Agency Digests2

•
1. Eurotech Industrial Technologies, Inc. v. Edwin Cuizon

and Erwin Cuizon
Eurotech Industrial Technologies vs Cuizon

GR #167552
Facts:
Edwin Cuizon, general manager of Impact Systems Sales owned

by Erwin Cuizon, bought one equipment from Petitioner Eurotech
valued at Php 250,000.00, paying Php 50,000.00 as
downpayment. When the equipment arrived, petitioner refused to
deliver it to the respondent without paying the balance.
Edwin and a general manager of Eurotech signed a deed of

assignment, whereby Impact Systems assigns its outstanding
receivable amounting to Php 365,000.00 to Eurotech, which
delivered the equipment thereafter.
But Erwin, the proprietor, still collected the receivables despite

the assignment. After partial payments made, Eurotech made a
final demand of Php 295,000.00, excluding interest and attorney's
fees.
For failure to meet the demand, Eurotech filed a complaint for

sum of money, damages, with application for preliminary
https://s3.amazonaws.com/academia.edu.documents/3470518…bdc68af710f41ef4295c51932b8d40e710bdf746f8e5115ab2198 18/08/2019, 8B54 PM

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attachment.
Edwin alleged that he is not a real party in interest in the case for
he merely acted as an agent of his principal, Impact Systems.
RTC dropped respondent as a party defendant of the case. The

CA affirmed the order, hence the appeal was made.
Issue:
Whether or not respondent, as sales manager, is acting merely

as an agent for the sole proprietorship
Held:
Respondent Edwin merely acted as an agent.
In a contract of agency, a person binds himself to render some

service or to do something in representation or on behalf of
another with the latter’s consent.
The underlying principle of the contract of agency is to

accomplish results by using the services of others – to do a great
variety of things like selling, buying, manufacturing, and
transporting.
Its purpose is to extend the personality of the principal or the

party for whom another acts and from whom he or she derives
the authority to act.
It is said that the basis of agency is representation, that is, the

agent acts for and on behalf of the principal on matters within the
scope of his authority and said acts have the same legal effect as
if they were personally executed by the principal.
By this legal fiction, the actual or real absence of the principal is

converted into his legal or juridical presence – qui facit per alium
facit per se.

Page 2 of 69
The elements of the contract of agency are:
(1) consent, express or implied, of the parties to establish the

relationship;
(2) the object is the execution of a juridical act in relation to a

third person;
(3) the agent acts as a representative and not for himself;
(4) the agent acts within the scope of his authority
In this case, the parties do not dispute the existence of the

agency relationship between respondents ERWIN as principal
and EDWIN as agent. The only cause of the present dispute is
whether respondent EDWIN exceeded his authority when he
signed the Deed of Assignment thereby binding himself
personally to pay the obligations to petitioner.
Article 1897 reinforces the familiar doctrine that an agent, who

acts as such, is not personally liable to the party with whom he
contracts.
The same provision, however, presents two instances when an

agent becomes personally liable to a third person:
(1) When he expressly binds himself to the obligation; and,
(2) When he exceeds his authority.
In the last instance, the agent can be held liable if he does not
give the third party sufficient notice of his powers.
We hold that respondent EDWIN does not fall within any of

the exceptions contained in this provision.
"...the position of manager is unique in that it presupposes the

grant of broad powers with which to conduct the business of the
principal."

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The powers of an agent are particularly broad in the case of one
acting as a general agent or manager; such a position
presupposes a degree of confidence reposed and investiture with
liberal powers for the exercise of judgment and discretion in
transactions and concerns which are incidental or appurtenant to
the business entrusted to his care and management. In the
absence of an agreement to the contrary, a managing agent may
enter into any contracts that he deems reasonably necessary or
requisite for the protection of the interests of his principal
entrusted to his management.
A real party in interest is one who "stands to be benefited or

injured by the judgment in the suit, or the party entitled to the
avails of the suit."
2. Rallos v. Felix Go Chan & Realty Corp.
FACTS: An SPA was executed by sisters Concepcion and

Gerundia in favo of their brother Simeon for the sale of a parcel
of land co-owned by the two. Months after Conception died,
Simeon sold the undivided shares of his sisters to herein
respondent Felix Go Chan & Realty Corp. Petitioner Ramon
Rallos, administrator of he late Concepcion's estate, prayed that
the sale of the undivided share of the deceased be invalidated
and a new certificate be issued in the name of respondent
corporation and Concepion's intestate estate, plus damages. CFI
ruled in favor of petitioner and granted the payers but CA
reversed the decision. Respondent's MR was further denied.
ISSUE: Whete the sale entered into by an agent is valid alhough

executed after death of the principal.
HELD: No, the sale is void because Simeon's authority as an

agent of Concepcion was extinguished upon her death. Article
1317 provides that no one may contract inthe name of another
without being authorized or unless he has, by law, a righ to
represent him. Article 1919 urthers hat the death of the princpal

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terminates the agency. The case at bar is also not among the
exceptions whereby an agent's acts bind the principal even after
the latter's death because of Simeon's knowledge of Concepion's
death is material. CA's decision is reversed, CFI decision affimed.
The sale was null and void.
3. Severino vs severino
Facts:
Fabiola severino is a recognized natural daughter of melencio severino one of the heirs of several property
of the decease. Guillermo severino, so of the decease. A litigation ensued the heads of the decease and in
order to put an end to the litigation Guillermo took over the property and a compromise agreement was put
up, and agreeing to settle with an amount of 100000, and upon the execution of the agreement cntract and
amount of 40000 shall be paid to, Fabiola severino and Felecia's Villanueva, the whole amount is paid in
installment of 20000 every year up to the third year. To which Fabiola is entitled to 20000. Enrique enchaus
signed as guarantor in the agreement.
This case is now filed on RTC to recover the 20000. Enrique as a guarantor protested that the agreement is
lacking consideration on his part when he signed the agreement as a guarantor.
Issue: WON the agreement is invalid due to lack of consideration as a guarantor.
Hel: NO, The agreement as a guarantor is a accessory contract to the principal and as such the
consideration in the principal contract is the same as in the agreement signed by Enrique as guarantor.
4. ORIENT AIR SERVICES v. CA
Facts:
American Air, an air carrier offering passenger and air cargo
transportation, entered into a General Sales Agency Agreement
with Orient Air, authorizing the latter to act as its exclusive
general sales agent for the sale of air passenger transportation.
Orient air failed to remit the net proceeds of sales for several
months prompting American Air to undertook the collection of the
proceeds of tickets sold originally by Orient Air and terminating
their agreement. American air instituted suit against Orient Air for
the settlement of past outstanding funds in possession of the
latter. Orient Air contended that because of the unpaid overriding
commissions it retained the sales proceeds before remitting the
balance to American Air. American Air contended that the sale
must be made by Orient Air and the sale must be done with the
use of American Air's ticket stocks in order for it to be entitled to
the overriding commission. On the other hand, Orient Air

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contends that the contractual stipulation of a 3% overriding
commission covers the total revenue of American Air and not
merely that derived from ticketed sales undertaken by Orient Air
because it was an exclusive General Sales Agent. CA held that
Orient Air is entitled to commissions and ordered American Air to
reinstate Orient Air as its General Sales Agent.
Issue:
Whether or not Orient Air is entitled to commissions.
Whether CA is correct in ordering reinstatement of Orient Air as
an agent.
Held:
1. Yes. Orient Air was entitled to an overriding commission based
on total flown revenue. American Air's perception that Orient Air
was remiss or in default of its obligations under the Agreement
was, in fact, a situation where the latter acted in accordance with
the Agreement—that of retaining from the sales proceeds its
accrued commissions before remitting the balance to American
Air. Since the latter was still obligated to Orient Air by way of such
commissions. Orient Air was clearly justified in retaining and
refusing to remit the sums claimed by American Air. The latter's
termination of the Agreement was, therefore, without cause and
basis, for which it should be held liable to Orient Air.
2. No. CA 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.
5. BORDADOR V. LUZ
FACTS:

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Petitioners(Bordadors) were engaged in the business of purchase and sale of jewelry and respondent
(Brigida D. Luz, also known as Aida D. Luz), was their regular customer.
On several occasions, respondent Narciso Deganos, the brother of Brigida D. Luz, received several
[1]
pieces of gold and jewelry from petitioners amounting to P382,816.00.
These items and their prices were indicated in seventeen receipts covering the same. Eleven of the
receipts stated that they were received for a certain Evelyn Aquino, a niece of Deganos, and the remaining
[2]
six indicated that they were received for Brigida D. Luz.
Deganos was supposed to sell the items at a profit and thereafter remit the proceeds and return the
unsold items to petitioners.
Deganos remitted only the sum of P53,207.00. He neither paid the balance of the sales proceeds, nor
did he return any unsold item to petitioners.
[3]
The total of his unpaid account to petitioners, including interest, reached the sum ofP725,463.98.
ISSUE:
The primary issue in the instant petition is whether or not herein respondent spouses are liable to
petitioners for the latter’s claim for money and damages in the sum of P725,463.98, plus interests and
attorney’s fees, despite the fact that the evidence does not show that they signed any of the subject
receipts or authorized Deganos to receive the items of jewelry on their behalf.
RULING:
No error having been committed by the Court of Appeals in affirming the judgment of the court a
quo, its challenged decision and resolution are hereby AFFIRMED and the instant petition is DENIED, with
double costs against petitioners
HELD:
No evidence support the theory of petitioners that Deganos was an agent of Brigida D. Luz and that the
latter should consequently be held solidarily liable with Deganos in his obligation to petitioners. While the
quoted statement in the findings of fact of the assailed appellate decision mentioned that Deganos
ostensibly acted as an agent of Brigida, the actual conclusion and ruling of the Court of Appeals
categorically stated that, “(Brigida Luz) never authorized her brother (Deganos) to act for and in her behalf
[15]
in any transaction with Petitioners x x x.” It is clear, therefore, that even assuming arguendo that
Deganos acted as an agent of Brigida, the latter never authorized him to act on her behalf with regard to
the transactions subject of this case.
The Civil Code provides:
Art. 1868. By the contract of agency a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the
latter.
The basis for agency is representation. Here, there is no showing that Brigida consented to the acts of
Deganos or authorized him to act on her behalf, much less with respect to the particular transactions
involved. Petitioners’ attempt to foist liability on respondent spouses through the supposed agency relation
with Deganos is groundless and ill-advised.
Besides, it was grossly and inexcusably negligent of petitioners to entrust to Deganos, not once or
twice but on at least six occasions as evidenced by six receipts, several pieces of jewelry of substantial
value without requiring a written authorization from his alleged principal. A person dealing with an agent is
[16]
put upon inquiry and must discover upon his peril the authority of the agent.
The records show that neither an express nor an implied agency was proven to have existed between
Deganos and Brigida D. Luz. Evidently, petitioners, who were negligent in their transactions with Deganos,
cannot seek relief from the effects of their negligence by conjuring a supposed agency relation between the
two respondents where no evidence supports such claim.
What was finally proven as a matter of fact is that there was no

such contract between Brigida D. Luz and Narciso Deganos,
executed or partially executed, and no delivery of any of the
items subject of this case was ever made to the former.

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6. Apex Mining Co., Inc. v. Southeast Mindanao Gold
Mining Corp. (2006)
Facts:The case involves the “Diwalwal Gold Rush Area”

(Diwalwal), a rich tract of mineral landlocated inside the Agusan-
Davao-Surigao Forest Reserve in Davao del Norte and Davao
Oriental. Sincethe early 1980s, Diwalwal has been stormed by
conflicts brought about by numerous mining claims over it.On
March 10, 1986, Marcopper Mining Corporation (MMC) was
granted an Exploration Permit(EP 133) by the Bureau of Mines
and Geo-Sciences (BMG). A long battle ensued between Apex
andMMC with the latter seeking the cancellation of the mining
claims of Apex on the ground that suchmining claims were within
a forest reservation (Agusan-Davao-Surigao Forest Reserve) and
thus theacquisition on mining rights should have been through an
application for a permit to prospect with theBFD and not through
registration of a DOL with the BMG. When it reached the SC in
1991, the Courtruled against Apex holding that the area is a
forest reserve and thus it should have applied for a permit to
prospect with the BFD.On February 16 1994,
MMC assigned all its rights to EP 133 to Southeast Mindanao

GoldMining Corporation (SEM), a domestic corporation which is
alleged to be a 100%-owned subsidiary of MMC. Subsequently,
BMG registered SEM’s Mineral Production Sharing Agreement
(MPSA)application and the Deed of Assignment. Several
oppositions were filed. The Panel of Arbitrators created by the
DENR upheld the validity of EP 133. During the pendency of the
case, DENR AO No. 2002-18 was issued declaring anemergency
situation in the Diwalwal Gold Rush Area and ordering the
stoppage of all miningoperations therein.
Issues:
1. W/N EP 133 and its subsequent transfer to SEM is valid.2.W/N
the DENR Secretary has authority to issue DAO 66 declaring 729
hectares of the areascovered by the Agusan-Davao-Surigao
Forest Reserve as non-forest lands and open to small-scale

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mining purposes.3.Who (among petitioners Apex and Balite) has
priority right over Diwalwal?
Held/Ratio:
1. INVALID. One of the terms and conditions of EP 133 is: “That
this permit shall be for the exclusive use and benefit of the
permittee or his duly authorized agentsn and shall be used for
mineral exploration purposes only and for no other purpose.”
While it may be true that SEM is a100% subsidiary corporation of
MMC, there is no showing that the former is the duly
authorizedagent of the latter. As such, the assignment is null and
void as it directly contravenes the termsand conditions of the
grant of EP 133.
a. The Deed of Assignment was a total abdication of MMC’s
rights over the permit.
It is not amere grant of authority to SEM as agent.
b. Reason for the stipulation. Exploration permits are strictly
granted to entities or individuals possessing the resources and
capability to undertake mining operations. Without such
acondition, non-qualified entities or individuals could circumvent
the strict requirementsunder the law by the simple expediency of
acquiring the permit from the original permittee.
c. Separate personality. The fact that SEM is a 100%
subsidiary of MMC does notautomatically make it an agent of
MMC. A corporation is an artificial being invested by lawwith a
personality separate and distinct from persons composing it as
well as from that of anyother legal entity to which it may be
related. Absent any clear proof to the contrary, SEM is aseparate
and distinct entity from MMC.
d. Doctrine of piercing the corporate veil inapplicable.
Only in cases where the corporatefiction was used as a shield for
fraud, illegality or inequity may the veil be pierced andremoved.
The doctrine of piercing the corporate veil cannot therefore be
used as a vehicle to commit prohibited acts. The assignment of
the permit in favor of SEM is utilized tocircumvent the condition of
nontransferability of the exploration permit. To allow SEM to

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avail itself of this doctrine and to approve the validity of the
assignment is tantamount tosanctioning an illegal act which is
what the doctrine precisely seeks to forestall.
e. PD 463 requires approval of Secretary of DENR. Also,
PD 463 (Mineral ResourcesDevelopment Decree), which is the
governing law when the assignment was executed,explicitly
requires that the transfer or assignment of mining rights, including
the right toexplore a mining area, must be with the prior approval
of the Secretary of DENR. Such is not present in this case.
f. EP 133 expired by non-renewal.Although EP 133 was
extended for 12 months until July 6,1994, MMC never renewed
its permit prior and after its expiration.With the expiration of EP
133 on July 6, 1994, MMC lost any right to the Diwalwal Gold
RushArea. SEM, on the other hand, has not acquired any right to
the said area because the transfer of EP 133 in its favor is invalid.
Hence, both MMC and SEM have not acquired any vested
rightover the area covered by EP 133.
2. NO. The DENR Secretary has no power to convert forest

reserves into non-forest reserves. Such power is vested with the
President. The DENR Secretary may only recommend to the
Presidentwhich forest reservations are to be withdrawn from the
coverage thereof. Thus, DAO No. 66 isnull and void for having
been issued in excess of the DENR Secretary’s authority.

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3. (Since it’s been held that neither MMC nor SEM has any right
over Diwalwal, it is thusnecessary to make a determination of the
existing right of the remaining claimants, petitioners Apex and
Balite, in the dispute.) The issue on who has priority right over
Diwalwal is deemedovertaken by the issuance of Proclamation
297 and DAO No. 2002-18, both beingconstitutionally-sanctioned
acts of the Executive Branch. Mining operations in the
DiwalwalMineral Reservation are now, therefore, within the full
control of the State through theexecutive branch. Pursuant to
Sec. 5 of RA 7942, the State can either: (1) directly undertake
theexploration, development and utilization of the area or (2) opt
to award mining operations in themineral reservation to private
entities including petitioners Apex and Balite, if it wishes. The
exercise of this prerogative lies with the Executive Department
over which courts will notinterfere.
7. MARIA TUAZON, ALEJANDRO P. TUAZON, MELECIO P.

TUAZON, Spouses ANASTACIO and MARY T.
BUENAVENTURA vs. HEIRS OF BARTOLOME RAMOS
Stripped of nonessentials, the present case involves the
collection of a sum of money. Specifically, this case arose from
the failure of petitioners to pay respondents’ predecessor-in-
interest. This fact was shown by the non-encashment of checks
issued by a third person, but indorsed by herein Petitioner Maria
Tuazon in favor of the said predecessor. Under these
circumstances, to enable respondents to collect on the
indebtedness, the check drawer need not be impleaded in the
Complaint. Thus, the suit is directed, not against the drawer, but
against the debtor who indorsed the checks in payment of the
obligation.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of
1
Court, challenging the July 31, 2002 Decision of the Court of 2
Appeals (CA) in CA-GR CV No. 46535. The decretal portion of

the assailed Decision reads:
"WHEREFORE, the appeal is DISMISSED and the appealed
decision is AFFIRMED."

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On the other hand, the affirmed Decision of Branch 34 of the 3
Regional Trial Court (RTC) of Gapan, Nueva Ecija, disposed as

follows:
"WHEREFORE, judgment is hereby rendered in favor of the
plaintiffs and against the defendants, ordering the defendants
spouses Leonilo Tuazon and Maria Tuazon to pay the plaintiffs,
as follows:
"1. The sum of P1,750,050.00, with interests from the filing of the
second amended complaint;
"2. The sum of P50,000.00, as attorney’s fees;
"3. The sum of P20,000.00, as moral damages
"4. And to pay the costs of suit.
x x x x x x x x x" 4
The Facts
The facts are narrated by the CA as follows:
"[Respondents] alleged that between the period of May 2, 1988
and June 5, 1988, spouses Leonilo and Maria Tuazon purchased
a total of 8,326 cavans of rice from [the deceased Bartolome]
Ramos [predecessor-in-interest of respondents]. That of this
[quantity,] x x x only 4,437 cavans [have been paid for so far],
leaving unpaid 3,889 cavans valued at P1,211,919.00. In
payment therefor, the spouses Tuazon issued x x x [several]
Traders Royal Bank checks.
xxxxxxxxx
[B]ut when these [checks] were encashed, all of the checks
bounced due to insufficiency of funds. [Respondents] advanced
that before issuing said checks[,] spouses Tuazon already knew
that they had no available fund to support the checks, and they
failed to provide for the payment of these despite repeated
demands made on them.
"[Respondents] averred that because spouses Tuazon
anticipated that they would be sued, they conspired with the other
[defendants] to defraud them as creditors by executing x x x
fictitious sales of their properties. They executed x x x simulated
sale[s] [of three lots] in favor of the x x x spouses Buenaventura x
x x[,] as well as their residential lot and the house thereon[,] all

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located at Nueva Ecija, and another simulated deed of sale dated
July 12, 1988 of a Stake Toyota registered with the Land
Transportation Office of Cabanatuan City on September 7, 1988.
[Co-petitioner] Melecio Tuazon, a son of spouses Tuazon,
registered a fictitious Deed of Sale on July 19, 1988 x x x over a
residential lot located at Nueva Ecija. Another simulated sale of a
Toyota Willys was executed on January 25, 1988 in favor of their
other son, [co-petitioner] Alejandro Tuazon x x x. As a result of
the said sales, the titles of these properties issued in the names
of spouses Tuazon were cancelled and new ones were issued in
favor of the [co-]defendants spouses Buenaventura, Alejandro
Tuazon and Melecio Tuazon. Resultantly, by the said ante-dated
and simulated sales and the corresponding transfers there was
no more property left registered in the names of spouses Tuazon
answerable to creditors, to the damage and prejudice of
[respondents].
"For their part, defendants denied having purchased x x x rice
from [Bartolome] Ramos. They alleged that it was Magdalena
Ramos, wife of said deceased, who owned and traded the
merchandise and Maria Tuazon was merely her agent. They
argued that it was Evangeline Santos who was the buyer of the
rice and issued the checks to Maria Tuazon as payments
therefor. In good faith[,] the checks were received [by petitioner]
from Evangeline Santos and turned over to Ramos without
knowing that these were not funded. And it is for this reason that
[petitioners] have been insisting on the inclusion of Evangeline
Santos as an indispensable party, and her non-inclusion was a
fatal error. Refuting that the sale of several properties were
fictitious or simulated, spouses Tuazon contended that these
were sold because they were then meeting financial difficulties
but the disposals were made for value and in good faith and done
before the filing of the instant suit. To dispute the contention of
plaintiffs that they were the buyers of the rice, they argued that
there was no sales invoice, official receipts or like evidence to
prove this. They assert that they were merely agents and should
not be held answerable." 5
The corresponding civil and criminal cases were filed by

respondents against Spouses Tuazon. Those cases were later

Page 13 of 69
consolidated and amended to include Spouses Anastacio and
Mary Buenaventura, with Alejandro Tuazon and Melecio Tuazon
as additional defendants. Having passed away before the pretrial,
Bartolome Ramos was substituted by his heirs, herein
respondents.
Contending that Evangeline Santos was an indispensable party
in the case, petitioners moved to file a third-party complaint
against her. Allegedly, she was primarily liable to respondents,
because she was the one who had purchased the merchandise
from their predecessor, as evidenced by the fact that the checks
had been drawn in her name. The RTC, however, denied
petitioners’ Motion.
Since the trial court acquitted petitioners in all three of the
consolidated criminal cases, they appealed only its decision
finding them civilly liable to respondents.
Ruling of the Court of Appeals
Sustaining the RTC, the CA held that petitioners had failed to
prove the existence of an agency between respondents and
Spouses Tuazon. The appellate court disbelieved petitioners’
contention that Evangeline Santos should have been impleaded
as an indispensable party. Inasmuch as all the checks had been
indorsed by Maria Tuazon, who thereby became liable to
subsequent holders for the amounts stated in those checks, there
was no need to implead Santos.
Hence, this Petition. 6
Issues
Petitioners raise the following issues for our consideration:
"1. Whether or not the Honorable Court of Appeals erred in ruling
that petitioners are not agents of the respondents.
"2. Whether or not the Honorable Court of Appeals erred in
rendering judgment against the petitioners despite x x x the
failure of the respondents to include in their action Evangeline
Santos, an indispensable party to the suit." 7
The Court’s Ruling

The Petition is unmeritorious.
First Issue:

Page 14 of 69
Agency
Well-entrenched is the rule that the Supreme Court’s role in a
petition under Rule 45 is limited to reviewing errors of law
allegedly committed by the Court of Appeals. Factual findings of
the trial court, especially when affirmed by the CA, are conclusive
on the parties and this Court. Petitioners have not given us
8
sufficient reasons to deviate from this rule.

In a contract of agency, one binds oneself to render some service
or to do something in representation or on behalf of another, with
the latter’s consent or authority. The following are the elements
9
of agency: (1) the parties’ consent, express or implied, to

establish the relationship; (2) the object, which is the execution of
a juridical act in relation to a third person; (3) the representation,
by which the one who acts as an agent does so, not for oneself,
but as a representative; (4) the limitation that the agent acts
within the scope of his or her authority. As the basis of agency is
10
representation, there must be, on the part of the principal, an

actual intention to appoint, an intention naturally inferable from
the principal’s words or actions. In the same manner, there must
be an intention on the part of the agent to accept the appointment
and act upon it. Absent such mutual intent, there is generally no
agency. 11
This Court finds no reversible error in the findings of the courts a

quo that petitioners were the rice buyers themselves; they were
not mere agents of respondents in their rice dealership. The
question of whether a contract is one of sale or of agency
depends on the intention of the parties. 12
The declarations of agents alone are generally insufficient to

establish the fact or extent of their authority. The law makes no 13
presumption of agency; proving its existence, nature and extent

is incumbent upon the person alleging it. In the present case, 14
petitioners raise the fact of agency as an affirmative defense, yet

fail to prove its existence.
The Court notes that petitioners, on their own behalf, sued
Evangeline Santos for collection of the amounts represented by
the bounced checks, in a separate civil case that they sought to
be consolidated with the current one. If, as they claim, they were
mere agents of respondents, petitioners should have brought the

Page 15 of 69
suit against Santos for and on behalf of their alleged principal, in
accordance with Section 2 of Rule 3 of the Rules on Civil
Procedure. Their filing a suit against her in their own names
15
negates their claim that they acted as mere agents in selling the
rice obtained from Bartolome Ramos.
Second Issue:
Indispensable Party
Petitioners argue that the lower courts erred in not allowing
Evangeline Santos to be impleaded as an indispensable party.
They insist that respondents’ Complaint against them is based on
the bouncing checks she issued; hence, they point to her as the
person primarily liable for the obligation.
We hold that respondents’ cause of action is clearly founded on
petitioners’ failure to pay the purchase price of the rice. The trial
court held that Petitioner Maria Tuazon had indorsed the
questioned checks in favor of respondents, in accordance with
Sections 31 and 63 of the Negotiable Instruments Law. That 16
Santos was the drawer of the checks is thus immaterial to the

respondents’ cause of action.
As indorser, Petitioner Maria Tuazon warranted that upon due
presentment, the checks were to be accepted or paid, or both,
according to their tenor; and that in case they were dishonored,
she would pay the corresponding amount. After an instrument is 17
dishonored by nonpayment, indorsers cease to be merely

secondarily liable; they become principal debtors whose liability
becomes identical to that of the original obligor. The holder of a
negotiable instrument need not even proceed against the maker
before suing the indorser. Clearly, Evangeline Santos -- as the
18
drawer of the checks -- is not an indispensable party in an action

against Maria Tuazon, the indorser of the checks.
Indispensable parties are defined as "parties in interest without
whom no final determination can be had." The instant case was 19
originally one for the collection of the purchase price of the rice
bought by Maria Tuazon from respondents’ predecessor. In this
case, it is clear that there is no privity of contract between
respondents and Santos. Hence, a final determination of the
rights and interest of the parties may be made without any need

Page 16 of 69
to implead her.
WHEREFORE, the Petition is DENIED and the assailed Decision
AFFIRMED. Costs against petitioners.
8. VICTORIAS MILLING CO., INC., vs. COURT OF APPEALS

and CONSOLIDATED SUGAR CORPORATION
Facts:
St. Therese Merchandising (STM), who regularly bought sugar
from Victorias Milling Co. (VMC), was issued Shipping
List/Delivery Receipts (SLDRs) by the latter as proof of
purchases for bags of sugar. Thereafter, STM sold to
Consolidated Sugar Co. (CSC) its rights in one of the SLDRs.
CSC communicated to VMC that it had been authorized by STM
to withdraw the sugar covered by SLDR. Enclosed in the letter
were a copy of SLDR and a letter of authority from STM
authorizing CSC "to withdraw for and in our behalf the refined
sugar covered by SLDR”. CSC surrendered the SLDR to VMC’s
warehouse and was allowed to withdraw sugar but after several
bags were released, it was later on refused to allow further
withdrawals of sugar. CSC communicated to VMC to allow it to
withdraw sugar because the SLDR had been “sold and endorsed”
to it by STM. VMC contended that it could not allow any further
withdrawals of sugar against SLDR because STM had already
withdrawn sugar covered by cleared checks. CSC filed complaint
against VMC. VMC contended that it had no privity of contract
with CSC, the dealings between it and STM were part of a series
of transactions involving only one account or one general
contract of sale because CSC was an agent of STM. CSC
countered that the sugar purchases involving SLDR were
separate and independent transactions.
Issue:
Whether or not CSC was an agent of STM.
Held:
No. CSC was a buyer of the SLDR form, and not an agent of
STM. CSC was not subject to STM's control. The question of
whether a contract is one of sale or agency depends on the
intention of the parties as gathered from the whole scope and
effect of the language employed. That the authorization given to

Page 17 of 69
CSC contained the phrase "for and in our (STM's) behalf" did not
establish an agency. CSC communicated to VMC that the SLDR
had been “sold and endorsed” to it by STM. The use of the words
"sold and endorsed" means that STM and CSC intended a
contract of sale, and not an agency.
The basis of agency is representation. On the part of the
principal, there must be an actual intention to appoint or an
intention naturally inferable from his words or actions; and on the
part of the agent, there must be an intention to accept the
appointment and act on it, and in the absence of such intent,
there is generally no agency. One factor which most clearly
distinguishes agency from other legal concepts is control; one
person - the agent - agrees to act under the control or direction of
another - the principal. Indeed, the very word "agency" has come
to connote control by the principal. The control factor, more than
any other, has caused the courts to put contracts between
principal and agent in a separate category.
9. DOMINION INSURANCE CORPORATION v. CA
FACTS: On January 25, 1991, plaintiff Rodolfo S. Guevarra

instituted a civil case for collection of sum of money against
defendant Dominion Insurance Corporation. Plaintiff sought to
recover the sum of P156,473.90 which he claimed to have
advanced in his capacity as manager of defendant to satisfy
certain car insurance claims filed by defendant’s clients. The CA
affirmed trial court’s decision for Dominion to pay plaintiff
Guevarra. Dominion filed a motion for reconsideration with the
Court of Appeals which was denied, hence, this appeal.
ISSUES: Dominion assails whether respondent Guevarra acted

within his authority as agent for petitioner, and whether
respondent Guevarra is entitled to reimbursement of amounts he
paid out of his personal money in settling the claims of several
insured.
HELD: The petition is without merit. 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

Page 18 of 69
authority of the latter. The basis for agency is representation. On
the part of the principal, there must be an actual intention to
appoint or an intention naturally inferable from his words or
actions; and on the part of the agent, there must be an intention
to accept the appointment and act on it, and in the absence of
such intent, there is generally no agency. A perusal of the Special
Power of Attorney would show that petitioner Dominion and
respondent Guevarra intended to enter into a principal-agent
relationship. Despite the word “special” in the title of the
document, the contents reveal that what was constituted was
actually a general agency. The agency comprises all the business
of the principal, but, couched in general terms, it 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. Thus, the
acts enumerated in or similar to those enumerated in the Special
Power of Attorney do not require a special power of attorney.
Article 1878, Civil Code, enumerates the instances when a
special power of attorney is required.
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 is required before respondent Guevarra could settle the
insurance claims of the insured. Nevertheless, Guevarra’s
authority to settle claims is embodied in the Memorandum of
Management Agreement which enumerates the scope of
respondent Guevarra’s duties and responsibilities as agency
manager for San Fernando, Pampanga. In settling the claims
mentioned, Guevarra’s authority is further limited by the written
standard authority to pay, which states that the payment shall
come from Guevarra’s revolving fund or collection. Therefore, the
instruction of Dominion as the principal could not be any clearer.
Respondent Guevarra was authorized to pay the claim of the
insured, but the payment shall come from the revolving fund or
collection in his possession. Having deviated from the
instructions of the principal, the expenses that respondent
Guevarra incurred in the settlement of the claims of the insured
may not be reimbursed from petitioner Dominion. This conclusion
is in accord with Article 1918, Civil Code, which states that: “The

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principal is not liable for the expenses incurred by the agent in
the following cases: “(1) If the agent acted in contravention of the
principal’s instructions, unless the latter should wish to avail
himself of the benefits derived from the contract; However, while
the law on agency prohibits respondent Guevarra from obtaining
reimbursement, his right to recover may still be justified under the
general law on obligations and contracts (on unjust enrichment).
Thus, to the extent that the obligation of the petitioner has been
extinguished, respondent Guevarra may demand for
reimbursement from his principal. To rule otherwise would result
in unjust enrichment of petitioner.
10. Doles vs. Angeles, GR 149353, 06/26/2006
Facts: Doles alleges that she referred her friends to Angeles, who
lends money in exchange for personal checks thru her capitalist
Pua. Her friends, absconded payment, prompting Angeles to
threaten Doles, who issued personal checks for payment despite
knowledge of insufficiency of funds, with a criminal case, forcing
the latter to execute a deed of sale of her Cavite property. RTC
held that the sale was void for lack of consideration and
dismissed the RTC case, but this was reversed by the CA.
Issue: WON there was a contract of agency as to both parties

and their principals.
Held: Yes. Doles as to her friends, Angeles as to her capitalist.

They are not creditors and debtors of each other. It is not material
if respective principals do not meet, for the purpose of agency is
to extend personality thru the facility of agents. Agents are
estopped from denying the existence of agency if their actions
prove otherwise. Sale of property is void due to lack of cause,
because the property belonged to HDC, the special power of
attorney given to Doles and her father was cancelled.
11. De La Cruz v. Northern Theatrical Enterprises
Facts: Northern Theatrical Enterprises Inc., a domestic

corporation operated a movie house in Laoag, Ilocos Norte, and

Page 20 of 69
among the persons employed by it was the plaintiff Domingo De
La Cruz, hired as a special guard whose duties were to guard the
main entrance of the cine, to maintain peace and order and to
report the commission of disorders within the premises. He
carried a revolver. One day, a Benjamin Martin wanted to enter
without a ticket but dela Cruz refused him entrance. Infuriated,
Martin attacked him with a bolo and in order to save his life, dela
Cruz shot and killed Martin. Martin, thereafter, was charged with
homicide which, after re-investigation, was dismissed. A few
years later, dela Cruz again figured in a homicide case related to
his work as security guard for the theater. He was acquitted for
the second charge. In both instances, dela Cruz employed a
lawyer. He thereafter demanded reimbursement for his litigation
expenses but was refused by the theater. After which, he filed an
action for reimbursement plus damages. The Court found for
Northern Theater and dismissed the complaint saying that dela
Cruz had no cause of action.
Issue: Whether or not the relationship involved bet. Northern and

De La Cruz is that of a principal and an agent.
Held: No. The trial court was correct in rejecting the theory of
dela Cruz that he was an agent of the defendants and that as
such agent he was entitled to reimbursement for the expenses
incurred by him in connection with the agency. The relationship
between the theater and the plaintiff was not that of principal and
agent because the principle of representation was not involved.
He was not employed to represent defendant corporation in its
dealings with third parties. He was merely an employee hired to
guard the cinema. Issue is primarily one of employer – employee.
Whether an employee who in line with the performance of his
duty incur expenses caused not directly by his employer or fellow
employees but by a third party or stranger, may recover against
his employer. In this case, there’s no legal obligation on the part
of the employer, it might yet be regarded as a moral obligation.
Since employer not legally obligated to give legal assistance,
plaintiff naturally cannot recover the amount from defendant. The
damage incurred did not flow from the performance of his duties
but only indirectly. Filing of the criminal charges was the efficient,

Page 21 of 69
intervening cause. As such, plaintiff cannot fix civil responsibility
to the defendant.
12. Prudential Bank vs. CA

Facts: The complaint in this case arose when private respondent
Aurora F. Cruz, with her sister as co-depositor, invested P200,
000.00 in Central Bank bills with the Prudential Bank at its branch
in Quezon Avenue, Quezon City, on June 23, 1986. Susan
Quimbo, the Bank employee assisted her on all her dealings.
One of such dealing involves Cruz withdrawal from her Savings
Account No. 2546 and applying such amount to the investment
with the same bank. Cruz was asked to sign a Withdrawal Slip for
P196, 122.98, representing the amount to be re-invested after
deduction of the prepaid interest. Quimbo explained this was a
new requirement of the bank. Several days later, Cruz received
another Confirmation of Sale and a copy of the Debit Memo
coming from Quimbo. On October 27, 1986, Cruz returned to the
bank and sought to withdraw her P200, 000.00. After verification
of her records, however, she was informed that the investment
appeared to have been already withdrawn by her on August 25,
1986. There was no copy on file of the Confirmation of Sale and
the Debit Memo allegedly issued to her by Quimbo. Quimbo
herself was not available for questioning as she had not been
reporting for the past week. Prompted by the event Cruz's
reaction was to file a complaint for breach of contract against
Prudential Bank in the Regional Trial Court of Quezon City. She
demanded the return of her money with interest, plus damages
and attorney's fees. Cruz won the case in both the RTC and CA.
Issue: Does the fault of bank employee bind the Bank particularly
in cases where the bank employee created blunder or, worse,
intentionally cheat the depositor?
Held:
The liability of the principal for the acts of the agent is not
debatable. Law and jurisprudence are clearly and absolutely
against the petitioner. Such liability dates back to the Roman Law
maxim, Qui per alium facit per seipsum facere videtur. "He who
does a thing by an agent is considered as doing it himself." This
rule is affirmed by the Civil Code thus: Art. 1910. The principal
must comply with all the obligations which the agent may have

Page 22 of 69
contracted within the scope of his authority. Art. 1911. Even when
the agent has exceeded his authority, the principal is solidarily
liable with the agent if the former allowed the latter to act as
though he had full powers. Conformably, we have declared in
countless decisions that the principal is liable for obligations
contracted by the agent. The agent's apparent representation
yields to the principal's true representation and the contract is
considered as entered into between the principal and the third
person. WHEREFORE, the petition is DENIED and the appealed
decision is AFFIRMED.
13. Uy and Roxas v. CA
FACTS: Petitioners Uy and Roxas were authorized agents for the

sale of 8 parcels of land. The land was offered to NHA and the
acquisition of he same was approved by an NHA resolution,
deeds of sale were executed thereafter. However, only 5/8 of the
land was paid because a report from DENR stated that only 5
parcels among the 8 are conducive to housing. NHA issued
anothe resolution cancelling the sale of the unpaid land and
offered to pay damages. Petitioners filed a case in their own
capacities a agens agains NHA for damages. RTC ruled in favor
of NHA. CA afirmed the decizion but deleted the award thereafter.
ISSUE: Whether petitioner agents are real parties in interest for

damage claim in the case at bar.
HELD: No, the petitioners are not the proper parties in the case.
An action shall be prosecuted in the name of the party who, by
the substantive law, has the right sought to be enforced.
Petitioners are not parties to the contract of sale between their
principals and NHA. They are mere agents of the owners of the
land subject of the sale. As agents, they only render some
service or do something in representation or on behalf of their
principals. The rendering of such service did not make them
parties to the contracts of sale executed in behalf of the latter.
Since a contract may be violated only by the parties thereto as
against each other, the real parties-in-interest, either as plaintiff or
defendant, in an action upon that contract must, generally, either

Page 23 of 69
be parties to said contract. Petitioners have not shown that they
are assignees of their principals to the subject contracts. While
they alleged that they made advances and that they suffered loss
of commissions, they have not established any agreement
granting them "the right to receive payment and out of the
proceeds to reimburse [themselves] for advances and
commissions before turning the balance over to the principal[s]."
14. Laureano T. Angeles vs. Philippine National Railways

(PNR) and Rodolfo Flores,
August 31, 2006 G.R. No. 150128 Facts:
Respondent Philippine National Railways (PNR) informed a

certain Gaudencio Romualdez (Romualdez, hereinafter) that it
has accepted the latter’s offer to buy the PNR’s
scrap/unserviceable rails located in Del Carmen and Lubao,
Pampanga at P1,300.00 andP2,100.00 per metric ton,
respectively, for the total amount of P96,600.00. Romualdez paid
the purchase price and addressed a letter to Atty. Cipriano
Dizon, PNR’s Acting Purchasing Agent. The letter authorized
LIZETTE R. WIJANCOto be his (Romualdez) lawful
representative in the withdrawal of the scrap/unserviceable rails
awarded to him. Furthermore, the original copy of the award
which indicates the waiver of rights, interest and participation in
favor of Lizette R. Wijanco was also given. The Lizette R.
Wijanco was petitioner's now deceased wife. That very same
day, Lizette requested the PNR to transfer the location of
withdrawal for the reason that the scrap/unserviceable rails
located in Del Carmen and Lubao, Pampanga were not ready for
hauling. The PNR granted said request and allowed Lizette to
withdraw scrap/unserviceable railsin Murcia, Capas and San
Miguel, Tarlac instead. However, PNR subsequently suspended
the withdrawal in view of what it considered as documentary
discrepancies coupled by reported pilferages of over
P500,000.00 worth of PNR scrap properties in Tarlac.
Consequently, the spouses Angeles demanded the refund of the
amount of P96,000.00. The PNR, however, refused to pay,
alleging that as per delivery receipt duly signed by Lizette, 54.658
metric tons of unserviceable rails had already been withdrawn.

Page 24 of 69
The spouses Angeles filed suit against the PNR for specific
performance and damages before the Regional Trial Court.
Lizette W. Angeles passed away and was substituted by her
heirs, among whom is her husband, herein petitioner Laureno T.
Angeles. The trial court, on the postulate that the spouses
Angeles are not the real parties-in-interest, rendered judgment
dismissing their complaint for lack of cause of action. As held by
the court, Lizette was merely a representative of Romualdez in
the withdrawal of scrap or unserviceable rails awarded to him and
not an assignee to the latter's rights with respect to the award.
Petitioner appealed with the Court of Appeals which dismissed
the appeal and affirmed that of the trial court.
Issue: Whether or not the CA erred in affirming the trial court's

holding that petitioner and his spouse, as plaintiffs a quo, had no
cause of action as they were not the real parties-in-interest in this
case.
Held: No. The CA’s conclusion, affirmatory of that of the trial

court, is that Lizette was not an assignee, but merely an agent
whose authority was limited to the withdrawal of the scrap rails,
hence, without personality to sue. Where agency exists, the third
party's (in this case, PNR's) liability on a contract is to the
principal and not to the agent and the relationship of the third
party to the principal is the same as that in a contract in which
there is no agent. Normally, the agent has neither rights nor
liabilities as against the third party. He cannot thus sue or be
sued on the contract. Since a contract may be violated only by
the parties thereto as against each other, the real party-in-
interest, either as plaintiff or defendant in an action upon that
contract must, generally, be a contracting party. The legal
situation is, however, different where an agent is constituted as
an assignee. In such a case, the agent may, in his own behalf,
sue on a contract made for his principal, as an assignee of such
contract. The rule requiring every action to be prosecuted in the
name of the real party-in-interest recognizes the assignment of
rights of action and also recognizes that when one has a right
assigned to him, he is then the real party-in-interest and may
maintain an action upon such claim or right. WHEREFORE , the

Page 25 of 69
petition is DENIED and the assailed decision of the CA is
AFFIRMED. Costs against the petitioner.
15. EDWARD C. ONG vs. THE COURT OF APPEALS AND

THE PEOPLE OFTHE PHILIPPINES, respondents., G.R.
No. 119858. April 29, 2003Case Digest
Facts:
Petitioner, representing ARMAGRI, applied for a letter of credit for P2,532,500.00 with SOLIDBANK
Corporation to finance the purchase of differential assemblies from Metropole Industrial Sales. On 6 July
1990, petitioner, representing ARMAGRI, executed a trust receipt acknowledging receipt from the Bank of
the goods valued at P2,532,500.00.
On 12 July 1990, petitioner and Benito Ong, representing ARMAGRI, applied for another letter of credit
for P2,050,000.00 to finance the purchase of merchandise from Fertiphil Corporation. The Bank approved
the application, opened the letter of credit and paid to Fertiphil Corporation the amount
of P2,050,000.00. On 23 July 1990, petitioner, signing for ARMAGRI, executed another trust receipt in
favor of the Bank acknowledging receipt of the merchandise.
Both trust receipts contained the same stipulations. Under the trust receipts, ARMAGRI undertook to
account for the goods held in trust for the Bank, or if the goods are sold, to turn over the proceeds to the
Bank. ARMAGRI also undertook the obligation to keep the proceeds in the form of money, bills or
receivables as the separate property of the Bank or to return the goods upon demand by the Bank, if not
sold
When the trust receipts became due and demandable,

ARMAGRI failed to pay or deliver the goods to the Bank despite
several demand letters. Consequently, as of 31 May 1991, the
unpaid account under the first trust receipt amounted
to P1,527,180.66, while the unpaid account under the second
trust receipt amounted to P1,449,395.71
Assistant City Prosecutor Dina P. Teves of the City of Manila
charged petitioner and Benito Ong with two counts of estafa.
WON Ong may be held liable for estafa as he was only acting as
agent.
The Trust Receipts Law is violated whenever the entrustee fails to: (1) turn over the proceeds of the
sale of the goods, or (2) return the goods covered by the trust receipts if the goods are not sold. The mere
failure to account or return gives rise to the crime which is malum prohibitum. There is no requirement to
prove intent to defraud.
The Trust Receipts Law recognizes the impossibility of imposing the penalty of imprisonment on a
corporation. Hence, if the entrustee is a corporation, the law makes the officers or employees or other
persons responsible for the offense liable to suffer the penalty of imprisonment. The reason is obvious:
corporations, partnerships, associations and other juridical entities cannot be put to jail. Hence, the criminal
liability falls on the human agent responsible for the violation of the Trust Receipts Law.
In the instant case, the Bank was the entruster while ARMAGRI was the entrustee. Being the
entrustee, ARMAGRI was the one responsible to account for the goods or its proceeds in case of sale.
However, the criminal liability for violation of the Trust Receipts Law falls on the human agent responsible
for the violation. Petitioner, who admits being the agent of ARMAGRI, is the person responsible for the
offense for two reasons. First, petitioner is the signatory to the trust receipts, the loan applications and the

Page 26 of 69
letters of credit. Second, despite being the signatory to the trust receipts and the other documents,
petitioner did not explain or show why he is not responsible for the failure to turn over the proceeds of the
sale or account for the goods covered by the trust receipts.
The Bank released the goods to ARMAGRI upon execution of the trust receipts and as part of the loan
transactions of ARMAGRI. The Bank had a right to demand from ARMAGRI payment or at least a return of
the goods. ARMAGRI failed to pay or return the goods despite repeated demands by the Bank.
It is a well-settled doctrine long before the enactment of the Trust Receipts Law, that the failure to
account, upon demand, for funds or property held in trust is evidence of conversion or misappropriation.
Under the law, mere failure by the entrustee to account for the goods received in trust constitutes estafa.
The Trust Receipts Law punishes dishonesty and abuse of confidence in the handling of money or goods to
the prejudice of public order. The mere failure to deliver the proceeds of the sale or the goods if not sold
constitutes a criminal offense that causes prejudice not only to the creditor, but also to the public interest.
Evidently, the Bank suffered prejudice for neither money nor the goods were turned over to the Bank.
The Trust Receipts Law expressly makes the corporation’s officers or employees or other persons
therein responsible for the offense liable to suffer the penalty of imprisonment. In the instant case, petitioner
signed the two trust receipts on behalf of ARMAGRI as the latter could only act through its agents. When
petitioner signed the trust receipts, he acknowledged receipt of the goods covered by the trust receipts. In
addition, petitioner was fully aware of the terms and conditions stated in the trust receipts, including the
obligation to turn over the proceeds of the sale or return the goods to the Bank
True, petitioner acted on behalf of ARMAGRI. However, it is a

well-settled rule that the law of agency governing civil cases
has no application in criminal cases. When a person
participates in the commission of a crime, he cannot escape
punishment on the ground that he simply acted as an agent of
another party. In the instant case, the Bank accepted the trust
receipts signed by petitioner based on petitioner’s
representations. It is the fact of being the signatory to the two
trust receipts, and thus a direct participant to the crime, which
makes petitioner a person responsible for the offense.
16. PHILIPPINE NATIONAL BANK vs.RITRATTO GROUP

INC., RIATTO INTERNATIONAL, INC., and DADASAN
GENERAL MERCHANDISE
PNB versus RITRATTO
FACTS:
Philippine National Bank is a domestic corporation organized and
existing under Philippine law. Ritratto Group, Inc., Riatto
International, Inc. and Dadasan General Merchandise are
domestic corporations, likewise, organized and existing under
Philippine law.
On 1996 PNB International Finance Ltd. (PNB-IFL), a subsidiary

pf PNB, established a branch and operated in Hong Kong, where

Page 27 of 69
it extended letters of credit to Rittrato, in increasing amoubts, with
the final total of USD1.4M in 1998. The loan was secured by a
real estate mortgage of four parcel of lands in Makati.
However, as of 1998, Rittrato's outstanding balance is stil at

USD1.4M. Pursuant to the terms of their real estate mortgage,
PNB-ICL thru its attorney-in-fact PNB caused the foreclosure and
auction of the real estates on 1999.
Ritratto filed for a writ of preliminary injunction with RTC as

against PNB, where they were granted and thus issued a TRO.
PNB then filed motion to dismiss but was likewise rejected.
Hence the appeal to SC, alleging that they are not really party to
the case, hence such action must not proper.
ISSUE: WON PNB is a party to the case being merely the

attorney-in-fact authorized to enforce ancillary contract
HELD:
No, PNB is just the attorney-in-fact for PNB-IFL. As a rule, a suit
as against the agent is not a suit against the principal. For the
suit to prosper, the petitioner must implead the proper party to the
case. Even Ritratto et al admit that petitioner is a mere attorney-
in-fact for the PNB-IFL with full power and authority to, inter alia,
foreclose on the properties mortgaged to secure their loan
obligations with PNB-IFL. In other words, PNB is an agent with
limited authority and specific duties under a special power of
attorney incorporated in the real estate mortgage. It is not privy to
the loan contracts entered into by respondents and PNB-IFL,
hence, not a party to the case.
17. TRINIDAD J. FRANCISCO, vs. GOVERNMENT

SERVICE INSURANCE SYSTEM
FACTS: Trinidad J. Francisco, in consideration of a loan in the
amount of P400,000.00, out of which the sum of P336,100.00
was released to her, mortgaged in favor of GSIS a parcel of land
with 21 bungalows, known as Vic-Mari Compound, located at QC.
- Upon failure to pay, GSIS foreclosed the mortgage and bought
the property.

Page 28 of 69
- But then, Trinidad’s father, Atty. Vicente Francisco, wrote a letter
to GSIS offering that he pay P30k off the loan and then allow
GSIS to administer the mortgaged property instead of foreclosing
it; that thereafter, GSIS shall receive rents from the tenants of the
land until the arrears are paid and the account is made current or
up to date (because the total of the monthly rents is bigger than
the monthly loan payments supposed to be paid by Trinidad to
GSIS).
- GSIS, through its general manager Rodolfo Andal, accepted
Vicente’s offer. GSIS did not take over the property.
- But Francisco collected rents and turned them over to GSIS.
-Then in 1960, GSIS demanded Francisco to pay off the loan.
Vicente then reminded GSIS that the agreement in 1959 which is
actually a compromise is binding upon GSIS. GSIS then averred
that the letter sent to Vicente in response to his offer was not sent
in error because Andal’s secretary sent the poorly worded
response without Andal’s knowledge.
ISSUE: Whether or not a corporation like GSIS is bound by the

acts of its officers acting in their apparent authority.
HELD Yes. If a corporation knowingly permits one of its officers,

or any other agent, to do acts within the scope of an apparent
authority, and thus holds him out to the public as possessing
power to do those acts, the corporation will, as against anyone
who has in good faith dealt with the corporation through such
agent, be estopped from denying his authority. At any rate, even
if the compromise agreement is void because of the
“unauthorized” telegram, GSIS’s silence and acceptance of the
subsequent remittances of the Franciscos ratified the
compromise agreement.
18. SUNACE INTERNATIONAL MANAGEMENT SERVICES,

INC. v. NLRC
FACTS:Petitioner, Sunace International Management Services

(Sunace), deployed to Taiwan Divina A. Montehermozo (Divina)
as a domestic helper under a 12-month contract effective
February 1, 1997. The deployment was with the assistance of a

Page 29 of 69
Taiwanese broker, Edmund Wang, President of Jet Crown
International Co., Ltd. After her 12-month contract expired on
February 1, 1998, Divina continued working for her Taiwanese
employer, Hang Rui Xiong, for two more years, after which she
returned to the Philippines on February 4, 2000. Shortly after her
return or on February 14, 2000, Divina filed a complaint before
the National Labor Relations Commission (NLRC) against
Sunace, one Adelaide Perez, the Taiwanese broker, and the
employer-foreign principal alleging that she was jailed for three
months and that she was underpaid
Reacting to Divina's Position Paper, Sunace filed on April 25,

2000 an ". . . ANSWER TO COMPLAINANT'S POSITION
PAPER" alleging that Divina's 2-year extension of her contract
was without its knowledge and consent, hence, it had no liability
attaching to any claim arising therefrom, and Divina in fact
executed a Waiver/Quitclaim and Release of Responsibility and
an Affidavit of Desistance, copy of each document was annexed
to said
The Labor Arbiter, rejected Sunace's claim that the extension of

Divina's contract for two more years was without its knowledge
and consent.
ISSUE: Whether the act of the foreigner-principal in renewing the

contract of Divina be attributable to Sunace
HELD: No, the act of the foreigner-principal in renewing the

contract of Divina is not attributable to Sunace. There being no
substantial proof that Sunace knew of and consented to be
bound under the 2-year employment contract extension, it cannot
be said to be privy thereto. As such, it and its "owner" cannot be
held solidarily liable for any of Divina's claims arising from the 2-
year employment extension. Furthermore, as Sunace correctly
points out, there was an implied revocation of its agency
relationship with its foreign principal when, after the termination of
the original employment contract, the foreign principal directly
negotiated with Divina and entered into a new and separate

Page 30 of 69
employment contract in Taiwan.
19. COSMIC LUMBER CORPORATION, vs.COURT OF

APPEALS and PEREZ
FACTS: The General Manager, Paz G. Villamil-Estrada, of
Cosmic Lumber Corporation on behalf of the company instituted
an action for ejectment against Isidro Perez to recover a portion
of Lot No. 443 before the Regional Trial Court of Dagupan,
docketed as Civil Case No. D-7750.2 on 11 March 1985. She was
appointed as Attorney-in-fact through a Special Power of
Attorney (28 January 1985) to do the following:
x x x to initiate, institute and file any court action for the
ejectment of third persons and/or squatters of the entire lot 9127
and 443 and covered by TCT Nos. 37648 and 37649, for the said
squatters to remove their houses and vacate the premises in
order that the corporation may take material possession of the
entire lot, and for this purpose, to appear at the pre-trial
conference and enter into any stipulation of facts and/or
compromise agreement so far as it shall protect the rights and
interest of the corporation in the aforementioned lots.
On 25 November 1985 Villamil-Estrada entered into a
Compromise Agreement with respondent Perez, the terms of
which follow:
1. That as per relocation sketch plan dated June 5, 1985
prepared by Engineer Rodolfo dela Cruz the area at present
occupied by defendant wherein his house is located is 333
square meters on the easternmost part of lot 443 and which
portion has been occupied by defendant for several years now;
2. That to buy peace said defendant pays unto the plaintiff
through herein attorney-in-fact the sum of P26,640.00 computed
at P80.00/square meter;
3. That plaintiff hereby recognizes ownership and possession
of the defendant by virtue of this compromise agreement over
said portion of 333 square m. of lot 443 which portion will be
located on the easternmost part as indicated in the sketch as
annex A;
4. Whatever expenses of subdivision, registration, and other
incidental expenses shall be shouldered by the defendant.
On 27 November 1985 the "Compromise Agreement" was

Page 31 of 69
approved by the trial court and judgment was rendered in
accordance with its terms. However, after five years from the date
of its finality (even if the decision became final and executory),
Paz G. Villamil-Estrada failed to produce the owner's duplicate
copy of Title No. 37649 needed to segregate from Lot No. 443
the portion she sold as attorney-in-fact. Hence, on 25 January
1993 Isidro Perez filed a complaint to revive the judgment,
docketed as Civil Case No. D-10459.
ISSUE: Whether or Not the actions of Paz G. Villamil-Estrada as

attorney-in-fact bind the principal, Cosmic Lumber Corporation, in
the compromise agreement she entered into with Isidro Perez?
HELD: A special power of attorney for an agent to institute any

action in court to eject all persons in the principal's lots so that the
principal could take material possession thereof, and for this
purpose, to appear at the pre-trial and enter into any stipulation of
facts and/or compromise agreement but only insofar as this is
protective of the rights and interests of the principal in the
property, does not grant any power to the agent to sell the subject
property nor a portion thereof.—We agree with petitioner. The
authority granted Villamil-Estrada under the special power of
attorney was explicit and exclusionary: for her to institute any
action in court to eject all persons found on Lots Nos. 9127 and
443 so that petitioner could take material possession thereof, and
for this purpose, to appear at the pre-trial and enter into any
stipulation of facts and/or compromise agreement but only insofar
as this was protective of the rights and interests of petitioner in
the property. Nowhere in this authorization was Villamil-Estrada
granted expressly or impliedly any power to sell the subject
property nor a portion thereof. Neither can a conferment of the
power to sell be validly inferred from the specific authority "to
enter into a compromise agreement" because of the explicit
limitation fixed by the grantor that the compromise entered into
shall only be "so far as it shall protect the rights and interest of
the corporation in the aforementioned lots" In the context of the
specific investiture of powers to Villamil-Estrada, alienation by
sale of an immovable certainly cannot be deemed protective of
the right of petitioner to physically possess the same, more so

Page 32 of 69
when the land was being sold for a price of P80.00 per square
meter, very much less than its assessed value of P250.00 per
square meter, and considering further that petitioner never
received the proceeds of the sale.
The express mandate required by law to enable an appointee of
an agency (couched) in general terms to sell must be one that
expressly mentions a sale or that includes a sale as a necessary
ingredient of the action mentioned.—When the sale of a piece of
land or any interest thereon is through an agent, the authority of
the latter shall be in writing; otherwise, the sale shall be void.
Thus the authority of an agent to execute a contract for the sale
of real estate must be conferred in writing and must give him
specific authority, either to conduct the general business of the
principal or to execute a binding contract containing terms and
conditions which are in the contract he did execute. A special
power of attorney is necessary to enter into any contract by which
the ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration. The express mandate
required by law to enable an appointee of an agency (couched) in
general terms to sell must be one that expressly mentions a sale
or that includes a sale as a necessary ingredient of the act
mentioned. For the principal to confer the right upon an agent to
sell real estate, a power of attorney must so express the powers
of the agent in clear and unmistakable language. When there is
any reasonable doubt that the language so used conveys such
power, no such construction shall be given the document.
DECISION: The petition is GRANTED. The decision and

resolution of respondent Court of Appeals dated 29 October 1993
and 10 March 1994, respectively, as well as the decision of the
Regional Trial Court of Dagupan City in Civil Case No. D-7750
dated 27 November 1985, are NULLIFIED and SET ASIDE. The
"Compromise Agreement" entered into between Attorney-in-fact
Paz G. Villamil-Estrada and respondent Isidro Perez is declared
VOID. This is without prejudice to the right of petitioner to pursue
its complaint against private respondent Isidro Perez in Civil
Case No. D-7750 for the recovery of possession of a portion of
Lot No. 443.

Page 33 of 69
20. NEW LIFE ENTERPRISES and JULIAN SY, vs. HON.
COURT OF APPEALS, EQUITABLE INSURANCE
CORPORATION, RELIANCE SURETY AND INSURANCE
CO., INC. and WESTERN GUARANTY CORPORATION
New Life Enterprises and Sy vs Court of Appeals

GR #94071
31 March 1992
Facts:
Julian Sy and Jose Sy Bang formed a partnership under a

business name New Life Enterprises, engaged in the sale of
construction materials. The stocks in trade of the business were
insured with Western Guaranty Corporation, Reliance Surety and
Insurance, and Equitable Insurance Corporation for an aggregate
amount of Php 1.55 million.
On 19 October 1982, the building occupied by NLE was gutted

with fire. The insurance companies denied the plaintiff's claim for
payment on the ground of breach of policy conditions, specifically,
failure to notify insurers of other insurances already effected or
subsequently effected covering the same stocks in trade.
Petitioners, however, argued that the agents of the insurance

companies knew of the existence of the additional insurance
coverage and that they were not informed about the said
requirement, as they have not even read the policies.
Issue:
Whether or not the knowledge of the agent satisfies the

requirement of the condition
Held:
The knowledge of such insurance by the insurer's agents, even

assuming the acquisition thereof by the former, is not the "notice"

Page 34 of 69
that would estop the insurers from denying the claim.
The theory of imputed knowledge, that is, knowledge of the agent

is knowledge of the principal, is not applicable in this case.
Post Script:
What is the Theory of Imputed Knowledge?
A rule in insurance law that any information material to the

transaction, either possessed by the agent at the time of the
transaction or acquired by him before its completion, is deemed
to be the knowledge of the principal, at least so far as the
transaction is concerned, even though in fact the knowledge is
not communicate
21. Caram vs Laureta
*Petition for Certiorari to review the decision of CA which affirmed

the decision of CFI Davao in favor of Claro Laureta ( as plaintiff
to that case).
Facts: Marcos Mata conveyed an agricultural land in favor of

respondent, Claro Laureta. Despite of the fact that the Deed of
Absolute Sale was not registered, the former delivered to
respondent peaceful and lawful possession of the premises of the
land together with the pertinent documents thereof, such as,
Original Certificate of title, tax declarations receipts and other
papers related thereto. Subsequently, the same land was sold by
Mata to herein plaintiff, Fermin Caram through his agents Irispe
and Atty. Aportadera who allegedly had knowledge of the
existence of unregistered prior sale between Mata and
Respondent as the time of second sale the respondent was
already in possession of the land. Nevertheless, the second sale
was properly registered to Registry of Property and thereafter a
new Certificate of Title was issued in favor of plaintiff. The plaintiff
denied any knowledge of the encumbrances, conveyance and
alienation of the property in favor of the respondent.
Issue: WON the purchase of property in bad faith by Irispe and

Page 35 of 69
Atty. Aportadera should also impugn Plaintiff?
Held: YES. There is no doubt then that Irespe and Aportadera,

acting as agents of Caram, and the said agents purchased the
property of Mata in bad faith. Applying the principle of agency,
Caram as principal, should also be deemed to have acted in bad
faith. Furthermore, Article 1544 of the New Civil Code provides
that:
Art. 1544. If the same thing should have been sold to
different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good
faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to

the person acquiring it who in good faith first recordered it in the
Registry of Property.
Should there be no inscription, the ownership shall pertain to the

person who in good faith was first in the possession; and, in the
absence thereof, to the person who presents the oldest title,
provided there is good faith.
Since Caram was a registrant in bad faith, the situation is as if

there was no registration at all. And the respondent being the first
in possession of the property is deemed as possessor in good
faith as the law defines a possessor in good faith is one who is
not aware that there exists in his title or mode of acquisition any
flaw which invalidates it.
22. VELOSO v. CA, G.R. No. 102737; August 21, 1996
FACTS:
Petitioner Francisco Veloso was the owner of a parcel of land
situated in the district of Tondo, Manila, with an area of 177
square meters. The title was registered in the name of Francisco
A. Veloso. The said title was subsequently cancelled and a new
one issued in the name of Aglaloma B. Escario, married to
Gregorio L. Escario, on May 24, 1988.

Page 36 of 69
On August 24, 1988, petitioner Veloso filed an action for
annulment of documents, reconveyance of property with
damages and preliminary injunction and/or restraining order.
Petitioner alleged therein that he was the absolute owner of the
subject property and he never authorized anybody, not even his
wife, to sell it. He alleged that he was in possession of the title
but when his wife, Irma, left for abroad, he found out that his copy
was missing. He then verified with the Registry of Deeds of
Manila and there he discovered that his title was already
canceled in favor of defendant Aglaloma Escario.
The transfer of property was supported by a General Power of

Attorney dated November 29, 1985 and Deed of Absolute Sale,
dated November 2, 1987, executed by Irma Veloso, wife of the
petitioner and appearing as his attorney-in-fact, and defendant
Aglaloma Escario.
Petitioner Veloso, however, denied having executed the power of

attorney and alleged that his signature was falsified. He also
denied having seen or even known Rosemarie Reyes and Imelda
Santos, the supposed witnesses in the execution of the power of
attorney. He vehemently denied having met or transacted with the
defendant. Thus, he contended that the sale of the property, and
the subsequent transfer thereof, were null and void.
Defendant Aglaloma Escario in her answer alleged that she was

a buyer in good faith and denied any knowledge of the alleged
irregularity. She allegedly relied on the general power of attorney
of Irma Veloso which was sufficient in form and substance and
was duly notarized.
ISSUE: Whether there was a valid sale of the subject property
HELD: Yes, the sale of the subject property is valid. The

Supreme Court held that an examination of the records showed
that the assailed power of attorney was valid and regular on its
face. It was notarized and as such, it carries the evidentiary

Page 37 of 69
weight conferred upon it with respect to its due execution. While it
is true that it was denominated as a general power of attorney, a
perusal thereof revealed that it stated an authority to sell.
Respondent Aglaloma relied on the power of attorney presented

by petitioner's wife, Irma. Being the wife of the owner and having
with her the title of the property, there was no reason for the
private respondent not to believe, in her authority. Thus, having
had no inkling on any irregularity and having no participation
thereof, private respondent was a buyer in good faith. It has been
consistently held that a purchaser in good faith is one who buys
property of another, without notice that some other person has a
right to, or interest in such property and pays a full and fair price
for the same, at the time of such purchase, or before he has
notice of the claim or interest of some other person in the
property.
23. LIM PIN vs.SPS. CONCHITA LIAO TAN, and TAN CHO
HUA and HONORABLE CANCIO C. GARCIA, PRESIDING
JUDGE OF BRANCH I, CITY COURT OF CALOOCAN
CITYRaymundo M. Aguila for petitioner.
In this petition for certiorari with prayer for the issuance of a writ
of preliminary injunction, the petitioner prays:
(1) that Judgment be rendered annulling or
modifying the Judgment, dated October 19, 1977,
of the Respondent Judge rendered in Civil Case
No. 11716, City Court of Caloocan City. (2) That a
Writ of Preliminary Injunction be issued requiring
Private Respondents, and all persons acting in their
behalf, to refrain from the Execution of the
Judgment, dated October 19, 1977, of the City
Court of Caloocan City in Civil Case No. 11716 until
further order.
The basis of the judgment, subject matter of the petition, is a
compromise agreement entered into between the petitioner,
represented by her son, George Hung and the private respondent
Conchita Liao Tan both parties assisted by their respective
counsel, during the October 19, 1977 hearing of Civil Case No.
11716 for unlawful detainer. The complaint for unlawful detainer

Page 38 of 69
was filed in the court a quo on August 12, 1977 by the private
respondents against the petitioner. The judgment incorporating
the compromise agreement reads as follows:
When this case was caged for hearing this
afternoon, October 19, 1977, plaintiffs and
defendant, the latter acting thru her son, George
Hung, as her duly authorized representative,
assisted by their respective counsels, personally
appeared before this Court and mutually agreed as
follows:
1. The parties admit that the stipulated rental for the
leased premises is as follows:
(a) For the months of April and May, 1977,
at P1,500.00 a month; thereafter a monthly
increase of P500.00 until the rent al
reaches to P 5,000.00 by December, 1977,
2. That defendant admits having been in arrears in
the payment of her rental obligation since April,
1977 and that as of October, 1977, her total
accrued rentals already amounted to P18,000.00,
broken down as follows:
April, 1977.........................P 1,500.00
May, 1977............................. 1,500.00
June, 1977............................. 2,000.00
July,1977............................... 2,500.00
August,1977......................... 3,000.00
September,1977.....................3,500.00
October,1977........................ 4,000.00
TOTAL P18,000.00
3. That defendant binds herself to pay in full said
accrued rentals of P18,000.00 and attorney's fee of
P 2,000.00, not later than October 31, 1977.
4. That the rental for November, 1977, shall be
P4,500.00 a month while the rentals for December,
1977 and for the succeeding months thereafter

Page 39 of 69
shall be P5,000.00, payable at the residence of
plaintiff within five (5) days of the current month.
5. That the Plaintiff hereby agrees to allow the
defendant to remain in the leased premises at the
rental herein agreed upon.
6. That should defendant fails to pay her accrued
rental of P18,000.00, plus attorney's fee of
P2,000.00 by October 31, 1977, Plaintiff shall be
entitled to an immediate writ of execution to enforce
defendant's ejectment from the leased premises
and the collection of all rental in arrears;
7. Defendant's representative, George Hung,
affirmed before this court and the same is confirmed
by defendant's counsel, that he (George Hung) has
the full authority of her mother, the herein
defendant, to act for her and to sign for and in
behalf this amicable settlement.
WHEREFORE, this Court, as prayed for, hereby
approves the foregoing compromise agreement and
consequently renders Judgment in accordance with
the precise terms and conditions hereof. (Annex
"D")
Spouses Conchita Liao Tan and Tan Cho Hua alleged in their
complaint for unlawful detainer that the plaintiff Conchita Liao
Tan, as owner of a parcel of registered land with improvements
located at Francisco Street, Caloocan City, had leased a portion
of it, more particularly known as 91 Francisco Street, Caloocan
City to defendant Lim Pin on a month to month basis but that the
latter starting April, 1977 had not paid the agreed rental stipulated
for such month and the succeeding months thereafter based on
the following schedule of payments: a) For the month of April,
1977 — P 1,500-00; b) For the month of May, 1977 — P1,500-00:
c) Commencing on the month of June, 1977 and for each
calendar month thereafter P6,000.00 per month; and that despite
demand, the defendant refused to vacate the leased premises. In
addition to the actual damages, the plaintiffs asked for an
attorney's fee in the amount of P3,000.00.

Page 40 of 69
On August 25, 1977, the defendant Lim Pin, filed her Answer
denying the material allegations of the complaint and protesting
the alleged highly "unconscionable and unreasonable" increase
of rental demanded by plaintiffs. As a counterclaim, she asked for
an attorney's fee in the amount of P5,000.00. The counterclaim
was denied in the plaintiffs' Answer to Counterclaim, dated
September 1, 1982.
The initial hearing set for September 1, 1977 was reset to
September 14, 1977 upon the joint motion of the parties who
were trying to work out a possible amicable settlement. Upon the
failure of the parties to reach an amicable settlement, the
September 14, 1977 hearing proceeded as scheduled during
which plaintiff Conchita Liao Tan testified. For lack of material
time, Conchita Liao Tan's cross-examination was set for
September 27, 1970 but this hearing was again cancelled and
reset to October 19, 1977.
On the scheduled October 19, 1977 hearing, defendant Lim Pin
was absent. Her son George Hung who attended with his mother
all the previous hearings was present together with the
defendant's counsel. Plaintiff Conchita Liao Tan together with her
counsel was also present. Through the initiative of the court a
quo, the subject compromise agreement was formulated and
executed and it finally became the basis of the October 19, 1977
judgment in Civil Case No. 11716.
The aforesaid judgment was the subject of a motion for
reconsideration filed on October 28, 1977 by defendant Lim Pin
on the following grounds: 1) that she never authorized her son
nor her counsel on record (Atty. Pastor Mamaril) to enter into
such compromise agreement and 2) that had she been present
when said agreement was prepared, she would not have
acceded thereto.
The motion prompted the plaintiffs to file an "Opposition To
Motion for Reconsideration With Prayer that defendant's son
George Hung and Atty. Pastor P. Mamaril be cited for contempt"
in the event they should belatedly deny that George Hung was
duly authorized by his mother to enter into the compromise
agreement dated November 5, 1982.
In the meantime, the plaintiffs, on November 3, 1977 filed an

Page 41 of 69
"Urgent Motion For Immediate Execution of Judgment dated
October 19, 1977."
All the foregoing motions were resolved by the respondent court
in its Order dated January 26, 1978.
The dispositive portion of the Order reads:
IN VIEW OF ALL THE FOREGOING, defendants'
'Motion For Reconsideration,' is hereby DENIED,
For reason hereinbefore mentioned, defendant's
son George Hung, is hereby declared in direct
contempt of court and is hereby sentenced to pay a
fine of TWO HUNDRED (P200.00) Pesos, with
subsidiary imprisonment in case of insolvency.
Finding the explanations given by Atty. Mamaril
during the hearing of November 18, 1977, to be
meritorious, this Court finds no basis to hold him in
contempt. As prayed for by plaintiffs in their motion
for execution, which this Court finds justified, let a
writ of execution be issued in this case.
A writ of execution was issued by the respondent court on the
same date. Pursuant to the writ of execution, the City Sheriff of
Caloocan City, Metro Manila served a "Notice of Ejectment" and
"Notice to Levy", both dated February 3, 1978, which were
received by the plaintiff on February 3, 1978. Hence, this petition.
On February 8, 1978, We issued a temporary restraining order
"enjoining respondent judge from enforcing the execution of the
judgment dated October 19, 1977 issued in Civil Case No.
11714." The petitioner raises two issues in this petition:
1) Whether the respondent Judge committed grave
abuse of discretion in allowing the October 19, 1977
compromise agreement in the absence of the
petitioner; and
2) Whether the respondent Judge committed grave
abuse of discretion amounting to lack of jurisdiction
in denying the petitioner's motion for
reconsideration on the October 19, 1977 judgment
and in granting the issuance of execution thereto
upon motion of the private respondents.

Page 42 of 69
Anent the first issue, the petitioner argues that the respondent
Judge should not have allowed her son George Hung and her
then counsel, Atty. Pastor Mamaril in her absence to enter into
the October 19, 1977 compromise agreement with the private
respondent Conchita Liao Tan assisted by her counsel. She
further argues that "... considering that such compromise
agreement would impose onerous obligations upon Petitioner,
such as a tremendous increase of rentals in the premises being
leased from Private Respondents from P1,500.00 a month to
P5,000.00 a month," and that said agreement contained
admissions by petitioner, the respondent Judge should have
required a written authority and power of attorney from her son
and counsel. Her objections to the validity of the compromise
agreement are premised on Article 1878 of the Civil Code and
Rule 138, Section 23 of the Rules of Court.
The arguments are not well taken.
Article 1878 is found in Title X of the Civil Code on Agency. It
states that a special power of attorney is necessary to
compromise, to submit questions to arbitration, to renounce the
right to appeal from a judgment, to waive objections to the venue
of an action or to abandon a prescription already acquired.
Section 23 of Rule 138 on Attorneys and Admission to the Bar
governs the authority of attorneys to bind their clients and
provides that "Attorneys have authority to bind their clients in any
case by any agreement in relation thereto made in writing, and in
taking appeal, and in an matters of ordinary Judicial Procedure,
but they cannot, without special authority, compromise their
clients' litigation or receive anything in discharge of their clients'
claims but the full amount in cash."
The requirements of a special power of attorney in Article 1878 of
the Civil Code and of a special authority in Rule 138 of the Rules
of Court refer to the nature of the authorization and not its form.
The requirements are met if there is a clear mandate from the
principal specifically authorizing the performance of the act. As
early as 1906, this Court in Strong v. Gutierrez-Repide (6 Phil.
680) stated that such a mandate may be either oral or written, the
one vital thing being that it shall be express. And more recently,
We stated that, if the special authority is not written, then it must

Page 43 of 69
be duly established by evidence:
... the Rules require, for attorneys to compromise
the litigation of their clients, a special authority. And
while the same does not state that the special
authority be in writing the Court has every reason to
expect that, if not in writing, the same be duly
established by evidence other than the self-serving
assertion of counsel himself that such authority was
verbally given him. (Home Insurance Company vs.
United States lines Company, et al., 21 SCRA 863;
866: Vicente vs. Geraldez, 52 SCRA 210; 225).
We are satisfied from the records of this case that Judge Cancio
C. Garcia took the necessary precautionary measures and acted
on the basis of satisfactory evidence when he allowed the
compromise agreement to be executed by George Hung the
petitioner's son.
The records show that prior to the October 19, 1977 hearing, the
petitioner as defendant in Civil Case No. 11-116 had repeatedly
asked that the respondent Judge approve her proposals for a
monthly increase of P500.00 starting April, 1977 and that the
increases be pegged at that rate until the monthly rental reaches
the sum of P5,000.00 on December, 1977. Such a proposal was
not acceptable at the time to the private respondents. Only at the
October 19, 1977 hearing did private respondent Conchita Liao
Tan have a change of mind. She expressed a willingness to
accomodate the proposals originating from the petitioner
prompting the court to suspend proceedings and initiate the
execution of the compromise agreement between the parties.
Whereupon the following took place: (1) The court asked George
Hung whether he was willing to enter into the compromise
agreement and whether he had the authority of his mother to
enter into such a compromise agreement; (2) The defendant's
counsel confirmed in open court the assurance of George Hung
that he had the full authority of his mother to enter into a
compromise agreement: (3) After the formulation of the
compromise agreement the Judge explained in Tagalog to both
parties, including George Hung its terms and conditions after
which the same was reduced into writing; (4) George Hung

Page 44 of 69
willingly signed the compromise agreement, the terms and
conditions of which were those originally proposed by the
petitioner herself. Hung was all the while assisted by their
counsel.
There were other reasons which led the lower court to a finding
that George Hung had the full authority to enter into the
compromise. The court itself observed during the earlier hearings
and it is not disputed that ... defendant Lim Pin could not decide
on anything without first consulting her son." George Hung's later
denial that he never manifested his authority to represent his
mother was rejected by the court. As a matter of fact, this sudden
turnabout of George Hung led the court to cite him for contempt.
He was fined Two Hundred Pesos. The citation for contempt was
never appealed.
And finally, even assuming that George Hung and the petitioner's
counsel acted without authority, the compromise agreement itself
was not null and void. It would be merely unenforceable, capable
of being ratified. (Dungo v. Lapena, 6 SCRA 1007). The
compromise agreement was ratified by the petitioner when, on
October 24, 1977, a few days after the promulgation of the
questioned judgment and before the filing of a motion for
reconsideration, she filed an "Ex-Parte Motion To Withdraw
Deposits" in Civil Case No. 11709, a consignation case pending
before the same court between the same parties. The ex-parte
motion in part reads:
xxx xxx xxx
3. That there is another case with this court
assigned in Branch I docketed as Civil Case No.
11716, for unlawful detainer, involving the same
parties and subject property and in the said case,
parties have entered into a compromise agreement
whereby, among others, petitioner herein shall pay
the accrued monthly rentals to respondent (plaintiff
in the aforementioned case);
4. That in order to implement the aforementioned
compromise agreement, it is necessary that the
deposits made by petitioner be withdrawn, the
same to be paid to respondent Conchita Liao Tan.

Page 45 of 69
(Annex "2" for the private respondents, p. 71, rollo).
The second ground for this petition is consequently
unmeritorious. The Petitioner alleged that the respondent Judge
acted with grave abuse of discretion amounting to lack of
jurisdiction when he denied the motion for reconsideration of the
October 19, 1977 judgment. The motion was based on the same
alleged absence of authority of the petitioner's son and her
counsel. A similar allegation regarding the writ of execution is
likewise without merit. It is a well-settled rule that a compromise
judgment is final and executory and unappealable. We also note
that on or before June 26, 1978 the petitioner abandoned the
disputed property, notwithstanding our February 8, 1978
temporary restraining order enjoining enforcement of the writ of
execution.
WHEREFORE, the instant petition is hereby DISMISSED for lack
of merit. The temporary restraining order issued by this Court
dated February 8, 1978 is LIFTED. The judgment appealed from
is AFFIRMED with costs against the petitioner.
24. JESUS M. GOZUN, vs. JOSE TEOFILO T. MERCADO
a.k.a. ‘DON PEPITO MERCADO,
On challenge via petition for review on certiorari is the Court of

Appeals’ Decision of December 8, 2004 and Resolution of April
14, 2005 in CA-G.R. CV No. 76309 reversing the trial court’s
1
decision against Jose Teofilo T. Mercado a.k.a. Don Pepito

2
Mercado (respondent) and accordingly dismissing the complaint

of Jesus M. Gozun (petitioner).
In the local elections of 1995, respondent vied for the
gubernatorial post in Pampanga. Upon respondent’s request,
petitioner, owner of JMG Publishing House, a printing shop
located in San Fernando, Pampanga, submitted to respondent
draft samples and price quotation of campaign materials.
By petitioner’s claim, respondent’s wife had told him that
respondent already approved his price quotation and that he
could start printing the campaign materials, hence, he did print
campaign materials like posters bearing respondent’s
photograph, leaflets containing the slate of party candidates,
3 4

Page 46 of 69
sample ballots, poll watcher identification cards, and stickers.
5 6
Given the urgency and limited time to do the job order, petitioner
availed of the services and facilities of Metro Angeles Printing
and of St. Joseph Printing Press, owned by his daughter Jennifer
Gozun and mother Epifania Macalino Gozun, respectively. 7
Petitioner delivered the campaign materials to respondent’s

headquarters along Gapan-Olongapo Road in San Fernando,
Pampanga. 8
Meanwhile, on March 31, 1995, respondent’s sister-in-law, Lilian

Soriano (Lilian) obtained from petitioner "cash advance" of
P253,000 allegedly for the allowances of poll watchers who were
attending a seminar and for other related expenses. Lilian
acknowledged on petitioner’s 1995 diary receipt of the amount.9 10
Petitioner later sent respondent a Statement of Account in the 11
total amount of P2,177,906 itemized as follows: P640,310 for

JMG Publishing House; P837,696 for Metro Angeles Printing;
P446,900 for St. Joseph Printing Press; and P253,000, the "cash
advance" obtained by Lilian.
On August 11, 1995, respondent’s wife partially paid P1,000,000
to petitioner who issued a receipt therefor. 12
Despite repeated demands and respondent’s promise to pay,

respondent failed to settle the balance of his account to
petitioner.
Petitioner and respondent being compadres, they having been
principal sponsors at the weddings of their respective daughters,
waited for more than three (3) years for respondent to honor his
promise but to no avail, compelling petitioner to endorse the
matter to his counsel who sent respondent a demand letter. 13
Respondent, however, failed to heed the demand. 14
Petitioner thus filed with the Regional Trial Court of Angeles City
on November 25, 1998 a complaint against respondent to collect
15
the remaining amount of P1,177,906 plus "inflationary

adjustment" and attorney’s fees.
In his Answer with Compulsory Counterclaim, respondent 16
denied having transacted with petitioner or entering into any

contract for the printing of campaign materials. He alleged that
the various campaign materials delivered to him were

Page 47 of 69
represented as donations from his family, friends and political
supporters. He added that all contracts involving his personal
expenses were coursed through and signed by him to ensure
compliance with pertinent election laws.
On petitioner’s claim that Lilian, on his (respondent’s) behalf, had
obtained from him a cash advance of P253,000, respondent
denied having given her authority to do so and having received
the same.
At the witness stand, respondent, reiterating his allegations in his
Answer, claimed that petitioner was his over-all coordinator in
charge of the conduct of seminars for volunteers and the
monitoring of other matters bearing on his candidacy; and that
while his campaign manager, Juanito "Johnny" Cabalu (Cabalu),
who was authorized to approve details with regard to printing
materials, presented him some campaign materials, those were
partly donated. 17
When confronted with the official receipt issued to his wife

acknowledging her payment to JMG Publishing House of the
amount of P1,000,000, respondent claimed that it was his first
time to see the receipt, albeit he belatedly came to know from his
wife and Cabalu that the P1,000,000 represented "compensation
[to petitioner] who helped a lot in the campaign as a gesture of
goodwill." 18
Acknowledging that petitioner is engaged in the printing business,

respondent explained that he sometimes discussed with
petitioner strategies relating to his candidacy, he (petitioner)
having actively volunteered to help in his campaign; that his wife
was not authorized to enter into a contract with petitioner
regarding campaign materials as she knew her limitations; that
he no longer questioned the P1,000,000 his wife gave petitioner
as he thought that it was just proper to compensate him for a job
well done; and that he came to know about petitioner’s claim
against him only after receiving a copy of the complaint, which
surprised him because he knew fully well that the campaign
materials were donations. 19
Upon questioning by the trial court, respondent could not,

however, confirm if it was his understanding that the campaign
materials delivered by petitioner were donations from third

Page 48 of 69
parties. 20
Finally, respondent, disclaiming knowledge of the Comelec rule

that if a campaign material is donated, it must be so stated on its
face, acknowledged that nothing of that sort was written on all the
materials made by petitioner. 21
As adverted to earlier, the trial court rendered judgment in favor

of petitioner, the dispositive portion of which reads:
WHEREFORE, the plaintiff having proven its (sic) cause
of action by preponderance of evidence, the Court
hereby renders a decision in favor of the plaintiff
ordering the defendant as follows:
1. To pay the plaintiff the sum of P1,177,906.00 plus
12% interest per annum from the filing of this complaint
until fully paid;
2. To pay the sum of P50,000.00 as attorney’s fees and
the costs of suit.
SO ORDERED. 22
Also as earlier adverted to, the Court of Appeals reversed the trial
court’s decision and dismissed the complaint for lack of cause of
action.
In reversing the trial court’s decision, the Court of Appeals held
that other than petitioner’s testimony, there was no evidence to
support his claim that Lilian was authorized by respondent to
borrow money on his behalf. It noted that the acknowledgment
receipt signed by Lilian did not specify in what capacity she
23
received the money. Thus, applying Article 1317 of the Civil 24
Code, it held that petitioner’s claim for P253,000 is

unenforceable.
On the accounts claimed to be due JMG Publishing House –
P640,310, Metro Angeles Printing – P837,696, and St. Joseph
Printing Press – P446,900, the appellate court, noting that since
the owners of the last two printing presses were not impleaded as
parties to the case and it was not shown that petitioner was
authorized to prosecute the same in their behalf, held that
petitioner could not collect the amounts due them.
Finally, the appellate court, noting that respondent’s wife had paid

Page 49 of 69
P1,000,000 to petitioner, the latter’s claim of P640,310 (after
excluding the P253,000) had already been settled.
Hence, the present petition, faulting the appellate court to have
erred:
1. . . . when it dismissed the complaint on the ground
that there is no evidence, other than petitioner’s own
testimony, to prove that Lilian R. Soriano was authorized
by the respondent to receive the cash advance from the
petitioner in the amount of P253,000.00.
xxxx
2. . . . when it dismissed the complaint, with respect to
the amounts due to the Metro Angeles Press and St.
Joseph Printing Press on the ground that the complaint
was not brought by the real party in interest. x x x x 25
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. Contracts 26
entered into in the name of another person by one who has been
given no authority or legal representation or who has acted
beyond his powers are classified as unauthorized contracts and
are declared unenforceable, unless they are ratified. 27
Generally, the agency may be oral, unless the law requires a

specific form. However, a special power of attorney is necessary
28
for an agent to, as in this case, borrow money, unless it be urgent

and indispensable for the preservation of the things which are
under administration. Since nothing in this case involves the
29
preservation of things under administration, a determination of

whether Soriano had the special authority to borrow money on
behalf of respondent is in order.
Lim Pin v. Liao Tian, et al. held that the requirement of a special
30
power of attorney refers to the nature of the authorization and not

to its form.
. . . The requirements are met if there is a clear mandate
from the principal specifically authorizing the
performance of the act. As early as 1906, this Court in
Strong v. Gutierrez-Repide (6 Phil. 680) stated that such
a mandate may be either oral or written. The one thing

Page 50 of 69
vital being that it shall be express. And more recently,
We stated that, if the special authority is not written, then
it must be duly established by evidence:
"…the Rules require, for attorneys to compromise the
litigation of their clients, a special authority. And while
the same does not state that the special authority be in
writing the Court has every reason to expect that, if not
in writing, the same be duly established by evidence
other than the self-serving assertion of counsel himself
that such authority was verbally given him." (Emphasis 31
and underscoring supplied)

Petitioner submits that his following testimony suffices to
establish that respondent had authorized Lilian to obtain a loan
from him, viz:
Q : Another caption appearing on Exhibit "A" is cash
advance, it states given on 3-31-95 received by Mrs.
Lilian Soriano in behalf of Mrs. Annie Mercado,
amount P253,000.00, will you kindly tell the Court and
explain what does that caption means?
A : It is the amount representing the money borrowed
from me by the defendant when one morning they
came very early and talked to me and told me that
they were not able to go to the bank to get money for
the allowances of Poll Watchers who were having a
seminar at the headquarters plus other election related
expenses during that day, sir.
Q : Considering that this is a substantial amount which
according to you was taken by Lilian Soriano, did you
happen to make her acknowledge the amount at that
time?
A : Yes, sir. (Emphasis supplied)
32
Petitioner’s testimony failed to categorically state, however,

whether the loan was made on behalf of respondent or of his
wife. While petitioner claims that Lilian was authorized by
respondent, the statement of account marked as Exhibit "A"
states that the amount was received by Lilian "in behalf of Mrs.
Annie Mercado."

Page 51 of 69
Invoking Article 1873 of the Civil Code, petitioner submits that
33
respondent informed him that he had authorized Lilian to obtain

the loan, hence, following Macke v. Camps which holds that one 34
who clothes another with apparent authority as his agent,

and holds him out to the public as such, respondent cannot
be permitted to deny the authority.
Petitioner’s submission does not persuade. As the appellate court
observed:
. . . Exhibit "B" [the receipt issued by petitioner]
presented by plaintiff-appellee to support his claim
unfortunately only indicates the Two Hundred Fifty
Three Thousand Pesos (P253,0000.00) was received by
one Lilian R. Soriano on 31 March 1995, but without
specifying for what reason the said amount was
delivered and in what capacity did Lilian R. Soriano
received [sic] the money. The note reads:
"3-31-95
261,120 ADVANCE MONEY FOR TRAINEE –
RECEIVED BY
RECEIVED FROM JMG THE AMOUNT OF
253,000 TWO HUNDRED FIFTY THREE
THOUSAND PESOS
(SIGNED)
LILIAN R. SORIANO
3-31-95"
Nowhere in the note can it be inferred that defendant-
appellant was connected with the said transaction.
Under Article 1317 of the New Civil Code, a person
cannot be bound by contracts he did not authorize to be
entered into his behalf. (Underscoring supplied)
35
It bears noting that Lilian signed in the receipt in her name alone,
without indicating therein that she was acting for and in behalf of
respondent. She thus bound herself in her personal capacity and
not as an agent of respondent or anyone for that matter.
It is a general rule in the law of agency that, in order to bind the
principal by a mortgage on real property executed by an agent, it

Page 52 of 69
must upon its face purport to be made, signed and sealed in the
name of the principal, otherwise, it will bind the agent only. It is
not enough merely that the agent was in fact authorized to make
the mortgage, if he has not acted in the name of the principal. x x
x (Emphasis and underscoring supplied)
36
On the amount due him and the other two printing presses,
petitioner explains that he was the one who personally and
directly contracted with respondent and he merely sub-contracted
the two printing establishments in order to deliver on time the
campaign materials ordered by respondent.
Respondent counters that the claim of sub-contracting is a
change in petitioner’s theory of the case which is not allowed on
appeal.
In Oco v. Limbaring, this Court ruled:
37
The parties to a contract are the real parties in interest

in an action upon it, as consistently held by the Court.
Only the contracting parties are bound by the
stipulations in the contract; they are the ones who would
benefit from and could violate it. Thus, one who is not a
party to a contract, and for whose benefit it was not
expressly made, cannot maintain an action on it. One
cannot do so, even if the contract performed by the
contracting parties would incidentally inure to one's
benefit. (Underscoring supplied)
38
In light thereof, petitioner is the real party in interest in this case.

The trial court’s findings on the matter were affirmed by the
appellate court. It erred, however, in not declaring petitioner as a
39
real party in interest insofar as recovery of the cost of campaign

materials made by petitioner’s mother and sister are concerned,
upon the wrong notion that they should have been, but were not,
impleaded as plaintiffs.
In sum, respondent has the obligation to pay the total cost of
printing his campaign materials delivered by petitioner in the total
of P1,924,906, less the partial payment of P1,000,000, or
P924,906.
WHEREFORE, the petition is GRANTED. The Decision dated
December 8, 2004 and the Resolution dated April 14, 2005 of the

Page 53 of 69
Court of Appeals are hereby REVERSED and SET ASIDE.
The April 10, 2002 Decision of the Regional Trial Court of
Angeles City, Branch 57, is REINSTATED mutatis mutandis, in
light of the foregoing discussions. The trial court’s decision is
modified in that the amount payable by respondent to petitioner is
reduced to P924,906.
SO ORDERED.
25. ANASTACIO G. DUÑGO vs. ADRIANO LOPENA

FACTS : Anastacio Duñgo and Rodrigo S. Gonzales purchased 3
parcels of land from Adriano Lopena and Rosa Ramos with the
remaining balance payable on installment secured by mortgage
over the same property.
-The vendees defaulted on the first installment.
-A compromise agreement was submitted to the lower court for
approval. It was signed by Adriano Lopena and Rosa Ramos on
one hand, and Rodrigo S. Gonzales, on the other. However,
Rodrigo S. Gonzales represented that his signature was for both
himself and the herein petitioner. Anastacio Duñgo's counsel was
present at the preparation of the compromise agreement and this
counsel affixed his signature thereto.
-When Anastacio Duñgo and Rodrigo S. Gonzales failed to pay
the balance of their indebtedness the mortgage was foreclosed.
- Anastacio Duñgo filed a motion to set aside all the proceedings
on the ground that the compromise agreement was void ab
initio with respect to him because he did not sign the same.
Consequently, he argued, all subsequent proceedings under and
by virtue of the compromise agreement, including the foreclosure
sale were void and null as regards him.
ISSUE:
Was the compromise agreement of January 15, 1960, the Order
of the same date approving the same, and, all the proceedings
subsequent thereto, valid or void insofar as the petitioner herein
is concerned?
HELD:
Valid.
Art. 1878 of the Civil Code, a third person cannot bind another to
a compromise agreement unless he, the third person, has

Page 54 of 69
obtained a special power of attorney for that purpose from the
party intended to be bound.
Although the Civil Code expressly requires a special power of
attorney in order that one may compromise an interest of another,
it is neither accurate nor correct to conclude that its absence
renders the compromise agreement void. In such a case, the
compromise is merely unenforceable. Contracts are
unenforceable, unless they are ratified.
Here, Anastacio Duñgo ratified the compromise agreement
conclusively established by the Tri-Party Agreement. Also, when
it appears that the client, on becoming aware the compromise
and the judgment thereon, fails to repudiate promptly the action
of his attorney, he will not afterwards be heard to contest its
validity.
Also, compromise agreement, the principal provision of the said
instrument was for his benefit.
26. VICENTE V. GERALDEZ

52 SCRA 210 – Business Organization – Corporation Law –
Delegation of Corporate Powers – Compromise Agreement
In 1967, HI Cement Corporation was granted authority to operate
mining facilities in Bulacan. However, the areas allowed for it to
explore cover areas which were also being explored by Ignacio
Vicente, Juan Bernabe, and Moises Angeles. And so a dispute
arose between the three and HI Cement as neither side wanted
to give up their mining claims over the disputed areas. Eventually,
HI Cement filed a civil case against the three. During pre-trial, the
possibility of an amicable settlement was explored where HI
Cement offered to purchase the areas of claims of Vicente et al at
the rate of P0.90 per square meter. Vicente et al however wanted
P10.00 per square meter.
In 1969, the lawyers of HI Cement agreed to enter into a
compromise agreement with the three whereby commissioners
shall be assigned by the court for the purpose of assessing the
value of the disputed areas of claim. An assessment was
subsequently made pursuant to the compromise agreement and
the commissioners recommended a price rate of P15.00 per
square meter.

Page 55 of 69
One of the lawyers of HI Cement, Atty. Francisco Ventura, then
notified the Board of Directors of HI Cement for the approval of
the compromise agreement. But the Board disapproved the
compromise agreement hence Atty. Ventura filed a motion with
the court to disregard the compromise agreement. Vicente et al
naturally assailed the motion. Vicente et al insisted that the
compromise agreement is binding because prior to entering into
the compromise agreement, the three lawyers of HI Cement
declared in open court that they are authorized to enter into a
compromise agreement for HI Cement; that one of the lawyers of
HI Cement, Atty. Florentino Cardenas, is an executive official of
HI Cement; that Cardenas even nominated one of the
commissioners; that such act ratified the compromise agreement
even if it was not approved by the Board. HI Cement, in its
defense, averred that the lawyers were not authorized and that in
fact there was no special power of attorney executed in their
favor for the purpose of entering into a compromise agreement.
Judge Ambrosio Geraldez ruled in favor of HI Cement.
ISSUE: Whether or not a compromise agreement entered into by
a lawyer purportedly in behalf of the corporation is valid without a
written authority.
HELD: No. Corporations may compromise only in the form and
with the requisites which may be necessary to alienate their
property. Under the corporation law the power to compromise or
settle claims in favor of or against the corporation is ordinarily
and primarily committed to the Board of Directors but such power
may be delegated. The delegation must be clearly shown for as a
general rule an officer or agent of the corporation has no power
to compromise or settle a claim by or against the corporation,
except to the extent that such power is given to him either
expressly or by reasonable implication from the circumstances. In
the case at bar, there was no special power of attorney
authorizing the three lawyers to enter into a compromise
agreement. This is even if the lawyers declared in open court that
they are authorized to do so by the corporation (in this case, the
transcript of stenographic notes does not show that the lawyers
indeed declare such in open court).
The fact that Cardenas, an officer of HI Cement, acted in

Page 56 of 69
effecting the compromise agreement, i.e. nominating a
commissioner, does not ratify the compromise agreement. There
is no showing that Cardenas’ act binds HI Cement; no proof that
he is authorized by the Board; no proof that there is a provision in
the articles of incorporation of HI Cement that he can bind the
corporation.
27. Mercado vs. Allied Bank digest sales G.R. No. 171460
Perla executed a Special Power of Attorney (SPA) in favor of

her husband, Julian D. Mercado over several pieces of real
property registered under her name, authorizing the latter to
perform the following acts:
1. To act in my behalf, to sell, alienate, mortgage, lease and
deal otherwise over the different parcels of land.
2. To sign for and in my behalf any act of strict dominion or
ownership any sale, disposition, mortgage, lease or any other
transactions including quit-claims, waiver and relinquishment of
rights x x x
3. To exercise any or all acts of strict dominion or ownership
over the above-mentioned properties, rights and interest therein.
On the strength of the aforesaid SPA, Julian obtained a loan
from the respondent. Still using the subject property as security,
Julian obtained an additional loan from the respondent. It
appears, however, that there was no property identified in the
SPA and registered with the Registry of Deeds. What was
identified in the SPA instead was the property different from the
one used as security for loan. Julian defaulted on the payment of
his loan obligations. Thus, respondent initiated extra- judicial
foreclosure proceedings over the subject property which
was subsequently sold at public auction wherein the respondent
was declared as the highest bidder. Petitioners initiated an action
for the annulment of REM constituted over the subject property
on the ground that the same was not covered by the SPA and
that the said SPA, at the time the loan obligations were
contracted, no longer had force and effect since it was previously
revoked by Perla. In the absence of authority to do so, the Real
Estate Mortgage constituted by Julian over the subject property
was null and void; thus, petitioners likewise prayed that the

Page 57 of 69
subsequent extra-judicial foreclosure proceedings and the
auction sale of the subject property be also nullified.
WHETHER OR NOT THERE WAS A VALID MORTGAGE

CONSTITUTED OVER SUBJECT PROPERTY.
Julian was not conferred by Perla with the authority to

mortgage the subject property under the terms of the SPA, the
real estate mortgages Julian executed over the said property are
therefore unenforceable. The SPA will be held to grant only those
powers which are specified therein, and the agent may neither go
beyond nor deviate from the power of attorney. Where powers
and duties are specified and defined in an instrument, all such
powers and duties are limited and are confined to those which
are specified and defined, and all other powers and duties are
excluded.
WHETHER OR NOT THERE WAS A VALID REVOCATION
OF THE SPA.
Article 1919, an agency is extinguished, among others,

by its revocation
Article 1920, the principal may revoke the agency at will,
and compel the agent to return the document evidencing the
agency. Such revocation may be express or implied. In this
case, the revocation of the agency or Special Power of
Attorney is expressed and by a public document executed
on March 10, 1993.
Given that Perla revoked the SPA as early as 10 March

1993, and that she informed the Registry of Deeds of
Quezon City of such revocation in a letter dated 23 January
1996 and received by the latter on 7 February 1996, then
third parties to the SPA are constructively notified that the
same had been revoked and Julian no longer had any
authority to mortgage the subject property.
28. BPI vs. De Coster
# 28 BPI vs. GABRIELA ANDREA DE COSTER y ROXAS, et al.

Page 58 of 69
(G.R. No. L-23181. March 16, 1925)
FACTS:
The Bank of the Philippine Islands (BPI) filed a complaint against
defendants Gabriela Andrea de Coster y Roxas, her husband
Jean M. Poizat and their partnership J.M. Poizat & Co. for failure
to deliver a mortgage on a real property in Manila. The Court of
First Instance (CFI) of Manila rendered that the defendants be
jointly and severally liable for Php 292,000 with an interest of 9%
per annum and other damages.
BPI filed later for the immediate possession of the property and
sell the same according to the Chattel Mortgage Law.
Spouses De Coster and Poizat, as well as J.M. Poizat & Co.,

were all declared in default by the court for their failure to appear
or file their answer. Without notifying the defendants, and after
introducing evidence, rendered an opinion that the property
should be sold and the proceeds should be used for the
satisfaction of respective judgments.
De Coster filed a suit to absolve her from the liability and to

request for the reopening of the case because: (1) She resided
in Paris from 1908 to April 30, 1924 and was not notified even by
her husband regarding the case; (2) Her husband executed the
mortgage transactions without her consent.
ISSUE:
Whether or not the transactions entered by Poizat, as an agent of his wife valid?
HELD:
NO. Paragraph 5 of the power of attorney authorizes the husband for in the name of his wife to “loan or
borrow any sums of money or fungible things, etc.” This should be construed to mean that the husband had
power only to his wife’s money and not to borrow money for or on account of his wife as her agent and
attorney-in-fact. That does not carry with it or imply that he had the legal right to make his wife liable as a
surety for the preexisting debt of a third person.
Anent her contention that the promissory note was void, the High
Court agreed with her that under the power of attorney given by
De Coster to her husband, he had no authority to execute a

Page 59 of 69
“joint and several” note nor to make her liable as an
accommodation maker or surety, as the case may be. The money
owed to BPI was Jean Poizat and his company’s alone, and she
was not a party to such loan, and therefore, was not obligated to
pay it. The old, original debts of her husband and his company to
the bank were all taken up and merged in the new note
in question.
Furthermore, the bank knew that not a dollar was loaned nor
borrowed on the strength of the note. It was actually given at the
bank’s urgent and pressing demand to obtain security for the
previous indebtedness of Jean Poizat
Considering these facts, De Coster had a valid defense against

the payment of the questioned note, and thus, she is not liable to
pay it or the original notes. In addition, the note and mortgage
show on their face that De Coster’s husband as her attorney-in-
fact executed them. The bank knew or should have known the
nature and extent of Jean Poizat’s authority and the limitations on
his power. The fact is, there is no provision in the husband’s
power of attorney that empowers or authorizes him to sign
anything or to do anything that will make his wife liable as a
surety for a pre-existing debt.
On the question of the void mortgage: The same is true of the

real estate mortgage. The note being void as to De Coster, it
follows that as to her, the real estate mortgage is also void for
want of power to execute it.
Hence, the SC reversed the lower court’s ruling and remanded

the case to said court for trial on the merits.
29. Insular Drug Co. Inc. vs PNB

Facts: 132 checks made out in the name of the Insular Drug Co., Inc., were brought to the branch office of
the Philippine National Bank in Iloilo by Foerster, a salesman of the drug company, Foerster's wife, and
Foerster's clerk. And said bank credited those checks to the personal account of Foerster and permitted
him amd his wife to make withdrawals.
Eventually the Manila office of the drug company investigated the transactions of Foerster. Upon the

Page 60 of 69
discovery of anomalies, Foerster committed suicide. But there is no evidence showing that the bank knew
that Foerster was misappropriating the funds of his principal. The Insular Drug Company claims that it
never received the face value of 132 checks.
Issue: WON PNB shall be held liable for permitting Foerster to indorse and withdraw the checks of his
principa, Insular Druga Co. Inc.
Held:
Yes. The bank could tell by the checks themselves that the money belonged to the Insular Drug Co., Inc.,
and not to Foerster or his wife or his clerk. Moreover, the bank did not only permit Foerster to indorse
checks and then place them to his personal account, but it went farther and permitted Foerster's wife and
clerk to indorse the checks. The right of an agent to indorse commercial paper is a very responsible power
and will not be lightly inferred. A salesman with authority to collect money belonging to his principal does
not have the implied authority to indorse checks received in payment. And it suffices to state in conclusion
that bank will have to stand the loss occasioned by the negligence of its agents.
30. Hodges v. Salas and Salas
Facts: In 1923, Salas executed a power of attorney in favor of

their brother-in-law, Felix Yulo. Said P.A. enables Yulo to obtain a
loan and secure it with a mortgage on real property. Acting under
said power of attorney, Yulo obtained a loan of P28,000 from
Hodges, binding his principals jointly and severally to pay it within
10 years with 12% interest. This loan is secured with a mortgage
over a real property. However, the P28,000 loan was not
delivered to Yulo. Instead, an agreement between Yulo and
Hodges indicate that the P28,000 loan was applied to pay his
personal debts to Hodges, amounting to P10,188.29. Defendants
failed to pay the interests at maturity, which should have been
paid one year in advance. Hodges, now seeks to have the
property subject of mortgage foreclosed. Salas then counters
such action arguing that Yulo acted in excess of his authority,
hence such loan is invalid. Hodges then contends that Salas, thru
power of attorney, ratified the action of Yulo.
Issue: WON agent Yulo was authorized to borrow money and

invest it as he wished, without being obliged to apply it
necessarily for the benefit of the principals, by virtue of the
authority conferred by the defendants
Held: No. In Manila Trading & Supply Co., vs. Uy Tiepo, the
Court held that an agent who applied loaned money for his own
benefit is deemed to have exceeded his authority as provided

Page 61 of 69
under the power of attorney. The power of attorney which
authorizes an agent for a specific undertaking has limited term.
In this case, Yulo exceeded the authority provided under the
power of attorney since he applied portion of the money loaned
for his own benefit.
Note: The Court ordered that defendants pay Hodges the

balance of P17,811.71, since P10,188.29 was applied by agent
Yulo to the payment of his personal debt to Hodges. As to the
interest, since defendants already paid to Hodges a total of
P18,138.77, which includes a usurious interest, they are still
indebted to pay P4,321.79 (defendants have to pay P22, 460.56
interest—12% p.a. from 1926 to 1936—less P3,000 attorney’s
fees).
31. Bravo-Guerrero vs. Bravo, GR 152658, 07/29/2005
Facts: Grandparents-spouses Bravo owned two parcel of land in

Makati, the wife executed GPA in favor of her husband. These
properties were subsequently sold by the grandfather to their
grandchildren. Such properties were mortgaged to PNB and DBP
and the grandchildren-heirs assumed the payment. Later on, one
of the grandchildren moved for the partition of the properties as
co-owners but the buyers refused. The grandchildren contested
the sale for lack of consideration. The trial court upheld the
validity of the sale, which was reversed by CA for lack of the
consent on the part of the grandmother.
Issue: WON the GPA granted by grandmother was valid.
Held: Yes. Sale of conjugal property by husband is only voidable

if without wife’s consent. The sale can only be contested by the
wife, and this is not the case. The grandmother executed a GPA
specifying the authority (i.e. mortgae, sell, assign, dispose, etc) of
his husband, thus meeting the requirement of authorization
specified in Art. 1878 (nature, and not the form of power). There
was no need to execute a separate and special power of
attorney as it can be included in the general power when it is
specified therein the act or transaction for which the special

Page 62 of 69
power is required. The SC divided the co-owned properties
between heirs of the buyers. Gross inadequacy of price will not
affect sal.
32. FRANCISCO A. VELOSO vs. COURT OF APPEALS,

AGLALOMA B. ESCARIO, assisted by her husband
GREGORIO L. ESCARIO, the REGISTER OF DEEDS FOR
THE CITY OF MANILA,
Petitioner Francisco Veloso owns a parcel of land in Tondo,

Manila covered by a TCT issued by the Registry of Deeds-
Manila.He acquired the subject property before he got married
frOm Philippine Building Corporation. Hence, the property did not
belong to the conjugal partnership. The said title was
subsequently canceled and a new one was issued in the name
of Aglaloma B. Escario. Subsequently, petitioner filed an action
for annulment of documents, reconveyance of property with
damages and preliminary injunction alleging that he was the
absolute owner of the subject property and he never authorized
anybody to sell it. He alleged that when his wife left for abroad,
he found out that his copy was missing. The transfer of property
was supported by a General Power of Attorney and Deed of
Absolute Sale, executed by IrmaVeloso, wife of the petitioner.
Petitioner denied executing the power of attorney and alleged

that his signature was falsified. He also denied having known the
supposed witnesses in the execution of the power of attorney.
Thus, he contended that the sale of the property, and the
subsequent transfer were null and void.
Defendant Aglaloma Escario alleged that she was a buyer in

good faith and denied any knowledge of the alleged irregularity.
She allegedly relied on the general power of attorney which
was sufficient in form and substance and was duly notarized.
Witness for the plaintiff

Atty. Julian G. Tubig denied any participation in the execution of
the general power of attorney, and attested that he did not sign.
RTC ruled in favor of Escaro as the lawful owner of the property

Page 63 of 69
as she was deemed an innocent purchaser for value. The trial
court ruled
that there was no need for a special power of attorney when the
special power was already mentioned in the general one.
CA affirmed in toto the findings of the trial court.
ISSUE:
Was the General Power of Attorney valid?
HELD:
The assailed power of attorney was valid and regular on its face.
It was notarized and as such, it carries the evidentiary weight
conferred upon it with respect to its due execution. While it is true
that it was denominated as a general power of attorney, a perusal
thereof revealed that it stated an authority to sell."
2. To buy or sell, hire or lease, mortgage or otherwise

hypothecate lands, tenements and hereditaments …. "Thus,
there was no need to execute a separate and special power of
attorney since the general power of attorney had expressly
authorized the agent or attorney in fact the power to sell
the subject property. The general power of attorney was accepted
by the Register of Deeds when the title to the subject property
was canceled and transferred in the name of private Respondent.
RE FALSIFIED SIGNATURE:SC found that the basis presented

by the petitioner was inadequate to sustain his allegation of
forgery. Mere variance of the signatures cannot be considered as
conclusive proof that the same were forged. Forgery cannot be
presumed.
DOCTRINE:
The special power of attorney can be included in the general
power when it is specified therein the act or transaction for which
the special power is required. "Whether the instrument be
denominated as "general power of attorney" or "special power
of attorney," what matters is the extent of the power or powers
contemplated upon the agent or attorney in fact. If the power is

Page 64 of 69
couched in general terms, then such power cannot go beyond
acts of administration. However, where the power to sell is
specific, it not being merely implied, much less couched in
general terms, there cannot be any doubt that the attorney in fact
may execute a valid sale. An instrument may be captioned as
"special power of attorney" but if the powers granted are couched
in general terms without mentioning any specific power to sell or
mortgage or to do other specific acts of strict dominion, then in
that case only acts of administration may be deemed conferred."
33. Siasat v. IAC
Facts: Nacianceno was able to convince the Department of

Education and Culture to purchase without bidding Philippine
Flags. When she followed-up the Department of Budget
regarding such purchase, the latter informed her that purchase
order cannot be released until a formal offer to deliver the flags is
given. Due this, she contacted Siasat, the owner of the United
Flag Ind. The latter then issued a document authorizing
Nacianceno to deal with any entity regarding the marketing of the
products of the UFI. They also agreed that Nacianceno shall be
entitled to a commission of 30%. The purchase order was then
released in favor of UFI. After the first delivery was made, UFI
gave Nacianceno her commission amounting to 5% of the
amount purchased. UFI then revoked the authorization given to
Nacianceno. After such revocation, another delivery was made
by UFI to the DEC. Because of this, Nacianceno demanded that
her full 30% from the first delivery be given as well as her
commission for the second delivery. UFI then contended, among
others, that she has no right over the commission since the
agency contract is special in character (as it is limited to the
marketing of the UFI products only).
Issue: WON the agency contract authorizing of Nacianceno is

special in character.
Held:B No. A special agent is one authorized to do some

particular act or to act upon some particular occasion while a
general agent is one authorized to do all acts pertaining to a

Page 65 of 69
business of a certain kind or at a particular place, or all acts
pertaining to a business of a particular class or series.
In this case, it is clear from the document that 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.
34. Urban Bank v. Peña
Facts: Atty. Magdaleno Peña was formerly a stockholder, director

and corporate secretary of Isabel Sugar Company, Inc. (ISCI).
ISCI owned a parcel of land. ISCI leased the land. Without its
consent and in violation of the lease contract, the lessee
subleased the land to several tenants, who in turn put up
nightclubs inside the compound. Before the expiration of the
lease contract, ISCI informed the lessee and his tenants that the
lease would no longer be renewed because the land will be sold.
ISCI and Urban Bank executed a Contract to Sell, and they
agreed that the final installment released by the bank upon ISCI’s
delivery of full and actual possession of the land, free from any
tenants.ISCI then instructed Peña, to act as its agent and handle
the eviction of the tenants. The lessee left, but the unauthorized
sub-tenants refused to leave. Peña had the gates of the property
closed and he also posted security guards—services for which he
advanced payments. Despite the closure of the gates and the
posting of the guards, the sub-tenants would force open the
gates, and proceed to carry on with their businesses. Peña then
filed a complaint with the RTC, which issued a TRO. At the time
the complaint was filed, a new title to the had already been
issued in the name of Urban Bank. When information reached the
judge that the had already been transferred by ISCI to Urban
Bank, the trial court recalled the TRO and issued a break-open
order for the property. Peña immediately contacted ISCI’s
presidentand told him that because of the break-open order of
the RTC, he (Peña) would be recalling the security guards he had
posted to secure the property. The President asked him to
suspend the withdrawal of the posted guards, so that ISCI could

Page 66 of 69
get in touch first with Urban Bank. Peña also called Urban Bank’s
President. The President allegedly assured him that the bank
was going to retain his services, and that the he should not give
up possession of the subject land. Thereafter, Peña, in
representation of Urban Bank, filed a separate complaint with the
RTC-Makati City, to enjoin the tenants from entering the Pasay
property. Acting on Urban Bank’s preliminary prayer, the RTC-
Makati City issued a TRO. While the 2nd complaint was pending,
Peña made efforts to settle the issue of possession of the with
the sub-tenants. During the negotiations, he was exposed to
several civil and crimal cases and received several threats
against his life. The sub-tenants eventually agreed to stay off the
property for a total consideration of 1.5M. Peña advanced the
payment for the full and final settlement of their claims against
Urban Bank. Peña formally informed Urban Bank that it could
already take possession of the Pasay property. There was
however no mention of the compensation due and owed to him
for the services he had rendered. The bank subsequently took
actual possession of the property and installed its own guards at
the premises. Peña thereafter made several attempts to contact
Urban Bank, but the bank officers would not take any of his calls.
Peña formally demanded from Urban Bank the payment of the
10% compensation and attorney’s fees allegedly promised to him
during his telephone conversation with Urban Bank’s President
for securing and maintaining peaceful possession of the property.
Urban Bank and individual bank officers and directors argued that
it was ISCI, the original owners of the Pasay property, that had
engaged the services of Peña in securing the premises; and,
consequently, they could not be held liable for the expenses
Peña had incurred.
ISSUE: Whether or not Peña is entitled to payment for the

services he rendered as agent of Urban Bank.
HELD: Yes.
Peña should be paid for services rendered under the agency

relationship that existed between him and Urban Bank based on
the civil law principle against unjust enrichment, and not on the

Page 67 of 69
basis of the purported oral contract. Whether or not an agency
has been created is determined by the fact that one is
representing and acting for another. The law makes no
presumption of agency; proving its existence, nature and extent
is incumbent upon the person alleging it.
Agency is presumed to be for compensation. Unless the contrary

intent is shown, a person who acts as an agent does so with the
expectation of payment according to the agreement and to the
services rendered or results effected. In the instant case, there’s
no evidence that Urban Bank agreed to pay Peña a specific
amount or percentage of amount for his services, so the court
applies the principle against unjust enrichment and on the basis
of quantum meruit. The agency of Peña comprised of services
ordinarily performed by a lawyer who is tasked with the job of
ensuring clean possession by the owner of a property. The court
measured the amount Pena is entitled to for the services he
rendered (as opposed to the 10% compensation demanded by
Pena).
35. Westmont Investment Corp. v Francia

FACTS: Amos Francia, convinced by the bank manager of Westmont Bank, made an investment in
Westmont Investment. Amos also invited his siblings to join in the investment since the interest rate offered
was impressive. They invested an aggregate amount of P3.9M. When the Francia siblings demanded the
retirement of their investment on its maturity, Westmont Investment told them that they have no funds at the
moment and requested for an extension. They also advised the Francias that their money was borrowed by
Pearlbank. When the period of extension given to Westmont Investment expired, they were still not able to
pay the Francias resulting to a suit filed by the latter against Westmont Investment, impleading Pearlbank
as well in the complaint.
Westmont Investment contends that they were merely acting as an agent of Pearlbank which authorized
them to borrow money on its behalf. They averred that they merely brokered a “loan transaction” between
Pearlbank and the Francias. Westmont provided documents to support their claim showing that Pearlbank
borrowed an amount equivalent to the investment of the Francias.
ISSUE: Whether or not Westmont Investment is an agent of Pearlbank.
HELD: No. The fact that Pearlbank questioned Westmont Investment’s practice of naming Pearlbank as a
“borrower” of certain investments made by other investors with Westmont Investment only shows that
AUTHORITY from Pearlbank is absent. The evidence presented is not sufficient to prove that Westmont
Investment was authorized by Pearlbank to borrow money for it and that an agency existed therefrom.
Neither was there a ratification, expressly or impliedly, that it had authorized or consented to said
transaction.
Also, the Francias had no personal knowledge of Pearlbank. The Francias maintained that they only
transacted with Westmont Investment and Pearlbank was never mentioned by Westmont Investment until
the time they knew that the latter does not have any funds pointing then Pearlbank as the borrower of their
investment. The fact that the Francias impleaded Pearlbank in their suit does not defeat the fact that they
only transact with Westmont Investment. They only did so to protect their interest when they found out that
Westmont was already bankrupt.
Francisco vs GSIS (1963)

Page 68 of 69
Facts: The plaintiff, Trinidad J. Francisco, in consideration of a loan mortgaged in favor of the defendant, Government
Service Insurance System a parcel of land known as Vic-Mari Compound, located at Baesa, Quezon City. The System
extrajudicially foreclosed the mortgage on the ground that up to that date the plaintiff-mortgagor was in arrears on her
monthly instalments. The System itself was the buyer of the property in the foreclosure sale. The plaintiff’s father, Atty.
Vicente J. Francisco, sent a letter to the general manager of the defendant corporation, Mr. Rodolfo P. Andal. And
latter the System approved the request of Francisco to redeem the land through a telegram. Defendant received the
payment and it did not, however, take over the administration of the compound. The System then sent a letter to
Francisco informing of his indebtedness and the 1 year period of redemption has been expired. And the System
argued that the telegram sent to Francisco saying that the System has approved the request in redeeming the
property is incorrect due to clerical problems.
Issue: WON the System is liable for the acts of its employees regarding the telegram?
Held: Yes. There was nothing in the telegram that hinted at any anomaly, or gave ground to suspect its veracity, and
the plaintiff, therefore, can not be blamed for relying upon it. There is no denying that the telegram was within Andal’s
apparent authority. Hence, even if it were the board secretary who sent the telegram, the corporation could not evade
the binding effect produced by the telegram. Knowledge of facts acquired or possessed by an officer or agent of a
corporation in the course of his employment, and in relation to matters within the scope of his authority, is notice to the
corporation, whether he communicates such knowledge or not. Yet, notwithstanding this notice, the defendant System
pocketed the amount, and kept silent about the telegram not being in accordance with the true facts, as it now alleges.
This silence, taken together with the unconditional acceptance of three other subsequent remittances from plaintiff,
constitutes in itself a binding ratification of the original agreement.

Page 69 of 69

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1. Eurotech Industrial Technologies, Inc. v. Edwin Cuizon

Eurotech Industrial Technologies vs Cuizon

Edwin Cuizon, general manager of Impact Systems Sales owned

Edwin and a general manager of Eurotech signed a deed of

But Erwin, the proprietor, still collected the receivables despite

For failure to meet the demand, Eurotech filed a complaint for

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RTC dropped respondent as a party defendant of the case. The

Whether or not respondent, as sales manager, is acting merely

Respondent Edwin merely acted as an agent.

In a contract of agency, a person binds himself to render some

The underlying principle of the contract of agency is to

Its purpose is to extend the personality of the principal or the

It is said that the basis of agency is representation, that is, the

By this legal fiction, the actual or real absence of the principal is

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(1) consent, express or implied, of the parties to establish the

(2) the object is the execution of a juridical act in relation to a

(3) the agent acts as a representative and not for himself;

(4) the agent acts within the scope of his authority

In this case, the parties do not dispute the existence of the

Article 1897 reinforces the familiar doctrine that an agent, who

The same provision, however, presents two instances when an

(1) When he expressly binds himself to the obligation; and,

(2) When he exceeds his authority.

We hold that respondent EDWIN does not fall within any of

"...the position of manager is unique in that it presupposes the

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A real party in interest is one who "stands to be benefited or

2. Rallos v. Felix Go Chan & Realty Corp.

FACTS: An SPA was executed by sisters Concepcion and

ISSUE: Whete the sale entered into by an agent is valid alhough

HELD: No, the sale is void because Simeon's authority as an

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Issue: WON the agreement is invalid due to lack of consideration as a guarantor.

4. ORIENT AIR SERVICES v. CA

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What was finally proven as a matter of fact is that there was no

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Facts:The case involves the “Diwalwal Gold Rush Area”

MMC assigned all its rights to EP 133 to Southeast Mindanao

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2. NO. The DENR Secretary has no power to convert forest

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7. MARIA TUAZON, ALEJANDRO P. TUAZON, MELECIO P.

Court, challenging the July 31, 2002 Decision of the Court of 2

Appeals (CA) in CA-GR CV No. 46535. The decretal portion of

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Regional Trial Court (RTC) of Gapan, Nueva Ecija, disposed as

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The corresponding civil and criminal cases were filed by

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The Court’s Ruling

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sufficient reasons to deviate from this rule.

of agency: (1) the parties’ consent, express or implied, to

representation, there must be, on the part of the principal, an

This Court finds no reversible error in the findings of the courts a

The declarations of agents alone are generally insufficient to

presumption of agency; proving its existence, nature and extent