PARTNERSHIP


1. Existence, NCC 1769, 1782

Yulo v. Yang, August 28, 1959

Where one of the parties to a contract does not contribute the capital he is supposed to contribute
to a common fund; does not furnish any help or intervention in the management of the business
subject of the contract; does not demand from the other party an accounting of the expenses and
earnings of the business; and is absolutely silent with respect to any of the acts that a partner
should have done, but, on the other hand, receives a fixed monthly sum from the other party,
there can be no other conclusion than that the contract between the parties is one of lease and
not of partnership.

Heirs of Jose Lim, GR 172690, March 3, 2010

Civil Law; Partnership; A Partnership exists when two or more persons agree to place their
money, effects, labor and skill in lawful commerce or business with the understanding that there
shall be a proportionate sharing of the profits and losses among them; Definition of a Contract of
Partnership. —A partnership exists when two or more persons agree to place their money,
effects, labor, and skill in lawful commerce or business, with the understanding that there shall be
a proportionate sharing of the profits and losses among them. A contract of partnership is defined
by the Civil Code as one where two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the profits among
themselves. Undoubtedly, the best evidence would have been the contract of partnership or the
articles of partnership. Unfortunately, there is none in this case, because the alleged partnership
was never formally organized.

J. Tiosejo v Sps. Aug, GR 174149, September 8, 2010

Even prescinding from the foregoing procedural considerations, we also find that the HLURB
Arbiter and Board correctly held petitioner liable alongside PPGI for respondents’ claims and the
P10,000.00 administrative fine imposed pursuant to Section 20 in relation to Section 38 of P.D.
957. By the express terms of the JVA, it appears that petitioner not only retained ownership of the
property pending completion of the condominium project but had also bound itself to answer
liabilities proceeding from contracts entered into by PPGI with third parties.

Civil Law; Partnership; Under Article 1824 of the Civil Code of the Philippines, all partners are
solidarily liable with the partnership for everything chargeable to the partnership, including loss or
injury caused to a third person or penalties incurred due to any wrongful act or omission of any
partner acting in the ordinary course of the business of the partnership or with the authority of his
co-partners. — Viewed in the light of the foregoing provision of the JVA, petitioner cannot avoid
liability by claiming that it was not in any way privy to the

Contracts to Sell executed by PPGI and respondents. As correctly argued by the latter, moreover,
a joint venture is considered in this jurisdiction as a form of partnership and is, accordingly,
governed by the law of partnerships. Under Article 1824 of the Civil Code of the Philippines, all
partners are solidarily liable with the partnership for everything chargeable to the partnership,
including loss or injury caused to a third person or penalties incurred due to any wrongful act or
omission of any partner acting in the ordinary course of the business of the partnership or with the
authority of his co-partners. Whether innocent or guilty, all the partners are solidarily liable with
the partnership itself. [J. Tiosejo Investment Corp. vs. Ang, 630 SCRA 334(2010)]

Realubit v Jaso, 2011

Joint Ventures; Partnership; Agency; Words and Phrases; Generally understood to mean an
organization formed for some temporary purpose, a joint venture is likened to a particular
partnership or one which “has for its object determinate things, their use or fruits, or a specific
undertaking, or the exercise of a profession or vocation”; The rule is settled that joint ventures are
governed by the law on partnerships which are, in turn, based on mutual agency or delectus
personae. —Generally understood to mean an organization formed for some temporary purpose,
a joint venture is likened to a particular partnership or one, which “has for its object determinate
things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.”
The rule is settled that joint ventures are governed by the law on partnerships which are, in turn,
based on mutual agency or delectus personae. Insofar as a partner’s conveyance of the entirety
of his interest in the partnership is concerned, Article 1813 of the Civil Code provides as follows:
Art. 1813. A conveyance by a partner of his whole interest in the partnership does not itself
dissolve the partnership, or, as against the other partners in the absence of agreement, entitle the
assignee, during the continuance of the partnership, to interfere in the management or
administration of the partnership business or affairs, or to require any information or account of
partnership transactions, or to inspect the partnership books; but it merely entitles the assignee to
receive in accordance with his contracts the profits to which the assigning partners would
otherwise be entitled. However, in case of fraud in the management of the partnership, the
assignee may avail himself of the usual remedies. In the case of a dissolution of the partnership,
the assignee is entitled to receive his assignor’s interest and may require an account from the
date only of the last account agreed to by all the partners.

Same; Same; Same; The transfer by a partner of his partnership interest does not make the
assignee of such interest a partner of the firm, nor entitle the assignee to interfere in the
management of the partnership business or to receive anything except the assignee’s profits. —
From the foregoing provision, it is evident that “(t)he transfer by a partner of his partnership
interest does not make the assignee of such interest a partner of the firm, nor entitle the assignee
to interfere in the management of the partnership business or to receive anything except the
assignee’s profits. T he assignment does not purport to transfer an interest in the
partnership, but only a future contingent right to a portion of the ultimate residue as the
assignor may become entitled to receive by virtue of his proportionate interest

in the capital.” Since a partner’s interest in the partnership includes his share in the profits, we
find that the CA committed no reversible error in ruling that the Spouses Jaso are entitled to
Biondo’s share in the profits, despite Juanita’s lack of consent to the assignment of said
Frenchman’s interest in the joint venture. Although Eden did not, moreover, become a partner as
a consequence of the assignment and/or acquire the right to require an accounting of the
partnership business, the CA correctly granted her prayer for dissolution of the joint venture
conformably with the right granted to the purchaser of a partner’s interest under Article 1831 of
the Civil Code.

2. Liabilities of Partners, NCC 1797, 1799-`1803, 1816-1824

Island Sales v. Pioneers, July 31, 1975, 65 SCRA 554

Civil law; Partnership; Condonation by creditor of share in partnerships debt of one partner does
not increase pro rata liability of other partners. —In the instant case, there were five general
partners when the promissory note in question was executed for and in behalf of the partnerships.
Since the liability of the partners in pro rata, the liability of the appellant Benjamin C. Daco shall
be limited to only 1⁄5of the obligations of the defendant company. The fact that the complaint
against the defendant Romulo B. Lumauig was dismissed, upon motion of the plaintiff, does not
unmake the said Lumauig as a general partner in the defendant company. In so moving to
dismiss the complaint, the plaintiff merely condoned Lumauig’s individual liability to the plaintiff.
[Island Sales, Inc. vs. United Pioneers Gen. Const. Co., 65 SCRA 554(1975)]

3. Dissolution, NCC 1832-1834

Singsong v. Isabela Sawmill, supra

Civil Law; Partnership; Dissolution; When the partnership is dissolved, the partnership is not
terminated but continues until winding up of business. —It is true that the dissolution of a
partnership is caused by any partner ceasing to be associated in the carrying on of the business.
However, on dissolution, the partnership is not terminated but continuous until the winding up of
the business. The remaining partners did not terminate the business of the partnership “Isabela
Sawmill”. Instead of winding up the business of the partnership, they continued the business still
in the name of said partnership. It is expressly stipulated in the memorandum agreement that the
remaining partners had constituted themselves as the partnership entity, the “Isabela Sawmill.”

Properties is dissolved but unliquidated partnership which was mortgaged, judicially foreclosed
and then sold at public auction to the partner who had withdrawn still belong to partnership and
the said properties as well as of the withdrawn partner are answerable to liabilities of partnership
and to innocent third persons. —There was no liquidation of the assets of the partnership. The
remaining partners, Leon Garibay and Timoteo Tubungbanua. continued doing the business of
the partnership in the name of “Isabela Sawmill”. They used the properties of said partnership.
The properties mortgaged to Margarita G. Saldajeno by the remaining partners, Leon Garibay
and Timoteo Tubungbanua, belonged, to the partnership “Isabela Sawmill”. The appellant,
Margarita G. Saldajeno, was correctly held liable by the trial court because she purchased at
public auction the properties of the partnership which were mortgaged to her.

Partner who had withdraw from partnership is relieved from partnership liability only when there is
liquidation of assets of partnership and his withdrawal had been published; Where a former
partner entered into agreement with remaining partners to continue business of partnership and
third parties were misled into believing that they are dealing with, the same old partnership, that
partner who withdrawn is still liable to partnership liabilities; Where one of two persons must
suffer, that person who gave occasion for the damages to be caused must hear consequences.
—It does not appear that the withdrawal of Margarita G. Saldajeno from the partnership was
published in the newspapers. The appellees and the public in general had a right to expect that
whatever credit they extended to Leon Garibay and Timoteo Tubungbanua doing the business in
the name of the partnership “Isabela Sawmill” could be enforced against the properties of said
partnership. The judicial foreclosure of the chattel mortgage executed in favor of Margarita G.
Saldajeno did not relieve her from liability to the creditors of the partnership. The appellant,
Margarita G. Saldajeno, cannot complain. She is partly to blame for not insisting on the liquidation
of the assets of the partnership. She even agreed to let Leon Garibay and Timoteo Tubungbanua
continue doing the business of the partnership “Isabela Sawmill” by entering into the
memorandum-agreement with them. Although it may be presumed that Margarita G. Saldajeno
had acted in good faith, the appellees also acted in good faith in extending credit to the
partnership. Where one of two innocent persons must suffer, that person who gave occasion for
the damages to be caused must bear the consequences. Had Margarita G. Saldajeno not entered
into the memorandum-agreement allowing Leon Garibay and Timoteo Tubungbanua to continue
doing the business of the partnership, the appellees would not have been misled into thinking that
they were still dealing with the partnership “Isabela Sawmill”. Under the facts, it is of no moment
that technically speaking the partnership “Isabela Sawmill” was dissolved by the withdrawal
therefrom of Margarita G. Saldajeno. The partnership was not terminated and it continued doing
business through the two remaining partners. [Singsong vs. Isabela Sawmill, 88 SCRA
623(1979)]

4. Limited Partnership, NCC 1844, 1852

 AGENCY

1. Definition

Yoshizaki v. Joy Training Center, G.R. No. 174978, July 31, 2013

Civil Law; Agency; Words and Phrases; Article 1868 of the Civil Code defines a contract of
agency as a contract whereby a person “binds himself to render some service or to do something
in representation or on behalf of another, with the consent or authority of the latter.” —Article
1868 of the Civil Code defines a contract of agency as a contract whereby a person “binds
himself to render some service or to do something in representation or on behalf of another, with
the consent or authority of the latter.” It may be express, or implied from the acts of the principal,
from his silence or lack of action, or his failure to repudiate the agency, knowing that another
person is acting on his behalf without authority. As a general rule, a contract of agency may be
oral. However, it must be written when the law requires a specific form. Specifically, Article 1874
of the Civil Code provides that the contract of agency must be written for the validity of the sale of
a piece of land or any interest therein. Otherwise, the sale shall be void. A related provision,
Article 1878 of the Civil Code, states that special powers of attorney are necessary to convey real
rights over immovable properties.

Same; Same; The purpose of the law in requiring a special power of attorney in the disposition of
immovable property is to protect the interest of an unsuspecting owner from being prejudiced by
the unwarranted act of another and to caution the buyer to assure himself of the specific
authorization of the putative agent. —The special power of attorney mandated by law must be
one that expressly mentions a sale or that includes a sale as a necessary ingredient of the
authorized act. We unequivocably declared in Cosmic Lumber Corporation v. Court of Appeals,
265 SCRA 168 91996), that a special power of attorney must express the powers of the agent in
clear and unmistakable language for the principal to confer the right upon an agent to sell real
estate. When there is any reasonable doubt that the language so used conveys such power, no
such construction shall be given the document. The purpose of the law in requiring a special
power of attorney in the disposition of immovable property is to protect the interest of an
unsuspecting owner from being prejudiced by the unwarranted act of another and to caution the
buyer to assure himself of the specific authorization of the putative agent.

Agency couched in general terms comprises only acts of administration, even if the principal
should state that he withholds no power or that the agent may execute such acts as he may
consider appropriate, or even though the agency should authorize a general and unlimited
management.” —Article 1877 of the Civil Code clearly states that “[a]n agency couched in general
terms comprises only acts of administration, even if the principal should state that he withholds no
power or that the agent may execute such acts as he may consider appropriate, or even though
the agency should authorize a general and unlimited management.”

Persons dealing with a registered land have the legal right to rely on the face of the title and to
dispense with the need to inquire further, except when the party concerned has actual knowledge
of facts and circumstances that would impel a reasonably cautious man to make such inquiry. —
The absence of a contract of agency renders the contract of sale unenforceable; Joy Training
effectively did not enter into a valid contract of sale with the spouses Yoshizaki. Sally cannot also
claim that she was a buyer in good faith. She misapprehended the rule that persons dealing with
a registered land have the legal right to rely on the face of the title and to dispense with the need
to inquire further, except when the party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry. This rule
applies when the ownership of a parcel of land is disputed and not when the fact of agency is
contested.
Persons dealing with an agent must ascertain not only the fact of agency, but also the nature and
extent of the agent’s authority. —Persons dealing with an agent must ascertain not only the fact
of agency, but also the nature and extent of the agent’s authority. A third person with whom the
agent wishes to contract on behalf of the principal may require the presentation of the power of
attorney, or the instructions as regards the agency. The basis for agency is representation and a
person dealing with an agent is put upon inquiry and must discover on his own peril the authority
of the agent. Thus, Sally bought the real properties at her own risk; she bears the risk of injury
occasioned by her transaction with the spouses Johnson.

2. Scope of Authority, NCC 1883

NFA v. IAC, 184 SCRA 166

Civil Law; Agency; Agent’s apparent representation yields to the principal’s true representation
and the contract is considered as entered into between the principal and third person. —
Consequently when things belonging to the principal (in this case, Superior Shipping Corporation)
are dealt with, the agent is bound to the principal although he does not assume the character of
such agent and appears acting in his own name. In other words, the agent’s apparent
representation yields to the principal’s true representation and that, in reality and in effect, the
contract must be considered as entered into between the principal and the third person (Sy Juco
and Viardo v. Sy Juco, 40 Phil. 634). Corollarily, if the principal can be obliged to perform his
duties under the contract, then it can also demand the enforcement of its rights arising from the
contract. [National Food Authority vs. Intermediate Appellate Court, 184 SCRA 166(1990)]

Urban Bank v Pena, Oct 19, 2011

Based on the evidence on records and the proceedings below, the Court concludes that Urban
Bank constituted Atty. Peña as its agent to secure possession of the Pasay property. This
conclusion, however, is not determinative of the basis of the amount of payment that must be
made to him by the bank. The context in which the agency was created lays the basis for the
amount of compensation Atty. Peña is entitled to.

Urban Bank’s letter dated 19 December 1994 confirmed in no uncertain terms Peña’s designation
as its authorized representative to secure and maintain possession of the Pasay property against
the tenants. Under the terms of the letter, petitioner-respondent bank confirmed his engagement
(a) “t o hold and maintain possession” of the Pasay property; (b) “t o protect the same f rom
former tenants, occupants or any other person who are threatening to return to the said property
and/or interfere with your possession of the said property for and in our behalf”; and (c) to
represent the bank in any instituted court action intended to prevent any intruder from
entering or staying in the premises.

These three express directives of petitioner-respondent bank’s letter admits of no other

construction than that a specific and special authority was given to Peña to act on behalf of the
bank with respect to the latter’s claims of ownership over the property against the tenants. Having
stipulated on the due execution and genuineness of the letter during pretrial, the bank is bound by
the terms thereof and is subject to the necessary consequences of Peña’s reliance thereon. No
amount of denial can overcome the presumption that we give this letter – that it means what it
says.

In any case, the subsequent actions of Urban Bank resulted in the ratification of Peña’s authority
as an agent acting on its behalf with respect to the Pasay property. By ratification, even an
unauthorized act of an agent becomes an authorized act of the principal
Country Bankers v Keppel, G.R. No. 166044, June 18, 2012

Same; Same; Guaranty; Suretyship; Special Power of Attorney; Under Article 1878(11) of the
Civil Code, a special power of attorney is necessary to obligate the principal as a guarantor or
surety.—T he scope of an agent’s authority is what appears in the written terms of the power of
attorney granted upon him. Under Article 1878(11) of the Civil Code, a special power of attorney
is necessary to obligate the principal as a guarantor or surety.

Same; Same; An agent’s act, even if done beyond the scope of his authority, may bind the
principal if he ratifies them, whether expressly or tacitly. —Under Articles 1898 and 1910, an
agent’s act, even if done beyond the scope of his authority, may bind the principal if he ratifies
them, whether expressly or tacitly. It must be stressed though that only the principal, and not the
agent, can ratify the unauthorized acts, which the principal must have knowledge of.

Same; Same; Agency by Estoppel; The principal is solidarily liable with the agent even when the
latter has exceeded his authority, if the principal allowed him to act as though he had full
powers.—A rticle 1911, on the other hand, is based on the principle of estoppel, which is
necessary for the protection of third persons. It states that the principal is solidarily liable with the
agent even when the latter has exceeded his authority, if the principal allowed him to act as
though he had full powers. However, for an agency by estoppel to exist, the following must be
established: 1. The principal manifested a representation of the agent’s authority or knowingly
allowed the agent to assume such authority; 2. The third person, in good faith, relied upon such
representation; and 3. Relying upon such representation, such third person has changed his
position to his detriment.

Same; Same; Same; Persons dealing with an assumed agent are bound at their peril, and if they
would hold the principal liable, to ascertain not only the fact of agency but also the nature and
extent of authority, and in case either is controverted, the burden of proof is upon them to prove it.
—As this Court held in Litonjua, Jr. v. Eternit Corp., 490 SCRA 204, 224-225 (2006): A person
dealing with a known agent is not authorized, under any circumstances, blindly to trust the
agents; statements as to the extent of his powers; such person must not act negligently but must
use reasonable diligence and prudence to ascertain whether the agent acts within the scope of
his authority. The settled rule is that, persons dealing with an assumed agent are bound at their
peril, and if they would hold the principal liable, to ascertain not only the fact of agency but also
the nature and extent of authority, and in case either is controverted, the burden of proof is upon
them to prove it. In this case, the petitioners failed to discharge their burden; hence, petitioners
are not entitled to damages from respondent EC.

PETRON v Spouses Jovero, G.R. No. 151038, January 18, 2012

Moreover, it cannot be denied that petitioner likewise obligated itself to deliver the products to the
dealer. When the incident occurred, petitioner, through Gale Freight Services, was still in the
process of fulfilling its obligation to the dealer. We disagree with its contention that delivery was
perfected upon payment of the goods at its depot. There was yet no complete delivery of the
goods as evidenced by the aforementioned hauling contract petitioner executed with Villaruz.
That contract made it clear that delivery would only be perfected upon the complete unloading of
the gasoline.

Thus, with regard to the delivery of the petroleum, Villaruz was acting as the agent of petitioner
Petron. For a fee, he delivered the petroleum products on its behalf. Notably, petitioner even
imposed a penalty clause in instances when there was a violation of the hauling contract, wherein
it may impose a penalty ranging from a written warning to the termination of the contract.
Therefore, as far as the dealer was concerned with regard to the terms of the dealership contract,
acts of Villaruz and his employees are also acts of petitioner. Both the RTC and the CA held that
Villaruz failed to rebut the presumption that the employer was negligent in the supervision of an
employee who caused damages to another; and, thus, petitioner should likewise be held
accountable for the negligence of Villaruz and Igdanis.

To reiterate, petitioner, the dealer Rubin Uy – acting through his agent, Dortina Uy – shared the
responsibility for the maintenance of the equipment used in the gasoline station and for making
sure that the unloading and the storage of highly flammable products were without incident. As
both were equally negligent in those aspects, petitioner cannot pursue a claim against the dealer
for the incident. Therefore, both are solidarily liable to respondents for damages caused by the
fire.

Viloria v Continental Airlines, 2012

Prior to Spouses Viloria’s filing of a complaint against it, CAI never refuted that it gave Holiday
Travel the power and authority to conclude contracts of carriage on its behalf. As clearly extant
from the records, CAI recognized the validity of the contracts of carriage that Holiday Travel
entered into with Spouses Viloria and considered itself bound with Spouses Viloria by the terms
and conditions thereof; and this constitutes an unequivocal testament to Holiday Travel’s
authority to act as its agent. This Court cannot therefore allow CAI to take an altogether different
position and deny that Holiday Travel is its agent without condoning or giving imprimatur to
whatever damage or prejudice that may result from such denial or retraction to Spouses Viloria,
who relied on good faith on CAI’s acts in recognition of Holiday Travel’s authority. Estoppel is
primarily based on the doctrine of good faith and the avoidance of harm that will befall an
innocent party due to its injurious reliance, the failure to apply it in this case would result in gross
travesty of justice. Estoppel bars CAI from making such denial.

As to how the CA have arrived at the conclusion that the contract between CAI and Holiday
Travel is a sale is certainly confounding, considering that CAI is the one bound by the contracts of
carriage embodied by the tickets being sold by Holiday Travel on its behalf. It is undisputed that
CAI and not Holiday Travel who is the party to the contracts of carriage executed by Holiday
Travel with third persons who desire to travel via Continental Airlines, and this conclusively
indicates the existence of a principal-agent relationship. That the principal is bound by all the
obligations contracted by the agent within the scope of the authority granted to him is clearly
provided under Article 1910 of the Civil Code and this constitutes the very notion of agency.

Recio v Altamirano, G.R. No. 182349, July 24, 2013

Same; Same; Same; Special Power of Attorney; In Alcantara v. Nido, 618 SCRA 333 (2010), the
Supreme Court emphasized the requirement of an Special Power of Attorney (SPA) before an
agent may sell an immovable property. ―In Alcantara v. Nido, 618 SCRA 333 (2010), the Court
emphasized the requirement of an SPA before an agent may sell an immovable property. In the
said case, Revelen was the owner of the subject land. Her mother, respondent Brigida Nido
accepted the petitioners’ offer to buy Revelen’s land at Two Hundred Pesos (P200.00) per sq m.
However, Nido was only authorized verbally by Revelen. Thus, the Court declared the sale of the
said land null and void under Articles 1874 and 1878 of the Civil Code.

Same; Same; Same; Same; Persons dealing with an assumed agency, whether the assumed
agency be a general or special one, are bound at their peril, if they would hold the principal liable,
to ascertain not only the fact of agency but also the nature and extent of authority, and in case
either is controverted, the burden of proof is upon them to establish it.―I n Woodchild Holdings,
Inc. v. Roxas Electric and Construction Company, Inc., 436 SCRA 235 (2004), the Court stated
that “persons dealing with an assumed agency, whether the assumed agency be a general or
special one, are bound at their peril, if they would hold the principal liable, to ascertain not only
the fact of agency but also the nature and extent of authority, and in case either is controverted,
the burden of proof is upon them to establish it.” In other words, when the

petitioner relied only on the words of respondent Alejandro without securing a copy of the SPA in
favor of the latter, the petitioner is bound by the risk accompanying such trust on the mere
assurance of Alejandro. The same Woodchild case stressed that apparent authority based on
estoppel can arise from the principal who knowingly permit the agent to hold himself out with
authority and from the principal who clothe the agent with indicia of authority that would lead a
reasonably prudent person to believe that he actually has such authority. Apparent authority of an
agent arises only from “acts or conduct on the part of the principal and such acts or conduct of
the principal must have been known and relied upon in good faith and as a result of the exercise
of reasonable prudence by a third person as claimant and such must have produced a change of
position to its detriment.” In the instant case, the sale to the Spouses Lajarca and other
transactions where Alejandro allegedly represented a considerable majority of the co-owners
transpired after the sale to the petitioner; thus, the petitioner cannot rely upon these acts or
conduct to believe that Alejandro had the same authority to negotiate for the sale of the subject
property to him. [Recio vs. Heirs of the Spouses Aguedo and Maria Altamirano, 702 SCRA
137(2013)]

Yoshizaki v. Joy Training Center, G.R. No. 174978, July 31, 2013

Article 1868 of the Civil Code defines a contract of agency as a contract whereby a person “binds
himself to render some service or to do something in representation or on behalf of another, with
the consent or authority of the latter.” It may be express, or implied from the acts of the principal,
from his silence or lack of action, or his failure to repudiate the agency, knowing that another
person is acting on his behalf without authority. As a general rule, a contract of agency may be
oral. However, it must be written when the law requires a specific form. Specifically, Article 1874
of the Civil Code provides that the contract of agency must be written for the validity of the sale of
a piece of land or any interest therein. Otherwise, the sale shall be void. A related provision,
Article 1878 of the Civil Code, states that special powers of attorney are necessary to convey real
rights over immovable properties.

The special power of attorney mandated by law must be one that expressly mentions a sale or
that includes a sale as a necessary ingredient of the authorized act. We unequivocably declared
in Cosmic Lumber Corporation v. Court of Appeals, 265 SCRA 168 91996), that a special power
of attorney must express the powers of the agent in clear and unmistakable language for the
principal to confer the right upon an agent to sell real estate. When there is any reasonable doubt
that the language so used conveys such power, no such construction shall be given the
document. The purpose of the law in requiring a special power of attorney in the disposition of
immovable property is to protect the interest of an unsuspecting owner from being prejudiced by
the unwarranted act of another and to caution the buyer to assure himself of the specific
authorization of the putative agent.

Article 1877 of the Civil Code clearly states that “[a]n agency couched in general terms comprises
only acts of administration, even if the principal should state that he withholds no power or that
the agent may execute such acts as he may consider appropriate, or even though the agency
should authorize a general and unlimited management.”

Patrimonio v Gutierrez, GR 187769, June 4, 2014

In the absence of any showing of any agency relations or special authority to act for and in behalf
of the petitioner, the loan agreement Gutierrez entered into with Marasigan is null and void. Thus,
the petitioner is not bound by the parties’ loan agreement.

Furthermore, that the petitioner entrusted the blank pre-signed checks to Gutierrez is not legally
sufficient because the authority to enter into a loan can never be presumed. The contract of
agency and the special fiduciary relationship inherent in this contract must exist as a matter of
fact. The person alleging it has the burden of proof to show, not only the fact of agency, but also
its nature and extent.
Zarsona Medical Clinic v. Philhealth, October 23, 2014.

At the outset, the issues revolve on the sufficiency of the SPA authorizing Dr. Bragat to sign the
verification and certification of non-forum shopping in the petition filed before the Court of
Appeals.

In this case, Philhealth found the SPA defective. Indeed, a reading of the SPA reveals that the
powers conferred by Dr. Zarsona to his attorneys-in- fact pertain to administrative matters. The
phrase "claims, benefits and privileges belonging to or owing to Zarsona Medical Clinic" clearly
does not include the filing of cases before the courts or any quasi-judicial agencies. The
term"claims" in particular refers to those claims for payment of services rendered by the hospital
during a Philhealth member’s confinement. These claims are filed by the hospital with Philhealth.
Furthermore, the SPA makes no mention of any court, judicial or quasi- judicial bodies. The
enumeration of agencies in the first paragraph of the SPA, such as Philhealth and Department of
Health, refers to those agencies which are health-related. There is no explicit authorization for Dr.
Bragat to sign and execute the requirement verification and certification in this case. At the very
least, the SPA should have granted the attorneys-in-fact the power and authority to institute civil
and criminal actions which would necessarily include the signing of the verification and
certification against forum-shopping.

The defects in the SPA notwithstanding, the Court rules in favor of ZMC. ZMC had in good faith
complied by submitting an SPA which it thought was sufficient and encompasses the filing of the
instant suit.

V-Gent, Inc. v. Morning Star Travel, July 22, 2015.

Every action must be prosecuted or defended in the name of the real party-in-interest - the party
who stands to be or injured by the judgment in the suit. In suits where an agent represents a
party, the principal is the real party-in-interest; an agent cannot file a suit in his own name on
behalf of the principal.

Rule 3, Section 3 of the Rules of Court provides the exception when an agent may sue or be
sued without joining the principal. Thus an agent may sue or be sued solely in its own name
and without joining the principal when the following elements concur: (1) the agent acted in his
own name during the transaction; (2) the agent acted for the benefit of an undisclosed principal;
and (3) the transaction did not involve the property of the principal.

In the present case, only the·first element is present; the purchase order and the receipt were in
the name of V-Gent. However, the remaining elements are absent because: (1) V -Gent disclosed
the names o f the passengers to Morning Star - in fact the tickets were in their names; and (2) the
transaction was paid using the passengers' money. Therefore, Rule 3, Section 3 ofthe Rules of
Court cannot apply. From this perspective, V-Gent evidently does not have a legal standing to file
the complaint.

The power to collect and receive payments on behalf of the principal is an ordinary act of
administration covered by the general powers of an agent. On the other hand, the filing ofsuits is
an act of strict dominion.

Under Article 1878 (15) of the Civil Code, a duly appointed agent has no power to exercise any
act of strict dominion on behalf of the principal unless authorized by a special power of attorney.
An agent's authority to file suit cannot be inferred from his authority to collect or receive
payments; the grant of special powers cannot be presumed from the grant of general powers.
Moreover, the authority to exercise special powers must be duly established by evidence, even
though it need not be in writing.
By granting the initial refund, Morning Star recognized V-Gent's authority to buy the tickets and
collect refunds on behalf of the passengers. However, Morning Star's recognition of V-Gent's
authority to collect a refund for the passengers is not equivalent to recognition of V-Gent's
authority to initiate a suit on behalf of the passengers. Morning Star therefore, is not estopped
from questioning V-Gent's legal standing to initiate the suit.

Bautista v. Nicorp Management and Development Corporation, October 18, 2015.

The well-established rule is when a sale of a parcel of land or any interest therein is through an
agent, the authority of the latter shall be in writing, and otherwise, the sale shall be void as
provided for by Articles 1874 and 1878 of the Civil Code. From the foregoing, it is clear that an
SPA in the conveyance of real rights over immovable property is necessary.

To reiterate, such authority must be conferred in writing and must express the powers of the
agent in clear and unmistakable language in order for the principal to confer the right upon an
agent to sell the real property. It is a general rule that a power of attorney must be strictly
construed, and courts will not infer or presume broad powers from deeds, which do not
sufficiently include property or subject under which the agent is to deal. Thus, when the authority
is couched in general terms, without mentioning any specific power to sell or mortgage or to do
other specific acts of strict dominion, then only acts of administration are deemed conferred.

Doubtless, there was no perfected contract to sell between petitioner and NICORP. Nowhere in
the General Power of Attorney was Benjamin granted, expressly or impliedly, any power to sell
the subject property or a portion thereof. The authority expressed in the General Power of
Attorney was couched in very broad terms covering petitioner's businesses and properties. Time
and again, this Court has stressed that the power of administration does not include acts of
disposition, which are acts of strict ownership. As such, an authority to dispose cannot proceed
from an authority to administer, and vice versa, for the two powers may only be exercised by an
agent by following the provisions on agency of the Civil Code.

NICORP cannot be considered a purchaser in good faith. The well-settled rule is that a person
dealing with an assumed agent is bound to ascertain not only the fact of agency but also the
nature and extent of the agent's authority. The law requires a higher degree of prudence from one
who buys from a person who is not the registered owner.

Republic v Banez, G.R. No. 169442, Oct. 14, 2015

The present case is a case of an express agency, where, Hojilla, the agent, binds himself to
represent another, the principal, who are herein respondents, with the latter's express consent or
authority. In a contract of agency, the agent acts for and in behalf of the principal on matters
within the scope of the authority conferred upon him, such that, the acts of the agent have the
same legal effect as if they were personally done by the principal. Because there is an express
authority granted upon Hojilla to represent the respondents as evidenced by the SPA, Hojilla's
actions bind the respondents.

As agent, the representations and guarantees of Hojilla are considered representations and
guarantees of the principal. This is the principle of agency by promissory estoppel. It was
Hojilla who administered and/or managed the subject property. Based on Hojilla's letter dated 15
August 1984 to petitioner, Hojilla made the representation that besides being the attorney-in-fact
of the respondents with limited authority to register the property, he was also their agent with
regard to respondents' other obligations related to the Contract. 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, "the 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 Hojilla knew that he had no authority to execute the Contract and receive the letters on behalf of
respondents, he should have opposed petitioner's demand letters. However, 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.

Clearly, the respondents are estopped by the acts and representations of their agent. In an
agency by estoppel or apparent authority, "[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 possessing."

The respondents' acquiescence of Hojilla's acts 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.

Salvador v. Gonzales, February 4, 2015.

The Court agrees with the courts below in finding that the contract entered into by the parties was
essentially a contract of sale which could be validly rescinded. Spouses Salvador insist that they
did not receive the payments made by Spouses Rabaja from Gonzales which totalled
P950,000.00 and that Gonzales was not their duly authorized agent.

According to Article 1990 of the New Civil Code, insofar as third persons are concerned, an act is
deemed to have been performed within the scope of the agent's authority, if such act is within the
terms of the power of attorney, as written. In this case, Spouses Rabaja did not recklessly enter
into a contract to sell with Gonzales. They required her presentation of the power of attorney
before they transacted with her principal. And when Gonzales presented the SPA to Spouses
Rabaja, the latter had no reason not to rely on it.

The law mandates an agent to act within the scope of his authority which what appears in the
written terms of the power of attorney granted upon him. The Court holds that, indeed, Gonzales
acted within the scope of her authority. The SPA precisely stated that she could administer the
property, negotiate the sale and collect any document and all payments related to the subject
property. As the agent acted within the scope of his authority, the principal must comply with all
the obligations. As correctly held by the CA, considering that it was not shown that Gonzales
exceeded her authority or that she expressly bound herself to be liable, then she could not be
considered personally and solidarily liable with the principal, Spouses Salvador.

3. Extinguishment, NCC 1927, 1980

Dela Rama SS v. Tan, May 21, 1956, 99 PHIL 1034

The first time that this case came up to this Court was in G.R. No. L-8784, decided on May 21,
1956, which involved the principal question regarding the right granted by the management
contract to NDC to cancel upon one year's notice the general agency granted Dela Rama. The
NDC decided to cancel the contract but was opposed by De la Rama, which alleged that it had
been granted the option to purchase the vessels and that in 1952 it exercised that right of option.
In the decision in G.R. No. L-8784 this Court upheld the right of NDC to cancel the management
contract, and the option of De la Rama to purchase the vessels was declared ineffective.
Perez v. PNB. July 30, 1966, 17 SCRA 835

The argument that foreclosure by the Bank under its power of sale is barred upon death of the
debtor, because agency is extinguished by the death of the principal, under Article 1732 of the
Civil Code of 1889 and Article 1919 of the Civil Code of the Philippines, neglects to take into
account that the power to foreclose is not an ordinary agency that contemplates exclusively the
representation of the principal by the agent but is primarily an authority conferred upon the
mortgagee for the latter's own protection. It is, in fact, an ancillary stipulation supported by the
same causa or consideration for the mortgage and forms an essential and inseparable part of that
bilateral agreement. As can be seen in the preceding quotations from P asno vs. Ravina, 54 Phil.
382, both the majority and the dissenting opinions conceded that the power to foreclose
extrajudicially survived the death of the mortgagor, even under the law prior to the Civil Code of
the Philippines now in force.

Lim v Saban, GR 163720, December 16, 2004

The Court affirms the appellate court’s finding that the agency was not revoked since Ybañez
requested that Lim make stop payment orders for the checks payable to Saban only after the
consummation of the sale on March 10, 1994. At that time, Saban had already performed his
obligation as Ybañez’s agent when, through his (Saban’s) efforts, Ybañez executed the Deed of
Absolute Sale of the lot with Lim and the Spouses Lim.

To deprive Saban of his commission subsequent to the sale which was consummated through his
efforts would be a breach of his contract of agency with Ybañez which expressly states that
Saban would be entitled to any excess in the purchase price after deducting the P200,000.00 due
to Ybañez and the transfer taxes and other incidental expenses of the sale.

COMPROMISE


1. Void - NCC 2035, 2037, 2041

Samonte v. Samonte, June 25, 1975, 64 SCRA 524

Judgments; Judgment on a compromise; Judgment on a compromise final and executory. —A

judgment of the court approving a compromise agreement is final and immediately executory. In
the words of the Supreme Court it is “right there and then writes finish to the controversy.”

Reason. —The reason why a judgment based on a compromise agreement is final and
immediately executory is that when the parties agree to settle their differences to end a litigation
and request the court to render judgment on the basis of their agreement, there is an implied
waiver of their right to appeal from the judgment.

Decision based on compromise agreement a judgment; Reasons. —In the case of Vda. de
Corpus vs. Phodaca-Ambrosio the Court ruled that the Saminiada vs. Mata case is no longer
authority for the contention that a decision based on a compromise agreement is not a judgment.
This is so because the view that a decision based upon a compromise agreement does not
become immediately final and executory, was arrived at only by four members of the Supreme
Court, which view is inconsistent with what was adhered to in subsequent cases and the explicit
provision of Article 2037 of the Civil Code. Besides, even the four justices of the Supreme Court
acknowledged, in the Saminiada case, that a decision based upon a compromise agreement is a
judgment.

Petition to set aside judgment on a compromise; Time for filing a petition. —The motion to set
aside the judgment must be filed within sixty (60) days after the petitioner learned of the judgment
and not more than six (6) months after the occurrence of the proceeding wherein the judgment on
a compromise was approved.

Reason. —A motion to set aside a judgment must be filed within 60 days after the petitioner
learned of the judgment, order or other proceeding to be set aside, and not more than six (6)
months after such judgment or order was entered, or such proceeding was taken. And the
judgment or order shall be entered by the clerk if no appeal or motion for new trial is filed within
the time provided in the rules. The recording of the judgment or order in the book of entries of
judgments constitutes its entry. The record shall contain the dispositive part of the judgment or
order and shall be signed by the clerk, with a certificate that such judgment or order has become
final and executory. This applies to judgment or order that has to be entered. The alternative
phrase “or such proceeding was taken” employed in Section 3, of Rule 38 could be taken to mean
other proceeding which are not to be “entered”, such as a writ of execution (Aquino vs. Blanco, 79
Phil. 647, 650) and an order approving a compromise agreement (Bodiongan vs. Ceniza, 102
Phil. 750). In such case, the period must have to commence from the date of occurrence because
entry is either unnecessary or inconsequential.

Periods unextendible and not subject to conditions or contingencies. —The periods are
unextendible and are not subject to any condition or contingency.

Grounds for. —A party to a compromise agreement may move to set it aside on the ground of
fraud, mistake or duress in which case an appeal may be taken from the order denying the
motion.

Fraud in the procurement of the judgment; Extrinsic,fraud. —Fraud in the procurement of a

judgment means any trick or device which prevents the adversary from presenting defense or
conceals from him pendency of action. The fraud must be perpetrated upon the Court in
rendering the judgment, and it must also appear that there is a valid defense to the judgment.
Extrinsic fraud is that where the alleged deceit was not on a matter raised, controverted or
decided.

Contents of petition.—The motion to suspend the compromise agreement should meet the
essential requirements of Section 3 of Rule 38. It must be accompanied by an affidavit of merits
showing the fraud, mistake, or excusable negligence relied upon and the facts constituting the
petitioner’s good and substantial cause of action or defense, as the case may be.

Parties may compromise cause of action without the intervention of his attorney. —The Court is
not aware of any provision of law or of any existing jurisprudence that has pronounced a
compromise agreement entered into by parties-litigants without being assisted by their counsel to
be null and void and of no legal effect. On the contrary, there is authority to the effect that an
attorney by virtue of his general authority as such, has the exclusive control of the litigation in
which he represents his client; his client on the other hand, is generally conceded to have the
exclusive control over the subject-matter of the litigation and may, according to the great weight
of authority, at any time before judgment, if acting in good faith, compromise, settle and adjust his
cause of action out of court without his attorney’s intervention, knowledge, or consent and, even
though he has agreed with his attorney not to do so. The parties may ordinarily settle and adjust
their cause without the intervention of their attorneys.
Garcia v Garcia, November 14, 2011.

First, the compromise agreement. It must be recalled that the compromise agreement came
about because of the case for annulment of title instituted by Monica and her children against
Benjamin and Rita. At the time of the institution of the annulment case, the subject property had
been divided between Benjamin and Rita, wherein they were issued their respective titles, TCT
No. 171639 in the name of Benjamin covering 564 sq. m. and TCT No. 171640 in the name of
Rita covering 1,000 sq. m. The parties later entered into a compromise agreement recognizing
the rights of Monica and her children to the subject property as heirs of Emilio being the surviving
wife and children of the second marriage. To facilitate the delivery of their shares, it was stated in
the compromise agreement that their shares shall be taken from Rita’s portion covered by TCT
No. 171640.

Respondents were not parties to the annulment case or to the compromise agreement but
their rights to the subject property as heirs of Emilio were recognized. Of the 1,564 sq. m.
property, 1,091 sq. m. was agreed upon as the total shares of the children of the first marriage
which include Rita, Benjamin and respondents, and 472 sq. m. for Monica and her children. From
Rita’s 1,000 sq. m. share, 47246 sq. m. was supposed to be given to Monica and her children.
After deducting said area, 528 sq. m. remained for the children of the first marriage who are
entitled to 1,091 sq. m. Although it was not specifically stated in the compromise agreement,
obviously, the shares of the children of the first marriage should be taken from the remaining 528
sq. m. of Rita and the 564 sq. m. of Benjamin. Benjamin’s claim that the portion of the property
registered in his name is not covered by the compromise agreement, certainly, has no leg to
stand on. [Garcia vs. Garcia, 660 SCRA 1(2011)]

Riviera Golf Club v. CCA Holdings, June 17, 2015.

CCA Holdings contends that Riviera Golf is already estopped from questioning the filing of the
second complaint because the non-waiver clause of the Compromise Agreement recognized
CCA Holdings’ prerogative to seek damages arising from the premature termination of the
Management Agreement.

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a

litigation or put an end to one already commenced. Like any other contract, is binding between
the parties and becomes the law between them, it is also a rule that to be valid, a compromise
agreement must not be contrary to law, while it is true that the agreement morals, good customs,
and public policy.

In the present case, a reading of paragraph 4 of the Compromise Agreement shows that it allows
the filing of complaints based on the same cause of action (i.e., breach of the Management and
Royalty Agreements).

Since paragraph 4 allows the splitting of causes of action and res judicata, this provision of the
Compromise Agreement should be invalidated for being repugnant to our public policy.