G.R. No.

95909               August 16, 1991

UNILAND RESOURCES, petitioner,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES,* respondent.

FACTS:
Marinduque Mining Corporation got hold of a loan from the DBP and mortgaged a warehouse
lot and an office building lot previously mortgaged by MMC to Caltex, and the mortgage in
favor of DBP was entered on their titles as a second mortgage. The account of the Marinduque
Mining Corp., with the DBP was later transferred to the Assets Privatization Trust (APT).
Caltex foreclosed the mortgage due to the nonpayment of MMC. APT on the other hand
offered for sale to the public through DBP its right of redemption on said two lots by public
bidding. DBP subsequently retrieved the account from APT and redeemed said lots from
Caltex. A public bidding for the sale of the two lots was held and the warehouse lot was sold
to Charges Realty Corp. The office building lot was later sold by DBP to a different buyer.
After the aforesaid sale, Uniland Resources sent two letters to DBP asking for the payment of
its broker's fee in instrumenting the sale of it’s the warehouse lot to Charges Realty Corp.
Uniland filed a case to recover from DBP the broker's fee.
The Trial Court ordered DBP to pay the brokers’s fee to the petitioner. On appeal,
the Court of Appeals reversed the judgment of the lower court ..
Petitioner asserts that the respondent Court of Appeals disregarded evidence in its favor
consisting of its letters to respondent DBP's higher officers sent prior to the bidding and sale,
wherein petitioner requested accreditation as a broker and, in the process of informing that it
had offered the DBP properties for sale, also volunteered the name of its client, Glaxo,
Philippines, as an interested prospective buyer.7
Issue:
Whether or not the petitioner there is a contract of agency between DBP and Uniland in the
sale of warehouse lot.
Held:
No.
There is no contract of agency, express or implied. The petitioner was never able to secure the
required accreditation from respondent DBP to transact business on behalf of the latter. It was
always made clear to petitioner that only accredited brokers may look for buyers on behalf of
respondent DBP. The contract of Agency is one founded on mutual consent: the principal
agrees to be bound by the acts of the agent and the latter in turn consents to render service on
behalf or in representation of the principal.
In its reply submitted pursuant to the resolution requiring the same 13 petitioner also invokes
Article 1869 of the new Civil Code 14 in contending that an implied agency existed. Petitioner
argues that it "should have been stopped, disauthorized and outrightly prevented from
dealing the 12,355 sq. m (with warehouse) [sic] by the DBP from the inception." 15 On the
contrary, these steps were never necessary. In the course of petitioner's dealings with the DBP,
it was always made clear to petitioner that only accredited brokers may look for buyers on
behalf of respondent DBP.
Petitioner, however, also invokes equity considerations, and in equity, the Court recognizes
the efforts of petitioner in bringing together respondent DBP and an interested and
financially-able buyer. While not actively involved in the actual bidding and transfer of
ownership of the warehouse property, petitioner may be said to have initiated, albeit without
proper authority, the transaction that eventually took place. The Court is also aware that
respondent DBP was able to realize a substantial profit from the sale of its two properties.
While purely circumstantial, there is sufficient reason to believe that the DBP became more
confident to venture and redeem the properties from the APT due to the presence of a ready
and willing buyer, as communicated and assured by petitioner.
WHEREFORE, the decision appealed from is hereby AFFIRMED, with the MODIFICATION that in
equity respondent DBP is ordered to pay petitioner the amount of One Hundred Thousand
Pesos (P100,000.00). No pronouncement as to costs.
G.R. No. 144805 June 8, 2006

EDUARDO V. LINTONJUA, JR. and ANTONIO K. LITONJUA, Petitioners,

vs.
ETERNIT CORPORATION (now ETERTON MULTI-RESOURCES CORPORATION),
ETEROUTREMER, S.A. and FAR EAST BANK & TRUST COMPANY, Respondents.

FACTS:
Eternit Corp. is engaged in the manufacture of roofing materials and pipe products. Its
manufacturing operations were conducted on 8 parcels of land located in Mandaluyong City,
covered by TCTs with Far East Bank & Trust Company, as trustee. 90% of the shares of stocks of
Eternit Corp. were owned by Eteroutremer S.A. Corporation (ESAC), a corporation organized
and registered under the laws of Belgium. Jack Glanville, an Australian citizen, was the
General Manager and President of Eternit Corp., while Claude Frederick Delsaux was the
Regional Director for Asia of ESAC.
In 1986, the management of ESAC grew concerned about the political situation in the
Philippines and wanted to stop its operations in the country. The Committee for Asia of ESAC
instructed Michael Adams, a member of Eternit Corp.’s Board of Directors, to dispose of the
eight parcels of land. Adams engaged the services of realtor/broker Lauro G. Marquez so that
the properties could be offered for sale to prospective buyers. Marquez offered the parcels of
land and the improvements thereon to Eduardo B. Litonjua, Jr. of the Litonjua & Company, Inc.
Marquez declared that he was authorized to sell the properties for P27,000,000.00 and that
the terms of the sale were subject to negotiation. Eduardo Litonjua, Jr. responded to the offer.
Marquez showed the property to Eduardo Litonjua, Jr., and his brother Antonio K. Litonjua. The
Litonjua siblings offered to buy the property for P20,000,000.00 cash. Marquez apprised
Glanville of the Litonjua siblings’ offer and relayed the same to Delsaux in Belgium, but the
latter did not respond. Glanville telexed Delsaux in Belgium, inquiring on his position/
counterproposal to the offer of the Litonjua siblings. Delsaux sent a telex to Glanville stating
that, based on the “Belgian/Swiss decision,” the final offer was “US$1,000,000.00 and
P2,500,000.00 to cover all existing obligations prior to final liquidation. Litonjua, Jr. accepted
the counterproposal of Delsaux. Marquez conferred with Glanville, and confirmed that the
Litonjua siblings had accepted the counter-proposal of Delsaux. He also stated that the Litonjua
siblings would confirm full payment within 90 days after execution and preparation of all
documents of sale, together with the necessary governmental clearances.
The Litonjua brothers deposited the amount of US$1,000,000.00 with the Security Bank &
Trust Company, Ermita Branch, and drafted an Escrow Agreement to expedite the sale. With
the assumption of Corazon Aquino as President of RP, the political situation in the Philippines
had improved. Marquez received a telephone call from Glanville, advising that the sale would
no longer proceed. Glanville followed it up with a letter, confirming that he had been instructed
by his principal to inform Marquez that the decision has been taken at a Board Meeting not to
sell the properties on which Eternit Corp. is situated.
When apprised of this development, the Litonjuas, through counsel, wrote Eternit Corp.,
demanding payment for damages they had suffered on account of the aborted sale. EC,
however, rejected their demand.
The Litonjuas then filed a complaint for specific performance and damages
In their answer to the complaint, EC and ESAC alleged that since Eteroutremer was not doing
business in the Philippines, it cannot be subject to the jurisdiction of Philippine courts ; the
Board and stockholders of EC never approved any resolution to sell subject properties nor
authorized Marquez to sell the same; and the telex dated October 28, 1986 of Jack Glanville
was his own personal making which did not bind EC.
On July 3, 1995, the trial court rendered judgment in favor of defendants and dismissed the
amended complaint.
WHEREFORE, the complaint against Eternit Corporation now Eterton Multi-Resources
Corporation and Eteroutremer, S.A. is dismissed on the ground that there is no valid and
binding sale between the plaintiffs and said defendants.
The trial court declared that since the authority of the agents/realtors was not in writing, the
sale is void and not merely unenforceable, and as such, could not have been ratified by the
principal. In any event, such ratification cannot be given any retroactive effect. Plaintiffs could
not assume that defendants had agreed to sell the property without a clear authorization
from the corporation concerned, that is, through resolutions of the Board of Directors and
stockholders. The trial court also pointed out that the supposed sale involves substantially all
the assets of defendant EC which would result in the eventual total cessation of its operation.14
The Litonjuas appealed the decision to the CA,
On June 16, 2000, the CA rendered judgment affirming the decision of the RTC. 16 The
Litonjuas filed a motion for reconsideration, which was also denied by the appellate court.
The CA ruled that Marquez, who was a real estate broker, was a special agent within the
purview of Article 1874 of the New Civil Code. Under Section 23 of the Corporation Code, he
needed a special authority from EC’s board of directors to bind such corporation to the sale of
its properties. Delsaux, who was merely the representative of ESAC (the majority stockholder of
EC) had no authority to bind the latter. The CA pointed out that Delsaux was not even a
member of the board of directors of EC. Moreover, the Litonjuas failed to prove that an
agency by estoppel had been created between the parties.
ISSUE:
WON Marquez, Glanville, and Delsaux were authorized by respondent Eternit Corp. to act as its
agents relative to the sale of the properties of Eternit Corp., and if so, what are the boundaries
of their authority as agents
HELD:
No.
A corporation is a juridical person separate and distinct from its members or stockholders and
is not affected by the personal rights, obligations and transactions of the latter. It may act only
through its board of directors or, when authorized either by its by-laws or by its board
resolution, through its officers or agents in the normal course of business.
The general principles of agency govern the relation between the corporation and its officers
or agents, subject to the articles of incorporation, bylaws, or relevant provisions of law. The
property of a corporation is not the property of the stockholders or members, and as such, may
not be sold without express authority from the board of directors. Physical acts, like the
offering of the properties of the corporation for sale, or the acceptance of a counter-offer of
prospective buyers of such properties and the execution of the deed of sale covering such
property, can be performed by the corporation only by officers or agents duly authorized for
the purpose by corporate by-laws or by specific acts of the board of directors.
Absent such valid delegation/authorization, the rule is that the declarations of an individual
director relating to the affairs of the corporation, but not in the course of, or connected with,
the performance of authorized duties of such director, are not binding on the corporation.
While a corporation may appoint agents to negotiate for the sale of its real properties, the final
say will have to be with the board of directors through its officers and agents as authorized by
a board resolution or by its by-laws.3 An unauthorized act of an officer of the corporation is
not binding on it unless the latter ratifies the same expressly or impliedly by its board of
directors. Any sale of real property of a corporation by a person purporting to be an agent
thereof but without written authority from the corporation is null and void.
An agency may be expressed or implied from the act of the principal, from his silence or lack of
action, or his failure to repudiate the agency knowing that another person is acting on his
behalf without authority. Acceptance by the agent may be expressed, or implied from his acts
which carry out the agency, or from his silence or inaction according to the circumstances.
Agency may be oral unless the law requires a specific form. However, to create or convey real
rights over immovable property, a special power of attorney is necessary.
The Litonjuas failed to adduce in evidence any resolution of the Board of Directors of Eternit
Corp. empowering Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for sale,
for and in its behalf, the 8 parcels of land owned by Eternit Corp. including the improvements
thereon. The bare fact that Delsaux may have been authorized to sell to Ruperto Tan the shares
of stock of respondent ESAC cannot be used as basis for Litonjua’s claim that he had likewise
been authorized by Eternit Corp. to sell the parcels of land. While Glanville was the President
and General Manager of Eternit Corp., and Adams and Delsaux were members of its Board of
Directors, the three acted for and in behalf of respondent ESAC, and not as duly authorized
agents of Eternit Corp.; a board resolution evincing the grant of such authority is needed to
bind Eternit Corp. to any agreement regarding the sale of the subject properties. Such board
resolution is not a mere formality but is a condition sine qua non to bind Eternit Corp.
Requisites of an agency by estoppels: (1) the principal manifested a representation of the
agent’s authority or knowingly allowed the agent to assume such authority; (2) the third
person, in good faith, relied upon such representation; (3) relying upon such representation,
such third person has changed his position to his detriment.

G.R. No. 142625             December 19, 2006

ROGELIO P. NOGALES, for himself and on behalf of the minors, ROGER ANTHONY,
ANGELICA, NANCY, and MICHAEL CHRISTOPHER, all surnamed NOGALES, petitioners,
vs.
CAPITOL MEDICAL CENTER, DR. OSCAR ESTRADA, DR. ELY VILLAFLOR, DR. ROSA UY,
DR. JOEL ENRIQUEZ, DR. PERPETUA LACSON, DR. NOE ESPINOLA, and NURSE J.
DUMLAO, respondents.

FACTS:
Corazon Nogales (Corazon) was pregnant of her 4th child and was under the exclusive
prenatal care of Dr. Oscar Estrada (Dr. Estrada). On her last trimester of pregnancy, Dr. Estrada
noted an increase in Corazon’s blood pressure and development of leg edema which may lead
to a dangerous complication of pregnancy. When Corazon started experiencing mild labor
pains, she and his husband Rogelio opted to see Dr. Estrada for examination, and the latter
advised them to admit Corazon to the Capitol Medical Center (CMC). Short after Corazon’s bag
of water ruptured, she started to experience convulsions. Dr. Estrada and another physician in
the name of Dr. Villaflor began extracting the baby, which allegedly torn a piece of cervical
tissue of the patient. After the baby was taken out of the womb, Corazon began to manifest
moderate vaginal bleeding which rapidly became profuse. Despite efforts to revive the patient,
Corazon died. The cause of which was “hemorrhage, post-partum.”
Rogelio Nogales, et al. (petitioners) filed a complaint for damages against CMC, Dr. Estrada,
and the other involved medical personnel of the hospital (Dr. Villaflor, Dr. Uy, Dr. Enriquez, Dr.
Lacson, Dr. Espinola, and a certain Nurse J. Dumlao) for the death of Corazon, charging CMC
with negligence in the selection and supervision of defendant physicians and hospital staff.
The RTC (Manila) rendered judgment finding Dr. Estrada solely liable for damages. In ruling
the same, the Court finds no legal justification to find the other impleaded physicians and
hospital personnel civilly liable.
Upon appeal, petitioners claimed that aside from Dr. Estrada, the remaining respondents
should be held equally liable for negligence, pointing out the extent of each respondent’s
alleged liability.
The CA affirmed the decision of the trial court and on ruling the same, the Court of Appeals
applied the “borrowed servant” doctrine considering that Dr. Estrada was an independent
contractor who was merely exercising hospital privileges. This doctrine provides that once the
surgeon enters the operating room and takes charge of the proceedings, the acts or omissions
of operating room personnel, and any negligence associated with such acts or omissions, are
imputable to the surgeon. While the assisting physicians and nurses may be employed by the
hospital, or engaged by the patient, they normally become the temporary servants or agents
of the surgeon in charge while the operation is in progress, and liability may be imposed upon
the surgeon for their negligent acts under the doctrine of respondeat superior. Hence, the
petition.
ISSUE:
Whether CMC is vicariously liable for the negligence of Dr. Estrada.
HELD:
YES.
Art. 2180. The obligation imposed by article 2176 is demandable not only for one’s own acts or
omissions, but also for those of persons for whom one is responsible.
xxxx
Employers shall be liable for the damages caused by their employees and household helpers
acting within the scope of their assigned tasks, even though the former are not engaged in any
business or industry.
xxxx
The responsibility treated of in this article shall cease when the persons herein mentioned
prove that they observed all the diligence of a good father of a family to prevent damage.
Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
In general, a hospital is not liable for the negligence of an independent contractor-physician.
There is, however, an exception to this principle. The hospital may be liable if the physician is
the “ostensible” agent of the hospital. This is known as the “doctrine of apparent authority.”
In Gilbert v. Sycamore Municipal Hospital, the Illinois Supreme Court explained the doctrine of
apparent authority in this wise:
[U]nder the doctrine of apparent authority a hospital can be held vicariously liable for the
negligent acts of a physician providing care at the hospital, regardless of whether the physician
is an independent contractor, unless the patient knows, or should have known, that the
physician is an independent contractor. The elements of the action have been set out as
follows:
“For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that:
(1) the hospital, or its agent, acted in a manner that would lead a reasonable person to
conclude that the individual who was alleged to be negligent was an employee or agent of the
hospital; (2) where the acts of the agent create the appearance of authority, the plaintiff must
also prove that the hospital had knowledge of and acquiesced in them; and (3) the plaintiff
acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care
and prudence.”
xxxx
The doctrine of apparent authority essentially involves two factors to determine the liability of
an independent-contractor physician:
The first factor focuses on the hospital’s manifestations and is sometimes described as an
inquiry whether the hospital acted in a manner which would lead a reasonable person to
conclude that the individual who was alleged to be negligent was an employee or agent of
the hospital. In this regard, the hospital need not make express representations to the patient
that the treating physician is an employee of the hospital; rather a representation may be
general and implied. The second factor focuses on the patient’s reliance. It is sometimes
characterized as an inquiry on whether the plaintiff acted in reliance upon the conduct of the
hospital or its agent, consistent with ordinary care and prudence.
YUN KWAN BYUNG V PAGCOR
GR. NO. 163553
FACTS:
PAGCOR launched its Foreign Highroller Marketing Program. The Program aims to invite
patrons from foreign countries to play at the dollar pit of designated PAGCOR-operated
casinos under specified terms and conditions and in accordance with industry practice.
The Korean-based ABS Corporation was one of the international groups that availed of the
Program. In the Junket Agreement dated 25 April 1996, ABS Corporation agreed to bring in
foreign players to play at the five designated gaming tables of the Casino Filipino Silahis at the
Grand Boulevard Hotel in Manila (Casino Filipino).
The relevant stipulations of the Junket Agreement state:
1. PAGCOR will provide ABS Corporation with separate junket chips. The junket chips will be
distinguished from the chips being used by other players in the gaming tables. ABS Corporation
will distribute these junket chips to its players and at the end of the playing period, ABS
Corporation will collect the junket chips from its players and make an accounting to the casino
treasury.
2. ABS Corporation will assume sole responsibility to pay the winnings of its foreign players
and settle the collectibles from losing players.
3. ABS Corporation shall hold PAGCOR absolutely free and harmless from any damage, claim or
liability which may arise from any cause in connection with the Junket Agreement.
4. In providing the gaming facilities and services to these foreign players, PAGCOR is entitled to
receive from ABS Corporation a 12.5% share in the gross winnings of ABS Corporation or 1.5
million US dollars, whichever is higher, over a playing period of 6 months. PAGCOR has the
option to extend the period.
Petitioner, a Korean national, alleges that he came to the Philippines four times to play for
high stakes at the Casino Filipino; that in the course of the games, he was able to accumulate
gambling chips worth US$2.1 million.
Petitioner contends that when he presented the gambling chips for encashment with
PAGCORs employees or agents, PAGCOR refused to redeem them. PAGCOR claims that
petitioner, who was brought into the Philippines by ABS Corporation, is a junket player who
played in the dollar pit exclusively leased by ABS Corporation for its junket players. PAGCOR
alleges that it provided ABS Corporation with distinct junket chips.
ABS Corporation distributed these chips to its junket players. At the end of each playing period,
the junket players would surrender the chips to ABS Corporation. Only ABS Corporation would
make an accounting of these chips to PAGCORs casino treasury.
The Trial Court dismissed the complaint and ruled that the Junket Agreement is void. Since the
Junket Agreement is not permitted by PAGCORs charter, the mutual rights and obligations of
the parties to this case would be resolved based on agency and estoppel.
The CA affirmed the trial court’s decision. It upheld that the Junket Agreement was void and
cannot give rise to an implied agency which the petitioner claims to exist between PAGCOR
and ABS Corporation.
The CA explained that it cannot see how the principle of implied agency can be applied to this
case. Article 1883 of the Civil Code applies only to a situation where the agent is authorized by
the principal to enter into a particular transaction, but instead of contracting on behalf of the
principal, the agent acts in his own name.
ISSUES:
1. Whether the CA erred in holding that PAGCOR is not liable to petitioner, disregarding the
doctrine of implied agency, or agency by estoppel;
2. Whether the CA erred in using intent of the contracting parties as the test for creation of
agency, when such is not relevant since the instant case involves liability of the presumed
principal in implied agency to a third party; and
3. Whether the CA erred in failing to consider that PAGCOR ratified, or at least adopted, the
acts of the agent, ABS Corporation.

HELD:
1. Acts and conduct of PAGCOR negates the existence of an implied agency or an agency by
estoppels. The basis for agency is representation, [that is, the agent acts for and on behalf of
the principal on matters within the scope of his authority and said acts have the same legal
effect as if they were personally executed by the principal. [On the part of the principal, there
must be an actual intention to appoint or an intention naturally inferable from his words or
actions, while on the part of the agent, there must be an intention to accept the appointment
and act on it.
Absent such mutual intent, there is generally no agency.
There is no implied agency in this case because PAGCOR did not hold out to the public as the
principal of ABS Corporation. PAGCORs actions did not mislead the public into believing that an
agency can be implied from the arrangement with the junket operators, nor did it hold out ABS
Corporation with any apparent authority to represent it in any capacity.
The Junket Agreement was merely a contract of lease of facilities and services.
2. The SC held that the Court of Appeals correctly used the intent of the contracting parties in
determining whether an agency by estoppel existed in this case.
An agency by estoppel, which is similar to the doctrine of apparent authority requires proof of
reliance upon the representations, and that, in turn, needs proof that the representations
predated the action taken in reliance. There can be no apparent authority of an agent without
acts or conduct on the part of the principal and such acts or conduct of the principal must have
been known and relied upon in good faith and as a result of the exercise of reasonable
prudence by a third person as claimant, and such must have produced a change of position to
its detriment.
3. The SC affirmed the decision of the trial court in holding that the Junket Agreement is void. A
void or inexistent contract is one which has no force and effect from the very beginning. Hence,
it is as if it has never been entered into and cannot be validated either by the passage of time or
by ratification. Article 1409 of the Civil Code provides that contracts expressly prohibited or
declared void by law, such as gambling contracts, cannot be ratified.