CLASS RECITATION

65) ORIENT AIR SERVICES AND HOTEL REPRESENTATIVES vs. COURT OF APPEALS

CASE NUMBER: GR. NO. 76931 PONENTE: PADILLA, J.

DATE: MAY 29, 1991

FACTS:
 January 15 1977- American Airlines, Inc. an air carrier offering passenger and air cargo transportation in the
Philippines, and Orient Air Services and Hotel Representatives entered into a General Sales Agency Agreement,
whereby the former authorized the latter to act as its exclusive general sales agent within the Philippines for the sale of
air passenger transportation.
 May 11 1981- American Air took charge of the collection of the proceeds of tickets sold originally by Orient Air and
terminated the Agreement in accordance with Paragraph 13 thereof (Termination).

13. Termination

American may terminate the Agreement on two days' notice in the event Orient Air Services is unable to transfer
to the United States the funds payable by Orient Air Services to American under this Agreement. Either party
may terminate the Agreement without cause by giving the other 30 days' notice by letter, telegram or cable.

 May 15 1981- American Air instituted suit against Orient Air with the Court of First Instance of Manila, for Accounting
with Preliminary Attachment or Garnishment, Mandatory Injunction and Restraining Order
 In its Answer with counterclaim dated 9 July 1981, Orient Air denied the material allegations of the complaint with
respect to plaintiff's entitlement to alleged unremitted amounts, contending that after application thereof to the
commissions due it under the Agreement, plaintiff in fact still owed Orient Air a balance in unpaid overriding
commissions. Further, the defendant contended that the actions taken by American Air in the course of terminating the
Agreement as well as the termination itself were untenable, Orient Air claiming that American Air's precipitous conduct
had occasioned prejudice to its business interests.
 Trial Court ruled in favor of Orient Air
 ON APPEAL: Intermediate Appellate Court affirmed the ruling of TC

ISSUE: W/N the respondent appellate court correctly ruled that Orient Air be reinstated again as sales agent of American Air

RULING:
By affirming this ruling of the trial court, respondent appellate court, in effect, compels American Air to extend its personality
to Orient Air. Such would be violative of the principles and essence of agency, defined by law 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 .

In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing,
the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a
relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by
any court. The Agreement itself between the parties states that "either party may terminate the Agreement without cause by
giving the other 30 days' notice by letter, telegram or cable." (emphasis supplied) We, therefore, set aside the portion of the
ruling of the respondent appellate court reinstating Orient Air as general sales agent of American Air.

WHEREFORE, with the foregoing modification, the Court AFFIRMS the decision and resolution of the respondent Court of
Appeals, dated 27 January 1986 and 17 December 1986, respectively. Costs against petitioner American Air.

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 CASE DIGEST

66) RALLOS vs. FELIX GO CHAN & SONS REALTY CORPORATION

CASE NUMBER: L-24332 PONENTE: Munoz-Palma, J.

DATE: January 31, 1978

FACTS: complaint against the regular administrator of the

 Concepcion and Gerundia Rallos were sisters and
registered co-owners of a parcel of land known as
Lot No. 5983 of the Cadastral Survey of Cebu
covered by Transfer Certificate of Title No. 11116 of
the Registry of Cebu.
 They executed a special power of attorney in favor
of their brother, Simeon Rallos, authorizing him to
sell such land for and in their behalf.
 After Concepcion died, Simeon Rallos sold the
undivided shares of his sisters Concepcion and
Gerundia to Felix Go Chan & Sons Realty
Corporation for the sum of P10,686.90. New TCTs
were issued to the latter.
 Petitioner Ramon Rallos, administrator of the
Intestate Estate of Concepcion filed a complaint
praying (1) that the sale of the undivided share of
the deceased Concepcion Rallos in lot 5983 be
unenforceable, and said share be reconveyed to her
estate; (2) that the Certificate of 'title issued in the
name of Felix Go Chan & Sons Realty Corporation be
cancelled and another title be issued in the names of
the corporation and the "Intestate estate of
Concepcion Rallos" in equal undivided and (3) that
plaintiff be indemnified by way of attorney's fees
and payment of costs of suit.

CFI: [Plaintiff’s Complaint]

 Sale of land was null and void insofar as the one-half
pro-indiviso share of Concepcion Rallos
 Ordered the issuance of new TCTs to respondent
corporation and the estate of Concepcion in the
proportion of ½ share each pro-indiviso and the
payment of attorney’s fees and cost of litigation
[Respondent filed cross claim against Simon
Rallos(*Simon and Gerundia died during pendency
of case)]
 Juan T. Borromeo, administrator of the Estate
of Simeon Rallos was ordered to pay defendant
the price of the ½ share of the land (P5,343.45)
plus attorney’s fees
[Borromeo filed a third party complaint against
Josefina Rallos, special administratrix of the Estate of
Gerundia]
 Dismissed without prejudice to filing either a
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 CLASS RECITATION
Estate of Gerundia Rallos or a claim in the
Intestate- Estate of Cerundia Rallos, covering the
same subject- matter
CA: CFI Decision reversed, upheld the sale of
Concepcion’s share.
MR: denied.

ISSUES & RULING:

1) WON sale was valid although it was executed
after the death of the principal,
Concepcion.?
 Sale was void.
o 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
(Art. 1317 of the Civil Code).
o Simon’s authority as agent was extinguished
upon Concolacion’s death

2) WON sale fell within the exception to the

general rule that death extinguishes the
authority of the agent
 The sale did not fall under the exceptions to
the general rule that death ipso jure
extinguishes the authority of the agent
o Art. 1930 inapplicable: SPA in favor of
Simon Rallos was not coupled with
interest
o Art. 1931 inapplicable:
 Simon Rallos knew (as can be inferred from
his pleadings) of principal Concepcion’s
death
 For Art 1931 to apply, both requirements
must be present

3) WON agent’s knowledge of the principal’s death is

a material factor.
 Yes, agent’s knowledge of principal’s death is
material.
o Respondent asserts that: there is no
provision in the Code which provides that
whatever is done by an agent having
knowledge of the death of his principal is
void even with respect to third persons who
may have contracted with him in good
faith and without knowledge of the death
of the principal
o Court says: this contention ignored the
ignores the existence of the general rule
enunciated in Article 1919 that the death of
the principal

Page 3
 CASE DIGEST
construed.
extinguishes the agency. Article 1931, being an
exception to the general rule, is to be strictly

67) AIR FRANCE vs. COURT OF APPEALS

CASE NUMBER: G.R. No. L- PONENTE: MELENCIO-HERRERA, J.

57339
DATE: December 29, 1983

CAUSE OF ACTION: Petition for review on certiorari assailing the Decision of then respondent Court of Appeals promulgated
"Jose G. Gana, et al. vs. Sociedad Nacionale Air France", which reversed the Trial Court's judgment dismissing the Complaint
of private respondents for damages arising from breach of contract of carriage, and awarding instead P90,000.00 as moral
damages.

FACTS:
1. Late Jose G. Gana and his family (the GANAS), purchased from AIR FRANCE (9) "open-dated" air passage tickets for
the Manila/Osaka/Tokyo/Manila route. On 24 April 1970, AIR FRANCE exchanged or substituted the
aforementioned tickets with other tickets for the same route. At this time, the GANAS were booked for the
Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May 1970, and for the Tokyo/Manila return trip on
AIR FRANCE Flight 187 on 22 May 1970.
2. The aforesaid tickets were valid until 8 May 1971. The GANAS did not depart on 8 May 1970. Instead, Jose Gana
sought the assistance of Teresita Manucdoc, a Secretary of the Sta. Clara Lumber Company where Jose Gana was the
Director and Treasurer, for the extension of the validity of their tickets, which were due to expire on 8 May 1971.
3. Teresita enlisted the help of Lee Ella Manager of the Philippine Travel Bureau. Ella sent the tickets to Cesar Rillo,
Office Manager of AIR FRANCE. The tickets were returned to Ella who was informed that extension was not
possible unless the fare differentials resulting from the increase in fares triggered by an increase of the exchange
rate of the US dollar to the Philippine peso and the increased travel tax were first paid. Ella then returned the tickets
to Teresita and informed her of the impossibility of extension.
4. In the meantime, the GANAS had scheduled their departure on 7 May 1971 or one day before the expiry date.
Teresita requested travel agent Ella to arrange the revalidation of the tickets. Ella gave the same negative answer
and warned her that although the tickets could be used by the GANAS if they left on 7 May 1971, the tickets would
no longer be valid for the rest of their trip because the tickets would then have expired on 8 May 1971. Teresita
replied that it will be up to the GANAS to make the arrangements.
5. With that assurance, Ella on his own, attached to the tickets validating stickers for the Osaka/Tokyo flight, one a JAL.
sticker and the other an SAS (Scandinavian Airways System) sticker. The SAS sticker indicates thereon that it was
"Reevaluated by: the Philippine Travel Bureau, Branch No. 2" (as shown by a circular rubber stamp) and signed
"Ador", and the date is handwritten in the center of the circle. Then appear under printed headings the notations: JL.
108 (Flight), 16 May (Date), 1040 (Time), OK (status). Apparently, Ella made no more attempt to contact
AIR FRANCE as there was no more time.
6. Notwithstanding the warnings, the GANAS departed from Manila in the afternoon of 7 May 1971 on board AIR
FRANCE Flight 184 for Osaka, Japan. There is no question with respect to this leg of the trip.
7. However, for the Osaka/Tokyo flight on 17 May 1971, Japan Airlines refused to honor the tickets because of their
expiration, and the GANAS had to purchase new tickets. They encountered the same difficulty with respect to their
return trip to Manila as AIR FRANCE also refused to honor their tickets. They were able to return only after pre-
payment in Manila, through their relatives, of the readjusted rates. They finally flew back to Manila on separate Air
France Frights on 19 May 1971 for Jose Gana and 26 May 1971 for the rest of the family.
8. On 25 August 1971, the GANAS commenced before the then Court of First Instance of Manila, Branch III, Civil Case
No. 84111 for damages arising from breach of contract of carriage.
9. AIR FRANCE traversed the material allegations of the Complaint and alleged that the GANAS brought upon
themselves the predicament they found themselves in and assumed the consequential risks; that travel agent
Ella's affixing of validating stickers on the tickets without the knowledge and consent of AIR FRANCE, violated
Page 4
 CLASS RECITATION
airline tariff rules and regulations and was beyond the scope of his authority as a travel agent; and that AIR
FRANCE was not guilty of any fraudulent conduct or bad faith.
10. TC dismissed the Complaint of the GANAS based on Partial and Additional Stipulations of Fact .

Page 5
 CASE DIGEST
11. The GANAS appealed to the CA. During the pendency of the appeal, Jose Gana, the principal plaintiff, died.
12. CA set aside and reversed the TC’s decision ordering Air France to pay appellants moral damages in the total sum
P90,000.00 plus costs.
13. Reconsideration sought by AIR FRANCE was denied, hence, petitioner's recourse before this instance, to which
we gave due course.

ISSUE:
1. Whether or not, under the environmental milieu the GANAS have made out a case for breach of contract of
carriage entitling them to an award of damages? No!
2. Whether or not Teresita was the agent of the GANAS and notice to her of the rejection of the request for
extension of the validity of the tickets was notice to the GANAS, her principals? YES!

RULING: No! SC reversed the affirmative ruling of the CA. (As for the main—FIRST issue)
AIR FRANCE cannot be faulted for breach of contract when it dishonored the tickets of the GANAS after 8 May 1971 since
those tickets expired on said date; nor when it required the GANAS to buy new tickets or have their tickets re-issued for
the Tokyo/Manila segment of their trip. Neither can it be said that, when upon sale of the new tickets, it imposed additional
charges representing fare differentials, it was motivated by self-interest or unjust enrichment considering that an increase of
fares took effect, as authorized by the Civil Aeronautics Board (CAB) in April, 1971. This procedure is well in accord with the
IATA tariff rules which provide:

6. TARIFF RULES
7. APPLICABLE FARE ON THE DATE OF DEPARTURE
3.1 General Rule.
All journeys must be charged for at the fare (or charge) in effect on the date on which transportation
commences from the point of origin. Any ticket sold prior to a change of fare or charge (increase or
decrease) occurring between the date of commencement of the journey, is subject to the above general
rule and must be adjusted accordingly. A new ticket must be issued and the difference is to be collected or
refunded as the case may be. No adjustment is necessary if the increase or decrease in fare (or charge)
occurs when the journey is already commenced.

The GANAS cannot defend by contending lack of knowledge of those rules since the evidence bears out that Teresita, who
handled travel arrangements for the GANAS, was duly informed by travel agent Ella of the advice of Reno, the Office
Manager of Air France, that the tickets in question could not be extended beyond the period of their validity without
paying the fare differentials and additional travel taxes brought about by the increased fare rate and travel taxes.

Teresita was the agent of the GANAS and notice to her of the rejection of the request for extension of the validity of the
tickets was notice to the GANAS, her principals. (AGENCY: NOTICE TO THE AGENT IS NOTICE TO THE PRINCIPAL)

The circumstances that AIR FRANCE personnel at the ticket counter in the airport allowed the GANAS to leave is not
tantamount to an implied ratification of travel agent Ella's irregular actuations. It should be recalled that the GANAS left in
Manila the day before the expiry date of their tickets and that "other arrangements" were to be made with respect to the
remaining segments. Besides, the validating stickers that Ella affixed on his own merely reflect the status of reservations on
the specified flight and could not legally serve to extend the validity of a ticket or revive an expired one.

The conclusion is inevitable that the GANAS brought upon themselves the predicament they were in for having insisted on
using tickets that were due to expire in an effort, perhaps, to beat the deadline and in the thought that by commencing the
trip the day before the expiry date, they could complete the trip even thereafter.
It should be recalled that AIR FRANCE was even unaware of the validating SAS and JAL. stickers that Ella had affixed
spuriously. Consequently, Japan Air Lines and AIR FRANCE merely acted within their contractual rights when they
dishonored the tickets on the remaining segments of the trip and when AIR FRANCE demanded payment of the adjusted
fare rates and travel taxes for the Tokyo/Manila flight.

WHEREFORE, the judgment under review is hereby reversed and set aside, and the Amended Complaint filed by private
respondents hereby dismissed.
Page 6
 CLASS RECITATION

No costs.

68) SANTOS vs. BUENCONSEJO

CASE NUMBER: G.R. No. L-20136 PONENTE: CONCEPCION, J

DATE: June 23, 1965

FACTS:
1. Petitioner Jose A. Santos y Diaz seeks the reversal of an order of the Court of First Instance of Albay, denying his
petition:
a. Cancellation of original certificate of title No. RO-3848 (25322), issued in the name of Anatolio Buenconsejo,
Lorenzo Bon and Santiago Bon, and covering Lot No. 1917 of the Cadastral Survey of Tabaco, Albay, and
b. Issuance in lieu thereof, of a separate transfer certificate of title in his name.
2. Lot No. 1917 covered by Original Certificate of Title No. RO-3848 (25322) was originally owned in common by
Anatolio Buenconsejo to the extent of ½ undivided portion and Lorenzo Bon and Santiago Bon to the extent of the
other ½ (Exh. B)
3. Anatolio Buenconsejo's rights, interests and participation over the portion abovementioned were by a Certificate of
Sale executed by the Provincial Sheriff of Albay, transferred and conveyed to Atty. Tecla San Andres Ziga, awardee
in the corresponding auction sale conducted by said Sheriff
4. By a certificate of redemption issued by the Provincial Sheriff of Albay, the rights, interest, claim and/or or
participation which Atty. Tecla San Andres Ziga may have acquired over the property in question by reason of the
aforementioned auction sale award, were transferred and conveyed to the herein petitioner in his capacity as
Attorney-in-fact of the children of Anatolio Buenconsejo, namely, Anastacio Buenconsejo, Elena Buenconsejo and
Azucena Buenconsejo (Exh. C).
5. Petitioner Santos had redeemed the aforementioned share of Anatolio Buenconsejo, upon the authority of a special
power of attorney executed in his favor by the children of Anatolio Buenconsejo.
6. Relying upon this power of attorney and redemption made by him, Santos now claims to have acquired the share of
Anatolio Buenconsejo in the aforementioned Lot No. 1917;
7. As the alleged present owner of said share, Santos caused a subdivision plan of said Lot No. 1917 to be made, in
which the portion he claims as his share thereof has been marked as Lot No. 1917-A; and that he wants said
subdivision at No. 1917-A to be segregated from Lot No. 1917 and a certificate of title issued in his name exclusively
for said subdivision Lot No. 1917-A.
8. Lower court: ruled in favor of the respondents.

ISSUE: Whether or not petitioner Santo’s claim that he has acquired the share of Anatolio Buenconsejo in Lot No. 1917
relying upon a power of attorney and redemption made by him is tenable?

RULING: No! SC affirmed the lower court’s decision that petitioner's claim is clearly untenable, for three reasons:

a. Said special power of attorney authorized him to act on behalf of the children of Anatolio
Buenconsejo, and, hence, it could not have possibly vested in him any property right in his own
name; (
b. The children of Anatolio Buenconsejo had no authority to execute said power of attorney, because their
father is still alive and, in fact, he and his wife opposed the petition of Santos;
c. In consequence of said power of attorney (if valid) and redemption, Santos could have acquired no more
than the share pro indiviso of Anatolio Buenconsejo in Lot No. 1917, so that petitioner cannot — without
the conformity of the other co-owners (Lorenzo and Santiago Bon), or a judicial decree of partition issued
pursuant to the provisions of Rule 69 of the new Rules of Court (Rule 71 of the old Rules of Court) which
have not been followed By Santos — adjudicate to himself in fee simple a determinate portion of said Lot

Page 7
 No. 1917, as his share therein, to the exclusion of the other co-owners. CASE DIGEST
Inasmuch as the appeal is patently devoid of merit, the order appealed from is hereby affirmed, with treble cost
against petitioner-appellant Jose A. Santos y Diaz. It is so ordered.

Page 8
 CLASS RECITATION

69) ALBADEJO y CIA vs. PHILIPPINE REFINING CO.

CASE NUMBER: G.R. No. L-20726 PONENTE: Street, J.

DATE: December 20, 1923

FACTS:
It appears that Albaladejo y Cia. is a limited partnership,
organized in conformity with the laws of these Islands,
and having its principal place of business at Legaspi,
Albay. The firm was engaged in the buying and selling of
the products of the country, especially copra.
The Visayan Refining Co. is a corporation organized
engaged in operating its extensive plant at Opon, Cebu,
for the manufacture of coconut oil.
When the contract above referred to was originally made,
Albaladejo y Cia. apparently had only one commercial
establishment. After the Visayan Refining Co. had ceased
to buy copra, the supplies of copra already purchased by
the plaintiff were gradually shipped out and accepted by
\the Visayan Refining Co. In next eight or ten months the
accounts between the two parties were liquidated. The
last account rendered by the Visayan Refining Co. to the
plaintiff was for the month of April, 1921, and it showed a
balance of P288 in favor of the defendant.

On August 28, 1918, the plaintiff made a contract with the continued by tacit consent to govern their future relations
Visayan Refining Co., the material parts of which are as by the same agreement.
follows: (important provisions)

- The party of the first part (Albadejo) agrees and

binds itself to sell to the party of the second part
(Visayan Refining Co.) , and the party of the
second part agrees and binds itself to buy from
the party of the first part, for a period of one (1)
year

- During the continuance of this contract the party

of the second part will not appoint any other
agent for the purchase of copra in Legaspi, nor
buy copra from any vendor in Legaspi.

- The party of the second part will provide

transportation by sea to Opon, Cebu, for the
copra delivered to it by the party of the first part,
but the party of the first part must deliver such
copra to the party of the second part free on
board the boats of the latter's ships or on the
pier alongside the latter's ships.

Pursuant to this agreement the plaintiff bought copra

extensively for the Visayan Refining Co. for a year. At the
end of said year both parties found themselves satisfied
with the existing arrangement, and they therefore
Page 9
Under date of June 25, 1921, the plaintiff company CASE DIGEST
addressed a letter from Legaspi to the Philippine Refining
Co. (which had now succeeded to the rights and
liabilities of the Visayan Refining Co.), expressing its
approval of said account. In this letter no
dissatisfaction was expressed by the plaintiff as to
the state of affairs between the parties; but about six
weeks thereafter the present action was begun.

This action was instituted in the CFI Albay by Albaladejo

to recover a sum of money from the Philippine Refining
Co., as successor to the Visayan Refining Co., two
causes of action being stated in the complaint.

Upon hearing the cause, the trial judge absolved the

defendant from the first cause of action but gave
judgment for the plaintiff to recover the sum of
P49,626.68, with costs, upon the second cause of action.

The plaintiff appealed the first cause of action, and the

defendant appealed with respect to the action taken
upon the second cause of action. It results that, by the
appeal of the two parties, the decision of the lower
court is here under review.

ISSUE: Whether he defendant liable for the expenses

incurred by the plaintiff in keeping its organization intact
during the period now under consideration.

RULING: NO

Page 10

First cause of action: The alleged negligent failure of the
Visayan Refining Co. to provide opportune transportation
for the copra collected by the plaintiff and deposited for
shipment.
Upon consideration of all the facts revealed in evidence
(records of shipping), court found that the Visayan
Refining Co. had used reasonable promptitude in its
efforts to get out the copra from the places where it had
been deposited for shipment, notwithstanding occasional
irregularities due at times to the condition of the weather
as related to transportation by sea and at other times to
the inability of the Visayan Refining Co. to dispatch boats
to the more remote ports. This finding of the trial judge,
that no negligence of the kind alleged can properly be
imputed to the Visayan Refining Co., is in our opinion
supported by the proof.
The trial judge calls attention to the fact that it is
expressly provided in paragraph two of the contract that
the shrinkage of copra from the time of its delivery to the
party of the second part till its arrival at Opon should fall
upon the plaintiff, from whence it is to be interfered that
the parties intended that the copra should be paid for
according to its weight upon arrival at Opon regardless of
its weight when first purchased.
From what has been said it follows that the first cause of
action set forth in the complaint is not well founded, and
the trial judge committed no error in absolving the
plaintiff therefrom.
Second cause of action: Plaintiff seeks to recover the sum
of P110,000, the alleged amount expended by the plaintiff
in maintaining and extending its organization for Visayan
Refining Co.
As a basis for the defendant's liability in this respect it is
alleged that said organization was maintained and
extended at the express request, or requirement, of the
defendant, in conjunction with repeated assurances that
the defendant would soon resume activity as a purchaser
of copra.
SC: We note that in his letter of July 10, 1920, Mr. Day
suggested that if the various purchasing agents of the
Visayan Refining Co. would keep their organization intact,
the company would endeavour to see that they should
not lose by the transaction in the long run. These words
afford no sufficient basis for the conclusion, which the
trial judge deduced there from, that the defendant is
bound to compensate the plaintiff for the expenses
incurred in maintaining its organization. The
Page 11
CLASS RECITATION
correspondence sufficiently shows on its face that there
was no intention on the part of the company to lay a basis
for contractual liability of any sort; and the plaintiff must
have understood the letters in that light. The parties could
undoubtedly have contracted about it, but there was
clearly no intention to enter into contractual relation; and
the law will not raise a contract by implication against the
intention of the parties.
The inducement held forth was that, when purchasing
should be resumed, the plaintiff would be compensated
by the profits then to be earned for any expense that
would be incurred in keeping its organization intact. It is
needless to say that there is no proof showing that the
officials of the defendant acted in bad faith in holding out
this hope.
In the appellant's brief the contention is advanced that
the contract between the plaintiff and the
VisayanRefining Co. created the relation of principal and
agent between the parties, and the reliance is placed
upon article1729 of the Civil Code which requires the
principal to indemnify the agent for damages incurred in
carrying out the agency. Attentive perusal of the contract
is, however, convincing to the effect that the relation
between the parties was not that of principal and agent in
so far as relates to the purchase of copra by the plaintiff.
It is true that the Visayan Refining Co. made the plaintiff
one of its instruments for the collection of copra; but it is
clear that in making its purchases from the producers the
plaintiff was buying upon its own account
In paragraph three of the contract it is declared that
during the continuance of this contract the Visayan
Refining Co. would not appoint any other agent forthe
purchase of copra in Legaspi; and this gives rise indirectly
to the inference that the plaintiff was considered its
buying agent. But the use of this term in one clause of the
contract cannot dominate the real nature of the
agreement as revealed in other clauses, no less than in
the caption of the agreement itself.
In some of the trade letters also the various
instrumentalities used by the Visayan Refining Co. for the
collection of copra are spoken of as agents. But this
designation was evidently used for convenience; and it is
very clear that in its activities as a buyer the plaintiff was
acting upon its own account and not as agents of the
Visayan Refining Co. The title to all of the copra purchased
by the plaintiff undoubtedly remained in it until it was
delivered by way of subsequent sale to said company.
For the reasons stated we are of the opinion that no
liability on the part of the defendant is shown upon the
plaintiff's second cause of action, and the judgment of the
trial court on this part of the case is erroneous.
 70) THOMAS vs. PINEDA

CASE NUMBER: G.R. No. L- PONENTE: not indicated

2411
DATE: June 28, 1951

FACTS:
Thomas bought the bar and restaurant known as Silver Dollar Café at Plaza Sta. Cruz.
• He employed Pineda as a bartender-promoted to cashier and manager
• During Japanese occupation, to prevent the business and its property from falling into enemy hands, Thomas
made a fictitious sale to Pineda – fictitious sale was admitted by both parties;
2nd agreement which was a secret stating that the sale was fictitious
• Original building was destroyed by fire, Pineda was able to remove some furniture and a considerable qty of stocks
to a place of safety- a bar was opened on Calle Bambang-after 4 months it was transferred to the original location
• Thomas brought a CPA for the purpose of examining the books- Pineda threatened Thomas with a gun if
they persisted in their purpose. So Thomas filed a case and set up another bar
• 1st CoA- Thomas sought to compel an ACCOUNTING of Pineda’s operations during the time he was in control of the bar
- Pineda claims that there was a 3rd verbal agreement, the import of which was that he was to operate the business
with no liability other than to turn over to the plaintiff as the plaintiff would find it after the war
• 2nd CoA: ownership of Silver Dollar Café trade name – it appears that Pineda registered the business as his own

RULING:
• 1st CoA – valid
- Little or no weight can be attached to Pineda’s assertion .As sole manager with full power to do as his fancies
dictated; the defendant could strip the business naked of all its stocks, leaving the plaintiff holding the bag, as it
were, when the defendant's management was terminated. Unless Thomas was willing to give away his property and
its profits, no man in his right senses would have given his manager an outright license such as the defendant claims
to have gotten from his employer.

- The conclusion thus seems clear that the defendant owes the plaintiff an accounting of his management of the
plaintiff's business during the occupation. The exact legal character of the defendant's relation to the plaintiff
matters not a bit. It was enough to show, and it had been shown, that he had been entrusted with the possession
and management of the plaintiff's business and property for the owner's benefit and had not made an accounting.

- It was error for the court below to declare at this stage of the proceeding, on the basis of defendant's incomplete
and indefinite evidence, that there were no surplus profits

- Monies and food stuffs which the defendant said he had supplied the plaintiff and his daughters during the war are
appropriate items to be considered on taking account

-
Upon plaintiff’s release from the internment camp, he lost no time in looking for a site where he could open a saloon
The use of the old name suggested that the business was in fact an extension and continuation of the Silver Dollar Café
- Upon the reopening of the bar in the original place- lease was in the name of Thomas; calling cards saying Thomas is
Page 12
 CLASS RECITATION
the proprietor == defendant was only a manager

Page 13
• 2nd CoA- Thomas is the owner of the trade name
- In the fictitious bill of sale Pineda acknowledged Thomas’ ownership of the business
- Business cards: Thomas is the proprietor
- No abandonment because when Thomas set up a new saloon it used the same name

The most that can be said is that the plaintiff instructed Pineda to renew the registration of the trade-name and the
defendant understood the instruction as permission to make the registration in his favor
As legal proposition and in good conscience, the defendants registration of the trade name Silver Dollar Cafe must be
deemed to have been affected for the benefit of its owner of whom he was a mere trustee or employee.

"The relations of an agent to his principal are fiduciary and it is an elementary and very old rule that in regard to property
forming the subject matter of the agency, he is estopped from acquiring or asserting a title adverse to that of principal. His
position is analogous to that of a trustee and he cannot consistently, with the principles of good faith, be allowed to create in
himself an interest in opposition to that of his principal or cestuique trust. A receiver, trustee, attorney, agent or any other
person occupying fiduciary relations respecting property or persons utterly disabled from acquiring for his own benefit the
property committed to his custody for management.

The rule stands on the moral obligation to refrain from placing one's self in position which ordinarily excite conflicts between
self-interest at the expense of one's integrity and duty to another, by making it possible to profit by yielding to temptation

Page 14
 71) PALMA VS. CRISTOBAL

CASE NUMBER: G.R. No. L- PONENTE: Perfecto, J.

49219
DATE: December 11, 1946

FACTS:
 A parcel of a land located in Quesada Street, Tondo, Manila, covered by transfer certificate of title No. 31073 of the
Register of Deeds of Manila, issued in favor of petitioner Pablo D. Palma, is the subject of contention between the
parties.
o Petitioner sought, at first, to eject respondent Eduardo Cristobal Reyes from the land in question in a complaint
filed with the Municipal Court of Manila. As respondent raised the question of ownership, the complaint was
dismissed, and petitioner filed with the Court of First Instance of Manila the complaint which initiated this case,
petitioner praying that he be declared the owner of the land and that respondent be ordered to restore its
possession and to remove his house therefrom.
o The complaint was dismissed and petitioner brought the case to the Court of Appeals, where he again failed.
o The case is appealed by certiorari.
 In 1909, after registration proceedings under the provisions of Act No. 496, original certificate of title No. 1627
was issued in the names of petitioner and his wife Luisa Cristobal.
 In 1923, said certificate was cancelled and substituted by certificate of title No. 20968 by virtue of a decree issued by the
Court of First Instance of Manila in connection with Manila cadastre.
 It was later substituted by certificate of title No. 26704, also in the name of petitioner and his wife.
 After the wife’s death in 1922,a new certificate of title was issued in 1923 only in the name of the name of the petitioner,
substituted in 1928 by certificate of title No. 31073.
 The Court of Appeals, upon the evidence, concluded with the Court of First Instance of Manila that the parcel of land in
question is a community property held by petitioner in trust for the real owners (the respondent being an heir of one
of them), the registration having been made in accordance with an understanding between the co-owners, by reason
of the confidence they had in petitioner and his wife. This confidence, close relationship, and the fact that the co-
owners were receiving their shares in the rentals, were the reasons why no step had been taken to partition the
property.
 It was only after the death of Luisa Cristobal and petitioner had taken a second wife that trouble on religious matters
arose between petitioner and respondent, and it gives credence to the testimony of Apolonia Reyes and respondent to
the effect that Luisa, before her death, called her husband, the petitioner, and enjoined him to give her co-owners
their shares in the parcel of land; but respondent told her then not to worry about it, for it was more important to
them to have her cured of the malady that affected her. Petitioner answered his wife that she should not worry
because he would take care of the matter by giving the co-owners their respective shares.
 After Luisa Cristobal, petitioner’s wife, died in 1922, instead of moving for the partition of the property, considering
specially that petitioner had promised such a partition at the deathbed of the deceased, respondent appeared as
attorney for petitioner and prayed that a new certificate of title be issued in the name of said petitioner as the sole
owner of the property.

Petitioner assigns as first error of the Court of Appeals the fact that it considered the oral testimony adduced in behalf
of respondent sufficient to rebut the legal presumption that petitioner is the owner of the land in controversy. .
Page 10
In Severino vs. Severino (43 Phil. 343), this court declared that Affirming the said doctrine in Barretto vs. Tuason (50
Phil.

Page 11
888), the Supreme Court declared that In Palet vs. Tejedor (55 Phil. 790), it was declared that This right to recover is
sanctioned by section 55 of Act No. 496, as amended by Act No. 3322.

There is no showing why the conclusions of facts of the Court of Appeals should be disturbed, and upon said facts petitioner’s
first assignment of errors appears to be untenable in the light of law and of the decision of this court.
Petitioner alleged that the Court of Appeals erred in not holding

ISSUE: Whether the respondent is estopped from claiming that petitioner is not the absolute owner of the property in
question.

RULING: No
 The fact that respondent has been a party to the deception which resulted in petitioner’s securing in his name the
title to a property not belonging to him, is not valid reason for changing the legal relationship between the latter and
its true owners to such an extent as to let them lose their ownership to a person trying to usurp it.
 Respondent is not barred because his appearance as attorney for petitioner was not a misrepresentation which
would induce petitioner to believe that respondent recognized the former as the sole owner of the property in
controversy.
 Respondent’s appearance, as attorney for petitioner in 1923, was a consequence of the understanding, and
petitioner could not legitimately assume that it had the effect of breaking or reversing said understanding.
Lastly, it is contended by petitioner that, even conceding that the controverted property was owned in common by several
co-owners, yet the Court of Appeals erred in not holding that, as against respondent,

ISSUE: Whether petitioner had acquired absolute ownership of the property through prescription.

Upon the premise that the registration in 1909 in the name of petitioner and his wife, Luisa Cristobal, was in accordance with
an agreement among the co-owners, petitioner advances the theory that when he, upon the death of his wife in 1922,
caused the trust property to be registered in his sole name in 1923, and subsequently partitioned between himself and his
daughter, Ildefonsa Cristobal Ditangco, as heirs of the decedent, “he openly breached the agreement of 1909 as well as the
promise made to his dying wife of giving the co-owners their respective shares,” concluding that “that breach was an
assumption of ownership, and could be the basis of title by prescription.”

RULING No, Petitioner’s pretension of building his right to claim ownership by prescription upon his own breach of a trust
cannot be countenanced by any court, being subversive of generally accepted ethical principles.

 Petitioner held the property and secured its registration in his name in a fiduciary capacity, and it is elementary that
a trustee cannot acquire by prescription the ownership of the property entrusted to him.
 The position of a trustee is of representative nature. His position is the position of a cestui que trust.
 It is logical that all benefits derived by the possession and acts of the agent, as such agent, should accrue to the benefit
of his principal.
 The registration of the property in the name of the trustees in possession thereof, must be deemed to have been effected
for the benefit of the cestui que trust.
 whether or not there is bad faith or fraud in obtaining a decree with respect to a registered property, the same does not
belong to the person in whose favor it was issued, and the real owners be entitled to recover the ownership of the
property so long as the same has not been transferred to a third person who has acquired it in good faith and for a valuable
consideration.

Page 12
 72) VALERA VS. VELASCO

CASE NUMBER: G.R. No. L-

28050 DATE: March 13, 1928
PONENTE: VILLA-REAL, J

Doctrine: The filing of a complaint by an agent against his principal for the collection of a balance in his favor resulting from
the liquidation of the agency accounts between them, and his rendering of a final account of his operations, are equivalent to
an express renunciation of the agency and terminates the juridical relation between them.

FACTS:
 This is an appeal taken by Federico Valera from the judgment of the Court of First Instance of Manila dismissing his
complaint against Miguel Velasco, on the ground that he has not satisfactorily proven his right of action.
 By virtue of the powers of attorney, Exhibits X and Z, executed by the plaintiff on April 11, 1919, and on August 8, 1922,
the defendant was appointed attorney-in-fact of the said plaintiff with authority to manage his property in the
Philippines, consisting of the usufruct of a real property located of Echague Street, City of Manila.
 The defendant accepted both powers of attorney, managed plaintiff's property, reported his operations, and rendered
accounts of his administration; and on March 31, 1923 presented exhibit F to plaintiff, which is the final account of his
administration for said month, wherein it appears that there is a balance of P3,058.33 in favor of the plaintiff.
 The liquidation of accounts revealed that the plaintiff owed the defendant P1,100, and as misunderstanding arose
between them, the defendant brought suit against the plaintiff, civil case No. 23447 of this court. Judgment was
rendered in his favor on March 28, 1923, and after the writ of execution was issued, the sheriff levied upon the
plaintiff's right of usufruct, sold it at public auction and adjudicated it to the defendant in payment of all of his claim.

o Subsequently, on May 11, 1923, the plaintiff sold his right of redemption to one Eduardo Hernandez, for
the sum of P200 (Exhibit A). On September 4, 1923, this purchaser conveyed the same right of
redemption, for the sum of P200, to the plaintiff himself, Federico Valera (Exhibit C).
o After the plaintiff had recovered his right of redemption, one Salvador Vallejo, who had an execution
upon a judgment against the plaintiff rendered in a civil case against the latter, levied upon said right of
redemption, which was sold by the sheriff at public auction to Salvador Vallejo for P250 and was
definitely adjudicated to him. Later, he transferred said right of redemption to the defendant Velasco.
This is how the title to the right of usufruct to the aforementioned property later came to vest the said
defendant.

ISSUE: Whether the lower court erred in holding that one of the ways of terminating an agency is by the express or tacit
renunciation of the agent; and that the institution of a civil action and the execution of the judgment obtained by the agent
against his principal is but renunciation of the powers conferred on the agent;

RULING:

The lower court did not err. The fact that an agent institutes an action against his principal for the recovery of the balance in
Page 13
 his favor resulting from the liquidation of the accounts between them arising from the agency, and renders a final
account of his operations, is equivalent to an express renunciation of the agency, and terminates the juridical relation
between them.

Article 1732 of the Civil Code reads as

follows: Art. 1732. Agency is
terminated:
1. By revocation;
2. By the withdrawal of the agent;
3. By the death, interdiction, bankruptcy, or insolvency of the principal or of the
agent. And article 1736 of the same Code provides that:
Art. 1736. An agent may withdraw from the agency by giving notice to the principal. Should the latter suffer any
damage through the withdrawal, the agent must indemnify him therefore, unless the agent's reason for his
withdrawal should be the impossibility of continuing to act as such without serious detriment to himself.

 The misunderstanding between the plaintiff and the defendant over the payment of the balance of P1,000 due the latter,
as a result of the liquidation of the accounts between them arising from the collections by virtue of the former's
usufructuary right, who was the principal, made by the latter as his agent, and the fact that the said defendant brought suit
against the said principal on March 28, 1928 for the payment of said balance, more than prove the breach of the juridical
relation between them; for, although the agent has not expressly told his principal that he renounced the agency, yet
neither dignity nor decorum permits the latter to continue representing a person who has adopted such an antagonistic
attitude towards him.
 When the agent filed a complaint against his principal for recovery of a sum of money arising from the liquidation of the
accounts between them in connection with the agency, Federico Valera could not have understood otherwise than that
Miguel Velasco renounced the agency; because his act was more expressive than words and could not have caused any
doubt.
 In order to terminate their relations by virtue of the agency the defendant, as agent, rendered his final account on March
31, 1923 to the plaintiff, as principal.
 The defendant-appellee Miguel Velasco, in adopting a hostile attitude towards his principal, suing him for the collection
of the balance in his favor, resulting from the liquidation of the agency accounts, ceased ipso facto to be the agent of the
plaintiff-appellant, said agent's purchase of the aforesaid principal's right of usufruct at public auction held by virtue of an
execution issued upon the judgment rendered in favor of the former and against the latter, is valid and legal.
 The defendant-appellee, Miguel Velasco, having acquired Federico Valera's right of redemption from Salvador Vallejo, who
had acquired it at public auction by virtue of a writ of execution issued upon the judgment obtained by the said Vallejo
against the said Valera, the latter lost all right to said usufruct.
 The disagreements between an agent and his principal with respect to the agency, and the filing of a civil action by the
former against the latter for the collection of the balance in favor of the agent, resulting from a liquidation of the agency
accounts, are facts showing a rupture of relations, and the complaint is equivalent to an express renunciation of the
agency, and is more expressive than if the agent had merely said, "I renounce the agency."

Page 14
 73) CUI vs. CUI

CASE NUMBER: L-7041 PONENTE: J. Makalintal

DATE: August 31, 1964

FACTS:

1. The Hospicio is a charitable institution established by the spouses Don Pedro Cui and Doña Benigna Cui, now
deceased, "for the care and support, free of charge, of indigent invalids, and incapacitated and helpless persons." It
was incorporated under Act No. 3239 of the Philippine Legislature in 1925 and endowed with extensive properties
by the said spouses through a series of donations, principally the deed of donation executed in 1926.
2. Section 2 of Act No. 3239 gave the initial management to the founders jointly and, in case of their incapacity or
death, to "such persons as they may nominate or designate, in the order prescribed to them."
3. Don Pedro Cui died in 1926, while his widow died in 1929. The administration passed to Mauricio Cui and Dionisio
Jakosalem. The former died on 8 May 1931 and the latter on 1 July 1931.
4. On 2 July 1931 Dr. Teodoro Cui, only son of Mauricio Cui, became the administrator. Beginning 1932, a series
of controversies and court litigations ensued concerning the position of administrator.
5. Plaintiff Jesus Ma. Cui and defendant Antonio Ma. Cui are brothers, being the sons of Mariano Cui, one of the
nephews of the spouses Don Pedro Cui and Doña Benigna Cui. In 1960, the then incumbent administrator, Dr.
Teodoro Cui, resigned in favor of Antonio Ma. Cui pursuant to a "convenio" entered into between them. On
February 28, Antonio Ma. Cui took his oath of office. Jesus Ma. Cui, had no prior notice of either the "convenio" or of
his brother's assumption of the position.
6. Dr. Teodoro Cui died on 27 August and the plaintiff wrote a letter to the defendant demanding that the office be
turned over to him. The demand remained unheeded, the plaintiff filed the complaint. Romulo Cui later on
intervened, claiming a right to the same office, being a grandson of Vicente Cui, one of the nephews mentioned by
the founders of the Hospicio in their deed of donation.
7. As between Jesus and Antonio the main issue turns upon their respective qualifications to the position of
administrator. Jesus is the older and under equal circumstances would be preferred pursuant to section 2 of the
deed of donation. However, before the test of age may be, applied the deed gives preference to the one, among the
legitimate descendants of the nephews named, "que posea titulo de abogado, o medico, o ingeniero civil, o
farmaceutico, o a falta de estos titulos el que pague al estado mayor impuesto o contribucion."
8. What is being disputed is the meaning of the term "titulo de abogado." Jesus Ma. Cui holds the degree of Bachelor of
Laws from the University of Santo Tomas (Class 1926) but is not a member of the Bar, not having passed the
examinations. Antonio Ma. Cui is a member of the Bar and although disbarred by the Court but was reinstated by
resolution about two weeks before he assumed the position of administrator of the Hospicio.
9. The Court a quo, decied in favor of the plaintiff and held that the phrase "titulo de abogado," taken alone, means
that of a full-fledged lawyer, but that has used in the deed of donation and considering the function or purpose of
Page 15
the administrator, it should not be given a strict interpretation but a liberal one," and therefore means a law

Page 16
 degree or diploma of Bachelor of Laws.
10. Jesus Ma. Cui believed he was entitled to the office in as long ago as 1932. On January 26 of that year he filed
a complaint in quo warranto against Dr. Teodoro Cui, who assumed the administration of the Hospicio. Mariano
Cui, the plaintiff's father and Antonio Ma. Cui came in as intervenors. The case was dismissed by the Court of
First Instance upon a demurrer by the. Upon appeal to the Supreme Court from the order of dismissal, the case
was remanded. The plaintiff, did not prosecute the case as decided by the Court, but entered into an
arrangement whereby Teodoro Cui continued as administrator, Mariano Cui was named "legal adviser" and plaintiff
Jesus Ma. Cui accepted a position as assistant administrator.
11. The plaintiff tried to get the position by a series of extra-judicial maneuvers. However, the Commissioner to the
Secretary of Justice ruled that the plaintiff, not being a lawyer, was not entitled to the administration of the
Hospicio.
12. Defendant Antonio Ma. Cui was reinstated by this Court as member of the Bar, and succeeded Dr. Teodoro Cui
when he resigned as administrator pursuant to the "convenio" between them.

ISSUE & RULING:

WON the administrator should only have possession of the academic degree of Bachelor of Laws. NO.

The Court is of the opinion, that whether taken alone or in context the term "titulo de abogado" means not mere
possession of the academic degree of Bachelor of Laws but membership in the Bar after due admission, qualifying one for
the practice of law. In Spanish the word "titulo" is defined as "testimonies o instrumento dado para ejercer un empleo,
dignidad o profesion" and the word "abogado," as follows: "Perito en el derecho positivo que se dedica a defender en
juicio, por escrito o de palabra, los derechos o intereses de los litigantes, y tambien a dar dictmen sobre las cuestiones o
puntos legales que se le consultan (Id., p.5) A Bachelor's degree alone, conferred by a law school upon completion of certain
academic requirements, does not entitle its holder to exercise the legal profession. The English equivalent of "abogado" is
lawyer or attorney-at-law. This term has a fixed and general signification, and has reference to that class of persons who
are by license officers of the courts, empowered to appear, prosecute and defend, and upon whom peculiar duties,
responsibilities and liabilities are devolved by law as a consequence.

2) WON Jesus Cui is disqualified as being an administrator. YES.

He only has the academic degree of Bachelor of Laws. The founders of the Hospicio de San Jose de Barili provided in the
deed of donation that if not a lawyer, the administrator should be a doctor or a civil engineer or a pharmacist, in that order;
or failing all these, should be the one who pays the highest taxes among those otherwise qualified. A lawyer, first of all,
because under Act No. 3239 the managers or trustees of the Hospicio shall "make regulations for the government of said
institution (Sec. 3, b); shall "prescribe the conditions subject to which invalids and incapacitated and destitute persons may
be admitted to the institute" (Sec. 3, d); shall see to it that the rules and conditions promulgated for admission are not in
conflict with the provisions of the Act; and shall administer properties of considerable value — for all of which work, it is to
be presumed, a working knowledge of the law and a license to practice the profession would be a distinct asset.
3) WON Antonio Cui is entitled as administrator despite his past disbarment. YES.

It is argued that although the latter (Antonio) is a member of the Bar he is nevertheless disqualified by virtue of paragraph
3 of the deed of donation, which provides that the administrator may be removed on the ground, among others, of
ineptitude in the discharge of his office or lack of evident sound moral character. Reference is made to the fact that the
defendant was disbarred by this Court in1957 for immorality and unprofessional conduct. It is also a fact, however, that he
was reinstated in 1960, before he assumed the office of administrator. His reinstatement is a recognition of his moral
rehabilitation, upon proof no less than that required for his admission to the Bar in the first place.

As far as moral character is concerned, the standard required of one seeking reinstatement to the office of attorney cannot
be less exacting than that implied in paragraph 3 of the deed of donation as a requisite for the office which is disputed in
this case. When the defendant was restored to the roll of lawyers the restrictions and disabilities resulting from his
previous disbarment were wiped out.

Page 17
This action must fail on one other ground: it is already barred by lapse of time amounting the prescription or laches. Under
Section 16 of Rule 66, this kind of action must be filed within one (1) year after the right of plaintiff to hold the office
arose.

4) WON the action of the plaintiff for administrator has prescribed. YES.

The failure of the plaintiff to prosecute his claim judicially after this Court decided the first case of Cui v. Cui in 1934
remanding it to the trial court for further proceedings; his acceptance instead of the position of assistant administrator,
allowing Dr. Teodoro Cui to continue as administrator and his failure to file an action in quo warranto against said Dr. Cui
after 31 July 1956, when the appeal in Civil Case No. R-1216 of the Cebu Court was dismissed upon motion of the parties
precisely so that the conflicting claims of the parties could be ventilated in such an action — all these circumstances
militate against the plaintiff's present claim in view of the rule that an action in quo warranto must be filed within one
year after the right of the plaintiff to hold the office arose. The excuse that the plaintiff did not file an action against Dr.
Teodoro Cui after 31 July 1956 because of the latter's illness did not interrupt the running of the statutory period. And the
fact that this action was filed within one year of the defendant's assumption of office in September 1960 does not make
the plaintiff's position any better, for the basis of the action is his own right to the office and it is from the time such right
arose that the one-year limitation must be counted, not from the date the incumbent began to discharge the duties of said
office.

5) WON Romulo Cui is entitled as administrator. NO.

Now for the claim of intervenor and appellant Romulo Cui. This party is also a lawyer, grandson of Vicente Cui, one of the
nephews of the founders of the Hospicio mentioned by them in the deed of donation. He is further, in the line of
succession, than defendant Antonio Ma. Cui, who is a son of Mariano Cui, another one of the said nephews. The deed of
donation provides: "a la muerte o incapacidad de estos administradores (those appointed in the deed itself) pasara a una
sola persona que sera el varon, mayor de edad, que descienda legitimamente de cualquiera de nuestros sobrinos legitimos
Mariano Cui, Mauricio Cui, Vicente Cui, Victor Cui, y que posea titulo de abogado ... En igualdad de circumstancias, sera
preferido el varon de mas edad descendiente de quien tenia ultimamente la administration." Besides being a nearer
descendant than Romulo Cui, Antonio Ma. Cui is older than he and therefore is preferred when the circumstances are
otherwise equal. The intervenor contends that the intention of the founders was to confer the administration by line and
successively to the descendants of the nephews named in the deed, in the order they are named. Thus, he argues, since the
last administrator was Dr. Teodoro Cui, who belonged to the Mauricio Cui line, the next administrator must come from the
line of Vicente Cui, to whom the intervenor belongs. This interpretation, however, is not justified by the terms of the deed of
donation.

IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from is reversed and set aside, and the complaint
as well as the complaint in intervention are dismissed, with costs equally against plaintiff-appellee and intervenor-
appellant.

Page 18
 74) ALLIED FREE WORKER’S UNION [PLUM] vs. COMPANIA MARITIMA

CASE NUMBER: L-22971 PONENTE: Bengzon, J.P

DATE: January 31, 1967

FACTS:
1. MARITIMA is a local corporation engaged in the shipping business. Teves is its branch manager in the port of Iligan
City and AFWU is a duly registered legitimate labor organization with 225 members.
2. On August 11, 1952, MARITIMA, through Teves, entered into a CONTRACT with AFWU to do and perform all
the work of stevedoring and arrastre services of all its vessels or boats calling in the port of Iligan City, beginning
August 12, 1952.
3. During the first month of the existence of the CONTRACT, AFWU rendered satisfactory service. So, MARITIMA,
through Teves, verbally renewed the same.
4. The harmonious relations between MARITIMA and AFWU lasted up to the latter part of 1953 when the former
complained to the latter of unsatisfactory and inefficient service by the laborers doing the arrastre and stevedoring
work. This deteriorating situation was admitted as a fact by AFWU's president.
5. To remedy the situation since MARITIMA's business was being adversely affected -Teves was forced to hire extra
laborers from among "stand-by" workers not affiliated to any union to help in the stevedoring and arrastre work.
The wages of these extra laborers were paid by MARITIMA through separate vouchers and not by AFWU. Moreover,
said wages were not charged to the consignees or owners of the cargoes.
6. On July 23, 1954, AFWU presented to MARITIMA a written proposal for a collective bargaining agreement. This
demand embodied certain terms and conditions of employment different from the provisions of the CONTRACT. No
reply was made by MARITIMA.
7. AFWU sued MARITIMA for unfair labor practice saying that MARITIMA refused to bargain collectively. CIR dismissed
the case on the ground that it has no jurisdiction over the case.

ISSUES:
1. Whether or not Maritima is can be considered an employer of the members of AFWU? NO.
2. Whether or not AFWU is an agent of Maritima?

NO. RULING:

1. There is no any direct employment relationship between MARITIMA and the laborers. The latter have no separate
individual contracts with MARITIMA. In fact, the court a quo found that it was AFWU that hired them. Their only
possible connection with MARITIMA is through AFWU which contracted with the latter. Hence, they could not
Page 19
 possibly be in a better class than AFWU which dealt with MARITIMA.

a. Under the CONTRACT, AFWU was an independent contractor of MARITIMA.

i. The petitioner union operated as a labor contractor under the so-called "cabo" system has a
complete set of officers and office personnel and its organizational structure.

ii. The payrolls where laborers are listed and paid were prepared by the union itself without the
intervention or control of the respondent company and/or its agent at. The respondent never had
any knowledge of the individual names of laborers and/or workers listed in the union payroll or in
their roster of membership.

iii. The union engaged the services of their members in undertaking the work of arrastre and
stevedoring geither to haul shippers' goods from their warehouses to the MARITIMA boat or from
the boat to the different consignees. The charges for such service were known by the union and
collected by them through their bill collector, who are employees of the union and not of the
respondent. The respondent had no intervention whatsoever in the collection of those charges.

iv. The union members who were hired by the union to perform arrastre and stevedoring work on
respondents' vessels at Iligan port were being supervised and controlled by the general foreman of
the petitioner union or by any union assistant when performing arrastre and/or stevedoring work
aboard vessels of the Compañia MARITIMA. There were no instances where offices and employees
of the respondent Compañia MARITIMA and/or its agent had interferred in the giving of
instructions to the laborers performing the arrastre and/or stevedoring work.

b. It is true that MARITIMA admits that it did not answer AFWU's proposal for a collective bargaining
agreement. From this it does not necessarily follow that it is guilty of unfair labor practice. Under the law
the duty to bargain collectively arises only between the "employer" and its "employees". Where neither
party is an ''employer" nor an "employee" of the other, no such duty would exist. Needless to add, where
there is no duty to bargain collectively the refusal to bargain violates no right.

c. The facts as found by the court a quo strongly indicate that it is AFWU itself who is the "employer" of those
laborers. The facts very succinctly show that it was AFWU, through its officers, which (1) selected and hired
the laborers, (2) paid their wages, (3) exercised control and supervision over them, and (4) had the power
to discipline and dismiss them. These are the very elements constituting an employer-employee
relationship.

2. An agent can not represent two conflicting interests that are diametrically opposed. And that the cases sought to be
relied upon did not involve representatives of opposing interests.

Page 20
 75) FAR EASTERN EXPORT & IMPORT CO, vs. LIM TECK SUAN

CASE NUMBER: L-7144 PONENTE: Montemayor, J.

DATE: May 31, 1955
and sale?
FACTS:

 Ignacio Delizalde, an agent of the Far Eastern Export RULING: One of purchase and sale
& Import Company, went to the store of Lim Teck  SC agreed with the CA that the facts in this case are
Suan in Manila and offered to sell textile. very similar to those in the Velasco case.
 Having arrived at an agreement with Bernardo Lim,
General Manager of Lim Teck Suan, Delizalde o In the Velasco case, Universal Trading contends
returned with a buyer’s order. that it merely acted as agent for Velasco and
 Suan established a letter of credit in favour of could not be held responsible for the
Frenkel International Corporation through HSBC. substitution of Blended Whisky for Bourbon
 The textile arrived and was received by Suan, but Whisky.
complained to Far Eastern of the inferior quality of
the textile.
 Upon the instruction of Far Eastern, Suan deposited
the goods in a warehouse and withdrew the same
and was offered for sale. The net direct loss is now
being claimed against Far Eastern.
 The defense set up is that Far Eastern only acted as a
broker in this transaction.
 The lower court acquitted Far Eastern. o The Court held that the transaction was
 CA reversed the judgment, basing its decision of purchase and sale and ordered the defendant
reversal on the case of Jose Velasco v. Universal to refund his deposit with legal interest.
Trading where the transaction therein involved was
found by the court to be one of purchase and sale  Where a foreign company has an agent here selling
and not of brokerage or agency. its goods and merchandise, that same agent could
not very well act as agent for local buyers, because
ISSUE: Was the transaction one of agency that will the interests of his foreign principal and those of the
exonerate Far Eastern from liability, or one of purchase buyer would be in direct conflict.
Page 21
o He could not serve two masters at the
same

Page 22
 time.
o Far Eastern, being an agent of Frenkel, could
not have acted as an agent or broker for Suan.
 The transaction entered into by Far Eastern
with Suan is one of purchase and sale.
o Far Eastern acted as agent for Frenkel
International Corporation, presumably the
supplier of the textile sold.
o Suan according to the first part of the
agreement is said merely to be
commissioning Far Eastern to procure for him
the merchandise in question.
o The price of the merchandise bought was paid
for by Suan by means of an irrevocable letter
of credit opened in favour of the supplier,
Frenkel International Corporation.
o The agreement speaks of the items involved as
sold, and the sale was even confirmed by Far
Eastern.
o Far Eastern dealt directly with Suan without
expressly indicating or revealing the principal.
o There was no privity of contract between the
buyer and supplier.
o No commission or monetary consideration
was paid or agreed to be paid by the buyer to
export company – proof that there was no
agency or brokerage, and that the profit of
the latter was undoubtedly the difference
between the price listed to the buyer and the
net or special price quoted to the seller by the
supplier.

76) NIELSON & CO., INC. vs LEPANTO CONSOLIDATED MINING CO.

CASE NUMBER: L-21601 PONENTE: Zaldivar, J.

DATE: December 28, 1968

FACTS:

 Nielson & Company, Inc. and Lepanto Consolidated Mining Company entered into a management contract.
o Nielson had agreed, for a period of five years, with the right to renew for a like period, to explore, develop
and operate the mining claims of Lepanto, and to mine, or mine and mill, such pay ore as may be found and
to market the metallic products recovered therefrom which may prove to be marketable, as well as to
render for Lepanto other services specified in the contract.
o Nielson was to take complete charge, subject at all times to the general control of the Board of Directors of
Lepanto, of the exploration and development of the mining claims, of the hiring of a sufficient and
competent staff and of sufficient and capable laborers, of the prospecting and development of the mine, of
the erection and operation of the mill, and of the benefication and marketing of the minerals found on the
mining properties.
o Nielson was also to act as purchasing agent of supplies, equipment and other necessary purchases by
Lepanto, but no purchase shall be made without the prior approval of Lepanto and no commission shall be
claimed or retained by Nielson on such purchase.
o The principal and paramount undertaking of Nielson under the management contract was the operation
and development of the mine and the operation of the mill. All the other undertakings mentioned in the
contract are necessary or incidental to the principal.
o In the performance of this principal undertaking, Nielson was not in any way executing juridical acts for
Lepanto.
 Lepanto terminated the contract in 1945, 2 years before its expiration, when it took over and assumed
exclusive management of the work previously entrusted to Nielson under the contract.
 Lepanto finally maintains that Nielson as an agent is not entitled to damages since the law gives to the principal the
right to terminate the agency at will.

ISSUE: Was the management contract entered into by and between Nielson and Lepanto a contract of agency such that it has
Page 23
the right to revoke and terminate the contract at will, or a contract of lease of services?

Page 24
RULING: Contract of Lease of Services

 The management contract was one of contract of lease of services and not a contract of agency.
 In both agency and lease of services, one of the parties binds himself to render some service to the other
party. Agency, however is distinguished from lease of work or services in that:
o The basis of agency is representation, while in the lease of work or services, the basis is employment.

77) SHELL COMPANY OF THE PHILS., LTD. vs. FIREMEN’S INS. OF NEWARK, N.J.

CASE NUMBER: L-8169 PONENTE: Padilla, J.

DATE: January 29, 1957

FACTS: favor of the respondent-insurance companies.

1. A Plymounth car, owned by Salvador Sison, was
brought by his son, Perlito Sison to the Shell
Gasoline and Service Station in Manila for washing,
greasing and spraying.
2. The operator of the station agreed to do service
upon payment of P 8.00
3. The car was placed on a hydraulic lifter under the
direction of the personnel of the station.
4. According to the testimony of son Perlito, the car
was raised up to 6 feet high. After it was washed and
greased, the grease men cannot reach the
ungreased portion underneath the vehicle so they
loosen the lifter a few feet lower. Because of this,
the car swayed and for a few second, it fell.
5. This was immediately reported to the Manila
Adjustor Company, the adjustor of respondent
insurance companies.
6. As inspected by Mr. Baylon, the damaged car was
taken to the repair shop and it was restored to
running condition after repairs amounting to P
1,651.38.
7. Because the insurance companies paid for the
damages, respondent Salvador Sison made
assignments of his rights to recover damages in

Page 25
8. However, according to the counter-statement of
facts by defendant Porfirio de la Fuente, the
operator of Shell gasoline –Manila, the ff tasks were
done by the ff people:
 Job of washing and greasing – defendant
Porfirio de la Fuente through his two
employees:
o Alfonso Adriano – grease man
o De los Ryees – helper and washer
 Respondent de la Fuente denied negligence
in the operation of the lifter
9. The insures and the owner of the car brought an
action against petitioner Shell Company and de la
Fuente to recover the sum of P 1, 651. 38 from
them jointly and severally.
10. Decision of CFI: Dismissed complaint
11. Decision of CA: reversed decision of CFI; Shell must
pay insurance companies the amount P 1,651. 38
with legal interest.

 The car fell as a result of the jerking and swaying of

the lift when the valve was released and that the
jerking was due to some accident and unforeseen
shortcoming of the mechanism itself.
 Reasoning of CA: De la Fuente is NOT an independent
contractor BUT an AGENT of petitioner Shell

Page 26

o Respondent de la Fuente, the operator of the
gasoline and service station was the AGENT of the
petitioner Shell Company of the Philippines, Ltd.
o Facts which show that de la Fuente is a mere agent:
 The operator, de la Fuente, owned his position to
the company and the company could remove
him or terminate his services at will
 The service station belonged to the company and
bore its trade name and the operator sold only
the products of the company
 The equipment used by the operator belonged to
the company and were just loaned to the
operator and the company took charge of their
remain and maintenance
 An employee of the company supervised the
operator and conducted periodic inspection of
the company’s gasoline and service station, etc.
ISSUE: WON petitioner Shell should be liable for the acts
of an agent or his employee acting within the scope of his
authority?
RULING: YES. The breach of the undertaking by the agent
(defendant de la Fuente) is one for which the principal
(Shell) is answerable. Decision: Judgment under review is
AFFIRMED. Costs against petitioner
1. Rule: As the act of the agent or his employees acting
within the scope of his authority is the act of the
principal, the breach of the undertaking by the agent
is one for which the principal is answerable.
2. The petitioner-company undertook to "answer and
see to it that the equipments are in good running
order and usable condition;"
3. Also, the CA found that the Company's mechanic
failed to make a thorough check up of the hydraulic
lifter and the check up made by its mechanic was
"merely routine" by raising "the lifter once or twice
and after observing that the operator was
satisfactory, he (the mechanic) left the place."
4. The latter was negligent and the company must
answer for the negligent act of its mechanic which
was the cause of the fall of the car from the hydraulic
lifter.

78) SEVILLA VS. COURT OF APPEALS

CASE NUMBER: L-41182-3 PONENTE: SARMIENTO, J.

DATE: APRIL 15, 1988

FACTS:
1. Mrs. Segundina Noguera leased her premises located at Ermita, Manila to Tourist World Service, Inc. (TWSI),
represented by Eliseo Canilao, for the latter’s use as branch office.
2. In the said contract Mrs. Lina Sevilla held herself solidarily liable with TWSI for the prompt payment of the monthly
rental agreed on.
3. When the branch office was opened, the same was run by petitioner Mrs. Sevilla, who was designated as branch
manager by TWSI. For any fare bought in on the efforts of Mrs. Sevilla,, 4% was to go her and 3% was to be withheld
by TWSI
4. In November 1961, TWSI was allegedly informed that Mrs. Sevilla was connected with a rival travel firm. Since the
branch office was losing, TWSI considered closing it down. The firm’s board of directors issued two resolutions; the first
abolishing the office of manager of the Ermita Branch Office and the second, authorizing the corporate secretary to
receive the property of TWSI in said branch
5. In January 1962, the lease contract to use the premises as branch office was terminated. In June 1962, the Corporate
Secretary went over to the office to comply with the mandate of the resolutions. Finding the premises locked and
unable to contact Mrs. Sevilla, he padlocked the premises to protect the interests of TWSI
6. As such, petitioners Spouses Sevilla filed a complaint against respondents TWSI, Canilao and Noguera, praying for
mandatory preliminary injunction. Petitioners claim that Mrs. Sevilla’s relationship with TWSI was one of joint business
venture and notone of employment.
7. In its answer, TWSI contend that Mrs. Sevilla was its employee and as such was designated manager.
8. The trial court held for the private respondents. It ruled that TWSI, being the true lessee, has the privilege to terminate
the lease and padlock the premises. It also held that Mrs. Sevilla was a mere employee of TWSI and that she was bound
by the act of her employer.
9. The Court of Appeals affirmed said decision, Hence, the instant petition.
Page 27
ISSUE: WON there is a contract of agency between respondent-principal TWSI and petitioner Sevilla? If yes, should

Page 28
principal TWSI be liable for damages for its unwarranted revocation of the contract of agency?
 YES for both.

Decision: Decision of CA is REVERSED and SET ASIDE. Costs against respondent TWSI

RULING:
1. This case involves a contract of Agency. There is neither joint venture between nor partnership TWSI and Mrs. Sevilla
 The relationship of said parties is one that of a principal and an agent.
 Case at bar:

o Petitioner Sevilla agreed to man the Ermita office of respondent TWSI based on a contract of agency.
o It is the essence of this contract that the agent renders services in “representation or on behalf of another”
o Sevilla solicited airline fares but she did so for and on behalf of her principal TWSI. As compensation, she received
4% of the proceeds in the concept of commissions. Sevilla pre-assumed her principal’s authority as owner of the
business undertaking. Considering the facts, this case involves a principal-agent relationship rather than a joint
management or partnership.
o But unlike simple grants of a power of attorney, the agency that the Court here by declares to be compatible with
the intent of the parties cannot be revoked at will.
o The reason is that it is an agency coupled with an interest, the agency having been created for mutual interest of
the agent and the principal.
o In this case, the agency cannot be revoked at the pleasure of the principal. This unwarranted revocation of the
contract of agency entitles petitioner Sevilla to damages
 Respondent TWIS is liable for P 25,000 moral damages, P 10,000 exemplary damages, P 5,000
nominal damages and/or temperate damages.

Other issues:

2. No Employer-Employee Relationship between TWSI and Mrs. Sevilla.

 There has been no uniform test to determine the existence of an employer-employee relation.
 In general, The Court has relied in the so-called control test, “where the person for whom the services are
performed reserves a right to control not only the end to be achieved but also the means to be used in reaching
such end.”
 Case at bar:
o The records will show that the petitioner, Lina Sevilla, was not subject to control by the private
respondent Tourist World Service, Inc., either as to the result to the means used in connection
therewith. In the first place, under the contract of lease covering the Tourist Worlds Ermita office, she
had bound herself in solidum as and for rental payments.
o Also, when the branch office was opened, the same was run by Mrs. Sevilla payable to TWSI. It cannot
be said that she was under the control of TWSI “as to the means used”. She obviously relied on her
own capabilities
o Sevilla was also not in the company’s payroll. She retained commissions based on her booking successes
and it’s not based on a fixed salary
 A true employee cannot be made to part with his own money in pursuance of his employer’s business, or
otherwise, assume any liability thereof. In that event, the parties must be bound by some other relation, but
certainly not employment.

Page 29
 79) LIM vs. PEOPLE

CASE NUMBER: G.R. No. L- PONENTE: RELOVA, J

34338
DATE: November 21, 1984

FACTS:

1. Lourdes Lim went to the house of Maria de Guzman and proposed to sell the latter’s tobacco.
2. Maria agreed with the proposal—hence the execution of a receipt manifesting that Lourdes received 615 kilos of
tobacco to be sold at P1.30 per kilo, the overprice for which would be received by Lourdes.
3. The receipt also states that the proceeds will be given to Mariaas soon as it was sold.
4. However, Lourdes paid only P240, despite repeated demands.
5. Thus, Maria filed a complaint, and Lourdes was found guilty of estafa. (Estafa is present where contract to
sell constituted another as mere agent)
6. Lourdes argued that the receipt was a “contract of sale” and not a “contract of agency to sell.”

ISSUE: Is Lourdes’ argument tenable?

RULING: NO.

The contract was not a contract of sale because there was no transfer of ownership of the goods to Lourdes. Instead,
the agreement was a contract of agency to sell for it constituted Lourdes as agent with the obligation to give the proceeds of
the sale to Maria as soon as the same was sold.

The obligation was immediately demandable as soon as the tobacco was disposed of. Consequently, there is no need
Page 30
for the court to fix the duration of the obligation, as contended by Lourdes.

Page 31
 80) SAN DIEGO, SR. vs. NOMBRE

CASE NUMBER: G.R. No. L- PONENTE: PAREDES, J.:

19265
DATE: May 29, 1964

FACTS:
1. While being the judicial administrator of the intestate estate subject of Special Proceeding 7279, AdeloNombre
leased one of the properties (fishpond) of the said estate to Pedro Escanlar for 3 years without approval of the
court.
2. When Nombre was removed as judicial administrator, he was substituted by SofronioCampillanos. Campillanos filed
a motion asking for authority to execute a lease contract of the same fishpond in favour of Moises San Diego.This
motion was granted on the ground that the contract of lease entered into between Nombre and Escanlar was void
for want of judicial authority.
3. Nombre and Escanlar appealed this order to the Court of Appeals, which reversed the same order.
4. Aggrieved, San Diego appealed to the Supreme Court.

ISSUE: San Diego raised the following legal questions:

1. Whether a judicial administrator can validly lease property of the estate without prior judicial authority
and approval, and
2. Whether the provisions of the New Civil Code on Agency (referring specifically to par. 8 of Article 1878) should
apply to judicial administrators.

RULING:
Page 32
 Administrator has the power of administering the estate of the deceased person. He may, therefore, exercise all acts
of administration without special authority of the court. For instance, he may lease the property without prior approval
from

Page 33
the court, since leasing has been considered an act of administration.
Par. 8 of Article 1878 states that “Special powers of attorney are necessary” to “lease any real property to
another person for more than one (1) year.”This provision, according to San Diego, is a limitation to the right of a judicial
administrator to lease real property without prior judicial authority if it exceeds one (1) year. However, the same argument
falls becauseprovisions on Agency do not apply to judicial administrators.
A judicial administrator is appointed by the court. He is not only the representative of the court, but also the heirs
and creditors of the estate. Before conducting his duties, he is required to file a bond. His actions are subject to specific
provisions of law and orders of the appointing court. These circumstances are not true in case of agency.

81) DELA PENA VS. HIDALGO

CASE NUMBER: G.R. No. L-5486 PONENTE: TORRES, J.

DATE: August 17, 1910

FACTS:
1. Before Jose de la Peña y Gomiz embarked for Spain, on November 12, 1887, he executed a power of attorney
in favor of Federico Hidalgo, Antonio L. Rocha, Francisco Roxas and Isidro Llado, so that, as his agents, they
might represent him and administer various properties he owned and possessed in Manila.
2. After Federico Hidalgo had occupied the position of agent and administrator of De la Peña's property, he wrote to
the latter requesting him to designate a person who might substitute him in his said position in the event of his
being obliged to absent himself from the country.
 one of those appointed in the said power of attorney had died and the others did not wish to take charge of
the administration of their principal's property.
3. Hidalgo stated that Peña y Gomiz, did not even answer his letters, to approve or object to the former's accounts, and
did not appoint or designate another person who might substitute him.
4. For reasons of health and by order of his physician, Federico Hidalgo was obliged to embark for Spain, and, on
preparing for his departure, he rendered the accounts of his administration by letter of the date of March 22, 1894,
addressed to his principal, Peña y Gomiz.
5. In this letter the defendant informed the dela Pena of the his intended departure from this country and of his having
provisionally turned over the administration of the said property to his cousin, Antonio Hidalgo, upon whom he
had conferred a general power of attorney.He added thatin case that this was not sufficient, that Peña send to
Antonio Hidalgo a new power of attorney.
6. TC concluded that despite the denial, the was sent to, and was received by Jose de la Peña y Gomiz, during his
Page 34
lifetime and that the constituent he was informed of the departure of his agent of the latter's having turned over the

Page 35
 administration of the property to Antonio Hidalgo, and of his agent's the defendant's petition that he send a new
power of attorney to the substitute.

ISSUE:
(1) WON Federico had renounced his agency
(2) WON Federico can be held liable with the wrongful administration of the subsequent agents

RULING:

1. YES

Federico had definitely renounced his agency was duly terminated, according to the provisions of article 1732 of the Civil
Code, because, althoughthe word "renounce" was not employed in connection with the agency or power of attorney
executed in his favor, yet when the agent informs his principal that for reasons of health and by medical advice he is about
to depart from the place where he is exercising his trust and where the property subject to his administration is situated,
abandons the property, turns it over a third party, without stating when he may return to take charge of the
administration, renders accounts of its revenues up to a certain date, December 31, 1893, and transmits to his principal a
general statement which summarizes and embraces all the balances of his accounts since he began to exercise his agency
to the date when he ceased to hold his trust, and asks that a power of attorney in due form in due form be executed and
transmitted to another person who substituted him and took charge of the administration of the principal's property, it is
then reasonable and just to conclude that the said agent expressly and definitely renounced his agency, and it may not be
alleged that the designation of Antonio Hidalgo to take charge of the said administration was that of a mere proceed lasted
for more than fifteen years, for such an allegation would be in conflict with the nature of the agency.

In permitting Antonio Hidalgo to administer his property in this city during such a number of years, it is inferredthatthe
deceased consented to have Antonio Hidalgo administer his property, and in fact created in his favor an implied agency, as
the true and legitimate administrator.

Antonio Hidalgo administered the aforementioned property of De la Peña y Gomiz, not in the character of business manager,
but as agent by virtue of an implied agency vested in him by its owner who was not unaware of the fact, who knew perfectly
well that the said Antonio Hidalgo took charge of the administration of that property on account of the obligatory absence of
his previous agent for whom it was an impossibility to continue in the discharge of his duties.

**Difference between agency and business management:

The implied agency is founded on the lack of contradiction or opposition, which constitutes simultaneous agreement on the
part of the presumed principal to the execution of the contract, while in the management of another's business there is no
simultaneous consent, either express or implied, but a fiction or presumption of consent because of the benefit received.

In the power of attorney executed by Peña y Gomizin favor of Federico Hidalgo, no authority was conferred upon the latter
by his principal to substitute the power or agency in favor of another person; wherefore the agent could not, by virtue of the
said power of attorney, appoint any person to substitute or relieve him in the administration of the principal's property, for
the lack of a clause of substitution in the said instrument authorizing him so to do.

HOWEVER, from the time of that notification the agent who, for legitimate cause, ceased to exercise his trust, was free and
clear from the results and consequences of the management of the person who substituted him with the consent, even only
a tacit one, of the principal, inasmuch as the said owner of the property could have objected to could have prohibited the
continuance in the administration thereof, of the party designated by his agent, and could have opportunely appointed
another agent or mandatory of his own confidence to look after his property and if he did not do so, he is obliged to abide
by the consequences of his negligence and abandonment and has no right to claim damages against his previous agent, who
complied with his duty and did all that he could and ought to have done, in accordance with the law.

Page 36
2. NO

If the defendant Federico is not responsible for the results of the administration of said property administered by Antonio
Hidalgo during the second period before referred to, neither is he responsible for that performed during the third period by
Francisco Hidalgo, inasmuch as the latter was not even chosen when Francisco Hidalgo took charge of Peñas' property that
had been turned over to him by Antonio Hidalgo. Hence, the defendant can in no manner be obliged to pay to the plaintiff
any sum that may be found owing by Francisco Hidalgo.

82) Conde vs. Court of Appeals, 119 SCRA 245

CASE NUMBER:
DATE:
PONENTE:
FACTS:
ISSUE:
RULING:

Page 37
 83) HARRY E. KELLER ELEC. CO. vs. RODRIGUEZ

CASE NUMBER: 19001 PONENTE: Johns, J.

DATE: November 11, 1922

FACTS:
 this is a case filed by harry keeler, an electric co. which sold a mathews electric plant to rodriguez.
 harry keeler co. authorized ac montelibano to find buyers for the mathews electric plant.
 montelibano informed harry that he found a buyer in iloilo.
 harry then shipped the electric plant to iloilo, which was then installed by cenar
 cenar, the mechanic of harry keeler, testified that he in fact presented a bill to rodriguez.
 when he presented this bill, rodriguez informed him that payment would just be made in manila.
 allegedly, rodriguez already made payment to montelibano.
 when harry wanted to collect the 2500 pesos from rodriguez, rodriguez said that he already paid montelibano.
 a case for collection was the filed by harry against rodriguez
 the lower court ruled in favor of rodriguez.
 the lower court said that:
1.) that the bill was given to montelibano for collection
2.) that harry represented montelibano as an agent authorized to collect.

ISSUE: Was the lower court correct in ruling that montelibano was an agent of harry keeler authorized to make collection?

Page 38
RULING: NO, the lower court ruling is hereby reversed!!!
 in the receipt presented by rodriguez(which was the receipt given by montelibano) there was no showing that
montelibano was an agent
 it also did not contain that montelibano had authority to receive money
 payment made by rodriguez to montelibano was at his own risk.
 rodriguez failed to exercise ordinary prudence and reasonable diligence in making sure that montelibano was in fact
authorized to receive payment.
 important things to remember in assuming that there is authority
 1.)the law does not presume that an agency exists. it has to be proven through facts
 2.)the agent cannot establish his authority
 3.)authority cannot be established through mere rumor or general reputation
 4.)general authority is not equal to unlimited authority
 5.)that every authority must find its ultimate source in some act or omission by the principal
 in assuming that there is authority, a person has to be very cautious
 note: that the agent cannot enlarge or extend his authority without the concurrence of the principal

important provisions:
art 1162: payment must be made to the person in whose favor the obligation is constituted, or to another authorized to
receive it in his name
art 1727: the principal shall be liable as to matters with respect to which the agent has exceeded his authority only when he
ratifies the same expressly or by implication

84) RALLOS vs. YANGCO

CASE NUMBER: 6906

DATE: September 27, 1911
PONENTE: Moreland, J.

FACTS:
 Yangco sent a letter of invitation to rallos.
 This was an invitation regarding the buying and selling of tobacco
 In the letter, it was stated that collantes would be his agent and that as agent collantes would be acting in his behalf.
 This arrangement was accepted by rallos
 At one point, rallos gave collantes 218 bundles of tobacco, which was sold at a price of 1744 pesos
 206 pesos was deducted for charges involving the sale, leaving the sum of 1537 pesos.
 This amount was not remitted by collantes to rallos.
 Apparently, collantes used the money for his personal gain
 Rallos was now claiming from yangco the unpaid amount for the sale of tobacco.
 Yangco refused, saying that collantes was no longer connected with him.
 Yangco also claims that at the time when the 218 bundles of tobacco was given to collantes, the latter was no longer
acting as his factor.

Page 39
  This then forced rallos to file a collection case.
 The lower court ruled in favor of rallos.

ISSUE: Should yangco still be liable for the acts of collantes, considering that collantes was no longer his agent at the time of
the transaction?

RULING: YES!! Yangco is still liable

 Yangco did not even inform rallos that collantes was no longer his agent.
 Furthermore, yangco advertised collantes to be his agent, he should have given rallos timely notice that he had
already severed ties with collantes.
 The negligence of yangco to give timely notice to rallos, makes him liable for the acts of collantes.
 It was the duty of yangco to notify rallos regarding the severed relation with collantes.

85) MACKE vs. CAMPS

CASE NUMBER: G.R. No. PONENTE: CARSON, J.

2962
DATE: 27 February 1907

FACTS:
 The plaintiffs are partners doing business under the firm name of Macke, Chandler & Company, allege that during
the months of February and March, 1905, they sold to the defendant and delivered at his place of business, known
as the "Washington Cafe," various bills of goods amounting to P351.50.

 The plaintiffs further alleged that the defendant has only paid on account of said accounts the sum of P174; that
there is still due sum of P177.50; that before instituting this action they made demand for the payment but the
defendant had failed and refused to pay.

 The plaintiffs, testified that on the order of one Ricardo Flores, who represented himself to be agent of the
defendant, he shipped the said goods to the defendants at the Washington Cafe; that Flores later acknowledged the
receipt of said goods and made various payments amounting in all to P174.

Page 31
 On demand for payment of balance of the account Flores informed him that he did not have the necessary funds on

Page 32
 hand, and that he would have to wait the return of his principal, the defendant, who was at that time visiting in the
provinces.

 The plaintiffs were satisfied as to the credit of the defendant and as to the authority of Flores to act as his agent who
was apparently in charge of the business and claiming to be the business manager of the defendant.

 A written contract (for the hotel with a bar and restaurant business of the defendant) dated May 25, 1904, was
introduced in evidence to establish the relationship between the defendant and Flores.

 The defendant relies wholly on his contention that the foregoing facts are not sufficient to establish the fact that he
received the goods for which payment is demanded.

ISSUE: WON Flores was managing the business as agent?

RULING:

 YES, the evidence is sufficient to sustain a finding that Flores was the agent of the defendant in the management of
the bar of the Washington Cafe with authority to bind the defendant, his principal, for the payment of the goods
mentioned in the complaint. Lastly, from an examination of the items of the account attached to the complaint, we
are of opinion that Flores was acting within the scope of his authority.

 It is a well settled rule that: “One who clothes another apparent authority as his agent, and holds him out to the
public as such, can not be permitted to deny the authority of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good faith and in the honest belief that he is what he appears to
be.”

86) JIMENEZ vs. RABOT

CASE NUMBER: G.R. No. L- PONENTE: STREET, J.

12579
DATE: July 27, 1918

FACTS:
 It is admitted that the parcel of land in question, together with two other parcels in the same locality originally
belonged to the plaintiff (Gregorio Jimenez), having been assigned to him as one of the heirs in the division of the
estate of his father.

 Gregorio was staying at Vigan, his property in Alaminos was confided by him to the care of his elder sister Nicolasa
Jimenez. On 7 February 1911 of that year he wrote this sister a letter from Vigan in which he informed her that
he was pressed for money and requested her to sell one of his parcels of land and send him the money in order that
he might pay his debts.

 This letter contains no description of the land to be sold other than is indicated in the words "one of my parcels of
Page 33
land" ("uno de mis terrenos"). Acting upon this letter Nicolasa approached the defendant Pedro Rabot, and the

Page 34
 latter agreed to buy the parcel in question for the sum of P500.

 Nicolasa admits having received this payment of P250 at the time stated; but there is no evidence that she sent any
of it to her brother. About one year later Gregorio came down to Alaminos and demanded that his sister should
surrender this piece of land to him, it being then in her possession. She refused upon some pretext.

 Gregorio, in conjunction with others of his brothers and sisters, whose properties were also in the hands of Nicolasa,
instituted an action in the Court of First Instance for the purpose of recovering their land from her control. This
action was decided favorably to the plaintiffs upon August 12, 1913.

 May 31, 1912, Nicolasa Jimenez executed and delivered to Pedro Rabot a deed purporting to convey to him the
parcel of land which is the subject of this controversy.

 Pedro Rabot went into possession, and the property was found in his hands at the time when final judgment was
entered in favor of the plaintiffs in the action above mentioned. It will thus be seen that Pedro Rabot acquired
possession under the deed from Nicolasa during the pendency of the litigation in which she was defendant.

ISSUE: WON the authority conferred on Nicolasa by the letter of February 7, 1911, was sufficient to enable her to bind her
brother?

RULING: YES, under Article 1713 of the Civil Code it requires that the authority to alienate land shall be contained in an
express mandate; while subsection 5 of section 335 of the Code of Civil Procedure says that the authority of the agent must be
in writing and subscribed by the party to be charged; as such we are of the opinion that the authority expressed in the letter
is a sufficient compliance with both requirements and Nicolasa Jimenez acted within the scope of her authority.

 It is a rule that: “where the owner of real property desires to confer upon an attorney in fact authority to sell the
same, it is necessary that the authority should be expressed in writing; but it is not necessary that the property to be
sold should be precisely described. It is sufficient if the authority is so expressed as to determine without doubt the
limits of the agent’s authority.

 The purpose in giving a power of attorney is to substitute the mind and hand of the agent for the mind and hand of
the principal; and if the character and extent of the power is so far defined as to leave no doubt as to the limits
within which the agent is authorized to act, and he acts within those limits, the principal cannot question the validity
of his act.

87) LINAN VS. PUNO

CASE NUMBER: G.R. No. L- PONENTE: Johnson, J.

9608
DATE: August 7, 1915

FACTS:
1) Linan was the owner of a certain parcel of subject land. He executed a document, which conferred upon the Puno
the power, duties and obligations to administer the interest Linan including to “purchase, sell, collect and pay, as
well as sue and be sued before any authority, appear before the courts of justice and administrative officers in any
proceeding or business concerning the good administration and advancement of Linan’s said interests, and may, in
necessary cases, appoint attorneys at law or attorneys in fact to represent him.”
2) The meaning, purport, and power conferred by this document constitute the very gist of the present action.
3) Defendant Puno, for the sum of P800, sold and delivered said parcel of land to the other defendants. The plaintiff
alleges that the said document (Exhibit A) did not confer upon the defendant Puno the power to sell the land and
prayed that the sale be set aside; that the land be returned to him, together with damages.
Page 35
ISSUE: Did the document (Exhibit A)give Puno authority to sell the land?

RULING:
1) Contracts of agency as well as general powers of attorney must be interpreted in accordance with the language used
by the parties. The real intention of the parties is primarily to be determined from the language used. The intention
is to be gathered from the whole instrument. In case of doubt resort must be had to the situation, surroundings and
relations of the parties. The intention of the parties must be sustained rather than defeated. If the contract be
open to two constructions, one of which would uphold while the other would overthrow it, the former is to be
chosen. The acts of the parties will be presumed to have been done in conformity with and not contrary to the
intent of the contract.
2) The lower court held that the "only power conferred was the power to administer." Reading the contract we find it
says that the plaintiff "I confer ... power ... that ... he may administer ... purchase, sell, collect and pay ... in
any proceeding or business concerning the good administration and advancement of my said interests." The
words "administer, purchase, sell," etc., seem to be used coordinately. Each has equal force with the other. There
seems to be no good reason for saying that Puno had authority to administer and not to sell when "to
sell" was as advantageous to the plaintiff in the administration of his affairs as "to administer."
3) To hold that the power was "to administer" only when the power "to sell" was equally conferred would be to give to
special words of the contract a special and limited meaning to the exclusion of other general words of equal import.
4) The record contains no allegation on proof that Puno acted in bad faith or fraudulently in selling the land. It will be
presumed that he acted in good faith and in accordance with his power as he understood it. That his interpretation
of his power, as gathered from the contract (Exhibit A), is tenable cannot, we believe, be successfully denied. Neither
have we overlooked the fact in the brief of the appellants that the plaintiff has not returned, nor offered to return,
nor indicated a willingness to return, the purchase price. (Art. 1308 of the Civil Code; Manikis vs. Blas, No. 7585.).

Disposition: In view of all the foregoing, we are of the opinion that the lower court committed the error complained of in the
second assignment, and, without discussing the other assignments of error, we are of the opinion, and so hold, that the
judgment of the lower court should be and is hereby revoked and that the appellants should be relieved from all liability
under the complaint. Without any finding as to costs, it is so ordered.

88) KATIGBAK vs. TAI HING CO.

CASE NUMBER: G.R. No. L- PONENTE: Villareal, J.

29917
DATE: December 29, 1928

FACTS:

1) Gabino Barreto Po Ejap, as attorney-in-fact of Po Tecsi, sold in favor of Jose M. Katigbak the subject land; after said
sale, Po Tecsi leased the property sold, from Gabino Barreto Po Ejap, who administered it in the name of Jose
M. Katigbak, at a rental of P1,500 per month, payable in advance, leaving unpaid the rents accrued from that date
until his death which occurred on November 26, 1926, having paid the accrued rents up to October 22, 1925;

2) from November 26, 1926, the defendants Po Sun Suy and Po Ching leased said land for the sum of P1,500 per
Page 36
month; on February 11, 1927, Po Sun Suy was appointed administrator of the estate of his father Po Tecsi, and filed
with the court an inventory of said estate including the land in question; and on May 23, 1927, Jose M. Katigbak sold

Page 37
 the same property to Po Sun Boo.

3) Take note that all these transfers happened even though the power of attorney was not registered in the Registry of
deeds.

ISSUE: Can the Principal be bound by the acts of the agent even though the power of attorney is not registered the Registry
of deeds?

RULING: YES
1) Inasmuch as in accordance with section 39 of said Act No. 496, “Every applicant receiving a certificate of title in
pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of
title for value in good faith, shall hold the same free of all incumbrance except noted on said certificate,” every
document which in any manner affects the registered land is ineffective unless it is recorded in the registry of deeds.
But such inefficacy only refers to third persons who, in good faith, may have acquired some right to the registered
land.

2) While it is true that a power of attorney not recorded in the registry of deeds is ineffective in order than an agent or
attorney-in-fact may validly perform acts in the name of his principal, and that any act performed by the agent by
virtue of said with respect to the land is ineffective against a third person who, in good faith, may have acquired a
right thereto, it does, however, bind the principal to acknowledge the acts performed by his attorney-in-fact
regarding said property (sec. 50, Act No. 496).

3) In the present case, while it is true that the non-registration of the power of attorney executed by Po Tecsi in favor
of his brother Gabino Barreto Po Ejap prevents the sale made by the latter of the litigated land in favor of Jose M.
Katigbak from being recorded in the registry of deeds, it is not ineffective to compel Tecsi to acknowledge said sale.

4) From the fact that said power and sale were not recorded in the registry of deeds, and from the omission of any
mention in the deed of sale of the mortgage lien in favor of Antonio M. H. Limjenco, and the lease of a part of said
land in favor of Uy Chia, the appellants deduce that said sale is fraudulent.

5) The record contains many indication that Po Tecsi was not unaware of said sale. His several letters complaining of
the pressing demands of his brother Gabino Barreto Po Ejap to send him the rents of the land, his promises to send
them to him, and the remittance of the same were a tacit acknowledgment that he occupied the land in question no
longer as an owner but only as lessee.

89) DANONA vs. BRIMO & CO.

CASE NUMBER: G.R. No. PONENTE: JOHNSON, J.:

15823
DATE: September 12, 1921

FACTS:
 Danon was employed byHolland American Oil Co thru its manager, Antonio A. Brimo,to look for a purchaser of its
factoryfor the sum of P1,200,000, payable in cash;
 Brimopromised to pay the Danon, as compensation for his services, a commission of five per cent on the said sum of
P1,200,000, if the sale was consummated, or if he should find a purchaser ready, able and willing to buy said factory for
the said sum of P1,200,000;
Page 38
 No definite period of time was fixed where Danon should effect the sale. It seems that another broker, Sellner, was also

Page 39
 negotiating the sale, or trying to find a purchaser for the same property and that the plaintiff was informed of the fact
either by Brimo himself or by someone else; at least, it is probable that Dano was aware that he was not alone in the
field, and his whole effort was to forestall his competitor by being the first to find a purchaser and effect the sale.
 Danon found such a purchaser, but Brimo refused to sell the said factory without any justifiable motive or
reason therefor and without having previously notified Danon of its desistance or variation in the price and terms of
the sale.
 RTC ruled in favor of Danon
 CA affirmed RTC’s ruling

ISSUE: Was Danon as broker entitled to payment of his commission?

RULING: NO

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

Under the proofs in this case, the most that can be said as to what the plaintiff had accomplished is, that he had
found a person who might have bought the defendant's factory if the defendant had not sold it to someone else. The
evidence does not show that the Santa Ana Oil Mill had definitely decided to buy the property in question at the fixed price of
P1,200,000. The board of directors of said corporation had not resolved to purchase said property; and even if its president
could legally make the purchase without previous formal authorization of the board of directors, yet said president does not
pretend that he had definitely and formally agreed to buy the factory in question on behalf of his corporation at the price
stated.
In all the cases, under all and varying forms of expression, the fundamental and correct doctrine, is, that the duty
assumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the price and terms on
which it is to be made, and until that is done his right to commissions does not accrue. It follows, as a necessary deduction
from the established rule, that a broker is never entitled to commissions for unsuccessful efforts. The risk of a failure is wholly
his.
The undertaking to procure a purchaser requires of the party so undertaking, not simply to name or introduce a
person who may be willing to make any sort of contract in reference to the property, but to produce a party capable, and
who ultimately becomes the purchaser.

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

90) INFANTE vs. CUNANAN

CASE NUMBER: G.R. No. L- PONENTE: BAUTISTA ANGELO, J.

5180
DATE: August 31, 1953

FACTS:

1. Consejo Infante owns of two parcels of land with a house built thereon in Manila
2. Infante contracted the services of Jose Cunanan and Juan Mijares, to sell the property for a price of P30,000 subject

Page 40
 to the condition that the purchaser would assume the mortgage existing thereon in the favor of the Rehabilitation
Finance Corporation.
3. Infante agreed to pay them a commission of 5% on the purchase price plus whatever overprice they may obtain for

Page 41
 the property.
4. Cunanan & Mijares found one Pio S. Noche who was willing to buy the property under the terms agreed upon with
Infante but when they introduced him to Infante the latter informed them that she was no longer interested in
selling the property and succeeded in making them sign a document stating therein that the written authority she
had given them was already can-celled.
5. However, Infantedealt directly with Pio S. Noche selling to him the property for P31,000.
6. Upon learning this transaction, Cunanan & Mijares demanded from Infante the payment of their commission, but
she refused and so they brought the present action.

ISSUE: Were Cunanan and Mijares as brokers entitled to payment of their commission?

RULING: YES

1. After infante had given the written authority to respondents to sell her land for the sum of P30,000, respondents
found a buyer in the person of one Pio S. Noche who was willing to buy the property under the terms agreed upon,
and this matter was immediately brought to the knowledge of Infante.

2. Infante, perhaps by way of strategem, advised respondents that she was no longer interested in the deal and was
able to prevail upon them to sign a document agreeing to the cancellation of the written authority.

3. Infante had changed her mind even if respondents had found a buyer who was willing to close the deal, is a matter
that would not give rise to a legal consequence if respondents agree to call off the transaction in deference to the
request of the petitioner. But the situation varies if one of the parties takes advantage of the benevolence of the
other and acts in a manner that would promote his own selfish interest. This act is unfair as would amount to bad
faith. This act cannot be sanctioned without according to the party prejudiced the reward which is due him. This is
the situation in which respondents were placed by petitioner.

4. Infante took advantage of the services rendered by respondents, but believing that she could evade payment of
their commission, she made use of a ruse by inducing them to sign the deed of cancellation Exhibit 1. This act of
subversion cannot be sanctioned and cannot serve as basis for petitioner to escape payment of the commission
agreed upon.

91) MANOTOK BROTHERS, INC. VS. COURT OF APPEALS

CASE NUMBER: G.R. No. PONENTE: Campos Jr., J.

94753
DATE: April 7, 1993.

FACTS:
 The petitioner in this case is the owner of a parcel of land and building which was leased to the City of Manila and
was used by Claro M. Recto High school.
Page 42
 Respondent here, Salvador Saligumba was the agent of the petitioner who negotiated with the city for the sale of the
said property.

Page 43
  Accordingly as such, he was given letters of authority that allowed him to negotiate the property at a price not less
than 425k
 He was to get a 5% commission from the said sale
 His authority was extended several times, the last one lasting for 180 days from November 16, 1987, also it was
at this time that petitioner allowed the sale to be consummated for the amount of 410k.
 However, it was only on April 26, 1968, passed Ordinance No. 6603, appropriating the sum of P410,816.00 for
the purchase of the property which private respondent was authorized to sell.
 Said ordinance however, was signed by the City Mayor only on May 17, 1968, one hundred eighty three (183)
days after the last letter of authorization.
 On January 14, 1969, the parties signed the deed of sale of the subject property. The initial payment of P200,000.00
having been made, the purchase price was fully satisfied with a second payment on April 8, 1969 by a check in the
amount of P210,816.00.
 Respondent now asks that the 5% commission be paid to him in the amount of P20,554.50.
 But petitioners refused to pay up, arguing that:
 (1) Private respondent would be entitled to a commission only if the sale was consummated and the price paid
within the period given in the respective letters of authority;
 (2) Private respondent was not the person responsible for the negotiation and consummation of the
sale; instead it was Filomeno E. Huelgas, the PTA president for 1967-1968 of the Claro M. Recto High
School.
 Petitioner presented as its witnesses Filomeno Huelgas and the petitioner's President, Rufino Manotok.
 Huelgas testified to the effect that after being inducted as PTA president in August, 1967 he followed up the sale
from the start with Councilor Magsalin until after it was approved by the Mayor on May 17, 1968
 He also said that he came to know Rufino Manotok only in August, 1968, at which meeting the latter told him
that he would be given a "gratification" in the amount of P20,000.00 if the sale was expedited.
 Petitioner’s contention that as a broker, private respondent's job is to bring together the parties to a transaction.
 Accordingly, if the broker does not succeed in bringing the minds of the purchaser and the vendor to an agreement
with respect to the sale, he is not entitled to a commission.
 The Court ruled in favor of the respondent, with the CA affirming the RTC decision. Hence the appeal

ISSUE: is the private respondent entitled to the 5% commission? -> Yes

RULING:
 Court says: it is to be noted that the ordinance was approved on April 26, 1968 when private respondent's
authorization was still in force.
 Moreover, the approval by the City Mayor came only three days after the expiration of private respondent's authority.
 It is also worth emphasizing that from the records, the only party given a written authority by petitioner to
negotiate the sale from July 5, 1966 to May 14, 1968 was private respondent.
 When there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale
of his property, the agent is entitled to a commission.
 Private respondent is the efficient procuring cause for without his efforts, the municipality would not have anything
to pass and the Mayor would not have anything to approve.
 The SC agrees with respondent Court that the City of Manila ultimately became the purchaser of petitioner's
property mainly through the efforts of private respondent.

Disposition: Decision of the RTC is affirmed.

92) DOMINGO VS. DOMINGO

CASE NUMBER: GR No. L- PONENTE: Makasiar, J.

30573
DATE: Oct. 29, 1971

Page 44
FACTS:
 Vicente Domingo granted to Gregorio Domingo, a real estate broker, the exclusive agency to sell his Lot No.
883, Piedad Estate in a document.

Page 45
  thelot has an area of 88,477 sq. m.
 According to the document, said lot must be sold for P2 per sq. m.
 Accordingly, Gregorio is entitled to 5% commission on the total price if the property is sold by
Vicente or by anyone else during the 30-day duration of the agency or by Vicente within 3 months from the
termination of the agency to a purchaser to whom it was submitted by Gregorio during the effectivity of the
agency with notice to Vicente.
 This contract is in triplicate with the original and another copy being retained by Gregorio.
 The last copy was given to Vicente. Subsequently, Gregorio authorized Teofilo Purisima to look for a buyer
without notifying Vicente.
 Gregorio promised Teofilo ½ of the 5% commission.
 Teofilo then introduced Oscar de Leon to Gregorio as a prospective buyer.
 Oscar submitted a written offer which was very much lower than the P2 per sq. m. price.
 Vicente directed Gregorio to tell Oscar to raise his offer.
 After several conferences between the parties, Oscar raised his offer to P1.20 per sq. m. or P109k in total to
which Vicente agreed to said offer.
 Upon Vicente’s demand, Oscar issued a P1,000 check to him as earnest money.
 Vicente, then, advanced P300 to Gregorio.
 Subsequently, Vicente asked for an additional P1,000 as earnest money, which Oscar promised to deliver to Vicente.
 The written agreement, Exhibit C, between the parties was amended.
 Oscar will vacate on or about September 15, 1956 his house and lot at Denver St., QC, which is part of the
purchase price later on, it was again amended to state that Oscar will vacate his house and lot on Dec.1, 1956
because his wife was pregnant at that time.
 Oscar gave Gregorio P1,000 as a gift or propina for succeeding in persuading Vicente to sell his lot at P1.20 per sq. m.
 Gregorio did not disclose said gift or propina to Vicente.
 Oscar did not pay Vicente the additional P1,000 Vicente asked from him as earnest money.
 The deed of sale was not executed since Oscar gave up on the negotiation when he did not receive his money from
his brother in the US, which he communicated to Gregorio.
 Gregorio did not see Oscar for several weeks thus sensing that something fishy might be going on.
 He went to Vicente’s house where he read a portion of the agreement to the effect that Vicente was still willing to
pay him 5% commission, P5,450.
 Gregorio went to the Register of Deeds of QC, where he discovered that a Deed of sale was executed by Amparo de
Leon, Oscar’s wife, over their house and lot in favor of Vicente. After discovering that Vicente sold his lot to Oscar’s
wife, Gregorio demanded in writing the payment of his commission.
 Gregorio also conferred with Oscar who told him that:
 Vicente went to him and asked him to eliminate Gregorio in the transaction and that he would sell his
property to him for P104k.
 In his reply, Vicente stated that Gregorio is not entitled to the 5% commission:
 Since he sold the property not to Gregorio’s buyer (Oscar de Leon) but to another buyer (Amparo Diaz) who
is the wife of Oscar de Leon.
 CA said: the exclusive agency contract is genuine. The sale of the lot to Amparo de Leon is practically a sale to
Oscar.

ISSUE: Does Gregorio’s act of accepting the gift or propina from Oscar constitute fraud which would cause the forfeiture
of his 5%commission? -> Yes

RULING:
 Gregorio Domingo as the broker received a gift or propina from the prospective buyer Oscar de Leon, without
the knowledge and consent of the principal, Vicente.
 His acceptance of said substantial monetary gift corrupted his duty to serve the interests only of his principal and
undermined his loyalty to his principal, who gave him partial advance of P3000 on his commission.
 As a consequence, instead of exerting his best to persuade his prospective buyer to purchase the property on the most
advantageous terms desired by his principal, Gregorio Domingo, succeeded in persuading his principal to accept the
counter-offer of the prospective buyer to purchase the property at P1.20 per sq. m.
 The duties and liabilities of a broker to his employer are essentially those which an agent owes to his principal.
Page 46
  An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without
revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and
forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by
reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that
usage or custom allows it.
 This is to prevent the possibility of any wrong not to remedy or repair an actual damage agent thereby assumes a
position wholly inconsistent with that of being an agent for his principal, who has a right to treat him, insofar as his
commission is concerned, as if no agency had existed
 The fact that the principal may have been benefited by the valuable services of the said agent does not exculpate the
agent who has only himself to blame for such a result by reason of his treachery or perfidy.
 As a necessary consequence of such breach of trust, Gregorio Domingo must forfeit his right to the
commission and must return the part of the commission he received from his principal.
Decisive Provisions Article 1891 and 1909 CC
 Article 1891 consists in changing the phrase "to pay" to "to deliver", which latter term is more comprehensive than the
former.
 Paragraph 2 of Article 1891 is a new addition designed to stress the highest loyalty that is required to an agent
condemning as void any stipulation exempting the agent from the duty and liability imposed on him in paragraph one
thereof.
 Article 1909 demands the utmost good faith, fidelity, honesty, candor and fairness on the part of the agent, the real
estate broker in this case, to his principal, the vendor.
 The law imposes upon the agent the absolute obligation to make a full disclosure or complete account to his
principal of all his transactions and other material facts relevant to the agency, so much so that the law as
amended does not countenance any stipulation exempting the agent from such an obligation and considers such
an exemption as void.
 Situations where the duty mandated by Art 1891 does not apply:
 Agent or broker acted only as a middleman with the task of merely bringing together the vendor and
vendee, who themselves thereafter will negotiate on the terms and conditions of the transaction.
 Agent or broker had informed the principal of the gift or bonus or profit he received from the purchaser and
his principal did not object
Teofilo Purisima’s entitlement to his share in the 5% commission

 Teofilo can only recover from Gregorio his ½ share of whatever amounts Gregorio Domingo received by virtue of the
transaction as his sub-agency contract was with Gregorio Domingo alone and not with Vicente Domingo, who was not
even aware of such sub-agency.
 Since Gregorio already received a total of P1,300 from Oscar and Vicente, P650 of which should be paid by Gregorio to
Teofilo.

Disposition: CA decision reversed.

93) SIASAT vs. INTERMEDIATE APPELLATE COURT

CASE NUMBER: G.R. No. L- PONENTE: GUTIERREZ, JR., J.

67889
DATE: October 10, 1985

Page 47
FACTS:
 Teresita Nacianceno succeeded in convincing officials of the Department of Education and Culture to purchase

Page 48
 without public bidding, one million pesos worth of national flags for the use of public schools throughout the
country.
 Nancianceno was able to expedite the approval of the purchase.
 All the legal requirements had been complied with, except the release of the purchase orders.
 She was informed by the Chief of the Budget Division of the Department that the purchase orders could not
be released unless a formal offer to deliver the flags was first submitted for approval
 She contacted the owners of the United Flag Industry.
 Mr. Primitivo Siasat, owner and general manager of United Flag Industry came up with a document which
read: Mrs. Tessie Nacianceno,
This is to formalize our agreement for you to represent United Flag Industry to deal with any entity or
organization, private or government in connection with the marketing of our products-flags and all its
accessories.
For your service, you will be entitled to a commission of thirty (30%) percent.
Signed
Mr. Primitive Siasat
Owner and Gen. Manager

 The first delivery of 7,933 flags was made by the United Flag Industry.
 Then, Nancianceno’s authority to represent the United Flag Industry was revoked by Primitivo Siasat on the
ground that she was not authorized to sell 16, 666 Philippine flags to the Department.
 Nancianceno said that for the first delivery, United Flag Industry tendered the amount of P23,900.00 or five
percent (5%) of the amount received as payment of her commission. She refused to accept the said amount
insisting on the 30% commission agreed upon.
 She later learned that petitioner Siasat had already received payment for the second delivery of 7,833 flags. When
she confronted the petitioners, they vehemently denied receipt of the payment, at the same time claimed that
the respondent had no participation whatsoever with regard to the second delivery of flags and that the agency
had already been revoked.
 Nancianceno filed an action in the Court of First Instance of Manila to recover the following commissions: 25%,
as balance on the first delivery and 30%, on the second delivery.
 The trial court decided in favor of the respondent.
 The decision was affirmed in toto by the Intermediate Appellate Court.

ISSUE:
1. Did Nancianceno have the capacity to represent United Flag in the transaction with the Department?
2. Did the revocation of agency foreclose the respondent's claim of 30% commission on the second transaction?
3. Was the award for attorney’s fees and moral damages proper?

RULING:

1. YES, she had the capacity to represent United Flag In fact, she was a general agent.

- There are several kinds of agents. An agent may be (1) universal: (2) general, or (3) special. A universal; agent
is one authorized to do all acts for his principal which can lawfully be delegated to an agent. So far as such
a condition is possible, such an agent may be said to have universal authority.
-

- A general agent is one authorized to do all acts pertaining to a business of a certain kind or at a particular
place, or all acts pertaining to a business of a particular class or series. He has usually authority either
expressly conferred in general terms or in effect made general by the usages, customs or nature of the
business which he is authorized to transact.
- An agent, therefore, who is empowered to transact all the business of his principal of a particular kind or in a
particular place, would, for this reason, be ordinarily deemed a general agent.
- A special agent is one authorized to do some particular act or to act upon some particular occasion. lie acts

Page 49
 usually in accordance with specific instructions or under limitations necessarily implied from the nature of the
act to be done.
- By the way general words were employed in the agreement, no restrictions were intended as to the manner
the agency was to be carried out or in the place where it was to be executed. The power granted to the
respondent was so broad that it practically covers the negotiations leading to, and the execution of, a
contract of sale of petitioners' merchandise with any entity or organization.
- There was nothing to prevent the petitioners from stating in the contract of agency that the respondent could
represent them only in the Visayas or to state that the Department of Education and Culture and the
Department of National Defense, which alone would need a million pesos worth of flags, are outside the scope
of the agency.

2. NO, the revocation did not foreclose the respondent’s claime of 30% commission on the second transaction.
- The revocation of agency could not prevent the Nancianceno from earning her commission because the
contract of sale had been already perfected and partly executed.
- The principal cannot deprive his agent of the commission agreed upon by cancelling the agency and,
thereafter, dealing directly with the buyer.

3. NO, the award was not proper.

- Moral damages: To support a judgment for damages, facts which justify the inference of a lack or absence of
good faith must be alleged and proven. There is no evidence on record from which to conclude that the
revocation of the agency was deliberately effected by the petitioners to avoid payment of the respondent's
commission.
- Attorney’s fees: For one thing, the respondent did not come to court with completely clean hands. For another,
the petitioners apparently believed they could legally revoke the agency in the manner they did and deal
directly with education officials handling the purchase of Philippine flags. They had reason to sincerely believe
they did not have to pay a commission for the second delivery of flags.

The decision of the respondent court was MODIFIED. The petitioners were ordered to pay the respondent the amount of
ONE HUNDRED FOURTY THOUSAND NINE HUNDRED AND NINETY FOUR PESOS (P140,994.00) as her commission on the
second delivery of flags with legal interest from the date of the trial court's decision.

*The decision was modified to exclude the respondent’s right to collect 25% from the first delivery. The demand letter of the
respondent's lawyer dated November 13, 1984 asked petitioner Siasat only for the 30% commission due from the second
delivery. The fact that the respondent demanded only the commission on the second delivery without reference to the
alleged unpaid balance which was only slightly less than the amount claimed can only mean that the commission on the first
delivery was already fully paid.

94) GERMAN & CO. vs. DONALDSON, SIM, & CO.

CASE NUMBER: G.R. No. L- PONENTE: LADD, J

439
DATE: November 11, 1901
Page 50
FACTS:
 A general power for suits was executed in Manila in favor of Fernando Kammerzell, a German national. It was
purported to be a substitution in favor of several attorneys of powers conferred upon Kammerzell in an instrument
executed in Berlin, Germany by Max Leonard Tornow, the sole owner of the business carried on in Berlin and Manila
under the name of Germann & Co.
 Kammerzell, by virtue of the general power for suits, filed an action against Donaldson, Sim & Co. to recover a sum
claimed to be due for freight under a charter party.
 The Court of First Instance of Manila ruled in favor of Germann & Co.

ISSUE:
1. Is the original power invalid under article 1280, No. 5, of the Civil Code, which provides that powers for suits must be
contained in a public instrument?

2. Can the original power be construed as conferring upon Kammerzell authority to institute or defend suits?

RULING:

1. No, because no claim is made that the document was not executed with the formalities required by the German law
in the case of such an instrument. The Court saw no reason why the general principle that the formal validity of
contracts is to be tested by the laws of the country where they are executed should not apply.

2. Yes, because the instrument contains an explicit grant of a power broad enough to authorize the bringing of the
present action, even assuming the applicability of the domestic law as claimed by the defendants.
- By this instrument Tornow constitutes Kammerzell his "true and lawful attorney with full power to enter the
firm name of Germann & Co. in the Commercial Registry of the city of Manila as a branch of the house of
Germann & Co. in Berlin, it being the purpose of this power to invest said attorney will full legal powers and
authorization to direct and administer in the city of Manila for us and in our name a branch of our general
commercial business of important and exportation, for which purpose he may make contracts of lease and
employ suitable assistants, as well as sign every kind of documents, accounts, and obligations connected with
the business which may be necessary, take charge in general of the receipt and delivery of merchandise
connected with the business, sign all receipts for sums of money and collect them and exact their payment by
legal means, and in general execute all the acts and things necessary for the perfect carrying on of the business
committed to his charge in the same manner as we could do ourselves if we were present in the same place.”
- The Court did not consider the institution of the suit to collect a claim accruing in the ordinary course of the
plaintiff's business, as properly belonging to the class of acts described in article 1713 of the Civil Code as acts
"of strict ownership.
- “It is necessarily a part of the mere administration of such a business as that described in the instrument in
question and only incidentally, if at all, involving a power to dispose of the title to property.”

The judgment was affirmed.

95) Municipal Council of Iloilo vs. Evangelista, 55 Phil. 290

CASE NUMBER:
DATE:
Page 51
 PONENTE:
FACTS:
ISSUE:
RULING:

96) CABALLERO VS. DEIPARINE

CASE NUMBER: L-39059 PONENTE: Esguerra, J.

DATE: September 30, 1974

Page 52
FACTS:
1. This involves a dispute over a parcel of land and the acts committed by the plaintiff lawyer which were not intended
by his client, the plaintiff.
2. That during the lifetime of Bucao she with her second husband acquired by joint purchase a parcel of land from the
Talisay-Minglanilla Estate
3. That in 1932 Bucao and Tomas executed jointly a notarial instrument identified as Annex "B" wherein they
acknowledged that Antonio Caballero had contributed the amount therein stated for the purchase of the property
and they sold 1/4 of the lot to him; when the title to said lot was issued, VicentaBucao and Tomas Raga held it
in trust for their co-owner.
4. That the portion mentioned as sold to plaintiff Antonio Caballero remained unsegregated from Lot 2072 and the
deed of sale, Annex "B" of the Complaint; nor had it been registered in the Register of Deeds; but he, had been in
occupation of a portion of this lot peacefully until the present.
5. Bucaosold her undivided 1/2 of the above parcel to her co-owner, Tomas Raga.
6. Defendants Olimpio Raga, Adriano Raga, Magdalena Raga and Tomas Raga executed an instrument known as
"Declaration and confirmation of sale" without the participation of plaintiffs Antonio Caballero and Concordia
Caballero, wherein they stated that they are the heirs of VicentaBucao of the 1/2 of the property to Tomas Raga, a
certified true copy of which document is identified as Annex "E" in the Complaint.
7. Alma Deiparine acquired in good faith, with a just title and for a valuable consideration, the whole of Lot 2072 from
Tomas Raga as per deed of absolute sale identified as Annex "C" in the complaint which cancelled Transfer
Certificate of Title No. RT-2482 (T-17232) and the issuance in her name of Transfer Certificate of Title No. 9934 on
April 1, 1963, a certified true copy of which is identified as Annex "D" in the complaint;
8. That defendant Alma Deiparine came to know only of Annex "B" when it was presented by plaintiff Antonio
Caballero at the trial of an ejectment case filed by the former in the Municipal Court of Talisay.
9. This case was decided in favor of Antonio Caballero but the decision was appealed by Alma Deiparine to the Court of
First Instance of Cebu which affirmed the decision for Caballero. The case is now in the Court of Appeals on appeal
by Alma Deiparine.
10. Caballero and the defendant parties entered into a compromise agreement. And the lawyer of Caballero admitted to
certain facts without the authority of his client, Caballero.

ISSUE: Is the compromise valid, considering that the lawyer admitted to facts which were not authorized by his client
to make? No

RULING:
1. A reading of the stipulation of facts convinced the court that it is a compromise agreement of the parties. The
stipulation concludes with this prayer: "WHEREFORE, it is most respectfully prayed that the foregoing Stipulation of
Facts be approved and that a decision be handed down on the legal issues submitted on the basis of said Stipulation
of Facts." Apparently it is intended to terminate the case.
2. Attorneys have authority to bind their clients in any case by any agreement in relation thereto made in writing, and
in taking appeals, and in all matters of ordinary judicial procedure. But they cannot, without special authority,
compromise their client's litigation, or receive anything in discharge of a client's claim but the full amount in cash
3. It may be true that during the pre-trial hearing held on February 3, 1968, the parties concerned agreed to execute a
stipulation of facts but it does not mean that the respective counsels of the contending parties can prepare a
stipulation of facts the contents of which is prejudicial to the interest of their clients and sign it themselves without
the intervention of their clients.
4. Counsel for plaintiffs-appellants, Atty. Melecio C. Guba, agreed that defendant-appellee Alma Deiparine bought the
land in question in good faith and for a valuable consideration; that during the lifetime of their mother
VicentaBucao, she, with the conformity of her husband, sold her undivided ½ of the land in question to her co-owner
and son, Tomas Raga.
5. All these adverse facts were made the basis of the appealed decision against the plaintiffs. No further evidence was
presented as there was no hearing.
6. The attorney for the plaintiffs in making such admission went beyond the scope of his authority as counsel and
practically gave away the plaintiffs' case. The admission does not refer to a matter of judicial procedure related to

Page 53
the enforcement of the remedy. It related to the very subject matter of the cause of action, or to a matter on which

Page 54
 the client alone can make the admission binding on him.
7. The broad implied or apparent powers of an attorney with respect to the conduct or control of litigation are,
however, limited to matters which relate only to the procedure or remedy.
8. The employment of itself confers upon the attorney no implied or power or authority over the subject matter of the
cause of action or defense; and, unless the attorney has expressly been granted authority with respect thereto, the
power to deal with or surrender these matters is regarded as remaining exclusively in the client.

97) PHILIPPINE NATIONAL BANK vs. STA. MARIA

Page 55
CASE NUMBER: G.R. No. L- PONENTE: TEEHANKEE, J.
24765
DATE: August 29, 1969

FACTS:
 In this appeal certified to this Court by the Court of Appeals as involving purely legal issues, we hold that a special
power of attorney to mortgage real estate is limited to such authority to mortgage and does not bind the grantor
personally to other obligations contracted by the grantee, in the absence of any ratification or other similar act that
would estop the grantor from questioning or disowning such other obligations contracted by the grantee.
 Plaintiff bank filed this action on February 10, 1961 against defendant Maximo Sta. Maria and his six brothers and
sisters, defendants-appellants, Valeriana, Emeteria, Teofilo, Quintin, Rosario and Leonila, all surnamed Sta. Maria,
and the Associated Insurance & Surety Co., Inc. as surety, for the collection of certain amounts representing unpaid
balances on two agricultural sugar crop loans due allegedly from defendants. 1
 The said sugar crop loans were obtained by defendant Maximo Sta. Maria from plaintiff bank under a special power
of attorney, executed in his favor by his six brothers and sisters, defendants-appellants herein, to mortgage a 16-odd
hectare parcel of land, jointly owned by all of them.
 In addition, Valeriana Sta. Maria alone also executed in favor of her brother, Maximo, a special power of attorney to
borrow money and mortgage any real estate owned by her.
 By virtue of the two above powers, Maximo Sta. Maria applied for two separate crop loans, for the 1952-1953 and
1953-1954 crop years, with plaintiff bank, one in the amount of P15,000.00, of which only the sum of P13,216.11
was actually extended by plaintiff, and the other in the amount of P23,000.00, of which only the sum of P12,427.57
was actually extended by plaintiff. As security for the two loans, Maximo Sta. Maria executed in his own name in
favor of plaintiff bank two chattel mortgages on the standing crops, guaranteed by surety bonds for the full
authorized amounts of the loans executed by the Associated Insurance & Surety Co., Inc. as surety with Maximo Sta.
Maria as principal. The records of the crop loan application further disclose that among the securities given by
Maximo for the loans were a "2nd mortgage on 25.3023 Has. of sugarland, including sugar quota rights therein"
including, the parcel of land jointly owned by Maximo and his six brothers and sisters herein for the 1952-1953 crop
loan, with the notation that the bank already held a first mortgage on the same properties for the 1951-1952 crop
loan of Maximo, and a 3rd mortgage on the same properties for the 1953-1954 crop loan.
 The trial court rendered judgment in favor of plaintiff and against defendants: condemning the defendant Maximo R.
Sta. Maria and his co-defendants Valeriana, Quintin, Rosario, Emeteria, Teofilo, and Leonila all surnamed Sta. Maria
and the Associated Insurance and Surety Company, Inc., jointly and severally, to pay the plaintiff, the Philippine
National Bank, Del Carmen Branch the sum of P8,500.72 and P14,299.79 .
 Defendant Maximo Sta. Maria and his surety, defendant Associated Insurance & Surety Co., Inc. who did not resist
the action, did not appeal the judgment. This appeals been taken by his six brothers and sisters, defendants-
appellants who reiterate in their brief their main contention in their answer to the complaint that under this special
power of attorney, they had not given their brother, Maximo, the authority to borrow money but only to mortgage
the real estate jointly owned by them; and that if they are liable at all, their liability should not go beyond the value
of the property which they had authorized to be given as security for the loans obtained by Maximo. In their answer,
defendants-appellants had further contended that they did not benefit whatsoever from the loans, and that the
plaintiff bank's only recourse against them is to foreclose on the property which they had authorized Maximo to
mortgage.

ISSUE: Whether the 6 brothers and sisters are liable for the loan obtained by Maximo.

RULING:
 The authority granted by defendants-appellants (except Valeriana) unto their brother, Maximo, was merely to
mortgage the property jointly owned by them. They did not grant Maximo any authority to contract for any loans in
their names and behalf. Maximo alone, with Valeriana who authorized him to borrow money, must answer for said
loans and the other defendants-appellants' only liability is that the real estate authorized by them to be mortgaged
would be subject to foreclosure and sale to respond for the obligations contracted by Maximo. But they cannot be
held personally liable for the payment of such obligations, as erroneously held by the trial court.

Page 56
 It is not unusual in family and business circles that one would allow his property or an undivided share in real estate

Page 57
 to be mortgaged by another as security, either as an accommodation or for valuable consideration, but the grant of
such authority does not extend to assuming personal liability, much less solidary liability, for any loan secured by the
grantee in the absence of express authority so given by the grantor.

 The outcome might be different if there had been an express ratification of the loans by defendants-appellants or if
it had been shown that they had been benefited by the crop loans so as to put them in estoppel. Quintin Sta. Maria
testified that he and his co-defendants executed the authority to mortgage "to accommodate (my) brother Dr.
Maximo Sta. Maria ... and because he is my brother, I signed it to accommodate him as security for whatever he may
apply as loan. Only for that land, we gave him as, security" and that "we brothers did not receive any centavo as
benefit." The record further shows plaintiff bank itself admitted during the trial that defendants-appellants "did not
profit from the loan" and that they "did not receive any money (the loan proceeds) from (Maximo)." No estoppel,
therefore, can be claimed by plaintiff as against defendants-appellants.

 Valeriana Sta. Maria's liability to plaintiff. Valeriana stands liable not merely on the mortgage of her share in the
property, but also for the loans which Maximo had obtained from plaintiff bank, since she had expressly granted
Maximo the authority to incur such loans. The Court hold that Valeriana's liability for the loans secured by Maximo is
not joint and several or solidary as adjudged by the trial court, but only joint, pursuant to the provisions of Article
1207 of the Civil Code that "the concurrence ... of two or more debtors in one and the same obligation does not
imply that ... each one of the (debtors) is bound to render entire compliance with the prestation. There is a solidary
liability only when the obligation expressly so states, or when the law or the nature of the obligation requires
solidarity." It should be noted that in the additional special power of attorney, executed by Valeriana, she did not
grant Maximo the authority to bind her solidarity with him on any loans he might secure thereunder.

 WHEREFORE, the judgment of the trial court against defendants-appellants Emeteria, Teofilo, Quintin, Rosario and
Leonila, all surnamed Sta. Maria is hereby reversed and set aside, with costs in both instances against plaintiff. The
judgment against defendant-appellant Valeriana Sta. Maria is modified in that her liability is held to be joint and not
solidary.

Page 58
 98) BA FINANCE CORPORATION vs. COURT OF APPEALS

CASE NUMBER: G.R. No. PONENTE: MEDIALDEA, J.

94566
DATE: July 3, 1992

FACTS:
 On December 17, 1980, Renato Gaytano, doing business under the name Gebbs International, applied for and was
granted a loan with respondent Traders Royal Bank in the amount of P60,000.00. As security for the payment of said
loan, the Gaytano spouses executed a deed of suretyship whereby they agreed to pay jointly and severally to
respondent bank the amount of the loan including interests, penalty and other bank charges.
 In a letter dated December 5, 1980 addressed to respondent bank, Philip Wong as credit administrator of BA Finance
Corporation for and in behalf of the latter, undertook to guarantee the loan of the Gaytano spouses.
 Partial payments were made on the loan leaving an unpaid balance in the amount of P85,807.25. Since the Gaytano
spouses refused to pay their obligation, respondent bank filed with the trial court complaint for sum of money
against the Gaytano spouses and petitioner corporation as alternative defendant.
 The Gaytano spouses did not present evidence for their defense. Petitioner corporation, on the other hand, raised
the defense of lack of authority of its credit administrator to bind the corporation.
 On December 12, 1988, the trial court: judgment in favor of plaintiff and against defendants/Gaytano spouses,
ordering the latter to jointly and severally pay the plaintiff the following among others P85,807.25
 Not satisfied with the decision, respondent bank appealed with the Court of Appeals. On March 13, 1990,
respondent appellate court rendered judgment modifying the decision of the trial court ordering the defendants
Gaytano spouses and alternative defendant BA Finance Corporation, jointly and severally, to pay the plaintiff the
amount of P85,807.25
 Hence this petition was filed with the petitioner assigning the following errors committed by respondent appellate
court:

ISSUE: Whether the plaintiff was guilty of estoppels despite the fact that it never knew of such alledged letter-guaranty.

RULING:
 Persons dealing with an assumed agent, whether the assumed agency be a general or special one are bound at their
peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of
authority, and in case either is controverted, the burden of proof is upon them to establish it (Harry Keeler v.
Rodriguez, 4 Phil. 19).
 that a power of attorney or authority of an agent should not be inferred from the use of vague or general words.
Guaranty is not presumed, it must be expressed and cannot be extended beyond its specified limits (Director v. Sing
Juco, 53 Phil. 205).
 We find that the said conclusion has no basis in fact. Respondent bank had not shown any evidence aside from the
testimony of the credit administrator that the disputed transaction of guaranty was in fact entered into the official
records or files of petitioner corporation, which will show notice or knowledge on the latter's part and its
consequent ratification of the said transaction. In the absence of clear proof, it would be unfair to hold petitioner
corporation guilty of estoppel in allowing its credit administrator to act as though the latter had power to guarantee.
 ACCORDINGLY, the petition is GRANTED and the assailed decision of the respondent appellate court dated March 13,
1990 is hereby REVERSED and SET ASIDE and another one is rendered dismissing the complaint for sum of money
against BA Finance Corporation.

Page 49
 99) DIRECTOR OF PUBLIC WORKS VS. SING JUCO, et al.

CASE NUMBER: 30181 PONENTE: Street, J.

DATE: July 12, 1929

FACTS:
1. Involves a land located on “Point Llorente” at the mouth of Iloilo River, near Iloilo City. Mariano de la Rama, Gonzalo
Mariano Tanboontien, Sing Juco, and Sing Bengco owned this land, in undivided shares.
2. In 1920, the owners of the property conveyed it by way of mortgage to the PNB for the purpose of securing a credit
in current account of not exceeding P170,000.00.
3. The subject land was subject to frequent flooding due to its low level. In 1921, the Government of the Philippine
Islands was planning extensive harbor improvements in this vicinity, requiring extensive dredging by the Bureau of
Public Works in the mouth of said river.
4. This dredging operation requires the Director of Public Works to find a place of deposit for the dirt and mud taken
from the places dredged.
5. A contract was made between the DPW, representing the Government of the Philippine Islands, and the four
owners. DPW also required a bond to be supplied by the owners in the amount of P150,000.00. This bond was made
together with the main contract; one of the signatures of the owner was under the name of “Casa Viuda de Tan
Toco,” purporting to be signed by M. de la Rama.
6. The dredging operation was conducted in substantial compliance with the agreement; and the amount due from the
owners was determined and demanded. No payment was made thus an action was instituted by the DPW to recover
the amount due to the Government under the said contract.
a. Defense: government has not complied with the contract; the material deposited on the land was not
enough to raise the level of the land above water. Defendants asserted that they are not obliged to pay and
subsequently sought to recover further damages.
i. On part of Viuda de Tan Toco: the name “Casa Viuda de Tan Toco” signed under the contract
of suretyship by M. de la Rama was signed without authority.
b. Decision: Owners are obliged to pay and that Tan OngSze (widow of Tan Toco) and Viuda de Tan Toco
is personally liable upon the contract of suretyship in case the principal debtors should not satisfy
their indebtedness.

ISSUE: Whether or not TanOngSze, Viuda de Tan Toco is liable upon the contract of suretyship?

RULING: No. Judgment in relation to Tan OngSze, Viuda de Tan Toco was reversed.

 The said contract purports to have been signed by Mariano de la Rama, acting for this defendant under the power of
attorney. But the Government did not exhibitevidence that would prove that the defendant was authorized in
creating an obligation in the nature of suretyship binding upon the principal. The clauses noted in the documents
exhibiting powers of attorney, relate more specifically to the execution of contracts relating to property. Neither of
these powers officially confers upon Mariano de la Rama the power to bind a principal by a contract of suretyship.
Following the principle of ejusdem generis.
 Power to execute a contract such as a contract of suretyship or guaranty cannot be inferred from the general words
contained in these powers. Article 1827 of the Civil Code declared that guaranty should not be presumed; it must be
expressed and cannot be extended beyond its limit.
 By effect, a power of attorney to execute a contract of guaranty should not be inferred from vague or general words,
especially when such words have their origin and explanation in particular powers of a wholly different nature.

Page 50
 100) PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., vs. POIZAT

CASE NUMBER: G.R. No. L- PONENTE: Johns, J.

23352
DATE: December 31, 1925

FACTS:

1. Appellant, Doña Gabriela Andrea de Coster, executed to and in favor of her husband, Juan M.Poizat, a general power
of attorney. It authorized him to do "in her name, place and stead, and making use of her rights and actions"; to loan
or borrow any amount of cash under the conditions he may deemed convenient, executing and signing private and
public document and making these transactions with or without mortgage.

2. Poizat obtained from the plaintiff a credit for the sum of 10,000 Pounds Sterling to be drawn on the "Banco Español del
Rio de la Plata.

3. To secure payment he executed a mortgage upon the real property of his wife.

4. Plaintiff then brought an action against the defendant for failure to pay, to for lose the mortgage. The trial court's
decision issued an order directing the sale of the mortgaged property to satisfy the judgment. Consequently, the
property was sold to the plaintiff for P100,000.00

5. Appellant personally appeared and objected to the confirmation of the sale. She alleged that the mortgage in question
was illegally executed thus null and void, because the agent of the defendant was not authorized to execute it. That
the plaintiff was aware of such fact and that the mortgage was executed to secure a loan, which was not made to this
defendant or for her benefit but was made to him personally. Such objections were overruled, which prompted the
appellant to appeal.

ISSUE: Whether the act of defendant Poizant, in his capacity as attorney in fact, binds her wife?

HELD: No. The mortgage is declared null and void ab initio. The sale is set aside

RULING:

Juan Poizat may have had the authority to borrow money and mortgage the real property of his wife, but the law specifically
provided how and in what manner it must be done. The law requires that a power of attorney to mortgage or sell real
property should be executed with all the formalities required in a deed. In this case it was not excersiced. His personal
signature, standing alone, does not bind his principal. The deed in its face does not purport to be the deed of the principal,
made and signed by him in his name and as his deed. The mortgage in question was held to be executed by him and him only
thus it is not binding to his wife.

Page 51
 101) RURAL BANK OF BOMBON INC. vs. COURT OF APPEALS

CASE NUMBER: G.R. No. PONENTE: GRINO-AQUINO, J,

95703
DATE: August 3, 1992

FACTS:
1. On January 12, 1981, Ederlinda M. Gallardo, married to Daniel Manzo, executed a special power of attorney in favor
of Rufina S. Aquino authorizing him:
- To secure a loan from any institution for any amount or mortgage the property at Las Pinas, Rizal
2. On August 26, 1981, a Deed of Real Estate Mortgage was executed by Rufino S. Aquino in favor of the Rural Bank of
Bombon(Camarines Sur), Inc. The property was secured for a loan in the total sum of Three Hundred Fifty Thousand
Pesos only (P350,000.00), plus interest at the rate of fourteen (14%) per annum.
3. Spouses Gallardo filed an action against Rufino Aquino and Rural Bank. They alleged that Aquino mortgaged the
property to pay for his personal loans, from the same Bank.
- The trial court temporarily restrained the Rural Bank "from enforcing the real estate mortgage and
from foreclosing it either judicially or extrajudicially until further orders from the court.”
4. Aquino, in his answer, alleged that the spouses allowed him to mortgage the property and use the use the proceeds
thereof to compensate for the pre-existing obligation of P350,000 that the spouse owed him.
5. The trial court lifted the TRO against the bank and ordered the foreclosure proceeding against the mortgaged
property. The Spouses Gallardo appealed to the Court of Appeals (CA). The CA reversed the trial court and held that
Rufino Aquino had no authority to mortgage the land. Thus, this appeal against the decision.

ISSUE: Whether or not the Deed of Real Estate Mortgageexecuted by Rufino S. Aquinoin favor of the Rural Bank of Bombon
(Cam. Sur), Inc. is with authority, thus valid? NO, it was without authority.

RULING:

Agent who signs a Deed of Mortgage in his name alone does not validly bind the owner of the real estate
mortgaged.Aquino's act of signing the Deed of Real Estate Mortgage in his name alone as mortgagor, without any indication
that he was signing for and in behalf of the property owner, Ederlinda Gallardo, bound himself alone in his personal capacity
as a debtor of the petitioner Bank and not as the agent or attorney-in-fact of Gallardo.

The petitioner misapplied Art. 1883. The above provision of the Civil Code relied upon by the petitioner Bank, is not
applicable to the case at bar. Herein respondent Aquino acted purportedly as an agent of Gallardo, but actually acted in his
personal capacity. Involved herein are properties titled in the name of respondent Gallardo against which the Bank proposes
to foreclose the mortgage constituted by an agent (Aquino) acting in his personal capacity. Under these circumstances, we
hold, that Gallardo's property is not liable on the real estate mortgage.

Page 52
 102) COMMERCIAL BANK & TRUST CO. OF THE PHILS Vs. REP. ARMORED CAR SERVICE
CORP.

CASE NUMBER: G.R. Nos. L-18223- PONENTE: LABRADOR, J.

24
DATE: September 30, 1963

FACTS:
1. Defendant-appellant Damaso Perez has presented a motion for new trial on the ground of newly discovered
evidence.
2. Damaso Perez claims that he was not aware of the nature of the power of attorney that Ramon Racelis used,
purportedly signed by him, to secure the loans for the Republic Armored Car Service Corporation and the Republic
Credit Corporation.
3. He claims that Ramon Racelis only used a photastic copy as proof of the Power of Attorney. He further presents the
original purporting the alleged true authority granted by the movant.
- It is not expressly mentioned that this is the precise power of attorney that Ramon Racelis Utilized to secure
the loans the collection of which is sought in these cases.

ISSUE: Whether or not the claim of the movant is tenable as to invalidate the security loans secured under the name of
movant? NO, it is not.

RULING:

Assuming, for the sake of argument, that the said power of attorney incorporated in the motion for reconsideration was the
one used to obtain the loans. We find that the movant's contention has no merit. In accordance with the document, Racelis
was authorized to negotiate for a loan or various loans .. with other being institution, financing corporation, insurance
companies or investment corporations, in such sum or sums, aforesaid Attorney-in-fact Mr. Ramon Racelis, may deem proper
and convenient to my interests, ... and to execute any and all documents he deems requisite and necessary in order to obtain
such loans, always having in mind best interest; ... We hold that this general power attorney to secure loans from any banking
institute was sufficient authority for Ramon Racelis to obtain the credits subject of the present suits.

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 103) LIM TIU vs. RUIZ y REMENTERIA

CASE NUMBER: GR No. 5676 PONENTE: Johnson, J.

DATE: March 2, 1910

FACTS:
 On May 26, June 5 and June 12, 1908, Lim Tiu sold to Ruiz y Rementeria certain merchandise totaling P1,043.57

 Said amount was due and unpaid therefore, an action was filed by Lim Tiu against Ruiz y Rementeria

 Lower Court ruling

- Ruiz y Rementeria purchased and paid the merchandise to Domingo Tim Bun Lui
- Since they have already paid the merchandise, Ruiz y Rementeria is no longer liable

 Lim Tiu filed an appeal, arguing that the following errors, among others, were committed by the lower court
- Ruiz y Rementeria never had a notice that their business transactions with Domingo were by him as agent
or employee of Lim Tiu
- They never notified Ruiz y Rementeria that Domingo could sell their merchandise
- No payments were accepted by them thru Domingo

ISSUE/RULING:

a. W/N Ruiz y Rementeria purchased directly from Lim Tiu?

 NO. They have no knowledge or information that the merchandise they were receiving from Domingo was
the merchandise of Lim Tiu
 Ruiz y Rementeria had been buying merchandise from Domingo for several months and paying for said merchandise
by selling to Domingo certain goods in exchange. Payments were likewise made to him
 Further, Ruiz y Rementeria’s books of account were kept by Domingo during the entire period they were
doing business
 Domingo even presented a bill in Ruiz y Rementeria’s favor for every merchandise sold
 Since Ruiz y Rementeria already paid to Domingo the merchandise purchased, they are no longer liable to Lim Tiu

b. W/N Domingo Tim Bun Liu acted in his own name in dealing with Ruiz y Rementeria?

 YES. No notice was given by Domingo to Ruiz y Rementeria that he was acting as Lim Tiu’s agent in selling
the merchandise
 What Domingo did was to purchase the all or nearly all the merchandise from Lim Tiu then sell it to Ruiz
y Rementeria
 Ruiz y Rementeria also believed that they were dealing with Domingo without any knowledge that he is indeed an
agent of Lim Tiu
 Art. 1717 of the Civil Code: When an agent acts in his own name, the principal shall have no action against
the persons with whom the agent has contracted, nor the said persons against the principal
 Art. 246 of the Code of Commerce: When an agent transacts business in his own name, it shall not be necessary for
him to state who is the principal, and he shall be directly liable, as if the business were for his own account, to the
persons with whom he transacts the same, said persons not having any right of action against the principal, nor the
latter against the former, the liabilities of the principal and the agent to each other always reserved

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The judgment of the lower court is hereby affirmed.

104) PHIL. NATIONAL BANK vs. AGUDELO y GONZAGA

CASE NUMBER: GR No. L- PONENTE: Villareal, J.

39037
DATE: Oct. 30, 1933

FACTS:

 On Nov. 9, 1920, Paz Agudelo executed a special power of attorney (Exhibit K) in favor of her nephew, Mauro Garrucho
 In the said SPA, Garrucho is able to sell alienate and mortgage in whatever manner or form he might deem
convenient, all Agudelo’s properties in Murcia and Bacolod, Negros Occidental
 On Dec. 22, 1920, Amparo Garrucho executed a special power of attorney (Exhibit H) wherein she enabled her
brother, Mauro, to sell, alienate, mortgage or otherwise encumber all her properties in Murcia and Bago, Negros
Occidental
 However, nothing in the said SPAs expressly authorized Mauro A. Garrucho to contract any loan nor to constitute
a mortgage on the properties belonging to the respective principals, to secure his obligations
 On Dec. 23, 1920, a document (Exhibit G) was executed by Mauro in favor of Philippine National Bank (PNB) whereby he
constituted a mortgage on Lot No. 878 under Amparo A. Garrucho, to secure the payment of credits, loans, commercial
overdrafts, etc., not exceeding P6,000, together with interest thereon, which he might obtain from PNB, issuing the
corresponding promissory note to that effect
 For the years 1921 and 1922, Mauro maintained a personal credit account with PNB
 On Aug. 24, 1921, Mauro executed another document (Exhibit J) in PNB’s favor whereby he constituted a mortgage on
Agudelo’s 2 lots, including the buildings and improvements to secure the payment of credits, loans and commercial
overdrafts which the said bank might furnish him to the amount of P16,000, payable on August 24, 1922, executing the
corresponding promissory note to that effect.
 Said mortgage contracts and promissory notes were executed by Mauro in his own name and signed by him in his
personal capacity, authorizing PNB to take possession of the mortgaged properties, by means of force if necessary, in
case he failed to comply with any of the conditions stipulated therein
 Thereafter, PNB notified Mauro of his promissory note within which to make a payment
 Eventually, Mauro’s commercial credit was closed starting May 22, 1922
 PNB manager requested Mauro to liquidate his account amounting to P15,148.15, at the same time notifying him
that his promissory note for P16,000 giving as security for the commercial overdraft in question, had fallen due
 As a result, another mortgage contract (Exhibit C) was executed by Mauro in PNB’s favor over Agudelo’s lot in Bacolod
and Murcia
 Mauro incurred credits and loans for a total of P21,000. A new promissory note was executed for P21,000,
thereby novating the first 2 notes
 Sometime 1925, Amparo sold Lot 878 (which was under exhibit G) to Paz Agudelo (Exhibit M).
 An affidavit (Exhibit N) was likewise signed by Paz Agudelo which states: “xxx do hereby agree and consent to the
transfer in my favor of lot No. 878 of the Cadastre of Murcia, Occidental Negros, P. I., by Miss Amparo A. Garrucho, as
evidenced by the public instrument dated November 25, 1925, executed before the notary public Mr. Genaro B.
Benedicto, and do hereby further agree to the amount of the lien thereon stated in the mortgage deed executed by Miss
Amparo A. Garrucho in favor of the Philippine National Bank.”
 Pursuant to the said sale, the property and title was transferred in Paz’s name
 CFI Ruling:
- Absolved Mauro from the complaint
- Paz Agudelo is ordered to pay PNB

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ISSUE: W/N the powers of attorney issued in Mauro Garrucho’s favor to mortgage their respective real estate, authorized

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him to obtain loans secured by mortgage in the properties in question?

RULING: NO

 Art. 1709 of the Civil Code states that by the contract of agency, one person binds himself to render some service, or to
do something for the account or at the request of another

 On the other hand, Art. 1717 states that when an agent acts in his own name, the principal shall have no right of action
against the persons with whom the agent has contracted, or such persons against the principal. In such case, the agent is
directly liable to the person with whom he has contracted, as if the transaction were his own. Cases involving things
belonging to the principal are excepted xxx

 There is nothing in the mortgage deeds to show that Mauro A. Garrucho is attorney in fact of Amparo and Paz, and that
he obtained the loans mentioned in the aforesaid mortgage deeds and constituted said mortgages as security for the
payment of said loans, for the account and at the request of said Amparo A. Garrucho and Paz Agudelo

 Mauro’s transactions with PNB appears to have been acted in his personal capacity

 In the mortgage deeds, Mauro appears to have acted in his personal capacity. In his capacity as mortgage debtor, he
appointed the mortgage creditor PNB as his attorney in fact so that it might take actual and full possession of the
mortgaged properties by means of force in case of violation of any of the conditions stipulated in the respective
mortgage contracts

 As held in National Bank vs. Palma Gil, a mortgage on real property of the principal not made and signed in the name of
the principal is not valid as to the principal.

 If Mauro A. Garrucho acted in his capacity as mere attorney in fact of Amparo A. Garrucho and of Paz Agudelo, he could
not delegate his power, in view of the legal principle of "delegata potestas delegare non potest" (a delegated power
cannot be delegated), inasmuch as there is nothing in the records to show that he has been expressly authorized to do so

 Also, he executed the promissory notes evidencing the aforesaid loans, under his own signature, without authority from
his principal and, therefore, were not binding upon the latter. There was no showing that the loan obtained was for his
principal

 What really happened was Mauro obtained such credit for himself in his personal capacity and secured the payment
thereof by mortgage constituted by him in his personal capacity, although on properties belonging to his principal

 Thus, Mauro exceeded his scope of his authority and the principal is not liable for his acts

 In conclusion, when an agent negotiates a loan in his personal capacity and executes a promissory note under his own
signature, without express authority from his principal, giving as security therefor real estate belonging to the letter, also
in his own name and not in the name and representation of the said principal, the obligation do constructed by him is
personal and does not bind his aforesaid principal.

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 105) SYJUCO & VIARDO vs. SY-JUCO

CASE NUMBER: 13471 PONENTE: Avanceña, J.

DATE: 12 Jan 1920

FACTS:
1. Santiago was appointed by the plaintiffs (“Syjucos” for brevity; Santiago’s parents) as administrator of their
property and acted as such from 1902-1916.
2. The Syjucos allege that during his administration, Santiago acquired the launch Malabon in his capacity as
administrator with their (Syjucos’) money and for their benefit.
3. The RTC ruled in favor of the Syjucos and ordered Santiago to return basically everything that the Syjucos asked for
in the complaint.
4. The SC affirmed the RTC with the exception of casco No. 2545 which was lawfully sold to Santiago.

ISSUE: Do the properties bought by Santiago in his own name, as an administrator, belong to him? (No; except the casco
2545)

RULING:

1. Regarding the launch Malabon: though Santiago bought it in his own name, such fact does not show that bought it
for himself and with his own money, as he claims.
- This transaction was within the agency which he had received from the Syjucos (the principal).
- The fact that he has acted in his own name may be only a violation of the agency on his part.
- The question is not in whose favor the document of sale of the launch is executed nor in whose name same was
registered, but with whose money was said launch bought.
2. Moreover, from the rule established in Article 1717 of the Civil Code (“when an agent acts in his own name, the
principal shall have no right of action against the person with whom the agent has contracted, cases involving things
belonging to the principal are excepted”):
- According to this exception: the agent is bound to the principal although he does not assume the character of
such agent and appears acting on his own name
- Thus, in effect, the contract must be considered as entered into between the principal and the third person;
and, consequently, if the obligations belong to the former, to him alone must also belong the rights arising from
the contract.
- The money with which the launch was bought having come from the Syjucos, the exception established
in Article 1717 is applicable to this case.
3. Concerning the casco No. 2584, Santiago himself admits it was constructed by the Syjucos in the latter's ship-yard.
4. As to the automobile, there is sufficient evidence to show that its price was paid with the Syjucos’ money.
5. Concerning the casco No. 2545: (the RTC refrained from making any declaration about its ownership in view of the
fact that this casco had been leased and was sunk while in the lessee's hands before the complaint in this case was
filed)
- The RTC should have made a pronouncement upon this casco.
- As it belonged to the Syjucos, and that the latter sold it afterwards to Santiago- Santiago’s ownership over
it absolves him from liability on it.
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6. Concerning the rendition of accounts which the Syjucos require of Santiago, Santiago is also absolved from this for it

Page 59
 appears that Santiago used to render accounts of his agency after each transaction, to the Syjucos’ satisfaction.

106) NATIONAL FOOD AUTHORITY vs. INTERMEDIATE APPELLATE COURT

CASE NUMBER: GR NO. 75640 PONENTE: Paras

DATE: April 5, 1990

FACTS:

Medalla, as commission agent of Superior Shipping Corporation (SSC), entered into a contract for hire of ship with
the National Grains Authority (NGA), where sacks of rice belonging to the latter would be transported from
Occidental Mindoro to Manila. SSC then asked payments from NGA and it requested that the payment be made to
it and not to Medalla. NGA replied that it could not grant its request because the contract was entered into by
NGA and Medalla who did not disclose that he was acting as a mere agent of SSC. NGA paid Medalla. The SSC
asked Medalla for the payment but the latter ignored the request.

ISSUE: : Is NGA liable to SSC?

RULING:

NGA is liable under Art 1883 of the Civil Code. Relevant portion of the provision states, “In such case the agent is
the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own,
except when the contract involves things belonging to the principal.” Consequently, when things belonging to the
principal (in this case, SSC) 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. Thus, in effect, the contract must be considered as
entered into between the principal and the third person.

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 107) AWAD vs. FILMA MAECANTILE CO.

CASE NUMBER: No. L-25950 PONENTE: Ostrand, J.

DATE: December 24, 1926

FACTS:
Plaintiff, doing business in the Philippine Islands under the name of E. Awad & Co., delivered certain merchandise
with an invoice value of ₱11,140 to Chua Lioc, a merchant operating under the name of Hang Chua Co. in Manila, and sell it
on commission basis. Chua Lioc, representing himself as the owner of the merchandise, sold it to Filma Mercantile
(defendant) for ₱12,155.60. He owed the Philippine Manufacturing Co. ₱3,480, which the defendant agreed to pay, and was
also indebted to the defendant itself of the amount of ₱2,017.98. The total amount of the two debts, ₱5,497.98, was
deducted from the purchase price, leaving a balance of ₱6,657.52 which the defendant promised to pay to Chua Lioc on or
before October 9, 1924.

The merchandise purchased was delivered to the defendant, who immediately offered it for sale. Three days later D.
J. Awad, plaintiff’s representative in the Philippine Islands, having ascertained that the goods entrusted to Chua Lioc was
being offered for sale by the defendant, obtained authorization from Chua Lioc to collect ₱11,707 from the defendant and
informed the latter's treasurer of the said transaction. On September 15, D. J. Awad, in behalf of E. Awad & Co., wrote a letter
to the defendant corporation telling them that inasmuch the merchandise belonged to E. Awad & Co., the purchase price
should be paid to them, but the defendant refused to comply in its reply letter.

On September 18, 1924, the Philippine Trust Company brought an action against Chua Lioc for the recovery of the
sum of ₱1,036.36 and under a writ of attachment garnished the balance due Chua Lioc from the defendant. On October 7, E.
Awad also brought an action, against Chua Lioc for the recovery of the sum of ₱11,140 (invoice value of the merchandise) and
also obtained a writ of attachment under which notice of garnishment of the said aforesaid balance we served upon the
herein defendant.

The present action was filed on November 26, 1924 with the plaintiff demanding payment of the same sum of
₱11,140 for which action had already been brought against Chua Lioc. The defendant averred, among others, that it brought
the merchandise in good faith and without any knowledge whether of the person from whom or the condition under which
the said merchandise had been acquired by Chua Lioc or Hang Chua Co. The trial court dismissed the case on the ground that
the plaintiff was only entitled to payment of the sum of ₱6,657.52, but which sum the defendant had the right to retain
subject to the orders of the court in the two other cases. Hence, this appeal.

ISSUE: Whether the defendant brought the merchandise in good faith.

RULING: Yes. Article 246 of the Code of Commerce states that:

When the agent transacts business in his own name, it shall not be necessary for him to state who is the
principal and he shall be directly liable, as if the business were for his own account, to the persons with

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whom he transacts the same, said persons not having any right of action against the principal, nor the latter
against the former, the liabilities of the principal and of the agent to each other always being reserved.

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The plaintiff-appellant pointed out several circumstances which he believes indicate that the defendant-appellee was aware
of the condition under which the merchandise was entrusted to the agent Chua Lioc and therefore did not purchase the
goods in good faith. But the court did not see anything conclusive about the circumstances referred to and they are not
sufficient to overcome the presumption of good faith.

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