AGENCY 2D 13 Class Digest Complete

7/22/2019 AGENCY 2D 13 Class Digest Complete

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2D 2013 CLASS DIGEST

(AGENCY ATTY. OBIETA) 1

Philpotts vs. Philippine Manufacturing Co. and Berry

W.G. Philpotts (Petitioner) , a stockholder in Philippine ManufacturingCompany sought to compel respondents to permit plaintiff, a person or bysome authorized agent or attorney to inspect and examine the records of the

business transacted by said company since January 1, 1918.

Respondent corporation or any of its officials has refused to allow thepetitioner himself to examine anything relating to the affairs of the company,and the petitioner prays for an order commanding respondents to placerecords of all business transactions of the company, during a specific period, atthe disposal of the plaintiff or his duly authorized agent or attorney. Petitionerdesires to exercise said right through agent or attorney.

Petition is filed originally in the Supreme Court under authority of Section 515of Code of Civil Procedure, which gives SC concurrent jurisdiction with then

Court of First Instance in cases where any corporation or person unlawfullyexcludes the plaintiff from use and enjoyment and some right he is entitled.

ISSUE:

Whether the right which the law concedes to a stockholder to inspect therecords can be exercised by a proper agent or attorney of the stockholder aswell as by stockholder in person

HELD:

Yes. Right of inspection of records can be exercised by proper agent orattorney of the stockholder as well as by stockholder in person.

The right of inspection / examination into corporate affairs given to astockholder in section 51 of the Corporation Lawwhich states: The records ofall business transactions of the corporation and the minutes of any meeting shall

be open to the inspection of any director, member, or stockholder of thecorporation at reasonable hour can be exercised either by himself or by anyduly authorized representative or attorney in fact, and either with or withoutthe attendance of the stockholder. This is in conformity with the general rulethat what a man may do in person he may do through another.

Quiroga v. Parsons

FACTS: Quiroga and Parsons entered into a contract for the exclusive sale ofQuiroga beds in the Visayan Islands. They agreed on the following terms: a)Quiroga shall furnish the beds and shall give a 25% discount on the invoicedprices as commission sales and Parsons shall order by the dozen; b) Paymentshall be made within 60 days from date of shipment; c) Transportation andshipment expenses shall be borne by Quiroga while freight, insurance, and costof unloading by Parsons; d) If before an invoice falls due, Quiroga shouldrequest payment, payment made shall be prompt payment and a deduction of2% shall be given; same discount if payment is in cash; e) Notice from Quirogashall be given at least 15 days before any change in price; f) Parsons bindshimself not to sell any other kind of bed; and g) Contract is for an unlimitedperiod.

Parsons violated some of the conditions such as not to sell the beds athigher prices, pay for the advertisement expenses, and to order beds by thedozen. Quiroga alleged that Parsons was his agent and that the obligations areimplied in a commercial agency contract.

ISSUE: w/n Parsons, by reason of the contract, was a purchaser or an agent ofQuiroga for the sale of the latters beds.

HELD: NO, Parsons was not an agent.

In order to classify a contract, due regard must be given to theessential clauses. In this case, there was an obligation on Quirogas part tosupply beds while an obligations on Parsons part to pay the price. These areessential features of a contract of purchase and sale. None of the clausesconveys the idea of an agency where an agent received the thing to sell it and


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does not pay the price but delivers to the principal the price he obtains fromthe sale to a third person, and if he does not sell it, he returns it.

The word agency used in the contract only expresses that Parsonswas the only one who could sell the petitioners beds in the Visayan Islands. Acontract is what the law defines it to be and not what the parties call it.

Shell Co. v. Firemens Insurance

Facts:

This is an action for recovery of sum of money, based on alleged negligence ofthe defendants

A car was brought to a Shell gasoline station owned by dela Fuente forwashing and greasing. The car was placed on a hydraulic lifter for greasing. Assome parts of the car couldnt be reached by the greaseman, the lifter waslowered. Unfortunately, for unknown reasons (probably due to mechanicalfailure or human error), while the lifter was being lowered, the car swung and

fell from the platform.

Said car was insured against loss or damage by Firemen's Insurance Companyof Newark, New Jersey, and Commercial Casualty Insurance Company jointlyfor the sum of P10,000

The insurance companies after paying the sum of P1,651.38 for the damage andcharging the balance of P100.00 to Salvador Sison in accordance with theterms of the insurance contract, have filed this action together with saidSalvador Sison for the recovery of the total amount of the damage from thedefendants on the ground of negligence

Issue: WON dela Fuente is merely an agent of Shell Co.

Held: Yes

D:

De la Fuente was the operator of the station "by grace" of the DefendantCompany which could and did remove him as it pleased; that all theequipments needed to operate the station was owned by the DefendantCompany which took charge of their proper care and maintenance, despite thefact that they were loaned to him; that the Defendant company did not leavethe fixing of price for gasoline to De la Fuente;

That the service station belonged to the company and bore its tradename andthe operator sold only the products of the company; that the equipment usedby the operator belonged to the company and were just loaned to theoperator and the company took charge of their repair and maintenance

As the act of the agent or his employees acting within the scope of hisauthority is the act of the principal, the breach of the undertaking by the agentis one for which the principal is answerable

The latter was negligent and the company must answer for the negligent act ofits mechanic which was the cause of the fall of the car from the hydraulic lifter.

Dela Cruz v Northern Theatrical Enterprises, Inc., et al

Northern Theatrical Enterprises Inc. operated a movie house in Laoag, IlocosNorte. Domingo Dela Cruz was one of their security guards. He carried arevolver. One day, a Benjamin Martin wanted to enter without a ticket but delaCruz refused him entrance. Infuriated, Martin attacked him with a bolo and inorder to save his life, dela Cruz shot and killed Martin. Martin, thereafter, wascharged with homicide which, after re-investigation, was dismissed. A fewyears later, dela Cruz again figured in a homicide case related to his work as

security guard for the theater. He was acquitted for the second charge. In bothinstances, dela Cruz employed a lawyer. He thereafter demandedreimbursement for his litigation expenses but was refused by the theater. Afterwhich, he filed an action for reimbursement plus damages.


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Northern Theater moved for the dismissal of the complaint. The Court foundfor Northern Theater and dismissed the complaint saying that dela Cruz had nocause of action. Dela Cruz filed present appeal (for the reason that onlyquestions of law are involved).

Held: Judgment affirmed.

Agency Doctrine

CFI was correct in rejecting the theory of dela Cruz that he was an agent of thedefendants and that as such agent he was entitled to reimbursement for theexpenses incurred by him in connection with the agency. The relationshipbetween the theater and the plaintiff was not that of principal and agent becausethe principle of representation was not involved. He was not employed torepresent defendant corporation in its dealings with third parties. He was merelyan employee hired to guard the cinema.

Issue is primarily one of employer employee. Whether an employee who inline with the performance of his duty incur expenses caused not directly by his

employer or fellow employees but by a third party or stranger, may recoveragainst his employer. In this case, theres no legal obligation on the part of theemployer, it might yet be regarded as a moral obligation. Since employer notlegally obligated to give legal assistance, plaintiff naturally cannot recover theamount from defendant.

SC also says that the damage incurred did not flow from the performance of hisduties but only indirectly. Filing of the criminal charges was the efficient,intervening cause. As such, plaintiff cannot fix civil responsibility to thedefendant.

GUARDEX ENTERPRISES V. NLRC

Facts:A claim for alleged unpaid commissions of an agent is what is basically involvedin the action at bar.The two parties in this case are: Marcelina A. Escandor (engaged in themanufacture and sale of fire-fighting equipment and the building or fabrication

of fire trucks under Guardex Enterprises) and Jumbee Orbeta (a freelancesalesman).

It appears that Orbeta somehow learned that Escandor had offered tofabricate a fire truck for Rubberworld (Phil) Inc. He wrote to Escandor inquiringabout the amount of commission for the sale of a fire truck. Escandor wroteback on the same day to advise that it was P15,000 per unit. Four days later,

Orbeta offered to follow up Escandors pending proposal to sell a fire truckto Rubberworld, and asked for P250 as representation expenses. Escandoragreed and gave him the money. When no word was received by Escandorfrom Orbeta after 3 days, she herself inquired in writing from Rubberworldabout her offer of sale of a fire truck. After 7 months, Escandor finallyconcluded a contract with Rubberworld for the latters purchase of a fire truck.At this point, Orbeta suddenly reappeared and asked for his commission forthe sale of the fire truck to Rubberworld. Escandor refused, saying that he hadnothing to do with the offer, negotiation and consummation of the sale.

Issue:

Whether or not Orbeta (acting as an agent) is entitled to commission asregards the sale of a fire truck to Rubberworld?

Held:No. He is not entitled to any commission.

Ratio:Even finding that under these circumstances, an agency had indeed beenconstituted will not save the day for Orbeta, because nothing in the recordtends to prove that he succeeded in carrying out its terms or ever as much asattempted to do so. The evidence in fact clearly indicates otherwise. The terms

of Escandors letter assuming that it was indeed an authority to sell, asOrbeta insists are to the effect that entitlement to the P15,000 commission iscontingent on the purchase by a customer of a fire truck, the implicit conditionbeing that the agent would earn the commission if he was instrumental inbringing the sale about. Orbeta certainly had nothing to do with the sale of thefire truck, and is not therefore entitled to any commission at all.


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Furthermore, even if Orbeta is considered to have been Escandors agent forthe time he was supposed to follow up the offer to sell, such agency wouldhave been deemed revoked upon the resumption of direct negotiationsbetween Escandor and Rubberworld, Orbeta having in the meantimeabandoned all efforts (if indeed any were exerted) to secure the deal inEscandors behalf.

BORDADOR vs. LUZFACTS:Petitioners Bordador spouses were engaged in the business ofpurchase and sale of jewelry, while respondent Brigida Luz was their regularcustomer. Respondent Narciso Deganos, Luz's brother, received several piecesof jewelry from the Bordadors amounting to P382,816.00, which items wereindicated in 17 receipts covering the same--11 of the receipts stated that theywere received by Deganos for a certain Evelyn Aquino, while the remaining 6

indicated that they were received by Deganos for Luz.Deganos wassupposed to sell the items at a profit and remit the proceeds and return theunsold items to the Bordadors. Deganos remitted only P53,207.00. He neitherpaid the balance of the sales proceeds, nor did he return any unsold item to theBordadors, which led them to file an action for recovery of a sum of money anddamages against Deganos and Luz with the RTC. The Bordadors claimed thatDeganos acted as the agent of Luz when he received the items of jewelry, andbecause he failed to pay for the same, Luz, as principal, became solidarily liable

with him.Deganos asserted that it was he alone who was involved in thetransaction with the Bordadors; that he neither acted as agent for nor was heauthorized to act as an agent by Luz, notwithstanding the fact that 6 of thereceipts indicated that the items were received by him for Luz. He added that

he never delivered any of the items to Luz. Luz corroborated the claims ofDeganos.The RTC found that only Deganos was liable to the Bordados. Itfurther found that it was petitioner Lydia Bordador who indicated in thereceipts that the items were received by Deganos for Evelyn Aquino and forLuz. It said that it was "persuaded that Brigida D. Luz was behind Deganos,"but because there was no memorandum to this effect, the agreement

between the parties was unenforceable under the Statute of Frauds. Absentthe required memorandum or any written document connecting Luz with thesubject receipts or authorizing Deganos to act on her behalf, the alleged

agreement between the Bordadors and Luz was unenforceable.TheBordadors elevated the case to the CA which affirmed said judgment, hence

the instant petition.ISSUE:Whether Luz is liable to the Bordadors for the latter's claim for moneyand damages despite the fact that Luz did not sign any of the subject receipts

or authorized Deganos to receive the items of jewelry on her behalfHELD:No, Luz is not liable to the Bordadors.RATIO:THE BASIS FOR AGENCY IS REPRESENTATION.The basis for agency isrepresentation. Here, there is no showing that Luz consented to the acts ofDeganos or authorized him to act on her behalf, much less with respect to theparticular transactions involved. The Bordadors' attempt to foist liability on Luzthrough the supposed agency relation with Deganos is groundless and ill-

advised.A PERSON DEALING WITH AN AGENT IS PUT UPON INQUIRY AND MUSTDISCOVER UPON HIS PERIL THE AUTHORITY OF THE AGENT.Besides, it wasgrossly and inexcusably negligent of the Bordadors to entrust to Deganos, notonce or twice but on at least 6 occasions as evidenced by 6 receipts, severalpieces of jewelry of substantial value without requiring a written authorizationfrom his alleged principal. A person dealing with an agent is put upon inquiry

and must discover upon his peril the authority of the agent. HAHN VS. CA and BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT(BMW)

266 SCRA 537Facts

Alfred Hahn is a Filipino citizen doing business under the name and style ofHahn-Manila. BMW is a non resident foreign corporation existing under thelaws of Germany.


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In March of 1967 Hahn executed in favor of BMW a Deed of Assignment. InFebruary of 1993, Hahn was informed that his exclusive dealership was indanger of being terminated due to deteriorating services and sales. Hahnclaimed that the termination of his exclusive dealership would be a breach ofthe deed of assignment. He then filed for a complaint of specific performanceand damages against BMW to compel it to continue with the exclusivedealership.

BMW on the other hand filed for a motion to dismiss, contending that thecourt did not acquire jurisdiction over it because it was a foreign corporationand was not doing business in the Philippines. It further claimed that theexecution of the Deed of Assignment was an isolated transaction and thatHahn was not its agent and was merely a middleman transacting business forhis own name and for his own account.

IssueWhether respondent company was doing business in the Philippines?

Whether Alfred Hahn was an agent of BMW?

Decision

Yes. Alfred Hahn was an agent of BMW and consequently, respondentcompany was doing business in the Philippines.

Ratio

The phrase "doing business" includes "appointing representatives or

distributors in the Philippines". (Foreign Investments Act of 1991)

The question is whether petitioner Alfred Hahn is the agent or distributor in thePhilippines of private respondent BMW. If he is, BMW may be considered doingbusiness in the Philippines and the trial court acquired jurisdiction over it byvirtue of the service of summons on the Department of Trade and Industry.

Hahn claimed he took orders for BMW cars and transmitted them to BMW.Upon receipt of the orders, BMW fixed the down payment and pricing charges,notified Hahn of the scheduled production month for the orders, andreconfirmed the orders by signing and returning to Hahn the acceptancesheets. Payment was made by the buyer directly to BMW. Title to carspurchased passed directly to the buyer and Hahn never paid for the purchase

price of BMW cars sold in the Philippines. Hahn was credited with acommission equal to 14% of the purchase price upon the invoicing of a vehicleorder by BMW. Upon confirmation in writing that the vehicles had beenregistered in the Philippines and serviced by him, Hahn received an additional3% of the full purchase price. Hahn performed after-sale services, including,warranty services, for which he received reimbursement from BMW. All orderswere on invoices and forms of BMW.

This arrangement shows an agency. An agent receives a commission upon thesuccessful conclusion of a sale. On the other hand, a broker earns his paymerely by bringing the buyer and the seller together, even if no sale is

eventually made.

DE LA PENA V. HIDALGO

FACTS:

1887-1893 (1st period) 1893-1902 (2nd period) 1902-1904 (3rd period)

FEDERICO ANTONIO FRANCISCO

Before DE LA PENA went to Spain, he executed a power of attorney in favor of

FEDERICO and 3 other people. Their task is to represent him and administervarious properties he owned in Manila. FEDERICO took charge in Nov. 1887.After a few years, FEDERICO wrote a letter to DE LA PENA. It contains arequest that DE LA PENA assign a person who might substitute FEDERICO inthe event that he leaves the Philippines because one of the agents died and theother 2 are unwilling to take charge. DE LA PENA did not answer the letter


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there was neither approval nor objection on the accounts and no appointmentof another person who might substitute FEDERICO. Because of health reasons,FEDERICO went to Spain. Before he departed, he sent another letter to DE LAPENA a summary of accounts and informing that he will be leaving thePhilippines and that he turned over the administration to ANTONIO (thoughFEDERICO stated that if DE LA PENA is not happy with this, DE LA PENA mustsend ANTONIO a new power of attorney).

DE LA PENA files in court for the collection of revenue from his accounts whichwas handled by FEDERICO. DE LA PENA alleges that FEDERICO has onlyremitted 1.2k and still owes him roughly 72k. Furthermore, DE LA PENA seeks tohold FEDERICO liable for the administration from the period of 1887 until 1904.FEDERICO asserts that he cannot be liable for the period after he renouncedhis agency. Furthermore FEDERICO argues that his renunciation andappointment of a substitute was legal for there was no objection on the part ofDE LA PENA.

ISSUE:

Whether there was a valid agency in the case of ANTONIO (2 nd period)

HELD:

There was an implied agency in the case of ANTONIO. DE LA PENA created animplied agency in favor of ANTONIO because of his silence on the matter for anumber of years.

There was a valid renunciation in the case of FEDERICO. His reason for leavingthe country is legitimate. Furthermore, he gave notice to DE LA PENA about hissituation in which the latter failed to give his objection.

Being a valid agency on the part of ANTONIO and a valid renunciation on theparty of FEDERICO, it must follow that the liability of FEDERICO only extendsup to the point before his renunciation of the agency (1st period).

DOCTRINE:

The implied agency is founded on the lack of contradiction or opposition,which constitutes simultaneous agreement on the part of the presumedprincipal to the execution of the contract.

The agent and administrator who was obliged to leave his charge for alegitimate cause and who duly informed his principal, is thenceforwardreleased and freed from the results and consequences of the management of

the person who substituted him with the consent, even tacit though it be, ofhis principal.

SIDE NOTE ON POWER OF ATTORNEY:

It was also argued by DE LA PENA that there was no authority on the part ofFEDERICO to appoint a substitute. The COURT ruled that the power of attorneygiven by DE LA PENA to FEDERICO did not include a power to appoint asubstitute. Nevertheless, it was pointed out that the appointment made byFEDERICO was not based on the power of attorney of DE LA PENA. Theappointment was grounded on a new power of attorney FEDERICO himselfexecuted in favor of ANTONIO. Thus, there was no violation incurred byFEDERICO. And as stated in the case, DE LA PENA was duly informed of this butnevertheless kept his silence on the matter.

CONDE v. RIVERA ( December 15, 1982)

FACTS: 7 April 1938, Dominga Conde, together with her siblings, sold a parcel ofland located in Burauen Leyte, to Casimira Pasagui married to Pio Altera(ALTERAS) with a right of repurchase, within 10 years from said date. ThePacto de retro sale provided that if the end of 10 years the said land is notrepurchased, a new agreement shall be made between the parties and in no casetitle and ownership shall be vested in the hand of the ALTERAS. On a later date,

Paciente Cordero, son-in-law, of the ALTERAS signed a document. Insubstance, the said document provides that the original document was lost inspite of diligent efforts to locate the same; that the representative of theCONDES, Eusebio Amarille, repurchased the subject lot; that Alteras and PioCordero received the payment for the repurchase; and that if Dominga et. al.,will be disturbed by other persons, Altera and Pio will defend in behalf of


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Dominga el. Al., because the same was already repurchased by them. To benoted is the fact that the Alteras did not sign the deed and only Pio was thesignatory to the deed. On a relevant date, Pio Altera sold the disputed lo to thespouses Ramon Conde and Catalina Conde (their relationship to petitioner wasnot established). After 24 years, Dominga Conde filed with the CFI of Leyte acivil case for quieting of title against the ALTERAS and the spouses CONDE.Dominga contended that Pio signed the Memorandum in representation of the

Pio Aletra, who was very ill on that occasion. Alteras, on the other hand,contended that Pio was not their agent and Pio signed because he has noobjection to the repurchase.. The CFI dismissed the complaint which wasaffirmed by the CA. Hence, this petition.

ISSUE: Whether Pio Cordero, in signing the memorandum, acted inrepresentation of the ALTERAS.

HELD: YES! There was an impled agency. The Alteras did not repudiate thedeed that Pio Cordero had signed. If, as alleged, Dominga never exerted anyeffort to procure the signature of Pio Altera after he had recovered from his

illness, neither did the Alteras repudiate the deed that Pio executed. Thus, animplied agency must be held to have been created from their silence or lackof action, or their failure to repudiate the agency. Alteras must be held boundby the clear terms of the Memorandum of Repurchase. If the contract is plainand unequivocal in its terms he is ordinarily bound thereby.

(The court also held that the ALTERAS were guilty of laches. They, for 24 years,slept on their right to institute an action for quieting of title against petitioner.Furthermore, the court also ruled that the spouses Conde were not purchasersin good faith. They bought the disputed property despite the notice of thecondition in the title that the property was subject to repurchase.)

PNB VS. CA

FACTS

The Solomon spouses were the registered owners of a lot located in Davao.

In 1932, the Solomon spouses mortgaged the land in favor of PhilippineNational Bank to secure a loan of P500.00. For failure to pay the loan, themortgage was foreclosed, the property was sold at public auction, and aCertificate of Sale was executed in favor of the Bank.

The next day, after the execution of the Certificate of Sale, the Solomonspouses and the Bank, represented by its manager, Cortes, created a "Promesa

de Venta" whereby the Bank bound itself to sell to the Solomon spouses forP802.26 payable in eight equal annual amortizations. Possession of theproperty was likewise turned over to said spouses upon the execution of thecontract. Further, it was stipulated that if the Solomon spouses should fail topay any of the amortizations, the contract shall be automatically rescinded andthe Bank shall be free to take possession of the land and sell it to a thirdperson.

Solomon spouses defaulted on the seventh and eighth amortizations.Eventually, both spouses died. Perez as sole heir of the deceased spouses,succeeded into the possession of the land in question.

7 years after default, Perez offered to pay the last two amortizations plusinterest, with the request that a Deed of Sale be executed in his favour but wasrejected by the bank manager, Lagdameo, on the ground that the "Promesa deVenta" was executed by the Bank in favor of the Solomon spouses. Uponsuggestion of Lagdameo, Perez filed an action in Court for a declaration ofheirship. Consequently, Perez was judicially declared heir.

Acting on Perez notification of such court order, bank manager, Maceda,informed Perez that as soon as he pays the account due of P535.45, they shallcause the release of the mortgage. He also conveyed the comment of the headoffice as regards his "offer to purchase" which they found too low compared

to the market value of the property; therefore he was asked to increase theprice. Perez then made several offers to the bank, the last price amounting toP8000.00. However, all these offers were turned down by the Bank.


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De Castro spouses offered to buy the property for P13,500.00. Failing to matchthe offer, Perez lost the land to the De Castro spouses and the Bank issued anew TCT under their name.

Perez filed a complaint, praying among other things, that the Bank be orderedto accept from Perez payment of the outstanding balance and to deliver theproperty to him.

The court dismissed Perez' complaint. Perez appealed to the Court of Appealswhich reversed the trial court's decision. Perez was allowed to redeem orpurchase the said property, upon payment of the last two installments andwith interest. The Bank and De Castro spouses moved for reconsideration butwere denied. Hence, the petitions for review.

ISSUE:

1. Whether the CA erred in holding petitioners in estoppelHELD:

No. Firstly the clear intention of the Bank was to allow the Solomon spouses toreacquire ownership of the property. Thus, the "Promesa de Venta" wasprimarily created to favor the Solomon spouses giving them 8 years toreacquire their land. During those years, the spouses were allowed to remain inpossession of the property. Secondly, the Bank did not register the same until24 years later nor did it disturb Perez's possession of the property. Thirdly,when Perez offered to pay the balance with the request that a Deed of Sale beexecuted in his favor, his offer was rejected by Lagdameo not because the"Promesa de Venta " had been automatically rescinded and right to redeemwas lost, but on the ground that it was in favor of the Solomon spouses.

Maceda, on the other hand, issued a statement of account on the loan andinformed Perez that "as soon as (he) could cause full payment of the aboveaccount, (they) shall cause the release of the mortgage." Relying on thiscommitment, Perez made several offers as to the amount but Maceda stillasked for an increase in the "price." In other words, Perez was led to believethat he would be allowed to redeem the property.

The "Promesa de Venta" was not essentially a contract to sell real estate oninstallments but was more of a contract of redemption. Perez justifiably andreasonably relied upon the assurance of the bank managers that he would beallowed to pay the remaining obligation of his deceased parent. The automaticrescission clause contained in it should not be controlling because based on the

facts, the bank itself did not strictly adhering to it.

The Bank's argument that it is not bound by the acts of its managers, is notwell taken for well settled is the rule that if a private corporation intentionallyor negligently clothes its officers or agents with apparent power to performacts for it, the corporation will be estopped to deny that such apparentauthority is real as to innocent third persons dealing in good faith with suchofficers or agents.

Rallos v Yangco

Facts:Through a letter, Yangco invited Rallos in a consignmentarrangementfor the business of buying and selling of leaf tobacco andothernative products, terms and conditions of which were also includedinthe letter.In the same letter, Yangco introduced to Rallos the former'sagent,Collantes, upon whom Yangco conferred a public power of attorneytoperform on Yangco's behalf, all acts necessary for carrying outthebusiness.Rallos accepted the invitation and transacted with YangcothroughCollantes; last transaction being the supply of tobacco, the costofwhich that belonged to Rallos was misappropriated byCollantes.Apparently, prior to the last delivery of tobacco, Yangco hadalreadyterminated his agency relation with Collantes, unknown to Rallos.ISSUE:W/N Rallos, in good faith and without knowledge of the terminationofthe agency agreement, can recover from Yangco theamountmisappropriated by Collantes.RULING:Yes, Yangco was liable. Having given special notice to Rallos


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thatCollantes was his (Yangco's) agent and having given him invitationtodeal with such agent, it was then the duty of Yangco to give due andtimelynotice to Rallos regarding the termination of the agency.Failing to do so,Yangco will be held liable to third parties actingin good faith and properlyrelying upon such agency.

Macke v Camps

Facts:

The plaintiffs in this action, B. H. Macke and W. H. Chandler, partners doingbusiness under the firm name of Macke, Chandler & Company, allege thatduring the months of February and March, 1905, they sold to the defendantand delivered at his place of business, known as the "Washington Cafe,"various bills of goods amounting to P351.50; that the defendant has only paidon account of said accounts the sum of P174.

Before instituting this action they made demand for the payment thereof; and

that defendant had failed and refused to pay the said balance.B. H. Macke, one of the plaintiffs, testified that on the order of one RicardoFlores, who represented himself to be agent of the defendant, he shipped thesaid goods to the defendants at the Washington Cafe; that Flores lateracknowledged the receipt of said goods and made various payments.

Flores informed him that he did not have the necessary funds on hand, andthat he would have to wait the return of his principal.

Flores, in the absence of the defendant in the provinces, apparently in chargeof the business and claiming to be the business manager of the defendant, said

business being that of a hotel with a bar and restaurant.

A written contract dated May 25, 1904, was introduced in evidence, from whichit appears that one Galmes, the former owner of the business now know as the"Washington Cafe," subrented the building wherein the business wasconducted, to the defendant for a period of one year, for the purpose of

carrying on that business, the defendant obligating himself not to sublet orsubrent the building or the business without the consent of the said Galmes.This contract was signed by the defendant and the name of Ricardo Floresappears thereon as a witness, and attached thereto is an inventory of thefurniture and fittings which also is signed by the defendant with the word"sublessee" (subarrendatario) below the name, and at the foot of thisinventory the word "received" (recibo) followed by the name "Ricardo Flores,"

with the words "managing agent"

Issue:

W/n Flores was an agent of Washington Caf.

Held:

Flores is an agent of Washington Caf

Ratio:

In the absence of proof of the contrary we think that this evidence is sufficientto sustain a finding that Flores was the agent of the defendant in themanagement of the bar of the Washington Cafe with authority to bind thedefendant, his principal, for the payment of the goods mentioned in thecomplaint.

The contract introduced in evidence sufficiently establishes the fact that thedefendant was the owner of business and of the bar, and the title of"managing agent" attached to the signature of Flores which appears on thatcontract, together with the fact that, at the time the purchases in questionwere made, Flores was apparently in charge of the business, performing the

duties usually entrusted to managing agent, leave little room for doubt that hewas there as authorized agent of the defendant. One who clothes anotherapparent authority as his agent, and holds him out to the public as such, cannot be permitted to deny the authority of such person to act as his agent, tothe prejudice of innocent third parties dealing with such person in good faithand in the following preassumptions or deductions, which the law expressly


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directs to be made from particular facts, are deemed conclusive and unless thecontrary appears, the authority of an agent must be presumed to include allthe necessary and usual means of carrying his agency into effect.

Jimenez vs Rabot

Facts: Gregorio was in need of money to pay off his debts. He instructed his

sister, through a letter, to sell one of his two parcels of land so as to come upwith cash. Nicolasa, following her brother's request, sold one of his parcels ofland to Rabot for 500 pesos. There was proof of payment between Rabot andNicolasa but there was no proof of the payment ever reaching Gregorio.

When Gregorio asked for the parcel of land, Nicolasa refused. Gregorio nowsues for the land and learns later on that ownership was already with Rabot.

Issue: Whether or not the conveyance between Nicolasa and Pedro Rabot wasa valid.

Held: It was valid. Judgement of CA is reversed.

Ratio:

The purpose in giving a power of attorney is to substitute the mind andhand of the agent for the mind and hand of the principal; and if thecharacter and extent of the power is so far defined as to leave nodoubt as to the limits within which the agent is authorized to act, andhe acts within those limits, the principal cannot question the validity ofhis act. It is not necessary that the particular act to be accomplishedshould be predestinated by the language of the power. The question tobe answered always, after the power has been exercised, is rather this:

Was the act which the agent performed within the scope of hisauthority? In the case before us, if the question is asked whether theact performed by Nicolasa Jimenez was within the scope of theauthority which had been conferred upon her, the answer must beobviously in the affirmative.

When the owner, or his agent, comes to make a contract to sell, or aconveyance to effect a transfer, there must be a description of theproperty which is the subject of the sale or conveyance. This isnecessary of course to define the object of the contract

The general rule here applicable is that the description must besufficiently definite to identify the land either from the recitals of thecontract or deed or from external facts referred to in the document,

thereby enabling one to determine the identity of the land and if thedescription is uncertain on its face or is shown to be applicable withequal plausibility to more than one tract, it is insufficient. The principleembodied in these decisions is not, in our opinion, applicable to thepresent case, which relates to the sufficiency of the authorization, notto the sufficiency of the contract or conveyance. It is unquestionablethat the deed which Nicolasa executed contains a proper description ofthe property which she purported to convey

There is ample authority to the effect that a person may by a generalpower of attorney an agent to sell "all" the land possessed by theprincipal, or all that he possesses in a particular city, county, or state.

In the present case the agent was given the power to sell either of theparcels of land belonging to the plaintiff. We can see no reason whythe performance of an act within the scope of this authority should notbind the plaintiff to the same extent as if he had given the agentauthority to sell "any or all" and she had conveyed only one.

COSMIC LUMBER vs. COURT OF APPEALS (CA)

Petition for review on certiorari of Court of Appeals decision

(CA decision: dismissed the case, against Cosmic Lumber)

FACTS:

- Cosmic Lumber Corporation executed a SPA to Villamil-Estrada asattorney in fact, to wit: (1) to initiate, institute and file an ejectment


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case against squatters/third persons on the Lot 9127 and 443, in orderfor the company to take material possession of the entire lot and (2) toappear at the pre-trial conference and enter into any stipulation offacts and/or compromise agreement so far as to protect the rights andinterest of the corporation.

- Villamil-Estrada instituted an action for ejectment of privaterespondent Perez

- Villamil-Estrada entered into a Compromise Agreement whichcontained:

Perez has been an occupant of a part of the lot for severalyears

Pays Php 26,640 at Php.80/sqm Recognizes ownership and possession of Perez over said lot

- Compromise Agreement was approved by trial court which becamefinal without execution within the 5 yr period due to failure ofpetitioner to produce the owners duplicate copy. To wit, Perez filed acomplaint to retrieve the judgment

- Cosmic Lumber asserts it did not know about the compromiseagreement until summons for the revival of judgment was served.

- Cosmic Lumber sought annulment of the decision of the trial court toCA on the grounds of (1) Villamil-Estrada did not have authority, (2)Villamil-Estradas authority was only to file an ejectmen t case, (3)Villamil-Estradas authority was limited, (4) the consideration was neverreceived by Cosmic Lumber, (5) Villamil-Estrada acted in bad faith and(6) disposal of corporate property indispensably requires a BoardResolution.

HELD:

petition granted; CA decision is nullified; Compromise agreement is void;without prejudice to the right of Cosmic Lumber to pursue a complaint againstPerez for the recovery of the lot

RATIO:

- SPA was explicit and exclusionary, compromise agreement wascoupled with an explicit limitation fixed by Cosmic Lumber that itshould only be entered so far as it shall protect the rights and interestof the corporation in the aforementioned lots.

- Price of Php.80/sqm is considerably less than its assessed value ofPhp.250/sqm and that Cosmic Lumber never received the proceeds ofthe sale.

- Art. 1874 of Civil Code: when a sale of a piece of land or any interestthereon is through an agent, the authority of the latter should be inwriting; otherwise the sale is void.

- The express mandate of the law requires of an appointed of an agencycouched in general terms, must include an express mention of a sale asa necessary ingredient. The express powers must be clear andunmistakable. When there is reasonable doubt, no such constructionshall be given in the document.

- Villamil-Estrada acted without or in obvious disregard of authority.- Sale is ipso jure void and the judgment based thereon is also void.- Cosmic Lumber is not in the position to question the compromise

agreement in the action to revive the compromise agreement, since itwas never PRIVY to such agreement.

- Trial court had no jurisdiction to render judgment.- Villamil-Estradas acts constituted extrinsic fraud (any fraudulent act of

the prevailing party in a litigation which is committed outside of thetrial of the case, whereby the defeated party is prevented fromexhibiting fully his side of the case by deception practiced on him by hisopponent)

- Villamil-Estrada deliberately concealed from her principal (CosmicLumber) that a compromise agreement had been forged with the endresult of selling a portion of the property.

- General Rule: principal is chargeable with and bound by the knowledgeor notice to his agent (purpose: to protect those who exercise it ingood faith)


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- Exception: conduct and dealings of agent are such as to raise a clearpresumption that he will not communicate the facts in controversy(reason: when agent is committing fraud, it is contrary to commonsense to expect the agent to communicate the facts to the principal)

- Villamil-Estradas acts were not for the principal, rather he was actingfor his own benefit.

- The basic tenets of an agency rest on justice, equity and fair play. Agentis not permitted to pervert his authority to do such acts contrary to theinterests of the principal.

RAET v. CA

Facts

In 1984 Spouses Raet and Spouses Mitra negotiated with Amparu Gatusconcerning the possibility of buying his rights to certain units at the Las Villasde Sto. Nio Subdivision, Bulacan, which was developed by Phil-VilleDevelopment and Housing Corporation (PVDHC) primarily for parties qualified

to obtain loans from the Government Service Insurance System (GSIS). Theypaid Gatus P40,000 (Raet) and 35,000 (Mitra), and which Gatus issued receiptsin her own name. In 1985, the spouses applied directly with PVDHC, with thecondition that their application would be processed upon the approval of theGSIS Loans using policy names of Casidsid (for Raet) and Lim (for Mitra), sincethe spouses are not GSIS members. They paid P32,653 (Raet) and P27,000(Mitra) to PVDHC, which would be credited to purchase units upon the loansapproval. In the meantime, PVDHC had allowed them to occupy certain units.However, the GSIS loans were disapproved, therefore PVDHC told them toseek other sources of financing, while allowing them to stay in the units.

Elvira Raet filed an estafa case against Gatus, where the RTC acquitted her.

Later in an ejectment case by the PVDHC, the spouses were ordered tosurrender possession of the units. Therefore the spouses filed a complaint forspecific performances and damages against Gatus and PVDHC. The Housingand Land Use Arbiter ruled in favor of spouses, which the Board ofCommissioners of Housing and Land Use Regulatory Board (HLURB) reversed.

Yet, the Office of the President sustained the HLU Arbiter, and the CAdismissed it.

Issue: Whether Gatus was acting as an agent of PVDHC.

Held:

NO!

Ratio

Gatus was not the agent of private respondent PVDHC. Indeed, the criminalcase for estafa against her was dismissed because it was found that she neverrepresented herself to be an agent of private respondent PVDHC. Moreover,Art. 1874 of the Civil Code requires for the validity of a sale involving land thatthe agent should have an authorization in writing, which Gatus did not possess.Petitioners knew from the beginning that Gatus was negotiating with them inher own behalf, and not as an agent of private respondent PVDHC. There is,therefore, no basis in fact for the finding of the Housing and Land Use Arbiter

that Gatus was the agent of private respondent PVDHC with respect to thetransactions in question.

Aguna v Larena

Facts

This action is brought to recover the sum of P29,600 on two cause against theadministrator. The plaintiff claims the sum of P9,600, the alleged value of theservices rendered by him to said deceased as his agent in charge of thedeceased's houses situated in Manila.

From the evidence it appears undisputed that from February, 1922, to February,1930, the plaintiff rendered services to the deceased, consisting in thecollection of the rents due from the tenants occupying the deceased's housesin Manila and attending to the repair of said houses when necessary.


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The evidence also shows that during the time the plaintiff rendered hisservices, he did not receive any compensation. It is, however, a fact admittedthat during said period the plaintiff occupied a house belonging to thedeceased without paying any rent at all.

Issue

W/n Agency is for compensation.Held

The service rendered by the agent was deemed to be gratuitous

Ratio

The plaintiff-appellant insists that, the services having been rendered, anobligation to compensate them must necessarily arise. The trial court held thatthe compensation for the services of the plaintiff was the gratuitous use andoccupation of some of the houses of the deceased by the plaintiff and hisfamily. This conclusion is correct. if it were true that the plaintiff and thedeceased had an understanding to the effect that the plaintiff was to receivecompensation aside from the use and occupation of the houses of thedeceased, it cannot be explained how the plaintiff could have renderedservices as he did for eight years without receiving and claiming anycompensation from the deceased.

Insular Drug Company VS National Bank

Facts:

U.E. Foerster was formerly a salesman of the drug company for the island ofPanay and Negros. He also acted as a collector of the company, mainly takingchecks from the Iloilo branch of the drug company and depositing them to thecompany account with Philippine National Bank.

Upon examination of the checks deposited by Foerster with PNB, there wereseveral indorsements guaranteed by the PNB manager Angel Padilla forCarmen E. de Foerster, the wife of U.E. Foerster, which was consequentlywithdrawn by the couple and a certain V. Bacaldo (stenographer of Foerster).

When the Manila office of the drug company investigated and discovered theanomalies, Foerster committed suicide. Although there was no evidence

showing that the bank knew that Foerster was misappropriating the funds ofhis principal, the Insular Drug Co. claims that it never received the face value ofthe 132 checks in question covering a total of Php 18, 285.92.

The drug company saw fit to stand on the proposition that checks drawn in itsfavor were improperly and illegally cashed by the bank for Foersters personalaccount.

Issue:

Whether the bank is liable for the amount indorsed and withdrawn by Foersterusing company checks even if the latter is an agent of the drug company.

Whether the bank is liable for the negligence of its agents when they allowedencashing of the checks without prior authority from the company.

Ratio:

Yes on both issues.

The bank is liable for the amount withdrawn by Foerster and will have to standthe loss occasioned by negligence of its agents.

The right of an agent to indorse commercial paper is a very responsible power

and will not be lightly inferred. A salesman with authority to collect moneybelonging to his principal does not have the implied authority to indorse checksreceived in payment. Any person taking checks made payable to a corporation,which can [be acted upon] only by agents does so at his peril, and must abide bythe consequences if the agent who indorses the same is without authority.


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The fact that the bank acted in good faith does not relieve it fromresponsibility. The bank could tell by the checks themselves that the moneybelonged to the Insular Drug Company and not to Foerster, his wife or hisclerk. When the bank permitted the withdrawals without the authority fromthe drug company, the bank made itself responsible to the drug company forthe amounts represented by the checks.

The bank could have relieved itself from the responsibility had it proven thatthe money withdrawn by Foerster passed to the drug company but it hasntdone so.

Municipal Council of Iloilo vs. Evangelista and Tan Toco

FACTS:

This is an appeal taken by Tan Toco of the decision of CFI of Iloilo, declaring validand binding

1. the deed of assignment of the credit executed by Tan Toco's widow,through her attorney-in-fact Tan Buntiong, in favor of late Antero Soriano

2. the assignment executed by the latter during his lifetime in favor of thedefendant Mauricio Cruz & Co., Inc.

The CFI of Iloilo rendered judgment in a case awarding Tan Toco the recoveryof the value of a strip of land taken by the municipality of Iloilo from her. Afterthe case was remanded to the court of origin, Atty. Evangelista, in his behalfand as counsel for the administratrix of Jo se Ma. Arroyos intestate estate,filed a claim in the same case for professional services rendered by him, whichthe court, acting with the consent of the appellant widow, fixed at 15 per centof the amount of the judgment.

At the hearing on said claim, the claimants appeared, as did also the PhilippineNational Bank, which prayed that the amount of the judgment be turned overto it because the land taken over had been mortgaged to it. Antero Soriano

also appeared claiming the amount of the judgment as it had been assigned tohim, and by him, in turn, assigned to Mauricio Cruz & Co., Inc.

After hearing all the adverse claims on the amount of the judgment the courtordered that the attorney's lien in the amount of 15 per cent of the judgment,be recorded in favor of Attorney Jose Evangelista, in his own behalf and ascounsel for the administratrix of the deceased Jose Ma .Arroyo, and directed

the municipality of Iloilo to file an action of interpleading against the adverseclaimants, the Philippine National Bank, Antero Soriano, Mauricio Cruz & Co.,Jose Evangelista and Jose Arroyo, as was done, the case being filed in theCourt of First Instance of Iloilo.Then municipal treasurer of Iloilo deposited with the clerk of the Court of FirstInstance of Iloilo the amount of P6,000 on account of the judgment renderedin said civil case No. 3514. In pursuance of the resolution of the court belowordering that the attorney's lien in the amount of 15 per cent of the judgmentbe recorded in favor of Attorney Jose Evangelista, in his own behalf and ascounsel for the late Jose Ma. Arroyo, the said clerk of court delivered on thesame date to said Attorney Jose Evangelista the said amount of P6,000. At the

hearing of the instant case, the codefendants of Attorney Jose Evangelistaagreed not to discuss the payment made to the latter by the clerk of the Courtof First Instance of Iloilo of the amount of P6,000 mentioned above inconsideration of said lawyer's waiver of the remainder of the 15 per cent of saidjudgment amounting to P444.69. With these two payments of P6,000 eachmaking a total of P12,000, the judgment for P42,966.44 against themunicipality of Iloilo was reduced to P30,966.40, which was adjudicated bysaid court to Mauricio Cruz & Co.

This appeal, then, is confined to the claim of Mauricio Cruz & Co. as allegedassignee of the rights of the late Attorney Antero Soriano by virtue of the said

judgment in payment of professional services rendered by him to the saidwidow and her coheirs.

ISSUE: Whether the deeds of assignment in this case are null and voidHELD: NO.


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Tan Toco contends, in the first place, that said assignments was notmade in consideration of professional services by Attorney AnteroSoriano, for they had already been satisfied before the execution ofsaid deed of assignment, but in order to facilitate the collection of theamount of said judgment in favor of the appellant, for the reason that,being Chinese, she had encountered many difficulties in trying tocollect. In support of her contention on this point, the appellant alleges

that the payments admitted by the court in its judgment, as made byTan Toco's widow to Attorney Antero Soriano for professional servicesrendered to her and to her coheirs, amounting to P2,900, must beadded to the P700, on the ground that they were considered aspayments made for professional services rendered, not by AnteroSoriano personally, by the firm of Soriano & Arroyo.

An agent of attorney-in -fact empowered to pay the debts of theprincipal, and to employ lawyers to defend the latter's interests, isimpliedly empowered to pay the lawyer's fees for services rendered inthe interests of said principal, and may satisfy them by an assignmentof a judgment rendered in favor of said principal

When a person appoints two attorneys-in-fact independently, theconsent of the one will not be required to validate the acts of theother unless that appears positively to have been the principal'sattention

The assignment of the amount of a judgment made by a person to hisattorney, who has not taken any part in the case wherein saidjudgment was rendered, made in payment of professional services inother cases, does not contravene the prohibition of article 1459, case5, of the Civil Code.

Municipal Council of Iloilo vs. Evangelista and Tan Toco (widow)

FACTS:

1924:

- CFI awarded to Tan Toco 42K++ for the value of a strip of land taken bythe municipality to widen a public street

- Atty. Evangelista (Atty. E)(as counsel of Jose Marias intestate estate)filed a claim in the same case for professional services rendered by him

o He acted with Tan Tocos consento And the court fixed at 15% of the amount of judgment as

payment for his professional services

- Other claimants also appeared: PNB and Atty. Antero Soriano (Atty. S)(pero he died diba?)

- So the court judged in favour of Atty. E and ordered Municipality ofIloilo to file an action of interpleading against the claimants

- CFI then rendered the following decision:1.That the deed of assignment executed by Tan Tocos widow thru

Atty. BoonTiong in favour of Atty. S is valid and binding2.That the deed of assignment by Atty. S in favour of Mauricio Cruz &

Co. Inc is valid and binding3.Municipal of Iloilo should pay Mauricio Cruz & C o Inc 30K++

- But Tan Toco appealed and said that #1 and #2 were null and void andthe balance of 30K++ should be given to her instead of Mauricio Cruzand Co Inc.

1928

- Iloilo paid Atty. S the 6K- The Court also delivered 6K to Atty. E, but Atty. E waived the remaining

amount that should be given to him

- So from the 42K 12K, the 30K was awarded to Mauricio Cruz and Co.Inc.

- So Mauricio claimed the remaining amount since he is the assignee ofthe rights of Atty. S

ISSUE:Whether the assignment made by Tan BoonTiong to Atty. S of all the creditsand rights of belonging to Tan Toco (from the strip of land case) is valid aspayment for the professional services rendered by Atty. S to Tan Toco

HELD:


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YES. VALID. Tan Toco (widow) contended the following:

1. That the said assignment was not in consideration of theprofessional services by Atty. S, since:

a. The payment was already satisfied even before theexecution of the deed of assignment

b. The they only hired Atty. S to collect the amount ofjudgment, since Tan Toco is Chinese, she cannot maketransactions properly (HAHA)

c. She already paid Atty. S for professional services renderedby the firm of Soriano & Arroyo, evidenced by receipts

2. That the deed of assignment was drawn up in contravention of theprohibition that lawyers cannot acquire even by assignment(Article 1491 (5))

BUT THE COURT SAID THAT TAN TOCOS CONTENTIONS AREUNTENABLE:

1. Tan Toco still wired Atty. S money for his services in 1928 after thedeed of assignment was executed2. Atty. S appeared as counsel for Tan Toco many times and won

several times too for them. The payment he received for hisservices is inadequate (10K)

3. INDIRECTLY: the assignment made to Atty. S and determined in theprevious judgment was made in consideration of the professionalservices rendered by Atty. S to Tan Toco

4. Atty. S was NOT counsel for Tan Toco in the case regarding therecovery of value of the strip of land

5. The lawyers who represented her were Arroyo and Evangelistawho filed a claim for professional fees!!

6. When the assignment was made to Atty. S this was alreadydecided! Because the rights, credit, etc., in that strip of land casewas payment for his professional services rendered in connectionwith the other cases (client still Tan Toco)so the only thing leftto do is to COLLECT!

7. Atty. BoonTiong is authorized to employ and contract for theservices of lawyers upon such conditions as he may deemconvenient AND take charge of any actions necessary or expedientfor the interests of his principal and defend suits brought againsther [AGENCY!]

Implied power: authority to pay for professional servicesthus engaged by the principal

The assignment made by Atty. BoonTiong was VALID aspayment for professional services rendered by Atty. S.DOCTRINES:

An agent of attorney-in -fact empowered to pay the debts of theprincipal, and to employ lawyers to defend the latter's interests, isimpliedly empowered to pay the lawyer's fees for services rendered inthe interests of said principal, and may satisfy them by an assignmentof a judgment rendered in favor of said principal

When a person appoints two attorneys-in-fact independently, theconsent of the one will not be required to validate the acts of the other

unless that appears positively to have been the principal's attention Apparently, 2 ang attorney-in-fact ni Tan Toco. Atty.

Montano did not consent to the assignment. But theyhad different and separate letters of attorney, so it wasnot the principals intention that they should act jointlyin order to make their acts valid.

The assignment of the amount of a judgment made by a person to hisattorney, who has not taken any part in the case wherein saidjudgment was rendered, made in payment of professional services inother cases, does not contravene the prohibition of article 1491, case 5,of the Civil Code.

Rural Bank of Caloocan vs CA

Maxima Castro with Severino Valencia went to the Rural Bank of Caloocan inorder to apply for an industrial loan. Valencia personally took care of all therequirement in order for Castro to secure said loan. The loan of 3000 was


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approved and Castro, accompanied by Valencia spouses, signed a promissorynote. On the same day Valencia spouses also secured a loan of 3000 and wasalso signed by castro as co-maker. The two loans were secured by a real estatemortgage on castros house and lot.

Sheriff informed Castro that her property will be sold at a public aution whichshall cover the promissory note plus interest and attorneys fee. Castro claimsthat she has no knowledge of the mortgage contract up until a notice from thesheriff was given.

Castro filed a case against the bank. Bank argues that they were led to believethat Valencia was Castros agent

Issue: Whether the bank believed Valencia to be Castros agent

Whether the promissory note is invalid insofar as they affect Castro and theBank ?

Held: SC affirmed the CA decision.

Ratio: the authority of the Valencias was only up to follow up Castros loanapplication. But they were never authorized to borrow for her. If her acts hadbeen understood by the bank to be a grant of authority to the Valencias itshould have required a special power of attorney. Since the bank did not, itcan be assumed that it did not entertain the notion that the Valencia spouseswere in any manner acting as the agent of Castro

Valencia defrauded Castro by making her sign the promissory note and themortgage contract, they also misrepresented to the bank Castros

qualifications in order to secure the Banks consent and grant the loan. As aresult , both Castro and the bank committed mistake in giving their consents.Such mistake is deemed substantial thereby rendering such consents, vitiated.For if Castro has been aware of what she signed and the bank of the truequalifications of the loan applicants, they would not have given their consents.They PN in effect may also be invalidated because of substantial mistake

mutually committed by the Bank and Castro, as a consequence of the fraud andmisrepresentation (respectively) employed by the Valencias. In the case at bar,the PN is valid only up to the amount of 3000 pesos

VDA. DE CHUA VS. INTERMEDIATE APPELLATE COURT

FACTS

Herrera executed a Contract of Lease in favor of Sy whereby Herrera leased herlots in Cebu. Sy erected a residential building in the leased premises & w/in 4years from the execution of the contract, he sold the said building to Chua forP8,000. The Deed of Absolute Sale contained provisions where Sy assigned allhis rights and privileges on the leased lot with the corresponding obligations.The sale was made with the knowledge and consent of Herrera who isrepresented by her attorney-in-fact, Reynes.

Chua & his family resided in the said building and when the lease contractexpired, Chua and Herrera through her attorney-in-fact executed another

Contract of Lease wherein & will lease the said lots for a period of 5 years for amonthly rental of P60 w/ Chua having an option to buy the said premises if heis qualified & when Herrera decides to sell the same. Chua is also given theoption to renew the contract. It also contained a stipulation that should theproperty leased be sold to any other party, the terms & conditions of thecontract will continue for the duration of the contract.

After the expiration of the contract of lease, Chuas successor-in-interest (Chuahaving died) continued the possession of the premises with an adjusted rentalrate of P1000. Herrera through her attorney-in-fact, Reynes sold the lot to theGo spouses. This was registered with the RD and the lots were transferred in

spouses names. Chuas successors-in-interest filed a suit claiming that the saleviolated their right of option to buy the said lots. The RTC dismissed thecomplaint and ordered Chuas heirs to vacate the premises & remove thebuilding. Herrera was ordered to reimburse them for attorneys fees anddamages. Both Chuas heirs and Herrera appealed to the CA. The CA removedthe award of moral damages but affirmed all other respects. The CA in


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declaring their contract of lease void noted that Reynes was not armed w/ aSPA to enter into a lease contract for a period of more than 1 year.

ISSUE

W/N the lease contract entered into by Chua and Reynes is valid.

RULING

NO. In order for a contract of lease executed by an agent to be valid, the lawrequires the agent to be armed with a special power of attorney to lease thepremises. According to Art. 1878 of the NCC, Special Powers of Attorney arenecessary to lease any real property to a person for more than 1 year.Therefore, the contract entered into by Reynes and Chua was invalid becauseReynes did not have a Special power of Attorney to enter into the contract.

It is true that respondent Herrera allowed petitioners to occupy the leasedpremises after the expiration of the lease contract. This is a tacit renewal of thelease. A tacit renewal is limited only to the terms of the contract w/c aregermane to the lessees right of continued enjoyment of the property and doesnot extend to alien matters like the option to buy the lease premises.

Veloso v CA

Applicable Provision: Art. 1878

Facts:

Petitioner Francisco Veloso was the sole owner of a registered parcelof land in Tondo, Manila, which he acquired in 1957.

His wife Irma, armed with a general power of attorney, sold said lot tothe respondent spouses Escario in 1987.

Petitioner filed an action for annulment of the deed of sale andreconveyance of property

Issue:

Whether a general power of attorney may authorize an agent to sellreal property.

Held/Ratio:

Yes. Although sale of real property requires a special power of attorney, if a

general power of attorney expressly grants the power to sell to theagent, there is no need to execute a separate special power of

attorney. The assailed power of attorney had the following provision: To buy or

sell land, more specifically TCT No. 49138

Thus, said power of attorney sufficiently authorized the wife to sell theproperty.

Therefore, the sale is valid.

RODRIGUEZ vs. PAMINTUAN and DE JESUSFacts:March 21, 1903, the defendant de Jesus, the owner of the three parcels of landand sugar mill, executed power of attorney in favor of her husband Pamintuan,authorizing him (1) to borrow money in such amount and upon such terms andconditions as he might deem proper, and (2) to secure payment of the loan by

a mortgage on her property. June 1, 1903, the husband executed in favor ofRodriguez ( deceased, leaving the plaintiffs as his testamentary heirs) annotarized instrument purporting on its face to be a deed of sale of the landsstated, for the sum of P5,000 with a reserved right in the vendor to repurchaseany time within ten years from the date of the deed, and to continue occupying

them under as annual rental of 120 pilones of sugar. September 2, 1914, thisaction was instituted to recover possession of the land and payment of theannual rental due thereon. The defendant husband admitted the execution ofthe document purporting to be a deed of sale, but alleged that the realpurpose and intent of the parties in the execution of the document was tosecure payment of the indebtedness by a mortgage upon the lands mentioned

therein, and that the instrument would not be enforced as a deed of sale. The


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plaintiffs filed an amended complaint and alleged that the true intention andunderstanding of the parties in the execution of the instrument purporting tobe a deed of sale with the right to repurchase reserved in favor of the vendorwas to provide written evidence of a loan of P5,000 and to furnish security forits repayment from the properties mentioned therein. The prayer of theamended complaint is for the amount of the loan, P5,000, and interest thereonat the rate of P900 per annum, the equivalent of 120 pilones of sugar at the

rate of P7.50 the pilon, less the sum of P300, the total amount paid on accountof interest during the life of the loan; and further that appropriate relief begranted the plaintiffs providing for the recovery of the loan as a debt secured

by a mortgage on the lands described in the contract.The trial judge heldthat the evidence of record conclusively establishes the execution of thepower of attorney, and of the instrument purporting to be a deed of sale withthe right of repurchase reserved to the vendor, and further that thedefendants have repaid neither the principal (P5,000) received by the husbandat the time of the execution of the instrument, nor any part of the annualpayment of 120 pilones of sugar provided for in the contract, nor its equivalentin money, except only the sum of P300, payment of which is admitted by the

plaintiffs. the trial court gave judgment in favor of the plaintiffs for therecovery of the possession of the land in question and for the recovery of 1,440pilones of sugar which he took to be the total amount due under the contractfor the twelve full years which had expired from the date of the contract to thedate of the judgment, less 50 pilones of sugar which he found to be equivalentof P300 admittedly paid on account thereof, at the rate of P6 a pilon. Hence,

this appeal.Issue:

whether the transaction is a sale or a security of a loan?Decision:

it is a security of loan. The power of attorney from the defendant wife in favorof the defendant husband authorized merelyBy means of a mortgage of myreal property, to borrow and lend sums in cash, at such interest and for suchperiods and conditions as he may deem proper, and to collect or to pay the

principal and interest thereon when dueThis, cannot be construed assufficient authority to sell the real estate of the wife, and nothing in the recordwhich tends to disclose that she did in fact authorize her husband to sell herlands, or ratified his action in executing a deed of sale therefor. It follows thatneither she nor her lands would be bound by the instrument purporting on itsface to be a deed of sale of these lands, if that instrument set forth the truenature of the transaction. The instrument should be enforced in accordance

with the true intent and purpose of the parties, without prejudice to the rightsof third parties.The review of the whole record, that, acting under and byvirtue of the powers conferred upon him by his wife, the husband did in factborrow P5,000 from Rodriguez, and that he executed a public instrumentpurporting to be a deed of sale, with a reserved right of repurchase, by way ofsecurity for the repayment of the loan, with the understanding that althoughtitle to the land had been conveyed to him he would hold the land merely as

security, and would reconvey it upon receipt of paymentThe instrument wasnot recorded in the mortgage registry, and it cannot therefore be given theeffect of a legal mortgage, but we are of opinion that the contract which isproved to have been entered into by the husband acting by authority of, and

on behalf of his wife, may be and should be enforced in accordance with thereal intent of the parties so far as innocent third persons are not adverselyaffected thereby; that is to say, that it should be deemed to be a validinstrument, evidencing the loan of the money mentioned therein and bindingthe property for the payment of the indebtedness, but without prejudice tothe right of third parties. Plaintiffs are not entitled to a judgment for a recoveryof the lands but the judgment should be entered in their favor for the sum ofP5,000 together with interest thereon at the rate of P720 a year from the dateof the execution of the document purporting to be a deed of sale, until paid,less P300, receipt of which is acknowledged by the plaintiffs.

PNB vs. Sta. Maria, et al.

Facts:

Maximos six brothers and sisters (Valeriana, Emeteria, Teofilo, Quintin,Rosario and Leonila) executed a special power of attorney in his favor to


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mortgage a parcel of land, jointly owned by all of them. In addition, ValerianaSta. Maria (sister of Maximo) alone also executed in favor of her brother,Maximo, a special power of attorney to borrow money and mortgage any realestate owned by her. By virtue of the two aforementioned powers ofattorney, Maximo Sta. Maria applied for two separate crop loans, for the 1952-1953 and 1953-1954 crop years, with PNB, in the amount of P13,216.11 andP23,000.00, respectively. Included as security for these two loans are the

parcel of land jointly owned by Maximo and his six brothers and sisters. Also,the loan was guaranteed by surety bonds executed by Associate Insurance &Surety Co.

Due to failure to pay said loans, PNB filed a case on collection of money. Thetrial court rendered judgment in favor of PNB requiring Maximo and his sixbrothers and sisters together with the surety, to be liable jointly and severally.Maximo and his surety did not appeal the judgment, however, his six brothersand sisters appeal the decision to the Supreme Court.

Issue:

Whether Maximo and his six brothers and sisters and surety are liable to PNB?

Held:

No. Only Maximo and his sister Valeriana are jointly liable to PNB. The otherfive brothers and sisters are not liable.

The authority granted by Maximos brothers and sisters (except Valeriana)unto their brother, Maximo, was merely to mortgage the property jointlyowned by them. They did not grant Maximo any authority to contract for any

loans in their names and behalf. Maximo alone, together with Valeriana whoauthorized him to borrow money, must answer for said loans and the otherdefendants-appellants' only liability is that the real estate authorized by themto be mortgaged would be subject to foreclosure and sale to respond for theobligations contracted by Maximo. But they cannot be held personally liablefor the payment of such obligations. Moreover, the brothers and sisters did

not receive any centavo from the loan proceeds as benefit, thus no estoppelcan be claimed by PNB to them.

Doctrine/Ratio:

Authority to mortgage does not carry with it the authority to contractobligation.

A special power of attorney to mortgage real estate is limited to such authorityto mortgage and does not bind the grantor personally to other obligationscontracted by the grantee, in the absence of any ratification or other similar actthat would estop the grantor from questioning or disowning such otherobligations contracted by the grantee.

Sy-Juco v. Sy-Juco

FACTS:

Plaintiff Sy-Juco and Viardo are parents of defendant Sy-Juco. They appointed

defendant Sy-Juco as administrator of their property for a period of time, untilsuch was revoked. Defendant Sy-Juco bought launchMalabon(a boat) in hisown name from Pacific Commercial Co. during the period of the agency. Heused his parents money and registered it with the Custom House in his name.It was found that such property was bought by defendant Sy-Juco for and inbehalf of his parents. The trial court held that defendant Sy-Juco must returnthe launch Malabon to his parents, and execute all the necessary documentsand instruments for such delivery and the registration in the records of theCustom House of said launch as plaintiffs' property.

ISSUE:

Whether the trial court erred in holding that defendant Sy-Juco must return thelaunch Malabon to his parents, and execute all the necessary documents andinstruments for such delivery and the registration in the records of the CustomHouse of said launch as plaintiffs' property


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HELD:

NO. Since the defendant contracted the obligation to but the launch forhisparents and in their representation, by virtue of the agency,notwithstanding the fact that he bought it in his own name, he is obliged totransfer to his parents the rights he received from the vendor, and they areentitled to be subrogated in these rights.

Article 1883 of the Civil Code provides that when an agent acts in his ownname, the principal shall have no right of action against the person with whomthe agent has contracted, cases involving things belonging to the principal areexcepted. According to this exception (when things belonging to the principalare dealt with) the agent is bound to the principal although he does not assumethe character of such agent and appears acting in his own name . This means thatin the case of this exception the agent's apparent representation yields to theprincipal's true representation and that, in reality and in effect, the contractmust be considered as entered into between the principal and the third

person; and, consequently, if the obligations belong to the former, to himalone must also belong the rights arising from the contract. The money withwhich the launch was bought having come the parents, the exceptionestablished in article 1883 is applicable to the instant case.

National Food Authority (NFA) v. IAC

Facts:

Medalla, as a commission agent of plaintiff Superior Shipping Corporation,entered into a contract for hire of ship (MV Sea Runner) with defendant NFA.The contract obligated Medalla to transport on the MV Sea Runner 8,550 sacks

of rice belonging to NFA from Occidental Mindoro to Malabon, Metro Manila.

Upon completion of the delivery, plaintiff wrote a letter around October 1979,requesting NFA that it be allowed to collect the amount for freightage andother charges. Plaintiff wrote again around November 1979, this time

specifically requesting that payment be made to it and not to Medalla becauseplaintiff was the owner of the vessel.

On November 16, 1979, NFA informed plaintiff that it could not grant itsrequest because the contract to transport the rice was entered into by NFAand defendant Medalla who did not disclose that he was acting as a mereagent of plaintiff. Thereupon on November 19, 1979, defendant NGA paid

defendant Medalla the sum of P25,974.90, for freight services.

On December 4, 1979, plaintiff wrote defendant Medalla demanding that heturn over to plaintiff the amount of P27,000.00 paid to him by defendant NFA.Defendant Medalla, however, "ignored the demand."

Issue: Whether NFA is jointly and severally liable with defendant Medalla.

Held: Yes, NFA is solidarily liable with defendant Medalla.

Ratio: It is an undisputed fact that Gil Medalla was a commission agent of

respondent Superior Shipping Corporation which owned the vessel "MV SeaRunner" that transported the sacks of rice belonging to petitioner NFA. Thecontext of the law is clear. Art. 1883, which is the applicable law in the case atbar provides:

Art. 1883. If an agent acts in his own name, the principal has noright of action against the persons with whom the agent hascontracted; neither have such persons against the principal.

In such case the agent is the one directly bound in favor of theperson with whom he has contracted, as if the transaction were

his own, except when the contract involves things belongingto the principal.

The provision of this article shall be understood to be withoutprejudice to the actions between the principal and agent.


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Consequently, when things belonging to the principal (in this case, SuperiorShipping Corporation) are dealt with, the agent is bound to the principal although he does not assume the character of such agent and appears acting inhis own name. In other words, the agent's apparent representation yields to theprincipal's true representation and that, in reality and in effect, the contractmust be considered as entered into between the principal and the third person .Corollarily, if the principal can be obliged to perform his duties under the

contract, then it can also demand the enforcement of its rights arising fromthe contract.

PNB V. MANILA SURETY & FIDELITY CO., INC.

An agent is required to act with the care of a good father of a family andbecomes liable for the damages, which the principal may suffer through hisnon-performance.

A bank is answerable for negligence in failing to collect the sums due itsdebtor from the latters own debtor, contrary to said banks duty as holder

of an exclusive and irrevocable power of attorney to make such collections.

FACTS:

The Philippine National Bank had opened a letter of credit and advancedthereon $120,000.00 to Edgington Oil Refinery for 8,000 tons of hot asphalt. Ofthis amount, 2,000 tons worth P279,000.00 were released and delivered toAdams & Taguba Corporation (ATACO) under a trust receipt guaranteed byManila Surety & Fidelity Co. up to the amount of P75,000.00. To pay for theasphalt, ATACO constituted the Bank its assignee and attorney-in-fact toreceive and collect from the Bureau of Public Works the amount aforesaid out

of funds payable to the assignor.

ATACO delivered to BPW asphalt worth P431,466.52. Of this amount, PNB wasable to regularly collect a total of P106,382.01. However, due to unexplainedreasons, PNB

was not able to collect until the investigators found out that more money werepayable to ATACO from BPW. The latter allowed another creditor to collectfunds due toATACO under the same purchase order, to a total of P311,230.41.

Thus, PNB sued both ATACO and Manila Surety to recover the balance ofP158,563.18, plus interests and damages.

CA ruled that PNB was negligent in having stopped collecting from BPW beforeATACOs debt is fully collected, thereby allowing funds to be taken by othercreditors to the prejudice of the surety.

PNB asserts that the power of attorney executed in it is favor from ATACO wasmerely an additional security; that it was the duty of the surety to see to it thatthe obligor fulfills his obligation; and that PNB has no obligation to the suretyto collect any sum from ATACO.

ISSUE:

W/N PNB is negligent as an agent-creditor of ATACO in collecting sums due to it

HELD:

YES. The CA did not hold PNB responsible for its negligence in failing to collectfrom ATACO for its debt to PNB, but for ITS NEGLECT IN COLLECTING SUMSDUE TO ATACO FROM BPW. An agent is required to act with the care anddiligence of a good father of a family(Art1887) and becomes liable for thedamages, which the principal may suffer through its non-performance(Art1884). PNBs power to collect was expressly made irrevocable

so that BPW could very well refuse to make payments to ATACO itself, andreject any demands by the surety.

NEPOMUCENO V.HEREDIA


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The Deed of Conditional Sale was executed on Sept. 24, 1904 with a right torepurchase at the end of 1yr and obligating himself to make monthly paymentsin considerations of the right to retain the land in possession in sufficientamount to bring 17% interest per annum on Nepomuceno and Canonsinvestments (proponents opinion is that this could effectively be called rent).Canon and Nepomuceno indeed paid the P1,500 price evidenced by a notarized

memorandum. The title was placed in the name of Heredia. Leao continued topay for more than a year to plaintiffs. There was recovery of possessioninstituted by 3rd parties prompting herein plaintiffs to seek recovery of thewhole amount of the money invested from Heredia and alleging that thepurchase of the land was not made in accordance with their instructions.

The RTC ruled in favor of Nepomuceno and Canon. On appeal, the plaintiffswanted modification of the RTCs judgment on the grounds that Herediainvested their money under his name and account and not as their agent.

The Court reverses the lower courts decision finding that Heredia was actingas mere agent and plaintiffs had full knowledge of the agents actions andratified it. Furthermore, nothing in the record which would indicate that thedefendant failed to exercise reasonable care and diligence in the performanceof his duty as an agent, or that he undertook to guarantee the vendors title tothe land purchased by direction of the plaintiffs.

Severino vs. Severino

Facts:

Melecio Severino owned some 428 hectares of land recorded in his name.During his lifetime, he appointed defendant Guillermo Severino, his brother, ashis administrator for the said land. This defendant continued to administer andoccupy the land even after the death of Melecio. Subsequently, Guillermo filed

for the registration of the land in his name and consequently, the courtdecreed the title in his favor. At that time (when the cadastral proceedingswere instituted), petitioner Fabiola Severino, who is the alleged naturaldaughter and sole heir of Melecio, was a minor. However, after the incapacityceased, the petitioner filed a complaint for recovery of the litigated land on theground of fraud and that the property has been wrongfully registered in thename of defendant. The defendant merely denied said allegations. The trialcourt decided in favor of petitioner as the acknowledged natural child ofMelecio and ordered the defendant to convey said property to petitioner.

Issue:

Whether the lower court erred in its decision

Decision:

No.

Reason:

Although defendant denied the accusation of fraud and even offered evidenceto rebut such accusation, such attempt is immaterial. It is to be noted that thecase is an action in personam against an agent to compel him to return, or

retransfer, to the heirs or the estate of its principal, the property committed tohis custody as such agent, to execute the necessary documents thereof, to paydamages.

That the defendant came into the possession of the property here in questionas the agent of the deceased Melecio Severino in the administration of the

NEPOMUCENO

-has unsecured debt receivable from Leao,

P500.00

-Leao proposed to give a d eed of conditional

sale to a tract of land w/ buildings and

improvements thereon for P2,000 less theP500; P1,500 balance

-

HEREDIA

- Business adviser of

MARCIANA CANON

MARCIANA CANON

- principal of HEREDIA


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property, cannot be successfully disputed. His testimony in a previous relatedcase is, in fact, conclusive in this respect. He there stated under oath that fromthe year 1902 up to the time the testimony was given, in the year 1913, he hadbeen continuously in charge and occupation of the land as the encargado oradministrator of Melecio Severino; that he had always known the land as theproperty of Melecio Severino; and that the possession of the latter had beenpeaceful, continuous, and exclusive. In his answer filed in the same case, the

same defendant, through his attorney, disclaimed all personal interest in theland and averred that it was wholly the property of this brother Melecio.

The relations of an agent to his principal are fiduciary and it is an elementaryand very old rule that in regard to property forming the subject-matter of theagency, he is estopped from acquiring or asserting a title adverse to that of theprincipal. His position is analogous to that of a trustee and he cannotconsistently, with the principles of good faith, be allowed to create in himselfan interest in opposition to that of his principal or cestui que trust.

"A receiver, trustee, attorney, agent, or any other person occupying fiduciaryrelations respecting property or persons, is utterly dis

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