CLASS RECITATION

65) ORIENT AIR SERVICES AND HOTEL REPRESENTATIVES vs. COURT OF APPEALS
CASE NUMBER: GR. NO. 76931 DATE: MAY 29, 1991 PONENTE: PADILLA, J.
FACTS:
January 15 1977- American Airlines, Inc. an air carrier offering passenge
r and air cargo transportation in the Philippines, and Orient Air Services and H
otel Representatives entered into a General Sales Agency Agreement, whereby the
former authorized the latter to act as its exclusive general sales agent within
the Philippines for the sale of air passenger transportation.
May 11 1981- Ameri
can Air took charge of the collection of the proceeds of tickets sold originally
by Orient Air and terminated the Agreement in accordance with Paragraph 13 ther
eof (Termination).
13. Termination American may terminate the Agreement on two days' notice in the
event Orient Air Services is unable to transfer to the United States the funds p
ayable by Orient Air Services to American under this Agreement. Either party may
terminate the Agreement without cause by giving the other 30 days' notice by le
tter, telegram or cable.
May 15 1981- American Air instituted suit against Orient Air with the Court of F
irst Instance of Manila, for Accounting with Preliminary Attachment or Garnishme
nt, Mandatory Injunction and Restraining Order
In its Answer with counterclaim d
ated 9 July 1981, Orient Air denied the material allegations of the complaint wi
th respect to plaintiff's entitlement to alleged unremitted amounts, contending
that after application thereof to the commissions due it under the Agreement, pl
aintiff in fact still owed Orient Air a balance in unpaid overriding commissions
. Further, the defendant contended that the actions taken by American Air in the
course of terminating the Agreement as well as the termination itself were unte
nable, Orient Air claiming that American Air's precipitous conduct had occasione
d prejudice to its business interests. Trial Court ruled in favor of Orient Air
ON APPEAL: Intermediate Appellate Court affirmed the ruling of TC ISSUE: W/N the
respondent appellate court correctly ruled that Orient Air be reinstated again
as sales agent of American Air RULING: By affirming this ruling of the trial cou
rt, respondent appellate court, in effect, compels American Air to extend its pe
rsonality to Orient Air. Such would be violative of the principles and essence o
f 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, th
e 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 per
form all acts which the latter would have him do. Such a relationship can only b
e effected with the consent of the principal, which must not, in any way, be com
pelled by law or by any court. The Agreement itself between the parties states t
hat "either party may terminate the Agreement without cause by giving the other
30 days' notice by letter, telegram or cable." (emphasis supplied) We, therefore
, set aside the portion of the ruling of the respondent appellate court reinstat
ing Orient Air as general sales agent of American Air. WHEREFORE, with the foreg
oing modification, the Court AFFIRMS the decision and resolution of the responde
nt Court of Appeals, dated 27 January 1986 and 17 December 1986, respectively. C
osts against petitioner American Air.
Page 1

CASE DIGEST
66) RALLOS vs. FELIX GO CHAN & SONS REALTY CORPORATION
CASE NUMBER: L-24332 DATE: January 31, 1978 FACTS:
Concepcion and Gerundia Rallo
s were sisters and registered co-owners of a parcel of land known as Lot No. 598
3 of the Cadastral Survey of Cebu covered by Transfer Certificate of Title No. 1
1116 of the Registry of Cebu.
They executed a special power of attorney in favor
of their brother, Simeon Rallos, authorizing him to sell such land for and in t
heir behalf. After Concepcion died, Simeon Rallos sold the undivided shares of h
is sisters Concepcion and Gerundia to Felix Go Chan & Sons Realty Corporation fo
r the sum of P10,686.90. New TCTs were issued to the latter.
Petitioner Ramon Ra
llos, administrator of the Intestate Estate of Concepcion filed a complaint pray
ing (1) that the sale of the undivided share of the deceased Concepcion Rallos i
n lot 5983 be unenforceable, and said share be reconveyed to her estate; (2) tha
t the Certificate of 'title issued in the name of Felix Go Chan & Sons Realty Co
rporation be cancelled and another title be issued in the names of the corporati
on and the "Intestate estate of Concepcion Rallos" in equal undivided and (3) th
at plaintiff be indemnified by way of attorney's fees and payment of costs of su
it. CFI: [Plaintiffs Complaint] Sale of land was null and void insofar as the one
-half pro-indiviso share of Concepcion Rallos
Ordered the issuance of new TCTs t
o respondent corporation and the estate of Concepcion in the proportion of share
each pro-indiviso and the payment of attorneys fees and cost of litigation [Resp
ondent filed cross claim against Simon Rallos(*Simon and Gerundia died during pe
ndency of case)] Juan T. Borromeo, administrator of the Estate of Simeon Rallos
was ordered to pay defendant the price of the share of the land (P5,343.45) plus
attorneys fees [Borromeo filed a third party complaint against Josefina Rallos,
special administratrix of the Estate of Gerundia]
Dismissed without prejudice to
filing either a complaint against the regular administrator of the
PONENTE: Munoz-Palma, J.
Estate of Gerundia Rallos or a claim in the IntestateEstate of Cerundia Rallos,
covering the same subjectmatter CA: CFI Decision reversed, upheld the sale of Co
ncepcions share. MR: denied. ISSUES & RULING: 1) WON sale was valid although it w
as executed after the death of the principal, Concepcion.? Sale was void. o No o
ne may contract in the name of another without being authorized by the latter, o
r unless he has by law a right to represent him (Art. 1317 of the Civil Code). o
Simons authority as agent was extinguished upon Concolacions death 2) WON sale fe
ll within the exception to the general rule that death extinguishes the authorit
y of the agent The sale did not fall under the exceptions to the general rule th
at death ipso jure extinguishes the authority of the agent o Art. 1930 inapplica
ble: SPA in favor of Simon Rallos was not coupled with interest o Art. 1931 inap
plicable:
Simon Rallos knew (as can be inferred from his pleadings) of principal
Concepcions death
For Art 1931 to apply, both requirements must be present 3) WO
N agents knowledge of the principals death is a material factor. Yes, agents knowle
dge of principals death is material. o Respondent asserts that: there is no provi
sion in the Code which provides that whatever is done by an agent having knowled
ge of the death of his principal is void even with respect to third persons who
may have contracted with him in good faith and without knowledge of the death of
the principal o Court says: this contention ignored the ignores the existence o
f the general rule enunciated in Article 1919 that the death of the principal
Page 2

CLASS RECITATION extinguishes the agency. Article 1931, being an exception to th

e general rule, is to be strictly construed.
67) AIR FRANCE vs. COURT OF APPEALS
CASE NUMBER: G.R. No. L-57339 DATE: December 29, 1983 PONENTE: MELENCIO-HERRERA,
J.
CAUSE OF ACTION: Petition for review on certiorari assailing the Decision of the
n respondent Court of Appeals promulgated "Jose G. Gana, et al. vs. Sociedad Nac
ionale Air France", which reversed the Trial Court s judgment dismissing the Com
plaint of private respondents for damages arising from breach of contract of car
riage, and awarding instead P90,000.00 as moral damages. FACTS: 1. Late Jose G.
Gana and his family (the GANAS), purchased from AIR FRANCE (9) "open-dated" air
passage tickets for the Manila/Osaka/Tokyo/Manila route. On 24 April 1970, AIR F
RANCE exchanged or substituted the aforementioned tickets with other tickets for
the same route. At this time, the GANAS were booked for the Manila/Osaka segmen
t on AIR FRANCE Flight 184 for 8 May 1970, and for the Tokyo/Manila return trip
on AIR FRANCE Flight 187 on 22 May 1970. 2. The aforesaid tickets were valid unt
il 8 May 1971. The GANAS did not depart on 8 May 1970. Instead, Jose Gana sought
the assistance of Teresita Manucdoc, a Secretary of the Sta. Clara Lumber Compa
ny where Jose Gana was the Director and Treasurer, for the extension of the vali
dity of their tickets , which were due to expire on 8 May 1971. 3. Teresita enli
sted the help of Lee Ella Manager of the Philippine Travel Bureau. Ella sent the
tickets to Cesar Rillo, Office Manager of AIR FRANCE. The tickets were returned
to Ella who was informed that extension was not possible unless the fare differ
entials resulting from the increase in fares triggered by an increase of the exc
hange rate of the US dollar to the Philippine peso and the increased travel tax
were first paid. Ella then returned the tickets to Teresita and informed her of
the impossibility of extension. 4. In the meantime, the GANAS had scheduled thei
r departure on 7 May 1971 or one day before the expiry date. Teresita requested
travel agent Ella to arrange the revalidation of the tickets . Ella gave the sam
e negative answer and warned her that although the tickets could be used by the
GANAS if they left on 7 May 1971, the tickets would no longer be valid for the r
est of their trip because the tickets would then have expired on 8 May 1971. Ter
esita replied that it will be up to the GANAS to make the arrangements . 5. With
that assurance, Ella on his own, attached to the tickets validating stickers fo
r the Osaka/Tokyo flight, one a JAL. sticker and the other an SAS (Scandinavian
Airways System) sticker. The SAS sticker indicates thereon that it was "Reevalua
ted by: the Philippine Travel Bureau , Branch No. 2" (as shown by a circular rub
ber stamp) and signed "Ador", and the date is handwritten in the center of the c
ircle. Then appear under printed headings the notations: JL. 108 (Flight), 16 Ma
y (Date), 1040 (Time), OK (status). Apparently, Ella made no more attempt to con
tact AIR FRANCE as there was no more time. 6. Notwithstanding the warnings, the
GANAS departed from Manila in the afternoon of 7 May 1971 on board AIR FRANCE Fl
ight 184 for Osaka, Japan. There is no question with respect to this leg of the
trip. 7. However, for the Osaka/Tokyo flight on 17 May 1971, Japan Airlines refu
sed to honor the tickets because of their expiration, and the GANAS had to purch
ase new tickets. They encountered the same difficulty with respect to their retu
rn trip to Manila as AIR FRANCE also refused to honor their tickets. They were a
ble to return only after prepayment in Manila, through their relatives, of the r
eadjusted rates. They finally flew back to Manila on separate Air France Frights
on 19 May 1971 for Jose Gana and 26 May 1971 for the rest of the family. 8. On
25 August 1971, the GANAS commenced before the then Court of First Instance of M
anila , Branch III, Civil Case No. 84111 for damages arising from breach of cont
ract of carriage. 9. AIR FRANCE traversed the material allegations of the Compla
int and alleged that the GANAS brought upon themselves the predicament they foun
d themselves in and assumed the consequential risks; that travel agent Ella s af
fixing of validating stickers on the tickets without the knowledge and consent o
f AIR FRANCE, violated airline tariff rules and regulations and was beyond the s
cope of his authority as a travel agent; and that AIR FRANCE was not guilty of a

ny fraudulent conduct or bad faith. 10. TC dismissed the Complaint of the GANAS
based on Partial and Additional Stipulations of Fact .
Page 3

CASE DIGEST 11. The GANAS appealed to the CA. During the pendency of the appeal,
Jose Gana, the principal plaintiff, died. 12. CA set aside and reversed the TCs
decision ordering Air France to pay appellants moral damages in the total sum P9
0,000.00 plus costs. 13. Reconsideration sought by AIR FRANCE was denied, hence,
petitioner s recourse before this instance, to which we gave due course. ISSUE:
1. Whether or not, under the environmental milieu the GANAS have made out a cas
e for breach of contract of carriage entitling them to an award of damages? No!
2. Whether or not Teresita was the agent of the GANAS and notice to her of the r
ejection of the request for extension of the validity of the tickets was notice
to the GANAS, her principals? YES! RULING: No! SC reversed the affirmative rulin
g of the CA. (As for the mainFIRST issue) AIR FRANCE cannot be faulted for breach
of contract when it dishonored the tickets of the GANAS after 8 May 1971 since
those tickets expired on said date; nor when it required the GANAS to buy new ti
ckets or have their tickets re-issued for the Tokyo/Manila segment of their trip
. Neither can it be said that, when upon sale of the new tickets, it imposed add
itional charges representing fare differentials, it was motivated by self-intere
st or unjust enrichment considering that an increase of fares took effect, as au
thorized by the Civil Aeronautics Board (CAB) in April, 1971. This procedure is
well in accord with the IATA tariff rules which provide: 6. TARIFF RULES 7. APPL
ICABLE FARE ON THE DATE OF DEPARTURE 3.1 General Rule. All journeys must be char
ged for at the fare (or charge) in effect on the date on which transportation co
mmences from the point of origin. Any ticket sold prior to a change of fare or c
harge (increase or decrease) occurring between the date of commencement of the j
ourney, is subject to the above general rule and must be adjusted accordingly. A
new ticket must be issued and the difference is to be collected or refunded as
the case may be. No adjustment is necessary if the increase or decrease in fare
(or charge) occurs when the journey is already commenced. The GANAS cannot defen
d by contending lack of knowledge of those rules since the evidence bears out th
at Teresita, who handled travel arrangements for the GANAS, was duly informed by
travel agent Ella of the advice of Reno, the Office Manager of Air France, that
the tickets in question could not be extended beyond the period of their validi
ty without paying the fare differentials and additional travel taxes brought abo
ut by the increased fare rate and travel taxes. Teresita was the agent of the GA
NAS and notice to her of the rejection of the request for extension of the valid
ity of the tickets was notice to the GANAS, her principals. (AGENCY: NOTICE TO T
HE AGENT IS NOTICE TO THE PRINCIPAL) The circumstances that AIR FRANCE personnel
at the ticket counter in the airport allowed the GANAS to leave is not tantamou
nt to an implied ratification of travel agent Ella s irregular actuations. It sh
ould be recalled that the GANAS left in Manila the day before the expiry date of
their tickets and that "other arrangements" were to be made with respect to the
remaining segments. Besides, the validating stickers that Ella affixed on his o
wn merely reflect the status of reservations on the specified flight and could n
ot legally serve to extend the validity of a ticket or revive an expired one. Th
e conclusion is inevitable that the GANAS brought upon themselves the predicamen
t they were in for having insisted on using tickets that were due to expire in a
n effort, perhaps, to beat the deadline and in the thought that by commencing th
e trip the day before the expiry date, they could complete the trip even thereaf
ter. It should be recalled that AIR FRANCE was even unaware of the validating SA
S and JAL. stickers that Ella had affixed spuriously. Consequently, Japan Air Li
nes and AIR FRANCE merely acted within their contractual rights when they dishon
ored the tickets on the remaining segments of the trip and when AIR FRANCE deman
ded payment of the adjusted fare rates and travel taxes for the Tokyo/Manila fli
ght. WHEREFORE, the judgment under review is hereby reversed and set aside, and
the Amended Complaint filed by private respondents hereby dismissed.
Page 4

CLASS RECITATION No costs.

68) SANTOS vs. BUENCONSEJO
CASE NUMBER: G.R. No. L-20136 DATE: June 23, 1965 PONENTE: CONCEPCION, J
FACTS: 1. Petitioner Jose A. Santos y Diaz seeks the reversal of an order of the
Court of First Instance of Albay, denying his petition: a. Cancellation of orig
inal certificate of title No. RO-3848 (25322), issued in the name of Anatolio Bu
enconsejo, Lorenzo Bon and Santiago Bon, and covering Lot No. 1917 of the Cadast
ral Survey of Tabaco, Albay, and b. Issuance in lieu thereof, of a separate tran
sfer certificate of title in his name. 2. Lot No. 1917 covered by Original Certi
ficate of Title No. RO-3848 (25322) was originally owned in common by Anatolio B
uenconsejo to the extent of undivided portion and Lorenzo Bon and Santiago Bon t
o the extent of the other (Exh. B) 3. Anatolio Buenconsejo s rights, interests a
nd participation over the portion abovementioned were by a Certificate of Sale e
xecuted by the Provincial Sheriff of Albay, transferred and conveyed to Atty. Te
cla San Andres Ziga , awardee in the corresponding auction sale conducted by sai
d Sheriff 4. By a certificate of redemption issued by the Provincial Sheriff of
Albay, the rights, interest, claim and/or or participation which Atty. Tecla San
Andres Ziga may have acquired over the property in question by reason of the af
orementioned auction sale award, were transferred and conveyed to the herein pet
itioner in his capacity as Attorney-in-fact of the children of Anatolio Buencons
ejo, namely, Anastacio Buenconsejo, Elena Buenconsejo and Azucena Buenconsejo (E
xh. C). 5. Petitioner Santos had redeemed the aforementioned share of Anatolio B
uenconsejo, upon the authority of a special power of attorney executed in his fa
vor by the children of Anatolio Buenconsejo. 6. Relying upon this power of attor
ney and redemption made by him, Santos now claims to have acquired the share of
Anatolio Buenconsejo in the aforementioned Lot No. 1917; 7. As the alleged prese
nt owner of said share, Santos caused a subdivision plan of said Lot No. 1917 to
be made, in which the portion he claims as his share thereof has been marked as
Lot No. 1917-A; and that he wants said subdivision at No. 1917-A to be segregat
ed from Lot No. 1917 and a certificate of title issued in his name exclusively f
or said subdivision Lot No. 1917-A. 8. Lower court: ruled in favor of the respon
dents. ISSUE: Whether or not petitioner Santos claim that he has acquired the sha
re of Anatolio Buenconsejo in Lot No. 1917 relying upon a power of attorney and
redemption made by him is tenable? RULING: No! SC affirmed the lower courts decis
ion that petiti oner s claim is clearly untenable, for three reasons: Said speci
al power of attorney authorized him to act on behalf of the children of Anatolio
Buenconsejo, and, hence, it could not have possibly vested in him any property
right in his own name; ( b. The children of Anatolio Buenconsejo had no authorit
y to execute said power of attorney, because their father is still alive and, in
fact, he and his wife opposed the petition of Santos; c. In consequence of said
power of attorney (if valid) and redemption, Santos could have acquired no more
than the share pro indiviso of Anatolio Buenconsejo in Lot No. 1917, so that pe
titioner cannot without the conformity of the other co-owners (Lorenzo and Santi
ago Bon), or a judicial decree of partition issued pursuant to the provisions of
Rule 69 of the new Rules of Court (Rule 71 of the old Rules of Court) which hav
e not been followed By Santos adjudicate to himself in fee simple a determinate
portion of said Lot No. 1917, as his share therein, to the exclusion of the othe
r co-owners. Inasmuch as the appeal is patently devoid of merit, the order appea
led from is hereby affirmed, with treble cost against petitioner-appellant Jose
A. Santos y Diaz. It is so ordered. a.
Page 5

CASE DIGEST
69) ALBADEJO y CIA vs. PHILIPPINE REFINING CO.
CASE NUMBER: G.R. No. L-20726 DATE: December 20, 1923 PONENTE: Street, J.
FACTS:
It appears that Albaladejo y Cia. is a limited partnership, organized in conform
ity with the laws of these Islands, and having its principal place of business a
t Legaspi, Albay. The firm was engaged in the buying and selling of the products
of the country, especially copra. The Visayan Refining Co. is a corporation org
anized engaged in operating its extensive plant at Opon, Cebu, for the manufactu
re of coconut oil. On August 28, 1918, the plaintiff made a contract with the Vi
sayan Refining Co., the material parts of which are as follows: (important provi
sions) The party of the first part (Albadejo) agrees and binds itself to sell to
the party of the second part (Visayan Refining Co.) , and the party of the seco
nd part agrees and binds itself to buy from the party of the first part, for a p
eriod of one (1) year During the continuance of this contract the party of the s
econd part will not appoint any other agent for the purchase of copra in Legaspi
, nor buy copra from any vendor in Legaspi. The party of the second part will pr
ovide transportation by sea to Opon, Cebu, for the copra delivered to it by the
party of the first part, but the party of the first part must deliver such copra
to the party of the second part free on board the boats of the latter s ships o
r on the pier alongside the latter s ships. When the contract above referred to
was originally made, Albaladejo y Cia. apparently had only one commercial establ
ishment. After the Visayan Refining Co. had ceased to buy copra, the supplies of
copra already purchased by the plaintiff were gradually shipped out and accepte
d by \the Visayan Refining Co. In next eight or ten months the accounts between
the two parties were liquidated. The last account rendered by the Visayan Refini
ng Co. to the plaintiff was for the month of April, 1921, and it showed a balanc
e of P288 in favor of the defendant. Under date of June 25, 1921, the plaintiff
company addressed a letter from Legaspi to the Philippine Refining Co. (which ha
d now succeeded to the rights and liabilities of the Visayan Refining Co.), expr
essing its approval of said account. In this letter no dissatisfaction was expre
ssed by the plaintiff as to the state of affairs between the parties; but about
six weeks thereafter the present action was begun. This action was instituted in
the CFI Albay by Albaladejo to recover a sum of money from the Philippine Refin
ing Co., as successor to the Visayan Refining Co., two causes of action being st
ated in the complaint. Upon hearing the cause, the trial judge absolved the defe
ndant from the first cause of action but gave judgment for the plaintiff to reco
ver the sum of P49,626.68, with costs, upon the second cause of action. The plai
ntiff appealed the first cause of action, and the defendant appealed with respec
t to the action taken upon the second cause of action. It results that, by the a
ppeal of the two parties, the decision of the lower court is here under review.
Pursuant to this agreement the plaintiff bought copra extensively for the Visaya
n Refining Co. for a year. At the end of said year both parties found themselves
satisfied with the existing arrangement, and they therefore continued by tacit
consent to govern their future relations by the same agreement.
ISSUE: Whether he defendant liable for the expenses incurred by the plaintiff in
keeping its organization intact during the period now under consideration. RULI
NG: NO
Page 6

CLASS RECITATION First cause of action: The alleged negligent failure of the Vis
ayan Refining Co. to provide opportune transportation for the copra collected by
the plaintiff and deposited for shipment. Upon consideration of all the facts r
evealed in evidence (records of shipping), court found that the Visayan Refining
Co. had used reasonable promptitude in its efforts to get out the copra from th
e places where it had been deposited for shipment, notwithstanding occasional ir
regularities due at times to the condition of the weather as related to transpor
tation by sea and at other times to the inability of the Visayan Refining Co. to
dispatch boats to the more remote ports. This finding of the trial judge, that
no negligence of the kind alleged can properly be imputed to the Visayan Refinin
g Co., is in our opinion supported by the proof. The trial judge calls attention
to the fact that it is expressly provided in paragraph two of the contract that
the shrinkage of copra from the time of its delivery to the party of the second
part till its arrival at Opon should fall upon the plaintiff, from whence it is
to be interfered that the parties intended that the copra should be paid for ac
cording to its weight upon arrival at Opon regardless of its weight when first p
urchased. From what has been said it follows that the first cause of action set
forth in the complaint is not well founded, and the trial judge committed no err
or in absolving the plaintiff therefrom. Second cause of action: Plaintiff seeks
to recover the sum of P110,000, the alleged amount expended by the plaintiff in
maintaining and extending its organization for Visayan Refining Co. As a basis
for the defendant s liability in this respect it is alleged that said organizati
on was maintained and extended at the express request, or requirement, of the de
fendant, in conjunction with repeated assurances that the defendant would soon r
esume activity as a purchaser of copra. SC: We note that in his letter of July 1
0, 1920, Mr. Day suggested that if the various purchasing agents of the Visayan
Refining Co. would keep their organization intact, the company would endeavour t
o see that they should not lose by the transaction in the long run. These words
afford no sufficient basis for the conclusion, which the trial judge deduced the
re from, that the defendant is bound to compensate the plaintiff for the expense
s incurred in maintaining its organization. The correspondence sufficiently show
s on its face that there was no intention on the part of the company to lay a ba
sis for contractual liability of any sort; and the plaintiff must have understoo
d the letters in that light. The parties could undoubtedly have contracted about
it, but there was clearly no intention to enter into contractual relation; and
the law will not raise a contract by implication against the intention of the pa
rties. The inducement held forth was that, when purchasing should be resumed, th
e plaintiff would be compensated by the profits then to be earned for any expens
e that would be incurred in keeping its organization intact. It is needless to s
ay that there is no proof showing that the officials of the defendant acted in b
ad faith in holding out this hope. In the appellant s brief the contention is ad
vanced that the contract between the plaintiff and the VisayanRefining Co. creat
ed the relation of principal and agent between the parties, and the reliance is
placed upon article1729 of the Civil Code which requires the principal to indemn
ify the agent for damages incurred in carrying out the agency. Attentive perusal
of the contract is, however, convincing to the effect that the relation between
the parties was not that of principal and agent in so far as relates to the pur
chase of copra by the plaintiff. It is true that the Visayan Refining Co. made t
he plaintiff one of its instruments for the collection of copra; but it is clear
that in making its purchases from the producers the plaintiff was buying upon i
ts own account In paragraph three of the contract it is declared that during the
continuance of this contract the Visayan Refining Co. would not appoint any oth
er agent forthe purchase of copra in Legaspi; and this gives rise indirectly to
the inference that the plaintiff was considered its buying agent. But the use of
this term in one clause of the contract cannot dominate the real nature of the
agreement as revealed in other clauses, no less than in the caption of the agree
ment itself. In some of the trade letters also the various instrumentalities use
d by the Visayan Refining Co. for the collection of copra are spoken of as agent
s. But this designation was evidently used for convenience; and it is very clear
that in its activities as a buyer the plaintiff was acting upon its own account

and not as agents of the Visayan Refining Co. The title to all of the copra pur
chased by the plaintiff undoubtedly remained in it until it was delivered by way
of subsequent sale to said company. For the reasons stated we are of the opinio
n that no liability on the part of the defendant is shown upon the plaintiff s s
econd cause of action, and the judgment of the trial court on this part of the c
ase is erroneous.
Page 7

70) THOMAS vs. PINEDA

CASE NUMBER: G.R. No. L-2411 DATE: June 28, 1951 PONENTE: not indicated
FACTS: Thomas bought the bar and restaurant known as Silver Dollar Caf at Plaza S
ta. Cruz. He employed Pineda as a bartender-promoted to cashier and manager Duri
ng Japanese occupation, to prevent the business and its property from falling in
to enemy hands, Thomas made a fictitious sale to Pineda fictitious sale was admi
tted by both parties; 2nd agreement which was a secret stating that the sale was
fictitious Original building was destroyed by fire, Pineda was able to remove s
ome furniture and a considerable qty of stocks to a place of safety- a bar was o
pened on Calle Bambang-after 4 months it was transferred to the original locatio
n Thomas brought a CPA for the purpose of examining the books- Pineda threatened
Thomas with a gun if they persisted in their purpose. So Thomas filed a case an
d set up another bar 1st CoA- Thomas sought to compel an ACCOUNTING of Pinedas op
erations during the time he was in control of the bar - Pineda claims that there
was a 3rd verbal agreement, the import of which was that he was to operate the
business with no liability other than to turn over to the plaintiff as the plain
tiff would find it after the war 2nd CoA: ownership of Silver Dollar Caf trade na
me it appears that Pineda registered the business as his own RULING: 1st CoA val
id - Little or no weight can be attached to Pinedas assertion .As sole manager wi
th full power to do as his fancies dictated; the defendant could strip the busin
ess naked of all its stocks, leaving the plaintiff holding the bag, as it were,
when the defendant s management was terminated. Unless Thomas was willing to giv
e away his property and its profits, no man in his right senses would have given
his manager an outright license such as the defendant claims to have gotten fro
m his employer. The conclusion thus seems clear that the defendant owes the plai
ntiff an accounting of his management of the plaintiff s business during the occ
upation. The exact legal character of the defendant s relation to the plaintiff
matters not a bit. It was enough to show, and it had been shown, that he had bee
n entrusted with the possession and management of the plaintiff s business and p
roperty for the owner s benefit and had not made an accounting. It was error for
the court below to declare at this stage of the proceeding, on the basis of def
endant s incomplete and indefinite evidence, that there were no surplus profits
Monies and food stuffs which the defendant said he had supplied the plaintiff an
d his daughters during the war are appropriate items to be considered on taking
account
Upon plaintiffs release from the internment camp, he lost no time in looki ng for
a site where he could open a saloon The use of the old name suggested that the
business was in fact an extension and continuation of the Silver Dollar Caf - Upo
n the reopening of the bar in the original place- lease was in the name of Thoma
s; calling cards saying Thomas is the proprietor == defendant was only a manager
Page 8

 2 CoA- Thomas is the owner of the trade name - In the fictitious bill of sale Pi
neda acknowledged Thomas ownership of the business - Business cards: Thomas is th
e proprietor No abandonment because when Thomas set up a new saloon it used the
same name The most that can be said is that the plaintiff instructed Pineda to r
enew the registration of the trade-name and the defendant understood the instruc
tion as permission to make the registration in his favor As legal proposition an
d in good conscience, the defendants registration of the trade name Silver Dolla
r Cafe must be deemed to have been affected for the benefit of its owner of whom
he was a mere trustee or employee. "The relations of an agent to his principal
are fiduciary and it is an elementary and very old rule that in regard to proper
ty forming the subject matter of the agency, he is estopped from acquiring or as
serting a title adverse to that of principal. His position is analogous to that
of a trustee and he cannot consistently, with the principles of good faith, be a
llowed to create in himself an interest in opposition to that of his principal o
r cestuique trust. A receiver, trustee, attorney, agent or any other person occu
pying fiduciary relations respecting property or persons utterly disabled from a
cquiring for his own benefit the property committed to his custody for managemen
t. The rule stands on the moral obligation to refrain from placing one s self in
position which ordinarily excite conflicts between self-interest at the expense
of one s integrity and duty to another, by making it possible to profit by yiel
ding to temptation
nd
Page 9

71) PALMA VS. CRISTOBAL

CASE NUMBER: G.R. No. L-49219 DATE: December 11, 1946 PONENTE: Perfecto, J.
FACTS:
A parcel of a land located in Quesada Street, Tondo, Manila, covered by t
ransfer certificate of title No. 31073 of the Register of Deeds of Manila, issue
d in favor of petitioner Pablo D. Palma, is the subject of contention between th
e parties. o Petitioner sought, at first, to eject respondent Eduardo Cristobal
Reyes from the land in question in a complaint filed with the Municipal Court of
Manila. As respondent raised the question of ownership, the complaint was dismi
ssed, and petitioner filed with the Court of First Instance of Manila the compla
int which initiated this case, petitioner praying that he be declared the owner
of the land and that respondent be ordered to restore its possession and to remo
ve his house therefrom. o The complaint was dismissed and petitioner brought the
case to the Court of Appeals, where he again failed. o The case is appealed by
certiorari.
In 1909, after registration proceedings under the provisions of Act
No. 496, original certificate of title No. 1627 was issued in the names of petit
ioner and his wife Luisa Cristobal.
In 1923, said certificate was cancelled and
substituted by certificate of title No. 20968 by virtue of a decree issued by th
e Court of First Instance of Manila in connection with Manila cadastre.
It was l
ater substituted by certificate of title No. 26704, also in the name of petition
er and his wife. After the wifes death in 1922,a new certificate of title was iss
ued in 1923 only in the name of the name of the petitioner, substituted in 1928
by certificate of title No. 31073.
The Court of Appeals, upon the evidence, conc
luded with the Court of First Instance of Manila that the parcel of land in ques
tion is a community property held by petitioner in trust for the real owners (th
e respondent being an heir of one of them), the registration having been made in
accordance with an understanding between the co-owners, by reason of the confid
ence they had in petitioner and his wife. This confidence, close relationship, a
nd the fact that the coowners were receiving their shares in the rentals, were t
he reasons why no step had been taken to partition the property.
It was only aft
er the death of Luisa Cristobal and petitioner had taken a second wife that trou
ble on religious matters arose between petitioner and respondent, and it gives c
redence to the testimony of Apolonia Reyes and respondent to the effect that Lui
sa, before her death, called her husband, the petitioner, and enjoined him to gi
ve her co-owners their shares in the parcel of land; but respondent told her the
n not to worry about it, for it was more important to them to have her cured of
the malady that affected her. Petitioner answered his wife that she should not w
orry because he would take care of the matter by giving the co-owners their resp
ective shares. After Luisa Cristobal, petitioners wife, died in 1922, instead of
moving for the partition of the property, considering specially that petitioner
had promised such a partition at the deathbed of the deceased, respondent appear
ed as attorney for petitioner and prayed that a new certificate of title be issu
ed in the name of said petitioner as the sole owner of the property. Petitioner
assigns as first error of the Court of Appeals the fact that it considered the o
ral testimony adduced in behalf of respondent sufficient to rebut the legal pres
umption that petitioner is the owner of the land in controversy. . In Severino v
s. Severino (43 Phil. 343), this court declared that Affirming the said doctrine
in Barretto vs. Tuason (50 Phil.
Page 10

888), the Supreme Court declared that In Palet vs. Tejedor (55 Phil. 790), it wa
s declared that This right to recover is sanctioned by section 55 of Act No. 496
, as amended by Act No. 3322. There is no showing why the conclusions of facts o
f the Court of Appeals should be disturbed, and upon said facts petitioners first
assignment of errors appears to be untenable in the light of law and of the dec
ision of this court. Petitioner alleged that the Court of Appeals erred in not h
olding ISSUE: Whether the respondent is estopped from claiming that petitioner i
s not the absolute owner of the property in question.
RULING: No
The fact that respondent has been a party to the deception which resu
lted in petitioners securing in his na me the title to a property not belonging t
o him, is not valid reason for changing the legal relationship between the latte
r and its true owners to such an extent as to let them lose their ownership to a
person trying to usurp it.
Respondent is not barred because his appearance as a
ttorney for petitioner was not a misrepresentation which would induce petitioner
to believe that respondent recognized the former as the sole owner of the prope
rty in controversy. Respondents appearance, as attorney for petitioner in 1923, w
as a consequence of the understanding, and petitioner could not legitimately ass
ume that it had the effect of breaking or reversing said understanding. Lastly,
it is contended by petitioner that, even conceding that the controverted propert
y was owned in common by several co-owners, yet the Court of Appeals erred in no
t holding that, as against respondent, ISSUE: Whether petitioner had acquired ab
solute ownership of the property through prescription. Upon the premise that the
registration in 1909 in the name of petitioner and his wife, Luisa Cristobal, w
as in accordance with an agreement among the co-owners, petitioner advances the
theory that when he, upon the death of his wife in 1922, caused the trust proper
ty to be registered in his sole name in 1923, and subsequently partitioned betwe
en himself and his daughter, Ildefonsa Cristobal Ditangco, as heirs of the deced
ent, he openly breached the agreement of 1909 as well as the promise made to his
dying wife of giving the co-owners their respective shares, concluding that that b
reach was an assumption of ownership, and could be the basis of title by prescri
ption. RULING No, Petitioners pretension of building his right to claim ownership
by prescription upon his own breach of a trust cannot be countenanced by any cou
rt, being subversive of generally accepted ethical principles. Petitioner held t
he property and secured its registration in his name in a fiduciary capacity, an
d it is elementary that a trustee cannot acquire by prescription the ownership o
f the property entrusted to him. The position of a trustee is of representative
nature. His position is the position of a cestui que trust.
It is logical that a
ll benefits derived by the possession and acts of the agent, as such agent, shou
ld accrue to the benefit of his principal. The registration of the property in t
he name of the trustees in possession thereof, must be deemed to have been effec
ted for the benefit of the cestui que trust. whether or not there is bad faith o
r fraud in obtaining a decree with respect to a registered property, the same do
es not belong to the person in whose favor it was issued, and the real owners be
entitled to recover the ownership of the property so long as the same has not b
een transferred to a third person who has acquired it in good faith and for a va
luable consideration.
Page 11

72) VALERA VS. VELASCO

CASE NUMBER: G.R. No. L-28050 DATE: March 13, 1928 PONENTE: VILLA-REAL, J Doctri
ne: The filing of a complaint by an agent against his principal for the collecti
on of a balance in his favor resulting from the liquidation of the agency accoun
ts between them, and his rendering of a final account of his operations, are equ
ivalent to an express renunciation of the agency and terminates the juridical re
lation between them. FACTS:
This is an appeal taken by Federico Valera from the
judgment of the Court of First Instance of Manila dismissing his complaint again
st Miguel Velasco, on the ground that he has not satisfactorily proven his right
of action. By virtue of the powers of attorney, Exhibits X and Z, executed by t
he plaintiff on April 11, 1919, and on August 8, 1922, the defendant was appoint
ed attorney-in-fact of the said plaintiff with authority to manage his property
in the Philippines, consisting of the usufruct of a real property located of Ech
ague Street, City of Manila. The defendant accepted both powers of attorney, man
aged plaintiff s property, reported his operations, and rendered accounts of his
administration; and on March 31, 1923 presented exhibit F to plaintiff, which i
s the final account of his administration for said month, wherein it appears tha
t there is a balance of P3,058.33 in favor of the plaintiff.
The liquidation of
accounts revealed that the plaintiff owed the defendant P1,100, and as misunders
tanding arose between them, the defendant brought suit against the plaintiff, ci
vil case No. 23447 of this court. Judgment was rendered in his favor on March 28
, 1923, and after the writ of execution was issued, the sheriff levied upon the
plaintiff s right of usufruct, sold it at public auction and adjudicated it to t
he defendant in payment of all of his claim. o Subsequently, on May 11, 1923, th
e plaintiff sold his right of redemption to one Eduardo Hernandez, for the sum o
f P200 (Exhibit A). On September 4, 1923, this purchaser conveyed the same right
of redemption, for the sum of P200, to the plaintiff himself, Federico Valera (
Exhibit C). After the plaintiff had recovered his right of redemption, one Salva
dor Vallejo, who had an execution upon a judgment against the plaintiff rendered
in a civil case against the latter, levied upon said right of redemption, which
was sold by the sheriff at public auction to Salvador Vallejo for P250 and was
definitely adjudicated to him. Later, he transferred said right of redemption to
the defendant Velasco. This is how the title to the right of usufruct to the af
orementioned property later came to vest the said defendant.
o
ISSUE: Whether the lower court erred in holding that one of the ways of terminat
ing an agency is by the express or tacit renunciation of the agent; and that the
institution of a civil action and the execution of the judgment obtained by the
agent against his principal is but renunciation of the powers conferred on the
agent; RULING: The lower court did not err. The fact that an agent institutes an
action against his principal for the recovery of the balance in
Page 12

his favor resulting from the liquidation of the accounts between them arising fr
om the agency, and renders a final account of his operations, is equivalent to a
n express renunciation of the agency, and terminates the juridical relation betw
een them. Article 1732 of the Civil Code reads as follows: Art. 1732. Agency is
terminated: 1. By revocation; 2. By the withdrawal of the agent; 3. By the death
, interdiction, bankruptcy, or insolvency of the principal or of the agent. And
article 1736 of the same Code provides that: Art. 1736. An agent may withdraw fr
om the agency by giving notice to the principal. Should the latter suffer any da
mage through the withdrawal, the agent must indemnify him therefore, unless the
agent s reason for his withdrawal should be the impossibility of continuing to a
ct as such without serious detriment to himself.
The misunderstanding between th
e plaintiff and the defendant over the payment of the balance of P1,000 due the
latter, as a result of the liquidation of the accounts between them arising from
the collections by virtue of the former s usufructuary right, who was the princ
ipal, made by the latter as his agent, and the fact that the said defendant brou
ght suit against the said principal on March 28, 1928 for the payment of said ba
lance, more than prove the breach of the juridical relation between them; for, a
lthough the agent has not expressly told his principal that he renounced the age
ncy, yet neither dignity nor decorum permits the latter to continue representing
a person who has adopted such an antagonistic attitude towards him.
When the ag
ent filed a complaint against his principal for recovery of a sum of money arisi
ng from the liquidation of the accounts between them in connection with the agen
cy, Federico Valera could not have understood otherwise than that Miguel Velasco
renounced the agency; because his act was more expressive than words and could
not have caused any doubt. In order to terminate their relations by virtue of th
e agency the defendant, as agent, rendered his final account on March 31, 1923 t
o the plaintiff, as principal.
The defendant-appellee Miguel Velasco, in adoptin
g a hostile attitude towards his principal, suing him for the collection of the
balance in his favor, resulting from the liquidation of the agency accounts, cea
sed ipso facto to be the agent of the plaintiff-appellant, said agent s purchase
of the aforesaid principal s right of usufruct at public auction held by virtue
of an execution issued upon the judgment rendered in favor of the former and ag
ainst the latter, is valid and legal.
The defendant-appellee, Miguel Velasco, ha
ving acquired Federico Valera s right of redemption from Salvador Vallejo, who h
ad acquired it at public auction by virtue of a writ of execution issued upon th
e judgment obtained by the said Vallejo against the said Valera, the latter lost
all right to said usufruct. The disagreements between an agent and his principa
l with respect to the agency, and the filing of a civil action by the former aga
inst the latter for the collection of the balance in favor of the agent, resulti
ng from a liquidation of the agency accounts, are facts showing a rupture of rel
ations, and the complaint is equivalent to an express renunciation of the agency
, and is more expressive than if the agent had merely said, "I renounce the agen
cy."
Page 13

73) CUI vs. CUI

CASE NUMBER: L-7041 DATE: August 31, 1964 FACTS: 1. The Hospicio is a charitable
institution established by the spouses Don Pedro Cui and Doa Benigna Cui, now de
ceased, "for the care and support, free of charge, of indigent invalids, and inc
apacitated and helpless persons." It was incorporated under Act No. 3239 of the
Philippine Legislature in 1925 and endowed with extensive properties by the said
spouses through a series of donations, principally the deed of donation execute
d in 1926. Section 2 of Act No. 3239 gave the initial management to the founders
jointly and, in case of their incapacity or death, to "such persons as they may
nominate or designate, in the order prescribed to them." Don Pedro Cui died in
1926, while his widow died in 1929. The administration passed to Mauricio Cui an
d Dionisio Jakosalem. The former died on 8 May 1931 and the latter on 1 July 193
1. On 2 July 1931 Dr. Teodoro Cui, only son of Mauricio Cui, became the administ
rator. Beginning 1932, a series of controversies and court litigations ensued co
ncerning the position of administrator. Plaintiff Jesus Ma. Cui and defendant An
tonio Ma. Cui are brothers, being the sons of Mariano Cui, one of the nephews of
the spouses Don Pedro Cui and Doa Benigna Cui. In 1960, the then incumbent admin
istrator, Dr. Teodoro Cui, resigned in favor of Antonio Ma. Cui pursuant to a "c
onvenio" entered into between them. On February 28, Antonio Ma. Cui took his oat
h of office. Jesus Ma. Cui, had no prior notice of either the "convenio" or of h
is brother s assumption of the position. Dr. Teodoro Cui died on 27 August and t
he plaintiff wrote a letter to the defendant demanding that the office be turned
over to him. The demand remained unheeded, the plaintiff filed the complaint. R
omulo Cui later on intervened, claiming a right to the same office, being a gran
dson of Vicente Cui, one of the nephews mentioned by the founders of the Hospici
o in their deed of donation. As between Jesus and Antonio the main issue turns u
pon their respective qualifications to the position of administrator. Jesus is t
he older and under equal circumstances would be preferred pursuant to section 2
of the deed of donation. However, before the test of age may be, applied the dee
d gives preference to the one, among the legitimate descendants of the nephews n
amed, "que posea titulo de abogado, o medico, o ingeniero civil, o farmaceutico,
o a falta de estos titulos el que pague al estado mayor impuesto o contribucion
." What is being disputed is the meaning of the term "titulo de abogado." Jesus
Ma. Cui holds the degree of Bachelor of Laws from the University of Santo Tomas
(Class 1926) but is not a member of the Bar, not having passed the examinations.
Antonio Ma. Cui is a member of the Bar and although disbarred by the Court but
was reinstated by resolution about two weeks before he assumed the position of a
dministrator of the Hospicio. The Court a quo, decied in favor of the plaintiff
and held that the phrase "titulo de abogado," taken alone, means that of a fullfledged lawyer, but that has used in the deed of donation and considering the fu
nction or purpose of the administrator, it should not be given a strict interpre
tation but a liberal one," and therefore means a law PONENTE: J. Makalintal
2. 3. 4. 5.
6.
7.
8.
9.
Page 14

degree or diploma of Bachelor of Laws. 10. Jesus Ma. Cui believed he was entitle
d to the office in as long ago as 1932. On January 26 of that year he filed a co
mplaint in quo warranto against Dr. Teodoro Cui, who assumed the administration
of the Hospicio. Mariano Cui, the plaintiff s father and Antonio Ma. Cui came in
as intervenors. The case was dismissed by the Court of First Instance upon a de
murrer by the. Upon appeal to the Supreme Court from the order of dismissal, the
case was remanded. The plaintiff, did not prosecute the case as decided by the
Court, but entered into an arrangement whereby Teodoro Cui continued as administ
rator, Mariano Cui was named "legal adviser" and plaintiff Jesus Ma. Cui accepte
d a position as assistant administrator. 11. The plaintiff tried to get the posi
tion by a series of extra-judicial maneuvers. However, the Commissioner to the S
ecretary of Justice ruled that the plaintiff, not being a lawyer, was not entitl
ed to the administration of the Hospicio. 12. Defendant Antonio Ma. Cui was rein
stated by this Court as member of the Bar, and succeeded Dr. Teodoro Cui when he
resigned as administrator pursuant to the "convenio" between them.
ISSUE & RULING: WON the administrator should only have possession of the academi
c degree of Bachelor of Laws. NO. The Court is of the opinion, that whether take
n alone or in context the term "titulo de abogado" means not mere possession of
the academic degree of Bachelor of Laws but membership in the Bar after due admi
ssion, qualifying one for the practice of law. In Spanish the word "titulo" is d
efined as "testimonies o instrumento dado para ejercer un empleo, dignidad o pro
fesion" and the word "abogado," as follows: "Perito en el derecho positivo que s
e dedica a defender en juicio, por escrito o de palabra, los derechos o interese
s de los litigantes, y tambien a dar dictmen sobre las cuestiones o puntos legal
es que se le consultan (Id., p.5) A Bachelor s degree alone, conferred by a law
school upon completion of certain academic requirements, does not entitle its ho
lder to exercise the legal profession. The English equivalent of "abogado" is la
wyer or attorney-at-law. This term has a fixed and general signification, and ha
s reference to that class of persons who are by license officers of the courts,
empowered to appear, prosecute and defend, and upon whom peculiar duties, respon
sibilities and liabilities are devolved by law as a consequence. 2) WON Jesus Cu
i is disqualified as being an administrator. YES. He only has the academic degre
e of Bachelor of Laws. The founders of the Hospicio de San Jose de Barili provid
ed in the deed of donation that if not a lawyer, the administrator should be a d
octor or a civil engineer or a pharmacist, in that order; or failing all these,
should be the one who pays the highest taxes among those otherwise qualified. A
lawyer, first of all, because under Act No. 3239 the managers or trustees of the
Hospicio shall "make regulations for the government of said institution (Sec. 3
, b); shall "prescribe the conditions subject to which invalids and incapacitate
d and destitute persons may be admitted to the institute" (Sec. 3, d); shall see
to it that the rules and conditions promulgated for admission are not in confli
ct with the provisions of the Act; and shall administer properties of considerab
le value for all of which work, it is to be presumed, a working knowledge of the
law and a license to practice the profession would be a distinct asset . 3) WON
Antonio Cui is entitled as administrator despite his past disbarment. YES. It i
s argued that although the latter (Antonio) is a member of the Bar he is neverth
eless disqualified by virtue of paragraph 3 of the deed of donation, which provi
des that the administrator may be removed on the ground, among others, of inepti
tude in the discharge of his office or lack of evident sound moral character. Re
ference is made to the fact that the defendant was disbarred by this Court in195
7 for immorality and unprofessional conduct. It is also a fact, however, that he
was reinstated in 1960, before he assumed the office of administrator. His rein
statement is a recognition of his moral rehabilitation, upon proof no less than
that required for his admission to the Bar in the first place. As far as moral c
haracter is concerned, the standard required of one seeking reinstatement to the
office of attorney cannot be less exacting than that implied in paragraph 3 of
the deed of donation as a requisite for the office which is disputed in this cas
e. When the defendant was restored to the roll of lawyers the restrictions and d
isabilities resulting from his previous disbarment were wiped out.

Page 15

This action must fail on one other ground: it is already barred by lapse of time
amounting the prescription or laches. Under Section 16 of Rule 66, this kind of
action must be filed within one (1) year after the right of plaintiff to hold t
he office arose. 4) WON the action of the plaintiff for administrator has prescr
ibed. YES. The failure of the plaintiff to prosecute his claim judicially after
this Court decided the first case of Cui v. Cui in 1934 remanding it to the tria
l court for further proceedings; his acceptance instead of the position of assis
tant administrator, allowing Dr. Teodoro Cui to continue as administrator and hi
s failure to file an action in quo warranto against said Dr. Cui after 31 July 1
956, when the appeal in Civil Case No. R-1216 of the Cebu Court was dismissed up
on motion of the parties precisely so that the conflicting claims of the parties
could be ventilated in such an action all these circumstances militate against
the plaintiff s present claim in view of the rule that an action in quo warranto
must be filed within one year after the right of the plaintiff to hold the offi
ce arose. The excuse that the plaintiff did not file an action against Dr. Teodo
ro Cui after 31 July 1956 because of the latter s illness did not interrupt the
running of the statutory period. And the fact that this action was filed within
one year of the defendant s assumption of office in September 1960 does not make
the plaintiff s position any better, for the basis of the action is his own rig
ht to the office and it is from the time such right arose that the one-year limi
tation must be counted, not from the date the incumbent began to discharge the d
uties of said office. 5) WON Romulo Cui is entitled as administrator. NO. Now fo
r the claim of intervenor and appellant Romulo Cui. This party is also a lawyer,
grandson of Vicente Cui, one of the nephews of the founders of the Hospicio men
tioned by them in the deed of donation. He is further, in the line of succession
, than defendant Antonio Ma. Cui, who is a son of Mariano Cui, another one of th
e said nephews. The deed of donation provides: "a la muerte o incapacidad de est
os administradores (those appointed in the deed itself) pasara a una sola person
a que sera el varon, mayor de edad, que descienda legitimamente de cualquiera de
nuestros sobrinos legitimos Mariano Cui, Mauricio Cui, Vicente Cui, Victor Cui,
y que posea titulo de abogado ... En igualdad de circumstancias, sera preferido
el varon de mas edad descendiente de quien tenia ultimamente la administration.
" Besides being a nearer descendant than Romulo Cui, Antonio Ma. Cui is older th
an he and therefore is preferred when the circumstances are otherwise equal. The
intervenor contends that the intention of the founders was to confer the admini
stration by line and successively to the descendants of the nephews named in the
deed, in the order they are named. Thus, he argues, since the last administrato
r was Dr. Teodoro Cui, who belonged to the Mauricio Cui line, the next administr
ator must come from the line of Vicente Cui, to whom the intervenor belongs. Thi
s interpretation, however, is not justified by the terms of the deed of donation
. IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from is reverse
d and set aside, and the complaint as well as the complaint in intervention are
dismissed, with costs equally against plaintiff-appellee and intervenorappellant
.
Page 16

74) ALLIED FREE WORKERS UNION [PLUM] vs. COMPANIA MARITIMA

CASE NUMBER: L-22971 DATE: January 31, 1967 PONENTE: Bengzon, J.P
FACTS: 1. MARITIMA is a local corporation engaged in the shipping business. Teve
s is its branch manager in the port of Iligan City and AFWU is a duly registered
legitimate labor organization with 225 members. 2. On August 11, 1952, MARITIMA
, through Teves, entered into a CONTRACT with AFWU to do and perform all the wor
k of stevedoring and arrastre services of all its vessels or boats calling in th
e port of Iligan City, beginning August 12, 1952. 3. During the first month of t
he existence of the CONTRACT, AFWU rendered satisfactory service. So, MARITIMA,
through Teves, verbally renewed the same. 4. The harmonious relations between MA
RITIMA and AFWU lasted up to the latter part of 1953 when the former complained
to the latter of unsatisfactory and inefficient service by the laborers doing th
e arrastre and stevedoring work. This deteriorating situation was admitted as a
fact by AFWU s president. 5. To remedy the situation since MARITIMA s business w
as being adversely affected -Teves was forced to hire extra laborers from among
"stand-by" workers not affiliated to any union to help in the stevedoring and ar
rastre work. The wages of these extra laborers were paid by MARITIMA through sep
arate vouchers and not by AFWU. Moreover, said wages were not charged to the con
signees or owners of the cargoes. 6. On July 23, 1954, AFWU presented to MARITIM
A a written proposal for a collective bargaining agreement. This demand embodied
certain terms and conditions of employment different from the provisions of the
CONTRACT. No reply was made by MARITIMA. 7. AFWU sued MARITIMA for unfair labor
practice saying that MARITIMA refused to bargain collectively. CIR dismissed th
e case on the ground that it has no jurisdiction over the case. ISSUES: 1. Wheth
er or not Maritima is can be considered an employer of the members of AFWU? NO.
2. Whether or not AFWU is an agent of Maritima? NO. RULING: 1. There is no any d
irect employment relationship between MARITIMA and the laborers. The latter have
no separate individual contracts with MARITIMA. In fact, the court a quo found
that it was AFWU that hired them. Their only possible connection with MARITIMA i
s through AFWU which contracted with the latter. Hence, they could not
Page 17

possibly be in a better class than AFWU which dealt with MARITIMA. a. Under the
CONTRACT, AFWU was an independent contractor of MARITIMA. i. The petitioner unio
n operated as a labor contractor under the so-called "cabo" system has a complet
e set of officers and office personnel and its organizational structure. ii. The
payrolls where laborers are listed and paid were prepared by the union itself w
ithout the intervention or control of the respondent company and/or its agent at
. The respondent never had any knowledge of the individual names of laborers and
/or workers listed in the union payroll or in their roster of membership. iii. T
he union engaged the services of their members in undertaking the work of arrast
re and stevedoring geither to haul shippers goods from their warehouses to the
MARITIMA boat or from the boat to the different consignees. The charges for such
service were known by the union and collected by them through their bill collec
tor, who are employees of the union and not of the respondent. The respondent ha
d no intervention whatsoever in the collection of those charges.
iv. The union members who were hired by the union to perform arrastre and steved
oring work on respondents vessels at Iligan port were being supervised and cont
rolled by the general foreman of the petitioner union or by any union assistant
when performing arrastre and/or stevedoring work aboard vessels of the Compaia MA
RITIMA. There were no instances where offices and employees of the respondent Co
mpaia MARITIMA and/or its agent had interferred in the giving of instructions to
the laborers performing the arrastre and/or stevedoring work. b. It is true that
MARITIMA admits that it did not answer AFWU s proposal for a collective bargain
ing agreement. From this it does not necessarily follow that it is guilty of unf
air labor practice. Under the law the duty to bargain collectively arises only b
etween the "employer" and its "employees". Where neither party is an
employer"
nor an "employee" of the other, no such duty would exist. Needless to add, wher
e there is no duty to bargain collectively the refusal to bargain violates no ri
ght. The facts as found by the court a quo strongly indicate that it is AFWU its
elf who is the "employer" of those laborers. The facts very succinctly show that
it was AFWU, through its officers, which (1) selected and hired the laborers, (
2) paid their wages, (3) exercised control and supervision over them, and (4) ha
d the power to discipline and dismiss them. These are the very elements constitu
ting an employer-employee relationship.
c.
2.
An agent can not represent two conflicting interests that are diametrically oppo
sed. And that the cases sought to be relied upon did not involve representatives
of opposing interests.
Page 18

75) FAR EASTERN EXPORT & IMPORT CO, vs. LIM TECK SUAN
CASE NUMBER: L-7144 DATE: May 31, 1955 and sale? FACTS:
Ignacio Delizalde, an ag
ent of the Far Eastern Export & Import Company, went to the store of Lim Teck Su
an in Manila and offered to sell textile. Having arrived at an agreement with Be
rnardo Lim, General Manager of Lim Teck Suan, Delizalde returned with a buyers or
der. Suan established a letter of credit in favour of Frenkel International Corp
oration through HSBC.
The textile arrived and was received by Suan, but complain
ed to Far Eastern of the inferior quality of the textile.
Upon the instruction o
f Far Eastern, Suan deposited the goods in a warehouse and withdrew the same and
was offered for sale. The net direct loss is now being claimed against Far East
ern. The defense set up is that Far Eastern only acted as a broker in this trans
action.
The lower court acquitted Far Eastern. CA reversed the judgment, basing
its decision of reversal on the case of Jose Velasco v. Universal Trading where
the transaction therein involved was found by the court to be one of purchase an
d sale and not of brokerage or agency. ISSUE: Was the transaction one of agency
that will exonerate Far Eastern from liability, or one of purchase RULING: One o
f purchase and sale
SC agreed with the CA that the facts in this case are very s
imilar to those in the Velasco case. o In the Velasco case, Universal Trading co
ntends that it merely acted as agent for Velasco and could not be held responsib
le for the substitution of Blended Whisky for Bourbon Whisky. PONENTE: Montemayo
r, J.
o The Court held that the transaction was purchase and sale and ordered the defe
ndant to refund his deposit with legal interest. Where a foreign company has an
agent here selling its goods and merchandise, that same agent could not very wel
l act as agent for local buyers, because the interests of his foreign principal
and those of the buyer would be in direct conflict. o He could not serve two mas
ters at the same
Page 19

time. o Far Eastern, being an agent of Frenkel, could not have acted as an agent
or broker for Suan.
The transaction entered into by Far Eastern with Suan is on
e of purchase and sale. o Far Eastern acted as agent for Frenkel International C
orporation, presumably the supplier of the textile sold. o Suan according to the
first part of the agreement is said merely to be commissioning Far Eastern to p
rocure for him the merchandise in question. o The price of the merchandise bough
t was paid for by Suan by means of an irrevocable letter of credit opened in fav
our of the supplier, Frenkel International Corporation.
o The agreement speaks of the items involved as sold, and the sale was even conf
irmed by Far Eastern. o Far Eastern dealt directly with Suan without expressly i
ndicating or revealing the principal. o There was no privity of contract between
the buyer and supplier. o No commission or monetary consideration was paid or a
greed to be paid by the buyer to export company proof that there was no agency o
r brokerage, and that the profit of the latter was undoubtedly the difference be
tween the price listed to the buyer and the net or special price quoted to the s
eller by the supplier.
76) NIELSON & CO., INC. vs LEPANTO CONSOLIDATED MINING CO.
CASE NUMBER: L-21601 DATE: December 28, 1968 FACTS:
Nielson & Company, Inc. and
Lepanto Consolidated Mining Company entered into a management contract. o Nielso
n had agreed, for a period of five years, with the right to renew for a like per
iod, to explore, develop and operate the mining claims of Lepanto, and to mine,
or mine and mill, such pay ore as may be found and to market the metallic produc
ts recovered therefrom which may prove to be marketable, as well as to render fo
r Lepanto other services specified in the contract. o Nielson was to take comple
te charge, subject at all times to the general control of the Board of Directors
of Lepanto, of the exploration and development of the mining claims, of the hir
ing of a sufficient and competent staff and of sufficient and capable laborers,
of the prospecting and development of the mine, of the erection and operation of
the mill, and of the benefication and marketing of the minerals found on the mi
ning properties. o Nielson was also to act as purchasing agent of supplies, equi
pment and other necessary purchases by Lepanto, but no purchase shall be made wi
thout the prior approval of Lepanto and no commission shall be claimed or retain
ed by Nielson on such purchase. o The principal and paramount undertaking of Nie
lson under the management contract was the operation and development of the mine
and the operation of the mill. All the other undertakings mentioned in the cont
ract are necessary or incidental to the principal. o In the performance of this
principal undertaking, Nielson was not in any way executing juridical acts for L
epanto. Lepanto terminated the contract in 1945, 2 years before its expiration,
when it took over and assumed exclusive management of the work previously entrus
ted to Nielson under the contract. Lepanto finally maintains that Nielson as an
agent is not entitled to damages since the law gives to the principal the right
to terminate the agency at will. PONENTE: Zaldivar, J.

ISSUE: Was the management contract entered into by and between Nielson and Lepan
to a contract of agency such that it has the right to revoke and terminate the c
ontract at will, or a contract of lease of services?
Page 20

RULING: Contract of Lease of Services

The management contract was one of contrac
t of lease of services and not a contract of agency. In both agency and lease of
services, one of the parties binds himself to render some service to the other
party. Agency, however is distinguished from lease of work or services in that:
o The basis of agency is representation, while in the lease of work or services,
the basis is employment.
77) SHELL COMPANY OF THE PHILS., LTD. vs. FIREMENS INS. OF NEWARK, N.J.
CASE NUMBER: L-8169 DATE: January 29, 1957 FACTS: 1. A Plymounth car, owned by S
alvador Sison, was brought by his son, Perlito Sison to the Shell Gasoline and S
ervice Station in Manila for washing, greasing and spraying. 2. The operator of
the station agreed to do service upon payment of P 8.00 3. The car was placed on
a hydraulic lifter under the direction of the personnel of the station. 4. Acco
rding to the testimony of son Perlito, the car was raised up to 6 feet high. Aft
er it was washed and greased, the grease men cannot reach the ungreased portion
underneath the vehicle so they loosen the lifter a few feet lower. Because of th
is, the car swayed and for a few second, it fell. 5. This was immediately report
ed to the Manila Adjustor Company, the adjustor of respondent insurance companie
s. 6. As inspected by Mr. Baylon, the damaged car was taken to the repair shop a
nd it was restored to running condition after repairs amounting to P 1,651.38. 7
. Because the insurance companies paid for the damages, respondent Salvador Siso
n made assignments of his rights to recover damages in favor of the respondent-i
nsurance companies. 8. PONENTE: Padilla, J.
However, according to the counter-statement of facts by defendant Porfirio de la
Fuente, the operator of Shell gasoline Manila, the ff tasks were done by the ff
people: Job of washing and greasing defendant Porfirio de la Fuente through his
two employees: o Alfonso Adriano grease man o De los Ryees helper and washer Res
pondent de la Fuente denied negligence in the operation of the lifter 9. The ins
ures and the owner of the car brought an action against petitioner Shell Company
and de la Fuente to recover the sum of P 1, 651. 38 from them jointly and sever
ally. 10. Decision of CFI: Dismissed complaint 11. Decision of CA: reversed deci
sion of CFI; Shell must pay insurance companies the amount P 1,651. 38 with lega
l interest.
The car fell as a result of the jerking and swaying of the lift when
the valve was released and that the jerking was due to some accident and unfore
seen shortcoming of the mechanism itself.
Reasoning of CA: De la Fuente is NOT a
n independent contractor BUT an AGENT of petitioner Shell
Page 21

o Respondent de la Fuente, the operator of the gasoline and service station was
the AGENT of the petitioner Shell Company of the Philippines, Ltd. o Facts which
show that de la Fuente is a mere agent:
The operator, de la Fuente, owned his p
osition to the company and the company could remove him or terminate his service
s at will
The service station belonged to the company and bore its trade name an
d the operator sold only the products of the company The equipment used by the o
perator belonged to the company and were just loaned to the operator and the com
pany took charge of their remain and maintenance An employee of the company supe
rvised the operator and conducted periodic inspection of the companys gasoline an
d service station, etc. ISSUE: WON petitioner Shell should be liable for the act
s of an agent or his employee acting within the scope of his authority?
RULING: YES. The breach of the undertaking by the agent (defendant de la Fuente)
is one for which the principal (Shell) is answerable. Decision: Judgment under
review is AFFIRMED. Costs against petitioner 1. Rule: As the act of the agent or
his employees acting within the scope of his authority is the act of the princi
pal, the breach of the undertaking by the agent is one for which the principal i
s answerable. The petitioner-company undertook to "answer and see to it that the
equipments are in good running order and usable condition;" Also, the CA found
that the Company s mechanic failed to make a thorough check up of the hydraulic
lifter and the check up made by its mechanic was "merely routine" by raising "th
e lifter once or twice and after observing that the operator was satisfactory, h
e (the mechanic) left the place." The latter was negligent and the company must
answer for the negligent act of its mechanic which was the cause of the fall of
the car from the hydraulic lifter.
2.
3.
4.
78) SEVILLA VS. COURT OF APPEALS
CASE NUMBER: L-41182-3 DATE: APRIL 15, 1988 PONENTE: SARMIENTO, J.
FACTS: 1. Mrs. Segundina Noguera leased her premises located at Ermita, Manila t
o Tourist World Service, Inc. (TWSI), represented by Eliseo Canilao, for the lat
ters use as branch office. 2. In the said contract Mrs. Lina Sevilla held herself
solidarily liable with TWSI for the prompt payment of the monthly rental agreed
on. 3. When the branch office was opened, the same was run by petitioner Mrs. S
evilla, who was designated as branch manager by TWSI. For any fare bought in on
the efforts of Mrs. Sevilla,, 4% was to go her and 3% was to be withheld by TWSI
4. In November 1961, TWSI was allegedly informed that Mrs. Sevilla was connecte
d with a rival travel firm. Since the branch office was losing, TWSI considered
closing it down. The firms board of directors issued two resolutions; the first a
bolishing the office of manager of the Ermita Branch Office and the second, auth
orizing the corporate secretary to receive the property of TWSI in said branch 5
. In January 1962, the lease contract to use the premises as branch office was t
erminated. In June 1962, the Corporate Secretary went over to the office to comp
ly with the mandate of the resolutions. Finding the premises locked and unable t
o contact Mrs. Sevilla, he padlocked the premises to protect the interests of TW
SI 6. As such, petitioners Spouses Sevilla filed a complaint against respondents
TWSI, Canilao and Noguera, praying for mandatory preliminary injunction. Petiti
oners claim that Mrs. Sevillas relationship with TWSI was one of joi nt business
venture and notone of employment. 7. In its answer, TWSI contend that Mrs. Sevil
la was its employee and as such was designated manager. 8. The trial court held
for the private respondents. It ruled that TWSI, being the true lessee, has the
privilege to terminate the lease and padlock the premises. It also held that Mrs
. Sevilla was a mere employee of TWSI and that she was bound by the act of her e
mployer. 9. The Court of Appeals affirmed said decision, Hence, the instant peti

tion. ISSUE: WON there is a contract of agency between respondent-principal TWSI

and petitioner Sevilla? If yes, should
Page 22

principal TWSI be liable for damages for its unwarranted revocation of the contr
act of agency?
YES for both. Decision: Decision of CA is REVERSED and SET ASIDE.
Costs against respondent TWSI RULING: 1. This case involves a contract of Agenc
y. There is neither joint venture between nor partnership TWSI and Mrs. Sevilla
The relationship of said parties is one that of a principal and an agent. Case a
t bar: o Petitioner Sevilla agreed to man the Ermita office of respondent TWSI b
ased on a contract of agency. o It is the essence of this contract that the agen
t renders services in representation or on behalf of another o Sevilla solicited a
irline fares but she did so for and on behalf of her principal TWSI. As compensa
tion, she received 4% of the proceeds in the concept of commissions. Sevilla pre
-assumed her principals authority as owner of the business undertaking. Consideri
ng the facts, this case involves a principal-agent relationship rather than a jo
int management or partnership. o But unlike simple grants of a power of attorney
, the agency that the Court here by declares to be compatible with the intent of
the parties cannot be revoked at will. o The reason is that it is an agency cou
pled with an interest, the agency having been created for mutual interest of the
agent and the principal. o In this case, the agency cannot be revoked at the pl
easure of the principal. This unwarranted revocation of the contract of agency e
ntitles petitioner Sevilla to damages Respondent TWIS is liable for P 25,000 mor
al damages, P 10,000 exemplary damages, P 5,000 nominal damages and/or temperate
damages.
Other issues: 2. No Employer-Employee Relationship between TWSI and Mrs. Sevilla
. There has been no uniform test to determine the existence of an employer-emplo
yee relation.
In general, The Court has relied in the so-called control test, whe
re the person for whom the services are performed reserves a right to control no
t only the end to be achieved but also the means to be used in reaching such end
. Case at bar: o The records will show that the petitioner, Lina Sevilla, was not
subject to control by the private respondent Tourist World Service, Inc., eithe
r as to the result to the means used in connection therewith. In the first place
, under the contract of lease covering the Tourist Worlds Ermita office, she had
bound herself in solidum as and for rental payments. o Also, when the branch of
fice was opened, the same was run by Mrs. Sevilla payable to TWSI. It cannot be
said that she was under the control of TWSI as to the means used. She obviously re
lied on her own capabilities o Sevilla was also not in the companys payroll. She
retained commissions based on her booking successes and its not based on a fixed
salary
A true employee cannot be made to part with his own money in pursuance of
his employers business, or otherwise, assume any liability thereof. In that even
t, the parties must be bound by some other relation, but certainly not employmen
t.
Page 23

79) LIM vs. PEOPLE

CASE NUMBER: G.R. No. L-34338 DATE: November 21, 1984 FACTS: 1. 2. 3. 4. 5. 6. L
ourdes Lim went to the house of Maria de Guzman and proposed to sell the latters
tobacco. Maria agreed with the proposalhence the execution of a receipt manifesti
ng that Lourdes received 615 kilos of tobacco to be sold at P1.30 per kilo, the
overprice for which would be received by Lourdes. The receipt also states that t
he proceeds will be given to Mariaas soon as it was sold. However, Lourdes paid
only P240, despite repeated demands. Thus, Maria filed a complaint, and Lourdes
was found guilty of estafa. (Estafa is present where contract to sell constitute
d another as mere agent) Lourdes argued that the receipt was a contract of sale an
d not a contract of agency to sell. PONENTE: RELOVA, J
ISSUE: Is Lourdes argument tenable? RULING: NO. The contract was not a contract o
f sale because there was no transfer of ownership of the goods to Lourdes. Inste
ad, the agreement was a contract of agency to sell for it constituted Lourdes as
agent with the obligation to give the proceeds of the sale to Maria as soon as
the same was sold. The obligation was immediately demandable as soon as the toba
cco was disposed of. Consequently, there is no need for the court to fix the dur
ation of the obligation, as contended by Lourdes.
Page 24

80) SAN DIEGO, SR. vs. NOMBRE

CASE NUMBER: G.R. No. L-19265 DATE: May 29, 1964 PONENTE: PAREDES, J.:
FACTS: 1. While being the judicial administrator of the intestate estate subject
of Special Proceeding 7279, AdeloNombre leased one of the properties (fishpond)
of the said estate to Pedro Escanlar for 3 years without approval of the court.
2. When Nombre was removed as judicial administrator, he was substituted by Sof
ronioCampillanos. Campillanos filed a motion asking for authority to execute a l
ease contract of the same fishpond in favour of Moises San Diego.This motion was
granted on the ground that the contract of lease entered into between Nombre an
d Escanlar was void for want of judicial authority. 3. Nombre and Escanlar appea
led this order to the Court of Appeals, which reversed the same order. 4. Aggrie
ved, San Diego appealed to the Supreme Court.
ISSUE: San Diego raised the following legal questions: 1. Whether a judicial adm
inistrator can validly lease property of the estate without prior judicial autho
rity and approval, and 2. Whether the provisions of the New Civil Code on Agency
(referring specifically to par. 8 of Article 1878) should apply to judicial adm
inistrators. RULING: Administrator has the power of administering the estate of
the deceased person. He may, therefore, exercise all acts of administration with
out special authority of the court. For instance, he may lease the property with
out prior approval from
Page 25

the court, since leasing has been considered an act of administration. Par. 8 of
Article 1878 states that Special powers of attorney are necessary to lease any rea
l property to another person for more than one (1) year.This provision, according
to San Diego, is a limitation to the right of a judicial administrator to lease
real property without prior judicial authority if it exceeds one (1) year. Howe
ver, the same argument falls becauseprovisions on Agency do not apply to judicia
l administrators. A judicial administrator is appointed by the court. He is not
only the representative of the court, but also the heirs and creditors of the es
tate. Before conducting his duties, he is required to file a bond. His actions a
re subject to specific provisions of law and orders of the appointing court. The
se circumstances are not true in case of agency.
81) DELA PENA VS. HIDALGO
CASE NUMBER: G.R. No. L-5486 DATE: August 17, 1910 PONENTE: TORRES, J.
FACTS: 1. Before Jose de la Pea y Gomiz embarked for Spain, on November 12, 1887,
he executed a power of attorney in favor of Federico Hidalgo, Antonio L. Rocha,
Francisco Roxas and Isidro Llado, so that, as his agents, they might represent
him and administer various properties he owned and possessed in Manila. 2. After
Federico Hidalgo had occupied the position of agent and administrator of De la
Pea s property, he wrote to the latter requesting him to designate a person who m
ight substitute him in his said position in the event of his being obliged to ab
sent himself from the country.
one of those appointed in the said power of attor
ney had died and the others did not wish to take charge of the administration of
their principal s property. 3. Hidalgo stated that Pea y Gomiz, did not even ans
wer his letters, to approve or object to the former s accounts, and did not appo
int or designate another person who might substitute him. 4. For reasons of heal
th and by order of his physician, Federico Hidalgo was obliged to embark for Spa
in, and, on preparing for his departure, he rendered the accounts of his adminis
tration by letter of the date of March 22, 1894, addressed to his principal, Pea
y Gomiz. 5. In this letter the defendant informed the dela Pena of the his inten
ded departure from this country and of his having provisionally turned over the
administration of the said property to his cousin, Antonio Hidalgo, upon whom he
had conferred a general power of attorney.He added thatin case that this was no
t sufficient, that Pea send to Antonio Hidalgo a new power of attorney. 6. TC con
cluded that despite the denial, the was sent to, and was received by Jose de la
Pea y Gomiz, during his lifetime and that the constituent he was informed of the
departure of his agent of the latter s having turned over the
Page 26

administration of the property to Antonio Hidalgo, and of his agent s the defend
ant s petition that he send a new power of attorney to the substitute. ISSUE: (1
) WON Federico had renounced his agency (2) WON Federico can be held liable with
the wrongful administration of the subsequent agents RULING: 1. YES Federico ha
d definitely renounced his agency was duly terminated, according to the provisio
ns of article 1732 of the Civil Code, because, althoughthe word "renounce" was n
ot employed in connection with the agency or power of attorney executed in his f
avor, yet when the agent informs his principal that for reasons of health and by
medical advice he is about to depart from the place where he is exercising his
trust and where the property subject to his administration is situated, abandons
the property, turns it over a third party, without stating when he may return t
o take charge of the administration, renders accounts of its revenues up to a ce
rtain date , December 31, 1893, and transmits to his principal a general stateme
nt which summarizes and embraces all the balances of his accounts since he began
to exercise his agency to the date when he ceased to hold his trust, and asks t
hat a power of attorney in due form in due form be executed and transmitted to a
nother person who substituted him and took charge of the administration of the p
rincipal s property , it is then reasonable and just to conclude that the said a
gent expressly and definitely renounced his agency, and it may not be alleged th
at the designation of Antonio Hidalgo to take charge of the said administration
was that of a mere proceed lasted for more than fifteen years, for such an alleg
ation would be in conflict with the nature of the agency. In permitting Antonio
Hidalgo to administer his property in this city during such a number of years, i
t is inferredthatthe deceased consented to have Antonio Hidalgo administer his p
roperty, and in fact created in his favor an implied agency, as the true and leg
itimate administrator. Antonio Hidalgo administered the aforementioned property
of De la Pea y Gomiz, not in the character of business manager, but as agent by v
irtue of an implied agency vested in him by its owner who was not unaware of the
fact, who knew perfectly well that the said Antonio Hidalgo took charge of the
administration of that property on account of the obligatory absence of his prev
ious agent for whom it was an impossibility to continue in the discharge of his
duties. **Difference between agency and business management: The implied agency
is founded on the lack of contradiction or opposition , which constitutes simult
aneous agreement on the part of the presumed principal to the execution of the c
ontract, while in the management of another s business there is no simultaneous
consent, either express or implied, but a fiction or presumption of consent beca
use of the benefit received. In the power of attorney executed by Pea y Gomizin f
avor of Federico Hidalgo, no authority was conferred upon the latter by his prin
cipal to substitute the power or agency in favor of another person; wherefore th
e agent could not, by virtue of the said power of attorney, appoint any person t
o substitute or relieve him in the administration of the principal s property, f
or the lack of a clause of substitution in the said instrument authorizing him s
o to do. HOWEVER, from the time of that notification the agent who, for legitima
te cause, ceased to exercise his trust, was free and clear from the results and
consequences of the management of the person who substituted him with the consen
t, even only a tacit one, of the principal, inasmuch as the said owner of the pr
operty could have objected to could have prohibited the continuance in the admin
istration thereof, of the party designated by his agent, and could have opportun
ely appointed another agent or mandatory of his own confidence to look after his
property and if he did not do so, he is obliged to abide by the consequences of
his negligence and abandonment and has no right to claim damages against his pr
evious agent, who complied with his duty and did all that he could and ought to
have done, in accordance with the law.
Page 27

2. NO If the defendant Federico is not responsible for the results of the admini
stration of said property administered by Antonio Hidalgo during the second peri
od before referred to, neither is he responsible for that performed during the t
hird period by Francisco Hidalgo, inasmuch as the latter was not even chosen whe
n Francisco Hidalgo took charge of Peas property that had been turned over to hi
m by Antonio Hidalgo. Hence, the defendant can in no manner be obliged to pay to
the plaintiff any sum that may be found owing by Francisco Hidalgo.
82) Conde vs. Court of Appeals, 119 SCRA 245
CASE NUMBER: DATE: PONENTE: FACTS: ISSUE: RULING:
Page 28

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

CASE NUMBER: 19001 DATE: November 11, 1922 FACTS:

PONENTE: Johns, J.

this is a case filed by harry keeler, an electric co. which sold a mathews elect
ric plant to rodriguez. harry keeler co. authorized ac montelibano to find buyer
s for the mathews electric plant. montelibano informed harry that he found a buy
er in iloilo. harry then shipped the electric plant to iloilo, which was then in
stalled by cenar cenar, the mechanic of harry keeler, testified that he in fact
presented a bill to rodriguez. when he presented this bill, rodriguez informed h
im that payment would just be made in manila. allegedly, rodriguez already made
payment to montelibano. when harry wanted to collect the 2500 pesos from rodrigu
ez, rodriguez said that he already paid montelibano. a case for collection was t
he filed by harry against rodriguez the lower court ruled in favor of rodriguez.
the lower court said that: 1.) that the bill was given to montelibano for colle
ction 2.) that harry represented montelibano as an agent authorized to collect.
ISSUE: Was the lower court correct in ruling that montelibano was an agent of ha
rry keeler authorized to make collection?
Page 29

RULING: NO, the lower court ruling is hereby reversed!!!

in the receipt presente
d by rodriguez(which was the receipt given by montelibano) there was no showing
that montelibano was an agent
it also did not contain that montelibano had autho
rity to receive money payment made by rodriguez to montelibano was at his own ri
sk. rodriguez failed to exercise ordinary prudence and reasonable diligence in m
aking sure that montelibano was in fact authorized to receive payment.
important
things to remember in assuming that there is authority
1.)the law does not pres
ume that an agency exists. it has to be proven through facts 2.)the agent cannot
establish his authority 3.)authority cannot be established through mere rumor o
r general reputation 4.)general authority is not equal to unlimited authority
5.
)that every authority must find its ultimate source in some act or omission by t
he principal in assuming that there is authority, a person has to be very cautio
us note: that the agent cannot enlarge or extend his authority without the concu
rrence of the principal important provisions: art 1162: payment must be made to
the person in whose favor the obligation is constituted, or to another authorize
d to receive it in his name art 1727: the principal shall be liable as to matter
s with respect to which the agent has exceeded his authority only when he ratifi
es the same expressly or by implication
84) RALLOS vs. YANGCO
CASE NUMBER: 6906 DATE: September 27, 1911 PONENTE: Moreland, J. FACTS:
Yangco sent a letter of invitation to rallos. This was an invitation regarding t
he buying and selling of tobacco In the letter, it was stated that collantes wou
ld be his agent and that as agent collantes would be acting in his behalf. This
arrangement was accepted by rallos At one point, rallos gave collantes 218 bundl
es of tobacco, which was sold at a price of 1744 pesos 206 pesos was deducted fo
r charges involving the sale, leaving the sum of 1537 pesos. This amount was not
remitted by collantes to rallos. Apparently, collantes used the money for his p
ersonal gain Rallos was now claiming from yangco the unpaid amount for the sale
of tobacco. Yangco refused, saying that collantes was no longer connected with h
im. Yangco also claims that at the time when the 218 bundles of tobacco was give
n to collantes, the latter was no longer acting as his factor.
Page 30

This then forced rallos to file a collection case. The lower court ruled in favo
r of rallos.
ISSUE: Should yangco still be liable for the acts of collantes, considering that
collantes was no longer his agent at the time of the transaction? RULING: YES!!
Yangco is still liable
Yangco did not even inform rallos that collantes was no
longer his agent. Furthermore, yangco advertised collantes to be his agent, he s
hould have given rallos timely notice that he had already severed ties with coll
antes. The negligence of yangco to give timely notice to rallos, makes him liabl
e for the acts of collantes.
It was the duty of yangco to notify rallos regardin
g the severed relation with collantes.
85) MACKE vs. CAMPS
CASE NUMBER: G.R. No. 2962 DATE: 27 February 1907 PONENTE: CARSON, J.
FACTS: The plaintiffs are partners doing business under the firm name of Macke,
Chandler & Company, allege that during the months of February and March, 1905, t
hey sold to the defendant and delivered at his place of business, known as the "
Washington Cafe," various bills of goods amounting to P351.50.
The plaintiffs fu
rther alleged that the defendant has only paid on account of said accounts the s
um of P174; that there is still due sum of P177.50; that before instituting this
action they made demand for the payment but the defendant had failed and refuse
d to pay. The plaintiffs, testified that on the order of one Ricardo Flores, who
represented himself to be agent of the defendant, he shipped the said goods to
the defendants at the Washington Cafe; that Flores later acknowledged the receip
t of said goods and made various payments amounting in all to P174. On demand fo
r payment of balance of the account Flores informed him that he did not have the
necessary funds on

Page 31

hand, and that he would have to wait the return of his principal, the defendant,
who was at that time visiting in the provinces.
The plaintiffs were satisfied a
s to the credit of the defendant and as to the authority of Flores to act as his
agent who was apparently in charge of the business and claiming to be the busin
ess manager of the defendant. A written contract (for the hotel with a bar and r
estaurant business of the defendant) dated May 25, 1904, was introduced in evide
nce to establish the relationship between the defendant and Flores. The defendan
t relies wholly on his contention that the foregoing facts are not sufficient to
establish the fact that he received the goods for which payment is demanded.
ISSUE: WON Flores was managing the business as agent? RULING:
YES, the evidence
is sufficient to sustain a finding that Flores was the agent of the defendant in
the management of the bar of the Washington Cafe with authority to bind the def
endant, his principal, for the payment of the goods mentioned in the complaint.
Lastly, from an examination of the items of the account attached to the complain
t, we are of opinion that Flores was acting within the scope of his authority. I
t is a well settled rule that: One who clothes another apparent authority as his
agent, and holds him out to the public as such, can not be permitted to deny the
authority of such person to act as his agent, to the prejudice of innocent thir
d parties dealing with such person in good faith and in the honest belief that h
e is what he appears to be.

86) JIMENEZ vs. RABOT

CASE NUMBER: G.R. No. L-12579 DATE: July 27, 1918 PONENTE: STREET, J.
FACTS:
It is admitted that the parcel of land in question, together with two oth
er parcels in the same locality originally belonged to the plaintiff (Gregorio J
imenez), having been assigned to him as one of the heirs in the division of the
estate of his father.
Gregorio was staying at Vigan, his property in Alaminos wa
s confided by him to the care of his elder sister Nicolasa Jimenez. On 7 Februar
y 1911 of that year he wrote this sister a letter from Vigan in which he informe
d her that he was pressed for money and requested her to sell one of his parcels
of land and send him the money in order that he might pay his debts. This lette
r contains no description of the land to be sold other than is indicated in the
words "one of my parcels of land" ("uno de mis terrenos"). Acting upon this lett
er Nicolasa approached the defendant Pedro Rabot, and the

Page 32

latter agreed to buy the parcel in question for the sum of P500.
Nicolasa admits
having received this payment of P250 at the time stated; but there is no eviden
ce that she sent any of it to her brother. About one year later Gregorio came do
wn to Alaminos and demanded that his sister should surrender this piece of land
to him, it being then in her possession. She refused upon some pretext. Gregorio
, in conjunction with others of his brothers and sisters, whose properties were
also in the hands of Nicolasa, instituted an action in the Court of First Instan
ce for the purpose of recovering their land from her control. This action was de
cided favorably to the plaintiffs upon August 12, 1913. May 31, 1912, Nicolasa J
imenez executed and delivered to Pedro Rabot a deed purporting to convey to him
the parcel of land which is the subject of this controversy. Pedro Rabot went in
to possession, and the property was found in his hands at the time when final ju
dgment was entered in favor of the plaintiffs in the action above mentioned. It
will thus be seen that Pedro Rabot acquired possession under the deed from Nicol
asa during the pendency of the litigation in which she was defendant.

ISSUE: WON the authority conferred on Nicolasa by the letter of February 7, 1911
, was sufficient to enable her to bind her brother? RULING: YES, under Article 1
713 of the Civil Code it requires that the authority to alienate land shall be c
ontained in an express mandate; while subsection 5 of section 335 of the Code of
Civil Procedure says that the authority of the agent must be in writing and sub
scribed by the party to be charged; as such we are of the opinion that the autho
rity expressed in the letter is a sufficient compliance with both requirements a
nd Nicolasa Jimenez acted within the scope of her authority.
It is a rule that: w
here the owner of real property desires to confer upon an attorney in fact autho
rity to sell the same, it is necessary that the authority should be expressed in
writing; but it is not necessary that the property to be sold should be precise
ly described. It is sufficient if the authority is so expressed as to determine
without doubt the limits of the agents authority. The purpose in giving a power o
f attorney is to substitute the mind and hand of the agent for the mind and hand
of the principal; and if the character and extent of the power is so far define
d as to leave no doubt as to the limits within which the agent is authorized to
act, and he acts within those limits, the principal cannot question the validity
of his act.

87) LINAN VS. PUNO

CASE NUMBER: G.R. No. L-9608 DATE: August 7, 1915 PONENTE: Johnson, J.
FACTS: 1) Linan was the owner of a certain parcel of subject land. He executed a
document, which conferred upon the Puno the power, duties and obligations to ad
minister the interest Linan including to purchase, sell, collect and pay, as well
as sue and be sued before any authority, appear before the courts of justice an
d administrative officers in any proceeding or business concerning the good admi
nistration and advancement of Linans said interests, and may, in necessary cases,
appoint attorneys at law or attorneys in fact to represent him. 2) The meaning,
purport, and power conferred by this document constitute the very gist of the pr
esent action. 3) Defendant Puno, for the sum of P800, sold and delivered said pa
rcel of land to the other defendants. The plaintiff alleges that the said docume
nt (Exhibit A) did not confer upon the defendant Puno the power to sell the land
and prayed that the sale be set aside; that the land be returned to him, togeth
er with damages.
Page 33

ISSUE: Did the document (Exhibit A)give Puno authority to sell the land? RULING:
1) Contracts of agency as well as general powers of attorney must be interprete
d in accordance with the language used by the parties. The real intention of the
parties is primarily to be determined from the language used. The intention is
to be gathered from the whole instrument. In case of doubt resort must be had to
the situation, surroundings and relations of the parties. The intention of the
parties must be sustained rather than defeated. If the contract be open to two c
onstructions, one of which would uphold while the other would overthrow it, the
former is to be chosen. The acts of the parties will be presumed to have been do
ne in conformity with and not contrary to the intent of the contract. 2) The low
er court held that the "only power conferred was the power to administer." Readi
ng the contract we find it says that the plaintiff "I confer ... power ... that
... he may administer ... purchase, sell, collect and pay ... in any proceeding
or business concerning the good administration and advancement of my said intere
sts." The words "administer, purchase, sell," etc., seem to be used coordinately
. Each has equal force with the other. There seems to be no good reason for sayi
ng that Puno had authority to administer and not to sell when "to sell" was as a
dvantageous to the plaintiff in the administration of his affairs as "to adminis
ter." 3) To hold that the power was "to administer" only when the power "to sell
" was equally conferred would be to give to special words of the contract a spec
ial and limited meaning to the exclusion of other general words of equal import.
4) The record contains no allegation on proof that Puno acted in bad faith or f
raudulently in selling the land. It will be presumed that he acted in good faith
and in accordance with his power as he understood it. That his interpretation o
f his power, as gathered from the contract (Exhibit A), is tenable cannot, we be
lieve, be successfully denied. Neither have we overlooked the fact in the brief
of the appellants that the plaintiff has not returned, nor offered to return, no
r indicated a willingness to return, the purchase price. (Art. 1308 of the Civil
Code; Manikis vs. Blas, No. 7585.). Disposition: In view of all the foregoing,
we are of the opinion that the lower court committed the error complained of in
the second assignment, and, without discussing the other assignments of error, w
e are of the opinion, and so hold, that the judgment of the lower court should b
e and is hereby revoked and that the appellants should be relieved from all liab
ility under the complaint. Without any finding as to costs, it is so ordered.
88) KATIGBAK vs. TAI HING CO.
CASE NUMBER: G.R. No. L-29917 DATE: December 29, 1928 FACTS: 1) Gabino Barreto P
o Ejap, as attorney-in-fact of Po Tecsi, sold in favor of Jose M. Katigbak the s
ubject land; after said sale, Po Tecsi leased the property sold, from Gabino Bar
reto Po Ejap, who administered it in the name of Jose M. Katigbak, at a rental o
f P1,500 per month, payable in advance, leaving unpaid the rents accrued from th
at date until his death which occurred on November 26, 1926, having paid the acc
rued rents up to October 22, 1925; 2) from November 26, 1926, the defendants Po
Sun Suy and Po Ching leased said land for the sum of P1,500 per month; on Februa
ry 11, 1927, Po Sun Suy was appointed administrator of the estate of his father
Po Tecsi, and filed with the court an inventory of said estate including the lan
d in question; and on May 23, 1927, Jose M. Katigbak sold PONENTE: Villareal, J.
Page 34

the same property to Po Sun Boo. 3) Take note that all these transfers happened
even though the power of attorney was not registered in the Registry of deeds. I
SSUE: Can the Principal be bound by the acts of the agent even though the power
of attorney is not registered the Registry of deeds? RULING: YES 1) Inasmuch as
in accordance with section 39 of said Act No. 496, Every applicant receiving a ce
rtificate of title in pursuance of a decree of registration, and every subsequen
t purchaser of registered land who takes a certificate of title for value in goo
d faith, shall hold the same free of all incumbrance except noted on said certif
icate, every document which in any manner affects the registered land is ineffect
ive unless it is recorded in the registry of deeds. But such inefficacy only ref
ers to third persons who, in good faith, may have acquired some right to the reg
istered land. 2) While it is true that a power of attorney not recorded in the r
egistry of deeds is ineffective in order than an agent or attorney-in-fact may v
alidly perform acts in the name of his principal, and that any act performed by
the agent by virtue of said with respect to the land is ineffective against a th
ird person who, in good faith, may have acquired a right thereto, it does, howev
er, bind the principal to acknowledge the acts performed by his attorney-in-fact
regarding said property (sec. 50, Act No. 496).
3) In the present case, while it is true that the non-registration of the power
of attorney executed by Po Tecsi in favor of his brother Gabino Barreto Po Ejap
prevents the sale made by the latter of the litigated land in favor of Jose M. K
atigbak from being recorded in the registry of deeds, it is not ineffective to c
ompel Tecsi to acknowledge said sale. 4) From the fact that said power and sale
were not recorded in the registry of deeds, and from the omission of any mention
in the deed of sale of the mortgage lien in favor of Antonio M. H. Limjenco, an
d the lease of a part of said land in favor of Uy Chia, the appellants deduce th
at said sale is fraudulent.
5) The record contains many indication that Po Tecsi was not unaware of said sal
e. His several letters complaining of the pressing demands of his brother Gabino
Barreto Po Ejap to send him the rents of the land, his promises to send them to
him, and the remittance of the same were a tacit acknowledgment that he occupie
d the land in question no longer as an owner but only as lessee.
89) DANONA vs. BRIMO & CO.
CASE NUMBER: G.R. No. 15823 DATE: September 12, 1921 PONENTE: JOHNSON, J.:
Danon was employed byHolland American Oil Co thru its manager, Antonio A.
FACTS:
Brimo,to look for a purchaser of its factoryfor the sum of P1,200,000, payable
in cash; Brimopromised to pay the Danon, as compensation for his services, a com
mission of five per cent on the said sum of P1,200,000, if the sale was consumma
ted, or if he should find a purchaser ready, able and willing to buy said factor
y for the said sum of P1,200,000;
No definite period of time was fixed where Dan
on should effect the sale. It seems that another broker, Sellner, was also
Page 35

negotiating the sale, or trying to find a purchaser for the same property and th
at the plaintiff was informed of the fact either by Brimo himself or by someone
else; at least, it is probable that Dano was aware that he was not alone in the
field, and his whole effort was to forestall his competitor by being the first t
o find a purchaser and effect the sale.
Danon found such a purchaser, but Brimo
refused to sell the said factory without any justifiable motive or reason theref
or and without having previously notified Danon of its desistance or variation i
n the price and terms of the sale. RTC ruled in favor of Danon
CA affirmed RTCs r
uling ISSUE: Was Danon as broker entitled to payment of his commission? RULING:
NO The broker must be the efficient agent or the procuring cause of sale. The me
ans employed by him and his efforts must result in the sale. He must find the pu
rchaser, and the sale must proceed from his efforts acting as broker. Under the
proofs in this case, the most that can be said as to what the plaintiff had acco
mplished is, that he had found a person who might have bought the defendant s fa
ctory if the defendant had not sold it to someone else. The evidence does not sh
ow that the Santa Ana Oil Mill had definitely decided to buy the property in que
stion at the fixed price of P1,200,000. The board of directors of said corporati
on had not resolved to purchase said property; and even if its president could l
egally make the purchase without previous formal authorization of the board of d
irectors, yet said president does not pretend that he had definitely and formall
y agreed to buy the factory in question on behalf of his corporation at the pric
e stated. In all the cases, under all and varying forms of expression, the funda
mental and correct doctrine, is, that the duty assumed by the broker is to bring
the minds of the buyer and seller to an agreement for a sale, and the price and
terms on which it is to be made, and until that is done his right to commission
s does not accrue. It follows, as a necessary deduction from the established rul
e, that a broker is never entitled to commissions for unsuccessful efforts. The
risk of a failure is wholly his. The undertaking to procure a purchaser requires
of the party so undertaking, not simply to name or introduce a person who may b
e willing to make any sort of contract in reference to the property, but to prod
uce a party capable, and who ultimately becomes the purchaser. Where no time for
the continuance of the contract is fixed by its terms either party is at libert
y to terminate it at will , subject only to the ordinary requirements of good fa
ith. Usually the broker is entitled to a fair and reasonable opportunity to perf
orm his obligation, subject of course to the right of the seller to sell indepen
dently. But having been granted him, the right of the principal to terminate his
authority is absolute and unrestricted, except only that he may not do it in ba
d faith, and as a mere device to escape the payment of the broker s commissions.
90) INFANTE vs. CUNANAN
CASE NUMBER: G.R. No. L-5180 DATE: August 31, 1953 FACTS: 1. 2. Consejo Infante
owns of two parcels of land with a house built thereon in Manila Infante contrac
ted the services of Jose Cunanan and Juan Mijares, to sell the property for a pr
ice of P30,000 subject to the condition that the purchaser would assume the mort
gage existing thereon in the favor of the Rehabilitation Finance Corporation. In
fante agreed to pay them a commission of 5% on the purchase price plus whatever
overprice they may obtain for PONENTE: BAUTISTA ANGELO, J.
3.
Page 36

4.
5. 6.
the property. Cunanan & Mijares found one Pio S. Noche who was willing to buy th
e property under the terms agreed upon with Infante but when they introduced him
to Infante the latter informed them that she was no longer interested in sellin
g the property and succeeded in making them sign a document stating therein that
the written authority she had given them was already can-celled. However, Infan
tedealt directly with Pio S. Noche selling to him the property for P31,000. Upon
learning this transaction, Cunanan & Mijares demanded from Infante the payment
of their commission, but she refused and so they brought the present action.
ISSUE: Were Cunanan and Mijares as brokers entitled to payment of their commissi
on? RULING: YES 1. After infante had given the written authority to respondents
to sell her land for the sum of P30,000, respondents found a buyer in the person
of one Pio S. Noche who was willing to buy the property under the terms agreed
upon, and this matter was immediately brought to the knowledge of Infante. Infan
te, perhaps by way of strategem, advised respondents that she was no longer inte
rested in the deal and was able to prevail upon them to sign a document agreeing
to the cancellation of the written authority. Infante had changed her mind even
if respondents had found a buyer who was willing to close the deal, is a matter
that would not give rise to a legal consequence if respondents agree to call of
f the transaction in deference to the request of the petitioner. But the situati
on varies if one of the parties takes advantage of the benevolence of the other
and acts in a manner that would promote his own selfish interest. This act is un
fair as would amount to bad faith. This act cannot be sanctioned without accordi
ng to the party prejudiced the reward which is due him. This is the situation in
which respondents were placed by petitioner. Infante took advantage of the serv
ices rendered by respondents, but believing that she could evade payment of thei
r commission, she made use of a ruse by inducing them to sign the deed of cancel
lation Exhibit 1. This act of subversion cannot be sanctioned and cannot serve a
s basis for petitioner to escape payment of the commission agreed upon.
2.
3.
4.
91) MANOTOK BROTHERS, INC. VS. COURT OF APPEALS
CASE NUMBER: G.R. No. 94753 DATE: April 7, 1993. PONENTE: Campos Jr., J.
FACTS:
The petitioner in this case is the owner of a parcel of land and building
which was leased to the City of Manila and was used by Claro M. Recto High scho
ol. Respondent here, Salvador Saligumba was the agent of the petitioner who nego
tiated with the city for the sale of the said property.
Page 37

Accordingly as such, he was given letters of authority that allowed him to negot
iate the property at a price not less than 425k
He was to get a 5% commission fr
om the said sale His authority was extended several times, the last one lasting
for 180 days from November 16, 1987, also it was at this time that petitioner al
lowed the sale to be consummated for the amount of 410k. However, it was only on
April 26, 1968, passed Ordinance No. 6603, appropriating the sum of P410,816.00
for the purchase of the property which private respondent was authorized to sel
l. Said ordinance however, was signed by the City Mayor only on May 17, 1968, on
e hundred eighty three (183) days after the last letter of authorization. On Jan
uary 14, 1969, the parties signed the deed of sale of the subject property. The
initial payment of P200,000.00 having been made, the purchase price was fully sa
tisfied with a second payment on April 8, 1969 by a check in the amount of P210,
816.00.
Respondent now asks that the 5% commission be paid to him in the amount
of P20,554.50. But petitioners refused to pay up, arguing that:
(1) Private resp
ondent would be entitled to a commission only if the sale was consummated and th
e price paid within the period given in the respective letters of authority; (2)
Private respondent was not the person responsible for the negotiation and consu
mmation of the sale; instead it was Filomeno E. Huelgas, the PTA president for 1
967-1968 of the Claro M. Recto High School. Petitioner presented as its witnesse
s Filomeno Huelgas and the petitioner s President, Rufino Manotok.
Huelgas testi
fied to the effect that after being inducted as PTA president in August, 1967 he
followed up the sale from the start with Councilor Magsalin until after it was
approved by the Mayor on May 17, 1968
He also said that he came to know Rufino M
anotok only in August, 1968, at which meeting the latter told him that he would
be given a "gratification" in the amount of P20,000.00 if the sale was expedited
. Petitioners contention that as a broker, private respondent s job is to bring t
ogether the parties to a transaction.
Accordingly, if the broker does not succee
d in bringing the minds of the purchaser and the vendor to an agreement with res
pect to the sale, he is not entitled to a commission. The Court ruled in favor o
f the respondent, with the CA affirming the RTC decision. Hence the appeal
ISSUE: is the private respondent entitled to the 5% commission? -> Yes RULING: C
ourt says: it is to be noted that the ordinance was approved on April 26, 1968 w
hen private respondent s authorization was still in force.
Moreover, the approva
l by the City Mayor came only three days after the expiration of private respond
ent s authority.
It is also worth emphasizing that from the records, the only pa
rty given a written authority by petitioner to negotiate the sale from July 5, 1
966 to May 14, 1968 was private respondent.
When there is a close, proximate and
causal connection between the agent s efforts and labor and the principal s sal
e of his property, the agent is entitled to a commission.
Private respondent is
the efficient procuring cause for without his efforts, the municipality would no
t have anything to pass and the Mayor would not have anything to approve.
The SC
agrees with respondent Court that the City of Manila ultimately became the purc
haser of petitioner s property mainly through the efforts of private respondent.
Disposition: Decision of the RTC is affirmed.
92) DOMINGO VS. DOMINGO
CASE NUMBER: GR No. L-30573 DATE: Oct. 29, 1971 PONENTE: Makasiar, J.
FACTS:

Vicente Domingo granted to Gregorio Domingo, a real estate broker, the ex

clusive agency to sell his Lot No. 883, Piedad Estate in a document.
Page 38

thelot has an area of 88,477 sq. m.

According to the document, said lot must be
sold for P2 per sq. m. Accordingly, Gregorio is entitled to 5% commission on the
total price if the property is sold by Vicente or by anyone else during the 30day duration of the agency or by Vicente within 3 months from the termination of
the agency to a purchaser to whom it was submitted by Gregorio during the effec
tivity of the agency with notice to Vicente.
This contract is in triplicate with
the original and another copy being retained by Gregorio.
The last copy was giv
en to Vicente. Subsequently, Gregorio authorized Teofilo Purisima to look for a
buyer without notifying Vicente. Gregorio promised Teofilo of the 5% commission.
Teofilo then introduced Oscar de Leon to Gregorio as a prospective buyer.
Oscar
submitted a written offer which was very much lower than the P2 per sq. m. pric
e. Vicente directed Gregorio to tell Oscar to raise his offer.
After several con
ferences between the parties, Oscar raised his offer to P1.20 per sq. m. or P109
k in total to which Vicente agreed to said offer.
Upon Vicentes demand, Oscar iss
ued a P1,000 check to him as earnest money. Vicente, then, advanced P300 to Greg
orio. Subsequently, Vicente asked for an additional P1,000 as earnest money, whi
ch Oscar promised to deliver to Vicente. The written agreement, Exhibit C, betwe
en the parties was amended.
Oscar will vacate on or about September 15, 1956 his
house and lot at Denver St., QC, which is part of the purchase price later on,
it was again amended to state that Oscar will vacate his house and lot on Dec.1,
1956 because his wife was pregnant at that time.
Oscar gave Gregorio P1,000 as
a gift or propina for succeeding in persuading Vicente to sell his lot at P1.20
per sq. m. Gregorio did not disclose said gift or propina to Vicente.
Oscar did
not pay Vicente the additional P1,000 Vicente asked from him as earnest money. T
he deed of sale was not executed since Oscar gave up on the negotiation when he
did not receive his money from his brother in the US, which he communicated to G
regorio. Gregorio did not see Oscar for several weeks thus sensing that somethin
g fishy might be going on.
He went to Vicentes house where he read a portion of t
he agreement to the effect that Vicente was still willing to pay him 5% commissi
on, P5,450.
Gregorio went to the Register of Deeds of QC, where he discovered th
at a Deed of sale was executed by Amparo de Leon, Oscars wife, over their house a
nd lot in favor of Vicente. After discovering that Vicente sold his lot to Oscars
wife, Gregorio demanded in writing the payment of his commission. Gregorio also
conferred with Oscar who told him that: Vicente went to him and asked him to el
iminate Gregorio in the transaction and that he would sell his property to him f
or P104k.
In his reply, Vicente stated that Gregorio is not entitled to the 5% c
ommission: Since he sold the property not to Gregorios buyer (Oscar de Leon) but
to another buyer (Amparo Diaz) who is the wife of Oscar de Leon.
CA said: the ex
clusive agency contract is genuine. The sale of the lot to Amparo de Leon is pra
ctically a sale to Oscar. ISSUE: Does Gregorios act of accepting the gift or prop
ina from Oscar constitute fraud which would cause the forfeiture of his 5%commis
sion? -> Yes RULING: Gregorio Domingo as the broker received a gift or propina f
rom the prospective buyer Oscar de Leon, without the knowledge and consent of th
e principal, Vicente.
His acceptance of said substantial monetary gift corrupted
his duty to serve the interests only of his principal and undermined his loyalt
y to his principal, who gave him partial advance of P3000 on his commission. As
a consequence, instead of exerting his best to persuade his prospective buyer to
purchase the property on the most advantageous terms desired by his principal,
Gregorio Domingo, succeeded in persuading his principal to accept the counter-of
fer of the prospective buyer to purchase the property at P1.20 per sq. m.
The du
ties and liabilities of a broker to his employer are essentially those which an
agent owes to his principal.
Page 39

An agent who takes a secret profit in the nature of a bonus, gratuity or persona
l benefit from the vendee, without revealing the same to his principal, the vend
or, is guilty of a breach of his loyalty to the principal and forfeits his right
to collect the commission from his principal, even if the principal does not su
ffer any injury by reason of such breach of fidelity, or that he obtained better
results or that the agency is a gratuitous one, or that usage or custom allows
it.
This is to prevent the possibility of any wrong not to remedy or repair an a
ctual damage agent thereby assumes a position wholly inconsistent with that of b
eing an agent for his principal, who has a right to treat him, insofar as his co
mmission is concerned, as if no agency had existed
The fact that the principal m
ay have been benefited by the valuable services of the said agent does not excul
pate the agent who has only himself to blame for such a result by reason of his
treachery or perfidy.
As a necessary consequence of such breach of trust, Gregor
io Domingo must forfeit his right to the commission and must return the part of
the commission he received from his principal. Decisive Provisions Article 1891
and 1909 CC Article 1891 consists in changing the phrase "to pay" to "to deliver
", which latter term is more comprehensive than the former.
Paragraph 2 of Artic
le 1891 is a new addition designed to stress the highest loyalty that is require
d to an agent condemning as void any stipulation exempting the agent from the du
ty and liability imposed on him in paragraph one thereof. Article 1909 demands t
he utmost good faith, fidelity, honesty, candor and fairness on the part of the
agent, the real estate broker in this case, to his principal, the vendor.
The la
w imposes upon the agent the absolute obligation to make a full disclosure or co
mplete account to his principal of all his transactions and other material facts
relevant to the agency, so much so that the law as amended does not countenance
any stipulation exempting the agent from such an obligation and considers such
an exemption as void. Situations where the duty mandated by Art 1891 does not ap
ply: Agent or broker acted only as a middleman with the task of merely bringing
together the vendor and vendee, who themselves thereafter will negotiate on the
terms and conditions of the transaction.
Agent or broker had informed the princi
pal of the gift or bonus or profit he received from the purchaser and his princi
pal did not object Teofilo Purisimas entitlement to his share in the 5% commissio
n Teofilo can only recover from Gregorio his share of whatever amounts Gregorio
Domingo received by virtue of the transaction as his sub-agency contract was wit
h Gregorio Domingo alone and not with Vicente Domingo, who was not even aware of
such sub-agency.
Since Gregorio already received a total of P1,300 from Oscar a
nd Vicente, P650 of which should be paid by Gregorio to Teofilo. Disposition: CA
decision reversed.
93) SIASAT vs. INTERMEDIATE APPELLATE COURT
CASE NUMBER: G.R. No. L-67889 DATE: October 10, 1985 PONENTE: GUTIERREZ, JR., J.
FACTS: Teresita Nacianceno succeeded in convincing officials of the Department o
f Education and Culture to purchase
Page 40

without public bidding, one million pesos worth of national flags for the use of
public schools throughout the country. Nancianceno was able to expedite the app
roval of the purchase. All the legal requirements had been complied with, except
the release of the purchase orders. She was informed by the Chief of the Budget
Division of the Department that the purchase orders could not be released unles
s a formal offer to deliver the flags was first submitted for approval She conta
cted the owners of the United Flag Industry. Mr. Primitivo Siasat, owner and gen
eral manager of United Flag Industry came up with a document which read: Mrs. Te
ssie Nacianceno, This is to formalize our agreement for you to represent United
Flag Industry to deal with any entity or organization, private or government in
connection with the marketing of our products-flags and all its accessories. For
your service, you will be entitled to a commission of thirty (30%) percent. Sig
ned Mr. Primitive Siasat Owner and Gen. Manager The first delivery of 7,933 flag
s was made by the United Flag Industry. Then, Nanciancenos authority to represent
the United Flag Industry was revoked by Primitivo Siasat on the ground that she
was not authorized to sell 16, 666 Philippine flags to the Department. Nancianc
eno said that for the first delivery, United Flag Industry tendered the amount o
f P23,900.00 or five percent (5%) of the amount received as payment of her commi
ssion. She refused to accept the said amount insisting on the 30% commission agr
eed upon. She later learned that petitioner Siasat had already received payment
for the second delivery of 7,833 flags. When she confronted the petitioners, the
y vehemently denied receipt of the payment, at the same time claimed that the re
spondent had no participation whatsoever with regard to the second delivery of f
lags and that the agency had already been revoked. Nancianceno filed an action i
n the Court of First Instance of Manila to recover the following commissions: 25
%, as balance on the first delivery and 30%, on the second delivery. The trial c
ourt decided in favor of the respondent. The decision was affirmed in toto by th
e Intermediate Appellate Court.

ISSUE: 1. Did Nancianceno have the capacity to represent United Flag in the tran
saction with the Department? 2. Did the revocation of agency foreclose the respo
ndent s claim of 30% commission on the second transaction? 3. Was the award for
attorneys fees and moral damages proper? RULING: 1. YES, she had the capacity to
represent United Flag In fact, she was a general agent. There are several kinds
of agents. An agent may be (1) universal: (2) general, or (3) special. A univers
al; agent is one authorized to do all acts for his principal which can lawfully
be delegated to an agent. So far as such a condition is possible, such an agent
may be said to have universal authority.
A general agent is one authorized to do all acts pertaining to a business of a c
ertain kind or at a particular place, or all acts pertaining to a business of a
particular class or series. He has usually authority either expressly conferred
in general terms or in effect made general by the usages, customs or nature of t
he business which he is authorized to transact. An agent, therefore, who is empo
wered to transact all the business of his principal of a particular kind or in a
particular place, would, for this reason, be ordinarily deemed a general agent.
A special agent is one authorized to do some particular act or to act upon some
particular occasion. lie acts
Page 41

usually in accordance with specific instructions or under limitations necessaril

y implied from the nature of the act to be done. By the way general words were e
mployed in the agreement, no restrictions were intended as to the manner the age
ncy 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 negotiati
ons leading to, and the execution of, a contract of sale of petitioners merchan
dise with any entity or organization. There was nothing to prevent the petitione
rs from stating in the contract of agency that the respondent could represent th
em only in the Visayas or to state that the Department of Education and Culture
and the Department of National Defense, which alone would need a million pesos w
orth of flags, are outside the scope of the agency.
2.
NO, the revocation did not foreclose the respondents claime of 30% commission on
the second transaction. - The revocation of agency could not prevent the Nancian
ceno from earning her commission because the contract of sale had been already p
erfected and partly executed. - The principal cannot deprive his agent of the co
mmission agreed upon by cancelling the agency and, thereafter, dealing directly
with the buyer. NO, the award was not proper. - Moral damages: To support a judg
ment for damages, facts which justify the inference of a lack or absence of good
faith must be alleged and proven. There is no evidence on record from which to
conclude that the revocation of the agency was deliberately effected by the peti
tioners to avoid payment of the respondent s commission. - Attorneys fees: For on
e thing, the respondent did not come to court with completely clean hands. For a
nother, the petitioners apparently believed they could legally revoke the agency
in the manner they did and deal directly with education officials handling the
purchase of Philippine flags. They had reason to sincerely believe they did not
have to pay a commission for the second delivery of flags.
3.
The decision of the respondent court was MODIFIED. The petitioners were ordered
to pay the respondent the amount of ONE HUNDRED FOURTY THOUSAND NINE HUNDRED AND
NINETY FOUR PESOS (P140,994.00) as her commission on the second delivery of fla
gs with legal interest from the date of the trial court s decision. *The decisio
n was modified to exclude the respondents right to collect 25% from the first del
ivery. The demand letter of the respondent s lawyer dated November 13, 1984 aske
d petitioner Siasat only for the 30% commission due from the second delivery. Th
e fact that the respondent demanded only the commission on the second delivery w
ithout reference to the alleged unpaid balance which was only slightly less than
the amount claimed can only mean that the commission on the first delivery was
already fully paid.
94) GERMAN & CO. vs. DONALDSON, SIM, & CO.
CASE NUMBER: G.R. No. L-439 DATE: November 11, 1901 PONENTE: LADD, J
Page 42

FACTS:
A general power for suits was executed in Manila in favor of Fernando Kam
merzell, a German national. It was purported to be a substitution in favor of se
veral attorneys of powers conferred upon Kammerzell in an instrument executed in
Berlin, Germany by Max Leonard Tornow, the sole owner of the business carried o
n in Berlin and Manila under the name of Germann & Co.
Kammerzell, by virtue of
the general power for suits, filed an action against Donaldson, Sim & Co. to rec
over a sum claimed to be due for freight under a charter party.
The Court of Fir
st Instance of Manila ruled in favor of Germann & Co. ISSUE: 1. Is the original
power invalid under article 1280, No. 5, of the Civil Code, which provides that
powers for suits must be contained in a public instrument? 2. RULING: 1. No, bec
ause no claim is made that the document was not executed with the formalities re
quired by the German law in the case of such an instrument. The Court saw no rea
son why the general principle that the formal validity of contracts is to be tes
ted by the laws of the country where they are executed should not apply. Yes, be
cause the instrument contains an explicit grant of a power broad enough to autho
rize the bringing of the present action, even assuming the applicability of the
domestic law as claimed by the defendants. - By this instrument Tornow constitut
es Kammerzell his "true and lawful attorney with full power to enter the firm na
me of Germann & Co. in the Commercial Registry of the city of Manila as a branch
of the house of Germann & Co. in Berlin, it being the purpose of this power to
invest said attorney will full legal powers and authorization to direct and admi
nister in the city of Manila for us and in our name a branch of our general comm
ercial business of important and exportation, for which purpose he may make cont
racts of lease and employ suitable assistants, as well as sign every kind of doc
uments, accounts, and obligations connected with the business which may be neces
sary, take charge in general of the receipt and delivery of merchandise connecte
d with the business, sign all receipts for sums of money and collect them and ex
act their payment by legal means, and in general execute all the acts and things
necessary for the perfect carrying on of the business committed to his charge i
n the same manner as we could do ourselves if we were present in the same p lace
. - The Court did not consider the institution of the suit to collect a claim acc
ruing in the ordinary course of the plaintiff s business, as properly belonging
to the class of acts described in article 1713 of the Civil Code as acts "of str
ict ownership. - It is necessarily a part of the mere administration of such a bu
siness as that described in the instrument in question and only incidentally, if
at all, involving a power to dispose of the title to property. Can the original
power be construed as conferring upon Kammerzell authority to institute or defen
d suits?
2.
The judgment was affirmed.
95) Municipal Council of Iloilo vs. Evangelista, 55 Phil. 290
CASE NUMBER: DATE:
Page 43

PONENTE: FACTS: ISSUE: RULING:

96) CABALLERO VS. DEIPARINE
CASE NUMBER: L-39059 DATE: September 30, 1974 PONENTE: Esguerra, J.
Page 44

FACTS: 1. This involves a dispute over a parcel of land and the acts committed b
y the plaintiff lawyer which were not intended by his client, the plaintiff. 2.
That during the lifetime of Bucao she with her second husband acquired by joint
purchase a parcel of land from the Talisay-Minglanilla Estate 3. That in 1932 Bu
cao and Tomas executed jointly a notarial instrument identified as Annex "B" whe
rein they acknowledged that Antonio Caballero had contributed the amount therein
stated for the purchase of the property and they sold 1/4 of the lot to him; wh
en the title to said lot was issued, VicentaBucao and Tomas Raga held it in trus
t for their co-owner. 4. That the portion mentioned as sold to plaintiff Antonio
Caballero remained unsegregated from Lot 2072 and the deed of sale, Annex "B" o
f the Complaint; nor had it been registered in the Register of Deeds; but he, ha
d been in occupation of a portion of this lot peacefully until the present. 5. B
ucaosold her undivided 1/2 of the above parcel to her co-owner, Tomas Raga. 6. D
efendants Olimpio Raga, Adriano Raga, Magdalena Raga and Tomas Raga executed an
instrument known as "Declaration and confirmation of sale" without the participa
tion of plaintiffs Antonio Caballero and Concordia Caballero, wherein they state
d that they are the heirs of VicentaBucao of the 1/2 of the property to Tomas Ra
ga, a certified true copy of which document is identified as Annex "E" in the Co
mplaint. 7. Alma Deiparine acquired in good faith, with a just title and for a v
aluable consideration, the whole of Lot 2072 from Tomas Raga as per deed of abso
lute sale identified as Annex "C" in the complaint which cancelled Transfer Cert
ificate of Title No. RT-2482 (T-17232) and the issuance in her name of Transfer
Certificate of Title No. 9934 on April 1, 1963, a certified true copy of which i
s identified as Annex "D" in the complaint; 8. That defendant Alma Deiparine cam
e to know only of Annex "B" when it was presented by plaintiff Antonio Caballero
at the trial of an ejectment case filed by the former in the Municipal Court of
Talisay. 9. This case was decided in favor of Antonio Caballero but the decisio
n was appealed by Alma Deiparine to the Court of First Instance of Cebu which af
firmed the decision for Caballero. The case is now in the Court of Appeals on ap
peal by Alma Deiparine. 10. Caballero and the defendant parties entered into a c
ompromise agreement. And the lawyer of Caballero admitted to certain facts witho
ut the authority of his client, Caballero. ISSUE: Is the compromise valid, consi
dering that the lawyer admitted to facts which were not authorized by his client
to make? No RULING: 1. A reading of the stipulation of facts convinced the cour
t that it is a compromise agreement of the parties. The stipulation concludes wi
th this prayer: "WHEREFORE, it is most respectfully prayed that the foregoing St
ipulation of Facts be approved and that a decision be handed down on the legal i
ssues submitted on the basis of said Stipulation of Facts." Apparently it is int
ended to terminate the case. 2. Attorneys have authority to bind their clients i
n any case by any agreement in relation thereto made in writing, and in taking a
ppeals, and in all matters of ordinary judicial procedure. But they cannot, with
out special authority, compromise their client s litigation, or receive anything
in discharge of a client s claim but the full amount in cash 3. It may be true
that during the pre-trial hearing held on February 3, 1968, the parties concerne
d agreed to execute a stipulation of facts but it does not mean that the respect
ive counsels of the contending parties can prepare a stipulation of facts the co
ntents of which is prejudicial to the interest of their clients and sign it them
selves without the intervention of their clients. 4. Counsel for plaintiffs-appe
llants, Atty. Melecio C. Guba, agreed that defendant-appellee Alma Deiparine bou
ght the land in question in good faith and for a valuable consideration; that du
ring the lifetime of their mother VicentaBucao, she, with the conformity of her
husband, sold her undivided of the land in question to her co-owner and son, Tom
as Raga. 5. All these adverse facts were made the basis of the appealed decision
against the plaintiffs. No further evidence was presented as there was no heari
ng. 6. The attorney for the plaintiffs in making such admission went beyond the
scope of his authority as counsel and practically gave away the plaintiffs case
. The admission does not refer to a matter of judicial procedure related to the
enforcement of the remedy. It related to the very subject matter of the cause of
action, or to a matter on which

Page 45

7. 8.
the client alone can make the admission binding on him. The broad implied or app
arent powers of an attorney with respect to the conduct or control of litigation
are, however, limited to matters which relate only to the procedure or remedy.
The employment of itself confers upon the attorney no implied or power or author
ity over the subject matter of the cause of action or defense; and, unless the a
ttorney has expressly been granted authority with respect thereto, the power to
deal with or surrender these matters is regarded as remaining exclusively in the
client.
97) PHILIPPINE NATIONAL BANK vs. STA. MARIA
Page 46

CASE NUMBER: G.R. No. L-24765 DATE: August 29, 1969

PONENTE: TEEHANKEE, J.
FACTS:
In this appeal certified to this Court by the Court of Appeals as involvi
ng purely legal issues, we hold that a special power of attorney to mortgage rea
l estate is limited to such authority to mortgage and does not bind the grantor
personally to other obligations contracted by the grantee, in the absence of any
ratification or other similar act that would estop the grantor from questioning
or disowning such other obligations contracted by the grantee.
Plaintiff bank f
iled this action on February 10, 1961 against defendant Maximo Sta. Maria and hi
s six brothers and sisters, defendants-appellants, Valeriana, Emeteria, Teofilo,
Quintin, Rosario and Leonila, all surnamed Sta. Maria, and the Associated Insur
ance & Surety Co., Inc. as surety, for the collection of certain amounts represe
nting unpaid balances on two agricultural sugar crop loans due allegedly from de
fendants. 1 The said sugar crop loans were obtained by defendant Maximo Sta. Mar
ia from plaintiff bank under a special power of attorney, executed in his favor
by his six brothers and sisters, defendants-appellants herein, to mortgage a 16odd hectare parcel of land, jointly owned by all of them.
In addition, Valeriana
Sta. Maria alone also executed in favor of her brother, Maximo, a special power
of attorney to borrow money and mortgage any real estate owned by her.
By virtu
e of the two above powers, Maximo Sta. Maria applied for two separate crop loans
, for the 1952-1953 and 1953-1954 crop years, with plaintiff bank, one in the am
ount of P15,000.00, of which only the sum of P13,216.11 was actually extended by
plaintiff, and the other in the amount of P23,000.00, of which only the sum of
P12,427.57 was actually extended by plaintiff. As security for the two loans, Ma
ximo Sta. Maria executed in his own name in favor of plaintiff bank two chattel
mortgages on the standing crops, guaranteed by surety bonds for the full authori
zed amounts of the loans executed by the Associated Insurance & Surety Co., Inc.
as surety with Maximo Sta. Maria as principal. The records of the crop loan app
lication further disclose that among the securities given by Maximo for the loan
s were a "2nd mortgage on 25.3023 Has. of sugarland, including sugar quota right
s therein" including, the parcel of land jointly owned by Maximo and his six bro
thers and sisters herein for the 1952-1953 crop loan, with the notation that the
bank already held a first mortgage on the same properties for the 1951-1952 cro
p loan of Maximo, and a 3rd mortgage on the same properties for the 1953-1954 cr
op loan. The trial court rendered judgment in favor of plaintiff and against def
endants: condemning the defendant Maximo R. Sta. Maria and his co-defendants Val
eriana, Quintin, Rosario, Emeteria, Teofilo, and Leonila all surnamed Sta. Maria
and the Associated Insurance and Surety Company, Inc., jointly and severally, t
o pay the plaintiff, the Philippine National Bank, Del Carmen Branch the sum of
P8,500.72 and P14,299.79 .
Defendant Maximo Sta. Maria and his surety, defendant
Associated Insurance & Surety Co., Inc. who did not resist the action, did not
appeal the judgment. This appeals been taken by his six brothers and sisters, de
fendantsappellants who reiterate in their brief their main contention in their a
nswer to the complaint that under this special power of attorney, they had not g
iven their brother, Maximo, the authority to borrow money but only to mortgage t
he real estate jointly owned by them; and that if they are liable at all, their
liability should not go beyond the value of the property which they had authoriz
ed to be given as security for the loans obtained by Maximo. In their answer, de
fendants-appellants had further contended that they did not benefit whatsoever f
rom the loans, and that the plaintiff bank s only recourse against them is to fo
reclose on the property which they had authorized Maximo to mortgage. ISSUE: Whe
ther the 6 brothers and sisters are liable for the loan obtained by Maximo. RULI
NG:
The authority granted by defendants-appellants (except Valeriana) unto their
brother, Maximo, was merely to mortgage the property jointly owned by them. The
y did not grant Maximo any authority to contract for any loans in their names an
d behalf. Maximo alone, with Valeriana who authorized him to borrow money, must
answer for said loans and the other defendants-appellants only liability is tha
t the real estate authorized by them to be mortgaged would be subject to foreclo

sure and sale to respond for the obligations contracted by Maximo. But they cann
ot be held personally liable for the payment of such obligations, as erroneously
held by the trial court.
It is not unusual in family and business circles that
one would allow his property or an undivided share in real estate
Page 47

to be mortgaged by another as security, either as an accommodation or for valuab

le consideration, but the grant of such authority does not extend to assuming pe
rsonal liability, much less solidary liability, for any loan secured by the gran
tee in the absence of express authority so given by the grantor.
The outcome mig
ht be different if there had been an express ratification of the loans by defend
ants-appellants or if it had been shown that they had been benefited by the crop
loans so as to put them in estoppel. Quintin Sta. Maria testified that he and h
is co-defendants executed the authority to mortgage "to accommodate (my) brother
Dr. Maximo Sta. Maria ... and because he is my brother, I signed it to accommod
ate him as security for whatever he may apply as loan. Only for that land, we ga
ve him as, security" and that "we brothers did not receive any centavo as benefi
t." The record further shows plaintiff bank itself admitted during the trial tha
t defendants-appellants "did not profit from the loan" and that they "did not re
ceive any money (the loan proceeds) from (Maximo)." No estoppel, therefore, can
be claimed by plaintiff as against defendants-appellants. Valeriana Sta. Maria s
liability to plaintiff. Valeriana stands liable not merely on the mortgage of h
er share in the property, but also for the loans which Maximo had obtained from
plaintiff bank, since she had expressly granted Maximo the authority to incur su
ch loans. The Court hold that Valeriana s liability for the loans secured by Max
imo is not joint and several or solidary as adjudged by the trial court, but onl
y joint, pursuant to the provisions of Article 1207 of the Civil Code that "the
concurrence ... of two or more debtors in one and the same obligation does not i
mply that ... each one of the (debtors) is bound to render entire compliance wit
h the prestation. There is a solidary liability only when the obligation express
ly so states, or when the law or the nature of the obligation requires solidarit
y." It should be noted that in the additional special power of attorney, execute
d by Valeriana, she did not grant Maximo the authority to bind her solidarity wi
th him on any loans he might secure thereunder. WHEREFORE, the judgment of the t
rial court against defendants-appellants Emeteria, Teofilo, Quintin, Rosario and
Leonila, all surnamed Sta. Maria is hereby reversed and set aside, with costs i
n both instances against plaintiff. The judgment against defendant-appellant Val
eriana Sta. Maria is modified in that her liability is held to be joint and not
solidary.

Page 48

98) BA FINANCE CORPORATION vs. COURT OF APPEALS

CASE NUMBER: G.R. No. 94566 DATE: July 3, 1992 PONENTE: MEDIALDEA, J.
FACTS:
On December 17, 1980, Renato Gaytano, doing business under the name Gebbs
International, applied for and was granted a loan with respondent Traders Royal
Bank in the amount of P60,000.00. As security for the payment of said loan, the
Gaytano spouses executed a deed of suretyship whereby they agreed to pay jointl
y and severally to respondent bank the amount of the loan including interests, p
enalty and other bank charges.
In a letter dated December 5, 1980 addressed to r
espondent bank, Philip Wong as credit administrator of BA Finance Corporation fo
r and in behalf of the latter, undertook to guarantee the loan of the Gaytano sp
ouses. Partial payments were made on the loan leaving an unpaid balance in the a
mount of P85,807.25. Since the Gaytano spouses refused to pay their obligation,
respondent bank filed with the trial court complaint for sum of money against th
e Gaytano spouses and petitioner corporation as alternative defendant.
The Gayta
no spouses did not present evidence for their defense. Petitioner corporation, o
n the other hand, raised the defense of lack of authority of its credit administ
rator to bind the corporation. On December 12, 1988, the trial court: judgment i
n favor of plaintiff and against defendants/Gaytano spouses, ordering the latter
to jointly and severally pay the plaintiff the following among others P85,807.2
5 Not satisfied with the decision, respondent bank appealed with the Court of Ap
peals. On March 13, 1990, respondent appellate court rendered judgment modifying
the decision of the trial court ordering the defendants Gaytano spouses and alt
ernative defendant BA Finance Corporation, jointly and severally, to pay the pla
intiff the amount of P85,807.25
Hence this petition was filed with the petitione
r assigning the following errors committed by respondent appellate court: ISSUE:
Whether the plaintiff was guilty of estoppels despite the fact that it never kn
ew of such alledged letter-guaranty. RULING: Persons dealing with an assumed age
nt, whether the assumed agency be a general or special one are bound at their pe
ril, if they would hold the principal liable, to ascertain not only the fact of
agency but also the nature and extent of authority, and in case either is contro
verted, the burden of proof is upon them to establish it (Harry Keeler v. Rodrig
uez, 4 Phil. 19).
that a power of attorney or authority of an agent should not b
e inferred from the use of vague or general words. Guaranty is not presumed, it
must be expressed and cannot be extended beyond its specified limits (Director v
. Sing Juco, 53 Phil. 205).
We find that the said conclusion has no basis in fac
t. Respondent bank had not shown any evidence aside from the testimony of the cr
edit administrator that the disputed transaction of guaranty was in fact entered
into the official records or files of petitioner corporation, which will show n
otice or knowledge on the latter s part and its consequent ratification of the s
aid transaction. In the absence of clear proof, it would be unfair to hold petit
ioner corporation guilty of estoppel in allowing its credit administrator to act
as though the latter had power to guarantee.
ACCORDINGLY, the petition is GRANT
ED and the assailed decision of the respondent appellate court dated March 13, 1
990 is hereby REVERSED and SET ASIDE and another one is rendered dismissing the
complaint for sum of money against BA Finance Corporation.
Page 49

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

CASE NUMBER: 30181 DATE: July 12, 1929 PONENTE: Street, J.
FACTS: 1. Involves a land located on Point Llorente at the mouth of Iloilo River,
near Iloilo City. Mariano de la Rama, Gonzalo Mariano Tanboontien, Sing Juco, an
d Sing Bengco owned this land, in undivided shares. 2. In 1920, the owners of th
e property conveyed it by way of mortgage to the PNB for the purpose of securing
a credit in current account of not exceeding P170,000.00. 3. The subject land w
as subject to frequent flooding due to its low level. In 1921, the Government of
the Philippine Islands was planning extensive harbor improvements in this vicin
ity, requiring extensive dredging by the Bureau of Public Works in the mouth of
said river. 4. This dredging operation requires the Director of Public Works to
find a place of deposit for the dirt and mud taken from the places dredged. 5. A
contract was made between the DPW, representing the Government of the Philippin
e Islands, and the four owners. DPW also required a bond to be supplied by the o
wners in the amount of P150,000.00. This bond was made together with the main co
ntract; one of the signatures of the owner was under the name of Casa Viuda de Ta
n Toco, purporting to be signed by M. de la Rama. 6. The dredging operation was c
onducted in substantial compliance with the agreement; and the amount due from t
he owners was determined and demanded. No payment was made thus an action was in
stituted by the DPW to recover the amount due to the Government under the said c
ontract. a. Defense: government has not complied with the contract; the material
deposited on the land was not enough to raise the level of the land above water
. Defendants asserted that they are not obliged to pay and subsequently sought t
o recover further damages. i. On part of Viuda de Tan Toco: the name Casa Viuda d
e Tan Toco signed under the contract of suretyship by M. de la Rama was signed wi
thout authority. b. Decision: Owners are obliged to pay and that Tan OngSze (wid
ow of Tan Toco) and Viuda de Tan Toco is personally liable upon the contract of
suretyship in case the principal debtors should not satisfy their indebtedness.
ISSUE: Whether or not TanOngSze, Viuda de Tan Toco is liable upon the contract o
f suretyship? RULING: No. Judgment in relation to Tan OngSze, Viuda de Tan Toco
was reversed.
The said contract purports to have been signed by Mariano de la Ra
ma, acting for this defendant under the power of attorney. But the Government di
d not exhibitevidence that would prove that the defendant was authorized in crea
ting an obligation in the nature of suretyship binding upon the principal. The c
lauses noted in the documents exhibiting powers of attorney, relate more specifi
cally to the execution of contracts relating to property. Neither of these power
s officially confers upon Mariano de la Rama the power to bind a principal by a
contract of suretyship. Following the principle of ejusdem generis. Power to exe
cute a contract such as a contract of suretyship or guaranty cannot be inferred
from the general words contained in these powers. Article 1827 of the Civil Code
declared that guaranty should not be presumed; it must be expressed and cannot
be extended beyond its limit. By effect, a power of attorney to execute a contra
ct of guaranty should not be inferred from vague or general words, especially wh
en such words have their origin and explanation in particular powers of a wholly
different nature.

Page 50

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

CASE NUMBER: G.R. No. L-23352 DATE: December 31, 1925 FACTS: 1. Appellant, Doa Ga
briela Andrea de Coster, executed to and in favor of her husband, Juan M.Poizat,
a general power of attorney. It authorized him to do "in her name, place and st
ead, and making use of her rights and actions"; to loan or borrow any amount of
cash under the conditions he may deemed convenient, executing and signing privat
e and public document and making these transactions with or without mortgage. 2.
Poizat obtained from the plaintiff a credit for the sum of 10,000 Pounds Sterli
ng to be drawn on the "Banco Espaol del Rio de la Plata. 3. To secure payment he
executed a mortgage upon the real property of his wife. 4. Plaintiff then brough
t an action against the defendant for failure to pay, to for lose the mortgage.
The trial court s decision issued an order directing the sale of the mortgaged p
roperty to satisfy the judgment. Consequently, the property was sold to the plai
ntiff for P100,000.00 5. Appellant personally appeared and objected to the confi
rmation of the sale. She alleged that the mortgage in question was illegally exe
cuted thus null and void, because the agent of the defendant was not authorized
to execute it. That the plaintiff was aware of such fact and that the mortgage w
as executed to secure a loan, which was not made to this defendant or for her be
nefit but was made to him personally. Such objections were overruled, which prom
pted the appellant to appeal. ISSUE: Whether the act of defendant Poizant, in hi
s capacity as attorney in fact, binds her wife? HELD: No. The mortgage is declar
ed null and void ab initio. The sale is set aside RULING: Juan Poizat may have h
ad the authority to borrow money and mortgage the real property of his wife, but
the law specifically provided how and in what manner it must be done. The law r
equires that a power of attorney to mortgage or sell real property should be exe
cuted with all the formalities required in a deed. In this case it was not excer
siced. His personal signature, standing alone, does not bind his principal. The
deed in its face does not purport to be the deed of the principal, made and sign
ed by him in his name and as his deed. The mortgage in question was held to be e
xecuted by him and him only thus it is not binding to his wife. PONENTE: Johns,
J.
Page 51

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

CASE NUMBER: G.R. No. 95703 DATE: August 3, 1992 PONENTE: GRINO-AQUINO, J,
FACTS: 1. On January 12, 1981, Ederlinda M. Gallardo, married to Daniel Manzo, e
xecuted a special power of attorney in favor of Rufina S. Aquino authorizing him
: - To secure a loan from any institution for any amount or mortgage the propert
y at Las Pinas, Rizal 2. On August 26, 1981, a Deed of Real Estate Mortgage was
executed by Rufino S. Aquino in favor of the Rural Bank of Bombon(Camarines Sur)
, Inc. The property was secured for a loan in the total sum of Three Hundred Fif
ty Thousand Pesos only (P350,000.00), plus interest at the rate of fourteen (14%
) per annum. 3. Spouses Gallardo filed an action against Rufino Aquino and Rural
Bank. They alleged that Aquino mortgaged the property to pay for his personal l
oans, from the same Bank. - The trial court temporarily restrained the Rural Ban
k "from enforcing the real estate mortgage and from foreclosing it either judici
ally or extrajudicially until further orders from the court. 4. Aquino, in his an
swer, alleged that the spouses allowed him to mortgage the property and use the
use the proceeds thereof to compensate for the pre-existing obligation of P350,0
00 that the spouse owed him. 5. The trial court lifted the TRO against the bank
and ordered the foreclosure proceeding against the mortgaged property. The Spous
es Gallardo appealed to the Court of Appeals (CA). The CA reversed the trial cou
rt and held that Rufino Aquino had no authority to mortgage the land. Thus, this
appeal against the decision. ISSUE: Whether or not the Deed of Real Estate Mort
gageexecuted by Rufino S. Aquinoin favor of the Rural Bank of Bombon (Cam. Sur),
Inc. is with authority, thus valid? NO, it was without authority. RULING: Agent
who signs a Deed of Mortgage in his name alone does not validly bind the owner
of the real estate mortgaged.Aquino s act of signing the Deed of Real Estate Mor
tgage in his name alone as mortgagor, without any indication that he was signing
for and in behalf of the property owner, Ederlinda Gallardo, bound himself alon
e in his personal capacity as a debtor of the petitioner Bank and not as the age
nt or attorney-in-fact of Gallardo. The petitioner misapplied Art. 1883. The abo
ve provision of the Civil Code relied upon by the petitioner Bank, is not applic
able to the case at bar. Herein respondent Aquino acted purportedly as an agent
of Gallardo, but actually acted in his personal capacity. Involved herein are pr
operties titled in the name of respondent Gallardo against which the Bank propos
es to foreclose the mortgage constituted by an agent (Aquino) acting in his pers
onal capacity. Under these circumstances, we hold, that Gallardo s property is n
ot liable on the real estate mortgage.
Page 52

102) COMMERCIAL BANK & TRUST CO. OF THE PHILS Vs. REP. ARMORED CAR SERVICE CORP.
CASE NUMBER: G.R. Nos. L-18223-24 DATE: September 30, 1963 PONENTE: LABRADOR, J.
FACTS: 1. Defendant-appellant Damaso Perez has presented a motion for new trial
on the ground of newly discovered evidence. 2. Damaso Perez claims that he was n
ot aware of the nature of the power of attorney that Ramon Racelis used, purport
edly signed by him, to secure the loans for the Republic Armored Car Service Cor
poration and the Republic Credit Corporation. 3. He claims that Ramon Racelis on
ly used a photastic copy as proof of the Power of Attorney. He further presents
the original purporting the alleged true authority granted by the movant. - It i
s not expressly mentioned that this is the precise power of attorney that Ramon
Racelis Utilized to secure the loans the collection of which is sought in these
cases. ISSUE: Whether or not the claim of the movant is tenable as to invalidate
the security loans secured under the name of movant? NO, it is not. RULING: Ass
uming, for the sake of argument, that the said power of attorney incorporated in
the motion for reconsideration was the one used to obtain the loans. We find th
at the movant s contention has no merit. In accordance with the document, Raceli
s was authorized to negotiate for a loan or various loans .. with other being in
stitution, financing corporation, insurance companies or investment corporations
, in such sum or sums, aforesaid Attorney-in-fact Mr. Ramon Racelis, may deem pr
oper and convenient to my interests, ... and to execute any and all documents he
deems requisite and necessary in order to obtain such loans, always having in m
ind best interest; ... We hold that this general power attorney to secure loans
from any banking institute was sufficient authority for Ramon Racelis to obtain
the credits subject of the present suits.
Page 53

103) LIM TIU vs. RUIZ y REMENTERIA

CASE NUMBER: GR No. 5676 DATE: March 2, 1910 PONENTE: Johnson, J.
FACTS:
On May 26, June 5 and June 12, 1908, Lim Tiu sold to Ruiz y Rementeria ce
rtain merchandise totaling P1,043.57
Said amount was due and unpaid therefore, a
n action was filed by Lim Tiu against Ruiz y Rementeria
Lower Court ruling - Rui
z y Rementeria purchased and paid the merchandise to Domingo Tim Bun Lui - Since
they have already paid the merchandise, Ruiz y Rementeria is no longer liable L
im Tiu filed an appeal, arguing that the following errors, among others, were co
mmitted by the lower court - Ruiz y Rementeria never had a notice that their bus
iness transactions with Domingo were by him as agent or employee of Lim Tiu - Th
ey never notified Ruiz y Rementeria that Domingo could sell their merchandise No payments were accepted by them thru Domingo ISSUE/RULING: a. W/N Ruiz y Remen
teria purchased directly from Lim Tiu?
NO. They have no knowledge or information
that the merchandise they were receiving from Domingo was the merchandise of Li
m Tiu Ruiz y Rementeria had been buying merchandise from Domingo for several mon
ths and paying for said merchandise by selling to Domingo certain goods in excha
nge. Payments were likewise made to him Further, Ruiz y Rementerias books of acco
unt were kept by Domingo during the entire period they were doing business Domin
go even presented a bill in Ruiz y Rementerias favor for every merchandise sold S
ince Ruiz y Rementeria already paid to Domingo the merchandise purchased, they a
re no longer liable to Lim Tiu
b. W/N Domingo Tim Bun Liu acted in his own name in dealing with Ruiz y Rementer
ia?
YES. No notice was given by Domingo to Ruiz y Rementeria that he was acting
as Lim Tius agent in selling the merchandise What Domingo did was to purchase the
all or nearly all the merchandise from Lim Tiu then sell it to Ruiz y Rementeri
a Ruiz y Rementeria also believed that they were dealing with Domingo without an
y knowledge that he is indeed an agent of Lim Tiu Art. 1717 of the Civil Code: W
hen an agent acts in his own name, the principal shall have no action against th
e persons with whom the agent has contracted, nor the said persons against the p
rincipal Art. 246 of the Code of Commerce: When an agent transacts business in h
is own name, it shall not be necessary for him to state who is the principal, an
d he shall be directly liable, as if the business were for his own account, to t
he persons with whom he transacts the same, said persons not having any right of
action against the principal, nor the latter against the former, the liabilitie
s of the principal and the agent to each other always reserved
Page 54

The judgment of the lower court is hereby affirmed.

104) PHIL. NATIONAL BANK vs. AGUDELO y GONZAGA
CASE NUMBER: GR No. L-39037 DATE: Oct. 30, 1933 FACTS:
On Nov. 9, 1920, Paz Agud
elo executed a special power of attorney (Exhibit K) in favor of her nephew, Mau
ro Garrucho
In the said SPA, Garrucho is able to sell alienate and mortgage in w
hatever manner or form he might deem convenient, all Agudelos properties in Murci
a and Bacolod, Negros Occidental On Dec. 22, 1920, Amparo Garrucho executed a sp
ecial power of attorney (Exhibit H) wherein she enabled her brother, Mauro, to s
ell, alienate, mortgage or otherwise encumber all her properties in Murcia and B
ago, Negros Occidental However, nothing in the said SPAs expressly authorized Ma
uro A. Garrucho to contract any loan nor to constitute a mortgage on the propert
ies belonging to the respective principals, to secure his obligations
On Dec. 23
, 1920, a document (Exhibit G) was executed by Mauro in favor of Philippine Nati
onal Bank (PNB) whereby he constituted a mortgage on Lot No. 878 under Amparo A.
Garrucho, to secure the payment of credits, loans, commercial overdrafts, etc.,
not exceeding P6,000, together with interest thereon, which he might obtain fro
m PNB, issuing the corresponding promissory note to that effect For the years 19
21 and 1922, Mauro maintained a personal credit account with PNB On Aug. 24, 192
1, Mauro executed another document (Exhibit J) in PNBs favor whereby he constitut
ed a mortgage on Agudelos 2 lots, including the buildings and improvements to sec
ure the payment of credits, loans and commercial overdrafts which the said bank
might furnish him to the amount of P16,000, payable on August 24, 1922, executin
g the corresponding promissory note to that effect.
Said mortgage contracts and
promissory notes were executed by Mauro in his own name and signed by him in his
personal capacity, authorizing PNB to take possession of the mortgaged properti
es, by means of force if necessary, in case he failed to comply with any of the
conditions stipulated therein Thereafter, PNB notified Mauro of his promissory n
ote within which to make a payment Eventually, Mauros commercial credit was close
d starting May 22, 1922
PNB manager requested Mauro to liquidate his account amo
unting to P15,148.15, at the same time notifying him that his promissory note fo
r P16,000 giving as security for the commercial overdraft in question, had falle
n due As a result, another mortgage contract (Exhibit C) was executed by Mauro i
n PNBs favor over Agudelos lot in Bacolod and Murcia Mauro incurred credits and lo
ans for a total of P21,000. A new promissory note was executed for P21,000, ther
eby novating the first 2 notes Sometime 1925, Amparo sold Lot 878 (which was und
er exhibit G) to Paz Agudelo (Exhibit M).
An affidavit (Exhibit N) was likewise
signed by Paz Agudelo which states: xxx do hereby agree and consent to the transf
er in my favor of lot No. 878 of the Cadastre of Murcia, Occidental Negros, P. I
., by Miss Amparo A. Garrucho, as evidenced by the public instrument dated Novem
ber 25, 1925, executed before the notary public Mr. Genaro B. Benedicto, and do
hereby further agree to the amount of the lien thereon stated in the mortgage de
ed executed by Miss Amparo A. Garrucho in favor of the Philippine National Bank.
Pursuant to the said sale, the property and title was transferred i n Pazs name C
FI Ruling: - Absolved Mauro from the complaint - Paz Agudelo is ordered to pay P
NB ISSUE: W/N the powers of attorney issued in Mauro Garruchos favor to mortgage
their respective real estate, authorized PONENTE: Villareal, J.
Page 55

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

O
Art. 1709 of the Civil Code states that by the contract of agency, one person
binds himself to render some service, or to do something for the account or at t
he request of another On the other hand, Art. 1717 states that when an agent act
s in his own name, the principal shall have no right of action against the perso
ns with whom the agent has contracted, or such persons against the principal. In
such case, the agent is directly liable to the person with whom he has contract
ed, as if the transaction were his own. Cases involving things belonging to the
principal are excepted xxx There is nothing in the mortgage deeds to show that M
auro A. Garrucho is attorney in fact of Amparo and Paz, and that he obtained the
loans mentioned in the aforesaid mortgage deeds and constituted said mortgages
as security for the payment of said loans, for the account and at the request of
said Amparo A. Garrucho and Paz Agudelo Mauros transactions with PNB appears to
have been acted in his personal capacity In the mortgage deeds, Mauro appears to
have acted in his personal capacity. In his capacity as mortgage debtor, he app
ointed the mortgage creditor PNB as his attorney in fact so that it might take a
ctual and full possession of the mortgaged properties by means of force in case
of violation of any of the conditions stipulated in the respective mortgage cont
racts As held in National Bank vs. Palma Gil, a mortgage on real property of the
principal not made and signed in the name of the principal is not valid as to t
he principal. If Mauro A. Garrucho acted in his capacity as mere attorney in fac
t of Amparo A. Garrucho and of Paz Agudelo, he could not delegate his power, in
view of the legal principle of "delegata potestas delegare non potest" (a delega
ted power cannot be delegated), inasmuch as there is nothing in the records to s
how that he has been expressly authorized to do so Also, he executed the promiss
ory notes evidencing the aforesaid loans, under his own signature, without autho
rity from his principal and, therefore, were not binding upon the latter. There
was no showing that the loan obtained was for his principal What really happened
was Mauro obtained such credit for himself in his personal capacity and secured
the payment thereof by mortgage constituted by him in his personal capacity, al
though on properties belonging to his principal Thus, Mauro exceeded his scope o
f his authority and the principal is not liable for his acts In conclusion, when
an agent negotiates a loan in his personal capacity and executes a promissory n
ote under his own signature, without express authority from his principal, givin
g as security therefor real estate belonging to the letter, also in his own name
and not in the name and representation of the said principal, the obligation do
constructed by him is personal and does not bind his aforesaid principal.

Page 56

105) SYJUCO & VIARDO vs. SY-JUCO

CASE NUMBER: 13471 DATE: 12 Jan 1920 PONENTE: Avancea, J.
FACTS: 1. Santiago was appointed by the plaintiffs (Syjucos for brevity; Santiagos
parents) as administrator of their property and acted as such from 1902-1916. 2.
The Syjucos allege that during his administration, Santiago acquired the launch
Malabon in his capacity as administrator with their (Syjucos) money and for thei
r benefit. 3. The RTC ruled in favor of the Syjucos and ordered Santiago to retu
rn basically everything that the Syjucos asked for in the complaint. 4. The SC a
ffirmed the RTC with the exception of casco No. 2545 which was lawfully sold to
Santiago. ISSUE: Do the properties bought by Santiago in his own name, as an adm
inistrator, belong to him? (No; except the casco 2545) RULING: 1. Regarding the
launch Malabon: though Santiago bought it in his own name, such fact does not sh
ow that bought it for himself and with his own money, as he claims. - This trans
action was within the agency which he had received from the Syjucos (the princip
al). - The fact that he has acted in his own name may be only a violation of the
agency on his part. - The question is not in whose favor the document of sale o
f the launch is executed nor in whose name same was registered, but with whose m
oney was said launch bought. Moreover, from the rule established in Article 1717
of the Civil Code (when an agent acts in his own name, the principal shall have
no right of action against the person with whom the agent has contracted, cases
involving things belonging to the principal are excepted): According to this exce
ption: the agent is bound to the principal although he does not assume the chara
cter of such agent and appears acting on his own name Thus, in effect, the contr
act must be considered as entered into between the principal and the third perso
n; and, consequently, if the obligations belong to the former, to him alone must
also belong the rights arising from the contract. - The money with which the la
unch was bought having come from the Syjucos, the exception established in Artic
le 1717 is applicable to this case. Concerning the casco No. 2584, Santiago hims
elf admits it was constructed by the Syjucos in the latter s ship-yard. As to th
e automobile, there is sufficient evidence to show that its price was paid with
the Syjucos money. Concerning the casco No. 2545: (the RTC refrained from making
any declaration about its ownership in view of the fact that this casco had been
leased and was sunk while in the lessee s hands before the complaint in this ca
se was filed) The RTC should have made a pronouncement upon this casco. - As it
belonged to the Syjucos, and that the latter sold it afterwards to Santiago- San
tiagos ownership over it absolves him from liability on it. Concerning the rendit
ion of accounts which the Syjucos require of Santiago, Santiago is also absolved
from this for it
2.
3. 4. 5.
6.
Page 57

appears that Santiago used to render accounts of his agency after each transacti
on, to the Syjucos satisfaction.
106) NATIONAL FOOD AUTHORITY vs. INTERMEDIATE APPELLATE COURT CASE NUMBER: GR NO
. 75640 DATE: April 5, 1990 PONENTE: Paras
FACTS: Medalla, as commission agent of Superior Shipping Corporation (SSC), ente
red into a contract for hire of ship with the National Grains Authority (NGA), w
here sacks of rice belonging to the latter would be transported from Occidental
Mindoro to Manila. SSC then asked payments from NGA and it requested that the pa
yment be made to it and not to Medalla. NGA replied that it could not grant its
request because the contract was entered into by NGA and Medalla who did not dis
close that he was acting as a mere agent of SSC. NGA paid Medalla. The SSC asked
Medalla for the payment but the latter ignored the request. ISSUE: : Is NGA lia
ble to SSC? RULING:
NGA is liable under Art 1883 of the Civil Code. Relevant portion of the provisio
n states, In such case the agent is the one directly bound in favor of the perso
n with whom he has contracted, as if the transaction were his own, except when t
he contract involves things belonging to the principal. Consequently, when things
belonging to the principal (in this case, SSC) are dealt with, the agent is bou
nd to the principal although he does not assume the character of such agent and
appears acting in his own name. Thus, in effect, the contract must be considered
as entered into between the principal and the third person.
Page 58

107) AWAD vs. FILMA MAECANTILE CO.

CASE NUMBER: No. L-25950 DATE: December 24, 1926 FACTS: Plaintiff, doing busines
s in the Philippine Islands under the name of E. Awad & Co., delivered certain m
erchandise with an invoice value of 11,140 to Chua Lioc, a merchant operating und
er the name of Hang Chua Co. in Manila, and sell it on commission basis. Chua Li
oc, representing himself as the owner of the merchandise, sold it to Filma Merca
ntile (defendant) for 12,155.60. He owed the Philippine Manufacturing Co. 3,480, w
hich the defendant agreed to pay, and was also indebted to the defendant itself
of the amount of 2,017.98. The total amount of the two debts, 5,497.98, was deduct
ed from the purchase price, leaving a balance of 6,657.52 which the defendant pro
mised to pay to Chua Lioc on or before October 9, 1924. The merchandise purchase
d was delivered to the defendant, who immediately offered it for sale. Three day
s later D. J. Awad, plaintiffs representative in the Philippine Islands, having a
scertained that the goods entrusted to Chua Lioc was being offered for sale by t
he defendant, obtained authorization from Chua Lioc to collect 11,707 from the de
fendant and informed the latter s treasurer of the said transaction. On Septembe
r 15, D. J. Awad, in behalf of E. Awad & Co., wrote a letter to the defendant co
rporation telling them that inasmuch the merchandise belonged to E. Awad & Co.,
the purchase price should be paid to them, but the defendant refused to comply i
n its reply letter. On September 18, 1924, the Philippine Trust Company brought
an action against Chua Lioc for the recovery of the sum of 1,036.36 and under a w
rit of attachment garnished the balance due Chua Lioc from the defendant. On Oct
ober 7, E. Awad also brought an action, against Chua Lioc for the recovery of th
e sum of 11,140 (invoice value of the merchandise) and also obtained a writ of at
tachment under which notice of garnishment of the said aforesaid balance we serv
ed upon the herein defendant. The present action was filed on November 26, 1924
with the plaintiff demanding payment of the same sum of 11,140 for which action h
ad already been brought against Chua Lioc. The defendant averred, among others,
that it brought the merchandise in good faith and without any knowledge whether
of the person from whom or the condition under which the said merchandise had be
en acquired by Chua Lioc or Hang Chua Co. The trial court dismissed the case on
the ground that the plaintiff was only entitled to payment of the sum of 6,657.52
, but which sum the defendant had the right to retain subject to the orders of t
he court in the two other cases. Hence, this appeal. ISSUE: Whether the defendan
t brought the merchandise in good faith. RULING: Yes. Article 246 of the Code of
Commerce states that: When the agent transacts business in his own name, it sha
ll not be necessary for him to state who is the principal and he shall be direct
ly liable, as if the business were for his own account, to the persons with whom
he transacts the same, said persons not having any right of action against the
principal, nor the latter against the former, the liabilities of the principal a
nd of the agent to each other always being reserved. PONENTE: Ostrand, J.
Page 59

The plaintiff-appellant pointed out several circumstances which he believes indi

cate that the defendant-appellee was aware of the condition under which the merc
handise was entrusted to the agent Chua Lioc and therefore did not purchase the
goods in good faith. But the court did not see anything conclusive about the cir
cumstances referred to and they are not sufficient to overcome the presumption o
f good faith.
Page 60