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Case #1

G.R. No. 156262 July 14, 2005
FACTS OF THE CASE: The case involves the collection of a sum of money which arose from the bouncing check issued
by one Evangeline Santos, indorsed by the spouses Leonilo and Maria Tuazon in payment of the remaining unpaid 3,889
cavans amounting to P1,211,919.00. Despite demand from the heirs of Ramos, spouses Tuazon failed to pay and instead
claimed that they are merely acting as agents and should not be held liable. Further, spouses Tuazon instituted a civil case
against Evangeline Santos for collection of the amounts represented by the unfunded checks, in a separate civil case which
they now sought to be consolidated with the instant case.
ISSUES : Whether or not the spouses Tuazon are agents of Ramos.
HELD : No.
RATIONALE: The declarations of agents alone are generally insufficient to establish the fact or extent of their authority.13
The law makes no presumption of agency; proving its existence, nature and extent is incumbent upon the person alleging it.
In the present case, petitioners raise the fact of agency as an affirmative defense, yet fail to prove its existence.
Spouses Tuazon, on their own behalf, sued Evangeline Santos for collection of the amounts represented by the
bounced checks, in a separate civil case that they sought to be consolidated with the current one. If, as they claim, they were
mere agents of respondents, petitioners should have brought the suit against Santos for and on behalf of their alleged
principal, in accordance with Section 2 of Rule 3 of the Rules on Civil Procedure. Their filing a suit against her in their own
names negates their claim that they acted as mere agents in selling the rice obtained from Bartolome Ramos.


Ponente: Quisumbing, J.
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co. (VCM). In the course of their
dealings, petitioner issued several Shipping List/Delivery Receipts to STM as proof of purchases. STM bought 25,000 bags
of sugar from petitioner VCM, as evidenced by SLDR No. 1214MM. Subsequently, STM sold its rights in said SLDR to
Consolidated Sugar Corporation (CSC). CSC informed petitioner about STMs letter of authority allowing the former to
withdraw for and in our behalf the refined sugar covered by Shipping List/Delivery Receipt-Refined Sugar No. 114 dated
October 16, 1989 in the total quantity of 25,000 bags. VCM released only 2,000 bags saying that all the sugar
corresponding to STMs cleared checks had been fully withdrawn and hence, there would be no more deliveries of the
commodity to STMs account. Therefore, CSC having represented itself as STMs agent, can no longer have any sugar
withdrawn in its favor.
Issue: WON CSC is an agent of STM and hence, estopped to sue upon SLDR No. 1214 as an assignee.
Ruling: NO, CSC was a buyer of the SLDFR form, and not an agent of STM, under Art. 1868 of the Civil Code
Article 1868 of the Civil Code provides, 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. It is clear from
Article 1868 that the basis of agency is representation. On the part of the principal, there must be an actual intention to
appoint or an intention naturally inferable rom 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.
In the instant case, it appears plain that private respondent CSC was a buyer of the SLDFR form, and not an agent
of STM. CSC was not subject to STMs control. The question of whether a contract is one of sale or agency depends on the
intention of the parties as gathered from the whole scope and effect of the language employed. That the authorization given
to CSC contained the phrase for and in our behalf did not establish any agency. That no agency was meant to be
established by the CSC and STM is clearly shown by CSCs communication to petitioner that SLDR No. 1214 had been
sold and endorsed to it. The use of the words sold and endorsed means that STM and CSC intended a contract of sale,
and not an agency.
Conclusion: Petition is denied for lack of merit

Case No. 3
Uy and Roxas vs. CA
G.R No. 120465 Sept 9, 1999
Facts: William Uy and Rodel Roxas herein petitioners are authorized to sell 8 parcels of land by the owner. William and
Rodel then offered to sell the properties to NHA, and by Res. No. 1632, NHA accepted the offer to the amount of 23.867
million pesos and executed Deeds of Absolute Sale. However, NHA received a report from Land Geoscience Bureau of the
DENR that 3 of the 8 parcels of land are prone to landslides and are not suitable for housing project, thus NHA cancelled
the sale over the 3 parcels of land, and offered 1.255 million as damages to the owners of the property. Petitioners as agents
of the owner, instituted a complaint over the RTC, RTC awarded the owner the same amount offered by NHA as damages,
1.255 million and held that the cancellation of NHA is valid. On appeal, CA reversed RTC decision removing the award for
ISSUE: Whether or not petitioners have the right as agents to file an action in their own behalf and receive damages for the
cancellation of the sale of the 3 parcels of land.
Held: No. As mere authorized agents, they are not real parties to the Contract of Sale.
Ruling: Art. 1311 of the Civil Code states that Contracts only take effect between the parties, their heirs, their assigns, and
third persons only if there is stipulation in the contract. Herein petitioners are not parties to the contract of sale between the
principal and NHA, but are mere agents to sell the properties. Thus being an agent, they may only bring an action founded
on a contract made for his principal, as an assignee of such contract. Sec. 372 of the Restatement of the Law on Agency
Sec 372. Agent as Owner of Contract Right
(1) Unless otherwise agreed, an agent who has acquires an interest in a contract which he makes on behalf of his
principal can, although not a primrose, maintain such action thereon as might a transferee having similar interest.
However, the petitioners failed show that they are assignees to the said contract. Finally, Art. 372 par (2) provides:
(2) An agent does not have such an interest in a contract as to entitle an action at law upon it in his own name merely
because he is entitled to a portion of the proceed as compensation for making it or because he is liable for its
Thus, as an agent, who may have advances expenses for the perfection of the sale, and are entitled of the commission as
compensation upon the perfection of the Contract of Sale, does not have right of action on his own name over the principal
and the other parties in case of breach.

Case # 4
Eurotech Industrial Inc v. Cuizon and Cuizon
GR. 167552
April 23, 2007
Chico-Nazario, J.
Petitioner is engaged in business of importation and distribution of various European industrial equipment for customers in
the Philippines. One of its customers Impact System Sales owned by respondent Erwin Cuizon and its sales manager is
respondent Edwin Cuizon. Petitioner sold to Impact Systems a sludge pump but refused to deliver the same because
respondents did not fully settle their indebtedness to petitioner. On June 1995, respondent Edwin and petitioner executed a
Deed of Assignment wherein respondent assigned receivables to petitioner for the delivery of the sludge pump. Unknown to
the petitioner, respondent still collected the receivables despite the Assignment. Petitioner filed an action against the
Issue: Whether or not Edwin Cuizon is personally liable in the indebtedness of the company
Held: No
Ratio: Article 1897 provides that an agent who acts as such is not personally liable to party with whom he contracts except
when (1) he expressly binds himself to the obligation and (2) when he exceeded his authority. The Deed of Assignment
clearly states that respondent Edwin Cuizon signed as the sales manager of Impact Systems.

Case# 5
G.R. No. 149353 June 26, 2006
JOCELYN B. DOLES,Petitioner,
Facts: Respondent alleged that petitioner was indebted to the former in the concept of a personal loan amounting
toP405,430.00 representing the principal amount and interest; that on October 5, 1996, by virtue of a "Deed of Absolute
Sale",3petitioner, as seller, ceded to respondent, as buyer, a parcel of land, as well as the improvements thereon, with an area
of 42 square meters, in order to satisfy her personal loan with respondent.
Petitioner, denied that she borrowed money from respondent, and averred that from June to September 1995, she referred
her friends to respondent whom she knew to be engaged in the business of lending money in exchange for personal checks
through her capitalist Arsenio Pua. She alleged that her friends, borrowed money from respondent and issued personal
checks in payment of the loan; that the checks bounced for insufficiency of funds; that despite her efforts to assist
respondent to collect from the borrowers, she could no longer locate them; that she was forced to issue eight checks
amounting toP350,000 to answer for the bounced checks of the borrowers she referred; that prior to the issuance of the
checks she informed respondent that they were not sufficiently funded but the latter nonetheless deposited the checks and
for which reason they were subsequently dishonored, that she was forced by respondent to execute an "Absolute Deed of
Sale" over her property in Bacoor, Cavite, to avoid criminal prosecution.
RTC: Plaintiff Angeles admission that the borrowers are the friends of defendant Doles and further admission that the
checks issued by these borrowers in payment of the loan obligation negates the cause or consideration of the contract of sale
executed by and between plaintiff and defendant.
CA Reversed: The CA concluded that petitioner was the borrower and, in turn, would "re-lend" the amount borrowed from
the respondent to her friends. Hence, the Deed of Absolute Sale was supported by a valid consideration, which is the sum of
money petitioner owed respondent amounting toP405,430.00, representing both principal and interest.
Petitioner filed her Motion for Reconsideration, arguing that respondent categorically admitted in open court that she acted
only as agent or representative of Arsenio Pua, the principal financier and, hence, she had no legal capacity to sue petitioner.
Hence this petition.
Whether or not the petitioner can be considered as a debtor of the respondent.
Whether or not an agent who was not authorized by the principal to collect debt in his behalf could directly collect payment
from the debtor.
Held: No. No.
Ratio: Petitioner knew that the financier of respondent is Pua; and respondent knew that the borrowers are friends of
petitioner. This Court has affirmed that, under Article 1868 of the Civil Code, the basis of agency is representation. In the
case at bar, both petitioner and respondent have undeniably disclosed to each other that they are representing someone else,
and so both of them are estopped to deny the same. And since plaintiff, being an agent, was not authorized by the principal
to collect the debt in his behalf, and respondent was acting only as an agent with regards to the debtors, the sale of the
respondent's property having been predicated on the loan is void for lack of consideration.

Case No. 7
Shoppers Paradise Realty & Development Corp. vs. Efren Roque
G.R No. 148775 Jan 13, 2004
Third Division
Facts: Shoppers Paradise Realty Corp and Dr. Felipe Roque entered into a contract of lease for 25 years for a development
of a Commercial Building located in Plaza Novaliches Quezon City. Shoppers Paradise Realty Corp paid 250,000 for the
initial reservation payment and another 250,000 for the downpayment, after which the contract of lease and memorandum of
agreement were notarized, but the annotation on the Title of the property were never made because of the death of Dr. Felipe
Roque. The son of Dr. Roque, Efren Roque, herein respondent, filed a case over the RTC for the annulment of the Contract
of Lease and Memorandum of Agreement. He alleged that the subject property has been donated to him by his parents long
before the transaction was made, thus he is the lawful owner of the property. RTC decided in favor of Shoppers Paradise
Realty Corp, it held that the registration of the donation do not affect third persons unless he had knowledge of such
donation. On appeal, CA reversed RTC Decision, and held that the Contract of Lease and Memorandum of agreement
invalid. Hence, this petition.
Issue: Whether or not the Contract of Lease and Memorandum of Agreement is valid.
Held: No, Dr. Roque has no authority.
Ruling: The Court upholds the validity of the donation of the property to Efren Roque. The non-registration of the donation
does not affect its validity. However, in order to bind third persons, donations must be registered in the registry of deeds,
unless such third person had knowledge of the donation. The CA held that Shoppers Paradise actually had knowledge of the
donation and that Efren Roque is the lawful owner of the property. Efren Roque being the lawful owner, Dr. Felipe Roque,
in order to transact with Shoppers Paradise Realty Corp should first acquire authority from Efren Roque as an agent as
provided by Art.1878 of the Civil Code which states that a special power of attorney is necessary to lease any real property
to another person for more than one year. There is no showing that Efren Roque executed a Special Power of Attorney in
favor of Dr. Felipe Roque, thus Felipe Roque has no authority and the Contract of Lease and the Memorandum of
Agreement are invalid.

Case #8
Air Philippines Corporation v International Business Aviation Services Phils., Inc. G.R. No. 151963 September 9, 2004
J. Panganiban
API rendered the services of IBASPI to ferry its B-737 airplane via Subic Bay International Airport at Olongapo City.
IBASPI was able to engage the services of Universal Weather and Aviation, Inc. (UWAI) to ferry the said airplane. UWAI
sent its billings to API, through IBASPI, however API refused the payment of the bills. Unable to bear the pressure of
UWAI and avoid corporate embarrassment for API, IBASPI was impelled to advance and pay the said bills. IBASPI wrote
several letters to API to reimburse payments made to UWAI but the former refused to do so due to improper documentation.
After some time, API made partial first payment with IBASPI accepting such payment and simultaneously executed a
Receipt/Agreement through Atty. Manolito Manalo, OIC of the Legal Department of API, obliging itself to pay the balance
of its account.
Despite demands of IBASPI via its letter, API refused to pay the balance prompting IBASPI to file a complaint with the
RTC of Pasay City for the collection of its account including its broker fee. RTC ruled in favor of IBASPI and compelling
API to pay the former.
The court issued Pre-Trial Notice wherein it required both parties to file their respective Pre-Trial Brief. During the PreTrial, Atty. Manalo appeared as counsel of API but without an SPA. Despite the several motions for extension, Atty. Manalo
failed to submit the same to RTC wherein the court ruled in favor of IBASPI.
API filed a motion for new trial to CA due to the acts of Atty Manalo but CA affirmed the RTCs decision. Hence the instant
WON the receipt/agreement constitutes an act of dominion which requires a Special Power of Attorney.
The Receipt/Agreement was entered into by respondent and petitioner, which was represented by its agent Atty. Manalo. As
an agent, he rendered service to, and did something in representationor on behalf of, his principaland with its consentand
authority. It cannot be denied that, on its part, there was an actual intent to appoint its counsel;and, on the latters part,to
accept the appointment and "act on it."
A corporation, as "a juridical person separate and distinct from its stockholders," may act "through its officers or agents in
the normal course of business." Thus, the general principles of agency govern its relationship with its officers or agents,
subject to the articles of incorporation, bylaws and other relevant provisions of law.
While it is true that a special power of attorney (SPA) is necessary to a compromise, it is equally true that the herein
Receipt/Agreement was not a compromise. The payment was made in the ordinary course of business. Whether total or
partial, the payment of an ordinary obligationis neither included among nor of a character similar to the instances
enumerated in Article 1878 of the Civil Code.All that the law requires is a general power, not an SPA.
Moreover, the Receipt/Agreement is not a promise to pay that "amounts to an offer to compromise and requires a special
power of attorney or the express consent of petitioner."A compromise agreement is a contract whereby the parties, by
making reciprocal concessions, avoid litigation or put an end to one already commenced."No such reciprocal
concessionswere made in this case. Thus, the Receipt/Agreement is but an outright admission of petitioner of its obligation,
after making partial payment, to pay the balance of its account. And even if we were to consider the same as a compromise,
from its nature as a contract, the absence of an SPA does not render it void, but merely unenforceable.
Hence, the acts of Atty. Manalo merely constituted acts of administration and not dominion which no longer need a SPA.

Case #9
August 12, 2014
Callejos Sr. J
Facts: Roxas Electric and Construction Company, Inc. was the owner of two parcels of land, identified as Lot No. 491-A-3B-1 covered by Transfer Certificate of Title (TCT) No. 78085 and Lot No. 491-A-3-B-2 covered by TCT No. 78086. the
respondent's Board of Directors approved a resolution authorizing the corporation, through its president, Roberto B. Roxas,
to sell Lot No. 491-A-3-B-2 covered by TCT No. 78086, with an area of 7,213 square meters, at a price and under such
terms and conditions which he deemed most reasonable and advantageous to the corporation; and to execute, sign and
deliver the pertinent sales documents and receive the proceeds of the sale for and on behalf of the company.
Petitioner Woodchild Holdings, Inc. (WHI) wanted to buy Lot No. 491-A-3-B-2 covered by TCT No. 78086 on which it
planned to construct its warehouse building, and a portion of the adjoining lot, Lot No. 491-A-3-B-1, so that its 45-foot
container van would be able to readily enter or leave the property. WHI President Jonathan Y. Dy offered to buy Lot No.
491-A-3-B-2 under stated terms and conditions for P1,000 per square meter or at the price of P7,213,000.
Roxas indicated his acceptance of the offer. Roxas, as President of RECCI, as vendor, and Dy, as President of WHI, as
vendee, executed a contract to sell in which RECCI bound and obliged itself to sell to Dy Lot No. 491-A-3-B-2 covered by
TCT No. 78086 for P7,213,000.6On September 5, 1991, a Deed of Absolute Sale7in favor of WHI was issued, under
which Lot No. 491-A-3-B-2 covered by TCT No. 78086 was sold for P5,000,000, receipt of which was acknowledged by
Roxas under the following terms and conditions:
The Vendor agree (sic), as it hereby agrees and binds itself to give Vendee the beneficial use of and a right of way
from Sumulong Highway to the property herein conveyed consists of 25 square meters wide to be used as the
latter's egress from and ingress to and an additional 25 square meters in the corner of Lot No. 491-A-3-B-1, as
turning and/or maneuvering area for Vendee's vehicles.
The Vendor agrees that in the event that the right of way is insufficient for the Vendee's use (ex entry of a 45-foot
container) the Vendor agrees to sell additional square meters from its current adjacent property to allow the Vendee
full access and full use of the property.
WHI wrote the RECCI, reiterating its verbal requests to purchase a portion of the said lot as provided for in the deed of
absolute sale, and complained about the latter's failure to eject the squatters within the three-month period agreed upon in
the said deed. RECCI rejected the demand of WHI. WHI filed a complaint against the RECCI with the Regional Trial Court
of Makati, for specific performance and damages. RTC ruled in favor of WHI. CA rendered a decision reversing that of the
trial court.

Issue: whether the respondent is bound by the provisions in the deed of absolute sale granting to the petitioner beneficial use
and a right of way over a portion of Lot No. 491-A-3-B-1 accessing to the Sumulong Highway and granting the option to
the petitioner to buy a portion thereof, and, if so, whether such agreement is enforceable against the respondent

Held: No

Ratio: A corporation is a juridical person separate and distinct from its stockholders or members. Accordingly, the property
of the corporation is not the property of its stockholders or members and may not be sold by the stockholders or members
without express authorization from the corporation's board of directors. Indubitably, a corporation may act only through its
board of directors or, when authorized either by its by-laws or by its board resolution, through its officers or agents in the

normal course of business. The general principles of agency govern the relation between the corporation and its officers or
agents, subject to the articles of incorporation, by-laws, or relevant provisions of law.
Evidently, Roxas was not specifically authorized under the said resolution to grant a right of way in favor of the petitioner
on a portion of Lot No. 491-A-3-B-1 or to agree to sell to the petitioner a portion thereof. The authority of Roxas, under the
resolution, to sell Lot No. 491-A-3-B-2 covered by TCT No. 78086 did not include the authority to sell a portion of the
adjacent lot, Lot No. 491-A-3-B-1, or to create or convey real rights thereon. Neither may such authority be implied from
the authority granted to Roxas to sell Lot No. 491-A-3-B-2 to the petitioner "on such terms and conditions which he deems
most reasonable and advantageous." Under paragraph 12, Article 1878 of the New Civil Code, a special power of attorney is
required to convey real rights over immovable property.26Article 1358 of the New Civil Code requires that contracts which
have for their object the creation of real rights over immovable property must appear in a public document.27The petitioner
cannot feign ignorance of the need for Roxas to have been specifically authorized in writing by the Board of Directors to be
able to validly grant a right of way and agree to sell a portion of Lot No. 491-A-3-B-1. The rule is that if the act of the agent
is one which requires authority in writing, those dealing with him are charged with notice of that fact. respondent had not
ratified the unauthorized acts of Roxas, the same are unenforceable.38Hence, by the respondent's retention of the amount, it
cannot thereby be implied that it had ratified the unauthorized acts of its agent, Roberto Roxas.

Case #10
Dominion Insurance Corporation v CA
GR No. 129919, February 6,2002
Pardo, J
Rodolfo Guevarra instituted a civil case for the recovery of a sum of money against Dominion Insurance. He sought to
recover sums he had advanced in his capacity as manager. Dominion denied any liability to Guevarra.
The pre-trial was always postponed, and during one of the pre-trial conference dominion failed to arrive therefore the court
declared them to be in default. Dominion filed several Motions to Lift Order of Default but was always denied by the court.
The RTC rendered its decision making Dominion liable to repay Guevarra for the sum advanced and other damages and
fees. Dominion appealed but CA affirmed the decision of RTC and denied the appeal of Dominion.

Issue: WON Guevarra acted within his authority as agent for Dominion?
Held: No.
Ratio: Even though the contact entered into by Guevarra and Dominion was with the word special the contents of the
document was actually a general agency. A general power permits the agent to do all acts for which the law does not require
a special power and the contents in the document did not require a special power of attorney.
Art 1878 of the civil code provides instances when a special power of attorney is required.:
1) To make such payment as are not usually considered as acts of administration.
15) any other act of dominion
The payment of claims is not an act of administration which requires a special power of attorney before Guevarra could
settle the insurance claims of the insured.
Also Guevarra was instructed that the payment for the insured must come from the revolving fund or collection in his
possession, Gueverra should not have paid the insured through his own capacity. Under 1918 of civil code an agent who
acted in contravention of the principals instruction the principal will not be liable for the expenses incurred by the agent.

Case No. 11
Mercado v Allied Banking
G.R. No. 171460, July 27, 2007
Julian Mercado was given a Special Power of Attorney authorizing him to perform the acts to sell, alienate,
mortgage, lease and deal on the properties of his wife Perla enumerated in the said document. However, the heirs of Perla
are seeking the declaration of the real estate mortgage constituted on TCT No. RT-18206 (106338) entered into by Julian
and the Allied Banking Corporation to be null and void on the ground that it is not among the properties covered by the SPA
executed in favour of Julian.
WON the SPA the real estate mortgage constituted on TCT No. RT-18206 is null and void.
The real estate mortgage entered between Julian and Allied banking Corporation is not null and void but
Under Article 1878 paragraph 12 of the Civil Code, a special power of attorney is necessary in cases where real
rights over immovable property are created or conveyed. However, the agent may not go beyond nor deviate from the
powers specified and defined in the special power of attorney.
In the case at bar, Julian entered into a real estate mortgage on the strength the SPA executed in his favor. However,
it is clear that TCT No. RT-18206 (106338) was not included among the properties listed in the SPA.
Therefore, Julian was not given the authority to mortgage the subject property which was not covered by the SPA.
This results in the unenforceability of the real estate mortgage.

G.R. No. 82040 August 27, 1991
BA Finance Corporation v. Court of Appeals
Private respondents Manuel Cuady and Lilia Cuady obtained from Supercars Inc. a credit of P39,574.80, which covered the
cost of (1) Ford Escort 1300 and was evidenced by a promissory note. To secure the prompt compliance of the obligation
under the said promissory note, the Cuady spouses constituted a chattel mortgage.
Supercars Inc. assigned the promissory note and chattel mortgage to the petitioner. They paid a total of P36,730.15 to the
petitioner, thus leaving an unpaid balance of P2,344.65. The spouses also owe the petitioner P460.00 representing the
penalties for late payment.

Petitioner obtained the renewal of the insurance coverage of the vehicle with Zenith Insurance Corporation because the
spouses failed to do so. Under its terms and conditions, any loss under the policy shall be payable to the petitioner.
Unfortunately, the said vehicle figured in an accident and was badly damaged. It was reported to the petitioner and to the
insurer, Zenith Insurance Corporation. The Cuadys asked the petitioner to consider it as a total loss but the latter insisted on
just having the motor vehicle repaired. When B.A. Finance Corporation did not respond favorably to the request, the Cuadys
stopped paying their monthly installments on the promissory note.
In view of the failure of the Cuadys to pay the remaining installments on the note, petitioner sued them for the recovery of
the said remaining instalments.
Whether or not petitioner has waived its right to collect the unpaid balance of the Cuady spouses on the promissory note for
failure of the former to enforce the total loss provision in the insurance coverage of the motor vehicle subject of the chattel
YES. Petition is DENIED, and the decision appealed from is AFFIRMED.
B.A. Finance Corporation was deemed subrogated to the rights and obligations of Supercars, Inc. when the latter assigned
the promissory note and chattel mortgage constituted on the motor vehicle. Consequently, B.A. Finance Corporation is
bound by the terms and conditions of the chattel mortgage.
Under the deed of chattel mortgage, B.A. Finance Corporation was constituted attorney-in-fact with full power and
authority to file, follow-up, prosecute, compromise or settle insurance claims; to sign execute and deliver the corresponding
papers, receipts and documents to the Insurance Company as may be necessary to prove the claim, and to collect from the
latter the proceeds of insurance to the extent of its interests, in the event that the mortgaged car suffers any loss or damage.
In granting B.A. Finance Corporation the said powers and prerogatives, the Cuady spouses created in the former's favour, an
agency. Thus, under Article 1884 of the Civil Code of the Philippines, B.A. Finance Corporation is bound by its acceptance
to carry out the agency, and is liable for damages which, through its non-performance, the Cuadys, the principal in the case
at bar, may suffer.

13) Manila Memorial Park Cemetery v Linsangan

GR No 151319 November 22, 2004
Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by
petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under Contract was no longer interested in
acquiring the lot and had opted to sell his rights subject to reimbursement of the amounts he already paid. The contract was
for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the former buyer, the contract would
be transferred to him. Baluyot informed Atty. Linsangan that, a new contract covering the subject lot in the name of the
latter instead of old Contract has a listed price of P132,250.00 Atty. Linsangan protested, but Baluyot assured him that he
would still be paying the old price of P95,000.00. For its part, MMPCI alleged that second Contract was cancelled
conformably with the terms of the contract because of non-payment of arrearages. MMPCI stated that Baluyot was not an
agent but an independent contractor, and as such was not authorized to represent MMPCI or to use its name except as to the
extent expressly stated in the Agency Manager Agreement.
Issue: WON MMPI is liable for the acts of Florencia
No. The acts of the agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same. It
also bears emphasis that when the third person knows that the agent was acting beyond his power or authority, the principal
cannot be held liable for the acts of the agent. If the said third person was aware of such limits of authority, he is to blame
and is not entitled to recover damages from the agent, unless the latter undertook to secure the principals ratification.
Atty. Linsangan failed to show that MMPCI had knowledge of the arrangement. As far as MMPCI is concerned, the contract
price was P132,250.00, as stated in the Offer to Purchase signed by Atty. Linsangan and MMPCI's authorized officer.
Likewise, this Court does not find favor in the Court of Appeals' findings that "the authority of defendant Baluyot may not
have been expressly conferred upon her; however, the same may have been derived impliedly by habit or custom which may
have been an accepted practice in their company in a long period of time." A perusal of the records of the case fails to show
any indication that there was such a habit or custom in MMPCI that allows its agents to enter into agreements for lower
prices of its interment spaces, nor to assume a portion of the purchase price of the interment spaces sold at such lower price.
No evidence was ever presented to this effect.

Case #14
Safic Alcan & Cie v. IVO
GR No. 126751
March 28, 2001
Ynares-Santiago, J:
IVO engaged in a washout settlement with Safic for the latters failure to deliver the ordered coconut oil. IVOs president,
Dominador Monteverde, was the one who entered into the speculative contract in contravention of the Board of Directors
prohibition. When the contracts were not fulfilled, Safic sued IVO for damages.
Whether or not IVO was liable for Dominador Monteverdes acts of entering into the speculative contract with Safic despite
the Boards prohibition.
No, IVO was not liable for Monteverdes acts of entering into the speculative contract with Safic despite the Boards
Under Article 1898 of the Civil Code, the acts of the agent beyond the scope of his authority do not bind the principal unless
the latter ratifies the same expressly or impliedly. There was no such ratification in the case. When Monteverde entered into
the speculative contracts with Safic, he did not secure the boards approval. He also did not submit the contracts to the board
after their consummation so there was, in fact, no occasion at all for ratification.

15) Filipinas Life Assurance Co. v Pedroso

Gr No. 159489 February 4, 2008

Teresita O. Pedroso is a policyholder of a 20-year endowment life insurance issued by petitioner Filipinas Life Assurance
Company (Filipinas Life). Pedroso claims Renato Valle was her insurance agent since 1972 and Valle collected her monthly
premiums. Valle told her that the Filipinas Life Escolta Office was holding a promotional investment program for
policyholders. She called the Escolta office and talked to Francisco Alcantara, the administrative assistant, who referred her
to the branch manager, Angel Apetrior. Pedroso inquired about the promotional investment and Apetrior confirmed that
there was such a promotion. She was even told she could push through with the check she issued. From the records, the
check, with the endorsement of Alcantara at the back, was deposited in the account of Filipinas Life with the Commercial
Bank and Trust Company (CBTC), Escolta Branch. However, when Pedroso tried to withdraw her investment, Valle did not
want to return some P17,000 worth of it.

Issue: WON Filipinas Life is jointly and severally liable with Apetrior and Alcantara on the claim of
Pedroso and Palacio or WON its agent Renato Valle is solely liable to Pedroso and Palacio

Filipinas Life cannot profess ignorance of Valles acts. Even if Valles representations were beyond his authority as a debit/
insurance agent, Filipinas Life thru Alcantara and Apetrior expressly and knowingly ratified Valles acts. It cannot even be
denied that Filipinas Life benefited from the investments deposited by Valle in the account of Filipinas Life. In our
considered view, Filipinas Life had clothed Valle with apparent authority; hence, it is now estopped to deny said authority.
Innocent third persons should not be prejudiced if the principal failed to adopt the needed measures to prevent
misrepresentation, much more so if the principal ratified his agents acts beyond the latters authority.

Case No. 16
Escueta vs. Lim
G.R No. 137162 Jan 24, 2007
First Division
Facts:Rufino Lim, herein respondent, averred that she had bought the hereditary properties of the Petitioners Rubio and
heirs of Baloloy. On April 10, 1990 Petitioners executed a Contract of Sale and received from Respondent Lim a down
payment of 102,169.86 and 450,000 respectively and the balance will be paid after the titles are transferred into Lims name.
Rubio and the heirs of Baloloy refused to deliver the title to Lim despite her offer of the payment of the balance. Despite the
existence of a Contract of Sale between Lim and Rubio and the heirs of Baloloy, Corazon Escueta having knowledge
thereof executed a simulated sale involving the lots. As for the Baloloys, they argued that they already withdrawn their offer
to sell for the reason that respondent failed to pay the balance on time hence the Contract of Sale has no more force and
effect. As to Rubio, it alleged that Lim has no cause of action since, Rubio appointed her daughter Patricia Llamas to be his
attorney-in-fact, and not in favor of Victoria Laygo Lim who represented Rubio in the sale between the Respondent Rufina
Lim. The RTC declared the Petitioners in default. CA affirmed RTC decision with amendments. Hence, this petition.
Issue: Whether or not the Contract of Sale between Rufina Lim and the Petitioners Rubio and Baloloys is valid.
Held: Yes, the Contract of Sale is valid.
Ruling: The Court held that the Contract of Sale between the petitioner and respondent is valid and binding. Rubio argued
that Victoria has no authority to represent him in the Sale of the disputed properties since Rubio appointed her daughter as
his attorney-in-fact and not Victoria. Art. 1892 provides:
Article 1892 of the Civil Code provides:
Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be
responsible for the acts of the substitute:
(1) When he was not given the power to appoint one
In the case above, Rubio made his daughter Patricia to be her Attorney-in fact, and according to the above article, Patricia
is not prohibited to appoint a substitute as a representative of Rubio. Patricia, acting on the authority given to her, appointed
Victoria as her substitute hence the transaction between Victoria and Respondent is valid. Art. 1317 further provides:
Art. 1317. x x x
A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond
his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been
executed, before it is revoked by the other contracting party.
The acceptance of Rubio of the downpayment and encashment of the said checks serves as the ratification of Rubio of the
Sale of the Properties with the respondent Rufina Lim.

G.R. No. 136433 December 6, 2006
Baltazar v. Ombudsman
Paciencia Regala owns a (7)-hectare fishpond located at Sasmuan, Pampanga. Her Attorney-in-Fact Faustino R. Mercado
leased the fishpond to Eduardo Lapid for a (3)-year period. The latter sub-leased the fishpond to Rafael Lopez. Respondent
Ernesto Salenga was hired by Eduardo Lapid as fishpond watchman. In the sub-lease, Rafael Lopez rehired respondent
Respondent Salenga, through a certain Francis Lagman, sent his demand letter to Rafael Lopez and Lourdes Lapid for
unpaid salaries and non-payment of the 10% share in the harvest.
Sub-lessee Rafael Lopez wrote a letter to respondent Salenga informing him that for the last two (2) months of the sublease, he had given the rights over the fishpond to Mario Palad and Ambit Perez. This prompted respondent Salenga to file a
Complaint before the PARAB for Maintenance of Peaceful Possession, Collection of Sum of Money and Supervision of
Harvest. After the trial, respondent Ilao, Jr. rendered a Decision dismissing the Complaint for lack of merit; but losing
plaintiff, respondent Salenga, appealed the decision before the DARAB Appellate Board.
Pending resolution of the agrarian case, the instant case was instituted by petitioner Antonio Baltazar, an alleged nephew of
Faustino Mercado, through a Complaint-Affidavit against private respondents before the Office of the Ombudsman for
violation of RA 3019 but said case was dismissed.
Whether or not petitioner is duly authorized by Faustino Mercado to institute the suit by virtue of the Special Power of
Attorney from the latter?
NO. Petition is DENIED for lack of merit
Such SPA is unavailing for petitioner. Petitioners principal, Faustino Mercado, is an agent himself and as such cannot
further delegate his agency to another. An agent cannot delegate to another the same agency. The legal maxim potestas
delegata non delegare potest; a power once delegated cannot be re-delegated, is a principle of agency. Also, a re-delegation
of the agency would be detrimental to the principal as the second agent has no privity of contract with the former. In the
instant case, petitioner has no privity of contract with Paciencia Regala, owner of the fishpond and principal of Faustino
Moreover, while the Civil Code under Article 1892 allows the agent to appoint a substitute, such is not the situation in the
instant case. The SPA clearly delegates the agency to petitioner to pursue the case and not merely as a substitute. Besides, it
is clear in the said Article that what is allowed is a substitute and not a delegation of the agency. Clearly, petitioner is not a
party who will be benefited or injured by the results of both cases.

Case # 18

[G.R. No. 130423.November 18, 2002]


Virgie Serano received in trust from Leonida E. Quilatan various pieces of jewelry in the total value of P567,750.00 to be
sold on commission basis under the express duty and obligation of remitting the proceeds thereof to Quilantan if sold or
returning the same to the latter if unsold.
Unknown to Quilatan, Serona entrusted the jewelry to one Marichu Labrador for the latter to sell on commission
basis.Serona was not able to collect payment from Labrador, which caused her to likewise fail to pay her obligation to




Virgie Serona isACQUITTEDof the crime of estafa, but is held civilly liable.
An agent who is not prohibited from appointing a sub-agent but does so without express authority is responsible for the acts
of the sub-agent.

Serano did notipso factocommit the crime ofestafathrough conversion or misappropriation by delivering the
jewelry to a sub-agent for sale on commission basis.
The law on agency in our jurisdiction allows the appointment by an agent of a substitute or sub-agent in the
absence of an express agreement to the contrary between the agent and the principal. In the case at bar, the
appointment of Labrador as petitioners sub-agent was not expressly prohibited by Quilatan, as the acknowledgment
receipt does not contain any such limitation. Neither does it appear that petitioner was verbally forbidden by
Quilatan from passing on the jewelry to another person before the acknowledgment receipt was executed or at any
other time. Thus, it cannot be said that petitioners act of entrusting the jewelry to Labrador is characterized by
abuse of confidence because such an act was not proscribed and is, in fact, legally sanctioned.


It was established that the inability of petitioner as agent to comply with her duty to return either the pieces of
jewelry or the proceeds of its sale to her principal Quilatan was due, in turn, to the failure of Labrador to abide by
her agreement with petitioner. Notably, Labrador testified that she obligated herself to sell the jewelry in behalf of
petitioner also on commission basis or to return the same if not sold. In other words, the pieces of jewelry were
given by petitioner to Labrador to achieve the very same end for which they were delivered to her in the first place.

Consequently, there is no conversion since the pieces of jewelry were not devoted to a purpose or use different
from that agreed upon.
Similarly, it cannot be said that petitioner misappropriated the jewelry or delivered them to Labrador without right.
Aside from the fact that no condition or limitation was imposed on the mode or manner by which petitioner was to
effect the sale, it is also consistent with usual practice for the seller to necessarily part with the valuables in order to
find a buyer and allow inspection of the items for sale.

19) Imperial Insurance Inc v Rosete

GR No 55630 March 6, 1990

The case was set for pre-trial conference of which the parties and their counsel were duly notified. At said pre-trial
conference petitioner was represented by Atty. Arturo A. Magallanes who presented a special power of attorney executed by
Bernardito R. Pulvera, regional branch manager of petitioner for Mindanao and Visayas, authorizing said counsel to
represent petitioner at the pre-trial conference, to enter into any amicable settlement and to do such other acts as may be
necessary to implement the authority. The presiding judge refused to honor the same and observed that it is only the Board
of Directors of the petitioner who may authorize the appearance of the regional manager in behalf of petitioner and that he
cannot delegate his functions. Counsel for private respondent stated he was willing to give petitioner a chance to produce
the appropriate authority. Nevertheless, the respondent judge declared the petitioner in default

Issue: WON Pulvera as agent of the petitioner may appoint a substitute

There can be no doubt therefore that regional branch manager Pulvera, as regional manager for Visayas and Mindanao of
petitioner, was authorized to represent petitioner in any litigation and in the process to enter into a compromise agreement or
settlement thereof. As such agent of petitioner he may appoint a substitute, as he was not prohibited from doing so by his
principal. Moreover, even assuming for the sake of argument that the observations of the respondent judge is correct in that
a board resolution of the petitioner is required for the purposes of authorizing Pulvera and/or Magallanes to bind the
petitioner, the counsel for the private respondent manifested to the respondent judge his willingness to give the petitioner an
opportunity to comply with the requirement of the court. Just the same, the respondent judge declared petitioner to be in
default. No doubt, the respondent judge was unnecessarily harsh when the Rules call for liberality in such cases. This is a
case where petitioner filed an answer with counterclaim and advanced apparently a meritorious and valid defense. It should
be given its day in court and the opportunity to prove its assertions. This is the situation contemplated by the Rules. The
courts must lean in favor of affording substantial justice as against a technical requirement.

Case #20
The Manila Remnant Co. Inc v CA
GR No. 82978, November 22,1990
Fernan, J.

Manila Remnant Co. is the owner of Capital Homes Subdivision and Artemio Valencia as President. A.U. Valencia and Co.,
is the authorized agent of Manila Remnant to develop the aforesaid subdivision with authority to manage the sales thereof,
execute contracts to sell to lot buyers and issue official receipts. Artemio Valencia is also the president of this company.
Sometime in March 1970, Manila Remnant thru A.U. Valencia, executed contracts to sell with Ventanilla covering two lots
amounting to P66k to paid monthly for 10 years. Ventanilla paid the downpayment. After 10 days, Artemio Valencia sold the
same lots without informing Ventanilla to Crisostomo, his sales agent without any consideration. Artemio Valencia then
transmitted the fictitious Crisostomo contracts to Manila Remnant while he kept in his files the contracts to sell in favor of
the Ventanillas. All the amounts paid by the Ventanillas were deposited in Valencia's bank account and this is remitted to
Manila Remnant in favor of Crisostomo. Receipts issued by Manila Remnant in favor of Crisostomo are kept by Valencia.
Ventanilla is not aware of Valencia's scheme and thus continued paying their monthly installments. Sometime in May 1973,
Manila Remnant terminated its collection agreement with AU Valencia due to discrepancies and irregularities discovered in
its collections and remittances. Valencia was also removed as the President of Manila Remnant.
The Ventanilla couple unaware of the circumstances happened, continued paying their installments to Valencia. It is only in
1978 they learned the termination of Valencia, thus they went immediately to Manila Remnant to pay their balance but to
their shock they discovered from Gloria Caballes, an accountant of Manila Remnant, that their names did not appear in the
records of A.U. Valencia and Co. as lot buyers. Thus, the Ventanillas commenced an action for specific performance,
annulment of deeds and damages against Manila Remnant, A.U. Valencia and Co. and Carlos Crisostomo. Lower court's
rendered judgment in favor of Ventanilla, and in the decision, the court ordered defendants A.U. Valencia and Co. Inc.,
Manila Remnant and Carlos Crisostomo jointly and severally to pay the Ventanillas the amount of P100,000.00 as moral
damages, P100,000.00 as exemplary damages and P100,000.00 as attorney's fees and in case the transfer of lots cannot be
effected for any legal reason, the defendants should reimburse jointly and severally to the Ventanillas the total amount of
P73,122.35 representing the total amount paid for the two lots plus legal interest thereon from March 1970 plus damages.
While petitioner Manila Remnant has not refuted the legality of the award of damages per se, it believes that it cannot be
made jointly and severally liable with its agent A.U. Valencia and Co. since it was not aware of the illegal acts perpetrated
nor did it consent or ratify said acts of its agent.
ISSUE: Whether or not petitioner Manila Remnant should be held solidarily liable together with A.U. Valencia and Co. and
Carlos Crisostomo for the payment of moral, exemplary damages and attorney's fees in favor of the Ventanillas
Held: Yes.
Ratio: The unique relationship existing between the principal and the agent at the time of the dual sale must be underscored.
Bear in mind that the president then of both firms was Artemio U. Valencia, the individual directly responsible for the sale
scam. Hence, despite the fact that the double sale was beyond the power of the agent, Manila Remnant as principal was
chargeable with the knowledge or constructive notice of that fact and not having done anything to correcr such an
irregularity was deemed to habe ratified the same.

Case #21
Cervantes v. CA
GR No. 125138
March 2, 1999
Purisima, J:
Cervantes was issued a round ticket for Manila-Honolulu-Los Angeles-Honolulu-Manila, which ticket expressly provided
an expiry date of March 27, 1990. He was issued the said ticket following a compromises agreement between the two
parties from previous lawsuits. On March 23, four days before its expiration, he used the ticket and went to Los Angeles. He
booked a return ticket for the April 2 flight which was confirmed by PAL personnel. On the day of his supposed return, he
was not allowed to board because it was already expired.
Whether or not the PAL agents (personnel), upon confirmation of Cervantes return ticket, extended the validity of the
No, PAL agents confirmation did not extend the validity of the ticket. They did not have authority.
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, he cannot use what the PAL agents did to his advantage. The said agents acted without authority when
they confirmed the flights of the petitioner. If the said third person is aware of such limits of authority, he is to blame.

Case # 22

[G.R. No. 129039.September 17, 2002]

Conrado De Guzman is an architect-contractor doing business under the name and style of Jigscon Construction. Siredy
Enterprises, Inc. (hereafter Siredy) is the owner and developer of Ysmael Village, a subdivision in Sta. Cruz, Marilao,
Bulacan. The president of Siredy is Ismael E. Yanga.
As stated in its Articles of Incorporation,the primary corporate purpose of Siredy is to acquire lands, subdivide and develop
them, erect buildings and houses thereon, and sell, lease or otherwise dispose of said properties to interested buyers.
Sometime before October 1978, Yanga executed an undated Letter of Authority duly signed by Yanga which constituted
Hermogenes Santos as Siredys agent,whose authority included entering into a contract for the building of housing units at
Ysmael Village.
Thereafter, Santos entered into a Deed of Agreement with De Guzman.
From October 1978 to April 1990, De Guzman constructed 26 residential units at Ysmael Village.Thirteen (13) of these
were fully paid but the other 13 remained unpaid.The total contractual price of these 13 unpaid houses is P412,154.93
which was verified and confirmed to be correct by Santos, per an Accomplishment Billingthat the latter signed. Yanga is not
a signatory to the said contact.
De Guzman tried but failed to collect the unpaid account from petitioner.Thus, he instituted the action below for specific
performance against Siredy, Yanga, and Santos who all denied liability.
During the trial, Santos disappeared and his whereabouts remain unknown.

W/N Hermogenes B. Santos was a duly constituted agent of Siredy, with authority to enter into contracts for the
construction of residential units in Ysmael Village and thus the capacity to bind Siredy to the Deed of Agreement.

Siredy Enterprises, Inc. is ordered to pay Conrado de Guzman actual damages with legal interest.

By the relationship of agency, one party called the principal authorizes another called the agent to act for and in his behalf in
transactions with third persons. The authority of the agent to act emanates from the powers granted to him by his principal;
his act is the act of the principal if done within the scope of the authority. He who acts through another acts himself.
On its face, the Letter of Authority executed by Yanga clearly and unequivocally constituted Santos to do and execute,
among other things, the act of negotiating and entering into contract or contractsto buildHousing Units on the subdivision

lots in Ysmael Village, Sta. Rosa, Marilao, Bulacan.Nothing could be more express than the written stipulations contained
It was upon the authority of this document that De Guzman transacted business with Santos that resulted in the construction
contract denominated as the Deed of Agreement.

Case No. 23
Cruz v Court of Appeals
G.R. No. 85685 September 11, 1991
Lauro Cruz owns a store under the tradename Mang Uro Store. However, he was dismayed when he was sued by
Purefoods Corporation in an action for sum of money in the amount of P55, 246.21 for the unpaid canned goods. It
appeared that although the store is now being manage by his son, it is still licensed under his name and the credit card
application signed by a certain Me Cruz and Marilou Cruz.
WON Lauro is liable to pay P55, 246.21 contracted under his name by Me Cruz and Marilou Cruz.
Lauro is not liable to pay the amount demanded by Purefoods Corporation.
It is provided under Artcicle 1902 of the Civil Code that a third person with whom the agent wishes to contract on behalf of
the principal may require the presentation of the power of attorney, or the instructions as regards the agency.
In the case at bar, there is no showing that Purefoods Corporation exerted effort to inquire on the relationship of the
signatories Me Cruz and Marilou Cruz to that of the owner/manager Lauro Cruz. Also, there was no showing on its part to
ascertain the extent of authority of the said signatories to represent Lauro in the credit transaction.
The failure on the part of Purefoods to observe the primary duty of persons dealing with parties who act for others
bars it cannot to collect the sum of money from Mr Lauro. Hence, Lauro is not liable to pay P55, 246.21.


Ponente: Cruz, J.
Eduardo Gomez opened an account with Golden Savings and deposited 38 treasury warrants. All these warrants
were indorsed by Golden Savings Cashier and deposited to its Savings Account in Metrobank. They were sent for clearing
by the branch office to the principal office of Metrobank, which forwarded them to the Bureau of Treasury for special
clearing. The dorsal side of the deposit slip provides that the bank obligates itself only as the depositors collecting agent,
assuming no responsibility beyond care in selecting correspondents, and until such time as actual payment shall have come
into possession of his bank, the right is reserved to charge back to the depositors account any amount previously credited,
whether or not such item is returned. Meanwhile, Gomez was not allowed to withdraw from his accounts. Because of
persistent inquiries by Golden Savings cashier about whether the warrants had been cleared, Metrobank decided to allow
Golden Savings to withdraw from the proceeds of the warrants. In turn, Golden Savings allowed Gomez to make
withdrawals from his own account. The warrants, however, had been dishonored by the Bureau of Treasury, and hence
Metrobank demanded the refund by GS of the amount it had previously withdrawn. The RTC and CA ruled in favor of
Golden Savings.
Issue: WON Metrobank is merely a collecting agent and hence cannot be made liable for its failure to collect on the
Ruling: NO, it can be made liable for its negligence, under Art 1909 of the Civil Code
Art. 1909 of the Civil Code states that the agent is responsible not only for his fraud but also for negligence which
shall be judged with more or less signs by the courts, according to whether the agency was or was not for a compensation.
The negligence of Metrobank has been sufficiently established. It was the clearance given by it that assured
Goldman Savings it was already safe to allow Gomez to withdraw the proceeds of the treasury warrants he had deposited.
Metrobank misled Golden Savings. There may have been no express clearance, as Metrobank insists but in any case that
clearance could be implied from its allowing Golden Savings to withdraw from its account not only once or even twice but
three times. The total withdrawal was in excess of its original balance before the treasury warrants were deposited, which
only added to its belief that the treasury warrants had indeed been cleared.
Conclusion: The challenged decision is affirmed.


Ponente: Romero, J.
Areola (petitioner insured) applied for a one-year personal accident insurance policy through Prudential Guarantee
and Assurance, Inc. (Prudential). Under the terms of the statement of account, upon payment by petitioner of the full amount
and premium, he must demand for an official receipt. When he paid in full, respondent insurance company issued only a
collectors provisional receipt. Subsequently, Prudential unilaterally cancelled the insurance since company records revealed
that petitioner insured failed to pay his premiums. This prompted Areola to file a complaint for breach of contract with
damages. Later, Prudential offered to reinstate the same policy upon a finding that the cancellation was erroneous and that
the premiums were paid in full but were not remitted by Teofilo Malapit, Prudentials branch manager. The RTC ruled in
favor of Areola on the ground that Prudential acted in bad faith in cancelling the insurance policy. The CA reversed the
decision of the lower court.
Issue: WON respondent insurance company may be held liable by way of damages for the fraudulent acts committed by its
branch manager that gave occasion to the erroneous cancellation of the subject insurance policy
Ruling: Yes, Malapits fraudulent act of misappropriating the premiums paid by petitioner-insured is beyond doubt directly
imputable to respondent insurance company, under Article 1910 of the Civil Code.
A corporation, such as respondent insurance company, acts solely thru its employees. The latters acts are clear as
to the relationship between private respondent insurance company. As admitted by private respondent insurance company,
Malapit was the branch manager of its Baguio branch. It is beyond doubt that he represented its interest and acted in its
behalf. His act of receiving the premiums collected is well within the province of his authority. Thus, his receipt of said
premiums is receipt by private respondent insurance company who, by provision of law, particularly under Art. 1910 of the
Civil Code, is bound by the acts of his agent.
Article 1910 thus reads: The principal must comply with all the obligations which the agent may have contracted within the
scope of his authority. As for any obligation wherein the agent has exceeded his power, the principal is not bound except
when he ratifies it expressly or tacitly.
Conclusion: The petition is granted and the decision of the Court of Appeals is reversed.

Case #27
G.R. No. 156335 SPOUSES RAUL and AMALIA PANLILIO,Petitioners,vs. CITIBANK, N.A.,Respondent. November
Facts:Amalia Panlilio (Amalia) visited respondent's Makati City office and deposited one million pesos (PhP1 million) in
the bank's "Citihi" account, a fixed-term savings account with a higher-than-average interest.3On the same day, Amalia also
opened a current or checking account with respondent, to which interest earnings of the Citihi account were to be credited.
4Respondent assigned one of its employees, Jinky Suzara Lee (Lee), to personally transact with Amalia and to handle the
Amalia opened the accounts as ITF or "in trust for" accounts, as they were intended to benefit her minor children, in case
she would meet an untimely death.
Amalia's initial intention was to invest the money in a Citibank product called the Peso Repriceable Promissory Note
(PRPN), a product which had a higher interest. However, as the PRPN was not available that day, Amalia put her money in
the Citihi savings account.9
More than a month later, or on November 28, 1997, Amalia phoned Citibank saying she wanted to place an investment, this
time in the amount of three million pesos (PhP3 million). During the visit, Amalia instructed Lee on what to do with the
PhP3 million. Later, she learned that out of the said amount, PhP2,134,635.87 was placed by Citibank in a Long-Term
Commercial Paper (LTCP), a debt instrument that paid a high interest, issued by the corporation Camella and Palmera
Homes (C&P Homes).10The rest of the money was placed in two PRPN accounts, in trust for each of Amalia's two
Allegations differ between petitioners and respondent as to whether Amalia instructed Lee to place the money in the LTCP
of C&P Homes. Amalia claims to have called Lee as soon as she received the first COI in December 1997, and demanded
that the investment in LTCP be withdrawn and placed in a PRPN.24Respondent, however, denies this, claiming that Amalia
merely called to clarify provisions in the COI and did not demand a withdrawal.25
Amalia, through counsel, sent her first formal, written demand to respondent "for a withdrawal of her investment as soon as
possible. Respondent noted that the investment had a 2003 maturity, was not a deposit, and thus, its return to the investor
was not guaranteed by respondent; however, it added that the LTCP may be sold prior to maturity and had in fact been put
up for sale, but such sale was "subject to the availability of buyers in the secondary market."29At that time, respondent was
not able to find a buyer for the LTCP.
Thus, petitioners filed with the RTC their complaint against respondent for a sum of money and damages. RTC ruled in
favor of plaintiffs. CA reversed the decision of the trial court.

Issue: (1) whether petitioners are bound by the terms and conditions of the Directional Investment Management Agreement
(DIMA), Term Investment Application (TIA), Directional Letter/Specific Instructions, and Confirmations of Investment
(COIs); (2) and whether petitioners are entitled to take back the money they invested from respondent bank; or stated
differently, whether respondent is obliged to return the money to petitioners upon their demand prior to maturity.

Held: (1) yes (2) no

Ratio: Re first issue: The DIMA, Directional Letter and COIs are evidence of the contract between the parties and are
binding on them, following Article 1159 of the Civil Code which states that contracts have the force of law between the
parties and must be complied with in good faith.47In particular, petitioner Amalia affixed her signatures on the DIMA,
Directional Letter and TIA, a clear evidence of her consent which, under Article 1330 of the same Code, she cannot deny
absent any evidence of mistake, violence, intimidation, undue influence or fraud.48
As the documents have the effect of law, an examination is in order to reveal what underlies petitioners' zeal to exclude
these from consideration.

Under the DIMA, the following provisions appear:

The DIMA, Directional Letter, TIA and COIs, read together, establish the agreement between the parties as an investment
management agreement, which created a principal-agent relationship between petitioners as principals and respondent as
agent for investment purposes. The agreement is not a trust or an ordinary bank deposit; hence, no trustor-trusteebeneficiary or even borrower-lender relationship existed between petitioners and respondent with respect to the DIMA
account. Respondent purchased the LTCPs only as agent of petitioners; thus, the latter assumed all obligations or inherent
risks entailed by the transaction under Article 1910 of the Civil Code, which provides:
Article 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of
his authority.
As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it
expressly or tacitly.
Re second issue: It is clear that since the money is committed to C&P Homes via LTCP for five years, or until 2003,
petitioners may not seek its recovery from respondent prior to the lapse of this period. Petitioners must wait and meanwhile
just be content with receiving their interest regularly. If petitioners want the immediate return of their investment before the
maturity date, their only way is to find a willing buyer to purchase the LTCP at an agreed price, or to go directly against the
issuer C&P Homes, not against the respondent.

Case #28
G.R. No. 111924 January 27, 1997
Facts: Petitioner Adoracion Lustan is the registered owner of a parcel of land containing an area of 10.0057 hectares,
petitioner leased the above described property to private respondent Nicolas Parangan for a term of ten (10) years and an
annual rent of One Thousand (P1,000.00) Pesos. During the period of lease, Parangan was regularly extending loans in
small amounts to petitioner to defray her daily expenses and to finance her daughter's education. On July 29, 1970,
petitioner executed a Special Power of Attorney in favor of Parangan to secure an agricultural loan from private respondent
Philippine National Bank (PNB) with the aforesaid lot as collateral. On February 18, 1972, a second Special Power of
Attorney was executed by petitioner, by virtue of which, Parangan was able to secure four (4) additional loans. The last
three loans were without the knowledge of herein petitioner and all the proceeds therefrom were used by Parangan for his
own benefit.
For fear that her property might be prejudiced by the continued borrowing of Parangan, petitioner demanded the return of
her certificate of title. Instead of complying with the request, Parangan asserted his rights over the property which allegedly
had become his by virtue of the aforementioned Deed of Definite Sale.
Aggrieved, petitioner filed an action for cancellation of liens, quieting of title, recovery of possession and damages against
Parangan and PNB in the Regional Trial Court of Iloilo City.
Issue: Whether or not the Special Power of Attorney afforded to respondent is binding to petitioner with regard to the
additional loans made by respondent?
Held: Yes.
Ratio: It is admitted that petitioner is the owner of the parcel of land mortgaged to PNB on five (5) occasions by virtue of
the Special Powers of Attorney executed by petitioner in favor of Parangan. Petitioner argues that the last three mortgages
were void for lack of authority. She totally failed to consider that said Special Powers of Attorney are a continuing one and
absent a valid revocation duly furnished to the mortgagee, the same continues to have force and effect as against third
persons who had no knowledge of such lack of authority. Article 1921 of the Civil Code provides:
Art. 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its revocation
shall not prejudice the latter if they were not given notice thereof.
The Special Power of Attorney executed by petitioner in favor of Parangan duly authorized the latter to represent and act on
behalf of the former. Having done so, petitioner clothed Parangan with authority to deal with PNB on her behalf and in the
absence of any proof that the bank had knowledge that the last three loans were without the express authority of petitioner, it
cannot be prejudiced thereby.

Case #29
July 18, 2002

Facts: Appellants5were co-owners of four (4) lots located at EDSA corner New York and Denver Streets in Cubao, Quezon
City. In a letter dated January 24, 1984 appellee6was authorized by appellants to act as real estate broker in the sale of these
properties for the amount ofP23,000,000.00, five percent (5%) of which will be given to the agent as commission. It was
appellee who first found Times Transit Corporation, represented by its president Mr. Rondaris, as prospective buyer which
desired to buy two (2) lots only, specifically lots 14 and 15. Eventually, sometime in May of 1985, the sale of lots 14 and 15
was consummated. Appellee received from appellantsP48,893.76 as commission.
It was then that the rift between the contending parties soon emerged. Appellee apparently felt short changed
because according to him, his total commission should beP352,500.00 which is five percent (5%) of the agreed
price ofP7,050,000.00 paid by Times Transit Corporation to appellants for the two (2) lots, and that it was he who
introduced the buyer to appellants and unceasingly facilitated the negotiation which ultimately led to the
consummation of the sale. Hence, he sued below to collect the balance ofP303,606.24 after having
receivedP48,893.76 in advance.

Issue: (1) whether the complaint merits dismissal for failure to implead other co-owners as indispensable parties (2)
whether Artigo's claim has been extinguished by full payment, waiver or abandonment

Held: (1) no, (2) no

Ratio: Re first issue: There is no dispute that Constante appointed Artigo in a handwritten note dated January 24, 1984 to
sell the properties of the De Castros for P23 million at a 5 percent commission. The authority was on a first come, first serve
basis. Constante signed the note as owner and as representative of the other co-owners. Under this note, a contract of agency
was clearly constituted between Constante and Artigo. Whether Constante appointed Artigo as agent, in Constante's
individual or representative capacity, or both, the De Castros cannot seek the dismissal of the case for failure to implead the
other co-owners as indispensable parties.The De Castros admit that the other co-owners are solidarily liable under the
contract of agency,10citing Article 1915 of the Civil Code, which reads:
Art. 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily
liable to the agent for all the consequences of the agency.
When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in a contract of agency,
each obligor may be compelled to pay the entire obligation.12The agent may recover the whole compensation from any one
of the co-principals, as in this case.
Indeed, Article 1216 of the Civil Code provides that a creditor may sueanyof the solidary debtors. This article reads:
Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The
demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others,
so long as the debt has not been fully collected.
Solidarity does not make a solidary obligor an indispensable party in a suit filed by the creditor.

Re second issue: A contract of agency which is not contrary to law, public order, public policy, morals or good custom is a
valid contract, and constitutes the law between the parties.14The contract of agency entered into by Constante with Artigo
is the law between them and both are bound to comply with its terms and conditions in good faith. The mere fact that "other
agents" intervened in the consummation of the sale and were paid their respective commissions cannot vary the terms of the

contract of agency granting Artigo a 5 percent commission based on the selling price. These "other agents" turned out to be
employees of Times Transit, the buyer Artigo introduced to the De Castros. In any event, we find that the 5 percent real
estate broker's commission is reasonable and within the standard practice in the real estate industry for transactions of this
Artigo's acceptance of partial payment of his commission neither amounts to a waiver of the balance nor puts him in
estoppel. In this case, it is evident that Artigo merely received the partial payment without waiving the balance. Thus, there
is no estoppel to speak of.

Case #30
Cuison v. Court of Appeals
GR No. 88539
October 26, 1993
Bidin, J.
Petitioner Kue Cuison is a sole proprietorship engaged in the purchase and sale of newsprint, bond paper and scrap. Private
respondent Valiant Investment Associates delivered various kinds of paper products to Lilian Tan of LT Trading. It was Tiu
Huy Tiac's (employed by petitioner) instructions that merchandise was delivered to Lilian Tan. Tiac issued 9 postdated
checks for the payment of paper products. The checks were dishonored by the drawee bank. Private respondent filed an
action againts petitioner. Petitioner denied any involvement in the transaction entered by Tiac.
Issue: Whether or not petitioner is liable by the transactions entered by Tiac
Held: Yes
Ratio: It is evident that by the acts and admission, petitioner held out Tiu Huy Tiac to the public as manager of his store in
Binondo, Manila. The fact that at the time of the transaction Tiac was admittedly the manager of the store even he was no
longer employed 3 months after does not mean that petitioner is absolved from liability. Petitioner is now estopped from
disclaiming liability for the transaction entered into.

G.R. No. 76931 May 29, 1991
American Airlines, Inc., an air carrier offering passenger and air cargo transportation in the Philippines, and Orient Air
Services and Hotel Representatives, entered into a General Sales Agency Agreement whereby the former authorized the
latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation
On 11 May 1981, alleging that Orient Air had reneged on its obligations under the Agreement by failing to promptly remit
the net proceeds of sales, American Air undertook the collection of the proceeds of tickets sold originally by Orient Air and
terminated the Agreement. American Air instituted a suit against Orient Air averring the aforesaid basis for the termination
of the Agreement.
Orient Air denied the material allegations of the complaint with respect to plaintiff's entitlement to alleged unremitted
amounts, contending that after application thereof to the commissions due it under the Agreement, plaintiff in fact still owed
Orient Air a balance in unpaid overriding commissions.

Whether or not Orient Air is entitled to the 3% overriding commission?


Whether or not the CA erred in affirming the decision of the trial court in ordering American Air to "reinstate
defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA

YES. The Court AFFIRMS the decision and resolution of the respondent Court of Appeals with modifications.

It is a well settled legal principle that in the interpretation of a contract, the entirety thereof must be taken into
consideration to ascertain the meaning of its provisions. The Agreement, when interpreted in accordance with the
foregoing principles, entitles Orient Air to the 3% overriding commission based on total revenue.

As the designated exclusive General Sales Agent of American Air, Orient Air was responsible for the promotion and
marketing of American Air's services for air passenger transportation, and the solicitation of sales. Orient Air was to be
paid commissions of two kinds: first, a sales agency commission, ranging from 7-8% of tariff fares and charges from
sales by Orient Air when made on American Air ticket stock; and second, an overriding commission of 3% of tariff
fares and charges for all sales of passenger transportation over American Air services.


The CA in affirming the trial courts decision, in effect, compels American Air to extend its personality to Orient Air.
Such would be violative of the principles and essence of agency, defined by law as a contract whereby "a person binds
himself to render some service or to do something in representation or on behalf of another, WITH THE CONSENT

In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. The
agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a
relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or
by any court.

Case # 32
Herein complainant Nena Lising and her sister Rosita de Guzman ( mother of herein complainant Susana Buado) were the
plaintiffs in a civil case which was decided in favor of the plaintiffs. Atty Eufracio Layag represented the said plaintiffs in
that case.Inland Trailways, the defendantin that case, issued checks: (1) payable to Atty. Layag for P15,000 (2) payable to
Lising for P30,180 (3) payable to De Guzman, who had by then passed away(for P45,000).The checkswere receivedby
Atty Layag. Atty Layag didnot inform the plaintiffs about the checks.Instead he gave thechecks to one Marie Paz
Gonzales for encashment on the strength of a Special Power of Attorney, purportedly executed by De Guzman constituting
Gonzales as agent. After discovering that checks have already been issued, Lising and Buado, as heir of De Guzman
demandedthe delivery ofthe checks.Gonzales, the agentgave Lising P10,000.No further amounts were remitted after that.
Issue: WON there was a valid agency
Held: No, there is no valid ag ency, Special Power of Attorney no longer has an effect.
As a lawyer, with more than thirty (30) years in practice, respondent is charged with knowledge of the law. He should know
that it was error for him to rely on a Special Power of Attorney after the death of the principal, Rosita de Guzman. As
pointed out by the IBP Investigating Commissioner, even assuming there was a Special Power of Attorney, although
respondent could not produce a copy nor prove its existence, when de Guzman died that document ceased to be operative.
This is clear from Article 1919of the Civil Code. While there are instances, as provided in Article 1930,where the agency
is not extinguished by the death of the principal, the instant case does not fall under the exceptions. Clearly, at the time Atty.
Layag received and turned over the checks corresponding to the award of damages in the mentioned Civil Case, there was
no longer any valid Special Power of Attorney. Again, as pointed out by the IBP Investigating Commissioner, respondent's
duty when the award of damages was made, was to preserve and deliver the amount received to the heirs of his client, de
Guzman, and not to any other person.

Case #33
G.R. No. L-41420 July 10, 1992
CMS LOGGING, INC.,petitioner,
Facts: Petitioner CMS is a forest concessionaire engaged in the logging business, while private respondent DRACOR is
engaged in the business of exporting and selling logs and lumber. On August 28, 1957, CMS and DRACOR entered into a
contract of agency1whereby the former appointed the latter as its exclusive export and sales agent for all logs that the
former may produce, for a period of five (5) years. By virtue of the aforesaid agreement, CMS was able to sell through
DRACOR a total of 77,264,672 board feet of logs in Japan, from September 20, 1957 to April 4, 1962.
About six months prior to the expiration of the agreement, while on a trip to Tokyo, Japan, CMS's president, Atty. Carlos
Moran Sison, and general manager and legal counsel, Atty. Teodoro R. Dominguez, discovered that DRACOR had used
Shinko Trading Co., Ltd. (Shinko for brevity) as agent, representative or liaison officer in selling CMS's logs in Japan for
which Shinko earned a commission of U.S. $1.00 per 1,000 board feet from the buyer of the logs. Under this arrangement,
Shinko was able to collect a total of U.S. $77,264.67.
After this discovery, CMS sold and shipped logs valued at U.S. $739,321.13 or P2,883,351.90,4directly to several firms in
Japan without the aid or intervention of DRACOR.
CMS sued DRACOR for the commission received by Shinko and for moral and exemplary damages, while DRACOR
counterclaimed for its commission, amounting to P144,167.59, from the sales made by CMS of logs to Japanese firms.
Issue: Whether or not DRACOR was entitled to its commission from the sales made directly by CMS to Japanese firms.
Held: No.
Ratio: The principal may revoke a contract of agency at will, and such revocation may be express, or implied,and may be
availed of even if the period fixed in the contract of agency as not yet expired. As the principal has this absolute right to
revoke the agency, the agent can not object thereto; neither may he claim damages arising from such revocation,unless it is
shown that such was done in order to evade the payment of agent's commission. In the case at bar, CMS appointed
DRACOR as its agent for the sale of its logs to Japanese firms. Yet, during the existence of the contract of agency,
DRACOR admitted that CMS sold its logs directly to several Japanese firms. This act constituted an implied revocation of
the contract of agency under Article 1924 of the Civil Code, which provides:
Art. 1924 The agency is revoked if the principal directly manages the business entrusted to the agent, dealing
directly with third persons.
Since the contract of agency was revoked by CMS when it sold its logs to Japanese firms without the intervention of
DRACOR, the latter is no longer entitled to its commission from the proceeds of such sale and is not entitled to retain
whatever moneys it may have received as its commission for said transactions. Neither would DRACOR be entitled to
collect damages from CMS, since damages are generally not awarded to the agent for the revocation of the agency, and the
case at bar is not one falling under the exception mentioned, which is to evade the payment of the agent's commission.

Case #34
G.R. No. 141525 September 2, 2005
FACTS OF THE CASE: Medicard Philippines, Inc. (Medicard) appointed Carlos Sanches as its special corporate agent. As
such agent, Medicard gave him a 18% commission based on "cash brought in." Through Sanchez' efforts, Medicard and
United Laboratories Group of Companies (Unilab) executed a Health Care Program Contract which was renewed for
another year, in both instances, Medicard paid Sanchez his commissions. On the third year, Unilab rejected Medicard's
proposal "for the reason that it was too high," prompting the Administrators of Medicard to request for the reduction of
Sanchez's commission which he refused.
Meanwhile, in order not to prejudice its personnel by the termination of their health insurance, Unilab, through
Medicard's administrators negotiated a new scheme acceptable by both parties involved. Medicard did not give petitioner
any commission under the new scheme.
ISSUE : Whether or not Sanchez is entitled to a commission under the new scheme as Medicard's appointed special
corporate agent.
HELD : No.
RATIONALE: Since petitioner refused to reduce his commission, prompting Medicard to directly negotiate with Unilab, in
turn revoked its agency contract with Sanchez, such revocation is authorized by Article 1924 of the Civil Code which
provides: "The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with
third persons."

Case #35
Labor Arbiter, NLRC; NCR, Arbitration Branch, Quezon City and DIVINA A. MONTEHERMOZO
G.R. No. 161757 January 25, 2006
FACTS OF THE CASE : Sunace International Management Services (Sunace), deployed to Taiwan Divina A.
Montehermozo (Divina) as a domestic helper under a 12-month contract. The deployment was with the assistance of a
Taiwanese broker, Edmund Wang, President of Jet Crown International Co., Ltd.
After her 12-month contract expired, Divina continued working for her Taiwanese employer, Hang Rui Xiong, for
two more years, after which she returned to the Philippines. Shortly thereafter, she filed a complaint before the National
Labor Relations Commission (NLRC) against Sunace, one Adelaide Perez, the Taiwanese broker, and the employer-foreign
principal demanding refund of taxes and her savings for the two year extension, alleging further that the 2-year extended
contract was with the knowledge and consent of Sunace. Sunace, however denies knowledge and consent of the extension,
hence, it had no liability attaching to any claim arising therefrom.
1. Whether or not Sunace impliedly consented to the extension of the contract of Divina thru its
continuous communication with its foreign principal.
2. Whether or not upon the termination of the one year contract, the agency relations was deemed
HELD : 1. No.
2. Yes.
RATIONALE:1. The theory of imputed knowledge ascribes knowledge to the agent, not the other way around. The
knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent Sunace. There being no substantial
proof that Sunace knew of and consented to be bound under the 2-year employment contract extension, it cannot be said to
be privy thereto. As such, it and its "owner" cannot be held solidarily liable for any of Divina's claims arising from the 2year employment extension.
2. There was an implied revocation of its agency relationship with its foreign principal when, after the
termination of the original employment contract, the foreign principal directly negotiated with Divina and entered into a
new and separate employment contract in Taiwan. Article 1924 of the New Civil Code reading "The agency is revoked if the
principal directly manages the business entrusted to the agent, dealing directly with third persons"

Case #36
Mendoza v. Paule
GR No. 175885
February 13, 2009
Ynares-Santiago, J.
Engineer Eduardo M. Paule is the proprietor of E.M. Paule Construction and Trading. Paule executed a SPA authorizing
Zenaida Mendoza to participate in the bidding of National Irrigation Administration project and to represent him in all
transactions related thereto. EMPCT, through Mendoza was awarded projects. Manuel de la Cruz leased heavy equipments
to EMPCT through Mendoza. On April 27, 2000, Paule revoked the SPA in favor of Mendoza. Cruz filed an action against
Mendoza and Cruz.
Whether or not Mendoza is an agent of Paule
Records show that Paule and Mendoza entered into a partnership in regard to the NIA project. Paule's contribution is his
contractor's license and expertise, while Mendoza is to secure the funds for labor, materials and services. There is no valid
reason for Paule to revoke Mendoza's SPA. Since Mendoza took care of the funding it is only logical that the SPA issued
were necessary for the performance of her role in the partnership. Paule's revocation of SPA was done in bad faith. Paule is
liable for abandoning the partnership, leaving Mendoza to fend for her own.

Case #37
Valenzuela v Court of Appeals G.R. No. 83122 October 19, 1990
J. Gutierrez Jr.
Valenzuela, a General Agent of respondent Philippine American General Insurance Company, Inc (Philmagen), was
authorized to solicit and sell all kinds of non-life insurance. He had a 32.5% commission rate. From 1973 to 1975,
Valenzuela solicited marine insurance from Delta Motors, Inc. from which he was entitled to a commission of 32%.
However, Valenzuela did not receive his full commission. Philamgen wanted to cut Valenzuelas commission by 50% but he
declined. When Philamgen offered again, Valenzuela firmly reiterated his objection. Afterwards, Philamgen took drastic
action against Valenzuela. They reversed the commission due him, threatened the cancellation of policies issued by his
agency, and started to leak out news that Valenzuela has a substantial debt with Philamgen. His agency contract was
The petitioners sought relief by filing the complaint against the private respondents. The trial court found that the principal
cause of the termination as agent was his refusal to share his Delta commission.
The court considered these acts as harassment and ordered the company to pay for the resulting damage in the value of the
commission. They also ordered the company to pay moral damages.
The company appealed. The CA ordered Valenzuela to pay the entire amount of the commission.
Hence, this appeal by Valenzuela.
WON the agency contract is coupled with interest on the part of agent Valenzuela.
In any event the principal's power to revoke an agency at will is so pervasive, that the Supreme Court has consistently held
that termination may be effected even if the principal acts in bad faith, subject only to the principal's liability for damages.
The Supreme Court accorded great weight on the trial courts factual findings and found the cause of the conflict to be
Valenzuelas refusal to share the commission. Philamgen told the petitioners of its desire to share the Delta Commission
with them. It stated that, should Delta back out from the agreement, the petitioners would be charged interests through a
reduced commission after full payment by Delta.
Philamgen proposed reducing the petitioners' commissions by half of the original thus giving them an agent's commission of
16.25%. The company insisted on the reduction scheme. Also, the company pressured the agents to share the income with
the threat to terminate the agency. The petitioners were also told that the Delta commissions would not be credited to their
account. This continued until the agency was terminated.
Records also show that the agency is one "coupled with an interest," and, therefore, should not be freely revocable at the
unilateral will of the company.
The records sustain the finding that the private respondent started to covet a share of the insurance business that Valenzuela
had built up, developed and nurtured for years. The company appropriated the entire insurance business of Valenzuela.
Worse, despite the termination of the agency, Philamgen continued to hold Valenzuela jointly and severally liable with the
insured for unpaid premiums.
Under these circumstances, it is clear that Valenzuela had an interest in the continuation of the agency when it was
unceremoniously terminated not only because of the commissions he procured, but also Philamgens stipulation liability
against him for unpaid premiums. The respondents cannot state that the agency relationship between Valenzuela and
Philamgen is not coupled with interest.
There is an exception to the principle that an agency is revocable at will and that is when the agency has been given not only
for the interest of the principal but also for the mutual interest of the principal and the agent. The principal may not defeat
the agent's right to indemnification by a termination of the contract of agency. Also, if a principal violates a contractual or
quasi-contractual duty which he owes his agent, the agent may as a rule bring an appropriate action for the breach of that
duty. Hence, if a principal acts in bad faith and with abuse of right in terminating the agency, then he is liable in damages.

Case #39
GR NO. 151218
January 28, 2003
Ynares-Santiago, J:
PHILEXCHANGE was the marketing agent of PHILSUCOM. The formers purchases of sugar were financed by PNB.
NASUTRA soon replaced PHILEXCHANGE as the marketing agent of PHILSUCOM. To finance its sugar trading
operations, petitioner applied for and was granted a P408 Million credit line by PNB. Every time NASUTRA availed of the
credit line, its Exec. VP Jose Union, executed a promissory note in favr of PNB. Despite such liquidation scheme, petitioner
still failed to remit payments to PNB. This prompted PNB to apply petitioners remittances from foreign banks to its unpaid
accounts since it was stipulated in their contract. NASUTRA questioned PNBs actions.
Whether or not PNBs act of offsetting or compensating the subject remittances to alleged accounts of NASUTRA with
PNB and PHILEXCHANGE was valid.
Yes, PNBs act of offsetting or compensating the subject remittances to alleged accounts of NASUTRA with PNB and
The relationship between NASUTRA/SRA and PNB when the former constituted the latter as its attorney-in-fact is not a
simple agency. NASUTRA/SRA has assigned and practically surrendered its rights in favor of PNB for a substantial
consideration.To reiterate, NASUTRA/SRA executed promissory notes in favor of PNB every time it availed of the credit
line. The agency established between the parties is one coupled with interest which cannot be revoked or cancelled at will
by any of the parties.

Case #40
Ramnani vs. CA

Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are brothers of the full blood. Ishwar and his spouse Sonya
had their main business based in New York. Realizing the difficulty of managing their investments in the Philippines they
executed a general power of attorney on January 24, 1966 appointing Navalrai and Choithram as attorneys-in-fact,
empowering them to manage and conduct their business concern in the Philippines. Choithram entered into two agreements
for the purchase of two parcels of land located in Barrio Ugong, Pasig, Rizal, from Ortigas & Company, Ltd. Partnership. A
building was constructed thereon by Choithram in 1966. Three other buildings were built thereon by Choithram through a
loan of P100,000.00 obtained from the Merchants Bank as well as the income derived from the first building.
Sometime in 1970 Ishwar asked Choithram to account for the income and expenses relative to these properties during the
period 1967 to 1970. Choithram failed and refused to render such accounting. Thereafter, Ishwar revoked the general power
of attorney. Choithram and Ortigas were duly notified of such.Said notice was also registered with the Securities and
Exchange Commissionand was published in the April 2, 1971 issue ofThe Manila Timesfor the information of the general
Choithram, transferred all rights and interests of Ishwar and Sonya in favor of his daughter-in-law, Nirmla Ramnani. Ishwar
and Sonya then filed a complaint against Choitram and/or spouses Nirmla and Moti and Ortigas for reconveyance of said
properties or payment of its value and damages.

Whether Ishram can recover the entire properties subject in the ligitation

No, Ishram cannot recover the entire properties subject.

The Supreme Court held thatdespite the fact that Choithram, et al., have committed acts which demonstrate their bad
faith and scheme to defraud spouses Ishwar and Sonya of their rightful share in the properties in litigation, the Court cannot
ignore the fact that Choithram must have been motivated by a strong conviction that as the industrial partner in the
acquisition of said assets he has as much claim to said properties as Ishwar, the capitalist partner in the joint venture.

Choithram in turn decided to invest in the real estate business. He bought the two (2) parcels of land in question
from Ortigas as attorney-in-fact of Ishwar. Instead of paying for the lots in cash, he paid in installments and used the balance
of the capital entrusted to him, plus a loan, to build two buildings. Although the buildings were burned later, Choithram was
able to build two other buildings on the property. He rented them out and collected the rentals. Through the industry and
genius of Choithram, Ishwar's property was developed and improved into what it is now. Justice and equity dictate that the
two share equally the fruit of their joint investment and efforts. Both would stand to gain. No one would end up the loser.