MANILA MEMORIAL PARK CEMETERY, INC.vs.
PEDRO L.

LINSANGAN

FACTS:

Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by
petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under Contract No. 25012 was no longer
interested in acquiring the lot and had opted to sell his rights subject to reimbursement of the amounts he already paid.
The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the former buyer,
the contract would be transferred to him.

Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed to the original buyer and
to complete the down payment to MMPCI. Baluyot issued handwritten and typewritten receipts for these payments.
Contract No. 28660 has a listed price of P132,250.00. Atty. Linsangan objected to the new contract price, as the same
was not the amount previously agreed upon. To convince Atty. Linsangan, Baluyot executed a document confirming that
while the contract price is P132,250.00, Atty. Linsangan would pay only the original price of P95,000.00.

Later on, Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was cancelled for reasons the latter could not
explain. For the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan filed a Complaint for
Breach of Contract and Damages against the former.

MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the contract because of non-
payment of arrearages. MMPCI stated that Baluyot was not an agent but an independent contractor, and as such was not
authorized to represent MMPCI or to use its name except as to the extent expressly stated in the Agency Manager
Agreement. Moreover, MMPCI was not aware of the arrangements entered into by Atty. Linsangan and Baluyot, as it in
fact received a down payment and monthly installments as indicated in the contract.

The trial court held MMPCI and Baluyot jointly and severally liable. The Court of Appeals affirmed the decision of the trial
court.

ISSUES:

1. Whether or not there was a contract of agency between Baluyot and MMPCI?
2. Whether or not MMPCI should be liable for Baluyot’s act?

HELD:

First Issue. Yes. By the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. As properly found both by the trial court
and the Court of Appeals, Baluyot was authorized to solicit and remit to MMPCI offers to purchase interment spaces
obtained on forms provided by MMPCI. The terms of the offer to purchase, therefore, are contained in such forms and,
when signed by the buyer and an authorized officer of MMPCI, becomes binding on both parties.

Second Issue. No. While there is no more question as to the agency relationship between Baluyot and MMPCI, there is no
indication that MMPCI let the public, or specifically, Atty. Linsangan to believe that Baluyot had the authority to alter the
standard contracts of the company. Neither is there any showing that prior to signing Contract No. 28660, MMPCI had
any knowledge of Baluyot's commitment to Atty. Linsangan. Even assuming that Atty. Linsangan was misled by MMPCI's
actuations, he still cannot invoke the principle of estoppel, as he was clearly negligent in his dealings with Baluyot, and
could have easily determined, had he only been cautious and prudent, whether said agent was clothed with the authority
to change the terms of the principal's written contract.
To repeat, the acts of the agent beyond the scope of his authority do not bind the principal unless the latter ratifies the
same. It also bears emphasis that when the third person knows that the agent was acting beyond his power or authority,
the principal cannot be held liable for the acts of the agent. If the said third person was aware of such limits of authority,
he is to blame and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's
ratification.

Harry E. Keeler Electric Co. vs. Rodriguez

November 11,1922, Johns, J.

***This case involves an action for the payment of purchase price by plaintiff Keeler Electric against defendant Rodriguez

Legal Doctrine: Persons dealing with an assumed agent, whether the assumed agency be a general or special one, are
bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but the nature and extent
of the authority, and in case either is controverted, the burden of proof is upon them to establish it.

Facts:
• Plaintiff is Harry E. Keeler Electric Co., a domestic corporation based in Manila engaged in the electrical business,
and among other things in the sale of what is known as the "Matthews" electric plant.
• Defendant is Domingo Rodriguez a resident of Talisay, Occidental Negros
• Montelibano, a resident of Iloilo, went to Keeler Electric and made arrangement with the latter wherein:
o He claimed that he could find purchaser for the "Matthews" plant
o Keeler Electric told Montelibano that for any plant that he could sell or any customer that he could find he
would be paid a commission of 10% for his services, if the sale was consummated.
• Through Montelibano’s efforts, Keeler was able to sell to Rodriguez one of the "Matthews" plants
• Rodriguez paid Montelibano (the purchase price of P2,513.55), after the installation of the plant and without the
knowledge of Keeler Electric,
• Keeler Electric filed an action against Rodriguez for the payment of the purchase price.
• Rodriguez: Claimed that he already paid the price of the plant. In addition, he alleged that:
o Montelibano sold and delivered the plant to him, and "was the one who ordered the installation of that
electrical plant"
o There were evidences: a statement and receipt which Montelibano signed to whom he paid the money.
o He paid Montelibano because the latter was the one who sold, delivered, and installed the electrical plant,
and he presented to him the account, and assured him that he was duly authorized to collect the value of
the electrical plant
o The receipt had the following contents:

STATEMENT Folio No. 2494

Mr. DOMINGO RODRIGUEZ,
Iloilo, Iloilo, P.I.
In account with
HARRY E. KEELER ELECTRIC COMPANY, INC.
221 Calle Echaque, Quiapo, Manila, P.I.
MANILA, P.I., August 18, 1920.
The answer alleges and the receipt shows upon its face that the plaintiff sold the plant to
the defendant, and that he bought it from the plaintiff. The receipt is signed as follows:
Received payment
HARRY E. KEELER ELECTRIC CO. Inc.,
Recibi
(Sgd.) A. C. MONTELIBANO.
• Witness (Juan Cenar):
o Cenar was sent by Keeler Electric to install the plant in Rodriguez’s premises in Iloilo
o He brought with him a statement of account for Rodriguez but the latter said that he would pay in Manila.
• ***Lower Court: In favor of Rodriguez. It held that:
o Keeler Electric had held out Montelibano to Rodriguez as an agent authorized to collect
o Payment to Montelibano would discharge the debt of Rodriguez
 o The bill was given to Montelibano for collection purposes
• Keeler Electric appealed. It alleged that:
o Montelibano had no authority to receive the money.
o His services were confined to the finding of purchasers for the "Matthews" plant
o Montelibano was not an electrician, could not install the plant and did not know anything about its
mechanism.

Issues:
1. WON Keeler Electric authorized Montelibano to receive or receipt for money in its behalf

2. WON Rodriguez had a right to assume by any act or deed of Keeler Electric that Montelibano was authorized to
receive the money

Held/Ratio:

1. NO, Montelibano was not authorized. The plant was sold by Keeler Electric to Rodriguez and was consigned
to Iloilo where it was installed by Cenar, acting for, and representing, Keeler Electric, whose expense for the trip
is included in, and made a part of, the bill which was receipted by Montelibano.

a. Montelibano was not an agent of Keeler Electric

o There is nothing on the face of this receipt to show that Montelibano was the agent of, or that he was
acting for, Keeler Electric. It is his own personal receipt and his own personal signature.
o Outside of the fact that Montelibano received the money and signed this receipt, there is no evidence that
he had any authority, real or apparent, to receive or receipt for the money.
o Neither is there any evidence that Keeler Electric ever delivered the statement to Montelibano. (It is very
apparent that the statement is the one which was delivered by Keeler Electric to Cenar, and is the one
which Cenar delivered to Rodriguez)

b. It was Juan Cenar, and not Montelibano who sold the plant to Rodiguez

o The evidence is in direct conflict with Rodriguez’s own pleadings and the receipt statement which he
offered in evidence. This statement also shows upon its face that P81.60 of the bill is round trip fare and
machine’s transportation costs.
o This claim must be for the expenses of Cenar in going to Iloilo from Manila and return, to install the plant,
and is strong evidence that it was Cenar and not Montelibano who installed the plant.
o If Montelibano installed the plant, there would not have been any necessity for Cenar to make this trip at
the expense of Rodriguez.
o After Cenar's return to Manila, Keeler Electric wrote a letter to Rodriguez requesting the payment of its
account, to which Rodriguez answered that he already paid to Montelibano.
§ This is in direct conflict with the receipted statement, which Rodriguez offered in evidence, signed
by Montelibano.
o It will be noted that the receipt which Montelibano signed is not dated, and it does not show when the
money was paid.

2. NO.

a. Relevant laws:
− Article 1162 CC: Payment must be made to the persons in whose favor the obligation is constituted, or to
another authorized to receive it in his name.

− Article 1727 CC: 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.

− Ormachea Tin-Conco vs. Trillana: The repayment of a debt must be made to the person in whose favor
the obligation is constituted, or to another expressly authorized to receive the payment in his name.

b. On whether an assumed authority exist – Certain principles must be considered: (Mechem on Agency, volume
I, section 743)
 − (1) that the law indulges in no bare presumptions that an agency exists: it must be proved or presumed
from facts;
− (2) that the agent cannot establish his own authority, either by his representations or by assuming to
exercise it;
− (3) that an authority cannot be established by mere rumor or general reputation;
− (4)that even a general authority is not an unlimited one; and
− (5) that every authority must find its ultimate source in some act or omission of the principal.

Applying the above rules:

o Persons dealing with an assumed agent, whether the assumed agency be a general or special one, are
bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but the
nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to
establish it.

o The person dealing with the agent must act with ordinary prudence and reasonable diligence.
Obviously, if he knows or has good reason to believe that the agent is exceeding his authority, he cannot
claim protection. So if the suggestions of probable limitations be of such a clear and reasonable quality,
or if the character assumed by the agent is of such a suspicious or unreasonable nature, or if the authority
which he seeks to exercise is of such an unusual or improbable character, the party dealing with him may
not shut his eyes to the real state of the case, but should either refuse to deal with the agent at all, or
should ascertain from the principal the true condition of affairs.

Judgment of the lower court is REVERSED. Rodriguez should pay Keeler Electric the purchase price of the plant.

Filipinas Life Assurance Co. (now Ayala Life Assurance, Inc.) v. Clemente Pedrosa, Teresita Pedrosa and Jennifer
Palacio

G.R. No. 159489, February 04, 2008

Quisumbing, J.

FACTS:
û Teresita Pedroso is a policyholder of a 20-year endowment life insurance issued by Filipinas Life Assurance Co. Pedroso
claims Renato Valle was her insurance agent since 1972 and Valle collected her monthly premiums. In the first week of
January 1977, Valle told her that the Filipinas Life Escolta Office was holding a promotional investment program for
policyholders. It was offering 8% prepaid interest a month for certain amounts deposited on a monthly basis. Enticed,
she initially invested and issued a post-dated check for P10,000. In return, Valle issued Pedroso his personal check for
P800 for the 8% prepaid interest and a Filipinas Life Agent receipt.
û Pedroso called the Escolta office and talked to Francisco Alcantara, the administrative assistant, who referred her to the
branch manager, Angel Apetrior. Pedroso inquired about the promotional investment and Apetrior confirmed that there
was such a promotion. She was even told she could push through with the check she issued. From the records, the
check, with the endorsement of Alcantara at the back, was deposited in the account of Filipinas Life with the Commercial
Bank and Trust Company, Escolta Branch.
û Relying on the representations made by Filipinas Life’s duly authorized representatives Apetrior and Alcantara, as well
as having known agent Valle for quite some time, Pedroso waited for the maturity of her initial investment. A month after,
her investment of P10,000 was returned to her after she made a written request for its refund. To collect the amount,
Pedroso personally went to the Escolta branch where Alcantara gave her the P10,000 in cash. After a second investment,
she made 7 to 8 more investments in varying amounts, totaling P37,000 but at a lower rate of 5% prepaid interest a
month. Upon maturity of Pedroso’s subsequent investments, Valle would take back from Pedroso the corresponding
agent’s receipt he issued to the latter.
û Pedroso told respondent Jennifer Palacio, also a Filipinas Life insurance policyholder, about the investment plan. Palacio
made a total investment of P49,550 but at only 5% prepaid interest. However, when Pedroso tried to withdraw her
investment, Valle did not want to return some P17,000 worth of it. Palacio also tried to withdraw hers, but Filipinas Life,
despite demands, refused to return her money.

ISSUE: WON Filipinas Life is jointly and severally liable with Apetrior and Alcantara on the claim of Pedroso and Palacio
or WON its agent Renato Valle is solely liable to Pedroso and Palacio

HELD:
û Pedroso and Palacio had invested P47,000 and P49,550, respectively. These were received by Valle and remitted to
Filipinas Life, using Filipinas Life’s official receipts. Valle’s authority to solicit and receive investments was also
 established by the parties. When Pedroso and Palacio sought confirmation, Alcantara, holding a supervisory position,
and Apetrior, the branch manager, confirmed that Valle had authority. While it is true that a person dealing with an agent
is put upon inquiry and must discover at his own peril the agent’s authority, in this case, Pedroso and Palacio did exercise
due diligence in removing all doubts and in confirming the validity of the representations made by Valle.
û Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle. By the contract of agency, a person
binds himself to render some service or to do something in representation or on behalf of another, with the consent or
authority of the latter. The general rule is that the principal is responsible for the acts of its agent done within the scope
of its authority, and should bear the damage caused to third persons. When the agent exceeds his authority, the agent
becomes personally liable for the damage. But even when the agent exceeds his authority, the principal is still solidarily
liable together with the agent if the principal allowed the agent to act as though the agent had full powers. The acts of
an agent beyond the scope of his authority do not bind the principal, unless the principal ratifies them, expressly or
impliedly.
û Ratification – adoption or confirmation by one person of an act performed on his behalf by another without authority
û Even if Valle’s representations were beyond his authority as a debit/insurance agent, Filipinas Life thru Alcantara and
Apetrior expressly and knowingly ratified Valle’s acts. Filipinas Life benefited from the investments deposited by Valle in
the account of Filipinas Life.

HAHN v. CA
G.R. No. 113074; January 22, 1997
Ponente: J. Mendoza

FACTS:
Petitioner Alfred Hahn is a Filipino citizen doing business under the name and style "Hahn-Manila". On the other hand,
private respondent (BMW) is a nonresident foreign corporation existing under the laws of the former Federal Republic of
Germany, with principal office at Munich, Germany.

On March 7, 1967, petitioner executed in favor of private respondent a "Deed of Assignment with Special Power of
Attorney. Per the agreement, the parties "continue[d] business relations as has been usual in the past without a formal
contract."

But on February 16, 1993, in a meeting with a BMW representative and the president of Columbia Motors Corporation
(CMC), Jose Alvarez, petitioner was informed that BMW was arranging to grant the exclusive dealership of BMW cars and
products to CMC, which had expressed interest in acquiring the same.

On February 24, 1993, petitioner received confirmation of the information from BMW which, in a letter, expressed
dissatisfaction with various aspects of petitioner's business, mentioning among other things, decline in sales, deteriorating
services, and inadequate showroom and warehouse facilities, and petitioner's alleged failure to comply with the standards
for an exclusive BMW dealer.

Nonetheless, BMW expressed willingness to continue business relations with the petitioner on the basis of a "standard
BMW importer" contract, otherwise, it said, if this was not acceptable to petitioner, BMW would have no alternative but to
terminate petitioner's exclusive dealership effective June 30, 1993.

Because of Hahn's insistence on the former business relations, BMW withdrew on March 26, 1993 its offer of a "standard
importer contract" and terminated the exclusive dealer relationship effective June 30, 1993.

On April 29, 1993, BMW proposed that Hahn and CMC jointly import and distribute BMW cars and parts.

Hahn found the proposal unacceptable. On May 14, 1993, he filed a complaint for specific performance and damages
against BMW to compel it to continue the exclusive dealership.

ISSUE:
Whether petitioner Alfred Hahn is the agent or distributor in the Philippines of private respondent BMW

HELD:

Alfred Hahn is an agent of BMW.

 The Supreme Court held that agency is shown when Hahn claimed he took orders for BMW cars and transmits them to
BMW. Then BMW fixes the down payment and pricing charges and will notify Hahn of the scheduled production month
for the orders, and reconfirm the orders by signing and returning to Hahn the acceptance sheets.

The payment is made by the buyer directly to BMW. Title to cars purchased passed directly to the buyer and Hahn never
paid for the purchase price of BMW cars sold in the Philippines. Hahn was credited with a commission equal to 14% of
the purchase price upon the invoicing of a vehicle order by BMW. Upon confirmation in writing that the vehicles had been
registered in the Philippines and serviced by him, Hahn received an additional 3% of the full purchase price. Hahn
performed after-sale services, including, warranty services. for which he received reimbursement from BMW. All orders
were on invoices and forms of BMW.

Moreover, the Court distinguished an agent from a broker. The court ruled that an agent receives a commission upon the
successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller
together, even if no sale is eventually made.

DOMINION INSURANCE V. CA
February 6, 2002

SUMMARY: Guevarra instituted a civil case for the recovery of a sum of money against Dominion Insurance. He sought to
recover sums he had advanced in his capacity as manager. Dominion denied any liability to Guevarra. RTC ruled that
Dominion was to pay Guevarra. CA affirmed. SC also ruled that Dominion should pay Guevarra, but not under the law on
agency, but the law on obligations and contracts. This is because Guevarra deviated from the instructions of Dominion
under which he would have had authority to settler the latter’s claims, i.e. to pay through the revolving fund. Nevertheless,
recovery may be made under Art. 1236.

DOCTRINE: When a special power of attorney is required for the agent to do a certain act, the agent, in the performance
of such act, must comply with the specifications embodied in the special power of attorney giving him authority to do
such.

For example, here, a special power of attorney was needed for Guevarra to settle the claims of Dominion’s clients. And for
this purpose, there was a memorandum. However, the memorandum stated that Guevarra was to settle the claims using
the money in a revolving fund. Guevarra did not comply with this, so e expenses Guevarra incurred in the settlement of
the claims of the insured my not be reimbursed from Dominion, at least under the law of agency.

FACTS: Rodolfo Guevarra instituted a civil case for the recovery of a sum of money against Dominion Insurance. He sought
to recover P156,473.90, which he claimed to have advanced in his capacity as manager of Dominion to satisfy claims filed
by Dominion’s clients. Dominion denied any liability to Guevarra and asserted a counterclaim for premiums allegedly
unremitted by the latter.

The pre-trial conference never pushed through despite being scheduled and postponed nine times over the course of six
months. Finally, the case was called again for pre-trial and Dominion and counsel failed to show up. The trial court declared
Dominion in default and denied any reconsideration.

On the merits of the case, the RTC ruled that Dominion was to pay Guevarra the P156,473.90 claimed as the total amount
advanced by the latter in the payment of the claims of Dominion’s clients. The CA affirmed.

ISSUES + RATIO:
WON Guevarra acted within his authority as agent for Dominion – NO
A perusal of the “Special Power of Attorney” would show that Dominion and Guevarra intended to enter into a
principal-agent relationship. Despite the word “special,” the contents of the document reveal that what was constituted
was a general agency. The agency comprises all the business of the principal, but, couched in general terms, is limited
only to acts of administration. A general power permits the agent to do all acts for which the law does not require a special
power.

Art. 1878 enumerates the instances when a special power of attorney is required, including (1) to make such
payments as are not usually considered as acts of administration; (15) any other act of strict dominion.

The payment of claims is not an act of administration. The settlement of claims is not included among the acts enumerated
in the Special Power of Attorney, neither is it of a character similar to the acts enumerated therein. A special power of
attorney would have been required before Guevarra could settle the insurance claims of the insured.
 Guevarra’s authority to settle claims is embodied in the Memorandum of Management Agreement which
enumerated the scope of Guevarra’s duties and responsibilities. However, the Memorandum showed the instruction of
Dominion that payment of claims shall come from a revolving fund. Having deviated from the instructions of the principal,
the expenses that Guevarra incurred in the settlement of the claims of the insured may not be reimbursed from Dominion.

WON Guevarra is entitled to reimbursement of amounts – YES

However, while the law on agency prohibits Guevarra from obtaining reimbursement, his right to recovery may still
be justified under the general law on Obligations and Contracts, particularly, Art. 1236 .

In this case, when the risk insured against occurred, Dominion’s liability as insurer arose. This obligation was
extinguished when Guevarra paid such claims. Thus, to the extent that the obligation of Dominion had been extinguished,
Guevarra may demand reimbursement from his principal. To rule otherwise would result in unjust enrichment of Dominion.

RULING: Dominion is ordered to pay Guevarra P112,6762.11, representing the total amount advanced by the latter in the
payment of the claims of the former’s clients, minus the amount in the revolving fund and the outstanding balance and
remittance.

Acting as agent for petitioner Dominion, Guevarra paid P156,473.90 in settling the claims of several insured clients of
petitioner out of his personal money. Guevarra thereafter filed a civil case for sum of money to recover said amount. The
RTC and the CA rendered judgment in favor of Guevarra.
On appeal, Dominion claimed Guevarra is not entitled to reimbursement because he did not act within his authority as
agent for Dominion.
The Supreme Court denied the petition with modification, and held: that Art. 1918 of the Civil Code makes Dominion not
liable for expenses incurred by Guevarra who acted in contravention of his principal's (Dominion's) instructions. Based on
their agreement, Guevarra was instructed to pay for the claims of the insured from the revolving fund, not from Guevarra's
personal money. However, while the law on agency prohibits Guevarra from obtaining reimbursement, his right to recover
may still be justified under Art. 1236, par. 2 of the Civil Code. In this case, when the risk insured against occurred,
Dominion's liability as insurer arose. This obligation was extinguished when Guevarra paid the claims of the insured. Thus,
to the extent the payment has been beneficial to Dominion, Guevarra may demand reimbursement from the latter. To rule
otherwise would result in unjust enrichment of Dominion.