien matters. must reimburse Roland Jr. defendant Herminigilda Herrera executed a Contract of Lease in favor of Tian On (or Sy Tian On) whereby the former leased to the latter Lots.00. Vicente and Victoria Go. 1954.00 After the expiration of the contract of lease in question the plaintiffs herein. ii. the Court of Appeals noted that Vicenta R. and The remaining one-third (1/3) portion of the Properties should be divided equally between the children of ROLAND BRAVO. IAC. Article 1878 of the New Civil Code. 57 SCRA 250 (1974). April 1978. renewable for another five (5) years. Ambrosio Magsaysay. like the option to buy the leased premises.000. as attorney-infact of respondent Herrera. as held in Bernardo M. Roland Jr. Thereafter. Petitioner LILY ELIZABETH BRAVOGUERRERO is entitled to one-third (1/3) of the Properties. W/N valid? No. the law requires that the agent be armed with a special power of attorney to lease the premises. c. In such a case. in pertinent part. defendant Herrera through her attorney-infact. a tacit renewal of the lease (tacita reconduccion) is deemed to have taken place.000. sold the lots in question to defendants-spouses. plaintiffs filed the instant case seeking the annulment of the said sale between Herminigilda Herrera and spouses Vicente and Victoria Go.000. the lessee. or on November 18. We agree with the Court of Appeals. who are the successors-in-interest of Chua Bok (who had meanwhile died) continued possession of the premises up to iii. with adjusted rental rate of P1. It is true that respondent Herrera allowed petitioners to occupy the leased premises after the expiration of the lease contract and under Article 1670 of the Civil Code of the Philippines. 1977. However.

The Commissioner’s report was approved by the trial court. In a subsequent amendment of the complaint of the Corporation. 6 SCRA 1007 (29 December 1962) DOCTRINE: Compromise agreement entered into by the lawyer without the SPA of client is NOT VOID but merely UNENFORCEABLE FACTS: • Lopena and Ramos sold their 3 parcels of land to Dungo and Gonzales who gave a downpayment and rest will be paid on installment for the next 6 months • (Weirdly to) The same buyers. The trial court also directed the parties to send their representatives to the place of the survey. or who has acted beyond his powers. Corporation requested the petitioners to allow its workers to enter their lands to explore and develop the claims. However. it alleged that the petitioners were willing to sell their properties for P10/sq. The trial court approved the Agreement and enjoined the .m.. with the exception of Dungo. However. Dungo and Gonzales mortgaged the property they just bought to the same sellers – Lopena and Dungo. 1403. including Dungo signed.R. HELD: The Compromise Agreement is valid as to Dungo too.m. the Corporation filed with the CFI of Bulacan a complaint for injunction and damages against the petitioners. G. thru its representatives. ATTY. TRI-PARTY AGREEMENT. It named a Commissioner to conduct a survey plan on relocation and to submit a report to the court. DUNGO’S COUNSEL. The trial court directed the issuance of a writ of injunction and suggested the relocation of the boundaries of the Corporation’s claims in relation to the properties of the petitioners. was entered into. the sellers-mortgagee filed for an Ex-parte Complaint for Foreclosure • BUT: Before trial the parties. however. Dungo RATIFIED the Compromise Agreement by entering into the subsequent Tri-Party Agreement Also. but when it offered to pay only P0. L-32473. This time all 4 buyers and sellers. to renounce the right to appeal from a judgment. Although an SPA is required in order that 1 may compromise an interest of another. Hence. of the its acquisition of the placer mining claims. the Corporation informed the petitioners. Hence. GUY-Vicente v. the petitioners refused and threatened the workers with bodily harm. Dungo benefited from the first Compromise Agreement which extended Duñgo's obligation which matured and became demandable on October 10. entered into a Compromise Agreement which was approved by the Court o Compromise Agreement: extended the due date of the payment due from Dungo and Gonzales o Failure to pay on the stated date will lead to foreclosure and that the buyers waived their right to a period of redemption o Dungo (only petitioner in this case) did not sign the agreement. was included who assumed to pay for the indebtedness of Dungo and Gonzales. The following contracts are unenforceable. 1973 FACTS: Hi Cement Corporation acquired a Placer Lease Contract from Banahaw Shale Mining Association. Lopena. as the defendants were willing to sell the properties at reasonable prices. ART. the counsels executed a Compromise Agreement to determine the prices. the absence of an SPA makes the compromise merely unenforceable and NOT VOID. Emma Santos. Included in the mining claims were the three parcels of land owned by the petitioners. Gonzales represented that his signature is good for him and Dungo o ALSO. the compromise agreement extended the date of maturity to June 30. The lease contract covered two mining claims over 51 ha of land. with the promise to pay the petitioners reasonable amounts. MANUEL CHAN WAS PRESENT IN THE PREPARATION OF THE COMPROMISE AGREEMENT WHO ALSO SIGNED THE SAID AGREEMENT  Atty. o The mortgage agreement had an acceleration clause wherein failure to pay any installment makes the rest of the succeeding payments due and demandable • As the buyers and mortgagors Lopena and Ramos failed to pay the 1st installment. On several occasions. FORTES-Dungo v. 1960. the lower court based on the 1st Compromise Agreement granted the Foreclosure action initiated by Ex-Parte by the sellers because the buyers failed to pay on the date stated in the 1 st Compromise Agreement • The 3 parcels of land were sold in an auction sale • Dungo is claiming that the first Compromise Agreement is void ab initio with respect to him as he did not sign it WON: The first Compromise Agreement is void with respect to Dungo.(3) To compromise. the petitioners stated that they were wiling to go to trial on the issue of what would be the reasonable price. • HOWEVER. Compromises are also govern by the laws on contracts. No. where a payor. Chan is the same lawyer who prepared the ANSWER of Dungo to the Complaint filed by the sellers • BUT AGAIN: Another Agreement. 1959. 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. to submit questions to arbitration. Geraldez. to waive objections to the venue of an action or to abandon a prescription already acquired. The counsels of the parties conferred among themselves on the possibility of terminating the case by compromise. 31 July 1973 Vicente v Geraldez (GEN) July 31.90/sq.

285. Upon the discovery of anomalies. the trial court reversed its decision and set aside the motion for execution. E. but it . Philippine National Bank. upon an opposition of the Corporation.. de Foerster. and the bank did not try to go back of this proposition. Ventura’s manifestation praying that the court ignore and disregard the manifestation. Instead. Ventura. The Compromise Agreement between the parties was signed only by the parties’ respective lawyers but it was not disputed that the lawyers of the Corporation had not submitted to the Court any written authority from their client to enter into a compromise. It held that the Agreement was contrary to law because the lawyers had no special power of attorney as required by Art. Foerster committed suicide.lawphil. except to the extent that such power is given to him either expressly or by reasonable implication from circumstance. After the indorsement on the checks was written "Received payment prior indorsement guaranteed by Philippine National bank. as administrative manager of the corporation. contrary to petitioner’s claims. 1878 of the Civil Code. Attorney. Attorney. But as presented by evidence. The Insular Drug Company claims that it never received the face value of 132 checks here in the question covering a total of P18. The petitioners then filed a motion for execution which the trial court granted. Inc. 58 Phil. the lawyers answered in the affirmative. But there is no evidence showing that the bank knew that Foerster was misappropriating the funds of his principal. Other acts of strict dominion Article 1878(12): Special powers of attorney are necessary in the following cases: (12) To create or convey real rights over immovable property HAUTEA-Insular Drug Co. The trial court rendered a decision upholding the Agreement. 1878 of the Civil Code and Rule 138. Also. Petition dismissed..E. Manager. Petitioners filed an answer to Attorney. 23 of the Rules of Court specifically require that a special power of attorney be had when entering into a compromise agreement. Art. Nowhere does it appear that the Corporation’s lawyers ever made such a representation. the counsels of both parties submitted the names of the persons designated by them as their commissioners. Angel Padilla. Eventually the Manila office of the drug company investigated the transactions of Foerster. Not only did the bank permit Foerster to indorse checks and then place them to his personal account. ISSUE: WON the Compromise Agreement is valid HELD: NO.92. it has been held that an officer or an agent of the corporation has no power to compromise or settle a claim by or against the corporation. did not tacitly ratify the agreement entered into by the parties. Iloilo Branch. Cardenas. 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. It has been held that ratification must be by the officer or governing body having authority to make such contract. Hence. Foerster deposited checks with the Iloilo branch of the Philippine National Bank. and must be with full knowledge. Australia and China and deposit the amounts to the credit of the drug company.. vii. Foerster and Carmen E. the doctrine of estoppel cannot be used against them. Pursuant to the terms. It is thus necessary to ascertain whether the Board of Directors of the Corporation had authorized its lawyers to enter into the Compromise Agreement. However. 684 (21 October 1936) FACTS: The Insular Drug Co. Some of the checks were drawn against the Bank of Philippine National Bank. Foerster was formerly a salesman of drug company for the Islands of Panay and Negros. Sec. The drug company saw fit to stand on the proposition that checks drawn in its favor were improperly and illegally cashed by the bank for Foerster and placed in his personal account. The checks were in that bank placed in the personal account of Foerster. It alleged that when the Court inquired if the lawyers of the Corporation were duly authorized to enter into a compromise agreement. filed a manifestation in Court stating that the Board of Directors did not approve the Compromise Agreement entered into by the counsels. The trial court later appointed the commissioners. Also. the Corporation’s counsel. v.parties to comply with the terms and conditions.net The bank argues that the drug company was never defrauded at all. As a consequence of the indorsements on checks the amounts therein stated were subsequently withdrawn by U. The Commissioners submitted to the court a Consolidated Report regarding the applicable unit prices. Foerster also acted as a collector for the company. He had no authority to ratify. thus making it possible for Foerster to defraud the drug company. the counsels of the Corporation have not demonstrated any act or declaration of the corporation amounting to false representation or concealment of material facts calculated to mislead the petitioners. However. is a Philippine corporation with offices in the City of Manila. Lastly. the counsels categorically deny that they ever represented to the court that they were authorized to enter into a compromise. U.

the PNR’s scrap/unserviceable rails located in Del Carmen and Lubao. 8706855 dated May 20. PNR. Wijanco mentioned in the letter was Lizette Wijanco. Consequently. Dizon: This is to inform you as President of San Juanico Enterprises. and not entitled to a refund? RULING: Yes. Tarlac instead. WIJANCO of No. the authority of the latter shall be in writing. (1710a) KUNG-Angeles v. 2. or his failure to repudiate the agency. The letter under consideration is sufficient to constitute a power of attorney. SGD. LIZETTE R.00 per metric ton. and the agent may neither go beyond nor deviate from the power of Articles 1869. No. knowing that another person is acting on his behalf without authority. on an “AS IS. When a sale of a piece of land or any interest therein is through an agent. and credits the checks to the personal account of the salesman and his wife. After paying the stated purchase price. the sale shall be void. as principal. petitioner's now deceased wife. The instrument will be held to grant only those powers which are specified therein. WON. Any person taking checks made payable to a corporation. or implied from the acts of the principal. 1874. interests and participation in favor of LIZETTE R. Cipriano Dizon. 500 SCRA 444 (2006) . to be my lawful representative in the withdrawal of the scrap/unserviceable rails awarded to me. 1980. 1980. A power of attorney must be strictly construed and pursued.went farther and permitted Foerster's wife and clerk to indorse the checks.00. For this reason. Sta. That very same day – May 26. thePNR subsequently suspended the withdrawal in view of what it considered as documentary discrepancies coupled by reported pilferages of over P500. WON.” Its primary purpose is not to define the authority of the agent as between himself and his principal but to evidence the authority of the agent to third parties with whom the agent deals. Romualdez addressed a letter to Atty. it passed to the drug company which thus suffered no loss. for the total amount of P96. 1869. Oral v. Manila. The PNR granted said request and allowed Lizette to withdraw scrap/unserviceable rails in Murcia. 1980 and O. and must same by the consequences if the agent who indorses the same is without authority.00 and P2. Agency may be express. 1874 Art. A salesman with authority to collect money belonging to his principal does not have the implied authority to indorse checks received in payment.00. hen a bank accepts the indorsements on checks made out to a drug company of a salesman of the drug company and the indorsements of the salesman's wife and clerk. The written authorization itself is the power of attorney. 1606 Aragon St. Pampanga at P1. respectively. (n) Art. Agency may be oral.100. the bank should stand the loss occasioned by the negligence of its agents? On May 5. However. dated May 5. ISSUE: Was the letter of Mr. 1980 – Lizette requested the PNR to transfer the location of withdrawal for the reason that the scrap/unserviceable rails located in Del Carmen and Lubao.600. Cruz. Except as may be required by statute. Thus. Capas and San Miguel. Written The Lizette R. was Lizette Angeles merely an agent. the letter reads: Dear Atty. from his silence or lack of action.300. otherwise.000. that I have authorized the bearer. ISSUES & HELD: 1. YES. permitting them to make withdrawals. Thank you for your cooperation. the right of an agent to indorse commercial paper should be inferred lightly? NO. Romualdez a valid form of a special power of attorney. PNR’sActing Purchasing Agent. Bearing date May 26. and this is clearly indicated by the fact that it has also been called a “letter of attorney. WHERE IS” basis. a power of attorney is valid although no notary public intervened in its execution. WIJANCO. the bank makes itself responsible to the drug company for the amounts represented by the checks. The right of an agent to indorse commercial paper is a very responsible power and will not be lightly inferred. the spouses Angeles demanded the refund of the amount of P96. a..000. I have given her the ORIGINAL COPY of the AWARD. appoints another as his agent and confers upon him the authority to perform certain specified acts on behalf of the principal.00 worth of PNR scrap properties in Tarlac. which can act only by agent does so at his peril. the respondent Philippine National Railways (PNR) informed a certain Gaudencio Romualdez that it has accepted the latter’s offer to buy.R. unless it is pleaded and proved that after the money was withdrawn from the bank.Angeles. Pampanga were not ready for hauling. unless the law requires a specific form. A power of attorney is only an instrument in writing by which a person. 1980 which will indicate my waiver of rights.

the judgment based thereon is necessarily void.” In the context of the specific investiture of powers to Villamil-Estrada. MAGSUMBOL-Cosmic Lumber v. and considering further that petitioner never received the proceeds of the sale. This being the case. FACTS: COSMIC LUMBER CORPORATION through its General Manager executed on 28 January 1985 a Special Power of Attorney appointing Paz G. Villamil-Estrada acted without or in obvious authority. 9127 and 443 so that petitioner could take material possession thereof. On 11 March 1985 Paz G. a power of attorney must so express the powers of the agent in clear and unmistakable language. 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. the authority of the latter shall be in writing. Petitioner asserts that it was only when the summons in Civil Case No. It is therefore clear that by selling to respondent Perez a portion of petitioner’s land through a compromise agreement. of lot 443 which portion will be located on the easternmost part as indicated in the sketch as annex A. On 25 November 1985 Villamil-Estrada entered into a Compromise Agreement with respondent Perez. vs. 2. instituted an action for the ejectment of private respondent Isidro Perez and recover the possession of a portion of Lot No. Forthwith. very much less than its assessed value of P250. Antipodal to the opinion expressed by respondent court in resolving petitioner’s motion for [G.00 per square meter. all that Lizette was authorized to do was to withdraw the unserviceable/scrap railings. That as per relocation sketch plan dated June 5. On 27 November 1985 the “Compromise Agreement” was approved by the trial court and judgment was rendered in accordance therewith. D-10459. No.00 per square meter.attorney. 114311 29 November 1996 complaint to revive the judgment. institute and file any court action for the ejectment of third persons and/or squatters of the entire lot 9127 and 443 and covered by TCT Nos. Villamil-Estrada. CA. Villamil-Estrada and respondent Isidro Perez upon which the trial court based its decision of 26 July 1993 in Civil Case No. Whatever expenses of subdivision.00/square meter. When there is any reasonable doubt that the language so used conveys such power. 4. alienation by sale of an immovable certainly cannot be deemed protective of the right of petitioner to physically possess the same. The sale ipso jure is consequently void. more so when the land was being sold for a price of P80. That plaintiff hereby recognizes ownership and possession of the defendant by virtue of this compromise agreement over said portion of 333 square m.640. no such construction shall be given the document. 37649 needed to segregate from Lot No. docketed as Civil Case No. and other incidental expenses shall be shouldered by the defendant.R. otherwise.R. petitioner sought annulment of the decision of the trial court. respondents.00 computed at P80. for the said squatters to remove their houses and vacate the premises in order that the corporation may take material possession of the entire lot. D-7750. 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. 443 before the Regional Trial Court of Dagupan. 3. 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. 114311. the terms of which follow: 1. The authority granted Villamil-Estrada under the special power of attorney was explicit and exclusionary: for her to institute any action in court to eject all persons found on Lots Nos. Contextually. 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. 1996] COSMIC LUMBER CORPORATION. 1985 prepared by Engineer Rodolfo dela Cruz the area at present occupied by defendant wherein his house is located is 333 square meters on the easternmost part of lot 443 and which portion has been occupied by defendant for several years now. G. to private respondent under the compromise agreement. and for this purpose. COURT OF APPEALS and ISIDRO PEREZ. upon learning of the fraudulent transaction. November 29. to appear at the pretrial 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. and for this purpose. petitioner. For the principal to confer the right upon an agent to sell real estate. Nowhere in this authorization was Villamil-Estrada granted expressly or impliedly any power to sell the subject property nor a portion thereof. When the sale of a piece of land or any interest thereon is through an agent. No. 37648 and 37649. Although the decision became final and executory it was not executed within the 5-year period from date of its finality allegedly due to the failure of petitioner to produce the owner’s duplicate copy of Title No. Thus on 25 January 1993 respondent filed a . 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. ISSUES: WON the compromise agreement is void? WON Attorney-infact Villamil-Estrada possess the authority to sell or was she armed with a Board Resolution authorizing the sale of its property? HELD: The court agrees with the petitioner. 443 the portion sold by the attorney-in-fact. registration. Villamil-Estrada as attorney-in-fact xxx to initiate. the sale shall be void. by virtue of her power of attorney. So is the compromise agreement. That to buy peace said defendant pays unto the plaintiff through herein attorney-in-fact the sum of P26. 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. VillamilEstrada. Paz G. D-7750. docketed as Civil Case No. D-10459 for the revival of judgment was served upon it that it came to know of the compromise agreement entered into between Paz G.

NO HELD: The Petition is bereft of merit. Bibiano. as it would be to read it before he signed it if he were able to do and his failure to obtain a reading and explanation of it is such gross negligence as  4. petitioners informed the respondent of their intention to rescind the Contract and to return the option money given by respondent (latter did not respond) Herein petitioners.. and co-owners of undivided shares of 2 parcels of agricultural and tenanted land situated in Cavite. Enriqueta. As to petitioner Enriqueta’s claim that she merely signed as a witness to the said contract. [herein petitioner] co-owner Ernesto Durumpili Oesmer. despite petitioner Ernesto’s lack of written authority from the five petitioners to sell their shares in the subject parcels of land. Paraiso Development. Petitioners acquired the lots as heirs.. for the purpose of brokering the sale of petitioners’ properties. Bibiano. The 8 Petitioners (Rizalino. One day. MR of petitioners DENIED. Leonora. Rizalino. Enriqueta. 5 February 2007   1.reconsideration. 6.  8. However. one Rogelio Paular brought along petitioner Ernesto to meet with a certain Sotero Lee. 2 of the brothers. herein petitioners. It is true that the signatures of the 5 petitioners (Enriqueta. the supposed Contract to Sell remains valid and binding upon the latter. which expressly provides that: Art. and Leonora (all surnamed Oesmer). payable to Ernesto. In the case.  ISSUES: WON Contract to Sell is not binding upon petitioner Ernesto’s co-owners (herein petitioners Enriqueta. it is not only petitioner Ernesto who signed the said Contract to Sell. it is as much his duty to procure some reliable persons to read and explain it to him. the authority of the latter shall be in writing. Hence. The law itself explicitly requires a written authority before an agent can sell an immovable.  7. although signed on the margin by the five petitioners. 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. 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. and Leonora) on the Contract to Sell did not confer authority on petitioner Ernesto as agent authorized to sell their respective shares in the questioned properties because of Article 1874 of the Civil Code. 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 herein [respondent] corporation. Therefore. they were selling the same directly and in their own right. Rizalino. Librado.R. When a sale of a piece of land or any interest is through an agent. by affixing their signatures on the Contract to Sell. A check in the amount of P100. Sometime thereafter.000. With respect to the other petitioners’ assertion that they did not understand the consequences of their action because of their low degree of education and because the contents were not explained to them. did not sign. namely: Ernesto. the same cannot be sustained. It is worth noting that petitioners’ signatures are found in the Contract to Sell.00. they are negligent if they fail to have the contract read to them. As the Court has held: x x x The rule that one who signs a contract is presumed to know its contents has been applied even to contracts of illiterate persons on the ground that if such persons are unable to read. As can be clearly gleaned from the contract itself. President of respondent corporation. sale shall be void. in as clear and precise terms as possible. are brothers and sisters. Rizalino. A Contract to Sell was drafted. Emphasis should also be given to the fact that petitioners Ernesto and Enriqueta concurrently signed the Contract to Sell. Petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell. was given as option money. and Librado also signed the said Contract to Sell. and Jesus) all surnamed Oesmer. Jr. Adolfo and Jesus. the Contract to Sell. 1874. Ernesto. Bibiano. MANALAYSAY-Rizalino v. otherwise. Respondent Paraiso Development Corporation is engaged in the real estate business. However. 2. the nullity of the settlement between VillamilEstrada and Perez impaired the jurisdiction of the trial court to render its decision based on the compromise agreement.. is not sufficient to confer authority on petitioner Ernesto to act as their agent in selling their shares in the properties in question. . rather. If a person cannot read the instrument. Jr. Jr. and Leonora) . Bibiano. Rizalino. Bibiano. the contract itself does not say so. In a letter. before he signs it. 157493. Adolfo. Librado.000. the other five petitioners also personally affixed their signatures thereon. RTC in favor of the respondent: The assailed Contract to Sell is valid and binding only to the undivided proportionate share of the signatory of this document and recipient of the check. and to pay the latter the attorney’s fees in the sum of Ten Thousand (P10. The Contract is absolutely silent on the establishment of any principal-agent relationship between the five petitioners and their brother and co-petitioner Ernesto as to the sale of the subject parcels of land. 9.00) Pesos plus costs of suit. No. filed a Complaint for Declaration of Nullity or for Annulment of Option Agreement or Contract to Sell with Damages before RTC. Librado. Thus. they were not selling their shares through an agent but. 3. CA declared that the Contract to Sell is valid and binding with respect to the undivided proportionate shares of the six signatories of the said document. a written authority is no longer necessary in order to sell their shares in the subject parcels of land because. The conferment of such an authority should be in writing. Both lots are unregistered and originally owned by their parents. this Petition for Review on Certiorari. G.  5. Librado. Leonora.

The final arguments of petitioners state that the Contract to Sell is void altogether considering that respondent itself did not sign it as to indicate its consent to be bound by its terms. subject to the AoI. Said arguments must fail. Selling is obviously foreign to a corporate treasurer’s function. a treasurer. the Contract to Sell is still valid and binding with respect to the 6/8 proportionate shares of the petitioners. Unmistakably. The contract entered into between Nenita and San Juan cannot bind Motorich. San Juan argues that the veil of corporate fiction should be pierced because the spouses Reynaldo and Nenita Gruenberg own 99. their actions cannot bind the corporation. can dispose of their shares even without the consent of all the co-heirs (Article 493) Consequently. CA affirmed this decision. Indubitably.96% of the subscribed capital stock. no cash payment was made on the due date. whose powers are limited. The veil can only be disregarded when it is utilized as a shield to commit fraud. San Juan failed to   PEREZ-PABALAN-San Juan Structural Steel v. unless it has ratified such acts or is estopped from disclaiming them. A corporate officer or agent may represent and bind the corporation in transactions with 3rd persons to the extent that the authority to do so has been conferred upon him. This is in accordance with Sec. Hence.00 was part of the purchase price. to ascertain not only the fact of agency but also the nature and extent of authority. are incidental to. the question of piercing the veil becomes a matter of proof. agency or adjunct of another corporation. Hence. as properly held by the appellate court. and this includes powers which have been intentionally conferred. by laws. the petitioners.000 earnest money. void. (2) No. 23 of the Corporation Code. through its officers or agents in the normal course of business. But when these officers exceed their authority. assets of the corporation in accordance with Sec. On the other hand. Nenita contended that since San Juan was not able to pay within the stipulated period. and since according to Nenita. refused to execute the Deed of Assignment of the land. this petition with SC. Unless duly authorized. defeat public convenience. if they would hold the principal liable. San Juan allegedly asked to be submitted a computation of the balance due to Motorich. The general principles of agency govern the relation between the corporation and its officers or agents. In the case at bar.000. and (c) petitioners are further ORDERED to execute in favor of respondent the Deed of Absolute Sale. and also such powers as. Adolfo and Jesus. Issues: (1) Whether or not there was a valid contract existing between San Juan and Motorich. (a) the Contract to Sell is DECLARED valid and binding with respect to the undivided proportionate shares in the subject parcels of land of the six signatories (petitioners) (b) respondent is ORDERED to tender payment to petitioners.will estop from avoiding it on the ground that he was ignorant of its contents. 296 SCRA 631 Facts: San Juan Structural and Steel Fabricators entered into an agreement with Motorich Sales Corporation through Nenita Gruenberg. Upon payment of the earnest money. The latter. The sum of P100. (2) Whether or not the veil of corporate fiction could be pierced. Held: (1) No. The deed was agreed to be executed only after receipt of the cash payment. the burden of proof is upon them to establish it. a corporation can only act through its BoD or. 1989. confuse legitimate issues. Reynaldo Gruenberg. no deed of assignment could be made. The Contract to Sell is not void merely because it does not bear the signature of the respondent corporation. balance to be payable within March 2. Neither was real estate sale shown to be a normal business activity of Motorich. Furthermore. they needed no authorization from the BoD to enter into the said contract. the powers intentionally conferred. In the case at bar. The primary purpose of said corporation is marketing. did not sign the agreement entered into by San Juan and Motorich. Hence. because the latter never authorized nor ratified such sale. its treasurer is not cloaked with actual or apparent authority to buy or sell real property. corporate treasurer of Motorich. import and export relating to a general merchandising business. San Juan discovered that Motorich entered into a Deed of Absolute Sale of the land to ACL Development Corporation. and again. Furthermore. DISPOSITIVE: Petition is DENIED. Respondent corporation’s consent to be bound by the terms of the contract is shown when partial performance by respondent of its obligation. the property of the corporation is not the property of its stockholders and may not be sold by them without express authorization from the corporation’s BoD. the treasurer’s signature was inadequate to bind Motorich to the agreement. RTC dismissed the case holding that Nenita Gruenberg was not authorized by Motorich to enter into said contract with San Juan. 1989. no deed could have been executed. or serve as a mere alter ego or business conduit of a person or an instrumentality. and on March 1. or relevant provisions of law. Motorich contends that since Nenita Gruenberg was only the treasurer of said corporation. SC found no reason to pierce the veil."  In addition. when authorized either by its by laws or by its board resolution. San Juan had the responsibility of ascertaining the extent of Nenita’s authority to represent the corporation. and that a majority vote of the BoD was necessary to sell . thus. being owners of their respective undivided shares in the subject properties. illegality or inequity. or may be implied from. Acts of corporate officers within the scope of their authority are binding on the corporation. 40 of the Corporation Code. are bound at their peril. and the Decision of CA are AFFIRMED. powers added by custom and usage." it is actually earnest money or down payment. A corporation is a juridical person separate and distinct from its stockholders or members. for the transfer to the former a parcel of land upon a P100. as usually pertaining to the particular officer or agent. and in case either is controverted. even without the consent of the two co-heirs. San Juan filed a complaint with the RTC. and such apparent powers as the corporation has caused persons dealing with the officer or agent to believe that it has conferred. and that its president. distribution. in the usual course of the particular business. despite repeated demands. whether the assumed agency be a general or special one. CA. and the Contract is really a unilateral promise to sell without consideration distinct from the price. Although the same was denominated as "option money. an activity which falls way beyond the scope of her general authority. Accordingly. persons dealing with an assumed agent. cannot bind the corporation in a sale of its assets.

Cruz. Jr.. CA reversed the judgment of the trial court holding that since Cruz. HELD: NO to both issues. In 1985. ordering the Delos Reyes to immediately vacate the premises.000. otherwise the sale shall be void.000. Daluyong sent his son Renato Gabriel to take over for Maria Rita. Davao Del Norte When Daluyong Gabriel was still alive. Dieselman and Midas executed a Deed of Absolute Sale of the same property. Polintan authorized Felicisima to sell the same lot. SC agrees with the CA. Sr. Renato Gabriel was neither the owner of the subject property nor a duly designated agent of the registered owner (his father) authorized to sell property on his behalf. issued a letter denominated as "Authority To Sell Real Estate" to Polintan.establish that said corporation was formed for the purpose of shielding any fraudulent act of its officers and stockholders. AF Realty replied that it has paid an initial down payment of P300. Maria Rita executed a Contract of Lease with the petitioner spouses Delos Reyes (1 year renewable lease). The original contract of lease was novated replaced by a new contract with a 6 year duration (lessee: the Delos Reyes and lessor: Renato Gabriel). Jr. making it impossible to be passed on to him. Polintan received the check and signed an "Acknowledgement Receipt" Cruz.000 pesos. a member of the board of directors of Dieselman. Cruz. - - - - - YAP-AF Realty v. Felicisima then offered for sale the property to AF Realty. As administratrix.00 payable to the order of Dieselman. As per Article 1874 of the Civil Code. Claiming that there was a perfected contract of sale between them. In 1987. He claimed that his son Renato was never given the authority to lease or to sell any portion of his land. a real estate broker. the fact that the board of directors of Dieselman never authorized. ordering the Gabriels to execute a deed of conveyance. Payment was received and acknowledged by Renato Gabriel. AF Realty filed a complaint. which is subject of the controversy Respondent CA and Daluyong Gabriel (later substituted by his heirs through hereditary succession) are the owners of the land in question The land is located in Barrio Magugpo. Dieselman. to sell the property in question or to look for buyers and negotiate the sale of the subject property - - - - - ISSUE: W/N the verbal agreement which petitioners entered into with private respondents Renatto Gabriel involving the sale of the 300 sq m land registered in Daluyong Gabriel’s name is a valid and enforceable contract of sale of real property? W/N Renato Gabriel as the purported vendor. he merely wanted Renato to collect rentals. president of Dieselman. Lydia Delos Reyes VERBALLY agreed to buy 300 sq m (including the lot she was leasing) for 90. 373 SCRA 385 Dieselman Corporation owns a parcel of commercial lot in Pasig. CA. Ruling: No. Jr. Daluyong Gabriel then demanded that the spouses Delos Reyes cease and desist from doing so. Sr. acknowledged receipt of the said P300. authorized Polintan "to look for a buyer/buyers and negotiate the sale" of the lot.. the CA reversed. Renato did not have one of the essential requisites for a contract’s validity which is CAPACITY (as per Article 1318) Renato could not have been the owner through succession because his father donate dthe entire lot to his sister. has no written authority from Dieselman to sell the lot. terminated the offer and demanded from AF Realty the return of the title of the lot earlier delivered by Polintan. the sale was not perfected. Tagum. he placed his sister Maria Rita Gabriel Del Ray as administratrix of the land because he was based in Metro Manila. the authority of the latter shall be in wiriting. Renato’s sister Maria Luisa Gabriel Esteban (also a respondent in this case). 313 SCRA 632 FACTS: Petioners Claudio Delos Reyes and Lydia Delos Reyes were buyers in a contract of sale of land. In other words. was not authorized in writing by Dieselman to sell the subject property to AF Realty. Ranullo.00 and is willing to pay the balance. Cruz. Meanwhile. the Delos Reyes claimed that Daluyong and his wife were aware of the sale and it was done with their consent and knowledge. TC ruled in favor of the Delos Reyes. TABAG-Delos Reyes v. accepted the offer and issued a check in the amount of P300. Jr. “From the foregoing scenario. board member and vice-president of AF Realty. Issue: WON AF Realty has better right to the subject lot. found out that the spouses Delos Reyes were building a 2 story structure in the lot. had legal capacity to enter into or to give consent to the sale? . However. There is also no sufficient evidence his father ratified Renato’s act.00 as "earnest money" but required AF Realty to finalize the sale at a higher price. Jr. Cruz. However. Cruz.000. when a sale of a piece of land or any interest there in is through an agent. verbally and in writing. As a defense.

No. In the cases mentioned in Nos. through a Complaint-Affidavit against private respondents before the Office of the Ombudsman which was docketed as OMB-1-94-3425 entitled Antonio B.scribd. Petitioner maintains that respondent Ilao. 552-P’93 filed by respondent Salenga as there was no tenancy relation between respondent Salenga and Rafael L. 1893. (1721) Art. but without designating the person. the instant case was instituted by petitioner Antonio Baltazar. Lopez. the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution. If he has been authorized to lend money at interest. has no written authority from the board of directors of respondent Dieselman to sell or to negotiate the sale of the lot.R. 1874. Felicisima could not have possessed authority broader in scope. the complaint was dismissible on its face. 136433. it should be noted that Cruz. sent the demand letter to Rafael Lopez and Lourdes Lapid for unpaid salaries and non-payment of the 10% share in the harvest. Article 1874 of the same Code provides: “ART. could not confer on Polintan any authority which he himself did not have. it is undisputed that respondent Cruz. 1892. Art. Pending resolution of the agrarian case. Salenga v. Nemo dat quod non habet. Jr. he cannot borrow it without the consent of the principal.00 as partial payment of the purchase price of the subject property is equally untenable. Eulogio Mariano. Ernesto Salenga was hired by Eduardo Lapid as fishpond watchman (bante-encargado). Jr. Region III. In the same manner. Rafael L.. Ombudsman. In the sublease. Salenga was prompted to file a Complaint before the Provincial Agrarian Reform Adjudication Board (PARAB). Lessee Eduardo Lapid in turn sub-leased the fishpond to Rafael Lopez during the last seven (7) months of the original lease. otherwise.com/doc/41988474/Case-No-4Baltazar-v-Ombudsman FACTS: Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan. If the agent has been empowered to borrow money. 1890. Jr. Jr. When a sale of piece of land or any interest therein is through an agent. 1 and 2 of the preceding article. "The argument that Dieselman ratified the contract by accepting the P300. the authority of the latter shall be in writing. San Fernando. had no jurisdiction to hear and act on DARAB Case No. being a mere extension of Polintan’s purported authority. Appoint a substitute Articles 1892 to 1893 . Rafael Lopez rehired respondent Salenga.000. Lend to/Borrow Money Agency from the Article 1890 Art. 6 December 2006 Source: http://www. the alleged sale of the subject property was effected through persons who were absolutely without any authority whatsoever from Dieselman. and the person appointed was notoriously incompetent or insolvent. much less to appoint other persons for the same purpose. "While Polintan was actually authorized by Cruz. Lapid for Maintenance of Peaceful Possession. he may himself be the lender at the current rate of interest. Her Attorney-in-Fact Faustino R. ISSUE: • Whether or not the petitioner has legal standing to pursue the instant petition? • Whether or not the Ombudsman likewise erred in reversing his own resolution where it was resolved that accused as Provincial Agrarian Adjudicator has no jurisdiction over a complaint where there exist no tenancy relationship? Pertinently. All acts of the substitute appointed against the prohibition of the principal shall be void. 552-P’93 entitled Ernesto R. to look for buyers and negotiate the sale of the subject property. Lopez and Lourdes L. ErnestoSalenga. and thus.is undeniable. Baltazar v. but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one. Mercado leased the fishpond to Eduardo Lapid for a three (3)year period. (2) When he was given such power. Succinctly stated. Jose Jimenez. The agent may appoint a substitute if the principal has not prohibited him from doing so. Pampanga docketed as DARAB Case No. and Ernesto Salenga for violation of RA 3019. Jr. the sale shall be void. Collection of Sum of Money and Supervision of Harvest. G. Jr. The sale of land through an agent without any written authority is void.Toribio Ilao. (1722a) BISNAR-Baltazar v. for it is a legal truism in our jurisdiction that a spring cannot rise higher than its source.” (13) Other rights of agents i. Pampanga. In the instant case. an alleged nephew of Faustino Mercado. (n) ii.

she likewise fail to pay her obligation to Quilatan. Besides. Faustino Mercado.HELD: The "real-party-in interest" is "the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit. 750 signed by petitioner and a witness. 18 In July 1992 Leonida Quilatan delivered pieces of jewelry to petitioner Virgie Serona to be sold on commission basis. 23661 (OMB-1-94-3425) are hereby AFFIRMED IN TOTO. is an agent himself and as such cannot further delegate his agency to another. And since she was not able to collect payment from Labrador. SC does not agree with the lower courts’ conclusion that this fact alone is sufficient ground for holding that petitioner disposed of the jewelry “as if it were hers. 130423. It was the Sandiganbayan who granted the prayed for re-investigation and ordered the OSP to conduct the re-investigation . Indeed. through counsel. both within 30 days from receipt of the items. a newspaper. o She identified an acknowledgment receipt and testified that she sold the jewelry to a person who absconded without paying her.. o And that the giving of the jewelries to a sub-agent (Labrador) for sale on commission basis did not violated her undertaking to Quilatan because it was under the same terms. which was eventually affirmed by CA • Petitioner argues that the prosecution failed to establish the elements of estafa for she did not abused the confidence reposed to her by Quilatan nor converted or misappropriated the jewelries. The nature of the case is determined by the settled rule that jurisdiction over the subject matter is determined by the allegations of the complaint. e. petitioner has no privity of contract with Paciencia Regala. Jr. could not be faulted in assuming jurisdiction as said allegations characterize an agricultural dispute.R. there is no question on his authority and legal standing. The Complaint-Affidavit filed before the Office of the Ombudsman. The nature of an action is determined by the material averments in the complaint and the character of the relief sought not by the defenses asserted in the answer or motion to dismiss. But upon petitioner’s failure to pay on September 1992. petitioner shall remit payment or return the pieces of jewelry if not sold to Quilatan. Issue: W/N CA erred in its decision Ruling:YES. thereby committing conversion and a clear breach of trust. • It must be pointed out that the law on agency allows the appointment by an agent of a substitute or subagent in the absence of an express agreement to the contrary between the agent and the principal o In the case at bar. o By oral agreement of the parties. BOMBALES-Serona November 2002 Facts: • v. The Ombudsman can act on anonymous complaints and motu proprio inquire into alleged improper official acts or omissions from whatever source. Navarette. In the instant case. • Petitioner pleaded not guilty to the charge upon arraignment. • Subsequently. Quilatan then required her to execute an acknowledgment receipt indicating their agreement and the total amount due of P567. People. whatever defense asserted in an answer or motion to dismiss is not to be considered in resolving the issue on jurisdiction as it cannot be made dependent upon the allegations of the defendant. Moreover. G. o She claimed that she entrusted the pieces of jewelry to Marichu Labrador who failed to pay her thereby causing her to default in paying Quilatan • Marichu Labrador on the other hand confirmed that she received pieces of jewelry from petitioner worth P441. The facts clearly show that it was not the Ombudsman through the OSP who allowed respondent Ilao. • Unknown to Quilatan.1997 Order of the graft court. respondent Ilao. SC finds merit in the petition • Petitioner did not ipso facto commit the crime of estafa through conversion or misappropriation by delivering the jewelry to a sub-agent for sale on commission basis.g. o Neither does it appear that petitioner was verbally forbidden by Quilatan from passing • . Re-delegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former. the appointment of Labrador as petitioner’s sub-agent was not expressly prohibited by Quilatan. • RTC rendered a decision finding petitioner guilty of estafa. An agent cannot delegate to another the same agency. 1998 Memorandum of the Office of the Special Prosecutor in Criminal Case No. WHEREFORE. Jr. Quilatan executed a complaint affidavit against petitioner before the Office of the Assistant Provincial Prosecutor.035. to submit his Counter-Affidavit. petitioner did not file any reply-affidavit in the re-investigation despite notice. No. o Petitioner admitted that she received several pieces of jewelry from Quilatan and that she indeed failed to pay for the same. owner of the fishpond and principal of Faustino Mercado. as the acknowledgment receipt does not contain any such limitation. clearly. sent a formal letter of demand to petitioner for failure to settle her obligation. petitioner did not contest nor question the August 29. the instant petition is DENIED for lack of merit. petitioner had earlier entrusted the jewelry to one Marichu Labrador for the latter to sell on commission basis. with costs against petitioner. and the Order and the October 30. Rufina G. Respondent Salenga’s complaint and its attachment clearly spells out the jurisdictional allegations that he is an agricultural tenant in possession of the fishpond and is about to be ejected from it. The OSP simply followed the graft court’s directive to conduct the re-investigation after the CounterAffidavit of respondent Ilao. Jr. was filed. Quilatan.00.

If the latter should suffer any damage by reason of the withdrawal. the agent must indemnify him therefor. unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. (1715) Art. from the day on which the advance was made. 1900.o on the jewelry to another person before the acknowledgment receipt was executed or at any other time. 1882. (n) v. ii. (1737a) (14) Obligations of agents i. provided the agent is free from all fault. even if the business or undertaking was not successful. (1730) iii. the principal must reimburse him therefor. The principal must advance to the agent. He must also finish the business already begun on the death of the principal. 1881. if such act is within the terms of the power of attorney. the principal may suffer. without fault or negligence on his part. 1491 . iii. even if he should withdraw from the agency for a valid reason. Thus. as written. and is liable for the damages which. it cannot be said that petitioner’s act of entrusting the jewelry to Labrador is characterized by abuse of confidence because such an act was not proscribed and is. through his non-performance. As regards 3rd persons – Article 1900 iv. 1880. Retain in pledge objects of the agency Articles 1912 to 1914 Art. the sums necessary for the execution of the agency. in fact. and a special power to mortgage does not include the power to sell. 1884. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles. (1736a) Art. A special power to compromise does not authorize submission to arbitration. An agent shall not carry out an agency if its execution would manifestly result in loss or damage to the principal. A special power to sell excludes the power to mortgage. The agent. The agent is bound by his acceptance to carry out the agency. Act within scope of authority – Articles 1879 to 1882. He may do such acts as may be conducive to the accomplishment of the purpose of the agency. (1714a) Art. Carry out agency – Articles 1884. 1887 Art. the agent shall act in accordance with the instructions of the principal. (1713a) Art. The limits of the agent's authority shall not be considered exceeded should it have been performed in a manner more advantageous to the principal than that specified by him. The agent must act within the scope of his authority. In the execution of the agency. (1728) Art. 1888. The agent may withdraw from the agency by giving due notice to the principal. 1912. should delay entail any danger. 1929. Should the agent have advanced them. (1718) Art. (1729) Art. So far as third persons are concerned. 1887. 1929 Art. (n) Not to carry out agency – Article 1888 Art. an act is deemed to have been performed within the scope of the agent's authority. 1928. must continue to act until the principal has had reasonable opportunity to take the necessary steps to meet the situation. legally sanctioned. 1913. 1914. Art. (n) Art. Loyalty – Articles 1889 to 1890. even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. The reimbursement shall include interest on the sums advanced. should the latter so request. 1928. The principal must also indemnify the agent for all the damages which the execution of the agency may have caused the latter. 1879.

(1726) vii. even at a public or judicial auction. 1889. The following persons cannot acquire by purchase. 1887. the agent shall act in accordance with the instructions of the principal. 1909. (n) Art. the property of the person or persons who may be under his guardianship. the property of the State or of any subdivision thereof. this prohibition includes the act of acquiring by assignment and shall apply to lawyers. 1887. he is bound to observe the diligence of a good father of a family in the custody and preservation of the goods forwarded to him by the owner until the latter should appoint an agent or take charge of the goods. (6) Any others specially disqualified by law. 1895. (3) Executors and administrators. take part in the sale. he cannot borrow it without the consent of the principal. even though it may not be owing to the principal. clerks of superior and inferior courts. unless the consent of the principal has been given. (4) Public officers and employees. (n) Art. and for the fault or negligence of his fellows agents. 1909. The agent is responsible not only for fraud. but also for negligence. In case a person declines an agency. 1891. If solidarity has been agreed upon. or of any government-owned or controlled corporation. Every stipulation exempting the agent from the obligation to render an account shall be void. The agent shall be liable for damages if. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency. 1894. there being a conflict between his interests and those of the principal. which shall be judged with more or less rigor by the courts. with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. Account/deliver – Article 1891 Art. (1720a) viii. (n) ix. or institution. In the execution of the agency. (1723) Art. the administration of which has been intrusted to them. 1909 x. which shall be judged with more or less rigor by the courts. Diligence – Articles 1885. even though they have been appointed simultaneously. if solidarity has not been expressly stipulated. (1459a) Art. Fraud. The agent is responsible not only for fraud. the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions. Solidary liability – Articles 1894 to 1895 Art. he may himself be the lender at the current rate of interest. (1726) xi. and on those which he still owes after the extinguishment of the agency. each of the agents is responsible for the non-fulfillment of agency. according to whether the agency was or was not for a compensation. is not solidary. (1724a) vi. 1491. The responsibility of two or more agents. 1890. the property whose administration or sale may have been entrusted to them. he should prefer his own. Specific obligations of commission agents – Articles 1903 to 1908 Art. negligence – Article 1909 Art. 1903. and other officers and employees connected with the administration of justice. (2) Agents. either in person or through the mediation of another: (1) The guardian. prosecuting attorneys. (n) Art. judges. the property of the estate under administration. Art.Art. but also for negligence. except in the latter case when the fellow agents acted beyond the scope of their authority. 1885. according to whether the agency was or was not for a compensation. this provision shall apply to judges and government experts who. If the agent has been empowered to borrow money. 1896. The agent owes interest on the sums he has applied to his own use from the day on which he did so. in any manner whatsoever. Pay interest – Article 1896 Art. The commission agent shall be responsible for the goods received by him in the terms and conditions and . (5) Justices. If he has been authorized to lend money at interest.

The commission agent who handles goods of the same kind and mark. 1961. Austria filed a complaint against Abad and her husband for the value of the pendant plus damages. 2. that resulted to the loss was not admitted by the court. Double Sales – Articles 1916 to 1917.000 tons of hot asphalt. HELD: No. 1886. which belong to different owners. (n) Art. because only preponderant evidence is needed in civil cases. which may result from such sale. provided there is good faith. Advance Funds – Article 1886 Art. to the person who presents the oldest title. (n) . Abad was robbed while walking home to her residence in Mandaluyong. If the same thing should have been sold to different vendees. it was contended by Austria that conviction of the pending criminal case is needed for Abad’s obligation over the pendant to be extinguished. Should the commission agent receive on a sale. 1907. CA.000 tons worth P279. To pay for the asphalt. and.000. The commission agent cannot. In the case referred to in the preceding article. 1917. 1544. if it should be movable property. unless upon receiving them he should make a written statement of the damage and deterioration suffered by the same. (n) Art. ATACO constituted the Art. the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.000. Should there be no inscription. unless he proves that he exercised due diligence for that purpose.00 to Edgington Oil Refinery for 8. The contention of Austria that Abad committed contributory negligence. The defense of the Spouses Abad of fortuitous event is tenable as all of the elements are present. ISSUE: W/N the spouses Abad are liable for the lost pendant to Austria. 1. Of this amount. and designate the merchandise respectively belonging to each principal. he alone shall be responsible. The court ruled that conviction is not needed. the ownership shall be transferred to the person who may have first taken possession thereof in good faith. Should it be immovable property. 1916. Should the commission agent. (1473) CHING-Austria v. he shall be bound to do so except when the principal is insolvent. shall distinguish them by countermarks. 1904. Should he fail to do so. criminality in had not by far reached the levels attained during 1971. that of prior date shall be preferred. Art. 1906. if the agent has acted in good faith. with authority of the principal. As Abad will be unable to return/sell the pendant. (n) Art. the principal may demand from him payment in cash. (date of decision) Also. sell on credit. Should there be a stipulation that the agent shall advance the necessary funds. the sale shall be deemed to have been made for cash insofar as the principal is concerned. another called a guarantee commission. without the express or implied consent of the principal. up to the amount of P75. (n) xiii. 14 SCRA 776 Art. and in requiring conviction of the criminal case would mean that for Abad to extinguish her liability. in the absence thereof. the ownership shall pertain to the person who in good faith was first in the possession. The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages. (n) xii. Should he do so. the principal shall be liable in damages to the third person whose contract must be rejected. as she went home alone after nightfall in an area where there is high incidence of crimes.00 were released and delivered to Adams & Taguba Corporation (known as ATACO) under a trust receipt guaranteed by Manila Surety & Fidelity Co. he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser.00. (n) Art. in addition to the ordinary commission. he shall so inform the principal. Feb. sell on credit. 39 SCRA 527 FACTS: On Jan. 1961. one of them with the agent and the other with the principal. 1544 FERNANDEZ-PNB v. but the commission agent shall be entitled to any interest or benefit.000. Because in 1961. This robbery became the subject of a pending criminal action. without prejudice to the provisions of Article 1544. Austria gave Abad a pendant with diamonds to be sold on commission basis or be returned on demand. When two persons contract with regard to the same thing. If the agent acted in bad faith. 1908. she would need proof beyond reasonable doubt. and the two contracts are incompatible with each other. (n) Art. Manila Surety. 30. 1905. (n) PNB vs manila surety The Philippine National Bank had opened a letter of credit and advanced thereon $120.as described in the consignment. with a statement of the names of the buyers.

71947. and to apply said payments to the settlement of said credit accommodation. Consequently. an action in personam will lie against an agent to compel him to return or retransfer to his principal or the latter’s estate the real property committed to his custody as such agent and also to execute the necessary documents of conveyance to effect such transfer. in the year 1913. for unexplained reasons. he had been continuously in charge and occupation of the land as the encargado or administrator of Melecio Severino • The agent estopped from acquiring or asserting a title adverse to that of the principal • Guillermo’s position as agent is also that of a trustee as agency is fiduciary in character -refrain from which ordinarily excite conflicts between self-interest and integrity -making it impossible to profit from yielding to temptation . to the heirs or the estate of its principal. a cadastral survey was conducted • Atty. Thereafter. the Bank sued both in the Court of First Instance of Manila to recover the balance of P158. even though they be solidary. the land and farm were managed and worked on by Melecio’s brother Guillermo Severino • After death of Melecio. The PHILIPPINE NATIONAL BANK is hereby appointed as our Attorney-in-Fact for us and in our name. HELD: Guillermo was ordered to reconvey to property to the Estate of Melecio. Melecio’s lifetime.R. Felicitas Villanueva. 18058. 1950. the Bank deprived the former of any possibility of recoursing against that security. the Bank ceased to collect. from April 21. asphalt to the total value of P431. 1948. Severino.563. contrary to its duty as holder of an exclusive and irrevocable power of attorney to make such collections. 1948 to November 18. wherein he said that: o 1902 up to the time the testimony was given. owed see to it that the obligor fulfills his obligation. 2.466. P106. Code. still a minor then • Administratrix. and that the creditor owed the surety no duty of active diligence to collect any. G. Hofilena represented Guillermo and claimed that the latter is in possession of land for 30 years o Atty claimed that the land was inherited by Guillermo from his father o Fabiola.41. This power of attorney shall also remain irrevocable until our total indebtedness to the said Bank have been fully liquidated. 1887) and becomes liable for the damages which the principal may suffer through his non-performance Even if the assignment with power of attorney from the principal debtor were considered as mere additional security still. place and stead. pursuant to Article 2080 of the Civil Code: ART. plus interests and costs. until in 1952 its investigators found that more moneys were payable to ATACO from the Public Works office. and not that of the creditor. because the latter had allowed mother creditor to collect funds due to ATACO under the same purchase order to a total of P311. to endorse for deposit or encashment checks. — The guarantors.382. or retransfer. sum from the principal debtor the issue whether the Bank has exercised due diligence in collecting from the Bureau of Public Works? No The Court of Appeals did not hold the Bank answerable for negligence in failing to collect from the principal debtor but for its neglect in collecting the sums due to the debtor from the Bureau of Public Works.01. the property committed to his custody as such agent ISSUE: Whether the decree of registration in the cadastral survey extinguishing this personal right of action. No. The Bank thereby exonerated the surety. • During his father. (Exhibit E) ATACO delivered to the Bureau of Public Works. and that it was the duty of the surety. he is stopped from acquiring or asserting a title adverse to that of the principal. Its demands on the principal debtor and the Surety having been refused. mortgages and preferences of the latter. The same shall remain irrevocable until the said credit accomodation is fully liquidated. This assignment (Exhibit "A") stipulated that: The conditions of this assignment are as follows: 1. to collect and to receive the payments to be made by virtue of the aforesaid Purchase Order. FACTS: • Melecio Severino had 400 hectares of land in Negros. • Guillermo bound by his testimony in an earlier court. intervened and asked for the reconveyance of the 400 hectare property to the Estate of Melecio o action in personam against an agent to compel him to return.18 as of February 15. by allowing the assigned funds to be exhausted without notifying the surety. the petitioner was. (Emphasis supplied FORTES-Severino v. 16 January 1923 DOCTRINE: Relations of an agent to his principal are fiduciary and in regard to the property forming the subject matter of the agency. Art. Severino. with full power and authority to execute and deliver on our behalf. he is the alleged father if Fabiola (shes actually playing a very small role in this case) who is claiming the land in her favour. 2080. The bank contends the power of attorney obtained from ATACO was merely in additional security in its favor.case of Montelibano vs.230. since an agent is required to act with the care of a good father of a family (Civ.Bank its assignee and attorney-in-fact to receive and collect from the Bureau of Public Works the amount aforesaid out of funds payable to the assignor under Purchase Order No. money order and treasury warrants which said Bank may receive. Of this amount the Bank regularly collected. are released from their obligation whenever by come act of the creditor they cannot be subrogated to the rights. and the latter accepted. receipt for all payments made to it.52.

as the alleged assignee of the rights of the late Atty. 15% of the amount was granted to him. IAC. Whether viewed as an agency to sell or as a contract of sale. de Tan Toco (widow of Tan Toco) to recover the value of a strip of land belonging to her taken by Municipal Council of Iloilo to widen a public street. She was able to recover P42. So. less its commission. adverse claimants appeared (PNB-claiming that land was mortgaged to it. -Squibb filed a suit to collect on goods delivered but unpaid. it is liable because it sold on credit without authority from its principal. in turn. Arroyo’s intestate estate. The commission agent cannot. that it never purchased goods from Squibb. Evangelista . 290. 1924. and to employ lawyers to defend the latter's interests.2.40 (P42.) After hearing all the adverse claims for the amount of the judgment. 966. Atty.40.000. he assigning it to Mauricio Cruz & Co. plus the costs of court against municipal council of Iloilo. is impliedly empowered to pay the lawyer's fees for services rendered in the interests of said principal. The court declared the deed of assignment of the credit executed by the widow’s attorney-in-fact (Tam Buntiong) in favor of Soriano valid and likewise the assignment of Soriano to Mauricio Cruz & Co.000 was delivered to Evangelista for his attorney’s lien. Afterwards.74 plus P96. 1905. another P6. ISSUES 1. remaining P30. rights and interests belonging to the widow in the amount of P42. DOCTRINES: • An agent of attorney-in-fact empowered to pay the debts of the principal.Arroyo and directed the Municipal Council of Iloilo to file an action of interpleading against the adverse claimants. -Upon the other hand.WoN it is a contract of sale or a contract to sell.966. during his lifetime.000. 133 SCRA 697 Green Valley Poultry v. 55 Phil. Soriano by virtue of the said judgment in payment of his professional fees given to him by the widow and her coheirs.40 for its value. Soriano.00 with interest at 6% per annum from the filing of this action. or to return the goods ff not sold. Inc.. the CFI of Iloilo City rendered judgment in favor of Tan Ong Sze Vda. 2. his own behalf and as counsel for the administratrix of the deceased Jose Ma .40 minus 15% attorney’s fee) is to be paid by the Municipal Council of Iloilo to Mauricio Cruz & Co. Issue:1. the action was premature. is confined to the claim of Mauricio Cruz & Co. in consideration of the professional services rendered by Soriano to the widow is valid. This appeal. plus attorney's fees in the amount of P5. that the goods received were on consignment only with the obligation to turn over the proceeds.966. -Green Valley claimed that the contract with Squibb was a mere agency to sell. the remaining P30. Adopting Green Valley's theory that the contract is an agency to sell. It reads: -Art. Should he do so. IAC & Squibb 1984J. the liability of Green Valley is indubitable. the principal may demand from him payment in cash. Inc.000 as partial payment of the judgment. With the payment of a total of P12. to Atty. With the consent of the widow. The Civil Code has a provision exactly in point.favor of said principal • (from Syllabus): That when a person appoints two attorneys-in-fact independently. which may result from such sale. of all the credits. Jose Evangelista filed a claim in the same case for his attorney’s fees as the administratrix of Jose Ma.00 and to pay the costs to Squibb. W/N the other attorney-in-fact’s. -Green Valley was ordered by the CA to pay the sum of P48.966. W/N the assignment made by Tan Buntiong (attorney-in-fact of the widow). Abad Santos Facts: -Green Valley was appointed as the noexclusive distributor of verinary products of Squibb in northern Luzon.claiming the amount as it had been assigned to him by the widow’s Attorney-infact and. After the hearing on this claim. Atty. GUY-Green Valley Poultry v. and may satisfy them by an assignment of a judgment rendered in . Squibb claimed that the contract was one of sale so that Green Valley was obligated to pay for the goods received upon the expiration of the 60-day credit period. then. Municipal treasurer of Iloilo paid the late Soriano P6.966. WoN Green Valley is liable to pay the unsold products Held: According to the SC:We do not have to categorize the contract. Inc.374.. Tan Montano’s. the court ordered that the 15% of the amount be granted to Atty Evangelista as. without the express or implied consent of the principal. consent is required to validate the acts of the other attorney-in- HAUTEA-Municipal Council of Iloilo v. Antero Soriano. the consent of the one will not be required to validate the acts of the other unless that appears positively to have been the principal's attention FACTS: On March 20. but the commission agent shall be entitled to any interest or benefit. sell on credit. and since it had sold the goods but had not been able to collect from the purchasers thereof.40 must go to Mauricio Cruz & Co.

coconut. Four devastating typhoons visited the Philippines. An agent of attorney-in-fact empowered to pay the debts of the principal. The buyers threatened damage suits. apprised the board of the impending heavy losses. for the delivery of copra.181. Tan Butiong. Nature supervened. represented by the Board of Liquidators. Cash requirements doubled. Kalaw made a full disclosure of the situation. and defendant board members. from those copra sales. That when a person appoints two attorneys-in-fact independently. Quick turnovers became impossible. 25 August 2005 MANALAYSAY-Board of Liquidators v. President Roxas made a statement that the NACOCO head did his best to avert the losses. 14 August 1967 • The National Coconut Corporation was chartered as a non-profit governmental organization avowedly for the protection. Plaintiff leans heavily on NACOCO's corporate by-laws.R. General manager and board chairman was Maximo M. and in any other manner deal in. • Long before the disputed contracts came into being. the consent of the one will not be required to validate the acts of the other unless that appears positively to have been the principal's attention. sell. NACOCO. 1947. and dessicated coconut. and that Kalaw was to remain in his post. the assignment made by Tan Buntiong.343. which by usage or necessity are incident to his office. Kalaw submitted them to the board for approval. Casimiro Garcia and Leonor Moll. the obligation: "(b) To perform or execute on behalf of the Corporation upon prior approval of the Board. People. Plaintiff levelled a major attack on the lower court's holding that Kalaw justifiedly entered into the controverted contracts without the prior approval of the corporation's directorate. 1946. Article IV (b). Copra production decreased. All the settlements sum up to P1. A rule that has gained acceptance through the years is that a corporate officer "intrusted with the general management and control of its business. Hence. with bad faith and/or breach of trust for having approved the contracts without prior approval of the Board. in Kalaw's absence. A meeting was then held. Kalaw. as amongst the duties of the general manager. the very fact that different letters of attorney were given to each of these two representatives shows that it was not the principal's intention that they should act jointly in order to make their acts valid. No action was taken on the contracts. and may bind the corporation by contracts in matters arising in the usual course of business. emphasized that government concerns faced the same risks that confronted private companies. preservation and development of the coconut industry in the Philippines. on December 5. copra. including Kalaw.343. and directors Juan Bocar. as well as their by-products. as Attorney-in-fact for the widow. During that period. Kalaw signed some 60 such contracts for the sale of copra to divers parties. Defendant Moll took her oath on that date. They unanimously approved the contracts hereinbefore enumerated. 162822. Amongst the scores of contracts executed by general manager Kalaw are the 9 disputed contracts. the board met again with Kalaw. NACOCO reaped a gross profit of P3. Warehouses were destroyed. Kalaw contracted — by himself alone as general manager — for forward sales of copra. is the nature of a general manager's position in the corporate structure. ́ ISSUE: Whether or not the acts of the respondent as General Manager without prior approval of the Board are valid corporate acts. So pleased was NACOCO's board of directors that. all contracts necessary and essential to the proper accomplishment for which the Corporation was organized. HELD: YES • Not of de minimis importance in a proper approach to the problem at hand. YES. No. Garcia and Moll in attendance. it voted to grant him a special bonus "in recognition of the signal achievement rendered by him in putting the • • . NACOCO but partially performed some contracts. The lower court came out with a judgment dismissing the complaint. that NACOCO was recouping its losses. NACOCO. defendants Juan Bocar and Casimiro Garcia were members of the Board. Coconut trees throughout the country suffered extensive damage. and to employ lawyers to defend the latter's interests. 1947. It was not until when the membership was completed. It charges Kalaw with negligence under Article 1902 of the old Civil Code (now Article 2176. dealers or merchants" An unhappy chain of events conspired to deter NACOCO from fulfilling some contracts entered. has implied authority to make any contract or do any other act which is necessary or appropriate to the conduct of the ordinary business of the corporation. When it became clear that the contracts would be unprofitable.631. No. and to act as agent. o Republic Act 5] to grant that corporation the express power "to buy. As such officer. • • • • 2. financing a problem.52 from general manager and board chairman Maximo M.48. Prices spiralled.fact. broker or commission merchant of the producers. and may satisfy them by an assignment of a judgment rendered in favor of said principal In the present case.274. in favor of Soriano for professional services rendered for other cases he served the widow and coheirs. without any special authority from the Board of Directors perform all acts of an ordinary nature. recites. plaintiff appealed direct to this Court. who assigned the amount as payment to Soriano HELD/RATIO: 1. is impliedly empowered to pay the lawyer's fees for services rendered in the interests of said principal. defendant Leonor Moll became director only on December 22. and such assignment was equivalent to the payment of the amount of said credit to Soriano. Deprivation of export facilities increased the time necessary to accumulate shiploads of copra. • MAGSUMBOL-Guinhawa v. Bocar. was that credit which she had against the municipality of Iloilo. new Civil Code). G. seeks to recover the above sum of P1. For the fiscal year ending June 30.52. Heirs of Maximo Kalaw. Chapter III thereof. after the passage of Republic Act 5. barter. export. Not long thereafter. Kalaw. L-18805. embarked on copra trading activities. G. "he may.274.R.

great in number. the usage and practices of the company and by the knowledge which the board of directors has. Everybody. Under the given circumstances." These previous contract it should be stressed. G. G. They did not think of raising their voice in protest against past contracts which brought in enormous profits to the corporation. the practice of the corporation has been to allow its general manager to negotiate and execute contracts in its copra trading activities for and in NACOCO's behalf without prior board approval." or "conscious doing of wrong. his luggage might have been diverted to London. despite numerous handicaps and difficulties." Indeed. GSIS. PABALAN-San Juan v. by proof of the course of business. He was asked to accomplish a Property Irregularity Report. According to BA representatives. Said contracts were known all along to the board members. GOP Mahtani (passenger) and Philippine Airlines Respondent passenger Mahtani wanted to visit relatives in Bombay. If the bylaws were to be literally followed. when unprofitable. Gumar. 129549. Profit or loss resulting from business ventures is no justification for turning one's back on contracts entered into. No. • Rightfully had it been said that bad faith does not simply connote bad judgment or negligence. custom. 29 January 1998 FACTS: Petitioner: British Airways. Settled jurisprudence has it that where similar acts have been approved by the directors as a matter of general practice. by its acts and through acquiescence. practically laid aside the by-law requirement of prior approval. Gumar purchased a ticket with British Airways. Nothing was said by them. were signed by Kalaw without prior authority from the board. The third party complaint was also dismissed - - - . Mahtani discovered his luggage was lost when he was already in Bombay. it means breach of a known duty thru some motive or interest or ill will. Mahtani had to take a flight from MNL to HK (via PAL) then HK to Bombia (via BA). we find that there was no "dishonest purpose. of acts and doings of its subordinates in and about the affairs of the corporation. allotting no time for the transfer of the luggage to BA’s plane bound for Bombay. But that board itself." or "breach of a known duty. and is equivalent to original authority. the board should give its stamp of prior approval on all corporate contracts. Mahtani checked in his luggage at the PAL counter (2 luggage full of clothes and personal effects). CA affirmed. thought so. our law pronounces that "[r]atification cleanses the contract from all its defects from the moment it was constituted.R. Doubts were first thrown on the way only when the contracts turned out to be unprofitable for NACOCO. Mahtani filled a complaint for damages and Atty’s fees against BA and Mr. CA. affirmed. He asked a certain Mr. and that of the other directors. NACOCO board met the difficulties attendant to forward sales by leaving the adoption of means to end. including Kalaw himself. The directors are not liable. the contracts executed by Kalaw are thus purged of whatever vice or defect they may have. Trial Court ruled in favor of passenger Mahtani. L-18287. are one in the idea that "ratification by a corporation of an unauthorized act or contract by its officers or others relates back to the time of the act or contract ratified. the board thought that to jettison Kalaw's contracts would contravene basic dictates of fairness. clinch the case for defendants.R." By corporate confirmation. In the case at bar. the Kalaw contracts are valid corporate acts. Since there is no direct flight from Manila to Bombay. CA. as it is hereby. it partakes of the nature of fraud.34 Applying this precept to the given facts herein." or "Some motive or interest or ill will" that "partakes of the nature of fraud." • Obviously. G. DISPOSITIVE: Kalaw's good faith. an airline Respondents: CA." or "some moral obliquity. to the sound discretion of NACOCO's general manager Maximo M. Kalaw. In varying language. or must be presumed to have. • As we have earlier expressed. Viewed in the light of the entire record. BA filed a third party complaint against PAL alleging that the reason for the non-transfer of luggage was due to PAL’s later arrival in HK.• • • • • Corporation's business on a self-sufficient basis within a few months after assuming office. should not merit the same treatment. the general manager may bind the company without formal authorization of the board of directors. 121824. No. Authorities. No. Eventually. 19 September 1998 PEREZ-Francisco v. The aforesaid contracts stand to prove one thing: Obviously. 30 March 1963 TABAG-British Airways v.R. The theory of corporate ratification is predicated on the right of a corporation to contract. the judgment under review must be." and that " [t]he corporation and the other party to the transaction are in precisely the same position as if the act or contract had been authorized at the time. ordering BA to may damages. India." The language of one case is expressive: "The adoption or ratification of a contract by a corporation is nothing more or less than the making of an original contract. fair dealing disagrees with the idea that similar contracts. By the same token. Gumar to prepare his travel plans. it imports a dishonest purpose or some moral obliquity and conscious doing of wrong. existence of such authority is established. and policy. and for a long time. Kalaw had authority to execute the contracts without need of prior approval. and any ratification or adoption is equivalent to a grant of prior authority.

the third party complaint should not be dismissed! The CA should have been aware of the well-settled rule that an agent is also responsible for any negligence in the performance of its function and is liable for damages which the principal may suffer by reason of its negligent act. commission equivalent to 50%. while petitioners maintained that he should receive only 30% of the net sales. even if Mahtani did not declare a higher value. he was merely collecting what rightfully belonged to LMICE. In this case. 30 June 2005 Facts: Petitioner Murao is the owner of Lorna Murao Industrial Commercial Enterprises (LMICE). but merely establishes the relation of agent and principal. Issue: WON the trial court erred in its decision Ruling: Yes. When Huertazuela.R. provided that he sets up his own sales force. CA. on behalf of LMICE. No. the check named LMICE as the lone payee. - - YAP-Murao v. BA had cause of action against PAL. Private complainant Federico may claim commission. G. based on his right to just compensation under his agency contract with LMICE. so that the collection and deposit of the said check by petitioners under the account of LMICE constituted misappropriation or conversion of private complainant Federico’s commission. This prompted Federico to file a case for estafa against the defendants. 141485. 18 February 1991 . Conctractual relationship between PAL and BA is one of agency – BA as principal. a company engaged in the business of selling and refilling fire extinguishers. The subject of this Petition is limited to the first purchase order. It is unequivocal that an agency existed between LMICE and private complainant Federico. petitioner Huertazuela claimed the said check and deposited it under the current account of LMICE with PCIBank. personally picked up the said check. due to his right to commission. Federico’s right to a commission does not make him a joint owner of the money paid to LMICE by the City Government of Puerto Princesa. Although private complainant Federico never had the opportunity to operate as a dealer for LMICE under the terms of the Dealership Agreement. in fact. he was allowed to act as a sales agent for LMICE. the City Government of Puerto Princesa requested that the transaction be split into two purchase orders. However. Thus. which he. Failing to comply with the conditions. Third party complaint must be allowed also to avoid multiplicity of cases. allegedly equivalent to 50% of the payment received by LMICE from the City Government of Puerto Princesa. NOTE 2: The case also discusses another transpo law doctrine regarding limiting the liability of airlines if luggage is lost.NOTE: Since this a transportation law case. the former refused to the latter’s commission since the two of them could not agree on the proper amount. LMICE. but not as the automatic owner of the 50% portion of the said payment. No. RTC convicted the defendants and the decision was affirmed by the CA. It should be 250 francs per kilograms UNLESS passenger declares a higher value. Thus. the Court ordered BA to pay the actual value of the luggage since BA did not object to the actual value during testimony. Indeed. People.R. Murao and complainant Federico entered into a Dealership Agreement where the latter could obtain fire extinguishers from LMICE at a 50% discount. and posts a bond as security for his credit line. did on two occasions. it is important to note that the law considers Mahtani’s flight from MNL to HK via PAL and HK to Bombay via BA as ONE CONTRACT OF CARRIAGE between Mahtani and Common Carrier British Airways. he was still allowed to act as a part-time sales agent for LMICE entitled to a percentage commission from the sales of fire extinguishers. As a sales agent. Within the same day. private complainant Federico entered into negotiations with prospective clients for and on behalf of his principal. He can negotiate for and on behalf of LMICE for the refill and delivery of fire extinguishers. already owned 50% of the amount paid by the City Government of Puerto Princesa to LMICE by virtue of the check. The City Government of Puerto Princesa issued a check in the amount of P300K. 88866. The obligation of LMICE to pay private complainant Federico his commission does not arise from any duty to deliver or return the money to its supposed owner. acquires and issues his own sales invoice. Federico. but rather from the duty of a principal to give just compensation to its agent for the services rendered by the latter. Private complainant Federico claimed that he was entitled to a BISNAR-Metrobank v. Federico went to see petitioner Huertazuela to demand his commission. subsequently facilitated a transaction with the City Government of Puerto Princesa. G. BA and PAL are members of the International Air Transport Association (IATA) where member airlines are regarded as agents of each other in the issuance of the tickets and other matters pertaining to their relationship. PAL as agent. PAL was merely acting as a subcontractor or agent of BA (stipulated in the ticket/contract). ISSUE: W/N British Airway’s third party compliant against Philippine Airlines should be dimissed? HELD: NO. (Court mentions jurisprudence for this: China Air Lines vs CA and Lufthansa German Airlines vs CA). Because of the considerable cost. “That Federico. All profits made and any advantage gained by an agent in the execution of his agency should belong to the principal. The amount of private complainant Federico’s commission as sales agent for LMICE was under contention.

755. its obligation is that of a mere collecting agent which cannot be held liable for its failure to collect on the warrants. to which she was told to wait. 32 of the warrants had been dishonored and Metrobank demanded a refund from Golden Savings. unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. Agent acting outside scope of authority Articles 1897 to 1898. (1725) Art. Castillo went to Metrobank several times to ask whether the warrants had been cleared. aware. Later however. The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. exceeding the scope of his authority. In such case the agent is the one directly bound in favor of the person with whom he has contracted. it seems to suggest that as a mere agent it cannot be liable to the principal – This is not true. except when the contract involves things belonging to the principal. (1717) Art. within 2 years. 1899. The agent who acts as such is not personally liable to the party with whom he contracts. Meanwhile. 1883. However. it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. or ought to have been. 1897. unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. In this case. signed the deposit slips. Golden Savings. Metrobank filed a complaint against Golden Savings. according to whether the agency was or was not for a compensation. 1897. balance before the treasury warrants were deposited. the agent is liable if he undertook to secure the principal's ratification. but also for negligence. Metrobank finally allowed to withdraw the proceeds of the warrants. claiming that until such time as Metrobank is actually paid. (n) Issue: Whether Metrobank should be held liable for the withdrawals made through the dishonored treasury warrants. unauthorized overdraft of any other reason. If a duly authorized agent acts in accordance with the orders of the principal. neither have such persons against the principal. o It was the clearance given by it that assured Golden Savings it was already safe to allow Gomez to withdraw the proceeds of the treasury warrants he had deposited. and the principal does not ratify the contract. as if the transaction were his own. in turn. Gloria Castillo (Respondent) and deposited in its savings account in Metrobank and Trust Co. Ruling: Yes. which in turn. – It misled Golden Savings. (1725) Art. If the agent contracts in the name of the principal. as Metrobank insists (although this is refuted by Golden Savings) but in any case that clearance could be implied from its allowing Golden Savings to withdraw from its account not only once but 3 times and the total withdrawal was in excess of its original balance before the treasury warrants was in excess of its original ii. had deposited 38 treasury warrants amounting to P1. If an agent acts in his own name. o That the conditions are in the nature of contractual stipulations and became binding on Golden Savings when Castillo. which was rejected. sent it for clearing. however. allowed Gomez to make withdrawals. o That this also applies to checks which are unpaid due to insufficiency of funds. (n) . There may have been no express clearance. 1897. acting only as a collecting agent for Golden Savings. When Metrobank argues that it was only acting as a collecting agent for Golden Savings. The treasury warrants were subsequently indorsed by Golden Savings’ cashier.37. which only added to its belief that the warrants had been cleared. it has the right to charge bank to the depositor’s account any amount previous credited. Gomez was not allowed to withdraw. forgery. the latter cannot set up the ignorance of the agent as to circumstances whereof he himself was. – Despite the treasury warrants not having been cleared yet. The agent who acts as such is not personally liable to the party with whom he contracts. 1909: The agent is responsible not only for fraud.Facts: • • • • • • • • Eduardo Gomez opened an account with Golden Savings and Loan Association (Respondent) and. • The negligence of Metrobank has been sufficiently established. the principal has no right of action against the persons with whom the agent has contracted. 1898. 1899 Art. exasperated over Castillo’s repeated inquiries and also as an accommodation for a “valued client”. Agent acting within scope of authority – Articles 1883. • Art. which shall be judged with more or less rigor by the courts.228. (Petitioner). and further claimed: o That. (15) Liability of Agents to Third Parties i. as its cashier. whether or not such item is returned. 1911 Art.

The provisions of this article shall be understood to be without prejudice to actions between principal and agent. 61 and 207. went straight to the issue) Issue: o Whether or not the powers of attorney issued in favor of Mauro A. 58 Phil. authorized him to obtain loans secured by mortgage in the properties in question? NO W/N the principal is liable for the payment of the loans obtained by Mauro A. When an agent acts in his own name. also in his own name and not in the name and representation of the said principal. With notice to third parties – Article 1901 Paz Agudelo y Gonzaga. if the principal has ratified. 1922. SC held hat when an agent negotiates a loan in his personal capacity and executes a promissory note under his own signature. and by his aunt. Garrucho and Paz Agudelo y Gonzaga. on July 15. Mauro A. . Garrucho was not authorize to obtain loans secured by mortgage in the properties of defendants. 1931. Garrucho by his sister. and that he obtained the loans mentioned in the aforesaid mortgage deeds and constituted said mortgages as security for the payment of said loans. in case he failed to comply with any of the conditions stipulated therein. alienate and mortgage in the manner and form he might deem convenient. Garrucho. Hence. without express authority from his principal. to secure his obligations. o Aside from the phrases "attorney in fact of his sister. the principal shall have no right of action against the persons with whom the agent has contracted. Mauro A. he exceeded the scope of the authority vested in him o Further as provided in A1717 o ART. 1920. 878 to Paz Agudelo y Gonzaga (No other facts stated. Even when the agent has exceeded his authority. owned by o As clearly stated on the SPA.  BUT Philippine National Bank. Garrucho.  In such case. as if the transaction were his own. o On December 23. Garrucho also sold lot No. Cases involving things belonging to the principal are excepted. executed 2 other mortgages in favor of the plaintiff e on lots Nos. o On July 15. 61 and 207owned by Paz Agudelo y Gonzaga for P16. A third person cannot set up the fact that the agent has exceeded his powers. Garrucho's own name and signed by him in his personal capacity. Garrucho and of Paz Agudelo y Gonzaga. for the account and at the request of said Amparo A. respectively. (n) o Ruling: o b. 1717. and on lot No. 878. Garrucho. Occidental Negros BUT Nothing in the aforesaid SPA expressly authorized Mauro A. 665 Facts: o Defendant-appellants Paz Agudelo y Gonzaga (Garrucho’s AUNT) and Amparo Garrucho (Garrucho’s Sister) both executed an SPA in favor of her nephew and brother. as evidenced by the power of attorney attached hereto" and "attorney in fact of Paz Agudelo y Gonzaga" written after the name of Mauro A. Garrucho from the Philippine National Bank for the security of which he constituted a mortgage on the aforesaid real estate belonging to the principal?NO Art. the agent is directly liable to the person with whom he has contracted. Garrucho to contract any loan nor to constitute a mortgage on the properties belonging to the respective principals. On August 24. 1911. Agudelo. Paz Agudelo y Gonzaga. Mauro A. Garrucho is attorney in fact of Amparo A. or such persons against the principal. Garrucho. 1922.000 loan amount o Again. Garrucho executed in favor of PNB another mortgage this time on lots Nos. 1901.Art. Garrucho executed a mortgage in favor of the plaintiff (PNB) on lot No. 878 owned by Amparo A. owned by Amparo A. o There is nothing in the said mortgage deeds to show that Mauro A. all her real estate situated in the municipalities of Murcia and Bacolod. the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. Amparo A. Amparo A. giving as security therefor real estate belonging to the letter. authorizing the mortgage creditor (PNB) to take possession of the mortgaged properties. Without notice to third parties BOMBALES-PNB v. by means of force if necessary. to mortgage their respective real estate. or has signified his willingness to ratify the agent's acts. cancelled the mortgages  AND Amparo A. (n) a. the obligation do constructed by him is personal and does not bind his aforesaid principal. Garrucho to enable him to sell.000 loan amount The 2 mortgage deeds were executed in Mauro A. Mauro A. Garrucho for P6.

. the contract of sale and that Namerco signed the contract on its own responsibility.000 representing the purchase price of a boat called Benito Juarez o Welch asked PNB as well to forego the requirement of submitting the Delivery Receipt and Insurance Policy of the said vessel o Welch made this request as they were rushing the repairs to the said vessel in order to prepare it for its journey to Manila • Welch is one of the owners of La Compania Naviera.00 cost of repair which was advanced by Welch. Due to this NPC’s plant had a shut down. tons of sulfur for its power plant in Iligan. defendant-appellee.. the agent becomes personally liable to the party with whom he contracts. Baylin. there is no proof that the agents exceeded the authority given by the principal. copras from Philippine Products. New york supplier was not able to deliver the sulfur because there was no shipping space. under 1897 CC the agent who exceeds the limits of his authority without giving the party with whom he contracts sufficient notice of his powers is personally liable to such party. Merchandising. no obligation against it was created by the letter sent on 18 August 1918 FERNANDEZ-NPC v. is premised on the inability to sure the principal or non-liability thereof. 117 SCRA 789 National NPC vs national merchandising digest NPC and national merchandising(namerco) . Primiteria Zurich failed to answer the complaint of Philippine Products for collection. plaintiff-appellant. Philippine Products delivered overseas copras in the amount of Php 33. Welch. 15 SCRA 301 FACTS: Primateria Zurich is a company based in Switzerland not licensed to engage in business in the Philippines. both the agent and the principal are liable to the other contracting party. WELCH. Here. if he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his power. • The vessel capsized in a Pacific Island due to a storm • Welch collected the insurance and appropriated.CHING-Philippine Products v. FAIRCHILD & CO. ISSUE: W/N the agents in the case at bar is liable to Philippine Products for the purchase of its principal (a foreign corporation not licensed) HELD: No. FORTES-National Bank v. it exceed its authority.000 cost of the vessel which was advanced by PNB and the $50. Primateria. as the representative of international commodities corp. INC. with the consent of La Compania. 1897 of the NCC does not hold that in case of excess of authority. Primiteria Phils. 1897. It purchased through an agent. otherwise the agent becomes liable also on the contract. Art. DOCTRINE: While it is true that an agent who acts for a revealed principal in the making of a contract does not become personally bound to the other party in the sense that an action can ordinarily be maintained upon such contract directly against the agent. It further claimed that it acted exclusively as AGENT of La Compania in the purchase of the Benito Juarez hence. W/N namerco is liable? yes Namerco is liable for damages.71. Trial court held that Primiteria Zurich was liable and absolving the agents. but not licensed in the Philippines. and Crame. in effect.71..009. it acted in its own name. according to Art. executed in manila a contract to purchase by the NPC from new york firm. It is the agent that it sought to be held liable on a contract of sale which was expreslly repudiated by the principal because the agent took chances. and. the latter is a corporation organized in Manila for the purpose of engaging in shipping. yet that rule does not control when the agent cannot intercept and appropriate the thing which the principal is bound to deliver. Baylin (officer of Primiteria Phils). and thereby make the performance of the principal impossible. Welch took out an insurance policy of $150. This includes the $125. it showed that Primiteria Zurich had an outstanding balance of Php 31. Welch Fairchild . In the case at bar. New york firm did not consider itself bound by . in the absence of express legislation. 780 PHILIPPINE NATIONAL BANK. Also. On account. 44 Phil. The SC stated that. • In preparation for Benito Juarez’s journey to Manila. the full amount of $150. FACTS: • On 18 August 1918. The agent in any event must be precluded from doing any positive act that could prevent performance on the part of his principal. Fairchild & Co (Welch) acting as an agent of La Compania Naviera sent a cablegram from San Francisco. vs. USA to PNB in the Philippines asking the latter to release a loan of $125. Before the contract of sale was signed Namerco was already aware that its principal was having difficulties in booking shipping space. therefore being in default.009.000 to itself as it applied the $50k to the repairs and the $125k to the other previous loan granted by Welch to La Compania • PNB is claiming from Welch the $125k due to it as La Compania became insolvent • Welch is claiming that it is not bound by the agreement between La Compania and PNB.000. the liability of the agent of a foreign corporation doing business. There was a mutual agreement between the principal and agent.

as alleged in the complaint. On the contrary. Upon learning that the same PAL plane would make a stopover in San Francisco. 1918. and it was confirmed for the April 2. petitioner made arrangements with PAL for him to board the flight In San Francisco instead of boarding in Las Angeles. Pursuant to instructions contained in the power of attorney the money was delivered to Varga's wife. to dispose of all his property. can not be HAUTEA-Cervantes v. Vargas. The law does not provide that the agent can not bind himself personally to the fulfillment of an obligation incurred by him in the name and on behalf of his principal. Issue: WON Orozco is liable. 304 SCRA 25 FACTS: (PAL). Enrique Grupe and Dolores Orozco de Rivero obtained a loan from plaintiff Tuazon secured by a mortgage on the property referred to in the power of attorney. it provides that such act on the part of an agent would be valid. i. and particularly of a certain house and lot known as No. Malate. 1890. His wife likewise took part in the execution of the mortgage as required in the power of attorney. Grupe. 5 Phil. This cannot be permitted sustained. 1990. In the caption of the instrument evidencing the debt it is stated that Grupe and Dolores Orozco appeared as the parties of the first part and Gonzalo Tuason. that Grupe acted for himself and also in behalf of Juan Vargas by virtue of the power granted him by the latter. was signed by Grupe as attorney in fact for Vargas. as in the present case. Upon his arrival in Los Angeles on the same day.• The appellant claims that the instrument is evidence of a debt personally incurred by Enrique Grupe for his own benefit. On April 2. Tuazon filed an action to recover the debt. who. The fact that the agent has also bound himself to pay the debt does not relieve from liability the principal for whose benefit the debt was incurred. 1990. he immediately booked his Los Angeles-Manila return ticket with the PAL office. Dolores Orozco de Rivero. bound himself personally to pay the debt. The PAL personnel concerned marked the following notation on his ticket: "TICKET NOT ACCEPTED DUE EXPIRATION OF VALIDITY ISSUES & HELD . Manila. and thereby make performance by the principal impossible. however. and not incurred for the benefit of his principal. The agent in any event must be precluded from doing any positive act that could prevent performance on the part of his principal. 1990. provided the former acted. has intervened in the making of a contract in the character of agent cannot be permitted to intercept and appropriate the thing which the principal is bound to deliver. issued to the herein petitioner.. so far as that amount is concerned. and considering that he would be there on April 2. The individual liability of the agent constitutes in the present case a further security in favor of the creditor and does not affect or preclude the liability of the principal. In the present case the latter's liability was further guaranteed by a mortgage upon his property.e. Welch indeed acted only as agent in writing and sending the cablegram on 18 August. • A debt thus incurred by the agent is binding directly upon the principal. executed a power of attorney to Enrique Grupe. Said instrument was duly recorded in the Registry of Property. he was not allowed to board. four days before the expiry date of subject ticket. CA. the defendant's husband. was a necessary party to its sale or incumbrance. among other things. GUY-Tuazon v. and that Dolores Orozco appeared merely for the purpose of complying with the requirement contained in the power of attorney. 24 Calle Nueva. the plaintiff. the petitioner used it. inasmuch as the property had been acquired with funds belonging to the conjugal partnership. Varga's property was mortgaged. the two have conspired to make an application of the proceeds of the insurance entirely contrary to the tenor of said letters. 596 Facts:• Juan de Vargas y Amaya. The appellant's contention however.ISSUE: WON Welch should turnover the collected proceeds from the insurance policy to PNB? HELD: Yes. On the 21st of January. He was also authorized to mortgage the house for the purpose of securing the payment of any amount advanced to his wife. Orosco. 1990 flight. To secure the payment of the debt. within the scope of his authority. which ticket expressly provided an expiry of date of one year from issuance. a round trip plane ticket for ManilaHonolulu-Los Angeles-Honolulu-Manila. Held: Yes. as the party of the second part. On March 23. the defendant in this case. As a matter of fact. Despite the promise held out jointly by principal and agent in the letters of August 8 and 10. when the petitioner checked in at the PAL counter in San Francisco. 1990. by the terms of the agreement. authorizing him. Nicholas Cervantes (Cervantes). The agreement. until March 27.

Dans. 109937. DBP made Dans go through the motion of applying for said insurance. together with his wife Candida. refused to accept an ex gratia settlementof P30. when the third person (herein petitioner) knows that the agent was acting beyond his power or authority.1. In dealing with Dans. WON. The DBP later submitted both the application form and health statement to the DBP MRI Pool at the DBP Main Building.00.R. DBP had full knowledge that Dan’s application was never going to be approved. that required Dans. was approved by DBP. Whether or not the act of the PAL agents in confirming subject ticket extended the period of validity of petitioner's ticket? NO. What the employees of PAL did was one of simple negligence. applied for a loan of P500. RTC-in favor of Dans. petitioner was fully aware that there was a need to send a letter to the legal counsel of PAL for the extension of the period of validity of his ticket. On September 23. DBP apprised Candida Dans of the disapproval of her late husband’s MRI application. but Candida Dans refused to accept the same.000. The DBP offered to refund the premium of P1. She. The DBP and the DBP MRI Pool separately filed their answers. unless the latter ratifies the same expressly or impliedly. required him to apply for MRI. as a matter of policy and practice. the denial of award of damages was proper? YES. DBP compelled him to apply with the DBP MRI Pool for MRI coverage. As an insurance agent. 21 March 1994 In May 1987. Accordingly. was advised by DBP to obtain a mortgage redemption insurance (MRI) with the DBP Mortgage Redemption Insurance Pool (DBP MRI Pool). he cannot use what the PAL agents did to his advantage.00 with the Development Bank of the Philippines (DBP). On September 3. likewise. with the former asserting a cross-claim against the latter. No injury resulted on the part of petitioner because he had a back-up ticket should PAL refuse to accommodate him with the use of subject ticket. KUNG-DBP v. 10 acted without authority when they confirmed the flights of the petitioner. On October 21. Issue: W/N DBP as agent of insurance is authorized as such. as a result. The DBP.476. hence. 1987. From the proceeds of the loan.00 which the deceased had paid.000. CA. There was. demanding payment of the face value of the MRI or an amount equivalent to the loan. As service fee. was credited by DBP to the savings account of the DBP MRI Pool. he is to blame. The maximum age for MRI acceptance is 60 years as clearly and 2.” The MRI premium of Dans. upon notice. we are of the opinion that it should be on the petitioner. G. DBP was wearing two legal hats: the first as a lender. CA . If the said third person is aware of such limits of authority.476. however. DBP deducted 10 percent of the premium collected by it from Dans. Respondent Estate alleged that Dans became insured by the DBP MRI Pool when DBP. Undisputably. Instead of allowing Dans to look for his own insurance carrier or some other form of insurance policy. Under Article 1989 of the New Civil Code. Case was filed with RTC for Collection of Sum of Money w/ Damages. Dans died of cardiac arrest. 1987. his son and daughter-in-law. the principal cannot be held liable for the acts of the agent. the breach must be wanton and deliberately injurious or the one responsible acted fraudulently or with malice or bad faith. It was DBP. 1987. 14 Petitioner knew there was a strong possibility that he could not use the subject ticket. the borrower. less the DBP service fee of 10 percent. thereby leading him and his familyto believe that they had already fulfilled all the requirements for the MRI and that the issuance of their policy was forthcoming. then 76 years of age. The admission by Cervantes that he was told by PAL's legal counsel that he had to submit a letter requesting for an extension of the validity of subject tickets was tantamount to knowledge on his part that the PAL employees had no authority to extend the validity of subject tickets and only PAL's legal counsel was authorized to do so. DBP made Dans fill up and sign his application for MRI.00. relayed this information to the DBP MRI Pool. which DBP credited to its account with full knowledge that it was payment for Dan’s premium. Since the PAL agents are not privy to the said Agreement and petitioner knew that a written request to the legal counsel of PAL was necessary. There is also no showing that it accepted the sum of P1.00 as payment for the MRI premium. No. Dans accomplished and submitted the “MRI Application for Insurance” and the “Health Statement for DBP MRI Pool. to secure MRI coverage. In awarding moral damages for breach of contract of carriage. which the DBP later offered. Juan B. according to the Court of Appeals. and later collected the insurance premium thereon. Should there be a finding of bad faith. The said agents. Four days latter. A loan. 1987. as well as his health statement. the DBP MRI Pool notified DBP that Dans was not eligible for MRI coverage. The liability of DBP is another matter. did not approve the application of Dans. and is not entitled to recover damages from the agent. Makati Metro Manila. The pool. being over the acceptance age limit of 60 years at the time of application. unless the latter undertook to secure the principal's ratification. the power to approve MRI applications is lodged with the DBP MRI Pool.00. and the second as an insurance agent. .000. the acts an agent beyond the scope of his authority do not bind the principal. DBP already deducted from the proceeds thereof the MRI premium. with full knowledge of Dans’ age at the time of application.affirmed RTC. Furthermore. As the principal mortgagor. Dans. so much so that he bought a back-up ticket to ensure his departure. the DBP MRI Pool was advised of the credit. DBP deducted the amount of P1. and be liable for the claim of Dans. the DBP MRI Pool cannot be held liable on a contract that does not exist. in the reduced amount of P300. Basilan Branch. When Dan’s loan was released on August 11. Apparently. no perfected contract of insurance.476.

00) as moral damages and the amount of Ten Thousand Pesos (P10.00) as attorney’s fees. V. “1-Pool”). 26434 is MODIFIED and petitioner DBP is ORDERED: (1) to REIMBURSE respondent Estate of Juan B. If the third person dealing with an agent is unaware of the limits of the authority conferred by the principal on the agent and he (third person) has been deceived by the non-disclosure thereof by the agent..-CV No. The rule that the agent is liable when he acts without authority is founded upon the supposition that there has been some wrong or omission on his part either in misrepresenting. DBP exceeded the scope of its authority when it accepted Dan’s application for MRI by collecting the insurance premium. or in affirming. 46 N. SO ORDERED.R. “the agent who acts as such is not personally liable to the party with whom he contracts. Agency 307 [1952]. and (2) to PAY said Estate the amount of Fifty Thousand Pesos (P50. 70. Knowing all the while that Dans was ineligible for MRI coverage because of his advanced age.Y. The liability of an agent who exceeds the scope of his authority depends upon whether the third person is aware of the limits of the agent’s powers. Lauderdale. There is no showing that Dans knew of the limitation on DBP’s authority to solicit applications for MRI. then the latter is liable for damages to him. the provisions of Articles 19. the decision of the Court of Appeals in CA G. or concealing the authority under which he assumes to act (Francisco. 75). unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. WHEREFORE. .000.000.specifically provided in Article 1 of the Group Mortgage Redemption Insurance Policy signed in 1984 by all the insurance companies concerned (Exh. With costs against petitioner. Dans the amount of P1. 20 and 21 of the Civil Code of the Philippines come into play.” The DBP is not authorized to accept applications for MRI when its clients are more than 60 years of age (Exh. Inasmuch as the non-disclosure of the limits of the agency carries with it the implication that a deception was perpetrated on the unsuspecting client.476. Under Article 1987 of the Civil Code of the Philippines. and deducting its agent’s commission and service fee.00 with legal interest from the date of the filing of the complaint until fully paid. citing Hall v. “1-Pool”).

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