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DOMINION INSURANCE CORPORATION vs.

COURT OF APPEALS,
RODOLFO S. GUEVARRA, and FERNANDO AUSTRIA

 FACTS:
Rodolfo Guevarra (Guevarra) filed a civil case for sum of money against
Dominion Insurance Corp. (Dominion) for the amount advanced by Guevarra in
his capacity as manager of defendant to satisfy certain claims filed by
defendant’s client.

The pre-trial was always postponed, and during one of the pre-trial
conference dominion failed to arrive therefore the court declared them to be in
default. Dominion filed several Motions to Lift Order of Default but was always
denied by the court. The RTC rendered its decision making Dominion liable to
repay Guevarra for the sum advanced and other damages and fees. Dominion
appealed but CA affirmed the decision of RTC and denied the appeal of
Dominion.

ISSUE:
(a) W/N Guevarra acted within his authority as agent of petitioner.
(b) W/N Guevarra must be reimbursed for the amount advanced.

HELD:
(a) NO. Even though the contact entered into by Guevarra and Dominion was
with the word “special” the contents of the document was actually a general
agency. A general power permits the agent to do all acts for which the law does
not require a special power and the contents in the document did not require a
special power of attorney.

Art 1878 of the civil code provides instances when a special power of attorney is
required.:
1) To make such payment as are not usually considered as acts of
administration.
15) any other act of dominion

The payment of claims is not an act of administration which requires a special  


power of attorney before Guevarra could settle the insurance claims of the
insured.

Also Guevarra was instructed that the payment for the insured must come from
the revolving fund or collection in his possession, Gueverra should not have paid
the insured through his own capacity. Under 1918 of civil code an agent who
acted in contravention of the principal’s instruction the principal will not be liable
for the expenses incurred by the agent.
(b) YES. Even if the law on agency prohibits Gueverra from obtaining
reimbursement his right to recover may be justified under the article 1236 of the
civil code.[1] Thus Guevarra must be reimbursed but only to the extent that
Dominion has benefited without interest or demand for damages.

G.R. No. 209119, October 03, 2018

PHILIPPINE INTERNATIONAL TRADING


CORPORATION, Petitioner, v. THRESHOLD PACIFIC CORPORATION AND
EDGAR REY A. CUALES, Respondents.

TOPIC: Special Power of Attorney (To Loan or Borrow Money).

FACTS:

The present controversy involves three key instruments executed between


PITC and TPC, viz.: (a) the Import Financing Agreement (IFA) dated July 5,
1993; (b) the 1st Addendum to the IFA (1st Addendum) dated July 6, 1993; and
the 2nd Addendum to the IFA (2nd Addendum) dated November 4, 1993
(hereinafter collectively referred to as the Loan).

The parties, PITC, represented by its President, Jose Luis U. Yulo, Jr.
(Yulo), and TPC, represented by its Managing Director, respondent Cuales,
executed the IFA whereby PITC agreed to assist TPC financially in the amount of
P50,000,000.00 for the latter's importation of urea fertilizers.
G.R. No. 137162     January 24, 2007
CORAZON L. ESCUETA, assisted by her husband EDGAR ESCUETA,
IGNACIO E. RUBIO, THE HEIRS OF LUZ R. BALOLOY, namely,
ALEJANDRINO R. BALOLOY and BAYANI R. BALOLOY, Petitioners, 
vs.
RUFINA LIM, Respondent.

TOPIC: Special Power of Attorney (With Respect to Immovable Properties).

FACTS:
Respondent Rufina Lim filed an action to remove cloud on, or quiet title
to, real property, with preliminary injunction and issuance of a hold-departure
order from the Philippines against Ignacio E. Rubio. Respondent Rufina Lim
averred that she bought the hereditary shares of Ignacio Rubio and the heirs of
Luz Baloloy, namely: Alejandrino, Bayani, and other co-heirs. Ignacio Rubio and
the heirs of Luz Baloloy received a down payment or earnest money in the
amount of P102,169.86 and P450,000, respectively.

However, Ignacio Rubio and the heirs of Luz Baloloy refused to receive
the other half of the down payment and refused to deliver to respondent the
certificates of title covering their share in the disputed lots. Ignacio argued that
respondent Rufina Lim has no cause of action, because he did not enter into a
contract of sale with her because he has appointed his daughter Patricia Llamas
to be his attorney-in-fact and not in favor of Virginia Rubio Laygo Lim who was
the one who represented him in the sale of the disputed lots in favor of
respondent Rufina Lim and that the P100,000 respondent claimed he received as
down payment for the lots is a simple transaction by way of a loan with Lim.

As to petitioner Corazon Escueta, in spite of her knowledge that the


disputed lots have already been sold by Ignacio Rubio to respondent, it is alleged
that a simulated deed of sale involving said lots was effected by Ignacio Rubio in
her favor; and that the simulated deed of sale by Rubio to Escueta has raised
doubts and clouds over respondent’s title.

ISSUE:
Whether the sub-agent Virginia Lim has authority to sell, thus validating
the sale of the subject properties.

RULING:
Yes. Art. 1892 of the New Civil Code states that the agent may appoint a
substitute if the principal has not prohibited him from doing so; but he shall be
responsible for the acts of the substitute.
Applying the above-quoted provision, the special power of attorney
executed by Ignacio Rubio in favor of his daughter Patricia Llamas, it is clear that
she is not prohibited from appointing a substitute. By authorizing Virginia Lim to
sell the subject properties, Patricia merely acted within the limits of the authority
given by her father, but she will have to be "responsible for the acts of the sub-
agent," among which is precisely the sale of the subject properties in favor of
respondent.

Moreover, Ignacio Rubio merely denies the contract of sale. He claims,


without substantiation, that what he received was a loan, not the down payment
for the sale of the subject properties. His acceptance and encashment of the
check, however, constitute ratification of the contract of sale and "produce the
effects of an express power of agency." His action necessarily implies that he
waived his right of action to avoid the contract, and, consequently, it also implies
the tacit, if not express, confirmation of the said sale effected" by Virginia Lim in
favor of respondent.

Indeed, Virginia Lim and respondent have entered into a contract of sale.
Not only has the title to the subject properties passed to the latter upon delivery
of the thing sold, but there is also no stipulation in the contract that states the
ownership is to be reserved in or "retained by the vendor until full payment of
the price. Similarly, the Baloloys have ratified the contract of sale when they
accepted and enjoyed its benefits. Consequently, Ignacio Rubio could no longer
sell the subject properties to Corazon Escueta, after having sold them to
respondent. 
G.R. No. 105562 September 27, 1993
LUZ PINEDA, MARILOU MONTENEGRO, VIRGINIA ALARCON,
DINA LORENA AYO, CELIA CALUMBAG and LUCIA LONTOK, Petitioners,
vs. HON. COURT OF APPEALS and THE INSULAR LIFE ASSURANCE
COMPANY, LIMITED, Respondents.

TOPIC: Special Power of Attorney (Any Other Act of Strict Dominion).

FACTS:
Prime Marine Services, Inc. (PMSI), a crewing/manning outfit, procured
from respondent-appellant Insular Life Assurance Co., Ltd. to provide life
insurance coverage to its sea-based employees enrolled under a plan. During the
effectivity of the policy, six covered employees of the PMSI perished at sea when
their vessel, M/V Nemos, sunk. They were survived by complainants-appellees,
the beneficiaries under the policy.

Following the tragic demise of their loved ones, complainants-appellees


sought to claim death benefits due them and, for this purpose, they approached
the President and General Manager of PMSI, Capt. Roberto Nuval. The latter
evinced willingness to assist complainants to recover OWWA benefits from the
POEA and to work for the increase of their PANDIMAN and other benefits arising
from the deaths of their husbands/sons. They were made to execute, with the
exception of the spouses Alarcon, special powers of attorney authorizing Capt.
Nuval to follow up, ask, demand, collect and receive for their benefit indemnities
of sums of money due them relative to the sinking of M/V Nemos. By virtue of
these written powers of attorney, complainants-appellees were able to receive
their respective death benefits.

Unknown to them, the PMSI, in its capacity as employer and policyholder


of the life insurance of its deceased workers, filed with respondent-appellant
Insular Life Assurance formal claims for and in behalf of the beneficiaries,
through its President, Capt. Nuval. Among the documents submitted by the latter
for the processing of the claims were five special powers of attorney executed by
complainants-appellees. On the basis of these and other documents duly
submitted, Insular Life Assurance drew against its account six (6) checks, four
for P200,00.00 each, one for P50,000.00 and another for P40,00.00, payable to
the order of complainants. These checks were released to the treasurer of PMSI
upon instructions of Capt. Nuval. Upon receipt of these checks from the
treasurer, who happened to be his son-in-law, Capt. Nuval endorsed and
deposited them in his account with the Commercial Bank of Manila.
ISSUE:
Whether the special powers of attorney relied upon by Insular Life were
sufficient to authorize Capt. Nuval to receive the proceeds of the insurance
proceeds.

RULING:
No. The execution by the complainants of special powers of attorney,
which clearly appeared to be in prepared forms and only had to be filled up with
their names, residences, dates of execution, dates of acknowledgment and
others, excludes any intent to grant a general power of attorney or to constitute
a universal agency. Being special powers of attorney, they must be strictly
construed.

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

Even granting for the sake of argument that the special powers of
attorney were in due form, Insular Life was grossly negligent in delivering the
checks, drawn in favor of the petitioners, to a party who is not the agent
mentioned in the special power of attorney. Thus, petition is granted.
G.R. No. 226587, November 21, 2018
DONABELLE V. GONZALES-SALDANA, Petitioner, v. SPOUSES GORDON R.
NIAMATALI AND AMY V. NIAMATALI, Respondents.

TOPIC: Duty of Obedience.

FACTS:
Respondent-spouses Gordon and Amy Niamatali, then residing in the
United States of America, made known to petitioner Donabelle Gonzales-Saldana
their intention to acquire real properties in Metro Manila. Petitioner, who was
then working in the DOLE, informed them that a certain parcel of land located in
Las Piñas City would be sold in a public auction conducted by the DOLE Sheriff's
Office.

Thereafter, respondent-spouses asked petitioner to participate in the


public auction on their behalf. Consequently, they remitted US$60,000.00 or
P3,000,000.00 to petitioner's bank account for the purchase of the Las Piñas
property. In March 2002, however, respondent spouses received from petitioner
photocopies of Transfer Certificates of Title covering properties located in Manila
and Parañaque contrary to their agreement that petitioner would purchase the
Las Piñas property.  Petitioner explained to them that the auction sale of the Las
Piñas property did not push through because of a third-party claim, but the
judgment creditor agreed to sell to her the Parañaque and Manila properties
which were also levied on execution. Upon their return to the Philippines,
petitioner brought respondent-spouses to the Las Piñas property but it was
locked up and a signboard was posted, on which the words "Future Home of
Lutheran School and Community Center" were written.

Respondent-spouses told petitioner that they were no longer interested in


buying the Las Piñas property. She then told them that she would return their
money but she had to sell first the Manila and Parañaque properties. However,
despite several demands from respondent-spouses, petitioner failed to return the
P3,000,000.00. Thus, a case for collection of sum of money was filed by
respondent-spouses.

ISSUE:
Whether petitioner's failure to fulfill her obligation to purchase the Las
Piñas property entitles respondent-spouses to the return of the P3,000,000.00.

RULING:
Yes. Under the New Civil Code, agency may be express, or implied from
the acts of the principal, from his silence or lack of action, or his failure to
repudiate the agency, knowing that another person is acting on his behalf
without authority. Acceptance by the agent may also be express, or implied from
his acts which carry out the agency, or from his silence or inaction according to
the circumstances. Here, a contract of agency may be inferred from all the
dealings between petitioner and respondent-spouses. Thus, it is beyond dispute
that an implied agency existed between petitioner and respondent-spouses for
the purpose of purchasing the Las Piñas property.

Petitioner, however, acted beyond the scope of her authority. It is worthy


to note that it was petitioner who introduced to respondent-spouses the idea of
participating in the auction sale of the Las Piñas property. When the parties came
to an agreement as to the purchase of the said property, petitioner was then
unaware of other properties which were going to be sold on auction. As a result,
the parties never agreed on a substitute property to be purchased in case the
bidding of the Las Piñas property failed to materialize. As it happened, the Las
Piñas property could not be auctioned on account of a third-party claim. Thus,
when petitioner was informed that certain properties in Manila and Parañaque
were to be auctioned for the same judgment creditor, she proceeded to
participate in the bidding and decided not to wait for respondent-spouses'
approval.

Thus, even though petitioner may have been motivated by good


intentions and by a sincere belief that the purchase of the Manila and Parañaque
properties would benefit respondent-spouses, it cannot be gainsaid that she
acted outside the scope of the authority given to her, i.e., to purchase the Las
Piñas property. Hence, petitioner's failure to fulfill her obligation entitles
respondent-spouses to the return of the P3,000,000.00 which they remitted to
her account.
G.R. No. 220926 July 5, 2017
LUIS JUAN L. VIRATA and UEMMARA PHILIPPINES CORPORATION
(now known as CAVITEXINFRASTRUCTURE CORPORATION), Petitioners 
vs.
ALEJANDRO NG WEE, WESTMONT INVESTMENT CORP., ANTHONY T.
REYES, SIMEON CUA, VICENTE CUALOPING, HENRY CUALOPING,
MARIZA SANTOSTAN, and MANUEL ESTRELLA, Respondents

TOPIC: Duty of Diligence.

FACTS:
Ng Wee was a valued client of Westmont Bank. Sometime in 1998, he was
enticed by the bank manager to make money placements with Westmont
Investment Corporation (Wincorp), a domestic corporation organized and
licensed to operate as an investment house, and one of the bank's affiliates.
Lured by representations that the "sans recourse"  transactions are safe, stable,
high-yielding, and involve little to no risk, Ng Wee placed investments thereon
under accounts in his own name, or in those of his trustees. Special Power of
Attorneys (SPAs) are also prepared for the signature of the lender investor Ng
Wee.

Sometime in Feb. 2000, Ng Wee received disturbing news on Wincorp’s


financial condition prompting him to inquire about and investigate the company’s
operations and transactions with its borrowers. He then discovered that the
company extended a loan equal to his total money placement to a Corporation
Power Merge with a subscribed capital of only P37.5M. This credit facility
originated from another loan of about P1.5B extended by Wincorp to another
Corporation Hottick Holdings. When the latter defaulted in its obligation, Wincorp
instituted a case against it and its surety. Settlement was, however, reached in
which Hottick’s president, Virata, assumed the obligation of the surety.

Under the scheme agreed upon by Wincorp and Hottick’s president, Ng


Wee’s money placements were transferred without his knowledge and consent to
the loan account of Power Merge through an agreement that virtually freed the
latter of any liability. Allegedly, through the false representations of Wincorp and
its officers and directors, Ng Wee was enticed to roll over his placements so that
Wincorp could loan the same to Virata or Power Merge. Finding that Virata
purportedly used Power Merge as a conduit and connived with Wincorp’s officers
and directors to fraudulently obtain for his benefit without any intention of
paying the said placements, Ng Wee instituted a case for damages.

ISSUE:
Whether Wincorp is a mere agent that could not be held liable for Power
Merge's unpaid loan.
RULING:
No. Through the contract of agency, a person binds himself to render
some service or to do something in representation or on behalf of another, with
the consent or authority of the latter. As the basis of agency is 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.

There is no dearth of statutory provisions in the New Civil Code that aim
to preserve the fiduciary character of the relationship between principal and
agent. Of the established rules under the code, one cannot be more basic than
the obligation of the agent to carry out the purpose of the agency within the
bounds of his authority. Though he may perform acts in a manner more
advantageous to the principal than that specified by him, in no case shall the
agent carry out the agency if its execution would manifestly result or damage to
the principal.

In the instant case, the SPAs executed by Ng Wee constituted Wincorp as


agent relative to the borrowings of Power Merge, allegedly without risk of liability
on the part of Wincorp. However, the SPAs, as couched, do not specifically
include a provision empowering Wincorp to excuse Power Merge from repaying
the amounts it had drawn from its credit line via  the Side Agreements. They
merely authorize Wincorp "to agree, deliver, sign, execute loan documents "
relative to the borrowing of a corporate borrower. Otherwise stated, Wincorp had
no authority to absolve Power Merge from the latter's indebtedness to its
lenders. Doing so therefore violated the express terms of the SPAs that limited
Wincorp's authority to contracting the loan.

In no way can the execution of the Side Agreements be considered as


part and parcel of Wincorp's authority since it was not mentioned with specificity
in the SPAs. As far as the investors are concerned, the Side Agreements
amounted to a gratuitous waiver of Power Merge's obligation, which authority is
required under the law to be contained in an SPA for its accomplishment.

Finally, the benefit from the Side Agreements, if any, redounded instead
to the agent itself, Wincorp, which was able to hold Power Merge papers that are
more valuable than the outstanding Hottick obligations that it exchanged. In
discharging its duties as an alleged agent, Wincorp then elected to put primacy
over its own interest than that of its principal, in clear contravention of the law.
And when Wincorp thereafter concealed from the investors the existence of the
Side Agreements, the company became liable for fraud even as an agent.
G.R. No. 192602, January 18, 2017
SPOUSES MAY S. VILLALUZ AND JOHNNY VILLALUZ,
JR., Petitioners, v. LAND BANK OF THE PHILIPPINES AND THE REGISTER
OF DEEDS FOR DAVAO CITY, Respondents.

TOPIC: Power of an Agent to Appoint a Sub-Agent.

FACTS:
Paula Agbisit, mother of petitioner May S. Villaluz, requested the latter to
provide her with collateral for a loan. At the time, Agbisit was the chairperson of
Milflores Cooperative and she needed P600,000 to P650,000 for the expansion of
her backyard cut flowers business. May convinced her husband, Johnny Villaluz,
to allow Agbisit to use their land, located in Calinan, Davao City as collateral. The
spouses executed a Special Power of Attorney in favor of Agbisit authorizing her
to negotiate for the sale, mortgage, or other forms of disposition the said parcel
of land and sign in their behalf all documents relating to the sale, loan or
mortgage, or other disposition of the aforementioned property.

Thereafter, Agbisit executed her own Special Power of Attorney,


appointing Milflores Cooperative as attorney-in-fact in obtaining a loan from and
executing a real mortgage in favor of Land Bank of the Philippines. Milflores
Cooperative, in a representative capacity, executed a Real Estate Mortgage in
favor of Land Bank in consideration of the P3,000,000 loan to be extended by
the latter. Milflores Cooperative also executed a Deed of Assignment of the
Produce/Inventory as additional collateral for the loan. Land Bank partially
released one-third of the total loan amount, or P995,500, to Milflores
Cooperative. On the same day, Agbisit borrowed the amount of P604,750 from
Milflores Cooperative. Land Bank released the remaining loan amount of
P2,000,500 to Milflores Cooperative.

Unfortunately, Milflores Cooperative was unable to pay its obligations to


Land Bank. Thus, Land Bank filed a petition for extra-judicial foreclosure sale
with the Office of the Clerk of Court of Davao City. Sometime in August, 2003,
the Spouses Villaluz learned that an auction sale covering their land had been set
tor October 2, 2003. Land Bank won the auction sale as the sole bidder. Hence,
the Spouses Villaluz filed a complaint with the RTC of Davao City seeking the
annulment of the foreclosure sale.

ISSUE:
Whether Agbisit's appointment of Milflores Cooperative as attorney-in-fact
is valid.
RULING:
Yes. The law creates a presumption that an agent has the power to
appoint a substitute. The consequence of the presumption is that, upon valid
appointment of a substitute by the agent, there ipso jure arises an agency
relationship between the principal and the substitute, i.e., the substitute
becomes the agent of the principal. As a result, the principal is bound by the acts
of the substitute as if these acts had been performed by the principal's appointed
agent. Concomitantly, the substitute assumes an agent's ob1igations to act
within the scope of authority, to act in accordance with the principal's
instructions, and to carry out the agency, among others. In order to make the
presumption inoperative and relieve himself from its effects, it is incumbent upon
the principal to prohibit the agent from appointing a substitute.

Here, the Special Power of Attorney executed by the Spouses Villaluz


contains no restrictive language indicative of an intention to prohibit Agbisit from
appointing a substitute or sub-agent. Moreover, they were not coerced to grant a
special power of attorney in favor of Agbisit. Nor were they prohibited from
prescribing conditions on how such power may be exercised. Absent such
express limitations, the law recognizes Land Bank's right to rely on the terms of
the power of attorney as written.

Thus, the Court agree with the findings of the CA and the RTC that
Agbisit's appointment of Milflores Cooperative was valid.
G.R. No. 167552             April 23, 2007
EUROTECH INDUSTRIAL TECHNOLOGIES, INC., Petitioner, 
vs.
EDWIN CUIZON and ERWIN CUIZON, Respondents.

TOPIC: Liability Rules to Third Parties.

FACTS:
From January to April 1995, petitioner Eurotech sold to Impact Systems
various products allegedly amounting to P91,338.00 pesos. Subsequently,
respondents Edwin Cuizon and Erwin Cuizon sought to buy from petitioner one
unit of sludge pump valued at P250,000.00 with respondents making a down
payment of P50,000.00.  When the sludge pump arrived from the United
Kingdom, petitioner Eurotech refused to deliver the same to respondents Cuizon
without fully settling their indebtedness to them. Thus, on 28 June 1995,
respondent Edwin Cuizon and Alberto de Jesus, general manager of petitioner,
executed a Deed of Assignment of receivables in favor of petitioner. Impact
systems is owned by Erwin Cuizon.

Despite the existence of the Deed of Assignment, respondents proceeded


to collect from Toledo Power Company the amount of P365,000. Alarmed by this
development, petitioner made several demands upon respondents to pay their
obligations. As a result, respondents were able to make partial payments to
petitioner. Petitioner's counsel sent respondents a final demand letter wherein it
was stated that respondents' total obligations stood at P295,000.00 excluding
interests and attorney's fees.  Because of respondents' failure to abide by said
final demand letter, petitioner instituted a complaint for sum of money,
damages, with application for preliminary attachment against herein respondents

By way of special and affirmative defenses, respondent Edwin Quizon


alleged that he is not a real party in interest in this case. According to him, he
was acting as mere agent of his principal, which was the Impact Systems, in his
transaction with petitioner and the latter was very much aware of this fact.

ISSUE:
Whether the act of Edwin Quizon in signing the Deed of Assignment binds
his principal Impact Systems.

RULING:
Yes. Article 1897 of the New Civil Code 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. The first is when he expressly
binds himself to the obligation and the second is 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. Moreover, the first part of Article 1897
declares that the principal is liable in cases when the agent acted within the
bounds of his authority. Under this, the agent is completely absolved of any
liability. The Court hold that respondent Edwin Quizon does not fall within any of
the exceptions contained in the said provision.

Applying the foregoing to the present case, we hold that Edwin Cuizon
acted well-within his authority when he signed the Deed of Assignment. The
significant amount of time spent on the negotiation for the sale of the sludge
pump underscores Impact Systems’ perseverance to get hold of the said
equipment. There is, therefore, no doubt in our mind that respondent EDWIN’s
participation in the Deed of Assignment was "reasonably necessary" or was
required in order for him to protect the business of his principal. Had he not
acted in the way he did, the business of his principal would have been adversely
affected and he would have violated his fiduciary relation with his principal.

In this respect, we sustain his exclusion as a defendant in the suit before


the court a quo.
G.R. No. 160346       August 25, 2009
PURITA PAHUD, SOLEDAD PAHUD, and IAN LEE CASTILLA
(represented by Mother and Attorney-in-Fact VIRGINIA
CASTILLA), Petitioners, 
vs.
COURT OF APPEALS, et al., Respondents.

TOPIC: Liability Rules to Third Parties.

FACTS:
Spouses Pedro San Agustin and Agatona Genil were able to acquire a 246-
square meter parcel of land situated in Laguna and covered by Original
Certificate of Title. Agatona Genil and Pedro San Agustin die, left with children:
respondents, Eufemia, Raul, Ferdinand, Zenaida, Milagros, Minerva, Isabelita and
Virgilio. Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of
Undivided Shares conveying in favor of petitioners their respective shares.
Eufemia also signed the deed on behalf of her four (4) other co-heirs, Only
Isabelita has the Power of attorney while the other three (3) co-heirs has no
written consent authorizing such sale. It was not notarized. The Pahuds paid the
accounts into the Rural Bank where the property was mortgaged. 

The bank issued a release of mortgage and turned over the ownership to
the Pahuds. Over the following months, the Pahuds made more payments to
Eufemia and her siblings. When Eufemia and her co-heirs drafted an extra-
judicial settlement of estate to facilitate the transfer of the title to the Pahuds,
Virgilio refused to sign it. Virgilio's co-heirs filed a complaint for judicial partition
of the subject property before the RTC of Calamba, Laguna. In the course of the
proceedings for judicial partition, a Compromise Agreement was signed with
seven (7) of the co-heirs agreeing to sell their undivided shares to Virgilio.

The compromise agreement was, however, not approved by the trial court
because the lawyer for Eufemia and her six (6) co-heirs, refused to sign the
agreement because he knew of the previous sale made to the Pahuds. Eufemia
acknowledged having received the payments from Virgilio. Virgilio then sold the
entire property to spouses Isagani Belarmino and Leticia Ocampo. The
Belarminos immediately constructed a building on the subject property. Alarmed
by the ongoing construction on the lot they purchased, the Pahuds immediately
confronted Eufemia who confirmed to them that Virgilio had sold the property to
the Belarminos. Then the Pahuds filed a complaint in intervention in the pending
case for judicial partition.

ISSUES:
1. Whether the sale of the subject property by Eufemia and her co- heirs
to the Pahuds is valid and enforceable.
2. Whether the sale by co-heirs to Virgilio is void.
3. Whether the sale of Virgilio to Belarminos is valid. 

RULING:
1. Yes. Based on the foregoing, it is not difficult to conclude, in principle,
that the sale made by Eufemia, Isabelita and her two brothers to the Pahuds
sometime in 1992 should be valid only with respect to the 4/8 portion of the
subject property. The sale with respect to the 3/8 portion, representing the
shares of Zenaida, Milagros, and Minerva, is void because Eufemia could not
dispose of the interest of her co-heirs in the said lot absent any written authority
from the latter, as explicitly required by law. This was, in fact, the ruling of the
CA. However, while the sale with respect to the 3/8 portion is void by express
provision of law and not susceptible to ratification, we nevertheless uphold its
validity on the basis of the common law principle of estoppel.

It is a basic rule in the law of agency that a principal is subject to liability


for loss caused to another by the latter’s reliance upon a deceitful representation
by an agent in the course of his employment (1) if the representation is
authorized; (2) if it is within the implied authority of the agent to make for the
principal; or (3) if it is apparently authorized, regardless of whether the agent
was authorized by him or not to make the representation.

Here, by their continued silence, Zenaida, Milagros and Minerva have


caused the Pahuds to believe that they have indeed clothed Eufemia with the
authority to transact on their behalf. Clearly, the three co-heirs are now
estopped from impugning the validity of the sale from assailing the authority of
Eufemia to enter into such transaction.

2. Yes. The subsequent sale made by the seven co-heirs to Virgilio was
void because they no longer own the subject property which they could alienate
at the time of the second transaction. You cannot give what you do not possess.

3. No. The sale to Bilarminos is not valid, they did not purchased the
property from Virgilio in good faith. The Belarminos were fully aware that the
property was registered not in the name of Virgilio. They knew that the property
was still subject of proceedings before the trial court. 
G.R. NO. 151319 November 22, 2004
MANILA MEMORIAL PARK CEMETERY, INC., Petitioner, v. PEDRO L.
LINSANGAN,Respondent.

TOPIC: Obligations of the Principal.

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

Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the


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

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

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

ISSUE:
Whether Baluyot’s act is binding to his principal MMPCI.

RULING:
No. While there is no more question as to the agency relationship
between Baluyot and MMPCI, there is no indication that MMPCI let the public, or
specifically, Atty. Linsangan to believe that Baluyot had the authority to alter the
standard contracts of the company. Neither is there any showing that prior to
signing Contract No. 28660, MMPCI had any knowledge of Baluyot's commitment
to Atty. Linsangan. Even assuming that Atty. Linsangan was misled by MMPCI's
actuations, he still cannot invoke the principle of estoppel, as he was clearly
negligent in his dealings with Baluyot, and could have easily determined, had he
only been cautious and prudent, whether said agent was clothed with the
authority to change the terms of the principal's written contract.

In addition, under the Law on Agency, the acts of the agent beyond the
scope of his authority do not bind the principal unless the latter ratifies the same.
It also bears emphasis that when the third person knows that the agent was
acting beyond his power or authority, the principal cannot be held liable for the
acts of the agent. If the said third person was aware of such limits of authority,
he is to blame and is not entitled to recover damages from the agent, unless the
latter undertook to secure the principal's ratification.
GR No. 212256 Dec 09, 2015
FARIDA YAP BITTE
v.
SPS. FRED AND ROSA ELSA SERRANO JONAS

TOPIC: Obligations of the Principal.

FACTS:
Before Rosa Elsa went to Australia, she had executed a Special Power of
Attorney (SPA) authorizing her mother, Andrea C. Serrano, to sell the property.
Cipriano Serrano, son of Andrea and brother of Rosa Elsa, offered the property
for sale to Spouses Benjamin and Farida Yap Bitte showing them the authority of
Andrea. Thereafter, Cipriano received from Spouses Bitte the amount of
P200,000.00 as advance payment for the property. Later on, on September 10,
1996, he received the additional amount of P400,000.00.

Spouses Bitte sought a meeting for final negotiation with Rosa Elsa, the
registered owner of the subject property. At that time, Rosa Elsa was in Australia
and had no funds to spare for her travel to the Philippines. To enable her to
come to the country, Spouses Bitte paid for her round trip ticket. Shortly after
her arrival here in the Philippines, Rosa Elsa revoked the SPA, through an
instrument of even date, and handed a copy thereof to Andrea. The next day,
the parties met at Farida Bitte's office, but no final agreement was reached. The
next day, Rosa Elsa withdrew from the transaction.

Spouses Bitte filed before the RTC a Complaint for Specific Performance
with Damages seeking to compel Rosa Elsa, Andrea and Cipriano to transfer to
their names the title over the subject property. While the case was pending,
Andrea sold the subject property to Spouses Bitte, through a notarized deed of
absolute sale.

ISSUE:
Whether the deed of absolute sale executed by Andrea in favor of
Spouses Bitte is unenforceable against Rosa Elsa.

RULING:
Yes. Basic is the rule that the revocation of an agency becomes operative,
as to the agent, from the time it is made known to him. Third parties
dealing bona fide with one who has been accredited to them as an agent,
however, are not affected by the revocation of the agency, unless notified of
such revocation. This refers to the doctrine of apparent authority. Under the said
doctrine, acts and contracts of the agent within the apparent scope of the
authority conferred on him, although no actual authority to do such acts or has
been beforehand withdrawn, revoked or terminated, bind the principal.
The notice or knowledge may be actual or implied. In either case, there is
no apparent authority to speak of and all contracts entered into by the former
agent with a third person cannot bind the principal. The reason behind this is
that a third person cannot feign ignorance of facts which should have put him on
guard and which he had a means of knowing. " Apparent authority ends when it
is no longer reasonable for the third party with whom an agent deals to believe
that the agent continues to act with actual authority ." In Cervantes v. Court of
Appeals, the Court wrote that "when the third person, knows that the agent was
acting beyond his power or authority, the principal cannot be held liable for the
acts of the agent."

Here, records show that Spouses Bitte initially transacted with Andrea as
Rosa Elsa's agent on the basis of the SPA, dated July 19, 1985. Thereafter,
however, Rosa Elsa returned to the Philippines and directly negotiated with them
on October 11, 1996. Rosa Elsa's act of taking over in the actual negotiation for
the sale of the property only shows that Andrea's authority to act has been
revoked pursuant to Article 1924. At that point, Spouses Bitte had information
sufficient enough to make them believe that Andrea was no longer an agent or
should have compelled them to make further inquiries. No attempt was shown
that Spouses Bitte took the necessary steps to inquire if Andrea was still
authorized to act at that time. Despite their direct negotiation with Rosa Elsa,
they still entered into a contract with Andrea on February 25, 1997.

In sum, the deed of absolute sale executed by Andrea in favor of Spouses


Bitte is unenforceable against Rosa Elsa because of their notice of the revocation
of the agency.
G.R. No. 113074 January 22, 1997
ALFRED HAHN, Petitioner, v. COURT OF APPEALS and
BAYERSCHE MOTOREN WERKE AKTIENGSELLSCHAFT
(BMW), Respondents.

TOPIC: Obligation of the Principal Within the Agency Agreement.

FACTS:
Petitioner Alfred Hahn is a Filipino citizen doing business under the name
and style "Hahn-Manila". On the other hand, private respondent (BMW) is a
nonresident foreign corporation existing under the laws of the former Federal
Republic of Germany, with principal office at Munich, Germany. Petitioner Hahn
executed in favor of private respondent BMW a Deed of Assignment with Special
Power of Attorney. Per the agreement, the parties continued business relations
as has been usual in the past without a formal contract.

But on February 16, 1993, in a meeting with a BMW representative and


the president of Columbia Motors Corporation (CMC), Jose Alvarez, petitioner
Hahn was informed that BMW was arranging to grant the exclusive dealership of
BMW cars and products to CMC, which had expressed interest in acquiring the
same. 

Nonetheless, BMW expressed willingness to continue business relations


with the petitioner on the basis of a "standard BMW importer" contract,
otherwise, it said, if this was not acceptable to petitioner, BMW would have no
alternative but to terminate petitioner's exclusive dealership effective June 30,
1993. Because of Hahn's insistence on the former business relations, BMW
withdrew on March 26, 1993 its offer of a "standard importer contract" and
terminated the exclusive dealer relationship. On April 29, 1993, BMW proposed
that Hahn and CMC jointly import and distribute BMW cars and parts. Hahn
found the proposal unacceptable. Thus, he filed a complaint for specific
performance and damages against BMW to compel it to continue the exclusive
dealership.

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

RULING:
Yes. Contrary to the appellate court's conclusion, the present case is an
agency. An agent receives a commission upon the successful conclusion of a
sale. On the other hand, a broker earns his pay merely by bringing the buyer and
the seller together, even if no sale is eventually made.
Here, as to the service centers and showrooms which he said he had put
up at his own expense, Hahn said that he had to follow BMW specifications as
exclusive dealer of BMW in the Philippines. According to Hahn, BMW periodically
inspected the service centers to see to it that BMW standards were maintained.
Indeed, it would seem from BMW's letter to Hahn that it was for Hahn's alleged
failure to maintain BMW standards that BMW was terminating Hahn's dealership.
The fact that Hahn invested his own money to put up these service centers and
showrooms does not necessarily prove that he is not an agent of BMW. For as
already noted, there are facts in the record which suggest that BMW exercised
control over Hahn's activities as a dealer and made regular inspections of Hahn's
premises to enforce compliance with BMW standards and specifications.

In addition, BMW held out private respondent Hahn as its exclusive


distributor in the Philippines, even as it announced in the Asian region that Hahn
was the "official BMW agent" in the Philippines.

Thus, BMW may be considered doing business in the Philippines and the
trial court acquired jurisdiction over it (BMW) by virtue of the service of
summons on the Department of Trade and Industry. The decision of the Court of
Appeals is REVERSED and the case is REMANDED to the trial court for further
proceedings.

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