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1st part hanna – wala pa

Nielson & Co. vs. Lepanto Consolidated Mining Co. 26 SCRA 540 (1968)
FACTS:
Lepanto seeks the reconsideration of the decision rendered on December 17, 1966. The motion for reconsideration is
based on two sets of grounds — the first set consisting of four principal grounds, and the second set consisting of five
alternative grounds, as follows:
Principal Grounds:
1. The court erred in overlooking and failing to apply the proper law applicable to the agency or management
contract in question, namely, Article 1733 of the Old Civil Code (Article 1920 of the new), by virtue of which said
agency was effectively revoked and terminated in 1945 when, as stated in paragraph 20 of the complaint,
"defendant voluntarily ... prevented plaintiff from resuming management and operation of said mining properties."
2. The court erred in holding that paragraph II of the management contract (Exhibit C) suspended the period of
said contract.
3. The court erred in reversing the ruling of the trial judge, based on well-settled jurisprudence of this Supreme
Court, that the management agreement was only suspended but not extended on account of the war.
4. The court erred in reversing the finding of the trial judge that Nielson's action had prescribed, but considering
only the first claim and ignoring the prescriptibility of the other claims.
Alternative Grounds:
5. The court erred in holding that the period of suspension of the contract on account of the war lasted from
February 1942 to June 26, 1948.
6. Assuming arguendo that Nielson is entitled to any relief, the court erred in awarding as damages (a) 10% of the
cash dividends declared and paid in December, 1941; (b) the management fee of P2,500.00 for the month of
January, 1942; and (c) the full contract price for the extended period of sixty months, since these damages were
neither demanded nor proved and, in any case, not allowable under the general law of damages.
7. Assuming arguendo that appellant is entitled to any relief, the court erred in ordering appellee to issue and
deliver to appellant shares of stock together with fruits thereof.
8. The court erred in awarding to appellant an undetermined amount of shares of stock and/or cash, which award
cannot be ascertained and executed without further litigation.
9. The court erred in rendering judgment for attorney's fees.
We are going to dwell on these grounds in the order they are presented.
1. In its first principal ground Lepanto claims that its own counsel and this Court had overlooked the real nature of the
management contract entered into by and between Lepanto and Nielson, and the law that is applicable on said contract.
Lepanto now asserts for the first time and this is done in a motion for reconsideration - that the management contract in
question is a contract of agency such that it has the right to revoke and terminate the said contract, as it did terminate the
same, under the law of agency, and particularly pursuant to Article 1733 of the Old Civil Code (Article 1920 of the New
Civil Code).
We have taken note that Lepanto is advancing a new theory. We have carefully examined the pleadings filed by Lepanto
in the lower court, its memorandum and its brief on appeal, and never did it assert the theory that it has the right to
terminate the management contract because that contract is one of agency which it could terminate at will. While it is true
that in its ninth and tenth special affirmative defenses, in its answer in the court below, Lepanto pleaded that it had the
right to terminate the management contract in question, that plea of its right to terminate was not based upon the ground
that the relation between Lepanto and Nielson was that of principal and agent but upon the ground that Nielson had
allegedly not complied with certain terms of the management contract. If Lepanto had thought of considering the
management contract as one of agency it could have amended its answer by stating exactly its position. It could have
asserted its theory of agency in its memorandum for the lower court and in its brief on appeal. This, Lepanto did not do. It
is the rule, and the settled doctrine of this Court, that a party cannot change his theory on appeal — that is, that a party
cannot raise in the appellate court any question of law or of fact that was not raised in the court below or which was not
within the issue made by the parties in their pleadings (Section 19, Rule 49 of the old Rules of Court, and also Section 18
of the new Rules of Court; Hautea vs. Magallon, L-20345, November 28, 1964; Northern Motors, Inc. vs. Prince Line, L13884, February 29, 1960; American Express Co. vs. Natividad, 46 Phil. 207; Agoncillo vs. Javier, 38 Phil. 424 and Molina
vs. Somes, 24 Phil 49).
At any rate, even if we allow Lepanto to assert its new theory at this very late stage of the proceedings, this Court cannot
sustain the same.
Lepanto contends that the management contract in question (Exhibit C) is one of agency because: (1) Nielson was to
manage and operate the mining properties and mill on behalf, and for the account, of Lepanto; and (2) Nielson was

authorized to represent Lepanto in entering, on Lepanto's behalf, into contracts for the hiring of laborers, purchase of
supplies, and the sale and marketing of the ores mined. All these, Lepanto claims, show that Nielson was, by the terms of
the contract, destined to execute juridical acts not on its own behalf but on behalf of Lepanto under the control of the
Board of Directors of Lepanto "at all times". Hence Lepanto claims that the contract is one of agency. Lepanto then
maintains that an agency is revocable at the will of the principal (Article 1733 of the Old Civil Code), regardless of any
term or period stipulated in the contract, and it was in pursuance of that right that Lepanto terminated the contract in 1945
when it took over and assumed exclusive management of the work previously entrusted to Nielson under the contract.
Lepanto finally maintains that Nielson as an agent is not entitled to damages since the law gives to the principal the right
to terminate the agency at will.
Because of Lepanto's new theory We consider it necessary to determine the nature of the management contract —
whether it is a contract of agency or a contract of lease of services. Incidentally, we have noted that the lower court, in the
decision appealed from, considered the management contract as a contract of lease of services.
Article 1709 of the Old Civil Code, defining contract of agency, provides:
By the contract of agency, one person binds himself to render some service or do something for the account or at the
request of another.
Article 1544, defining contract of lease of service, provides:
In a lease of work or services, one of the parties binds himself to make or construct something or to render a service to
the other for a price certain.
In both agency and lease of services one of the parties binds himself to render some service to the other party. Agency,
however, is distinguished from lease of work or services in that the basis of agency is representation, while in the lease of
work or services the basis is employment. The lessor of services does not represent his employer, while the agent
represents his principal. Manresa, in his "Commentarios al Codigo Civil Español" (1931, Tomo IX, pp. 372-373), points out
that the element of representation distinguishes agency from lease of services, as follows:
Nuestro art. 1.709 como el art. 1.984 del Codigo de Napoleon y cuantos textos legales citamos en las concordancias,
expresan claramente esta idea de la representacion, "hacer alguna cosa por cuenta o encargo de otra" dice nuestro
Codigo; "poder de hacer alguna cosa para el mandante o en su nombre" dice el Codigo de Napoleon, y en tales palabras
aparece vivo y luminoso el concepto y la teoria de la representacion, tan fecunda en ensenanzas, que a su sola luz es
como se explican las diferencias que separan el mandato del arrendamiento de servicios, de los contratos inominados,
del consejo y de la gestion de negocios.
En efecto, en el arrendamiento de servicios al obligarse para su ejecucion, se trabaja, en verdad, para el dueno que
remunera la labor, pero ni se le representa ni se obra en su nombre....
On the basis of the interpretation of Article 1709 of the old Civil Code, Article 1868 of the new Civil Code has defined the
contract of agency in more explicit terms, as follows:
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.
There is another obvious distinction between agency and lease of services. Agency is a preparatory contract, as agency
"does not stop with the agency because the purpose is to enter into other contracts." The most characteristic feature of an
agency relationship is the agent's power to bring about business relations between his principal and third persons. "The
agent is destined to execute juridical acts (creation, modification or extinction of relations with third parties). Lease of
services contemplate only material (non-juridical) acts." (Reyes and Puno, "An Outline of Philippine Civil Law," Vol. V, p.
277).
In the light of the interpretations we have mentioned in the foregoing paragraphs let us now determine the nature of the
management contract in question. Under the contract, Nielson had agreed, for a period of five years, with the right to
renew for a like period, to explore, develop and operate the mining claims of Lepanto, and to mine, or mine and mill, such
pay ore as may be found therein and to market the metallic products recovered therefrom which may prove to be
marketable, as well as to render for Lepanto other services specified in the contract. We gather from the contract that the
work undertaken by Nielson was to take complete charge subject at all times to the general control of the Board of
Directors of Lepanto, of the exploration and development of the mining claims, of the hiring of a sufficient and competent
staff and of sufficient and capable laborers, of the prospecting and development of the mine, of the erection and operation
of the mill, and of the benefication and marketing of the minerals found on the mining properties; and in carrying out said
obligation Nielson should proceed diligently and in accordance with the best mining practice. In connection with its work
Nielson was to submit reports, maps, plans and recommendations with respect to the operation and development of the
mining properties, make recommendations and plans on the erection or enlargement of any existing mill, dispatch mining
engineers and technicians to the mining properties as from time to time may reasonably be required to investigate and
make recommendations without cost or expense to Lepanto. Nielson was also to "act as purchasing agent of supplies,
equipment and other necessary purchases by Lepanto, provided, however, that no purchase shall be made without the
prior approval of Lepanto; and provided further, that no commission shall be claimed or retained by Nielson on such
purchase"; and "to submit all requisition for supplies, all constricts and arrangement with engineers, and staff and all
matters requiring the expenditures of money, present or future, for prior approval by Lepanto; and also to make contracts
subject to the prior approve of Lepanto for the sale and marketing of the minerals mined from said properties, when said

products are in a suitable condition for marketing." 1
It thus appears that the principal and paramount undertaking of Nielson under the management contract was the
operation and development of the mine and the operation of the mill. All the other undertakings mentioned in the contract
are necessary or incidental to the principal undertaking — these other undertakings being dependent upon the work on
the development of the mine and the operation of the mill. In the performance of this principal undertaking Nielson was not
in any way executing juridical acts for Lepanto, destined to create, modify or extinguish business relations between
Lepanto and third persons. In other words, in performing its principal undertaking Nielson was not acting as an agent of
Lepanto, in the sense that the term agent is interpreted under the law of agency, but as one who was performing material
acts for an employer, for a compensation.
It is true that the management contract provides that Nielson would also act as purchasing agent of supplies and enter
into contracts regarding the sale of mineral, but the contract also provides that Nielson could not make any purchase, or
sell the minerals, without the prior approval of Lepanto. It is clear, therefore, that even in these cases Nielson could not
execute juridical acts which would bind Lepanto without first securing the approval of Lepanto. Nielson, then, was to act
only as an intermediary, not as an agent.
Lepanto contends that the management contract in question being one of agency it had the right to terminate the contract
at will pursuant to the provision of Article 1733 of the old Civil Code. We find, however, a proviso in the management
contract which militates against this stand of Lepanto. Paragraph XI of the contract provides:
Both parties to this agreement fully recognize that the terms of this Agreement are made possible only because of the
faith or confidence that the Officials of each company have in the other; therefore, in order to assure that such confidence
and faith shall abide and continue, NIELSON agrees that LEPANTO may cancel this Agreement at any time upon ninety
(90) days written notice, in the event that NIELSON for any reason whatsoever, except acts of God, strike and other
causes beyond its control, shall cease to prosecute the operation and development of the properties herein described, in
good faith and in accordance with approved mining practice.
It is thus seen, from the above-quoted provision of paragraph XI of the management contract, that Lepanto could not
terminate the agreement at will. Lepanto could terminate or cancel the agreement by giving notice of termination ninety
days in advance only in the event that Nielson should prosecute in bad faith and not in accordance with approved mining
practice the operation and development of the mining properties of Lepanto. Lepanto could not terminate the agreement if
Nielson should cease to prosecute the operation and development of the mining properties by reason of acts of God,
strike and other causes beyond the control of Nielson.
The phrase "Both parties to this agreement fully recognize that the terms of this agreement are made possible only
because of the faith and confidence of the officials of each company have in the other" in paragraph XI of the
management contract does not qualify the relation between Lepanto and Nielson as that of principal and agent based on
trust and confidence, such that the contractual relation may be terminated by the principal at any time that the principal
loses trust and confidence in the agent. Rather, that phrase simply implies the circumstance that brought about the
execution of the management contract. Thus, in the annual report for 1936 2, submitted by Mr. C. A. Dewit, President of
Lepanto, to its stockholders, under date of March 15, 1937, we read the following:
To the stockholders
xxx
xxx
xxx
The incorporation of our Company was effected as a result of negotiations with Messrs. Nielson & Co., Inc., and
an offer by these gentlemen to Messrs. C. I. Cookes and V. L. Lednicky, dated August 11, 1936, reading as
follows:
Messrs. Cookes and Lednicky,
Present
Re: Mankayan Copper Mines
GENTLEMEN:
After an examination of your property by our engineers, we have decided to offer as we hereby offer to underwrite
the entire issue of stock of a corporation to be formed for the purpose of taking over said properties, said
corporation to have an authorized capital of P1,750,000.00, of which P700,000.00 will be issued in escrow to the
claim-owners in exchange for their claims, and the balance of P1,050,000.00 we will sell to the public at par or
take ourselves.
The arrangement will be under the following conditions:
1. The subscriptions for cash shall be payable 50% at time of subscription and the balance subject to the call of
the Board of Directors of the proposed corporation.
2. We shall have an underwriting and brokerage commission of 10% of the P1,050,000.00 to be sold for cash to
the public, said commission to be payable from the first payment of 50% on each subscription.

3. We will bear the cost of preparing and mailing any prospectus that may be required, but no such prospectus will
be sent out until the text thereof has been first approved by the Board of Directors of the proposed corporation.
4. That after the organization of the corporation, all operating contract be entered into between ourselves and said
corporation, under the terms which the property will be developed and mined and a mill erected, under our
supervision, our compensation to be P2,000.00 per month until the property is put on a profitable basis and
P2,500.00 per month plus 10% of the net profits for a period of five years thereafter.
5. That we shall have the option to renew said operating contract for an additional period of five years, on the
same basis as the original contract, upon the expiration thereof.
It is understood that the development and mining operations on said property, and the erection of the mill thereon,
and the expenditures therefor shall be subject to the general control of the Board of Directors of the proposed
corporation, and, in case you accept this proposition, that a detailed operating contract will be entered into,
covering the relationships between the parties.
Yours very truly,
(Sgd.) L. R. Nielson
Pursuant to the provisions of paragraph 2 of this offer, Messrs. Nielson & Co., took subscriptions for One Million
Fifty Thousand Pesos (P1,050,000.00) in shares of our Company and their underwriting and brokerage commission has
been paid. More than fifty per cent of these subscriptions have been paid to the Company in cash. The claim owners have
transferred their claims to the Corporation, but the P700,000.00 in stock which they are to receive therefor, is as yet held
in escrow.
Immediately upon the formation of the Corporation Messrs. Nielson & Co., assumed the Management of the
property under the control of the Board of Directors. A modification in the Management Contract was made with the
consent of all the then stockholders, in virtue of which the compensation of Messrs. Nielson & Co., was increased to
P2,500.00 per month when mill construction began. The formal Management Contract was not entered into until January
30, 1937.
xxx
xxx
xxx
Manila, March 15, 1937
(Sgd.) C. A. DeWitt President
ISSUE: WON there is a contract of agency between Lepanto and Nielson
HELD: NO.
We can gather from the foregoing statements in the annual report for 1936, and from the provision of paragraph XI of the
Management contract, that the employment by Lepanto of Nielson to operate and manage its mines was principally in
consideration of the know-how and technical services that Nielson offered Lepanto. The contract thus entered into
pursuant to the offer made by Nielson and accepted by Lepanto was a "detailed operating contract". It was not a contract
of agency. Nowhere in the record is it shown that Lepanto considered Nielson as its agent and that Lepanto terminated
the management contract because it had lost its trust and confidence in Nielson.
The contention of Lepanto that it had terminated the management contract in 1945, following the liberation of the mines
from Japanese control, because the relation between it and Nielson was one of agency and as such it could terminate the
agency at will, is, therefore, untenable. On the other hand, it can be said that, in asserting that it had terminated or
cancelled the management contract in 1945, Lepanto had thereby violated the express terms of the management
contract. The management contract was renewed to last until January 31, 1947, so that the contract had yet almost two
years to go — upon the liberation of the mines in 1945. There is no showing that Nielson had ceased to prosecute the
operation and development of the mines in good faith and in accordance with approved mining practice which would
warrant the termination of the contract upon ninety days written notice. In fact there was no such written notice of
termination. It is an admitted fact that Nielson ceased to operate and develop the mines because of the war — a cause
beyond the control of Nielson. Indeed, if the management contract in question was intended to create a relationship of
principal and agent between Lepanto and Nielson, paragraph XI of the contract should not have been inserted because,
as provided in Article 1733 of the old Civil Code, agency is essentially revocable at the will of the principal — that means,
with or without cause. But precisely said paragraph XI was inserted in the management contract to provide for the cause
for its revocation. The provision of paragraph XI must be given effect.
In the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to
be adopted as will give effect to all, 3 and if some stipulation of any contract should admit of several meanings, it shall be
understood as bearing that import which is most adequate to render it effectual. 4
It is Our considered view that by express stipulation of the parties, the management contract in question is not revocable
at the will of Lepanto. We rule that this management contract is not a contract of agency as defined in Article 1709 of the
old Civil Code, but a contract of lease of services as defined in Article 1544 of the same Code. This contract can not be

unilaterally revoked by Lepanto.
The first ground of the motion for reconsideration should, therefore, be brushed aside.

- performs a ministerial service for the benefit of another;
- employment; 2 persons involved
ii) Partnership – Art. 1767
ARTICLE 1767. By the contract of partnership two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the inten- tion of dividing the profits among themselves.
Two or more persons may also form a partnership for the exercise of a profession. (1665a)
Agency distinguished from partnership.
A contract of partnership18 is a contract of agency, and it differs from a pure agency in that while an agent acts only for his
principal, a partner acts not only for his co-partners and the partnership but also as principal of himself. In other words,
each partner is regarded as an agent of his co-partners when he is acting and as principal of his co-partners when they
are acting. This has been said to be the most certain test of partnership as distinguished from ordinary agency or

employment. A partnership is, in effect, a contract of mutual agency.
In both cases, the agent or partner can bind the principal or his co-partner only by such contracts as are entered into
within the scope of his authority. (Arts. 1910, 1803, 1818.) In general, both conceptions import the idea of a fiduciary
relationship.
The agency which results from the relation of partnership is of a peculiar kind, sui generis, and must be distinguished
sharply from the ordinary concept of agency in two important respects:
18Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property or industry
to a common fund, with the intention of dividing the profits among themselves.
Two or more persons may also form a partnership for the exercise of a profession. (1665a)
(1) Control by the principal. — An essential characteristic of the agency relationship, i.e., control by the principal, which is
not applicable to the partnership concept. It is fundamental in the law of agency that an agent must submit to the
principal’s right to control the agent’s conduct in regard to the subject of the agency. Yet the partnership relation, while
having many of the characteristics of the agency relationship, differs from it in that a partner’s power to bind his co-partner
is not subject to the co-partner’s right to control, unless there is an agreement to that effect.
(2) Liability of the agent. — A partner acting as agent for the partnership binds not only the firm members but himself as
well, while the ordinary agent assumes no personal liability where he acts within the scope of his authority. This is but a
logical deduction from the proposition that a partner is both an agent and a principal at the same time when engaged in
carrying on the partnership business. It is for this reason that Article 1822 of the Civil Code provides that, as to wrongful
acts of partners done in the ordinary course of business “the partnership is liable therefor to the same extent as the
partner so acting or omitting to act.”
(3) Sharing of profits. — Now, what is the test to determine whether, in a given case, the parties have entered into a
relationship of partner and partner, or principal and agent? The answer depends upon the manner in which the profits are
shared: “If, when earned, the profits belong to all the parties as common proprietors in agreed proportions, the relation is
one of partnership, but if the alleged owner or partner takes his agreed share of profits, not as owner but as an agreed
measure of compensation for his services or the like, the relation is one of agency.” Accordingly, Article 1769(4) of the Civil
Code provides that the receipt by a person of the share of the profits of a business is not prima facie evidence that he is a
partner in the business if such profits were received “as wages of an employee.” (Teller, op. cit., pp. 22-23, citing
Dinkelspeel vs. Lewis, 50 Wyo. 380; Person vs. Cartex, 7 N.C. 324; 2 Corp. Jur. 426.)
ILLUSTRATIVE CASE:
Branch manager of a travel agency company, who is a bona fide travel agent herself, had assumed solidary liability with
the company for the payment of monthly rentals to the lessor.
Facts: A contract of lease was entered into between LS and the Tourist World Service, Inc. (TWS), whereby the latter
leased the premises belonging to the former for use as a branch office. LS held herself solidarily liable with TWS for
prompt payment of the monthly rental. When the branch office was opened, the same was run by LS who was designated
as branch manager. Any airline fare brought in through the efforts of LS entitled her to receive 4% of the proceeds. LS was
not in the company’s payroll.
On mere suspicion that LS was connected with a rival firm, the office of branch manager was abolished.

Issue: What was the nature of the arrangement of LS and TWS?
Held: (1) Employer-employee relationship not intended. — It was not a case of employer-employee relation in view of the
following:
(a) LS was not subject to the control by TWS either as to the result of the enterprise or as to the means used in
connection therewith. A true employee cannot be made to part with his own money in pursuance of his employer’s
business or otherwise assume any liability thereof. “As to the means used” in soliciting airline fares, LS “obviously relied
on her own gifts and capabilities;” and
(b) She was not in the company’s payroll. Unlike an employee who usually earns a fixed salary, she earned compensation in fluctuating amounts, depending on her book- ing success. The fact that she was designated as “branch
manager” did not make her an employee. Employment is determined by the “right of control” test and certain eco- nomic
parameters, like the inclusion of the employee in the payroll.
(2) Partnership not intended. — The parties had not embarked on a partnership. LS herself did not recognize the
existence of such a relation when in her letter, she expressly “concedes your (TWS) right to stop the operation of your
branch
Art. 1868 NATURE, FORM, AND KINDS OF AGENCY 355
office,” in effect, accepting its control over the manner in which the business was run. A joint venture, including a
partnership, presupposes generally a parity of understanding between the joint co-venturers or partners in which each
party has an equal proprietary interest in the capital or property contributed and where each party exercises equal rights in
the conduct of the business. Furthermore, the partners did not hold themselves out as partners and the building itself was
embellished with the electric sign “Tourist World Service, Inc.,” in lieu of a distinct partnership name.
(3) Principal-agent relationship intended. — The parties have contemplated a principal-agent relationship. LS solicited
airline fares but she did so for and on behalf of her principal, TWS. As compensation, she received 4% of the proceeds in
the concept of commission. In her head letter, she presumed her principal’s authority as owner of the business
undertaking. The agency was one coupled with an interest (see Arts. 1927, 1930.) having been created for the mutual
interest of the agent (LS was a bona fide travel agent herself) and the principal, and, therefore, could not be revoked at
will. Accordingly, LS was entitled to damages. (Sevilla vs. Court of Appeals, 160 SCRA 171 [1988].)
- Sevilla vs. CA, 160 SCRA 171 (1988)
FACTS:
On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the appellees) entered into on Oct. 19, 1960 by and
between Mrs. Segundina Noguera, party of the first part; the Tourist World Service, Inc., represented by Mr. Eliseo Canilao
as party of the second part, and hereinafter referred to as appellants, the Tourist World Service, Inc. leased the premises
belonging to the party of the first part at Mabini St., Manila for the former-s use as a branch office. In the said contract the
party of the third part held herself solidarily liable with the party of the part for the prompt payment of the monthly rental
agreed on. When the branch office was opened, the same was run by the herein appellant Una 0. Sevilla payable to
Tourist World Service Inc. by any airline for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina
Sevilla and 3% was to be withheld by the Tourist World Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc. appears to have been informed that Lina
Sevilla was connected with a rival firm, the Philippine Travel Bureau, and, since the branch office was anyhow losing, the
Tourist World Service considered closing down its office. This was firmed up by two resolutions of the board of directors of
Tourist World Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13), the first abolishing the office of the manager and vicepresident of the Tourist World Service, Inc., Ermita Branch, and the second,authorizing the corporate secretary to receive
the properties of the Tourist World Service then located at the said branch office. It further appears that on Jan. 3, 1962,

the contract with the appellees for the use of the Branch Office premises was terminated and while the effectivity thereof
was Jan. 31, 1962, the appellees no longer used it. As a matter of fact appellants used it since Nov. 1961. Because of this,
and to comply with the mandate of the Tourist World Service, the corporate secretary Gabino Canilao went over to the
branch office, and, finding the premises locked, and, being unable to contact Lina Sevilla, he padlocked the premises on
June 4, 1962 to protect the interests of the Tourist World Service. When neither the appellant Lina Sevilla nor any of her
employees could enter the locked premises, a complaint wall filed by the herein appellants against the appellees with a
prayer for the issuance of mandatory preliminary injunction. Both appellees answered with counterclaims. For apparent
lack of interest of the parties therein, the trial court ordered the dismissal of the case without prejudice.
The appellee Segundina Noguera sought reconsideration of the order dismissing her counterclaim which the court a quo,
in an order dated June 8, 1963, granted permitting her to present evidence in support of her counterclaim.
On June 17,1963, appellant Lina Sevilla refiled her case against the herein appellees and after the issues were joined, the
reinstated counterclaim of Segundina Noguera and the new complaint of appellant Lina Sevilla were jointly heard
following which the court a quo ordered both cases dismiss for lack of merit, on the basis of which was elevated the
instant appeal.
In this appeal, appealant Lina Sevilla claims that a joint bussiness venture was entered into by and between her and
appellee TWS with offices at the Ermita branch office and that she was not an employee of the TWS to the end that her
relationship with TWS was one of a joint business venture.
Upon the other hand, appellee TWS contend that the appellant was an employee of the appellee Tourist World Service,
Inc. and as such was designated manager. 1
xxx xxx xxx
The trial court 2 held for the private respondent on the premise that the private respondent, Tourist World Service, Inc.,
being the true lessee, it was within its prerogative to terminate the lease and padlock the premises. 3 It likewise found the
petitioner, Lina Sevilla, to be a mere employee of said Tourist World Service, Inc. and as such, she was bound by the acts
of her employer. 4 The respondent Court of Appeal 5 rendered an affirmance.
The petitioners now claim that the respondent Court, in sustaining the lower court, erred.
ISSUES:
1

WON the relationship between Sevilla and TWS a Joint Venture or an employer-employee one.

HELD: Neither. Contract of Agency.
As a preliminary inquiry, the Court is asked to declare the true nature of the relation between Lina Sevilla and Tourist
World Service, Inc. The respondent Court of see fit to rule on the question, the crucial issue, in its opinion being "whether
or not the padlocking of the premises by the Tourist World Service, Inc. without the knowledge and consent of the
appellant Lina Sevilla entitled the latter to the relief of damages prayed for and whether or not the evidence for the said
appellant supports the contention that the appellee Tourist World Service, Inc. unilaterally and without the consent of the
appellant disconnected the telephone lines of the Ermita branch office of the appellee Tourist World Service, Inc. 7 Tourist
World Service, Inc., insists, on the other hand, that Lina SEVILLA was a mere employee, being "branch manager" of its
Ermita "branch" office and that inferentially, she had no say on the lease executed with the private respondent, Segundina
Noguera. The petitioners contend, however, that relation between the between parties was one of joint venture, but
concede that "whatever might have been the true relationship between Sevilla and Tourist World Service," the Rule of Law
enjoined Tourist World Service and Canilao from taking the law into their own hands, 8 in reference to the padlocking now
questioned.
The Court finds the resolution of the issue material, for if, as the private respondent, Tourist World Service, Inc., maintains,
that the relation between the parties was in the character of employer and employee, the courts would have been without
jurisdiction to try the case, labor disputes being the exclusive domain of the Court of Industrial Relations, later, the Bureau
Of Labor Relations, pursuant to statutes then in force. 9
In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee relation. In general,
we have relied on the so-called right of control test, "where the person for whom the services are performed reserves a
right to control not only the end to be achieved but also the means to be used in reaching such end." 10 Subsequently,
however, we have considered, in addition to the standard of right-of control, the existing economic conditions prevailing
between the parties, like the inclusion of the employee in the payrolls, in determining the existence of an employeremployee relationship. 11

The records will show that the petitioner, Lina Sevilla, was not subject to control by the private respondent Tourist World
Service, Inc., either as to the result of the enterprise or as to the means used in connection therewith. In the first place,
under the contract of lease covering the Tourist Worlds Ermita office, she had bound herself in solidum as and for rental
payments, an arrangement that would be like claims of a master-servant relationship. True the respondent Court would
later minimize her participation in the lease as one of mere guaranty, 12 that does not make her an employee of Tourist
World, since in any case, a true employee cannot be made to part with his own money in pursuance of his employer's
business, or otherwise, assume any liability thereof. In that event, the parties must be bound by some other relation, but
certainly not employment.
In the second place, and as found by the Appellate Court, '[w]hen the branch office was opened, the same was run by the
herein appellant Lina O. Sevilla payable to Tourist World Service, Inc. by any airline for any fare brought in on the effort of
Mrs. Lina Sevilla. 13 Under these circumstances, it cannot be said that Sevilla was under the control of Tourist World
Service, Inc. "as to the means used." Sevilla in pursuing the business, obviously relied on her own gifts and capabilities.
It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained 4% in commissions from
airline bookings, the remaining 3% going to Tourist World. Unlike an employee then, who earns a fixed salary usually, she
earned compensation in fluctuating amounts depending on her booking successes.
The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist World's employee. As we
said, employment is determined by the right-of-control test and certain economic parameters. But titles are weak
indicators.
In rejecting Tourist World Service, Inc.'s arguments however, we are not, as a consequence, accepting Lina Sevilla's own,
that is, that the parties had embarked on a joint venture or otherwise, a partnership. And apparently, Sevilla herself did not
recognize the existence of such a relation. In her letter of November 28, 1961, she expressly 'concedes your [Tourist
World Service, Inc.'s] right to stop the operation of your branch office 14 in effect, accepting Tourist World Service, Inc.'s
control over the manner in which the business was run. A joint venture, including a partnership, presupposes generally a
of standing between the joint co-venturers or partners, in which each party has an equal proprietary interest in the capital
or property contributed 15 and where each party exercises equal rights in the conduct of the business. 16 furthermore, the
parties did not hold themselves out as partners, and the building itself was embellished with the electric sign "Tourist
World Service, Inc. 17in lieu of a distinct partnership name.
It is the Court's considered opinion, that when the petitioner, Lina Sevilla, agreed to (wo)man the private
respondent, Tourist World Service, Inc.'s Ermita office, she must have done so pursuant to a contract of agency.
It is the essence of this contract that the agent renders services "in representation or on behalf of another. 18 In
the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her principal, Tourist World
Service, Inc. As compensation, she received 4% of the proceeds in the concept of commissions. And as we said,
Sevilla herself based on her letter of November 28, 1961, pre-assumed her principal's authority as owner of the
business undertaking. We are convinced, considering the circumstances and from the respondent Court's recital
of facts, that the ties had contemplated a principal agent relationship, rather than a joint managament or a
partnership..
But unlike simple grants of a power of attorney, the agency that we hereby declare to be compatible with the intent of the
parties, cannot be revoked at will. The reason is that it is one coupled with an interest, the agency having been created for
mutual interest, of the agent and the principal. 19 It appears that Lina Sevilla is a bona fide travel agent herself, and as
such, she had acquired an interest in the business entrusted to her. Moreover, she had assumed a personal obligation for
the operation thereof, holding herself solidarily liable for the payment of rentals. She continued the business, using her
own name, after Tourist World had stopped further operations. Her interest, obviously, is not to the commissions she
earned as a result of her business transactions, but one that extends to the very subject matter of the power of
management delegated to her. It is an agency that, as we said, cannot be revoked at the pleasure of the principal.
Accordingly, the revocation complained of should entitle the petitioner, Lina Sevilla, to damages.
As we have stated, the respondent Court avoided this issue, confining itself to the telephone disconnection and
padlocking incidents. Anent the disconnection issue, it is the holding of the Court of Appeals that there is 'no evidence
showing that the Tourist World Service, Inc. disconnected the telephone lines at the branch office. 20 Yet, what cannot be
denied is the fact that Tourist World Service, Inc. did not take pains to have them reconnected. Assuming, therefore, that it
had no hand in the disconnection now complained of, it had clearly condoned it, and as owner of the telephone lines, it
must shoulder responsibility therefor.
The Court of Appeals must likewise be held to be in error with respect to the padlocking incident. For the fact that Tourist
World Service, Inc. was the lessee named in the lease con-tract did not accord it any authority to terminate that contract
without notice to its actual occupant, and to padlock the premises in such fashion. As this Court has ruled, the petitioner,

Lina Sevilla, had acquired a personal stake in the business itself, and necessarily, in the equipment pertaining thereto.
Furthermore, Sevilla was not a stranger to that contract having been explicitly named therein as a third party in charge of
rental payments (solidarily with Tourist World, Inc.). She could not be ousted from possession as summarily as one would
eject an interloper.
The Court is satisfied that from the chronicle of events, there was indeed some malevolent design to put the petitioner,
Lina Sevilla, in a bad light following disclosures that she had worked for a rival firm. To be sure, the respondent court
speaks of alleged business losses to justify the closure '21 but there is no clear showing that Tourist World Ermita Branch
had in fact sustained such reverses, let alone, the fact that Sevilla had moonlit for another company. What the evidence
discloses, on the other hand, is that following such an information (that Sevilla was working for another company), Tourist
World's board of directors adopted two resolutions abolishing the office of 'manager" and authorizing the corporate
secretary, the respondent Eliseo Canilao, to effect the takeover of its branch office properties. On January 3, 1962, the
private respondents ended the lease over the branch office premises, incidentally, without notice to her.
It was only on June 4, 1962, and after office hours significantly, that the Ermita office was padlocked, personally by the
respondent Canilao, on the pretext that it was necessary to Protect the interests of the Tourist World Service. " 22 It is
strange indeed that Tourist World Service, Inc. did not find such a need when it cancelled the lease five months earlier.
While Tourist World Service, Inc. would not pretend that it sought to locate Sevilla to inform her of the closure, but surely, it
was aware that after office hours, she could not have been anywhere near the premises. Capping these series of
"offensives," it cut the office's telephone lines, paralyzing completely its business operations, and in the process, depriving
Sevilla articipation therein.
This conduct on the part of Tourist World Service, Inc. betrays a sinister effort to punish Sevillsa it had perceived to be
disloyalty on her part. It is offensive, in any event, to elementary norms of justice and fair play.
We rule therefore, that for its unwarranted revocation of the contract of agency, the private respondent, Tourist
World Service, Inc., should be sentenced to pay damages. Under the Civil Code, moral damages may be awarded
for "breaches of contract where the defendant acted ... in bad faith. 23
We likewise condemn Tourist World Service, Inc. to pay further damages for the moral injury done to Lina Sevilla from its
brazen conduct subsequent to the cancellation of the power of attorney granted to her on the authority of Article 21 of the
Civil Code, in relation to Article 2219 (10) thereof —
ART. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage. 24
ART. 2219. Moral damages 25 may be recovered in the following and analogous cases:
xxx xxx xxx
(10) Acts and actions refered into article 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The respondent, Eliseo Canilao, as a joint tortfeasor is likewise hereby ordered to respond for the same damages in a
solidary capacity.
Insofar, however, as the private respondent, Segundina Noguera is concerned, no evidence has been shown that she had
connived with Tourist World Service, Inc. in the disconnection and padlocking incidents. She cannot therefore be held
liable as a cotortfeasor.
-form of agency: acts for himself & partners.
- partner’s power to bind other partners is not subject to control of co-partners, unless agreed upon. - partner as agent is
also liable.
iii) Guardianship - Rules 93-95, Rules of Court- represents an incapacitated person- court appointed- not directed by ward
RULE 93
Appointment of Guardians
Section 1. Who may petition for appointment of guardian for resident. — Any relative, friend, or other person on behalf of
a resident minor or incompetent who has no parent or lawful guardian, or the minor himself if fourteen years of age or
over, may petition the court having jurisdiction for the appointment of a general guardian for the person or estate, or both,
of such minor or incompetent. An officer of the Federal Administration of the United States in the Philippines may also file
a petition in favor of a ward thereof, and the Director of Health, in favor of an insane person who should be hospitalized, or
in favor of an isolated leper.
Section 2. Contents of petition. — A petition for the appointment of a general guardian must show, so far as known to the
petitioner:

(a) The jurisdiction facts;
(b) The minority or incompetency rendering the appointment necessary or convenient;
(c) The names, ages, and residence of the relatives of the minor or incompetent, and of the person having him in their
care;
(d) The probable value and character of his estate;
(e) The name of the person for whom letters of guardianship.
The petition shall be verified; but no defect in the petition or verification shall render void the issuance of letters of
guardianship.
Section 3. Court to set time for hearing. Notice thereof. — When a petition for the appointment of a general guardian is
filed, the court shall fix a time and place for hearing the same, and shall cause reasonable notice thereof to be given to the
persons mentioned in the petition residing in the province, including the minor if above 14 years of age or the incompetent
himself, and may direct other general or special notice thereof to be given.
Section 4. Opposition to petition. — Any interested person may, by filing a written opposition, contest the petition on the
ground of majority of the alleged minor, competency of the alleged incompetent, or the insuitability of the person for whom
letters are prayed, and may pray that the petition be dismissed, or that letters of guardianship issue to himself, or to any
suitable person named in the opposition.
Section 5. Hearing and order for letters to issue. — At the hearing of the petition the alleged in competent must be
present if able to attend, and it must be shown that the required notice has been given. Thereupon the courts shall hear
the evidence of the parties in support of their respective allegations, and, if the person in question is a minor, or
incompetent it shall be appoint a suitable guardian of his person or estate, or both, with the powers and duties hereinafter
specified.
Section 6. When and how guardian for non-resident appointed. Notice. — When a person liable to be put under
guardianship resides without the Philippines but the estate therein, any relative or friend of such person, or any one
interested in his estate, in expectancy or otherwise, may petition a court having jurisdiction for the appointment of a
guardian for the estate, and if, after notice given to such person and in such manner as the court deems proper, by
publication or otherwise, and hearing, the court is satisfied that such non-resident is a minor or incompetent rendering a
guardian necessary or convenient, it may appoint a guardian for such estate.
Section 7. Parents as guardians. — When the property of the child under parental authority is worth two thousand pesos
or less, the father of the mother, without the necessity of court appointment, shall be his legal guardian. When the property
of the child is worth more than two thousand pesos, the father or the mother shall be considered guardian of the child's
property, with the duties and obligations of guardians under this rules, and shall file the petition required by section 2
hereof. For good reasons the court may, however, appoint another suitable person.
Section 8. Service of judgment. — Final orders or judgments under this rule shall be served upon the civil registrar of the
municipality or city where the minor or incompetent person resides or where his property or part thereof is situated.
RULE 94
Bonds of Guardians
Section 1. Bond to be given before issuance of letters. Amount. Condition. — Before a guardian appointed enters upon
the execution of his trust, or letters of guardianship issue, he shall give a bond, in such sum as the court directs,
conditioned as follows:
(a) To make and return to the court, within three (3) months, a true and complete inventory of all the estate, real and
personal, of his ward which shall come to his possession or knowledge of any other person for him;
(b) To faithfully execute the duties of his trust, to manage and dispose of the estate according to these rules for the best
interests of the ward, and to provide for the proper care, custody, and education of the ward;
(c) To render a true and just account of all the estate of the ward in his hands, and of all proceeds or interest derived
therefrom, and of the management and disposition of the same, at the time designated by these rules and such other
times as the courts directs, and at the expiration of his trust to settle his accounts with the court and deliver and pay over
all the estate, effects, and moneys remaining in his hands, or due from him on such settlement, to the person lawfully
entitled thereto;
(d) To perform all orders of the court by him to be performed.
Section 2. When new bond may be required and old sureties discharged. — Whenever it is deemed necessary, the court
may require a new bond to be given by the guardian, and may discharge the sureties on the old bond from further liability,
after due notice to interested persons, when no injury can result therefrom to those interested in the estate.
Section 3. Bonds to be filed. Actions thereon. — Every bond given by a guardian shall be filed in the office of the clerk of
the court, and, in case of the breach of a condition thereof, may be prosecuted in the same proceeding or in a separate
action for the use and benefit of the ward or of any other person legally interested in the estate.
RULE 95
Selling and Encumbering Property of Ward
Section 1. Petition of guardian for leave to sell or encumber estate. — When the income of the estate under guardianship
is insufficient to maintain the ward and his family, or to maintain and educate the ward when a minor, or when it appears
that it is for the benefit of the ward that his real estate or some part thereof be sold, or mortgaged or otherwise

encumbered, and the proceeds thereof put out at interest, or invested in some productive security, or in the improvement
or security or other real estate of the ward, the guardian may present a verified petition to the court by which he was
appointed setting forth such facts, and praying that an order issue authorizing the sale or encumbrance.
Section 2. Order to show cause thereupon. — If it seems probable that such sale or encumbrance is necessary, or would
be beneficial to the ward, the court shall make an order directing the next of kin of the ward, and all persons interested in
the estate, to appear at a reasonable time and place therein specified to show cause why the prayer of the petition should
not be granted.
Section 3. Hearing on return of order. Costs. — At the time and place designated in the order to show cause, the court
shall hear the proofs and allegations of the petitioner and next of kin, and other persons interested, together with their
witnesses, and grant and refuse the prayer of the petition as the best interest of the ward require. The court shall make
such order as to cost of the hearing as may be just.
Section 4. Contents of order for sale or encumbrance, and how long effective. Bond. — If, after full examination, it
appears that it is necessary, or would be beneficial to the ward, to sell or encumber the estate, or some portion of it, the
court shall order such sale or encumbrance and that the proceeds thereof be expended for the maintenance of the ward
and his family, or the education of the ward, if a minor, or for the putting of the same interest, or the investment of the
same as the circumstances may require. The order shall specify the causes why the sale or encumbrance is necessary or
beneficial, and may direct that estate ordered sold be disposed of at either public or private sale, subject to such
conditions as to the time and manner of payment, and security where a part of the payment is deferred as in the discretion
of the court are deemed most beneficial to the ward. The original bond of the guardian shall stand as security for the
proper appropriation of the proceeds of the sale, but the judge may, if deemed expedient, require an additional bond as a
condition for the granting of the order of sale. No order of sale granted in pursuance of this section shall continue in force
more than one (1) year after granting the same, without a sale being had.
Section 5. Court may order investment of proceeds and direct management of estate. — The court may authorize and
require the guardian to invest the proceeds of sales or encumbrances, and any other of his ward's money in his hands, in
real estate or otherwise, as shall be for the best interest of all concerned, and may make such other orders for the
management, investment, and disposition of the estate and effects, as circumstances may require.
Agency distinguished from guardianship.
The distinctions are:
(1) While the agent derives his authority from his principal, the guardian,23 although he acts for and on behalf of his ward,
does not derive his authority so to act from the ward (2 C.J.S. 1027.);
(2) The relation of principal and agent is founded upon consent of the parties thereto, while that of guardian and ward may
be created irrespective of the consent or capacity of the ward;
(3) Agents are subject to the control of their principals, while guardians are not subject to the direction of their wards;
(4) A legal guardian is substituted by law, while ordinarily an agent is the appointee of the principal and his power may at
any time be abrogated or modified by the principal (see 3 Am. Jur. 2d 421.); and
(5) While an agent represents one who has capacity to con- tract for himself where he present, a guardian represents one
who has no such capacity.
iv) Trust – Art. 1440
- title and control of the property under trust passes to a trustee who acts in his own name
- involves control of property
- does not possess authority to bind trustor
- may be created by law
ARTICLE 1440. A person who establishes a trust is called the trustor; one in whom
confidence is reposed as regards property for the benefit of another person is
known as the trustee; and the person for whose benefit the trust has been created is referred
to as the beneficiary.
Concept of trust
A trust is the fi duciary relationship between one person having an equitable ownership in property
and another owning the legal title to such property, the equitable ownership of the former entitling him to
the performance of certain duties and the exercise of certain powers by the latter (see 54 Am. Jur. 21.) for
the benefit of the former.
It is a legal arrangement whereby a person transfers his legal title to property to another to be
administered by the latter for the benefit of a third party. It is a right of property held by one party for the
benefit of another.
(1) Trust implies confidence in a relationship. — The word “trust” is often employed in a broader or
popular sense as denoting “confidence,” “fiduciary relationship,” etc. and is often used in reference to the

confidential aspect of any kind of a bailment or possession by one person of the property of another.
(Ibid.,22.)
It indicates duties, relations, and responsibilities which are not strictly technical trusts. (89 C.J.S. 712; Salao
vs. Salao, 70 SCRA 65[1976].)
In its more technical significance, the word still implies such confidence in a relationship
intentionally created, involving a trustee, a beneficiary, and a trust property and not one involving merely
personal duties, imposing equitable duties upon the trustee with respect to the property to deal with it for
the benefit of the beneficiary.
(2) Trust cannot be established in violation of law. — A trust is the right, enforceable in equity, to
the beneficial enjoyment of property the legal title to which is in another. Trust is founded in equity and can
never result from acts violative of law. Thus, no trust can result from a contract of partnership formed for
an illegal purpose. Since the contract is null and void, no rights and obligations can arise therefrom.
(Deluao vs. Casteel, 26 SCRA 415 [1968] and 29 SCRA 350 [1969].)
v) Sale – Art. 1458 vs. Agency to Sell;
Article 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
‘Sale’ Defined
Sale is a contract where one party (seller or vendor) obligates himself to transfer the ownership of
and to deliver a determinate thing, while the other party (buyer or vendee) obligates himself to pay for
said thing a price certain in money or its equivalent.
Elements of the Contract of Sale
Essential elements (those without which there can be novalid sale):
1) Consent or meeting of the minds, i.e., consent to transfer ownership in exchange for the price.
2) Determinate subject matter (generally, there is no sale of generic thing; moreover, if the parties differ
as to the object, there can be no meeting of the minds).
3) Price certain in money or its equivalent (this is the cause or consideration). (The price need not be in
money.) (Republic v. Phil. Resources Dev. Corp., L-10414, Jan. 31, 1958).
Art. 1466. In construing a contract containing provisions characteristic of both the
contract of sale and of the contract of agency to sell, the essential clauses of the whole
instrument shall be considered.
Distinctions Between a ‘Contract of Sale’ and an ‘Agency to Sell’ (like a Consignment for Sale)
(a) In sale, the buyer pays the price; the agent delivers the price which in turn he got from his
buyer.
(b) In sale, the buyer after delivery becomes the owner; the agent who is supposed to sell does not
become the owner, even if the property has already been delivered to him.
(c) In sale, the seller warrants; the agent who sells assumes no personal liability as long as he acts
within his authority and in the name of the principal.
Bar Question
X acquired a booklet of 10 sweepstakes tickets directly from the office of the Philippine Charity Sweepstakes. X paid P1,800 for the
booklet, less the customary discount. What was the legal nature of X’s act in acquiring the tickets? Did he enter into a contract of
purchase and sale?
ANS.: Yes, X entered into a contract of purchase and sale, notwithstanding the fact that he may be referred to as an “agent” of the
Sweepstakes Office, and the fact that he may be entitled to an “agent’s prize” should one of the tickets purchased win a principal
prize. The truth is that he is not really required to re-sell the tickets, and even if he were to do so, still failure on the part of his
purchasers to pay will not allow him to recover what he himself has paid to the office. Moreover, the delivery of the tickets to him
transferred their ownership to him; this is not true in the case of an agency to sell. Furthermore, it has been said that in a contract of
sale, the buyer pays the price; while in an agency to sell, the agent delivers the price. The mere fact that a “discount” or so-called
commission has been given is immaterial. (See Quiroga v. Parsons Hardware Co., 38 Phil. 501).

NARCISO DEGAÑOS, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.
Facts:

In an amended information dated March 23, 1994, the Office of the Provincial Prosecutor of Bulacan
charged Brigida D. Luz, alias Aida Luz, and Narciso Degaños in the Regional Trial Court in Malolos, Bulacan
with estafa under Article 315 paragraph 1 (b) of the Revised Penal Code, allegedly committed.
EVIDENCE FOR THE PROSECUTION
The prosecution evidence consists of the testimonies of the private complainants-spouses, Jose and Lydia
Bordador.
Private complainant Lydia Bordador, a jeweler, testified that accused Narciso Degaños and Brigida/Aida Luz
are brother and sister. She knew them because they are the relatives of her husband and their
Kumpadre/kumadre. Brigida/Aida Luz was the one who gave instructions to Narciso Degaños to get gold
and jewelry from Lydia for them to sell. Lydia came to know Narciso Degaños because the latter frequently
visited their house selling religious articles and books. While in their house, Narciso Degaños saw her
counting pieces of jewelry and he asked her if he could show the said pieces of jewelry to his sister,
Brigida/Aida Luz, to which she agreed. Thereafter, Narciso Degaños returned the jewelry and Aida/Brigida
Luz called her to ask if she could trust Narciso Degaños to get the pieces of jewelry from her for
Aida/Brigida Luz to sell. Lydia agreed on the condition that if they could not pay it in cash, they should pay
it after one month or return the unsold jewelry within the said period. She delivered the said jewelry
starting sometime in 1986 as evidenced by several documents entitled "Katibayan at Kasunduan", the
earliest of which is dated March 16, 1986. Everytime Narciso Degaños got jewelry from her, he signed the
receipts in her presence. They were able to pay only up to a certain point. However, receipt nos. 614 to
745 dated from April 27, 1987 up to July 20, 1987 (Exhs. "A"-"O") were no longer paid and the accused
failed to return the jewelry covered by such receipts. Despite oral and written demands, the accused failed
and refused to pay and return the subject jewelry. As of October 1998, the total obligation of the accused
amounted to P725,000.00. ACTaDH
Private complainant Atty. Jose Bordador corroborated the testimony of his wife, Lydia. He confirmed that
their usual business practice with the accused was for Narciso Degaños to receive the jewelry and gold
items for and in behalf of Brigida/Aida Luz and for Narciso Degaños to sign the "Kasunduan at Katibayan"
receipts while Brigida/Aida Luz will pay for the price later on. The subject items were usually given to
Narciso Degaños only upon instruction from Brigida/Aida Luz through telephone calls or letters. For the last
one year, the "Kasunduan at Katibayan" receipts were signed in his presence. Said business arrangement
went on for quite sometime since Narciso Degaños and Brigida/Aida Luz had been paying religiously. When
the accused defaulted in their payment, they sent demand letters. It was the accused's sister, Julie dela
Rosa, who responded, seeking an extension of time for the accused to settle their obligation.
EVIDENCE FOR THE DEFENSE
The defense presented accused Brigida/Aida Luz, who testified that she started transacting business of
selling gold bars and jewelry with the private complainants sometime in 1986 through her brother, Narciso
Degaños. It was the usual business practice for Narciso Degaños to get the gold bars and pieces of jewelry
from the private complainants after she placed orders through telephone calls to the private complainants,
although sometimes she personally went to the private complainants' house to get the said items. The
gold bars and pieces of jewelry delivered to her by Narciso Degaños were usually accompanied by a pink
receipt which she would sign and after which she would make the payments to the private complainants
through Narciso Degaños, which payments are in the form of postdated checks usually with a thirty-day
period. In return, the private complainants would give the original white receipts to Narciso Degaños for
him to sign. Thereafter, as soon as the postdated checks were honored by the drawee bank, the said white
receipts were stamped "paid" by Lydia Bordador, after which the same would be delivered to her by
Narciso Degaños. DEIHSa
On September 2, 1987, she sent a letter to private complainant Lydia Bordador requesting for an
accounting of her indebtedness. Lydia Bordador made an accounting which contained the amount of
P122,673.00 as principal and P21,483.00 as interest. Thereafter, she paid the principal amount through
checks. She did not pay the interest because the same was allegedly excessive. In 1998, private
complainant Atty. Jose Bordador brought a ledger to her and asked her to sign the same. The said ledger
contains a list of her supposed indebtedness to the private complainants. She refused to sign the same
because the contents thereof are not her indebtedness but that of his brother, Narciso Degaños. She even
asked the private complainants why they gave so many pieces of jewelry and gold bars to Narciso
Degaños without her permission, and told them that she has no participation in the transactions covered
by the subject "Kasunduan at Katibayan" receipts.

Co-accused Narciso Degaños testified that he came to know the private complainants when he went to the
latter's house in 1986 to sell some Bible books. Two days later he returned to their house and was initially
given a gold bracelet and necklace to sell. He was able to sell the same and paid the private complainants
with the proceeds thereof. Since then he started conducting similar business transactions with the private
complainants. Said transactions are usually covered by receipts denominated as "Kasunduan at
Katibayan". All the "Kasunduan at Katibayan" receipts were issued by the private complainants and was
signed by him. The phrase "for Brigida Luz" and for "Evely Aquino" were written on the receipts so that in
case he fails to pay for the items covered therein, the private complainants would have someone to collect
from. He categorically admitted that he is the only one who was indebted to the private complainants and
out of his indebtedness, he already made partial payments in the amount of P53,307.00. Included in the
said partial payments is the amount of P20,000.00 which was contributed by his brothers and sisters who
helped him and which amount was delivered by Brigida Luz to the private complainants.
Issue: What is the nature of the contract created?
Held: Transaction was an agency, not a sale on credit.
Based on the express terms and tenor of the Kasunduan at Katibayan, Degaños received and accepted the
items under the obligation to sell them in behalf of the complainants ("ang mga hiyas (jewelries) na
natatala sa ibaba nito upang ipagbili ko sa kapakanan ng nasabing Ginang"), and he would be
compensated with the overprice as his commission ("Ang bilang kabayaran o pabuya sa akin ay ano mang
halaga na aking mapalabis na mga halagang nakatala sa ibaba nito."). Plainly, the transaction was a
consignment under the obligation to account for the proceeds of sale, or to return the unsold items. As
such, he was the agent of the complainants in the sale to others of the items listed in the Kasunduan at
Katibayan.
In contrast, according the first paragraph of Article 1458 of the Civil Code, one of the contracting
parties in a contract of sale obligates himself to transfer the ownership of and to deliver a
determinate thing, while the other party obligates himself to pay therefor a price certain in
money or its equivalent. Contrary to the contention of Degaños, there was no sale on credit to
him because the ownership of the items did not pass to him.
4th part edward – wala pa

vi) Independent Contractor – Shell Co. of the Phil. vs. Firemen’s Ins. Co. of Nevada, et al. 53 OG 6084
G.R. No. L-8169
January 29, 1957
THE
SHELL
COMPANY
OF
THE
PHILIPPINES,
LTD., petitioner,
vs.
FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY COMMERCIAL CASUALTY INSURANCE
CO., SALVADOR SISON, PORFIRIO DE LA FUENTE and THE COURT OF APPEALS (First
Division),respondents.

FACTS: It is a fact that a Plymounth car owned by Salvador R. Sison was brought, on
September 3, 1947 to the Shell Gasoline and Service Station, located at the corner of
Marques de Comillas and Isaac Peral Streets, Manila, for washing, greasing and spraying.
The operator of the station, having agreed to do service upon payment of P8.00, the car
was placed on a hydraulic lifter under the direction of the personnel of the station.
Said car was insured against loss or damage by Firemen's Insurance Company of
Newark, New Jersey, and Commercial Casualty Insurance Company jointly for the sum of
P10,000
The job of washing and greasing was undertaken by DE LA FUENTE through his two
employees – a greaseman and a helper/washer. To perform the job, the car was carefully
and centrally placed on the platform of a hydraulic lifter before raising up said platform
to a height of about 5 feet and then the servicing job was started
After more than one hour of washing and greasing, the job was about to be completed
except for an ungreased portion underneath the vehicle which could not be reached by

the greaseman. So, the lifter was lowered a little by the greaseman and while doing so,
the car for unknown reason accidentally fell and suffered substantial damage
SISON forthwith brought the matter to his insurers’ attention. The insurance companies
after due inspection paid the sum of P1,651.38 for the damaged car’s repair. SISON, for
his part made assignments of his rights to recover damages in favor of the Firemen's
Insurance Company and the Commercial Casualty Insurance Company – hence, the
instant case for the recovery of the total amount of the damage from SHELL and DE LA
FUENTE on the ground of negligence
CFI dismissed the complaint. Insurance Companies appealed. The Court of Appeals
reversed the CFI’s judgment and sentenced SHELL and DE LA FUENTE to pay the amount
sought to be recovered, plus legal interest and costs
The CA ruled that DE LA FUENTE is SHELL’s agent; hence, as principal, it is liable for his
agent’s breach of undertaking
SHELL now comes to the SC on appeal questioning the aforesaid CA decision, raising the
following…
ISSUE: WON DE LA FUENTE is really SHELL’s agent? Isn’t he more of an independent
contractor?
HELD: DE LA FUENTE is SHELL’s agent. The operator of a gasoline station is an agent of
the oil company. He cannot be considered as an independent contractor by reason of
SHELL’s extensive control and supervision over his tasks. The assailed CA decision is
affirmed.
DE LA FUENTE owed his position to SHELL which could remove him or terminate his
services at any time. He merely undertook to exclusively sell SHELL’s products at the
station he operates. For this purpose, he was placed in possession of all the equipments
needed to operate it, including the hydraulic lifter from which SISON’s automobile fell
But it must be noted that these equipments were delivered to DE LA FUENTE merely on
loan basis. SHELL still took charge of its care and maintenance. It supervised DE LA
FUENTE and conducted periodic inspection of the gasoline and service station
Moreover, SHELL did not leave the fixing of price for gasoline to DE LA FUENTE; on the
other hand, SHELL had complete control thereof; and it had supervision over DE LA
FUENTE in the operation of the station and in the sale of its products therein
In fine, the gasoline and service station really belonged to SHELL. It bore its tradename
and the operator DE LA FUENTE merely sold the products of SHELL there
Considering the abovelisted, in no wise can it be said that DE LA FUENTE is an
independent contractor of SHELL. The extensive control and supervision that SHELL
exercises over DE LA FUENTE militate heavily against this contention. On the contrary,
such circumstances show the existence of agency between them
The existence of agency between SHELL and DE LA FUENTE is also evidenced by a
receipt issued by SHELL and signed by DE LA FUENTE, acknowledging the delivery of
equipments for the gas station in question and an official from of the inventory of said
equipment containing DE LA FUENTE’s signature above the words: "Agent's signature"
RE: Liability of Principal for Agent’s breach of undertaking
As the CA correctly ruled, the fall of SISON’s car from the hydraulic lift was the result of
some unforeseen shortcoming of the mechanism itself. As the servicing job on SISON’s
car was accepted by DE LA FUENTE in the normal and ordinary conduct of his business
as operator of SHELL’s service station, and that the defective hydraulic lift caused the fall
of the car, he is liable therefor. SHELL, his principal, is also liable as DE LA FUENTE acted
withn the representative authority granted him as SHELL’s agent. As the act of the
agent acting within the scope of his authority is the act of the principal, the
breach of the undertaking by the agent is one for which the principal is
answerable

Moreover, SHELL undertook to "answer and see to it that the equipments are in good
running order and usable condition." Obviously, SHELL failed to make a thorough check
up of the hydraulic lifter. Hence, it was also negligent in that aspect to which it must
answer, as the faulty lifter was the cause of the fall of the SISON’s car.
G.
i.
a. express – Art. 1869

Kinds
Manner

of

of

Agency
Constitution

Art. 1869. Agency may be express, or implied from the acts of the principal,
from his silence or lack of action, or his failure to repudiate the agency,
knowing that another person is acting on his behalf without authority.
Agency may be oral, unless the law requires a specific form. (1710a)
Kinds of agency.
Agency may be classified as follows:
(1) As to manner of its creation:
(a) express. — one where the agent has been actually authorized by the principal, either
orally or in writing (Art.1869.); or
(b) implied. — one which is implied from the acts of the principal, from his silence or lack
of action, or his failure to repudiate the agency knowing that another person is acting on
his behalf without authority (Ibid.), or from the acts of the agent which carry out the
agency, or from his silence or inaction according to the circumstances. (Art. 1870.) An
implied agency is an actual agency as much as an express agency.
The enumeration of cases of implied agency in Articles
1869 and 1870 is not exclusive. Ratification may produce the effect of an express or
implied agency. It results in agency by ratification. (see Arts. 1901, 1910, par. 2.) The
principal cannot deny the existence of the agency after third parties, relying on his
conduct, have had dealings with the supposed agent. This method of creating an agency
is known as agency by estoppel or implication. (see Art. 1911.)
25

An agency may exist by operation of law. (see Arts. 1884, par. 2; 1885, 1929, 1931, and
1932.)
(2) As to its character:
(a) gratuitous. — one where the agent receives no compensation for his services (Art.
1875.); or
(b) compensated or onerous. — one where the agent receives compensation for his
services. (Ibid.)
(3) As to extent of business covered:
(a) general. — one which comprises all the business of the principal (Art. 1876.); or
(b) special. — one which comprises one or more specific transactions. (Ibid.)
(4) As to authority conferred:
(a) couched in general terms. — one which is created in general terms and is deemed to
comprise only acts of administration (Art. 1877.); or
(b) couched in specific terms. — one authorizing only the performance of a specific act or
acts. (see Art. 1878.)
(5) As to its nature and effects:
(a) ostensible or representative. — one where the agent acts in the name and
representation of the principal (Art. 1868.); or
(b) simple or commission. — one where the agent acts in his own name but for the
account of the principal.
b. implied – Art. 1870; 1871; 1872; 1910, par. 2, 1911;

Art. 1870. Acceptance by the agent may also be express, or implied from his acts which
carry out the agency, or from his silence or inaction according to the circumstances. (n)
Form of agency.
The usual method an agency is created is by contract which may be oral, written, or
implied. There are some provisions of law which require certain formalities for particular
contracts. The first is when the form is required for the validity of the contract; the
second, when it is required to make the contract effective against third persons such as
those mentioned in Articles 1357 and 1358 of the Civil Code; and the third, when it is
required for the purpose of proving the existence of a contract such as those provided in
the Statute of Frauds in Article 1403. (Lim vs. Court of Appeals, 254 SCRA 170 [1996].)
(1) In general, there are no formal requirements governing the appointment of an agent.
The agent’s authority may be oral or written. It may be in public or private writing. An
instance when the law requires a specific form for the agency is Article
1874.
(2) Agency may even be implied from words and conduct of the parties and the
circumstances of the particular case. (Arts.1869-1872.) But agency cannot be inferred
from mere relationship or family ties. (Sidle vs. Kaufman, 345 Pa. 549.) Thus, it has been
held that a father who was unable to drive an automobile but who purchased one for
pleasure and convenience of family was not liable for injuries inflicted by the automobile
while driven by an adult son with the father’s permission on trip to make arrangements
for son’s approaching marriage, as no “agency” of son for father was created. (Hildock
vs. Grosso, 566 Pa. 222.)
Appointment of agent.
It is not essential that an agent should be appointed directly by the principal, but the
appointment may be made through another as by referring an applicant to another and
representing that he has authority to act, or the relation may arise out of an agreement
to employ the agent of another, such person then becoming the agent of the first party.
An agent appointed by the directors of a corporation to act for the corporation is an
agent of the corporation and not of the directors. (2 C.J.S. 1044-1045.)
Presumption of agency.
(1) General rule. — Agency is generally not presumed. The relation between principal
and agent must exist as a fact. Thus, it is held that where the relation of agency is
dependent upon the acts of the parties, the law makes no presumption of agency, and it
is always a fact to be proved, with the burden of proof resting upon the person alleging
the agency to show, not only the fact of its existence, but also its nature and extent.
(Antonio vs. Enriquez, [C.A.] 51 O.G. 3536; Lopez vs. Tan Tioco, 8 Phil. 693 [1907]; Harry
E. Keller Elec. Co. vs. Rodriguez, 44 Phil. 19 [1922].) It is a rule that whatever statements
or communications made by the parties (supposed principal and agent) between them, if
anything thereto appears contrary to their intention, the latter will always prevail. (3
C.J.S. 252.)
(2) Exceptions. — A presumption of agency may arise, however, in those few cases
where an agency may arise by operation of law (3 Am. Jur. 706.) or to prevent unjust
enrichment. Thus, it has been held that a shipper may be held liable for freightage on
bills of ladings signed by another person where the shipper appears as shipper or
consignee, on bills of lading where other persons appear as shippers, and on unsigned
bills of lading, where the evidence shows that the goods shipped actually belong to such
shipper. (Comp
27

Art. 1871. Between persons who are present, the acceptance of the agency
may also be implied if the principal delivers his power of attorney to the agent
and the latter receives it without any objection. (n)
Acceptance between persons present.
As regards implied acceptance by the agent, the law distinguishes between cases (1)
where persons are present (Art. 1871.) and (2) where persons are absent. (Art. 1872.)
The agency is impliedly accepted if the agent receives a power of attorney from the
principal himself personally without any objection, both being present.
The presumption of acceptance may be rebutted by contrary proof.
Definition and purpose of a power of attorney.
(1) A power of attorney is an instrument in writing by which one person, as principal,
appoints another as his agent and confers upon him the authority to perform certain
specified acts or kinds of acts on behalf of the principal. The written authorization itself is
the power of attorney, and this is clearly indicated by the fact that it has also been called
a “letter of attorney.”
(2) Its primary purpose is not to define the authority of the agent as between himself and
his principal but to evidence the authority of the agent to third parties within whom the
agent deals; and the person holding a power of attorney is shown and designated as an
“attorney-in-fact,” thus distinguishing such person from an attorney-at-law (3 Am. Jur. 2d
433.), a lawyer.
Except as may be required by statute, a power of attorney is valid although no notary
public intervened in its execution. (see Reyes vs. Santiago, C.A.-G.R. Nos. 47996-7-R,
Nov. 27, 1975; see Angeles vs. Phil. National Railways, 500 SCRA 744 [2006].)
28

Construction of powers of attorney.
(1) Rule of strict construction. — It is the general rule that a power of attorney must be
strictly construed and strictly pursued. Under this rule, the instrument will be held to
grant only those powers which are specified and defined, and the agent may neither go
beyond nor deviate from the power of attorney. In other words, the act done must be
legally identical with that authorized to be done. Moreover, where the mode of exercising
a power is prescribed in the instrument in which it is created, there must be a strict
compliance therewith in every substantial particular. This is but in accord with the
disinclination of courts to enlarge the authority granted.
(2) Qualification of the rule. — The rule is not absolute and should not be applied to the
extent of destroying the very purpose of the power. If the language will permit, a
construction should be adopted which will carry out, instead of defeat, the purpose of the
appointment. Even if there are repugnant clauses in a power of attorney, they should be
reconciled, if possible, so as to give effect to the instrument in keeping with its general
intent or predominant purpose. Furthermore, the instrument should always be deemed to
give such powers as are essential or usual and reasonably necessary and proper in
effectuating the express powers. (3 Am. Jur. 2d., 437-438; Angeles vs. Philippine National
Railways, 520 SCRA 444 [2006]; Mercado vs. Allied Banking Corporation, 528 SCRA 444
[2007].)
29

Art. 1872. Between persons who are absent, the acceptance of the agency
cannot be implied from the silence of the agent, except:
(1) When the principal transmits his power of attorney to the agent, who
receives it without any objection;

(2) When the principal entrusts to him by letter or telegram a power of
attorney with respect to the business in which he is habitually engaged as an
agent, and he did not reply to the letter or telegram. (n)
Acceptance between persons absent.
If both the principal and the agent are absent, acceptance of the agency by the agent is
not implied from his silence or inaction.
Since the agent is not bound to accept the agency, he can simply ignore the offer.
However, in the two cases mentioned in Article 1872, agency is implied. Thus, there is
implied acceptance if the agent writes a letter acknowledging receipt of the power of
attorney but offers no objection to the creation of the agency. (No. 1.) But his mere
failure to give a reply does not mean that the agency has been accepted unless the
“power of attorney is with respect to the business in which he is habitually engaged as
an agent” (No. 2.), or the acceptance could be inferred from his acts which carry out the
agency (Art. 1870.) as when he begins to act under the authority conferred upon him. It
should be noted that under Article 1872, the principal transmits the power of attorney to
the agent. In Article 1871, he personally delivers the power of attorney to the agent.
31

Art. 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. (1727)
Representation, essence of agency.
(1) Agent acts in a representative capacity. — Representation being the essence of
agency, it is evident that the obligations contracted by the agent are for and in behalf of
the principal to bind him as if he personally contracted. (11 Manresa 647.) It is not
enough, however, that the agent should act within the scope of his authority under
Article 1910. (par. 1.) The agent must also act in a representative capacity (Art. 1868.),
in the principal’s name; otherwise, the principal assumes no liability. (Art. 1883.)
(2) Agent acts within limits of his authority. — Under the second paragraph of Article
1910, the agent who exceeds his authority is not deemed a representative of the
principal. In effect, he acts without authority and becomes personally liable for any
damage caused. Hence, the principal is not bound unless he ratifies the act expressly or
impliedly. Without such ratification, the agent is the one personally liable. (Art. 1897.) Of
course, the principal must have capacity to ratify the unauthorized act. (Infra.)
2

Meaning of ratification.
As applied to the law of agency, ratification is the adoption or affirmance by a person of
a prior act which did not bind him, but which was done or professed to be done on his
account thus giving effect to the acts as if originally authorized. The doctrine applies to
the ratification of the act of an agent in excess of his authority or the act of one who
purports to be an agent but is really not. (3 Am. Jur. 2d 548.) It may be implied from the
principal’s conduct, e.g., acceptance of benefits by the principal under a contract
entered in his name.
3

Acts that may be ratified.
(1) Valid/void acts. — Usually, those acts that may be authorized (i.e., they are valid)
may be ratified. Acts which are absolutely void cannot be authorized nor ratified.
(2) Voidable acts. — Acts which are merely voidable may be

ratified. The reason is that a voidable act is not inoperative but imperfectly inoperative.
Ratification, indeed, is a method by which a voidable act may be ratified. (Teller, op. cit.,
p. 83.)
(3) Unrevoked acts. — The act or transaction must remain capable of ratification. The
general rule is that a principal must ratify his agent’s unauthorized contract before it is
revoked by the other contracting party. In other words, the third party’s contract with the
unauthorized agent may be said to constitute an offer to the principal which can be
revoked by the offeror before acceptance by the offeree. This aspect of the doctrine of
ratification would appear to contradict a fundamental concept of the doctrine, that of
relation back to the time when the contract was originally entered into. (Teller, op. cit., p.
93.)
The third party’s offer to a principal arising out of a contract with his unauthorized agent,
may be revoked in one of two ways: first, as indicated above, by express revocation, and
second, by a change in the nature of the contract as originally entered into.
(4) Criminal acts. — The general rule is subject to qualification in one important
particular. A substantial number of cases hold that one whose name has been forged can
ratify the act. A slight majority of the cases, however, hold that since forgery involves a
crime and a public wrong and is also opposed to public policy, it cannot be ratified. This
is another instance where ratification should not be confused with estoppel. All would
probably agree that a person who expressly or impliedly represents that his forged
signature is genuine, would be estopped from denying its genuineness against one who
has changed his position from the worse. (Wyatt & Wyatt, op. cit., p. 240.)
(5) Tortious acts. — An agency to commit a tort would generally be inoperative and,
therefore, the ratification without more of a tort is inconceivable, and is, in fact, a rare
phenomenon.
The usual case, however, presents the ratification of a transaction in general, which
includes, by circumstance, a tort. (Teller, op. cit., p. 83.)
5

6

7

Acts must be done in behalf of principal.
An act, to be capable of ratification, must be done by one party as agent for someone
else. Stated in another way, a principal cannot ratify the unauthorized act of another
person unless that person purported to act as agent for, and in the name of, the
principal, and not in his own behalf.
The rule operates to prevent one person from acquiring the right of another. One person
may enter into a fruitful contract with another person; a stranger cannot acquire rights in
the contract by attempting to ratify it. (Wyatt & Wyatt, op. cit., p. 240.)
Art. 1911. Even when the agent has exceeded his authority, the principal is
solidarily liable with the agent if the former allowed the latter to act as though
he had full powers. (n)
Meaning of estoppel.
Estoppel is a bar which precludes a person from denying or asserting anything contrary
to that which has been established as the truth by his own deed or representation either
express or implied. (19 Am. Jur. 601.)
Through estoppel, an admission or representation is thus rendered conclusive upon the
person making it and cannot be denied or disproved as against the person relying
thereon. (Art. 1431.)
Ratification and estoppel distinguished.
(1) Ratification differs from estoppel mainly in that the former rests on intention, express
or implied, regardless of prejudice to another, whereas estoppel rests on prejudice rather

than intention. (3 Am. Jur. 2d 549.) In other words, in the former, the party is bound
because he intended to be, while in the latter, he is bound notwithstanding the absence
of such intention because the other party will be prejudiced and defrauded by his
conduct, unless the law treats him as legally bound. (Forsythe vs. Day, 46 Me. 175, cited
in Teller, pp. 81-82.)
(2) While ratification is retroactive and makes the agent’s unauthorized act good from
the beginning, estoppel operates upon something which has been done but after the
misleading act and in reliance on it and may only extend to so much of such act as can
be shown to be affected by the estopping conduct. (Woodworth vs. School Dist. No. 2,
Stevens Country, 159 P. 757, 92 Washington 456; 2 C.J.S. 1070.) Stated otherwise,
ratification affects the entire transaction and from the beginning, while estoppel affects
only the relevant parts of the transaction and from that time only when estoppel may be
said to be spelled out. (Federal Garage, Inc. vs. Prenner, 106 Vt. 222, cited in Teller, p.
82.)
(3) Ratification by a principal of an unauthorized act of his agent has occasionally been
grounded upon the doctrine of an equitable estoppel. A clear distinction, however, exists
between an estoppel in pais (or by conduct) and ratification. The substance of
ratification is confirmation of the unauthorized act or contract after it has been done or
made, whereas, the substance of estoppel is the principal’s inducement to another to act
to his prejudice. Acts and conduct amounting to an estoppel in pais may in some
instances amount to a ratification; but on the other hand, ratification may be complete
without any elements of estoppel. (2 C.J. 469.)
So far as the rights of third persons are concerned, however, the distinctions are of little
importance because the principal is bound by the acts of the agent whether the conduct
of the principal constitutes ratification or whether it constitutes estoppel.
9

When principal solidarily liable with the agent.
Under Article 1911, the agent must have acted in the name of a disclosed principal and
the third person was not aware of the limits of the power granted by the principal. (See
Art. 1898.)
Article 1911 is based on the principle of estoppel and it is necessary for the protection of
innocent third persons. It is an instance when solidarity is imposed by law. (Arts. 1207,
1208.)
Both the principal and the agent may be considered as joint tortfeasors whose liability is
solidary. (Verzosa vs. Lim, 45 Phil. 416 [1923]; see Cuison vs. Court of Appeals, 227 SCRA
391 [1993]; Lustan vs. Court of Appeals, 266 SCRA 663 [1997].)
The third person with whom the agent dealt may sue either the agent or the principal
alone, or both. The agent should be exempt from liability if he acted in good faith.
- Equitable PCIBank vs. Ku, 355 SCRA 309 (2001)

[G.R. No. 142950. March 26, 2001]
EQUITABLE PCI BANK, formerly EQUITABLE BANKING CORPORATION, petitioner,
vs. ROSITA KU, respondent.
On February 4, 1982, respondent Rosita Ku, as treasurer of Noddy Dairy Products, Inc., and Ku Giok
Heng, as Vice-President/General Manager of the same corporation, mortgaged the subject property to the
Equitable Banking Corporation, now known as Equitable PCI Bank to secure Noddy Inc.s loan to
Equitable. The property, a residential house and lot located in La Vista, Quezon City, was registered in
respondents name.

Noddy, Inc. subsequently failed to pay the loan secured by the mortgage, prompting petitioner to foreclose
the property extrajudicially. As the winning bidder in the foreclosure sale, petitioner was issued a certificate of
sale. Respondent failed to redeem the property. Thus, on December 10, 1984, the Register of Deeds canceled
the Transfer Certificate of Title in the name of respondent and a new one was issued in petitioners name.
On May 10, 1989, petitioner instituted an action for ejectment before the Quezon City Metropolitan Trial
Court (MeTC) against respondents father Ku Giok Heng. Petitioner alleged that it allowed Ku Giok Heng to
remain in the property on the condition that the latter pay rent. Ku Giok Hengs failure to pay rent prompted the
MeTC to seek his ejectment. Ku Giok Heng denied that there was any lease agreement over the property.
On December 8, 1994, the MeTC rendered a decision in favor of petitioner and ordered Ku Giok Heng to,
among other things, vacate the premises
Ku Giok Heng did not appeal the decision of the MeTC. Instead, he and his daughter, respondent Rosita
Ku, filed on December 20, 1994, an action before the Regional Trial Court (RTC) of Quezon City to nullify the
decision of the MeTC. Finding no merit in the complaint, the RTC on September 13, 1999 dismissed the same
and ordered the execution of the MeTC decision.
Respondent filed in the Court of Appeals (CA) a special civil action for certiorari assailing the decision of
the RTC. She contended that she was not made a party to the ejectment suit and was, therefore, deprived of due
process. The CA agreed and, on March 31, 2000, rendered a decision enjoining the eviction of respondent from
the premises.
Issue: Can a person be evicted by virtue of a decision rendered in an ejectment case
where she was not joined as a party? This was the issue that confronted the Court of
Appeals, which resolved the issue in the negative. To hold the contrary, it said, would
violate due process.
Held:
The petition is meritorious.
Generally, no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are
not bound by judgment rendered by the court. [5] Nevertheless, a judgment in an ejectment suit is binding not
only upon the defendants in the suit but also against those not made parties thereto, if they are:
a) trespassers, squatters or agents of the defendant fraudulently occupying the property to frustrate the
judgment;
b) guests or other occupants of the premises with the permission of the defendant;
c) transferees pendente lite;
d) sub-lessees;
e) co-lessees; or
f) members of the family, relatives and other privies of the defendant.[6]
Thus, even if respondent were a resident of the property, a point disputed by the parties, she is nevertheless
bound by the judgment of the MeTC in the action for ejectment despite her being a non-party
thereto.Respondent is the daughter of Ku Giok Heng, the defendant in the action for ejectment.

Respondent nevertheless claims that the petition is defective. The bank alleged in its petition that it
received a copy of the CA decision on April 25, 2000. A Certification dated June 6, 2000 issued by the Manila
Central Post Office reveals, however, that the copy was duly delivered to and received by Joel Rosales
(Authorized Representative) on April 24, 2000.[7] Petitioners motion for extension to file this petition was filed
onMay 10, 2000, sixteen (16) days from the petitioners receipt of the CA decision (April 24, 2000) and one (1)
day beyond the reglementary period for filing the petition for review (May 9, 2000).
Petitioner argues that receipt on April 25, 2000 by Joel Rosales, who was not an agent of its counsels law
office, did not constitute notice to its counsel, as required by Sections 2 [10] and 10,[11] Rule 13 of the Rules of
Court. To support this contention, petitioner cites Philippine Long Distance Telephone Co. vs. NLRC.[12] In said
case, the bailiff served the decision of the National Labor Relations Commission at the ground floor of the
building of the petitioner therein, the Philippine Long Distance Telephone Co., rather than on the office of its
counsel, whose address, as indicated in the notice of the decision, was on the ninth floor of the building. We
held that:

x x x practical considerations and the realities of the situation dictate that the service made by the
bailiff on March 23, 1981 at the ground floor of the petitioners building and not at the address of
record of petitioners counsel on record at the 9 floor of the PLDT building cannot be considered a
valid service. It was only when the Legal Services Division actually received a copy of the decision
on March 26, 1981 that a proper and valid service may be deemed to have been made. x x x.
th

Applying the foregoing provisions and jurisprudence, petitioner submits that actual receipt by its counsel
was on April 27, 2000, not April 25, 2000. Following the argument to its logical conclusion, the motion for
extension to file the petition for review was even filed two (2) days before the lapse of the 15-day reglementary
period. That counsel treated April 25, 2000 and not April 27, 2000 as the date of receipt was purportedly
intended to obviate respondents possible argument that the 15-day period had to be counted from April 25,
2000.
The Court is not wholly convinced by petitioners argument. The Affidavit of Joel Rosales states that he is
not the constituted agent of Curato Divina Mabilog Nedo Magturo Pagaduan Law Office. An agency may be
express but it may also be implied from the acts of the principal, from his silence, or lack of action, or his
failure to repudiate the agency, knowing that another person is acting on his behalf without authority.
[13]
Likewise, acceptance by the agent may also be express, although it may also be implied from his acts which
carry out the agency, or from his silence or inaction according to the circumstances.[14] In this case, Joel Rosales
averred that [o]n occasions when I receive mail matters for said law office, it is only to help them receive their
letters promptly, implying that counsel had allowed the practice of Rosales receiving mail in behalf of the
former. There is no showing that counsel had objected to this practice or took steps to put a stop to it. The facts
are, therefore, inadequate for the Court to make a ruling in petitioners favor.
Assuming the motion for extension was indeed one day late, petitioner urges the Court, in any event, to
suspend its rules and admit the petition in the interest of justice. Petitioner invokes Philippine National Bank vs.
Court of Appeals,[15] where the petition was filed three (3) days late. The Court held:

It has been said time and again that the perfection of an appeal within the period fixed by the rules
is mandatory and jurisdictional. But, it is always in the power of this Court to suspend its own
rules, or to except a particular case from its operation, whenever the purposes of justice require
it. Strong compelling reasons such as serving the ends of justice and preventing a grave miscarriage
thereof warrant the suspension of the rules.
The Court finds these arguments to be persuasive, especially in light of the merits of the petition.

WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The decision of the Court of
Appeals is REVERSED. SO ORDERED.
Calibo vs. CA, 350 SCRA 427 (2001)
FACTS:
Mike Abuella, private respondent’s son leased the house of Calibo for residential purposes. Pablo
Abuella left the tractor with his son for safekeeping. Rent and other expenses were initially paid but
subsequently defaulted in payment thereof. When confronted by Calibo, Mike Abuella manifested that he’ll
only stay in the house until end of the year 1986 and offered the tractor as security. In order for him to pay
his obligations sooner, he asked Calibo to help him look for buyers. In January 1987, a new tenant occupied
the house and Calibo moved the tractor to his father’s garage also in the same city. Even after demands,
Mike failed to pay his arrears; he only assured Calibo that the tractor would stand as guarantee to his
payment. When Pablo Abuella tried to get the tractor from Calibo, he tried to negotiate with him and
offered to write a check in payment of the rentals and postdated checks to cover the other expenses but
still had to verify with Mike. Calibo would only accept the latter if Pablo would execute a promissory note in
his favor to cover the remaining expenses. The two did not agree. Pablo Abuella instituted an action for
replevin, claiming ownership of the tractor and seeking to recover possession thereof from petitioner Both
the trial court and the CA ruled in favor of Abuella. Mike Abuella could not have validly pledged the subject
tractor to petitioner since he was not the owner thereof, nor was he authorized by its owner to pledge the
tractor.
ISSUE: Whether or not there was an implied principal-agent relationship between Pablo and Mike
HELD: No.
Pablo Abuella categorically stated that the tractor was only left to Mike for safekeeping; not to be
pledged or alienated. Mike acted without authority or consent from Pablo. Article 1869 states that there
would only be implied agency is the person is acting within the authority granted to him by the principal.
Article 1911 mandates that the principal is solidarily liable with the agent if the former allowed the latter to
act as though he had full powers. Again, in view of Pablo’s lack of knowledge of Mike’s pledging the tractor
without any authority from him, it shows that Pablo could not have allowed the Mike to pledge the tractor
as if he had full powers to do so. Petition denied. CA decision affirmed.
- Dela Pena vs. Hidalgo, 16 Phil. 450;
The CASE was instituted by the heirs of Jose Gomiz y Dela Peña to recover sums of money from Federico
Hidalgo which he allegedly owes the estate of Jose representing unremitted accounts during the
administration of Federico of the properties of Jose Gomiz y Dela Peña.
FACTS:
In 1887, Federico Hidalgo took charge of administration of Jose Gomiz y Dela Peña’s properties by
virtue of a power of attorney executed by the latter in favor of 4 agents (Federico included) before he
embarked for Spain. After several years of agency, Federico Hidalgo wrote to Jose Gomiz requesting him to
designate a person to substitute him in the position because one of those appointed in the power of
attorney had died and the others did not wish to take charge of the administration of Gomiz’ properties.
Gomiz did not answer Federico’s letters nor did he approve or object to Federico’s accounts nor did he
appoint or designate another person to substitute Federico. In 1894, Federico was obliged to embark for
Spain for health reasons. On preparing for his departure, he rendered the accounts of the administration.
Federico also informed Gomiz of his intended departure from the Philippines and of his turning over the
administration to his cousin Antonio Hidalgo, upon whom he conferred a GPA. But because he deemed
such GPA to be insufficient, he also asked Gomiz to send a new SPA in favor or Antonio. When Antonio died,
Francisco Hidalgo took Antonio’s place. Gomiz died without having said anything regarding the substitution
of agents
ISSUE: Whether or not there was valid renunciation of the agency.
HELD: YES.
Under the circumstances of the case, it is reasonable to conclude that the agency was duly
terminated. Although Federico did not use the words “renouncing the agency”, such words were
undoubtedly understood and accepted by the principal because if the lapse of nearly 9 years up to time of
principal’s death, he never interrogated the renouncing agent and disapproved what he had done nor the
power conferred to the substituting agent. The agent who was obliged to leave his charge for a legitimate
cause and who duly informed his principal, is released and freed from the results and the consequences of
the substitute agent it was with the consent, even tacit of the principal. The agent is not required to
sacrifice his health, life, and his own interests, if it is shown that it was impossible for him to continue the
discharge of his duties.

- Conde vs. Court of Appeals, 119 SCRA 245 (1982)
FACTS: 7 April 1938. Margarita Conde, Bernardo Conde and the petitioner Dominga Conde, as heirs of
Santiago Conde, sold with right of repurchase, within ten (10) years from said date, a parcel of agricultural
land to Casimira Pasagui, married to Pio for P165.00. "Pacto de Retro Sale" provided that after 10 yrs. If
land is not repurchased a new agreement shall be made between the parties and in no case title and
ownership shall be vested in the hand of the party of the SECOND PART (the Alteras). Three years after
Cadastral Court adjudicated land to the Alteras "subject to the right of redemption by Dominga Conde,
within ten (10) years counting from April 7, 1983, after returning the amount of P165.00 and the amounts
paid by the spouses in concept of land tax …” Neither of the vendees-a-retro, Pio Altera nor Casimira
Pasagui, was a signatory to the deed. Conde maintains that because Pio Altera was very ill at the time,
Paciente Cordero executed the deed of resale for and on behalf of his father-in-law. Conde further states
that she redeemed the property with her own money as her co-heirs were bereft of funds for the purpose.
30 June 1965 Pio Altera sold lot to the Sps Ramon Conde and Catalina T. Conde (private respondents).
Dominga contends that land was repurchased in 1945 and filed a case against Paciente Cordero and his
wife Nicetas Altera, Ramon Conde and his wife Catalina T. Conde, and Casimira Pasagui Pio Altera having
died in 1966), for quieting of title to real property and declaration of ownership. Dominga’s Evidence:
Paciente Cordero signed the Memorandum of Repurchase in representation of his father-in-law Pio Altera,
who was seriously sick on that occasion, and of his mother-in-law who was in Manila at the time, and that
Cordero received the repurchase price of P65.00. TC: Dominga was ordered to vacate property CA: Upheld
TC-petitioner Neither of the vendees-a-retro signed the "Memorandum of Repurchase", and that there was
no formal authorization from the vendees for Paciente Cordero to act for and on their behalf.
ISSUE: Whether or not there was an implied agency
HELD: Yes.
From the execution of the repurchase document in 1945, possession, which heretofore had been with the
Alteras, has been in the hands of Dominga. Land taxes have also been paid for by Dominga, yearly from
1947 to 1969 inclusive. If, as opined by both the TC and the Appellate Court, petitioner had done nothing
to formalize her repurchase, by the same token, neither have the vendees-a-retro done anything to clear
their title of the encumbrance therein regarding petitioner's right to repurchase. No new agreement was
entered into by the parties as stipulated in the deed of pacto de retro, if the vendors a retro failed to
exercise their right of redemption after ten years. If, as alleged, petitioner exerted no effort to procure the
signature of Pio Altera after he had recovered from his illness, neither did the Alteras repudiate the deed
that their son-in-law had signed. Thus, an implied agency must be held to have been created from their
silence or lack of action, or their failure to repudiate the agency. Possession of the lot in dispute having
been adversely and uninterruptedly with petitioner from 1945 when the document of repurchase was
executed, to 1969, when she instituted this action, or for 24 years, the Alteras must be deemed to have
incurred in laches. That petitioner merely took advantage of the abandonment of the land by the Alteras
due to the separation of said spouses, and that petitioner's possession was in the concept of a tenant,
remain bare assertions without proof. Catalina is not buyer in good faith since the tenyear period had
lapsed in 1965 and there was no annotation of any repurchase by Domingo, neither had the title been
cleared of that encumbrance. The purchasers were put on notice that some other person could have a
right to or interest in the property. It behooved Ramon Conde and Catalina Conde to have looked into the
right of redemption inscribed on the title, and particularly the matter of possession, which, as also
admitted by them at the pre-trial, had been with petitioner since 1945. Altera and Catalina’s must be held
bound by the clear terms of the Memorandum of Repurchase that he had signed wherein he acknowledged
the receipt of P165.00 and assumed the obligation to maintain the repurchasers in peaceful possession
should they be "disturbed by other persons". The imperatives of substantial justice, and the equitable
principle of laches brought about by private respondents' inaction and neglect for 24 years, loom in
petitioner's favor.
ii.
According
to
Form
a. oral – Art. 1873; Agency by estoppel (1911) vs. implied agency (1881-1882)
ART. 1873. If a person specially informs another or states by public advertisement that he has given a
power of attorney to a third person, the latter thereby becomes a duly authorized agent, in the former case
with respect to the person who received the special information, and in the latter case with regard to any
person.
The power shall continue to be in full force until the notice is rescinded in the same manner in which it was
given. (n)
Communication of existence of agency. There are two ways of giving notice of agency with different
effects: (1) If by special information (e.g., by letter), the person appointed as agent is considered such with
respect to the person to whom it was given. (2) If by public advertisement, the agent is considered as such

with regard to any person. Public advertisement may be made in any form — through the newspaper,
radio, etc. and by posters or billboards. In either case, the agency is deemed to exist whether there is
actually an agency or not.
Manner of revocation of agency. The power of attorney must be revoked in the same manner in which
it was given. (par. 2.) If the agency has been entrusted for the purpose of contracting with specifi ed
persons, its revocation shall not prejudice the latter if they were not given notice thereof. (Art. 1921.) If the
agent had general powers, revocation of the agency does not prejudice third persons who acted in good
faith and without knowledge of the revocation. Notice of the revocation in a newspaper of general
circulation is a suffi cient warning to third persons. (Art. 1922.) Nevertheless, revocation made in any
manner is effective where the person dealing with the agent has actual knowledge thereof; otherwise, bad
faith and fraud would be committed.
Agency by estoppel and implied agency distinguished.
Agency by estoppel (see Art. 1911.) should be distinguished from implied agency. (see Arts. 1881-1882.)
(1) Existence of actual agency. — In the latter, there is an actual agency, as much as if it were created
by express words. The principal alone is liable. In an agency by estoppel, there is no agency at all, but the
one assuming to act as agent has apparent or ostensible, although not real, authority to represent another.
It is not a real agency as is one under express or implied authority.
(a) If the estoppel is caused by the principal, he is liable to any third person who relied on the
misrepresentation. Our Supreme Court has said: “One who clothes another with apparent authority as his
agent, and holds him out to the public as such, cannot be permitted to deny the authority of such person
to act as his agent to the prejudice of innocent third parties dealing with such person in good faith and in
the honest belief that he is what he appears to be.” (Macke vs. Camps, 7 Phil. 553 [1907]; Naguiat vs.
Court of Appeals, 412 SCRA 591 [2003].)
(b) If the estoppel is caused by the agent, then only the agent is liable.
(2) Reliance by third persons. — Agency by estoppel can be invoked only by a third person who in good
faith relied on the conduct of the principal in holding agent out as being authorized, while such reliance is
not necessary in an implied agency since in such case, the agent is a real agent. As to third persons, the
principal is equally liable in the case of agency by estoppel and implied agency.
(3) Nature of authority. — As between the principal and the agent, the distinction between the two
kinds of agency is vital.
(a) An agent by implied appointment is a real agent with all the rights and liabilities; he has actual
authority to act on behalf of the principal. An apparent agent, an agent by estoppel, is no agent at all, and
as against the principal, has none of the rights of an agent (2 C.J.S. 1050-1051.), except where the
principal’s conduct or representations are such that the agent reasonably believed that the principal
intended him to act as agent in the matter.
(b) Implied agency, being an actual agency, is a fact to be proved by deductions or inferences from
other facts, while in a strict sense, agency by estoppel should be restricted to cases in which the authority
is not real but apparent. (2-A Words and Phrases 461.)
Agency by estoppel is well recognized in the law. If the estoppel is on the ground of negligence or
fraud on the part of the principal, the agency is allowed upon the theory that, when one of two innocent
persons must suffer loss, the loss should fall upon him whose conduct brought about the situation. (Ibid.,
459.)
- Gozun vs. Mercado, 511 SCRA 305 (2006)
FACTS: In the local elections of 1995, respondent vied for the gubernatorial post in Pampanga. Upon
respondent’s request, petitioner, owner of JMG Publishing House, a printing shop located in San Fernando,
Pampanga, submitted to respondent draft samples and price quotation of campaign materials. By
petitioner’s claim, respondent’s wife had told him that respondent already approved his price quotation
and that he could start printing the campaign materials, hence, he did print campaign materials like
posters bearing respondent’s photograph, leaflets containing the slate of party candidates, sample ballots,
poll watcher identification cards, and stickers. Given the urgency and limited time to do the job order,
petitioner availed of the services and facilities of Metro Angeles Printing and of St. Joseph Printing Press,
owned by his daughter
Jennifer Gozun and mother Epifania Macalino Gozun, respectively.
Meanwhile, on March 31, 1995, respondent’s sister-in-law, Lilian Soriano (Lilian) obtained from
petitioner "cash advance" of P253,000 allegedly for the allowances of poll watchers who were attending a
seminar and for other related expenses. Lilian acknowledged on petitioner’s 1995 diary receipt of the
amount.
.

ISSUE: Whether or not Lilian R. Soriano was authorized by the respondent to receive the cash advance
from the petitioner in the amount of P253,000.00.
HELD: 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. Contracts entered into in
the name of another person by one who has been given no authority or legal representation or who has
acted beyond his powers are classified as unauthorized contracts and are declared unenforceable, unless
they are ratified. Generally, the agency may be oral, unless the law requires a specific form.
However, a special power of attorney is necessary for an agent to, as in this case, borrow money,
unless it be urgent and indispensable for the preservation of the things which are under administration.
Since nothing in this case involves the preservation of things under administration, a determination of
whether Soriano had the special authority to borrow money on behalf of respondent is in order.
It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real property
executed by an agent, it must upon its face purport to be made, signed and sealed in the name of the
principal, otherwise, it will bind the agent only. It is not enough merely that the agent was in fact
authorized to make the mortgage, if he has not acted in the name of the principal. x x x
b. written – Art. 1874;
ART. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the
latter shall be in writing; otherwise, the sale shall be void. (n)
Sale of land through agent. As a general rule, the agent’s authority may be oral or written. (Art. 1869.)
An agency to sell on commission basis does not belong to any of the categories of contracts for which the
law (see Arts. 1357, 1358, 1403.) requires certain formalities; hence, it is valid and enforceable in
whatever form it may be entered into. (Lim vs. Court of Appeals, 254 SCRA 170 [1996].) Under this article,
the sale of a piece of land (not any other real estate) or any interest thereon, like usufruct, mortgage, etc.,
through an agent is void unless the authority of the agent to sell is in writing. (Cosmic Lumber Corp. vs.
Court of Appeals, 265 SCRA 168 [1996].) It should, however, be considered as merely voidable since the
sale can be ratifi ed by the principal (see Arts. 1901, 1910, par. 2.) such as by availing himself of the benefi
ts derived from the contract.
(1) Article 1874 speaks only of an agency for “sale of a piece of land or any interest therein.” It may be
argued, therefore, that an agency to purchase need not be in writing. Such an agency, however, is covered
by Article 1878(5) which provides that, “A special power of attorney is necessary to enter into any contract
by which the ownership of an immovable is transmitted or acquired.”
(2) Article 1874 refers to sales made by an agent for a principal and not to sales made by the owner
personally to another, whether that other be acting personally or through a representative. (Rodriguez vs.
Court of Appeals, 29 SCRA 419 [1969].)
(3) A real estate broker is not within Article 1874 where his authority (as is usual) is limited to fi nding
prospective purchasers and does not extend to making a contract to pass title. (Babb & Martin, op. cit., p.
135.)
(4) A letter containing the specifi c authority to sell is held suffi cient. (see Jimenez vs. Rabot, 38 Phil. 387
[1918].) But when there is any reasonable doubt that the language used conveys such power, no such
construction shall be given the document. (Liñan vs. Puno, 31 Phil. 259 [1915]; Cosmic Lumber Corp. vs.
Court of Appeals, supra.)
(5) The express mandate required by law to enable an appointee of an agency couched in general terms to
sell must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the act
mentioned. (Strong vs. Gutierrez Repide, 6 Phil. 680 [1906]; Cosmic Lumber Corp. vs. Court of Appeals,
supra.) The written authorization need not contain a particular description of the property which the agent
is permitted to sell.
(a) Thus, the power giving to the agent the power to sell “any or all tracts, lots, or parcels” of land
belonging to the principal is adequate. (Ibid.)
(b) Similarly, a power of attorney stating that “I hereby confer suffi cient power x x x upon A, in
order that in my name and representation he may administer the interest I possess within this Municipality
of Tarlac, purchase, sell, collect and pay, etc.” was held sufficient to cover the sale by the agent of land of
the principal in Tarlac. (Liñan vs. Puno, 31 Phil. 259 [1915].)
(c) The authority to sell any kind of realty that “might belong” to the principal was held to include
also such as the principal might afterwards have during the time it was in force. (Katigbak vs. Tai Hing Co.,
52 Phil. 622 [1928].)
(6) To authorize a conveyance of real estate, a power of attorney must be plain in its terms.
(a) Where such power is specifically conferred, it does not authorize a conveyance by the agent to
himself; unless such power is expressly granted, it will not be implied. (Mechem, Selected Cases on the
Law of Agency [3rd ed.], pp. 142-143; see Art. 1491[2].)

(b) Where the power of attorney says that the agent can enter into any contract concerning a land,
or can sell the land under any term or condition and covenant he may think fi t, the power granted is so
broad that it practically covers the celebration of any contract and the conclusion of any covenant or
stipulation, and it undoubtedly means that the agent can act in the same manner and with same breadth
and latitude as the principal could concerning the property. (P. Amigo and J. Amigo vs. S. Teves, 96 Phil. 252
[1954].)
(7) Where the co-owners of land affi xed their signatures on the contract to sell, they were no longer selling
their shares through an agent, but, rather, they were selling the same directly and in their own right,
therefore, a written authority is no longer necessary in order to sell their shares in the subject land.
(Oesmer vs. Paraiso Development Corporation, 514 SCRA 228 [2007].)
Under Article 1403 (No. 2, par. [e].) of the Civil Code, an oral agreement for the sale of real property or of
an interest therein is unenforceable even if there is no agent.