G.R. No.

L-40242 December 15, 1982

DOMINGA CONDE, petitioner, (IMPLIED AGENCY)

vs.
THE HONORABLE COURT OF APPEALS, MANILA PACIENTE CORDERO, together
with his wife, NICETAS ALTERA, RAMON CONDE, together with his wife,
CATALINA T. CONDE, respondents.

MELENCIO-HERRERA, J.:

Margarita Conde, Bernardo Conde and the petitioner Dominga Conde, as heirs of
Santiago Conde, sold with right of repurchase, within ten (10) years from said date, a
parcel of agricultural land located in Maghubas Burauen Leyte, (Lot 840), with an
approximate area of one (1) hectare, to Casimira Pasagui, married to Pio Altera
(hereinafter referred to as the Alteras), for P165.00.

The "Pacto de Retro Sale" further provided:

... (4) if at the end of 10 years the said land is not repurchased, a new
agreement shall be made between the parties and in no case title and
ownership shall be vested in the hand of the party of the SECOND
PART (the Alteras)

April 1941, the Cadastral Court of Leyte adjudicated Lot No. 840 to the Alteras "subject
to the right of redemption by Dominga Conde, within ten (10) years 

On 28 November 1945, private respondent Paciente Cordero, son-in-law of the Alteras,

signed a document in the Visayan dialect, the English translation of which reads:

MEMORANDUM OF REPURCHASE OVER A PARCEL OF LAND SOLD

WITH REPURCHASE WHICH DOCUMENT GOT LOST

That I, PIO ALTERA bought with the right of repurchase two parcels of land from
DOMINGA CONDE, BERNARDO CONDE AND MARGARITA CONDE, all brother and
sisters.

2. That these two parcels of land were all inherited by the three.

3. That the document of SALE WITH THE RIGHT OF REPURCHASE got lost in spite of
the diligent efforts to locate the same which was lost during the war.
4. That these two parcels of land which was the subject matter of a Deed of Sale with
the Right of Repurchase consists only of one document which was lost.

5. Because it is about time to repurchase the land, I have allowed the representative of
Dominga Conde, Bernardo Conde and Margarita Conde in the name of EUSEBIO
AMARILLE to repurchase the same.

6. Now, this very day November 28, 1945, 1 or We have received together with
Paciente Cordero who is my son-in-law the amount of ONE HUNDRED SIXTY-FIVE
PESOS (P165. 00) Philippine Currency of legal tender which was the consideration in
that sale with the right of repurchase with respect to the two parcels of land.

To be noted is the fact that neither of the vendees-a-retro, Pio Altera nor Casimira
Pasagui, was a signatory to the original deed. Petitioner maintains that because Pio
Altera was very ill at the time, Paciente Cordero executed the deed of resale for and
on behalf of his father-in-law. Petitioner Corder further states that she redeemed the
property with her own money as her co-heirs were bereft of funds for the purpose.

The pacto de retro document was eventually found.

On 30 June 1965 Pio Altera sold the disputed lot to the spouses Ramon Conde and
Catalina T. Conde, who are also private respondents herein. Their relationship to
petitioner does not appear from the records. Nor has the document of sale been
exhibited.

Contending that she (DOMINGA CONDE) had validly repurchased the lot in question in
1945, petitioner filed, on 16 January 1969, in the Court of First Instance of Leyte,
Branch IX, Tacloban City, a Complaint (Civil Case No. B-110), against Paciente
Cordero and his wife Nicetas Altera, Ramon Conde and his wife Catalina T. Conde, and
Casimira Pasagui Pio Altera having died in 1966), for quieting of title to real property
and declaration of ownership.

Petitioner's evidence is that Paciente Cordero signed the Memorandum of Repurchase

in representation of his father-in-law Pio Altera, who was seriously sick on that
occasion, and of his mother-in-law who was in Manila at the time, and that Cordero
received the repurchase price of P65.00

Private respondents, for their part, adduced evidence that Paciente Cordero signed the
document of repurchase merely to show that he had no objection to the repurchase;
and that he did not receive the amount of P165.00 from petitioner inasmuch as he had
no authority from his parents-in-law who were the vendees-a-retro. (THEY DENY
RECEIVING MONEY, THEY DENY PACIENTE’S AUTHORITY TO SIGN)

The lower Court rendered its Decision dismissing the Complaint by DOMINGA and the
counterclaim and ordering petitioner DOMINGA "to vacate the property in dispute and
deliver its peaceful possession to the defendants Ramon Conde and Catalina T. Conde
(The buyers of Pio Alteras)"

CA affirms RTC. that petitioner had failed to validly exercise her right of repurchase in
view of the fact that the Memorandum of Repurchase was signed by Paciente Cordero
and not by Pio Altera, the vendee-a-retro, and that there is nothing in said document to
show that Cordero was specifically authorized to act for and on behalf of the vendee a
retro, Pio Altera.

There is no question that neither of the vendees-a-retro signed the "Memorandum of

Repurchase", and that there was no formal authorization from the vendees for Paciente
Cordero to act for and on their behalf.

Of significance, however, is the fact that from the execution of the repurchase document
in 1945, possession, which heretofore had been with the Alteras, has been in the hands
of petitioner (DOMINGA CONDE) as stipulated therein. Land taxes have also been paid
for by petitioner yearly from 1947 to 1969 inclusive

If, as opined by both the Court a quo and the Appellate Court, petitioner had done
nothing to formalize her repurchase, by the same token, neither have the vendees-a-
retro done anything to clear their title of the encumbrance therein regarding petitioner's
right to repurchase. No new agreement was entered into by the parties as stipulated in
the deed of pacto de retro, if the vendors a retro failed to exercise their right of
redemption after ten years. If, as alleged, petitioner exerted no effort to procure the
signature of Pio Altera after he had recovered from his illness, neither did the Alteras
repudiate the deed that their son-in-law had signed. 

Thus, an implied agency must be held to have been created from their silence or lack of
action, or their failure to repudiate the agency.

Possession of the lot in dispute having been adversely and uninterruptedly with
petitioner from 1945 when the document of repurchase was executed, to 1969, when
she instituted this action, or for 24 years, the Alteras must be deemed to have incurred
in laches

Private respondents Ramon Conde and Catalina Conde, to whom Pio Altera sold the
disputed property in 1965, assuming that there was, indeed, such a sale, cannot be said
to be purchasers in good faith. 

Private respondent(PACIENTE CORDERO) must be held bound by the clear terms of

the Memorandum of Repurchase that he had signed wherein he acknowledged the
receipt of P165.00 and assumed the obligation to maintain the repurchasers in peaceful
possession should they be "disturbed by other persons". 

In sum, although the contending parties were legally wanting in their respective
actuations, the repurchase by petitioner is supported by the admissions at the pre-trial
that petitioner has been in possession since the year 1945, the date of the deed of
repurchase, and has been paying land taxes thereon since then. The imperatives of
substantial justice, and the equitable principle of laches brought about by private
respondents' inaction and neglect for 24 years, loom in petitioner's favor.

WHEREFORE, the judgment of respondent Court of Appeals is hereby REVERSED

and SET ASIDE, and petitioner is hereby declared the owner of the disputed property.

.R. No. L-67889 October 10, 1985 (GENERAL AGENCY)

PRIMITIVO SIASAT and MARCELINO SIASAT, petitioners,

vs.
INTERMEDIATE APPELLATE COURT and TERESITA NACIANCENO, respondents.

Payawal, Jimenez & Associates for petitioners.

Nelson A. Loyola for private respondent.

GUTIERREZ, JR., J.:

This is a petition for review of the decision of the Intermediate Appellate Court affirming
in toto the judgment of the Court of First Instance of Manila, Branch XXI, which ordered
the petitioner to pay respondent the thirty percent (30%) commission on 15,666 pieces
of Philippine flags worth P936,960.00

1974, respondent Teresita Nacianceno succeeded in convincing officials of the then

Department of Education and Culture, hereinafter called Department, to purchase
without public bidding, one million pesos worth of national flags for the use of public
schools throughout the country.

When Nacianceno was informed by the Chief of the Budget Division of the Department
that the purchase orders could not be released unless a formal offer to deliver the flags
in accordance with the required specifications was first submitted for approval, she
contacted the owners of the United Flag Industry on September 17, 1974. The next day,
after the transaction was discussed, the following document (Exhibit A) was drawn up:

Mrs. Tessie Nacianceno,

This is to formalize our agreement for you to represent United Flag

Industry to deal with any entity or organization, private or government in
connection with the marketing of our products-flags and all its accessories.
 For your service, you will be entitled to a commission of thirty

(30%) percent.

Signed
Mr. Primitive Siasat
Owner and Gen. Manager

On October 16, 1974, the first delivery of 7,933 flags was made by the United Flag
Industry. The next day, on October 17, 1974, the respondent's authority to represent the
United Flag Industry was revoked by petitioner Primitivo Siasat. (AFTER CLOSING THE
SALE WITH DTI, HEREIN FLAG MANUFACTURER WANTS TO UNDERCUT THE
AGENT)

Siasat, after receiving the payment of P469,980.00 on October 23, 1974 for the first
delivery, tendered the amount of P23,900.00 or five percent (5%) of the amount
received, to the respondent as payment of her commission.

The latter allegedly protested. She refused to accept the said amount insisting on the
30% commission agreed upon.

The respondent was prevailed upon to accept the same, however, because of the
assurance of the petitioners that they would pay the commission in full after they
delivered the other half of the order. The respondent states that she later on learned
that petitioner Siasat had already received payment for the second delivery of 7,833
flags. When she confronted the petitioners, they vehemently denied receipt of the
payment, at the same time claiming that the respondent had no participation
whatsoever with regard to the second delivery of flags and that the agency had already
been revoked.

she filed an action in the Court of First Instance of Manila to recover the following
commissions: 25%, as balance on the first delivery and 30%, on the second delivery.

he trial court decided in favor of the respondent. The dispositive portion of the decision
reads as follows:

WHEREFORE, judgment is hereby rendered sentencing Primitivo Siasat

to pay to the plaintiff the sum of P281,988.00,

The CA affirms.

 first, the authorization making the respondent the petitioner's representative merely
states that she could deal with any entity in connection with the marketing of their
products for a commission of 30%.
 There was no specific authorization for the sale of 15,666 Philippine flags to the
Department; second, there were two transactions involved evidenced by the separate
purchase orders and separate delivery receipts, Exhibit 6-C for the purchase and deliver
on October 16, 1974, and Exhibits 7 to 7-C, for the purchase and delivery on November
6, 1974. The revocation of agency effected by the parties with mutual consent on
October 17, 1974, therefore, forecloses the respondent's claim of 30% commission on
the second transaction;

This petition was initially dismissed for lack of merit in a minute resolution.

On a motion for reconsideration, however,this Court give due course to the

petition on November 14, 1984.

After a careful review of the records, we are constrained to sustain with some
modifications the decision of the appellate court.

We find respondent's argument regarding respondent's incapacity to represent them in

the transaction with the Department untenable. There are several kinds of agents. To
quote a commentator on the matter:

An agent may be (1) universal: (2) general, or (3) special. A universal;

agent is one authorized to do all acts for his principal which can lawfully be
delegated to an agent. So far as such a condition is possible, such an
agent may be said to have universal authority. (Mec. Sec. 58).

A general agent is one authorized to do all acts pertaining to a

business of a certain kind or at a particular place, or all acts
pertaining to a business of a particular class or series. He has
usually authority either expressly conferred in general terms or in
effect made general by the usages, customs or nature of the
business which he is authorized to transact.

An agent, therefore, who is empowered to transact all the business of his

principal of a particular kind or in a particular place, would, for this reason,
be ordinarily deemed a general agent. (Mec Sec. ,30).

A special agent is one authorized to do some particular act or to act upon

some particular occasion. lie acts usually in accordance with specific
instructions or under limitations necessarily implied from the nature of the
act to be done. (Mec. Sec. 61) (Padilla, Civil Law The Civil Code
Annotated, Vol. VI, 1969 Edition, p. 204).

The respondent was held by the Court as a general agent. he power granted to the
respondent was so broad that it practically covers the negotiations leading to, and the
execution of, a contract of sale of petitioners' merchandise with any entity or
organization.
If the contracts were separate and distinct from one another, the whole or at least a
substantial part of the government's supply procurement process would have been
repeated. In this case, what were issued were mere indorsements for the release of
funds and authorization for the next purchase.

Since only one transaction was involved, we deny the petitioners' contention that
respondent Nacianceno is not entitled to the stipulated commission on the second
delivery because of the revocation of the agency effected after the first delivery.

The revocation of agency could not prevent the respondent from earning her
commission because as the trial court opined, it came too late, the contract of sale
having been already perfected and partly executed.

The fact that the respondent demanded only the commission on the second delivery
without reference to the alleged unpaid balance which was only slightly less than the
amount claimed can only mean that the commission on the first delivery was already
fully paid, Considering the sizeable sum involved, such an omission is too glaringly
remiss to be regarded as an oversight.

Moreover, the respondent's authorization letter (Exhibit "5") bears her signature with the
handwritten words "Fully Paid", inscribed above it.

The respondent contested her signature as a forgery, Handwriting experts from two
government agencies testified on the matter. The reason given by the trial court in ruling
for the respondent is too flimsy to warrant a finding of forgery.

The underlying circumstances of this case lead us to rule out any award of attorney's
fees. For one thing, the respondent did not come to court with completely clean hands.
For another, the petitioners apparently believed they could legally revoke the agency in
the manner they did and deal directly with education officials handling the purchase of
Philippine flags. They had reason to sincerely believe they did not have to pay a
commission for the second delivery of flags.

We cannot close this case without commenting adversely on the inexplicably strange
procurement policies of the Department of Education and Culture in its purchase of
Philippine flags. There is no reason why a shocking 30% of the taxpayers' money
should go to an agent or facilitator who had no flags to sell and whose only work was to
secure and handcarry the indorsements of education and budget officials. T
 [G.R. No. 129919. February 6, 2002.]

DOMINION INSURANCE CORPORATION, Petitioner, v. (GENERAL

AGENCY) COURT OF APPEALS, RODOLFO S. GUEVARRA(FORMER
MANAGER OF DOMINION), and FERNANDO AUSTRIA, Respondents.

DECISION

PARDO, J.:

1991, plaintiff Rodolfo S. Guevarra (former manager of DOMINION)

instituted Civil Case No. 8855 for sum of money against defendant Dominion
Insurance Corporation. Plaintiff sought to recover thereunder the sum of
P156,473.90 which he claimed to have advanced in his capacity as manager
of defendant to satisfy certain claims filed by defendant’s clients.

"In its traverse, defendant denied any liability to plaintiff and asserted a
counterclaim for P249,672.53, representing premiums that plaintiff allegedly
failed to remit.

After setting forth pretrial dates, DOMINION, plaintiff, did not come and was held in
Default.

RTC held: he defendant Dominion Insurance Corporation to pay plaintiff the

sum of P156,473.90 representing the total amount advanced by plaintiff in
the payment of the claims of defendant’s clients;

CA affirmed the RTC.

The issues raised are: (1) whether respondent Guevarra acted within his
authority as agent for petitioner, and (2) whether respondent Guevarra is
entitled to reimbursement of amounts he paid out of his personal money in
settling the claims of several insured.

HELD: No. A perusal of the Special Power of Attorney 16 would show that
petitioner (represented by third-party defendant Austria) and respondent
Guevarra intended to enter into a principal-agent relationship. Despite the
word "special" in the title of the document, the contents reveal that
what was constituted was actually a general agency.

The terms of the agreement read:jgc:chanrobles.com.ph

"That we, FIRST CONTINENTAL ASSURANCE COMPANY, INC., 17 a

corporation duly organized and existing under and by virtue of the laws of
the Republic of the Philippines, . . . represented by the undersigned as
Regional Manager, . . . do hereby appoint RSG Guevarra Insurance Services
represented by Mr. Rodolfo Guevarra . . . to be our Agency Manager in San
Fdo.,

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 is required before respondent Guevarra could
settle the insurance claims of the insured.

Respondent Guevarra’s authority to settle claims is embodied in the

Memorandum of Management Agreement 23 dated February 18,
1987 which enumerates the scope of respondent Guevarra’s duties
and responsibilities as agency manager for San Fernando,
Pampanga, 

The instruction of petitioner as the principal could not be any clearer.

Respondent Guevarra was authorized to pay the claim of the
insured, but the payment shall come from the revolving fund or
collection in his possession. (HE IS NOT AUTHORIZED TO PAY FROM
HIS OWN POCKET THEREFORE)

Having deviated from the instructions of the principal, the expenses that
respondent Guevarra incurred in the settlement of the claims of the insured
may not be reimbursed from petitioner Dominion. This conclusion is in
accord with Article 1918, Civil Code, which states
that:jgc:chanrobles.com.ph

"The principal is not liable for the expenses incurred by the agent in the
following cases:jgc:chanrobles.com.ph

"(1) If the agent acted in contravention of the principal’s

instructions, unless the latter should wish to avail himself of the
benefits derived from the contract;
However, while the law on agency prohibits respondent Guevarra from
obtaining reimbursement, his right to recover may still be justified under the
general law on obligations and contracts.

Article 1236, second paragraph, Civil Code,

provides:jgc:chanrobles.com.ph

"Whoever pays for another(in this case GUEVARRA) may demand from the
debtor what he has paid, except that if he paid without the knowledge or
against the will of the debtor, he can recover only insofar as the payment
has been beneficial to the debtor."cralaw virtua1aw library

In this case, when the risk insured against occurred, petitioner’s liability as
insurer arose. This obligation was extinguished when respondent Guevarra
paid the claims and obtained Release of Claim Loss and Subrogation
Receipts from the insured who were paid.

Thus, to the extent that the obligation of the petitioner has been
extinguished, respondent Guevarra may demand for reimbursement from his
principal. To rule otherwise would result in unjust enrichment of petitioner.

Reimbursement is in order less the revolving cash, hence 112,000

G.R. No. 169442

REPUBLIC OF THE PHILIPPINES, represented by the PRIVATIZATION AND

MANAGEMENT OFFICE (PMO), Petitioner
vs.
ANTONIO V. BANEZ, LUISITA BANEZ VALERA, NENA BANEZ HOJILLA, and
EDGARDO B. HOJILLA, JR., Respondents

DECISION

PEREZ, J.:

In 1976, Antonio V. Bañez, Luisita Bañez Valera, and Nena Bañez Hojilla (collectively,
respondents) offered for sale a parcel of land (subject property), with an area of 20,000
sq m in Barangay Calaba, Bangued, Abra to Cellophil Resources Corporation (CRC).
Pursuant to the offer to sell on 7 December 1981, respondents executed a Letter
Agreement irrevocably giving CRC the option to purchase the subject property, which
CRC accepted
he pertinent portion of the Letter Agreement (hereinafter referred to as Contract), to wit:

1. The purchase price shall be Twenty Pesos xxx per square meter or a total amount of
Four Hundred Thousand Pesos (₱400,000.00).

2. The co-owners shall take all necessary steps to cause the CRC Portion to be
brought under the operation of Republic Act No. 496, as amended, and to cause
the issuance in their name of the corresponding original certificate of title, all of
the foregoing to be accomplished within a reasonable time from date hereof. xx

8. An absolute deed of sale containing the above provisions and standard
warranties on conveyances of real property shall be executed by the co-owners in
favor of CRC or its assignee/s and the same delivered to the latter together with the
original certificate of title upon payment of the purchase price less the advances made
by CRC in accordance with Paragraphs 2 and 3 above; provided, that payment shall
be made by CRC only upon presentation by the co-owners to CRC of certificate/s
and/or clearances, with corresponding receipts, issued by the appropriate
government office/s or agency/ies to the effect that capital gains tax, real estate
taxes on the Property and local transfer tax and other taxes, fees or charges due
on the transaction and/or on the Property have been paid.

Respondents asked for several cash advances which reached the total amount of, more
or less, Two Hundred Seventeen Thousand Pesos (P217,000.00), to be deducted from
the purchase price of Four Hundred Thousand Pesos (₱400,000.00). After paying cash
advances to respondents, CRC constructed staff houses and introduced improvements
on the subject property.

As respondents would be staying abroad for a time, they executed a Special Power of
Attorney (SPA) in favor of Edgardo B. Hojilla (Hojilla). The SPA authorized Hojilla to
perform the following:

1. To take all steps necessary to cause a portion of the lot covered by Tax Declaration
No. 40185 in the name of Urbano Bañez which is the subject of our "Offer to Sell" to
Cellophil Resources Corporation containing an area xxx to be brought under the
operation of Republic Act No. 496, as amended, and to cause the issuance in our name
of the corresponding original certificate of title.

2. To do all acts and things and to execute all papers and documents of whatever
nature or kind required for the accomplishments of the aforesaid purpose.

HEREBY GRANTING AND GIVING unto our said attorney full power and authority
whatsoever requisite or necessary or proper to be done in or about the premises as fully
to all intents and purposes as we might or could lawfully do if personally present (with
power of substitution and revocation), and hereby ratifying and confirming all that our
said attorney shall do or cause to be done under and by virtue of these presents
However, CRC stopped its operation. The Development Bank of the Philippines and
National Development Company took over CRC’s operation and turned over CRC’s
equity to Asset Privatization Trust (APT)

Thus, the original party, CRC, is now represented by the Republic of the Philippines
through the PMO (hereinafter referred to as petitioner), the successor of the defunct
APT.

As alleged by petitioner (CRC), respondents declared afterwards the subject property

as Urbano Bañez property, rented out to third parties the staff houses petitioner
constructed, and ordered its guards to prohibit the petitioner from entering the
compound, which impelled petitioner to file a complaint for specific performance,
recovery of possession, and damages against respondents, including Hojilla, on 10 April
2000. Among others, the complaint prayed for respondents to surrender and deliver the
title of the subject property, and execute a deed of absolute sale in favor of petitioner
upon full payment. It mentioned three letters sent to respondents on 29 May 1991, 24
October 1991, and 6 July 1999

If Hojilla knew that he had no authority to execute the Contract and receive the letters
on behalf of respondents, he should have opposed petitioner’s demand letters.
However, having received the several demand letters from petitioner, Hojilla
continuously represented himself as the duly authorized agent of respondents,
authorized not only to administer and/or manage the subject property, but also
authorized to register the subject property and represent the respondents with regard to
the latter’s obligations in the Contract. Hojilla also assured petitioner that petitioner’s
obligation to pay will arise only upon presentation of the title.

Clearly, the respondents are estopped by the acts and representations of their agent.
Falling squarely in the case at bar is our pronouncement in Philippine National Bank v.
IAC (First Civil Cases Div.),24 "[h]aving given that assurance, [Hojilla] may not turn
around and do the exact opposite of what [he] said [he] would do. One may not take
inconsistent positions. A party may not go back on his own acts and representations to
the prejudice of the other party who relied upon them." 25

Assuming further that Hojilla exceeded his authority, the respondents are still solidarily
liable because they allowed Hojilla to act as though he had full powers by impliedly
ratifying Hojilla’s actions—through action by omission. 26 This is the import of the
principle of agency by estoppel or the doctrine of apparent authority.

In an agency by estoppel or apparent authority, "[t]he principal is bound by the acts of

his agent with the apparent authority which he knowingly permits the agent to assume,
or which he holds the agent out to the public as possessing." 27
The respondents’ acquiescence of Hojilla’s acts was made when they failed to repudiate
the latter’s acts. They knowingly permitted Hojilla to represent them and petitioners
were clearly misled into believing Hojilla’s authority. Thus, the respondents are now
estopped from repudiating Hojilla’s authority, and Hojilla’s actions are binding upon the
respondents.

The Contract and True Intent of the Parties

Based on the stipulation in the Contract, the parties agreed that payment shall be made
only upon presentation of the title and other documents of the subject property to
petitioner. Paragraph 8 of the Contract reads:

8. An absolute deed of sale containing the above provisions and standard warranties on
conveyances of real property shall be executed by the co-owners in favor of CRC or its
assignee/s and the same delivered to the latter together with the original certificate of
title upon payment of the purchase price less the advances made by CRC in
accordance with Paragraphs 2 and 3 above; provided, that payment shall be made
by CRC only upon presentation by the co-owners to CRC of certificate/s and/or
clearances, with corresponding receipts, issued by the appropriate government
office/s or agency/ies to the effect that capital gains tax, real estate taxes on the
Property and local transfer tax and other taxes, fees or charges due on the
transaction and/or on the Property have been paid.38 (Emphasis and underscoring
ours)

The true intent of the parties is further enunciated in Hojilla's letter to petitioner dated 15
August 1984, which stated, "[t]he Baiiez heirs will only claim for the full payment of the
property upon presentation of a clean title and execution of a Deed of Sale signed by
the heirs."39

To rule in favor of respondents despite their failure to perform their obligations is the
height of injustice. Respondents cannot benefit from their own inaction and failure to
comply with their obligations in the Contract and let the petitioner suffer from
respondents' own default.
G.R. No. L-27134 February 28, 1986

COMPANIA MARITIMA, plaintiff-appellant,
vs.
JOSE C. LIMSON, defendant-appellant.

Jose W. Diokno and Sergio Guadiz for plaintiff-appellant.

Jose Gutierrez and Agustin Ferrer for defendant-appellant.

PATAJO, J.:

On October 8, 1962, plaintiff Compania Maritima filed a complaint against defendant

Jose C. Limson for collection of the sum of P44,701.54 representing the balance of
defendant's unpaid accounts for passage and freight on shipments of hogs, cattle and
carabaos abroad plaintiff's vessel from various ports of Visayas and Mindanao for the
period from October 1957 to February 1961
On July 16, 1963, defendant filed his answer to the complaint denying any liability to
plaintiff. Defendant alleged that he had already fully paid for all the shipments he made
and that a number of the bills of lading submitted by plaintiff as basis of its claim are not
properly chargeable to defendant since he was not the shipper nor had he authorized
said shipments which were made by parties other than those for whom defendant is
liable or who had been duly authorized by defendant to make said shipments.
Defendant further set up a counterclaim for the refund of the rebate to which he was
entitled to pursuant to an agreement that he had with plaintiff for shipments made by
him from Davao, Cotabato, Dadiangas, Iligan and Masbate and for cost of foodstuffs
sold or delivered to plaintiff in the total amount of P411,477.45.

On October 29, 1963, Mr. del Rosario submitted his report to the Court. The salient
points in said report showed that with respect to the claim of defendant against plaintiff,
the same was in the total amount of P676,416.05 broken down as follows:

For purchases of foodstuffs................ P433,237.75

Freight adjustments.............................. 8,170.45
Cash payments made by defendant... P235,007.85
P676,416.05
The bills examined by the Commissioner had been classified and regrouped by him into
(1) original bills of lading signed by defendant or his agent; (2) original bills of lading
without signature of defendant or his agent; and (3) charges with no original bills of
lading, to wit:

(1) Original bills of lading duly signed by

defendant or his agent.................... P68,209.76
(2) Original bills of lading without
the signature of defendant............ 310,317.21
(3) No original bills of lading............... 166,867.28

Said Commissioner recommended that only the amount of P68,209.76 supported by

original bills of lading signed by defendant or his agent is properly chargeable to
defendant.

After hearing the lower Court rendered judgment based principally on the report of the
Commissioner. The Court, however, held that defendant was liable for the bills of lading
without originals involving a total of P166,867.26 but liable on the bills of lading which
had not been signed by him or his authorized representative. The Court sustained
defendant's claim that "Perry" was not his authorized representative. Thus the lower
Court rendered judgment sentencing plaintiff to pay defendant the sum of P441,339.01
with interest thereon at the legal rate from the date of the filing of the counterclaim plus
P5,000.00 as attorney's fees. 

ISSUE: Was the trial court correct in not ruling for the billing of the bills of lading signed
by a certain “Perry”

With regards to the 91 controverted bills of lading signed by "Perry" with Limson as
shipper or consignee in the total amount of P61,981.50, witness Cabling testified that
the signatures therein are those of Cipriano Magtibay alias "Perry" who took delivery of
the cargoes stated therein after signing the delivery receipts. He testified thus:

These are all the signatures of Perry. I know it to be his because

oftentimes he goes there to get the deliver y orders and he signed as
"Perry" in my presence. His real name is Cipriano Magtibay. I allowed
delivery of the Cargoes to him because he was the regular representative
of Mr. Limson."

On the other hand, Nolasco Cruz Ilagan, delivery order clerk of Compania Maritima,
testified to this wise:

In issuing these delivery orders, I get the data from the manifests or from
the bills of lading. I know the defendant Limson in this case. He is now in
the Court room. I knew him since the middle of 1956 up to 1961 when I
was assigned in the Terminal Office of Maritima. I came to know him
because Mr. Cabling introduced to us that he is a regular shipper of hogs,
 cattles, carabaos coming from the southern ports. As a clerk, I prepared
the delivery orders for these cargoes to be delivered to Mr. Limson or his
authorized representatives. I will mention some of his representatives: For
hog the authorized representative is Cipriano Magtibay or Perry; and for
cattles, carabaos and cows, is Eye, Mario, Mr. Marcelino Tinoco and
others whom I don't remember the names. When these representatives of
Mr. Limson take delivery of the shipments, I let them sign the delivery
orders. I prepared the delivery orders as soon as Mr. Limson himself or his
authorized representative go to our office and present the bills of lading. In
case where there is no original bill of lading, delivery order is effected also
only when authorized by Mr. Cabling, basing on the manifests. The boat
gives us the manifest as soon as it arrives. (t.s.n. 255-256, Mar. 10/65 &
256-260, Mar. 10/65. Even though the name of the shipper is not Mr.
Limson or the consignee is not Mr. Limson, I prepared delivery orders by
authorization of Mr. Cabling. (pp. 260-261 Id). The authorized
representative to receive for hogs was Mr. Cipriano Magtibay alias "Perry".
He signs the delivery orders by the name of "Perry". 

We were also the ones who put on the delivery orders the statement "account Limson".
We put that to indicate the cargo is chargeable to Mr. Limson, so that the accounting
department would know that the shipment is chargeable to Mr. Limson." 

Regarding the 149 controverted bills of lading in the name of other persons as shippers
or consignees and signed by Perry in the total amount of P46,869.60, it was established
that said bills of lading were for cattle and hogs-purchased by the defendant from his
"viajeros" in Manila which were delivered to and received by defendant, and for which
he had to pay the freight charges, where in turn, he deducted from the purchase price
the corresponding cost of freight; or were for cattle or hogs that belonged to Marcelino
Tinoco from whom defendant had made arrangements for paying the purchase price of
said Tinoco's cargo partly with the freight costs for which defendant agreed to be
debited in his charge account with Maritima.

To be added to said rebate of P111,291.18 are the cash payment made by defendant of
P235,007.85, freight adjustment of Pl,138.45 and cost of foodstuffs purchased by
plaintiff from defendant of P411,982.35 (from the total of P433,237.75 representing the
amount of said purchase deduct P21,255.40 which had been billed twice), all of which
would total P759,419.83. Deducting from said amount, the total of freight charges in
favor of plaintiff as per the statement of account attached as Annex "A" to the complaint
of P698,159.14 would give a balance of P61,260.69 in favor of defendant.

It may be noted that in his answer to the complaint defendant stated that the total of his
claim against plaintiff for the cost of foodstuffs delivered is P411,477.45

As stated above, witnesses Cabling and Ilagan testified that the practice was that when
the originals of the bins of lading could not be surrendered because they have not yet
been received by the consignee, the delivery of the cargo was nevertheless authorized
and a delivery receipt was prepared on the basis of the ship's cargo manifests or the
ship's copy of the bills of lading. This only shows that the ship's cargo manifests or the
ship's copy of the bills of lading can be accepted as evidence of shipments made by
defendant since he was allowed to accept delivery of said shipments even without
presented his copy of the bill of lading.

By way of recapitulation, the total of freight charges due plaintiff based on

the freight charges appearing on the face of the bills of lading supporting
the statement of account attached to the complaint is P698,159.14.
Deduct from said
amount the following:

(1) Rebate................................................................... P111,291.18

(2) Cash payments made by defendant................. 235,007.85
(3) Freight adjustment.............................................. 1,138.45
(4) Cost of foodstuffs purchased from defendant..411,982.35
Total.......................... P759,419.83

would show a balance in favor of defendant of P61,260.69.

G.R. No. L-24765             August 29, 1969

PHILIPPINE NATIONAL BANK, plaintiff-appellee, (SPA was only to allow properties to

be mortgaged but not to enter into debts/actual loans. One sister got tangled up upon
issuing another SPA)
vs.
MAXIMO STA. MARIA,

In this appeal certified to this Court by the Court of Appeals as involving purely legal
issues, we hold that a special power of attorney to mortgage real estate is limited to
such authority to mortgage and does not bind the grantor personally to other obligations
contracted by the grantee, in the absence of any ratification or other similar act that
would estop the grantor from questioning or disowning such other obligations contracted
by the grantee.

Plaintiff bank filed this action on February 10, 1961 against defendant Maximo Sta.
Maria   for the collection of certain amounts representing unpaid balances on two
agricultural sugar crop loans due allegedly from defendants.
The said sugar crop loans were obtained by defendant Maximo Sta. Maria from plaintiff
bank under a special power of attorney, executed in his favor by his six brothers and
sisters, defendants-appellants herein, to mortgage a 16-odd hectare parcel of land,
jointly owned by all of them

In addition, Valeriana Sta. Maria alone also executed in favor of her brother, Maximo, a
special power of attorney to borrow money and mortgage any real estate owned by her,
granting him the following authority:

For me and in my name to borrow money and make, execute, sign and deliver
mortgages of real estate now owned by me standing in my name and to make,
execute, sign and deliver any and all promissory notes necessary in the
premises. 

By virtue of the two above powers, Maximo Sta. Maria applied for two separate crop
loans, for the 1952-1953 and 1953-1954 crop years, with plaintiff bank, one in the
amount of P15,000.00, of which only the sum of P13,216.11 was actually extended by
plaintiff, and the other in the amount of P23,000.00, of which only the sum of
P12,427.57 was actually extended by plaintiff.

As security for the two loans, Maximo Sta. Maria executed in his own name in favor of
plaintiff bank two chattel mortgages on the standing crops, guaranteed by surety bonds
for the full authorized amounts of the loans executed by the Associated Insurance &
Surety Co., Inc. as surety with Maximo Sta. Maria as principal

The trial court rendered judgment in favor of plaintiff-BANK and against defendants 

Defendant Maximo Sta. Maria and his surety, defendant Associated Insurance & Surety
Co., Inc. who did not resist the action, did not appeal the judgment.

This appeals been taken by his six brothers and sisters, defendants-appellants who
reiterate in their brief their main contention in their answer to the complaint that under
this special power of attorney, Exh. E, they had not given their brother, Maximo,
the authority to borrow money but only to mortgage the real estate jointly owned
by them; and that if they are liable at all, their liability should not go beyond the
value of the property which they had authorized to be given as security for the loans
obtained by Maximo.

ISSUE: Is an SPA giving authority to mortgage property extendible to be used to borrow money?

HELD: No.  the authority to mortgage does not carry with it the authority to contract
obligation.

The authority granted by defendants-appellants (except Valeriana) unto their brother,

Maximo, was merely to mortgage the property jointly owned by them. They did not grant
Maximo any authority to contract for any loans in their names and behalf. Maximo
alone, with Valeriana who authorized him to borrow money, must answer for said loans
and the other defendants-appellants' only liability is that the real estate authorized by
them to be mortgaged would be subject to foreclosure and sale to respond for the
obligations contracted by Maximo. But they cannot be held personally liable for the
payment of such obligations, as erroneously held by the trial court.

Plaintiff's argument that "a mortgage is simply an accessory contract, and that to effect
the mortgage, a loan has to be secured" 10 falls, far short of the mark. Maximo had
indeed, secured the loan on his own account and the defendants-appellants had
authorized him to mortgage their respective undivided shares of the real property jointly
owned by them as security for the loan. But that was the extent of their authority land
consequent liability, to have the real property answer for the loan in case of non-
payment. It is not unusual in family and business circles that one would allow his
property or an undivided share in real estate to be mortgaged by another as security,
either as an accommodation or for valuable consideration, but the grant of such
authority does not extend to assuming personal liability, much less solidary liability, for
any loan secured by the grantee in the absence of express authority so given by the
grantor.

The outcome might be different if there had been an express ratification of the loans by
defendants-appellants or if it had been shown that they had been benefited by the crop
loans so as to put them in estoppel. But the burden of establishing such ratification or
estoppel falls squarely upon plaintiff bank. It has not only failed to discharge this burden,
but the record stands undisputed that defendant-appellant Quintin Sta. Maria testified
that he and his co-defendants executed the authority to mortgage "to accommodate
(my) brother Dr. Maximo Sta. Maria ... and because he is my brother, I signed it to
accommodate him as security for whatever he may apply as loan. Only for that land, we
gave him as, security" and that "we brothers did not receive any centavo as benefit.

 Now, as to the extent of defendant Valeriana Sta. Maria's liability to plaintiff. As already
stated above, Valeriana stands liable not merely on the mortgage of her share in the
property, but also for the loans which Maximo had obtained from plaintiff bank, since
she had expressly granted Maximo the authority to incur such loans. 

WHEREFORE, the judgment of the trial court against defendants-appellants Emeteria,

Teofilo, Quintin, Rosario and Leonila, all surnamed Sta. Maria is hereby reversed and
set aside, with costs in both instances against plaintiff. The judgment against defendant-
appellant Valeriana Sta. Maria is modified in that her liability is held to be joint and not
solidary,
G.R. No. L-23181             March 16, 1925

THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellee,

vs.
GABRIELA ANDREA DE COSTER Y ROXAS, ET AL., defendants.
LA ORDEN DE DOMINICOS or PP. PREDICADORES DE LA PROVINCIA DEL
SANTISIMO ROSARIO, defendants-appellees;
GABRIELA ANDREA DE COSTER Y ROXAS, 

March 10, 1924, the plaintiff filed a complaint

 that the defendant 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.
Predicadores de la Provincia del Santisimo Rosario was a religious corporation
 that on December 29, 1921, for value, the defendant Gabriela Andrea de Coster y
Roxas, having the consent and permission of her husband, and he acting as her agent,
said defendants made to the plaintiff a certain promissory note for P292,000, payable
one year after date, with interest of 9 per cent per annum, payable monthly, in which,
among other things, it is provided that in the event of a suit or action, the defendants
should pay the further sum of P10,000, as attorney's fees; that the note in question was
a joint and several note; that to secure the payment thereof, the defendants Jean M.
Poizat and J. M. Poizat and Co. executed a chattel mortgage to the plaintiff on the
steamers Roger Poizat and Gabrielle Poizat, with the machinery and materials
belonging to the Poizat Vegetable Oil Mills and certain merchandise; that at the same
time and for the same purpose, the defendant Gabriela Andrea de Coster y Roxas,
having the consent and permission of her husband, and he acting as her agent, they
acknowledged and delivered to this plaintiff a mortgage on certain real property lying
and being situated in the City of Manila, which is specifically described in the mortgage
that the real property was subject to a prior mortgage in favor of La Orden de Dominicos
or PP. Predicadores de la Provincia del Santisimo Rosario, hence it is made a party
defendant; that the note in question is long past due and owing
The plaintiff having brought action against the defendants on the note in the Court of
First Instance of the City of Manila, civil case No. 25218; that in such case the court
rendered judgment against the defendants Gabriela Andrea de Coster y Roxas, Jean M.
Poizat and J. M. Poizat and Co. jointly and severally for P292,000, with interest at the
rate of 9 per cent per annum from the 31st of August, 1923, P10,000 as attorney's fees,
and P2,500 for and in account of insurance upon the steamer Gabrielle Poizat
Wherefore, plaintiff prays for an order of the court to direct the sheriff of the City of
Manila to take immediate possession of the property described in the chattel mortgage
and sell the same according to the Chattel Mortgage Law; that the property described in
the real mortgage or so much thereof as may be required to pay the amount due the
plaintiff be sold according to law; that out of such sales plaintiff shall be paid the amount
due and owing it; and that such defendants be adjudged to pay any remaining
deficiency.
the defendant Gabriela Andrea de Coster y Roxas filed a motion in which she recites
that
that the summons was delivered by the sheriff of the City of Manila to her husband, and
that through his malicious negligence, default was taken and judgment entered for the
respective amounts; that she never had any knowledge of the actual facts until the latter
part of July, 1924, when, through the local newspapers, she learned that a default
judgment had been rendered against her on July 28, 1924; 
 that she has a good and legal defense to the action, which involves the validity of the
order of the Dominican Fathers in this, that their mortgage does not guarantee any loan
made to this defendant; that it is a security only given for a credit of a third person; that
the mortgage was executed without the marital consent of the wife; and that he did not
have nay authority to make her liable as surety on the debt of a third person; that as
regards the notes to the plaintif
After counter showings by the bank and the Dominican Fathers and the arguments of
respective counsel, the motion to set aside and vacate the judgment was denied. A
motion for a reconsideration was then made, and the motion of the defendant to file an
answer and make a defense was again denied. The defendant Gabriela Andrea de
Coster y Roxas appeals,

The lower court erred in holding that in contracting the obligations in favor of the plaintiff
Bank of the Philippine Islands and of the defendant Orden de PP. Predicadores de la
Provincia del Santisimo Rosario, the agent of the defendant Gabriela Andrea de Coster
y Roxas acted within the scope of his powers.

VII. The lower court erred in not holding that the plaintiff Bank of the Philippine Islands
and the defendant Orden de PP. Predicadores de la Provincia del Santisimo Rosario
had knowledge of the fact that J.M. Poizat in contracting the respective obligations in
their favor, pretending to act as agent of the defendant Gabriela Andrea de Coster y
Roxas, was acting beyond the scope of his powers as such agent.

VIII. The lower court erred in making the following statement:

"It is however alleged, by the petitioner, that these loans were obtained to pay
debts, of strangers. Even so, this would not render the loan obtained by the
attorney in fact null and void. The circumstance that the agent used the money,
 borrowed by him within the scope of his powers, to purposes for which he was
not authorized by his principal, may entitle the latter to demand from him the
corresponding liability for the damages suffered, but it cannot prejudice the
creditor and cause the nullity of the loan. But, even admitting that the money
borrowed was used by Poizat to pay debts which did not belong to his principal,
even then, he would have acted within his powers, since his principal, together
with the power to borrow money, had given her agent power to loan any amount
of money, and the payment of the debts of a stranger would amount to a loan
made by the agent on behalf of his principal to the person or entity whose debt
was paid with the money obtained from the creditors."

That involves the legal construction of the power of attorney which, it is admitted, the
wife gave to her husband on August 25, 1903, which, among other things material to
this opinion, recites that she gave to him:

Such full and ample power as required or necessary, to the end that he may
perform on my behalf, and in my name and availing himself of all my rights and
actions, the following acts:

5. Loan or borrow any sums of money or fungible things at the rate of interest
and for the time and under the conditions which he might deem convenient,
collecting or paying the capital or the interest on their respective due dates;
executing and signing the corresponding public or private documents related
thereto, and making all these transactions with or without mortgages, pledges or
personal guaranty.

6. Enter into any kind of contracts whether civil or mercantile, giving due form
thereof either by private documents or public deeds with all clauses and
requisites provided by law for their validity and effect, having due regard to the
nature of each contract.

It is admitted that on December 29, 1921, the defendant husband signed the name of
the defendant wife to the promissory note in question, and that to secure the payment of
the note, upon the same date and as attorney in fact for his wife, the husband signed
the real mortgage in question in favor of the bank, and that the mortgage was duly
executed.
In other words, that under the power of attorney, the husband had no authority for and
on behalf of the wife to execute a joint and several note or to make her liable as an
accommodation maker. That the debt in question was a preexisting debt of her husband
and of the firm of J.M. Poizat and Co., to which she was not a party, and for which she
was under no legal obligation to pay. That she never borrowed any money from the
bank, and that previous to the signing of the note, she never had any dealings with the
bank and was not indebted to the bank in any amount. That the old, original debts of her
husband and J.M. Poizat and Co. to the bank, to which she was not a party, were all
taken up and merged in the new note of December 29, 1921, in question, and that at
the time the note was signed, she did not borrow any money, and that no money was
loaned by the bank to the makers of the note.

It will be noted that there is no provision in either of them which authorizes or empowers
him to sign anything or to do anything which would make his wife liable as a surety for a
preexisting debt. (AND ACCOMODATION MAKER - A person signing a note without
receiving compensation or other benefit is an accommodation maker. S/he can be an
acceptor, maker, or endorser. An accommodation maker guarantees the debt of
another person)
It is fundamental rule of construction that where in an instrument powers and duties are
specified and defined, that all of such powers and duties are limited and confined to
those which are specified and defined, and that all other powers and duties are
excluded.
There is nothing in the record tending to show that the husband accepted the service of
any notice or summons in the action on behalf of the bank, and even so, if he had, it
would not be a defense to open up and vacate a judgment under section 113 of the
Code of Civil Procedure. The same thing is true as to paragraph 9 of the power of
attorney.
It is very apparent from the face of the instrument that the whole purpose and intent of
the power of attorney was to empower and authorize the husband to look after and
protect the interests of the wife and for her and in her name to transact any and all of
her business. But nowhere does it provide or authorize him to make her liable as a
surety for the payment of the preexisting debt of a third person.

Hence, it follows that the husband was not authorized or empowered to sign the note in
question for and on behalf of the wife as her act and deed, and that as to her the note is
void for want of power of her husband to execute it.

The same thing is true as to the real mortgage to the bank. It was given to secure the
note in question and was not given for any other purpose. The real property described
in the mortgage to the bank was and is the property of the wife. The note being void as
to her, it follows that as to her the real mortgage to the bank is also void for want of
power to execute it.

aragraph 5 of the power of attorney specifically authorizes him to borrow money for and
on account of his wife and her name, "and making all these transactions with or without
mortgages, pledges or personal guaranty."

It follows that the judgment of the lower court in favor of La Orden de Dominicos or PP.
Predicadores de la Provincia del Santisimo Rosario is reversed
G.R. No. 94566 July 3, 1992

BA FINANCE CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS and TRADERS ROYAL BANK, respondents.

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

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. The letter reads:

This is in reference to the application of Gebbs International for a twenty-

five (25) month term loan of 60,000.00 with your Bank.

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.

 trial court rendered a decision the dispositive portion of which states:

IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of

plaintiff and against defendants/Gaytano spouses, ordering the latter to
jointly and severally pay the plaintiff

Not satisfied with the decision, respondent bank appealed with the Court of Appeals. On
March 13, 1990, respondent appellate court rendered judgment modifying the decision
of the trial court as follows:

In view of the foregoing, the judgment is hereby rendered ordering the

defendants Gaytano spouses and alternative defendant BA Finance
Corporation, jointly and severally, to pay the plaintiff the amount of
P85,807.25 as

Petitioner contends that the letter guaranty is ultra vires, and therefore unenforceable;
that said letter-guaranty was issued by an employee of petitioner corporation beyond
the scope of his authority since the petitioner itself is not even empowered by its articles
of incorporation and by-laws to issue guaranties. Petitioner also submits that it is not
guilty of estoppel to make it liable under the letter-guaranty because petitioner had no
knowledge or notice of such letter-guaranty; that the allegation of Philip Wong, credit
administrator, that there was an audit was not supported by evidence of any audit report
or record of such transaction in the office files.
HELD: We find the petitioner's contentions meritorious. 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 (Harry Keeler v.
Rodriguez, 4 Phil. 19). Hence, the burden is on respondent bank to satisfactorily prove
that the credit administrator with whom they transacted acted within the authority given
to him by his principal, petitioner corporation. The only evidence presented by
respondent bank was the testimony of Philip Wong, credit administrator, who testified
that he had authority to issue guarantees as can be deduced from the wording of the
memorandum given to him by petitioner corporation on his lending authority.
lthough Wong was clearly authorized to approve loans even up to P350,000.00 without
any security requirement, which is far above the amount subject of the guaranty in the
amount of P60,000.00, nothing in the said memorandum expressly vests on the credit
administrator power to issue guarantees. 
We cannot agree with respondent's contention that the phrase "contingent commitment"
set forth in the memorandum means guarantees. It has been held that a power of
attorney or authority of an agent should not be inferred from the use of vague or general
words. Guaranty is not presumed, it must be expressed and cannot be extended
beyond its specified limits
The sole allegation of the credit administrator in the absence of any other proof that he
is authorized to bind petitioner in a contract of guaranty with third persons should not be
given weight. The representation of one who acts as agent cannot by itself serve as
proof of his authority to act as agent or of the extent of his authority as agent (Velasco v.
La Urbana, 58 Phil. 681). Wong's testimony that he had entered into similar transactions
of guaranty in the past for and in behalf of the petitioner, lacks credence due to his
failure to show documents or records of the alleged past transactions.

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.

ACCORDINGLY, the petition is GRANTED and the assailed decision of the respondent
appellate court dated March 13, 1990 is hereby REVERSED and SET ASIDE

[G.R. No. L-42958. October 21, 1936.]

C.N. HODGES, Plaintiff-Appellant, v. CARLOTA SALAS and PAZ

SALAS, Defendants-Appellees.

Jose P. Orozco and Gibbs, McDonough & Ozaeta for Appellant.

Vicente Varela and Conrado V. Sanchez for Appellees.

The action was brought by the plaintiff HODGES to foreclose a certain real
estate mortgage constituted by the defendants-SALAS to secure a loan.
The plaintiff appealed from the judgment of the Court of First Instance of
Occidental Negros absolving the defendants from the complaint and stating:
That of the capital of P28,000 referred to in Exhibit A, the defendants were
liable only for the sum of P14,451.71; that the transactions and negotiations
specified in Exhibit A as well as the interest charged are usurious; that the
sum of P14,778.77 paid by the defendants to the plaintiff should be applied
to the payment of the capital of P14,451.71; that the plaintiff must refund
the sum of P3,327.06 to the defendants and, lastly, he must pay the costs.
On September 2, 1923, the defendants executed a power of attorney in
favor of their brother-in-law Felix S. Yulo to enable him to obtain a loan and
secure it with a mortgage on the real property described in transfer
certificate of title No. 3335.
Acting under said power of attorney, Felix S. Yulo, on March 27, 1926,
obtained a loan of P28,000 from the plaintiff, binding his principals jointly
and severally to pay it within ten (10) years, together with interest thereon
at 12 per cent per annum payable annually in advance, to which effect he
signed a promissory note for said amount and executed a deed of mortgage
of the real property described in transfer certificate of title No. 3335 and the
improvements thereon consisting in concrete buildings. 
The action brought by the plaintiff was for the foreclosure of a mortgage in
accordance with the provision of sections 254 to 261 of the Code of Civil
Procedure.
 This specific allegation is equivalent to a statement that the mortgage deed
had been duly registered.
At the trial of the case, the attorney for the plaintiff did not present the
mortgage deed showing the registration thereof in the registry, or the
owner’s transfer certificate of title. In their stead the plaintiff testified that
the mortgage had been duly registered in the registry of deeds of Occidental
Negros and had been noted on the back of the transfer certificate of title.
The oral evidence was admitted without any objection on the part of the
attorney for the defendants. In the appealed decision the court held that the
plaintiff had failed to substantiate his foreclosure suit and, not having
presented competent evidence, the action arising from his evidence was
merely a personal action for the recovery of a certain sum of money. 
The pertinent clauses of the power of attorney from which may be
determined the intention of the principals in authorizing their agent
to obtain a loan, securing it with their real property, were quoted at
the beginning. The terms thereof are limited; the agent was thereby
authorized only to borrow any amount of money which he deemed
necessary. There is nothing, however, to indicate that the
defendants had likewise authorized him to convert the money
obtained by him to him personal use.
With respect to a power of attorney of special character, it cannot be
interpreted as also authorizing the agent to dispose of the money as he
pleased, particularly when it does not appear that such was the intention of
the principals, and in applying part of the funds to pay his personal
obligations, he exceeded his authority 
In cases like the present one, it should be understood that the agent was
obliged to turn over the money to the principals or, at least, place it at their
disposal.
The plaintiff contends that the agent’s act of employing part of the loan to
pay his personal debts was ratified by the defendants in their letter to him
dated August 21, 1927 (Exhibit E). This court has carefully read the contents
of said document and has found nothing implying ratification or approval of
the agent’s act.
In view of the foregoing, this court concludes that the fifth and sixth
assignments of error are unfounded.
The appellees’ motion for reconsideration is denied.

G.R. No. L-7154             February 21, 1912

ELEANOR ERICA STRONG, ET AL., plaintiffs-appellees,

vs.
FRANCISCO GUTIERREZ REPIDE, defendant-appellant.

Chicote and Miranda and Tirso de Irureta Goyena for appellant.

Bruce, Lawrence, Ross and Block for appellees.

MORELAND, J.:

Prior to October 10, 1903, the plaintiff, Eleanor Erica Strong, was the owner of 800
shares of the capital stock of the Philippine Sugar Estates Development Company,
Limited (sociedad anonima), of the par value of P100 each, evidenced by certificates
Nos. 2125 to 2924, inclusive. 
On the said 10th day of October, 1903, the defendant, Francisco Gutierrez Repide, by
means subsequently found and adjudged to have been fraudulent, obtained possession
of said shares and thereafter alleged to be the owner thereof. 
nstance of the city of Manila (case No. 2365) asking that the fraudulent sale by means
of which the defendant obtained possession of the said shares be declared null and
void and that they be returned to her. On the 29th of April, 1904, the Court of First
Instance of the city of Manila rendered its decision in favor of Mrs Strong.
This judgment was, on appeal to the Supreme Court of the Philippine Islands, reversed,
and plaintiff's complaint dismissed on the merits.1 Thereupon plaintiff prosecuted an
appeal to the Supreme Court of the United States, which court, on the 3d of May, 1909,
rendered its judgment, reversing the decision of the Supreme Court of the Philippine
Islands and affirming the judgment of the trial court

The appellant in this case relies for the success of this appeal upon the form of the
judgment of the court below in said action No. 2365. He asserts that that judgment is for
a sum of money and not for the rescission of a contract and the return of shares of
stock. This being so, he maintains that the payment of the sum named in the judgment,
whether by money or by shares of stock, was a complete satisfaction of the judgment in
that case. The mere fact that it was paid in shares of stock did not indicate that the
judgment of the trial court was for shares of stock but said judgment was, on the
contrary, in reality and in legal effect for a sum of money which could be paid in shares
of stock as well as in coin of the realm. Basing himself upon this contention appellant
asserts that that judgment having been satisfied by the payment of the sum adjudged to
be due, a subsequent action for dividends on said stock is in effect an action for interest
on the said sum found to be due, that it affects the subject matter of a judgment already
paid and discharged.

We do not believe that the contention of the appellant is sound. The action begun in the
trial court was to set aside a sale made by the plaintiff to the defendant and for the
return of the shares of stock which were the subject of that sale. The basis of that action
was the claim that the plaintiff had been deprived of the shares of stock in question by
false and fraudulent representations and fraudulent concealment on the part of the
defendant, or of his agents, and that thereby she had been induced to part with those
shares without just compensation and, in reality, without her legal consent

It is a necessary conclusion, therefore, that the action was in reality for the return of the
stock itself, with appropriate damages in case the return was not made by the
defendant. The finding of the court that the value of the stock was P138,352.71 was not
made for the purpose of declaring the nature of the action to be one for the recovery of
money, but rather, for the purpose of giving to the plaintiff her alternative remedy in
case the stock itself should not be returned.

 It is to the effect that when the judgement in question was paid a stipulation or
agreement was entered into between him and the plaintiff by virtue of which the plaintiff
released him from all responsibility in connection with the transaction relating to the
stock. That agreement, translated, reads as follows:

I, W. H. Lawrence, lawyer, with full authority from the plaintiff in the above-
entitled action for the purpose of this instrument; and I, Eduardo Gutierrez
Repide, lawyer, and being also fully authorized and empowered hereto by the
defendant in said action, now, for the purpose of satisfying the judgment
rendered therein, I, W. H. Lawrence, hereby deliver to Eduardo Gutierrez
P14,159.29, and I, Eduardo Gutierrez, on my part deliver to said W. H. Lawrence
the cost of this action and eight certificates of stock of the Philippine Sugar
Estates Development Company, each certificate representing 100 shares, which
certificates are of the par value of P10,000 each, and are numbered 1621, 1623,
1624, 1625, 1626, 1628, 1629, and 1630. Wherefore, both parties agree and
stipulate that, by reason of the said payments hereby mutually made, the
judgment in the above-entitled action is entirely paid and the action is finally
settled and terminated, together with all the legal results flowing from said
judgment.
We see nothing in this written discharge which could properly be given the legal effects
which the appellant in this case assigns to it. It is a discharge of a judgment and nothing
more.
There is no basis, then, for the contention of the appellant unless it be found in the
wording of that instrument itself. 

While it may appear from the stipulation entered into when the judgment was
satisfied between the parties interchanging the shares of stock and money, as
before stated, that the plaintiff had no further claim against the defendant,
because at that time the plaintiff paid the defendant a large sum of money
without making claim, it also appears that the plaintiff was not aware that the
defendant had collected the dividends before referred to.

In arguing this question plaintiff's counsel devotes himself at some length to sustaining
this finding of fact, and asserts that "even had she been aware of this fact it would make
no difference for the reason that the matter of dividends was not and could not have
been involved in the original suit." I

It is true that plaintiff could have included in her action and recovered at the most only
those dividends which were due at the time judgment in her favor was entered. It
happens in this case that most of the dividends became payable after the plaintiff had
secured her judgment. That being so, they could not have been included by her in the
original complaint, not could they have been incorporated within the judgment in that
action. This, then, furnishes another reason why the contention of the appellant in this
regard cannot be sustained. Under such circumstances a plea of multiplicity, even if
made, would not have been available as to those dividends which became payable after
the judgment was entered in that action.

G.R. No. L-29917          December 29, 1928

JOSE M. KATIGBAK, Plaintiff-Appellee, vs. TAI HING CO., defendant.

PO SUN and PO CHING intervenors-appellants.

Gabino Barreto Po Ejap was the owner, with a Torrens title, of the land in
litigation, with the improvements thereon. This realty was subject to a
mortgage lien in favor of the Philippine National Bank, executed on May 5,
1919, to secure the payment of the sum of P60,000
 Po Tecsi executed a general power of attorney in favor of his brother Gabino
Barreto Po Ejap, empowering and authorizing him to perform on his behalf
and as lawful agent, among other acts, the following: "To buy, sell or barter,
assign or admit in acquittance, or in any other manner to acquire or convey
all sorts of property, real and personal

Po Sun Suy, as the judicial administrator of the estate of his

deceased father Po Tecsi, filed an intervention praying that
judgment be rendered against Jose M. Katigbak, the plaintiff,
declaring him not to be the owner of the property described in the
second paragraph of the complaint and, therefore, not entitled to the
rents of the property in question. chanrob

In first place, it is contended by the appellants that Gabino Barreto Po Ejap

was not authorized under the power executed by Po Tecsi in his favor to sell
said land, for the reason that said power had been executed before Gabino
Barreto Po Ejap sold said land to his brother Po
Tecsi.chanroblesvirtualawlibrary chanrobles virtual law library

We do not think that on this point the pertinent part of the power of attorney
we have quoted above could give rise to any doubt. The power is general
and authorizes Gabino Po Ejap to sell any kind of realty "belonging"
(pertenezcan) to the principal. The use of the subjunctive "pertenezcan"
(might belong) and not the indicative "pertenecen" (belong), means that Po
Tecsi meant not only the property he had at the time of the execution of the
power, but also such as the might afterwards have during the time it was in
force. (2 Corpus Juris, p. 614.) chanrobles virtual law library

The appellants also contend that said power of attorney not having been
registered in the registry of deeds, the authority granted therein to sell
realty registered in accordance with the Torrens system is ineffective, and
the sale of the property in question made by Gabino Barreto Po Ejap in favor
of Jose M. Katigbak by virtue of said power has no more effect than that of a
contract to transfer or sell.chanroblesvirtualawlibrary chanrobles virtual law
library

COURT SAID:
To summarize, then: the sale made on November 22, 1923, by Gabino
Barreto Po Ejap, as attorney-in-fact of Po Tecsi, in favor of Jose M. Katigbak
of the land in question is valid; after said sale, Po Tecsi leased the property
sold, from Gabino Barreto Po Ejap, who administered it in the name of Jose
M. Katigbak, at a rental of P1,500 per month, payable in advance, leaving
unpaid the rents accrued from that date until his death which occurred on
November 26, 1926, having paid the accrued rents up to October 22, 1925;
from November 26, 1926, the defendants Po Sun Suy and Po Ching leased
said land for the sum of P1,500 per month; on February 11, 1927, Po Sun
Suy was appointed administrator of the estate of his father Po Tecsi, and
filed with the court an inventory of said estate including the land in question;
and on May 23, 1927, Jose M. Katigbak sold the same property to Po Sun
Boo.chan
While it is true that a power of attorney not recorded in the registry of deeds
is ineffective in order than an agent or attorney-in-fact may validly perform
acts in the name of his principal, and that any act performed by the agent by
virtue of said with respect to the land is ineffective against a third person
who, in good faith, may have acquired a right thereto, it does, however, bind
the principal to acknowledge the acts performed by his attorney-in-fact
regarding said property

In the present case, while it is true that the non-registration of the

power of attorney executed by Po Tecsi in favor of his brother
Gabino Barreto Po Ejap prevents the sale made by the latter of the
litigated land in favor of Jose M. Katigbak from being recorded in the
registry of deeds, it is not ineffective to compel Tecsi to
acknowledge said sale.chanroblesvirtualawlibrary chanrobles virtual
law library

From the fact that said power and sale were not recorded in the registry of
deeds, and from the omission of any mention in the deed of sale of the
mortgage lien in favor of Antonio M. H. Limjenco, and the lease of a part of
said land in favor of Uy Chia, the appellants deduce that said sale is
fraudulent.chanroblesvirtu

The record contains many indication that Po Tecsi was not unaware of said
sale. His several letters complaining of the pressing demands of his brother
Gabino Barreto Po Ejap to send him the rents of the land, his promises to
send them to him, and the remittance of the same were a tacit
acknowledgment that he occupied the land in question no longer as an
owner but only as lessee.chanroblesvirtualawlibrary chanr

SECOND DIVISION

G.R. No. 214057, October 19, 2015

FLORENTINA BAUTISTA-SPILLE REPRESENTED BY HER ATTORNEY-

IN-FACT, MANUEL B. FLORES, JR., Petitioner, v. NICORP MANAGEMENT
 AND DEVELOPMENT CORPORATION, BENJAMIN G. BAUTISTA AND
INTERNATIONAL EXCHAN BANK, Respondents.

DECISION

Petitioner Florentina Bautista-Spille (petitioner) is the registered owner of a

parcel of land covered by Transfer Certificate of Title (TCT) No. T-197,
located in Imus City, Cavite, with an area of more or less 33,052 square
meters (subject property).

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.

On August 13, 2004, Benjamin and NICORP Management and Development

Corporation (NICORP) entered into a contract to sell5 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. It was also agreed that upon receipt of the down payment, the TCT
of the subject property would be deposited with the International Exchange
Bank (IE Bank) and placed in escrow. It would only be released upon full
payment of the agreed amount. Furthermore, Benjamin was required to
submit a special power of attorney (SPA) covering the sale transaction,
otherwise, the payment of the balance would be suspended and a penalty of
P150,000.00 every month would be imposed

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
letters8 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.

Consequently, petitioner filed a complaint9 before the RTC against Benjamin,

NICORP and IE Bank for declaration of nullity of the contract to sell,

The RTC granted the writ of preliminary injunction in its Order,

n its Answer,11 NICORP asked for the dismissal of the case for lack of a cause
of action and averred that Benjamin was empowered to enter into a contract
to sell by virtue of the general power of attorney; that the said authority was
valid and subsisting as there was no specific instrument that specifically
revoked his authority

RTC rendered its judgment, declaring the contract to sell null and void. 14 It
explained that the general power of authority only pertained to acts of
administration over petitioner's businesses and properties in the Philippines
and did not include authority to sell the subject property.

ggrieved, NICORP appealed before the CA.

In the assailed decision, the CA reversed the RTC decision, explaining that

the general power of attorney executed by petitioner in favor of Benjamin
authorized the latter not only to perform acts of administration over her
properties but also to perform acts of dominion which included, among
others, the power to dispose the subject property.

HELD. The Court finds for petitioner.

The well-established rule is when a sale of a parcel 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. Articles 1874 and 1878 of the Civil Code
explicitly provide:

Art. 1874. When a sale of a piece of land or any interest therein is through
an agent, the authority of the latter shall be in writing; otherwise, the sale
shall be void.

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

cases:chanRoblesvirtualLawlibrary

(1) x xx
(5) To enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a
valuable consideration;

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 conferred.

Doubtless, there was no perfected contract to sell between petitioner and

NICORP. 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.

In the same vein, NICORP cannot be considered a purchaser in good faith.

The well-settled rule is that a person dealing with an assumed agent is
bound to ascertain not only the fact of agency but also the nature and extent
of the agent's authority.

G.R. No. 70909 January 5, 1994 (LEASE OF LAND)

CONCHITA T. VDA. DE CHUA, THELMA CHUA, assisted by her husband,

CHARLIE DY, CHARLITO CHUA, REYNALDO CHUA, SUSAN CHUA, ALEX CHUA,
EDDIE CHUA, SIMON CHUA, AND ERNESTO CHUA, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT, VICENTE GO, VICTORIA T. GO, AND
HERMINIGILDA HERRERA,

Sometime in 1950, defendant Herminigilda Herrera executed a Contract of Lease (Exh.

"A") in favor of Tian On (sic) (or Sy Tian On) whereby the former leased to the latter
Lots. Nos. 620 and 7549 containing an area of 151 square meters, located at Manalili
Street (now V. Gullas Street) Cebu City, for a term of ten (10) years, renewable for
another five (5) years. The contract of lease (Exh. "A") contains a stipulation giving the
lessee an option to buy the leased property (Exh. A-2) and that the lessor guarantees to
leave the possession of said property to the lessee for a period of ten (10) years or as
long as the lessee faithfully fulfills the terms and conditions of their contract

in accordance with the said contract of lease, the lessee, Tian On, erected a residential
house on the leased premises.

On February 2, 1954, or within four (4) years from the execution of the said contract of
lease (Exh. "A"), the lessee, Sy Tian On, executed a Deed of Absolute Sale of Building
(Exh. "B") in favor of Chua Bok, the predecessor-in-interest of the plaintiffs herein,
whereby the former sold to the latter the aforesaid residential house for and in
consideration of the sum of P8,000.00.

When the Original Contract of Lease expired in 1960, Chua Bok and defendant
Herminigilda Herrera, through her alleged attorney-in-fact executed the following —

CONTRACT OF LEASE.

After the expiration of the contract of lease in question (Exh. "C") the plaintiffs herein,
who are the successors-in-interest of Chua Bok (who had meanwhile died) continued
possession of the premises up to
April 1978, with adjusted rental rate of P1,000.00 (Exh. "D"); later readjusted to
P2,000.00.

On July 26, 1977, defendant Herrera through her attorney-in-fact, Mrs. Luz Tormis, who
was authorized with a special power of attorney, sold the lots in question to defendants-
spouses, Vicente and Victoria Go. The defendants-spouses were able to have aforesaid
sale registered with the Register of Deeds of the City of Cebu and the titles of the two
parcels of land were transferred in their names

Thereafter, or on November 18, 1977, plaintiffs filed the instant case seeking the
annulment of the said sale between Herminigilda Herrera and spouses Vicente and
Victoria Go, alleging that the conveyance was in violation of the plaintiffs' right of option
to buy the leased premises as provided in the Contract of Lease

After due trial, the lower court rendered judgment, the dispositive portion of which reads
as follows:

WHEREFORE, in view of the foregoing, this Court ORDERS:

1) The DISMISSAL of plaintiffs' complain

The Court of Appeals affirmed

In declaring the contract of lease (Exh. "C") void, the Court of Appeals noted that
Vicenta R. de Reynes was not armed with a special power of attorney to enter into
a lease contract for a period of more than one year.

Ob

The lease contract (Exh. "C"), the linchpin of petitioners' cause of action, involves the
lease of real property for a period of more than one year. The contract was entered into
by the agent of the lessor and not the lessor herself. In such a case, the law requires
that the agent be armed with a special power of attorney to lease the premises.

Article 1878 of the New Civil Code, in pertinent part, provides:

 Special Power of Attorney are necessary in the following cases:

xxx xxx xxx

(8) To lease any real property to another person for more than one year.

It is true that respondent Herrera allowed petitioners to occupy the leased premises
after the expiration of the lease contract (Exh. "C") and under
Article 1670 of the Civil Code of the Philippines, a tacit renewal of the lease (tacita
reconduccion) is deemed to have taken place. However, as held in Bernardo M. Dizon
v. Ambrosio Magsaysay, 57 SCRA 250 (1974), a tacit renewal is limited only to the
terms of the contract which are germane to the lessee's right of continued enjoyment of
the property and does not extend to alien matters, like the option to buy the leased
premises.
Art. 1670. If at the end of the contract the lessee should continue enjoying the thing
leased for fifteen days with the acquiescence of the lessor, and unless a notice to the
contrary by either party has previously been given, it is understood that there is an
implied new lease, not for the period of the original contract, but for the time established
in Articles 1682 and 1687. The other terms of the original contract shall be revived
WHEREFORE, the petition is DENIED.

G.R. No. L-18377           December 29, 1962

ANASTACIO G. DUÑGO, petitioner,
vs.
ADRIANO LOPENA, ROSA RAMOS and HON. ANDRES REYES, Judge of the
Court of First Instance of Rizal, respondents.

Gatchalian, Padilla & Sison for petitioner.

Santiago F. Alidio for respondents.

REGALA, J.:

On September 10, 1959, herein petitioner Anastacio Duñgo and one Rodrigo S.
Gonzales purchased 3 parcel of land from the respondents Adriano Lopena and Rosa
Ramos for the total price of P269,804.00. Of this amount P28.000.00 was given as
down payment with the agreement that the balance of P241,804.00 would be paid in 6
monthly installments. (SALE OF 3 PARCELS OF LAND, ON INSTALLMENT, WITH
DOWNPAYMENT)
To secure the payment of the balance Anastacio Duñgo and Rodrigo S. Gonzales, the
vendees, on September 11, 1958, executed over the same 3 parcels of land Deed of
Real Estate Mortgage in favor of the respondent Adriano Lopena and Rosa Ramos.
This deed was duly registered with the Office of the Register of Deeds Rizal, with the
condition that failure of the vendees to pay any of the installments on their maturity
dates shall automatically cause the entire unpaid balance to become due and
demandable.
The vendees defaulted, prompting the vendors – respondents to file a case with CFI Rizal.
COMPROMISE AGREEMENT.
Before the cases could be tried, a compromise agreement dated January 15, 1960 was
submitted to the lower court for approval. It was signed by herein respondents Adriano
Lopena and Rosa Ramos on one hand, and Rodrigo S. Gonzales, on the other. It was
not signed by the herein petitioner – ANASTACIA DUNGO.. However, Rodrigo S.
Gonzales represented that his signature was for both himself and the herein petitioner.
Moreover, Anastacio Duñgo's counsel of record, Atty. Manuel O. Chan, the same lawyer
who signed and submitted for him the answer to the complaint, was present at the
preparation of the compromise agreement and this counsel affixed his signature thereto.
2ND COMPROMISE AGREEMENT
Subsequently, on May 3, 1960, a so-called Tri-Party Agreement was drawn. The
signatories to it were Anastacio Duñgo (herein petitioner) and Rodrigo S. Gonzales as
debtors, Adriano Lopena and Rosa Ramos (herein respondents) as creditors, and, one
Emma R. Santos as pay or. 
When Anastacio Duñgo (herein petitioner) and Rodrigo S. Gonzales failed to pay the
balance of their indebtedness on June 30, 1960, herein respondents Lopena and
Ramos filed on July 5, 1960, a Motion for the Sale of Mortgaged Property. Although this
last motion was filed ex parte, Anastacio Duñgo and Rodrigo S. Gonzales were notified
of it by the lower court. Neither of them, however, despite the notice, filed any
opposition thereto. As a result, the lower court granted the above motion on July 19,
1960, and ordered the sale of the mortgaged property.
On August 25, 1960, the 3 parcels of land above-mentioned were sold by the Sheriff at
a public auction where at herein petitioners, together with the plaintiffs of the other two
cases won as the highest bidders
On August 31, 1960, Anastacio Duñgo filed a motion to set aside all the proceedings on
the ground that the compromise agreement dated January 15, 1960 was void ab
initio with respect to him because he did not sign the same. Consequently, he argued,
all subsequent proceedings under and by virtue of the compromise agreement,
including the foreclosure sale of August 25, 1960, were void and null as regards him.
This motion to set aside, however, was denied by the lower court in its order of
December 14, 1960.
 1) Was the compromise agreement of January 15, 1960, the Order of the same
date approving the same, and, all the proceedings subsequent thereto, valid or
void insofar as the petitioner herein is concerned?
Petitioner Anastacio Duñgo insists that the Compromise Agreement was
void ab initio  and could have no effect whatsoever against him because he did
not sign the same. Furthermore, as it was void, all the proceedings
subsequent to its execution, including the Order approving it, were similarly
void and could not result to anything adverse to his interest.

HELD: The SC Did not agree.

The argument was not well taken. It is true that a compromise is, in itself, a contract. It is as such
that the Civil Code speaks of it.

ART. 2028. A compromise is a contract whereby the parties, by making reciprocal

concessions, avoid a litigation or put an end to one already commenced.

Moreover, under Art. 1878 of the Civil Code, a third person cannot bind another to a
compromise agreement unless he, the third person, has obtained a special power of attorney
for that purpose from the party intended to be bound.

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

x x x           x x x          x x x

x x x           x x x          x x x

(3) 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;

However, although the Civil Code expressly requires a special power of attorney in order that one
may compromise an interest of another, it is neither accurate nor correct to conclude that its
absence renders the compromise agreement void. In such a case, the compromise is merely
unenforceable. This results from its nature is a contract. It must be governed by the rules and the
law on contracts.

ART. 1403. The following contracts are unenforceable, unless they are ratified:

(1) Those entered into in the name of another person by one who has been given no
authority or legal representation, or who has acted beyond his powers;

Logically, then, the next inquiry in this case should be whether the herein petitioner, Anastacio
Duñgo had or had not ratified the compromise agreement. If he had, then the compromise
agreement was legally enforced against him; otherwise, he should be sustained in his contention
that it never bound him, nor ever could it be made to bind him
 The ratification of the compromise agreement was conclusively established by the Tri-
Party Agreement of May 1960.

Petitioner Duñgo finally argued that even assuming that the compromise agreement was valid, it
nevertheless could not be enforced against him because it has been novated by the Tri-Party
Agreement which brought in a third party, namely, Emma R. Santos, who assumed the mortgaged
obligation of the herein petitioner.

This Court cannot accept the argument. Novation by presumption has never been favored. To be
sustained, it need be established that the old and new contracts are incompatible in all points, or that
the will to novate appears by express agreement of the parties or in acts of similar import

An obligation to pay a sum of money is not novated, in a new instrument wherein the old is
ratified, by changing only the term of payment and adding other obligations not incompatible with
the old one 

WHEREFORE, the petition for certiorari and mandamus filed by the herein petitioner is hereby
dismissed.

G.R. No. L-32473 July 31, 1973

IGNACIO VICENTE and MOISES ANGELES, petitioners,

vs.
HON. AMBROSIO M. GERALDEZ, as Judge of the Court of First Instance of Bulacan, Branch
V (Sta. Maria), and HI CEMENT CORPORATION, respondents

G.R. No. L-32483 July 31, 1973

JUAN BERNABE, petitioner,
vs.
HI CEMENT CORPORATION and THE HON. AMBROSIO M. GERALDEZ, Presiding Judge,
Branch V, Court of First Instance of Bulacan, respondents.

On September 9, 1967 herein private respondent Hi Cement Corporation filed with the Court of First
Instance of Bulacan a complaint for injunction and damages against herein petitioners Juan
Bernabe, Ignacio Vicente and Moises Angeles. In said complaint the plaintiff alleged that it had
acquired on October 27, 1965, Placer Lease Contract No. V-90, from the Banahaw Shale Mining
Association, under a deed of sale and transfer which was duly registered with the Office of the
Mining Recorder of Bulacan on November 4, 1965 and duly approved by the Secretary of Agriculture
and Natural Resources on December 15, 1965

that the said Placer Lease Contract No. V-90 was for a period of twenty-five years commencing from
August 1, 1960 and covered two mining claims (Red Star VIII & IX) with a combined area of about
fifty-one hectares; that within the limits of Placer Mining Claim Red Star VIII are three parcels of land
claimed by the defendants Juan Bernabe (about two hectares), Ignacio Vicente (about two hectares)
and Moises Angeles (about one-fourth hectare)
that the plaintiff had requested the defendants to allow its workers to enter the area in question for
exploration and development purposes as well as for the extraction of minerals therefrom, promising
to pay the defendants reasonable amounts as damages, but the defendants refused to allow entry of
the plaintiff's representatives; that the defendants were threatening the plaintiff's workers with bodily
harm if they entered the premises, for which reason the plaintiff had suffered irreparable damages
due to its failure to work on and develop its claims and to extract minerals therefrom, resulting in its
inability to comply with its contractual commitments, for all of which reasons the plaintiff prayed the
court to issue preliminary writs of mandatory injunction perpetually restraining the defendants and
those cooperating with them from the commission or continuance of the acts complained of, ordering
defendants to allow plaintiff, or its agents and workers, to enter, develop and extract minerals from
the areas claimed by defendants, to declare the injunction permanent after hearing, and to order the
defendants to pay damages to the plaintiff in the amount of P200,000.00

 the trial court, however, directed the issuance of a writ of preliminary mandatory injunction upon the
plaintiff's posting of a bond in the amount of P100,000.00. In its order, the court suggested the
relocation of the boundaries of the plaintiff's claims in relation to the properties of the defendants,
and to this end named as Commissioner, a Surveyor from the Office of the District Engineer of
Bulacan to relocate the boundaries of the plaintiff's mining claims, to show in a survey plan the
location of the areas thereof in conflict with the portions whose ownership is claimed by the
defendants and to submit his report thereof to the court on or before October 31, 1967

 plaintiff HI Cement Corporation filed a motion to amend the complaint "so as to conform to the facts
brought out and/or impliedly admitted in the pre-trial. This motion was granted by the court on April
6, 1968. Accordingly, on October 21, 1968, the plaintiff filed its amended complaint. The
amendments consisted in the statement of the correct areas of the land belonging to defendants
Bernabe (57,539 square meters), Vicente (32,619 square meters) and Angles (34,984 square
meters), as well as the addition of allegations to the effect, among others, that at the pre-trial the
defendants Angeles and Vicente declared their willingness to sell to the plaintiff their properties
covered by the plaintiff's mining claims for P10.00 per square meter, and that when the plaintiff
offered to pay only P0.90 per square meter, the said defendants stated that they were willing to go to
trial on the issue of what would be the reasonable price for the properties of defendants sought to be
taken by plaintiff.

The respective counsels of the parties then conferred among themselves on the possibility of
terminating the case by compromise, the defendants having previously signified their
willingness to sell to the plaintiff their respective properties at reasonable prices.

On September 15, 1969, Commissioner Liberato Barrameda submitted to the court for its approval a
Consolidated Report, containing the three reports of the Commissioners of the plaintiff and the three
defendants, together with an analysis of the said reports and a summary of the important facts and
conclusions. The following unit prices for the three defendants' properties were recommended in the
Consolidated Report:

A — JUAN BERNABE at P12.00 per square meter, wherefrom plaintiff has been
extracting its first output, and would still continue to extract therefrom as the property
consists of a mountain of limestone and shale;

B — IGNACIO VICENTE:

a) 60% or 19,571.4 sq. m. (mineral land) at P12.00 per sq. m.

 b) 40% or 13,047.6 sq. m. (riceland) at P8.00 per sq. m.

C — MOISES ANGELES (riceland) at P8.00 per sq. m.

It is worthy of note that in the individual report of the Commissioner nominated by plaintiff HI Cement
Corporation, the price recommended for defendant Juan Bernabe's property was P0.60 per square
meter, while in the individual report of the Commissioner nominated by the said defendant, the price
recommended was P50.00 per square meter. The Commissioners named by defendants Vicente
and Angeles recommended was P15.00 per square meter for the lands owned by the said two
defendants, while the Commissioners named by the said two defendants, while the Commissioner
named by the plaintiff recommended P0.65 per square meter for Vicente's land, and P0.55 per
square meter for Angeles' land.

On October 21, 1969, Atty. Francisco Ventura, one of the three lawyers for plaintiff HI Cement
Corporation, filed with the trial court a manifestation stating that on September 1, 1969 he sent a
copy of the Compromise Agreement to Mr. Antonio Diokno, President of the corporation, requesting
the latter to intercede with the Board of Directors for the confirmation or approval of the commitment
made by the plaintiff's lawyers to abide by the decision of the Court

On November 5, 1969, defendant Bernabe filed an answer to Atty. Ventura's manifestation, praying
the court to ignore, disregard and, if possible, order striken from the record, the plaintiff's
manifestation on the following grounds

cast suspicion on the sincerity of the plaintiff's motive; that when the Compromise Agreement was
being considered, the court inquired from the parties and their respective lawyers if all the attorneys
appearing in the case had been duly authorized and/or empowered to enter into a compromise
agreement, and the three lawyers for the plaintiff answered in the affirmative; that in fact it was Atty.
Ventura himself who prepared the draft of the Compromise Agreement in his own handwriting and
was the first to sign the agreement; that one of the three lawyers for the plaintiff, Atty. Florentino V.
Cardenas, who also signed the Compromise Agreement, was the official representative, indeed was
an executive official, of plaintiff corporation; that the Compromise Agreement, having been executed
pursuant to a pre-trial conference, partakes the nature of a stipulation of facts mutually agreed upon
by the parties and approved by the court, hence, was binding and conclusive upon the parties; and
that the nomination by the plaintiff of Mr. Larry G. Marquez as its Commissioner pursuant to the
Compromise Agreement, was a clear indication of the plaintiff's tacit approval of the terms and
conditions of the Compromise Agreement, i

On March 23, 1970 defendant Juan Bernabe filed an urgent motion for execution of judgment
anchored on the proposition that the judgment, being based on a compromise agreement, is not
appealable and is, on the other hand, immediately executory. The other two defendants, Moises
Angeles and Ignacio Vicente, likewise filed their respective motions for execution. These motions
were granted by the court in its Order of April 14, 1970.
ISSUE:

At issue is whether the respondent court, in setting aside its decision of March 13, 1970 and denying
the motions for execution of said decision, had acted without or in excess of its jurisdiction or with
grave abuse of discretion. We hold that said court did not, in view of the following considerations:

1. Special powers of attorney are necessary, among other cases, in the following: to compromise
and to renounce the right to appeal from a judgment.  Attorneys have authority to bind their clients in
1

any case by any agreement in relation thereto made in writing, and in taking appeals, and in all
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.
2

The Compromise Agreement dated January 30, 1969 was signed only by the lawyers for petitioners
and by the lawyers for private respondent corporation. It is not disputed that the lawyers of
respondent corporation had not submitted to the Court any written authority from their client to enter
into a compromise.

This Court has said that the Rules  "require, for attorneys to compromise the litigation of their clients,
3

a special authority. And while the same does not state that the special authority be in writing the
court has every reason to expect that, if not in writing, the same be duly established by evidence
other than the self-serving assertion of counsel himself that such authority was verbally given him." 4

The law specifically requires that "juridical persons may compromise only in the form and with the
requisites which may be necessary to alienate their property."  Under the corporation law the power
5

to compromise or settle claims in favor of or against the corporation is ordinarily and primarily
committed to the Board of Directors. The right of the Directors "to compromise a disputed claim
against the corporation rests upon their right to manage the affairs of the corporation according to
their honest and informed judgment and discretion as to what is for the best interests of the
corporation."  This power may however be delegated either expressly or impliedly to other corporate
6

officials or agents. Thus it has been stated, that as a general rule an officer or agent of the
corporation has no power to compromise or settle a claim by or against the corporation, except to
the extent that such power is given to him either expressly or by reasonable implication from the
circumstances.  It is therefore necessary to ascertain whether from the relevant facts it could be
7

reasonably concluded that the Board of Directors of the HI Cement Corporation had authorized its
lawyers to enter into the said compromise agreement.

Petitioners however insist that there was tacit ratification on the part of the corporation, because it
nominated Mr. Larry Marquez as its commissioner pursuant to the agreement, paid his services
therefor, and Atty. Florentino V. Cardenas, respondent corporation's administrative manager, not
only did not object but even affixed his signature to the agreement. It is also argued that respondent
corporation having represented, through its lawyers, to the court and to petitioners that said lawyers
had authority to bind the corporation and having induced by such representations the petitioners to
sign the compromise agreement, said respondent is now estopped from questioning the same.

he infirmity of these arguments is in their assumption that Atty. Cerdenas as administrative manager
had authority to bind the corporation or to compromise the case. Whatever authority the officers or
agents of a corporation may have is derived from the board of directors, or other governing body,
unless conferred by the charter of the corporation. 

In the absence of any proof that the governing body of respondent corporation had knowledge,
either actual or constructive, or the contents of the compromise agreement before September 1,
1969, why should the nomination of Mr. Marquez as commissioner, by Attys. Ventura, Cardenas and
Magpantay, on February 26, 1969, be considered as a form of tacit ratification of the compromise
agreement by the corporation? In order to ratify the unauthorized act of an agent and make it binding
on the corporation, it must be shown that the governing body or officer authorized to ratify had full
and complete knowledge of all the material facts connected with the transaction to which it relates.  It
9

cannot be assumed also that Atty. Cardenas, as administrative manager of the corporation, had
authority to ratify. For ratification can never be made "on the part of the corporation by the same
persons who wrongfully assume the power to make the contract, but the ratification must be by the
officer or governing body having authority to make such contract and, as we have seen, must be
with full knowledge." 
10

HEREFORE, the petitions in these two cases are hereby dismissed.

G.R. No. L-38816             November 3, 1933

INSULAR DRUG CO., INC., plaintiff-appellee,

vs.
THE PHILIPPINE NATIONAL BANK, ET AL., defendants.
THE PHILIPPINE NATIONAL BANK, appellant.

This is an appeal taken by Philippine National Bank from a judgment of the Court of First Instance of
Manila requiring bank to pay to the Insular Drug Co., Inc., the sum of P18,285.92

 U.E. Foerster was formerly a salesman of drug company for the Islands of Panay and Negros.
Foerster also acted as a collector for the company. He was instructed to take the checks which
came to his hands for the drug company to the Iloilo branch of the Chartered Bank of India, Australia
and China and deposit the amounts to the credit of the drug company. Instead, Foerster deposited
checks, including those of Juan Llorente, Dolores Salcedo, Estanislao Salcedo, and a fourth party,
with the Iloilo branch of the Philippine National Bank. The checks were in that bank placed in the
personal account of Foerster. 

Instead, Foerster deposited checks, including those of Juan Llorente, Dolores Salcedo, Estanislao
Salcedo, and a fourth party, with the Iloilo branch of the Philippine National Bank. The checks were
in that bank placed in the personal account of Foerster. 

Eventually the Manila office of the drug company investigated the transactions of Foerster. Upon the
discovery of anomalies, Foerster committed suicide.

But there is no evidence showing that the bank knew that Foerster was misappropriating the funds of
his principal. The Insular Drug Company claims that it never received the face value of 132 checks
here in the question covering a total of P18,285.92.lawphil.net

The drug company saw fit to stand on the proposition that checks drawn in its favor were improperly
and illegally cashed by the bank for Foerster and placed in his personal account, thus making it
possible for Foerster to defraud the drug company, and the bank did not try to go back of this
proposition.
The next point relied upon by the bank, to the effect that Foerster had implied authority to indorse all
checks made out in the name of the Insular Drug Co., Inc., has even less force. Not only did the
bank permit Foerster to indorse checks and then place them to his personal account, but it went
farther and permitted Foerster's wife and clerk to indorse the checks.

The right of an agent to indorse commercial paper is a very responsible power and will not be lightly
inferred. A salesman with authority to collect money belonging to his principal does not have the
implied authority to indorse checks received in payment. Any person taking checks made payable to
a corporation, which can act only by agent does so at his peril, and must same by the consequences
if the agent who indorses the same is without authority

 Further speaking to the errors specified by the bank, it is sufficient to state that no trust fund was
involved; that the fact that bank acted in good faith does not relieve it from responsibility; that no
proof was adduced, admitting that Foerster had right to indorse the checks, indicative of right of his
wife and clerk to do the same , and that the checks drawn on the Bank of the Philippine Islands can
not be differentiated from those drawn on the Philippine National Bank because of the indorsement
by the latter.

In brief, this is a case where 132 checks made out in the name of the Insular Drug Co., Inc., were
brought to the branch office of the Philippine National Bank in Iloilo by Foerster, a salesman of the
drug company, Foerster's wife, and Foerster's clerk. The bank could tell by the checks themselves
that the money belonged to the Insular Drug Co., Inc., and not to Foerster or his wife or his clerk.
When the bank credited those checks to the personal account of Foerster and permitted Foerster
and his wife to make withdrawals without there being made authority from the drug company to do
so, the bank made itself responsible to the drug company for the amounts represented by the
checks. The bank could relieve itself from responsibility by pleading and proving that after the money
was withdrawn from the bank it passed to the drug company which thus suffered no loss, but the
bank has not done so. Much more could be said about this case, but it suffices to state in conclusion
that bank will have to stand the loss occasioned by the negligence of its agents.