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NO 167552 (2007)
FACTS: Petitioner Eurotech, who is engaged in the business of importation and distribution of
various European equipment, sold to Impact Systems (Impact) a sledge pump valued at
P250,000, of which Impact made a down payment of P50,000. However, due to their failure to
pay, respondent Edwin Cuison as sales manager of Impact, executed a Deed of Assignment in
favor of petitioner.
1. Despite the existence of the Deed of Assignment, Impact proceeded to collect from
Toledo Power Company P365,135.29. As such, Eurotech demanded payment from
Impact Systems
2. For failure to pay, Eurotech filed an action for sum of money against respondents Edwin
Cuison (as sales manager) and Erwin Cuison (as owner of Impact Systems)
3. The trial court ordered that Edwin Cuison be dropped as party defendant since his
actions were ratified by Impact Systems. CA affirmed the trial courts decision
4. Petitioner contends that since Edwin did not sufficiently notify Eurotech of the extent of
his powers as an agent, Edwin Cuison should be made personally liable for the
obligations of his principal

ISSUE: WON Edwin Cuison as agent of Impact Systems can be held personally liable in this case

HELD: No. 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 latters consent. The underlying
principle of agency is to accomplish results by using the services of others. Its purpose is to
extend the personality of the principal or the party for whom another acts or from whom he or
she derives the authority to act. The basis of agency is representation---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.

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; and (4) the agent acts within
the scope of his authority.

Art 1897 provides that an agent who acts as such is not personally liable to the party with whom
he contracts. However, Art 1897 also provides two instances when an agent becomes personally
liable to a third person: (1) when the agent expressly binds himself to the obligation and; (2)
when the agent exceeds his authority. In the 2
instance, the agent can be liable if he does not
give the third party sufficient notice of his powers, which is not the case here.

The Deed of Assignment clearly states that Edwin is the sales manager of Impact Systems. Such
position presupposes a degree of confidence reposed and investiture with liberal powers for the
exercise of judgment and discretion in the transactions and concerns which are incidental to
the business entrusted to his care ad management. In the absence to the contrary a managing
agent may enter into contracts that he deems reasonably necessary for the protection of the
interests of his principal entrusted to his management.

Since Edwin Cuison acted within his authority as agent, who did not acquire any right nor incur in
any liability arising from the Deed of Assignment, it follows that he is not a real party in interest
who should be impleaded in this case.

FACTS: Spouses Mamaril are jeepney operators. Every night, they would park their 6 passenger
jeepneys at the Boy Scout of the Philippines (BSP) compound for a fee of P300 per month for
each unit. In May 1995, while all 6 vehicles were parked at the BSP compound for the night, one
of the vehicles went missing and was never recovered. According to the security guards of AIB
Security Agency with whom BSP had contracted for its security, a male person who looked
familiar to them took the subject vehicle out of the compound
1. As such, Spouses Mamaril filed a complaint for damages before RTC against BSP, AIB and
the attending security guards. RTC held in favor of the spouses
2. On appeal, CA affirmed the negligence on the part of the security guards but it
absolved BSP from any liability, holding that the Guard Service Contract is purely
between BSP and AIB and that there was nothing that would indicate any obligation
and/or liability on the part of BSP in favor of third persons, such as Mamaril

ISSUE: WON BSP should be held liable for the loss of petitioners vehicle based on the Guard
Service Contract and the parking ticket it issued

HELD: No. The vicarious liability of an employer under Art 2180 NCC is not applicable in this case.
Since the security guards were assigned by AIB to BS, there is no employer-employee relationship
between BSP and the security guards.

Neither can it be argued that a principal-agent relationship existed between BSP and the
security guards. Art 1868 NCC provides that 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 of agency which is representation, is lacking in this
case. It is clear from the facts presented that BSP merely hired the services of AIB, which in turn,
assigned security guards solely for the protection of its properties and premises. Nowhere can it
be inferred from the Guard Service Contract that AIB was appoint as an agent of BSP.

RALLOS V. FELIX GO CHAN, G.R. NO L-243332 (1978)
FACTS: Concepcion and Gerundia Rallos were registered co-owners of a parcel of land. The
sisters executed a SPA in favor of their brother, petitioner Rallos, authorizing him to sell for and in
their behalf said parcel of land.
1. Thereafter, Concepcion died.
2. Rallos, then, sold the undivided shares of his sisters to respondent Felix Go Chan.
3. The administrator of Concepcions estate subsequently filed an action to declare the
sale of Concepcions share in the lot unenforceable and for said share to be
reconveyed to her estate

ISSUE: What is the nature of the relationship of agent and principal in a contract of agency

HELD: As a general rule, a contract entered into in the name of another by one who has no
authority or the legal representation or who has acted beyond his powers, shall be enforceable,
unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed,
before it is revoked by the other contracting party. In a contract of agency, then, a party called
the principal authorizes another, the agent, to act for and in his behalf in transactions with third
persons. The essential elements of agency are:
(a) Consent, whether express or implied, of the parties to establish the relationship
(b) The object is the execution of a juridical act in relation to a third person
(c) The agent acts as a representative and not for himself
(d) The agent acts within the scope of his authority

Agency is basically personal representative and derivative in nature. The authority of the agent
to act emanates from the powers granted to him by his principal; his act is the act of the
principal if done within the scope of the authority.

By reason of the very nature of the relationship between the principal and agent, agency is
extinguished by the death of the principal or agent. Given the authority of the agent to act for
and in behalf of his principal is derived from the principal, the death of the principal extinguishes
the agency between the principal and agent.

ISSUE: Is the general rule under Art 1919 that the death of the principal or of the agent
extinguishes the agency, subject to any exception and if so, does the instant case fall within
such exception

HELD: No. Respondent contends that the despite the death of the principal, the sale of the
property by the agent is valid and enforceable inasmuch as the respondent acted in good faith
in buying the property in question.

Under Art 1931, an act done by the agent after the death of the principal is valid and effective
only under two conditions:
(a) That the agent acted without knowledge of the principals death; and
(b) The third person who contracted with the agent himself acted in good faith

Good faith here means that the third person was not aware of the principals death at the time
he contracted with the agent. These two requisites must concur; the absence of one will render
the act of the agent invalid and unenforceable.

CAB: It cannot be denied that the agent Rallos knew of the death of the principal at the time he
sold the latters share to respondent. This can be clearly inferred from the pleadings filed by the
agent before the trial court. On the basis of the established knowledge of Rallos concerning the
deateh of his principal, Art 1931 is not applicable. The law expressly requires lack of knowledge
on the part of the agent of the death of the principal; it is not enough that the third person acted
in good faith.

The fact that the notice of death was not annotated in the Certificate of Title by the heirs of the
principal is of no moment. The court made a distinction between revocation by an act of the
principal as a mode of terminating the agency as opposed to revocation by operation of law
such as the death of the principal. Although a revocation of a power of attorney in order to be
effective must be communicated to the parties concerned, revocation by operation of law such
as in the death of the principal, is instantaneously effective. With death, the principals will or his
authority is extinguished.

The Civil Code does not impose a duty on the heirs to notify the agent of the death of the
principal. What it provides in Art 1931 is that if the agent dies, his heirs must notify the principal
thereof. As such, the lack of notice of the death of the principal on the TCT is not fatal to the
cause of the estate of the principal.

TUAZON V. HEIRS OF RAMOS, G.R. NO 156262 (2005)
FACTS: This case arose from the failure of petitioners Tuazon to pay respondent predecessor-in-
interest. Respondents alleged that spouses Tuazon a total of 8,326 sacks of rice from Ramos. Of
this quantity, 3,889 sacks remain unpaid amounting to P1.2 million. As payment, Tuazon issued
several checks.
1. When these checks were encashed, all of the checks bounced due to insufficiency of
2. Respondents averred that because Tuazon anticipated they would be sued, they
conspired with other defendants to defraud them as creditors by executing fictitious
sales of their properties.
3. On the other hand, spouses Tuazon alleged that it was Magdalena Ramos, the wife of
the deceased, who owned and traded the merchandise and that Tuazon was merely
her agent.
4. Tuazon also argued that it was Santos (the owner of the checks) who was the buyer of
the rice and issued the checks to Tuazon as payments. Said checks were turned over to
Ramos in good faith without knowing that they were unfunded.
5. The trial court acquitted the petitioners of the criminal case. They appealed only its
decision in finding them civilly liable to respondents.
6. On appeal, CA held that petitioners failed to prove the existence of an agency between
respondents and spouses Tuazon

ISSUE: WON the spouses Tuazon merely acted as agents of Ramos

HELD: No. The following are elements of agency:
(a) The parties consent, express or implied, to establish the agency
(b) The object, which is the execution of a juridical act in relation to a third person
(c) The representation, by which the agent acts not for himself but as a representative
(d) The limitation that the agent acts within the scope of his or her authority.

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 principals 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. Without such mutual intent, there is no agency.

CAB: The declarations of the agents alone are generally insufficient to establish the fact or
extent of their authority. The law makes no presumption of agency; proving its existence, nature
and extent is incumbent upon the person alleging it. In the present case, the petitioners raise the
fact of agency as an affirmative defense but fail to prove its existence.

VICTORIAS MILLING V. CA, G.R. NO 117356 (2005)
FACTS: St. Therese Merchandising (STM) purchased sugar from petitioner Victorias Milling Co
(VMC). In the course of its dealings, petitioner issued several Shipping List/Delivery Receipts
(SLDR) as proof of purchases.
1. In October 1989, STM sold to private respondent Consolidated Sugar Corp (CSC) its rights
in SLDR no 1214M for P14.75 million. CSC then informed petitioner that it had been
authorized by STM to withdraw sugar covered by the SLDR in question
2. However, of the 25,000 bags covered by the SLDR, only 2,000 bags were released. VMC
refused to allow further withdrawals of sugar because STM had already withdrawn all the
sugar covered by the cleared checks
3. As such, CSC filed an action for specific performance against STM and VMC.
4. In its defense, VMC alleged that it was an unpaid seller for the 23,000 bags. Since STM
had already withdrawn in full the sugar covered by the SLDR, it could no longer authorize
further delivery of sugar to CSC
5. Petitioner argued that STMs letter of authority allowing CSC to withdraw sugar against
SLDR show that the latter was STMs agent.

ISSUE: WON CA erred in not ruling that CSC was an agent of STM and hence, estopped from
suing upon SLDR as an assignee

HELD: No. The basis of agency is representation. On the party 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. On fact which most clearly
distinguishes agency from other legal concepts is controlthe agent agrees to act under the
control or direction of the principal.

CAB: It clearly appears from the facts that CSC was a buyer of the SLDR and not an agent of
STM. CSC was not subject to STMs 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 was given to CSC contained the phrase for
and in our (STMs) behalf did not establish an agency. What is decisive is the intention of the
parties. No agency is meant to be established by CSC and STM because the SLDR has been
endorsed and sold to CSC, which means that STM and CSC intended a contract of sale and not
an agency.