BARRANTES, Hannah RUniversity of Asia and the Pacific

Eurotech v. CuizonGR No. 176552; 23 April 2007

In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latter’s consent.The underlying principle of the contract of agency is to accomplish results by using the services of others—to do a great variety of things like selling, buying, manufacturing, and transporting.Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act.It is said that the basis of agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal.By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence—qui facit per aliumfacit per se.The elements of the contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority.

…the position of manager is unique in that it presupposes the grant of broad powers with which to conduct the business of the principal, thus:

“The powers of an agent are particularly broad in the case of one acting as a general agent or manager; such a position presupposes a degree of confidence reposed and investiture with liberal powers for the exercise of judgment and discretion in transactions and concerns which are incidental or appurtenant to the business entrusted to his care and management. In the absence of an agreement to the contrary, a managing agent may enter into any contracts that he deems reasonably necessary or requisite for the protection of the interests of his principal entrusted to his management. xxx.”

Respondent EDWIN’s participation in the Deed of Assignment was “reasonably necessary” or was required in order for him to protect the business of his principal. Had he not acted in the way he did, the business of his principal would have been adversely affected and he would have violated his fiduciary relation with his principal.

Rallos v. Felix Go ChanGR No. L-24332; 31 January 1978

By the relationship of agency, one party called the principal authorizes another called the agent to act for and in his behalf in transactions with third persons. The essential elements of agency are:(l) there is consent, express or implied, of the parties to establish the relationship: (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; and (4) the agent acts within the scope of his authority. Agency is basically personal, representative, and derivative in nature. The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority. “He who acts through another acts himself.”

Reason of the very nature of the relationship between principal and agent, agency is extinguished by the death of the principal. Manresa explains that the rationale for the law is found in the juridical basis of agency which is representation. Laurent says that the juridical tie between the principal and the agent is severed ipso jure upon the death of either without necessity for the heirs of the principal to notify the agent of the fact of death of the former. The same rule prevails at common law—the death of the principal effects instantaneous and absolute revocation of the authority of the agent unless the power be coupled with an interest. This is the prevalent rule in American jurisprudence where it is well-settled that a power without an interest conferred upon an agent is dissolved by the principal’s death, and any attempted execution of the power afterwards is not binding on the heirs or representatives of the deceased.

Severino v. SeverinoGR No. 18058; 16 January 1923

The relations of an agent to his principal are fiduciary and it is an elementary and very old rule that in regard to property forming the subject-matter of the agency, he is estopped from acquiring or asserting a title adverse to that of the principal. His position is analogous to that of a trustee and he cannot consistently, with the principles of good faith, be allowed to create in himself an interest in opposition to that of his principal or cestuique trust.

Orient Air Services and Hotel Representatives v. Court of Appeals197 SCRA 645; 1991

In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court.

Bordador v. LuzGR No. 130148; 15 December 1997

The basis for agency is representation. There is no agency when there is no showing that an alleged principal consented to the acts of the alleged agent or authorized him to act on his/her behalf.

A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.

Apex Mining Co. Inc. v. Southeast MindanaoGR No. 152613 & 152628; 23 June 2006

For a contract of agency to exist, it is essential that the principal consents that the other party, the agent, shall act on its behalf, and the agent consents so as to act. The existence of the elements of agency is a factual matter that needs to be established or proven by evidence. The burden of proving that agency is extant in a certain case rests in the party who sets forth such allegation. This is based on the principle that he who alleges a fact has the burden of proving it. It must likewise be emphasized that the evidence to prove this fact must be clear, positive and convincing.

Difference of Agency and Assignment

The concept of agency is distinct from assignment. In agency, the agent acts not on his own behalf but on behalf of his principal.While in assignment, there is total transfer or relinquishment of right by the assignor to the assignee.The assignee takes the place of the assignor and is no longer bound to the latter.

On subsidiary ownership

Whole subsidiary ownership is not an agency. A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence. It is an artificial being invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related.

Dela Cruz v. Northern TheatricalGR No. L-7089; 31 August 1954

The relationship between the movie corporation and the plaintiff was not that of principal and agent because the principle of representation was in no way involved. Plaintiff was not employed to represent the defendant corporation in its dealings with third parties. He was a mere employee hired to perform a certain specific duty or task, that of acting as special guard and staying at the main entrance of the movie house to stop gate crashers and to maintain peace and order within the premises.

Tuazon v. Heirs of RamosGR No. 156262; 14 July 2005

The question of whether a contract is one of sale or of agency depends on the intention of the parties.

The declarations of agents alone are generally insufficient to establish the fact or extent of their authority.The law makes no presumption of agency; proving its existence, nature and extent is incumbent upon the person alleging it.

Victorias Milling v. Court of AppealsGR No. 117356; 19 June 2000

…the basis of agency is representation.On the part of the principal, there must be an actual intention to appointor an intention naturally inferable 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.One factor which most clearly distinguishes agency from other legal concepts is control; one person—the agent— agrees to act under the control or direction of another—the principal. Indeed, the very word “agency” has come to connote control by the principal.The control factor, more

than any other, has caused the courts to put contracts between principal and agent in a separate category.

The question of whether a contract is one of sale or agency depends on the intention of the parties as gathered from the whole scope and effect of the language employed.

Anauthorization given containing the phrase “for and in our behalf” does not establish an agency. Ultimately, what is decisive is the intention of the parties.The use of the words “sold and endorsed“ means that the parties intended a contract of sale, and not an agency.

Loadmasters Customs Services, Inc. v. Glodel Brokerage Corporation639 SCRA 69; 2011

The elements of a contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority.

Accordingly, there can be no contract of agency between the parties. Loadmasters never represented Glodel. Neither was it ever authorized to make such representation. It is a settled rule that the basis for agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of the agent, there must be an intention to accept the appointment and act on it. Such mutual intent is not obtaining in this case.

Westmont Investment Corporation v. Amos Francia661 SCRA 787; 2011

In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latter’s consent. It is said that the underlying principle of the contract of agency is to accomplish results by using the services of others—to do a great variety of things. Its aim is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. Its basis is representation.

Significantly, the elements of the contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority.

In this case, the principal-agent relationship between the Francias and Wincorp was not duly established by evidence. The records are bereft of any showing that Wincorp merely brokered the loan transactions between the Francias and Pearlbank and the latter was the actual recipient of the money invested by the former. Pearlbank did not authorize Wincorp to borrow money for it. Neither was there a ratification, expressly or

impliedly, that it had authorized or consented to said transaction.

Soriamont Steamship Agencies vs. Sprint Transport Services

1. The settled rule is that persons dealing with an assumed agent are bound at their peril, and if they would hold the principal liable, they must ascertain not only the fact of agency, but also the nature and extent of authority.

2. It is true that a person dealing with an agent is not authorized, under any circumstances, to trust blindly the agent’s 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.

J. Phil Marine vs. NLRC

1. Only the employee, not his counsel, who can impugn the consideration of the compromise as being unconscionable; The relation of attorney and client is in many respects one of agency, and the general rules of agency apply to such relation.

2. The circumstances of this case indicate that the employee’s counsel acted beyond the scope of his authority in questioning the compromise agreement; That a client has undoubtedly the right to compromise a suit without the intervention of his lawyer cannot be gainsaid, the only qualification being that if such compromise is entered into with the intent of defrauding the lawyer of the fees justly due him, the compromise must be subject to the said fees.

Filipinas Life Assurance vs. Pedroso

1. The general rule is that the principal is responsible for the acts of its agent done within the scope of its authority and should bear the damage caused to third persons; The acts of an agent beyond the scope of his authority do not bind the principal, unless the principal ratifies them, expressly or impliedly.

2. When the agent exceeds his authority, the agent becomes personally liable for the damage. But even when the agent exceeds his authority, the principal is still solidarily liable together with the agent if the principal allowed the agent to act as though the agent had full powers.

3. In other words, the acts of an agent beyond the scope of his authority do not bind the principal, unless the principal ratifies them, expressly or impliedly. Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority.

4. Innocent third persons should not be prejudiced if the principal failed to adopt the needed measures to prevent misrepresentation, much more so if the principal ratified his agent’s acts beyond the latter’s authority. The act of the agent is considered that of the principal itself.

5. “Qui per alium facit per seipsum facere videtur” He who does a thing by an agent is considered as doing it himself.

Tan vs GVT Engineering Services

1. The essence of agency being the representation of another, it is evident that the obligations contracted are for and onbehalf of the principal.

2. A consequence of this representation is the liability of the principal for the acts of his agent performed within the limits of his authority that is equivalent to the performance by the principal himself who should answer therefor.

Litonjua vs Eternit Corporation

1. 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.

2. Consent of both principal and agent is necessary to create an agency. The principal must intend that the agent shall act for him; the agent must intend to accept the authority and act on it, and the intention of the parties must find expression either in words or conduct between them.

3. An agency may be expressed or implied from the act of the principal, from his silence or lack of action, or failure to repudiate the agency.

4. A person dealing with a known agent is not authorized, under any circumstances, blindly to trust the agent’s 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

5. 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 suchauthority; (2) the third person, in good faith, relied upon such representation; (3) relying upon such representation, such third person has changed his position to his detriment.

6. An agency by estoppel, which is similar to the doctrine of apparent authority, requires proof of reliance upon the representations, and that, in turn, needs proof that the representations predated the action taken in reliance.

Amon Trading vs Court of Appeals

1. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable 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.

2. One factor which most clearly distinguishes agencyfrom other legal concepts is control; one person, the agent, agrees to act under the control or direction of another, the principal. Indeed, the very word “agency” has come to connote control by the principal. The control factor, more than any other, has caused the courts to put contracts between principal and agent in a separate category.

Yu Eng Cho vs. Pan American World Airways

1. 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.

2. The elements of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority.

3. It is a settled rule that persons dealing with an assumed agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it.

Eurotech vs. Cuison

1. The underlying principle of the contract of agency is to accomplish results by using the services of others·to do a great variety of things like selling, buying, manufacturing, and transporting

2. By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence “qui facit per alium facit per se”.

Doles vs Angeles

1. The basis of agency is representation; The question of whether an agency has been created is ordinarily a question which may be established in the same way as any other fact, either by direct or circumstantial evidence; Though that fact or extent of authority of the agents may not, as a general rule, be established from the declarations of the agents alone, if one professes to act as agent for another, she may be estopped to deny her agency both as against the asserted principal and the third persons interested in the transaction in which he or she is engaged.

2. For an agency to arise, it is not necessary that the principal personally encounter the third person with whom the agent interacts, precisely, the purpose of agency is to extend the personality of the principal through the facility of the agent.

3. If the principals do not actually and personally know each other, such ignorance does not affect their juridical standing as agents.

4. If an act done by one person in behalf of another is in its essential nature one of agency, the former is the agent of the latter notwithstanding he or she is not so called it will be an agency whether the parties understood the exact nature of the relation or not.

Uy and Roxas vs. Court of Appeals

1. An agent of the seller is not a party to the contract of sale between his principal and the buyer; Since a contract may be violated only by the parties thereto as against each other, the real parties-in-interest, either as plaintiff or defendant, in an action upon that contract must, generally, either be parties to said contract.

2. An agent, in his own behalf, may bring an action founded on a contract made for his principal, as an assignee of such contract

Angeles vs PNR

1. Normally, the agent has neither rights nor liabilities as against the third party; he cannot thus sue or be sued on the contract.

2 A power of attorney is only but an instrument in writing by which a person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts on behalf of the principal. The written authorization itself is the power of attorney, and this is clearly indicated by the fact that it has also been called a “letter of attorney”. Its primary purpose is not to define the authority of the agent as between himself and his principal but to evidence the authority of the agent to third parties with whom the agent deals.

Ong vs Court of Appeals

1. It is a well-settled rule that the law of agency governing civil cases has no application in criminal cases.When a person participates in the commission of a crime, he cannot escape punishment on the ground that he simply acted as an agent of another party.

PNB vs. Ritratto

1. In a foreclosure of a mortgage undertaken by an attorney-in-fact, the validity of a loan contract cannot be raised against said agent, as the matter is solely between the principal and the other party to the contract; An agent not a party to a contract of loan has no power to re-compute the interest rates set forth in the contract.

2. The doctrine of piercing the corporate veil of corporate fiction is an equitable doctrine developed to address situations where the separate corporate personality of a corporation is abused or used for wrongful purposes.

3. A suit against an agent cannot without compelling reasons be considered a suit against the principal.

Francisco vs GSIS.

1. If a private corporation intentionally or negligently clothes its officers or agents with apparent power to perform acts for it, the corporation will be estopped to deny that such apparent authority is real, as to innocent third persons dealing in good faith with such officers or agents.

SUNACE INTERNATIONAL MANAGEMENT SERVICESv. NATIONAL LABOR RELATIONS COMMISSION

480 SCRA 146 (2006)

There is an implied revocation of an agency relationship when after the termination of the original employment contract, the foreign principal directly negotiated with the employee and entered into a new and separate employment contract. Contrary to the Court of Appeals finding, the alleged continuous communication was with the Taiwanese broker Wang, not with the foreign employer.

COSMIC LUMBER CORPORATION V CA – G.R. No. 114311

When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing; otherwise, the sale should be void. Thus, the authority of an agent to execute a contract for the sale of real estate must be conferred in writing and must give him specific authority, either to conduct the general business of the principal or to execute a binding contract containing terms and conditions which are in the contract he did execute. For the principal to confer the right upon an agent to sell real estate, a power of attorney must so express the powers of the agent in clear and unmistakable language.It is therefore clear that by selling to Perez a portion of Cosmic Lumber’s land through a compromise agreement, Villamil-Estrada acted without or in obvious authority. The sale ipso jure is consequently void and so is the compromise agreement. This being the case, the judgment based thereon is necessarily void.

New Life Enterprises and Sy v. Court of AppealsG.R. No. 94071 31 March 1992

A rule in insurance law that any information material to the transaction, either possessed by the agent at the time of the transaction or acquired by him before its completion, is deemed to be the knowledge of the principal, at least so far as the transaction is concerned, even though in fact the knowledge is not communicated. The knowledge of such insurance by the insurer's agents, even assuming the acquisition thereof by the former, is not the "notice" that would estop the insurers from denying the claim. The theory of imputed knowledge, that is, knowledge of the agent is knowledge of the principal, is not applicable in this case.

Doles vs. AngelesGR 149353, 26 June 2006

Yes. Doles was an agent for her friends, Angeles was an agent for Pua. They are not creditors and debtors of each other. It is not material if respective principals do not meet, for the purpose of agency is to extend personality through the use of agents. Agents are estopped from denying the existence of agency if their actions prove otherwise.

VICTORIAS MILLING CO. vs. COURT OF APPEALS and CONSOLIDATED SUGAR CORPORATIONGR No. 117356

CSC was a buyer of the SLDR form, and not an agent of STM. CSC was not subject to STM's control. The question of whether a contract is one of sale or agency depends on the intention of the parties as gathered from the whole scope and effect of the language employed. CSC communicated to VMC that the SLDR had been “sold and endorsed” to it by STM. The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale, and not an agency.The basis of agency is representation. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable 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.

Sevilla vs. CAGR No. L-41182-3

The records show that petitioner, Sevilla, was not subject to control by the private respondent TWS. That does not make her an employee of TWS, since a true employee cannot be made to part with his own money in pursuance of his employer’s business, or otherwise, assume any liability thereof. It is further admitted that Sevilla was not in the company’s payroll. For her efforts, she retained 4% in commissions from airline bookings, the remaining 3% going to TWS. Unlike an employee, who earns a fixed salary, she earned compensation in fluctuating amount depending on her booking successes.

Lirio v. Genovia- 661 SCRA 126

It was not partnership but an employer-employee relationship. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct. Lirio failed to prove that his relationship with respondent was one of partnership. Such claim was not supported by any written agreement. It is a well-settled doctrine, that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence or in the interpretation of agreements and writing should be resolved in the former’s favor.

Tongko vs. The Manufacturer’s Life Insurance CoG.R. No. 167622

Mere usage of the term “Agent/Agency” does not automatically make the relationship as such. The intent and actions of the parties may be different than what is assumed on face value.In the instant case, Manulife had the power of control over Tongko that would make him its employee. Several factors contribute to this conclusion.In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that:The Agent hereby agrees to comply with all regulations and requirements of the Company.Under this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with the regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses.Among the company regulations of Manulife are the different codes of conduct such as the Agent Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct Agreement, which demonstrate the power of control exercised by the company over Tongko.

NIELSON & COMPANY, INCvs. LEPANTO CONSOLIDATED MINING COMPANY - 26 SCRA 540

In the old Civil Code, Article 1709 defines the contract of agency as “one person binds himself to render some service or to do something for the account or at the request of another.” While Article 1544 defines contract of lease of service as “in a lease of work or services, one of the parties binds himself to make or construct something or to render a service to the other for a price certain.”

The court determined the nature of the management contract in question wherein there was agreement for Nielson for 5 years had the right to renew, to explore, to develop, and to operate the mining claims of Lepanto. In the performance of this principal undertaking Nielson was not acting as an agent but one as performing material acts for an employer, for a compensation.

FresselvsUy Chaco - GR No. 10918 (1916)

Merritt is an independent contractor. Where one party to contract was authorized to do work according to his own method and without being subject to the other party’s control, except as to the result of the work, he is an independent contractor and not an agent.In the absence of a statute creating what is known as mechanic’s liens, the owner of a building is not liable for the value of the materials purchased by an independent contractor either as such owner or as the assignee of the contractor.

The Shell Company of the Philippines VS.Firemen’s Insurance CompanyGR No. L-8169

De la Fuente was merely an agent of the station “by grace” of the defendant company which could and did remove him as it pleased; As the act of the agent or his employees acting within the scope of authority, is the act of the principal, the breach of undertaking by an agent makes the principal liable. The company must answer for the negligent acts of its mechanic.

LITONJUA VS LITONJUAGR No. 166299-300

The partnership is void and legally nonexistent. The documentary evidence presented by Aurelio, did not prove partnership.The 1973 letter from Eduardo on its face, contains typewritten entries, personal in tone, but is unsigned and undated. As an unsigned document, there can be no quibbling that said letter does not meet the public instrumentation requirements exacted under Article 1771 (how partnership is constituted) of the Civil Code. Moreover, being unsigned and doubtless referring to a partnership involving more than P3,000.00 in money or property, said letter cannot be presented for notarization, let alone registered with the Securities and Exchange Commission (SEC), as called for under the Article 1772 (capitalization of a partnership) of the Code.The Memorandum is also not a proof of the partnership for the same is not a public instrument. Article 1773 of the Civil Code requires that if immovable property is contributed to the partnership an inventory shall be had and attached to the contract.

Deganos v. PeopleG.R. No. 162826

Novation is not a mode of extinguishing criminal liability under the penal laws of the country. Only the State may validly waive the criminal action against an accused. Novation is relevant only to determine if the parties have meanwhile altered the nature· of the obligation prior to the commencement of the criminal prosecution in order to prevent the incipient criminal liability of the accused.

Angeles vs. Philippine National Railways (PNR)G.R. No. 150128. August 31, 2006

Agency; Assignee; The legal situation is different where an agent is constituted as an assignee.—The legal situation is, however, different where an agent is constituted as an assignee. In such a case, the agent may, in his own behalf, sue on a contract made for his principal, as an assignee of such contract. The rule requiring every action to be prosecuted in the name of the real party-in-interest recognizes the assignment of rights of action and also recognizes that when one has a right assigned to him, he is then the real party-in-interest and may maintain an action upon such claim or right.

Victorias Milling Co., Inc. vs. Court of Appeals 333 SCRA 663(2000)

Agency; The basis of agency is representation—on the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of the agent, there must be an intention to accept the appointment and act on it; One factor which most clearly distinguishes agency from other legal concepts is control—one person (the agent) agreeing to act under the control

or direction of another (the principal).—It is clear from Article 1868 that the basis of agency is representation. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable 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. One factor which most clearly distinguishes agency from other legal concepts is control; one person—the agent—agrees to act under the control or direction of another—the principal. Indeed, the very word “agency” has come to connote control by the principal. The control factor, more than any other, has caused the courts to put contracts between principal and agent in a separate category.

An authorization given to another containing the phrase “for and in our behalf” does not necessarily establish an agency, as ultimately, what is decisive is the intention of the parties, and the use of the words “sold and endorsed” means that the parties intended a contract of sale, and not an agency.—It appears plain to us that private respondent CSC was a buyer of the SLDFR form, and not an agent of STM. Private respondent CSC was not subject to STM’s control. The question of whether a contract is one of sale or agency depends on the intention of the parties as gathered from the whole scope and effect of the language employed. That the authorization given to CSC contained the phrase “for and in our (STM’s) behalf” did not establish an agency. Ultimately, what is decisive is the intention of the parties. That no agency was meant to be established by the CSC and STM is clearly shown by CSC’s communication to petitioner that SLDR No. 1214M had been “sold and endorsed” to it. The use of the words “sold and endorsed” means that STM and CSC intended a contract of sale, and not an agency. Hence, on this score, no error was committed by the respondent appellate court when it

Hahn vs. Court of Appeals266 SCRA 537(1997)

Actions; Pleadings and Practice; It is now settled that, for purposes of having summons served on a foreign corporation in accordance with Rule 14, §14, it is sufficient that it be alleged in the complaint that the foreign corporation is doing business in the Philippines.—Anyway, private respondent need not apprehend that by responding to the summons it would be waiving its objection to the trial court’s jurisdiction. It is now settled that, for purposes of having summons served on a foreign corporation in accordance with Rule 14, §14, it is sufficient that it be alleged in the complaint that the foreign corporation is doing business in the Philippines. The court need not go beyond the allegations of the complaint in order to determine whether it has jurisdiction. A determination that the foreign corporation is doing business is only tentative and is made only for the purpose of enabling the local court to acquire jurisdiction over the foreign corporation through service of summons pursuant to Rule 14, §14. Such determination does not foreclose a contrary finding should evidence later show that it is not transacting business in the country.

Agency; Words and Phrases; “Agent” and “Broker,” Distinguished.—An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made.

The fact that a person invested his own money to put service centers and showrooms does not necessarily prove that he is not an agent of a car manufacturer.—As to the service centers and showrooms which he said he had put up at his own expense, Hahn said that he had to follow BMW specifications as exclusive dealer of BMW in the Philippines. According to Hahn, BMW periodically inspected the service centers to see to it that BMW standards were maintained. Indeed, it would seem from BMW’s letter to Hahn that it was for Hahn’s alleged failure to maintain BMW standards that BMW was terminating Hahn’s dealership. The fact that Hahn invested his own money to put up these service centers and showrooms does not necessarily prove that he is not an agent of BMW. For as already noted, there are facts in the record which suggest that BMW exercised control over Hahn’s activities as a dealer and made regular inspections of Hahn’s premises to enforce compliance with BMW standards and specifications.

Lim vs. People133 SCRA 333(1984)

Agency; Estafa is present where contract to sell constituted another as mere agent.—Aside from the fact that Maria Ayroso testified that the appellant asked her to be her agent in selling Ayroso’s tobacco, the appellant herself admitted that there was an agreement that upon the sale of the tobacco she would be given something. The appellant is a businesswoman, and it is unbelievable that she would go to the extent of going to Ayroso’s house and take the tobacco with a jeep which she had brought if she did not intend to make a profit out of the transaction. Certainly, if she was doing a favor to Maria Ayroso and it was Ayroso who had requested her to sell her tobacco, it would not have been the appellant who would have gone to the house of Ayroso, but it would have been Ayroso who would have gone to the house of the appellant and deliver the tobacco to the appellant.”

Sale; There is no contract of sale, but mere agency to sell, where agreement was to pay over to tobacco owner the proceeds thereof as soon as it was sold.—The fact that appellant received the tobacco to be sold at P1.30 per kilo and the proceeds to be given to complainant as soon as it was sold, strongly negates transfer of ownership of the goods to the petitioner. The agreement (Exhibit “A”) constituted her as an agent with the obligation to return the tobacco if the same was not sold.

Chua Ngo vs. Universal Trading Co., Inc.87 Phil. 331(1950)

PURCHASE AND SALE; PART OF GOODS LOST IN TRANSIT; WHO IS TO SUFFER THE LOSS.—Chua Ngo purchased and paid for 300 boxes of oranges from Universal Trading Co. In turn, the latter purchased from Gabuardi Company of San Francisco F. O. B. San Francisco sufficient fruit to comply with its contract with Chua Ngo. Part of the orange consignment from Gabuardi Company of San Francisco was lost in transit and so Chua Ngo received 120 boxes only. Held, as between Gabuardi Company and Universal Trading Co., the loss must be borne by the latter, said goods having been legally delivered to the purchaser at San Francisco on board the vessel; Chua Ngo, as a consequence, is entitled to be paid back for the price paid for the undelivered goods.

QUIROGA vs. PARSONS HARDWARE Co.38 Phil. 501(1918)

SALES; INTERPRETATION OF CONTRACT.—For the classification of contracts, due regard must be paid to their essential clauses. In the contract in the instant case, what was essential, constituting its cause and subject matter, was that the plaintiff was to furnish the defendant with the beds which the latter might order, at the stipulated price, and that the defendant was to pay this price in the manner agreed upon. These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds, and, on that of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatary or agent receives the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. Held: That this contract is one of purchase and sale, and not of commercial agency.

American Rubber Company vs. Collector of Internal Revenue64 SCRA 569(1975)

Contracts; Essence of contract determines law applicable to relationship between the parties.—As a general rule the essence of a contract determines what law should apply to the relation between the parties and not what the parties prefer to call that relationship. However, only the acts of the contracting parties, subsequent to and in connection with the execution of the contract, must be considered for the purpose of interpreting the same.

Ker & Co., Ltd. vs. Lingad38 SCRA 524(1971)

The mere disclaimer in a contract that an entity like petitioner is not “the agent or legal representative x xx for any purpose whatsoever” does not suffice to yield the conclusion that it is an independent merchant if the control over the goods for resale of the goods consigned is pervasive in character.

Puyat& Sons, Inc. vs. Arco Amusement Co.72 Phil. 402(1941)

CONTRACTS; PURCHASE AND SALE; INTERPRETATION.—The contract is the law between the parties and should include all the things they are supposed to have been agreed upon. What does not appear on the face of the contract should be regarded merely as "dealer's" or "trader's talk", which can not bind either party. (Nolbrook v. Conner, 56 So., 576; 11 Am. Rep., 212; Bank v. Brosscell, 120 111., 161; Bank v. Palmer, 47 111., 92; Hosser v. Copper, 8 Allen, 334; Doles v. Merrill, 173 Mass., 411.) The letters, Exhíbits 1 and 2, by which the respondent accepted the prices of $1,700 and $1,600, respectively, for the sound reproducing equipment subject of its contract with the petitioner, are clear in their terms and admit of no other interpretation than that the respondent agreed to purchase from the petitioner the equipment in question at the prices indicated which are fixed and determinate. The respondent admitted in its complaint filed with the Court of First Instance of Manila that the petitioner agreed to sell to it the first sound reproducing equipment and machinery.

Jimenez vs. Rabot.38 Phil. 378(1918)

SALE OP LAND; POWER OF ATTORNEY; SPECIFIC DESCRIPTION OP PROPERTY UNNECESSARY.—Where the owner of real property desires to confer upon an attorney in fact authority to sell the same, it is necessary that the authority should be expressed in writing; but it is not necessary that the property to be sold should be precisely described. It is sufficient if the authority is so expressed as to determine without doubt the limits of the agent's authority.

The plaintiff, being the owner of three parcels of land, left the same in the care of his sister as his agent and went to live in another province. While so absent, he wrote her to sell one of his parcels and to send him the money. The sister found a purchaser and sold one of the parcels but failed to forward the proceeds to her brother. Afterwards the plaintiff returned and instituted an action to recover the parcel which had been sold. Held: That the authority to sell was sufficient and that the plaintiff could not recover.

City-Lite Realty Corporation vs. Court of Appeals325 SCRA 385(2000)

Civil Law; Sales; Agency; When the sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.—On the issue of whether a contract of sale was perfected between petitioner CITYLITE and respondent F.P. HOLDINGS acting through its agent Meldin Al G. Roy of Metro Drug, Art. 1874 of the Civil Code provides: “When the sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.” Petitioner anchors the authority of Metro Drug and Meldin Al G. Roy on (a) the testimonies of petitioner’s three (3) witnesses and the admissions of Roy and the lawyer of Metro Drug; (b) the sales brochure specifying Meldin Al G. Roy as a contact person; (c) the guard posted at the property saying that Metro Drug was the authorized agent; and, (d) the common knowledge among brokers that Metro Drug through Meldin Al G. Roy was the authorized agent of F.P. HOLDINGS to sell the property.

The Civil Code requires that an authority to sell a piece of land shall be in writing.—The Civil Code requires that an authority to sell a piece of land shall be in writing. The absence of authority to sell can be determined from the written memorandum issued by respondent F.P. HOLDINGS’ President requesting Metro Drug’s assistance in finding buyers for the property. The memorandum in part stated: “We will appreciate Metro Drug’s assistance in referring to us buyers for the property. Please proceed to hold preliminary negotiations with interested buyers and endorse formal offers to us for our final evaluation and appraisal.”

For lack of a written authority to sell the “Violago Property” on the part of Meldin Al G. Roy and/or Metro Drug, the sale should be as it is declared null and void.—This obviously meant that Meldin Al G. Roy and/or Metro Drug was only to assist F.P. HOLDINGS in looking for buyers and referring to them possible prospects whom they were supposed to endorse to F.P. HOLDINGS. But the final evaluation, appraisal and acceptance of the transaction could be made only by F.P. HOLDINGS. In other words, Meldin Al G. Roy and/or Metro Drug was only a contact person with no authority to conclude a sale of the property. In fact, a witness for petitioner even admitted that Roy

and/or Metro Drug was a mere broker, and Roy’s only job was to bring the parties together for a possible transaction. Consequently, we hold that for lack of a written authority to sell the “Violago Property” on the part of Meldin Al G. Roy and/or Metro Drug, the sale should be as it is declared null and void. Therefore the sale could not produce any legal effect as to transfer the subject property from its lawful owner, F.P. HOLDINGS, to any interested party including petitioner CITYLITE.

Cosmic Lumber Corporation vs. Court of Appeals265 SCRA 168(1996)

Agency; Special Powers of Attorney; Compromise Agreements; Sales; Pre-Trial; Ejectment; A special power of attorney for an agent to institute any action in court to eject all persons in the principal's lots so that the principal could take material possession thereof, and for this purpose, to appear at the pre-trial and enter into any stipulation of facts and/or compromise agreement but only insofar as this is protective of the rights and interests of the principal in the property, does not grant any power to the agent to sell the subject property nor a portion thereof.—We agree with petitioner. The authority granted Villamil-Estrada under the special power of attorney was explicit and exclusionary: for her to institute any action in court to eject all persons found on Lots Nos. 9127 and 443 so that petitioner could take material possession thereof, and for this purpose, to appear at the pre-trial and enter into any stipulation of facts and/or compromise agreement but only insofar as this was protective of the rights and interests of petitioner in the property. Nowhere in this authorization was Villamil-Estrada granted expressly or impliedly any power to sell the subject property nor a portion thereof. Neither can a conferment of the power to sell be validly inferred from the specific authority "to enter into a compromise agreement" because of the explicit limitation fixed by the grantor that the compromise entered into shall only be "so far as it shall protect the rights and interest of the corporation in the aforementioned lots" In the context of the specific investiture of powers to Villamil-Estrada, alienation by sale of an immovable certainly cannot be deemed protective of the right of petitioner to physically possess the same, more so when the land was being sold for a price of P80.00 per square meter, very much less than its assessed value of P250.00 per square meter, and considering further that petitioner never received the proceeds of the sale.

Ching vs. Bantolo687 SCRA 134

There is no question that the SPA executed by respondents in favor of petitioners is a contract of agency coupled with interest. This is because their bilateral contract depends upon the agency. Hence, it “cannot be revoked at the sole will of the principal”.

Sarsaba vs. Vda. De Te594 SCRA 410

The contract of agency is extinguished. However, while it may be true that with the death of Vda. De Te, the Special Power of Attorney she executed is rendered functus officio, this Court believes that the Attorney-in-fact has not lost his personality to prosecute this case. When this case was filed, by the Attorney-in-fact, Vda. De Te was

very much alive.The proper remedy is the Substitution of Heirs and not the dismissal of the case.

Estate of the Late Juliana DiezVda. De Gabriel vs. CIR421 SCRA 266

The death of the taxpayer automatically severed the legal relationship between her and her agent and such could not be revived by the mere fact that the agent and such could not be revived by the mere fact that the agent filed the principal’s Income Tax Return.

Therefore, none of Philtrust’s acts or omissions could bind the Estate of the taxpayer. Philtrust was never appointed as administrator of the Estate of the decedent. Their relationship had been inexistent for 3 years, which indicated that there was no legal relationship to the deceased or to her Estate.

Rallos vs. Felix Go Chan81 SCRA 251

No, it was invalid and ineffective. The contract of agency is extinguished by the death of the principal. Article 1931 is inapplicable in this case because Simeon knew of the death of his principal at the time he sold the latter’s share in Lot No. 5983 to Go Chan. The act is void ab initio.

It is only valid if these two conditions are present: (1) the agent acted without knowledge of the death of the principal; and (2) the third person who contracted with the agent himself acted in good faith.

Buason vs. Panuyas105 Phil. 795

Yes, it was valid and effective. The contention that as the death of the principal ended the authority of the agent, the sale made by the latter of the land in question after the death of the principal is null and void, is untenable.

It not having been shown that the agent knew of the principal’s demise and for that reason, the sale made by the agent is valid and effective with respect to third persons who have contracted with him in good faith. Hence, the conditions in Article 1931 apply and were both present in this case.

III. Kinds of AgencyA. As to Form: Oral v. Written

Pahud vs. Court of Appeals 597 SCRA 13(2009)

Under Article 1878, a special power of attorney is necessary for an agent to enter into a contract by which the ownership of an immovable property is transmitted or acquired, either gratuitously or for a valuable consideration. Such stringent statutory requirement has been explained in Cosmic Lumber Corporation v. Court of Appeals, 265 SCRA 168 (1996). We have repeatedly held that the absence of a written authority to sell a piece of land is, ipso jure, void, precisely to protect the interest of an unsuspecting owner from

being prejudiced by the unwarranted act of another. [Pahud vs. Court of Appeals, 597 SCRA 13(2009)]

Litonjua, Jr. vs. Eternit Corporation490 SCRA 204(2006)

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. The declarations of the agent alone are generally insufficient to establish the fact or extent of his/her authority. 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. Thus, when a sale of a piece of land or any portion thereof is through an agent, the authority of the latter shall be in writing, otherwise, the sale shall be void.

B. As to Manner of Constitution: Express v. Implied

Equitable PCI Bank vs. Ku355 SCRA 309(2001)

The Court is not wholly convinced by petitioner’s argument. The Affidavit of Joel Rosales states that he is “not the constituted agent of ‘Curato Divina Mabilog Nedo Magturo Pagaduan Law Office.’” An agency may be express but it may also be implied from the acts of the principal, from his silence, or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. Likewise, acceptance by the agent may also be express, although it may also be implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances. In this case, Joel Rosales averred that “[o]n occasions when I receive mail matters for said law office, it is only to help them receive their letters promptly,” implying that counsel had allowed the practice of Rosales receiving mail in behalf of the former. There is no showing that counsel had objected to this practice or took steps to put a stop to it. The facts are, therefore, inadequate for the Court to make a ruling in petitioner’s favor.

Calibo, Jr. vs. Court of Appeals 350 SCRA 427(2001)

There also does not appear to be any agency in this case. We agree with the Court of Appeals that: “As indicated in Article 1869, for an agency relationship to be deemed as implied, the principal must know that another person is acting on his behalf without authority. Here, appellee categorically stated that the only purpose for his leaving the subject tractor in the care and custody of Mike Abella was for safekeeping, and definitely not for him to pledge or alienate the same. If it were true that Mike pledged appellee’s tractor to appellant, then Mike was acting not only without appellee’s authority but

without the latter’s knowledge as well. Article 1911, on the other hand, mandates that the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. Again, in view of appellee’s lack of knowledge of Mike’s pledging the tractor without any authority from him, it stands to reason that the former could not have allowed the latter to pledge the tractor as if he had full powers to do so.”

De la Peña vs. Hidalgo 16 Phil. 450(1910)

The person who took charge of the administration of property without express authorization and without a power of attorney executed by the owner thereof, and performed the duties of his office without opposition or absolute prohibition on the owner's part, expressly communicated to the said person, is concluded to have administered the said property by virtue of an 'implied agency, in accordance with the provisions of article 1710 of the Civil Code, since the said owner of the property, knowing perfectly well that the said person took charge of the administration of the same, through designation by such owner's former agent who had to absent himself from the place for well-founded reasons, remained silent for nearly nine years. Although he did not send a new power of attorney to the said person who took charge of his property, the fact remains that, during the .period stated, he neither opposed nor prohibited the new agent with respect to the administration, nor did he appoint another person in his confidence; wherefore it must be concluded that this new agent acted by virtue of an implied agency, equivalent to a legitimate agency, tacitly conferred by the owner of the property administered.

Conde vs. Court of Appeals119 SCRA 245(1982)

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

Uniland Resources vs. Development Bank of the Philippines200 SCRA 751(1991)

More importantly, petitioner’s stance goes against the basic axiom in Civil Law that no one may contract in the name of another without being authorized by the latter, unless the former has by law a right to represent him. From this principle, among others, springs the relationship of agency which, as with other contracts, is one founded on mutual consent: the principal agrees to be bound by the acts of the agent and the latter in turn consents to render service on behalf or in representation of the principal.

C. As to Extent of Business Covered: General v. Special

Siasat vs. Intermediate Appellate Court

139 SCRA 238(1985)One does not have to undertake a close scrutiny of the document embodying the agreement between the petitioners and the respondent to deduce that the latter was instituted as a general agent. Indeed, it can easily be seen by the way general words were employed in the agreement that no restrictions were intended as to the manner the agency was to be carried out or in the place where it was to be executed. The power granted to the respondent was so broad that it practically covers the negotiations leading to, and the execution of, a contract of sale of petitioners' merchandise with any entity or organization.

Dominion Insurance Corporation vs. Court of Appeals376 SCRA 239(2002)

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 general power permits the agent to do all acts for which the law does not require a special power. Thus, the acts enumerated in or similar to those enumerated in the Special Power of Attorney do not require a special power of attorney.Article 1878, Civil Code, enumerates the instances when a special power of attorney is required. The pertinent portion that applies to this case provides that:“Article 1878. Special powers of attorney are necessary in the following cases:“(1) To make such payments as are not usually considered as acts of administration; “x x x      x x x      x x x“(15) Any other act of strict dominion.”The payment of claims is not an act of administration. The settlement of claims is not included among the acts enumerated in the Special Power of Attorney, neither is it of a character similar to the acts enumerated therein. A special power of attorney is required before respondent Guevarra could settle the insurance claims of the insured.

Woodchild Holdings, Inc. vs. Roxas Electric and Construction Company, Inc.436 SCRA 235(2004)

Powers of attorney are generally construed strictly and courts will not infer or presume broad powers from deeds which do not sufficiently include property or subject under which the agent is to deal. The general rule is that the power of attorney must be pursued within legal strictures, and the agent can neither go beyond it; nor beside it. The act done must be legally identical with that authorized to be done.

Shopper’s Paradise Realty & Development Corporation vs. Roque419 SCRA 93(2004)

In a contract of agency, the agent acts in representation or in behalf of another with the consent of the latter. Article 1878 of the Civil Code expresses that a special power of attorney is necessary to lease any real property to another person for more than one year. The lease of real property for more than one year is considered not merely an act of administration but an act of strict dominion or of ownership. A special power of attorney is thus necessary for its execution through an agent.

Veloso vs. Court of Appeals260 SCRA 593(1996)

An examination of the records showed that the assailed power of attorney was valid and regular on its face. It was notarized and as such, it carries the evidentiary weight conferred upon it with respect to its due execution. Thus, there was no need to execute a separate and special power of attorney since the general power of attorney had expressly authorized the agent or attorney in fact the power to sell the subject property. The special power of attorney can be included in the general power when it is specified therein the act or transaction for which the special power is required.

Lim Pin vs. Liao Tan115 SCRA 290(1982)

The requirements of a special power of attorney in Article 1878 of the Civil Code and of a special authority in Rule 138 of the Rules of Court refer to the nature of the authorization and not its form. The requirements are met if there is a clear mandate from the principal specifically authorizing the performance of the act. As early as 1906, this Court in Strong v. Gutierrez-Repide (6 Phil. 680) stated that such a mandate may be either oral or written, the one vital thing being that it shall be express. And more recently, We stated that, if the special authority is not written, then it must be duly established by evidence.

Duñgo vs. Lopena 6 SCRA 1007(1962)

It is true that a compromise is, in itself, a contract. It is as such that the Civil Code speaks of it in Article 2028. Moreover, under Article 1878 of the Civil Code, a third person cannot bind another to a compromise agreement unless he, the third person, has obtained a special power of attorney for that purpose from the party intended to be bound. However, although the Civil Code expressly requires a special power of attorney in order that one may compromise an interest of another, it is neither accurate nor correct to conclude that its absence renders the compromise agreement void. In such a case, the compromise is merely unenforceable. This results from its nature as a contract.

Ratification by client of compromise made by his attorney.—When it appears that the client, on becoming aware of the compromise and the judgment thereon, fails to repudiate promptly the action of his attorney, he will not afterwards be heard to contest its validity.

Vicente vs. Geraldez52 SCRA 210(1973)

Special powers of attorney are necessary, among other cases, in the following: to compromise and to renounce the right to appeal from a judgment. Attorneys have authority to bind their clients in any case by any agreement in relation thereto made in

writing. and in taking appeals, and in all matters of ordinary judicial procedure, but they cannot, without special authority, compromise their clients' litigation, or receive anything in discharge of their clients' claims but the full amount in cash. The compromised agreement dated January 30, 1969 was signed only by lawyers for petitioners and by the lawyers for the private respondent corporation. It is not disputed that the lawyers of respondent corporation had not submitted to the Court any written authority from heir client to enter into a compromise. The compromise agreement is not binding upon the respondent corporation.

The law specifically requires that "juridical persons may compromise only in the form and with the requisites which may be necessary to alienate their property." Under the corporation law the power to compromise or settle claims in favor of or against the corporation is ordinarily and primarily committed to the board of directors. This power may however be delegated either expressly or impliedly to other corporate officials or agents. Thus, it has been stated, that as a general rule, an officer or agent of the corporation has no power to compromise or settle a claim by or against the corporation, except to the extent that such power is given to him either expressly or by reasonable implication from the circumstances.Petitioners claim that private respondent's attorneys admitted twice in open court that they were authorized to compromise their client's case. On the other hand, said respondent's counsels denied that they ever represented to the court that they were authorized to enter into a compromise. Nowhere does it appear in the stenographic notes that respondent's lawyers ever made such representation. In any event, assuming arguendo that they did, such a self-serving assertion cannot properly be the basis for the conclusion that the respondent corporation had in fact authorized its lawyers to compromise the litigation.

The infirmity of the argument, that there was tacit ratification on the part of the corporation of the compromise agreement because it nominated Mr. Larry Marquez as its commissioner (to determine value of land in dispute) and Atty. Florentino V. Cardenas, the corporation's administrative manager, not only did not object but even affixed his signature to the agreement, is in their assumption that Atty. Cardenas as administrative manager had authority to bind the corporation or to compromise the case. Whatever authority the officers or agents of a corporation may have is derived from the board of directors, or other governing body, unless conferred by the charter of the corporation. A corporate officer's power as an agent of the corporation must therefore be sought from the statute, the charter, the by-laws, or in a delegation of authority to such officer, from the acts of the board of directors, formally expressed or implied from a habit or custom of doing business. In the case at bar no provision of the charter and bylaws of the corporation or any resolution or any other act of the board of directors has been cited from which we could reasonably infer that the administrative manager had been granted expressly or impliedly the power to bind the corporation or the authority to compromise the case. The signature of Atty. Cardenas on the agreement would therefore be legally ineffectual.

As regards the nomination of Mr. Marquez as commissioner, counsel for respondent corporation has explained, and this has not been disproven, that Atty. Cardenas, apparently on his own, submitted the same to the court. There is no iota of proof that when Mr. Marquez' name was submitted, the respondent corporation knew of the contents of the compromise agreement.

When unauthorized acts of agent binding upon corporation. —In order to ratify the unauthorized act of an agent and make it binding on the corporation, it must be shown that the governing body or officer authorized to ratify had full and complete knowledge of all the material facts connected with the transaction to which it relates. It cannot be assumed also that Atty. Cardenas, as administrative manager of the corporation, had authority to ratify. For ratification can never be made on the part of the corporation by the same persons who wrongfully assume the power to make the contract, but the ratification must be by the officer or governing body having authority to make such contract, and, as we have seen, must be with full knowledge.

Cosmic Lumber Corporation vs. Court of Appeals265 SCRA 168(1996)

The authority granted Villamil-Estrada under the special power of attorney was explicit and exclusionary: for her to institute any action in court to eject all persons found on Lots Nos. 9127 and 443 so that petitioner could take material possession thereof, and for this purpose, to appear at the pre-trial and enter into any stipulation of facts and/or compromise agreement but only insofar as this was protective of the rights and interests of petitioner in the property. Nowhere in this authorization was Villamil-Estrada granted expressly or impliedly any power to sell the subject property nor a portion thereof. Neither can a conferment of the power to sell be validly inferred from the specific authority "to enter into a compromise agreement" because of the explicit limitation fixed by the grantor that the compromise entered into shall only be "so far as it shall protect the rights and interest of the corporation in the aforementioned lots" In the context of the specific investiture of powers to Villamil-Estrada, alienation by sale of an immovable certainly cannot be deemed protective of the right of petitioner to physically possess the same, more so when the land was being sold for a price of P80.00 per square meter, very much less than its assessed value of P250.00 per square meter, and considering further that petitioner never received the proceeds of the sale.

The express mandate required by law to enable an appointee of an agency (couched) in general terms to sell must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the action mentioned.—When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. Thus the authority of an agent to execute a contract for

the sale of real estate must be conferred in writing and must give him specific authority, either to conduct the general business of the principal or to execute a binding contract containing terms and conditions which are in the contract he did execute. A special power of attorney is necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration. The express mandate required by law to enable an appointee of an agency (couched) in general terms to sell must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the act mentioned. For the principal to confer the right upon an agent to sell real estate, a power of attorney must so express the powers of the agent in clear and unmistakable language. When there is any reasonable doubt that the language so used conveys such power, no such construction shall be given the document.

When an agent is engaged in the perpetration of a fraud upon his principal for his own extrinsic benefit, he is not really acting for the principal but is really acting for himself, entirely outside the scope of his agency—the basic tenets of agency rest on the highest considerations of justice, equity and fair play, and an agent will not be permitted to pervert his authority to his own personal advantage.—It may be argued that petitioner knew of the compromise agreement since the principal is chargeable with and bound by the knowledge of or notice to his agent received while the agent was acting as such. But the general rule is intended to protect those who exercise good faith and not as a shield for unfair dealing. Hence there is a well-established exception to the general rule as where the conduct and dealings of the agent are such as to raise a clear presumption that he will not communicate to the principal the facts in controversy. The logical reason for this exception is that where the agent is committing a fraud, it would be contrary to common sense to presume or to expect that he would communicate the facts to the principal. Verily, when an agent is engaged in the perpetration of a fraud upon his principal for his own exclusive benefit, he is not really acting for the principal but is really acting for himself, entirely outside the scope of his agency. Indeed, the basic tenets of agency rest on the highest considerations of justice, equity and fair play, and an agent will not be permitted to pervert his authority to his own personal advantage, and his act in secret hostility to the interests of his principal trascends the power afforded him.

Mercado vs. Allied Banking Corporation, 528 SCRA 444(2007)

Same; Same; Same; Same; A special power of attorney is necessary in cases where real rights over immovable property are created or conveyed.—Under Article 1878 of the Civil Code, a special power of attorney is necessary in cases where real rights over immovable property are created or conveyed. In the SPA executed by Perla in favor of Julian on 28 May 1992, the latter was conferred with the authority to “sell, alienate, mortgage, lease and deal otherwise” the different pieces of real and personal property

registered in Perla’s name. The SPA likewise authorized Julian “[t]o exercise any or all acts of strict dominion or ownership” over the identified properties, and rights and interest therein. The existence and due execution of this SPA by Perla was not denied or challenged by petitioners.

Equally relevant is the rule that a power of attorney must be strictly construed and pursued. The instrument will be held to grant only those powers which are specified therein, and the agent may neither go beyond nor deviate from the power of attorney. Where powers and duties are specified and defined in an instrument, all such powers and duties are limited and are confined to those which are specified and defined, and all other powers and duties are excluded. This is but in accord with the disinclination of courts to enlarge the authority granted beyond the powers expressly given and those which incidentally flow or derive therefrom as being usual and reasonably necessary and proper for the performance of such express powers.

Bank of the Philippine Islands vs. De Coster47 Phil. 594(1925)

Where a person gave a power of attorney to an agent to appear for and represent her in all court proceedings, and where the .agent fails and neglects to appear and make a defense, the principal on a proper showing is not estopped from obtaining relief under section 113 of the Code of Civil Procedure.

Where a wife gave her husband a power of attorney "to loan and borrow money," and for such purpose to mortgage her property, and where the husband signed his wife's name to a note and gave a mortgage on her property to secure the note and the amount of the loan was actually paid to her husband in money at the time the note and mortgage were executed, the transaction is binding upon the wife under her power of attorney, regardless of What the husband may have done with the money which he obtained on the loan.

Philippine National Bank vs. Sta. Maria29 SCRA 303(1969)

A special power of attorney to mortgage real estate is limited to such authority to mortgage and does not carry with it the authority to contract obligation, unless the contrary is shown.

The grantor of a special power of attorney to mortgage a real estate is liable only to the extent that the real estate authorized by him to be mortgaged would be subject to foreclosure and sale to respond for the obligations contracted by the grantee of the

power but the grantor cannot be held personally liable for the payment of such obligations, in the absence of any ratification or other similar act that would estop the grantor from questioning or disowning such other obligations contracted by the grantee,

Ratification by the grantor or estoppel consist" ing in benefiting from the loan must be expressly shown and proven during the ,trial in order to hold the grantor liable for the loans contracted by the grantee of the special power of attorney.

Where a person expressly authorized another to mortgage and borrow money for and in his name, the liability of the two to the creditor is only joint, not joint and several or solidary. Pursuant to Article 1207 of Civil Code, "the concurrence of two or more debtors in one and the same obligation does not imply that x x x each one of them (debtors) is bound to render entire compliance with the prestation. There is solidary 'liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity."

Insular Drug Co. vs. National Bank, 58 Phil. 684(1933)

The right of an agent to indorse commercial paper is a very responsible power and will not be lightly Inferred. A salesman with authority to collect money belonging to his principal does not have the implied authority to indorse checks received in payment. Any person taking checks made payable to a corporation, which can act only by agents does so at his peril, and must abide by the consequences if the agent who indorses the same is without authority.When a bank accepts the indorsements on checks made out to a drug company of a salesman of the drug company and the indorsements of the salesman's wife and clerk, and credits the checks to the personal account of the salesman and his wife, permitting them to make withdrawals, the bank makes itself responsible to the drug company for the amounts represented by the checks, unless it is pleaded and proved that after the money was withdrawn from the bank, it passed to the drug company which thus suffered no loss.

Hodges vs. Salas and Salas63 Phil. 567(1936)

The pertinent clauses of the power of attorney from which may be determined the intention of the principals in authorizing their agent to obtain a loan, securing it with their real property, were quoted at, the beginning of the decision. The terms thereof are limited; the agent was thereby authorized only to borrow any amount of money which he deemed necessary. There is nothing, however, to indicate that the defendants had likewise authorized him to convert the money obtained by him to his personal use. With

respect to a power of attorney of special character, it cannot be interpreted as also authorizing the agent to use the money as he pleased, particularly when it does not appear that such was the intention of the principals, and in applying part of the funds to pay his personal obligations, he exceeded his authority (art. 1714, Civil Code; Bank of the Philippine Islands vs. De Coster, 47 Phil., 594 and 49 Phil., 574). In cases like the present one, it should be understood that the agent was obliged to turn over the money to the principals or, at least, place it at their disposal.

Bravo-Guerrero vs. Bravo465 SCRA 244(2005)

The Court agree with the trial court that Simona authorized Mauricio to dispose of the Properties when she executed the GPA. True, Article 1878 requires a special power of attorney for an agent to execute a contract that transfers the ownership of an immovable. However, the Court has clarified that Article 1878 refers to the nature of the authorization, not to its form. Even if a document is titled as a general power of attorney, the requirement of a special power of attorney is met if there is a clear mandate from the principal specifically authorizing the performance of the act.

Sargasso Construction & Development Corporation/Pick & Shovel, Inc./Atlantic Erectors, Inc. (Joint Venture) vs. Philippine Ports Authority

623 SCRA 260(2010)

The authority of government officials to represent the government in any contract must proceed from an express provision of law or valid delegation of authority—without such actual authority being possessed by Philippine Ports Authority’s (PPA’s) general manager, there could be no real consent, much less a perfected contract, to speak of.

The doctrine of apparent authority, in the realm of government contracts, has been restated to mean that the government is not bound by unauthorized acts of its agents, even though within the apparent scope of their authority; Apparent authority, or what is sometimes referred to as the “holding out” theory, or doctrine of ostensible agency, imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists.

Professional Services, Inc. vs. Agana513 SCRA 478(2007)

PSI’s liability is also anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of corporate negligence which have gained acceptance in the determination of a hospital’s liability for negligent acts of health professionals. The present case serves as a perfect platform to test the applicability of these doctrines, thus, enriching our jurisprudence. Apparent authority, or what is sometimes referred to as the “holding out” theory, or doctrine of ostensible agency or agency by estoppel, has its origin from the law of agency. It imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists. The concept is essentially one of estoppel and has been explained in this manner: “The principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent to assume, or which he holds the agent out to the public as possessing. The question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question.

Philippine Aluminum Wheels, Inc. vs. FASGI Enterprises, Inc., 342 SCRA 722(2000)

In this jurisdiction, it is clear that an attorney cannot, without a client’s authorization, settle the action or subject matter of the litigation even when he honestly believes that such a settlement will best serve his client’s interest.

It is an accepted rule that when a client, upon becoming aware of the compromise and the judgment thereon, fails to promptly repudiate the action of his attorney, he will not afterwards be heard to complain about it.

Nichimen Corporation (Manila Branch) vs. Court of Appeals378 SCRA 443(2002)

A broker, in general, is a middleman who acts for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern—he is, in more ways than one, an agent of both parties.—A broker, in general, is a middleman who acts for others, on a commission, negotiating contracts relative to property with the

custody of which he has no concern; he is, in more ways than one, an agent of both parties. His task is to bring the parties together and to get them to come to an agreement. A basic characteristic of a broker is that he acts not for himself, but for a third person, regardless of whether the fee paid to him is a fixed amount, regular or not, or whether the act performed by him can be performed by the principal or not. Strictly, a commission merchant differs from a broker in that he may buy and sell in his own name without having to disclose his “principal,” for which purpose, the goods are placed in his session and at his disposal, features that are not true in the case of a broker. The commission merchant thus maintains a relation not only with the parties but also with the property subject matter of the transaction. A dealer buys and sells for his own account.

Tan v. Heirs of Antonio Yamson, 684 SCRA 442 (2012)

The Court noted that the Authority to Look for Buyer/Buyers reveals does not

state that the sale of all seven lots was a prerequisite to the payment by petitioners of

Yamson’s commission. If petitioners’ intention was for Yamson to locate a buyer for all

their properties, then they should have stated it clearly in writing. With no such

stipulation, then it could be found that there was no such intention, following Section 9,

Rule 130 of the Revised Rules on Evidence which provides:

Sec. 9. Evidence of written agreements.—When the terms of an agreement have been

reduced to writing, it is considered as containing all the terms agreed upon and there

can be, between the parties and their successors in interest, no evidence of such terms

other than the contents of the written agreement. [Tan vs. Heirs of Antonio F. Yamson,

684 SCRA 442(2012)]

The petitioners purposely engaged Yamson as their broker and knowingly

authorized him to look for a buyer for their properties. Petitioners offered no other

testimony but their own to bolster their allegations. Their sole witness was Annie Tan

and uncorroborated by any other documentary or testimonial evidence.

The Court found Yamson entitled to his commission for the sale of the two lots.

Urban Bank v. Peña, 659 SCRA 442 (2012)

Yes. Peña should be paid for services rendered under the agency relationship

that existed between him and Urban Bank. In this case however there’s no evidence that

Urban Bank agreed to pay Peña a specific amount or percentage of amount for his

services, the Court applied the principle against unjust enrichment and on the basis of

quantum meruit. The agency of Peña comprised of services ordinarily performed by a

lawyer who is tasked with the job of ensuring clean possession by the owner of a

property. Furthermore, whether or not agency has been created is determined by the

fact that one is representing and acting for another. 

It must be noted however that the law makes no presumption of agency; proving

its existence, nature and extent is incumbent upon the person alleging it.

Finally, agency is presumed to be for compensation unless the contrary is

stipulated or intended.

Philippine Health-Care Providers, Inc. v. Carmela Estrada, 542 SCRA 616 (2008)

Yes. Contrary to Maxicare’s assertion, the trial and the appellate courts carefully

considered the facts of the case through records. Both courts concluded that Maxicare

successfully landed the Meralco account for the sale of healthcare plans only by virtue of

Estrada’s involvement and participation in the negotiations.

Estrada penetrated the Meralco market, initially closed Maxicare and laid the

groundwork for a business relationship. She was unable to participate in the

collection and remittance of premium dues to Maxicare for she was prevented

from doing so by the acts of Maxicare, its officers, and employees. As such she

is entitled to a commission.

PROCURING CAUSE: a cause originating a series of events which,

without break in their continuity, result in the accomplishment of the prime

objective of the employment of the broke.

Sanchez v Medicard Philippines Inc, 469 SCRA 616 (2008)

Yes. There was no aid from Sanchez in the consummation of the contract

creating the new scheme under Medicard and Unilab. The Court noted that in order for

an agent to be entitled to a commission, he must be the procuring cause of the sale. It

means that the measures employed by him and the efforts he exerted must result in a

sale as such the agent receives his commission only upon the successful conclusion of

a sale.

Furthermore, Medicard directly negotiated with Unilab, revoking its agency

contract with petitioner.   Revocation is authorized by Article 1924 wherein agency is

revoked if the principal directly manages the business entrusted to the agent, dealing

directly with third persons.

EXC: In Prats v CA – as a measure of equity an agent who is not the efficient

procuring cause is nonetheless entitled to his commission, where said agent,

notwithstanding the expiration of his authority, nonetheless, took diligent steps to

bring back together the parties, such that a sale was finalized and consummated

between them. Manotok Bros. v CA applied this rule - agent (in Manotok) is

entitled to a commission since he was the efficient procuring cause of the sale,

notwithstanding that the sale took place after his authority had lapsed.  

Inland Realty Investment Service, Inc. v. CA , 273 SCRA 70 (1997)

The Court stated that where a party is not the efficient procuring cause in

bringing about a sale, he is not entitled to the stipulated broker’s commission.

From Sept. 16, 1975 to Jan. 1, 1976, when Inland Realty had the alleged

authority to sell, it had nothing to show that they actively served their principal’s

interests, pursued to sell the shares in accordance with the terms and conditions, and

performed substantial acts that led to the consummation of the sale to Stanford of

Araneta, Inc.’s shares.

Prats v. CA, 81 SCRA 360

The Court ruled that as a measure of equity an agent who is not the efficient

procuring cause is nonetheless entitled to his commission, where said agent,

notwithstanding the expiration of his authority, nonetheless, took diligent steps to bring

back together the parties, such that a sale was finalized and consummated between

them.

Reyes v. Mosqueda, 99 Phil 241

The Court noted that the actual sale was perfected and consummated without

the intervention of plaintiff Reyes, and what is more, before that, her authority to sell the

property had been withdrawn, at a time when there was still no meeting of the minds of

buyer and seller. She was not entitled to commission.

BROKER; DUTY TO PERFORM TO BE ENTITLED TO COMMISSION.—In order that a

broker could earn a commission it is not sufficient for him to find a prospective buyer but

to find one who will actually buy the property on the terms and conditions imposed by

thef owner and until that is done his right to commission does not accrue. [Reyes, et al.

vs. Mosqueda and Court of Appeals, 99 Phil. 241(1956)]

Henry v. Velasco, 34 Phil 587

Yes. The Court noted the fact that the appellant took over the operation of

completing the sale with the purchaser furnished by the plaintiff did not abrogate the

contract. Henry complied with his part of the contract by furnishing a purchaser ready,

willing, and able to buy the business and to rent the premises.

PRINCIPAL AND AGENT; AGENT'S COMMISSION.—When an agent, who was

employed to sell or lease certain property, has complied with the terms of his contract by

furnishing a purchaser ready, willing and able to buy or lease such property, he is

entitled to his commission. [Henry vs. Velasco., 34 Phil. 587(1916)]

Pahud v. CA, G.R. 160346

Yes. The Court noted that while the sale with respect to the 3/8 portion is void by

express provision of law and not susceptible to ratification, its validity was upheld on the

basis of the common law principle of estoppel.

Art. 1431. Through 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.

Although, at the time of the sale to the Pahuds, Eufemia was not armed with the

requisite special power of attorney to dispose of the 3/8 portion of the property, the 3 co-

heirs remained silent and left the task of assailing the validity of the sale to Virgilio, who

was not privy to the transaction. Due to their continued silence, Zenaida, Milagros and

Minerva have caused the Pahuds to believe that they have authorized Eufemia to

transact on their behalf. Due to this, they are now estopped from impugning the validity

of the sale from assailing the authority of Eufemia to enter into such transaction.

Eduardo Litonjua, Jr and Antonio Litonjua v. Eternit Corp

GR no. 144805

No. The Court noted that there was no agency by estoppel. The following are the

requisites for agency by estoppel: (1) the principal manifested a representation of the

agent’s authority or knowingly allowed the agent to assume such authority; (2) the third

person, in good faith, relied upon such representation; (3) relying upon such

representation, such third person has changed his position to his detriment. In the case,

there was lack of proof of reliance on such representation because in the

communications between the Litonjuas and Glanville, Delsaux and Marquez, the latter

parties clearly stated that they were acting in the behalf of ESAC only. There was no

ratification by Eternit for there is no proof showing that the communications between

them were forwarded to Eternit’s Board of Directors for ratification.

Nogales v. Capitol Medical Center, G.R. No. 142625 December 19, 2006

The Court noted that in general, a hospital is not liable for the negligence of an

independent contractor-physician except under the “doctrine of apparent authority.

In the current case, CMC impliedly held out Dr. Estrada as a member of its

medical staff. Through the actions of the hospital, CMC clothed Dr. Estrada with

apparent authority thereby leading the spouses to believe that Dr. Estrada was an

employee or agent of CMC. Due to this, the hospital can no longer repudiate such

authority.

The Court also noted the following:

Doctrine of Apparent Authority: a hospital can be held vicariously liable for the negligent

acts of a physician providing care at the hospital, regardless of whether the physician is

an independent contractor, unless the patient knows, or should have known, that the

physician is an independent contractor. The elements of the action have been set out as

follows:

"For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show

that: (1) the hospital, or its agent, acted in a manner that would lead a reasonable

person to conclude that the individual who was alleged to be negligent was an employee

or agent of the hospital; (2) where the acts of the agent create the appearance of

authority, the plaintiff must also prove that the hospital had knowledge of and

acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of the

hospital or its agent, consistent with ordinary care and prudence."

It is evident that the element of "holding out" on the part of the hospital does not

require an express representation by the hospital that the person alleged to be negligent

is an employee. It is satisfied if the hospital holds itself out as a provider of emergency

room care without informing the patient that the care is provided by independent

contractors.

Justifiable reliance on the part of the plaintiff is satisfied if the plaintiff relies upon

the hospital to provide complete emergency room care, rather than upon a specific

physician.

Naguiat v. CA

G.R. No. 118375, October 3, 2003

The Court noted that there was ample evidence of an agency relationship

between Naguiat and Ruebenfeldt. It was evident that Naguiat instructed Ruebenfeldt to

withhold from Queaño the checks she issued or indorsed to Queaño, pending delivery

by the latter of additional collateral. Ruebenfeldt also accompanied Queaño in her

negotiation with Naguiat.

In the case, the Court stated that there is an existence of an "agency by

estoppels citing Article 1873 of the Civil Code. As a consequence of the interaction

between Naguiat and Ruebenfeldt, Queaño got the impression that Ruebenfeldt was the

agent of Naguiat, but Naguiat did nothing to correct Queaño’s impression. It was stated

by the Court 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 be.

Woodchild v. Roxas, G.R. 140667, August 12, 2004

No. The Court noted that it bears stressing that apparent authority is based on

estoppel and can arise from two instances: first, the principal may knowingly permit the

agent to so hold himself out as having such authority, and in this way, the principal

becomes estopped to claim that the agent does not have such authority; second, the

principal may so clothe the agent with the indicia of authority as to lead a reasonably

prudent person to believe that he actually has such authority. There can be no apparent

authority of an agent without acts or conduct on the part of the principal and such acts.

In the current case, there is no evidence on record of specific acts made by the

respondent 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, create a

burden or lien thereon, or that the respondent allowed him to do so.

Estoppel; 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. [Woodchild Holdings, Inc. vs. Roxas Electric and Construction

Company, Inc., 436 SCRA 235(2004)]

Yun Kwan Byung vs PAGCOR

December 11, 2009

NO. In the case, during the duration that petitioner played in Casino Filipino, he

was dealing only with ABS Corporation, and availing of the privileges extended only to

players brought in by ABS Corporation. The special treatment upon his arrival in Manila

and special accommodations in Grand Boulevard Hotel, and that he was playing in

special gaming rooms are all indications that petitioner cannot claim good faith that he

believed he was dealing with PAGCOR. The petitioner cannot be considered as an

innocent third party and he cannot claim entitlement to equitable relief as well

The Court stated that an agency by estoppel, which is similar to the doctrine of

apparent authority, requires proof of reliance upon the representations which needs

proof that the representations predated the action taken in reliance. It was further noted

that there can be no apparent authority of an agent without acts or conduct on the part of

the principal and such acts or conduct of the principal must have been known and relied

upon in good faith and as a result of the exercise of reasonable prudence by a third

person and must have produced a change of position to its detriment. There was lack of

such evidence in the case at hand.

Agency By Estoppel

Professional Services vsAganaGR No. 126297

January 31, 2007

Its liability is also anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of corporate negligence which have gained acceptance in the determination of a hospital’s liability for negligent acts of health professionals. The present case serves as a perfect platform to test the applicability of these doctrines, thus, enriching our jurisprudence. Apparent authority, or what is sometimes referred to as the “holding out” theory, or doctrine of ostensible agency or agency by estoppel, has its origin from the law of agency. It imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists. The concept is essentially one of estoppel and has been explained in this manner:

“The principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent to assume, or which he holds the agent out to the public as possessing. The question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question.”

In this case, Professional Services Inc. (PSI) publicly displays in the lobby of the Medical City Hospital the names and specializations of the physicians associated or accredited by it, including those of Dr. Ampil and Dr. Fuentes. We concur with the Court of Appeals’ conclusion that it “is now estopped from passing all the blame to the physicians whose names it proudly paraded in the public directory leading the public to believe that it vouched for their skill and competence.” Indeed, PSI’s act is tantamount to holding out to the public that Medical City Hospital, through its accredited physicians, offers quality health care services. By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising their qualifications, the hospital created the impression that they were its agents, authorized to perform medical or surgical services for its patients. As expected, these patients, Natividad being one of them, accepted the services on the reasonable belief that such were being rendered by the hospital or its employees, agents, or servants.

February 11, 2008

In the instant cases, PSI merely offered a general denial of responsibility, maintaining that consultants, like Dr. Ampil, are “independent contractors,” not employees of the hospital. Even assuming that Dr. Ampil is not an employee of Medical City, but an independent contractor, still the said hospital is liable to the Aganas.

Citing  Nograles, et al. v. Capitol Medical Center, et al.Carpio, the Court held:

“…In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an exception to this principle. The hospital may be liable if the physician is the “ostensible” agent of the hospital. (Jones v. Philpott, 702 F. Supp. 1210 [1988]) This exception is also known as the “doctrine of apparent authority.” (Sometimes referred to as the apparent or ostensible agency theory. [King v. Mitchell, 31 A.D.3rd 958, 819 N.Y. S.2d 169 (2006)].

x x xThe doctrine of apparent authority essentially involves two factors to

determine the liability of an independent contractor-physician.The first factor focuses on the hospital’s manifestations and is sometimes

described as an inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital. (Diggs v. Novant Health, Inc., 628 S.E.2d 851 [2006] citing Hylton v. Koontz, 138 N.C. App. 629 [2000]).In this regard, the hospital need not make express representations to the patient that the treating physician is an employee of the hospital; rather a representation may be general and implied. (Id.)

The doctrine of apparent authority is a specie of the doctrine of estoppel. Article 1431 of the Civil Code provides that “[t]hrough 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.” Estoppel rests on this rule: “Whether a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it. (De Castro v. Ginete, 137 Phil. 453 [1969], citing Sec. 3, par. A, Rule 131 of the Rules of Court. See also King v. Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169 [2006]).

PSI is estopped from passing the blame solely to Dr. Ampil. Its act of displaying his name and those of the other physicians in the public directory at the lobby of the hospital amounts to holding out to the public that it offers quality medical service through the listed physicians. This justifies Atty. Agana’s belief that Dr. Ampil was a member of the hospital’s staff. It must be stressed that under the doctrine of apparent authority, the question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question.6 In these cases, the circumstances yield a positive answer to the question.

February 2, 2010

There is, however, ample evidence that the hospital (PSI) held out to the patient (Natividad)48 that the doctor (Dr. Ampil) was its agent. Present are the two factors that

determine apparent authority: first, the hospital’s implied manifestation to the patient which led the latter to conclude that the doctor was the hospital’s agent; and second, the patient’s reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence.

Clearly, the decision made by Enrique for Natividad to consult Dr. Ampil was significantly influenced by the impression that Dr. Ampil was a staff member of Medical City General Hospital, and that said hospital was well known and prominent. Enrique looked upon Dr. Ampil not as independent of but as integrally related to Medical City.

By such statement, PSI virtually reinforced the public impression that Dr. Ampil was a physician of its hospital, rather than one independently practicing in it; that the medications and treatments he prescribed were necessary and desirable; and that the hospital staff was prepared to carry them out.

Power to Sellvs Power to Mortgage

Bicol Savings Loan vs CAG.R. No. 85302. March 31, 1989.

The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and independent contract, and not an auction sale resulting from extrajudicial foreclosure, which is precipitated by the default of a mortgagor. Absent that default, no foreclosure results. The stipulation granting an authority to extrajudicially foreclose a mortgage is an ancillary stipulation supported by the same cause or consideration for the mortgage and forms an essential or inseparable part of that bilateral agreement.

The power to foreclose is not an ordinary agency that contemplates exclusively the representation of the principal by the agent but is primarily an authority conferred upon the mortgagee for the latter’s own protection. That power survives the death of the mortgagor (Perez vs. PNB, supra). In fact, the right of the mortgagee bank to extrajudicially foreclose the mortgage after the death of the mortgagor Juan de Jesus, acting through his attorney-in-fact, Jose de Jesus, did not depend on the authorization in the deed of mortgage executed by the latter. That right existed independently of said stipulation and is clearly recognized in Section 7, Rule 86 of the Rules of Court.

Parties to a Contract of Agency; Capacity

Commercial Bank & Trust vs Republic Armored CarNos. L-18223 & L-18224. September 30, 1963.

Where in accordance with a power of attorney executed by the principal, the agent was authorized to negotiate for a loan or various loans with banking institutions, financing or insurance companies etc., in such sum or sums, aforesaid agent may deem proper and convenient to the interest of the principal, such general power of attorney was held sufficient authority for the agent to obtain the credits subject of the case at bar.

Where one named Ramon Racelis, as agent of Damaso Perez (principal), executed a contract of loan, signing the name “Damaso Perez by Ramon Racelis,” and

in the said contract Damaso Perez agreed jointly and severally to be responsible for such loan, there would be no merit in the contention that Damaso Perez was only liable as a guarantor.

Philippine Charter Insurance vs Explorer MaritimeG.R. No. 175409. September 7, 2011.

PCIC alleged that defendant “Unknown Owner of the vessel M/V ‘Explorer’ ” is a foreign corporation whose identity or name or office address are unknown to PCIC but is doing business in the Philippines through its local agent, co-defendant Wallem Philippines Shipping, Inc., a domestic corporation.PCIC then added that both defendants may be served with summons and other court processes in the address of Wallem Philippines Shipping, Inc.,which was correctly donepursuant to Section 12, Rule 14 of the Rules of Court, which provides:

“Sec. 12. Service upon foreign private juridical entity.—When the defendant is a foreign private juridical entity which has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines.”

Futhermore, Section 3, Rule 3 of the Rules of Court likewise provides that an agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal. Since Civil Case No. 95-73340 – wherein Philippine Charter Insurance Corporation (PCIC) filed with a Complaint against respondents to recover P342,605.50 for the allegedly lost or damaged shipment – was an action for damages, the agent may be properly sued without impleading the principal.

Maritime Agenciesvs CAG.R. No. 77638. July 12, 1990.G.R. No. 77674. July 12, 1990.

As regards the goods damaged or lost during unloading, the charterer is liable therefore, having assumed this activity under the charter party “free of expense to the vessel.” The difficulty is that Transcontinental has not been impleaded in these cases and so is beyond our jurisdiction. The liability imposable upon it cannot be borne by Maritime which, as a mere agent, is not answerable for injury caused by its principal. It is a well-settled principle that the agent shall be liable for the act or omission of the principal only if the latter is undisclosed.

Moreover, The charterer did not represent itself as a carrier and indeed assumed responsibility only for the unloading of the cargo, i.e, after the goods were already outside the custody of the vessel. In supervising the unloading of the cargo and issuing Daily Operations Report and Statement of Facts indicating and describing the day-to-day discharge of the cargo, Maritime acted in representation of the charterer and not of the vessel. It thus cannot be considered a ship agent. As a mere charterer’s agent, it cannot be held solidarily liable with Transcontinental for the losses/damages to the cargo

outside the custody of the vessel. Notably, Transcontinental was disclosed as the charterer’s principal and there is no question that Maritime acted within the scope of its authority.

Gold Star Mining vs Lim-JimenaG.R. No. L-25301. October 26, 1968

We are of the same opinion with the Court of Appeals that respondents Jimenas have a cause of action against petitioner corporation and that the latter's joinder as one of the defendants before the trial court is fitting and proper. Said the Court of Appeals, and we adopt the same:

“From another standpoint, equally valid and acceptable, it can be said that Lincallo, in transferring the mining claims to Gold Star (without disclosing that Jimena was a co-owner although Gold Star had knowledge of this fact as shown by the proofs heretofore mentioned) acted as Jimena's agent with respect to Jimena's share of the claims,

"Under such conditions, Jimena has an action against Gold Star, pursuant to Article 1883, New Civil Code, which provides that the principal may sue the person with whom the agent dealt with in his (agent's) own name, when the transaction 'involves things belonging to the principal.”

Lorca vsDinerosG.R. No. L-10919. February 28, 1958

The appellant insists here that Dineros was responsible in view of sec. 334 of the Revised Administrative Code and sec. 15, Rule 39, Rules of Court, which provides as follows:

"SEC. 334—Right of Bonded Officer to Require Bond from Deputy or assistant.—A sheriff or other accountable official may require any of his deputies or assistants, not bonded in the fidelity fund, to give an adequate personal bond as security against loss by reason of any wrongdoing on the part of such deputy or assistant. The taking of such security shall in no wise impair the independent civil liability of any of the parties."

"* * * and in case the sheriff or attaching officer is sued for damages as a result of the attachment * * *."

In the light of section 330 of the Administrative Code we think the above provisions apply where the deputy acts in his own name or is guilty of active malfeasance or possibly where he exceeds the limits of his agency. In this case it is clear from the certificate of sale attached to the complaint that Dineros acted all the time in the name of the Ex-Officio Provincial Sheriff of Iloilo; and no allegations of misfeasance are made. The Sheriff is liable to third persons on the acts of his deputy, in the same manner that the principal is responsible for the acts of his agent. 

Virgie Seronavs CAG.R. No. 130423. November 18, 2002.

Petitioner did not ipso facto commit the crime of estafa through conversion or misappropriation by delivering the jewelry to a sub-agent for sale on commission basis. We are unable to agree with the lower courts’ conclusion that this fact alone is sufficient ground for holding that petitioner disposed of the jewelry “as if it were hers, thereby committing conversion and a clear breach of trust.”

It must be pointed out that the law on agency in our jurisdiction allows the appointment by an agent of a substitute or sub-agent in the absence of an express agreement to the contrary between the agent and the principal. In the case at bar, the appointment of Labrador as petitioner’s sub-agent was not expressly prohibited by Quilatan, as the acknowledgment receipt does not contain any such limitation. Neither does it appear that petitioner was verbally forbidden by Quilatan from passing on the jewelry to another person before the acknowledgment receipt was executed or at any other time. Thus, it cannot be said that petitioner’s act of entrusting the jewelry to Labrador is characterized by abuse of confidence because such an act was not proscribed and is, in fact, legally sanctioned.

The rule is that an accused acquitted of estafa may nevertheless be held civilly liable where the facts established by the evidence so warrant. Then too, an agent who is not prohibited from appointing a sub-agent but does so without express authority is responsible for the acts of the sub-agent. Considering that the civil action for the recovery of civil liability arising from the offense is deemed instituted with the criminal action, petitioner is liable to pay complainant Quilatan the value of the unpaid pieces of jewelry.

Santos vsBuenconsejoG.R. No. L-20136. June 23, 1965.

The said special power of attorney authorizing him to act on behalf of the children of Anatolio Buenconsejo could not have possibly vested in him any property right in his own name; the children of Anatolio Buenconsejo had no authority to execute said power of attorney, because their father is still alive and, in fact, he and his wife opposed the petition of Santos.

“A special power of attorney authorizing a person to act on behalf of the children of another cannot vest in the said attorney any property right in his own name.The children have no authority to execute a power of attorney for their father who is still alive.”

Rights, Obligations, and Liabilities of Agent

DanonvsBrimoG.R. No. 15823. September 12, 1921

It is perfectly clear and undisputed that his "services" did not in any way contribute towards bringing about the sale of the factory in question. He was not "the efficient agent or the procuring cause of the sale."

“The broker must be the efficient agent or the procuring cause of the sale. The means employed by him and his efforts must result in the sale. He must find the purchaser, and the sale must proceed from his efforts acting as broker.”

“In all cases, under all and varying forms of expression, the fundamental and correct doctrine is, that the duty assumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the price and terms on which it is to be made, and until that is done his right to commissions does not accrue.”

xxxxx“A broker is never entitled to commissions for unsuccessful efforts.

The risk of a failure is wholly his. The reward comes only with his success. The broker may devote his time and labor, and expend his money with ever so much of devotion to the interest of his employer, and yet if he fails, if without effecting an agreement or accomplishing a bargain, he abandons the effort, or his authority is fairly and in good faith terminated, he gains no right to commissions. He loses the labor and effort which was staked upon success. And in such event it matters not that after his failure, and the termination of his agency, what he has done proves of use and benefit to the principal. This however must be taken with one important and necessary limitation. If the efforts of the broker are rendered a failure by the fault of the employer, the broker does not lose his commissions. But this limitation is not even an exception to the general rule affecting the broker's right for it goes on the ground that the broker has done his duty, that he has brought buyer and seller to an agreement, but that the contract is not consummated and fails though the after-fault of the seller. The cases are uniform in this respect. ”

“Where no time for the continuance of the contract is fixed by its terms, either party is at liberty to terminate it at will, subject only to the ordinary requirements of good faith. Usually the broker is entitled to a fair and reasonable opportunity to perform his obligation, subject of course to the rightt of the seller to sell independently. But having been granted him, the right of the principal to terminate his authority is absolute and unrestricted, except only that he may not do it in bad faith, and as a mere device to escape the payment of the broker's commissions.”

Hahn vs CAG.R. No. 113074. January 22, 1997.

An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made.

As to the service centers and showrooms which he said he had put up at his own expense, Hahn said that he had to follow BMW specifications as exclusive dealer of BMW in the Philippines. According to Hahn, BMW periodically inspected the service centers to see to it that BMW standards were maintained. Indeed, it would seem from BMW’s letter to Hahn that it was for Hahn’s alleged failure to maintain BMW standards that BMW was terminating Hahn’s dealership.

The fact that Hahn invested his own money to put up these service centers and showrooms does not necessarily prove that he is not an agent of BMW. For as already noted, there are facts in the record which suggest that BMW exercised control over Hahn’s activities as a dealer and made regular inspections of Hahn’s premises to enforce compliance with BMW standards and specifications.

In addition, BMW held out private respondent Hahn as its exclusive distributor in the Philippines, even as it announced in the Asian region that Hahn was the “official BMW agent” in the Philippines.

Tan vs GullasG.R. No. 143978. December 3, 2002.

In Schmid and Oberly v. RJL Martinez Fishing Corporation, we defined a “broker” as “one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him. x x x a broker is one whose occupation is to bring the parties together, in matters of trade, commerce or navigation.” 

Private respondent authorized another agent in the person of Mr. Bobby Pacana to sell the same property. There was nothing illegal or amiss in this arrangement, per se, considering the non-exclusivity of petitioners’ authority to sell. The problem arose when it eventually turned out that these agents were entertaining one and the same buyer, the Sisters of Mary.Private respondents failed to prove their contention that Pacana began negotiations with private respondent Norma Gullas way ahead of petitioners.

Indeed, it is readily apparent that private respondents are trying to evade payment of the commission which rightfully belong to petitioners as brokers with respect to the sale. There was no dispute as to the role that petitioners played in the transaction. At theery least, petitioners set the sale in motion. They were not able to participate in its consummation only because they were prevented from doing so by the acts of the private respondents. Petitioners, as brokers, should be entitled to the commission whether or not the sale of the property subject matter of the contract was concluded through their efforts.

Philippine Health-Care Providers vs EstradaG.R. No. 171052. January 28, 2008.

At the very least, Estrada penetrated the Meralco market, initially closed to Maxicare, and laid the groundwork for a business relationship. The only reason Estrada was not able to participate in the collection and remittance of premium dues to Maxicare was because she was prevented from doing so by the acts of Maxicare, its officers, and employees.

In Tan v. Gullas, 393 SCRA 334 (2002), we had occasion to define a broker and distinguish it from an agent, thus:

“[O]ne who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between the other parties, never acting in his own name but in the name of those who employed him. [A] broker is one whose occupation is to bring the parties together, in matter of trade, commerce or navigation. An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made.”

We have held that the term “procuring cause” in describing a broker’s activity, refers to a cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime objective of the employment of the broker—producing a purchaser ready, willing and able to buy on the owner’s terms. To be regarded as the “procuring cause” of a sale as to be entitled to a commission, a broker’s efforts must have been the foundation on which the negotiations resulting in a sale began. Verily, Estrada was instrumental in the sale of the Maxicare health plans to Meralco. Without her intervention, no sale could have been consummated.

Sanchez vsMedicardG.R. No. 141525. September 2, 2005.

It is dictum that in order for an agent to be entitled to a commission, he must be the procuring cause of the sale, which simply means that the measures employed by him and the efforts he exerted must result in a sale. In other words, an agent receives his commission only upon the successful conclusion of a sale. Conversely, it follows that where his efforts are unsuccessful, or there was no effort on his part, he is not entitled to a commission.

In Prats vs. Court of Appeals, this Court held that for the purpose of equity, an agent who is not the efficient procuring cause is nonetheless entitled to his commission, where said agent, notwithstanding the expiration of his authority, nonetheless, took diligent steps to bringback together the parties, such that a sale was finalized and consummated between them. In Manotok Borthers vs. Court of Appeals, where the Deed of Sale was only executed after the agent’s extended authority had expired, this Court, applying its ruling in Prats, held that the agent (in Manotok) is entitled to a commission since he was the efficient procuring cause of the sale, notwithstanding that the sale took place after his authority had lapsed. The proximate, close, and causal connection between the agent’s efforts and the principal’s sale of his property can not be ignored.

It may be recalled that through petitioner’s efforts, Medicard was able to enter into a one-year Health Care Program Contract with Unilab. As a result, Medicard paid petitioner his commission. Again, through his efforts, the contract was renewed and once more, he received his commission. Before the expiration of the renewed contract, Medicard, through petitioner, proposed an increase in premium, but Unilab rejected this proposal. Medicard then requested petitioner to reduce his commission should the contract be renewed on its third year, but he was obstinate. Meantime, on October 3, 1990, Unilab informed Medicard it was no longer renewing the Health Care Program contract.

In order not to prejudice its personnel, Unilab, through respondent Ejercito, negotiated with respondent Dr. Montoya of Medicard, in order to find mutually beneficial ways of continuing the Health Care Program. The negotiations resulted in a new contract wherein Unilab shall pay Medicard the hospitalization expenses actually incurred by each employees, plus a service fee. Under the “cost plus” system which replaced the premium scheme, petitioner was not given a commission.

It is clear that since petitioner refused to reduce his commission, Medicard directly negotiated with Unilab, thus revoking its agency contract with petitioner. We hold that such revocation is authorized by Article 1924 of the Civil Code which provides:

“Art. 1924. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.”

INFANTE vs CUNANAN – TO – FRANCISCO vs GSISInfante vs Cunanan

It was seen that Infante took advantage of the benevolence of the petitioners and acted in a manner that would promote his own selfish interest. This act is unfair and amounts to bad faith. Petitioner took advantage of the services rendered by respondents, but believing that she could evade payment of their commission, she induced them to sign the deed of cancellation. This act of subversion cannot be sanctioned and cannot serve as basis for petitioner to escape payment of the commission agreed upon.That petitioner had changed her mind even if respondents had found a buyer who was willing to close the deal, is a matter that would not give rise to a legal consequence if respondents agree to call off the transaction in deference to the request of the petitioner. But the situation varies if one of the parties takes advantage of the benevolence of the other and acts in a manner that would promote his own selfish interest. This act is unfair as would amount to bad faith. This act cannot be sanctioned without according to the party prejudiced the reward which is due him. This is the situation in which respondents were placed by petitioner. Petitioner took advantage of the services rendered by respondents, but believing that she could evade payment of their commission, she made use of a ruse by inducing them to sign the deed of cancellation Exhibit 1. This act of subversion cannot be sanctioned and cannot serve as basis for petitioner to escape payment of the commission agreed upon.

Lim vs SabanTo deprive Saban of his commission subsequent to the sale which was consummated through his efforts would be a breach of his contract of agency with Ybañez which expressly states that Saban would be entitled to any excess in the purchase price after deducting the P200,000.00 due to Ybañez and the transfer taxes and other incidental expenses of the sale. In Macondray & Co. v. Sellner, the Court recognized the right of a broker to his commission for finding a suitable buyer for the seller’s property even though the seller himself consummated the sale with the buyer. The Court held that it would be in the height of injustice to permit the principal to terminate the contract of agency to the prejudice of the broker when he had already reaped the benefits of the broker’s efforts. Saban had completely performed his obligations under his contract of agency with Ybañez by finding a suitable buyer to preparing the Deed of Absolute Sale between Ybañez and Lim and her co-vendees. Moreover, the contract of agency very clearly states that Saban is entitled to the excess of the mark-up of the price of the lot after deducting Ybañez’s share of P200,000.00 and the taxes and other incidental expenses of the sale.

Prats vs CAPrats was not the efficient procuring cause in bringing about the sale proceeding from the fact of expiration of his exclusive authority. But, the Court notes that Prats had Monthly taken steps to bring back together respondent Doronila and the SSS. Prats communicated with the Office of the Presidential Housing Commission on February 23, 1968 offering the Doronila property. Prats wrote a follow-up letter on April 1968 which was answered by the Commission with the suggestion that the property be offered directly to the SSS. Prats wrote toSSS on March 16, 1968, inviting Chairman Ramon Gaviola, Jr. to discuss the offer of the sale of the property in question to the SSS. On May 6, 1968, Prats made a formal written offer to the Social Security System to self the 300 hectare land of Doronila at the price of P6.00 per square meter. Doronila received on May 17, 1968 from the SSS Administrator a telegram that the SSS was considering the purchase of Doronilas property for its housing project. Prats and his witness Raagas testified that Prats had several dinner and lunch meetings with Doronila and/or his nephew, Atty. Manuel D. Asencio, regarding the progress of the negotiations with the SSS.Even if Prats was not the procuring cause in bringing about the sale, the Court grants in equity the sum of One Hundred Thousand Pesos (P100,000.00) by way of compensation for his efforts and assistance in the transaction, which however was finalized and consummated after the expiration of his exclusive authority

Manotok Brothers vs CAAt first sight, it would seem that private respondent is not entitled to any commission as he was not successful in consummating the sale between the parties, for the sole reason that when the Deed of Sale was finally executed, his extended authority had already expired. By this alone, one might be misled to believe that a broker or agent is not entitled to any commission until he has successfully done the job given to him. But following the decision in Prats, Saligumba should be paid his commission, While in Prats vs. Court of Appeals, the agent was not even the efficient procuring cause in bringing about the sale, unlike in the case at bar, it was still held therein that the agent was entitled to compensation. In the case at bar, private respondent is the efficient procuring cause for without his efforts, the municipality would not have anything to pass and the Mayor would not have anything to approve.

Uniland Resources vs DBPFrom the very beginning, petitioner was aware that it had no express authority from DBP to find buyer…in equity, the Court recognizes the efforts of petitioner in bringing together respondent DBP and an interested and financially-able buyer. While not actively involved in the actual bidding and transfer of ownership of the warehouse property, petitioner may be said to have initiated, albeit without proper authority, the transaction that eventually took place…there is sufficient reason to believe that the DBP became more confident to venture and redeem the properties from the APT due to the presence of a ready and willing buyer, as communicated and assured by petitioner. Thus the Court in equity, granted Uniland Resources the sum of P100,000.00 for the role it played in the transaction between respondent DBP and buyer Glaxo, Philippines.

Domingo vs DomingoArticle 1909 of the New Civil Code is essentially a reinstatement of Article 1726 of the old Spanish Civil Code which reads thus: Art. 1726. The agent is liable not only for fraud,

but also for negligence, which shall be judged with more or less severity by the courts, according to whether the agency was gratuitous or for a price or reward.The provisions demand the utmost good faith, fidelity, honesty, candor and fairness on the part of the agent, the real estate broker in this case, to his principal, the vendor. The law imposes upon the agent the absolute obligation to make a full disclosure or complete account to his principal of all his transactions and other material facts relevant to the agency, so much so that the law as amended does not countenance any stipulation exempting the agent from such an obligation and considers such an exemption as void. The duty of an agent is likened to that of a trustee. This is not a technical or arbitrary rule but a rule founded on the highest and truest principle of morality as well as of the strictest justice. Hence, an agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage or custom allows it; because the rule is to prevent the possibility of any wrong, not to remedy or repair an actual damage. By taking such profit or bonus or gift or propina from the vendee, the agent thereby assumes a position wholly inconsistent with that of being an agent for his principal, who has a right to treat him, insofar as his commission is concerned, as if no agency had existed. The fact that the principal may have been benefited by the valuable services of the said agent does not exculpate the agent who has only himself to blame for such a result by reason of his treachery or perfidy. In the case at bar, defendant-appellee Gregorio Domingo as the broker, received a gift or propina in the amount of One Thousand Pesos (P1,000.00) from the prospective buyer Oscar de Leon, without the knowledge and consent of his principal, herein petitioner-appellant Vicente Domingo. His acceptance of said substantial monetary gift corrupted his duty to serve the interests only of his principal and undermined his loyalty to his principalInstead of exerting his best to persuade his prospective buyer to purchase the property on the most advantageous terms desired by his principal, the broker, herein defendant-appellee Gregorio Domingo, succeeded in persuading his principal to accept the counter-offer of the prospective buyer to purchase the property at P1.20 per square meter or One Hundred Nine Thousand Pesos (P109,000.00). As a necessary consequence of such breach of trust, defendant-appellee Gregorio Domingo must forfeit his right to the commission and must return the part of the commission he received from his principal.

Baltazar vs Ombudsman

For one, petitioner’s principal, Faustino Mercado, is an agent himself and as such cannot further delegate his agency to another. Otherwise put, an agent cannot delegate to another the same agency. The legal maxim potestas delegata non delegare potest; a power once delegated cannot be re-delegated, while applied primarily in political law to the exercise of legislative power, is a principle of agency. For another, a re-delegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former. In the instant case, petitioner has no privity of contract with Paciencia Regala, owner of the fishpond and principal of Faustino Mercado.

Moreover, while the Civil Code under Article 1892 allows the agent to appoint a substitute, such is not the situation in the instant case. The SPA clearly delegates the agency to petitioner to pursue the case and not merely as a substitute. Besides, it is

clear in the aforecited Article that what is allowed is a substitute and not a delegation of the agency.

Serona vs PeopleSerona did not ipso facto commit estafa through conversion or misappropriation by delivering the jewelry to a sub-agent for sale on commission basis. It must be pointed out that the law on agency in our jurisdiction allows the appointment by an agent of a substitute or sub-agent in the absence of an express agreement to the contrary between the agent and the principal. In the case at bar, the appointment of Labrador as petitioner’s sub-agent was not expressly prohibited by Quilatan. Neither does it appear that petitioner was verbally forbidden by Quilatan from passing on the jewelry to another person before the acknowledgment receipt was executed or at any other time. Thus, it cannot be said that petitioner’s act of entrusting the jewelry to Labrador is characterized by abuse of confidence because such an act was not proscribed and is, in fact, legally sanctionedIt cannot be said that petitioner misappropriated the jewelry or delivered them to Labrador "without right." Aside from the fact that no condition or limitation was imposed on the mode or manner by which petitioner was to effect the sale, it is also consistent with usual practice for the seller to necessarily part with the valuables in order to find a buyer and allow inspection of the items for sale.Where, as in the present case, the agents to whom personal property was entrusted for sale, conclusively proves the inability to return the same is solely due to malfeasance of a subagent to whom the first agent had actually entrusted the property in good faith, and for the same purpose for which it was received; there being no prohibition to do so and the chattel being delivered to the subagent before the owner demands its return or before such return becomes due, we hold that the first agent cannot be held guilty of estafa by either misappropriation or conversion. The abuse of confidence that is characteristic of this offense is missing under the circumstance

Woodchild vs RoxasCourt ruled that the agent was not specifically authorized to grant a right of way or to agree to sell to a portion thereof. It found that the authority of the agent, under the resolution, did not include the authority to sell a portion of the adjacent lot, or to create or convey real rights thereon.Powers of attorney are generally construed strictly and courts will not infer or presume broad powers from deeds which do not sufficiently include property or subject under which the agent is to deal. The general rule is that the power of attorney must be pursued within legal structures, and the agent can neither go beyond it; nor beside it. The act done must be legally identical with that authorized to be done.This case demonstrates a strict application of the rule that the agent must act within the scope of his authority

Guinhawa vs PeopleCase law has it that wherever the doing of a certain act or the transaction of a given affair, or the performance of certain business is confided to an agent, the authority to so act will, in accordance with a general rule often referred to, carry with it by implication the authority to do all of the collateral acts which are the natural and ordinary incidents of the main act or business authorized.

Board of Liquidators vs Heirs of Maximo KalawIt is possible for any corporate officer “intrusted with the general management and control” of the corporation’s business (e.g. president, CEO, manager) to perform an act without prior approval from the board of directors provided that the act is “necessary or appropriate to conduct the ordinary business of the corporation”. The Court added that such acts must be “an ordinary nature, which by usage or necessity are incident to his office”. In this case, the Court looked at the nature of the business of the corporation and the previous practice of the corporation and determined that the contracts in question were within the general authority granted to the corporate officer.

San Juan vs CAThe issue in this case revolved around the authority of the corporate treasurer to enter into the disputed contract of sale on behalf of the corporation. The Court ruled that the contract was not binding on Motorich because it never authorized or ratified the sale. It explained that because the corporation has a separate juridical personality distinct from its stockholders, the property of the corporation is not the property of the stockholders and may not be sold without express authorization from the board of directors.

A corporation may act only through its board of directors or, when authorized either by its bylaws or by its board resolution, through its officers or agents in the normal course of business. The general principles of agency govern the relation between the corporation and its officers or agents, subject to the articles of incorporation, bylaws, or relevant provisions of law. Thus, this Court has held that "a corporate officer or agent may represent and bind the corporation in transactions with third persons to the extent that the authority to do so has been conferred upon him, and this includes powers which have been intentionally conferred, and also such powers as, in the usual course of the particular business, are incidental to, or may be implied from, the powers intentionally conferred, powers added by custom and usage, as usually pertaining to the particular officer or agent, and such apparent powers as the corporation has caused persons dealing with the officer or agent to believe that it has conferred." 

AF Realty vs DieselmanHere, a member of the board of directors of the corporation issued a letter authorizing a real estate broker to look for buyers and negotiate the sale of a parcel of land owned by the corporation. The Court stated the relevant rule as follows:Section 23 of the Corporation Code expressly provides that the corporate powers of all corporations shall be exercised by the board of directors. Just as a natural person may authorize another to do certain acts in his behalf, so may the board of directors of a corporation validly delegate some of its functions to individual officers or agents appointed by it.19 Thus, contracts or acts of a corporation must be made either by the board of directors or by a corporate agent duly authorized by the board.20 Absent such valid delegation/authorization, the rule is that the declarations of an individual director relating to the affairs of the corporation, but not in the course of, or connected with, the performance of authorized duties of such director, are held not binding on the corporation.The Court ruled that the director had no written authority from the board to sell or negotiate the sale of the lot much less to appoint other persons for the same purpose.

Francisco vs GSIS

The issue was whether alleged acceptance made by a corporate officer was binding on the corporation. The court ruled that GSIS was bound by the acceptance.

The terms of the offer were clear, and over the signature of defendant's general manager, Rodolfo Andal, plaintiff was informed telegraphically that her proposal had been accepted. There was nothing in the telegram that hinted at any anomaly, or gave ground to suspect its veracity, and the plaintiff, therefore, can not be blamed for relying upon it. There is no denying that the telegram was within Andal's apparent authority, but the defense is that he did not sign it, but that it was sent by the Board Secretary in his name and without his knowledge. Assuming this to be true, how was appellee to know it? Corporate transactions would speedily come to a standstill were every person dealing with a corporation held duty-bound to disbelieve every act of its responsible officers, no matter how regular they should appear on their face. This Court has observed in Ramirez vs. Orientalist Co., 38 Phil. 634, 654-655, that —

In passing upon the liability of a corporation in cases of this kind it is always well to keep in mind the situation as it presents itself to the third party with whom the contract is made. Naturally he can have little or no information as to what occurs in corporate meetings; and he must necessarily rely upon the external manifestations of corporate consent. The integrity of commercial transactions can only be maintained by holding the corporation strictly to the liability fixed upon it by its agents in accordance with law; and we would be sorry to announce a doctrine which would permit the property of a man in the city of Paris to be whisked out of his hands and carried into a remote quarter of the earth without recourse against the corporation whose name and authority had been used in the manner disclosed in this case. As already observed, it is familiar doctrine that if a corporation knowingly permits one of its officers, or any other agent, to do acts within the scope of an apparent authority, and thus holds him out to the public as possessing power to do those acts, the corporation will, as against any one who has in good faith dealt with the corporation through such agent, be estopped from denying his authority; and where it is said "if the corporation permits" this means the same as "if the thing is permitted by the directing power of the corporation."

Thus, the court was saying that third persons have every right to rely on corporate communications, particularly in this case where there was nothing to alert Francisco of any anomaly. If the telegram was sent by the board secretary and not by the general manager, there was no way for Francisco to know that.

OBLIGATIONSBritish Airways vs. Court of Appeals

285 SCRA 450(1998)

An agent is also responsible for any negligence in the performance of its function and is liable for damages which the principal may suffer by reason of its negligent act.—Parenthetically, the Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible for any negligence in the performance of its function and is liable for damages which the principal may suffer by reason of its negligent act. Hence, the Court of Appeals erred when it opined that BA, being the principal, had no cause of action against PAL, its agent or subcontractor.

Also, it is worth mentioning that both BA and PAL are members of the International Air Transport Association (IATA), wherein member airlines are regarded as agents of each other in the issuance of the tickets and other matters pertaining to their relationship. Therefore, in the instant case, the contractual relationship between BA and PAL is one of agency, the former being the principal, since it was the one which issued the confirmed ticket, and the latter the agent.

Severino vs. Severino44 Phil. 343(1923)

The relations of an agent to his principal are fiduciary and in regard to the property forming the subject-matter of the agency, he is estopped from acquiring or asserting a title adverse to that of the principal.

An action in personam will lie against an agent to compel him to return or retransfer to his principal, or the latter's estate, the real property committed to his custody as such agent and also to execute the necessary documents of conveyance to effect such retransfer

Gregorio Araneta, Inc. vs. De Paterno and Vidal91 Phil. 786(1952)

An agent, in the sense used in article 1459 of the Civil Code, is one who accepts another's representation to perform in his name certain acts of more or less transcendancy.The ban of paragraph 2 of article 1459 connotes the idea of trust and confidence; and so, where the relationship does not involve considerations of good faith and integrity, the prohibition should not, and does not apply. To come under the prohibition, the agent must be in a fiduciary relation with his principal.

A person who acts as a go-between or middleman between the vendor and the vendee, bringing them together to make the contract themselves, without any power or discretion whatsoever which he could abuse to his advantage and to the owner's prejudice, is not an agent within the meaning of article 1459 of the Civil Code.

Domingo vs. Domingo42 SCRA 131(1971)

Articles 1891 and 1909 of the Civil Code demand the utmost good faith, fidelity, honesty, candor and fairness on the part of the agent to his principal. The agent has an absolute obligation to make a full disclosure or complete account to his principal of all his transactions and other material facts relevant to the agency, so much so that the law as amended does not countenance any stipulation exempting the agent from such an obligation and considers such an exemption as void.

An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to bis principal is guilty of a breach of his loyalty to the latter and forfeits his right to collect the commission that may be due him, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage or custom allows it; because the rule is to prevent the possibility of any wrong, not to remedy or repair an actual damage.

The duty embodied in Article 1891 of the Civil Code does not apply if the agent or broker acted only as a middleman with the task of merely bringing together the vendor and vendee, who themselves thereafter will negotiate on the terms and conditions of the transaction.

Murao vs. People462 SCRA 366(2005)

Private complainant’s right to a commission does not make him a joint owner of the money paid to LMICE by the City Government of Puerto Princesa but merely establishes the relation of agent and principal.—His right to a commission does not make private complainant Federico a joint owner of the money paid to LMICE by the City Government of Puerto Princesa, but merely establishes the relation of agent and principal. It is unequivocal that an agency existed between LMICE and private complainant Federico. Article 1868 of the Civil Code defines agency as a special contract whereby “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.” Although private complainant Federico never had the opportunity to operate as a dealer for LMICE under the terms of the Dealership Agreement, he was allowed to act as a sales agent for LMICE. He can negotiate for and on behalf of LMICE for the refill and delivery of fire extinguishers, which he, in fact, did on two occasions—with Landbank and with the City Government of Puerto Princesa.

All profits made and any advantage gained by an agent in the execution of his agency should belong to the principal.—All profits made and any advantage gained by an agent in the execution of his agency should belong to the principal. In the instant case, whether the transactions negotiated by the sales agent were for the sale of brand new fire extinguishers or for the refill of empty tanks, evidently, the business belonged to LMICE. Consequently, payments made by clients for the fire extinguishers pertained to LMICE. When petitioner Huertazuela, as the Branch Manager of LMICE in Puerto Princesa City, with the permission of petitioner Murao, the sole proprietor of LMICE, personally picked up Check No. 611437 from the City Government of Puerto Princesa, and deposited the same under the Current Account of LMICE with PCIBank, he was merely collecting what rightfully belonged to LMICE. Indeed, Check No. 611437 named LMICE as the lone payee.

Metropolitan Bank and Trust Company vs. Court of Appeals194 SCRA 169(1991)

The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation.—The negligence of Metro-bank has been sufficiently established. To repeat for emphasis, it was the clearance given by it that assured Golden Savings it was already safe to allow Gomez to withdraw the proceeds of the treasury warrants he had deposited. Metrobank misled Golden Savings. There may have been no express clearance, as Metrobank insists (although this is refuted by Golden Savings) but in any case that clearance could be implied from its allowing Golden Savings to withdraw from its account not only once or even twice but three times. The total withdrawal was in excess of its original balance before the treasury warrants were

deposited, which only added to its belief that the treasury warrants had indeed been cleared.

Thomas vs. Pineda89 Phil. 312(1951)

The relations of an agent to his principal are fiduciary and it is an elementary and very old rule that in regard to property forming the subject matter of the agency, an agent is estopped from acquiring or asserting a title adverse to that of the principal. His position is analogous to that of a trustee and he cannot, consistently with the principles of good faith, be allowed to create in himself an interest in opposition to that of his principal or cestui que trust

Palma vs. Cristobal77 Phil. 712(1946)

The relations of an agent to his principal are fiduciary and in regard to property forming the subject matter of the agency, he is estopped from acquiring or asserting a title adverse to that of 'the principal. His position is analogous to that of a trustee and he cannot consistently, with the principles of good faith, be allowed to create in himself an interest in opposition to that of his principal or cestui que trust.

Ramos vs. Caoibes94 Phil. 440(1954)

Where an agent makes use of his power of attorney after the death of his principal, the agent has the obligation to deliver the amount collected by him by virtue of said power to the administratrix of the estate of his principal.

People vs. Chowdury325 SCRA 572(2000)

The law of agency, as applied in civil cases, has no application in criminal cases, and no man can escape punishment when he participates in the commission of a crime upon the ground that he simply acted as an agent of any party.—The law of agency, as applied in civil cases, has no application in criminal cases, and no man can escape punishment when he participates in the commission of a crime upon the ground that he simply acted as an agent of any party. The culpability of the employee therefore hinges on his knowledge of the offense and his active participation in its commission. Where it is shown that the employee was merely acting under the direction of his superiors and was unaware that his acts constituted a crime, he may not be held criminally liable for an act done for and in behalf of his employer.

Agents or representatives appointed by a licensed recruitment agency whose appointments are not previously approved by the Philippine Overseas Employment Administration are considered “non-licensee” or “non-holder of authority” and therefore not authorized to engage in recruitment activity.—Evidence shows that accused-appellant interviewed private complainants in the months of June, August and September in 1994 at Craftrade’s office. At that time, he was employed as interviewer of Craftrade which was then operating under a temporary authority given by the POEA

pending renewal of its license. The temporary license included the authority to recruit workers. He was convicted based on the fact that he was not registered with the POEA as employee of Craftrade. Neither was he, in his personal capacity, licensed to recruit overseas workers. Section 10 Rule II Book II of the Rules and Regulation Governing Overseas Employment (1991) requires that every change, termination or appointment of officers, representatives and personnel of licensed agencies be registered with the POEA. Agents or representatives appointed by a licensed recruitment agency whose appointments are not previously approved by the POEA are considered “non-licensee” or “non-holder of authority” and therefore not authorized to engage in recruitment activity.

The obligation to register its personnel with the Philippine Overseas Employment Administration belongs to the officers of the agency.—Upon examination of the records, however, we find that the prosecution failed to prove that accused-appellant was aware of Craftrade’s failure to register his name with the POEA and that he actively engaged in recruitment despite this knowledge. The obligation to register its personnel with the POEA belongs to the officers of the agency. A mere employee of the agency cannot be expected to know the legal requirements for its operation. The evidence at hand shows that accused-appellant carried out his duties as interviewer of Craftrade believing that the agency was duly licensed by the POEA and he, in turn, was duly authorized by his agency to deal with the applicants in its behalf. Accused-appellant in fact confined his actions to his job description. He merely interviewed the applicants and informed them of the requirements for deployment but he never received money from them. Their payments were received by the agency’s cashier, Josephine Ong. Furthermore, he performed his tasks under the supervision of its president and managing director. Hence, we hold that the prosecution failed to prove beyond reasonable doubt accused-appellant’s conscious and active participation in the commission of the crime of illegal recruitment. His conviction, therefore, is without basis.

Olaguer vs. Purugganan, Jr.515 SCRA 460(2007)

It is a general rule that a power of attorney must be strictly construed; the instrument will be held to grant only those powers that are specified, and the agent may neither go beyond nor deviate from the power of attorney.—Petitioner’s arguments are unpersuasive. It is a general rule that a power of attorney must be strictly construed; the instrument will be held to grant only those powers that are specified, and the agent may neither go beyond nor deviate from the power of attorney. However, the rule is not absolute and should not be applied to the extent of destroying the very purpose of the power. If the language will permit, the construction that should be adopted is that which will carry out instead of defeat the purpose of the appointment. Clauses in a power of attorney that are repugnant to each other should be reconciled so as to give effect to the instrument in accordance with its general intent or predominant purpose. Furthermore, the instrument should always be deemed to give such powers as essential or usual in effectuating the express powers.

Article 1882 of the Civil Code provides that the limits of an agent’s authority shall not be considered exceeded should it have been performed in a manner advantageous to the principal than that specified by him.—Article 1882 of the Civil Code provides that the limits of an agent’s authority shall not be considered exceeded should it have been performed in a manner more advantageous to the principal than that specified by him.

The prohibition against agents purchasing property in their hands for sale or management is, however, clearly, not absolute.—It is, indeed, a familiar and universally recognized doctrine that a person who undertakes to act as agent for another cannot be permitted to deal in the agency matter on his own account and for his own benefit without the consent of his principal, freely given, with full knowledge of every detail known to the agent which might affect the transaction. The prohibition against agents purchasing property in their hands for sale or management is, however, clearly, not absolute. It does not apply where the principal consents to the sale of the property in the hands of the agent or administrator.

In re Bamberger49 Phil. 962(1924)

Lawyers are bound to promptly account for money or property received by them on behalf of their clients and failure to do so constitutes professional misconduct.

The fact that a lawyer has a lien for fees on money in his hands collected for his clients does not relieve him from the duty of promptly accounting for the funds received

Escueta vs. Lim512 SCRA 411(2007)

The agent may appoint a substitute if the principal has not prohibited him from doing so.—Article 1892 of the Civil Code provides: Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one x xx. Applying the above-quoted provision to the special power of attorney executed by Ignacio Rubio in favor of his daughter Patricia Llamas, it is clear that she is not prohibited from appointing a substitute. By authorizing Virginia Lim to sell the subject properties, Patricia merely acted within the limits of the authority given by her father, but she will have to be “responsible for the acts of the sub-agent,” among which is precisely the sale of the subject properties in favor of respondent.

A contract executed by an agent without authority to sell is not void but simply unenforceable.—Even assuming that Virginia Lim has no authority to sell the subject properties, the contract she executed in favor of respondent is not void, but simply unenforceable, under the second paragraph of Article 1317 of the Civil Code which reads: Art. 1317. x xx A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party.

The acceptance and encashment by the owner of a check representing the purchase price of his property sold through his agent constitute ratification of the contract of sale and produce the effects of an express power of agency.—Ignacio Rubio merely denies the contract of sale. He claims, without substantiation, that what he received was a loan, not the down payment for the sale of the subject properties. His acceptance and encashment of the check, however, constitute ratification of the contract of sale and “produce the effects of an express power of agency.” “[H]is action necessarily implies

that he waived his right of action to avoid the contract, and, consequently, it also implies the tacit, if not express, confirmation of the said sale effected” by Virginia Lim in favor of respondent.

Baltazar vs. Ombudsman, 510 SCRA 74(2006)

The legal maxim potestasdelegata non delegarepotest; a power once delegated cannot be re-delegated, while applied primarily in political law to the exercise of legislative power, is a principle of agency—for another, a redelegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former.—The legal maxim potestasdelegata non delegarepotest; a power once delegated cannot be re-delegated, while applied primarily in political law to the exercise of legislative power, is a principle of agency. For another, a re-delegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former.

Mendezona vs. Ciudad de Giota

Yes, Article 1724 of the Civil Code, ( Art. 1896 of the New Civil Code)which provides that an agent shall be liable for interest upon any sums he may have applied to his own use, from the day on which he did so, and upon those which. he still owes, after the expiration of the agency, from the time of his default.

Metrobank vs. Court of Appeals

Yes, Art. 1909 provides that “the agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation.” As the agent, Metrobank acted negligently; as they did not wait for the treasury warrants to cleared rather they accommodated the repeated inquires of a valued client. The carelessness resulted in loss which could be avoided by mere exercise of caution and prudence.

Austria vs. Court of Appeals

Yes, it is not necessary that there be a conviction for robbery for Abad to be relieved from civil liability ofreturning the pendant under Art, 1174, New Civil Code, as it would only be sufficient to establish that the unforseeable event, the robbery in this case, did take place without any concurrent fault on the debtor's part, and this can be done by preponderant evidence. To require, moreover prior conviction in order to establish robbery as a fact, would demand proof beyond reasonable doubt to prove a fact in a civil case.

International Films vs. Lyric Film

No, Ace Navigation’s duty was only limited to informing the consignee Heindenrich of the arrival of the vessel in order for the latter to immediately take possession of the goods. Art. 1897 cannot apply due to lack of evidence showing that Ace Navigation exceeded its authority in the discharge of its obligation.

National Power Corp. vs. National Merchandising Corp.

Yes, NAMERCO is liable for damages under article 1897 of the Civil Code the agent who exceeds the limits of his authority without giving the party with whom he contracts sufficient notice of his powers is personally liable to such party. NAMERCO never disclosed to the NAPOCOR the cabled or written instructions of its principal. For that reason and because NAMERCO exceeded the limits of its authority, it virtually acted in its own name and not as agent and it is, therefore, bound by the contract of sale which, however, is not enforceable against its principal.

Phil Products Co, vs. Primateria, Societe Anonyme Pour Le Commerce Exterieur: Primateria (Phil.) Inc .

No, Art. 1897 states that “The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers.” The article does not hold that in cases of excess of authority, both the agent and the principal are liable to the other contracting party. There is no proof that, as agents, they exceeded the limits of their authority, In fact, the principal—Primateria Zurich—who should be the one to raise the point, never raised it, denied its liability on the ground of excess of authority.

Development Bank of the Philippines vs. Court of Appeals

Yes, Dans, DBP was wearing two legal hats: the first as a lender, and the second as an insurance agent.As an insurance agent, DBP made Dans go through the motion of applying for said insurance, thereby leading him and his family to believe that they had already fulfilled all the requirements for the MRI and that the issuance of their policy was forthcoming. Apparently, DBP had full knowledge that Dans’s application was never going to be approved. In this case, DBP acted beyond the scope of its authority when it accepted the application of Juan Dans knowing full well that he is ineligible. On the part of the Dans’ there was no showing that they knew of DBP’s limitation of authority.

Macias vs. Weaver

No, Warner, Barnes & Co. did not insure the property of the plaintiff, or in any manner agree to pay the plaintiff the amount of any loss. There is no contract of any kind, either oral or written, between the plaintiff and Warner, Barnes & Co. Plaintiff's contracts are with the insurance companies. The present case shows that the Warner, Barnes & Co acted with the scope of its authority and therefore is not liable for any actions of the principal with regards to third parties.

Country Bankers vs. Keppel Cebu

No, presenting the special power of attorney that Quinian’s scope is only limited to transactions not exceeding 500000 and only in favor of the DPWH and NAPOCOR and other government agencies. Neither did it ratify the contract entered into by Quinian or was estopped by receiving premiums from Unimarine. Cebu Shipyard did not exert proper diligence in dealing with Quinian when it did not bother to inquire about the latter’s authority.

Manila Memorial vs. Linsangan

No, Baluyot in this case acted beyond the scope of her authority, Article 1897 provides that “The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers”. She is now personally liable for her own actions.

Safic Aclan vs. Imperial Vegetable

No, Monteverde had no blanket authority to bind Imperial Vegetable. The Board of Directors did not know or authorize any contract entered into by Monteverde. The Court stressed that Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agent’s authority, and his ignorance of that authority will not be any excuse. (Bacaltos Coal Mines v. Court of Appeals)

Siredy Enterprises vs. Court of Appeals

Yes, the letter of authority of Yanga to Santos clearly provides that Santos is authorized to enter into contracts for the construction of housing units. Santos acted within the scope of his authority. Article. 1900 provides that “So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent’s authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent”.

Toyota Shaw vs. Court of Appeals

No, Sosa was not dealing with Toyota rather it was dealing with Bernardo in his personal capacity. Bernardo did not misrepresent that he had the authority to sell any Toyota vehicle. He knew that Bernardo was only a sales representative of Toyota and hence a mere agent of the latter. It was incumbent upon Sosa to act with ordinary prudence and reasonable diligence to know the extent of Bernardo’s authority as an agent in respect of contracts to sell Toyota’s vehicles. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent

LIABILITIES

BACALTOS COAL MINES VS CA245 SCRA 460

The conclusion then of the Court of Appeals that the Authorization includes the power to enter into the Trip Charter Party because the “five prerogatives” are prefaced by such clause, is seriously flawed. It fails to note that the broadest scope of Savellon’s authority is limited to the use of the coal operating contract and the clause cannot contemplate

any other power not included in the enumeration or which are unrelated either to the power to use the coal operating contract or to those already enumerated. In short, while the clause allows some room for flexibility, it can comprehend only additional prerogatives falling within the primary power and within the same class as those enumerated. The trial court, however, went further by hastily making a sweeping conclusion that “a company such as a coal mining company is not prohibited to engage in entering into a Trip Charter Party contract.” But what the trial court failed to consider was that there is no evidence at all that Bacaltos Coal Mines as a coal mining company owns and operates vessels, and even if it owned any such vessels, that it was allowed to charter or lease them. The trial court also failed to note that the Authorization is not a general power of attorney. It is a special power of attorney for it refers to a clear mandate specifically authorizing the performance of a specific power and of express acts subsumed therein.

Furthermore, assuming that the transaction was permitted in the Authorization, the check should still have been drawn in favor of the principal. SMC then made possible the wrong done. There is an equitable maxim that 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. For this rule to apply, the condition precedent is that both parties must be innocent. In the present case, however, SMC is guilty of not ascertaining the extent and limits of the authority of Savellon. In not doing so, SMC dealt with Savellon at its own peril.

BA FINANCE VS. CA211 SCRA 112

Although Wong was clearly authorized to approve loans even up to P350,000.00 without any security requirement, which is far above the amount subject of the guaranty in the amount of P60,000.00, nothing in the said memorandum expressly vests on the credit administrator power to issue guarantees. We cannot agree with respondent’s contention that the phrase “contingent commitment” set forth in the memorandum means guarantees. It has been held that a power of attorney or authority of an agent should not be inferred from the use of vague or general words. Guaranty is not presumed, it must be expressed and cannot be extended beyond its specified limits (Director v. Sing Juco, 53 Phil. 205). In one case, where it appears that a wife gave her husband power of attorney to loan money, this Court ruled that such fact did not authorize him to make her liable as a surety for the payment of the debt of a third person (Bank of Philippine Islands v. Coster, 47 Phil. 594).

The sole allegation of the credit administrator in the absence of any other proof that he is authorized to bind petitioner in a contract of guaranty with third persons should not be given weight. The representation of one who acts as agent cannot by itself serve as proof of his authority to act as agent or of the extent of his authority as agent (Velasco v. La Urbana, 58 Phil. 681). Wong’s testimony that he had entered into similar transactions of guaranty in the past for and in behalf of the petitioner, lacks credence due to his failure to show documents or records of the alleged past transactions. The actuation of Wong in claiming and testifying that he has the authority is understandable. He would naturally take steps to save himself from personal liability for damages to respondent

bank considering that he had exceeded his authority. The rule is clear that an agent who exceeds his authority is personally liable for damages.

EUGENIO VS. CA239 SCRA 207

The substantive law is that payment shall be made to the person in whose favor the obligation has been constituted, or his successor-in-interest or any person authorized to receive it. As far as third persons are concerned, an act is deemed to have been performed within the scope of the agent’s authority, if such is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and his agent. In fact, Atty. Rosario, private respondent’s own witness, admitted that “it is the responsibility of the collector to turn over the collection.”

EUROTECH VS. CUISONG.R. 167552

Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is not personally liable to the party with whom he contracts. The same provision, however, presents two instances when an agent becomes personally liable to a third person. The first is when he expressly binds himself to the obligation and the second is when he exceeds his authority. In the last instance, the agent can be held liable if he does not give the third party sufficient notice of his powers.

The Court ruled that the agent in this case acted within the scope of his authorit, which made Article 1897 inapplicable. In addition, the Court took note of the fact that the third party is seeking to recover both from principal and agent which is not contemplated under the article. To reiterate, the first part of Article 1897 declares that the principal is liable in cases when the agent acted within the bounds of his authority. Under this, the agent is completely absolved of any liability. The second part of the said provision presents the situations when the agent himself becomes liable to a third party when he expressly binds himself or he exceeds the limits of his authority without giving notice of his powers to the third person. However, it must be pointed out that in case of excess of authority by the agent, like what petitioner claims exists here, the law does not say that a third person can recover from both the principal and the agent.

BEAUMONT VS. PRIETO41 PHIL 670

Although, according to article 1717 of the Civil Code, when the agent acts in his own name he is not personally liable to the person with whom he enters into a contract when things belonging to the principal are the object thereof, yet such third person has a right of action not only against the principal but also against the agent, when the rights and obligations which are the subject matter of the litigation cannot be legally and juridically determined without hearing both of them.

OBLIGATIONS

FILPINAS LIFE VS. PERDROSO543 SCRA 542

It appears indisputable that respondents Pedroso and Palacio had invested P47,000 and P49,550, respectively. These were received by Valle and remitted to Filipinas Life, using Filipinas Life’s official receipts, whose authenticity were not disputed. Valle’s authority to solicit and receive investments was also established by the parties. When respondents sought confirmation, Alcantara, holding a supervisory position, and Apetrior, the branch manager, confirmed that Valle had authority. While it is true that a person deal ing with an agent is put upon inquiry and must discover at his own peril the agent’s authority, in this case, respondents did exercise due diligence in removing all doubts and in confirming the validity of the representations made by Valle.

Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle. 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 general rule is that the principal is responsible for the acts of its agent done within the scope of its authority, and should bear the damage caused to third persons. When the agent exceeds his authority, the agent becomes personally liable for the damage. But even when the agent exceeds his authority, the principal is still solidarily liable together with the agent if the principal allowed the agent to act as though the agent had full powers. In other words, the acts of an agent beyond the scope of his authority do not bind the principal, unless the principal ratifies them, expressly or impliedly. Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority.

Filipinas Life cannot profess ignorance of Valle’s acts. Even if Valle’s representations were beyond his authority as a debit/insurance agent, Filipinas Life thru Alcantara and Apetrior expressly and knowingly ratified Valle’s acts. It cannot even be denied that Filipinas Life benefited from the investments deposited by Valle in the account of Filipinas Life. In our considered view, Filipinas Life had clothed Valle with apparent authority; hence, it is now estopped to deny said authority. Innocent third persons should not be prejudiced if the principal failed to adopt the needed measures to prevent misrepresentation, much more so if the principal ratified his agent’s acts beyond the latter’s authority. The act of the agent is considered that of the principal itself. Qui per alium facit per seipsum facere videtur. “He who does a thing by an agent is considered as doing it himself.”

MANILA MEMORIAL VS. LINSANGANG.R. 151319

Facts: Florencia Baluyot wass 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. 

Held: The acts of an agent beyond the scope of his authority do not bind the principal, unless he ratifies them, expressly or impliedly. Only the principal can ratify; the agent cannot ratify his own unauthorized acts. Moreover, the principal must have knowledge of the acts he is to ratify.

Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority. The substance of the doctrine is confirmation after conduct, amounting to a substitute for a prior authority. Ordinarily, the principal must have full knowledge at the time of ratification of all the material facts and circumstances relating to the unauthorized act of the person who assumed to act as agent. No ratification can be implied in the instant case. A perusal of Baluyot’s Answer reveals that the real arrangement between her and Atty. Linsangan was for the latter to pay a monthly installment of P1,800.00 whereas Baluyot was to shoulder the counterpart amount of P1,455.00 to meet the P3,255.00 monthly installments as indicated in the contract. However, it appears that while Atty. Linsangan issued the post-dated checks, Baluyot failed to come up with her part of the bargain. As far as MMPCI is concerned, the contract price was P132,250.00, as stated in the Offer to Purchase signed by Atty. Linsangan and MMPCI’s authorized officer. MMPCI received only P1,800.00 checks, which were clearly insufficient payment. If MMPCI was aware of the arrangement, it would have refused the latter’s check payments for being insufficient.

BOARD OF LIQUIDATORS vs. HEIRS OF MAXIMO KALAW20 SCRA 987

A corporate officer, entrusted with the general management and control of its business, has implied authority to make any contract or do any other act which is necessary or appropriate to the conduct of the ordinary business of the corporation. As such officer, he may, without any special authority from the Board of Directors, perform all acts of an ordinary nature, which by usage or necessity are incident to his office, and may bind the corporation by contracts in matters arising in the usual course of business.

Where similar acts have been approved by the directors as a matter of general practice, custom, and policy, the general manager may bind the company without formal authorization of the board of directors. In varying language, existence of such authority is established by proof of the course of business, the usages and practices of the company and by theknowledge which the board of directors has, or must be presumedto have, of acts and doings of its subordinates in and about the affairs of the corporation. Where the practice of the corporation has been to allow its general manager to negotiate and execute contracts in its copra trading activities for and in Nacoco's behalfwithout prior board approval, and the board itself, by its acts and through acquiescence, practically laid aside the by-law requirement of prior approval, the contracts of the general manager, under the given circumstances, are valid corporate acts.

Ratification by a corporation of an unauthorized act or contract by its officers or others relates back to the time of the act or contract ratified and is equivalent to original authority. The corporation and the other party to the transaction are in precisely the same position as if the act or contract had been authorized at the time. The adoption or ratif ication of a contract by a corporation is nothing more nor less than the making of an original contract. The theory of corporate ratification is predicated on the right of a corporation to contract, and any ratification or adoption is equivalent to a grant of prior authority.

FRANCISCO VS. GSIS7 SCRA 577

The terms of the offer were clear, and over the signature of defendant’s general manager, Rodolfo Andal, plaintiff was informed telegraphically that her proposal had been accepted. There was nothing in the telegram that hinted at any anomaly, or gave ground to suspect its veracity, and the plaintiff, therefore, can not be blamed for relying upon it. There is no denying that the telegram was within Andal’s apparent authority, but the defense is that he did not sign it, but that it was sent by the Board Secretary in his name and without his knowledge. Assuming this to be true, how was appellee to know it? Corporate transactions would speedily come to a standstill were every person dealing with a corporation held duty-bound to disbelieve every act of its responsible officers, no matter how regular they should appear on their face.

This Court has observed in Ramirez vs. Orientalist Co., 38 Phil. 634, 654-655, that—“In passing upon the liability of a corporation in cases of this kind it is always well to keep in mind the situation as it presents itself to the third party with whom the contract is made. Naturally he can have little or no information as to what occurs in corporate meetings; and he must necessarily rely upon the external manifestations of corporate consent. The integrity of commercial transactions can only be maintained by holding the corporation strictly to the liability fixed upon it by its agents in accordance with law; and we would be sorry to announce a doctrine which would permit the property of a man in the city of Paris to be whisked out of his hands and carried into a remote quarter of the earth without recourse against the corporation whose name and authority had been used in the manner disclosed in this case. As already observed, it is familiar doctrine that if a corporation knowingly permits one of its officers, or any other agent, to do acts within the scope of an apparent authority, and thus holds him out to the public as possessing power to do those acts, the corporation will, as against any one who has in good faith dealt with the corporation through such agent, be estopped from denying his authority; and where it is said ‘if the corporation permits’ this means the same as ‘if the thing is

permitted by the directing power of the corporation.’”

A corporation cannot evade the binding effect produced by a telegram sent by its board secretary, and the addressee of such telegram cannot be blamed for relying upon it, because if every person dealing with a corporation were held duty-bound to disbelieve every act of its responsible officers no matter how regular it should appear on its face, corporate transactions would speedily come to a standstill.

WOODCHILD VS. ROXAS436 SCRA 235

The agent was not specifically authorized to grant a right of way or to agree to sell to a portion thereof. It found that the authority of agent, under the resolution did not include the authority to sell a portion of the agacent lot, or to create or convey real rights thereon. Regarding an implied authority it said:

“Neither may such authority be implied from the authority granted to Roxas to sell Lot No. 491-A-3-B-2 to the petitioner “on such terms and conditions which he deems most reasonable and advantageous.” Under paragraph 12, Article 1878 of the New Civil Code, a special power of attorney is required to convey real rights over immovable property.26 Article 1358 of the New Civil Code requires that contracts which have for their object the creation of real rights over immovable property must appear in a public document.27 The petitioner cannot feign ignorance of the need for Roxas to have been specifically authorized in writing by the Board of Directors to be able to validly grant a right of way and agree to sell a portion of Lot No. 491-A-3-B-1. The rule is that if the act of the agent is one which requires authority in writing, those dealing with him are charged with notice of that fact.28”

The Court reiterated that:

Powers of attorney are generally construed strictly and courts will not infer or presume broad powers from deeds which do not sufficiently include property or subject under which the agent is to deal.The general rule is that the power of attorney must be pursued within legal strictures, and the agent can neither go beyond it; nor beside it. The act done must be legally identical with that authorized to be done.

Thus, this case demonstrates a strict application of the rule that the agent must act within the scope of his authority.

RURAL BANK of MILAOR VS. OCFEMIA325 SCRA 99

In failing to file its answer specifically denying under oath the Deed of Sale, the bank admitted the due execution of the said contract. Such admission means that it acknowledged that Tena was authorized to sign the Deed of Sale on its behalf.

In any event, the bank acknowledged, by its own acts or failure to act, the authority of Fe S. Tena 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. Likewise, 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.

CUISON vs. CA227 SCRA 391

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 be.

Petitioner is now estopped from disclaiming liability for the transaction entered into by Tiu Huy Tiac on his behalf. It 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.

BEDIA vs WHITE204 SCRA 273

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.

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.

PNB vs. Ritratto Group362 SCRA 216

The contract questioned is one entered into between respondent and PNB-IFL, not PNB. In their complaint, respondents admit that petitioner is a mere attorney-in-fact for the PNB-IFL with full power and authority to, inter alia, foreclose on the properties mortgaged to secure their loan obligations with PNB-IFL. In other words, herein petitioner is an agent with limited authority and specific duties under a special power of attorney incorporated in the real estate mortgage. It is not privy to the loan contracts entered into by respondents and PNB-IFL.

In any case, the parent-subsidiary relationship between PNB and PNB-IFL is not the significant legal relationship involved in this case since the petitioner was not sued because it is the parent company of PNB-IFL. Rather, the petitioner was sued because it acted as an attorney-in-fact of PNB-IFL in initiating the foreclosure proceedings. A suit against an agent cannot without compelling reasons be considered a suit against the principal. Under the Rules of Court, every action must be prosecuted or defended in the name of the real party-in-interest, unless otherwise authorized by law or these Rules. In mandatory terms, the Rules require that “parties-in-interest without whom no final determination can be had, an action shall be joined either as plaintiffs or defendants.” In the case at bar, the injunction suit is directed only against the agent, not the principal.

John Fortis vs. Gutierrez Hermanos

G.R. No. L-2484 April 11, 1906

Doctrine:

1. General rule: receipt by a person of share of profits of business is prima

facie evidence that he is a partner; Exception: profit was for payment as

wages of employee.

2. Articles of partnership prevail as to the division of profits among partners.

3. It is the net profit, after all expenses (including salary of employee) have

been deducted that is shared between partners.

No. The judgment of the court below was affirmed. Case was remanded to the lower

court for execution.

First, it was a mere contract of employment. The plaintiff had neither voice nor vote in

the management of the affairs of the company.

Second, the articles of partnership between the defendants provided that the profits

should be divided among the partners named in a certain proportion, and the contract

made between the plaintiff and the then manager of the defendant partnership did not in

any way vary or modify this provision of the articles of partnership.

The profits of the business could not be determined until all of the expenses had been

paid. A part of the expenses to be paid for the year 1902 was the salary of the plaintiff.

That salary had to be deducted before the net profits of the business, which were to be

divided among the partners, could be ascertained. It was necessary to determine what

the profits of the business were after paying all of the expenses except his, in order to

determine what the salary of the plaintiff was. But such determination does not arrive at

the net profits of the business yet. It was only made for the purpose of fixing the basis

upon which his compensation should be determined.

ALBALADEJO Y CIA., S. EN C. v. PHILIPPINE REFINING CO. 48 PHIL 556

The relation between the parties was not that of principal and agent in so far as relates

to the purchase of copra by Albaladejo. WhileVRC made Albaladejo one of its

instruments for the collection of copra,in making its purchases from the

producers,Albaladejo was buying upon its own account.When Albaladejo turned over the

copra to VRC, a second sale was effected.

In the contract, it is declared that during the continuance of theagreement,VRC would

not appoint any other agent for the purchase of copra in Legaspi; and this gives rise

indirectly to the inference that Albaladejo was considered its buying agent. However, the

use of this term in one clause of the contract cannot dominate the real nature of the

agreement as revealed in other clauses, no less than in the caption of the agreement

itself. This designation was used for convenience. The title to all of the copra purchased

by Albaladejo remained in it until it was delivered by way of subsequent sale to VRC.

Lastly, the letters from VRC to Albaladejo that the Court quoted did not indicate anything

to the effect that VRC is liable for the such expenses incurred by Albaladejo, as the

letters only noted the dire condition of VRC’s copra business, as well as its hopes to

enter the market on a more extensive scale [which was unfortunately unrealized].

Perez vs Luzon Surety 38 OG 1213

Doctrine: A Principal is obligated to give compensation to the broker/agent who is the

proximate cause of the deal/contract. The compensation being referred here is the

commission of the agent as a result of his services to the principal.

Constante de Castro vs CA 384 SCRA 607

Doctrine: 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. If there are two or more principals, each has the same obligation to

compensate the agent for his services as they are held to be solidarily liable to the

agent.

Sta Romana vs Imperio 15 SCRA 625

Doctrine: A principal may in some cases act as a vendor through his agent. In these

cases, he is obligated to reimburse to the vendee, in the event of eviction, the value of

the thing sold at the time of the eviction even if it be of a greater or lesser price of the

sale.

Syjuco vs Syjuco G.R. No. 13471

Doctrine: Whenever an agent enters into a contract under his own name, the principal is

not bound by what the agent does or contracts thereby not being liable. However, the

exception to this general rule is when the thing being dealt with belongs to the principal.

In this instance, the contract is deemed to have been entered by the principal and the

third person. As a result of this, the principal assumes all rights, obligations and liabilities

that arise from the contract made by the agent with third persons.

PNB vs Aguedo G.R. No. 39037

Doctrine: When an agent negotiates a loan in his own name and executes a promissory

note under his personal signature without express authority from his principal, giving as

security therefor real estate belonging to the latter, also in his own name and not in the

name and in representation of said principal, the obligation so contracted by him is

personal and is not binding upon the af oresaid principal.

Keeler vs Rodriguez G.R. No. 19001

Doctrine: Persons dealing with an assumed agent, whether the assumed agency be a

general or special one, are bound at their peril, if they would hold the principal, to

ascertain not only the fact of the agency but the nature and extent of the authority, and in

case either is controverted, the burden of proof is upon them to establish it.

BA Finance vs CA G.R. No. 94566

Doctrine: It is a settled rule that persons dealing with an assumed agent, whether the

assumed agency be a general or special one are bound at their peril, if they would hold

the principal liable, to ascertain not only the fact of agency but also the nature and extent

of authority, and in case either is controverted, the burden of proof is upon them to

establish it. Hence, the burden is on respondent bank to satisfactorily prove that the

credit administrator with whom they transacted acted within the authority given to him by

his principal, petitioner corporation.

Also, Guaranty is not presumed, it must be expressed and cannot be extended

beyond its specified limits.

NAPOCOR vs National Merchandising G.R. No. L-33819

Doctrine: The rule that a person dealing with an agent must inquire into the limits of the

agent's authority does not apply where the agent is being held directly responsible for

taking chances in exceeding its authority meaning the agent is acting in his own name.

Apex Minig vs Southeast Mindanao G.R. No. 152613

Doctrine: The concept of agency is distinct from assignment—in agency, the agent acts

not on his own but on behalf of his principal, while in assignment, there is total transfer

or relinquishment of right by the assignor to the assignee.

Bacaltos vs CA G.R. NO. 114091

Doctrine: Every person dealing with an agent is put upon inquiry and must discover upon

his peril the authority of the agent. If he does not make such inquiry, he is chargeable

with knowledge of the agent’s authority, and his ignorance of that authority will not be

any excuse. Persons dealing with an assumed agent, whether the assumed agency be a

general or special one, are bound at their peril, if they would hold the principal, to

ascertain not only the fact of the agency but also the nature and extent of the authority,

and in case either is controverted, the burden of proof is upon them to establish it.

Del Rosario vs Abad G.R. No. L-10881

Doctrine: The power of attorney executed by the homesteader in favor of defendant did

not create an agency with interest nor did it clothe the agency with irrevocable character.

A mere statement in the power of attorney that it is coupled With interest is not enough.

In what does such interest consist must be stated in the power of attorney.

VICENTE M. COLEONGCO vs. EDUARDO L. CLAPAROLSG.R. No. L-18616, March 31, 1964

Facts: Eduardo L. Claparols (appellee) operates the Claparol’s Steel and Nail Plant in Talisay, Occidental Negros. Due to losses, Claparols was compelled to look for someone to finance his imports of raw material (nail wire). At first, Kho To agreed to finance but eventually introduced Vicente Coleongco (appellant) to Claparols recommending the former to be the latter’s financier. Claparols agreed and on the same date, a contract was perfected between them whereby Coleongco undertook to finance and put up the funds required for the importation of the nail wire, which Claparols bound himself to convert into nails at his plant. Sometime in 1953, Claparols executed in favor of Coleongco at the latter’s behest, a special power of attorney to open and negotiate letters of credit, to sign contracts, bills of lading, invoices and papers covering transactions, to represent appellee and the nail factory and the acceptance of payments and cash advances from dealers and distributors. Around mid-November 1956, Claparols learned from the Philippine National Bank (PNB) that Coleongco wrote the bank trying to discredit him, causing the bank to issue an alias writ of execution. Behind Claparol’s back, Coleongco wrote the bank alleging that Claparols was not serious in meeting his financial obligations by selling the machines. Claparols was able to settle the matter with the bank but because of this, he revoked the SPA. Coleongco denies the allegations and claims that the revocation of the SPA was illegal and that he was entitled to the share of the profits as well as moral damages.

Issue: Whether Claparols had the legal power to revoke the power of attorney?

Held: Yes. Coleongco acting in bad faith towards his principal Claparols, is on the record, unquestionable. His letters to the PNB attempting to undermine the credit of the principal and to acquire the factory of the latter, without the principal’s knowledge are plain acts of deliberate sabotage by the agent that fully justified the revocation of the power of attorney. The basic rule of contracts requires parties to act loyally toward each other in the pursuit of the common end, and appellant clearly violated the rule of good faith prescribed by Article 1315 of the New Civil Code. Furthermore, it must not be forgotten that a power of attorney can be made irrevocable by contract only in the sense that the principal may not recall it at his pleasure but coupled with interest or not, the authority certainly can be revoked for a just cause, such as when the attorney-in-fact betrays the interest of the principal, as what happened in this case. It is not open to serious doubt that the irrevocability of the power of attorney may not be used to shield the perpetration of acts in bad faith, breach of confidence, or betrayal of trust, by the agent for that would amount to holding that a power coupled with an interest authorizes

the agent to commit frauds against the principal. Our new Civil Code, in Article 1172, expressly provides the contrary in prescribing that responsibility arising from fraud is demandable in all obligations, and that any waiver of action for future fraud is void. It is also on this principle that the Civil Code, in its Article 1800, declares that the powers of a partner, appointed as manager, in the articles of co-partnership are irrevocable without just or lawful cause and an agent with power coupled with an interest can not stand on better ground than such a partner in so far as irrevocability of the power is concerned.

GENEVIEVE LIM vs. FLORENCIO SABANG.R. No. 163720, December 16, 2004

Facts: Under an Agency Agreement, Ybañez authorized Saban to look for a buyer of the lot for P200,000.00 and to mark up the selling price to include the amounts needed for payment of taxes, transfer of title and other expenses incident to the sale, as well as Saban's commission for the sale. Through Saban's efforts, Ybañez and his wife were able to sell the lot to Genevieve Lim and the spouses Benjamin and Lourdes Lim at P600,000.00 inclusive of taxes and other incidental expenses of the sale. After the sale, Lim remitted to Saban the amounts of P113,257 for payment of taxes due on the transaction as well as P50,000.00 as broker's commission. Lim also issued in the name of Saban four postdated checks in the aggregate amount of P236,743.00. Subsequently, Ybañez sent a letter to Lim asking the latter to cancel all the checks issued by her in Saban's favor and to extend another partial payment for the lot in his (Ybañez's) favor. After the four checks in his favor were dishonored upon presentment, Saban filed a complaint for collection of sum of money and damages against Ybañez and Lim. Saban alleged that Ybañez told Lim that he (Saban) was not entitled to any commission for the sale since he concealed the actual selling price of the lot from Ybañez and because he was not a licensed real estate broker. Ybañez was able to convince Lim to cancel all four checks. In his Answer, Ybañez claimed that Saban was not entitled to any commission because he concealed the actual selling price from him and because he was not a licensed real estate broker.

Issue: Whether there was revocation of the agency that would make Saban ineligible to receive a commission from the sale?

Held: The agency was not revoked making Saban entitled to receive commission from the sale. There was no revocation since Ybañez requested that Lim make stop payment orders for the checks payable to Saban only after the consummation of the sale. At that time, Saban had already performed his obligation as Ybañez’s agent when, through his (Saban’s) efforts, Ybañez executed the Deed of Absolute Sale of the lot with Lim and the Spouses Lim. To deprive Saban of his commission subsequent to the sale which was consummated through his efforts would be a breach of his contract of agency with Ybañez which expressly states that Saban would be entitled to any excess in the purchase price after deducting the P200,000.00 due to Ybañez and the transfer taxes and other incidental expenses of the sale. However, the Court does not agree that Saban’s agency was one coupled with an interest. Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable. Stated differently, an agency is deemed as one coupled with an interest where it is established for the mutual benefit of the principal and of the agent, or for the

interest of the principal and of third persons, and it cannot be revoked by the principal so long as the interest of the agent or of a third person subsists. In an agency coupled with an interest, the agent’s interest must be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it entitles him to compensation. When an agent’s interest is confined to earning his agreed compensation, the agency is not one coupled with an interest, since an agent’s interest in obtaining his compensation as such agent is an ordinary incident of the agency relationship.

ARTURO P. VALENZUELA and HOSPITALITA N. VALENZUELA vs. COURT OF APPEALS, BIENVENIDO M. ARAGON, ROBERT E. PARNELL, CARLOS K.

CATOLICO and THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC.

G.R. No. 83122, October 19, 1990

Facts: Petitioner Valenzuela, a General Agent respondent Philamgen, was authorized to solicit and sell all kinds of non-life insurance. He had a 32.5% commission rate. From 1973 to 1975, Valenzuela solicited marine insurance from Delta Motors, Inc. in the amount of P4.4 Million from which he was entitled to a commission of 32%. However, Valenzuela did not receive his full commission, which amounted to P1.6 Million from the P4.4 Million. Premium payments amounting to P1,946,886.00 were paid directly to Philamgen. Valenzuela’s commission amounted to P632,737.00. Philamgen wanted to cut Valenzuela’s commission to 50% of the amount. He declined. When Philamgen offered again, Valenzuela firmly reiterated his objection. Philamgen took drastic action against Valenzuela. They reversed the commission due him, threatened the cancellation of policies issued by his agency and started to leak out news that Valenzuela has a substantial debt with Philamgen. His agency contract was terminated. The petitioners sought relief by filing the complaint against the private respondents.

Issue: Whether the agency is one coupled with an interest and, therefore, should not be freely revocable at the unilateral will of the company?

Held: Yes. Records show that the agency is one coupled with an interest and, therefore, should not be freely revocable at the unilateral will of the company. The records sustain the finding that the private respondent started to covet a share of the insurance business that Valenzuela had built up, developed and nurtured. The company appropriated the entire insurance business of Valenzuela. Worse, despite the termination of the agency, Philamgen continued to hold Valenzuela jointly and severally liable with the insured for unpaid premiums. Under these circumstances, it is clear that Valenzuela had an interest in the continuation of the agency when it was unceremoniously terminated not only because of the commissions he procured, but also Philamgen’s stipulation liability against him for unpaid premiums. The respondents cannot state that the agency relationship between Valenzuela and Philamgen is not coupled with interest. There is an exception to the principle that an agency is revocable at will and that is when the agency has been given not only for the interest of the principal but also for the mutual interest of the principal and the agent. The principal may not defeat the agent's right to indemnification by a termination of the contract of agency. Also, if a principal violates a contractual or quasi-contractual duty, which he owes his agent, the agent may as a rule bring an appropriate action for the breach of that duty.

ALBERT M. CHING and ROMEO J. BAUTISTA vs. FELIX M. BANTOLO, ANTONIO O. ADRIANO and EULOGIO STA. CRUZ, JR., substituted by his children,

represented by RAUL STA. CRUZ, JR.G.R. No. 177086, December 5, 2012

Facts: Respondents Felix M. Bantolo (Bantolo), Antonio O. Adriano and Eulogio Sta. Cruz, Jr. are owners of several parcels of land situated in Tagaytay City. On April 3, 2000, respondents executed in favor of petitioners Albert Ching (Ching) and Romeo J. Bautista a Special Power of Attorney (SPA) authorizing petitioners to obtain a loan using respondents’ properties as collateral. However, without notice to petitioners, respondents executed a Revocation of Power of Attorney effective on July 17, 2000. On July 18, 2000, the Philippine Veterans Bank (PVB) approved the loan application of Ching in the amount of P25 million. On July 31, 2000, Ching thru a letter informed respondents of the approval of the loan. Sometime in the first week of August 2000, petitioners learned about the revocation of the SPA. Consequently, petitioners sent a letter to respondents demanding that the latter comply with the agreement by annulling the revocation of the SPA. On September 8, 2000, petitioners filed before the Regional Trial Court a Complaint for Annulment of Revocation of SPA, Enforcement of SPA and/or interest in the properties covered by said SPA and Damages against respondents.

Issue: Whether the SPA executed by respondents in favor of petitioners is a contract of agency coupled with interest and, therefore, should not be freely revocable at the unilateral will of the company?

Held: Yes. The Court ruled that there is no question that the SPA executed by respondents in favor of petitioners is a contract of agency coupled with interest. This is because their bilateral contract depends upon the agency. Hence, it cannot be revoked at the sole will of the principal.

NATIONAL SUGAR TRADING and/or the SUGAR REGULATORY ADMINISTRATION vs. PHILIPPINE NATIONAL BANKG.R. No. 151218 January 28, 2003

Facts: Philippine Exchange Company, Inc. (PHILEXCHANGE) had an agreement with PNB for the latter to finance its sugar trading operations wherein the proceeds of the said operations were to be used to pay its liabilities. PNB then extended loans to PHILEXCHANGE. However, PHILEXCHANGE defaulted in the payments. Three years after, the National Sugar Trading Corporation (NASUTRA) replaced PHILEXCHANGE but NASUTRA was not required to immediately pay PHILEXCHANGE. Notwithstanding this concession, NASUTRA still failed to pay the sugar stocks covered by quedans to PHILEXCHANGE. As a consequence, PHILEXCHANGE was not able to pay its obligations to PNB. To finance its sugar trading operations, NASUTRA applied for and was granted a P408 Million Revolving Credit Line by PNB. Every time NASUTRA availed of the credit line, its Executive Vice-President, Jose Unson, executed a promissory note in favor of PNB. Subsequently, NASUTRA was not able to pay the interest. After the Edsa Revolution, the SRA (Sugar Regulatory Administration) was created, abolishing PHILSUCOM. NASUTRA then established a trusteeship to liquidate and settle its accounts. This notwithstanding, NASUTRA still defaulted in the payment of its loans to PNB. In the meantime, PNB received remittances from foreign banks, which represented the proceeds of NASUTRA’s sugar exports. Said remittances were then applied by PNB to the unpaid accounts of NASUTRA with PNB and PHILEXCHANGE.

Issue: Whether PNB can apply the foreign remittances on the long-overdue obligations of NASUTRA?

Held: Yes. When NASUTRA availed of the credit line from PNB, evidence showed that its Executive Vice President, Jose Unson, executed a promissory note in favor of PNB with the following proviso: “In the event that this note is not paid at maturity or when the same becomes due under any of the provisions hereof, I/We hereby authorize the Bank, at its option and without notice, to apply to the payment of this note, any and all moneys, securities and things of values which may be in the hands on deposit or otherwise belonging to me/us and for this purpose, I/We hereby, jointly and severally, irrevocably constitute and appoint the Bank to be my/our true Attorney-in-Fact with full power and authority for me/us and in my/our name and behalf and without prior notice to negotiate, sell and transfer any moneys, securities and things of value which it may hold, by public or private sale and apply the proceeds thereof to the payment of this note.”

PNB correctly treated the subject remittances for the account of NASUTRA “as moneys in its hands”, which may be “applied for the payment of the note”. The relationship between NASUTRA/SRA and PNB when the former constituted the latter as its attorney-in-fact is not a simple agency. NASUTRA/SRA has assigned and practically surrendered its rights in favor of PNB for a substantial consideration. To reiterate, NASUTRA/SRA executed promissory notes in favor of PNB every time it availed of the credit line. The agency established between the parties is one coupled with interest, which cannot be revoked or cancelled at will by any of the parties.

BISAYA LAND TRANSPORTATION CO., INC. vs. MARCIANO C. SANCHEZG.R. No. L-74623, August 31, 1987.

Facts: Bisaya Land Transportation Company, Inc. (BISTRANCO) has been engaged in the shipping business and one of its ports of call is in Butuan City. When BISTRANCO was under receivership, Mariano Sanchez (Sanchez) was appointed by BISTRANCO as its acting shipping agent for its vessels in Butuan City by its Receiver, Atty. Adolfo V. Amor (Amor) "pending the execution of the formal contract of agency". Thereafter a formal Contract of Agency was executed between BISTRANCO, represented by Receiver Atty. Adolfo V. Amor and Marciano C. Sanchez, represented by his authorized representative Exequiel Aranas. Sanchez, after finding out that Paragraph 16 of the Contract of Agency was quite prejudicial to him, he executed with BISTRANCO a Supplemental Shipping Agency Contract, which was duly signed by both parties. However, both the Contract of Agency and the Supplemental Shipping Agency Contract were never submitted by Atty. Amor to the receivership court for its approval. By virtue of the Contracts, Sanchez performed his duties as shipping agent of BISTRANCO. Under Sanchez’s endeavors, he had managed to increase the volume of the shipping business of BISTRANCO at Butuan City and helped it flourished. Then one day, BISTRANCO wrote Sanchez that they would commence operating its branch office at Butuan City and thereafter actually operated a branch office, which in effect repudiated the Contracts.

Issue: Whether the Contract of Agency and the Supplemental Shipping Agency Contract are void which would make the opening by BISTRANCO of a branch in Butuan City legal?

Held: The 2 contracts are unenforceable which were later on ratified by BISTRANCO. The ratification made the opening by BISTRANCO of a branch in BUTUAN city a

violation of the said contracts.

It is undisputed that Atty. Adolfo Amor was entrusted, as receiver, with the administration of BISTRANCO and its business. But the act of entering into a contract is one, which requires the authorization of the court, which appointed him receiver. Consequently, the questioned Contracts can rightfully be classified as unenforceable for having been entered into by one who had acted beyond his powers, due to Receiver Amor's failure to secure the court's approval of said Contracts. These unenforceable Contracts were nevertheless deemed ratified by a letter from the company informing Sanchez that, "we (petitioners) are abiding strictly with the terms of the contracts executed between Marciano C. Sanchez and Atty. Adolfo V. Amor in behalf of BISTRANCO…" Furthermore, BISTRANCO received material benefits from the contracts of agency of Sanchez, based upon the monthly statements of income of BISTRANCO, upon which the commissions of Sanchez were based. A perusal of the Contracts will also show that there is no single provision therein that can be said as prejudicial or not beneficial to BISTRANCO.

ANTONIO M. BARRETTO vs. JOSE SANTA MARINAG.R. No. 8238, December 2, 1913

Facts: The La Insular cigar and cigarette factory is a joint account association with a nominal capital of P865,000, the plaintiff's share being P20,000, or 4/173 of the whole. On March 14, 1910, the plaintiff's attorneys wrote the defendant's local representative a letter offering to sell to the defendant plaintiff's participation in the factory. The result of the correspondence between the parties and their representatives was that Exhibit G was duly executed on May 3, 1910. In accordance with the terms of this exhibit a committee of appraisers was appointed to ascertain and fix the actual value of La Insular. The committee rendered its report on November 14, 1910, fixing the net value at P4,428,194.44. Of this amount 4/173 part represented the plaintiff 's share on his P20,000 of the nominal capital. In Exhibit J, which was executed on November 22, 1910, the plaintiff acknowledged to have received from the defendant that amount. Subsequently to the execution of Exhibit J, demand was made by the plaintiff upon the defendant for his share of the profits from June 30, 1909, to November 22, 1910. This demand was refused and thereupon this action was instituted to recover said profits. The plaintiff admits that if the agreement of May 3, 1910, was a perfected sale he cannot recover any profits after that date. The defendant, on the other hand, concedes that if said agreement was only a promise to sell in the future, it, standing alone, would not prevent recovery in this action.

Issue: Whether the agreement of May 3, 1910, was a perfected sale, extinguishing the agency between plaintiff and defendant making the former ineligible to recover any profits after that date? Held: Yes. The plaintiff sold his share of the accumulated profits. Plaintiff executed a document whereby he agreed to transfer to the defendant "the whole of the right, title, and interest" he had in a joint stock association, at the same time agreeing that the ascertainment of the price of his share should depend unreservedly upon the appraisement made by three appraisers of the total value of the association's property. The appraisers occupied about six months in making the appraisement and in their report there was no indication that any attempt had been made to segregate accumulated profits from other assets of the association. Plaintiff had participated in 'the

last distribution of profits made by the association prior to the time he accepted payment for his share. Upon the completion of the defendant's report plaintifF executed a document whereby he acknowledged receipt of the price arrived at by the appraisers, and further stated that he relinquished from that date all intervention, claim, right, or action that he had in said business.

Eulogio Del Rosario, Aurelio del Rosario, Benito del Rosario, Bernardo del Rosario, Isidra del Rosario, Dominga del Rosario and Concepcion Borromeo vs.

Primitivo Abad and Teodorico AbadG.R. No. L-10881, September 30, 1958

Facts: On December 1936, the Secretary of Agriculture and Commerce issued under the provisions of the Public Land Act a homestead patent situated in Nueva Ecija to Tiburcio del Rosario. On February 1937, the Registrar of Deeds issued to him an original certificate of title. On February 24, 1937, del Rosario obtained a loan from Primitivo Abad in the sum of P2000 with interest payable on December 3, 1941. del Rosario executed an “irrevocable special power of attorney coupled with interest” in favor of the mortgagee, authorizing him to sell and convey the parcel of land. del Rosario died in December 1945 leaving the debt unpaid. Primitivo Abad, acting as attorney-in-fact of del Rosario sold the parcel of land to his son Teodorico Abad in consideration of the token sum of P1.00 and the payment of the mortgage debt of the late del Rosario. Teodorico too possession of the land, cancelled the original certificate of title and reigistered the land under his name in a transfer certificate of title. The heirs of del Rosario filed this case to recover the possession and ownership of the parcel of land, damages, etc. Issue: Whether the power of attorney executed by the homesteader in favor of defendant created an agency coupled with interest?

Held: No. The power of attorney executed by del Rosario in favor of Primitivo Abad providing, among others that, “it is coupled with an interest in the subject matter thereof and are therefore irrevocable, and … conferring upon my said attorney full and ample power and authority to do and perform all things reasonably necessary and proper for the due carrying out of the said powers according to the true tenor and purport of the same”, does not create an agency coupled with an interest nor does it clothe the agency with an irrevocable character. A mere statement in the power of attorney that it is coupled with interest is not enough. What such interest consist must be stated in the power of attorney. The mortgage has nothing to do with the power of attorney and may be foreclosed by the mortgagee upon failure of the mortgagor to comply with his obligation. As the agency was not coupled with an interest, it was terminated upon the death of the principal, and the agent could no longer validly convey the land.

DY BUNCIO & COMPANY, INC. vs. ONG GUAN CAN ET AL.G.R. No. 40681, October 2, 1934

Facts: This is a suit over a rice-mill and camarín situated at Dao, Province of Capiz. Plaintiff claims that the property belongs to its judgment debtor, Ong Guan Can, while defendants Juan Tong and Pua Giok Eng claim as owner and lessee of the owner by virtue of a deed dated July 31, 1931, by Ong Guan Can, jr. After trial the Court of First Instance of Capiz held that the deed was invalid and that the property was subject to the execution which had been levied on said properties by the judgment creditor of the owner. Defendants Juan Tong and Pua Giok Eng bring this appeal and insist that the deed of the 31st of July, 1931, is valid.

The first recital of the deed is that Ong Guan Can, jr., as agent of Ong Guan Can, the proprietor of the commercial firm of Ong Guan Can 4, Sons, sells the rice-mill and camarín for P13,000 and gives as his authority the power of attorney dated the 23d of May, 1928, a copy of this public instrument being attached to the deed and recorded with the deed in the office of the register of deeds of Capiz. The receipt of the money acknowledged in the deed was to the agent, and the deed was signed by the agent in his own name and without any words indicating that he was signing it for the principal. Leaving aside the irregularities of the deed and coming to the power of attorney referred to in the deed and registered therewith, it is at once seen that it is not a general power of attorney but a limited one and does not give the express power to alienate the properties in question. (Article 1713 of the Civil Code.) Appellants claim that the defect is cured by Exhibit 1, which purports to be a general power of attorney given to the same agent in 1920.

Issues: Whether the deed of sale executed by Ong Guan Can Jr. was valid? Held: NO. Article 1732 of the Civil Code is silent over the partial termination of an agency. The making and accepting of a new power of attorney, whether it enlarges or decreases the power of the agent under a prior power of attorney, must be held to supplant and revoke the latter when the two are inconsistent. If the new appointment with limited powers does not revoke the general power of attorney, the execution of the second power of attorney would be a mere futile gesture.

JUAN GARCIA vs. JOSEFA DE MANZANOG.R. No. 13414, February 4, 1919

Facts: Narciso Lopez Manzano gave a general power-of-attorney to his son, Angel L. Manzano on the 9th of February, 1910, and on the 25th of March a second general power of attorney to his wife, Josefa Samson. Manzano was the owner of a half interest in a small steamer, the San Nicolas, the other half owned by Ocejo, Perez & Co under a partnership agreement. When the agreement expired Ocejo, Perez & Co demanded that Manzano buy or sell. As he did not want to sell at the price offered and could not buy, Juan Garcia bought the half interest held by Ocejo, Perez & Co. Angel L. Manzano, acting under his power-of-attorney, sold in July, 1911, the other half of the boat to the plaintiff, but as Garcia is a Spaniard and could not register the boat in his name at the Custom House, the boat was registered in the name of Agustin Garcia, a son of  the plaintiff, who at that time, July 2, 1913, was a minor about twenty years old. Agustin Garcia shortly thereafter died, leaving his parents as his heirs at law, and as such heirs plaintiff's wife was made a party. The defendants allege that Narciso L. Manzano was the owner of one-half of the small steamer San Nicolas and that Angel L. Manzano had no authority to sell the interest in the steamer, because the power of attorney given to

Josefa revoked the one given to the son.

Issue: Whether the powerof attorney issued to the wife revoked the one issued to the son?

Held: No. A second power of attorney revokes the first one only after notice given to first agent. There is no proof in the record that the first agent, the son, knew of the power-of-attorney to his mother. It was necessary under the law for the defendants, in order to establish their counterclaim, to prove that the son had notice of the second power-of-attorney. They have not done so and it must be considered that Angel L. Manzano was acting under a valid power-of-attorney from his father which had not been legally revoked on the date of the sale of the half interest in the steamer to the plaintiff's son, which half interest was legally inherited by the plaintiffs.

CMS LOGGING, INC vs. THE COURT OF APPEALS and D.R. AGUINALDO CORPORATION

G.R. No. 41420, July 10, 1992

Facts: CMS Logging and DRACOR entered into a contract of agency whereby the former appointed the latter as its exclusive export and sales agent for all logs that the former may produce, for a period of 5 years. Out of this agreement, DRACOR was entitled to 5% commission of the gross sales of the logs sold. CMS was then able to sell through DRACOR a total of 77,264,672 board feet of logs in Japan, from September 20, 1957 to April 4, 1962. About six months prior to the expiration of the agreement, while on a trip to Japan, CMS's president, general manager and legal counsel, discovered that DRACOR had used Shinko Trading as agent in selling CMS's logs in Japan for which Shinko earned a commission of U.S. $1.00 per 1,000 board feet from the buyer of the logs. Under this arrangement, Shinko was able to collect a total of U.S. $77,264.67. CMS claimed that this commission paid to Shinko was in violation of the agreement and that they are entitled to this amount as part of the proceeds of the sale of the logs. CMS contended that since DRACOR had been paid the 5% commission under the agreement, it is no longer entitled to the additional commission paid to Shinko as this is tantamount to DRACOR receiving double compensation for the services it rendered. After this discovery, CMS sold and shipped logs directly to several firms in Japan without the aid or intervention of DRACOR.

Issue: Whether DRACOR is entitled to its commission from the sales made by CMS to Japanese firms?

Held: No. The principal may revoke a contract of agency at will, and such revocation may be express, or implied, and may be availed of even if the period fixed in the contract of agency has not yet expired. As the principal has this absolute right to revoke the agency, the agent cannot object thereto. Neither may he claim damages arising from such revocation, unless it is shown that such was done in order to evade the payment of agent's commission.

In the case at bar, CMS appointed DRACOR as its agent for the sale of its logs to Japanese firms. Yet, during the existence of the contract of agency, DRACOR admitted that CMS sold its logs directly to several Japanese firms. This act constituted an implied

revocation of the contract of agency under Article 1924 of the Civil Code, which provides: “The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.” Since the contract of agency was revoked by CMS when it sold its logs to Japanese firms without the intervention of DRACOR, the latter is no longer entitled to its commission from the proceeds of such sale and is not entitled to retain whatever money it may have received as its commission for said transactions. Neither would DRACOR be entitled to collect damages from CMS, since damages are generally not awarded to the agent for the revocation of the agency, and the case at bar is not one falling under the exception mentioned, which is to evade the payment of the agent's commission.

ADORACION LUSTAN vs. COURT OF APPEALS, NICOLAS PARANGAN and SOLEDAD PARANGAN, PHILIPPINE NATIONAL BANK

G.R. No. 111924, January 27, 1997

Facts: Petitioner Adoracion Lustan is the registered owner of a parcel of land in Calinog, Iloilo containing an area of 10.0057 hectares. Petitioner leased the above described property to private respondent Nicolas Parangan for a term of ten (10) years and an annual rent of One Thousand (P1,000.00) Pesos. During the period of lease, Parangan was regularly extending loans in small amounts to petitioner to defray her daily expenses and to finance her daughter's education. On July 29, 1970, petitioner executed a Special Power of Attorney in favor of Parangan to secure an agricultural loan from private respondent Philippine National Bank (PNB) with the aforesaid lot as collateral. On February 18, 1972, a second Special Power of Attorney was executed by petitioner, by virtue of which, Parangan was able to secure four (4) additional loans. The last three loans were without the knowledge of herein petitioner and all the proceeds therefrom were used by Parangan for his own benefit. These encumbrances were duly annotated on the certificate of title. On April 16, 1973, petitioner signed a Deed of Pacto de Retro Sale in favor of Parangan which was superseded by the Deed of Definite Sale dated May 4, 1979 which petitioner signed upon Parangan's representation that the same merely evidences the loans extended by him unto the former. For fear that her property might be prejudiced by the continued borrowing of Parangan, petitioner demanded the return of her certificate of title. Instead of complying with the request, Parangan asserted his rights over the property, which allegedly had become his by virtue of the aforementioned Deed of Definite Sale. Under said document, petitioner conveyed the subject property and all the improvements thereon unto Parangan absolutely for and in consideration of the sum of Seventy Five Thousand (P75,000.00) Pesos. Issue: Whether petitioner's property is liable to PNB for the loans contracted by Parangan by virtue of the special power of attorney?

Held: Yes, the mortgages can be enforced against petitioner. It is admitted that petitioner is the owner of the parcel of land mortgaged to PNB on five (5) occasions by virtue of the Special Powers of Attorney executed by petitioner in favor of Parangan. Petitioner argues that the last three mortgages were void for lack of authority. She totally failed to consider that said Special Powers of Attorney are a continuing one and absent a valid revocation duly furnished to the mortgagee, the same continues to have force

and effect as against third persons who had no knowledge of such lack of authority. Article 1921 of the Civil Code provides, “If the agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they were not given notice thereof.“

The Special Power of Attorney executed by petitioner in favor of Parangan duly authorized the latter to represent and act on behalf of the former. Having done so, petitioner clothed Parangan with authority to deal with PNB on her behalf and in the absence of any proof that the bank had knowledge that the last three loans were without the express authority of petitioner, it cannot be prejudiced thereby. As far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority if such is within the terms of the power of attorney as written even if the agent has in fact exceeded the limits of his authority according to the understanding between the principal and the agent.

The Special Power of Attorney particularly provides that the same is good not only for the principal loan but also for subsequent commercial, industrial, agricultural loan or credit accommodation that the attorney-in-fact may obtain and until the power of attorney is revoked in a public instrument and a copy of which is furnished to PNB. 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 (Article 1911, Civil Code). The mortgage directly and immediately subjects the property upon which it is imposed. The property of third persons which has been expressly mortgaged to guarantee an obligation to which the said persons are foreign, is directly and jointly liable for the fulfillment thereof. It is therefore subject to execution and sale for the purpose of paying the amount of the debt for which it is liable. However, petitioner has an unquestionable right to demand proportional indemnification from Parangan with respect to the sum paid to PNB from the proceeds of the sale of her property in case the same is sold to satisfy the unpaid debts.

CARLOS SANCHEZ vs. MEDICARD PHILIPPINES, INC., DR. NICANOR MONTOYA and CARLOS EJERCITO

G.R. No. 141525, September 2, 2005.

Facts: Sometime in 1987 Medicard Inc. appointed petitioner Sanchez as its special corporate agent and they gave him a commission based on the "cash brought in." In 1988, through petitioner's efforts, Medicard and Unilab executed a Health Care Program Contract. Unilab paid Medicard P4,148,005.00 representing the premium for one year. Medicard then handed petitioner 18% of said amount or P746,640.90 representing his commission. Again, through petitioner's initiative, the agency contract between Medicard and Unilab was renewed for another year. Prior to the expiration of the renewed contract, Medicard proposed an increase of the premium, which Unilab rejected "for the reason that it was too high". Unilab, through a letter, confirmed its decision not to renew the health program. Meanwhile, in order not to prejudice its personnel by the termination of their health insurance, Unilab negotiated with Dr. Montoya and other officers of Medicard, to discuss new ways in order to continue the insurance coverage. Under the new scheme, Unilab shall pay Medicard only the amount corresponding to the actual hospitalization expenses incurred by each personnel plus 15% service fee. Medicard did not give petitioner any commission under the new scheme.

Issue: Whether the contract of agency has been revoked by Medicard, hence, petitioner is not entitled to a commission?

Held: Yes, the Contract of Agency has been revoked, thus the petitioner is not entitled to any commission. It is dictum that in order for an agent to be entitled to a commission, he must be the procuring cause of the sale, which simply means that the measures employed by him and the efforts he exerted must result in a sale. In other words, an agent receives his commission only upon the successful conclusion of a sale. Conversely, it follows that where his efforts are unsuccessful, or there was no effort on his part, he is not entitled to a commission. Based on the facts, it may be recalled that through petitioner's efforts, Medicard was able to enter into a Contract with Unilab, two times, However before the expiration of the renewed contract, Unilab rejected the proposal. Medicard then requested petitioner to reduce his commission should the contract be renewed on its third year, but he was obstinate. It is clear that since petitioner refused to reduce his commission, Medicard directly negotiated with Unilab, thus revoking its agency contract with petitioner. Such revocation is authorized by Article 1924 of the Civil Code which provides: "The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons."

Moreover, as found by the lower courts, petitioner did not render services to Medicard, his principal, to entitle him to a commission. There is no indication from the records that he exerted any effort in order that Unilab and Medicard, after the expiration of the Health Care Program Contract, can renew it for the third time. In fact, his refusal to reduce his commission constrained Medicard to negotiate directly with Unilab. We find no reason in law or in equity to rule that he is entitled to a commission. 

FEDERICO VALERA vs. MIGUEL VELASCOG.R. No. 28050, March 13, 1928

Fact: The defendant was appointed attorney-in-fact of the said plaintiff with authority to manage his property in the Philippines, consisting of the usufruct of a real property located at Echague Street, City of Manila. The defendant, by virtue of the power of attorney, managed plaintiff's property, reported his operations and rendered accounts of his administration On March 31, 1923 presented to plaintiff the final account of his administration for said month, wherein it appears that there is a balance of 3,058.33 in favor of the plaintiff. The liquidation accounts revealed that the plaintiff owed the defendant P1,100, and as a misunderstanding arose between them, the defendant brought suit against the plaintiff. Judgment was rendered in his favor and after the writ of execution was issued, the sheriff levied upon the plaintiff’s right of usufruct, sold it at public auction and adjudicated it to the defendant in payment of all of his claim. Subsequently, the plaintiff sold his right of redemption to one Eduardo Hernandez. Later on, the purchaser conveyed the same right of redemption, to the plaintiff, Frederico Valera. After the plaintiff had recovered his right of redemption, one Salvador Vallejo, who had an execution upon a judgment against the plaintiff rendered in a civil case against the latter, levied upon said right of redemption, which was sold by the sheriff at public auction to Salvador Vallejo and was definitely adjudicated to him. Later, he transferred said right of redemption to the defendant Velasco.

Issue: Whether the acquisition of the usufructuary and right of redemption thereto are valid because the agency between Valera and Velasco has been extinguished by virtue of the agent’s filing of a suit against his principal?

Held: Yes. The fact that an agent institutes an action against his principal for the recovery of the balance in his favor resulting from the liquidation of the accounts between them arising from the agency, and renders a final account of his operations, is equivalent to an express renunciation of the agency, and terminates the juridical relation between them. Article 1732 of the New Civil Code provides: Agency is terminated by: 1. revocation, 2. withdrawal of the agent and 3. the death, interdiction, bankruptcy or insolvency of the principal or of the agent.” and article 1736 of the same code provides that: “An agent may withdraw from the agency by giving notice to the principal. Should the latter suffer any damage through the withdrawal, the agent must indemnify him therefore, unless the agent’s reason for his withdrawal should be the impossibility of continuing to act as such without serious detriment to himself.” The misunderstanding between the plaintiff and the defendant over the payment of the due the latter and the fact that the said defendant brought suit against the said principal for the payment of said balance, more than prove the breach of the juridical relation between them. For, although the agent has not expressly told his principal that he renounced the agency, yet neither dignity nor decorum permits the latter to continue representing a person who has adopted such an antagonistic attitude towards him. When the agent filed a complaint against his principal for recovery of a sum of money arising from the liquidation of the accounts between them in connection with the agency, Federico Valera could not have understood otherwise that Miguel Velasco renounced the agency because his act was more expressive than words and could not have caused any doubt.