1. Rural Bank of Milaor v Ocfemia, 325 scra 99 Doctrine: A bank is liable to innocent third persons where representation is made in the course of its normal business by an agent even though such agent is abusing her authority FACTS: The evidence presented by the respondents through the testimony of Marife O. Niño, one of the [respondents] in this case, shows that she is the daughter of Francisca Ocfemia and the late Renato Ocfemia who died on July 23, 1994. The parents of her father, Renato Ocfemia, were Juanita Arellano Ocfemia and Felicisimo Ocfemia. Marife O. Niño knows the five (5) parcels of land which are located in Bombon, Camarines Sur and that they are the ones possessing them which were originally owned by her grandparents. During the lifetime of her grandparents, respondents mortgaged the said five (5) parcels of land and two (2) others to the Rural Bank of Milaor. The spouses Felicisimo Ocfemia and Juanita Arellano Ocfemia were not able to redeem the mortgaged properties consisting of 7 parcels of land and so the mortgage was foreclosed and thereafter ownership thereof was transferred to the bank. Out of the 7 parcels that were foreclosed, 5 of them are in the possession of the respondents because these 5 parcels of land were sold by the bank to the parents of Marife O. Niño as evidenced by a Deed of Sale. The aforementioned 5 parcels of land subject of the deed of sale, have not been, however transferred in the name of the parents of Merife O. Niño after they were sold to her parents by the bank because according to the Assessor's Office the five (5) parcels of land, subject of the sale, cannot be transferred in the name of the buyers as there is a need to have the document of sale registered with the Register of Deeds of Camarines Sur. In view of the foregoing, Marife O. Niño went to the Register of Deeds of Camarines Sur with the Deed of Sale in order to have the same
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1. Rural Bank of Milaor v Ocfemia, 325 scra 99
Doctrine: A bank is liable to innocent third persons where representation is made in the course of its normal business by an agent even though such agent is abusing her authority
FACTS:
The evidence presented by the respondents through the testimony of Marife O. Niño, one of the [respondents] in this case, shows that she is the daughter of Francisca Ocfemia and the late Renato Ocfemia who died on July 23, 1994. The parents of her father, Renato Ocfemia, were Juanita Arellano Ocfemia and Felicisimo Ocfemia.
Marife O. Niño knows the five (5) parcels of land which are located in Bombon, Camarines Sur and that they are the ones possessing them which were originally owned by her grandparents. During the lifetime of her grandparents, respondents mortgaged the said five (5) parcels of land and two (2) others to the Rural Bank of Milaor.
The spouses Felicisimo Ocfemia and Juanita Arellano Ocfemia were not able to redeem the mortgaged properties consisting of 7 parcels of land and so the mortgage was foreclosed and thereafter ownership thereof was transferred to the bank. Out of the 7 parcels that were foreclosed, 5 of them are in the possession of the respondents because these 5 parcels of land were sold by the bank to the parents of Marife O. Niño as evidenced by a Deed of Sale.
The aforementioned 5 parcels of land subject of the deed of sale, have not been, however transferred in the name of the parents of Merife O. Niño after they were sold to her parents by the bank because according to the Assessor's Office the five (5) parcels of land, subject of the sale, cannot be transferred in the name of the buyers as there is a need to have the document of sale registered with the Register of Deeds of Camarines Sur.
In view of the foregoing, Marife O. Niño went to the Register of Deeds of Camarines Sur with the Deed of Sale in order to have the same registered. The Register of Deeds, however, informed her that the document of sale cannot be registered without a board resolution of the Bank. Marife Niño then went to the bank, showed to it the Deed of Sale, the tax declaration and receipt of tax payments and requested the bank for a board resolution so that the property can be transferred to the name of Renato Ocfemia the husband of petitioner Francisca Ocfemia and the father of the other respondents having died already.
Despite several requests, the bank refused her request for a board resolution and made many alibis. She was told that the bank had a new manager and it had no record of the sale.
ISSUE: (question of law)
WON the board of directors of a rural banking corporation be compelled to confirm a deed of absolute sale of real property which deed of sale was executed by the bank manager without prior authority of the board of directors of the rural banking corporation
HELD:
Yes, the board of directors can be compelled to confirm a deed of absolute sale even though the bank manager executed such deed without prior authority from the banking corporation.The Supreme Court ruled that the bank acknowledged, by its own acts or failure to act, the authority of the manager to enter into binding contracts. After the execution of the Deed of Sale, respondents occupied the properties in dispute and paid the real estate taxes due thereon. If the bank management believed that it had title to the property, it should have taken some measures to prevent the infringement or invasion of its title thereto and possession thereof.Tena had previously transacted business on behalf of the bank, and the latter had acknowledged her authority. A bank is liable to innocent third persons where representation is made in the course of its normal business by an agent like Manager Tena, even though such agent is abusing her authority. Clearly, persons dealing with her could not be blamed for believing that she was authorized to transact business for and on behalf of the bank.Notwithstanding the putative authority of the manager to bind the bank in the Deed of Sale, petitioner has failed to file an answer to the Petition below within the reglementary period, let alone present evidence controverting such authority. Indeed, when one of herein respondents, Marife O. Niño, went to the bank to ask for the board resolution, she was merely told to bring the receipts. The bank failed to categorically declare that Tena had no authority.
In this light, the bank is estopped from questioning the authority of the bank manager to enter into the contract of sale. If a corporation knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, it holds the agent out to the public as possessing the power to do those acts; thus, the corporation will, as against anyone who has in good faith dealt with it through such agent, be estopped from denying the agent's authority.
Unquestionably, petitioner has authorized Tena to enter into the Deed of Sale. Accordingly, it has a clear legal duty to issue the board resolution sought by respondents. Having authorized her to sell the property, it behooves the bank to confirm the Deed of Sale so that the buyers may enjoy its full use.
2. Prudential Bank v CA, 223 scra 350 (Integrity of the bank)
Doctrine: A banking corporation is liable to innocent third persons where the representation is made in the course of its business by an agent acting within the general scope of his authority even though the agent is secretly abusing his authority and attempting to perpetrate a fraud upon his principal or some other person for his own ultimate benefit
FACTSAurora F. Cruz, with her sister as co-depositor, invested P200,000.00 in Central Bank bills with the Prudential Bank The placement was for 63 days at 13.75% annual interest. For this purpose, the amount of P196,122.88 was withdrawn from the depositors’ Savings Account No. 2546 and applied to the investment. The transaction was evidenced by a Confirmation of Sale. The transaction was evidenced by a Confirmation of Sale delivered to Cruz two days later, together with a Debit Memo in the amount withdrawn and applied to the confirmed sale. These documents were issued by Susan Quimbo, the employee of the bank to whom Cruz was referred and who was apparently in charge of such transactions. Upon maturity of the placement, Cruz returned to the bank to "roll-over" or renew her investment. Quimbo, who again attended to her, prepared a Credit Memo crediting the amount of P200,000.00 in Cruz's savings account passbook. She also prepared a Debit Memo for the amount of P196,122.88 to cover the re-investment of P200,000.00 minus the prepaid interest of P3,877.02. Cruz was asked to sign a Withdrawal Slip , representing the amount to be re-invested after deduction of the prepaid interest. Quimbo explained this was a new requirement of the bank. Several days later, Cruz received another Confirmation of Sale and a copy of the Debit Memo. Cruz returned to the bank and sought to withdraw her P200,000.00. After verification of her records, she was informed that the investment appeared to have been already withdrawn by her on August 25, 1986. There was no copy on file of the Confirmation of Sale and the Debit Memo allegedly issued to her by Quimbo. Quimbo herself was not available for questioning as she had not been reporting for the past week. Cruz went to the bank everyday to inquire about her request to withdraw her investment. She received no definite answer, not even to the letter she wrote the bank which was received by Santos himself. Cruz sent the bank a demand letter for the amount of P200,000.00 plus interest. In a reply, the bank's Vice President Lauro J. Jocson said that there appeared to be an anomaly and requested Cruz to defer court action. Cruz sent another letter reiterating her demand. This time the reply of the bank was unequivocal and negative. She was told that her request had to be denied because she had already withdrawn the amount she was claiming. Cruz filed a complaint for breach of contract against Prudential Bank.She demanded the return of her money with interest, plus damages and attorney's fees. In its answer, the bank denied liability, insisting that Cruz had withdrawn her investment. The bank also instituted a third-party complaint against Quimbo, who did not file an answer and was declared in default.ISSUEWON the bank should not have been found liable for a quasi-delict when it was sued for breach of contractDecision:petition is DENIED and the appealed decision is AFFIRMEDHELD
NO. The private respondent claims she has not yet collected her investment of P200,000.00 and has submitted in proof of their contention the Confirmation of Sale and the Debit Memo issued to her by Quimbo on the official forms of the bank. The petitioner denies her claim and points to the Withdrawal Slip, which it says Cruz has not denied having signed. It also contends that the Confirmation of Sale and the Debit Memo are fake and should not have been given credence by the lower courts.The findings of the trial court on these issues have been affirmed by the respondent court and we see no reason to disturb them. The petitioner has not shown that they have been reached arbitrarily or in disregard of the evidence of record. On the contrary, we find substantial basis for the conclusion that the private respondents signed the Withdrawal Slip only as part of the bank's new procedure of re-investment. She did not actually receive the amount indicated therein, which she was made to understand was being re-invested in her name. The bank itself so assured her in the Confirmation of Sale and the Debit Memo later issued to her by Quimbo.
Conformably, we have declared in countless decisions that the principal is liable for obligations contracted by the agent. The agent's apparent representation yields to the principal's true representation and the contract is considered as entered into between the principal and the third person. A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of dealings of the officers in their representative capacity but not for acts outside the scope of their authority. A bank holding out its officers and agent as worthy of confidence will not be permitted to profit by the frauds they may thus be enabled to perpetrate in the apparent scope of their employment; nor will it be permitted to shirk its responsibility for such frauds, even though no benefit may accrue to the bank therefrom. Accordingly, a banking corporation is liable to innocent third persons where the representation is made in the course of its business by an agent acting within the general scope of his authority even though, in the particular case, the agent is secretly abusing his authority and attempting to perpetrate a fraud upon his principal or some other person, for his own ultimate benefit.It would appear from the facts established in the case before us that the petitioner bank was less than eager to present Quimbo at the trial or even to establish her liability although it made the initial effort — which it did not pursue — to hold her answerable in the third-party complaint. What ever happened to her does not appear in the record. Her absence from the proceedings feeds the suspicion of her possible misdeed, which the bank seems to have studiously ignored by its insistence that the missing money had been actually withdrawn by Cruz. By such insistence, the bank is absolving not only itself but also, in effect and by extension, the disappeared Quimbo who apparently has much to explain.The SC agrees with the lower courts that the petitioner acted in bad faith in denying Cruz the obligation she was claiming against it. It was obvious that an irregularity had been committed by the bank's personnel, but instead of repairing the injury to Cruz by immediately restoring her money to her, it sought to gloss over the anomaly in its own operations.
3. Areola v CA, 236 scra 643
Doctrine: A corporation such as respondent insurance company, acts solely thru its employees. The latter's’ acts are considered as its own for which it can be held to account.
Facts:Prudential Guarantee cancelled Areola’s personal accident insurance on the grounds that the latter failed to pay his premiums 7 months after issuing the policy. Areola was supposed to pay the total amount of P1,609.65 which included the premium of P1,470.00, documentary stamp of P110.25 and 2% premium tax of P29.40. The statement of account had a stipulation not considering it a receipt. It also reminded the customer to ask for a receipt after payment. There was also a stipulation calling for a demand for a provisional receipt after payment to an agent. A provisional receipt was sent to petitioner telling him that the provisional receipt would be confirmed by an official one. The company then cancelled the policy for non-payment of premiums. After being surprised, Areola confronted a company agent and demanded an official receipt. The latter told him that it was a mistake, but never gave him an official receipt. Areola sent a letter demanding that he be reinstated or he would file for damages if his demand was not met. The company then told him that his payments weren’t in full yet. The company replied to Areola by telling him that there was reason to believe that no payment has been made since no official receipt was issued. The company then told him that they would still hold him under the policy. The company then confirmed that he paid the premium and that they would extend the policy by one year.Thereby, the company offered to reinstate same policy it had previously cancelled and even proposed to extend its lifetime on finding that the cancellation was erroneous and that the premiums were paid in full by petitioner-insured but were not remitted by the company's branch manager, Mr. Malapit.However, they were too late for Areola already filed an action for breach of contract in the trial court.The company’s defense lay in rectifying its omission; hence, there was no breach of contract.The court ruled in favor of Areola and asked Prudential to pay 250,000 pesos in moral and exemplary damages. The court held that the company was in bad faith in cancelling the policy. Had the insured met an accident at that time, he wouldn’t be covered by the policy.This ruling was challenged on appeal by respondent insurance company, denying bad faith in unilaterally cancelling the policy. The AC absolved Prudential on the grounds that it was not motivated by negligence, malice or bad faith in cancelling subject policy. Rather, the cancellation of the insurance policy was based on what the existing records showed. The court even added that the errant manager who didn’t remit the profits was forced to resign. Areola then filed for a petition in the Supreme Court.
Issue:1. WON the erroneous act of cancelling subject insurance policy entitle petitioner-insured to payment of damages?2. WON the subsequent act of reinstating the wrongfully cancelled insurance policy by respondent insurance company, in an effort to rectify such error, obliterate whatever liability for damages it may have to bear, thus absolving it?
Held: Yes. No. Petition granted.
Ratio:1. Petitioner alleged that the manager’s misappropriation of his premium payments is the proximate cause of the cancellation of the insurance policy. Subsequent reinstatement could not possibly absolve respondent insurance company from liability, due to the breach of contract. He contended that damage had already been done.Prudential averred that the equitable relief sought by petitioner-insured was granted to the filing of the complaint, petitioner-insured is left without a cause of action. Reinstatement effectively restored petitioner-insured to all his rights under the policy.The court held that Malapit's fraudulent act of misappropriating the premiums paid by petitioner-insured is directly imputable to respondent insurance company. A corporation, such as respondent insurance company, acts solely thru its employees. The latter's' acts are considered as its own. Malapit represented its interest and acted in its behalf. His act of receiving the premiums collected is well within the province of his authority. Thus, his receipt of said premiums is receipt by private respondent insurance company who, by provision of law is bound by the acts of its agent.Article 1910 thus reads:Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.Malapit's failure to remit the premiums he received cannot constitute a defense for private respondent insurance company; no exoneration from liability could result therefrom. The fact that private respondent insurance company was itself defrauded due to the anomalies that took place does not free the same from its obligation to petitioner Areola. As held in Prudential Bank v. Court of Appeals “A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of dealings of the officers in their representative capacity but not for acts outside the scope of their authority. Accordingly, a banking corporation is liable to innocent third persons where the representation is made in the course of its business by an agent acting within the general scope of his authority even though the agent is secretly abusing his authority and attempting to perpetrate a fraud upon his principal or some other person.”Prudential is liable for damages for the fraudulent acts committed by Malapit. Reinstating the insurance policy can not obliterate the injury inflicted. A contract of insurance creates reciprocal obligations for both insurer and insured. Reciprocal obligations are those which arise from the same cause and in which each party is both a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other.2. Due to the agreement to enter into a contract of insurance where Prudential promised to extend protection to petitioner-insured against the risk insured, there was a debtor creditor relationship between the two parties. Under Article 1191, the injured party is given a choice between fulfillment or rescission of the obligation in case one of the obligors fails to comply with what is incumbent upon him. However, said article entitles the injured party to payment of damages, regardless of whether he demands fulfillment or rescission of the obligation.
The damages would be nominal because the insurance company took steps to rectify the contract. There was also no actual or substantial damage inflicted. Nominal damages are "recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind, or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown.”
4. Domingo v Robles, 453 scra 812
Doctrine: The registered owner who places in the hands of another an executed document of transfer of registered land effectively represents to a third party that the holder of such document is authorized to deal with the property
Facts: Petitioner Norma Domingo and her husband, Valentino Domingo, were the registered owners of Lot 19. On this lot, petitioner discontinued the construction of her house allegedly for failure of her husband to send the necessary financial support. So, she decided to dispose of the property. A friend, Flor Bacani, volunteered to act as agent in selling the lot. She delivered their owners copy of Transfer Certificate of Title to him (Bacani). Later, the title was said to have been lost. In the petition for its reconstitution, the petitioner gave Bacani all her receipts of payment for real estate taxes. At the same time, Bacani asked her to sign a record of exhibits. Thereafter, she waited patiently but Bacani did not show up any more. Norma Domingo visited the lot and was surprised to see the [respondents] (Robles, for short) starting to build a house on the subject lot. A verification with the Register of Deeds revealed that the reconstituted Transfer Certificate of Title No. 53412 had already been cancelled with the registration of a Deed of Absolute Sale signed by Norma B. Domingo and her husband Valentino Domingo, as sellers, and respondent Yolanda Robles, for herself and representing the other minor [respondents], as buyers. As a consequence, Transfer Certificate of Title No. 201730 was issued in the name of [Respondent] Robles. The petitioner claimed that she haven’t met the respondents nor signed any sale over the property in favor of anybody(her husband being abroad at the time), she assumed that the Deed of Absolute Sale is a forgery and, therefore, could not validly transfer ownership of the lot to the [respondents]. Hence, the case for the nullity thereof and its reconveyance. The respondents claimed that they were buyers in good faith. They narrate that the subject lot was offered to them by Flor Bacani, as the agent of the owners; that after some time when they were already prepared to buy the lot, Bacani introduced to them the supposed owners and agreed on the sale; Bacani and the introduced seller presented a Deed of Absolute Sale already signed by Valentino and Norma Domingo needing only her (Robles) signature. Presented likewise at that meeting, where she paid full purchase price, was the original of the owner's duplicate of Transfer Certificate of Title. Robles contracted to sell the lot in issue in favor of spouses Danilo and Herminigilda Deza for P250,000.00. Respondent Yolanda Robles even had to secure a guardianship authority over the persons and properties of her minor children. When only P20,000.00 remained unpaid of the total purchase price under the contract to sell, payment was stopped because of the letter received by Yolanda Robles that [petitioner] intends to sue her.
After due proceedings, the RTC rendered its Decision dismissing the complaint.The CA held that respondents were purchasers in good faith and for value. According to its findings, (a) the sale was admittedly made through petitioners agent; (b) as Domingos agent, Bacani brought with him the original of the owners duplicate Certificate of Title of the property and some receipts; (c) the reconstituted title presented to the buyers was free from any liens, encumbrances or adverse interests of other persons; and (d) the land was unoccupied. Petitioner was not able to present, against these established facts, any evidence to prove that respondents had prior knowledge of any other persons right to or interest over the property in question.Hence, this Petition.Issue: WON petitioner Norma Domingo is entitled to her claims, the issue worthy of consideration by the Honorable Court in the instant case is WHO IS A PURCHASER IN GOOD FAITH?Held:NOPetitioner claims that her signature and that of her husband were forged in the Deed of Absolute Sale transferring the property from the Domingo spouses to respondent. Relying on the general rule that a forged deed is void and conveys no title, she assails the validity of the sale. It is a well-settled rule, however, that a notarized instrument enjoys a prima facie presumption of authenticity and due execution. Clear and convincing evidence must be presented to overcome such legal presumption. Forgery cannot be presumed; hence, it was incumbent upon petitioner to prove it. This, she failed to do.Petitioner also failed to convince the trial court that the person with whom Respondent Yolanda Robles transacted was in fact not Valentino Domingo. Except for her insistence that her husband was out of the country, petitioner failed to present any other clear and convincing evidence that Valentino was not present at the time of the sale. Bare allegations, unsubstantiated by evidence, are not equivalent to proof.In the absence of a finding of fraud and a consequent finding of authenticity and due execution of the Deed of Absolute Sale, a discussion of whether respondents were purchasers in good faith is wholly unnecessary. Without a clear and persuasive substantiation of bad faith, a presumption of good faith in their favor stands.The sale was admittedly made with the aid of Bacani, petitioner’s agent, who had with him the original of the owner’s duplicate Certificate of Title to the property, free from any liens or encumbrances. The signatures of Spouses Domingo, the registered owners, appear on the Deed of Absolute Sale. Petitioner’s husband met with Respondent Yolanda Robles and received payment for the property. The Torrens Act requires, as a prerequisite to registration, the production of the owner’s certificate of title and the instrument of conveyance. The registered owner who places in the hands of another an executed document of transfer of registered land effectively represents to a third party that the holder of such document is authorized to deal with the property.
5. Bedia v White, 204 scra 273
Doctrine: The principal must comply with all the obligations which the agent may have contracted within the scope of his authority
The basic issue before us is the capacity in which petitioner Sylvia H. Bedia entered into the subject contract with private respondent Emily A. White. Both the trial court and the respondent court held she was acting in her own personal behalf. She faults this finding as reversible error and insists that she was merely acting as an agent. Facts: The case arose when Bedia and White entered into a Participation Contract. White and her husband filed a complaint for damages against Bedia and Hontiveros & Associated Producers Phil. Yields, Inc. for damages caused by their fraudulent violation of their agreement. She averred that Bedia had approached her and persuaded her to participate in the State of Texas Fair, and that she made a down payment of $500.00 to Bedia on the agreed display space. In due time, she enplaned for Dallas with her merchandise but was dismayed to learn later that the defendants had not paid for or registered any display space in her name, nor were they authorized by the state fair director to recruit participants. She said she incurred losses as a result for which the defendants should be held solidarily liable.The defendants denied the plaintiff's allegation that they had deceived her and explained that no display space was registered in her name as she was only supposed to share the space leased by Hontiveros in its name. She was not allowed to display her goods in that space because she had not paid her balance of $1,750.00, in violation of their contract. Bedia also made the particular averment that she did not sign the Participation Contract on her own behalf but as an agent of Hontiveros and that she had later returned the advance payment of $500.00 to the plaintiff. The complaint against Hontiveros was dismissed.Judge Fermin Martin, Jr. found Bedia liable for fraud and awarded the plaintiffs actual and moral damages plus attorney's fees and the costs.
Issue: Held:As the Participation Contract was signed by Bedia, the above statement was an acknowledgment by White that Bedia was only acting for Hontiveros when it recruited her as a participant in the Texas State Fair and charged her a partial payment of $500.00. This amount was to be fortified to Hontiveros in case of cancellation by her of the agreement. The fact that the contract was typewritten on the letterhead stationery of Hontiveros bolsters this conclusion in the absence of any showing that said stationery had been illegally used by Bedia.Hontiveros itself has not repudiated Bedia’s agency as it would have if she had really not signed in its name. In the answer it filed with Bedia, it did not deny the latter’s allegation in Paragraph 4 thereof that she was only acting as its agent when she solicited White’s participation. In fact, by filing the answer jointly with Bedia through their common counsel, Hontiveros affirmed .this allegation. If the plaintiffs had any doubt about the capacity in which Bedia was acting, what they should have done was verify the matter with Hontiveros. They did not. Instead, they simply accepted Bedia’s representation that she was an agent of Hontiveros and dealt with her as such. Under Article 1910 of the Civil Code, “the principal must comply with all the obligations which the agent may have contracted within the scope of his authority .”
Hence, the private respondents cannot now hold Bedia liable for the acts performed by her for, and imputable to, Hontiveros as her principal.The plaintiffs’ position became all the more untenable when they moved on June 5, 1984, for the dismissal of the complaint against Hontiveros, leaving Bedia as the sole defendant. Hontiveros had admitted as early as when it filed its answer that Bedia was acting as its agent. The effect of the motion was to leave the plaintiffs without a cause of action against Bedia for the obligation, if any, of Hontiveros.Our conclusion is that since it has not been found that Bedia was acting beyond the scope of her authority when she entered into the Participation Contract on behalf of Hontiveros, it is the latter that should be held answerable for any obligation arising from that agreement. By moving to dismiss the complaint against Hontiveros, the plaintiffs virtually disarmed themselves and forfeited whatever claims they might have proved against the latter under the contract signed for it by Bedia. It should be obvious that having waived these claims against the principal, they cannot now assert them against the agent.
6. Shell Co. of the Phils., Ltd. v. Firemen’s Ins. Of Newark, 100 scra 757
Doctrine:Where the operator of a gasoline and service station owed his position to the company and the latter could remove him or terminate his services at will; that the service station belonged to the company and bore its trade name and the operator sold only the products of the company; that the equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of their repair and maintenance; that an employee of the company supervised the operator and conducted periodic inspection of the company’s gasoline and service station; that the price of the products sold by the operator was fixed by the company and not by the operator; and that the receipts signed by the operator indicated that he was a mere agent.
Facts: A car belonging to Salvador SISON was brought to a gasoline and service station somewhere in Manila, owned by the SHELL Company of the Philippine Islands, Limited, but operated by Porfirio DE LA FUENTE, for the purpose of having said car washed and greased for a consideration of P8.00. Said car was insured against loss or damage by Firemen's Insurance Company of Newark, New Jersey, and Commercial Casualty Insurance Company jointly for the sum of P10,000. The job of washing and greasing was undertaken by DE LA FUENTE through his two employees – a greaseman and a helper/washer. To perform the job, the car was carefully and centrally placed on the platform of a hydraulic lifter before raising up said platform to a height of about 5 feet and then the servicing job was started. After more than one hour of washing and greasing, the job was about to be completed except for an ungreased portion underneath the vehicle which could not be reached by the greaseman. So, the lifter was lowered a little by the greaseman and while doing so, the car for unknown reason accidentally fell and suffered substantial damage. SISON forthwith brought the matter to his insurers’ attention. The insurance companies after due inspection paid the sum of P1,651.38 for the damaged car’s repair. SISON, for his part made assignments of his rights to recover damages in favor of the Firemen's Insurance Company and the Commercial Casualty Insurance Company
– hence, the instant case for the recovery of the total amount of the damage from SHELL and DE LA FUENTE on the ground of negligence. CFI dismissed the complaint. Insurance Companies appealed. The Court of Appeals reversed the CFI’s judgment and sentenced SHELL and DE LA FUENTE to pay the amount sought to be recovered, plus legal interest and costs. The CA ruled that DE LA FUENTE is SHELL’s agent; hence, as principal, it is liable for his agent’s breach of undertaking. SHELL now comes to the SC on appeal questioning the aforesaid CA decision.Issue: WON DE LA FUENTE is really SHELL’s agent? Isn’t he more of an independent contractor?Held:DE LA FUENTE is SHELL’s agent. The operator of a gasoline station is an agent of the oil company. He cannot be considered as an independent contractor by reason of SHELL’s extensive control and supervision over his tasks. The assailed CA decision is affirmed.Ratio:Where the operator of a gasoline and service station owed his position to the company and the latter could remove him or terminate his services at will; that the service station belonged to the company and bore its trade name and the operator sold only the products of the company; that the equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of their repair and maintenance; that an employee of the company supervised the operator and conducted periodic inspection of the company’s gasoline and service station; that the price of the products sold by the operator was fixed by the company and not by the operator; and that the receipts signed by the operator indicated that he was a mere agent.
DE LA FUENTE owed his position to SHELL which could remove him or terminate his services at any time. He merely undertook to exclusively sell SHELL’s products at the station he operates. For this purpose, he was placed in possession of all the equipments needed to operate it, including the hydraulic lifter from which SISON’s automobile fell. But it must be noted that these equipments were delivered to DE LA FUENTE merely on loan basis. SHELL still took charge of its care and maintenance. It supervised DE LA FUENTE and conducted periodic inspection of the gasoline and service station. Moreover, SHELL did not leave the fixing of price for gasoline to DE LA FUENTE; on the other hand, SHELL had complete control thereof; and it had supervision over DE LA FUENTE in the operation of the station and in the sale of its products therein. In fine, the gasoline and service station really belonged to SHELL. It bore its trade name and the operator DE LA FUENTE merely sold the products of SHELL there. Considering the above listed, in no wise can it be said that DE LA FUENTE is an independent contractor of SHELL. The extensive control and supervision that SHELL exercises over DE LA FUENTE militate heavily against this contention. On the contrary, such circumstances show the existence of agency between them. The existence of agency between SHELL and DE LA FUENTE is also evidenced by a receipt issued by SHELL and signed by DE LA FUENTE, acknowledging the delivery of equipments for the gas station in question and an official from of the inventory of said equipment containing DE LA FUENTE’s signature above the words: "Agent's signature".
RE: Liability of Principal for Agent’s breach of undertakingo As the CA correctly ruled, the fall of SISON’s car from the hydraulic lift was the result of some unforeseen shortcoming of the mechanism itself. As the servicing job on SISON’s car was accepted by DE LA FUENTE in the normal and ordinary conduct of his business as operator of SHELL’s service station, and that the defective hydraulic lift caused the fall of the car, he is liable therefor. SHELL, his principal, is also liable as DE LA FUENTE acted within the representative authority granted him as SHELL’s agent. As the act of the agent acting within the scope of his authority is the act of the principal, the breach of the undertaking by the agent is one for which the principal is answerableMoreover, SHELL undertook to "answer and see to it that the equipments are in good running order and usable condition." Obviously, SHELL failed to make a thorough check up of the hydraulic lifter. Hence, it was also negligent in that aspect to which it must answer, as the faulty lifter was the cause of the fall of the SISON’s car.
7. Cuison v CA, 227 scra 391
Doctrine: Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers
FACTS: Kue Cuison is a sole proprietorship engaged in the purchase and sale of newsprint, bond paper and scrap.Valiant Investment Associates delivered various kinds of paper products to a certain Tan. The deliveries were made by Valiant pursuant to orders allegedly placed by Tiac who was then employed in the Binondo office of petitioner. Upon delivery, Tan paid for the merchandise by issuing several checks payable to cash at the specific request of Tiac. In turn, Tiac issued nine (9) postdated checks to Valiant as payment for the paper products. Unfortunately, sad checks were later dishonored by the drawee bank.Thereafter, Valiant made several demands upon petitioner to pay for the merchandise in question, claiming that Tiac was duly authorized by petitioner as the manager of his Binondo office, to enter into the questioned transactions with Valiant and Tan. Petitioner denied any involvement in the transaction entered into by Tiac and refused to pay Valiant.Left with no recourse, private respondent filed an action against petitioner for the collection of sum of money representing the price of the merchandise. After due hearing, the trial court dismissed the complaint against petitioner for lack of merit. On appeal, however, the decision of the trial court was modified, but was in effect reversed by the CA. CA ordered petitioner to pay Valiant with the sum plus interest, AF and costs.ISSUE: WON Tiac possessed the required authority from petitioner sufficient to hold the latter liable for the disputed transactionHELD: YES. As to the merits of the case, it is a well-established rule that one who clothes another with apparent 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, to the prejudice of innocent third parties dealing with such person in good faith and in the honest belief that he is what he appears to beIt matters not whether the representations are intentional or merely negligent so long as innocent, third persons relied upon such representations in good faith and for value. Article 1911 of the Civil Code provides:“Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers.”The above-quoted article is new. It is intended to protect the rights of innocent persons. In such a situation, both the principal and the agent may be considered as joint tortfeasors whose liability is joint and solidary.It is evident from the records that by his own acts and admission, petitioner held out Tiac to the public as the manager of his store in Binondo. More particularly, petitioner explicitly introduced to Villanueva, Valiant’s manager, as his (petitioner’s) branch manager as testified to by Villanueva. Secondly, Tan, who has been doing business with petitioner for quite a while, also testified that she knew Tiac to be the manager of the Binondo branch. Even petitioner admitted his close relationship with Tiu Huy Tiac when he said that they are “like brothers” There was thus no reason for anybody especially those transacting business with petitioner to even doubt the authority of Tiac as his manager in the Binondo branch.Tiac, therefore, by petitioner’s own representations and manifestations, became an agent of petitioner by estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon (Article 1431, Civil Code of the Philippines). A party cannot be allowed to go back on his own acts and representations to the prejudice of the other party who, in good faith, relied upon them. Taken in this light, petitioner is liable for the transaction entered into by Tiac on his behalf. Thus, even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to fact as though he had full powers (Article 1911 Civil Code), as in the case at bar.Finally, although it may appear that Tiac defrauded his principal (petitioner) in not turning over the proceeds of the transaction to the latter, such fact cannot in any way relieve nor exonerate petitioner of his liability to private respondent. For it is an equitable maxim that as between two innocent parties, the one who made it possible for the wrong to be done should be the one to bear the resulting loss
8. Woodchild Holdings, Inc. v Roxas Electric & Construction, Co., 436 scra 235
Doctrine: Acts done by corporate officers beyond the scope of their authority cannot bind the corporation unless it has ratified such acts expressly or tacitly, or is estopped from denying them
Facts: Roxas Electric and Construction Company, Inc. (RECCI) authorized its President Roberto B. Roxas through a resolution to sell a parcel of land owned by the corporation, and to execute, sign and deliver for and on behalf of the company. Petitioner Woodchild Holdings, Inc. (WHI) through its President Jonathan Y. Dy, offered to buy the land from RECCI. The offer to purchase
stated that it is made on the representation and warranty of the OWNER/SELLER, that he holds a good and registrable title to the property, which shall be conveyed CLEAR and FREE of all liens and encumbrances, and that in the event that the right of way is insufficient for the buyer’s purpose, the seller agrees to sell additional square meter from his current adjacent property to allow the buyer full access and full use of the property.Roxas accepted the offer and indicated his acceptance on Page 2 of the Deed. The sale was consummated.WHI subsequently entered into a construction agreement with Wimbeco Builder’s Inc. (WBI) for the construction of a warehouse, and a lease agreement with Poderosa Leather Goods Company, Inc. with a condition that the warehouse be ready by April 1, 1992. The building was finished and Poderosa became the lessee. WHI complained to Roberto Roxas that the vehicles of RECCI were parked on a portion of the property over which WHI had been granted a right of way. Roxas promised to look into the matter. Dy and Roxas discussed the need of the WHI to buy a 500-square-meter portion the adjacent lot as provided for in the deed of absolute sale. However, Roxas died soon thereafter. WHI wrote the RECCI, reiterating its verbal requests to purchase a portion of the said lot as provided for in the deed of absolute sale, and complained about the latter’s failure to eject the squatters within the three-month period agreed upon in the said deed. RECCI rejected the demand of WHI, so WHI filed a case for Specific Performance and Damages in the RTC of Makati. RTC - in favor of WHI.CA - reversed the RTC decision and dismissed the complaint. The CA ruled that, under the resolution of the Board of Directors of the RECCI, Roxas was merely authorized to sell the first lot, but not to grant right of way in favor of the WHI over a portion of the second lot, or to grant an option to the petitioner to buy a portion thereof.
Issue: WON the respondent is bound by the provisions in the deed of absolute sale granting to the petitioner beneficial use and a right of way over a portion of Lot No. 491-A-3-B-1 accessing to the Sumulong Highway and granting the option to the petitioner to buy a portion thereof, and, if so, whether such agreement is enforceable against the respondentHeld:A corporation is a juridical person separate and distinct from its stockholders or members. Accordingly, the property of the corporation is not the property of its stockholders or members and may not be sold by the stockholders or members without express authorization from the corporation’s board of directors. Indubitably, a corporation may act only through its board of directors or, when authorized either by its by-laws or by its board resolution, through its officers or agents in the normal course of business. The general principles of agency govern the relation between the corporation and its officers or agents, subject to the articles of incorporation, by-laws, or relevant provisions of law.
Generally, the acts of the corporate officers within the scope of their authority are binding on the corporation. However, under Article 1910 of the New Civil Code, acts done by such officers beyond the scope of their authority cannot bind the corporation unless it has ratified such acts expressly or tacitly, or is estopped from denying them: Art. 1910. The principal must comply with
all the obligations which the agent may have contracted within the scope of his authority. As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly. Thus, contracts entered into by corporate officers beyond the scope of authority are unenforceable against the corporation unless ratified by the corporation.
In this case, the respondent denied authorizing its then president Roberto B. Roxas to sell a portion of Lot No. 491-A-3-B-1 covered by TCT No. 78085, and to create a lien or burden thereon. The petitioner was thus burdened to prove that the respondent so authorized Roxas to sell the same and to create a lien thereon.
Evidently, Roxas was not specifically authorized under the said resolution to grant a right of way in favor of the petitioner on a portion of the second lot or to agree to sell to the petitioner a portion thereof.For the principle of apparent authority to apply, the petitioner was burdened to prove the following: (a) the acts of the respondent justifying belief in the agency by the petitioner; (b) knowledge thereof by the respondent which is sought to be held; and, (c) reliance thereon by the petitioner consistent with ordinary care and prudence. In this case, there is no evidence on record of specific acts made by the respondent showing or indicating that it had full knowledge of any representations made by Roxas to the petitioner that the respondent had authorized him to grant to the respondent an option to buy a portion of Lot No. 491-A-3-B-1 covered by TCT No. 78085, or to create a burden or lien thereon, or that the respondent allowed him to do so. The doctrine of apparent authority was not applicable in this case because the president of the company was given a specific authority by virtue of a board resolution to sell a particular land. Any actions of the president outside such vested authority shall not bind the corporation with third party. (?)
9. Manila Memorial Park Cemetery, Inc. v. Linsangan, 443 scra 377
Doctrine: The acts of an agent beyond the scope of his authority do not bind the principal, unless he ratifies them, expressly or impliedly
Facts:
Florencia Baluyot is authorized by the Manila Memorial Park Inc. (MMPI) to sell burial lots to those interested in purchasing.Herein respondent Atty. Linsangan was approached by Florencia with an offer to sell to the former a lot that she alleges to have already been previously sold but the owner thereof has cancelled and thus, Atty. Linsangan shall only continue the payment thereof amounting to P95,000, Atty. Linsangan agreed and payed an initial P35, 000. Thereafter, Florencia advised Atty. Linsangan that there were changes in the contract and that she needed him to sign a new contract stipulating the total price of P132, 000 but Florencia assured Atty. Linsangan that he would only pay the agreed P95, 000. In the new contract, Atty. Linsangan acceded that he has read and understood all the stipulations therein. The payment was made in installments for two years which Atty. Linsangan completed, however, after two years, Florencia informed Linsangan that their contract was cancelled and offered a different lot, Atty. Linsangan refused the offer and filed a suit for breach of contract against MMPI and
Florencia. MMPI avers that Florencia acted beyond the scope of her authority as MMPI’s agent since the latter did not allow her to renegotiate existing contracts but only to sell new contracts. Atty. Linsangan on the other hand argues that MMPI should be liable for the acts of its agents.
Issue: Whether or not MMPI is liable for the acts of Baluyot
Held: NO. The SC ruled that Baluyot acted outside the scope of her authority as agent of MMPI and Atty. Linsangan failed to ascertain the authority given to Baluyot especially that their agreement on the second contract had a different stipulation than what he and Florencia agreed upon. Moreover, Atty. Linsangan’s signature over the new contract signifies his agreement thereto and serves as a form of ratification for the acts of Florencia which were outside the authority given her. As such, the SC ruled that the principal cannot be held liable for actions of agents outside the scope of their authority when such acts are ratified by the principal himself. On the part of MMPI, they did not ratify Baluyot’s acts, nor did they know of such actions.
10. Litonjua v Eternit Corporation, 490 scra 204
Doctrine: A person dealing with a known agent is not authorized, under any circumstances, blindly to trust the agents—statements as to the extent of his powers—such person must not act negligently but must use reasonable diligence and prudence to ascertain whether the agent acts within the scope of his authority
FACTS:Eternit Corp. is engaged in the manufacture of roofing materials and pipe products. Its manufacturing operations were conducted on 8 parcels of land located in Mandaluyong City, covered by TCTs with Far East Bank & Trust Company, as trustee. 90% of the shares of stocks of Eternit Corp. were owned by Eteroutremer S.A. Corporation (ESAC), a corporation organized and registered under the laws of Belgium. Jack Glanville, an Australian citizen, was the General Manager and President of Eternit Corp., while Claude Frederick Delsaux was the Regional Director for Asia of ESAC.In 1986, the management of ESAC grew concerned about the political situation in the Philippines and wanted to stop its operations in the country. The Committee for Asia of ESAC instructed Michael Adams, a member of Eternit Corp.’s Board of Directors, to dispose of the eight parcels of land. Adams engaged the services of realtor/broker Lauro G. Marquez so that the properties could be offered for sale to prospective buyers.Marquez offered the parcels of land and the improvements thereon to Eduardo B. Litonjua, Jr. of the Litonjua & Company, Inc. Marquez declared that he was authorized to sell the properties for P27,000,000.00 and that the terms of the sale were subject to negotiation.Eduardo Litonjua, Jr. responded to the offer. Marquez showed the property to Eduardo Litonjua, Jr., and his brother Antonio K. Litonjua. The Litonjua siblings offered to buy the property for P20,000,000.00 cash. Marquez apprised Glanville of the Litonjua siblings’ offer and relayed the same to Delsaux in Belgium, but the latter did not respond. Glanville telexed Delsaux in Belgium, inquiring on his position/ counterproposal to the offer of the Litonjua siblings. Delsaux
sent a telex to Glanville stating that, based on the “Belgian/Swiss decision,” the final offer was “US$1,000,000.00 and P2,500,000.00 to cover all existing obligations prior to final liquidation.Litonjua, Jr. accepted the counterproposal of Delsaux. Marquez conferred with Glanville, and confirmed that the Litonjua siblings had accepted the counter-proposal of Delsaux. He also stated that the Litonjua siblings would confirm full payment within 90 days after execution and preparation of all documents of sale, together with the necessary governmental clearances.The Litonjua brothers deposited the amount of US$1,000,000.00 with the Security Bank & Trust Company, Ermita Branch, and drafted an Escrow Agreement to expedite the sale.With the assumption of Corazon Aquino as President of RP, the political situation in the Philippines had improved. Marquez received a telephone call from Glanville, advising that the sale would no longer proceed. Glanville followed it up with a letter, confirming that he had been instructed by his principal to inform Marquez that the decision has been taken at a Board Meeting not to sell the properties on which Eternit Corp. is situated.When apprised of this development, the Litonjuas, through counsel, wrote Eternit Corp., demanding payment for damages they had suffered on account of the aborted sale. EC, however, rejected their demand. ISSUE: WON Marquez, Glanville, and Delsaux were authorized by respondent Eternit Corp. to act as its agents relative to the sale of the properties of Eternit Corp., and if so, what are the boundaries of their authority as agents HELD: No.While a corporation may appoint agents to negotiate for the sale of its real properties, the final say will have to be with the board of directors through its officers and agents as authorized by a board resolution or by its by-laws. An unauthorized act of an officer of the corporation is not binding on it unless the latter ratifies the same expressly or impliedly by its board of directors. Any sale of real property of a corporation by a person purporting to be an agent thereof but without written authority from the corporation is null and void.An agency may be expressed or implied from the act of the principal, from his silence or lack of action, or his failure to repudiate the agency knowing that another person is acting on his behalf without authority. Acceptance by the agent may be expressed, or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances. Agency may be oral unless the law requires a specific form. However, to create or convey real rights over immovable property, a special power of attorney is necessary.The Litonjuas failed to adduce in evidence any resolution of the Board of Directors of Eternit Corp. empowering Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for sale, for and in its behalf, the 8 parcels of land owned by Eternit Corp. including the improvements thereon. The bare fact that Delsaux may have been authorized to sell to Ruperto Tan the shares of stock of respondent ESAC cannot be used as basis for Litonjua’s claim that he had likewise been authorized by Eternit Corp. to sell the parcels of land.While Glanville was the President and General Manager of Eternit Corp., and Adams and Delsaux were members of its Board of Directors, the three acted for and in behalf of respondent ESAC, and not as duly authorized agents of Eternit Corp.; a board resolution evincing the grant of such authority is needed to bind Eternit Corp. to any agreement regarding the sale of the
subject properties. Such board resolution is not a mere formality but is a condition sine qua non to bind Eternit Corp.The petitioners cannot feign ignorance of the absence of any regular and valid authority of respondent EC empowering Adams, Glanville or Delsaux to offer the properties for sale and to sell the said properties to the petitioners. A person dealing with a known agent is not authorized, under any circumstances, blindly to trust the agents; statements as to the extent of his powers; such person must not act negligently but must use reasonable diligence and prudence to ascertain whether the agent acts within the scope of his authority. 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, the petitioners failed to discharge their burden; hence, petitioners are not entitled to damages from respondent EC.11. Country Bankers v. Keppel Cebu Shipyard, 673 scra 427
Doctrine: An agent’s act, even if done beyond the scope of his authority, may bind the principal if he ratifies them, whether expressly or tacitly
Facts: Unimarine Shipping Lines, Inc. (Unimarine) contracted the services of Keppel Cebu Shipyard for dry docking and ship repair works on its vessel, the M/V Pacific Fortune. Cebu Shipyard issued Bill No. 26035 to Unimarine in consideration for its services, which amounted to P4,486,052.00. Negotiations between Cebu Shipyard and Unimarine led to the reduction of this amount to P3,850,000.00. The terms of this agreement were embodied in Cebu Shipyards February 18, 1992 letter to the President/General Manager of Unimarine, Paul Rodriguez, who signed his conformity to said letter. Unimarine, through Paul Rodriguez, secured from Country Bankers Insurance Corp. (CBIC), through the latters agent, Bethoven Quinain (Quinain), CBIC Surety Bond. The expiration of this surety bond was extended to January 15, 1993, through Endorsement, which was later on attached to and formed part of the surety bond. In addition to this, Unimarine, on February 19, 1992, obtained another bond from Plaridel Surety and Insurance Co. (Plaridel), PSIC Bond. Unimarine executed a Contract of Undertaking in favor of Cebu Shipyard. Because Unimarine failed to remit the first installment when it became due, Cebu Shipyard was constrained to deposit the peso check corresponding to the initial installment of P2,350,000.00. The check was dishonored by the bank due to insufficient funds. Cebu Shipyard faxed a message to Unimarine, informing it of the situation, and reminding it to settle its account immediately. Due to Unimarines failure to heed Cebu Shipyards repeated demands, Cebu Shipyard, through counsel, wrote the sureties CBIC to inform them of Unimarines nonpayment, and to ask them to fulfill their obligations as sureties, and to respond within seven days from receipt of the demand. However, even the sureties failed to discharge their obligations, and so Cebu Shipyard filed a Complaint against Unimarine, CBIC, and Plaridel. Issue:
WON THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN APPLYING THE PROVISIONS OF ARTICLE 1911 OF THE CIVIL CODE TO HOLD PETITIONER LIABLE FOR THE ACTS DONE BY ITS AGENT IN EXCESS OF AUTHORITYHeld:Under Articles 1898 and 1910, an agents act, even if done beyond the scope of his authority, may bind the principal if he ratifies them, whether expressly or tacitly. It must be stressed though that only the principal, and not the agent, can ratify the unauthorized acts, which the principal must have knowledge of. Neither Unimarine nor Cebu Shipyard was able to repudiate CBICs testimony that it was unaware of the existence of Surety Bond No. G (16) 29419 and Endorsement No. 33152. There were no allegations either that CBIC should have been put on alert with regard to Quinains business transactions done on its behalf. It is clear, and undisputed therefore, that there can be no ratification in this case, whether express or implied.
Article 1911, on the other hand, is based on the principle of estoppel, which is necessary for the protection of third persons. It states that the principal is solidarily liable with the agent even when the latter has exceeded his authority, if the principal allowed him to act as though he had full powers. However, for an agency by estoppel to exist, the following must be established: 1. The principal manifested a representation of the agent’s authority or knowingly allowed the agent to assume such authority; 2. The third person, in good faith, relied upon such representation; and 3. Relying upon such representation, such third person has changed his position to his detriment.This Court cannot agree with the Court of Appeals pronouncement of negligence on CBICs part. CBIC not only clearly stated the limits of its agents powers in their contracts, it even stamped its surety bonds with the restrictions, in order to alert the concerned parties. Moreover, its company procedures, such as reporting requirements, show that it has designed a system to monitor the insurance contracts issued by its agents. CBIC cannot be faulted for Quinains deliberate failure to notify it of his transactions with Unimarine. In fact, CBIC did not even receive the premiums paid by Unimarine to Quinain. It is apparent that Unimarine had been negligent or less than prudent in its dealings with Quinain.12. Estate of Olave v. Matute, GR 27832, May 28, 1970
Doctrine:
General Rule: The courts, in the exercise of their supervisory authority over attorneys as officers of the court, are bound to respect and protect the attorney's lien as a necessary means to preserve the decorum and respectability of the profession.
Exception: But if it be entirely indispensable for the court to gain possession of the documents that have come to the attorney and are held by him in the course of his employment as counsel, it can require surrender thereof by requiring the client or claimant to first file proper and adequate security for the lawyers' compensation.
Facts:
Respondents Jose S. Matute, Anunciacion Candelario,, Elena Matute and Amadeo Matute Jr., filed this action praying that the former administrator, Matias S. Matute, be ordered to surrender 17 titles to various properties of the Estate to the assistant clerk of court, from whom said Matias had received them on 28 September 1966.
The motion was resisted by the co-administrators Matias and Carlos Matute and several other heirs (through counsel Paterno Canlas), who pleaded that the 17 titles is no longer with Matias and is already with Carlos. However the titles are currently possessed by their counsel Paterno Canlasin his capacity as counsel for the Estate is also retaining said titles in the exercise of his retention lien for services rendered to the estate (not to the Administrators).
The probate court granted the motion to surrender the documents to the clerk of court for safekeeping, "in order to prevent any possible controversy regarding any transaction involving the remaining properties of the estate"
Reconsideration of the order was sought and denied 29 May 1967, the Court ordering Attorney Paterno S. Canlas to surrender said documents immediately.
Petitioners appeal, insisting that the lower court erred in granting the motion to surrender the titles in question in view of Rule 138, Section 37, of the Rules of Court, specifically prescribing that —
SEC. 37. Attorneys' liens. — An attorney shall have a lien upon the funds, documents and papers of his client which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. ...
Issue: WON Atty. Canlas entitled to retain the 17 titles as provided in Rule 138, Sec 37?
Held:Yes. Sec 37 is controlling since the explicit terms of this section afford no alternative but to uphold the claim of appellant Paterno Canlas with respect to the seventeen documents in his possession. His right, as counsel for the deceased and his estate, "to retain the same until his lawful fees and disbursements have been paid "is incontestable, and under the rule and section aforesaid, the attorney can not be compelled to surrender the muniments of title mentioned without prior proof that his fees have been duly satisfied. The courts, in the exercise of their supervisory authority over attorneys as officers of the court, are bound to respect and protect the attorney's lien as a necessary means to preserve the decorum and respectability of the profession.
However, if it be entirely indispensable for the court to gain possession of the documents that have come to the attorney and are held by him in the course of his employment as counsel, it can require surrender thereof by requiring the client or claimant to first file proper and adequate security for the lawyers' compensation. The courts may require the attorney to deliver up the papers in his possession which may serve to embarrass his client, provided the client files proper security for the attorney's compensation. This proceeds from the power of the courts to control its own officers and to compel attorneys to act equitably and fairly towards their clients.
Dispositive Portion: IN VIEW OF THE FOREGOING, the orders of the probate court dated 22 April 1967 and 29 May 1967, in so far as denying appellant Attorney Paterno Canlas' right to retain the seventeen (17) documents in his hands, as counsel for the estate, and requiring him to surrender the same without his claim for fees being first satisfied, are hereby reversed and set aside. Costs against appellees.
13. Armando V. Ampil v Judge Corazon Agrava, GR 27394, July 31, 1970
Doctrine: Attorney can not be compelled to surrender the muniments of title that had come into his possession without prior proof that his fees have been duly satisfied
Facts:An original action of certiorari to annul the lower court's questioned order requiring petitioner to surrender three certificates of title, notwithstanding his assertion of his right of an attorney's retaining lien over them. Petitioner, for a considerable period of time, was the counsel for Angela Tuason de Perez in several cases which he handled successfully. Petitioner asserts and it is not disputed, that sometime in November, 1966, Angela, acting through a new attorney in-fact in the person of her daughter, Angela Perez y Tuason de Staley, terminated his services as counsel without just and lawful cause and without paying him for his professional services, for which he presented his bill in due course, as well as asserted his retaining lien over the three titles entrusted to him by Angela in the course of his professional employment in his letter of February 16, 1967 to respondents' counsel.After petitioner's discharge as counsel, developments ensued which gave rise to the present action. Thereafter, respondents Perezes, having failed to obtain from petitioner the three titles to the properties ceded to them as above stated in the compromise agreement, as petitioner asserted his retaining lien over them, filed on February 22, 1967 with respondent domestic court a so-called motion ,for partial execution disputing petitioner's asserted lien of retention and asking the court to order petitioner to surrender the three titles to them.Held: Overruling petitioner's opposition asking the court to respect his right to retain the titles until the value of the professional services rendered by him to Angela shall have been paid in full by the latter, respondent court ordered under date of March 8, 1967 petitioner to surrender the titles to respondents Perezes within five days from notice, holding that "(A)s the Compromise Agreement has already been approved, it is believed that the Court can have it enforced and, in connection therewith, can compel Atty. Ampil to deliver the owners duplicates of T.C.T.'s Nos. 24927, 24928 and 34769 to the Perezes . . . Any attorney's lien in favor of Mr. Ampil, as attorney of Tuason should be enforced against his client. and not against the Perezes." The Court cited therein the late Justice Laurel's opinion in Rustia vs. Abeto, with regard to the inconvenience that may accrue to the client, and to the client's adversary for that matter as in the case at bar, because of the retaining lien thus exercised by an attorney, that such inconvenience "is the reason and essence of the lien." But as in Rustia, we pointed out that "if it
be entirely indispensable for the court to gain possession of the documents that have come to the attorney and are held by him in the course of his employment as counsel, it can require the surrender thereof by requiring the client or claimant to first file proper and adequate security for the lawyers' compensation." This alternative was in fact availed of by respondent Antonio M. Perez, who, upon motion filed on August 10, 1967 alleging that "the properties in question awarded to Antonio Perez have a market value of easily a quarter of a million pesos and the property awarded to Benigno Perez easily has an equal value," secured from the Court its resolution of October 13, 1967 lifting the preliminary injunction as to Titles Nos. 24927 and 24928 of Manila upon his filing and the approval of a bond in the sum of P25,000.00 answerable for whatever damages may be suffered by petitioner. Such charging lien covers only the services rendered by an attorney in the action in which the judgment was obtained and takes effect under the cited rule after the attorney shall have caused a statement of his claim of such lien to be entered upon the records of the particular action with written notice thereof to his client and to the adverse party. The fact that the client Angela, in the compromise agreement, undertook to transfer her properties covered by the titles in question to respondents Perezes would not defeat petitioner's retaining lien over the same. Petitioner's position is similar to that of a creditor who holds an attachment lien over the properties, and the client debtor must discharge the lien before he can dispose the properties to a third person free of such lien. In enforcing his retaining lien over the titles, petitioner was enforcing the same against Angela as his former client who wasadmittedly the owner of the properties and not against her adversaries to whom the client had undertaken to transfer the same under the compromise agreement, without first discharging the attorney's lien by payment of the fees due to petitioner. What obviously was lost sight of by respondent court in ruling that petitioner's lien "should be enforced against his client and not against the Perezes" was that petitioner obtained possession of the titles when ,they did appertain to his then client, Angela. As of that time, petitioner's retaining lien was fastened to the titles and respondent court was bound to respect and protect the same. There can be no question, then, that these properties were exclusively Angela's prior to November, 1966 and that respondents could lay no claim thereto by virtue of the transfers provided in the compromise agreement until after its confirmation by Angela and approval in November, 1966; and that respondents' contention that petitioner could not exercise his retaining lien over the titles which had properly come into his possession during his engagement as Angela's counsel long before November, 1966 is untenable. ACCORDINGLY, the writ of certiorari is granted and the order of respondent court of March 8, 1967 is hereby declared null and void and set aside.
14. Miranda v. Atty Macario D. Carpio, A.C. No. 6281, Sept 26, 2011
Doctrine: Respondent-lawyer’s unjustified act of holding on to complainant’s title with the obvious aim of forcing complainant to agree to the amount of attorney’s fees
sought is an alarming abuse by respondent of the exercise of an attorney’s retaining lien
Facts:Complainant Valentin C. Miranda is one of the owners of a parcel of land consisting of 1,890 square meters located at Barangay Lupang Uno, Las Piñas, Metro Manila. In 1994, complainant initiated Land Registration Commission (LRC) Case No. M-226 for the registration of the aforesaid property. The case was filed before the Regional Trial Court of Las Piñas City, Branch 275. During the course of the proceedings, complainant engaged the services of respondent Atty. Carpio as counsel in the said case when his original counsel, Atty. Samuel Marquez, figured in a vehicular accident. In complainant's Affidavit,[2] complainant and respondent agreed that complainant was to pay respondent Twenty Thousand Pesos (PhP20,000.00) as acceptance fee and Two Thousand Pesos (PhP2,000.00) as appearance fee. Complainant paid respondent the amounts due him, as evidenced by receipts duly signed by the latter. During the last hearing of the case, respondent demanded the additional amount of Ten Thousand Pesos (PhP10,000.00) for the preparation of a memorandum, which he said would further strengthen complainant's position in the case, plus twenty percent (20%) of the total area of the subject property as additional fees for his services. Complainant did not accede to respondent's demand for it was contrary to their agreement. Moreover, complainant co-owned the subject property with his siblings, and he could not have agreed to the amount being demanded by respondent without the knowledge and approval of his coheirs. As a result of complainant's refusal to satisfy respondent's demands, the latter became furious and their relationship became sore. On January 12, 1998, a Decision was rendered which transmitted the decree of registration and the original and owner's duplicate of the title of the property. On April 3, 2000, complainant went to the RD to get the owner's duplicate of the Original Certificate of Title (OCT) bearing No. 0-94. He was surprised to discover that the same had already been claimed by and released to respondent on March 29, 2000. On May 4, 2000, complainant talked to respondent on the phone and asked him to turn over the owner's duplicate of the OCT, which he had claimed without complainant's knowledge, consent and authority. Respondent insisted that complainant first pay him the PhP10,000.00 and the 20% share in the property equivalent to 378 square meters, in exchange for which, respondent would deliver the owner's duplicate of the OCT. Once again, complainant refused the demand, for not having been agreed upon. On June 26, 2000, complainant learned that on April 6, 2000, respondent registered an adverse claim on the subject OCT wherein he claimed that the agreement on the payment of his legal services was 20% of the property and/or actual market value. To date, respondent has not returned the owner's duplicate of OCT No. 0-94 to complainant and his co-heirs despite repeated demands to effect the same. ISSUE: Whether or not Atty. Carpio has violated Canon 20, Rule 20.01 of the Code of Professional Responsibility. HELD: An attorney's retaining lien is fully recognized if the presence of the following elements concur: (1) lawyer-client relationship; (2) lawful possession of the client's funds, documents and papers; and (3) unsatisfied claim for attorney's fees.[9] Further, the attorney's retaining lien is a general lien for the balance of the account between the attorney and his client, and applies to the
documents and funds of the client which may come into the attorney's possession in the course of his employment. As correctly found by the IBP-CBD, there was no proof of any agreement between the complainant and the respondent that the latter is entitled to an additional professional fee consisting of 20% of the total area covered by OCT No. 0-94. Clearly, there is no unsatisfied claim for attorney's fees that would entitle respondent to retain his client's property. Respondent's unjustified act of holding on to complainant's title with the obvious aim of forcing complainant to agree to the amount of attorney's fees sought is an alarming abuse by respondent of the exercise of an attorney's retaining lien, which by no means is an absolute right, and cannot at all justify inordinate delay in the delivery of money and property to his client when due or upon demand. Atty. Carpio failed to live up to his duties as a lawyer by unlawfully withholding and failing to deliver the title of the complainant, despite repeated demands, in the guise of an alleged entitlement to additional professional fees. He has breached Rule 1.01 of Canon 1 and Rule 16.03 of Canon 16 of the Code of Professional Responsibility. Further, in collecting from complainant exorbitant fees, respondent violated Canon 20 of the Code of Professional Responsibility, which mandates that “a lawyer shall charge only fair and reasonable fees.” It is highly improper for a lawyer to impose additional professional fees upon his client which were never mentioned nor agreed upon at the time of the engagement of his services. The principle of quantum meruit applies if a lawyer is employed without a price agreed upon for his services. In such a case, he would be entitled to receive what he merits for his services, as much as he has earned. Respondent's further submission that he is entitled to the payment of additional professional fees on the basis of the principle of quantum meruit has no merit. "Quantum meruit, meaning `as much as he deserved' is used as a basis for determining the lawyer's professional fees in the absence of a contract but recoverable by him from his client." In the present case, the parties had already entered into an agreement as to the attorney's fees of the respondent, and thus, the principle of quantum meruit does not fully find application because the respondent is already compensated by such agreement. WHEREFORE, Atty. Macario D. Carpio is SUSPENDED from the practice of law for a period of six (6) months, effective upon receipt of this Decision. He is ordered to RETURN to the complainant the owner's duplicate of OCT No. 0-94 immediately upon receipt of this decision. He is WARNED that a repetition of the same or similar act shall be dealt with more severely.15. Metropolitan Bank v CA, GR 86100-03, January 23, 1990
Doctrine: A charging lien to be enforceable as security for the payment of attorney’s fees requires as a condition sine qua non a judgment for money and execution in pursuance of such judgment.
FACTS:Petitioner Metrobank filed a petition for review on certiorari after the Court of Appeals ruled that petitioner should pay the certain amount based on the charging lien on the civil case filed against them which resulted to dismissal. In the dismissed case, private respondent filed a motion to fix its attorney’s fees, based on quantum meruit, which precipitated an exchange of arguments between the parties. Petitioner manifested that it had fully paid private respondent, Arturo Alafriz and Associates. Private respondent countered and attempted to arrange a compromise with petitioner in order to avoid suit, but the negotiations were unsuccessful.
ISSUES:Whether or not: (1) respondent is entitled to the enforcement of its charging lien for payment of its attorney’s fees; (2) a separate civil suit is necessary for the enforcement of such lien, and (3) private respondent is entitled to twenty-five (25%) percent of the actual and current market values of the litigated properties on a quantum meruit basis.HELD:(1) NO. (2) YES. (3) Ruling subject to separate trial.RATIO:[A] charging lien, to be enforceable as security for the payment of attorney’s fees, requires as a condition sine qua non a judgment for money and execution in pursuance of such judgment secured in the main action by the attorney in favor of his clientThe persons who are entitled to or who must pay attorney’s fees have the right to be heard upon the question of their propriety or amount. Hence, the obvious necessity of a hearing is beyond cavil.In the case at bar, the civil cases below were dismissed upon the initiative of the plaintiffs “in view of the full satisfaction of their claims.”The dismissal order neither provided for any money judgment nor made any monetary award to any litigant, much less in favor of petitioner who was a defendant therein. This being so, private respondent’s supposed charging lien is, under our rules, without any legal basis. It is flawed by the fact that there is nothing to generate it and to which it can attach in the same manner as an ordinary lien arises and attaches to real or personal property.
[I]n fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit, the determination of elements to be considered would indispensably require nothing less than a full-blown trial.
16. De Castro v CA, 384 scra 607
Doctrine: A contract of agency which is not contrary to law, public order, public policy, morals or good custom is a valid contract, and constitutes the law between the parties
FACTS: Appellants were co-owners of four (4) lots located at EDSA corner New York and Denver Streets in Cubao, Quezon City. In a letter dated January 24, 1984 (Exhibit "A-1, p. 144, Records), appellee was authorized by appellants to act as real estate broker in the sale of these properties for the amount of P23,000,000.00, five percent (5%) of which will be given to the agent as commission. It was appellee who first found Times Transit Corporation, represented by its president Mr. Rondaris, as prospective buyer which desired to buy two (2) lots only, specifically lots 14 and 15. Eventually, sometime in May of 1985, the sale of lots 14 and 15 was consummated. Appellee received from appellants P48,893.76 as commission.It was then that the rift between the contending parties soon emerged. Appellee apparently felt short changed because according to him, his total commission should be P352,500.00 which is five percent (5%) of the agreed price of P7,050,000.00 paid by Times Transit Corporation to appellants for the two (2) lots, and that it was he who introduced the buyer to appellants and
unceasingly facilitated the negotiation which ultimately led to the consummation of the sale. Hence, he sued below to collect the balance of P303,606.24 after having received P48,893.76 in advance.On the other hand, appellants completely traverse appellee's claims and essentially argue that appellee is selfishly asking for more than what he truly deserved as commission to the prejudice of other agents who were more instrumental in the consummation of the sale. Although appellants readily concede that it was appellee who first introduced Times Transit Corp. to them, appellee was not designated by them as their exclusive real estate agent but that in fact there were more or less eighteen (18) others whose collective efforts in the long run dwarfed those of appellee's, considering that the first negotiation for the sale where appellee took active participation failed and it was these other agents who successfully brokered in the second negotiation. But despite this and out of appellants' "pure liberality, beneficence and magnanimity", appellee nevertheless was given the largest cut in the commission (P48,893.76), although on the principle of quantum meruit he would have certainly been entitled to less. So appellee should not have been heard to complain of getting only a pittance when he actually got the lion's share of the commission and worse, he should not have been allowed to get the entire commission. Furthermore, the purchase price for the two lots was only P3.6 million as appearing in the deed of sale and not P7.05 million as alleged by appellee. Thus, even assuming that appellee is entitled to the entire commission, he would only be getting 5% of the P3.6 million, or P180,000.00." Private respondent Francisco Artigo ("Artigo" for brevity) sued petitioners Constante A. De Castro ("Constante" for brevity) and Corazon A. De Castro ("Corazon" for brevity) to collect the unpaid balance of his broker's commission from the De Castros. The Trial Court finds defendants Constante and Corazon Amor de Castro jointly and solidarily liable to plaintiff. The Court of Appeals affirmed in toto the decision of the RTC. Hence, this petition. ISSUE:Whether the complaint merits dismissal for failure to implead other co-owners as indispensable parties HELD:The De Castros argue that Artigo's complaint should have been dismissed for failure to implead all the co-owners of the two lots. The De Castros claim that Artigo always knew that the two lots were co-owned by Constante and Corazon with their other siblings Jose and Carmela whom Constante merely represented. The De Castros contend that failure to implead such indispensable parties is fatal to the complaint since Artigo, as agent of all the four co-owners, would be paid with funds co-owned by the four co-owners.The De Castros' contentions are devoid of legal basis.An indispensable party is one whose interest will be affected by the court's action in the litigation, and without whom no final determination of the case can be had.7 The joinder of indispensable parties is mandatory and courts cannot proceed without their presence.8
Whenever it appears to the court in the course of a proceeding that an indispensable party has not been joined, it is the duty of the court to stop the trial and order the inclusion of such party.9
However, the rule on mandatory joinder of indispensable parties is not applicable to the instant case.There is no dispute that Constante appointed Artigo in a handwritten note dated January 24, 1984 to sell the properties of the De Castros for P23 million at a 5 percent commission. The authority was on a first come, first serve basis.Constante signed the note as owner and as representative of the other co-owners. Under this note, a contract of agency was clearly constituted between Constante and Artigo. Whether Constante appointed Artigo as agent, in Constante's individual or representative capacity, or both, the De Castros cannot seek the dismissal of the case for failure to implead the other co-owners as indispensable parties. The De Castros admit that the other co-owners are solidarily liable under the contract of agency,10 citing Article 1915 of the Civil Code, which reads:Art. 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.The solidary liability of the four co-owners, however, militates against the De Castros' theory that the other co-owners should be impleaded as indispensable parties.When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in a contract of agency, each obligor may be compelled to pay the entire obligation.12 The agent may recover the whole compensation from any one of the co-principals, as in this case.Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the solidary debtors. This article reads:Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected.Thus, the Court has ruled in Operators Incorporated vs. American Biscuit Co., Inc. that"x x x solidarity does not make a solidary obligor an indispensable party in a suit filed by the creditor. Article 1216 of the Civil Code says that the creditor `may proceed against anyone of the solidary debtors or some or all of them simultaneously'." (Emphasis supplied)
17. Dominion Insurance v CA, 376 scra 239
Doctrine: There must be an actual intention by the principal to appoint and on the part of the agent an intention to accept the appointment and act on it, otherwise there is generally no agency
This is an appeal via certiorari from the decision of the Court of Appeals affirming the decision of the Regional Trial Court, Branch 44, San Fernando, Pampanga, which ordered petitioner Dominion Insurance Corporation (Dominion) to pay Rodolfo S. Guevarra (Guevarra) the sum of P156,473.90 representing the total amount advanced by Guevarra in the payment of the claims of Dominion’s clients. Facts:
January 25, 1991: Rodolfo S. Guevarra instituted Civil Case No. 8855 for sum of money against Dominion Insurance Corporation. Plaintiff sought to recover thereunder the sum of P156,473.90 which he claimed to have advanced in his capacity as manager of defendant to satisfy certain claims filed by defendant’s clientsDominion denied any liability to Guevarra and asserted a counterclaim for P249,672.53, representing premiums that plaintiff allegedly failed to remit.August 8, 1991: Dominion filed a third-party complaint against Fernando Austria, who, at the time relevant to the case, was its Regional Manager for Central Luzon area.Pre-trial reset for many timesMay 22, 1992 the case was again called for pre-trial conference. Only plaintiff and counsel were present. Despite due notice, defendant and counsel did not appear, although a messenger, Roy Gamboa, submitted to the trial court a handwritten note sent to him by defendant’s counsel which instructed him to request for postponement. Plaintiff’s counsel objected to the desiredpostponement and moved to have defendant declared as in default. TC granted motion.Plaintiff presented his evidence on June 16, 1992. This was followed by a written offer of documentary exhibits on July 8 and a supplemental offer of additional exhibits on July 13, 1992. The exhibits were admitted in evidence in an order dated July 17, 1992.August 7, 1992: defendant corporation filed a ‘MOTION TO LIFT ORDER OF DEFAULT.’ denied. MR also deniedTC decided in favor of Guerrero. CA affirmed TC’s decision. MR denied. Hence, the petition.
Issue: (1) whether respondent Guevarra acted within his authority as agent for petitioner(2) whether respondent Guevarra is entitled to reimbursement of amounts he paid out of his personal money in settling the claims of several insured.
Held:The petition is without merit.By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. The basis for agency is representation. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferrable from his words or actions; and on the part of the agent, there must be an intention to accept the appointment and act on it, and in the absence of such intent, there is generally no agency.A perusal of the Special Power of Attorney would show that petitioner (represented by third-party defendant Austria) and respondent Guevarra intended to enter into a principal-agent relationship. Despite the word “special” in the title of the document, the contents reveal that what was constituted was actually a general agency.
