Eurotech Industrial Technologies, Inc. v.

Edwin Cuizon and Erwin Cuizon

G.R. No. 167552 April 23, 2007
Chico-Nazario, J.

FACTS:
û Eurotech is engaged in the business of importation and distribution of various European industrial
equipment. It has as one of its customers Impact Systems Sales which is a sole proprietorship
owned by Erwin Cuizon.
û Eurotech sold to Impact Systems various products allegedly amounting to P91,338.00. Cuizons
sought to buy from Eurotech 1 unit of sludge pump valued at P250,000.00 with Cuizons making a
down payment of P50,000.00. When the sludge pump arrived from the United Kingdom, Eurotech
refused to deliver the same to Cuizons without their having fully settled their indebtedness to
Eurotech. Thus, Edwin Cuizon and Alberto de Jesus, general manager of Eurotech, executed a Deed
of Assignment of receivables in favor of Eurotech.
û Cuizons, despite the existence of the Deed of Assignment, proceeded to collect from Toledo Power
Company the amount of P365,135.29. Eurotech made several demands upon Cuizons to pay their
obligations. As a result, Cuizons were able to make partial payments to Eurotech. Cuizons’ total
obligations stood at P295,000.00 excluding interests and attorney’s fees.
û Edwin Cuizon alleged that he is not a real party in interest in this case. According to him, he was
acting as mere agent of his principal, which was the Impact Systems, in his transaction with
Eurotech and the latter was very much aware of this fact.

ISSUE: WON Edwin exceeded his authority when he signed the Deed of Assignment thereby binding
himself personally to pay the obligations to Eurotech

HELD: No.
û Edwin insists that he was a mere agent of Impact Systems which is owned by Erwin and that his
status as such is known even to Eurotech as it is alleged in the Complaint that he is being sued in
his capacity as the sales manager of the said business venture. Likewise, Edwin points to the Deed
of Assignment which clearly states that he was acting as a representative of Impact Systems in said
transaction.
û Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts,
unless he expressly binds himself or exceeds the limits of his authority without giving such party
sufficient notice of his powers.
û In a contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another with the latter’s consent. Its purpose is to extend the
personality of the principal or the party for whom another acts and from whom he or she derives
the authority to act. The basis of agency is representation, 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.
û elements of the contract of agency: (1) consent, express or implied, of the parties to establish the
relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the
agent acts as a representative and not for himself; (4) the agent acts within the scope of his
authority
û An agent, who acts as such, is not personally liable to the party with whom he contracts. There are
2 instances when an agent becomes personally liable to a third person. The first is when he
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 expressly binds himself to the obligation and the second is when he exceeds his authority. In the
last instance, the agent can be held liable if he does not give the third party sufficient notice of his
powers. Edwin does not fall within any of the exceptions contained in Art. 1897.
û In the absence of an agreement to the contrary, a managing agent may enter into any contracts
that he deems reasonably necessary or requisite for the protection of the interests of his principal
entrusted to his management.
û Edwin Cuizon acted well-within his authority when he signed the Deed of Assignment. Eurotech
refused to deliver the 1 unit of sludge pump unless it received, in full, the payment for Impact
Systems’ indebtedness. Impact Systems desperately needed the sludge pump for its business since
after it paid the amount of P50,000.00 as downpayment it still persisted in negotiating with
Eurotech which culminated in the execution of the Deed of Assignment of its receivables from
Toledo Power Company. The significant amount of time spent on the negotiation for the sale of the
sludge pump underscores Impact Systems’ perseverance to get hold of the said equipment. Edwin’s
participation in the Deed of Assignment was “reasonably necessary” or was required in order for
him to protect the business of his principal.

RALLOS v FELIX GO CHAN & REALTY COPR., Munoz-Palma

Plaintiff: Ramon Rallos

Defendant: Felix Go Chan & Sons Realty Corporation
Facts: Concepcion and Gerundia Rallos were sisters and registered co-owners of the parcel of land
in issue. They executed a special power of attorney in favor of their brother, Simeon Rallos,
authorizing him to sell such land for and in their behalf. After Concepcion died, Simeon Rallos sold
the undivided shares of his sisters Concepcion and Gerundia to Felix Go Chan & Sons Realty
Corporation for the sum of P10,686.90. New TCTs were issued to the latter.
Petitioner Ramon Rallos, administrator of the Intestate Estate of Concepcion filed a complaint praying
(1) that the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be
unenforceable, and said share be reconveyed to her estate; (2) that the Certificate of 'title issued in
the name of Felix Go Chan & Sons Realty Corporation be cancelled and another title be issued in the
names of the corporation and the "Intestate estate of Concepcion Rallos" in equal undivided and (3)
that plaintiff be indemnified by way of attorney's fees and payment of costs of suit.

Issues: Whether or not the sale fell within the exception to the general rule that death extinguishes
the authority of the agent

Held/Ratio: Yes the sale is void. The court held that no one may contract in the name of another
without being authorized by the latter, or unless he has by law a right to represent him (Art. 1317 of
the Civil Code). Simon’s authority as agent was extinguished upon Concolacion’s death. The sale did
not fall under the exceptions to the general rule that death ipso jure extinguishes the authority of the
agent. Art. 1930 inapplicable since SPA in favor of Simon Rallos was not coupled with interest and
Art. 1931 inapplicable because Rallos knew of principal Concepcion’s death. For Art 1931 to apply,
both requirements must be present

Laws on agency, the terms of which are clear and unmistakable leaving no room for an interpretation
contrary to its tenor, should apply, the law provides that death of the principal ipso jure extinguishes
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the authority of the agent to sell rendering the sale to a third person in good faith unenforceable
unless at the agent had no knowledge of the principal’s death at that time (exception under Art.
1931)

Dispositive: CA Decision reversed, CFI decision affirmed. Sale was null and void.

(Court discussed relevant principles first)

Relationship of Agency (concept arising from principles under Art 1317 and 1403)- one party, caged
the principal (mandante), authorizes another, called the agent ( mandatario), to act for and in his
behalf in transactions with third persons.
-derivative in nature, power emanating from principal
-agent’s acts are acts of the principal

· Essential Elements:
(1) there is consent, express or implied of the parties to establish the relationship;
(2) the object is the execution of a juridical act in relation to a third person;
(3) the agents acts as a representative and not for himself, and
(4) the agent acts within the scope of his authority.

· Extinguishment
o Generally: among others, By the death, civil interdiction, insanity or insolvency of the
principal or of the agent
- death of the principal effects instantaneous and absolute revocation of the
authority of the agent
o Exceptions:
§ (Art. 1930) if it has been constituted in the common interest of the latter and of
the agent, or in the interest of a third person who has accepted the stipulation in
his favor.
§ (Art. 1931) agent acted without knowledge of the pricipal’s death and that the
third person was in good faith (both these reqs should be present)

G.R. No. 18058 January 16, 1923

Fabiola Severino
vs.
Guillermo Severino
Facts:
Defendant Guillermo Severino, after the death of his brother (Melecio Severino), was the latter’s
administrator and as such, continued to occupy the land owned by Melecio. Eventually, cadastral
proceedings were instituted for the registration of the land titles. Guillermo claimed such land and
since no opposition was presented, the court decreed the title in his favor.
Melecio’s daughter and sole heir, plaintiff Fabiola Severino, compelled Guillermo to convey to her the
land. It bears noting that Fabiola was a minor during the time of the cadastral proceedings.
Issue:

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Whether or not Guillermo can be compelled to convey the land to Fabiola, even if there is already a
title in Guillermo’s name.
Held:
Yes. The relations of an agent to his principal are fiduciary. Guillermo’s position as agent is analogous
to that of a trustee and he cannot consistently, with the principles of good faith, be allowed to create
in himself an interest in opposition to that of his principal or cestui que trust. Whatever a trustee
does for the advantage of the trust estate inures to the benefit of the cestui que trust.
SC cited the following jurisprudence:
A receiver, trustee, attorney, agent, or any other person occupying fiduciary relations respecting
property or persons, is utterly disabled from acquiring for his own benefit the property committed to
his custody for management. This rule is entirely independent of the fact whether any fraud has
intervened. No fraud in fact need be shown, and no excuse will be heard from the trustee. It is to
avoid the necessity of any such inquiry that the rule takes so general a form. The rule stands on the
moral obligation to refrain from placing one’s self in positions which ordinarily excite conflicts
between self-interest and integrity. It seeks to remove the temptation that might arise out of such a
relation to serve one’s self-interest at the expense of one’s integrity and duty to another, by making it
impossible to profit by yielding to temptation. It applies universally to all who come within its
principle.
SC reiterated that an agent, who has entered and surveyed a portion of that land for himself and
obtained a patent for it in his own name, becomes a trustee for his principal. He cannot hold the land
under an entry for himself otherwise than as trustee for his principal.
The substance of these authorities is that, wherever a person obtains the legal title to land by any
artifice or concealment, or by making use of facilities intended for the benefit of another, a court of
equity will impress upon the land so held by him a trust in favor of the party who is justly entitled to
them, and will order the trust executed by decreeing their conveyance to the party in whose favor
the trust was created.
There have been a number of cases before this court in which a title to real property was acquired by
a person in his own name, while acting under a fiduciary capacity, and who afterwards sought to
take advantage of the confidence reposed in him by claiming the ownership of the property for
himself. This court has invariably held such evidence competent as between the fiduciary and the
cestui que trust. What judgment ought to be entered in this case? The court simply absolved the
defendant from the complaint. The proper procedure in such a case, so long as the rights of innocent
third persons have not intervened, is to compel a conveyance to the rightful owner.
The Land Registration Act cannot cut off, through an issuance of title, equitable rights or remedies.
Torrens titles carries a strong presumption in favor of their regularity or validity, and in order to
maintain an action such as the present, the proof as to the fiduciary relation of the parties and of the
breach of trust must be clear and convincing. Such proof is not lacking in this case. But once the
relation and the breach of trust on the part of the fiduciary is thus established, there is no reason,
neither practical nor legal, why he should not be compelled to make such reparation as may lie within
his power for the injury caused by his wrong, and as long as the land stands registered in the name
of the party who is guilty of the breach of trust and no rights of innocent third parties are adversely
affected, there can be no reason why such reparation should not, in the proper case, take the form
of a conveyance or transfer of the title to the cestui que trust. No reasons of public policy demand
that a person guilty of fraud or breach of trust be permitted to use his certificate of title as a shield
against the consequences of his own wrong.

4
 Orient-Air Services and Hotel Representatives vs. Court of Appeals
May 29, 1991

FACTS:
American Air entered into a General Sales Agency Agreement between Orient Air Services and Hotel
Representatives (Orient Air) whereby the former authorized the latter to act as its exclusive general
sales agent within the Philippines for the sale of air passenger transportation.

In 1981, Orient Air reneged in its obligations by failing to promptly remit the net proceeds of sales for
the months of January to March 1981 amounting to $254,400.

American Air instituted a suit against Orient Air with CFI Manila for Accounting with Preliminary
Attachment/Garnishment, Mandatory Injuction and Restraining Order.

Orient Air answered with counterclaim denying the material allegation and contends the following:
- American Air still owed Orient Air a balance in unpaid overriding commission. Orient Air
contends that the contractual stipulation of a 3% overriding commission covers the
total revenue of American Air and not merely that derived from the ticketed sales
undertaken by the former.
- The termination of the contract is untenable
- American Air’s precipitous conduct had occasioned prejudice to its business interests.

Trial Court ruled in favor of Orient Air ordering American Air to “reinstate defendant as its general
sales agent for passenger transportation in the Philippines in accordance with the said GSA
Agreement.”

Court of Appeals affirmed the decision of the Trial Court.

Issue:
Whether the respondent appellate court correctly ruled that Orient Air be reinstated again as sales
agent of American Air?

Ruling:
SC affirmed the decision of the CA however, set aside the portion of the ruling by the appellate court
reinstating Orient Air as the General Sales Agent of American Air.

By affirming this ruling of the trial court, respondent appellate court, in effect, compels American Air
to extend its personality to Orient Air. Such would be violative of the principles and essence of
agency, defined by law as a contract whereby “a person binds himself to render some service or to
do something in representation or on behalf of another, WITH THE CONSENT OR AUTHORITY OF
THE LATTER.”

In an agent-principal relationship, the personality of the principal is extended through the facility of
the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all
acts which the latter would have him do. Such a relationship can only be effected with the consent of
5
the principal, which must not, in any way, be compelled by law or by any court.

Bordador v. Luz
G.R. No. 130148 December 15, 1997 J. Regalado
petitioners Jose and Lydia Bordador
respondents Sps. Brigida and Ernesto Luz, Narciso Deganos
summary The Bordadors, who were running a jewelry business, entrusted pieces of
jewelry to Degnos, who was obliged to sell them. Deganos failed to account
for them. A civil and criminal case were filed against him, which prayed that
Brigida Luz, who was puported to be his principal, be held solidarily liable. The
Court ruled that Deganos was not the agent of Luz, as there was no evidence
that Luz consented to, or authorized Deganos to act on her behalf.

6
facts of the case
The Bordador's were in the business of purchase and sale of jewelry, and Brigida
Luz was their regular customer. Deganos, the brother of Luz, received pieces of jewelry
worth P382,816.00, covered by seventeen receipts, eleven of them indicating that they
were received on behalf a certain Evelyn Aquino, and six indicated that they were
receive don behalf of Luz.

Deganos was supposed to sell the items, remit the proceeds, and return the unsold
ones to the Bordadors. However, he was only able to remit P53,207.00, failing to pay
the balance of the sales proceeds and returning any unsold items. The Bordadors filed a
complaint before the barangay court, where Deganos along with the Sps. Luz signed a
compromise agreement promising to pay the unpaid account of P765,463.98. Deganos,
however, failed to comply.

A civil case for the recovery of sum of money was instituted against Deganos and
Brigida Luz in the Malolos RTC. Her husband Ernesto was impleaded as well. Four
years later in 1994, a criminal case for estafa was filed, which was still pending when
this decision was promulgated.

Petitioners claimed that Deganos was acting as the agent of Brigida Luz and
because he failed to pay for the pieces of jewelry, the Sps. Luz, as principals, are
solidarily liable. The respondents countered that only Deganos was liable, that Brigida
never authorized him to receive jewelry on her behalf, neither did she receive the
articles in question.

The RTC ruled that there was no agency between Brigida Luz and Deganos. It was
Bordador who indicated that the items were received on behalf of Luz. Even if there
was a contract of agency, there was no memorandum to this effect and was therefore
unenforceable.

CA affirmed the judgment.

issue
Was there a contract of agency between Luz and Deganos? NO.

ratio
Petitioners presented as evidence several letters sent by Luz to the Bordadors to prove
that she recognized her liability but the court had pointed out that such letters were for
previous obligations and did not include the jewelries involved in the present case. As
for the statement of Brigida Luz that she received pieces of gold jewelry, there was no
proof that the said jewelry were the same items in question.

7
While it was shown in the findings of fact that Deganos had ostensibly acted as an
agent of Luz, there was no showing that Luz authorized him to act on her behalf
regarding the transaction questioned in this case. The basis for agency is
representation, and there is no showing that Luz consented or authorized Deganos to
act on her behalf.

It was inexcusably negligent of the Bordados to entrust Deganos with several pieces of
jewelry without requiring a written authorization from the supposed principal. A person
dealing with an agent is put upon inquiry and must discover upon his peril the authority
of the agent. There was no express or implied agency between Deganos and Luz.

Petitioners also assail the validity of the CA's ruling, as it will be in conflict with the
criminal case of estafa. This will not be the case as Article 33 of the Civil Code provides
that action for damages arising from fraud may proceed independently of the criminal
case and will need only a preponderance of evidence.

DOMINGO DE LA CRUZ vs. NORTHERN THEATRICAL ENTERPRISES INC.,

ET AL.
January 28, 2017cdizonblog
Conrado Rubio for appellant.
Ruiz, Ruiz, Ruiz, Ruiz, and Benjamin Guerrero for appellees.
Facts:
1941, The Northern Theatrical Enterprises Inc., a domestic corporation operated a
movie house in Laoag, Ilocos Norte. Domingo De La Cruz was employed whose duties
were to guard the main entrance, to maintain peace and order and to report the
commission of disorders within premises. He carried a revolver.
Benjamin Martin wanted to crash the gate or entrance of the movie house. Infuriated
by the refusal of De la Cruz to let him in without first providing himself with a ticket,
Martin attacked him with a bolo. De la Cruz defendant himself as best he could until he
was cornered, at which moment to save himself he shot Martin, resulting in Benjamin
Martin’s death.
De la Cruz was charged with homicide. After a re-investigation conducted by the
Provincial Fiscal the latter filed a motion to dismiss the complaint, which was granted by
the court. De la Cruz was again accused of the same crime of homicide. After trial, he
was finally acquitted of the charge.
He then demanded from former employer to repay the expenses but was refused thus
filed present action against the Northern Theatrical Enterprises Inc company and to
three members of its Board of Directors to recover amounts he had paid his lawyers
including moral damages said to have been suffered due to his worry, neglect of his
interests and his family as well in the supervision of the cultivation of his land, a total of
P 15,000.
Court of First Instance of Ilocos Norte rejected the theory of De la Cruz because he was
8
an agent of Northern Theatrical Enterprises Inc. and that as such agent he was entitled
to compensate the expenses incurred by him in connection with the agency.
The court found and decided that De La Cruz had no cause of action and dismissed the
complaint without costs.
Issue:
Whether or not an agent who’s in the line of duty performs an act that resulted in his
incurring expenses caused by a stranger. May the latter recover the said expenses
against his former employer.
Held:
No, because the relationship between the Northern Theatrical Enterprises Inc. and
plaintiff was not that of principal and agent because the principle of representation as a
characteristic of agency was in no way involved. Plaintiff was not employed to represent
corporation in its dealings with third parties. Plaintiff is a mere employee hired to
perform a certain specific duty or task, that of acting as a special guard and staying at
the main entrance of the movie house to stop gate crashers and to maintain peace and
order within the premises.

CASE # 01
GR No. 156262
TITLE: Maria Tuazon, Alejandro Tuazon, Melencio Tuazon, Spouses Anastacio and
Mary Buenaventura, petitioners vs. Heirs of Bartolome Ramos,
defendant
NATURE OF ACTION: Petition for Review
PONENTE: Panganiban, J.

FACTS:
· This case arose from failure of the petitioners to pay the respondents
predecessor-in-interest ( deceased Bartolome Ramos). The check in issue was
indorsed by the petitioner (Tuazon) in favor of the said predecessor.
· The petitioners Leonilo and Maria (Tuazon) purchased 8,326 cavans of rice from
Bartolome Ramos. Only 4,437 cavans were paid leaving unpaid 3,889 cavans
with value of P 1,211,919.00. In payment, the spouses issued several checks.
· The checks bounced due to insufficiency of funds.
Side of the Petitioner:
· Denied the purchase of rice from Bartolome and alleged that it was Magdalena
Ramos (his wife) owned and traded the merchandise. They also alleged that
Maria Tuazon was merely Magdalena’s agent.
· They argued that Evangeline Santos (the one who issued the checks) was the
buyer of the rice, and the checks were merely turned over by Maria to
Bartolome, without knowing that these were not funded. They argued that they
were mere agents and should not be held answerable.

9
 · They alleged that Santos should be primarily liable to Ramos because she was
the one who had purchased the merchandise from Bartolome as evidenced by
the checks that had been drawn in her name.
· The petitioners also alleged that their personal properties were sold because they
were meeting financial difficulties and they were valued in good faith.

Side of the Defendant:

· The Tuazons already knew that they had no available funds to support the
checks, and anticipated that they will be sued. Thus, they executed fictitious
sales of their properties (residential house and lot and a Toyota)
RTC Ruling:
· In favor of the plaintiffs (Bartolome) and against the defendants (Tuazon),
ordering the defendants to pay the plaintiffs as follows:
o 1,750,050.00 + interest; 50,000.00 attorney’s fees; 20,000.00 moral
damages; and pay the cost of suit.
CA Ruling:
· Appeal is DISMISSED and the decision is AFFIRMED.
ISSUES:
1. WON Maria Tuazon was considered as an agent of Bartolome Ramos
2. Won Evangeline Santos was an indispensable party
HELD:
· No.
The declarations of agents alone are generally insufficient to establish the fact or
extent of their authority. The law makes no presumption of agency; proving its
nature and extent is incumbent upon the person alleging it. The petitioners raise
the fact of agency as an affirmative defense, yet fail to prove its existence.
Their filing a suit against her in their own names negates their claim that they
acted as mere agents in selling the rice obtained from Bartolome Ramos.

· No.
There is no privity of contract between the respondents and Santos. Maria
Tuazon indorsed the questioned checks in favor of the respondent, as indorser,
in case the checks were dishonored, she would pay the corresponding amount.
After an instrument is dishonored by nonpayment, indorsers cease to be merely
secondarily liable; they become principal debtors whose liability becomes
identical to that of the original obligor.

DOCTRINE:
· In a contract of agency, one binds oneself to render some service or to do
something in representation or on behalf of another, with the latters consent or
authority.
· The following are the elements of agency:
o (1) the parties consent, express or implied, to establish the relationship;
10
 o (2) the object, which is the execution of a juridical act in relation to a third
person;
o (3) the representation, by which the one who acts as an agent does so,
not for oneself, but as a representative;
o (4) the limitation that the agent acts within the scope of his or her
authority.
· As the basis of agency is representation, there must be, on the part of the
principal, an actual intention to appoint, an intention naturally inferable from the
principals words or actions. In the same manner, there must be an intention on
the part of the agent to accept the appointment and act upon it. Absent such
mutual intent, there is generally no agency.

VICTORIAS MILLING CO. vs. COURT OF APPEALS

FACTS:
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling
Co (VMC). In the course of their dealings, VMC issued several Shipping List/Delivery
Receipts (SLDRs) to STM as proof of purchases. Among these was SLDR No.
1214M.SLDR No. 1214M, dated October 16, 1989, covers 25,000 bags of sugar. Each
bag contained 50 kg and priced at P638.00 per bag. The transaction covered was a
“direct sale”.

On October 25, 1989, STM sold to private respondent Consolidated Sugar

Corporation (CSC) its rights in the same SLDR for P14,750,000.00. CSC issued checks in
payment. That same day, CSC wrote petitioner that it had been authorized by STM to
withdraw the sugar covered by the said SLDR. Enclosed in the letter were a copy of
SLDR No. 1214M and a letter of authority from STM authorizing CSC to “withdraw for
and in our behalf the refined sugar covered by the SLDR” 
On Oct. 27, 1989, STM
issued checks to VMC as payment for 50,000 bags, covering SLDR No. 1214M. 
CSC
surrendered the SLDR No. 1214M and to VMC’s NAWACO Warehouse and was allowed
to withdraw sugar. But only 2,000 bags had been released because VMC refused to
release the other 23,000 bags.

Therefore, CSC informed VMC that SLDR No. 1214M had been “sold and
endorsed” to it. But VMC replied that it could not allow any further withdrawals of
sugar against SLDR No. 1214M because STM had already withdrawn all the sugar
covered by the cleared checks. VMC also claimed that CSC was only representing itself
as STM’s agent as it had withdrawn the 2,000 bags against SLDR No. 1214M “for and in
behalf” of STM. Hence, CSC filed a complaint for specific performance against Teresita
Ng Sy (doing business under STM's name) and VMC. However, the suit against Sy was

11
discontinued because later became a witness. RTC ruled in favor of CSC and ordered
VMC to deliver the 23,000 bags left. CA concurred. Hence this appeal.

ISSUES:
W/N CA erred in not ruling that CSC was an agent of STM and hence, estopped to sue
upon SLDR No. 1214M as assignee.

HELD:
NO. CSC was not an agent of STM. VMC heavily relies on STM’s letter of authority that
said CSC is authorized to withdraw sugar “for and in our behalf”. It is clear from Art.
1868 that the: basis of agency is representation. On the part of the principal,
there must be an actual intention to appoint or an intention naturally
inferable from his words or actions, and on the part of the agent, there must
be an intention to accept the appointment and act on it, and in the absence
of such intent, there is generally NO agency. One factor, which most clearly
distinguishes agency from other legal concepts, is control; one person – the agent –
agrees to act under the control or direction of another – the principal. Indeed, the very
word “agency” has come to connote control by the principal. The control factor, more
than any other, has caused the courts to put contracts between principal and agent in a
separate category. 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 persons alleging the agency, to show not only
the fact of its existence but also its nature and extent. It appears that CSC was a buyer
and not an agent of STM. CSC was not subject to STM’s control. The terms “for and in
our behalf” should not be eyed as pointing to the existence of an agency
relation. Whether or not a contract is one of sale or agency depends on the
intention of the parties as gathered from the whole scope and effect of the
language employed. Ultimately, what is decisive is the intention of the
parties. (In fact, CSC even informed VMC that the SLDR was sold and endorsed to it.)
Agency distinguished from sale.

In an agency to sell, the agent, in dealing with the thing received, is bound to act
according to the instructions of his principal, while in a sale, the buyer can deal with the
thing as he pleases, being the owner. The elementary notion of sale is the transfer of
title to a thing from one to another, while the essence of agency involves the idea of an
appointment of one to act for another. Agency is a relationship which often results in a
sale, but the sale is a subsequent step in the transaction. (Teller, op. cit., p. 26; see
Commissioner of Internal Revenue vs. Manila Machinery & Supply Co., 135 SCRA 8
[1985].) An authorization given to another containing the phrase “for and in our behalf’’
does not necessarily establish an agency, as ultimately what is decisive is the intention
of the parties. Thus, the use of the words “sold and endorsed’’ may mean that the
parties intended a contract of sale, and not a contract of agency.

12
Jocelyn B. Doles vs. Ma. Aura Tina Angeles
G.R. No. 149353. June 26, 2006.

Facts:
Petitioner executed a Deed of Absolute Sale ceding a parcel of land in favor of
respondent to satisfy the alleged indebtedness of the former in the amount of
P405,430.00. Since the said land was mortgaged to the National Home Mortgage
Finance Corporation, they further agreed that respondent assume the remaining
balance of the loan. Learning that the petitioner still has arrearages, respondent
demanded that the arrearages be paid first. Petitioner did not heed, thus a case was
filed by the respondent.

In answer, the petitioner alleged that sale was void for lack of consideration and that
she was not indebted to the respondent as she only referred her friends to respondent
whom she knew to be engaged in the business of lending money in exchange for
personal checks through her capitalist Arsenio Pua. Further petitioner contended that
since the respondent is also an agent, she does not have the capacity to sue her.

It is an admitted fact by both petitioner and defendant, based on their testimonies, that
respondent knew that the money will be used by the friends of the petitioner; that the
respondent was merely representing Arsenio Pua; and that before the supposed friends
of the petitioner defaulted in payment, each issued their personal checks in the name of
Arsenio Pua for the payment of their debt.

Issue/s:
Whether or not petitioner and respondent were acting on their personal capacity or as
mere agents.

Ruling:
The question whether an agency has been created is ordinarily a question which may
be established in the same was as any other fact, either by direct or circumstantial
evidence. Agency may be implied from the words and conduct of the parties and the
circumstances of the particular case. Though the fact or extent of authority of the
agents may not, as a general rule, be established from the declarations of the agents
alone, if one frofessed to act as agent for another, she may be stopped to deny her
agency both as against the asserted principal and the third persons interested in the
transaction in which he or she is engaged.

In this case, petitioner knew that the financier of the respondent is Pua, and
respondent knew that the borrowers are friends of petitioner. It is sufficient that
petitioner disclosed to respondent that the former was acting in behalf of her principals,

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her friends. For an agency to arise, it is not necessary that the principal personally
encounter the third person with whom the agent interacts.

Here, both petitioner and respondent have undeniably disclosed to each other that they
are representing someone else and so both of them are estopped to deny the same.

That both parties acted as mere agents is shown by the undisputed fact that the friends
of the petitioner issued checks in payment of the loan in the name of Arsenio Pua.

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