NATURE AND OBJECT OF AGENCY
ELEMENTS OF THE CONTRACT
RALLOS V. FELIX GO CHAN & SONS REALTY CORP.
Sisters Concepcion and Gerundia Rallos co-owned a parcel of land and they
executed a special power of attorney in behalf of their brother Simeon Rallos,
authorizing him to sell sail land on their behalf.
March 3, 1955, Concepcion died, but Simeon still sold both his sisters share in
the lot to Felix Go Chan and Sons Realty Corp.
So, Ramon Rallos, as administrator of Concepcion’s estate, filed a complaint
that the sale of Concepcion’s share be declared unenforceable. And the
court declared the sale null and void on Concepcion’s share.
CA later ruled in Favor of Felxi and Sons and validated the sale.
ISSUE: W/N sale of the Undivided share of Concepcion ralos in Lot 5983 was
valid although executed by the agent after the death of his principal.
SC RULED THAT THE SALE OF CNCEPCION’S SHARE IS NOT VALID
The law provides that no one may contract in the name of another without being authorized by the latter
or unless he has by law a right to represent him. Otherwise, unless it is ratified before it is revoked, the
contract shall be unenforceable. In a relationship of agency, the principal authorizes the agent to act in
his behal in transaction with thid persons. Essential the elements are:
1.
2.
3.
4.
Consent, express or implied, of the parties in the relationship
Object, the execution of a juridical act in relation to a third person
The agent acts in representation and not for himself
Agent acts witin the scope of his authority
Also, agency is personal, derivative and rperesntative in natire. THe agent’s authority emantes from the
powers granted by his principal.
There are various ways of extinguishing agency, and death of the prncipla is one of them. Since the
rationale of agency is founded on representation, the juridical tie between the principal and agent is
severed upon the death of either without necessity or the heirs of the principal to notify the agaent of the
death. An exception applies where the act of the agent becomes valid after the principla’s death, under
the 2 conditions
1.
2.
The agent acted without knowledge of the death of the principal
The 3rd person who contracted wit the agent himself was in good faith which measn he was not
aarre of the death of the principal at the time the agent contracte with him.
In this case, There is no doubt that simeon knew the death of the principal, his sister, at the time he sold
concepcion’s share to the corporation. Thus, exception under Art. 1931 is inapplicable. Also, since the
death of the principal in this case is revocation by authority of law, the agency is extinguished upon
Concepcion’s death even without the notification of the agent. On the other hand, if the agent dies, his
heirs must notify the principal. Thus, court ruled that Siemon’s act is unenforceable against Concpecion’s
estate.
ESSENTIAL CHARACTERISTICS OF AGENCY
ORIENT AIR SERVICES V. CA – consensual
American Airlines, an air carrier offering passenger and cargo transportation
in the PH, and ORIENT air seriices and Hotel Reps, entered into a GENERAL
SALES AGENCY AGREEMENT where Orient was authorized to act as American
Air’s exclusive sales agent within the PH for sale of air passenger
transportation. Under the agreement, Orient is enetitled to commission of 2
kinds 7-8 % on ticket sales covnering points within US and Canada, and a 3%
overriding commission on all other sales. And if Orient defaults or failes to
transfer to the funds to American, American can terminate their agreement.
Later American Air terminated their agreement, alleging that Orient Air
reneged on its obligations by failng to remit the net proceeds of the sale for
January to March 1981, and undertook the collection of the proceeds of
tickets sold originally by orient air. 4 days later, it filed a case against Orient
Air to settle unremited amounts
Orient air contended that American was not entitled to any amount
because after applying commission due to it, American still owed orient a
balance in unpaid overriding commissions,that the termination was
untenable.
So, the RTC rueled in favor of Orient and ordered American to pay Orient’s
overriding commission and since the termination was improper, it order it to
reisnstate orient as its general sales agnet.
THE COURT URLED THAT ORIENT IS ENTITLED TO OVERRIDING COMMISSION, BUT THE LOWER COURTS WERE
WRONG IN ORDERING AMERICAN TO REINSTATE IT AS IT SALES AGENT
As the designated exclusive General Sales agent of amerian Air, orient air was entitled to 2 kinds of
commission
1.
2.
Sales againcy commission of 7-8 percent from sales by orient whne maid on American air ticket
stock and
An overriding commission of 3% for alls ales of passenger and transportation over marican air
services.
Form the second type of commission it is clear that commission would accrue for sales on all American air
services and not on ticket stock of merican air. Also, amrican air was the party responsible for th
eprepartion of the agreement, by interpretation, the consitrution of the provision most favorable to the
party in whose favor the provision was and who did not cause ambiguity shall be made. Hence, Orient is
entitle dot Overriding commission based on total flown revenue.
However, the lowr court was worng in ordering American Air to reinstate Orient as it sgeneral sales agent
because in effect it comepsl American air to extend its personality to Oreint air. Such would be a violation
of the essence of agency which is defined as a contract where a person binds himself to render some
service or to do something in representation or on behalf of the other with consent or authority of the
latter. In this relationship, the principal’s personality is extended through the agent. In doin so, the agent
by legal fiction becomes the principal, authorized t perofm all acts which the later would have him do.
Such can only be affected iwht the pricniap’s consent which must not be compelled by law or any court.
The CA affirmed such ruling.
So, American appealed to the SC contending that orient air can only claim
overriding commission based on ticketed sales, which means, sale must be
made by orient and doen with American air’s stocks.
W/N ORIENT IS ENTITLED TO THE COMMISSION
RALLOS V. FELIX GO CHAN – personal, rep, derivative
RALLOS V. FELIX GO CHAN – agency is a preparatory contract
DISTINGUISHED FROM SIMILAR CONTRACTS
BROKERAGE
MACONDRAY & CO. V. SELLNER – commission
George Sellner sold a land to Macondray & CO Inc in the amount of 17,175.
However, the land was flooded due to high tides. So, the company became
dissastisfied with tis purchase and requested that Sellner find another
puchhaser. They agreed that the company was willing to dispose of the land
for 17,175 and anuthing over that amound would be Sellner’s commission.
Later, Sellner infomed the company that Antonio Barett was willing to
purchase the land for 18,892 after he inspects the toorens title and the
certificate of land. However, Barreto failed to immediately inspect the titled
an cerficate because he had to go to Tayabas and was detained typhoon,
and his arrival was delayed.
During such time, the company advised Sllner that he must consummate the
sale and collect and remit the payment 2 days after Berretto’s return to
manila, 5 o’clock that afternoon, otherwise the deal would be off.
On sept 2, berretto was iformed that and told that the torrens title be turned
over for him to check and he would received that check after. But, slelner
did not receive the check until 36 hours after. Upon receipt, sellner
immediately tendered it to the company.
But, young, the general manager reused to accept the check claiming that
the sale has been cancelled upon Sellner’s failure to turn over the purchase
price that afteonn of Sept. 2.
THE COURT RUELD THAT THE COMPANY IS NOT ENTITLED TO DAMAGES AND THAT SELLNER IS ENETITLED TO
THE COMMISSION AGGRED ON
The business of a reals estate broker or agent, generally, is only to ind a purchaser, and the settled rule is
that the absence of an express contract between the broker and his principal, the implication is that the
broker becomes entitled to the unsual commissions whnever he bring buyer to the principal, who is willing
to accept the terms name by him, although such particulars made be arranged and neguotiated
directyly between the principal and the purchaser.
It would be unust to permit the principal to withdraw the authrotiy and terminate the agency against the
epress provision of the contract and to reap the agent’s labors without being liable for his commission.
Even though the court does not question the power of the principal to revoke authority of his agent at
will, in the absence of the contract fixing duriation of the agence, in this case, there can be no question
that the company is laible to Sellner for commission which it agreed to pay him should he find a purchaser
for the land at the price agreed upon in the contract.
Also, the cancellation is considered arbitrary because there was no reason given to justify it. Based on
urisprudence, Barreto had the right to examine the title and certificate for a reasonable time.
Moreover, in this case, at the time the manager already fixed the time for the ttermiantion of negotiations,
Sellner already earned the commission oagreed upon and could not be deprived dtherefor by the
arbitrary action of the company in declining ot exeuute the contrac of sale for some personal reson.
Since slelner is entitled to commission, offessting the commission aginst th eunpiad balance will not make
the company enetiled to any money judgment against sllner.
So, the company filed a case against Selner to recover damages amounting
to 17,175. The company’s claimin ghta tit suffered damage as a result of the
sale of land Sellner made even after his auhtoriy to sell such was revoked.
The court ruled in favor of the company hence, the appeal.
W/N SELLNER IS ENTITLED TO COMMISION EVEN THOUGH THE LAND WAS
CANCELLED BY THE COMPANY? YES
GUARDEX V. NLRC– commission
COURT RULED ORBETA IS NOT ENTITLED TO COMMISSION NOR SI HE AN AGENT
Jumbee Orbeta, a freelance salesman, learned that Escandor offered to
fabricate a fire truck for rubberworld. He wrote to Escandor inquiring about
the amount of commission for the sale of the fire truck who advised him that
it was 15000 per unit. F4 days later, orbet offered to look after (follow p) on
encandor’s pending prosoal to sell a frie truck to rubberworld and received
250 for representation expenses.
Priro to the Orbreta approaching Escandor, the latter already made written offer of a fire truck to
rubberwold. All that she consented to was for Orbeta to follow up the pending offer. And nothing shows
that Orebta undertook the promised foolow up. Instead , it was escandor who pushed fo the Rubberworld
Deal. And 250 rep alloance was meant to conver the expenses for the follow up, which does not sugest
creation of an agency.
With no word for orbeta for 3 days, escando inquired about her offer to
Rubberworld and later finally concluded the sale with Rubberworld.
Moreover, assuming that the terms of escandor’s letter was an authority to sell, etntield to the 15k
commission is contingent on the purchase of the customer of a fire turck, that the agent would earn
commission if he was instrumental in bring the sale about. In this case, Orbeta had nothing to do with the
sale of the firetruck, and is not therefore entitled to any commission at all.
Orbeta suddenly appeared and asked for his commission for the sale of the
fire truc to rubberworld. Escandor refused, saying he had nothing to do with
the offer, negotiation and consummation of the sae.
Also, if orbeta is considered to have been an from the he was supposed to follow up the offer to sell, such
agen would have been deemed recooked upon resumption of direct negotiations between escandor
and rubberowlrd because orbeta abandoned all efforts to secure the deal in escandor’s behalf.
Orbera filed a complaint agisnt Escandor with Minstry of Labor who rendered
judgment in his favor, and affiremed by NLRC.
So, Escandor appealed to SC. Orbeata calims that there is an implied
aganecy between him and escandor.
TAN V. GULLAS – commission
THE COURT RULED THAT TAN IS ENTITLED TO BROKERAGE FEE
SPs Gullas owned a parcel of land in Minglanilla Cebu. They executed a
SPECIAL POWER OF ATTORNY authroizeing Manuela tan, a license real estate
broker and his assoctaties to negotiate for the sale of the land, 550 persm at
3% commission. Spa was non exlusive and effective for 1 month from June
29, 1992.
Manuel Tan is a licensed real estate broker. And a broker is one who is engaged on commission,
negotiating contracts trelative to property with the custody of which he has no concernt,negotiator
between other partes.
On June 29, Tan conacted Engr Edsel Ledesma, the construction manader
of Sister of Mary of Banneaux, a religious organization interested in acquiring
property. Tan visited the property with the egrr and some sisters to see
Eduardo in his office. The sisters found the land suitable and expressed their
desire to buy it.
Later, the Ssps gulas aggree to sell the property to Sisteer os Mary and
executed a SPA in favor of Eufemia caeta for her to sell, transfer and covent
lthe land at 200 persqm. Caeta executed the deed of sale
Earlier that day JULY 3, Tan and his associate went to see Eduardo o claim
their commission, but Eduardo reused to pay them, contending that he and
his wife already afreed to sell the popety to SOM and another group of
agents was responsible for the sale.
The one month non-exlclusive authority to sell grante to tan menat the sps were not precluded form
granting the same authority to other agents. However, gulases failed to prove that PAcana began
negotiations ahead of Tan and only presented an undate and unnotarized spa in favo r of apance which,
is incosistenwith sound procative. Meanwhile, tan was given authority to sell by sps.
Thus, it is apprant the the sps are tying to vedaee payment of Tan’s commission as borkers who set the
slae in motion. They were not able to consummate it only through the acts fo the sps which prverented it.
Moreover, jurisprudence provides that an agent receives commission upon successful conclusion of sale
whicl a broker earns his by merely bring the buyer and selletr together, even if no sale was made. Thus,
tan and assoc shoule be entitled to commission where ot not he sale of the property was concluded
through their efforts.
So tan and is associate field a complaint against eh gulasse fore recovery of
their broker fee. They alleged that they were efficient in prouring cuase to
bring about the sale of the propert to SOM, but their efforts to cossumate it
was frustrated by the sps.
The gullas countered that it was another broker whoch introduted the
property to SOM ahead of Tan and when Tan introduce the buyers to
Eduardo, SOm was already decided on buyng the property through
pacana, who had already been parid his commission.
The court ruled in favor of tan. Aupon appeal to the Ca, CA dismissed the
complaint. Hence, petition to sc
W/N ETNTNILED TO BROEKERAGE COMMISSION
DOCTRINE OF EFFICIENT PROCURING CAUSE
PRATTS V. CA
Alfonso Doronila was the registered owner of 300 heactars of land situated in
Rizal. For sometime he had tried the to slel his property to SSS but faield to
consummate it.
So, on FEB 14, 1968 he gave Antonio Prats an exclusive option and authority
to negotiate the sale of the property under the condition the authority is
good only for 60 days which can be extended a max of 15 days when
negotioations with the buyer start. If n such offer was made by the buyer, the
option and authority automatically expries and becomes null and void.
THE COURT RULED THAT PRATS WAS NOT THE EFFICIENT PROCURING CAUSE TO BRIN THE SALE OF
DORONIAL’S LAND
From facts, Dotonilla’s offer tos ell his land to sss was fromally accepted on JUNE 20 1968 after the
execlusive authority had expired. Thus, court finds that Prats is not the efficient procuring cause.
Also, days before May 29, 1968, Prats arranged with SSS admin Gilbert Teodara a meeting, but he
specifically requested that Prats not be present in the meeting because he wasn’t to directly deal with
Dornilla.
Thus, the negotiation was done independently not by Prat’s efforts to hold such meeting. Also, his offers
to sell the property to SSS at 6 prsm and 4.5 sqm received no asnwers from SSS. So ti was rwrong for him to
claim that he aroused the intereste of SS to buy Dornilal’s land whne as early as July 1967, SSS had already
reirctly deal with Dornilla to such price of 3.25 ofered by SSS and accepted by him under certain
Later, Pratts negotiated the sale with SSS and Doronilla extended the
contract beyond may 18 or for 15 days.
conditions. There should be a written offer by the prospective butyer brought by prts and if there is non,
the option shall have expired.
On June 19 1968 doronilla wrote a letter to SSS rewneing his offer to sell his
land and on JUNE 20, the sss formalized its counteroffer of 3.25 per swm and
latoer on approved the purchase of Doronila’s land.
However, the court notest aht Prats had taken steps to bring back together oronilla and SSS.
On sept 17, Prats demanded that Doronilla pay him processional fee as a
reasl estate broker. However, Doronilla reused to pay it.
Although Doronilla finally sold the property to SSS at 3.25 which ws the same price when he was alone
dealing exsluively with sss before prats came, pratts efforts were instrumental in bringin them together
again and finally consummating the transaction. Thus, the courts ggrants 100,000 as by way of
compensation for his efforts and assistanct.
w/n Prats was efficient procuring cause in bringin about the sale of doroniall’s
land to sss? NO
MANOTOK BROS INC V. CA
Court RUELD THAT SLAIGUMBA IS ENTITLED TO THE 5 PERCENT COMMISION.
Manotok Brother owned a parcel of Lnad leased by the Crity of Manila used
by Calro M. Recto HS. After sometime, Manotok decided to sell the land to
the city and authorized Salvdor Saligumba to negotiate the sale of the
property for not less than 425,000, and pay hm a commission of 5% in the
even
tht
the
sal
eis
finally
consummate
and
paid.
Subseuquently, Manootc bother authorized him to fianles and consummate
the sale of the property for not less than 410,000 and extendsion of authroy
for 180 days.
Altoghu asligumba wsas not entitled to any commission because he was not successful in consummating
the sale between the parties for his extended authority already expired.
Later, the municipal city board of mania eventually passed an ordinance
approiprite money for the property with Saligumab authorized os ell.
However, this was signed by the Mayor 183 days after the letter of
authorizeation.
However, the execption provided n Prats v CA applies to this case that despite the expiration of the
agent’s aythiry before the consummateion of sale, the court granted him commission
Although prats was not the efficient procuring cause in bringin about the sale then, he was awarded
compensation for the diligent steps he took to consummate the sale. Thus, it follows that in this case,
saligumba should be paid his commission as the efficient procuring cause of sale because without si
efforts, the municparly would not have naything to pas and the maor would not have naything to
approve.
When there is a close and proximate and causal connection between the agent’s aefforts and labor nd
the pricnipal’s ale of his property, the agent is entitled to commission.
The sale was consummate, hoever saligumabda did not receive any
commission due to refusal of Manotok brother to pay him.
So, slaigumab field a complaint against manoroc, alleging he successfully
negotiated the sale of the property. And it was because of his efforts that
manila paporpitaed a sume for the sale. On the other hand, Manotol claimes
that he ie not entitled to commission because he will onlybe entitled if the
sale was consummated and price paide with period in the lettrs of atuthorizt
INLAND REALTY V. CA
Court urled that inrland realt is not entitled to 5% broer’s free
Roman Delos Reyes of Inland Realty was granted by Gregorio Araneta Inc
the authority to sell on first come first served basis the olding of Geregorio
areneta Inc equivalet to 9,800 shares of stock at 1500 php for 30 days.
Art. 1875 provides that agency is premised to be for compensation unless there is proof to the contrary.
After recevieng proposal from Delos Reyes, Stnadford Microsystems counter
propped to buy the shares at 1000 php per share or 9.8 M. Howeve, Areneta
sadi that the offer was too lo and suggested fro more negotiont through
inland realty.
Thus, nothing shows that it actively served its principal interest and performed substantial acts that led the
consummation of th sla eof shares to Stanford.
The authority to sell was granted 3 times, each for 30 days:
October 2 1975, oct 28, dec 2 expring on jan 1.
On July 8, 1977, inland sold the shares to standford fo 13.5 M. It then sent a
demand letter to aren’t for payment of their 5% broker’s commission.
However, Araneta declined this and claimed inland was no longer privy to
the sale since its authority already expred on January 1, 1976
So, Inland filed a cased for collection of its commission which the RTC
dismissed. Ca also dimissed it since the consummation of the sale between
arantea and stnadford was on July 8, 1977, more than 1 yr and 5 months after
the expritation of the authority to sell.
Sc held that Inland realy did nothung but submit Stanford’s name as proseepctive buyter, but faield to
outrightly sell the shares under the terms and conditions set out by areneta inc.
Moreover, the lapse of more than 1 yr and 5 monhs between the expriraiton of its authority to sell and the
consummation of the sale is significantly shows that inland did not participare in the really critical events
leading the consummation of the sale.
Inland contends that a broker is automatically entitle dot the commiin merey
upon securing or introducing to the seller the particular buyer who ultimately
purschased the object of the sale, regardless of such epxoreation.
MEDRANO V. CA
COURT RUELD AS THE PROUING CAUSE OF THE SALE, THEY ARE ENTITLE TO COMMISION
Bienvenido Medrano was the vice chariamn of IBaan Rual Bank and in 1986
he asked his cousin in Law, Mrs. Flor to look for a buyer of a 17-hectare mango
plantation in Btangas, a foreclosed asste of the bank.
Procuring cause is meant to be the proizmate cause which refers to a cause originating a seris of events
wchih, without break in their contitnuiyt, result in accomplishment of prime objective of the employment
of the borker producing a prushaser ready, willing and able to buy a real estate on the owner’s terms.
Mr. Lee was a client of Mrs. Brobon, licensed real estate broker, and he
expressed interess to buy the proepty. So flor advised borbon about the
mango planataion being sold and conforered with Medrano who issued a
letter of authority which gave Borbon, Flor and Antonio the authority to
negotiate the ale of the property and find a purchaser. The loa also binds
him to pay them a commission of 5% fo the ttlate purchase prisece ugreed
upon between buyer and seller.
To be enttield to a commission, a borker will be regarded as the procuring casue of a siled if his efforts are
the foundation from which the negotiations reulsting in a sale originated. He must find the purchaser and
sale must processd afrom his efforts as borker.
Ararangement for ocular inspection was made but it never amterialied due
to reasons. When Mr. Lee decided to look at the property, the respondent
can no logner accompany him so they gavehim the address and instructed
him to get in touch isth Medrano;s’ dought Teresa Ganzao. 3 weeks later,
Antonio called lee to make a follow up whoc informed him he already
purchased the poery and made a downpayment of 1M.
Borbon, Flor and Antion were the procuring cause of the sale, without their intervernetion, no sale could
have been consummate. Thus, when ethere is ac lsoe, proximate and causal connection between the
borker’s efforts and the pricnipa’ ssale of his property, the broker is entitled to a cmission.
A deed of sale was eventually executed between the bandk, represetend
by ganzon and KGB Farms, MR LREE. Since the sale was consummate, Flor,
Borbon and Antion asked for their commission, but Medrando refused and
paid them 5,000 php only.
A broker is genrally defined as one who is engeaged for others, on a commission, to negotiate cotnracts
reltive to property wherein the custody of which he has no ocnernc; he is the middleman to bring the
parties together and the agent of nother parties. Here, Brobon is a license real estate broker and Antonio
and Flor are her associates.
Also, Medrano issued a letter of uthority, wth the clear intention to reward them for precuring a buyer for
the proewer. Generallt, the broker’s business is only to find a pucharser and by implication is entitled to
the usal commission whenever he bring to his principal a party who is abel and willing to enter into a valid
contra upn the terms name by the principal.
Hence they sued the Bank. However, the bank contend that the LOA by
medrano does not bind them because it had a personality separate ad
distinct from Medrano and that it never negotiated with them.
RTC ruled in favor of respondetns and ordered they be paid commission.
W/N PROVU CASUE
ENFORCE
TICONG V. MALIM
Malim and his associates were real estate broekrs, while the Ticongs were the
onwers of several parcels of land in Davao Del Sur.
In 2000, Malim presenting himself to be the Ticong’s authorized
represetatives, sent a formar letter of intent to sell to PEREZ, the real estate
supervisor of CHURCH OF JESUS CHRIST OF LATTER-DAY SAINTS, offering to sell
the Ticongs proeprtyes, and in the letter, Ticong singed as the owener.
Later, Malim averred that they signed a MOA where they were authorized to
1.
2.
look, negotiate and sell to any prospective buyer, their proeprties
on commission
Charge an overprice on top of the 900 price
The properties were sold for 7300,000 and this was made possible thru Malim’s
efforts. Hence, they should be entitled to the commission of 2,800,000.
However, Ticongs only paid them 50,000 and refused to pay the remaining.
On the other hand, the Ticongs alleged that Malim were not entitled to the
commission because the sale was made through their own efforts when they
sued the buyer, and that Malim ere not even licensed real estate brokers.
COURT RULED THAT MALIM WERE ENTITLED TO COMMISSION AND THAT THEY WERE THE PROCURING CAUSE
OF THE SALE
1ST, THEY WERE PROCURING CASUE OF THE SALE
Pocuring cause refers to a cuase originating a series of events which, without break in their continuity,
results in the accomplishment of the prime objective of the employment of the broker – to produce a
buyer willing, ready and able to buy the property at the owner’s terms.
To be regaeded as the procuring cause, the broker’s efforts must have been the FOUNDATION of the
negotiations which resulted in the sale which means his means and efforts resulted in the sale that he finds
the purchaser and the sale proceeds from his efforts as broker.
In this case, the evidence shows that Malim were instrumental in the sale of Ticong’s proeprts because
without their intervention, the sale would have nto been consummated. If not for them, the buyer would
not have knoabout the klots being sold by the Ticongs, they were the procuring cause as shown by:
1.
2.
The formal letter of intent informaing the buyers that Malim were the representative and sole
agents of ticongs for the sale
The 50,000 partial payment of commission
2NDENTITLED TO COMMISSION
On the issue of the overpriced commission, they are tnetiled to that 2.8 million overpriced commission
Considering that anomalous nature of the MOA, Malimw ere not enetiled to
the 5% commission.
The RTC uphel the MOA’s validity and held that Malim were entitled to
27500000 commission. CA denied their appel
So, they filed a petition before the SC contending that Malim were not the
efficient procuring cuase in bringing about the consummation of the sale
between ticongs and the church, thus, not entitled to Commission.
According to their MOA, they were authorized to make an overprice at top of the 900Psm selling ptice,
and they were enetiled to %% commission if they were able to sell in at 900 or higher. Thus, they were
entitled to the overpriced commission. A contract is law between the parties and stipulations are binding
on them, unless, the contract is cntary to…. So ticongs cannot renege on their obligation to pay the
overprice commission.
TICONG: athough Malim introduced and brough the parties together for
negotioations, their meager efforts did not contribute the consummate the
sale. Because it was Wilma who followed up with the Buyer as reagrds the
buying of properties, where the buyer said they will no longer push for the
prucahse (land would cost a lot) so they filed a case against Buyer and the
constituted the break in the continuity of the event Malim set = not efficient
procuring cause, only 5 % brokers fee.
MALIM: Caused the sale of the property, letter of intent, signed by Malim
w/conformity of Ticong which stated they were autorised agents;
acknowledgement receipt showed ticong’s payment of 50,000 to them as
partial payment of commission; MOA – procuring caue
KINDS OF AGENCY
AGENCY MAY BE CONSTITUTED
LIM V. CA
Victoria Suarez sued Rosa Lim for Estafa for allegedly misappropriating the
ring she was obligated to sell or reutn to Suaarez.
Lim received from Suarez,1 ring and 1 bracelet to be sold on commission
basis. This agreement was rfelcted bu a receipt.
Later, Lim retuned the bracelet to suarez but failed to return the diamond
ring or tun over its proceeds to her despite several demands.
Lim alleged that she had already returned the ring via Aurelia Nedera, who
suazeres allegedly authrozied to receive it. Thus, Lim claims she no longer has
liability to Suzarez.
Hence, Suarez filed a complaint for Estafa.
Still, Lim contends that she cannot be liable for Estafa because she never
received the jerwliry in trust or commission for the real agreement between
her and Suarez was A SALE ON CREIDIT with Suarez as owner-sell, and her as
buyer, as indicated by the fact that she, (Lim) did not signe on the blank
provided for the signature of the person receiving the jewelry, but she singed
on a different part.
THE COURT RULED THAT THE AGREEMENT BETWEEN THEM IS ACTUALLY A CONTRACT OF AGENCY TO SELL
AND LIM WAS LIABLE
The recipe wich provides that Suarez authorizes Lim to sell the jewelry on commission basis ot return them
or their proceeds if she fials ro was able to sell, establishes a contract of agency to sell on commission
basis.
Although Lim’s signature was not on the blank for the person receingn the items, such does not hace an
effect of altering the terms of their transation from a contract of agency to sell on commission basis to a
contract of sale.
The moment Lim signed on the ageemnt, she became bound by all the terms stipulated there.
Moreover, although there are some provisions of law which require certain formatlities for a particular
contract, such as
1.
2.
3.
For the validity of the contract
Required to make it effective against 3rd parties
For proving the contract’s existence
A contract of agency does not fall in any of the categories, thus, IT IS VALID IN WTV FORM ENTERED INTO.
Motrobrt, ther eis only 1 type of instrument the law strictly prescribes that the law stictily prescribes the
location, on notarial wills. Here, they did not execute a notarial will but only a simple contract of agency
to sell on commission basis, Thus location of Lims signature was immaterial.
Since all elements of Estafa were present because there was no evidence that the ring was rerturne or
that nadera was authorized, Lim is liale .
BORADOR V. LUZ
Boardors were engaged in the buy and sell of jewelry and Brigida Luz was
their regular customer.
On several occasion, Brigda’s brother, Narcisos, received several pieces of
jewly from the Boradors, which were indicated in 17 receipt. 11 of them
There ws no evidence to shoe what NAricos was Brigida’s agent and that Brigida should be held solidarily
liable with Nariciso for his obligatins.
indicated they were received by Narciso’s niece, whil the 6 were receied by
Brigida.
Narciso was upposed to sell the jewlrey then remit the proceeds or return
them to Boradors. However, he only remitted partial of the item sold and did
not return any of the unsold items. The total of his account reached around
725,000.
Boradors field a complaint aginst him with the barangay court. Brigida was
not impleaded, but she later signed a compromise agreement with his
brother to pay Borados the balance of the account. However, they failed to
pay.
SO, boradors filed a civil case against Narciso and Brigida for recovere of
money.
4 years later, Narciso and Brigida were charged with Estafa.
During the trial of the CIVIL CASE, Boardors claimed that Narcisos acted as
Brigida’s agent when he receved the jewelry and becaes he failed to pay
for them, Brigida, as his principal was solidarly liabile with him.
Form the CA’s findings the court ruled that Brigida never authrozied Naricis to act for her on any transation.
Hence, even if Narcisio acted as her agnet, Brigida never authorized him to act on her behald with regard
to the transatoon subject of this case.
The civil cod provides that by a contract of agency, a person binds himself to render osm eservice or to
do something in rep or behalf of another with consent…
The basis of agency is representation. HERE, there is not showing htat Brigida consented to Narcisio’s acts
or authorized him to act on her behalf. Thus, Boradors attempt to impute liability to Brigida is groundless.
Moreoer, the court found that they were negligent to entrust Narciso several pieces of jewelry of
substantial value on 6 occasion without WRITTEN AUTHORIZATION FORM THE PRICIPAl.
Also, No express or implied agency existed between Nariciso and Brigiday. Thus, Boradors were negligent
in their transation with Narcisio and BRigiday. As such, they cannot seeke relief from the effects of their
negligence by conjurigng a supposed agency relation between Brigida and nariciso.
**If there was a contract of anecy existing, it will be unenforcebal since it will fall under the Statute of
Frauds which require presentation of not or memo in order to be enforceable in court.
On ther other hand, Nariciso asserted that he never acted as Brigida’s agent,
nothwithstanding that the 6 recipts indicated that he received the tiems for
brigifay, he never delivered the items to brigifa.
Brigida contends she never authorized Nacriciso to recived any jewlrey on
her behalf.
After triel, the Court found Narciso only liable to Boardors.
w/n Luz was liable to Boradors even if evidence does not sow that she
authorized Narciso to recived the jewelry on her behalf.
FROM SIDE OF THIRD PARTIES/PUBLIC
SALVADOR V. RABAJA – agency not presumed to exist
SPs Salvador (sellers), Rosario Gonzales (agent), SPs Rabaja (buyers)
COURT RULED THAT GONZALES, AS AGENT OF SPS SALVADOR, COULD VALIDY REIEVE PAYMENT FROM
RABAJA
Sps Salvador owned land in Mandaluyng. When Sps Rabaja leaned that Sps
Salvador were looking for a buyer of the property, Sellers personally
introduced Gonzales as the admisnitrator of the property.
The court ruled that there was contract of sale which could validly be rescindied.
The sellers handed thei agent the owner duplicate ceritifcate of the title over
the property. Later, the Buyers made an intial payment to the agent in the
presence of the seller where the agent even presented a SPA executed by
the seller.
PErsosn dealing with an agent must ascertain not only the fact of agency, but also the nature and extend
of the agent’s authorit. A 3rd person whom the agent wishes to contract of the pricniapl may require the
presentation of the power fo atty or isntructons as regards the agency.
On that same day, the parties executed a CONTRACT TO SELL, which
stipulated that for 5M, the sellers sold the porety to the buyers.
The buyers made several payments which the Agent received pursuant to
his SPA, evidence by check vouchers and recipets the seller signed.
However,, the SELLERS complained to the BUYERS that they did not reeive
any payment from the AGENT. So, this prompted the BUYERS to suspend their
payment, as conseuquence, they received a notice to VACTATE the roperty
from the Sellers for non=payment of rentals.
Thereafter, the SELLERS filed a case for ejectment against the buyers, and the
Buyers filed an action for recissio of the contract against the Sellers and their
agent.
The civil code probies that the 3rd person whomt hea gent wishes t contrct on behalf of the principal may
require the presentation of the power of atty or the nstuction regarding the agency.
The basis of agency is representation, and a persons dealing with an agent is must discover on his own
peril the authroty of the agent.
Accordin to art 1990, isndoar as 3rd ersosn are concerned, an act is deemd to have been performed withn
the scope of the agent’s aithrity if such act is within the tterms of the power of atty.
Int his case, the Buyers did not recklessly enter into a contract of sale with the Agent ebcasue they required
the presentation of the power of atty, before they transacted with her. And when the agnet resented the
principal they had no reason not to rely on it.
The SPA state that Gonzaels can administer the property, negotiate the sale and collect any document
and all payments related ot the property.
As she acted within the scoper of her authiryt, the principal (SELLERS) must comply with all obligations.
Since it was not shown that Gonzales exceeded her authirut, she cannot be solidarly liable with SPS
salvaor.
EJECTMENT: so the lower courts ruled in favor of the Sellers that the Buyer
should be ejected for no-payment of rentals (lessor lesse)
RECISSION: in recission case, The Buyers prayed that the amount htye initially
paid be returned. But the sellers caliemd that the SPA in favor of the Agent
was falsidied and they did not revieve any payment. On the other hand, the
agent contended that the payments were all handed over to the Seller.
RTC DECSION: The Court ruled in favor of the Buyers that there was a valid
contract of sale between them. And undoubtedly, Gonzales was theattoryney in fact of the sellers. But made the agemt sp;odarily libale with the
Sellers.
Moreover, it was the Sellers themesleves who itnrodued Gonzales as their administrator of the property. By
their acts, they mad a 3rd person believe that Gonaazalers was duly authorized to admisniter, negotiate
and sell the poreprty.
Cosnidering there was a valid SPA, they the Sellers poeprly made payment to the agent as if they paid
the sellers. So, w/n the payments were remitted to the sellers, is not concern because If SPS Salvador as
rincipal did not reieve the payments or want to reok the SPA, their recorse is t isnttue a separate action
against Gonzales.
Contract to sell rescined, SPs Salvador pay Sps rabaja.
CA: Ca reulled that Gonzales as sagnet cannot be solidarily laible because
as agenthe must expressly bind himself or exceed his authority in order to be
soliddarily liable.
COUNTRY BANKERS INSURANCE V. KEPPEL CEBU – agency by estoppel needs
proof
W/N QUINAIN, AGENT, EXCEE HIS AUTHORITY AS CBIC’S AGENT WHEN HE EXECUTED THE SURETY BOND IN
FAVOR OF UNIMAIRNE
Unimarine Shipping LLines contracted the Services of KEPPEL Cebu Shipyar
(aka Cebu Shipyar), for dry docking and ship reair works on its vessel.
THE COURT RULED THAT
Later, Cebu Shipyard issed Unimarine’s BILL for its services 4.4M. they
negotaiated and the amount as reduced. This was embodied in a letter to
GM of Unimarine.
Agency is based on representation. The law mandates the agent to act within the scope of his authiruty
and this authority is what appears in the SPA granted to him. According to the ivil code, an SPA was
necessaru to oblige the principal as gurantor or surety.
In compliance, Unimarine, through PAUL RODRIGUEZ, secure 2 bonds:
1.
2.
from COUNTRY BANKERS INSURANCE CORP, through its agnet
BETHOVEN QUINAIN, a SURETY BOND of 3M.
Form PLaridel Surety, 1.6 M.
Later, Unimarine executed a Contract of Undertaking in favor of Cebu
Shipyard. Becaue Unimarine failed to remit the first installment, Ceby shipyard
deposited the check for installment, but this was dishonored.
Ebu Shipuard deands that Unimairne setlle its accounts, otherwise it will
enforce payment against the SURETIES. But Unifmairne stil failed to pay.
So, Cebu Shipyard went after the sureties. Later, filed a case against
Unimarine, CBIC and Plaridel.
Country Bankkers contends that Cebu Shipyar has no cuase of action
against it because the surety bond was issued by its AGENT, in exevuss of his
authority. And Cebu Shipyar should have doubte the Agent’s authority to
issue the surety bond because according to the SPA in favor of their agent,
the latter was ony authorized to issued surety bonds NOT EXEEDING 500,000
in favor of DPWH, NAPOCOR and other gov agencies.
Hoerbrt, the rRTC ruled that CBIC was still liable to Cebu Shipyard because its
agent acted within his APPARENT SCOPE OF AUTHIRITY, and CBIC was
ESTOPPED from disclaiming laibility.
AGENT EXCEEDED AUTHORITY PROVIDED IN SPA
In this case, The SPA in favor of Quinain, cearly states that the agents power to issued Surety bonds was
limited that it can only be issued in favor of DPH and other gov agency, and its limited to 500,000.
Because the limits of the agent’s authority were specifically provided in the SPA, the Court found the
aguen exceeded his authority.
NO RATIFICATION
The law provides that the principal may ratify the agent’s act when he exceeds his auroty. However,
netiher Unimarine or Cebu Shipyard repudiated CBIC’s testimony that it was UNAWARE of the existence
of the Surety Bond nor was CBIC notified about the Agent’s transaction on his behalf. Thus, there was no
ratification.
1911 By principle of Estoppel, the principal is solidarily liable even I the agent exceeded his authority if the
rinciapl allowed him to act as though he had full powers. However, for this to exist, the following must be
established:
1.
2.
3.
The principal manifested a representation that the agent had the authority
The 3 person, in good faith, relied on said representation
Upon such representation, the 3rd person change his position to his detriment.
For agency by estoppel to eist, there must be proof of reliance upon the prinipal’s representation that the
agent had uahtryt, nad that the representation were doen before the 3 party relied on them.
In this case, CBIC was not negligent nor was there representation on their art that the agent had authoryt
because it cleary stated the agent’s powers in the SPA. Moreover, it had company procedures that the
agent notify them of their transaction, but their agent here failed to do so. Moreover, CBIC nevere made
the public or UNIMARINE believe that Quinain had the authority to issued a surety bon in favor of the
companies other than DPWH and other government agencies, nor did it knew the existend of the surety
bond.
For one to claim agency by estoppel on the ground he was misled by the ther, he must show that hw was
not misle through his own fault.
In this case, UNIMARINE was negligent for fialing to isbalish or inquire if Quianin was authorized to issued
the surety bond nro did they ask that the SPA in his faor be shown.
Thus, CBIC is release from its liability on the surety bond
REPUBLIC V. BANEZ – doctrine of apparent authority
EXCHANGE OF LETTERS – INTERRUPTED PRESCIOTIVE PERIOD
Bañez and others offered to sell a land to Cellophil Resources Corporation.
Prusuant to such, Banez exectured a letter of agreement giving Cellophiil the
opition for purchase the property, which it accepted.
Aug 15, 1984 – updated RP of status of property title – acknowledgement of Bane commitment under the
ontaact. Wirtiten acknowledge of debt of bane
Banez et all, asked for several cash advances to be deducted from the
purchase price After paying the cash advance, Cellophil constructed STAFF
HOUSES and other improvement on the proerpty.
Since Banez et al will be stab=yong abroad for a while, they exeuted an SPA
in favoe of HOJILLA, this authorized him to
1.
2.
Take all necessary stpets to have the certificate of title in the name
of Cellophil
To do all acts and things and to execute all pappers and
documents of whatever nature or kind required for
accomplishment of said purpose.
However, Cellophill stopped its operations and Government took over its
operations.
Afterwards, Banez et all decreared the property was their property and
rented out the staff houses Cellophil made to 3rd parties and ordered
gurades to prohibit the Republic form entering the compound.
Hence, the rp filed a complaint for sepciic performance, recover and
damages including the agnet. They prayed the title be surrendered and
deliver to themupon full paymern.
The RTC dismissed bec complaint was filed beyon d 10 yr prescriptive period.
Within 18 years, there was no act to demand to interrupt presciptuin from
1981. There were several letters given to the agent however, ourt held that it
was not inding agisnt Banez et al.
ruled that while RP paid cahs advanaces, it never demanded that Bane
comply with there obligation to execute the absolute deed of sale or deliver
the OCT to them upon payment of purchase price. There were letters
address to them but they were not demands, hence, presciprtive period was
not interrupt.
RP: Hojilla sent letter on Agu 15, 1984, 1001, 1000. In 1983, they cakme fill
payment upon presetement of title and absolute deed f sale. From that
hojilla is estopped because Banez msirepre that they wkring on the title but
there were not.
May 29, 1991/oct 29,1991from RP – demanded banez to discontinue the contrauction, repair, demolishin
and occupance of staff hosues. – demand letters to enforce obligation under the contract, cede
possession to RP. So it interrupd running of precpitov period
July 6 1999- rp letter – demand hojilla to surrender possession of property.
--inrweeuprws inALL LETTERS
SPA – THERE IS EXPRESS AGNCY TO ADMINISTER
When respondents went abroad pending the performance of their obligations in the Contract, they
authorized Hojilla to register the subject property — a single obligation in the whole range of obligations
in the Contract. The SPA appeared to have left no representative to fulfill respondents' obligations in the
Contract on their behalf except for Hojilla's authority to register the subject property.
SPA power Hjillato register the property and all necessary sstpes for it.
The strict construction of the Spa will render the obligation of contrac ineffective. This case is an express
agency where Hojilla, agent, bins himself to represent the principal with the latter sexpress conent or
autorty. Because there is an express authority granted upon Hojilla to represent the respondents as
evidenced by the SPA, Hojilla's actions bind the respondents.
Also, one glaring fact that cannot escape us is Hojilla's representation and guarantee that petitioner's
obligation will only arise upon presentation of a clean title and execution of a Deed of Sale signed by the
respondents' heirs, which reads, "[t]he Bañez heirs will only claim for the full payment of the property upon
presentation of a clean title and execution of a Deed of Sale signed by the heirs."
IF he knew he had no authority to execute the contrat and receive the letters, he should have opppsed
the demands. However, having received the several demand letters from petitioner, Hojilla continuously
represented himself as the duly authorized agent of respondents, authorized not only to administer and/or
manage the subject property, but also authorized to register the subject property and represent the
respondents with regard to the latter's obligations in the Contract. Hojilla also assured petitioner that
petitioner's obligation to pay will arise only upon presentation of the title. Thus, BANEZ re estopped by the
acts of their ahent.
IMPLIED RATIFICATION
ALSO, ASSUMING HE EXCEEDED HIS AUTHORIT, BANEX SOLIDARITLY IBALE because they allowed Hojilla to
act as though he had full powers by impliedly ratifying Hojilla's actions — through action by omission.
AND this ratification was made when they failed to repudiate the latter's acts. They knowingly permitted
Hojilla to represent them and petitioners were clearly misled into believing Hojilla's authority. Thus, the
respondents are now estopped from repudiating Hojilla's authority, and Hojilla's actions are binding upon
the respondents.
"[t]he 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 possessin
SPECIAL POWERS OF ATTORNEY
DOMINION INSURANCE CORP V CA – SPA/ make payments not usually
considered acts of administration
Dominion insurance corp and Rodolfo GUeverra entered in an agency
contract where Guevarra would act Dominion’s Manager.
FIRST THE COURT RULED THAT THE SPA IS IN FACT A GENERAL POWER OF ATTY.
In this case, the SPA shows that dominion and gueverra entered into a principal-agent relanethip where
by Doinion appointed GUevera to be its agency manager in its pamanga branch. Enrumerated his duties,
are actually acts of administaritn. Thus, although the titled of the document is an SPA, from its contendt,
what was acutaly cosntitued is a GENERAL AGENCY.
Rodolfo Guevarra sued Dominion Insurance Corp to recover a sum of
156,473 which he paid out of his PERSONAL FUND to satisfy the claims of
Dominion’s clients, in his capacity as the Manager/ANGENT.
Their SPA shows that Domnion and Guevarra entered into a PRINCIPAL-AGENT RELATIONSHIP. Hwere,
despite the word SPECIAL in the Document’s title, what was actually constituted from its contents was a
GENERAL AGENCY.
On the other hand, Dominion refuted this stating that Gueverra cannot claim
reimbursement because he exceeded hi suathority as an agen. Then it filed
a counterclaim against Gueverra for collection of premiums Gueverra
allegedly failed to pay. Also, Dominion filed a rd party complaint against its
Regnionla Manager ofr Luzon, Fernando Austria.
The SPA provides that Dominion, represented by its regional maanger, appoint Guevarra to be the
compay’s Agency Manager in San Fernando, in its place. to perform the following:
The RTC ruled that Dominion Insurance pay Guevarra the money he
advanced and dismissed its counterclaim against him.
Dominion appealed, but this was denied.
W/N GUEVERRA ACTED WITHIN HIS AYTHROITY/W/N HE IS ENTLTIED TO
REIMBURSEMENT?
1.
2.
3.
4.
To conduct, sing, manage, carry on and transact bonding and insurance business…with the
right upon prior consent, to appoint agents and sub agents;
To accept, underwrite and subscribe cover notes and policies of sinurance and bonds
To demand, sue collect, deposit, enforce payment, deliver and transfer and recive, give effect
the reivpt and discharge for all money to which dominion became due
TOrecieve notices, summons and legal process in behalf of first Domnion…
Gueverra;s duties in the SPA comprises all Dominion’s business as priniapl, coched in general terms, thus
LIMITED TO ACTS OF ADMISNITRATION.
A general power permits the agent to do all acts for which the law does not require a specil power, an
the acts enumerated in the SPA in this case, do not actually required an SPA.
The Civil code provides that an SPA is necessary in the following instance:
1.
To make payments NOT usually considered as acts of administration; and any other act of stic t
dominion.
SECOND, THE COURT RULED THAT UNDER THE LAW OF AGENCY, GUEVERRA CANNOT SEEK REIMBURSEMNT
FROM DOMNION BECAUSE HE EXCEEDED HIS AUTHORITY. While the payment of claims to the insure dis not
enumerated in the SPA or similar to scuh acts, Dominion Executed a Memorandum of Management
Agreement to Guevarra, authorizeing him to settle and dispose all claims in the amounf of 5,000.
HOWEVER, this authority was limited to PAYMENTS COMING FROM GUEVERRA’S REVOLIVING FUND, not his
personal fund. Hence, because he deviatedform the Prinicpal’s instuciton , he cannot reimburse.
In this case, the payment of caims is NOT AN ACT OF ADMINISTRATION because it is not included among
the duties enumerated in the SPA or similar to thos eenurmerted therewith. Thus, an SPA is first need beore
Guevera could actually stlled the insurance calims of the insured.
NONETHLESS, Gueverra’s authority to SETTLE CALIMS is embodied in the MEMORANDM OF MANAGEMENT
AGREEMENT whiwch enumerates his duties and responsibilities and AGENCY MANAGER of SAN
FERNANDO PAMANGPANG:
1.
2.
He was authorized to settled and dispose all motor car claims in the amount of 5,0000 with
approval from the regional office
Full authority to settle tppu claime.
But from the Memorandum, his authrotiy to pay was LIMITED to pay from His REVOLVING FUND OR
COLLECTION
“This is to authorize you to withdraw from your revolving fund/collection…represteing the payment on the
calim….
Hence, from such instruction, Geuverra was authorized to pay the claims of the insured, BUTE PAYMENT
SHALL COME FROM THE REVOLVING FUND OF COLLECTION IN HIS POSSESSION.
Because he deviated from his principal’s instuctions, the expenses Guevarra Incurred cannot be
reimbursed from OMINION.
STILL, THE COURT RUELD THAT UNDER THE LAW ON OBLIGAITONS AND CONTRACTS, GUEVARRA CAN SEEK
REIMBURSMENT IN SO FAR AS DOMINION WAS BENEFITTED. Because by Geuervarra’s act, Dominion’s
obligation towards his clients was extinguished, thereby benefiting him. Hence, isn for as his obligation
was extinguished, Gueverra may demand reimbursement.
Nonetheless, whle the law on agency prhibtis him from obtaing reimbursement, he stil has the right to
revcover from the law on oblicon; which provides that whoever pays for another, without the knowledge
or against the witll of the debtor, can recover insofar as the debtor benefitted.
Since form Geuverras act, Dominion’s obligation to pay his clients was extinguished, to that
extend,Gueverra may DEMAND reiimbursemnt for Dominion. This extend wil be proed by the Release fo
CLAIM LOSS and Subrogation reipts., in total of 116,276.95. this is to bededucted from the revolving fund.
Hence, Dominion is to reimburse Gueverra for 112,672.
PATRIMONIO V. GUTIERREZ – requisites/loan or borrow money
Alvin Patrimonio and Napoleon Gutierrez entered into a business venture
named SLAM DUNK corporation, a basketball related production thingy.
In the course of their business, PATRIMONIO, pre-signed several BLANK checks
to answer for SLAM DUNK’s expenses, and he entrusted them to GUTIERREZ
with the instruction not to fill them out without Patrimonio’s approval or
notification. So patrimonio can veriy payment and arrange fund.
Later, howeer, without Patrimonio’s knowledge and consent, Gutierrez went
to MARASIGAN (patrimoni’s foremer teammate) and secured a lone for
200,000, saying that Patrimonion needed the money to consturc his house. In
addiotn to the payment of the 200,000 Gutierrez also assure that Marasigan
will be paid 5% interest per month.
Marasigan gave the 200,000. In return, Guetierrez gave the pre-signed blank
checks and filled them out with 200,000, May 23,1994.
When Marasigan deposited the check, it was dishonored(cloed since May
28, 1993)
When Marasigan failed to recover the amount from guetierrez despite
demands, he filed a case for violation of BP 22 against PATRIMONIO.
On the other hand, Patrimonio filed a case for the annulment of loan and
recovery of damages angaisnt marasigna and Gutierrez. He contends he
never athorized Gutierrez to borrow the money or issue the checks.
RTC ruled in favor of Marasigan and order Patrimonio to pay Marasigan. The
CA, however, ruled that Gutiereez had the authority to fill out the checks, so
Patrimonio was still liable.
PATRIMONIO: a SPA is necessary for an individual to make a loan or borrow
money on behalf of another.
W/N GUTIERREZ HAD AUTHOITY TO FILL OUT THE CHECKS, THUS MAKE
PATRIMONIO LIBALE FOR ITS VALUE
PITC V. THRESHOLD PACIFIC CORP – spa must be express
Philippine INTernation Trading Corporation and Threshold Pacific corporation
executed 3 Insturment between them, the IMPORT FINANCING AGREEMNT,
and its 1st and 2nd Addendum.
Under the IFA, PITC agreed to fianncly assist TPC, represetnee dby tis
madanging director, in the amount of 50M for its importation of urea
fertilizers for resale on credit on credit to ALLIED SUGARCANE PLANTER
ASSOCITION (ASPAI).
It was provided therein that TPC, as borrower, has no right to delay or
suspend payment, and that it is lible to pay until PITC receives full payment
regardless of the securities offered. Among theose secruties were chesk
APSAI issued, and that if the checks were to bounce,TPC will autmottically be
in degault and all obligation due and demandable.
1ST ADDENDUM, due to ASPAI’s delay in theimprotaion of fertilizers, PITC and
TPC amended the IFA and in the 1st addendum PITC agreed to disburse the
COURT RULED THAT THE CONTRACT OF LOAN GUTIERREZ NETERD ON BEHLAF OF PATRIMONIO SHOULD BE
NULLIEFIED, AND THE LATTER IS NOT BOUND BY IT.
FIRST, GUTIERREZ WAS NOT AN AGENT NOR WAS HE AUTROZED TO CONTACT THE LOAN.
Agency may be express or implied. Under the Civil Code, a contrac t of agency may be oral, however,
it must be written where law requires a specific form. Furhter, Art. 1878 of the civil code, expressly provides
that a SPA is required before an agent can loan or borrow money on behalf of his principal. However, this
does not required that the spa be in writing. FOR this requirement refers to the nature of the authorization
and not its form. STILL, authority must be established by competent and convicning evidence other than
selg-erving assertion of the party claiming that the authority was verbally given.
From the records, Gutierrez did not have authrotiy to borrow money on behalf of Patirmonio, nor the he
execute a SPA in favor of Gutierrez. In fact, he testified that he never verbally or in writing authrotized the
loan nor was he aware of the transaction.
Thus, in the absence of authroitzation Gutierrez can not enter in a contract of loan in behalf of Patrimnnio.
In the absence of showing any agency relation or special authroty to act on Patrimonio behalf, the loan
entered by Gutierrez is null and void and Patrimonio is not bound by it.
SECOND, THAT FACT THAT PATRIMONIO ENTRUSTED THE PRE-SIGNED CHECKS TO GUTIREEZ IS NOT SUFFICIENT
BECAUSE AUTHROTIY TO ENTER A LOAN CAN NEVER BE PRESUMED. A contract of agency and the fiduciary
relationship mst exist as a matter of fact. SO theperson alleging it has the burden of proof to show, nto
only the fact of agency, but also its nature and extent.
THIRD, THERE WAS NO PERFECTED OCNTRACT OF LOAN BETWEEN MARASIGAN AND PATRIMONIO BECAUSE
OF LACK OF CONSENT.
Since Gutierrez dd not have the authroty to enter in the contract of lona, while there may be meeting of
the midns between amarasigna nad Gutierrez, such cannot bind Patrimonio because his conset was ot
obtain. So, Gutierrez is the only one bound.
Moreover, while he issued several pre-signed checks to gutieress, one of which wne tot marasigna, this
act foes not constitue suffiecinet authroty for Gutierrez to borrow money on his befalf or be construed as
his consent to the loan agreement.
HENCE, court annulled the lower courts decision and absolved patrimonio of liability.
FIRST, THE COURT EULD THAT THE LOAN AGREMENT DOES NOT EXPRESLSY STIPULATE AN AGENCY BETWEEN
TPC AND ASPAI
The Stipulation reveal the follwowitng:
1.
2.
3.
4.
TPC, as borrower, applied for financial accmodation from PITC to fund its importation of urea
fertilizers
Upon import, TPC will sell the fertilizers to Aspai
50 m was payable in 4 installments plust tinerest
As security, TPC ageed to proved post dated cecks issued by aspai payable to PTIC,furth secure
by certs of title o f proeprties, sugar quedans issude by noah’s ark assigne by Aspai to tpc, itf
post date check dishonored, immedialte ue, and atty’s fees 25
Sicne the ageemetn is clear and unequvacal, the court aare bound to repect the agreement. From the
loan fprovison ther is no express stipulation cosnittuing TPC as Apsai’s agent.
SECOND, TPC FAILED TO PROVE THAT THE EGREMENT DOE NOT EXPRESS THE TURE TINETENSTION FO THE
APRTIES THAT ASPAI WAS PTIC’S CLIENT AND PTC WAS ONLY ASPAI’S AGENT.
CA: Contract was simulated
first portion of the loan for 5M so that TPC can purchse fetilizers domestivcally
and resell to APSAI, PITC was assignor.
2nd ADDENDUM – since there was further delay for shipment of fertilzers, they
further amended the IFA to meet APSAI’s request for additional fertilizaer,
and PITC released 5M on the agreement that it would be the last time that
TPC would source its fertilizers locally.
COURT RUELD IT WAS NOT
In general, an agency may be express or implied. However, an agent must posses as special power of
attorney if he intednt to borrow money in his pricnipals’s behalf to bind him as guarantor or surety or to
convey real right over immovable property, including real estate mortgages.
Instead of opening a letter of credit, PITC issued a check directly payable to
TPC for 5M.
WHiel SPA may be oral or written, the authoty msut be express or there must be a clear madate from the
principal specifically authroizeing the performance of the act, not merely overt acts from which an
agency mat be inferred. Consequently the agents atuhoty must be duly established by cometpetedn and
convicing evidence other than sel-serving assertion
Later, TPC failed to pay is loan so, PITC field a complaint for sum of money.
And when PITC deposited the post detaed cheks of APSAI, they were
dishonored. Despite demasn to APSAI to setlle the amount under the IFA,
APsai and TPC refused to pay.
In this case, TPC relies of CUALES’testimony as its signatory and representative to the transaction. On the
other hand, TPC does not offer proof to justicy its liablitly other than CUales’ aaccount and recollecton of
the transaction. Thus, TPC’s disavowal of liability is negative and self-servicen that has no weirhgt in law
and cannot be gievenr greater evidentiary value.
TPC Denied liability, ASPAI is actually PITC’s cLient and TPC is merely ASPAI’s
Agent, and the IFA is iNRISICTLY AMBGUGIOUS for failing to exresst he true
inten of the agteemnt of the parties. The real intent is that PTC will only ensure
thet the furterlize deiver to ASPAi.
Moreover, while they assaile the contract as ambiguous, they do not assail is genuiness. On the toher
hand, CUales entere into the IFA and its aammnedum as TPC’s Mangaing director. Thus, the loan
instrument best represtn the parties actual intent and agreement.
Nonthetles, RTC found TPC liable to PITC ebcasue there was not evidence to
show the TPC merely acted as agents of APSAI. APSAI executed real estate
mortgages and posted ceks to secure payment of the IFA loan. But, APSAI’s
security does not automatically make TPC its agent.
However, CA reversed this, stating that since PTIC required ASPAI to issued
the psot-dated checks and real estate ortages to secure the loan , the CA
ocncluded that TPC was only an Agent of ASPAI, and not liable for their
pricnoapsl’s fault.
W/N THERE WAS AN AGENCY BETWEEN TPC AND ASPAI
Also, TPC presented eveidecne:
1.
2.
3.
4.
5.
6.
Psotadate checks and real estate morgages to secure the loan
Reimbursemtn PITC made to it for storage and delivery expense
Land bank letter of ceredi to ASPAI and akcnowleing
Fertilizer purchases form ASPAI to PITC
Demand letter to ASPAI
Criminal complaint against ASpai as real client and TPC mere ageny.
However, nono of the evdeicen denmonstrat the express or direct order form ASpai authrotize=ing TPC to
enter into the loan. Thus, since it ailed to dispore the authoenticey of the loan contract, TPC and CUales
are liable to pay PITC as its creditor, plus interests
WITH REPECT TO OBLIGATION DUE FROM TE PRINCIPAL
VIRATA V NG WEE
NG WEE was a Westmont Bank’s valued client. Sometime in 1998, the bank
manager enticed him to invest in WINCORP, a corporation licensed to
operate as an investment and he was offered a SANS REOCOURSE
TRASNACITON where he was going to be an investor who provides fund fund
to a corporate borrower from wincorp in need of inancial assistance r
dunding.
Lured by the representation that the SANS RECOURSE transactions are safe
and involving little to no risk, NG Wee invested in his own name and under his
trustees. In exchange, WIncrop issued ng wee and his trustees Confimatio
devices informaing them of the borrower thwy were matched and the terms
they would repay, which provided that WINCOPR may act as its collecting
and payin agent, that Ng wee authorizes it to grant loan to the borrower,
without liability on therir part.
“This is to confirm that pursuant to you authroti, we acted in you
behalf/benefit, riske or account without libility, or contingent to WINCROP
with respect ot he lona granted o the Borrower. For your convenience, but
without obligation on our pary, we may aact as your collecting and paying
agent for this transaction. “
SPAS were wlaso prepared for Ng Wee’s signature,where it provides that he
appoints Wincorp to
1.
AGREE, DELIVER, SIGN, EXECUTLE loan documents relative to the
borrowing of the loan to whom Ng wee thru wicnorp agreed to lend.
Wincorp attempts to evade liability by hiding behind the "sans recourse" nature of the transactions with
Ng Wee. It argues that as a mere agent or broker that matches an investor with a borrower, it cannot be
held liable for the invested amount in case of an unsuccessful or failed match.
W/N WINCORP EVEN AS AN AGENT SHOULD STILL BE LIABLE
Since the purpose of agency is representation, there sust be intent on the aprt of the pricniapl to appopint
the agent form his words and actions, and an intent on the agent to accept the appoitnemtnand act on
it . Without this, there is no agency.
Althought he agent may perfom acts advantegoes to the principal that that specided by him, he cannot
carry out the gagenc which would result damage to the principal.
In tis case the SPAS NG wee executed to WIncorp as agent relative to the borrowing of Power Merege,
allegedly without risk of libitli on wincopr. But, the SPAS do not include a provision empower WIncorp to
excuse power Merge from repaying the amount ti had dtwaen from its credit line. The Spas merely
authorize to agree, deliver, sign and excetue loan documents relative to the boowing of the corporate
borrowter. Otherwise stated, Wincrop had not authrotiy to absolve power merege from tis indebtenes to
ng Wee. Doing so violted the express terms of the SPA that imited Incopr’s authroty in contracting the
loan.
In no way can the execution of the SIDE AGREEMNTS be considered as aprt of WIncorp’s autroty since it
was nto mentoned specifically in the SPAS, as far as the investors are considered, the side agreement
amounted toa gratuitous waiver of POWER MERGE;’s obligation which such authority must be contained in
the SPA.
Moreover, the court noted that the Side agrements redounded to WIncorp’s benfirs because the Power
Merge paper were more valuable that the outstandin Hottick obligations. In discharging its duties as
2.
3.
And that WIncop was authorized to do and performa all and every
act and thing necessary to be done for the loan.
And that NG wee RATIFIES and confirms all the acts Wincopr shall
lawfully do.
Ng wee was matched with Hottick plding Corp, owned by a Malaysian. So,
Hottick was extended credit of aroung 1B5M, on return it executed some
secureites:
1.
3 Surety agreements by LUIS VERATA, Srim Halim Saad, and a 3rd
party rea estate mortgage
HOttick fully availed of the loan facility IWncorp extended, but it deautled in
aying its obligaitons due to the Asian Financl crisis. Thus, Wincorp filed a
collection suit agaistn Hottic and its sureites.
TO induce the aprties to settle, VIRATA offere to guarantee full payment of
the loan, and a MOA was executed between him and WIncorp. And a
settlement ageemnt was then arrangem where the other surety who’s
property was attached, aggreed to pay 1M dolla to wincorm to stasify its
clains, So, Wincorp dopped him from the case and released its attachment.
Later, WIncorp xecuted a WAIVER AND QUITCLAIM in favor of Virata, relaeing
it from its obligation for the MEMO except for the transfer of equity over its
proepies.
SO when NG wee learned of Htottic’s default, he confronted WIncorp about
the investements and WIncopr assured him that the looses from Hottic’s
account would be absorbed by the company and that his investements wil
be transferred to a new broower. From that Ng wee continued making
payment. And even increased his stake in the new borrower POWER MERGE
COPROATION.
Virata is the Majoroty sockholder of Powermerg, and WIncorp aggreed to
extend a credit line to it for 1B300M, later increased to 2B100M.
Pusuant to this, Power Merge made 6 withdwals from the credit line and
issued Promisorry notes inv favor of Wincorm as agent on behalf of the
investor.
After the promsisorry notes were issued, wicop issed a Cnrifmation Advices
to NG wee. Unknown to wee, however 2 Corporations made side agreemnts
absolving Power merge of the libilty towards the PROMISSORY NOTES It and
that the accommodation agreement WIncrop entered does not intedne that
Powermerge would pay.
So, despite demands, NG Wee was not able to collect power merge’s
outstanding obligation of 200M. So Ng wee filed a complaint fr sum of money.
Against Power merge et al, but Virata was the only oen served with summons.
NG wee calims that he fell prey to the fraudulent Scheem of wncorp and
power Merge.
Later, SEC found that the Confirmation avices wincorp had been isttuin iss
investors was actulay a security to be registered being offered to the public
and WIncorp had been advancing payment of interest to investors to cover
up tis borrower’s insolvency.
Howeverr, WINCORP eevaded libailtiy because its only roe was to match an
investor with the corporate borrowers thus is has not liability to the Money Ng
wee loaned.
alleged agent, WIncrp elected to put primacy over its own interst than that of its principal. And when
WINCOPR conceled the existence of the side agreement, the company became lible for the fraud as an
agnet.
Ng wee didn’t ratify because he doesn’t know existenece of isde agrements.
VIRATA AND POWER MERGE ARE LIBLE
POWER Merge contends that he Credit Line Agreement and the issuance of
the promissory notes, according to Virata, were mere accommodations to
help Wincorp enforce the outstanding obligations of Hottick so was contrary
to their ageemtne that he was offerec investement papers.
The RTC Ruled that VIrata nd Wincopr other pay NG WEE. Because WIncorop
was a vendor in bad faith sicne it kewn hthat power merge’s notes wer
euncollectibel form the beffine and it violated its agency agreement with
NG wee.
WINCROP: SO, wincorp contends what was involved in the case is a loan
arement and WIncopr was a mere borker of the transaction, and that NG wee
knew of the Trasnaction it enter with Power Merge as his agent, and the SPAs
ratified WIncorp’s acts of agency in the execution of the loand because he
had been renewing th placement despite nwoleg of the setup.
WITH RESPECT TO IMMOVABLE PROPERTIES
GUTIERREZ HERMANOS V ORENSE
Engracio Orense owned a parcel of land with buildings and improvemnts
registered under his name. later, JOSE DURAN, his nephew, with Orense’s
cnsent and knwoedlge, executed a instrument selling the land to GUTIERREZ
HERMANOS, for 1,500, with a right to repurches within 4 years.
Howecer, Gureterrz was not able to possess the proepty because Orense
and his nepehew continued to occupy it by virtue of a contract of LEASE it
executed in ther favor.
The deed of sale of the land was executed by Duran and ratified by Orense
in the court.
To perfect the title to the property, Guteirrez demanded hat Orense execute
a deed of convenyance of the proety but Orense refused to do so without
justifiable reason. Jose Dora cannot reimbrurse the company for the
purchase price and refused to pay rent.
Despite repeated demands, Duran failed to pay, and Orense did not
surrender the property, so Gutierrez filed a case, rpatying that
1.
2.
An deed of covyeance of proety and all right and itneres therein
be trasnfered to him,
That he be declared he owner.
In defense, ORENSE claimed that he was the lawful owner of he property,
because it is till registed under his name, and he never authorized nor
executed a power of atty or verbally authorized JOSE DURAN, to sell, in his
behalf, the porety to the company.
Moreover, he only found out about the sale after the contract of sale was
executed and befoe that he did not deliberately perfom any act which
might have induced the company toe belive that duran was empoert and
authorized to sell the alnd.
Later, the company charged Duran with ESTAFA for having represented
himself to be the owner of the land and its imporovnet,s when in realty they
did nt belong to him, but to Orense.
However, at the trial, when Oresne was call as witness, he testidfeid that he
CONSENTED TO DURAN’S SELLING OF THE PROEPRTY WITH RIGHT OF
REDEMTION.
Notwithstanding the allegation of Orense, th records show that he CONSETNED to Duran’s sale of the
proepty to Hermanos and that he RATIFIED it by means of a public isnturent executed before the notary.
So, from his conet, he conferred a VERBAL or Implied power of agency upn his nephew who accepted it
the same wasy by selling the porety.
Thus, As principal, Orense must fulfill his oblgiations contracted by the agent who actedwithin the scope
of his authority.
Moreover, even if ti be held that the conset was granted subequelt to the sale, still Orense, the owner,
approved his nephew’s action which acted as the manger of his unlcies business and Orense’s ratification
produced an EXPRESS AUTHROITZAITON TO THE SAEL.
Moreover, OResnes sworn statemnt while testifying, confirm and ratifies the sale of his property done by
his nephew, which remedies all the defects which the contract may have contained form the moment
of its exeution
Thus, alsothough the sale Duran made to Gutieriez was initially VOID in the beginning, it became perfectly
valide and cured of defect when Orense, the owner, stated under oath that he cosnetned the Duran’s
sale.
The contract os ale of the proepty in the notarial isntuemetn may beb invlaid under the civil code
because the authority which Orense gave was not in writing and signed by Orense, but by thei sratification
thru his sworn testimony admitting his authorization to sell the ad, by other evidence which he did not
object, thea gency was perfected and HE IS BOUDND TO THE COSNWUECNS OF THE AGENCY AS THOUGH
IT HAD BEEN IN WRITING, by express power of agency.
Thus, affirmed.
So, Duran was acquitted of Estafa. Thus, the company filed a case to Hav
Orense exececute a deed of transfer and conveyance to the company and
to pay rental fee.
ESCUETA V LIM
THE SALE IS VALID
Rufina Lim bought HEREDEARY SHARE of 10 LOTs from Ignacio Lubio and LUZ
Baloloy’s heris.
BALULOY PROPERTY – Bayani Baloloy a s represented by his agent Alejandro Baloloy who was served with
the notice of the pre-trial. As agen, he was charged with the duty of notyfin the party he represted.
The vendors executed a contract f sale in favor of Lim, in return, they
received a down payment and they agreed in the contract of sale that the
vendors would secure certiicates of title covering their HEREDITARY SHARES
and the purchase prive will be paide upon the presentment of title.
RUBIO PROPERTY
However, the vendors, both Rubio and the heirs, reufsed to perfom the
delilver of the certiifactes of titles.
However, appaprently, Rubio also sold his share to the lots to CORAZEN
ESCUETA which is purposted to be a simuated deed of sale, even with
Escuate knowing that the lots were sold to Lim.
Lim filed a case against them.
The heris alleged that there is no cause of action because they already
withdrew their offer to sell because Lim failed to pay theybalanc of the
purchase price.
Meanwhil, Rubio and Escueta also alleged that Lim has no cuase of action
ebcasue Rubio has not entered into a contrac of sale with her, and that he
only appointed his daught PATRICIA LAMAS AS HIS AGENT and not Virgina
LIM who represtend him in the sale in RUFINA’s favor, and the the 100000 he
gave as downp payment for lots was a loan with lim.
Under the Civil code, the agnet may appoint a substitute if the principal as not prohbbited him from droin
gso, BUT he shall be responsible for the acts fo the subjstitute hwne he was not givern power to appoint
oen.
RUBIO executed an SPA in favor of his daughter who was not prohibited form appointing a substited.
By authrozing VIrgian Lim to sell the proepties, Patricia Acted within the limites given by her father, bu she
will have to be responsible for the sub-agent’s acts, among which is the ale ot he porerty in Rufina’s favor.
Even assuming that Virgina had not authority to sell the property, the contract she executed is not VOID
but UNENFORCEABLE for having entered into a a ontract int eh anme of natoher without authority.
Rubio merely denied the contract of sale. HE calimes hat what he receved was a loan, not downpaymetn
fo rhte sale.
Howeer, the acceptance and encashment of the chek constitute ratification of the contract of the sale
which produces the effects of an express power of agency. Mroeover, ti implies that he waived he right
of acoit to avoid the contract and tacitly confirmes the sale Virigina made to Rufina.
Similary, the Balloloys reatified the sale when the accepted and enjoyed its benfits.
Conseuqenly, Rubio could no longer sell the proetuies to escueta since they were sold to Rufina.
THe RTC ruled in Favor with regard to the Baloloy heirs, and order them to
excute the absolud deed of sale over tehir shares.
On the other hand, the court dimssied the case against Escueta and Rubio.
Ca reversed this, and directed Rubio to exevute a deed of sale to
Rufinaupon payment of purchase price, and sale between him and escuta
were null and void.
Appeal: Rubio contends that the subagent, virgian lim had not aurhtoity to
sell the property on his behalf since, the SPA was only in his duather’s favor
without authority to authrotize a subagent.
W/N THE SALE BETWEEN RUBIO AND RUFINA SI VALID
PAHUD v. CA
THE COURT RUELD THAT THE SALE IS VALID EBCAUSE OF ESTOPPEL.
Pedro san Agustin and Agaton Genril acquired a 246 sqm parcel of Land in
laguna. Alter, they both died and were survived by their 8 children.
The CIivl code provides that when an agent sells a piece of land or any interest theirein, his atuhroti should
be in writing otherwise the sale is void.
In 1992, 3 of the children (Eufemia, Fernand and Raul) executed a Deed of
absolute Sale of Undivided shares in favor the Pahuds, thei shares in the lot
they inereited form their parents.
Udner 1878, a SPA is necessary for the agent to enter in a ctornt by which the ownership of the immovable
is transmitted or acquired, either gratuitously or fo a valuable consideration.
Eufemia, signed the deed on behalf of his 4 co-heirs namely:
1.
2.
Isabelity by SPA
Milargors, Minerva and Zenaid but without their autrhotity.
The deed of sale was not notarized.
Based on such, the sale made by Eufemia, Isabelita nad her 2 brther to the Phuds should only be valdi
with respect ot 4/8 of the land , 3/8 of the ald cannot be unhheld because the other co-heirs did not write
an atuhroziation for Eugfemia to sell their share.
While by express proivion of law, the 3/8 shares were void, and not susceptible to ratiicaiton. The corut
upheld is validyt base dn estoppel.
The PAhuds paid 35,000 to the Los Banos bank where th proepty was
mortgaged. And the banki issued the relaed and turned over the owners’s
copy of the COT to the PAhuds.
While it was true at the time of sale to the Pahuds that Eufemia was not armed with an SPA to dispose the
3/8 porton, during the proe-trial conference hey admittetd that they sold 7/8 fo the property to the Phuds
in 1992. Thus, there admission is conclusive upon them.
The following Motnhs, the Pahuds made more payment to EUFEMIA and her
siblisngs to 350,000 (525,000 initlal).
Also, the 3 heris never assailed the vaiity of the trasnacion Eufemia made to the aphdus for alck of written
authroty to sell.
Later, Eufemia and her co-heirs executed an extrajudicial settlement of
estate to facilitate the transfer but VRIGILIO REFUSE TO SIGN.
Bytheir silence, the 3 heirs cause the pahus to belive that they had authorized Eufemia to transact in their
behalf. Thus, they are estopped from impugnin gvlaidty fo the sale.
So, the Heirs filed for judicial partition of the property, a a comporise
agreement was signed by 7 conheire and 7 of the co-heirs agreed to sell
their undivided shares to virigilio for 700,000. However, Eufeia and 6 coheirs
refused to sign because of the previous sale to the Pahuds.
COsneutnly, the sale in favor fo the Belramos sps is void,
In 1994, Eufemia received 700,000 from virigilio who then sold he entire
proepty to SPS BELARMINOS. And the latter constructed a builditn thereon.
Because of the cosnturicon, Pahuds immediately confronted Eufemia, who
confirmed to theme that Vigilio sold the porerty to the Belarminos.
Aggrieve,d the Pahuds field a complaint wher the RTC upheld the validity of
the sale. CA revereded. because Eufemia lacked authority to sell the land
on behalf of her co-heirs. C
W/N THE SALE FO THE PROERTY BY EUFEMIA TO THE PAHUDS WAS VALID AND
ENFORCEMBLE?
YOSHIZAKI V JOY TRAINING CENTER
Joy training is a non-profit religious education nisntution, and was the
registered owner of a parcel f land and building llocate din aurtota.
SPS Johnson who were memebrt of joytraining’s board of trustees,, sold land,
jee and personal proepties in favor of SPS YOSHIZAKI. And a tct was isused in
their name.
Later, joy traing represented byb its acting charipersan filed for annulment of
the sale against SPS Yoshizaki and SPS johnson, alleging that SPS Johnson sold
the proetie swithou autoiryt or the board of direcotrrs, and assailed the
validity of he board resolution wchih authrotized them to sell the proety
because only minory of the bord authrozed the sle.
Under their AOI, the borad of trusties cosnits of seven memebrers, wheres only
3 authroized ths ae included SPS joinshn.
SPS yohizaki claiedm that SPS johnson were atuhrized because ther were
majory who approved the resolution and the corp sec alreadu issued a
cerificatio authorizeing sps johnson to act on jy training;’s behalf.
RTC rule din favor of sps Yoshizakie. Ca reverse.
Yoshizaki argues that they wer ebuyre in good faith because under the TTCT
SPS johson wer eauthrized to sell as joy training’s reps.
W/N A CONTRACT OF AGENCY TO SELL REAL PROEPTY AND SPS JOHNSON
EXITSED.
THE COURT RUELD THAT THERE IS NO CONTRACT OF AGENCY BEWEEN JOY TRIANIN GNA DTHE SPS
JOHNSON.
As a genral rule, agency may be oral. Howee,r it must be written when the law requires a specific form.
And the civil code provides that the contract of agency ust be written for the sale fo the peive of land be
vlaid. Otherwise it shall be void. Moreover, a SPA is necessary to covey real rights over its.
The spac must expressly mention the sale ro invlude the sae as necessary ingrediten of the authorized act.
In this case, the evdiecnethat Yoshizaki presetne dto prove that Joy training authrzed the SPs johnos to
sell the proeties wer:
1.
2.
3.
The TCT
Board reosution
Corp Sec Certification
First, the tCt prvides that the parcel of land is registered in the name of joy training gin Representaiton of
SPS ojohnson.
Second, the certiicaion provides that sps johsn were given full authrotiy for ALL SIGNATORY PURSPOES for
the corpoataion on any and all mater decision regarding he poreprty and minster here.
3rd resouton sate stha the bord of trustees in majryt authorized the sale of land and building owned by SPS
Johnson.
The Court found tha the docuents do ntot show the existence of a contract of agency to sell the real
poretites. TCE merely state Joy training gwas represten tby sps johnson in land registration; moreover, the
cerficaiton and resolution were not purduce in the original.
The resolution which purportedly grante the sps john a SPA is negated by the phrase land and building
owned by SPS johnson, and he certicaiton was a mere genral power of atty which compricay all joy
taining’s business.
Absnet the contract of agency render the contract of sale UNENFORCEABLE.T HS, THERE WAS NO VLAID
CONTARACT OF SALE.
ANY OTHER ACT OF STRICT DOMINION
PINEDA V CA
The court ueld that insular life is laible for CAPT NUVAL’S ACTS AS PRINICPAL AND LATTER AS AGENT
Prime marine Services procured a group policy form Isnural life to proved life
insurance coverage to its sea-based employees.
The 5 SPAS executed by the compalints and granted to Cpat Nuval provide the following powers
During the policy, 6 covered employees died at sea when their vessel sank.
Theywere survived the petitioned in thisc ase
So, as beneficiaries, the compalintas sough to claim the death benafits ue
them and approced the Presidnet of Prime Marine.
The Presidnent showed his willines for them to revcover benfits and they
executed, tith the execption to SPS Alarcon, an SPA Auctorizeing the Presind,
CAPT NUVAL, to FOLLOW UP, ASK, DEMAND, COLLECT AND RECIVE for their
benfit indemintis of sums of money due them.
Fro the SPA, the complaints wer able to receive death benefits.
Unknwn to them, however, Prime marine as poliy holder of insular life and
employer of its deceased works, filed with Insular life thru cptain Nuval, claims
in behalf of the beneficiaries.
Submitted were 5 SPA and nt he beasis of such, Insular life dre 6 checks, 4 for
200,000 each and 1 20k, 1 40L payable to order of Complaintns.
These were relased to PMSI Treasurer. However, CAPT Nuval upon receipt of
the cheks, despotied them to his account
When the compalintts learned they were entitled to the life insuranc ebenfits,
they sought to revoer for Insular Life but the latter denied this on the ground
that 6 checks wer lareay issued int heir names, basd on the SPAS they issued
in favor of Capt nuval where they authorized him to collect befnfits in his
behalf because there nto spefici or specil power of atty to be eexecuted to
collec insutena proceeds.
Pineda and others filed an admisntrative complaint against INSULAR LIFE for
payment of their insurance claims.
1.
2.
Follow up, ask demand, collect and recipt for benefit indemnities or sum of money due me or
relaive to sinking of MV Nemos
To sign recipets, docuemtns, pertinent waivers of indemtnits or othe rwiritns of whatsoever nature
Whil the SPA does not contain a clear and unequivocal authority to CAP NUvAL to OBTAIN, ECEVIE, RECIPT
form Insual Life the insurance proceeds for the death of the seaman isnure, the powers of atty were
ocungh in terms whci could arouse suspicion of an ordinary man.
Stil, they could not have ben meant ot be a general power of ATTTy since they are specifically, SPAs. Thus,
must be sticly constued.
Certainly it was highly imprudent to read into the SPA the power to collect and reciev the insurance
proceeds due the epttioners form the gourp polic when Insular Knew that the power of atty in favor fo
Capt Nuval for collection fo the proveeds was a deviation for its practice. (go thru policy holder, no need
for spa).
Consitent trom the insurance code, the employer-plicyholder is the agent of the Isnurer. The most
persuasive rationale for adopting the view that the employer acts as the agent of the insurer, however, is
that the employee has no knowledge of or control over the employer's actions in handling the policy or
its administration. An agency relationship is based upon consent by one person that another shall act in
his behalf and be subject to his control. It is clear from the evidence regarding procedural techniques
here that the insurer-employer relationship meets this agency test with regard to the administration of the
policy, whereas that between the employer and its employees fails to reLect true agency. The insurer
directs the performance of the employer's administrative acts, and if these duties are not undertaken
properly the insurer is in a position to exercise more constricted control over the employer's conduct.
Thus, PMSI thu ists president, acted as agent of insular life and insular life as principal is bound by the
agent’s misconduct.
Insular Life, however, likewise recognized Capt. Nuval as the attorney-in-fact of the petitioners.
Unfortunately, through its oOcial, Mr. Urbano, it acted imprudently and negligently in the premises by
relying without question on the special power of attorne
POWERS DUTIES AND OBLIGATIO RIGHTS OF AGNET
BANK OF PI V. LAINGO
THE COURT RULED THAT FGU INSURANCE SHOULD PAY LAINGO THE INSURANCE PROCEEDS
RHOEZE LAINGO opened a Platinum 2 in 1 Savings and Insurance account
with the Bank of the Philippine Isalands.
FIRST, the court ruled that BPI IS THE AGENT OF FGU insurance.
The platinum 2 in 1 Savings Insurance is a savings acvount where the
deopstiro is automativally covered by an insurance policy against disability
or death issued by FGU insurance or BPI Insurance Corp (Passbook and
Insurance certificate were issude)
Later, Rhoezel died due to a car accident. So, Yolanda Laingo, mother
directed the family secretary to got to BPI and inquire about Rhoezel’s BPI
account because she was nted to us it for his funeral expensas.
The secretary we to BPI and talk to BPI’s Branch manger, and LAingo was
allowed to withdraw around 995,000 from the account.
More than 2 years later, ROheozel’s sister found the Persoanl accident
Insurance coverage certificate issued by FGU Insurance to Rhoezel. MRs.
Laingo was informed about this and immediately requested from BP and FGU
insurance for claim of the proceeds as beneficiary of the insurance policy.
But, FGU denied her claim, stating htat she should have filed her calime 3
months from ROhezel’s death as required in the Insurance cerficate.
BPI was the propornet of the 2 in 1 deposit account with FGU snuance as its partner. After submitting the
necessary documents to BPI, the customer will authomatically isnured. Since the basis of agency is
representation, Thus, BPI acted as FGU Iuanrcen’s agnet with repsect to its insurance feature where the
customer, in this case Rhoezel, directly communicated with BPI the agent of FGU insurance and BPI not
ony facitlitaed the processing of the deposit account, bur also the endorcemnt and approval of the
insurance coverage. Rhoezel never interact with FGU isruance directrly.
SECOND, as the aent, BPI had the respinisbility to give rpoerpt notice of the insurance coverage to the
beneficiary upon the customer’s death.
UNDER ART 1884 AND 1887 of the civil code, the agent is bound by his acceptance to carry out the
agency and is lible for the damges which, through his nonperformance, the rpicnipal may suffer. And in
the execution of the agency, the agent shall act in accordance with the isnturctions of the principal in
default thereof, she shll foal l that a good ather of a family would do as required by the nature of the
busness.
The provision is clear that the agent is bound to carry out the agencu, and aS an agent, Since agency is
a fiduaciary relationship, it the agent’s duty to carry out the agency in good faith for the advancement
of the Preciapl’s interest. Here, BPI had the primary responitbly to ensure that the 2 in 1 account be carried
out with full disclosure to the parties concered, particularly its beneficieries. It also had the obligation to
SO, Mrs. Laingo filed a complaint for specific permant in the RTC against BPI
and FGU. But the court ruled in favor of the companies and dismissed the
complaint.
But CA reversed the ruling. So the Bank and FGU peititoned to the SC,
contending that ignorance of the unsurance police does not exempt lailo
from complying with the 3 month deadline.
On the other hand, LAINGO contend that the insurance contract is
ambiguous since there was no way to inform her, the beneficiary about the
3 carlendar month claim perion, nor was she notified about it.Thus, since FGU
and BPI failed to notify her, they are responsible for her ailure for file notie of
insurance calim within 3 months form her son’s death.
Issue is w/N Laigno as beneficiary who had no knowledge about the
insurance contract, is bound by the 3 calendar month deadline for filing a
written notice of claim upon the death of the insured?
infrom the beneficiary who appered before it to withdraw funds who ws BPI’s depositor, in order for the
beneficiary to be able to properly and timely calim the benfi as prescribe in the insurance contract.
So, upon ROheel]’s death, which the Mother properly communicated to BPI, BPI should have fulfilled its
duty as agent of advising Laigno that there was an insurance benfit coverage in ROhezel’s saving
actound. Since the agent was informed about the death, the principal FGU is also infoemd about such.
So, FGU cannot justy the denial of the Insuracnce claim for he was given timely notice about Rohoezel’s
death.
Moreover, BPI had ample opportunity to infrom Laingo reggading the insurance policy:
1.
2.
3.
Roezel’s death was headlined in a newpaper
Laingo was able to withdraw fund from the bank
An employee of BPI visted th e wake and submitted documents for LAingo to sing.
SInce BPI, as FGU’s agnet failed to norifiy Alngo about the insurance policy, it would be unfair for Laingo
to shoulder the loss whe BPI was remiss in its duty to properly noty her as a beneficiary.
HENCE, BPI and FGU shall bear the loss and must compensate Laingo for damages, adnFGU shold pay
her the insurance proceeds.
WHEN ACT BEYOND SCOPE OF AGNET’S AUTHORITY UNENFORCEABLE
CERVANTES V CA
THE COURT RULED THAT PAL CANNOT BE MADE LIABLE, NOR CAN CERVANTES CLAIM DAMAGES
Philippine Airlaines issued to NICOLAS Cervantes a round trip ticket for
Manila- Honolulu-LA-Honolulu- Manila which expressly provided an expirdy
date of 1 year from issuance (until march 1990).
Under the Art. 1898 of the Civil Code, the agent acts beyond the scope of his authority, the principal is
not boudn by such act, unless the principal ratifies it expressly or impliedly.
The ticket was issued in complince with a compromise agreement they
entered into in 2 previous suits.
4 days before the ticket expire, Cervantes used it, and when he arrived in LA
he immediately booked his return ticket to Manila with Pal.
When he learned that the Plane would make a stop over in San Francisco,
he arrange with Pal OFFICE that he board the flight in San Francisco insead
of LA
However, when he checked in san Francisco, he was not allowed to board
due to the EXPIRATION OF THE TICKET. (April 2, 1990)
So, Cervantes filed a complaint for damages and breackh of contract of
carriage in the RTC but the court dismissed it.
Appelaed to CA, but Ca also dimissed it.
Moreover, when the 3rd person (cervatnes) knows tha the agent was acting beyond his authority, the
principal cannot be lible for the agetns acts.
Also, if the 3rd person is aware of such limits of authority, he is to balme and he is not enetiled to recover
damges from theagent, unless the agent tried to secure the Principal’s ratification.
In this case, Since the Pal agent are not part of the agreement between PAL and Cervantes, and
Cervantes knew that written requies to PAL was necessary, he cannot use what the Pal agents did to his
advantage, because he knew that the Pal agents acted without authority when they confirmed his flights.
Hence, the court denied his petition.
Petitioner knew there was a strong possibility that he could not use the subject ticket, so much so that he
bought a back-up ticket to ensure his departure. Should there be a >nding of bad faith, we are of the
opinion that it should be on the petitioner. What the employees of PAL did was one of simple negligence.
No injury resulted on the part of petitioner because he had a back-up ticket should PAL refuse to
accommodate him with the use of subject ticket.
sSo, Petition for review with SC, contending that when the PAL agnets
confirmed the ticket, its validity was extended.
DUTY OF DILIGENCE
BA FINANCE V CA
SPS Cuady obtained on credit a Ford Escort from Suprecars. Thie was
evidence by a promissory note which the SPS executed in favor of Suprecars,
(where they were to pay 39574, plus 14%itnerst per annum, payable on
monthly isntallments plus penalty for late payment), and to secure the PN,
they cosntitued a CHTTEL MORTGAGE over the Ford Escort.
Later, SUprecars assigned the promissory note with the CM to BA FINANCE
CORP.
When SUprecar assigned the Promissory Note to BA finance, BA was deemed to have suborgatesd to the
rights and obligations of suprecors, together with the CM of the car.
COnsuquelty, BA Finance is bound by the terms and condition sof the CM exeuted between Suprecars
and the SPS where under the CM , BA was constituted as ATTY IN FACT with full power to FILE, FOLLOW UP,
PROSECUT, COMPOROMISE, OR SETTLE INSURNACE CLAIMES, SIGN EXECUTE AND DELIVER
CORREPSONDING PAPERS, AND TO COLLECT THE PROCEEDS OF INSURANCE IN THE EVENT HE CAR SUFFERS
LOSS OR DAMGE.
So, the SPS paid the sum of 36,730 to BA Finance, with an unpaid balance of
2,344, as well as penalties and surcharges for alte payment.
Later, BA Fiance, as the assignee of the CM, renewed the insurance
coverage of the vehicle foe 1980 with Zenith Insurance Cop because th SPS
failed to renew the insurance coverage themselves.
Under the terms of the insunace coverage, any loss under the policy shall be
payable to BA fiannce.
Later, the car figured and accident and was badly damged.
The SPS asked BA fiancne to treat the car as total loss, and calim form Zenith
Insurance the value of the isnruance policy and apply it for their remaining
balance with Ba Fiannce.
However, BA finance directed the PSS to just repair the car.
Later, the the car bogged down and the SPS asked BA finance to just treat it
as complete loss to claim the isnurnace coverage. When BA Finance refused,
the SPS stopped paying hteir istallmens on the promissory note.
In granting BA the powers, an agency contrac was created. Thus, under 1884 of the CIVIl, BA finance is
bound by its acceptance to carry out the agency and it its liable for damges which, THRU ITS NONPERFOMANCE, the principal (the sps) may suffer.
In this case, the SPS suddered pecuniary loss for the salvage value of the car when BA finance reused to
enfoce the the insurance police for the car’s loss which os a valid isnurnace claim, despite the fact hat
when the car was retuned from repaired, it was rendered unsuable.
Since BA finance breached its duty of diligence, it must assume the damges and can no longer claim the
balance of the loan.
---CM provides that BA is constituted the tty in fact with the power to collect the nsrucna provceed in the
event the car is lost or damge. Form that, a contract of agency was created and as the agent, BA finance
was bound to carry out its duty as an agnet and is lible for damges. In this case, because of its refusal to
claime the insurance despite the principal’s directive that the car be alim a loss and istnead the proceeds
calimed, because of the breache of his duty of diligence, BA cn ca no loner claim the balance of the
loan an ust suffer the damages.
Because of afilrue to pay, BA fiannce sued the SPS in the RTC for recovery of
the Installments, but the RTC dismissed the case. CA affirmed.
W/N BA FINANCE WAIVED ITS RIGHT TO COLLECT THEUNPAID BALANCE FO THE
SPS ON THE PN WHEN TI REFUSED TO ENFOCE THE TOTLA LOSS PROVISION O TE
INSURANCE COVERAGE OF THE CAR SUBJECT OF CM
BA: even if ti failed to enfocrce the total loss provision in the policy, the
oblgiton of ss to pay unaoid baance is nt extinguished
BRITISH AIRWAYS V CA
Gop Mahtani decided to visit his reltives in Bombay India, and he obtained
the servies of a certain Mr. Gumar to prepared hi travel plans and purchased
a ticked from BRITISH AIRWAYS.
Since British Airways had no direcet flights from Manila to Bombay, Mahtani
had to take a Pal flight to Hong Kong then take a connecting flright via British
Airways to Bombay
Prior to departure, Mahtani checked in 2 pecies of lugages at the PAL
counter in Manila, assuming that the lgugag would be Transferred to British
aiwars from Hong Kong to Bombay.
Undortunately, when he arrived in Bomay his luggage was missing. And when
he inquired about it from the British AIR reps, he was told that the luggage
might have been diverted to LONDON.
After waiting for his luggag for a 1 week, BA advise him to filed a calim by
commplishing PROPERTY IRREGULARITY REPORT.
Back in the PH, Mahtani filed a complaint against BA and MR. Gumar
BA contended that Mahtani has not cause of action against it and fileed a
3rd party calaimnt against PAL alegeing tha the reason the luggage was not
transfer is due to PALs late arrival in Hong Kong, yhud there was not
enougtime to transfer the luggage to the BA aircraft bound for Bombay
Pal disclaimed libility, claiming that there was adequate time to transfer the
luggage to the BA facilities in Hongkong.
THe RTC ruled in Favor of Mahtani and ordered BA to pay him, and dismissed
the 2rd party complaint against PAL.
THE COURT RULEDMAHTANI CAN CALIM LAIBILTY FROM BA ONLY, BUT PAL MAY BE HELD LIABLE FOR TITS
NEGLIGENCE
FIRST COURT RULED THAT PAL WAS BA’S AGNET
The contract of ait ranport here was exclusive between Mahtani and BA, with BA merely endorsing the
Manila to Hongkong transfer of Mahtani to PAL, as its agent.
Moreover, the under the conditions of contracts of the ciket BA issued to Mahtani, it proves that there the
contrac t was one of consituous air transportation from Manila to Bombay.
Thus, it isundepputed that PAL in trasporing Mahtani fromManila to Hongkong, acted as BA’s agnet.
An agent is also responsible for any negligence in the perfomnave of its function, and is libale fro damages
whihch the prnipal may suffer by reason of its negligent act. Hence, CA erred when it ruled tha BA as
prinicapl ahad not cuase of action against PAL, its agent
Moreover, as member of the INTERNATION AIR TRANSPORT ASSOCIATION, BA and APL are regarded as
agents of each other in the issuance of tickets. tHus, the contract between PAL and BA is an agency
where BA is the principal, since it issued the ticket, and PAL is the agnet.
Second, HOWEVER, MATHANI CAN ONLY SUE BA ALONG, BUT BA CAN CALIME INDMNIFICATION FORM [AL
AS NELGIGENT AGENT.
However, since Mahtani’s petition was based on breach of contract of carriage, he can sue BA alone,
not PAL since Pal is not a party to eh contract. However since PAL negligently acted on its dutis as an
agent, he is also liable for his act.
So, although the 3rd party complaitn BA field against Pal was without basis, it can sue PAL for
indemnifaiction if it be proven that PAL’s negligentce was the proximate cause of ht eloss of luggae.
REsintated the 3rd party complaint.
CA ffirmed.
BA petitioned againt the 3 party complaint agisnt PAL.
VIRATA V NG WEE
COURT RULED THAT WINCORP, AS AGENT IS LIABLE FOR FRAUD
Ng Wee entered into “Sans Recourse” Transactions where they would invest
in Wincorp, a credit facility, for corporate borrowers.
The agent has an obligation to carry out the purpose of the agency within the bounds of his authority.
SPAS were wlaso prepared for Ng Wee’s signature,where it provides that he
appoints Wincorp to
1.
2.
3.
AGREE, DELIVER, SIGN, EXECUTLE loan documents relative to the
borrowing of the loan to whom Ng wee thru wicnorp agreed to lend.
And that WIncop was authorized to do and performa all and every
act and thing necessary to be done for the loan.
And that NG wee RATIFIES and confirms all the acts Wincopr shall
lawfully do.
Initially, Ng Wee was matched with Hotick, a credit line was extended to it
but due to the Asian financial Crises, it was unable to pay.
Ng wee was matched with Hottick plding Corp, owned by a Malaysian. So,
Hottick was extended credit of aroung 1B5M, on return it executed some
secureites:
1.
3 Surety agreements by LUIS VERATA, Srim Halim Saad, and a 3rd
party rea estate mortgage
HOttick fully availed of the loan facility IWncorp extended, but it deautled in
aying its obligaitons due to the Asian Financl crisis. Thus, Wincorp filed a
collection suit agaistn Hottic and its sureites.
TO induce the aprties to settle, VIRATA offere to guarantee full payment of
the loan, and a MOA was executed between him and WIncorp. And a
settlement ageemnt was then arrangem where the other surety who’s
property was attached, aggreed to pay 1M dolla to wincorm to stasify its
clains, So, Wincorp dopped him from the case and released its attachment.
Later, WIncorp xecuted a WAIVER AND QUITCLAIM in favor of Virata, relaeing
it from its obligation for the MEMO except for the transfer of equity over its
proepies.
SO when NG wee learned of Htottic’s default, he confronted WIncorp about
the investements and WIncopr assured him that the looses from Hottic’s
account would be absorbed by the company and that his investements wil
be transferred to a new broower. From that Ng wee continued making
payment. And even increased his stake in the new borrower POWER MERGE
COPROATION.
Virata is the Majoroty sockholder of Powermerg, and WIncorp aggreed to
extend a credit line to it for 1B300M, later increased to 2B100M.
Pusuant to this, Power Merge made 6 withdwals from the credit line and
issued Promisorry notes inv favor of Wincorm as agent on behalf of the
investor.
After the promsisorry notes were issued, wicop issed a Cnrifmation Advices
to NG wee. Unknown to wee, however 2 Corporations made side agreemnts
absolving Power merge of the libilty towards the PROMISSORY NOTES It and
that the accommodation agreement WIncrop entered does not intedne that
Powermerge would pay.
Though he may perform acts in a manner more advantageous to the principal than that specified by
him, in no case shall the agent carry out the agency if its execution would manifestly result or damage to
the principal.
The SPAs executed by Ng Wee constituted Wincorp as agent relative to the borrowings of Power Merge,
allegedly without risk or liability of Wincorp.
However, the SPAs do not specifically include a provision empowering Wincorp to excuse Power Merge
from repaying the amounts it had drawn from its credit line via the Side Agreements. They merely authorize
Wincorp "to agree, deliver, sign, execute loan documents" relative to the borrowing of a corporate
borrower. THUS, Wincorp had no authority to absolve Power Merge from the latter's indebtedness to its
lenders.
IN THISCASE, The Side Agreements executed by Wincorp were not within the authority given by the SPAs.
As far as the investors are concerned, the Side Agreements were a gratuitous waiver of Power Merge's
obligation, which should be in the SPA.
MOREOVER, the benefit from the Side Agreements, if any, redounded to the agent itself, Wincorp, which
was able to hold Power Merge papers that are more valuable than the outstanding Hottick obligations
that it exchanged. Wincorp elected to put primacy over its own interest than that of its principal, in clear
contravention of the law.
And when Wincorp concealed from the investors the existence of the Side Agreements, the company
became liable for fraud even as an agent.
On a side note: Power Merge is NOT guilty fraud but is still liable under contract. The circumstances of this
case point to the conclusion that Power Merge and Virata were not active parties in defrauding Ng Wee.
Instead, the company was used as a mere conduit for Wincorp to be able to conceal its act of directly
borrowing funds for its own account.
So, despite demands, NG Wee was not able to collect power merge’s
outstanding obligation of 200M.
So Ng wee filed a complaint fr sum of money. Against Power merge et al, but
Virata was the only oen served with summons.
NG wee calims that he fell prey to the fraudulent Scheem of wncorp and
power Merge.
Later, SEC found that the Confirmation avices wincorp had been isttuin iss
investors was actulay a security to be registered being offered to the public
and WIncorp had been advancing payment of interest to investors to cover
up tis borrower’s insolvency.
Howeverr, WINCORP eevaded libailtiy because its only roe was to match an
investor with the corporate borrowers thus is has not liability to the Money Ng
wee loaned.
POWER Merge contends that he Credit Line Agreement and the issuance of
the promissory notes, according to Virata, were mere accommodations to
help Wincorp enforce the outstanding obligations of Hottick so was contrary
to their ageemtne that he was offerec investement papers.
The RTC Ruled that VIrata nd Wincopr other pay NG WEE. Because WIncorop
was a vendor in bad faith sicne it kewn hthat power merge’s notes wer
euncollectibel form the beffine and it violated its agency agreement with
NG wee.
WINCROP: SO, wincorp contends what was involved in the case is a loan
arement and WIncopr was a mere borker of the transaction, and that NG wee
knew of the Trasnaction it enter with Power Merge as his agent, and the SPAs
ratified WIncorp’s acts of agency in the execution of the loand because he
had been renewing th placement despite nwoleg of the setup.
DUTY OF LOYALTY
DOMING V DOMINGO
Vicentdd Domingo granted Fergorio Domingo, a real estate broker, the
exclusive ageny to sel his lot of Piedad Estate at the rate of 2 pesos per Sqm
with a commission of 5% n the total price, if (JUNE 2, 1956)
a.
b.
The duties and libilites of a broker to his employer is essentialy those which an agent owes his principal.
And every agent is bound to render an account of his transcation and to deliver to the principal whatever
he may have received thru agency even tho it may no be owing ot the principal.
the property is sold by Vicente or by anyone else during the 30 day
The property is sold by Vicente within 3 months from the termination
of the agency to a purchaser to whom it was submitted by
Gregorio during the continuance of the agency with notice to
Vicente
Hence, the law imposes upn the agent the obligation to fully disclose to his principal all of his transction
and other fact relevat to the agency.
Later, Gergorio authorized Teofilo Purisima to look for a buer and promised
him ½ of the 5% commission.
By taking a give from the vendee, the agent assums a position incosisted with that of being an agent and
the principal may trea him,a s so far as the commission is concered, as if no agency eixited.
Therafter, Tefilo introduced Oscar de Leon to Gregorio as a prosecpecitve
buyer.
Oscar offered to buy the property at price lower than 2 Pesos and vicente
directed Gregorio to tell Oscar to raise his offer, and Oscar raised his fofer to
109,000.
Later, Oscar issued Vicente a check of 1,000 for earnest money, after which
vicente advanced 300 to Gregorio.
Later, Oscar conimed his offer to pay 1.20 per sqm. In return Vicente asked
for another 1,000.
So an agent who secretly take a profit in the nature of bonus or grauity from the vendee without revealin
git to his principal, is GUITLY OF A BREACH OF HIS LOYALTY to the pricnicpal and fofeits his right to collect
te commission from his principal even if the principal does not suffer any inury from such breach.
In this case, Gregorio, as broker, received the give of 1,000 eso from the buyer Oscar, without the
knowledge and cosnten of the principal, Vicente.
Such accpetan corrupted his duty to serve the interests of only his principal and undermined his loyalty to
the procinpal who gave him a partial advance of 300 as commission.
Since Gregorio was not merely a middle man between Vicente and Oscar nor was he authorized to reice
the gift, the fact that the land was sold to OSca’s wife and in fact Oscar was also the buyer, he is not
enetiled to the commission as a necessary consequence of the breach of trush. Thus, from such act
GREGORIO must fofeit his right to the commission and mUST RETURN THE PART OF COMMISSION HE
RECEIVED FOROM VENCENT.
Later, Oscar gave Greogio a gift of 1,000 for successfully persuading Vicente
to sell his lot for 1.20 p sqm. However, the Gregorio did not disclose the ift to
Vicente, Oscar did not also pay the additional 1,000 to Vicente as earnest
money.
SUB AGENT: can only recover ½ of twhat gregorio received.
GREGORIO order to pay civent’s heir 1,000 for damages, 1000 for fees, Teofilo t650
Later, the deed of sale was not executed and Oscar told Gregorio that he
was ot proceeding with the sale, but he will not get the 1,000 gift and earnest
money given to them, because he did not receive money from his brother
in the US.
However Gregorio sensed something fishy, so he went ot the registry of deeds
and found that Oscar’s wife executed a deed of sale of their house as
downpayment to VIcent for his land.
When Gregorio found out about this, he demanded for his commission. He
also confronted Oscar who told him that Vicente asked him to remove him
Gregorio from the trrsanction so he would sel the lot for a lower price.
Vicente regused to give the commission because the land was not sold to
Gregorio’s buyer, but to another buyer, Oscar’s wife.
So, Gregorio sued Vicente. And the lower courts ordered vicente to pay
gregorio .
W/N the failure of greogrio ro disclose the gift Oscar gave constitutes fraud
and as a cause to foregit his 5% commission?
COSMIC LUMBER V CA
Cosmic lumer executd an SPA in favo of Paz Estrada, authorizing her to
1.
2.
3rd
Initiate, isntite and file and court action for the ejectment of
person/squtters of the lot it owned for the squatters to remove their
houses and vacate the premises
Also, she was authorized to appear at the pre-tria conference and
nter into a CROMPOMISE AGEEMTN so far as IT SHALL PROTECT THE
RIGHT AND ITNRET OF THE CORP OVER THE LOTS.
By the SPA, Estrada filed an action for the ejectment of Isidro Perez and
recover the possession of a protion of the laot he occupied.
Later, Estrada entered into a Compromise Agreemtn with Perez where she
sold Cosmic Lumber’s lot which Perez occupied to Perez. RTC approved the
Compromise Agreemnt.
Later, Perez field a complaint for revival of the judgment and Cosmic
asserted it only knew about the Compromise agreemtn between its agent
and parez when summons were served for reviva l of judgment.
The authority granted to Estrada under the SPA was limited for her to isnitute any action in ourt to eject all
person in Cosmic’s lto so that Cosmic can posses sit, and for Estara to enter into a compormoise agreemtn
BUT ONLY ISNFOAR AS IT WOULD PROTEC THE IGHT AND INTERESTS OF COMSIC OVER THE PROEPTY.
Nowhere in the SPA authorized estrade to sell the property partiualy, the authority to enter itno a
compromise aggrement was fixed insofar as it shall prtect the rights and itnert of Cosmi over the lots.
Thus, form theat the sale of the property cannot be deemd rpoetceive of the rights or interests of cosmic.
Moreover, when the sale of land or any interest theis is thru an agent, the authority should be in writing,
otherwise it si void.
Thus, the agent’s sale of the lot to perez was without authryt.
Thus, the sale si void, as well as the compromise agreement.
erily, when an agent is engaged in the perpetration of a fraud upon his principal for his own exclusive
bene;t, he is not really acting for the principal but is really acting for himself, entirely outside the scope of
his agency
So, Cosomic south ht annulment of the decision beore the CA, on the groun
that its agent did not have authority to sell or encumber the land when the
SPA limited her powe to compromise as amy be nexessary to evice the
squtter from the lot to protect the Corporation’s rights over them.
THe CA, dimissed the complaint. So, petitioned before the SC, contending
the the Compromise agreemtn is void because Estada did not possess
authority to sell the lot.
POWER TO APOINT SUB AGENT
VILLALUZ V LAND BANK OF THE PH
THE COURT RULED THAT THE APPOINT MENT OF SUBAGENT WAS VLID
The civil code proide the rules regarding the appointment of a substitute by an agent that
Paula Agbisit, mother of May Villaluz, requested that May provide heer with
a collateral for a loan because she needed it for the expansion of her
backyard cut flower business.
Later, May conviced her husband ot use their land located in Davao city as
collateral.
So, SPS VILLALUZ executed a SPA in favor of Agbisit, authorizing her to
1.
2.
NEGOTIATE FOR THE SALE, MORTGAGE, OR OTHER FORMS OF
DISPOSITION OVER THE PARCEL OF LAND and
To sign all documents realting the sale, loan or mortgage
The SPA neither specified conditions uunder which the SPA may be exercise
no did its tate the amount the land may be sold.
Later, AGBISIT exeuted an SPA appointing MILLFLORES COOPERATIVE to
which she is the cahimant, as its agent to obtain a loan from LAND BANK OF
THE PHILLIPPIEN and to execute a real mrotgage to secure it.
So, Millflores Loanded from Land Bank and executed a REM over SPS villauz
land.
When it failed to pay, Land bank foreclosed on the land and bought it from
the acution.
When SPS learned aout he acution of their land, they filed a complaint for
the annulment fo rhte forclusre sale.
The amin issue was w/n agbisit could have aldly deligated her authority as
agent to Millflores Coop?
1.
2.
The agent amy appoint a susbtitie if the principal has not prohibited him form doing so. However
he shall be responsible for the acts fo the substitute
a. When he was not given power to appointe one
b. When he was given poer, but ther was no subagent designated, and person appointed
was notoriously incompetent or insolven
All acts the the sub agent does against the principal’s prohibition is void.
MOREOVE, The rpicnipal may bring action against the substite with respect to the obligation the latter
contracted.
The law preumes that an agent ahs the power to appoint a substitute. As a cosneuqnce upon the valid
appoint fo the sub agent, an agency relationship exeists between the principal and the sub agent.
As a result, the subegent is bound by the acts of the substitute as if the acts had been performed by its
appointed agent.
Also, the subagent assumes the agent’s obligation to act within the sope of its authrotuy amotn others.
IN this case, the SPA SPS Villaluz executed did not prohibit no was there an intention to prohibit Agbisit
from appointing a sub agent. Thus, AGbisits appointment of Millflores was valid.
oreclosed by reason of another person's inability to pay. However, they were not coerced to grant a
special power of attorney in favor of Agbisit. Nor were they prohibited from prescribing conditions on how
such power may be exercised. Absent such express limitations, the law recognizes Land Bank's right to rely
on the terms of the power of attorney as written.
The remedy afforded by the Civil Code to the Spouses Villaluz is to proceed against the agent and the
substitute in accordance with Articles 1892 and 1893.
The RTC held that the delegation was valid sicne the SPA did not prohibit it.
SO ti dismissed the compalitn, CA affimed.
SO, SPS VIalluz petioned to the SC, arguing that the REM was void
ESCUETA V LIM
THE SALE IS VALID AND THE DAUGHTER MAY VALUDLY APPONT A SUB AGENT
Rufina Lim bought HEREDEARY SHARE of 10 LOTs from Ignacio Lubio and LUZ
Baloloy’s heris.
BALULOY PROPERTY – Bayani Baloloy a s represented by his agent Alejandro Baloloy who was served with
the notice of the pre-trial. As agen, he was charged with the duty of notyfin the party he represted.
The vendors executed a contract f sale in favor of Lim, in return, they
received a down payment and they agreed in the contract of sale that the
vendors would secure certiicates of title covering their HEREDITARY SHARES
and the purchase prive will be paide upon the presentment of title.
RUBIO PROPERTY
However, the vendors, both Rubio and the heirs, reufsed to perfom the
delilver of the certiifactes of titles.
However, appaprently, Rubio also sold his share to the lots to CORAZEN
ESCUETA which is purposted to be a simuated deed of sale, even with
Escuate knowing that the lots were sold to Lim.
Lim filed a case against them.
The heris alleged that there is no cause of action because they already
withdrew their offer to sell because Lim failed to pay theybalanc of the
purchase price.
Meanwhil, Rubio and Escueta also alleged that Lim has no cuase of action
ebcasue Rubio has not entered into a contrac of sale with her, and that he
only appointed his daught PATRICIA LAMAS AS HIS AGENT and not Virgina
Under the Civil code, the agnet may appoint a substitute if the principal as not prohbbited him from droin
gso, BUT he shall be responsible for the acts fo the subjstitute hwne he was not givern power to appoint
oen.
RUBIO executed an SPA in favor of his daughter who was not prohibited form appointing a substited.
By authrozing VIrgian Lim to sell the proepties, Patricia Acted within the limites given by her father, bu she
will have to be responsible for the sub-agent’s acts, among which is the ale ot he porerty in Rufina’s favor.
Even assuming that Virgina had not authority to sell the property, the contract she executed is not VOID
but UNENFORCEABLE for having entered into a a ontract int eh anme of natoher without authority.
Rubio merely denied the contract of sale. HE calimes hat what he receved was a loan, not downpaymetn
fo rhte sale.
Howeer, the acceptance and encashment of the chek constitute ratification of the contract of the sale
which produces the effects of an express power of agency. Mroeover, ti implies that he waived he right
of acoit to avoid the contract and tacitly confirmes the sale Virigina made to Rufina.
Similary, the Balloloys reatified the sale when the accepted and enjoyed its benfits.
Conseuqenly, Rubio could no longer sell the proetuies to escueta since they were sold to Rufina.
LIM who represtend him in the sale in RUFINA’s favor, and the the 100000 he
gave as downp payment for lots was a loan with lim.
THe RTC ruled in Favor with regard to the Baloloy heirs, and order them to
excute the absolud deed of sale over tehir shares.
On the other hand, the court dimssied the case against Escueta and Rubio.
Ca reversed this, and directed Rubio to exevute a deed of sale to
Rufinaupon payment of purchase price, and sale between him and escuta
were null and void.
Appeal: Rubio contends that the subagent, virgian lim had not aurhtoity to
sell the property on his behalf since, the SPA was only in his duather’s favor
without authority to authrotize a subagent.
W/N THE SALE BETWEEN RUBIO AND RUFINA SI VALID
LIABILITY HEN 2 OR MORE AGENT APPOINTED BY THE SAME PRINCIPAL
MUNUCIAPL COUNSTIL OF ILOILOV EVANGELISTA
n March 1924, Tan Ong Sze Vda. de Tan Toco sought to recover from the
Municipal Council of Iloilo the value of a strip of land she owned. The
Municipality took the said strip of land to widen a public street.
The CFI awarded Tan Ong P42,966.40. The judgment was affirmed by the SC.
LATER, Atty. Evangelista, in his own behalf and as counsel for Jose Arroyo’s
intestate estate, filed a claim for professional services he rendered fixed at
15% by the court. The claimants prayed that the amount be turned over
because the land taken over had been mortgaged.
At the hearing on said claim, the claimants appeared, as did also the
Philippine National Bank, which prayed that the amount of the judgment be
turned over to it because the land taken over had been mortgaged to it.
Antero Soriano also appeared claiming the amount of the judgment as it
had been assigned to him, and by him, in turn, assigned to Mauricio Cruz &
Co., Inc.
After hearing about the adverse claims, the court ordered that the amount
be recorded in favor of Atty. Evangelista, in his own behalf, and as counsel
for the administratrix of deceased Arroyo. The court directed the Municipality
to file an action of interpleading against the adverse claimants PNB, Soriano,
Mauricio Cruz, Jose Evangelista, and Jose Arroyo.
After hearing, the court rendered the decision, declaring valid and binding
the deed of assignment of the credit executed by Tan Ong, through her
attorney-in-fact Tan Buntiong, in favor of the deceased Atty. Soriano.
Four years after, the Municipal Treasurer paid Soriano (Mauricio & Co) P6000
as part of the payment, assigned to him by Tan Buntiong. What remains
unsolved is Mauricio and Co.’s claims for remaining payment now that Atty.
Soriano has passed away.
1.
W/N ASSINEMTN ADE BY THE AGENT TO ATTY SORIANO WAS LEGAL?
APPELANT: asignemtn nto made in consideration of atty’s lawyer services, satifided before the
execution of assignment
COURT: NO PAYMENT YET AND the assignment of the amount of a judgment made by a person to his
attorney, who has not taken any part in the case wherein said judgment was rendered, made in payment
of professional services in other cases, does not contravene the prohibition of article 1459, case 5, of the
Civil Code.
With regard to the first issue, even if Tan Ong contends that she had already satisfied the payment that
was due Atty. Soriano for his professional services, this would not hold because evidence shows that she
had made payments to him subsequent to the execution of the deed of assignment.
In addition, the payments made to him prior show that what had been paid were wholly inadequate
considering how many cases Soriano had won for Tan Ong. The contention that it violates the prohibition
of Article 1459 of the Civil Code on lawyers and solicitors with respect to any property or rights involved in
any litigation in which they may take part by virtue of their profession and office, will also not fly because
Atty. Evangelista and Atty. Arroyo were Tan Ong’s lawyers for the case against the Municipal Council of
Iloilo. Atty. Soriano was merely assigned what was due to Tan Ong in the case.
2.
W/NAGENT WAS EMPOWERED TO MAKE ASSIGNMETN OF CREDIT IN PAYMENT OF DEBTS FOR
PROFESSIONAL SERVICES RENDERED BY LAWYERS? an agent or attorney-in-fact empowered to
pay the debts of the principal, and to employ lawyers to defend the latter's interests, is impliedly
empowered to pay the lawyer's fees for services rendered in the interests of said principal, and
may satisfy them by an assignment of a judgment rendered in favor of said principal
Tan Buntiong was authorized to employ and contract for the services of lawyers upon such conditions as
he may deem convenient, to take charge of any actions necessary or expedient for the interests of his
principal, and to defend suits brought against her. This power necessarily implies the authority to pay for
the professional services thus engaged as well. In the end, the SC found no error with the lower court’s
decision. In the present case, the assignment made by Tan Boon Tiong, as attorney-in-fact for the
appellant, in favor of Attorney Antero Soriano for professional services rendered in other cases in the
interests of the appellant and her coheirs, was that credit which she had against the municipality of Iloilo,
and such assignment was equivalent to the payment of the amount of said credit to Antero Soriano for
professional services.
3.
W/N FAILURE OF AGENT NEEDS TO SEEK THE COSNENT OF THE OTHER AGNET OF SAME PRINCIAPL
TO THE DEED OF ASSIGNEMTN? when a person appoints two attorneys-in-fact independently, the
consent of the one will not be required to validate the acts of the other unless that appears
positively to have been the principal's intention;
the very fact that different letters of attorney were given to each of these two representatives shows that
it was not the principal's intention that they should act jointly in order to make their acts valid. Furthermore,
the appellant was aware of that assignment and she not only did not repudiate it, but she continued
employing Attorney Antero Soriano to represent her in court.
For the foregoing considerations, the court is of opinion and so holds: (1) That an agent or attorney-in-fact
empowered to pay the debts of the principal, and to employ lawyers to defend the latter's interests, is
impliedly empowered to pay the lawyer's fees for services rendered in the interests of said principal, and
may satisfy them by an assignment of a judgment rendered in favor of said principal; (2) that when a
person appoints two attorneys-in-fact independently, the consent of the one will not be required to
validate the acts of the other unless that appears positively to have been the principal's intention; and (3)
that the assignment of the amount of a judgment made by a person to his attorney, who has not taken
any part in the case wherein said judgment was rendered, made in payment of professional services in
other cases, does not contravene the prohibition of article 1459, case 5, of the Civil Code.
EROTECH INDUSTRIAL TECHNOLOGIES V CUIZON – LIABILITY TO 3RD PARTIES
EUrotech Industrial Technoolgies (Seller) engaged in the business of
importation and distributon of various eruopean industrial equipment for
customers in the PH.
One of its customers is Impact Systems Sales owned by ERWIN CUISON with
Edwin Cuison as its sales manger.
From January to April 1995 Eurotech (SELLER) sold to Impact Systmes (Buyer)
various products in the amount of 91,338.
Susbequently the buyer sought to buy 1 unit of sludge dumpvalued 250,000
from the seller.
When the SLUDGE DUMP arrived from the UK. Seller refused to deliver it to the
buyer because the buyer has not fully settled its indebtedness.
So, Seller’s Agent (EDWIN) executed a Deed of Asignment of recivebale in
favor of the buyer:
1.
Recievabls from TOLEDO POWER CORPORATIOn for 365,000
payamnt of Selwood spate sludge dump
Folloing the execution of the Deed of Assignment, the SELLER delivered the
sludge pump to the buyer.
FIRST, there is no dispute that Edwin is the agent of the principal Erwin, the owner of Impact systems since
hwas was the sales manager of said coprotion.
SECOND, AGENT DID NOT EXCEED HIS AURHOTY, SHOULD NOT BE LIABLE
Main issue: w/n the Edwin as agent exceeded his aruhtoity when he signed the deed of assignment,
thereby binding imself personally to pay the obligaitons to the seller/
Under art. 1987 of the Civil Code the agent who acts within his authority is not personally laible to the party
with whom he contracfts.
Howeer, said provision also provides that the agent is personally alibel to a 3rd person when:
1.
2.
He expressly binds himself to the obligation and
When he exceeds his authority.
In the event he exceeds his authority, the agent can be held liabile if he does not give the 3rd party
sufficient notice of his powers.
In this case. The agent does not fall within the exception.
The deed of Assingment state that the AGEN signed as the sales manager of Impact Systems. As a sales
manager, he has broad powers to conduct the business of the principal he may enter into any contrat
he deems REASONBLY NECESSARY for the protection of the interests of his principal.
Unbrnknonst to the Seller, the buyer/PRINCIPAL collected the amount 365,135
from Tolde Power Company despite the deed of assignment.
that he has such liberal powers for the execise of judement and discretion in transaction and conerns
which are incidental to the business entrusted to his care and magemnt. Absent such agreement ot the
contrry, the MANAGING AGENT, may enter into any contrat he deems REASONBLY NECESSARY for the
protection of the interests of his principal.
Because of this, the Buyer demanded that the seller pay their obligations. As
a result, the buyers were able to make paritla payments to the seller.
In this case, the court held that the Agent, EDWIN CUISOn acted within his authority when he signed the
deed of assignment.
Because the buye failed to pay the unpaid balance of 295,000 despite
demand, the seler ifiled a case for sum of money and issuance of writ of
preliminary attachment in the RTC against the buyer and its agent.
Here, The seller refused to deliver the Sludge Dump unless it received payment for the the Buyer’s
intedebtendess.
The Agent alleged that he is not a ral party in this case since he was merely
acting as the buyer’s agent, in his transaction with the Seller, the principal or
the buyer knew about the deed of assignment.
Later, the RTC droped the AGENT as party in the case upn the finding that
the Agent merely represented the Buyer or his principal in executing the
deed of assignment.
The CA affiemd the ruling.
The Seller petitioned against this, ccontending that the agent should be
made personally lible because the agent exceeded his atuhroity in
executing the Deed of assignment and the principal/buyer’s act of
collecting from Toldeo Popwer Corporation REPUDIATED it.
It may be assumed that the Buyer/the principal needed the sludge pump for its business since after it paid
a downpayment, it still negotiated with the buyer, which culminated int eh execution of the deed of
assignment of its receivable from Toledo power company.
Hence, the agent’s exution of the deed of assignment was reasonably necessary or required for him to
protect the business of the principal. Without such act, the pricipal’s business would have been adverslya
ffected.
In this case, the seller is seeking to recover from both the principal and the agent. However, sicne the
agent acted within the limits of hsia uthority in this case, he did not incur any liability to the seller and he
should not be impleaded.
W/N THE AGENT SHOULD BE LIABLE?
NATIONAL POWER CORPORATION V NAMARCO – AGENTS EXEEDS HIS
AUTHORITY
The National Power Corporation bought 4,000 tons of crude sulfer for its Maria
Crisitina Fertilizer Plant from National Merchandising Corporation, the agnet
of the New York Firm in the Ph (Intenational Commodites Corporation).
The Agent executed a perfomane bond in favor of the Buyer to guarantee
the pricnipal’s oobligations.
It as stipulated int eh contract of sale that the Principal/Seller would delvier
the sulfur at Iligan City within 60 days from notice of the establishment of a
letter of credit , and the failure to effect the delivery would subject the
Serller/principal and its surety to the pay LIQUIDATED DAMAGES.
Later, the Buyer adviced the Agent of the opening of a letter of credit for
212120 in favor of the principal.
The Principal was not able to deliver the sulfur due to its inability to secure
shipping space, becaseu of that, there was a shutdown of the BUYER’s palnt.
Later, the Buyer advised the Agent that according to their contrat, the nonavailbality of a vessel was not a fotuitous event that would excuse the nonperfomance of the obligation and that the buyer will file a case to enforce it
rihts.
However, prior to that the principal (ICC) and the agent had an agteemnt
atha the sale of the sulfur would be subject to the avialtibility of a
STEAMER.But the Agent, Namerco, never disclosed this fact ot the Buyer NPC,
contrary to the Principal’s insturctions.
Later, the Buyer rescined the contract of salebecause the Pricniapl’s failure
of perfoming the obligation.
The Buyer also sued the Pricniapl, the agnet and the insurance company for
liquidated damges.
The RTC dimissed the case as ot the Prinicpal because of lack of jurisidciotn
(NY FIRM).
Later, the principal sued the agent for damages in connection witht eh sulfur
transaction.
The agent contends that the delivery of sulfur wa condition on the availability
of the vessel and that the aent acted within scope of its authority.
However, their contract provides that the non-availbiliyt of a steamer to
transport the sulfur is not a ground for non-payment of liquidated damages.
THE RTC Ruled that the Agent, Namerco, acted beyond its authority because
it violated the pricnipal’s isntrucitonw:
1.
2.
3.
Delivery of sufulr shold be C&F Manila not C7F illagan City
Sale was subject ot the avialibility of the steamer
Seller wuldbe allowed to wihraw the full amount of the credit,not
merely 80%
The Agent contends that the Buyer cannot calim liquidate damges from the
agent because it was incumbent aupon the BUYER to inquire about the
extent fo the agent’s authority, by failing to do so, It could not calim any
liquidated damages.
W/N AGENT LIABLE FOR DAMAGES?
THE SC HELD AGENT IS LAIBLE FOR ADAMGES.
ART. 1897 proides that the agent who exceeds the limits of his authrioty without giving the party whom he
contracts sufficient notice of his powers is personally liable to such party.
In this case, NAMERCO< as agent of the NY based principal, entered int a contract of sale with NPC
without disclosing to NPC the limits of its powers that the sale should be subject to avaliblility of a steamer.
However, it agreed in the contract that the non-availablity of a steamer is ot a justification for non-ayment
of liquidated damges. Hence, Namerco is laible.
Also, the rule that every peson dealing with an agent must discover upon his peril the authority of the
agent is not applicable in this case, where the agent, not the principal, is ought to be held liable on the
contract the agent entered into.
Since the agent entered into a contract in excess of its authority granted by the principal, such contract,
is UNENFORCEBLE against the principal.
Thus, the contact contiaing a stipulation for liquidate damges is not being enforced against the principal,
but against he agent.
Since it is enforced aaisnt he agent, the agent is persoanly lible to the parte whom it contracted.
Namerco never disclosed to the NPC 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, it not enforceable against its principal.
However, the court reduced its libility.
The buyer argues that the agent should have advised the buer of the
limitation on its authoiyt to negotiate.
DBP V CA
FIRST, THE COURT RULED THAT DBP MRI IS NTO LIBLE TO PAY DANS
Juan B Dans. With his wie, son and daughter in law, applied loan of 500,000
from DBP
Based on the Health Statemnt for DBP pool that DAns signed, the MRI coverage will take effect when the
application was approved by the insurance pool, and the when the full premius is paid during the good
health of the applicant.
As the principal mortgator of the Loan, DANS, whowas 76 years old, was
advised by DBP to obtain a mortgate redemption insurance with the DBP
MORTGAGE Redemption Insurance Pool.
DBP approved a 300,000 loan. From its proceeds, DBP deducted 1,476 as
paymet for the MRI premium. Later Dans accomplished and submitted the
MRI application for Insurance and the Health Staemtn for DBP MRI pool. DBP
then credited this to DBP MRI’s account.
Later, DANS died of cardiac arrest, and DBP relatyed this information to DBP
MRI Pool.
However DBP MRI notified DBP that Dans was not eligible for the MRI
coverage because the acceptance limit is 60 years at the time of
applcaiton.
DBP notified the wife of the disapproval of the application, and offered to
refund the deducte premium of 1476. But the wide refused to accept it,and
demanded for the payment of the MRI or amount equivalent to the long.
She also refused the settlement of 300,000 DBP offered.
Later, Estate thru DAns filed a complaint with the RTC against DBP and the
insurance pool for collection of sum of money and adamges.
Estate alleged that Dans became insured by the Pool when DBP, with full
kowledg of Dan’s age at the time of application, required him to apply for
the MRT and coolected insurance premoin thereon.
The RTC ruled in favor of the Estate. But, absolved DBP MRI POOL from libility,
and ordred DBP to reimbuse DAns.
In this case, although he powe to approve the MRI applciaitons is lodged with DBP MRI Pool, it did not
approve of Dan’s application. Moreover, ther is no showing that it accepted the premium of 1476. Hence,
there was no perfected contract of insurance and DBP MRII pool cannot be held liable.
DBP IS LIABLE.
The case found that in deling with Dans, DBP was both a LENDER and an INSURANCE AGENT.
As insurance agent, DBP madw Dans apply for the insuance which led his family to believe they already
fulfilled all requiremtns of the MRI. Apparentlt, DBP had knowledge that tDAN’s application will never be
approved becaue the max MRI acpcetance age is 60 years.
EXCEEDED AUTHORITY
Accoding to the civil code, an agent who acts within his scope of atuhoity 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 aprty sufficient notice of his powers.
In this case, DBP was not authorized to accept applications for MRI when its clients are more than 60 years
old. Knwoing that DAns’ was inelliible for MRI coverage because of his age, DBP exceeded the scope of
its authority when it accpetd Dan’s aplcaition of MRI, by collecting the insurance premium and deducting
its commission and service fee.
3RD PERSON DID NOT KNOW LIMITS OF POWERS
Morever, an aent who exceeds the scope of his authority depends upon whether the 3rd person is aware
of the limits of the aggents powers . There is no shoing hat Dans knew the limits of DBP’s authority to scolit
applciations for MR.
Hence, if the 3rd person dealing with an agent is UNAWRE of the limits of the authority conferred by the
principal on the agent, nd the 3rd person was decebed by the non-dsiclusre by the aent, then the agent
is liable for damges to him.
DPB ORDERED TO REIMBURSE ESTATE OF JUAN B DANS OF 1476 WITH LEGAL INTEREST, PLUST DAMDAGES
PAHUD V CA
THE COURT RUELD THAT THE SALE IS VALID EBCAUSE OF ESTOPPEL.
Pedro san Agustin and Agaton Genril acquired a 246 sqm parcel of Land in
laguna. Alter, they both died and were survived by their 8 children.
The CIivl code provides that when an agent sells a piece of land or any interest theirein, his atuhroti should
be in writing otherwise the sale is void.
In 1992, 3 of the children (Eufemia, Fernand and Raul) executed a Deed of
absolute Sale of Undivided shares in favor the Pahuds, thei shares in the lot
they inereited form their parents.
Udner 1878, a SPA is necessary for the agent to enter in a ctornt by which the ownership of the immovable
is transmitted or acquired, either gratuitously or fo a valuable consideration.
Eufemia, signed the deed on behalf of his 4 co-heirs namely:
1.
2.
Isabelity by SPA
Milargors, Minerva and Zenaid but without their autrhotity.
The deed of sale was not notarized.
The PAhuds paid 35,000 to the Los Banos bank where th proepty was
mortgaged. And the banki issued the relaed and turned over the owners’s
copy of the COT to the PAhuds.
Based on such, the sale made by Eufemia, Isabelita nad her 2 brther to the Phuds should only be valdi
with respect ot 4/8 of the land , 3/8 of the ald cannot be unhheld because the other co-heirs did not write
an atuhroziation for Eugfemia to sell their share.
While by express proivion of law, the 3/8 shares were void, and not susceptible to ratiicaiton. The corut
upheld is validyt base dn estoppel.
While it was true at the time of sale to the Pahuds that Eufemia was not armed with an SPA to dispose the
3/8 porton, during the proe-trial conference hey admittetd that they sold 7/8 fo the property to the Phuds
in 1992. Thus, there admission is conclusive upon them.
The following Motnhs, the Pahuds made more payment to EUFEMIA and her
siblisngs to 350,000 (525,000 initlal).
Also, the 3 heris never assailed the vaiity of the trasnacion Eufemia made to the aphdus for alck of written
authroty to sell.
Later, Eufemia and her co-heirs executed an extrajudicial settlement of
estate to facilitate the transfer but VRIGILIO REFUSE TO SIGN.
Bytheir silence, the 3 heirs cause the pahus to belive that they had authorized Eufemia to transact in their
behalf. Thus, they are estopped from impugnin gvlaidty fo the sale.
So, the Heirs filed for judicial partition of the property, a a comporise
agreement was signed by 7 conheire and 7 of the co-heirs agreed to sell
their undivided shares to virigilio for 700,000. However, Eufeia and 6 coheirs
refused to sign because of the previous sale to the Pahuds.
COsneutnly, the sale in favor fo the Belramos sps is void,
In 1994, Eufemia received 700,000 from virigilio who then sold he entire
proepty to SPS BELARMINOS. And the latter constructed a builditn thereon.
Because of the cosnturicon, Pahuds immediately confronted Eufemia, who
confirmed to theme that Vigilio sold the porerty to the Belarminos.
Aggrieve,d the Pahuds field a complaint wher the RTC upheld the validity of
the sale. CA revereded. because Eufemia lacked authority to sell the land
on behalf of her co-heirs. C
W/N THE SALE FO THE PROERTY BY EUFEMIA TO THE PAHUDS WAS VALID AND
ENFORCEMBLE?
Accordingly, the subsequent sale made by the seven co-heirs to Virgilio was void because they no longer
had any interest over the subject property which they could alienate at the time of the second
transaction. 38 Nemo dat quod non habet. Virgilio, however, could still alienate his 1/8 undivided share
to the Belarminos.
The Belarminos, for their part, cannot argue that they purchased the property from Virgilio in good faith.
As a general rule, a purchaser of a real property is not required to make any further inquiry beyond what
the certi@cate of title indicates on its face.
But the rule excludes those who purchase with knowledge of the defect in the title of the vendor or of
facts suLcient to induce a reasonable and prudent person to inquire into the status of the property.
Such purchaser cannot close his eyes to facts which should put a reasonable man on guard, and later
claim that he acted in good faith on the belief that there was no defect in the title of the vendor. His mere
refusal to believe that such defect exists, or his obvious neglect by closing his eyes to the possibility of the
existence of a defect in the vendor's title, will not make him an innocent purchaser for value, if afterwards
it turns out that the title was, in fact, defective. In such a case, he is deemed to have bought the property
at his own risk, and any injury or prejudice occasioned by such transaction must be borne by him.
the Belarminos were fully aware that the property was registered not in the name of the immediate
transferor, Virgilio, but remained in the name of Pedro San Agustin and Agatona Genil.
This fact alone is suLcient impetus to make further inquiry and, thus, negate their claim that they are
purchasers for value in good faith. They knew that the property was still subject of partition proceedings
before the trial court, and that the compromise agreement signed by the heirs was not approved by the
RTC following the opposition of the counsel for Eufemia and her six other co-heirs.
The Belarminos, being transferees pendente lite, are deemed buyers in mala @de, and they stand exactly
in the shoes of the transferor and are bound by any judgment or decree which may be rendered for or
against the transferor. Furthermore, had they veri@ed the status of the property by asking the neighboring
residents, they would have been able to talk to the Pahuds who occupy an adjoining business
establishment and would have known that a portion of the property had already been sold. All these
existing and readily verifiable facts are sufficient to suggest that the Belarminos knew that they were
buying the property at their own risk.
GREEN VALLEY V INTERMEDIATE APPEALLTE COURT
THE COURT URLED THAT GREEN VALLEY SHOULD BE LAIBLE TO SUIBB
Squibb & Sons and Green Valley Poultry entered into a letter agreement
where Squibb and sons appointed Green Valley as its non-exclusive
distributor for Squibb Vetenrinary PRdocust
Whether their contract is one of agency to seell or one of contract fo sale, Green Valley is still laible.
Since good were delivered to Green Valley but they were unpaid, Squibb
filed a suit to collect, sicne the contract beween them was one of sale not,
agentcy to sell
If it were an agency to sell, Green Valley would still be liable because it sold on credit without authority
form tis principal. Under art. 1905, the commission agent cannot, without express or implied consent of the
principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but the
commission agent shall be entitled to any interest or benefit, from the sael.
Hence, Affirmed CA.
THe RTC ruled that Green Valley pay Squibb 48,374. CA affirmed this.
Green Vally caliemd that the acontract between them is one of Agency to
sell, and that the goods were receved with the obligation to turn over the
proceeds to Squibb or return them if not sold.
W/N GREEN VALUE SHOULD BE LIABLE?
MMPC V LINSANGAN
Baluyot was authorized to solicit and remit to MMPCI offers to purchase interment spaces obtained on
forms provided by MMPCI. The terms of the offer to purchase, therefore, are contained in such forms and,
when signed by the buyer and an authorized officer of MMPCI, becomes binding on both parties. The
Baluyot offered Atty. Linsangan a lot at a Memorial Park owned by Manila
Memorial Park.
The former owener of the lot not longer wants to acquire that lot and opeted
tos ell rights subject to reimbursement.
Baluyot assured linsanga that once reimbursement is made to former buyer
35K, contract will be rasnferred. Linsangan agreed, recipts were isused.
Later, baluyt ifomed new contract over same land will be executed instead,
upn assurance will be same price, Linsanagna agree.’
Later, Baluyot cancelled the contract and offered another property.
Lisanang refused and filed a case for breach of contract and damages
against MMPCI and Baluyot.
MMPIC: I’m not liable because Bluyot exceeded terms of agency. In fact,
she was only allowed to ecive downpayment, but she received the checks
on her ow.
RTC: Solidary libale to pay Lisanangan.
MMPCI: Lisananga was egkkignet because it was his obligation to determine
extent of Baluyots authority as agent.
LINSANAN: MMPCI allowed Baluyot to act as though she had full powers to
be held solidarily liable with
ji
Offer to Purchase duly signed by Atty. Linsangan, and accepted and validated by MMPCI showed a total
list price of P132,250.00. Likewise, it was clearly stated therein that "Purchaser agrees that he has read or
has had read to him this agreement, that he understands its terms and conditions, and that there are no
covenants, conditions, warranties or representations other than those contained herein." 37 By signing the
Offer to Purchase, Atty. Linsangan signi;ed that he understood its contents. That he and Baluyot had an
agreement different from that contained in the Offer to Purchase is of no moment, and should not affect
MMPCI, as it was obviously made outside Baluyot's authority. To repeat, Baluyot's authority was limited
only to soliciting purchasers. She had no authority to alter the terms of the written contract provided by
MMPCI. The document/letter "con;rming" the agreement that Atty. Linsangan would have to pay the old
price was executed by Baluyot alone. Nowhere is there any indication that the same came from MMPCI
or any of its officers.
Linsangan signe purchase offer and validated by MPIC contained that he understood contents and no
other warranties contained therein.
Lisangna and Bluyot had a different aggrement from the purchase ofer shouldnot affect mmpci, outside
bluyot’s authotiy.
agreement that Atty. Linsangan would have to pay the old price was executed by Baluyot alone.
Nowhere is there any indication that the same came from MMPCI or any of its officers.