8.

Manotok Brothers v. CA, G.R. No. 94753, April 7, 1993

Doctrines:

When there is a close, proximate and causal connection between the agent's
efforts and labor and the principal's sale of his property, the agent is entitled to a
commission.

Efficient procuring cause: when there is a close proximate and causal connection
between the efforts and labor of the agent and the principals sale of property.
Facts:

Manotok Brothers Inc is the owner of a certain parcel of land and building which
were formerly leased by the City of Manila and used by the Claro M. Recto High
School.
o Manotok Brothers authorized Salvador Saligumba to negotiate with
the City of Manila the sale of the aforementioned property for not
less than P425,000.00. 5% commission would be paid to him in the
event the sale is finally consummated and paid.
o Manotok executed a 2nd and 3rd letter, each for 120 days,
extending the authority of Saligumba.
o Finally, the 4th letter dated November 16, 1967, ManotoK with
Rufino Manotok, its President, as signatory, authorized Saligumba
to finalize and consummate the sale of the property to the City of
Manila for not less than P410,000.00. With this letter came another
extension of 180 days.

The Municipal Board of the City of Manila, on April 26, 1968, passed Ordinance
No. 6603, appropriating the sum of P410,816.00 for the purchase of the
aforementioned property. Said ordinance however, was signed by the City Mayor
only on May 17, 1968, 183 days after the last letter of authorization. On January
14, 1969, the parties signed the deed of sale.

Saligumba never received any commission (should have been P20,540.00). He

filed a complaint against Manotok Brothers, alleging that he had successfully
negotiated the sale of the property.
o He claimed that it was because of his efforts that the Municipal
Board of Manila passed Ordinance No. 6603 which appropriated
the sum for the payment of the property subject of the sale.

Manotok Borthers claimed

o (1) a broker is only entitled to a commission if the sale was
consummated and the price paid within the period given in the
respective letters of authority; and
o (2) that Filomeno E. Huelgas, the PTA president of the Claro M.
Recto High School was responsible for the negotiation and
consummation of the sale.

Issues: W/N Saligumba is entitled to the five percent (5%) agent's commission.
Held/Ratio:YES.

Saligumba is entitled to the 5% agents commission because it was through his

efforts that a purchase actually materialized between the parties.

It would seem that Saligumba is not entitled to any commission because when
the Deed of Sale was finally executed, his extended authority had already
expired. Going deeper however into the case would reveal that it is within the
coverage of the exception rather than of the general rule.

In an earlier case, this Court ruled that when there is a close, proximate and
causal connection between the agent's efforts and labor and the principal's sale
of his property, the agent is entitled to a commission.
o We agree that the City of Manila ultimately became the purchaser
of petitioner's property mainly through the efforts of Saligumba.
o Without discounting the fact that when Municipal Ordinance No.
6603 was signed by the City Mayor on May 17, 1968, Saligumbas
authority had already expired, it is to be noted that the ordinance
was approved on April 26, 1968 when Saligumbas authorization
was still in force.
o Moreover, the approval by the City Mayor came only 3 days after
the expiration of Saligumbas authority. It is also worth emphasizing
that from the records, the only party given a written authority by
Manotok Brothers Inc. to negotiate the sale from July 5, 1966 to
May 14, 1968 was Saligumba.

In the case at bar, private respondent is the efficient procuring cause for without
his efforts, the municipality would not have anything to pass and the Mayor would
not have anything to approve.

Note: Although Filomeno Huelgas followed up the matter with Councilor Magsalin
(author of Ordinance) and Mayor Villegas, his intervention regarding the
purchase came only after the ordinance had already been passed when the
buyer has already agreed to the purchase and to the price for which said
property is to be paid.

9.

Gonzalez v. Haberer, 47 Phil. 380

Facts:

The plaintiff spouses executed a deed of sale over a tract of land with the
defendant. It was stipulated in their contract that if the plaintiffs were found by
court to not be the owners of the land, they would return any amount that the
defendant had paid. It was also stipulated that Gomez gave his wife Gonzalez
the marital license to execute the deed.

However, after making an initial payment of Php30,000, the defendant found that
the land was in the adverse possession of many others. Thus, he stopped
making payments. The plaintiffs then filed an action to recover the sum of unpaid
balance.

The defendant claimed that when they entered into this contract, the plaintiffs
made false representations and mislead him into thinking they had full ownership
of the land.

Issue:
WON Gonzalez was free of the liabilities that her husband incurred from the
misrepresentations in the sale of the land
Held:
NO
Rationale:

As to the plaintiffs contention that Gonzales cannot be charged by her husbands

misrepresentation, it is sufficient to say that the latter in negotiating for the sale of
the land acted as an agent and representative of his wife; having accepted the
benefit of the representations of her agent she cannot, of course, escape liability
for them

having received the money. On the contrary, she promised to settle.

The only explanation is that she actually received the money.
10. Tuazon v. Orosco, 5 Phil. 596
o

The fact that Orozco received the money from Grupe, her husbands agent, and
not from Tuason himself does not affect the validity of the mortgage. Nowhere
does it appear in the Power that the money was to be delivered to her by the
creditor himself. The important thing was that she should have received the
money.

Orozco claims that the instrument is evidence of a debt personally incurred by

Grupe for his own benefit, and not incurred for the benefit of Vargas. This
contention cannot be sustained. The agreement was signed by Grupe as
attorney in fact for Vargas.

DOCTRINE: A debt this incurred by the agent is binding directly upon the principal,
provided the former acted, as in the present case, within the scope of his authority.
(Art. 1727) The fact that the agent has also bound himself to pay the debt does not
relieve from liability the principal for whose benefit the debt was incurred. The
individual liability of the agent constitutes only a further security in favor of the
creditor. The law does not provide that the agent cannot bind himself personally to the
fulfillment of an obligation incurred by him in the name and on behalf of his principal.
(Art. 1725)

A debt this incurred by the agent is binding directly upon the principal, provided
the former acted, as in the present case, within the scope of his authority. (Art.
1727) The fact that the agent has also bound himself to pay the debt does not
relieve from liability the principal for whose benefit the debt was incurred. The
individual liability of the agent constitutes only a further security in favor of the
creditor. The law does not provide that the agent cannot bind himself personally
to the fulfillment of an obligation incurred by him in the name and on behalf of his
principal. (Art. 1725)

FACTS:

In 1888, (principal) Juan Vargas, husband of defendant Dolores Orozco,

executed a Power of Attorney in favor of (agent) Enrique Grupe, authorizing the
latter: (1) to dispose of all his property, in particular, a house and lot situated at 24
Calle Nueva, Malate; and (2) to mortgage the house for the purpose of securing
the payment of any amount advanced to Dolores.

The mortgage being valid and duly recorded in the Registry of Property, directly
subjects the property to the fulfillment of the obligation for the security of which it
was created. It is of no importance whether or not Grupe bound himself
personally to pay the debt in question. The right in rem arising from the mortgage
would have justified the creditor in bringing his action directly against the property
encumbered, had he chosen to foreclose the mortgage rather than to sue Grupe.

SUMMARY: Vargas, husband of Dolores Orozco, executed a Power of Attorney in

favor of Enrique Grupe, authorizing the latter: (1) to dispose of all his property,
particularly, a house and lot; and (2) to mortgage the house for the purpose of
securing the payment of any amount advanced to Dolores. Grupe and Orozco
obtained a loan from Gonzalo Tuason. The instrument evidencing the debt was duly
recorded in the Registry of Property, and it appears therefrom that Grupe, as attorney
in fact for Vargas, received from Tuason a loan of P2,200 and delivered the same to
the Orozco; and that to secure its payment, he mortgaged the property of Vargas with
Orozcos consent. But Orozco denies having received the loan.

In January 1980, Enrique Grupe and Dolores Orozco obtained a loan from
plaintiff Gonzalo Tuason. The instrument evidencing the debt was duly recorded
in the Registry of Property, and it appears therefrom that Enrique Grupe, as
attorney in fact for Vargas, received from Tuason a loan of P2,200 and delivered
the same to the defendant; and that to secure its payment, he mortgaged the
property of Vargas with Orozcos consent. But Orozco denies having received the
loan.

ISSUE + RATIO:
o Orozcos denial cannot overcome the proof to the contrary in the agreement.
Orozco was one of the parties to the January 1980 instrument and signed it. This
implied an admission on her part that the statements relating to her in the
agreement are true.
o She also personally intervened in the execution of the mortgage
and stated in the deed that the mortgage has been created with her
knowledge and consent. The lien was created precisely on the
assumption that she had received the amount for the purpose of
securing its payment.
o In addition to this, she wrote a letter to the attorneys of Tuason
promising to pay the debt. Thirteen years have elapsed since she
signed the mortgage deed. During all this time, she never denied

RULING: Orozco is ordered to pay Tuason.

deliver promissory notes; and to receive the proceeds of the loans on the
formers behalf. In other words, the mortgage contracts were valid and
enforceable against petitioner/plaintiff, who is fully bound by their terms. It is
stipulated under Article 1898 of the Civil Code, the acts of an agent done beyond
the scope of his authority do not bind the principal unless the latter expressly or
impliedly ratifies the same.

11. Prieto v. CA, G.R. No. 158597, June 18, 2012

FACTS:
o The petitioner/plaintiff Marcos V. Prieto with his spouse and Susan Prieto
executed a Special Power of Attorney (SPA) to spouses Antonio and Monette
Prieto to use their real property in La Union.
o

The real property with the Transfer Certificate of Title (TCT) No. T-40223 was
used as collateral for a loan of P 5,000,000 from Far Eastern Bank and Trust
Company (FEBTC).

The defendants spouses Antonio and Monette Prieto obtained the load
evidenced by promissory notes and real estate mortgage contracts were in the
name of the defendants, which later on was extra-judicially foreclosed by FEBTC
because of the defendant failed to pay their loans.

The petitioner/plaintiff Marcos Prieto filed Temporary Restraining Order (TRO)

against the bank with the RTC, which was granted, contending that the real
estate mortgage and promissory notes was in the name of the defendant
spouses thus it should be null and void ab initio.

The RTC dismissed the application for the writ of preliminary injunction stating
that although the name of the petitioner/plaintiff Marcos as a registered owner,
did not appear in the real estate contracts, the petitioner/plaintiff cannot be
absolved from liability because he ratified the contract by acknowledging the
contract. Such acknowledgement was sent through a said letter of
acknowledgement and was found as a document of adhesion.

As a principal, the contracts entered into by his agent on his behalf even if
assuming that the agent has exceeded his authority. Thus, the petitioner/plaintiff
Marcos Prieto filed an appeal with the CA, which was dismissed because of the
delay in filing and this petition was sought on certiorari.

As to the ratification by the contract of adhesion, although his agent, the

defendant, had exceeded the express authority, the petitioner/plaintiff is liable by
virtue of the expressed ratification. In agency, ratification is the adoption or
confirmation by one person of an act performed on his behalf by another without
authority. The substance of ratification is the confirmation after the act,
amounting to a substitute for a prior authority.

The court held that the petitioner/plaintiff was a lawyer that he is aware of the
import and consequences of the letter of acknowledgment. It is not a contract of
adhesion for the petitioner/plaintiff is not the weaker party because he is fully
aware of the meaning of every phrase and letter of the letter of acknowledgment
as well as the legal effect of his confirmation of the act of his agent.
Thus, the court affirms the decision of the CA.

ISSUE:
1) Whether or not the ratification by the petitioner/plaintiff would validate the
real estate mortgage and promissory notes and such ratification in letter of
acknowledgment could be treated as a contract of adhesion.
HELD:
o

Yes, the Supreme Court held that the petitioner/plaintiff had precisely granted the
defendant Antonio as his agent the authority to borrow money, and to transfer
and convey the property by way of mortgage to FEBTC; to sign, execute and

12. Filipinas Life v. Pedroso, G.R. No. 159489, February 4, 2008

FACTS:

Teresita Pedroso is a policyholder of a 20-year endowment life insurance issued

by Filipinas Life Assurance Co. Pedroso claims Renato Valle was her insurance
agent since 1972 and Valle collected her monthly premiums. In the first week of
January 1977, Valle told her that the Filipinas Life Escolta Office was holding a
promotional investment program for policyholders. It was offering 8% prepaid
interest a month for certain amounts deposited on a monthly basis. Enticed, she
initially invested and issued a post-dated check for P10,000. In return, Valle
issued Pedroso his personal check for P800 for the 8% prepaid interest and a
Filipinas Life Agent receipt.

Pedroso 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, Escolta Branch.
Relying on the representations made by Filipinas Lifes duly authorized
representatives Apetrior and Alcantara, as well as having known agent Valle for
quite some time, Pedroso waited for the maturity of her initial investment. A
month after, her investment of P10,000 was returned to her after she made a
written request for its refund. To collect the amount, Pedroso personally went to
the Escolta branch where Alcantara gave her the P10,000 in cash. After a second
investment, she made 7 to 8 more investments in varying amounts, totaling
P37,000 but at a lower rate of 5% prepaid interest a month. Upon maturity of
Pedrosos subsequent investments, Valle would take back from Pedroso the
corresponding agents receipt he issued to the latter.
Pedroso told respondent Jennifer Palacio, also a Filipinas Life insurance
policyholder, about the investment plan. Palacio made a total investment of
P49,550 but at only 5% prepaid interest. However, when Pedroso tried to
withdraw her investment, Valle did not want to return some P17,000 worth of it.
Palacio also tried to withdraw hers, but Filipinas Life, despite demands, refused
to return her money.

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

HELD:

Pedroso and Palacio had invested P47,000 and P49,550, respectively. These
were received by Valle and remitted to Filipinas Life, using Filipinas Lifes official
receipts. Valles authority to solicit and receive investments was also established
by the parties.
o When Pedroso and Palacio sought confirmation, Alcantara, holding
a supervisory position, and Apetrior, the branch manager, confirmed
that Valle had authority. While it is true that a person dealing with an
agent is put upon inquiry and must discover at his own peril the
agents authority, in this case, Pedroso and Palacio did exercise
due diligence in removing all doubts and in confirming the validity of
the representations made by Valle.

Filipinas Life, as the principal, is liable for obligations contracted by its agent
Valle. 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.
o The general rule is that the principal is responsible for the acts of its
agent done within the scope of its authority, and should bear the
damage caused to third persons. When the agent exceeds his
authority, the agent becomes personally liable for the damage.
o

But even when the agent exceeds his authority, the principal is still
solidarily liable together with the agent if the principal allowed the
agent to act as though the agent had full powers. The acts of an
agent beyond the scope of his authority do not bind the principal,
unless the principal ratifies them, expressly or impliedly.

Ratification adoption or confirmation by one person of an act performed on his

behalf by another without authority

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. Filipinas Life benefited from the investments deposited by Valle in
the account of Filipinas Life.

13. Country Bankers v. Keppel, G.R. No. 166044, June 18, 2012

Neither Unimarine nor Cebu Shipyard was able to repudiate CBICs testimony
that it was unaware of the existence of Surety Bond No. G (16) 29419 and
Endorsement No. 33152.

There were no allegations either that CBIC should have been put on alert with
regard to Quinains business transactions done on its behalf. It is clear, and
undisputed therefore, that there can be no ratification in this case, whether
express or implied.

Article 1911, on the other hand, is based on the principle of estoppel, which is
necessary for the protection of third persons. It states that the principal is
solidarily liable with the agent even when the latter has exceeded his authority, if
the principal allowed him to act as though he had full powers. However, for an
agency by estoppel to exist, the following must be established:
1. The principal manifested a representation of the agents authority or
knowingly allowed the agent to assume such authority;
2. The third person, in good faith, relied upon such representation; and
3. Relying upon such representation, such third person has changed his
position to his detriment.

In Litonjua, Jr. v. Eternit Corp., this Court said that [a]n agency by estoppel,
which is similar to the doctrine of apparent authority, requires proof of reliance
upon the representations, and that, in turn, needs proof that the representations
predated the action taken in reliance.

This Court cannot agree with the Court of Appeals pronouncement of negligence
on CBICs part. CBIC not only clearly stated the limits of its agents powers in
their contracts, it even stamped its surety bonds with the restrictions, in order to
alert the concerned parties.

Facts:

On January 27, 1992, Unimarine Shipping Lines, Inc. (Unimarine), a corporation

engaged in the shipping industry, contracted the services of Keppel Cebu
Shipyard, formerly known as Cebu Shipyard and Engineering Works, Inc. (Cebu
Shipyard) for dry docking and ship repair works on its vessel, the M/V Pacific
Fortune.

In compliance with the agreement, Unimarine secured from Country Bankers

Insurance Corp. (CBIC), through the latters agent, Bethoven Quinain. Unimarine
failed to settle its obligations so Cebu Shipyard, wrote the sureties CBIC [to inform
them of Unimarines nonpayment, and to ask them to fulfill their obligations as
sureties.

However, even the sureties failed to discharge their obligations, and so Cebu
Shipyard filed a Complaint RTC. CBIC, in its Answer ] said that Cebu Shipyards
complaint states no cause of action. CBIC alleged that the surety bond was
issued by its agent, Quinain, in excess of his authority.

The RTC applied Articles 1900 and 1911 of the Civil Code in holding CBIC liable
for the surety bond. It held that CBIC could not be allowed to disclaim liability
because Quinains actions were within the terms of the special power of attorney
given to him. The Court of Appeals agreed that CBIC could not be permitted to
abandon its obligation especially since third persons had relied on Quinains
representations. It based its decision on Article 1911 of the Civil Code and found
CBIC to have been negligent and less than prudent in conducting its insurance
business for its failure to supervise and monitor the acts of its agents, to regulate
the distribution of its insurance forms, and to devise schemes to prevent
fraudulent misrepresentations of its agents.

Issue:
Whether or not CBIC is liable for the unauthorized acts of its Agent.
Held:

No. Under Articles 1898 and 1910, an agents act, even if done beyond the scope
of his authority, may bind the principal if he ratifies them, whether expressly or
tacitly. It must be stressed though that only the principal, and not the agent, can
ratify the unauthorized acts, which the principal must have knowledge of.

Moreover, its company procedures, such as reporting requirements,

show that it has designed a system to monitor the insurance
contracts issued by its agents. CBIC cannot be faulted for Quinains
deliberate failure to notify it of his transactions with Unimarine. In
fact, CBIC did not even receive the premiums paid by Unimarine to
Quinain.

Furthermore, nowhere in the decisions of the lower courts was it stated that CBIC
let the public, or specifically Unimarine, believe that Quinain had the authority to
issue a surety bond in favor of companies other than the Department of Public
Works and Highways, the National Power Corporation, and other government
agencies.
o Neither was it shown that CBIC knew of the existence of the surety
bond before the endorsement extending the life of the bond, was
issued to Unimarine. For one to successfully claim the benefit of
estoppel on the ground that he has been misled by the
representations of another, he must show that he was not misled
through his own want of reasonable care and circumspection.

registered without a board resolution of the Bank.

o

14. Rural Bank of Milaor v. Ocfemia, G.R. No. 137686, February 8, 2000
FACTS:

The evidence presented by the respondents through the testimony of Marife O.

Nio, shows that she is the daughter of Francisca Ocfemia and the late Renato
Ocfemia who died on July 23, 1994. The parents of her father, Renato Ocfemia,
were Juanita Arellano Ocfemia and Felicisimo Ocfemia.

Marife O. Nio knows the five (5) parcels of land which are located in Bombon,
Camarines Sur and that they are the ones possessing them which were originally
owned by her grandparents. During the lifetime of her grandparents, respondents
mortgaged the said five (5) parcels of land and two (2) others to the Rural Bank
of Milaor.

The spouses Felicisimo Ocfemia and Juanita Arellano Ocfemia were not able to
redeem the mortgaged properties consisting of 7 parcels of land and so the
mortgage was foreclosed and thereafter ownership thereof was transferred to the
bank.

Despite several requests, the bank refused her request for a board resolution
and made many alibis. She was told that the bank had a new manager and it
had no record of the sale.

ISSUE:
Whether the board of directors of a rural banking corporation be compelled to confirm
a deed of absolute sale of real property which deed of sale was executed by the bank
manager without prior authority of the board of directors of the rural banking
corporation
HELD:

Yes, the board of directors can be compelled to confirm a deed of absolute sale
even though the bank manager executed such deed without prior authority from
the banking corporation.

The Supreme Court ruled that the bank acknowledged, by its own acts or failure
to act, the authority of the manager to enter into binding contracts. After the
execution of the Deed of Sale, respondents occupied the properties in dispute
and paid the real estate taxes due thereon.
o

If the bank management believed that it had title to the property, it

should have taken some measures to prevent the infringement or
invasion of its title thereto and possession thereof.

Out of the 7 parcels that were foreclosed, 5 of them are in the

possession of the respondents because these 5 parcels of land
were sold by the bank to the parents of Marife O. Nio as
evidenced by a Deed of Sale executed in January 1988.

The aforementioned 5 parcels of land subject of the deed of sale, have not been,
however transferred in the name of the parents of Merife O. Nio after they were
sold to her parents by the bank because according to the Assessor's Office the
five (5) parcels of land, subject of the sale, cannot be transferred in the name of
the buyers as there is a need to have the document of sale registered with the
Register of Deeds of Camarines Sur.

In this light, the bank is estopped from questioning the authority of the bank
manager to enter into the contract of sale. If a corporation knowingly permits one
of its officers or any other agent to act within the scope of an apparent authority, it
holds the agent out to the public as possessing the power to do those acts; thus,
the corporation will, as against anyone who has in good faith dealt with it through
such agent, be estopped from denying the agent's authority.

Unquestionably, petitioner has authorized Tena to enter into the Deed of Sale.
Accordingly, it has a clear legal duty to issue the board resolution sought by
respondents. Having authorized her to sell the property, it behooves the bank to
confirm the Deed of Sale so that the buyers may enjoy its full use.

Marife Nio then went to the bank, showed to it the Deed of Sale,
the tax declaration and receipt of tax payments and requested the
bank for a board resolution so that the property can be transferred
to the name of Renato Ocfemia the husband of petitioner Francisca
Ocfemia and the father of the other respondents having died
already.

In view of the foregoing, Marife O. Nio went to the Register of Deeds of

Camarines Sur with the Deed of Sale in order to have the same registered. The
Register of Deeds, however, informed her that the document of sale cannot be