Case Escra Digest

G.R. No. L-24332 January 31, 1978

RAMON RALLOS, Administrator of
the Estate of CONCEPCION
RALLOS, petitioner,
vs.
FELIX GO CHAN & SONS REALTY
CORPORATION and COURT OF
APPEALS, respondents.
Agency, its concept, essential elements and characteristics.By the relationship of agency,
one party called the principal authorizes another called the agent to act for and in his
behalf in transactions with third persons. The essential elements of agency are:(l) there is
consent, express or implied, of the parties to establish the relationship: (2) the object is the
execution of a juridical act in relation to a third person; (3) the agent acts as a
representative and not for himself; and (4) the agent acts within the scope of his authority.
Agency is basically personal, representative, and derivative in nature. The authority of the
agent to act emanates from the powers granted to him by his principal; his act is the act of
the principal if done within the scope of the authority. He who acts through another acts
himself.
Same: Same; Art. 1930 and Art. 1931 of the Civil Code providing that death of principal or
agent extinguishing agency is only a general rule; Rationale for the provision.Reason of
the very nature of the relationship between principal and agent, agency is extinguished by
the death of the principal. Manresa explains that the rationale for the law is found in the
juridical basis of agency which is representation. Laurent says that the juridical tie between
the principal and the agent is severed ipso jure upon the death of either without necessity
for the heirs of the principal to notify the agent of the fact of death of the former. The same
rule prevails at common lawthe death of the principal effects instantaneous and absolute
revocation of the authority of the agent unless the power be coupled with an interest. This
is the prevalent rule in American jurisprudence where it is well-settled that a power
without an interest conferred upon an agent is dissolved by the principals death, and any
attempted execution of the power afterwards is not binding on the heirs or representatives
of the deceased.
Facts:
Concepcion and Gerundia Rallos were sisters and registered co-owners of the parcel of land in issue.
They executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing him
to sell such land for and in their behalf. After Concepcion died, Simeon Rallos sold the undivided
shares of his sisters Concepcion and Gerundia to Felix Go Chan & Sons Realty Corporation for the
sum of P10,686.90. New TCTs were issued to the latter.
Petitioner Ramon Rallos, administrator of the Intestate Estate of Concepcion filed a complaint
praying (1) that the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be
unenforceable, and said share be reconveyed to her estate; (2) that the Certificate of 'title issued in
the name of Felix Go Chan & Sons Realty Corporation be cancelled and another title be issued in the
names of the corporation and the "Intestate estate of Concepcion Rallos" in equal undivided and (3)
that plaintiff be indemnified by way of attorney's fees and payment of costs of suit.
Issues: Whether or not the sale fell within the exception to the general rule that death extinguishes
the authority of the agent
Held/Ratio:
Yes the sale is void. The court held that no one may contract in the name of another without being
authorized by the latter, or unless he has by law a right to represent him (Art. 1317 of the Civil
Code). Simeons authority as agent was extinguished upon Concolacions death. The sale did not fall
under the exceptions to the general rule that death ipso jure extinguishes the authority of the
agent. Art. 1930 inapplicable since SPA in favor of Simon Rallos was not coupled with interest and
Art. 1931 inapplicable because Rallos knew of principal Concepcions death.

Same; Same; Art. 1930 and Art. 1931 of the Civil Code exceptions to general rule provided For Art 1931 to apply, both requirements must be present Laws on agency, the terms of which are
in Art. 1919 of the Civil Code, that death of principal revokes ipso jure the agency.Is the clear and unmistakable leaving no room for an interpretation contrary to its tenor, should apply, the
general rule provided for in Art. 1919 that the death of the principal or of the agent law provides that death of the principal ipso jure extinguishes the authority of the agent to sell
extinguishes the agency, subject to any exception, and if so, is the instant case within that rendering the sale to a third person in good faith unenforceable unless at the agent had no
exception? That is the determinative point in issue in this litigation x x x Articles 1930 and knowledge of the principals death at that time (exception under Art. 1931)
1931 of the Civil Code provide the exceptions to the general rule aforementioned.
Dispositive: CA Decision reversed, CFI decision affirmed. Sale was null and void.
Same; Same; Same; Contention that despite death of principal the act of attorney-in-fact in
selling his principals share of the disputed property is valid and enforceable since the buyer
acted in good faith is untenable because of the established knowledge of the attorney-in-
fact of the death of his principal; Requisites of Art. 1931 that despite death of principal and
of agent is valid not complied with.Under Art. 1931 of the Civil Code, an act done by the
agent after the death of his principal is valid and effective only under two conditions, viz:
(1) that the agent acted without knowledge of the death of the principal, and (2) that the
third person who contracted with the agent himself acted in good faith. Good faith here
means that the third person was not aware of the death of the principal at the time he
contracted with said agent. These two requisites must concur: the absence of one will
render the act of the agent invalid and unenforceable. In the instant case, it cannot be
questioned that the agent Simeon Rallos knew of the death of his principal at the time he
sold the latters share in Lot No. 5983 to respondent corporation. x x x On the basis of the
established knowledge of Simeon Rallos concerning the death of his principal, Concepcion
Rallos, Article 1931 of the Civil Code is inapplicable. The law expressly requires for its
application lack of knowledge on the part of the agent of the death of his principal; it is not
enough that the third person acted in good faith.
Same; Same; Same; Same; General rule is that an act of agent after death of his principal is
void ab initio unless the same falls under exceptions in Arts. 1930 and 1931 of the Civil
Code; Art 1931 being an exception to the general rule is to be strictly construed.In
sustaining the validity of the sale to respondent corporation, the Court of Appeals reasoned
out that there is no provision in the Civil Code which provides that whatever is done by an
agent having knowledge 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. We cannot see the merits of the foregoing argument as it ignores the
existence of the general rule enunciated in Art. 1919 that the death of the principal
extinguishes the agency. That being the general rule it follows a fortiori that any act of an
agent after the death of his principal is void ab initio unless the same falls under the
exceptions provided for in the aforementioned Articles 1930 and 1931. Article 1931, being
an exception to the general rule, is to be strictly construed; it is not to be given an
interpretation or application beyond the clear import of its terms for otherwise the courts
will be involved in a process of legislation outside of their judicial function.

Same; Same; Revocation by an act of the principal as a mode of terminating agency

distinguished from revocation by operation of law such as death of principal.Revocation
by an act of the principal as a mode of terminating an agency is to be distinguished from
revocation by operation of law such as death of the principal which obtains in this case. The
decision stressed that by reason of the very nature of the relationship between principal
and agent, agency is extinguished ipso jure upon the death of either principal or agent.
Although a revocation of a power of attorney to be effective must be communicated to the
parties concerned, yet a revocation by operation of law, such as by death of the principal is,
as a rule, instantaneously effective inasmuch as by legal fiction the agents exercise of
authority is regarded as an execution of the principals continuing will. With death, the
principals will ceases or is terminated; the source of authority is extinguished.

Same; Same; Law does not impose a duty on the heirs of principal to notify agent of death
of principal; If agent dies, his heirs must notify principal thereof.The Civil Code does not
impose a duty on the heirs of the principal to notify the agent of the death of said principal.
What the Code provides in Article 1932 is that, if the agent dies, his heirs must notify the
principal thereof, and in the meantime adopt such measures as the circumstances may
demand in the interest of the latter. Hence, the fact that no notice of the death of the
principal was registered on the certificate of title of the property in the Office of the
Register of Deeds, is not fatal to the cause of the estate of the principal.

Same; Same; No parallel can be drawn between the case of attorney-in-fact who after
death of his principal sold the latters share in the land pursuant to a special power of
attorney which the principal had executed in his favor and that of an innocent purchaser for
value of registered land.Holding that the good faith of a third person in dealing with an
agent affords the former sufficient protection, respondent court drew a parallel between
the instant case and that of an innocent purchaser for value of a registered land, stating
that if a person purchases a registered land from one who acquired it in bad faitheven to
the extent of forging or falsifying the deed of sale in his favorthe registered owner has no
recourse against such innocent purchaser for value but only against the forger. To support
the correctness of this parallelism, respondent corporation, in its brief, cites the case of
Blondeau, et al. vs. Nano and Vallejo, 61 Phil. 625. x x x The Blondeau decision, however, is
not on all fours with the case before Us because here We are confronted with one who
admittedly was an agent of his sister and who sold the property of the latter after her death
 with full knowledge of such death. The situation is expressly covered by a provision of law
on agency the terms of which are clear and unmistakable leaving no room for an
interpretation contrary to its tenor, in the same manner that the ruling in Blondeau and the
cases cited therein found a basis in Section 55 of the Land Registration Law.

Same; Same; Conflict of legal opinion in American jurisprudence does not hold true in
Philippine law; Civil Code of the Philippines expressly provides for two exceptions to
general rule that death of the principal revokes the agency; Agents act of executing the
sale of property despite notice of death of his principal is unenforceable against the estate
of the principal.One last point raised by respondent corporation in support of the
appealed decision is an 1842 ruling of the Supreme Court of Pennsylvania in Cassiday v.
McKenzie wherein payments made to an agent after the death of the principal were held to
be good, the parties being ignorant of the death. Let us take note that the Opinion of
Justice Rogers was premised on the statement that the parties were ignorant of the death
of the principal. x x x To avoid any wrong impression which the Opinion in Cassiday v.
McKenzie may evoke, mention may be made that the above represents the minority view in
American jurisprudence. x x x Whatever conflict of legal opinion was generated by Cassiday
v. McKenzie in American jurisprudence, no such conflict exists in our own for the simple
reason that our statute, the Civil Code, expressly provides for two exceptions to the general
rule that death of the principal revokes ipso jure the agency, to wit: (1) that the agency is
coupled with an interest (Art. 1930), and (2) that the act of the agent was executed without
knowledge of the death of the principal and the third person who contracted with the
agent acted also in good faith (Art. 1931). Exception No. 2 is the doctrine followed in
Cassiday, and again We stress the indispensable requirementthat the agent acted
without knowledge or notice of the death of the principal. In the case before Us the agent
Ramon Rallos executed the sale notwithstanding notice of the death of his principal.
Accordingly, the agents act is unenforceable against the estate of his principal. Rallos vs.
Felix Go Chan & Sons Realty Corporation, 81 SCRA 251, No. L-24332 January 31, 1978
EUROTECH INDUSTRIAL TECHNOLOGIES, INC., G.R. No. 167552
Agency; The underlying principle of the contract of agency is to accomplish results by using
Petitioner, the services of othersto do a great variety of things like selling, buying, manufacturing, FACTS:
and transporting.In a contract of agency, a person binds himself to render some service
or to do something in representation or on behalf of another with the latters consent. The From January to April 1995, petitioner sold to Impact Systems various products allegedly amounting
underlying principle of the contract of agency is to accomplish results by using the services to P91,338.00 pesos. Subsequently, respondents sought to buy from petitioner one unit of sludge
- versus -
of othersto do a great variety of things like selling, buying, manufacturing, and pump valued at P250,000.00 with respondents making a down payment of P50,000.00. When the
transporting. Its purpose is to extend the personality of the principal or the party for whom sludge pump arrived from the United Kingdom, petitioner refused to deliver the same to
another acts and from whom he or she derives the authority to act. It is said that the basis respondents without their having fully settled their indebtedness to petitioner. Thus, on 28 June
of agency is representation, that is, the agent acts for and on behalf of the principal on 1995, respondent EDWIN and Alberto de Jesus, general manager of petitioner, executed a Deed of
matters within the scope of his authority and said acts have the same legal effect as if they Assignment of receivables in favor of petitioner. Impact systems is owed by ERWIN Cuizon.
EDWIN CUIZON and ERWIN CUIZON, were personally executed by the principal. By this legal fiction, the actual or real absence of
the principal is converted into his legal or juridical presencequi facit per alium facit per Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo
Respondents. se. Power Company the amount of P365,135.29. Alarmed by this development, petitioner made
several demands upon respondents to pay their obligations. As a result, respondents were able to
Same; Elements.The elements of the contract of agency are: (1) consent, express or make partial payments to petitioner. On 7 October 1996, petitioner's counsel sent respondents a
implied, of the parties to establish the relationship; (2) the object is the execution of a final demand letter wherein it was stated that as of 11 June 1996, respondents' total obligations
juridical act in relation to a third person; (3) the agent acts as a representative and not for stood at P295,000.00 excluding interests and attorney's fees. Because of respondents' failure to
himself; (4) the agent acts within the scope of his authority. abide by said final demand letter, petitioner instituted a complaint for sum of money, damages,
with application for preliminary attachment against herein respondents
Same; Article 1897 of the Civil Code reinforces the familiar doctrine that an agent, who acts
as such, is not personally liable to the party with whom he contracts; Exceptions.Article By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party in
1897 reinforces the familiar doctrine that an agent, who acts as such, is not personally interest in this case. According to him, he was acting as mere agent of his principal, which was the
liable to the party with whom he contracts. The same provision, however, presents two
instances when an agent becomes personally liable to a third person. The first is when he
expressly binds himself to the obligation and the second is when he exceeds his authority.
In the last instance, the agent can be held liable if he does not give the third party sufficient
notice of his powers. We hold that respondent EDWIN does not fall within any of the
exceptions contained in this provision.
Same; Managers; The position of manager is unique in that it presupposes the grant of
broad powers with which to conduct the business of the principal.The Deed of
Assignment clearly states that respondent EDWIN signed thereon as the sales manager of
Impact Systems. As discussed elsewhere, the position of manager is unique in that it
presupposes the grant of broad powers with which to conduct the business of the principal,
thus: The powers of an agent are particularly broad in the case of one acting as a general
agent or manager; such a position presupposes a degree of confidence reposed and
investiture with liberal powers for the exercise of judgment and discretion in transactions
and concerns which are incidental or appurtenant to the business entrusted to his care and
management. In the absence of an agreement to the contrary, a managing agent may enter
into any contracts that he deems reasonably necessary or requisite for the protection of
the interests of his principal entrusted to his management. x x x.
Same; In case of excess of authority by the agent, the law does not say that a third person
can recover from both the principal and the agent.We likewise take note of the fact that
in this case, petitioner is seeking to recover both from respondents ERWIN, the principal,
and EDWIN, the agent. It is well to state here that Article 1897 of the New Civil Code upon
which petitioner anchors its claim against respondent EDWIN does not hold that in case of
excess of authority, both the agent and the principal are liable to the other contracting
party. To reiterate, the first part of Article 1897 declares that the principal is liable in cases
when the agent acted within the bounds of his authority. Under this, the agent is
completely absolved of any liability. The second part of the said provision presents the
situations when the agent himself becomes liable to a third party when he expressly binds
himself or he exceeds the limits of his authority without giving notice of his powers to the
third person. However, it must be pointed out that in case of excess of authority by the
agent, like what petitioner claims exists here, the law does not say that a third person can
recover from both the principal and the agent.
Same; Actions; Parties; Words and Phrases; An agent acting within his authority as such,
who did not acquire any right nor incur any liability arising from a Deed, is not a real
property in interest who should be impleaded; A real party in interest is one who stands to
be benefited or injured by the judgment in the suit, or the party entitled to the avails of the
suit.As we declare that respondent EDWIN acted within his authority as an agent, who
did not acquire any right nor incur any liability arising from the Deed of Assignment, it
follows that he is not a real party in interest who should be impleaded in this case. A real
party in interest is one who stands to be benefited or injured by the judgment in the suit,
or the party entitled to the avails of the suit. In this respect, we sustain his exclusion as a
defendant in the suit before the court a quo. Eurotech Industrial Technologies, Inc. vs.
Cuizon, 521 SCRA 584, G.R. No. 167552 April 23, 2007
Impact Systems, in his transaction with petitioner and the latter was very much aware of this fact.
ISSUE:
Whether the act of Edwin in signing the Deed of Assignment binds his principal Impact Systems
HELD:
Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems
The Supreme Court held that in a contract of agency, a person binds himself to render some service
or to do something in representation or on behalf of another with the latter's consent. Its purpose is
to extend the personality of the principal or the party for whom another acts and from whom he or
she derives the authority to act. It is said that the basis of agency is representation, that is, the agent
acts for and on behalf of the principal on matters within the scope of his authority and said acts
have the same legal effect as if they were personally executed by the principal.
In this case at hand, the parties do not dispute the existence of the agency relationship between
respondents ERWIN as principal and EDWIN as agent.
FACTS:
From January to April 1995, petitioner sold to Impact Systems various products allegedly amounting
to P91,338.00 pesos. Subsequently, respondents sought to buy from petitioner one unit of sludge
pump valued at P250,000.00 with respondents making a down payment of P50,000.00. When the
sludge pump arrived from the United Kingdom, petitioner refused to deliver the same to
respondents without their having fully settled their indebtedness to petitioner. Thus, on 28 June
1995, respondent EDWIN and Alberto de Jesus, general manager of petitioner, executed a Deed of
Assignment of receivables in favor of petitioner. Impact systems is owed by ERWIN Cuizon.
Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo
Power Company the amount of P365,135.29. Alarmed by this development, petitioner made
several demands upon respondents to pay their obligations. As a result, respondents were able to
make partial payments to petitioner. On 7 October 1996, petitioner's counsel sent respondents a
final demand letter wherein it was stated that as of 11 June 1996, respondents' total obligations
stood at P295,000.00 excluding interests and attorney's fees. Because of respondents' failure to
abide by said final demand letter, petitioner instituted a complaint for sum of money, damages,
with application for preliminary attachment against herein respondents
By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party in
interest in this case. According to him, he was acting as mere agent of his principal, which was the
Impact Systems, in his transaction with petitioner and the latter was very much aware of this fact.
ISSUE:
Whether the act of Edwin in signing the Deed of Assignment binds his principal Impact Systems
HELD:
Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems
The Supreme Court held that in a contract of agency, a person binds himself to render some service
or to do something in representation or on behalf of another with the latter's consent. Its purpose is

MARIA TUAZON, ALEJANDRO P.
TUAZON, MELECIO P.
TUAZON, Spouses ANASTACIO and
Present:
MARY T. BUENAVENTURA,
Petitioners, Panganiban, J.,
Chairman,
Sandoval-Gutierrez,
Corona,
- versus - Carpio Morales, and
Garcia, JJ
Promulgated:
HEIRS OF BARTOLOME RAMOS,
Respondents. July 14, 2005
G.R. No. 156262
Civil Law; Agency; In a contract of agency, one binds oneself to render some service or to
do something in representation or on behalf of another, with the latters consent or
authority; Elements of Agency.In a contract of agency, one binds oneself to render some
service or to do something in representation or on behalf of another, with the latters
consent or authority. The following are the elements of agency: (1) the parties consent,
express or implied, to establish the relationship; (2) the object, which is the execution of a
juridical act in relation to a third person; (3) the representation, by which the one who acts
as an agent does so, not for oneself, but as a representative; (4) the limitation that the
agent acts within the scope of his or her authority. As the basis of agency is representation,
there must be, on the part of the principal, an actual intention to appoint, an intention
naturally inferable from the principals words or actions. In the same manner, there must
be an intention on the part of the agent to accept the appointment and act upon it. Absent
such mutual intent, there is generally no agency.
Same; Same; Declarations of agents alone are generally insufficient to establish the fact or
extent of their authority.The declarations of agents alone are generally insufficient to
establish the fact or extent of their authority. The law makes no presumption of agency;
proving its existence, nature and extent is incumbent upon the person alleging it. In the
present case, petitioners raise the fact of agency as an affirmative defense, yet fail to prove
its existence.
Tuazon vs. Heirs of Bartolome Ramos, 463 SCRA 408, G.R. No. 156262 July 14, 2005
to extend the personality of the principal or the party for whom another acts and from whom he or
she derives the authority to act. It is said that the basis of agency is representation, that is, the agent
acts for and on behalf of the principal on matters within the scope of his authority and said acts
have the same legal effect as if they were personally executed by the principal.
In this case at hand, the parties do not dispute the existence of the agency relationship between
respondents ERWIN as principal and EDWIN as agent.
463 SCRA 408
FACTS:
Respondents alleged that on a relevant date, spouses Tuazon purchased from their
predecessor-in-interest cavans of rice. That on the total number of cavans, only a certain
portion has been paid for. In payment thereof, checks have been issued but on presentment, the
checks were
dishonored. Respondents alleged that since spouses anticipated the forthcoming suit against
them, they made fictitious sales over their properties. As defense, the spouses averred that it was
the wife of Bartolome who effected the sale and that Maria was merely her agent in selling the
rice. The true buyer of the cavans was Santos. The spouses further averred that when Ramos got
the check from Santos, she took it in good faith and didn't knew that the same were unfunded.
ISSUE:
w/n there is contract of agency
HELD:
First, there is no contract of agency.
If it was truly the intention of the parties to have a contract of agency, then when the
spouses sued Santos on a separate civil action, they should have instituted the same on behalf and
for the respondents. They didn't do so. The filing in their own names negate their claim that they
acted as
mere agents in selling the rice.
Second, the spouses are liable on the check.
As indorser, Tuazon warranted that upon due presentment, according to
their tenor, and that in case they were dishonored, she would pay the
corresponding amount. After the instrument is dishonored by non-
payment, indorsers cease to be merely secondarily liable. They became
principal debtors whose liability becomes identical to that of the original
obligor. The holder of a negotiable instrument need not even proceed
against the maker before suing the indorser. Santos is not an indispensable party to the
suit against the spouses.
ACTS OF THE CASE: The case involves the collection of a sum of money which arose from the
bouncing check issued
by one Evangeline Santos, indorsed by the spouses Leonilo and Maria Tuazon in payment of the
remaining unpaid 3,889
cavans amounting to P1,211,919.00. Despite demand from the heirs of Ramos, spouses Tuazon
failed to pay and instead
claimed that they are merely acting as agents and should not be held liable. Further, spouses Tuazon
instituted a civil case

SUNACE INTERNATIONAL
MANAGEMENT SERVICES, INC.
Petitione
- versus
NATIONAL LABOR RELATIONS
COMMISSION, Second
Division; HON. ERNESTO S.
DINOPOL, in his capacity as Labor
Arbiter, NLRC; NCR, Arbitration
Branch, Quezon City and DIVINA A.
MONTEHERMOZO,
G.R. No. 161757
Civil Law; Contracts; Finding of the Court of Appeals solely on the basis of the above-
quoted telefax message, that Sunace continually communicated with the foreign principal
and therefore was aware of and had consented to the execution of the extension of the
contract is misplaced.The finding of the Court of Appeals solely on the basis of the above-
quoted telefax message, that Sunace continually communicated with the foreign principal
(sic) and therefore was aware of and had consented to the execution of the extension of
the contract is misplaced. The message does not provide evidence that Sunace was privy to
the new contract executed after the expiration on February 1, 1998 of the original contract.
That Sunace and the Taiwanese broker communicated regarding Divinas allegedly withheld
savings does not necessarily mean that Sunace ratified the extension of the contract.
Same; Same; The theory of imputed knowledge ascribes the knowledge of the agent,
Sunace, to the principal, employer Xiong, not the other way around.The theory of
imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal,
employer Xiong, not the other way around. The knowledge of the principal-foreign
employer cannot, therefore, be imputed to its agent Sunace. Sunace International
Management Services, Inc. vs. National Labor Relations Commission, 480 SCRA 146, G.R.
No. 161757 January 25, 2006
Present:
against Evangeline Santos for collection of the amounts represented by the unfunded checks, in a
separate civil case which
they now sought to be consolidated with the instant case.
ISSUES : Whether or not the spouses Tuazon are agents of Ramos.
HELD : No.
RATIONALE: The declarations of agents alone are generally insufficient to establish the fact or extent
of their authority.13
The law makes no presumption of agency; proving its existence, nature and extent is incumbent
upon the person alleging it.
In the present case, petitioners raise the fact of agency as an affirmative defense, yet fail to prove
its existence.
Spouses Tuazon, on their own behalf, sued Evangeline Santos for collection of the amounts
represented by the
bounced checks, in a separate civil case that they sought to be consolidated with the current one. If,
as they claim, they were
mere agents of respondents, petitioners should have brought the suit against Santos for and on
behalf of their alleged
principal, in accordance with Section 2 of Rule 3 of the Rules on Civil Procedure. Their filing a suit
against her in their own
names negates their claim that they acted as mere agents in selling the rice obtained from
Bartolome Ramos.
FACTS:
Petitioner, Sunace International Management Services (Sunace), deployed to Taiwan Divina A.
Montehermozo (Divina) as a domestic helper under a 12-month contract effective February 1,
1997. The deployment was with the assistance of a Taiwanese broker, Edmund Wang, President of
Jet Crown International Co., Ltd.
After her 12-month contract expired on February 1, 1998, Divina continued working for her
Taiwanese employer, Hang Rui Xiong, for two more years, after which she returned to the
Philippines on February 4, 2000.
Shortly after her return or on February 14, 2000, Divina filed a complaint before the National Labor
Relations Commission (NLRC) against Sunace, one Adelaide Perez, the Taiwanese broker, and the
employer-foreign principal alleging that she was jailed for three months and that she was underpaid
Reacting to Divina's Position Paper, Sunace filed on April 25, 2000 an ". . . ANSWER TO
COMPLAINANT'S POSITION PAPER" alleging that Divina's 2-year extension of her contract was
without its knowledge and consent, hence, it had no liability attaching to any claim arising
therefrom, and Divina in fact executed a Waiver/Quitclaim and Release of Responsibility and an
Affidavit of Desistance, copy of each document was annexed to said
The Labor Arbiter, rejected Sunace's claim that the extension of Divina's contract for two more years
was without its knowledge and consent.
ISSUE:
Whether the act of the foreigner-principal in renewing the contract of Divina be attributable to

Respondents. [G.R. No. 117356.
June 19, 2000]
VICTORIAS MILLING CO.,
INC., petitioner, vs. COURT OF
APPEALS and CONSOLIDATED
SUGAR
CORPORATION, respondents.
Agency; The basis of agency is representationon the part of the principal, there must be
an actual intention to appoint or an intention naturally inferable from his words or actions,
while on the part of the agent, there must be an intention to accept the appointment and
act on it; One factor which most clearly distinguishes agency from other legal concepts is
controlone person (the agent) agreeing to act under the control or direction of another
(the principal).It is clear from Article 1868 that the basis of agency is representation. On
the part of the principal, there must be an actual intention to appoint or an intention
naturally inferable from his words or actions; and on the part of the agent, there must be
an intention to accept the appointment and act on it, and in the absence of such intent,
there is generally no agency. One factor which most clearly distinguishes agency from other
legal concepts is control; one personthe agentagrees to act under the control or
direction of anotherthe principal. Indeed, the very word agency has come to connote
control by the principal. The control factor, more than any other, has caused the courts to
put contracts between principal and agent in a separate category.
Same; An authorization given to another containing the phrase for and in our behalf does
not necessarily establish an agency, as ultimately, what is decisive is the intention of the
parties, and the use of the words sold and endorsed means that the parties intended a
contract of sale, and not an agency.It appears plain to us that private respondent CSC was
a buyer of the SLDFR form, and not an agent of STM. Private respondent CSC was not
subject to STMs control. The question of whether a contract is one of sale or agency
depends on the intention of the parties as gathered from the whole scope and effect of the
language employed. That the authorization given to CSC contained the phrase for and in
our (STMs) behalf did not establish an agency. Ultimately, what is decisive is the intention
of the parties. That no agency was meant to be established by the CSC and STM is clearly
shown by CSCs communication to petitioner that SLDR No. 1214M had been sold and
endorsed to it. The use of the words sold and endorsed means that STM and CSC
intended a contract of sale, and not an agency. Hence, on this score, no error was
committed by the respondent appellate court when it held that CSC was not STMs agent
and could independently sue petitioner. Victorias Milling Co., Inc. vs. Court of Appeals, 333
SCRA 663, G.R. No. 117356 June 19, 2000
Sunace
HELD:
No, the act of the foreigner-principal in renewing the contract of Divina is not attributable to
Sunace.
There being no substantial proof that Sunace knew of and consented to be bound under the 2-year
employment contract extension, it cannot be said to be privy thereto. As such, it and its "owner"
cannot be held solidarily liable for any of Divina's claims arising from the 2-year employment
extension.
Furthermore, as Sunace correctly points out, there was an implied revocation of its agency
relationship with its foreign principal when, after the termination of the original employment
contract, the foreign principal directly negotiated with Divina and entered into a new and separate
employment contract in Taiwan.
FACTS:
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co (VMC). In
the course of their dealings, VMC issued several Shipping List/Delivery Receipts (SLDRs) to STM as
proof of purchases. Among these was SLDR No. 1214M.SLDR No. 1214M, dated October 16, 1989,
covers 25,000 bags of sugar. Each bag contained 50 kg and priced at P638.00 per bag. The
transaction covered was a direct sale.
On October 25, 1989, STM sold to private respondent Consolidated Sugar Corporation (CSC)
its rights in the same SLDR for P14,750,000.00. CSC issued checks in payment. That same day, CSC
wrote petitioner that it had been authorized by STM to withdraw the sugar covered by the said
SLDR. Enclosed in the letter were a copy of SLDR No. 1214M and a letter of authority from STM
authorizing CSC to withdraw for and in our behalf the refined sugar covered by the SLDR On Oct.
27, 1989, STM issued checks to VMC as payment for 50,000 bags, covering SLDR No. 1214M. CSC
surrendered the SLDR No. 1214M and to VMCs NAWACO Warehouse and was allowed to withdraw
sugar. But only 2,000 bags had been released because VMC refused to release the other 23,000
bags.
Therefore, CSC informed VMC that SLDR No. 1214M had been sold and endorsed to it. But
VMC replied that it could not allow any further withdrawals of sugar against SLDR No. 1214M
because STM had already withdrawn all the sugar covered by the cleared checks. VMC also claimed
that CSC was only representing itself as STMs agent as it had withdrawn the 2,000 bags against
SLDR No. 1214M for and in behalf of STM. Hence, CSC filed a complaint for specific performance
against Teresita Ng Sy (doing business under STM's name) and VMC. However, the suit against Sy
was discontinued because later became a witness. RTC ruled in favor of CSC and ordered VMC to
deliver the 23,000 bags left. CA concurred. Hence this appeal.
ISSUES:
W/N CA erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon SLDR
No. 1214M as assignee.
HELD:

G.R. No. L-55764 February 16, 1982
SOCIAL SECURITY
SYSTEM, petitioner,
vs.
COURT OF APPEALS and MANILA
COSMOS AERATED WATER
FACTORY, INC., respondents.
Contracts; Labor Law; Social Security System; Persons who agree to sell the products of a
softdrinks manufacturer under an Agreement to Peddle Soft Drinks, who have their own
capital and employees are independent contractors, not employees of the soft drinks
manufacturer. The manufacturer is not liable to pay SSS premiums for such distributors.
We hold that conformably to Mafinco, the peddling contract involved in the instant petition
makes the peddler an independent contractor. Additionally, We have taken into account
the fact that the individual petitioners before the SSC who were the principal beneficiaries
of the petition have become indifferent to their cause. Social Security System vs. Court of
Appeals, 112 SCRA 47, No. L-55764 February 16, 1982
NO. CSC was not an agent of STM. VMC heavily relies on STMs letter of authority that said CSC is
authorized to withdraw sugar for and in our behalf. It is clear from Art. 1868 that the: basis of
agency is representation. On the part of the principal, there must be an actual intention to appoint
or an intention naturally inferable from his words or actions, and on the part of the agent, there
must be an intention to accept the appointment and act on it, and in the absence of such intent,
there is generally NO agency. One factor, which most clearly distinguishes agency from other legal
concepts, is control; one person the agent agrees to act under the control or direction of
another the principal. Indeed, the very word agency has come to connote control by the
principal. The control factor, more than any other, has caused the courts to put contracts between
principal and agent in a separate category. Where the relation of agency is dependent upon the acts
of the parties, the law makes no presumption of agency and it is always a fact to be proved, with the
burden of proof resting upon the persons alleging the agency, to show not only the fact of its
existence but also its nature and extent. It appears that CSC was a buyer and not an agent of STM.
CSC was not subject to STMs control. The terms for and in our behalf should not be eyed as
pointing to the existence of an agency relation. Whether or not a contract is one of sale or agency
depends on the intention of the parties as gathered from the whole scope and effect of the
language employed. Ultimately, what is decisive is the intention of the parties. (In fact, CSC even
informed VMC that the SLDR was sold and endorsed to it.)
Agency distinguished from sale.
In an agency to sell, the agent, in dealing with the thing received, is bound to act according to the
instructions of his principal, while in a sale, the buyer can deal with the thing as he pleases, being
the owner. The elementary notion of sale is the transfer of title to a thing from one to another,
while the essence of agency involves the idea of an appointment of one to act for another. Agency is
a relationship which often results in a sale, but the sale is a subsequent step in the transaction.
(Teller, op. cit., p. 26; see Commissioner of Internal Revenue vs. Manila Machinery & Supply Co., 135
SCRA 8 [1985].) An authorization given to another containing the phrase for and in our behalf
does not necessarily establish an agency, as ultimately what is decisive is the intention of the
parties. Thus, the use of the words sold and endorsed may mean that the parties intended a
contract of sale, and not a contract of agency.
FACTS:
Jose Concepcion, Manuel Chan, Manuel Ong, Roberto Lai, Arturo Gonzales, William Co, Federico
Marcial, Santiago Mancuba, Jesus Crelencia, Alfredo So and Pedro Aquino, filed a petition to Social
Security Commission seeking to be declared employees of Manila Cosmos AerAted Water Factory,
Inc. (Cosmos) and not independent contractors under the following Agreement to Peddle Soft
Drinks.
>The respondent manufacturer shall provide the peddler a delivery truck on the following
conditions:
The truck shall be under the peddlers responsibility and shall be used exclusively for the sale of the
manufacturers products purchased by the peddler
In case the peddler hires a driver, the latter shall be the employee of the former and not by the
manufacturer.
Liabilities arising from damage to properties, death or injuries or damage to the truck shall be borne
by the peddler
>The peddler shall secure at his own expense permits, licenses or charges in hich may be incurred by
him in selling the goods
>All good softdrinks bought from manufacturer shall be charged at a factory price.
>The peddler is required to file a bond amounting to P500.00
>Upon expiration of agreement, the delivery truck shall be returned to the manufacturer in good
and working condition.

SSC ruled that there exist an employer-employee relationship between the manufacturer and the
peddlers.

ISSUE:
Whether or not an employer employee relationship exist between the Manila Cosmos Aerated
Water Factory and the peddlers in this case.

RULING:
No. There is no employer-employee relationship that exist between the Manila Cosmos Aerated
Water Factory and the peddlers in this case.

In Mafinco Trading Corporation vs.Ople, et al. No. L-37790, March 25, 1976, 70 SCRA 139, the
question was whether there was an employer- employee relationship under the terms of a peddling
contract in words almost Identical to the one quoted above. Under their peddling contracts,

Repomanta and Moralde were not employees of Mafinco but were independent contractors. They
were distributors of Cosmos soft drinks with their own capital and employees.

Repomanta and Moralde (private respondents in Mafinco case) voluntarily executed with Mafinco
formal peddling contracts which indicate the manner in which they would sell Cosmos soft drinks.
That circumstance signifies that they were acting as independent businessmen. They were free to
sign or not to sign that contract. If they did not want to sell Cosmos products under the conditions
defined in that contract; they were free to reject it.

In determining whether the relationship is that of employer and employee or whether one is an
independent contractor, "each case must be determined on its own facts and all the features of the
relationship are to be considered. On the basis of the peddling contract, no employer-employee
relationship was created