MANILA MEMORIAL PARK CEMETERY, INC., petitioner, vs. PEDRO L. practice in their company in a long period of time.

mpany in a long period of time." A perusal of the records of the case

LINSANGAN, respondent. G.R. No. 151319 November 22, 2004 fails to show any indication that there was such a habit or custom in MMPCI that
allows its agents to enter into agreements for lower prices of its interment spaces, nor
to assume a portion of the purchase price of the interment spaces sold at such lower
price. No evidence was ever presented to this effect.
FACTS:
 
 Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy
Cross Memorial Park owned by petitioner (MMPCI). According to Baluyot, a former
owner of a memorial lot under Contract No. 25012 was no longer interested in acquiring
the lot and had opted to sell his rights subject to reimbursement of the amounts he already
paid. The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once
reimbursement is made to the former buyer, the contract would be transferred to him.
Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be
reimbursed to the original buyer and to complete the down payment to MMPCI. Baluyot
issued handwritten and typewritten receipts for these payments. Baluyot verbally advised
Atty. Linsangan that Contract No. 28660 was cancelled for reasons the latter could not
explain, and presented to him another proposal for the purchase of an equivalent property.
He refused the new proposal and insisted that Baluyot and MMPCI honor their
undertaking. For the alleged failure of MMPCI and Baluyot to conform to their
agreement, Atty. Linsangan filed a Complaint for Breach of Contract and Damages
against the former. For its part, MMPCI alleged that Contract No. 28660 was cancelled
conformably with the terms of the contract because of non-payment of arrearages.
MMPCI stated that Baluyot was not an agent but an independent contractor, and as such
was not authorized to represent MMPCI or to use its name except as to the extent
expressly stated in the Agency Manager Agreement.
 
ISSUE: Whether or not a contract of agency exists between Baluyot and MMPCI.
 
RULING: NO. The acts of an agent beyond the scope of his authority do not bind the
principal, unless he ratifies them, expressly or impliedly. Only the principal can ratify; the
agent cannot ratify his own unauthorized acts. Moreover, the principal must have
knowledge of the acts he is to ratify. No ratification can be implied in the instant case.
Atty. Linsangan failed to show that MMPCI had knowledge of the arrangement. As far as
MMPCI is concerned, the contract price was P132,250.00, as stated in the Offer to
Purchase signed by Atty. Linsangan and MMPCI's authorized officer. Likewise, this
Court does not find favor in the Court of Appeals' findings that "the authority of
defendant Baluyot may not have been expressly conferred upon her; however, the same
may have been derived impliedly by habit or custom which may have been an accepted
Orient Air Services vs. CA be held liable to Orient Air.
G.R. No. 76931, May 29, 1991 2.) No. CA in effect compels American Air to extend its personality to Orient Air.
PADILLA, J.: Such would be violative of the principles and essence of agency, defined by
law as a contract whereby “a person binds himself to render some service or to
do something in representation or on behalf of another, WITH THE
Facts: CONSENT OR AUTHORITY OF THE LATTER. In an agent-principal
American Air, an air carrier offering passenger and air cargo transportation, entered into a relationship, the personality of the principal is extended through the facility of
General Sales Agency Agreement with Orient Air, authorizing the latter to act as its the agent. In so doing, the agent, by legal fiction, becomes the principal,
exclusive general sales agent for the sale of air passenger transportation. Orient air failed authorized to perform all acts which the latter would have him do. Such a
to remit the net proceeds of sales for several months prompting American Air to relationship can only be effected with the consent of the principal, which must
undertake the collection of the proceeds of tickets sold originally by Orient Air and not, in any way, be compelled by law or by any court.
terminating their agreement.
American air instituted suit against Orient Air for the settlement of past outstanding funds
in possession of the latter. Orient Air contended that because of the unpaid overriding
commissions it retained the sales proceeds before remitting the balance to American Air.
American Air contended that the sale must be made by Orient Air and the sale must be
done with the use of American Air’s ticket stocks in order for it to be entitled to the
overriding commission. On the other hand, Orient Air contends that the contractual
stipulation of a 3% overriding commission covers the total revenue of American Air and
not merely that derived from ticketed sales undertaken by Orient Air because it was an
exclusive General Sales Agent. CA held that Orient Air is entitled to commissions and
ordered American Air to reinstate Orient Air as its General Sales Agent.

Issue:
1) Whether or not Orient Air is entitled to commissions.
2) Whether CA is correct in ordering reinstatement of Orient Air as an agent.

Held:
1.) Yes. Orient Air was entitled to an overriding commission based on total flown
revenue. American Air’s perception that Orient Air was remiss or in default of its
obligations under the Agreement was, in fact, a situation where the latter acted in
accordance with the Agreement—that of retaining from the sales proceeds its accrued
commissions before remitting the balance to American Air. Since the latter was still
obligated to Orient Air by way of such commissions. Orient Air was clearly justified in
retaining and refusing to remit the sums claimed by American Air. The latter’s
termination of the Agreement was, therefore, without cause and basis, for which it should
Sevilla v. Court of Appeals acquired an interest in the business entrusted to her. Moreover, she had assumed a
personal obligation for the operation thereof, holding herself solidarily liable for the
G.R. Nos. L-41182-3, 15 April 1988
payment of rentals. She continued the business, using her own name, after Tourist
World had stopped further operations. Her interest, obviously, is not limited to the
FACTS: commissions she earned as a result of her business transactions, but one that extends to
the very subject matter of the power of management delegated to her. It is an agency
Mrs. Noguera entered into a contract of lease w/ TWSI, signed by Mr. Canilao in its that, as we said, cannot be revoked at the pleasure of the principal.
behalf, to be used as branch office of the latter. Petitioner Mrs. Sevilla also signed as
someone solidarily liable with TWSI for the prompt payment of the monthly rental. The
said branch was run by Mrs. Sevilla and is also an independent agent selling tickets of
various airlines, in which she receives commission of 7%. She gives 3% of which to
TWSI.
TWSI was informed that Mrs. Sevilla was connected with a rival firm, the Philippine
Travel Bureau, and, since the branch office was anyhow losing, the Tourist World Service
considered closing down its branch office. Mr. Canilao went over to the branch office,
and, finding the premises locked, and, being unable to contact petitioner, he padlocked
the premises to protect the interest of TWSI.
A complaint was filed by petitioner when neither she nor any of her employees could
enter the locked premises. She contends that she and TWSI entered into a Joint Venture
business. Hence, she has a right on the premises.

ISSUE:
Whether there is a contract of agency between TWSI and petitioner.

RULING:
When the petitioner, Lina Sevilla, agreed to manage the TWSI’s Ermita office, she must
have done so pursuant to a contract of agency. It is the essence of this contract that the
agent renders services “in representation or on behalf of another.” In the case at bar,
Sevilla solicited airline fares, but she did so for and on behalf of her principal, TWSI. As
compensation, she received 4% of the proceeds in the concept of commissions. But
unlike simple grants of a power of attorney, the agency that we hereby declare to be
compatible with the intent of the parties, cannot be revoked at will. The reason is that it is
one coupled with an interest, the agency having been created for the mutual interest of the
agent and the principal.
It appears that Lina Sevilla is a bona fide travel agent herself, and as such, she had
Commissioner of Internal Revenue v. Manila Machinery & Supply
G.R. No. L-25653, 28 February 1985
FACTS:
It appears that during the tax period in question, respondent taxpayer realized an income
of P630,635.62 from both its activities as sales representative and as distributor of
American manufacturers/suppliers and paid thereon P37,837.94 as broker’s percentage
tax on the assumption that the income consisted entirely of commissions.
Later however respondent sought a partial refund of P21,620.36 on the ground that of the
total income of P630,635.62, P360,339.35 was not broker’s commission but simply
overprice or profit (plus exchange income on overprice) realized from ordinary sales of
machineries and equipment it had purchased from American companies. The respondent
ask for a refund because it found out that it was overprice during the sales.
ISSUE:
Whether the amount earned by respondent taxpayer in its capacity “as distributor” of
American machineries and equipment should be considered as commission?
RULING:
One of the purposes of petitioner corporation, as stated in its articles of incorporation, is
“to make and enter into all kinds of contracts, agreements, and obligation with any
persons, corporation or corporations, or other associations for the purchasing, acquiring,
selling, or otherwise disposing of goods, wares, and merchandise of all kinds, either as
principal or agent, upon commission, consignment, or indent orders.” (BIR rec., pp. 43-
48.)
Petitioner is, therefore, authorized to act either as principal or agent in the transaction of
its business.
However, the evidence of record regarding petitioner’s transactions which gave rise to the
income in question indicates the status of petitioner as an independent dealer and not as a
commercial broker. Petitioner’s contracts with several U.S. manufacturers indubitably
show that it acted as an independent dealer. A Commercial broker includes persons other
than importers, manufacturer, producers, or bona fide employees, who, for compensation
or profit, sell or bring about sales for purchases of merchandise for other persons, or
bring proposed buyers and sellers together, or negotiate freights or other business for
owners of vessels, or other means of transportation, or for the skippers, or consignors or
consignees of freight carried by vessels or other means of transportation. The term
includes commission merchants.
Ker and Co., LTD vs Lingad
GR No. L-20871 April 30, 1971
Facts:
CIR assessed the sum of P20,272.33 as the commercial broker’s percentage tax,
surcharge, and compromise penalty against Ker & Co. Ker and Co. requested for the
cancellation of the assessment and filed a petition for review with the Court of Tax
Appeals. The CTA ruled that Ker and Co is liable as a commercial broker. Ker has a
contract with US rubber. Ker is the distributor of the said company. Ker was precluded
from disposing the products elsewhere unless there has been a written consent from
the company. The prices, discounts, terms of payment, terms of delivery and other
conditions of sale were subject to change in the discretion of the Company.
Issue:
Whether the relationship of Ker and Co and US rubber was that of a vendor- vendee or
principal-broker
Ruling:
The relationship of Ker and Co and US rubber was that of a principal-broker/ agency.
Ker and Co is only an agent of the US rubber because it can dispose of the products of
the Company only to certain persons or entities and within stipulated limits, unless
excepted by the contract or by the Rubber Company, it merely receives, accepts and/or
holds upon consignment the products, which remain properties of the latter company,
every effort shall be made by petitioner to promote in every way the sale of the
products and that sales made by petitioner are subject to approval by the company.
Since the company retained ownership of the goods, even as it delivered possession
unto the dealer for resale to customers, the price and terms of which were subject to
the company’s control, the relationship between the company and the dealer is one of
agency.
 whatsoever. It is fair and reasonable inference that the incident happened because of
want of care.
Africa, et al. v. Caltex Phils
G.R. No. L-12986, March 31, 1966, 16 SCRA 448
FACTS:
On March 18, 1948 a fire broke out at the Caltex service station at the corner of Antipolo
street and Rizal Avenue, Manila St. all started while a gasoline was being hosed from a
tank truck into the underground storage, right at the opening of the receiving tank where
the nozzle of the hose was inserted. The fire spread to and burned several neighboring
house. The spouse Bernabe and heirs of Domingo Ong herein petitioner, sued
respondents Caltex (phils), Inc. and Mateo Boquiren on negligence on the part of both of
tyhem was attributed as the cause of the fire.
In the polioce and fire report they started that during the transferring of gasoline to the
tank truck an unknown Filipino Citizen lighted a cigarette and threw the burning match
stick near the main valve of the of the paid underground tank. Due to gasoline fumes, fire
suddenly blazed. The respondents contend that it is not their negligence why the fire
broke. But there was no evidence presented to prove this theory and no other explanation
can be had as to the reason for the fire. Apparently also, Caltex and the branch owner
failed to install a concrete firewall to contain fire if in case one happens.
ISSUE:
Whether or not Caltex and Boquiren are liable to pay for damages.
RULING:
Caltex and Boquiren are liable. Though the one who accuses the other of negligence is
the one with burden to prove, in this case the principle of res ipsa loquitor applies. Res
ipsa loquitur (the transaction speaks for itself) which states: “where the thing which
caused injury, without fault of the injured person, is under the exclusive control of the
defendant and the injury is such as in the ordinary course of things does not occur if he
having such control use proper care, if affords reasonable evidence, in the absence of the
explanation, that the injury arose from defendant1s want of care.” Article 1173 states that,
the fault on negligence of the obligation consists in the omission of that diligence which
is required by the nature of the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows bad faith, the provisions of
article 1171 and 2201 paragraph 2 shall apply. a fired occurred therein an spread to and
burned the neighboring houses. The person who knew or could have known how the fire
started, were Boquiren, Caltex and their employees, but they gave no explanation thereof
Jai- Alai Corporation of the Philippines v. Bank of the Philippine Islands
66 SCRA 29 (1975)
FACTS:
Petitioner deposited in its current account with respondent bank several checks with a
total face value of P8,030.58, all acquired from Antonio J. Ramirez, a regular bettor at the
jai-alai games and a sale agent of the Inter-Island Gas Service, Inc., the payee of the
checks. The deposits were all temporarily credited to petitioner’s account in accordance
with the clause printed on the bank’s deposit slip.
Subsequently, Ramirez resigned and after the checks had been submitted to inter-bank
clearing, the Inter-Island Gas discovered that all the indorsement made on the cheeks
purportedly by its cashiers, as well as the rubber stamp impression thereon reading “Inter-
Island Gas Service, Inc.”, were forgeries.
It informed petitioner, the respondent, the drawers and the drawee banks of the said
checks and forgeries and filed a criminal complaint against its former employee. In view
of these circumstances, the respondent Bank debited the petitioner’s current account and
forwarded to the latter the checks containing the forged indorsements, which petitioner
refused to accept. Later, petitioner drew against its current account a check for
P135,000.00.
This check was dishonored by respondent as its records showed that petitioner’s balance
after netting out the value of the checks with the forged indorsement, was insufficient to
cover the value of the check drawn.
A complaint was filed by petitioner with the Court of First Instance of Manila. The same
was dismissed by the said court after due trial, as well as by the Court of Appeals, on
appeal.
Hence, this petition for review.
ISSUE:
Whether or not the respondent had the right to debit the petitioner’s current account in the
amount corresponding to the total value of the checks in question.
RULING:
The Supreme Court ruled that respondent acted within legal bounds when it debited
petitioner’s account; that the payments made by the drawee banks to the respondent on
account of the checks with forged indorsements were ineffective; that on account thereof,
no creditor-debtor relationship was created between the parties; that petitioner was
grossly recreant in accepting the checks in question from Ramirez without making any
inquiry as to authority to exchange checks belonging to the payee-corporation; and
that petitioner, in indorsing the said checks when it deposited them with respondent,
guaranteed the genuineness of all prior indorsement thereon so that the respondent,
which relied upon its warranty, cannot be held liable for the resulting loss.
Section 23 of the Negotiable Instruments Law (Act 2031) states that —
“When a signature is forged or made without the authority of the person whose
signature it purports to be, it is wholly inoperative, and no right to retain the
instrument, or to give a discharge therefor, or to enforce payment thereof against any
party thereto, can be acquired through or under such signature, unless the party against
whom it is sought to enforce such right is precluded from setting up the forgery or
want of authority.”
Since under the foregoing provision, a forged signature in a negotiable instrument is
wholly inoperative and no right to discharge it or enforce its payment can be acquired
through or under the forged signature except against a party who cannot invoke the
forgery, it stands to reason, upon the facts of record, that the respondent, as a
collecting bank which indorsed the checks to the drawee-banks for clearing, should be
liable to the latter for reimbursement, for, as found by the court a quo and by the
appellate court, the indorsements on the checks had been forged prior to their delivery
to the petitioner.
In legal contemplation, therefore, the payments made by the drawee-banks to the
respondent on account of the said checks were ineffective; and, such being the case,
the relationship of creditor and debtor between the petitioner and the respondent had
not been validly effected, the checks not having been properly and legitimately
converted into cash.
Switzerland General Insurance Co. Ltd. v. Ramirez
G.R. No. L-48264, 21 February 1980
FACTS:
Petitioner Switzerland General Insurance Company, Ltd, a foreign insurance company
authorized to do business in the Philippines thru its agent, F. E:.Zuellig, Inc., filed an
admiralty case against private respondents Oyama Shipping Co., Ltd. (Oyama Lines), a
foreign firm doing business in the Philippines, and Citadel Lines, Inc (Citadel). which is
the local agent of private respondent Oyama Shipping Co., Inc. and/or Mabuhay
Brokerage Co., Inc. (Mabuhay)
The complaint alleged that 60,000 bags of Urea Nitrogen were shipped from Japan, on
board the S/S “St Lourdes”, claimed to be owned and operated by defendant Citadel. The
goods were consigned to Borden International Phils., Inc., and insured by petitioner
against all risks. The shipment was discharged from the vessel shipside into lighters
owned by Mabuhay, but when the same was subsequently delivered to and received by
the consignee, it was found to have sustained losses and/or damage which was paid by
petitioner insurance company to the consignee/assured, by virtue of which payment it
became subrogated to the rights of the latter. Petitioner made repeated demands against
private respondents for payment of the losses but no payment was made and, uncertain in
whose custody the goods were damaged, impleaded the private respondents as alternative
defendants to determine their respective liability.
Defendant filed an Answer alleging that defendant Citadel Lines was merely the civil
agent in the Philippines for the Japanese firm Oyama Lines., the charterer of the vessel
S/S “St. Lourdes”, said vessel being owned by Companie Maritime de Brios, Sociedad
Anonima (CMBSA), a Panamanian corporation. It was further alleged that the principal
agency relationship between the said Oyama Lines and defendant Citadel Lines, Inc. was
terminated on August 21, 1975 when the Tokyo District Court declared and decreed its
insolvency. It was argued that defendant Citadel Lines “has always acted as an agent of a
disclosed principal and, therefore, the herein defendant is without any liability at all” in
connection with the plaintiff’s claim. Defendant alleged that said corporation should be
held liable and interposed a counterclaim for damages against plaintiff. Defendant Oyama
Lines alleged that it ceased to be represented in the Philippines upon the declaration of its
insolvency by the Tokyo Court; that it was a mere charterer of the S/S “St. Lourdes”
which is owned by CMBSA; that due to the insolvency of Oyama lines, the case as
against it should be dismissed, the remedy for the plaintiff being to file its claim before
the insolvency court in Tokyo, Japan. Further, it imputed the loss or damage to the
shipment to the shipper, Sumitomo Shoji Kaisha, Ltd. for failing to provide seaworthy
packages for the goods, and/or the Mabuhay Brokerage for failure to exercise utmost
diligence after it took possession of the cargo from the vessel S/S “St. Lourdes.”
After trial on the merits, respondent court rendered a decision in favor of petitioner as
against therein defendant Oyama Lines but absolving Citadel Lines, Inc. and Mabuhay
Brokerage Co., Inc. from liability. Petitioner filed a Motion for Reconsideration
insofar as it absolves respondents Citadel Lines, Inc. and Mabuhay Brokerage Co.,
Inc. from liability, but said Motion for Reconsideration was denied; hence, the instant
petition for review.
ISSUE:
Whether respondent Citadel Lines, Inc., the local agent of a foreign ocean going
vessel, the S/S “St. Lourdes”, may be held primarily liable for the loss/damage found
to have been sustained by subject shipment while on board and/or still in the custody
of the said vessel.
RULING:
In fine, private respondents do not dispute that a ship agent is liable to third persons
under certain circumstances as provided in the Code of Commerce, but insists that it is
not a ship agent but a mere agent and hence, not liable.
We find the instant petition meritorious. The error of the lower court lies in its
application of the general rule on agency to the case a quo, when the applicable law is
contained in the pertinent provisions of the Code of Commerce as applied in relevant
decisions of this Court. Its finding, therefore, that respondent Citadel Lines, Inc. was a
mere agent of Oyama Shipping Co., Ltd. was a result of its erroneous application of
the law on agency to the instant case. Considering the peculiar relationship of the
parties, respondent Citadel Lines, Inc. cannot be considered as a “mere agent” under
the civil law on agency as distinguished from a ship agent, within the context of the
Code of Commerce. In Yu Biao Sontua& Co. v. Ossorio 1 for example, it was held that
the doctrines having reference to the relations between principal and agent cannot be
applied in the case of ship agents and ship owners. For this reason, respondent cannot
validly claim that the court a quo made a finding of fact which is conclusive upon this
Court. A ship agent, according to Article 586 of the Code of Commerce, is “the person
entrusted with the provisioning of a vessel, or who represents her in the port in which
she happens to be.” (Emphasis supplied.)
It is not disputed by the private respondent that it is the local representative in the
Philippines of the Oyama Lines and, as alleged by petitioner, upon arrival of the vessel
S/S “St. Lourdes” in Manila, it took charge of the unloading of the cargo and issued cargo
receipts (or tally sheets) in its own name, for the purpose of evidencing discharge of
cargoes and the conditions thereof from the vessel to the arrastre operators and/or unto
barges/lighters, and that claims against the vessel S/S “St. Lourdes” for losses/damages
sustained by shipments were in fact filed and processed by respondent Citadel Lines, Inc.
These facts point to the inevitable conclusion that private respondent is the entity that
represents the vessel in the port of Manila and hence is a ship agent within the meaning
and context of Article 586 of the Code of Commerce.
At any rate, the liabilities of the ship agent are not disputed by private Respondent. It
appearing that the Citadel Lines is the ship agent for the vessel S/S “St. Lourdes” at the
port of Manila, it is, therefore, liable to the petitioner, solidarily with its principal, Oyama
Shipping Co., Ltd., in an amount representing the value of the goods lost and or damaged,
amounting to P38,698.94, which was likewise the amount paid by petitioner, as insurer,
to the insured/consignee. As found by the court a quo, there has been no proof presented
to show that the officers of the vessel, in whose custody the goods were lost or damaged,
are exempt from liability therefrom and that the damage was caused by factors and
circumstances exempting them from liability.
The insolvency of Oyama Lines has no bearing on the instant case insofar as the liability
of Citadel Lines, Inc. is concerned. The law does not make the liability of the ship agent
dependent upon the solvency or insolvency of the ship owner.
WHEREFORE, the decision appealed from is modified, and private respondent Citadel
Lines, Inc. is hereby ordered to pay, solidarily with its principal, Oyama Lines (Oyama
Shipping Co., LTD.), the amount of P38,698.94, with interest thereon at the legal rate
from the date of the filing of the complaint on December 24, 1975 until fully paid,
P5,000.00 as attorney’s fees and the costs of suit. The rest of the decision is affirmed. No
pronouncement as to costs.
Equitable PCI Bank v. Rosita Ku
G.R. No. 142950, 26 March 2001
FACTS:
Petitioner instituted an action for ejectment before the Quezon City Metropolitan Trial
Court (MeTC) against respondent’s father Ku Giok Heng. The MeTC rendered a
decision in favor of petitioner and ordered Ku Giok Heng to, among other things,
vacate the premises.
Ku Giok Heng did not appeal the decision of the MeTC. Instead, he and his daughter,
respondent Rosita Ku, filed an action before the Regional Trial Court to nullify the
decision of the MeTC. RTC dismissed the action.
Respondent filed in the Court of Appeals (CA) a special civil action for certiorari
assailing the decision of the RTC. The CA on March 31, 2000, rendered a decision
enjoining the eviction of respondent from the premises.
On May 10, 2000, Equitable PCI Bank filed in this Court a motion for an extension of
30 days from May 10, 2000 or until June 9, 2000 to file its petition for review of the
CA decision. The motion alleged that the Bank received the CA decision on April 25,
2000.The Court granted the motion for a 30-day extension “counted from the
expiration of the reglementary period” and “conditioned upon the timeliness of the
filing of [the] motion [for extension].
On June 13, 2000, Equitable Bank filed its petition.Respondent nevertheless claims
that the petition is defective.Respondent insists that petitioner received the CA
decision on April 24, 2000, as certified by Manila Post Office stating that the copy
“was duly delivered to and received by Joel Rosales (Authorized Representative) on
April 24, 2000.
Hence he has until May 9, 2000 to file the motion. But petitioner’s motion was only
filed on May 10, 2000, sixteen (16) days from the receipt of the CA decision and one
(1) day beyond the reglementary period.
ISSUE:
Whether receipt by Joel Rosales constitutes notice to counsel of the petitioner.
RULING:
Yes.
Petitioner argues that receipt on April 25, 2000 by Joel Rosales, who was not an agent
of its counsel’s law office, did not constitute notice to its counsel, as required by
Sections 2 and 10, Rule 13 of the Rules of Court.
The Court is not wholly convinced by petitioner’s argument. The Affidavit of Joel
Rosales states that he is “not the constituted agent of ‘Curato Divina
MabilogNedoMagturoPagaduan Law Office.'”
An agency may be express but it may also be implied from the acts of the principal, from
his silence, or lack of action, or his failure to repudiate the agency, knowing that another
person is acting on his behalf without authority. Likewise, acceptance by the agent may
also be express, although it may also be implied from his acts which carry out the agency,
or from his silence or inaction according to the circumstances.
In this case, Joel Rosales averred that “[o]n occasions when I receive mail matters for
said law office, it is only to help them receive their letters promptly,” implying that
counsel had allowed the practice of Rosales receiving mail in behalf of the former. There
is no showing that counsel had objected to this practice or took steps to put a stop to
it.The facts are, therefore, inadequate for the Court to make a ruling in petitioner’s favor.
Conde v. Court of Appeals
G.R. No. L-40242, 15 December 1982
FACTS:
On April 7, 19311, Margarita, Bernardo and petitioner Dommga, all surnamed Conde,
(the vendors-a-retro) sold with right of repurchase within ten years from said date, an
unregistered parcel of agricultural land, to the spouses Casimira Pasagui and Pio Altera
(the vendees-a-retro).
Three years later, Original Certificate of Title No. N-534 covering the land was issued in
the name of the vendees-a-retro subject to the stipulated right of redemption of the
vendors-a-retro. Within the repurchase period, particularly on November 28, 1943,
Paciente Cordero, son-in-law of and representing the vendees-a-retro signed a
Memorandum of Repurchase declaring therein that he received from Eusebio
Amarille, a representative of the vendors-a-retro, the full amount of the repurchase
price.
Petitioner Dominga, claiming that she redeemed the property with her own money,
immediately took possession of the land in 1945 and paid the land taxes thereon since
then. On June 30, 1965, however, the vendees-a-retro sold the land to the private
respondent spouses, the Condes. Consequently, in 1969, petitioner filed with the Court
of First Instance a complaint for quieting of title and declaration of ownership against
all the private respondents.
The Trial Court dismissed the Complaint and ordered petitioner to vacate the disputed
property and to deliver its peaceful possession to the Conde spouses. The Court of
Appeals affirmed the decision and held that petitioner failed to validly exercise her
tight of repurchase because the Memorandum of Repurchase was not signed by the
vendees-a-retro but by Cordero who was not formally authorized to sign for said
vendees-a-retro.
ISSUE:
Whether there was an implied agency when Cordero signed the Memorandum of
Repurchase.
RULING:
Yes. 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 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. (Art. 1869, Civil
Code.) Wherefore, a new Transfer Certificate of Title was issued in the name of
petition Dominga Conde.
G.R. No. L-30831 & L-31176 November 21, 1979
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE HONORABLE COURT OF APPEALS (Third Division) and DELFIN PEREZ, substituted
by his heirs, respondents; JOAQUIN DE CASTRO and GRACIANA PASIA, petitioners, vs.
THE HONORABLE COURT OF APPEALS (Third Division) and DELFIN PEREZ, substituted
by his heirs, respondents.
C.E. Medina & Associates for Phil. National Bank.
Jose W. Diokno and Sergio L. Guadiz for other petitioners.
Ilagan & Bolcan for private respondent.
MELENCIO-HERRERA, J.:
These two Petitions seek a review on certiorari of the same Decision of the Court of Appeals
promulgated on June 6, 1969 in CA-G.R. No. 32934-R, entitled "Delfin Perez vs. Philippine National
Bank, et al.," which reversed the Decision-dated March 20, 1963 of the Court of First Instance of
Davao, Branch II, in Civil Case No. 3064, with the same title.
There is no dispute as to the following facts:
The spouses Leandro Solomon and Leocadia Bustamante (Solomon spouses, for short) were the
registered owners of Lot No. 230 of the cadastral survey of Davao, with an area of 126,497 square
meters, situated in the Municipality (now city) of Davao, and registered under Original Certificate of
Title No. 152 of the Registry of Deeds of Davao. 1
In 1932, the Solomon spouses mortgaged the land in favor of the Banco Nacional Filipino, now the
Philippine National Bank (briefly referred to as the Bank), to secure a loan of five hundred pesos
(P500.00) For failure to pay the loan on maturity, the mortgage was foreclosed, the property was sold
at public auction, and a Certificate of Sale was executed in favor of the Bank on December 28, 1934.
2 It was not until "June 27, 1958, 4 P.M.", however, that the Certificate of Sale was registered, OCT
No. 152 cancelled, and in its stead, TCT No. 8042 issued in the name of the Bank.
The next day, after the execution of the Certificate of Sale, or on December 29, 1934, the Solomon
spouses and the Bank, represented by Amado F. Cortes, Manager of the Davao Branch entered into a
contract denominated as "Promesa de Venta" whereby the Bank, as the owner of the property, bound
itself to sell to the Solomon spouses for the consideration of P802.26, all its rights, title and interest to
said property, the said amount to be payable in eight equal annual amortizations commencing on
December 29, 1935; and that upon full payment of the amortizations, the Bank would execute a final
deed of sale in favor of the Solomon spouses. Possession of the property was likewise turned over to
said spouses upon the execution of the contract. Further, it was stipulated that if the Solomon spouses
should fail to pay any of the amortizations or to comply with any provision, the contract shall be
automatically rescinded and cancelled and all payments made by the spouses shall be considered as
rentals for the use and occupation of the property, and the Bank shall be free to take possession of the
land and sell it to a third person. 3
Payments were regularly made by the Solomon spouses under said contract except for the seventh
and eighth amortizations due on December 29, 1941 and on December 29, 1942, respectively, thus
leaving an outstanding balance of P217.23.
War broke out on December 8, 194 1. Leandro Solomon died on January 8, 1943 and Leocadia
Bustamante died on March 20, 1943. Delfin Perez as sole heir of the deceased spouses (he being
the son of Leocadia Bustamante by her first husband Jose Perez, and the stepson of Leandro
Solomon), succeeded into the possession of the land in question. 4
On March 12, 1948, or approximately seven (7) years after default, Delfin Perez offered to pay the
last two amortizations plus accrued interest, with the request that a Deed of Sale be executed in his
favor, which offer was rejected by the Bank Manager, Amado Lagdameo on the ground that the
"Promesa de Venta" was executed by the Bank in favor of the Solomon spouses. Upon suggestion
of the Bank Manager, Delfin Perez filed an action in Court for a declaration of heirship. On
September 25, 1956, the Court of First Instance of Davao, in Special Case No. l441, declared him
as the sole and only heir of the Solomon spouses. 5
On May 9, 1957, Delfin Perez notified the Bank of the Court Order declaring him as such heir and
manifested his desire to pay off the remaining obligation of his deceased parents. On June 13,
1957, upon request of Delfin Perez, the Bank Manager, B. Maceda, issued a statement of account
on the loan of the deceased spouses showing that the total amount due the Bank as of June 15,
1957 was P535.45, and informed Delfin Perez that "as soon as (he) could cause full payment of the
above account, (they) shall cause the release of the mortgage. 6 Delfin Perez offered to pay the
balance but the Bank 'manager asked him to increase the price. 7 On June 26, 1958, Delfin Perez
wrote the Bank asking that he be allowed to buy the land in question for P600.00. This was
followed by another letter, dated July 22, 1958, wherein Perez reiterated his offer, this time for
P3,000.00, accompanied by a tender of payment, of P300.00. Perez at the same time requested that
the Bank permit him to pay the said sum of P3,000.00 in ten (10) years, in ten (10) equal
installments with interest at 8% per annum. 8
On August 8, 1958, the Bank, through its Manager, B. Maceda, wrote Perez a letter informing him
of the comment of the head office on his "offer to purchase" the former property of the deceased
spouses to the effect that although the amount offered covers fully the total claim of the Bank, yet
it is too low compared to the market value of the property; and of the suggestion of the head office
that Perez should be prevailed upon to improve his offer and reduce the term of payment from ten
(10) to five (5) years only. The Manager also asked Perez to give his opinion on the matter. 9
On August 15, 1958, Perez wrote the Bank that he was raising his "offer to buy" from P3,000.00 to
P5,000.00 payable in five (5) years or in five (5) equal yearly installments with 8% interest per
annum. The offer of P5,000.00 was later increased to P7,000.00 and finally to P8,000.00. However,
all these offers were turned down by the Bank. 10
On October 6, 1958, Perez had his adverse claim inscribed on the Bank's Certificate of Title. 11
On May 18, 1959, the Bank advised Perez that a third party was offering to buy the property for
P13,500.00 and asked him if he would equal the offer. Delfin Perez failed to equal the offer. On July 1,
1959, the Bank sold the property of the spouses, Joaquin de Castro and Graciana Pasia, and on July 2,
1959, 'Transfer Certificate of Title No. T-8583 was issued in the name of the De Castro spouses. 12
Upon learning that the Bank had sold the property, Perez filed, on July 7, 1959, a Complaint for
Specific Performance and Damages against the Bank, which was amended on July 21,1959, Lo
include the De Castro spouses as defendants (Civil Case No. 3064, CFI, Davao, Branch 11, "Delfin
Perez vs. Philippine National Bank, et al.,). 13 The Complaint, as amended, prayed that the Bank be
ordered to accept from Perez payment of the outstanding balance in the amount of P535.45 in
accordance with the document "Promesa de Venta" which allegedly is, in effect, a perfected contract
of sale; that the Register of Deeds of Davao be ordered to cancel Transfer Certificate of Title No.
8042, and, in lieu thereof, to issue another in the name of Perez; and that defendants be ordered to pay
Perez, jointly and severally, the amount of P1,000.00 as actual damages and P2,000.00 as attorney's
fees. 14
On July 9, 1959, the Bank wrote Perez informing him of the disapproval of his ofter to purchase the
property and returning to him, by way of a manager's check, the amount of P800.00 which represented
the "earnest money " for said offer to buy. 15
The Bank filed an Answer on July 16, 1959, and an Amended Answer on August 1, 1959, both with
counterclaims. The Bank alleged principally that the "Promesa de Venta" had been automatically
rescinded and cancelled upon the failure of the Solomon spouses to pay the last two installments; that
it had afforded Perez all the opportunity to reacquire the property but he tailed to do so; that as
registered owner of the property, it had the perfect right to sell the same; that it sold the land to the De
Castro spouses after negotiations with Perez for his repurchase of the property failed.
On August 4, the De Castro spouses present their Answer with counterclaim and a cross-claim against
the Bank. 16 The spouses alleged that they were purchasers in good faith, for valuable consideration,
since Perez's adverse claim was not even inscribed at the back of the duplicate copy of TCT No. T-
8042, which was in the possession of the Bank at the time the property was sold. By way of
counterclaim, they prayed that Perez be ordered to vacate the land; to account for the produce since
July 1, 1959, and to pay reasonable rentals for the use and occupation of the land at P400.00 per
month. On their cross- claim, they prayed that the Bank be ordered to refund the sum of P13,500.00
plus expenses and attorney's fees in the event that the Bank is declared without title to the property in
question.
After due hearing, the Court of First Instance of Davao rendered a Decision, dated March 20, 1963,
dismissing Perez's Complaint and resolving the counterclaim of the De Castro spouses by ordering
Perez to vacate the land in litigation and to deliver possession thereof to the De Castro spouses. 17
Perez appealed to the Court of Appeals (CA-G.R. No. 32934-R), which in a Decision * promulgated
on June 6, 1969, reversed the trial Court's Decision; declared null and void the sale of the property in
question by the Bank in favor of the De Castro spouses stating that they were not buyers in good faith
since their title, issued only on July 7, 1959, carried the annotation of adverse claim; ordered the Bank
to return to the De Castro spouses the price the latter paid for the land, without any interest, "the latter
being in possession of the property;" and allowed Perez to redeem or purchase the said property, upon
payment of the last two installments due thereon, with interest at the rate stipulated in the
"Promesa de Venta. 18
The Bank moved for reconsideration but this was denied by the Court of Appeals in its Resolution
of July 22, 1969. 19 The De Castro spouses also moved for reconsideration but their Motion was
likewise denied by the Court of Appeals in its Resolution of September 18, 1969. 20
Hence, these Petitions for Review on certiorari separately filed by the Bank and the De Castro
spouses against the Court of Appeals and Delfin Perez.
The De Castro spouses manifested in their Petition 21 that pursuant to their agreement with the
Bank's counsel, they were adopting the same grounds relied upon by the Bank in its Petition in L-
30831 due to. the unity and inseparability of their causes and defenses. The Do Castro spouses
reiterated in their Brief (p. 2) that they were adopting the Brief filed by the Bank, although they
added two additional assignments of error (infra).
On February 3, 1977, this Court received a Manifestation from Perez's counsel that Perez had died.
On March 16, 1979, the Heirs of Perez also manifested that he died on July 1, 1976 and prayed that
they be substituted in his stead. 22 That Motion petition is hereby granted and Perez's heirs hereby
deemed substituted for him namely, Leona Vda. de Perez, Lourdes P. Copas Milagros P. Barrera
Trinidad P. Alberto, Soto, Mercedes, Carlito, Ricardo and Lailrente all surnamed Perez (pp. 144,
Rollo of L-30831).
The errors assigned by both sets of petitioners read:
I
RESPONDENT COURT ERRED IN APPLYING ARTICLE 1191 OF THE NEW
CIVIL CODE TO THE CASE AT BAR
II
RESPONDENT COURT ERRED IN NOT FINDING OR DECLARING THAT
THE 'PROMESA DE VENTA' WAS AUTOMATICALLY RESCINDED BY THE
FAILURE OF THE VENDEES THEREIN TO COMPLY WITH THE TERMS
AND %- CONDITIONS THEREOF.
III
RESPONDENT COURT ERRED IN NOT UPHOLDING PARAGRAPH 8 OF
THE PROMESA DE VENTA'.
IV
RESPONDENT COURT ERRED IN HOLDING PETITIONER IN ESTOPPEL.
V
RESPONDENT COURT ERRED IN HOLDING THAT THE BASIC ISSUE IN
THE PRESENT CASE IS WHETHER DELFIN PEREZ MAY STILL REDEEM
THE PROPERTY SUBJECT OF THE PROMESA DE VENTA.
 VI
RESPONDENT COURT ERRED IN APPLYING THE RULE REQUIRING
REGISTRATION OF CERTIFICATE OF SALE TO START RUNNING OF
REDEMPTION PERIOD.
VII
RESPONDENT COURT ERRED IN ALLOWING RESPONDENT DELFIN PEREZ
THE RIGHT OF REDEMPTION OR OF PURCHASE.
VIII
RESPONDENT COURT ERRED IN DECLARING NULL AND VOID THE SALE
OF THE PROPERTY IN QUESTION BY PETITIONER IN FAVOR OF SPOUSES
DE CASTRO AND PASIA.
IX
RESPONDENT COURT ERRED IN ORDERING THE RETURN OF THE PRICE
PAID BY THE SPOUSES DE CASTRO AND PASIA FOR THE LAND IN
QUESTION.
X above account, (they) shall cause the release of the mortgage." Perez relied on this commitment,
RESPONDENT COURT ERRED IN REVERSING THE DECISION OF THE
TRIAL COURT. 23
The two additional Assignments of Error made by the De Castro spouses read:
FIRST ADDITIONAL ASSIGNMENT OF ERROR
"RESPONDENT COURT ERRED IN FINDING THAT SPOUSES DE CASTRO AND PASIA HAD
BEEN IN POSSESSION OF THE PROPERTY.
SECOND ADDITIONAL ASSIGNMENT OF ERROR
"ASSUMING, WITHOUT ADMITTING THAT THE SALE OF THE PROPERTY IN QUESTION
BY THE PHILIPPINE NATIONAL BANK IN FAVOR OF THE SPOUSES DE CASTRO AND
PASIA WAS NULL AND VOID AND, THEREFORE, THE PRICE PAID FOR THE PROPERTY
SHOULD BE RETURNED RESPONDENT COURT ERRED IN ORDERING THE RETURN OF
THE PRICE WITHOUT ANY INTEREST. 24
On equitable principles, particularly on the ground of estoppel, we must rule against petitioner Bank.
"The doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith and
justice, and its purpose is to forbid one to speak against his own act, representations, or commitments
to the injury of one to whom they were directed and who reasonably relied thereon. The doctrine of
estoppel springs from equitable principles and the equities in the case. It is designed to aid the law in
the administration of justice where, 25 bee without its aid injustice might result'. It has n applied by
this Court wherever and whenever special circumstances of a case so demand.26
Applied to the case at bar, these special circumstances may be stated thus: Firstly the clear intendment
of the Bank was to allow the Solomon spouses to reacquire ownership of the property. Thus, the
day after the Certificate of Sale was issued in favor of the Bank, the latter executed the "Promesa
de Venta" in favor of the Solomon spouses giving the latter eight years within which to reacquire
their land. During those eight years, the spouses were allowed to remain in continued possession of
the subject property. Secondly, notwithstanding the sale in its favor in 1934, the Bank did not
register the same until June 27, 1958, or 24 years later. And from the death of his last surviving
parent in 1943, the Bank never disturbed Perez's possession of the property. 'Thirdly, when on
March 12, 1948, Perez offered to pay the last two amortizations on the land, plus accrued interest,
with the request that a Deed of Sale be executed in his favor, his offer was rejected by the Bank
Manager, Amado Lagdameo, not on the ground that the "Promesa de Venta " had been
automatically rescinded and the right to redeem was lost, as now alleged by petitioners, but on the
ground that the "Promesa de Venta" was executed by the Bank in favor of the Solomon spouses. It
was, in fact, suggested by the Bank Manager that Perez file an action in Court for declaration of
heirship, which the latter did, and on September 25, 1956, the Court of First Instance of Davao in
Special Case No. 441, declared him as the sole and only heir of the Solomon spouses. Perez
notified the Bank on May 9, 1957 of that Court Order and again manifested his desire to pay off
the remaining obligation of his deceased parents. upon Perez' request, the Bank Manager, this time,
B. Maceda, issued a statement of account on the loan showing that the total amount due as of June
15, 1957 was P535.45, and informed Perez that "as soon as (he) could cause full payment of the
offered to pay the outstanding balance but the Bank Manager asked him to increase the "price"
offered. Perez made subsequent tenders until his offer reached the amount of P8,000.00 but the
Bank still refused to allow him to redeem the same. In other words, during all the ten years of
negotiation the Bank led Perez to believe that he would be allowed to redeem the property, only to
renege on that commitment when it sold the property for P13,500.00 to the De Castro spouses.
Perez justifiably and reasonably relied upon the assurance of the Bank's Manager that he would be
allowed to pay the remaining obligation of his deceased parents and he acted on that basis. Even
fair dealing alone would have requited the Bank to abide by its representations, but Id did not.
Clearly, the equities of the case are with Perez.
The Bank's argument that it is not bound by the acts of its Branch Manager in Davao, is not well
taken for well settled is the rule that if a private corporation intentionally or negligently clothes its
officers or agents with apparent power to perform acts for it, the corporation will be estopped to
deny that such apparent authority is real as to innocent third persons dealing in good faith with
such officers or agents. 27
The Bank's reliance and insistence on the automatic rescission clause contained in the "Promesa de
Venta" should not be controlling. In the first place, by snowing the Solomon spouses and after
them, their son Perez, to be in continued possession of the property and by not registering the sale
until years later, the Bank itself was not adhering strictly to its terms. Secondly, our rulings
upholding the validity of automatic rescission clauses contained in contracts to sell industrial and
commercial real estate on installments upon failure to pay the stipulated installments, and allowing
the retention or forfeiture as rentals of the installments previously paid, should not be made
applicable to the present case because the "Promesa de Venta" was not essentially a contract to sell
real estate on installments but was more of a contract for the redemption of the mortgaged property
of the Solomon spouses foreclosed by petitioner Bank. 28 Thirdly, the record shows that the Solomon the said annotation of adverse claim. Consequently, they are not entitled to any interest on the price
spouses religiously paid their annual installments and it was only due to the outbreak of the war and they paid for the property.
their untimely deaths in 1941 and 1943, respectively, that they failed to make payments of the last two WHEREFORE, we hereby affirm the judgment of the Court of Appeals with the following
amortizations which became due in December, 1941 and December, 1942. The non-fulfillment of the modifications:
obligation was not of their own making, and they can be exempted from responsibility therefor under
Article 1174 of the Civil Code. 29 War, or its effects, or other factors which could not have been a) The Philippine National Bank is ordered to accept from Delfin Perez, or the
foreseen or avoided by a party to a contract, such as uncertain condition of peace and order then heirs who have herein been substituted for him the sum of P535.45, the total
prevailing which the Court may take judicial notice of are deemed sufficient causes that could justify amount due the Bank as of June 15, 1957, and, after receipt thereof, to execute the
the non-fulfillment of a contract and exempt the party from responsibility. 30 Fourthly, breach may be corresponding Deed of Sale in favor of Perez;
considered slight. The original loan secured by the subject property was P500.00; the redemption price b) The Register of Deeds of Davao is ordered to cancel Transfer Certificate of
agreed upon in the "Promesa de Venta" was P802.26; while the outstanding balance in December, Title Nos. 8042 and T-8583 in the name of the Philippine National Bank and the
1941 was P217.23 only. The obligation may be said to have been substantially performed. The original De Castro spouses, respectively, and to issue a new one in the name of Delfin
loan was almost paid up by the Solomon spouses and could have been paid but for the war and their Perez; his heirs, who have been substituted for him, may pursue the necessary
supervening deaths during the Japanese occupation. legal steps for the transfer of the property in their names.
Worthy of note also is the fact that the Bank registered the sheriff's Certificate of Sale of the c) The Philippine National Bank is further ordered to return to the De Castro
foreclosed property, which was issued on December 28, 1934, only on "June 27, 1958, 4 P.M." OCT spouses the price of P13,500.00, which they paid for the property.
No. 152 in the name of the Solomon spouse was also cancelled only on said date and TCT No. 8042
With costs against petitioners.
issued in the name of the Bank. "The redemption period, for purposes of determining the time when a
final deed of sale may be executed or issued and the ownership of file registered land consolidated in SO ORDERED.
the purchaser at an extrajudicial foreclosure sale under Act 3135, should be reckoned from the date of
registration of the certificate of sale in the office of the register of deeds concerned and not from the
date of the public auction sale." 31 Consequently, the right of redemption could still be validly
exercised within one year from June 27, 1958, the date of registration. From the facts before us, Perez
offered to redeem the property as early as March 12, 1948.
One last point. From December 28, 1934, the date when the Bank acquired the subject property in an
extra-judicial foreclosure sale, up to July 1, 1959, the date when it sold the same to the De Castro
spouses, petitioner Bank held the property for more than twenty- four (24) years, in violation of
Section 39 of Act No. 2612, the law of its creation, which provides:
SEC. 39. The National Bank is hereby authorized to purchase and own such real
estate as may be necessary for the purpose of carrying on its business. It is also
authorized to hold such real estate as it may find necessary to acquire in the collection
of debts due to the said bank or to its branches; but real estate acquired in the
collection of debts shall be sold by the said bank within three years after the date of
its acquisition.
and the provision of the subsequent PNB Charter, RA 1300, which took effect on June 16, 1955 (as
amended), whereby the period of disposal of real estate acquired in the collection of debts is within 5
years after the date of its acquisition.
The subsequent sale of the property to the De Castro spouses cannot prevail over the adverse claim of
Perez, which was inscribed on the Bank's Certificate of Title on October 6, 1958. That should have put
said spouses on notice and they can claim no better legal right over and above that of Perez. The
Transfer Certificate of Title issued in the spouses' names on July 7, 1959 (Exhs. V, V-1-a) also carried
 respondent should have done was to ascertain the extent of the authority of Alice A.
Dizon. Being negligent in this regard, private respondent cannot seek relief on the
basis of a supposed agency.
In Bacaltos Coal Mines vs. Court of Appeals, we explained the rule in dealing with an
agent: Every person dealing with an agent is put upon inquiry and must discover upon
Dizon v. Court of Appeals
his peril the authority of the agent. If he does not make such inquiry, he is chargeable
G.R. No. 122544, 28 January 2003 with knowledge of the agent’s authority, and his ignorance of that authority will not be
FACTS: any excuse. 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, to
Private respondent Overland Express Lines, Inc. (lessee) entered into a Contract of Lease ascertain not only the fact of the agency but also the nature and extent of the authority,
with Option to Buy with petitioners (lessors) involving a parcel of land. The term of the and in case either is controverted, the burden of proof is upon them to establish it.
lease was for one (1) year commencing from May 16, 1974 up to May 15, 1975. During
this period, private respondent was granted an option to purchase for the amount of
P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a
monthly rental of P3,000.00.
For failure of private respondent to pay the increased rental of P8,000.00 per month,
petitioners filed an action for ejectment. It also concluded that there was a perfected
contract of sale between the parties on the leased premises and that pursuant to the option
to buy agreement, private respondent had acquired the rights of a vendee in a contract of
sale. It opined that the payment by private respondent of the partial payment for the
leased property, which petitioners accepted (through Alice A. Dizon) and for which an
official receipt was issued, was the operative act that gave rise to a perfected contract of
sale, and that for failure of petitioners to deny receipt thereof, private respondent can
therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by
them to receive the money in their behalf.
ISSUE:
Whether or not Alice Dizon was an authorized agent of the petitioners to receive payment
from the respondents.
RULING:
No. There was no valid consent by the petitioners (as co-owners of the leased premises)
on the supposed sale entered into by Alice A. Dizon, as petitioners’ alleged agent, and
private respondent. The basis for agency is representation and a person dealing with an
agent is put upon inquiry and must discover upon his peril the authority of the agent. As
provided in Article 1868 of the New Civil Code, there was no showing that petitioners
consented to the act of Alice A. Dizon nor authorized her to act on their behalf with
regard to her transaction with private respondent. The most prudent thing private

AF Realty & Development v. Dieselman Freight Services
G.R. No.111448, 16 January 2002
FACTS:
Manuel Cruz, Jr., a board member of Dieselman Freight Services, Co. (DFS) authorized
Cristeta Polintan to sell a parcel of land owned by DFS. Polintan in turn authorized
Felicisima Noble to sell the same lot. Noble then offered AF Realty & Development, Co.,
represented by Zenaida Ranullo, the land at the rate of P2,500.00 per sq. m. AF Realty
accepted the offer and issued a P300,000 check as down payment. However, it appeared
that DFS did not authorize Cruz, Jr. to sell the said land. Nevertheless, Manuel Cruz, Sr.
(father) and president of DFS, accepted the check but modified the offer. He increased the
selling price. AF Realty, in its response, did not exactly agree nor disagree with the
counter-offer but only said it is willing to pay the balance (but was not clear at what rate).
Eventually, DFS sold the property to someone else. Now AF Realty is suing DFS for
specific performance. It claims that DFS ratified the contract when it accepted
the check and made a counter-offer.
ISSUE:
Whether or not the sale made through an agent was ratified.
RULING:
No. There was no valid agency. The BOD never authorize Cruz to see the land. The
agreement between Cruz, Jr. and Polintan, as well as the subsequent agreement between
Polintan and Noble, never bound the corporation. It presumed that the sale transacted by
Noble purportedly on behalf of Polintan and ultimately purportedly on behalf of DFS is
void. Article 1874 provides that when a sale of 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. Considering that respondent Cruz, Jr., Cristeta Polintan and Felicisima Ranullo
were not authorized by respondent Dieselman to sell its lot, the supposed contract is
void.
Manotok Brothers v. Court of Appeals
G.R. No. 94753, 7 April 1993
FACTS:
The facts as found by the appellate court, revealed that petitioner herein (then
defendant-appellant) is the owner of a certain parcel of land and building which were
formerly leased by the City of Manila and used by the Claro M. Recto High School, at
M.F. Jhocson Street, Sampaloc Manila. By means of a letter 5 dated July 5, 1966,
petitioner authorized herein private respondent Salvador Saligumba to negotiate with
the City of Manila the sale of the aforementioned property for not less than
P425,000.00. In the same writing, petitioner agreed to pay private respondent a five
percent (5%) commission in the event the sale is finally consummated and paid.
Finally, through another letter dated November 16, 1967, the corporation with Rufino
Manotok, its President, as signatory, authorized private respondent to finalize and
consummate the sale of the property to the City of Manila for not less than
P410,000.00. With this letter came another extension of 180 days.
The Municipal Board of the City of Manila eventually, on April 26, 1968, passed
Ordinance No. 6603, appropriating the sum of P410,816.00 for the purchase of the
property which private respondent was authorized to sell. Said ordinance however,
was signed by the City Mayor only on May 17, 1968, one hundred eighty three (183)
days after the last letter of authorization. Notwithstanding the realization of the sale,
private respondent never received any commission, which should have amounted to
P20,554.50. This was due to the refusal of petitioner to pay private respondent said
amount as the former does not recognize the latter’s role as agent in the transaction.
Private respondent filed a complaint against petitioner, alleging that he had
successfully negotiated the sale of the property. He claimed that it was because of his
efforts that the Municipal Board of Manila passed Ordinance No. 6603 which
appropriated the sum for the payment of the property subject of the sale. have anything to approve. This Court ruled in another case that when there is a
close, proximate and causal connection between the agent’s efforts and labor and
Petitioner claimed otherwise. It denied the claim of private respondent on the following
the principal’s sale of his property, the agent is entitled to a commission.
grounds: (1) private respondent would be entitled to a commission only if the sale was
consummated and the price paid within the period given in the respective letters of We agree with respondent Court that the City of Manila ultimately became the
authority; and (2) private respondent was not the person responsible for the negotiation purchaser of petitioner’s property mainly through the efforts of private respondent.
and consummation of the sale, instead it was Filomeno E. Huelgas, the PTA president of Without discounting the fact that when Municipal Ordinance No. 6603 was
the Claro M. Recto High School. signed by the City Mayor on May 17, 1968, private respondent’s authority had
already expired, it is to be noted that the ordinance was approved on April 26,
Thereafter, the then Court of First Instance (now, Regional Trial Court) rendered
1968 when private respondent’s authorization was still in force. Moreover, the
judgment sentencing petitioner and/or Rufino Manotok to pay unto private respondent the
approval by the City Mayor came only three days after the expiration of private
sum of P20,540.00 by way of his commission fees with legal interest thereon. Petitioner
respondent’s authority. It is also worth emphasizing that from the records, the
appealed said decision, but to no avail. Respondent Court of Appeals affirmed the said
only party given a written authority by petitioner to negotiate the sale from July
ruling of the trial court. Hence this petition.
5, 1966 to May 14, 1968 was private respondent.
While it may be true that FilomenoHuelgas followed up the matter with Councilor
ISSUE: Magsalin, the author of Municipal Ordinance No. 6603 and Mayor Villegas, his
The sole issue to be addressed in this petition is whether or not private respondent is intervention regarding the purchase came only after the ordinance had already been
entitled to the five percent (5%) agent’s commission. passed — when the buyer has already agreed to the purchase and to the price for
which said property is to be paid. Without the efforts of private respondent then,
Mayor Villegas would have nothing to approve in the first place. It was actually
RULING: private respondent’s labor that had set in motion the intervention of the third party that
produced the sale, hence he should be amply compensated. WHEREFORE, in the light
It is petitioner’s contention that as a broker, private respondent’s job is to bring together of the foregoing and finding no reversible error committed by respondent Court, the
the parties to a transaction. Accordingly, if the broker does not succeed in bringing the decision of the Court of Appeals is hereby AFFIRMED.
minds of the purchaser and the vendor to an agreement with respect to the sale, he is not
entitled to a commission.
Private respondent, on the other hand, opposes petitioner’s position maintaining that it
was because of his efforts that a purchase actually materialized between the parties.
We rule in favor of private respondent.
At first sight, it would seem that private respondent is not entitled to any commission as
he was not successful in consummating the sale between the parties, for the sole reason
that when the Deed of Sale was finally executed, his extended authority had already
expired. By this alone, one might be misled to believe that this case squarely falls within
the ambit of the established principle that a broker or agent is not entitled to any
commission until he has successfully done the job given to him.
In the case at bar, private respondent is the efficient procuring cause for without his
efforts, the municipality would not have anything to pass and the Mayor would not

G.R. No. L-16893            October 22, 1966
THE COLLECTOR (now COMMISSIONER) OF INTERNAL REVENUE,
petitioner,
vs.
TAN ENG HONG, respondent.
Office of the Solicitor General for petitioner.
Teodoro G. Landas for respondent.
REGALA, J.:
This is an appeal from the decision of the Court of Tax Appeals in C.T.A. Case No. 436
entitled "Tan Eng Hong, Petitioner, vs. Collector of Internal Revenue, Respondent,"
absolving Tan Eng Hong from certain tax liabilities as a commercial broker.
Sometime in 1952, the Philippine Council For United States Aid (PHILCUSA) called a
public bidding for the supply of certain materials which it intended to give as aid to the
Philippines. Tan Eng Hong won the bid so that from 1952 to 1955, inclusive, he made
deliveries to PHILCUSA of the bidded goods for which he received in payment the total
sum of P94,685.71. The Bureau of Internal Revenue determined that the various
transactions under the above bid were carried out by Tan Eng Hong as a commercial
broker and, accordingly, assessed against the sum received, fixed and percentage taxes
and surcharge in the amount of P7,513.94.
Taking issue with the Bureau's ruling that he was acting as a commercial broker in
supplying the goods under the above bid, Tan Eng Hong went to the Court of Tax
Appeals, under C.T.A. Case No. 436, on a petition for review. After due trial and hearing,
the said Court rendered judgment with the following dispositive portion —
WHEREFORE, in view of the foregoing considerations, the decision appealed
from is hereby reversed, and the deficiency assessment for fixed and percentage
taxes in the total sum of P7,513.94 issued by the respondent Collector of Internal
Revenue is hereby cancelled and withdrawn. Without pronouncement as to
costs.
The sole and principal predicate of the trial court's decision abovementioned was its
finding that "petitioner Tan Eng Hong was not a broker but the importer of the goods
sold to PHILCUSA." Consequently, the instant appeal refers alone to the correctness
or error of the above finding that Tan Eng Hong was not a commercial broker. The
Commissioner of Internal Revenue urges that he was so.
To resolve the issue, it is necessary to discuss the specific details of the transactions in
dispute. Inasmuch as there is no dispute by the parties herein on the trial court's
account of it, We deem it best to reproduce the said account hereunder:
To start with, PHILCUSA announces that "Sealed bids ... will be received ...
and then publicly opened for furnishing commodities for delivery C & W
Manila." (Exh. 7, pp. 44-46 BIR rec.; Exh. H, p. 65 CTA rec.) The petitioner, as
a qualified bidder, submits his signed proposal together with a proposal bond.
He "offers and agrees, if this (his) bid be accepted within 20 calendar days
from the date of opening, to furnish any or all of the items of which prices are
quoted, at the price set opposite each item and delivered at the point(s)
specified . . ." Exh. 7, pp. 44-46, BIR rec.; Exh. H, p. 65 CTA rec.) The
quotations of the petitioner is in Philippine currency for the C & F Philippine
Port Value. In computing his bid, the total C & F dollar cost is converted to
pesos on the basis of P2.00 to $1.00, and his profit in pesos which he
personally and solely fixes, is then added thereto in order to arrive at the
correct total quotation.
If the bid of the petitioner is accepted by PHILCUSA, he receives a letter of
award wherein he is required to inform PHILCUSA of the (1) Net C & F dollar
cost to his suppliers per item and per each supplier's group; (2) Names and
addresses of his suppliers; and (3) Names of independent inspection firms that
will undertake the inspection prior to the shipment of the goods. Hence, it is
only after the petitioner has been finally awarded the bid contract that
PHILCUSA comes to know of the names of the foreign suppliers of the
commodities to be imported and the sole purpose seems to be to secure and
facilitate the dollar payment of the imported goods to said suppliers abroad.
Then, the petitioner is also requested to submit a performance bond and to
apply at the Philippine National Bank for the corresponding letters(s) of credit
in favor of his suppliers abroad. (Exh. Z, p. 32 CTA rec.) However, he is not
required to secure an import license for the goods imported for PHILCUSA.
 Accordingly, the petitioner applies for a letter of credit with the Philippine
National Bank in his own name and for his own account and in favor of his
suppliers abroad. He pays the usual bank charges, but is not required to make
payment of pesos into the counterpart fund nor pay the foreign exchange premium
as no actual sale of dollars is involved. He is also exempt from the payment of the
following: (1) Foreign exchange tax; (2) sales tax; (3) customs duties; (4)
municipal taxes; (5) arrastre charges; and (6) delivery charges, except when
otherwise provided in the contract. The dollars that are being used in all the
PHILCUSA purchases belong to the United States Mutual Security
Administration (hereinafter referred to as MSA) and are actually paid for by the
Philippine Government by general payments from the special appropriation
directly into the counterpart fund. (Par. 14, Exh. F, pp. 55-56 CTA rec.; also Exh.
8, pp. 19-20 BIR rec.) And most probably for this reason, the petitioner authorizes
the Philippine National Bank to deliver all documents drawn under this credit to
PHILCUSA. (Exh. G, p. 64 CTA rec.)
In carrying out a commercial venture under the aforequoted arrangement, did Tan Eng
Hong act as a commercial broker?
We do not think so.
In the case of Kuenzle & Streiff Inc. vs. The Commissioner of Internal Revenue, G.R.
No. L-17648, October 31, 1964, this Court held that the essential feature of a broker is
the fact that he acts not for himself, but for a third person. As was therein held:
Section 194(t) of the Revenue Code defines a commercial broker in the following
manner:
"(t) "Commercial broker" includes all persons, other than importer,
manufacturers, producers, or bona fide employees, who, for compensation
or profit, sell or bring about sales or purchases of merchandise for other
persons, or bring proposed buyers and sellers together, or negotiate
freights or other business for owners of vessels, or other means of
transportation, or for the shoppers, or consignors or consignees of freight
carried by vessels or other means of transportation. The term includes
commission merchants."
There does not seem to be any room for doubt that the petitioner falls within the
above definition. Under the said section, as well as by the rulings handed down in
at least two cases by this Court, the essential feature of a broker is the fact that he
acts not for himself, but, for a third person. (Ker & Co., Ltd. v. Collector of
Internal Revenue, 70 Phil. 36; Behn, Meyer & Co., Ltd. v. Nolting and Garcia, 35
Phil. 274). In Behn Meyer case. We said:
. . . A broker is generally defined as one who is engaged, for others, on a
commission, negotiating contracts relative to property with the custody of
which he has no concern; the negotiator between other parties, never acting in
his own name, but in the name of those who employed him; he is strictly a
middleman and for some purposes the agent of both parties. (Emphasis ours).
It seems obvious from the facts of this case that Tan Eng Hong undertook the
importation of the goods needed by PHILCUSA for himself and not for PHILCUSA.
In effecting the importation of the said goods, he was discharging his own, personal
obligation as the winner in the bidding called by PHILCUSA. He imported the
commodities not because PILCUSA had asked him to but because he had obligated
himself to deliver the same to PHILCUSA when he participated and won in the public
bidding called by the said agency. Tan Eng Hong would have been liable in damages
to PHILCUSA if he had failed to import the said goods so that when he carried out the
importation, he was, first and foremost, serving his own interest and no one else's.
Upon the records of this case, it appears that Tan Eng Hong signed and submitted his
bids or proposals under his name and the corresponding letters of credit were sent to
his business address. The letters of credit, performance bonds, invoices and all other
documents relative to the transactions were in his name. The bid contracts were strictly
between Tan Eng Hong and PHILCUSA just as the former's contracts with his foreign
supplier were strictly between them alone, i.e., Tan Eng Hong and the foreign supplier
only. The foreign supplier and PHILCUSA had no privity of contractual relations
whatsoever to the end that neither of them could have had any claim against each other
for whatever fault or breach Tan Eng Hong might have committed relevant to the
transactions in dispute. It would indeed be quite difficult to sustain any assertion that
Tan Eng Hong was acting for and in behalf of PHILCUSA or his foreign supplier or
both.
The broker must be the efficient agent or the procuring cause of the sale. The means
employed by him and his efforts must result in the sale. He must find the purchaser,
and the sale must proceed from his efforts acting as a broker. (Reyes v. Mosqueda,
G.R. No. L-8669, May 25, 1956; 53 O.G. 2158). This condition may not be said to
obtain in the case on hand. Tan Eng Hong did not merely bring PHILCUSA and his
foreign supplier to come to an agreement for the sale of certain commodities. It was he
himself who contracted with his foreign supplier for the purchase of the said goods. If,
for one reason or another PHILCUSA had refused to accept the delivery of the said
goods to it by Tan Eng Hong, the foreign supplier could not have compelled
PHILCUSA otherwise. Similarly, if somehow the foreign supplier had defaulted in the
performance of its obligations to Tan Eng Hong, PHILCUSA could not have had any
action or remedy against the said foreign supplier. All these indicate the distinct and
independent personality of Tan Eng Hong as an importer and not a commercial broker.
WHEREFORE, the decision appealed from is hereby affirmed in full. No pronouncement
on costs.
Infante vs. Cunanan
G.R L- 5180 August 31, 1953
Bautista Angelo, J:
Facts:
Infante was the owner of the land with a house built on it. Cunanan and Mijares were
contracted to sell the property from which they would receive commission. Noche agreed
to purchase the lot but Infante informed C & M about her change of mind to sell the lot
and had them sign a document stating that their authority to sell was already cancelled.
Subsequently, Infante sold the lot & house to Noche. Defendants herein demanded for
their commission. RTC ordered Infante to pay commission. CA affirmed.
Issue:
Whether or not petitioner was duty bound to pay commission notwithstanding that
authority to sell has been cancelled.
Ruling:
A principal may withdraw the authority given to an agent at will. But respondents agreed
to cancel the authority given to them upon assurance by petitioner that should property be
sold to Noche, they would be given commission.
That petitioner had changed her mind even if respondents had found a buyer who was
willing to close the deal, is a matter that would give rise to a legal consequence if
respondents agree to call off to transaction in deference to the request of the petitioner.
Petitioner took advantage of the services of respondents, but believing that she could
evade payment of their commission, she made use of a ruse by inducing them to sign
the deed of cancellation. This act of subversion cannot be sanctioned and cannot serve
as basis for petitioner to escape payment of the commissions agreed upon.
Siredy Enterprises v. Court of Appeals
G.R. No. 129039, 17 September 2002
FACTS:
Private respondent Conrado De Guzman is an architect-contractor doing business
under the name and style of Jigscon Construction. Herein petitioner Siredy
Enterprises, Inc. is the owner and developer of Ysmael Village, a subdivision in Sta.
Cruz, Marilao, Bulacan. The president of Siredy is Ismael E. Yanga. As stated in its
Articles of Incorporation, the primary corporate purpose of Siredy is to acquire lands,
subdivide and develop them, erect buildings and houses thereon, and sell, lease or
otherwise dispose of said properties to interested buyers. Sometime before October
1978, Yanga executed an undated Letter of Authority, duly authorizing MR.
HERMOGENES B. SANTOS, to negotiate and enter into contract or contracts to build
Housing Units on our subdivision lots in Ysmael Village, Sta. Rosa, Marilao, Bulacan
and to sell lots on our subdivisions.
On October 15, 1978, Santos entered into a Deed of Agreement with De Guzman. The
deed expressly stated that Santos was “representing Siredy Enterprises, Inc.” Private
respondent was referred to as “contractor” while petitioner Siredy was cited as
“principal” . To build for them 2-bedroom single housing units and 4-bedroom duplex
housing units; at YSMAEL VILLAGE, Bo. Sta. Rosa, Marilao, Bulacan owned and
developed by SIREDY ENTERPRISES and Mr. Ismael E. Yanga, Sr.; the
CONTRACTOR intends to build for the PRINCIPAL eighty (80) units singles and
eighteen (18) units duplex residences at the cost above mentioned or a lump sum total
of FOUR MILLION, EIGHT HUNDRED FORTY TWO THOUSAND
(P4,842,000.00) PESOS, Philippine Currency;
From October 1978 to April 1990, De Guzman constructed 26 residential units at Ysmael
Village. Thirteen (13) of these were fully paid but the other 13 remained unpaid. The total
contractual price of these 13 unpaid houses is P412,154.93 which was verified and
confirmed to be correct by Santos, per an Accomplishment Billing that the latter signed.
De Guzman tried but failed to collect the unpaid account from petitioner. Thus, he
instituted the action below for specific performance against Siredy, Yanga, and Santos
who all denied liability. During the trial, Santos disappeared and his whereabouts remain
unknown.
In its defense, petitioner presented testimonial evidence to the effect that Siredy had no
contract with De Guzman and had not authorized Santos to enter into a contract with
anyone for the construction of housing units at Ysmael Village. The trial court agreed
with petitioner based on the doctrine of privity of contract.
Thus, the trial court disposed of the case in favor of Siredy Enterprises and Dr. Yanga and
directing defendant Hermogenes B. Santos to pay unto plaintiff Conrado de Guzman the
amount of P412,154.93 as actual damages.
On appeal, De Guzman obtained a favorable judgment from the Court of Appeals. The
CA ordered Siredy Enterprises, Inc. to pay appellant Conrado de Guzman cost and
P412,154.93 as actual damage plus legal interest thereon. Hence this petition for review
on certiorari under Rule 45 of the Rules of Court.
ISSUE:
Whether or not Hermogenes B. Santos was a duly constituted agent of Siredy, with
authority to enter into contracts for the construction of residential units in Ysmael Village
and thus the capacity to bind Siredy to the Deed of Agreement.
the nature and extent of the authority granted to Santos which, in turn, determines the
extent of Siredy’s participation in the Deed of Agreement.
On its face, the instrument executed by Yanga clearly and unequivocally constituted
Santos “to do and execute”, among other things, the act of negotiating and entering
into “contract or contracts to build Housing Units on our subdivision lots in Ysmael
Village. Nothing could be more express than the written stipulations contained therein.
It was upon the authority of this document that De Guzman transacted business with
Santos that resulted in the construction contract denominated as the Deed of
Agreement.
Aside from the Letter of Authority, Siredy’s Articles of Incorporation, duly approved
by the Securities and Exchange Commission, shows that Siredy may also undertake to
erect buildings and houses on the lots and sell, lease, or otherwise dispose of said
properties to interested buyers. Such Articles, coupled with the Letter of Authority, is
sufficient to have given De Guzman reason to believe that Santos was duly authorized
to represent Siredy for the purpose stated in the Deed of Agreement.
We find that a valid agency was created between Siredy and Santos, and the authority
conferred upon the latter includes the power to enter into a construction contract to
build houses such as the Deed of Agreement between Santos and De Guzman’s
Jigscon Construction. Hence, the inescapable conclusion is that Siredy is bound by the
contract through the representation of its agent Santos.
This petition is DENIED for lack of merit. The Decision of the Court of Appeals dated
April 26, 1996, is hereby AFFIRMED.

RULING:
By the relationship of agency, one party called the principal authorizes another called the
agent to act for and in his behalf in transactions with third persons. The authority of the
agent to act emanates from the powers granted to him by his principal; his act is the act of
the principal if done within the scope of the authority. “He who acts through another acts
himself.”
Resolution of this issue necessitates a review of the Letter of Authority executed by
Ismael E. Yanga as president of Siredy in favor of Santos. Within its terms can be found
G.R. No. L-27991 December 24, 1927
PHILIPPINE NATIONAL BANK, plaintiff-appellant,
vs.
TAN ONG ZSE, VDA. DE TAN TOCO, defendant-appellee.
Roman Lacson for appellant.
Soriano and Nepomuceno for appellee.

VILLA-REAL, J.:
In this instance the plaintiff Philippine National Bank appeals from the judgment of
the Court of First Instance of Iloilo dismissing said plaintiff's complaint against the
defendant Tan Ong Zse Vda. de Tan Toco for the sum of P357,075.80, plus interest on
the capital of P300,000 at the rate of 8 per cent per annum from November 15, 1924
until fully paid, and an additional sum equivalent to 10 per cent of said amount as
attorney's fees, with the costs of the action. It was further prayed that, should the
defendant fail to pay the amount of the judgment within the period of three months
from the date thereof, the mortgaged property be ordered sold at public auction; and
furthermore, should the proceeds from the mortgaged property be insufficient to cover
the amount of the judgment that a writ of attachment be issued against whatever other
property the defendant may have not exempt from execution.
In support of its appeal, the appellant bank assigns the following alleged errors as
committed by the trial court in its decision, to wit: (1) In striking out from the record
all of the testimony of witness Ramon Mendoza; (2) in finding that the defendant Tan
Ong Zse's attorney's had asked, during the hearing, that all of Ramon Mendoza's
testimony be stricken out; (3) in refusing to admit as plaintiff's evidence, the
documents marked Exhibit A, B, C, D, E and F; (4) in not finding that the evidence
shows that Tan Bunco or Mariano de la Rama Tan Bunco was empowered to
administer and mortgage the property of the defendant Tan Ong Zse Vda. de Tan Toco;
(5) in not finding that the promissory note Exhibit B and the mortgage deed Exhibit E
are obligations contracted by the defendant Tan Ong Zse to the Philippine National
Bank through M. de la Rama Tan Bunco, her attorney in fact; (6) in not finding that on
May 23, 1922, the defendant Tan Ong Zse Vda. de Tan Toco obtained a loan of P300,00
from the Philippine National Bank, with interest at 8 per cent per annum; (7) in not
holding that on May 28, 1927, the defendant Tan Ong Zse Vda. de Tan Toco owed the
Philippine National Bank, for the loan secured by Exhibit E, the sum of P414,333.35 and
that the Philippine National Bank is entitled to recover said sum from the defendant; (8)
in not sentencing the defendant Tan Ong Zse Vda. de Tan Toco to pay the plaintiff bank
the said sum of P414,333.35 with interest at 8 per cent annum from March 29, 1927 until
fully paid, 10 per cent of the total debt by way of attorney's fees, and the costs of the
action; (9) in not ordering that, if after the lapse of three months from the date of the
judgment, the defendant has not paid to the plaintiff the said sum of P414,333.35 with
interest at 8 per cent per annum from March 29, 1927, plus 10 per cent of the Province of
Iloilo should sell at public auction the mortgaged property described in Exhibit E; and
(10) in dismissing the complaint with the costs against the plaintiff.
The principal question to determine in the present appeal, and on which depends the
solution of the other questions raised by the remaining assignments of error, is that
contained in the fourth assignment of error, with reference to the sufficiency of the
evidence to establish the existence of a power of attorney from the defendant Tan Ong
Zse Vda. de Tan Toco to Mariano de la Rama Tan Bunco to administer and mortgage
property belonging to her.
Ong Zse.
The appellant contends that said memorandum is sufficient the fact that Tan Ong Zse
Vda. de Tan Toco authorized Mariano Tan Bunco, to administer her property, obtain
loans, and mortgage said property to secure said loans. It cites, in support of its claim,
section 47 of Act No. 496, which reads as follows:
SEC. 47. The original certificate in the registration book, any copy thereof duly
certified under the signature of the clerk, or of the deeds of the province or city
where the land is situate, and the seal of the court, and also the owner's
duplicate certificate, shall be received as evidence in all the courts of the
Philippines Islands and shall be conclusive as to all matters contained therein
except so far as otherwise provided in this Act.
From a careful examination of the section just quoted, it will be seen that it is the
original certificate in the registration book, a copy thereof certified under the signature
of the clerk of court or of the registrar of deeds of the province or city in which the
land is situated, the duplicate of the same for the owner, and the seal of the court that
must be received evidence of all the matters contained therein.
Section 41 of the same Act defines a "certificate of title" as follows:

The only evidence presented by the plaintiff's entity to prove the existence such power of SEC. 41. Immediately upon the entry of the decree of registration the clerk
attorney is the original certificate of title, exhibit F, issued to Tan Ong Zse Vda. de Tan shall send a certified copy thereof, under the seal of the court, to the register of
Toco, on the back of which, among other things, there is a memorandum which reads: deeds for the province, or provinces, or city in which the land lies, and the
register of deeds shall transcribe the decree in a book to be called the
Memorandum of the incumbrances affecting the property described in the original "Registration Book," in which a leaf, or leaves, in consecutive order, shall be
certificate of title No. 329, issued in favor of Tan Ong Zse, a widowlawphi1.net devoted exclusively to each title. The entry made by the register of deeds in
this book in each case shall be the original certificate of title, and shall be
Doc. Kind Executed Conditions Date of Date of signed by him and sealed with the seal of the court. . . .
No. in favor of instrument inscription
According to this legal definition, the certificate of the title is the transcript of the
Power of Tan Bunco Authority is 1916 1919 decree of registration made by the registrar of deeds in the registry.
attorney hereby Sept. 14 Sept. 10
And, according to section 40 of the same Act, the decree of registration must contain
conferred,
the following data:
among other
things, to SEC. 40. Every decree of registration shall bear the day of the year, hour, and
mortgage as well minute of its entry, and shall be signed by the clerk. It shall state whether the
as to administer owner is married or unmarried, and if married, the name of the husband or
property wife. If the owner is under disability, it shall state the nature of the disability,
belonging to Tan and if a minor, shall state his age. It shall contain a description of the land as
finally determined by the court, and shall set forth the estate of the owner, and
 also, in such manner as to show their relative priority, all particular estates,
mortgages, easements liens, attachments, and other incumbrances, including rights
or husband or wife, if any, to which the land or owner's estate is subject, and may
contain any other matter properly to be determined in pursuance of this Act. The
decree shall be stated in a convenient form for transcription upon the certificates
of title hereinafter mentioned.
If, according to the above cited section 47, only the original certificate in the registry of
deeds, a certified copy of the same, or the seal of the court, will be admitted as conclusive
proof of its contents and if, according to section 41, also above quoted, the original
certificate of title is no other than the transcript of the decree of registration made in the
registration book, then the notations, or memoranda on the back of the certificate of title
are not admissible as proof of the contents of the documents to which they refer,
inasmuch as they do not form a part of the contents of the decree of registration. The said
notations or memoranda are at most, proof of the existence of the transactions and
judicial orders noted, which affect the registered land, of its presentation to the registrar
of its entry in the registry, and a notice to the whole world of such facts, as provided for
in section 51 of said Act No. 496, which reads as follows:
SEC. 51. Every conveyance, mortgage, lease, lien, attachment, order, decree,
instrument, or entry effecting registered land which would under existing laws, if
recorded, filed, or entered in the office of the register of deeds, affect the real
estate to which it relates shall, if registered, filed, or entered in the office of the
register of deeds in the province or city where the real estate to which such
instrument relates, lies, be notice to all persons from the time of such registering,
filing, or entering.
It could not have been the Legislature's intention to make the original certificate of title,
or a certified copy thereof, or a duplicate of the same for the owner, conclusive proof not
only of its contends but also of the contents of the documents and judicial orders noted
since, unlike the original certificates or certified copies thereof, said notation do not
contain the full text of the documents or judicial orders noted, but only a memorandum,
or extract of the same, consisting of the designation of the kind of the document, the
name of the person to whom it was issued, the date of its execution and the date and hour
of its registration. It would be extremely hazardous to accept such notations or
memoranda as conclusive proof of the contents of the documents or judicial orders noted,
because then the document itself which is an unnquestionable and indubitable evidence of
its contents would be supplanted by an extract of its contents made by the registrar, which
extract of the conditions stipulated therein. And even if such an extract as exact as could
be desired, still, it cannot be a guarantee of the authenticity and due execution of the
document from which the extract is made. Moreover, it would be contrary to the
fundamental rule that the document itself is the best proof of its contents and that only
in case of destruction or loss can secondary or suppletory proof of the same be
admitted. (Sec. 321, Act No. 190.)
In the case of Government of the Philippine Islands vs. Martinez and Martinez (44
Phil., 817), this court, speaking of the probatory value of the registration in the public
registry, said the following:
1. EVIDENCE; PRIMARY AND SECONDARY. — While it is true that the
record of any document, yet before the record or a certified copy of the recital
made in a public registry of the contents of a deed of sale, may be admitted as
evidence of the contents of said deed, it is indispensable to establish first that
said deed really existed, was duly executed and was lost; for while it may be
true that said document was really presented to the registry, as stated in the
entry or the books of the registry, yet the document actually presented may
have been falsified or stimulated, and may not have really been executed by the
parties appearing thereon to have signed the same. And if it really existed, it
should been lost, in which case, and only then, secondary evidence may be
introduced.
By analogy, we may say that the memorandum of a power of attorney noted on the
back of an original certificate of title is not admissible as proof of the contents of said
power of attorney, but only of the fact of its execution, of its presentation for notation
and of its notation for the purposes or preferential rights to the registered land covered
by the title.
The non-presentation of power of attorney as evidence of the authority conferred by
the defendant Tan Ong Zse Vda. de Tan Toco upon Mariano de la Rama Tan Bunco to
administer and mortgage her property, deprives us of the best means determining
whether the acts performed by the alleged attorney in fact are included in the powers
conferred by said power of attorney.
In view of the importance of the case, in the interest of equity and justice it is ordered
that it be reopened and the record be remanded to the court of origin for the
presentation of the power of attorney together with such evidence connected therewith
as the parties might deem fit to present, without the necessity of again submitting that
already presented at the original trial, and that a new judgment be rendered in
accordance with all the evidence in the record, without special pronouncement as to
costs. So ordered.
 regards to him.
The appellate court was not without substantial basis when it found petitioner to have
had knowledge of the donation at the time it entered into the two agreements with Dr.
Roque. During their negotiation, petitioner, through its representatives, was apprised
of the fact that the subject property actually belonged to respondent.
Shopper’s Paradise Realty & Development Corp. v. Roque It was not shown that Dr. Felipe C. Roque had been an authorized agent of respondent.
G.R. No. 148775, 13 January 2004 In a contract of agency, the agent acts in representation or in behalf of another with the
consent of the latter. Article 1878 of the Civil Code expresses that a special power of
attorney is necessary to lease any real property to another person for more than one
FACTS: year. The lease of real property for more than one year is considered not merely an act
Petitioner Shopper’s Paradise Realty & Development Corporation, represented by its of administration but an act of strict dominion or of ownership. A special power of
president, Veredigno Atienza, entered into a twenty-five year lease with Dr. Felipe C. attorney is thus necessary for its execution through an agent.
Roque, now deceased, over a parcel of land, situated at Plaza Novaliches, Quezon City, in
the name of Dr. Roque. Petitioner issued a check for reservation payment.
Simultaneously, petitioner and Dr. Roque likewise entered into a memorandum of
agreement for the construction, development and operation of a commercial building on
the property.
The contract of lease and memorandum of agreement were both notarized but were not
annotated due to the death of Dr. Roque. Respondent Efren Roque, one of the heirs of the
deceased, dealt with the petitioners but never came to an agreement. Efren alleged that he
was the owner of the subject property by virtue of a deed of donation inter vivos executed
by his parents in 1978 and that Dr. Roque was only delegated with the administration of
the property when the respondent left for the United States but the title of the property
was not transferred in the name of the respondent until 1994.

ISSUE:
Whether the deceased was an authorized agent.

RULING:
A person dealing with registered land may thus safely rely on the correctness of the
certificate of title issued therefore, and he is not required to go beyond the certificate to
determine the condition of the property but, where such party has knowledge of a prior
existing interest which is unregistered at the time he acquired a right thereto, his
knowledge of that prior unregistered interest would have the effect of registration as

Litonjua v. Fernandez
G.R. No. 148116, 14 April 2004
FACTS:
Mrs. Lourdes Alimario and Agapito Fisico who worked as brokers, offered to sell to the
petitioners the parcels of land. The brokers told the petitioners that they were authorized
by respondent Fernandez to offer the property for sale. The petitioners and respondent
Fernandez agreed that the petitioners would buy the property and that the owners were to
shoulder the capital gains tax, transfer tax and the expenses for the documentation of the
sale.
The petitioners and respondent Fernandez also agreed to meet to finalize the sale. It was
also agreed upon that on the said date, respondent would present a SPA executed by the
owners of the property, authorizing her to sell the property for and in their behalf and to
execute a deed of absolute sale thereon. The petitioners would also remit the purchase
price to the owners, through respondent Fernandez. However, only Agapito Fisico
attended the meeting. He informed the petitioners that respondent Fernandez was
encountering some problems with the tenants and was trying to work out a settlement
with them. After a few weeks of waiting, the petitioners wrote respondent Fernandez
demanding that their transaction be finalized.
When the petitioners received no response from respondent, the petitioners sent her
another letter, asking that the Deed of Absolute Sale covering the property be executed in
accordance with their verbal agreement. The petitioners also demanded the turnover of
the subject properties to them within fifteen days from receipt of the said letter;
otherwise, they would have no option but to protect their interest through legal means.
Petitioner rejected the claims of the petitioner. The petitioners filed the instant Complaint
for specific performance with damages against respondent Fernandez and the registered
owners of the property. After trial on the merits, the trial court rendered judgment in favor
of the petitioners. The appellate court promulgated its decision reversing and settling
aside the judgment of the trial court and dismissing the petitioners’ complaint, as well as
the respondents’ counterclaim.
ISSUE:
Whether the lower court erred in not holding that a special power of attorney was
required in order that defendant-appellant Fernandez could negotiate the sale on behalf
of the other registered co-owners of the two lots.
RULING:
There is no documentary evidence on record that the respondents-owners specifically
authorized respondent Fernandez to sell their properties to another, including the
petitioners. Article 1878 of the New Civil Code provides that a special power of
attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable
consideration, or to create or convey real rights over immovable property, or for any
other act of strict dominion. Any sale of real property by one purporting to be the
agent of the registered owner without any authority therefor in writing from the said
owner is null and void. The declarations of the agent alone are generally insufficient to
establish the fact or extent of her authority. In this case, the only evidence adduced by
the petitioners to prove that respondent Fernandez was authorized by the respondents-
owners is the testimony of petitioner Antonio Litonjua that respondent Fernandez
openly represented herself to be the representative of the respondents-owners, and that
she promised to present to the petitioners on December 8, 1996 a written authority to
sell the properties. However, the petitioners’ claim was belied by respondent
Fernandez when she testified.
The petitioners cannot feign ignorance of respondent Fernandez’ lack of authority to
sell the properties for the respondents-owners. It must be stressed that the petitioners
are noted businessmen who ought to be very familiar with the intricacies of business
transactions, such as the sale of real property.
The settled rule is that persons dealing with an assumed agent are bound at their peril,
and 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 prove it. In this case, respondent Fernandez specifically denied
that she was authorized by the respondents-owners to sell the properties, both in her
answer to the complaint and when she testified. The Letter dated January 16, 1996
relied upon by the petitioners was signed by respondent Fernandez alone, without any
authority from the respondents-owners. There is no evidence on record that the
respondents-owners ratified all the actuations of respondent Fernandez in connection
with her dealings with the petitioners. As such, said letter is not binding on the
respondents as owners of the subject properties.

Adriano v. Pangilinan
G.R. No. 137471, 16 January 2002
FACTS:
Adriano is the registered owner of a parcel of land. Sometime on 1990, petitioner
entrusted the original owner’s copy of the TCT to Salvador, a distant relative, for the
purpose of securing a mortgage loan. Thereafter without the knowledge and consent of
Adriano, Salvador mortgaged the property to Pangilinan. Subsequently when Adriano
verified the status of his title with the Register of Deeds of Marikina, he was surprised to
discover that there was already annotation for Real Estate Mortgage in the title,
purportedly executed by one Adriano, in favor of Pangilinan. Adriano then denied that he
executed deed and repeatedly demanded Pangilinan to return or reconvey to him his title
to the said property and when these demands were ignored or disregarded, he instituted
the present suit.
Pangilinan, in his defense, claimed that petitioner voluntarily entrusted his title Salvador
for the purpose of securing a loan, thereby creating a principal-agent relationship between
the plaintiff and Salvador for the aforesaid purpose. Thus, according to respondent, the
execution of the REM was within the scope of the authority granted to Salvador; that in
any event that since the said TCT has remained with petitioner, the latter has no cause of
action for reconveyance against him.
The trial court ruled in favor of Adriano, but the CA reversed the said decision.
ISSUE:
Whether herein respondent was an “innocent mortgagee for value.
RULING:
After a careful review of the records and pleadings of the case, we hold that he is not,
because he failed to observe due diligence in the grant of the loan and in the execution
of the real estate mortgage.
It is quite clear from the testimony of respondent that he dismally failed to verify
whether the individual executing the mortgage was really the owner of the property.
The ocular inspection respondent conducted was primarily intended to appraise the
value of the property in order to determine how much loan he would grant. He did not
verify whether the mortgagor was really the owner of the property sought to be
mortgaged. Because of this, he must bear the consequences of his negligence.
We are not impressed by the claim of respondent that he exercised due diligence in
ascertaining the identity of the alleged mortgagor when he made an ocular inspection
of the mortgaged property. Respondent’s testimony negated this assertion.
Since he knew that the property was being leased, respondent should have made
inquiries about the rights of the actual possessors. He could have easily verified from
the lessees whether the claimed owner was, indeed, their lessor.
Petitioner’s act of entrusting and delivering his TCT and Residence Certificate to
Salvador was only for the purpose of helping him find a money lender. Not having
executed a power of attorney in her favor, he clearly did not authorize her to be his
agent in procuring the mortgage. He only asked her to look for possible money
lenders. Article 1878 of the Civil Code provides:
“Art. 1878. Special powers of attorney are necessary in the following cases:
x xx – x xx – x xx
(7) To loan or borrow money, unless the latter act be urgent and indispensable for the
preservation of the things which are under administration;
x xx – x xx – x xx
(12) To create or convey real rights over immovable property;
x xx – x xx – x xx.”
As between petitioner and respondent, we hold that the failure of the latter to verify
essential facts was the immediate cause of his predicament. If he were an ordinary
individual without any expertise or experience in mortgages and real estate dealings,
we would probably understand his failure to verify essential facts. However, he has
been in the mortgage business for seven years. Thus, assuming that both parties were
negligent, the Court opines that respondent should bear the loss. His superior
knowledge of the matter should have made him more cautious before releasing the
loan and accepting the identity of the mortgagor.
Given the particular circumstances of this case, we believe that the negligence of
petitioner is not enough to offset the fault of respondent himself in granting the loan. The
former should not be made to suffer for respondent’s failure to verify the identity of the
mortgagor and the actual status of the subject property before agreeing to the real estate
mortgage. While we commiserate with respondent — who in the end appears to have
been the victim of scoundrels — his own negligence was the primary, immediate and
overriding reason that put him in his present predicament.
To summarize, we hold that both law and equity favor petitioner. First, the relevant legal
provision, Article 2085 of the Civil Code, requires that the “mortgagor be the absolute
owner of the thing x xx mortgaged.” Here, the mortgagor was an impostor who executed
the contract without the knowledge and consent of the owner. Second, equity dictates that
a loss brought about by the concurrent negligence of two persons shall be borne by one
who was in the immediate, primary and overriding position to prevent it. Herein
respondent – who, we repeat, is engaged in the business of lending money secured by real
estate mortgages – could have easily avoided the loss by simply exercising due diligence
in ascertaining the identity of the impostor who claimed to be the owner of the property
being mortgaged. Finally, equity merely supplements, not supplants, the law. The former
cannot contravene or take the place of the latter.
Bicol Savings v. Court of Appeals
G.R. No. 85302, 31 March 1989
FACTS:
Juan de Jesus was the owner of a parcel of land. He executed a Special Power of Attorney
in favor of his son, Jose de Jesus, to negotiate, mortgage his real property in any bank
preferably in the Bicol Savings Bank. By virtue thereof, Jose de Jesus obtained a loan
from petitioner bank and executed a deed of mortgage on the real property. Juan de
Jesus died at an unknown date. By reason of his failure to pay the loan obligation even
during his lifetime, petitioner bank caused the mortgage to be extrajudicially
foreclosed. In the subsequent public auction, the mortgaged property was sold to the
bank as the highest bidder. Jose de Jesus failed to redeem the property. Nonetheless,
Jose still negotiated for the repurchase of the property but was unsuccessful despite
offers and counter-offers. He then filed a complaint with the trial court, praying for the
annulment of the deed of sale but the complaint was dismissed ruling that the deed
became absolute.
Upon appeal, the CA reversed the ruling. CA applied Article 1879 of the Civil Code
and stated that since the special power to mortgage granted to Jose de Jesus did not
include the power to sell, it was error for the lower Court not to have declared the
foreclosure proceedings, and the auction sale held in null and void because the Special
Power of Attorney given by Juan de Jesus to Jose de Jesus was merely to mortgage his
property, and not to extrajudicially foreclose the mortgage and sell the mortgaged
property in the said extrajudicial foreclosure.
ISSUE:
Whether or not the extrajudicial foreclosure sale was valid.
RULING:
Yes. The right of the mortgagee bank to extrajudicially foreclose the mortgage after
the death of the mortgagor Juan de Jesus, acting through his attorney-in-fact, Jose de
Jesus, did not depend on the authorization in the deed of mortgage executed by the
latter. That right existed independently of said stipulation and is clearly recognized in
Section 7, Rule 86 of the Rules of Court.
The sale proscribed by a special power to mortgage under Article 1879 is a voluntary
and independent contract, and not an auction sale resulting from extrajudicial
foreclosure, which is precipitated by the default of a mortgagor. Absent that default, no
foreclosure results. The stipulation granting an authority to extrajudicially foreclose a
mortgage is an ancillary stipulation supported by the same cause or consideration for
the mortgage and forms an essential or inseparable part of that bilateral agreement.
The power to foreclose is not an ordinary agency that contemplates exclusively the
representation of the principal by the agent but is primarily an authority conferred
upon the mortgagee for the latter’s own protection. That power survives the death of
the mortgagor. It matters not that the authority to extrajudicially foreclose was granted
by an attorney-in fact and not by the mortgagor personally. The stipulation in that regard,
although ancillary, forms an essential part of the mortgage contract and is inseparable
therefrom.
Petitioner bank, therefore, in effecting the extrajudicial foreclosure of the mortgaged
property, merely availed of a right conferred by law. The auction sale that followed in the
wake of that foreclosure was but a consequence thereof.
G.R. No. L-3495 December 7, 1906
JAMES J. RAFFERTY, collector of customs for the port of Cebu, Philippine Islands,
plaintiff,
vs.
THE JUDGE OF THE COURT OF FIRST INSTANCE FOR THE PROVINCE OF
CEBU AND JUAN CO and his curator ad litem, MARTIN M. LEVERING,
defendants.
Attorney-General Araneta for plaintiff.
Levering & Wood for defendants.
WILLARD, J.:
On the 17th of January, a Chinese boy, under age, named Juan Ocaba, arrived at the port
of Cebu and was refused admission to the Islands by the plaintiff herein, who was then
collector of the port of Cebu. Ocaba appealed from this order to the Insular Collector and
was allowed to land and remain on shore during the pendency of the appeal furnishing a
bond of $1,000, money of the United States. The order of the collector of Cebu was
affirmed by the Insular Collector on the 10th of February, 1905. On the 27th of February,
1905, the Court of First Instance of Cebu, in proceedings had therein for the adoption of
Juan Ocaba by one of Co Quip Jat, entered an order declaring that Juan Ocaba, under the
name of Juan Co, was the legally adopted child of said Co Quip Jat. After this adoption a
petition was made to the plaintiff as such collector for an order to allow Juan Co to
remain in the Islands. This application was denied. On an appeal taken to the Insular
Collector, the order of the collector of the port of Cebu was affirmed; and on an appeal
taken to the Secretary of Finance and Justice it was again affirmed.
The eighth and thirteenth paragraphs of the amended complaint are as follows:
Eighth. That on or about the 28th day of February, 1905, the said Juan Co
(formerly Juan Ocaba), as plaintiff, applied to the Court of First Instance of Cebu
for a preliminary injunction against and collector of customs of the port of Cebu,
prohibiting said collector of customs from deporting said plaintiff, Juan Co
(formerly Juan Ocaba), and the said judge of the Court of First Instance for the
Province of Cebu issued the preliminary injunction as prayed for, prohibiting the
collector of customs for said port of Cebu from deporting the said Juan Ocaba
(Juan Co) from the Province of Cebu during the pendency of said suit in said
court.
x x x           x x x          x x x
Thirteenth. That thereafter, and until April 14, 1906, the said preliminary
injunction continued in force and effect, so that the said collector of customs
for the port of Cebu could not, without violating said injunction, carry into
effect the said order of deportation; and on or about said 14th day of April,
1906, the said Court of First Instance of Cebu rendered a so-called judgment
by default against the collector of customs for the port of Cebu upon the
ground that no answer had been filed in said injunction case, and permanently
enjoined the said collector of customs from deporting the said Juan Ocaba
(Juan Co) from the Province of Cebu; that said judgment by default was
rendered by the court without the knowledge or acquiescence of the collector
of customs of the port of Cebu, and no notice thereof was received until long
after the injunction was made permanent, and no copy of said judgment or
order of court was ever served upon the said collector of customs for the port
of Cebu.
A part of the prayer of the amended complaint is as follows:
1. That judgment be rendered in favor of the plaintiff, including an order
commanding the defendant, the judge of the Court of First Instance for the
Province of Cebu, absolutely to desist and refrain from further proceedings in
the action in which said order of adoption and said injunction were issued.
2. That the action of the said judge of the Court of First Instance of Cebu in the
issuance of said order of adoption and said injunctions be declared null and
void and of no force or effect.
To this complaint the defendant have demurred and the case is now before us for
resolution of the questions raised by the demurrer. We think it appears from the
complaint that in an ordinary civil action pending in the Court of First Instance of
Cebu in which Juan Co was plaintiff and this plaintiff, as collector of the port of Cebu,
was defendant, a final judgment was entered perpetually enjoining this plaintiff, the
defendant therein, from deporting Juan Co from the Islands. No appeal was ever taken
from that final judgment and no application has been made to set it aside on the
ground that it was entered by fraud, accident, or mistake.
The plaintiff herein asks that it be declared void on the ground that the court had no
jurisdiction of the action. That it had jurisdiction of the parties to the action is very
clear. The only question is whether it had jurisdiction of the subject-matter of the
action. That courts of justice may in some cases take jurisdiction of a case involving
the right of a Chinese person to remain in the Islands, we think is settled by the
decisions of the Supreme Court of the United States. In the Japanese Immigrant case
(189 U. S., 86) the court said, at page 100: his duty to show affirmatively that court had no jurisdiction of the subject-matter. This
has not been done. It nowhere appears in the amended complaint in this action what
But this court has never held, nor must we now be understood as holding, that
the grounds for the complaint in this action in the Court of First Instance were. If that
administrative officers, when executing the provisions of a statute involving the
action was founded upon an abuse of discretion or of their powers on the part of the
liberty of persons, may disregard the fundamental principles that inhere in "due
immigration officers, the court had jurisdiction of it, and its judgment, not appealed
process of law" as understood at the time of the adoption of the Constitution. One
from is final. The amended complaint in this action is therefore not sufficient. Whether
of these principles is that no person shall be deprived of his liberty without
it would be sufficient if it showed that the complaint in that action was based upon
opportunity, at some time, to be heard, before such officers, in respect of the
other grounds, we do not now decide.
matters upon which that liberty depends — not necessarily an opportunity upon a
regular, set occasion, and according to the forms of judicial procedure, but one by There is another ground, also, upon which the demurrer should be sustained. This is an
Congress, and at the same time be appropriate to the nature of the case upon action of prohibition. Upon the face of the amended complaint, both the judgment
which such officers are required to act. Therefore, it is not competent for the entered in the adoption proceedings and the judgment entered in the ordinary action
Secretary of the Treasury or any executive officer, at any time within the year were final. There is no allegation in the amended complaint that the court is
limited by the statute, arbitrarily to cause an alien, who has entered the country, threatening to or proposes to take any further action in either one of these proceedings.
and has become subject in all respects to its jurisdiction, and a part of its Without such an allegation, prohibition will not lie.
population, although alleged to be illegally here, to be taken into custody and The demurrer to the amended complaint is sustained, and the plaintiff is allowed ten
deported without giving him all opportunity to be heard upon the questions days within which to amend his complaint.
involving his right to be and remain in the United States. No such arbitrary power
can exist where the principles involved in due process of law are recognized.
x x x           x x x          x x x
The words here used do not require an interpretation which would invest
executive or administrative officers with the absolute, arbitrary power implied in
the contention of the appellant.
In the case of the United States, vs. Ju Toy (198 U. S., 253), in each of the three questions
submitted to the Supreme Court by the circuit courts of appeals, there is found a
statement substantially as follows:
And does not allege nor show in any other way unlawful action or abuse of their
direction or powers by the immigration officers who excluded him.
In that case the court said that —
We assume in what we have to say, as the questions assume, that no abuse of
authority of any kind is alleged.
If the immigration officers refuse to give the person interested any hearing at all upon his
right to enter, or commit any other abuse of their powers, the courts of justice have the
right to intervene. In this particular case we have a final judgment entered in a case in
which the court entering it had jurisdiction of the parties and might have had jurisdiction
of the subject-matter. The plaintiff in this case asks to have the judgment set aside. It is
National Power v. NAMERCO principal. For that reason and because Namerco exceeded the limits of its authority, it
virtually acted in its own name and not as agent and it is, therefore, bound by the
G.R. No. L-33819, 23 October 1982
contract of sale which, however, is not enforceable against its principal.
FACTS:
Plaintiff-appellant National Power Corporation (NPC) and defendant- appellant National
Merchandising Corporation (NAMERCO), the Philippine representative of New York-
based International Commodities Corporation, executed a contract of sale of sulfur with a
stipulation for liquidated damages in case of breach. Defendant-appellant Domestic
Insurance Company executed a performance bond in favor of NPC to guarantee the
seller’s obligation. In entering into the contract, Namerco, however, did not disclose to
NPC that Namerco’s principal, in a cabled instruction, stated that the sale was subject to
availability of a steamer, and contrary to its principal’s instruction, Namerco agreed that
non-availability of a steamer was not a justification for non-payment of liquidated
damages.
The New York supplier was not able to deliver the sulfur due to its inability to secure
shipping space. Consequently, the Government Corporate Counsel rescinded the contract
of sale due to the supplier’s non-performance of its obligations, and demanded payment
of liquidated damages from both Namerco and the surety. Thereafter, NPC sued for
recovery of the stipulated liquidated damages. After trial, the Court of First Instance
rendered judgment ordering defendants-appellants to pay solidarity to the NPC reduced
liquidated damages with interest.
ISSUE:
Whether NAMERCO exceeded their authority.
RULING:
Yes, NaMerCo exceeded their authority.
The Supreme Court held that before the contract of sale was signed Namerco was already
aware that its principal was having difficulties in booking shipping space.
It is being enforced against the agent because article 1897 implies that the agent who acts
in excess of his authority is personally liable to the party with whom he contracted.
Moreover, the rule is complemented by article 1898 of the Civil Code which provides
that “if the agent contracts in the name of the principal, exceeding the scope of his
authority, and the principal does not ratify the contract, it shall be void if the party with
whom the agent contracted is aware of the limits of the powers granted by the principal”.
Namerco never disclosed to the Napocor the cabled or written instructions of its
National Food Authority v. Intermediate Appellate Court Corporation) are dealt with, the agent is bound to the principal although he does not
assume the character of such agent and appears acting in his own name. In other
G.R. No. 75640, 5 April 1990
words, the agent’s apparent representation yields to the principal’s true representation
FACTS: and that, in reality and in effect, the contract must be considered as entered into
Gil Medalla, entered into a contract for hire of ship known as “MV Sea Runner” with between the principal and the third person. Corollarily, if the principal can be obliged
defendant National Grains Authority. Under the said contract Medalla obligated to to perform his duties under the contract, then it can also demand the enforcement of its
transport on the “MV Sea Runner” sacks of rice belonging to defendant National Grains rights arising from the contract.
Authority from the port of San Jose, Occidental Mindoro, to Malabon, Metro Manila.
Upon completion of the delivery of rice at its destination, plaintiff wrote a letter
requesting defendant NGA that it be allowed to collect the amount stated in its statement
of account. The statement of account included not only a claim for freightage but also
claims for demurrage and stevedoring charges. Plaintiff wrote, this time specifically
requesting that the payment for freightage and other charges be made to it and not to
defendant Medalla because plaintiff was the owner of the vessel “MV Sea Runner.
Plaintiff wrote defendant Medalla demanding that he turn over to plaintiff the money.
Defendant Medalla, however, “ignored the demand.
ISSUE:
Whether petitioner NFA is not liable under the exception to the rule (Art. 1883) since it
had no knowledge of the fact of agency.
RULING:
Petitioner NFA’s contention holds no water. It is an undisputed fact that Gil Medalla was
a commission agent of respondent Superior Shipping Corporation which owned the
vessel “MV Sea Runner” that transported the sacks of rice belonging to petitioner NFA.
The context of the law is clear. Art. 1883, which is the applicable law in the case at bar
provides:
Art. 1883. If an agent acts in his own name, the principal has no right of action against
the persons with whom the agent has contracted; neither have such persons against the
principal.
In such case the agent is the one directly bound in favor of the person with whom he has
contracted, as if the transaction were his own, except when the contract involves things
belonging to the principal.
The provision of this article shall be understood to be without prejudice to the actions
between the principal and agent.
Consequently, when things belonging to the principal (in this case, Superior Shipping
British Airways v. Court of Appeals Hongkong leg of the former’s journey to PAL, as its subcontractor or agent. In fact,
the fourth paragraph of the “Conditions of Contracts” of the ticket32 issued by BA to
G.R. No. 121824, 29 January 1998
Mahtani confirms that the contract was one of continuous air transportation from
FACTS: Manila to Bombay.
Mahtani decided to visit his relatives in Bombay, India. In anticipation of his visit, he 4. . . . carriage to be performed hereunder by several successive carriers is regarded as
obtained the services of a certain Mr. Gumar to prepare his travel plans. The latter, in a single operation.
turn, purchased a ticket from BA. Since BA had no direct flights from Manila to Bombay, Prescinding from the above discussion, it is undisputed that PAL, in transporting
Mahtani had to take a flight to Hongkong via PAL, and upon arrival in Hongkong he had Mahtani from Manila to Hongkong acted as the agent of BA.
to take a connecting flight to Bombay on board BA.
Parenthetically, the Court of Appeals should have been cognizant of the well-settled
Prior to his departure, Mahtani checked in at the PAL counter in Manila his two pieces of rule that an agent is also responsible for any negligence in the performance of its
luggage containing his clothings and personal effects, confident that upon reaching function (Art. 1909) and is liable for damages which the principal may suffer by
Hongkong, the same would be transferred to the BA flight bound for Bombay. reason of its negligent act (Art. 1884). Hence, the Court of Appeals erred when it
Unfortunately, when Mahtani arrived in Bombay he discovered that his luggage was opined that BA, being the principal, had no cause of action against PAL, its agent or
missing and that upon inquiry from the BA representatives, he was told that the same sub-contractor.
might have been diverted to London. After patiently waiting for his luggage for one
Also, it is worth mentioning that both BA and PAL are members of the International
week, BA finally advised him to file a claim by accomplishing the “Property Irregularity
Air Transport Association (IATA), wherein member airlines are regarded as agents of
Report.
each other in the issuance of the tickets and other matters pertaining to their
Back in the Philippines, Mahtani filed his complaint for damages and attorney’s fees 5 relationship. Therefore, in the instant case, the contractual relationship between BA
against BA and Mr. Gumar before the trial court. BA filed its answer and conteded that and PAL is one of agency, the former being the principal, since it was the one which
Mahtani did not have a cause of action against it. Likewise, BA filed a third-party issued the confirmed ticket, and the latter the agent.
complaint 7 against PAL alleging that the reason for the non-transfer of the luggage was
due to the latter’s late arrival in Hongkong, thus leaving hardly any time for the proper
transfer of Mahtani’s luggage to the BA aircraft bound for Bombay. PAL then disclaimed
any liability and argued that there was, in fact, adequate time to transfer the luggage to
BA facilities in Hongkong. Furthermore, the transfer of the luggage to Hongkong
authorities should be considered as transfer to BA.
The trial court rendered its decision in favor of Mahtani which is affirmed by the CA.
hence the petition.
ISSUE:
Whether PAL is considered an agent of BA and can be held liable for any negligence in
the performance of its function.
RULING:
Yes, is considered an agent of BA and can be held liable.
In resolving this issue, it is worth observing that the contract of air transportation was
exclusively between Mahtani and BA, the latter merely endorsing the Manila to