21. YOU, Jerico

Sunga-Chan vs. ChuaG.R. No. 143340, 15 AUG 2001

FACTS: Lamberto Chua alleged that in 1977, he verbally entered into a partnership with Jacinto in the distribution of Shellane LPG. For business convenience, Lamberto and Jacinto allegedly agreed to register the business name of their partnership, SHELLITE GAS APPLIANCE CENTER, under the name of Jacinto as a sole proprietorship. Both Lamberto and Jacinto contributed P100,000.00 to the partnership, with the intention that the profits would be equally divided between them. The partnership allegedly had Jacinto as manager, assisted by Josephine Sy, sister-in-law of Lamberto. Upon Jacintos death in the later part of 1989, his daughter, Lilibeth took over the operations of Shellite without Lambertos consent. Despite Lambertos repeated demands for accounting, she failed to comply. On June 22m 1992, Lamberto filed a complaint against Lilibeth with the RTC. RTC decided in favor of Lamberto. Lilibeth questions the correctness of the finding that a partnership existed between Lamberto and Jacinto. In the absence of any written document to show such partnership between Lamberto and Jacinto, Lilibeth argues that these courts were proscribed from hearing the testimonies of Lamberto and his witness, Josephine, to prove the alleged partnership three (3) years after Jacintos death. To support the argument, Lilibeth invokes the DEAD MANS STATUTE OR SURVIVORSHIP RULE under Sec. 23, Rule 130. Lilibeth thus implores this Court to rule that the testimonies of Lamberto and his alter ego, Josephine, should not have been admitted to prove certain claims against a deceased person (Jacinto). ISSUE: Whether or not the DEAD MANS STATUTE applies to this case so as to render inadmissible Lambertos testimony and that if his witness, Josephine. HELD: No. The Dead Mans Statute provides that if one party to the alleged transaction is precluded from testifying by death, insanity, or other mental disabilities, the surviving party is not entitled to the undue advantage of giving his own contradicted and unexplained account of the transaction.Lilibeth filed a compulsory counterclaim against Lamberto in their answer before the RTC, and with the filing of their counterclaim, Lilibeth herself effectively removed this case from the ambit of the Dead Mans Statute. Well entrenched is the rule that when it is the executor or administrator or representatives of the estate that sets up the counterclaim, Lamberto, may testify to occurrences before the death of the deceased to defeat the counterclaim. Moreover, as defendant in the counterclaim, Lamberto is not disqualified from testifying as to matters of fact occurring before the death of the deceased, said action not having been bought against but by the estate or representatives of the deceased.The testimony of Josephine is not covered by the Dead Mans Statute for the simple reason that she is not a party or assignor of a party to a case or persons in whose behalf a case is prosecuted. Lamberto offered the testimony of Josephine to establish the existence of the partnership between Lamberto and Jacinto. Lilibeths insistence that Josephine is the alter ego of Lamberto does not make her an assignor because of the term assignor of a party means assignor of a cause of action which has arisen, and not the assignor of a right assigned before any cause of action has arisen. Plainly then, Josephine is merely a witness of Lamberto, latter being the plaintiff.Lilibeths reliance alone on the Dead Mans Statue to defeat Lambertos claim cannot prevail over the factual findings that a partnership was established between Lamberto and Jacinto. Based not only on the testimonial evidence, but the documentary evidence as well, they considered the evidence for Lamberto as sufficient to prove the formation of a partnership, albeit an informal one.

22. Arce, Maria Christina

G.R. No. 126334 November 23, 2001EMILIO EMNACE, petitioner, vs.COURT OF APPEALS, ESTATE OF VICENTE TABANAO, SHERWIN TABANAO, VICENTE WILLIAM TABANAO, JANETTE TABANAO DEPOSOY, VICENTA MAY TABANAO VARELA, ROSELA TABANAO and VINCENT TABANAO, respondents.YNARES-SANTIAGO, J.:

Facts: Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a business concern known as Ma. Nelma Fishing Industry. They decided to dissolve their partnership and executed an agreement of partition and distribution of the partnership properties among them, consequent to Jacinto Divinagracia's withdrawal from the partnership. Among the assets to be distributed were five (5) fishing boats, six (6) vehicles, two (2) parcels of land and cash deposits. Throughout the existence of the partnership, and even after Vicente Tabanao's untimely demise in 1994, petitioner failed to submit to Tabanao's heirs any statement of assets and liabilities of the partnership, and to render an accounting of the partnership's finances. Petitioner also reneged on his promise to turn over to Tabanao's heirs the deceased's 1/3 share in the total assets of the partnership despite formal demand for payment thereof. Consequently, Tabanao' s heirs, respondents herein, filed against petitioner an action for accounting, payment of shares, division of assets and damages. Petitioner filed a motion to dismiss the complaint. The trial court held that the heirs of Tabanao had aright to sue in their own names, in view of the provision of Article 777 of the Civil Code, which states that the rights to the succession are transmitted from the moment of the death of the decedent. Petitioner filed a manifestation and motion to dismiss. However, it was denied by the trial court. Petitioner filed the instant petition for review and asserts that the surviving spouse of Vicente Tabanao has no legal capacity to sue since she was never appointed as administratrix or executrix of his estate.

Issue: Whether or not the surviving spouse of Vicente Tabanao has no legal capacity to sue since she was never appointed as administratrix or executrix of his estate.

Held: No. The surviving spouse of Vicente Tabanao has legal capacity to sue even she was never appointed as administratrix or executrix of his estate.

The Supreme Court ruled that the surviving spouse does not need to be appointed as executrix or administratrix of the estate before she can file the action. She and her children are complainants in their own right as successors of Vicente Tabanao. From the very moment of Vicente Tabanao's death, his rights insofar as the partnership was concerned were transmitted to his heirs, for rights to the succession are transmitted from the moment of death of the decedent.

Whatever claims and rights Vicente Tabanao had against the partnership and petitioner were transmitted to respondents by operation of law, more particularly by succession, which is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance of a person are transmitted. Moreover, respondents became owners of their respective hereditary shares from the moment Vicente Tabanao died.

A prior settlement of the estate, or even the appointment of Salvacion Tabanao as executrix or administratrix, is not necessary for any of the heirs to acquire legal capacity to sue. As successors who stepped into the shoes of their decedent upon his death, they can commence any action originally pertaining to the decedent. From the moment of his death, his rights as a partner and to demand fulfillment of petitioner's obligations as outlined in their dissolution agreement were transmitted to respondents. They, therefore, had the capacity to sue and seek the court's intervention to compel petitioner to fulfill his obligations.

24. Dolatre, GemilleG.R. No. 151319 November 22, 2004MANILA MEMORIAL PARK CEMETERY, INC., petitioner, vs. PEDRO L. LINSANGAN, respondent.FACTS: Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his rights subject to reimbursement of the amounts he already paid. The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the former buyer, the contract would be transferred to him. Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed to the original buyer and to complete the down payment to MMPCI. Baluyot issued handwritten and typewritten receipts for these payments. Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was cancelled for reasons the latter could not explain, and presented to him another proposal for the purchase of an equivalent property. He refused the new proposal and insisted that Baluyot and MMPCI honor their undertaking. For the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan filed a Complaint for Breach of Contract and Damages against the former. For its part, MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the contract because of non-payment of arrearages. MMPCI stated that Baluyot was not an agent but an independent contractor, and as such was not authorized to represent MMPCI or to use its name except as to the extent expressly stated in the Agency Manager Agreement.ISSUE: Whether or not a contract of agency exists between Baluyot and MMPCI.RULING: The Supreme Court ruled in the negative. The acts of an agent beyond the scope of his authority do not bind the principal, unless he ratifies them, expressly or impliedly. Only the principal can ratify; the agent cannot ratify his own unauthorized acts. Moreover, the principal must have knowledge of the acts he is to ratify. No ratification can be implied in the instant case. Atty. Linsangan failed to show that MMPCI had knowledge of the arrangement. As far as MMPCI is concerned, the contract price was P132,250.00, as stated in the Offer to Purchase signed by Atty. Linsangan and MMPCI's authorized officer. Likewise, this Court does not find favor in the Court of Appeals' findings that "the authority of defendant Baluyot may not have been expressly conferred upon her; however, the same may have been derived impliedly by habit or custom which may have been an accepted practice in their company in a long period of time." A perusal of the records of the case fails to show any indication that there was such a habit or custom in MMPCI that allows its agents to enter into agreements for lower prices of its interment spaces, nor to assume a portion of the purchase price of the interment spaces sold at such lower price. No evidence was ever presented to this effect.

25. Pelayo, Michael

VICTORIAS MILLING CO., INC (petitioner) VS CA and CONSOLIDATED SUGAR CORPORATION (respondents)GR 117356. June 19, 2000

Case on Agency FACTS:

St. Therese Merchandising (STM) regularly bought sugar from petitioner Victorias Milling Co., Inc., (VMC). In the course of their dealings, petitioner issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases. Dated October 16, 1989, SLDR No. 1214M covers 25,000 bags of sugar. The transaction it covered was a "direct sale." The SLDR also contains an additional note that reads: "subject for availability of stock at warehouse."

On October 25, 1989, STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in SLDR No. 1214M for P 14,750,000.00. CSC issued one check dated October 25, 1989 and three checks postdated November 13, 1989 in payment. That same day, CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by SLDR No. 1214M. Enclosed in the letter were a copy of SLDR No. 1214M and a letter of authority from STM authorizing CSC "to withdraw for and in our behalf the refined sugar covered by Shipping List/Delivery Receipt-Refined Sugar (SDR) No. 1214 dated October 16, 1989 in the total quantity of 25,000 bags."

On October 27, 1989, STM issued 16 checks in the total amount of P31,900,000.00 with petitioner as payee. Private respondent CSC surrendered SLDR No. 1214M to the petitioner's warehouse and was allowed to withdraw sugar for 2,000 bags. Thereafter, CSC then sent petitioner a letter dated January 23, 1990 informing it that SLDR No. 1214M had been "sold and endorsed" to it but that it had been refused further withdrawals of sugar from petitioner's warehouse despite the fact that only 2,000 bags had been withdrawn. CSC thus inquired when it would be allowed to withdraw the remaining 23,000 bags. Petitioner then replied that it could not allow any further withdrawals of sugar against SLDR No. 1214M because STM had already withdrawn all the sugar covered by the cleared checks paid by STM.

CSC's complaint alleged that STM had fully paid petitioner for the sugar covered by SLDR No. 1214M.

Therefore, the latter had no justification for refusing delivery of the sugar. Petitioner's primary defense a quo was that it was an unpaid seller for the 23,000 bags. Since STM had already drawn in full all the sugar corresponding to the amount of its cleared checks, it could no longer authorize further delivery of sugar to CSC. Petitioner contends that the other SLDRs of STM are in a one continuous contract including the covered SLDR no. 1214M. Petitioner also contended that it had no privity of contract with CSC and alleged that CSC did not pay for the SLDR and was actually STM's co-conspirator to defraud it through a misrepresentation that CSC was an innocent purchaser for value and in good faith. ISSUE:

(1). Whether or not the Court of Appeals erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon SLDR No. 1214M as an assignee.(2). Whether or not the Court of Appeals erred in not ruling that the sale of sugar under SLDR No. 1214M was a conditional sale or a contract to sell and hence freed petitioner from further obligations.

HELD:

1.Petitioner heavily relies upon STM's letter of authority allowing CSC to withdraw sugar against SLDR No. 1214M to show that the latter was STM's agent. The pertinent portion of said letter reads: "This is to authorize CSC to withdraw for and in our behalf

The Civil Code defines a contract of agency as follows: "Art. 1868. 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."

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.

In the instant case, 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 held that CSC was not STM's agent and could independently sue petitioner. 2. Petitioner contends that the sale of sugar under SLDR No. 1214M is a conditional sale or a contract to sell, with title to the sugar still remaining with the vendor. Noteworthy, SLDR No. 1214M contains the following terms and conditions: "It is understood and agreed that by payment by buyer/trader of refined sugar and/or receipt of this document by the buyer/trader personally or through a representative, title to refined sugar is transferred to buyer/trader and delivery to him/it is deemed effected and completed (stress supplied) and buyer/trader assumes full responsibility therefore" The aforequoted terms and conditions clearly show that petitioner transferred title to the sugar to the buyer or his assignee upon payment of the purchase price. Said terms clearly establish a contract of sale, not a contract to sell. Petitioner is now estopped from alleging the contrary. The contract is the law between the contracting parties. And where the terms and conditions so stipulated are not contrary to law, morals, good customs, public policy or public order, the contract is valid and must be upheld. Having transferred title to the sugar in question, petitioner is now obliged to deliver it to the purchaser or its assignee. WHEREFORE, the instant petition is DENIED for lack of merit. Costs against petitioner.______________________________________________________________________________

26. HERNANDEZ, Annabel and AREVALO, Mika

Lim v. Court of Appeals, G.R. No. 102784, February 28, 1996

FACTS: On October 8, 1987, Rosa Lim who had come from Cebu received from private respondent Victoria Suarez the following two pieces of jewelry; one 3.35 carat diamond ring worth P169K and one bracelet worth P170K, to be sold on commission basis. The agreement was reflected in a receipt. On December 15, 1987, Lim returned the bracelet to Suarez, but failed to return the diamond ring or to turn over the proceeds thereof if sold. As a result, private complainant, aside from making verbal demands, wrote a demand letter to petitioner asking for the return of said ring or the proceeds of the sale thereof. Lims contention: She was not an agent of Suarez. In fact, she was a prospective buyer of the pieces of jewelry. She told Mrs. Suarez that she would consider buying the pieces of jewelry for her own use and that she would inform the private complainant of such decision before she goes back to Cebu. She cannot be liable for estafa since she never received the jewelries in trust or on commission basis from Vicky Suarez. The real agreement between her and the private respondent was a sale on credit with Mrs. Suarez as the owner-seller and petitioner as the buyer, as indicated by the bet that petitioner did not sign on the blank space provided for the signature of the person receiving the jewelry but at the upper portion thereof immediately below the description of the items taken.ISSUE: Whether or not the real transaction between Lim and Suarez was that of sale or that of contract of agency to sell.HELD: Contract of Agency. Rosa Lim's signature indeed appears on the upper portion of the receipt immediately below the description of the items taken. We find that this fact does not have the effect of altering the terms of the transaction from a contract of agency to sell on commission basis to a contract of sale. Neither does it indicate absence or vitiation of consent thereto on the part of Rosa Lim which would make the contract void or voidable. The moment she affixed her signature thereon, petitioner became bound by all the terms stipulated in the receipt. She, thus, opened herself to all the legal obligations that may arise from their breach. This is clear from Article 1356 of the New Civil Code which provides: "Contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present." In the case before us, the parties did not execute a notarial will but a simple contract of agency to sell on commission basis, thus making the position of petitioner's signature thereto immaterial. There are some provisions of the law which require certain formalities for particular contracts. The first is when the form is required for the validity of the contract; the second is when it is required to make the contract effective as against the third parties such as those mentioned in Articles 1357 and 1358; and the third is when the form is required for the purpose of proving the existence of the contract, such as those provided in the Statute of Frauds in Article 1403. A contract of agency to sell on commission basis does not belong to any of these three categories, hence, it is valid and enforceable in whatever form it may be entered into.

27. Mendoza, Lauren and Herrera, Shauna

Dominion Insurance Corp. v. Court of Appeals, G.R. No. 129919, February 06, 2002 FACTS: Rodolfo Guevarra instituted a civil case for the recovery of a sum of money against Dominion Insurance. He sought to recover P156,473.90, which he claimed to have advanced in his capacity as manager of Dominion to satisfy claims filed by Dominions clients. Dominion denied any liability to Guevarra and asserted a counterclaim for premiums allegedly unremitted by the latter. The pre-trial conference never pushed through despite being scheduled and postponed nine times over the course of six months. Finally, the case was called again for pre-trial and Dominion and counsel failed to show up. The trial court declared Dominion in default and denied any reconsideration. On the merits of the case, the RTC ruled that Dominion was to pay Guevarra the P156,473.90 claimed as the total amount advanced by the latter in the payment of the claims of Dominions clients. The CA affirmed. ISSUES: a.) WON Guevarra acted within his authority as agent for Dominion b.) WON Guevarra is entitled to reimbursement of amounts HELD: a.) NO. A perusal of the Special Power of Attorney would show that Dominion and Guevarra intended to enter into a principal-agent relationship. Despite the word special, the contents of the document reveal that what was constituted was a general agency. The agency comprises all the business of the principal, but, couched in general terms, is limited only to acts of administration. A general power permits the agent to do all acts for which the law does not require a special power. Art. 1878 enumerates the instances when a special power of attorney is required, including (1) to make such payments as are not usually considered as acts of administration; (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 would have been required before Guevarra could settle the insurance claims of the insured. Guevarras authority to settle claims is embodied in the Memorandum of Management Agreement which enumerated the scope of Guevarras duties and responsibilities. However, the Memorandum showed the instruction of Dominion that payment of claims shall come from a revolving fund. Having deviated from the instructions of the principal, the expenses that Guevarra incurred in the settlement of the claims of the insured may not be reimbursed from Dominion. b.)YES. However, while the law on agency prohibits Guevarra from obtaining reimbursement, his right to recovery may still be justified under the general law on Obligations and Contracts, particularly, Art. 1236[1]. In this case, when the risk insured against occurred, Dominions liability as insurer arose. This obligation was extinguished when Guevarra paid such claims. Thus, to the extent that the obligation of Dominion had been extinguished, Guevarra may demand reimbursement from his principal. To rule otherwise would result in unjust enrichment of Dominion.Dominion is ordered to pay Guevarra P112,6762.11, representing the total amount advanced by the latter in the payment of the claims of the formers clients, minus the amount in the revolving fund and the outstanding balance and remittance.

[1] Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary

______________________________________________________________________________

28. Merrissa B. Cagampan

Conde V. CA GR No. 40242 (December 15, 1982)

RATIO DECIDENDIThe purpose of the rule is to give stability to written agreements, and to remove the temptation and possibility of perjury, which would be afforded if parol evidence was admissible. FACTSMargarita Conde, Bernardo Conde and Dominga Conde sold with a right of repurchase, within 10 years from, a parcel of agricultural land to the Altera Spouses. The contract provided that: If at the end of 10 years the said land is not repurchased, a new agreement shall be made between the parties and in no case title and ownership shall be vested in the hand of the party of the Second Part (Alteras). The Cadastral Court of Leyte then adjudicated the lot to the Alteras subject to the right of redemption counting from 7 April 1938 after returning the amount of PHP 165.00. On 28 November 1945, Paciente Cordero, son-in-law of the Alteras signed a document allowing Eusebio Amarille, the representative of the Condes, to repurchase the land. On 30 June 1965, Pio Altera sold the disputed lot to the spouses Ramon Conde and Catalina Conde. (Relationship to the other Condes were not shown) Dominga then filed a Complaint for quieting of title to property. ISSUE/HELDWoN Dominga Conde validly repurchased the said lot - YES RATIOAn implied agency was created from the silence or lack of action, or their failure to repudiate the agreement. The Alteras did not repudiate the agreement that their son-in-law signed. From the execution of the repurchase document in 1945, possession, which heretofore had been with the Alteras, has been in the hands of Dominga Conde as stipulated therein. Land taxes has already been paid for by Dominga Conde. Ramon and Catalina Conde are not purchasers in good faith.

The OCT in the name of the Alteras specifically contained the condition that it was subject to the right of repurchase within 10 years from 1938.

Although the 10 year period had lapsed in 1965, and there was no annotation of any repurchase by Dominga Conde, neither had the title been cleared of the encumbrance. They were put on notice that some other person could have a right to or interest in said property.

The Conde spouses conends that Paciente Cordero signed the document of repurchase merely to show that he had no objection to the repurchase. They introduced evidence for this purpose.

There is nothing in the document of repurchase to show that Paciente Cordero had signed the same merely to indicate that he had no objection to Dominga Condes right of repurchase.

At the same time, he had no personality to object. To uphold his oral testimony on that point, would be a departure from the parol evidence rule and would defeat the purpose for which the doctrine is intended. The purpose of the rule is to give stability to written agreements, and to remove the temptation and possibility of perjury, which would be afforded if parol evidence was admissible.

29. TALATALA, RJ

Uniland Resources vs DBPG.R. No. 95909 (1991) In the law on agency, it is elementary that when the main transaction between the principal parties does not materialize, the claim for commission of the duly authorized broker is disallowed. How about the instance when the sale was eventually consummated between parties introduced by a middleman who, in the first place, had no authority, express or implied, from the seller to broker the transaction? Should the interloper be allowed a commission? On these simplified terms rests the nature of the controversy on which this case turns.

FACTS:The Uniland resource is a private corp., licensed to engage in real estate brokerage while DBP is a govt corp. Engaged in finance and banking in proprietary capacity. Long before this case arose, Marinduque Mining Corporation obtained a loan from the DBP and as security therefor, mortgaged certain real properties to the latter, among them two lots located in Makati. The said lots, however, been previously mortgaged by Marinduque Mining Corp., to Caltex, and the mortgage in favor of DBP was entered on their titles as a second mortgage. The account of the Marinduque Mining Corp., with the DBP was later transferred to the Assets Privatization Trust (APT) pursuant to Proclamation No.50. For failure of the Marinduque Mining Corp. to pay its obligations to Caltex, the latter foreclosed its mortgage on the aforesaid two lots. APT on the other hand, to recover its investment on the Marinduque Account, offered for sale to the public through DBP its right of redemption on said two lots by public bidding. Caltex had required that both lots be redeemed, the bidding guidelines set by DBP provided that any bid to purchase either of the two lots would be considered only should there be two bids or a bid for the two items which, when combined, would fully coverT the sale of the two lots in question. Seeing, however, that it would make a profit if it redeemed the two lots and then offer them for sale, and asits right to redeem said lots from Caltex would expire on May 8, 1987, DBP retrieved the account from APT and, on the last day for the exercise of its right of redemption, May 8, 1987, redeemed said lots from Caltex, In preparation for the sale of the two lots in question, DBP called a pre-bidding conference wherein a new set of bidding guidelines were formulated the public bidding for the sale of the two lots was held and again, there was only one bidder, the Charges Realty Corp. Notwithstanding that there was no bidder for the office building lot, the DBP approved the sale of the warehouse lot to Charges Realty Corp., and the proper documentation of the sale was made. The DBP admittedly paid the (five percent) broker's fee on this sale to the DBP Management Corporation, which acted as broker for said negotiated sale. After the sale through its President, wrote two letters to [respondent DBP], the first through its Senior Vice President and, the second through its Vice Chairman asking for the payment of its broker's fee in instrument of the sale of its (DBP's) warehouse lot to Charges Realty Corp. The claim was referred to the Bidding Committee chaired by Amanda S. Guiam which met on November 9, 1987, and which, on November 18, 1987,issued a decision denying [petitioner's] claim. Hence, the instant case filed by [petitioner] to recover from [respondent] DBP the aforesaid broker's fee. LOWER COURT rendered judgmentORDERING [respondent DBP] to pay [petitioner] the sum of P1,203,500,00 which is the equivalent of [five percent] broker's fee plus legal interest thereto from the filing of the complaint on February 18, 1988 until fully paid and the sum of P50,000.00 as and for attorney's fees. Costs against [respondent DBP]. On appeal, the Court of Appeals reversed the judgment of the lower court and dismissed the complaint. The motion for reconsideration filed by petitioner was also subsequently denied. ISSUE:Whether there was an agency between Uniland resources and DBP (art 1869 civil code) HELD:No agency, SC affirmed CA with modifications in relation with equity consideration. That in equity respondent DBP is ordered to pay petitioner the amount of One Hundred Thousand Pesos. It is obvious that Uniland was never able to secure the required accreditation from respondent DBP to transact business on behalf of the latter. The letters sent by Uniland to the higher officers of the DBP and the APT are merely indicative of Uniland's desire to secure such accreditation. At best these missives are self-serving; the most that they prove is that they were sent by Uniland and received by DBP, which clearly never agreed to be bound thereto. As declared by the trial court even when it found in favor of Uniland, there was no express reply from the DBP or the APT as to the accreditation sought by Uniland. From the very beginning, therefore, petitioner was aware that it had no express authority from DBP to find buyers of its properties. The controversy is only between the DBP and petitioner, to whom it was emphasized in no uncertain terms that the arrangement sought did not exist. Article 1869, therefore, has no room for operation in this case. Petitioners stance goes against the basic axiom in Civil Law that no one may contract in the name of anotherwithout 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. In Prats v. Court of Appeals, there was a finding that the petitioner therein as the agent was no longer the efficient procuring cause in bringing about the sale proceeding from the fact of expiration of his exclusive authority. There was therefore no basis in law to grant the relief sought. Nevertheless, this Court in equity granted the sum of P100, 000.00, out of the P1, 380,000.00 claimed as commission, by way of compensation for the efforts and assistance rendered by the agent in the transaction prior to the expiration of his authority.

30. GABORNES, Maris Cay

THE MANILA REMNANT CO., v. COURT OF APPEALS [G.R. No. 82978. November 22, 1990.]FACTS:Manila Remnant Co. owns parcels of land in Quezon City, which constitutes Capital Homes Subdivision. Manila Remnant Co. entered into an agreement with A.U. Valencia and Co. Inc. wherein the latter was to develop the subdivision with authority to manage the sales thereof, execute contracts to sell to lot buyers and issue official receipts. Artemio Valencia was simultaneously the president of Manila Remnant and A.U. Valencia.

In March 1970, Manila Remnant, thru A.U. Valencia, executed contracts to sell covering lots 1 and 2 of Block 17 in favor of Oscar Ventanilla and Carmen Diaz (Ventanilla couple), the price of which payable monthly for 10 years. Ventanilla couple paid the down payments.

Artemio Valencia, as president of Manila Remnant and without knowledge of the Ventanilla couple, sold the same lots to Carlos Crisostomo, one of his sales agent without any consideration. Valencia then transmitted the fictitious Crisostomo contracts to Manila Remnant while he kept in his files the contracts to sell in favor of the Ventanillas. All the amounts paid by the Ventanillas were deposited in Valencia's bank account and are remitted to Manila Remnant in favor of Crisostomo. The Ventanillas were not aware of Valencias scheme and thus they continued paying their monthly installments.

Due to discrepancies and irregularities discovered in the collections and remittances, Manila Remnant terminated its collection agreement with AU Valencia sometime in May 1973. Valencia was also removed as the President of Manila Remnant. The Ventanilla couple, unaware of the circumstances, continued paying their installments to Valencia. When they learned about Valencias termination, they went immediately to Manila Remnant to pay their balance but they discovered from the accountant that their names did not appear in the records of A.U. Valencia and Co. as lot buyers. Consequently, the Ventanillas commenced an action for specific performance, annulment of deeds and damages against Manila Remnant, A.U. Valencia and Co. and Carlos Crisostomo. The lower court ruled in favor of Ventanilla and it ordered A.U. Valencia, Manila Remnant, and Carlos Crisostomo jointly and severally liable for moral damages, exemplary damages, and the attorneys fees. Manila Remnant contended, on appeal, that it cannot be made jointly and severally liable with its agent A.U. Valencia since it was not aware of the illegal acts perpetrated nor did it consent or ratify said acts of its agent. ISSUE: Whether or not Manila Remnant is solidarily liable together with A.U. Valencia and Carlos Crisostomo for the payment of moral, exemplary damages and attorney's fees in favor of the Ventanillas. HELD:Yes. Manila Remnant is solidarily liable with AU Valencia and Carlos Crisostomo..

The failure of the principal to correct an irregularity despite knowledge thereof is deemed a ratification of the act of the agent. The unique relationship existing between the principal and the agent at the time of the dual sale must be underscored. The president then of both firms was Artemio U. Valencia, the individual directly responsible for the sale scam. Hence, despite the fact that the double sale was beyond the power of the agent, Manila Remnant as principal was chargeable with the knowledge or constructive notice of that fact and not having done anything to correct such an irregularity was deemed to have ratified the same.

Moreover, by the principle of estoppel, Manila Remnant is deemed to have allowed its agent to act as though it had plenary powers. Article 1911 of the Civil Code provides: "Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers." The said provision is intended to protect the rights of innocent persons. In such a situation, both the principal and the agent may be considered as joint feasors whose liability is joint and solidary. Authority by estoppel has arisen in the instant case because by its negligence, the principal, Manila Remnant, has permitted its agent, A.U. Valencia and Co., to exercise powers not granted to it. That the principal might not have had actual knowledge of the agents misdeed is of no moment.