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Nogales vs.

Capitol Medical Center

G.R. No. 142625, December 19, 2006


Pregnant with her fourth child, Corazon Nogales, who was then 37 y/o was under the exclusive prenatal care of
Dr. Oscar Estrada beginning on her fourth month of pregnancy or as early as December 1975. While Corazon
was on her last trimester of pregnancy, Dr. Estrada noted an increase in her blood pressure and development
of leg edemas indicating preeclampsia which is a dangerous complication of pregnancy. Around midnight of May
26, 1976, Corazon started to experience mild labor pains prompting Corazon and Rogelio Nogales to see Dr.
Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate admission to Capitol Medical
Center (CMC). Upon her admission, an internal examination was conducted upon her by a resident-physician.
Based on the doctor’s sheet, around 3am, Dr. Estrada advised for 10mg valium to be administered immediately
by intramuscular injection, he later ordered the start of intravenous administration of syntociron admixed with
dextrose, 5% in lactated ringer’s solution, at the rate of 8-10 micro-drops per minute. When asked if he needed
the services of anesthesiologist, he refused. Corazon’s bag of water ruptured spontaneously and her cervix was
fully dilated and she experienced convulsions. Dr. Estrada ordered the injection of 10g of magnesium sulfate
but his assisting Doctor, Dr. Villaflor, only administered 2.5g. She also applied low forceps to extract Corazon’s
baby. In the process, a 10 x 2.5cm piece of cervical tissue was allegedly torn. The baby came out in an apric,
cyanatic weak and injured condition. Consequently the baby had to be intubated and resuscitated. Corazon had
professed vaginal bleeding where a blood typing was ordered and she was supposed to undergo hysterectomy,
however, upon the arrival of the doctor, she was already pronounced dead due to hemorrhage.


Whether or not in the conduct of child delivery, the doctors and the respondent hospital is liable for negligence.


Yes. In general, a hospital is not liable for the negligence of an independent contractor-physician. There is,
however an exception to this principle. The hospital may be liable if the physician is the ostensible agent of the
hospital. This exception is also known as the doctrine of apparent authority.

Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a
physician providing care at the hospital, regardless of whether the physician is an independent contractor,
unless the patient knows, or should have known, that the physician is an independent contractor.

For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that 1.) the hospital,
or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was
alleged to be negligent was an employee or agent of the hospital; 2.) Where the acts of the agent create the
appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquired in them;
and 3.) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care
and prudence.

Borrowed servant doctrine provides that once a surgeon enters the operating room and takes charge of the acts
or omissions of operating room personnel and any negligence associated with each acts or omissions are
imputable to the surgeon, while the assisting physicians and nurses may be employed by the hospital, or
engaged by the patient, they normally become the temporary servants or agents of the surgeon in charge while
the operation is in progress, and liability may be imposed upon the surgeon for their negligent acts under the
doctrine of respondeat superior.

Yun Kwan Byung vs. PAGCOR

PAGCOR is a government-owned and controlled corporation tasked to establish and operate gambling
clubs and casinos as a means to promote tourism and generate sources of revenue for the government. To
achieve these objectives, PAGCOR is vested with the power to enter into contracts of every kind and for any
lawful purpose that pertains to its business. Pursuant to this authority, PAGCOR launched its Foreign Highroller
Marketing Program (Program). The Program aims to invite patrons from foreign countries to play at the dollar
pit of designated PAGCOR-operated casinos under specified terms and conditions and in accordance with
industry practice.
The Korean-based ABS Corporation was one of the international groups that availed of the Program. In
a letter-agreement dated 25 April 1996 (Junket Agreement), ABS Corporation agreed to bring in foreign players
to play at the five designated gaming tables of the Casino Filipino Silahis at the Grand Boulevard Hotel in Manila
(Casino Filipino).
Petitioner brought an action against PAGCOR seeking the redemption of gambling chips valued at US$2.1
million. Petitioner claims that he won the gambling chips at the Casino Filipino, playing continuously day and
night. Petitioner states that he was able to redeem his gambling chips with the cashier during his first few
winning trips. But later on, the casino cashier refused to encash his gambling chips so he had no recourse but to
deposit his gambling chips at the Grand Boulevard Hotels deposit box, every time he departed from Manila.
PAGCOR claims that petitioner, who was brought into the Philippines by ABS Corporation, is a junket
player who played in the dollar pit exclusively leased by ABS Corporation for its junket players. PAGCOR alleges
that it provided ABS Corporation with distinct junket chips. ABS Corporation distributed these chips to its junket
players. At the end of each playing period, the junket players would surrender the chips to ABS Corporation.
Only ABS Corporation would make an accounting of these chips to PAGCORs casino treasury.
PAGCOR argues that petitioner is not a PAGCOR player because under PAGCORs gaming rules, gambling
chips cannot be brought outside the casino. The gambling chips must be converted to cash at the end of every
gaming period as they are inventoried every shift. Under PAGCORs rules, it is impossible for PAGCOR players to
accumulate two million dollars worth of gambling chips and to bring the chips out of the casino premises.
Petitioner alleges that there is an implied agency. Alternatively, petitioner claims that even assuming
that no actual agency existed between PAGCOR and ABS Corporation, there is still an agency by estoppel based
on the acts and conduct of PAGCOR showing apparent authority in favor of ABS Corporation. Petitioner states
that one factor which distinguishes agency from other legal precepts is control and the following undisputed
facts show a relationship of implied agency
Whether or not there exists an implied agency between ABS corporation and PAGCOR,
No. Petitioners argument is clearly misplaced. The basis for agency is representation,[58]that is, the agent
acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same
legal effect as if they were personally executed by the principal.[59]On the part of the principal, there must be
an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of
the agent, there must be an intention to accept the appointment and act on it. [60]Absent such mutual intent,
there is generally no agency.[61]

There is no implied agency in this case because PAGCOR did not hold out to the public as the principal of
ABS Corporation. PAGCORs actions did not mislead the public into believing that an agency can be implied from
the arrangement with the junket operators, nor did it hold out ABS Corporation with any apparent authority to
represent it in any capacity. The Junket Agreement was merely a contract of lease of facilities and services.
The players brought in by ABS Corporation were covered by a different set of rules in acquiring and
encashing chips. The players used a different kind of chip than what was used in the regular gaming areas of
PAGCOR, and that such junket players played specifically only in the third floor area and did not mingle with the
regular patrons of PAGCOR. Furthermore, PAGCOR, in posting notices stating that the players are playing under
special rules, exercised the necessary precaution to warn the gaming public that no agency relationship exists.

People’s Aircargo and Warehousing Co. vs. CA and Stefani Sao

People's Aircargo and Warehousing Co. Inc. (PAWCI) is a domestic corporation, which was organized in
the middle of 1986 to operate a customs bonded warehouse at the old Manila International
Airport in Pasay City. To obtain a license for the corporation from the Bureau ofCustoms, Antonio
Punsalan Jr., the corporation president, solicited a proposal from Stefani Saño forthe preparation of a feasibility
study. Saño submitted a letter-proposal dated 17 October 1986 ("FirstContract") to Punsalan, for the project
feasibility study (market, technical, and financial feasibility)and preparation of pertinent documentation
requirements for the application, worth P350,000.Initially, Cheng Yong, the majority stockholder of
PAWCI, objected to Saño's offer, as anothercompany priced a similar proposal at only P15,000. However,
Punsalan preferred Saño's servicesbecause of the latter's membership in the task force, which was supervising
the transition of theBureau of Customs from the Marcos government to the Aquino Administration.

On 17 October 1986,PAWCI, through Punsalan, sent Saño a letter confirming their agreement. Accordingly,
Saño prepared a feasibility study for PAWCI which eventually paid him the balance ofthe contract price, although
not according to the schedule agreed upon. On 4 December 1986, uponPunsalan's request, Saño sent PAWCI
another letter-proposal ("Second Contract") formalizing itsproposal for consultancy services in the amount of
P400,000. On 10 January 1987, Andy Villaceren,vice president of PAWCI, received the operations manual
prepared by Saño. PAWCI submitted saidoperations manual to the Bureau of Customs in connection with the
former's application to operate abonded warehouse; thereafter, in May 1987, the Bureau issued to it a license
to operate, enabling itto become one of the three public customs bonded warehouses at the international
airport. Sañoalso conducted, in the third week of January 1987 in the warehouse of PAWCI, a three-day
trainingseminar for the latter's employees.

On 25 March 1987, Saño joined the Bureau of Customs asspecial assistant to then Commissioner Alex
Padilla, a position he held until he became technicalassistant to then Commissioner Miriam Defensor-Santiago
on 7 March 1988. Meanwhile, Punsalansold his shares in PAWCI and resigned as its president in 1987. On 9
February 1988, Saño filed acollection suit against PAWCI. He alleged that he had prepared an operations manual
for PAWCI,conducted a seminar-workshop for its employees and delivered to it a computer program; but
that,despite demand, PAWCI refused to pay him for his services. PAWCI, in its answer, denied that Sañohad
prepared an operations manual and a computer program or conducted a seminar-workshop for its employees.
It further alleged that the letter-agreement was signed by Punsalan without authority,in collusion with Saño
in order to unlawfully get some money from PAWCI, and despite hisknowledge that a group of
employees of the company had been commissioned by the board ofdirectors to prepare an operations manual.
The Regional Trial Court (RTC) of Pasay City, Branch110, rendered a Decision dated 26 October 1990 declared
the Second Contract unenforceable or simulated. However, since Saño had actually prepared the operations
manual and conducted atraining seminar for PAWCI and its employees, the trial court awarded P60,000 to the
former, on theground that no one should be unjustly enriched at the expense of another (Article 2142, Civil
Code).The trial Court determined the amount "in light of the evidence presented by defendant on the
usualcharges made by a leading consultancy firm on similar services." Upon appeal, and on 28 February1994,
the appellate court modified the decision of the trial court, and declared the Second Contractvalid and binding
on PAWCI, which was held liable to Saño in the full amount of P400,000, representing payment
of Saño services in preparing the manual of operations and in the conduct ofa seminar for PAWCI. As no new
ground was raised by PAWCI, reconsideration of the decision wasdenied in the Resolution promulgated on 28
October 1994. PAWCI filed the Petition for Review.


Whether a single instance where the corporation had previously allowed its president to enterinto a
contract with another without a board resolution expressly authorizing him, has clothed itspresident with
apparent authority to execute the subject contract.

Apparent authority is derived not merely from practice. Its existence may be ascertainedthrough
(1) the general manner in which the corporation holds out an officer or agent as having thepower to act or, in
other words, the apparent authority to act in general, with which it clothes him; or(2) the acquiescence in his
acts of a particular nature, with actual or constructive knowledge thereof,whether within or beyond the scope
of his ordinary powers. It requires presentation of evidence ofsimilar act(s) executed either in its favor or in
favor of other parties. It is not the quantity of similaracts which establishes apparent authority, but the vesting
of a corporate officer with the power tobind the corporation. Herein, PAWCI, through its president Antonio
Punsalan Jr., entered into theFirst Contract without first securing board approval. Despite such lack of board
approval, PAWCI did not object to or repudiate said contract, thus "clothing" its president with the power to
bind the corporation. The grant of apparent authority to Punsalan is evident in the testimony of Yong —
senior vice president, treasurer and major stockholder of PAWCI. The First Contract was
consummated, implemented and paid without a hitch. Hence, Sano should not be faulted for
believing that Punsalan's conformity to the contract in dispute was also binding on petitioner. It is familiar
doctrine that if a corporation knowingly permits one of its officers, or any other agent, to actwithin the scope
of an apparent authority, it holds him out to the public as possessing the power todo those acts; and thus, the
corporation will, as against anyone who has in good faith dealt with itthrough such agent, be estopped from
denying the agent's authority. Furthermore, Saño prepared anoperations manual and conducted a seminar for
the employees of PAWCI in accordance with theircontract. PAWCI accepted the operations manual,
submitted it to the Bureau of Customs andallowed the seminar for its employees. As a result of its
aforementioned actions, PAWCI was givenby the Bureau of Customs a license to operate a bonded warehouse.
Granting arguendo then thatthe Second Contract was outside the usual powers of the president, PAWCI's
ratification of saidcontract and acceptance of benefits have made it binding, nonetheless. The
enforceability ofcontracts under Article 1403(2) is ratified "by the acceptance of benefits under them" under
Article 1405.
B. H. Macke and W.H. Chandler, partners doing business under thee firm name of Macke, Chandler And
Company, allege that during the months of February and March 1905, they sold to Jose Camps and delivered
at his place of business, known as the :Washington Café,” various bills of goods amounting to P351.50; that
Camps has only paid on account of said goods the sum of P174; that there is still due them on account of said
goods the sum of P177.50
Plaintiffs made demand for the payment from defendant and that the latter failed and refused to pay
the said balance or any part of it
Macke, one of the plaintiffs, testified that on the order of one Ricardo Flores, who represented himself
to be the agent of Jose Camps, he shipped the said goods to the defendant at the Washington Café; that Flores
(agent) later acknowledged the receipt of the said goods and made various payments thereon amounting in all
to P174; that believes that Flores is still the agent of Camps; and that when he went to the Washington Café for
the purpose of collecting his bill he found Flores, in the absence of Camps, apparently in charge of the business
and claiming to be the business manager of Camps, said business being that of a hotel with a bar and restaurant
A written contract was introduced as evidence, from which it appears that one Galmes, the former of
“Washington Café” sub rented the building wherein the business was conducted, to Camps for 1 year for the
purpose of carrying on that business, Camps obligating himself not to sublet or subrent the building or the
business without the consent of the said Galmes. *This contract was signed by Camps and the name of
Ricardo Flores as a witness and attached thereon is an inventory of the furniture and fittings which also is signed
by Camps with the word “sublessee” below the name, and at the foot of this inventory the word “received”
followed by the name “Ricardo Flores” with the words “managing agent” immediately following his name.
ISSUE: W/N Ricardo Flores was the agent of Camps
Ruling: Yes
Evidence is sufficient to sustain a finding that Flores is the agent of Camps in the management of the bar
of the Washington Café with authority to bind Camps, his principal, for the payment of the goods
The contract sufficiently establishes the fact that Camps was the owner of the business and of the bar,
and the title of “managing agent” attached to the signature of Flores which appears on that contract, together
with the fact that at the time the purchases were made, Flores was apparently in charge of the business
performing the duties usually entrusted to a managing agent leave little room for doubt that he was there as
the authorized agent of Camps.
Agency by Estoppel --- 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 persons dealing with such person in good faith and in the honest belief that he is
what he appears to be.
Estoppel---- “Whenever a party has, by his own declaration, act or omission, intentionally and
deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation
arising out of such declaration, act, or omission be permitted to falsify; and unless the contrary appears, the
authority of the agent must be presumed to include all the necessary and usual means of carrying his agency
into effect.



A compromise agreement entered into between the petitioner, represented by her son, George Hung
and the private respondent Conchita Liao Tan both parties assisted by their respective counsel, during the
October 19, 1977 hearing of Civil Case No. 11716 for unlawful detainer. The complaint for unlawful detainer was
filed in the court a quo on August 12, 1977 by the private respondents against the petitioner.

Spouses Conchita Liao Tan and Tan Cho Hua alleged in their complaint for unlawful detainer that the
plaintiff Conchita Liao Tan, as owner of a parcel of registered land with improvements located at Francisco
Street, Caloocan City, had leased a portion of it, more particularly known as 91 Francisco Street, Caloocan City
to defendant Lim Pin on a month to month basis but that the latter starting April, 1977 had not paid the agreed
rental stipulated for such month and the succeeding months thereafter based on various schedule of payments.
On the scheduled October 19, 1977 hearing, defendant Lim Pin was absent. Her son George Hung who
attended with his mother all the previous hearings was present together with the defendant's counsel. Plaintiff
Conchita Liao Tan together with her counsel was also present. Through the initiative of the court a quo, the
subject compromise agreement was formulated and executed and it finally became the basis of the October 19,
1977 judgment in Civil Case No. 11716.
Petitioner argues that the respondent Judge should not have allowed her son George Hung and her then
counsel, Atty. Pastor Mamaril in her absence to enter into the October 19, 1977 compromise agreement with
the private respondent Conchita Liao Tan assisted by her counsel. She further argues that "... considering that
such compromise agreement would impose onerous obligations upon Petitioner, such as a tremendous increase
of rentals in the premises being leased from Private Respondents from P1,500.00 a month to P5,000.00 a
month," and that said agreement contained admissions by petitioner, the respondent Judge should have
required a written authority and power of attorney from her son and counsel. Her objections to the validity of
the compromise agreement are premised on Article 1878 of the Civil Code and Rule 138, Section 23 of the Rules
of Court.
Defendant argued that 1) she never authorized her son nor her counsel on record (Atty. Pastor Mamaril)
to enter into such compromise agreement and 2) that had she been present when said agreement was prepared,
she would not have acceded thereto.
Whether or not the compromise agreement is valid even if the defendant was absent.

Article 1878 is found in Title X of the Civil Code on Agency. It states that a special power of attorney is
necessary to compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment,
to waive objections to the venue of an action or to abandon a prescription already acquired.

Section 23 of Rule 138 on Attorneys and Admission to the Bar governs the authority of attorneys to bind
their clients and provides that "Attorneys have authority to bind their clients in any case by any agreement in
relation thereto made in writing, and in taking appeal, and in an matters of ordinary Judicial Procedure, but they
cannot, without special authority, compromise their clients' litigation or receive anything in discharge of their
clients' claims but the full amount in cash."

The requirements of a special power of attorney in Article 1878 of the Civil Code and of a special
authority in Rule 138 of the Rules of Court refer to the nature of the authorization and not its form. The
requirements are met if there is a clear mandate from the principal specifically authorizing the performance of
the act.

There were other reasons which led the lower court to a finding that George Hung had the full authority
to enter into the compromise. The court itself observed during the earlier hearings and it is not disputed that ...
defendant Lim Pin could not decide on anything without first consulting her son." George Hung's later denial
that he never manifested his authority to represent his mother was rejected by the court. As a matter of fact,
this sudden turnabout of George Hung led the court to cite him for contempt. He was fined Two Hundred Pesos.
The citation for contempt was never appealed.

And finally, even assuming that George Hung and the petitioner's counsel acted without authority, the
compromise agreement itself was not null and void. It would be merely unenforceable, capable of being ratified.
(Dungo v. Lapena, 6 SCRA 1007). The compromise agreement was ratified by the petitioner when, on October
24, 1977, a few days after the promulgation of the questioned judgment and before the filing of a motion for
reconsideration, she filed an "Ex-Parte Motion To Withdraw Deposits" in Civil Case No. 11709, a consignation
case pending before the same court between the same parties.


COSMIC LUMBER CORPORATION through its General Manager executed on 28 January 1985 a Special
Power of Attorney appointing Paz G. Villamil-Estrada as attorney-in-fact -
x x x to initiate, institute and file any court action for the ejectment of third persons and/or squatters
of the entire lot 9127 and 443 and covered by TCT Nos. 37648 and 37649, for the said squatters to
remove their houses and vacate the premises in order that the corporation may take material
possession of the entire lot, and for this purpose, to appear at the pre-trial conference and enter into
any stipulation of facts and/or compromise agreement so far as it shall protect the rights and interest
of the corporation in the aforementioned lots.
On 11 March 1985 Paz G. Villamil-Estrada, by virtue of her power of attorney, instituted an action for the
ejectment of private respondent Isidro Perez and recover the possession of a portion of Lot No. 443 before the
Regional Trial Court of Dagupan, docketed as Civil Case No. D-7750.
On 25 November 1985 Villamil-Estrada entered into a Compromise Agreement with respondent Perez.
Although the decision became final and executory it was not executed within the 5-year period from date
of its finality allegedly due to the failure of petitioner to produce the owners duplicate copy of Title No. 37649
needed to segregate from Lot No. 443 the portion sold by the attorney-in-fact, Paz G. Villamil-Estrada, to private
respondent under the compromise agreement. Thus on 25 January 1993 respondent filed a complaint to revive
the judgment.
Petitioner asserts that it was only when the summons in Civil Case No. D-10459 for the revival of judgment
was served upon it that it came to know of the compromise agreement entered into between Paz G. Villamil-
Estrada and respondent Isidro Perez upon which the trial court based its decision of 26 July 1993 in Civil Case
No. D-7750. Forthwith, upon learning of the fraudulent transaction, petitioner sought annulment of the decision
of the trial court before respondent Court of Appeals on the ground that the compromise agreement was void
because: (a) the attorney-in-fact did not have the authority to dispose of, sell, encumber or divest the plaintiff
of its ownership over its real property or any portion thereof; (b) the authority of the attorney-in-fact was
confined to the institution and filing of an ejectment case against third persons/squatters on the property of
the plaintiff, and to cause their eviction therefrom; (c) while the special power of attorney made mention of an
authority to enter into a compromise agreement, such authority was in connection with, and limited to, the
eviction of third persons/squatters thereat, in order that the corporation may take material possession of the
entire lot



On June 20, 1996, petitioner and her spouse, Harold E. Spille, executed a document denominated as General
Power of Attorney[4] in favor of her brother, respondent Benjamin Bautista (Benjamin), authorizing the latter to
administer all her businesses and properties in the Philippines. The said document was notarized before the
Consulate General of the Philippines, New York, United States of America.
On August 13, 2004, Benjamin and NICORP Management and Development Corporation (NICORP) entered into
a contract to sell[5]which pertained to the parcel of land covered by TCT No. T-197 for the agreed amount of
P15,000,000.00. In the said contract, NICORP agreed to give a down payment equivalent to 20% of the purchase
price and pay the remaining balance in eight (8) months.
Pursuant thereto, an Escrow Agreement,[6] dated October 13, 2004, was executed designating IE Bank as the
Escrow Agent, obliging the latter to hold and take custody of TCT No. T-197, and to release the said title to
NICORP upon full payment of the subject property.

On October 14, 2004, NICORP issued a check in the amount of P2,250,000.00, representing the down payment
of the subject property.[7]Thereafter, the TCT was deposited with IE Bank and placed in escrow.
When petitioner discovered the sale, her lawyer immediately sent demand letters[8] to NICORP and Benjamin,
both dated October 27, 2004, and to IE pank, dated October 28, 2004, informing them that she was opposing
the sale of the subject property and that Benjamin was not clothed with authority to enter into a contract to
sell and demanding the return of the owner's copy of the certificate of title to her true and lawful attorney-in-
fact, Manujel B. Flores, Jr. (Flores). NICORP, Benjamin and IE Bank, however, failed and refused to return the
title of the subject property.

Petitioner argues that the general power of attorney did not clothe Benjamin with the authority to enter into a
contract to sell the subject property. She contends that the general power of attorney pertained to the power
to buy, sell, negotiate and contract over the business and personal property but did not specifically authorize
the sale of the subject property.
NICORP counters that the general power of attorney sufficiently conferred authority on Benjamin to enter into
the contract to sell. It asserts that the written authority, while denominated as a general power of attorney,
expressly authorized him to sell the subject property. NICORP insists that it was a buyer in good faith and was
never negligent in ascertaining the extent of his authority to sell the property. It explains that though the general
power of attorney sufficiently clothed Bautista with authority to sell the subject property, it nonetheless
required him to submit the SPA in order to comply with the requirements of the Register of Deeds and the
Bureau of Internal Revenue.
Whether or not Benjamin is authorized to enter into a contract as an agent of petitioner.
Art. 1878. Special powers of attorney are necessary in the following cases:

(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired
either gratuitously or for a valuable consideration;
To reiterate, such authority must be conferred in writing and must express the powers of the agent in clear and
unmistakable language in order for the principal to confer the right upon an agent to sell the real property. [23] It
is a general rule that a power of attorney must be strictly construed, and courts will not infer or presume broad
powers from deeds which do not sufficiently include property or subject under which the agent is to
deal.[24] Thus, when the authority is couched in general terms, without mentioning any specific power to sell or
mortgage or to do other specific acts of strict dominion, then only acts of administration are deemed
Nowhere in the General Power of Attorney was Benjamin granted, expressly or impliedly, any power to sell the
subject property or a portion thereof. The authority expressed in the General Power of Attorney was couched
in very broad terms covering petitioner's businesses and properties. Time and again, this Court has stressed that
the power of administration does not include acts of disposition, which are acts of strict ownership. As such, an
authority to dispose cannot proceed from an authority to administer, and vice versa, for the two powers may
only be exercised by an agent by following the provisions on agency of the Civil Code.



On and before Februaru 14, 1907, Engracio Orense had been the owner of a parcel of land in Guinobatan,
On February 14, 1907, Jose Duran, a nephew of Orense, sold the property for P1,500 to Gutierrez
Hermanos, with Orense’s knowledge and consent, executed before a notary a public instrument. The said public
instrument contained a provision giving Duran the right to repurchase it for the same price within a period of
four years from the date of the said instrument.
Orense continued occupying the land by virtue of a contract of lease.
After the lapse of four years, Gutierrez asked Orense to deliver the property to the company and to pay
rentals for the use of the property.
Orense refused to do so. He claimed that the sale was void because it was done without his authority
and that he did not authorize his nephew to enter into such contract.
During trial, Orense was presented as witness of the defense. He states that the sale was done with his
knowledge and consent. Because of such testimony, it was ascertained that he did give his nephew, Duran,
authority to convey the land. Duran was acquitted of criminal charges and the company demanded that Orense
execute the proper deed of conveyance of the property.
Whether or not Orense is bound by Duran’s act of selling the former’s property
Yes. It was proven during trial that he gave his consent to the sale. Such act of Orense impliedly conferred
to Duran the power of agency. The principal must therefore fulfill all the obligations contracted by the agent,
who acted within the scope of his jurisdiction.
The repeated and successive statements made by the defendant Orense in two actions, wherein he
affirmed that he had given his consent to the sale of his property, meet the requirements of the law and legally
excuse the lack of written authority, and, as they are a full ratification of the acts executed by his nephew Jose
Duran, they produce the effects of an express power of agency.

Spouses Pedro San Agustin and Agatona Genil were able to acquire a 246-square meter parcel of land
situated in Barangay Anos, Los Baños, Laguna and covered by Original Certificate of Title . Agatona Genil and
Pedro San Agustin died ,( both died intestate) survived by their eight (8) children: respondents, Eufemia, Raul,
Ferdinand, Zenaida, Milagros, Minerva, Isabelita and Virgilio.
Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of Undivided Shares conveying in favor
of petitioners (the Pahuds, for brevity) their respective shares . Eufemia also signed the deed on behalf of her
four (4) other co-heirs, namely: Isabelita on the basis of a special power of attorney , and also for Milagros,
Minerva, and Zenaida but without their apparent written authority. The deed of sale was also not notarized.
The Pahuds paid the accounts into the Los Baños Rural Bank where the subject property was mortgaged.
The bank issued a release of mortgage and turned over the owner's copy of the OCT to the Pahuds, the Pahuds
made more payments to Eufemia and her siblings. When Eufemia and her co-heirs drafted an extra-judicial
settlement of estate to facilitate the transfer of the title to the Pahuds, Virgilio refused to sign it.

Virgilio's co-heirs filed a complaint for judicial partition of the subject property before the RTC of
Calamba, Laguna.In the course of the proceedings for judicial partition, a Compromise Agreement was signed
with seven (7) of the co-heirs agreeing to sell their undivided shares to Virgilio .. The compromise agreement
was, however, not approved by the trial court because Atty. Dimetrio Hilbero, lawyer for Eufemia and her six
(6) co-heirs, refused to sign the agreement because he knew of the previous sale made to the Pahuds.
Eufemia acknowledged having received the payments from Virgilio. Virgilio then sold the entire property
to spouses Isagani Belarmino and Leticia Ocampo (Belarminos) . The Belarminos immediately constructed a
building on the subject property.
Alarmed and bewildered by the ongoing construction on the lot they purchased, the Pahuds immediately
confronted Eufemia who confirmed to them that Virgilio had sold the property to the Belarminos.Then the
Pahuds filed a complaint in intervention in the pending case for judicial partition.
Whether or not the sale of the subject property by Eufemia and her co-heirs to the Pahuds is valid and
The sale made by Eufemia, Isabelita and her two brothers to the Pahuds should be valid only with
respect to the 4/8 portion of the subject property.
While the sale with respect to the 3/8 portion is void by express provision of law and not susceptible to
ratification. The validity of the said transaction cannot be corrected on the basis of common law principle of
The law provides:

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.

A special power of attorney is necessary for an agent to enter into a contract by which the ownership of
an immovable property is transmitted or acquired, either gratuitously or for a valuable consideration. The
authority of an agent to execute a contract of sale of real estate must be conferred in writing and must give
him specific authority, either to conduct the general business of the principal or to execute a binding contract
containing terms and conditions which are in the contract he did execute. A special power of attorney is
necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration. The express mandate required by law to enable an appointee of an
agency 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. For the principal to confer the right upon an agent to sell real estate, a power
of attorney must so express the powers of the agent in clear and unmistakable language. When there is any
reasonable doubt that the language so used conveys such power, no such construction shall be given the
document. In the absence of a written authority to sell a piece of land is, ipso jure, void, precisely to protect the
interest of an unsuspecting owner from being prejudiced by the unwarranted act of another.


Richard and Linda Johnson were members of Joy Training’s Board of Trustees who sold the real
properties, a wrangler jeep, and other personal properties in favor of the spouses Sally and Yoshio Yoshizaki.
Joy Training filed an action for cancellation of sales alleging that the spouses Johnson is without the requisite
authority from the Board of Directors. The RTC ruled in favor of the spouses Yoshizaki. It found that Joy Training
owned the real properties and it authorized he spouses Johnson to sell the real properties. It recognized that
there were only five actual members of the board of trustees; consequently, a majority of the board of trustees
validly authorized the sale. It also ruled that the sale of personal properties was valid because they were
registered in the spouses Johnson’s name. The CA upheld the RTC’s jurisdiction over the case but reversed its
ruling with respect to the sale of real properties. It also ruled that the resolution is void because it was not
approved by a majority of the board of trustees.
Was there a contract of agency to sell the real properties between Joy Training and the spouses Johnson?
The SC ruled that there was no contract of agency between Joy Training and the spouses Johnson to sell
the parcel of land with its improvements. Art. 1868 of the Civil Code defines a contract of agency as a contract
whereby a person “binds himself to render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter.” It 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. In this case, the presented evidence did not convince the SC of the existence of
the contract of agency to sell the real properties. The certification is a mere general power of attorney which
comprises all of Joy training. Art. 1877 of CC clearly states that an agency couched in general terms comprises
only acts of administration, even if the principal should state that he withholds no power or that the agent may
execute such acts as he may authorize as general and unlimited management.



Rodolfo Guevarra instituted a civil case for the recovery of a sum of money against Dominion Insurance. He
sought to recover P156,473.90,which he claimed to have advanced in his capacity as manager of Dominion to
satisfy claims filed by Dominion’s clients. Dominion denied any liability to Guevarra and asserted a counterclaim
for premiums allegedly unremitted by the latter. The pre-trial conference never pushed through despite being
scheduled and postponed nine times over the course of six months. Finally, the case was called again for pre-
trial and Dominion and counsel failed to show up. The trial court declared Dominion in default and denied any
reconsideration. On the merits of the case, the RTC ruled that Dominion was to pay Guevarra the P156,473.90
claimed as the total amount advanced by the latter in the payment of the claims of Dominion’s clients. The CA


WON Guevarra acted within his authority as agent for Dominion


A perusal of the “Special Power of Attorney” would show that Dominion and Guevarra intended to enter into a
principal-agent relationship. Despite the word “special,” the contents of the document reveal that what was
constituted was a general agency. The agency comprises all the business of the principal, but, couched in general
terms, is limited only to acts of administration. A general power permits the agent to do all acts for which the
law does not require a special power. Art. 1878 enumerates the instances when a special power of attorney is
required, including (1) to make such payments as are not usually considered as acts of administration; (15) any
other act of strict dominion. The payment of claims is not an act of administration. The settlement of claims is
not included among the acts enumerated in the Special Power of Attorney, neither is it of a character similar to
the acts enumerated therein. A special power of attorney would have been required before Guevarra could
settle the insurance claims of the insured. Guevarra’s authority to settle claims is embodied in the Memorandum
of Management Agreement which enumerated the scope of Guevarra’s duties and responsibilities. However,
the Memorandum showed the instruction of Dominion that payment of claims shall come from a revolving fund.
Having deviated from the instructions of the principal, the expenses that Guevarra incurred in the settlement
of the claims of the insured may not be reimbursed from Dominion


The petitioner and the respondent Napoleon Gutierrez (Gutierrez) entered into a business venture under the
name of Slam Dunk Corporation (Slum Dunk), a production outfit that produced mini-concerts and shows
related to basketball. Petitioner was already then a decorated professional basketball player while Gutierrez
was a well-known sports columnist.

In the course of their business, the petitioner pre-signed several checks to answer for the expenses of Slam
Dunk. Although signed, these checks had no payee’s name, date or amount. The blank checks were entrusted
to Gutierrez with the specific instruction not to fill them out without previous notification to and approval by
the petitioner. According to petitioner, the arrangement was made so that he could verify the validity of the
payment and make the proper arrangements to fund the account.

In the middle of 1993, without the petitioner’s knowledge and consent, Gutierrez went to Marasigan (the
petitioner’s former teammate), to secure a loan in the amount of ₱200,000.00 on the excuse that the petitioner
needed the money for the construction of his house. In addition to the payment of the principal, Gutierrez
assured Marasigan that he would be paid an interest of 5% per month from March to May 1994.

On May 24, 1994, Marasigan deposited the check but it was dishonored for the reason "ACCOUNT CLOSED." It
was later revealed that petitioner’s account with the bank had been closed since May 28, 1993.
On September 10, 1997, the petitioner filed before the Regional Trial Court (RTC) a Complaint for Declaration
of Nullity of Loan and Recovery of Damages against Gutierrez and co-respondent Marasigan. He completely
denied authorizing the loan or the check’s negotiation, and asserted that he was not privy to the parties’ loan
The petitioner argues that: (1) there was no loan between him and Marasigan since he never authorized the
borrowing of money nor the check’s negotiation to the latter; (2) under Article 1878 of the Civil Code, a special
power of attorney is necessary for an individual to make a loan or borrow money in behalf of another; (3) the
loan transaction was between Gutierrez and Marasigan, with his check being used only as a security; (4) the
check had not been completely and strictly filled out in accordance with his authority since the condition that
the subject check can only be used provided there is prior approval from him, was not complied with; (5) even
if the check was strictly filled up as instructed by the petitioner, Marasigan is still not entitled to claim the check’s
value as he was not a holder in due course; and (6) by reason of the bad faith in the dealings between the
respondents, he is entitled to claim for damages.
Whether the contract of loan in the amount of ₱200,000.00 granted by respondent Marasigan to petitioner,
through respondent Gutierrez, may be nullified for being void

The petitioner seeks to nullify the contract of loan on the ground that he never authorized the borrowing
of money. He points to Article 1878, paragraph 7 of the Civil Code, which explicitly requires a written authority
when the loan is contracted through an agent. The petitioner contends that absent such authority in writing, he
should not be held liable for the face value of the check because he was not a party or privy to the agreement.

Contracts of Agency May be Oral Unless The Law Requires a Specific Form

Article 1868 of the Civil Code defines a contract of agency as a contract whereby a person "binds himself
to render some service or to do something in representation or on behalf of another, with the consent or
authority of the latter." 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

As a general rule, a contract of agency may be oral.6 However, it must be written when the law requires
a specific form, for example, in a sale of a piece of land or any interest therein through an agent.

Article 1878 paragraph 7 of the Civil Code expressly requires a special power of authority before an agent
can loan or borrow money in behalf of the principal, to wit:

Art. 1878. Special powers of attorney are necessary in the following cases:

(7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of
the things which are under administration. (emphasis supplied)

Article 1878 does not state that the authority be in writing. As long as the mandate is express, such
authority may be either oral or written. We unequivocably declared in Lim Pin v. Liao Tian, et al., 7 that the
requirement under Article 1878 of the Civil Code refers to the nature of the authorization and not to its form.
Be that as it may, the authority must be duly established by competent and convincing evidence other than the
self serving assertion of the party claiming that such authority was verbally given, thus:

The requirements of a special power of attorney in Article 1878 of the Civil Code and of a special
authority in Rule 138 of the Rules of Court refer to the nature of the authorization and not its form. The
requirements are met if there is a clear mandate from the principal specifically authorizing the performance of
the act. As early as 1906, this Court in Strong v. Gutierrez-Repide (6 Phil. 680) stated that such a mandate may
be either oral or written, the one vital thing being that it shall be express. And more recently, We stated that, if
the special authority is not written, then it must be duly established by evidence:

It bears noting that Lilian signed in the receipt in her name alone, without indicating therein that she
was acting for and in behalf of respondent. She thus bound herself in her personal capacity and not as an agent
of respondent or anyone for that matter.

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 (emphasis supplied).

In the absence of any showing of any agency relations or special authority to act for and in behalf of the
petitioner, the loan agreement Gutierrez entered into with Marasigan is null and void. Thus, the petitioner is
not bound by the parties’ loan agreement.
Furthermore, that the petitioner entrusted the blank pre-signed checks to Gutierrez is not legally
sufficient because the authority to enter into a loan can never be presumed. The contract of agency and the
special fiduciary relationship inherent in this contract must exist as a matter of fact. The person alleging it has
the burden of proof to show, not only the fact of agency, but also its nature and extent.

BA Finance Corp. vs CA

•On December 17, 1980, Renato Gaytano, doing business under the name Gebbs International, applied for
and was granted a loan with respondent Traders Royal Bank in the amount of P60,000.00. As security for the
payment of said loan, the Gaytano spouses executed a deed of suretyship whereby they agreed to pay jointly
and severally to respondent bank the amount of the loan including interests, penalty and other bank charges.

In a letter dated December 5, 1980 addressed to respondent bank, Philip Wong as credit administrator of BA
Finance Corporation for and in behalf of the latter, undertook to guarantee the loan of the Gaytano spouses.

Partial payments were made on the loan leaving an unpaid balance in the amount of P85,807.25. Since the
Gaytano spouses refused to pay their obligation, respondent bank filed with the trial court complaint for sum
of money against the Gaytano spouses and petitioner corporation as alternative defendant.

Petitioner corporation contends that its credit administrator lacks authority to bind the corporation.

The lower court dismissed the case against BA Finance Corporation. On the other hand CA ordered Gaytano
sps and BA Finance Corp to pay.

Whether or not BA Finance Corp is jointly liable with Gaytano Sps

No. It is a settled rule that persons dealing with an assumed agent, whether the assumed agency be a general
or special one are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of
agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is
upon them to establish it

Anent the conclusion of respondent appellate court that petitioner is estopped from alleging lack of authority
due to its failure to cancel or disallow the guaranty, We find that the said conclusion has no basis in fact.
Respondent bank had not shown any evidence aside from the testimony of the credit administrator that the
disputed transaction of guaranty was in fact entered into the official records or files of petitioner corporation,
which will show notice or knowledge on the latter's part and its consequent ratification of the said transaction.
In the absence of clear proof, it would be unfair to hold petitioner corporation guilty of estoppel in allowing its
credit administrator to act as though the latter had power to guarantee.

Pineda vs CA

PMSI obtained a group insurance policy for its sailors. 6 of the sailors, during the effectivity of the policy,
perished while the ship sank in Morocco. The families of the victims then wanted to claim the benefits of the
insurance. Hence, under the advice of Nuval, the president of PMSI, they executed a special power of attorney
authorizing Capt. Nuval to, "follow up, ask, demand, collect and receive" for their benefit the indemnities.
Insular drew against its account 6 checks, four for P200,00.00 each, one for P50,000.00 and another for
P40,00.00, payable to the order the families. The checks were given to PMSI. Nuval, the PMSI president,
pocketed the amounts in his bank account.
When the families went to insular to get the benefits, their request was denied because Insular claimed that
the checks were already given to PMSI.
The families filed a petition with the Insurance Commission. They won and Insular was ordered to pay them
500 a day until the amount was furnished to them. The insurance Commission held that the special powers of
attorney executed by complainants do not contain in unequivocal and clear terms authority to Nuval to obtain
and receive from respondent company insurance proceeds arising from the death of the seaman-insured; also,
that Insular Life did not convincingly refuted the claim of Mrs. Alarcon that neither she nor her husband
executed a special power of authority in favor of Capt. Nuval and that it did not observe Sec 180(3), when it
released the benefits due to the minor children of Ayo and Lontok, when the said complainants did notpost a
bond as required-
Insular Life appealed to the CA. CA modified the decision of the Insurance Commission, eliminating the award
to the minor children.
Hence, this petition by the beneficiary families.

Whether or not Insular Life should still be liable to the complainants when they relied on the special powers of
attorney, which Capt. Nuval presented as documents, when they released the checks to the latter.

Yes. The special powers of attorney "do not contain in unequivocal and clear terms authority to Capt. Nuval to
obtain, receive, receipt from respondent company insurance proceeds arising from the death of the seaman-
Insular Life knew that a power of attorney in favor of Capt. Nuval for the collection and receipt of such
proceeds was a deviation from its practice with respect to group policies.
They gave the proceeds to the policyholder instead of the beneficiaries themselves. Even the Isnular rep
admitted that he gave the checks to the policyholder.
Insular Life recognized Capt. Nuval as the attorney-in-fact of the petitioners. However, it acted imprudently
and negligently in the premises by relying without question on the special power of attorney.
Strong vs. Repide- third persons deal with agents at their peril and are bound to inquire as to the extent of the
power of the agent with whom they contract.
Harry E. Keller Electric Co. vs. Rodriguez- The person dealing with an agent must also act with ordinary
prudence and reasonable diligence. Obviously, if he knows or has good reason to believe that the agent is
exceeding his authority, he cannot claim protection… the party dealing with him may not shut his eyes to the
real state of the case, but should either refuse to deal with the agent at all, or should ascertain from the
principal the true condition of affairs.
Insular delivered the checks to a party not the agent of the beneficiaries.

G.R. No. 85302 March 31, 1989
Principal: Juan de Jesus
Agent: Jose de Jesus
Juan de Jesus, the owner of a parcel of land situated in Naga City, executed a Special Power of Attorney in
favor of his son, Jose de Jesus, "To negotiate, mortgage my real property in any bank either private or public
entity preferably in the Bicol Savings Bank, Naga City, in any amount that may be agreed upon between the
bank and my attorney-in-fact."
By virtue thereof, Jose de Jesus obtained a loan of P20,000.00 from petitioner bank on 13 April 1976. To
secure payment, Jose de Jesus executed a deed of mortgage on the real property referred to in the Special
Power of Attorney.
Juan de Jesus died in the meantime on a date that does not appear of record.
By reason of his failure to pay the loan obligation even during his lifetime, petitioner bank caused the
mortgage to be extrajudicially foreclosed on 16 November 1978. In the subsequent public auction, the
mortgaged property was sold to the bank as the highest bidder to whom a Provisional Certificate of Sale was
Private respondents herein filed a Complaint with the then Court of First Instance of Naga City for the
annulment of the foreclosure sale or for the repurchase by them of the property. The trial court ruled in favor
of petitioner bank. The CA, however, reversed the decision, relying on Article 1879 of the Civil Code which
Art. 1879. A special power to sell excludes the power to mortgage; and a special power to mortgage
does not include the power to sell.
Whether the agent-son exceeded the scope of his authority in agreeing to a stipulation in the mortgage deed
that petitioner bank could extrajudicially foreclose the mortgaged property.
Article 1879 of the Civil Code, relied on by the Appellate Court in ruling against the validity of the extrajudicial
foreclosure sale is inapplicable in the case at bar.
The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and independent
contract, and not an auction sale resulting from extrajudicial foreclosure, which is precipitated by the default
of a mortgagor. Absent that default, no foreclosure results. The stipulation granting an authority to
extrajudicially foreclose a mortgage is an ancillary stipulation supported by the same cause or consideration
for the mortgage and forms an essential or inseparable part of that bilateral agreement (Perez v. Philippine
National Bank, No. L-21813, July 30, 1966, 17 SCRA 833, 839).
The power to foreclose is not an ordinary agency that contemplates exclusively the representation of the
principal by the agent but is primarily an authority conferred upon the mortgagee for the latter's own
protection. That power survives the death of the mortgagor (Perez vs. PNB, supra). In fact, the right of the
mortgagee bank to extrajudicially foreclose the mortgage after the death of the mortgagor Juan de Jesus,
acting through his attorney-in-fact, Jose de Jesus, did not depend on the authorization in the deed of
mortgage executed by the latter.


G.R. No. L-13063, April 30, 1959
PRINCIPAL: Maria Fabricante
AGENT: Cesario Fabricante
Plaintiff-appellant filed an action before the Court of First Instance of Camarines Sur to foreclose the mortgage
executed by defendants-appellees covering two parcels of land situated in the same province.
As defendants-appelles failed to answer the complaint within the reglementary period, they were declared in
default, and forthwith, plaintiff-appellant presented his evidence. Thereupon, the trial court rendered decision
ordering Cesario A. Fabricante to pay the plaintiff the sum of P16,666.66 (as amended), with interest at the
rate of 6 per cent per annum from April 18, 1944 and, upon his failure to pay the same within the period of 90
days, to have the property covered by Transfer Certificate of Title No. RT-29 (50) sold for the satisfaction of
the judgment.
Plaintiff-appellant claims that the trial court erred in holding that only Cesario A. Fabricante is liable to pay the
mortgage debt and not his wife who is exempt from liability.
The trial court said: "Only the defendant Cesario A. Fabricante is liable for the payment of this amount
because it does not appear that the other defendant Maria G. de Fabricante had authorized Cesario A.
Fabricante to contract the debt also in her name. The power of attorney was not presented and it is to be
presumed that the power was limited to a grant of authority to Cesario A. Fabricante to mortgage the parcel
of land covered by Transfer Certificate of Title in the name of Maria G. de Fabricante."

Whether Maria Fabricante should also be held liable to pay the mortgage debt as principal of his husband-
agent Cesario Fabricante.

There is nothing in the contents of the deed of mortgage executed by Cesario Fabricante in favor of appellant
on April 18, 1944 that shows that Fabricante was authorized by his wife to contract the obligation in her name.
The deed shows that the authority was limited to the execution of the mortgage insofar as the property of the
wife is concerned. There is a difference between authority to mortgage and authority to contract obligation.
Since the power of attorney was not presented as evidence, the trial court was correct in presuming that the
power was merely limited to a grant of authority to mortgage unless the contrary is shown.


G.R. No. L-30181, July 12, 1929
AGENT: Mariano dela Rama
In 1921, the Government of the Philippine Islands was planning extensive harbor improvements in this vicinity,
requiring extensive dredging by the Bureau of Public Works in the mouth of said river. The conduct of these
dredging operations made it necessary for the Director of Public Works to find a place of deposit for the dirt
and mud taken from the place, or places, dredged. As the land already referred to was low and easily
accessible to the spot where dredging was to be conducted, it was obviously for the interest of the
Government and the said owners of the land that the material taken out by the dredges should be deposited
on the said property. Accordingly, after preliminary negotiations to this effect have been conducted, a
contract was made between the Director of Public Works, representing the Government of the Philippine
Islands, and the four owners, M. de la Rama, Sing Juco, G. M. Tanboontien, and Seng Bengco
The dredging operation were conducted by the Bureau of Public Works in substantial accomplice and after the
account with the owners were liquidated and the amount due from them determined, demand was made
upon them for the payment of the first installment. No such payment was, however, made. As a consequence
this action was instituted by the Director of Public Works on October 14, 1926, for the purpose of recovering
the amount due to the Government under the contract from the original owners of the property from the
sureties whose names were signed to the contract of suretyship, and to enforce the obligation as a real lien
upon the property. In said action the Philippine National Bank was made a party defendant, as having an
interest under its prior mortgage upon the property, while Enrique Enchaus was made defendant as successor
in interest of M. de la Rama, and Tan Ong Sze, widow of Tan Toco, was also made defendant by reason of her
supposed liability derived from the act of De la Rama in signing the firm "Casa Viuda de Tan Toco" as a surety
on bond.
On the part of Viuda de Tan Toco the defense was interposed that the name "Casa Viuda de Tan Toco" signed
to the contract of suretyship by Mariano de la Rama was signed without authority.

Whether Tan Ong Sze, widow of Tan Toco, should be liable as surety.
Article 1827 of the Civil Code provides that guaranty shall not be presumed; it must be expressed and cannot
be extended beyond its specified limits. By analogy a power of attorney to execute a contract of guaranty
should not be inferred from vague or general words, especially when such words have their origin and
explanation in particular powers of a wholly different nature. It results that the trial court was in error in giving
personal judgment against Tan Ong Sze upon the bond upon which she was sued in this case.
In the case at bar, the said contract purported to have been signed by Mariano de la Rama, acting for Tan Toco
under the power of attorney has exhibited no power of attorney which would authorize the creation, by the
attorney-in-fact, of an obligation in the nature of suretyship binding upon this principal.
It is true that the Government introduced in evidence 2 documents exhibiting powers of attorney. However,
the clauses relate more specifically to the execution of contracts relating to property; and the more general
words should be interpreted, under the general rule ejusdem generis, as referring to the contracts of like
character. Power to execute a contract so exceptional a nature as a contract of suretyship or guaranty cannot
be inferred from the general words contained in these powers.

G.R. No. 108538
January 22, 1996


Principal (?): Lourdes Valmonte

Agent (?): Atty. Alfredo Valmonte (Mag-asawa sila)


Lourdes and Alfredo Valmonte are husband and wife, they are residents of Seattle, Washington, USA but Alfredo
is a practicing lawyer in the Philippines. Lourdes is staying in the US to pursue her studies. Alfredo holds office
at Mabini, Ermita, Manila.

On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes A. Valmonte,
filed a complaint for partition of real property and accounting of rentals against petitioners Lourdes A. Valmonte
and Alfredo D. Valmonte before the Regional Trial Court of Manila, Branch 48. The subject of the action is a
three-door apartment located in Paco, Manila.

For purposes of this complaint may be served with summons at Gedisco Center, Unit 304, 1564 A. Mabini St.,
Ermita, Manila where defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmontes spouse holds
office and where he can be found. A letter was sent to Alfredo from Lourdes stating that all communications
regarding such case be sent to her lawyer Atty. Alfredo, who is also her husband.

Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was concerned, but refused to accept the
summons for his wife, Lourdes A. Valmonte, on the ground that he was not authorized to accept the process on
her behalf.


Whether Atty. Alfredo Valmonte has the authority to represent her wife in litigation.


In the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her attorney-in-fact. Although
she wrote private respondent s attorney that all communications intended for her should be addressed to her
husband who is also her lawyer at the latters address in Manila, no power of attorney to receive summons for
her can be inferred therefrom. In fact the letter was written seven months before the filing of this case below,
and it appears that it was written in connection with the negotiations between her and her sister, respondent
Rosita Dimalanta, concerning the partition of the property in question. As is usual in negotiations of this kind,
the exchange of correspondence was carried on by counsel for the parties. But the authority given to petitioners
husband in these negotiations certainly cannot be construed as also including an authority to represent her in
any litigation.

GR No. L-23181
March 16, 1925


Gabriela Andrea de Coster y Roxas was the wife of the defendant Jean M. Poizat, both of whom were residents
of the City of Manila; that the defendant J. M. Poizat and Co. was a duly registered partnership with its principal
office and place of business in the City of Manila; that the defendant La Orden de Dominicos or PP. Defendant
executed an SPA in favor of her husband, this gave him the power to loan and borrow money in her behalf. The
agent was able to obtain a loan from BPI, secured by a chattel mortgage on the steamers of his company. Poizat
Vegetable Oil Mills and a real mortgage over a property, which is also subject to another mortgage in fvor of La
Orden De Dominicos. Defendant defaulted on their obligations to BPI and La Orden de Dominicos. Thus, both
creditors prayed for the foreclosure of the mortgaged properties.

RTC declared the defendants in default for their failure to appear and ruled in favor of the plaintiffs. De Coster
alleges that she never had any knowledge of the actual facts until she read about her default in the newspapers,
since she was not in the Philippines when the summons were served; ther her husband fled the country; that
the mortgages executed by her agent-husband was without marital consent; and that he did not have any
authority to make her liable as surety on the debt of a third person – it being a personal debt of her husband
and his company.

ISSUE: Whether the prinicipal-wife is liable for the mortgage executed by her agent husband


The note and mortage show upon their face that at the time they were excuted, the agent-husband was atty-
in-fact for the defendant-wife, and the bank knew or should have known that nature and extent of his authority
and the limitation upon his power.

Par. 5 if the power of atty authorizes the agent-husband for and in the name of his wife “to loan or borrow any
sums of money or fungible things, etc”

This is taken to mean that he only had the power to loan his wife’s money and to borrow money for or on
account of his wife as her agent and atty-in-fact. It does not carry with it or imply that he had the legal right to
make his wife liable as a surety for the preexisting debt of a third person.