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RALLOS v FELIX GO CHAN & REALTY COPR.

, Munoz-Palma Essential Elements:


1. there is consent, express or implied of the parties to
Plaintiff: Ramon Rallos establish the relationship;
Defendant: Felix Go Chan & Sons Realty Corporation 2. the object is the execution of a juridical act in relation to a
Facts: third person;
3. the agents acts as a representative and not for himself, and
 Concepcion and Gerundia Rallos were sisters and registered 4. the agent acts within the scope of his authority.
co-owners of a parcel of land known as Lot No. 5983 of the
Cadastral Survey of Cebu covered by Transfer Certificate of • Extinguishment
Title No. 11116 of the Registry of Cebu. O Generally: among others , By the death,
 They executed a special power of attorney in favor of their civil interdiction, insanity or insolvency of the
brother, Simeon Rallos, authorizing him to sell such land for principal or of the agent
and in their behalf. - death of the principal effects
 After Concepcion died, Simeon Rallos sold the undivided instantaneous and absolute revocation
shares of his sisters Concepcion and Gerundia to Felix Go of the authority of the agent
Chan & Sons Realty Corporation for the sum of P10,686.90. O Exceptions:
New TCTs were issued to the latter.  (Art. 1930) if it has been
 Petitioner Ramon Rallos, administrator of the Intestate constituted in the common interest of
Estate of Concepcion filed a complaint praying (1) that the the latter and of the agent, or in the
sale of the undivided share of the deceased Concepcion interest of a third person who has
Rallos in lot 5983 be unenforceable, and said share be accepted the stipulation in his favor.
reconveyed to her estate; (2) that the Certificate of 'title  (Art. 1931) agent acted
issued in the name of Felix Go Chan & Sons Realty without knowledge of the pricipal’s death
Corporation be cancelled and another title be issued in the and that the third person was in good
names of the corporation and the "Intestate estate of faith (both these reqs should be present)
Concepcion Rallos" in equal undivided and (3) that plaintiff IN THE CASE AT BAR:
be indemnified by way of attorney's fees and payment of 1) Sale was void.
costs of suit. • No one may contract in the name of another
without being authorized by the latter, or unless he has by
CFI: [Plaintiff’s Complaint] law a right to represent him (Art. 1317 of the Civil Code).
 Sale of land was null and void insofar as the one-half pro- • Simon’s authority as agent was extinguished upon
indiviso share of Concepcion Rallos Concolacion’s death
 Ordered the issuance of new TCTs to respondent 2) The sale did not fall under the exceptions to the general rule
corporation and the estate of Concepcion in the proportion of that death ipso jure extinguishes the authority of the agent
½ share each pro-indiviso and the payment of attorney’s O Art. 1930 inapplicable: SPA in favor of
fees and cost of litigation Simon Rallos was not coupled with
interest
[Respondent filed cross claim against Simon Rallos(*Simon and O Art. 1931 inapplicable:
Gerundia died during pendency of case)]  Simon Rallos knew (as can be
inferred from his pleadings) of
 Juan T. Borromeo, administrator of the Estate of Simeon
principal Concepcion’s death
Rallos was ordered to pay defendant the price of the ½
 For Art 1931 to apply, both
share of the land (P5,343.45) plus attorney’s fees
requirements must be present
.
[Borromeo filed a third party complaint against Josefina Rallos, special
3) Yes, agent’s knowledge of principal’s death is
administratrix of the Estate of Gerundia]
material.
 Dismissed without prejudice to filing either a complaint
Respondent asserts that: there is no provision in
against the regular administrator of the Estate of Gerundia
the Code which provides that whatever is done by an agent
Rallos or a claim in the Intestate-Estate of Cerundia Rallos,
having knowledge of the death of his principal is void even
covering the same subject-matter
with respect to third persons who may have contracted with
him in good faith and without knowledge of the death of the
CA: CFI Decision reversed, upheld the sale of Concepcion’s share.
principal
MR: denied.
Court says: this contention ignored the ignores the
existence of the general rule enunciated in Article 1919 that
Issues:
the death of the principal extinguishes the agency. Article
WON sale was valid although it was executed after the death of the
1931, being an exception to the general rule, is to be strictly
principal, Concepcion.
construed.
1. WON sale fell within the exception to the general rule that
death extinguishes the authority of the agent
4) NO, the Civil Code does not impose a duty upon
2. WON agent’s knowledge of the principal’s death is a material
the heirs to notify the agent or others of the death of the
factor.
principal.
3. WON petitioner must suffer the consequence of failing to
• If revocation was by the act of the principal: a general power
annotate a notice of death in the title (thus there was good
which does not specify the persons to whom represents' on
faith on the part of the Respondent vendee)
should be made, it is the general opinion that all acts,
4. WON good faith on the part of the respondent in this case
executed with third persons who contracted in good faith,
should be treated parallel to that of an innocent purchaser
Without knowledge of the revocation, are valid.
for a value of a land.
• BUT, if revocation was due to death of the principal:
extinguishment, by operation of law, is instantaneous without
Held/Ratio:
the need for notification to the parties concerned.
(Court discussed relevant principles first)
5) No.
Relationship of Agency (concept arising from principles under Art 1317
• Laws on agency, the terms of which are clear and
and 1403 )- one party, caged the principal (mandante), authorizes
unmistakable leaving no room for an interpretation contrary
another, called the agent (mandatario), to act for and in his behalf in
to its tenor, should apply, the law provides that death of the
transactions with third persons.
principal ipso jure extinguishes the authority of the agent to
-derivative in nature, power emanating from principal
sell rendering the sale to a third person in good faith
-agent’s acts are acts of the principal
unenforceable unless at the agent had no knowledge of the
principal’s death at that time (exception under Art. 1931)
Dispositive: CA Decision reversed, CFI decision affirmed. Sale was null Issue:
and void. Whether or not respondent, as sales manager, is acting
merely as an agent for the sole proprietorship
ORIENT AIR SERVICES v. CA Held:

Respondent Edwin merely acted as an agent.


Facts:
American Air, an air carrier offering passenger and air cargo In a contract of agency, a person binds himself to render
transportation, entered into a General Sales Agency Agreement with some service or to do something in representation or on behalf of
Orient Air, authorizing the latter to act as its exclusive general sales another with the latter’s consent.
agent for the sale of air passenger transportation. Orient air failed to The underlying principle of the contract of agency is to
remit the net proceeds of sales for several months prompting American accomplish results by using the services of others – to do a great
Air to undertook the collection of the proceeds of tickets sold originally variety of things like selling, buying, manufacturing, and transporting.
by Orient Air and terminating their agreement. American air instituted Its purpose is to extend the personality of the principal or the
suit against Orient Air for the settlement of past outstanding funds in party for whom another acts and from whom he or she derives the
possession of the latter. Orient Air contended that because of the authority to act.
unpaid overriding commissions it retained the sales proceeds before It is said that the basis of agency is representation, that is,
remitting the balance to American Air. American Air contended that the the agent acts for and on behalf of the principal on matters within the
sale must be made by Orient Air and the sale must be done with the scope of his authority and said acts have the same legal effect as if
use of American Air's ticket stocks in order for it to be entitled to the they were personally executed by the principal.
overriding commission. On the other hand, Orient Air contends that the By this legal fiction, the actual or real absence of the
contractual stipulation of a 3% overriding commission covers the total principal is converted into his legal or juridical presence – qui facit per
revenue of American Air and not merely that derived from ticketed alium facit per se.
sales undertaken by Orient Air because it was an exclusive General
Sales Agent. CA held that Orient Air is entitled to commissions and The elements of the contract of agency are:
ordered American Air to reinstate Orient Air as its General Sales Agent. (1) consent, express or implied, of the parties to establish
Issue: the relationship;
Whether or not Orient Air is entitled to commissions. (2) the object is the execution of a juridical act in relation to a
Whether CA is correct in ordering reinstatement of Orient Air as an third person;
agent. (3) the agent acts as a representative and not for himself;
Held: (4) the agent acts within the scope of his authority
1. Yes. Orient Air was entitled to an overriding commission
based on total flown revenue. American Air's perception that Orient Air In this case, the parties do not dispute the existence of the
was remiss or in default of its obligations under the Agreement was, in agency relationship between respondents ERWIN as principal and
fact, a situation where the latter acted in accordance with the EDWIN as agent. The only cause of the present dispute is whether
Agreement—that of retaining from the sales proceeds its accrued respondent EDWIN exceeded his authority when he signed the Deed
commissions before remitting the balance to American Air. Since the of Assignment thereby binding himself personally to pay the obligations
latter was still obligated to Orient Air by way of such commissions. to petitioner.
Orient Air was clearly justified in retaining and refusing to remit the Article 1897 reinforces the familiar doctrine that an agent,
sums claimed by American Air. The latter's termination of the who acts as such, is not personally liable to the party with whom he
Agreement was, therefore, without cause and basis, for which it should contracts.
be held liable to Orient Air. The same provision, however, presents two instances when
2. No. CA in effect compels American Air to extend its an agent becomes personally liable to a third person:
personality to Orient Air. Such would be violative of the principles and
essence of agency, defined by law as a contract whereby "a person (1) When he expressly binds himself to the obligation; and,
binds himself to render some service or to do something in
representation or on behalf of another, WITH THE CONSENT OR (2) When he exceeds his authority.
AUTHORITY OF THE LATTER. In an agent-principal relationship, the
personality of the principal is extended through the facility of the agent. In the last instance, the agent can be held liable if he does
In so doing, the agent, by legal fiction, becomes the principal, not give the third party sufficient notice of his powers.
authorized to perform all acts which the latter would have him do. Such
a relationship can only be effected with the consent of the principal, We hold that respondent EDWIN does not fall within any
which must not, in any way, be compelled by law or by any court. of the exceptions contained in this provision.

Eurotech Industrial Technologies vs Cuizon "...the position of manager is unique in that it presupposes the grant of
broad powers with which to conduct the business of the principal."
Facts:
The powers of an agent are particularly broad in the case of
Edwin Cuizon, general manager of Impact Systems Sales one acting as a general agent or manager; such a position
owned by Erwin Cuizon, bought one equipment from Petitioner presupposes a degree of confidence reposed and investiture with
Eurotech valued at Php 250,000.00, paying Php 50,000.00 as liberal powers for the exercise of judgment and discretion in
downpayment. When the equipment arrived, petitioner refused to transactions and concerns which are incidental or appurtenant to the
deliver it to the respondent without paying the balance. business entrusted to his care and management. In the absence of an
Edwin and a general manager of Eurotech signed a deed of agreement to the contrary, a managing agent may enter into any
assignment, whereby Impact Systems assigns its outstanding contracts that he deems reasonably necessary or requisite for the
receivable amounting to Php 365,000.00 to Eurotech, which delivered protection of the interests of his principal entrusted to his management.
the equipment thereafter.
But Erwin, the proprietor, still collected the receivables A real party in interest is one who "stands to be benefited or
despite the assignment. After partial payments made, Eurotech made a injured by the judgment in the suit, or the party entitled to the avails of
final demand of Php 295,000.00, excluding interest and attorney's fees. the suit."
For failure to meet the demand, Eurotech filed a complaint
for sum of money, damages, with application for preliminary BORDADOR V. LUZ
attachment. FACTS:
Edwin alleged that he is not a real party in interest in the Petitioners(Bordadors) were engaged in the business of
case for he merely acted as an agent of his principal, Impact Systems. purchase and sale of jewelry and respondent (Brigida D. Luz, also
RTC dropped respondent as a party defendant of the case. known as Aida D. Luz), was their regular customer.
The CA affirmed the order, hence the appeal was made.
On several occasions, respondent Narciso Deganos, the brother period, Overland Express Lines was granted an option to purchase
of Brigida D. Luz, received several pieces of gold and jewelry from for the amount of P3,000.00 per square meter. Thereafter, the lease
petitioners amounting to P382,816.00. [1] shall be on a per month basis with a monthly rental of P3,000.00.
These items and their prices were indicated in seventeen  For failure of Overland Express Lines to pay the increased rental of
receipts covering the same. Eleven of the receipts stated that they P8,000.00 per month effective June 1976, petitioners filed an action
were received for a certain Evelyn Aquino, a niece of Deganos, and the for ejectment against it. The lower court rendered judgment ordering
remaining six indicated that they were received for Brigida D. Luz. [2] Overland Express Lines to vacate the leased premises and to pay
Deganos was supposed to sell the items at a profit and the sum of P624,000.00 representing rentals in arrears and/or as
thereafter remit the proceeds and return the unsold items to damages in the form of reasonable compensation for the use and
petitioners. occupation of the premises during the period of illegal detainer from
Deganos remitted only the sum of P53,207.00. He neither paid June 1976 to November 1982 at the monthly rental of P8,000.00,
the balance of the sales proceeds, nor did he return any unsold item to less payments made, plus 12% interest per annum from November
petitioners. 18, 1976, the date of filing of the complaint, until fully paid, the sum
The total of his unpaid account to petitioners, including interest, of P8,000.00 a month starting December 1982, until Overland
reached the sum ofP725,463.98. [3] Express Lines fully vacates the premises, and to pay P20,000.00 as
ISSUE: and by way of attorney’s fees.
The primary issue in the instant petition is whether or not herein
respondent spouses are liable to petitioners for the latter’s claim for ISSUE: WON Overland Express Lines actually paid the alleged
money and damages in the sum of P725,463.98, plus interests and P300,000.00 to Fidela Dizon, as representative (agent) of petitioners in
attorney’s fees, despite the fact that the evidence does not show that consideration of the option
they signed any of the subject receipts or authorized Deganos to
receive the items of jewelry on their behalf. HELD: No.
RULING:  CA opined that the payment by Overland Express Lines of
No error having been committed by the Court of Appeals in P300,000.00 as partial payment for the leased property, which
affirming the judgment of the court a quo, its challenged decision and petitioners accepted (through Alice A. Dizon) and for which an
resolution are hereby AFFIRMED and the instant petition is official receipt was issued, was the operative act that gave rise to a
DENIED, with double costs against petitioners perfected contract of sale, and that for failure of petitioners to deny
HELD: receipt thereof, Overland Express Lines can therefore assume that
No evidence support the theory of petitioners that Deganos was Alice A. Dizon, acting as agent of petitioners, was authorized by
an agent of Brigida D. Luz and that the latter should consequently be them to receive the money in their behalf. CA went further by stating
held solidarily liable with Deganos in his obligation to that in fact, what was entered into was a “conditional contract of
petitioners. While the quoted statement in the findings of fact of the sale” wherein ownership over the leased property shall not pass to
assailed appellate decision mentioned that Deganos ostensibly acted the Overland Express Lines until it has fully paid the purchase price.
as an agent of Brigida, the actual conclusion and ruling of the Court of Since Overland Express Lines did not consign to the court the
Appeals categorically stated that, “(Brigida Luz) never authorized her balance of the purchase price and continued to occupy the subject
brother (Deganos) to act for and in her behalf in any transaction with premises, it had the obligation to pay the amount of P1,700.00 in
Petitioners x x x.”[15] It is clear, therefore, that even monthly rentals until full payment of the purchase price.
assuming arguendo that Deganos acted as an agent of Brigida, the  In an attempt to resurrect the lapsed option, Overland Express Lines
latter never authorized him to act on her behalf with regard to the gave P300,000.00 to petitioners (thru Alice A. Dizon) on the
transactions subject of this case. erroneous presumption that the said amount tendered would
The Civil Code provides: constitute a perfected contract of sale pursuant to the contract of
Art. 1868. By the contract of agency a person lease with option to buy. There was no valid consent by the
binds himself to render some service or to do petitioners (as co-owners of the leased premises) on the supposed
something in representation or on behalf of sale entered into by Alice A. Dizon, as petitioners’ alleged agent, and
another, with the consent or authority of the latter. Overland Express Lines. The basis for agency is representation and
The basis for agency is representation. Here, there is no a person dealing with an agent is put upon inquiry and must
showing that Brigida consented to the acts of Deganos or authorized discover upon his peril the authority of the agent. As provided in
him to act on her behalf, much less with respect to the particular Article 1868 of the New Civil Code, there was no showing that
transactions involved. Petitioners’ attempt to foist liability on petitioners consented to the act of Alice A. Dizon nor authorized her
respondent spouses through the supposed agency relation with to act on their behalf with regard to her transaction with private
Deganos is groundless and ill-advised. respondent. The most prudent thing private respondent should have
Besides, it was grossly and inexcusably negligent of petitioners done was to ascertain the extent of the authority of Alice A. Dizon.
to entrust to Deganos, not once or twice but on at least six occasions Being negligent in this regard, private respondent cannot seek relief
as evidenced by six receipts, several pieces of jewelry of substantial on the basis of a supposed agency.
value without requiring a written authorization from his alleged  Every person dealing with an agent is put upon inquiry and must
principal. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not
discover upon his peril the authority of the agent.[16] make such inquiry, he is chargeable with knowledge of the agent’s
The records show that neither an express nor an implied agency authority, and his ignorance of that authority will not be any excuse.
was proven to have existed between Deganos and Brigida D. Persons dealing with an assumed agency, whether the assumed
Luz. Evidently, petitioners, who were negligent in their transactions agency be a general or special one, are bound at their peril, if they
with Deganos, cannot seek relief from the effects of their negligence by would hold the principal, to ascertain not only the fact of the agency
conjuring a supposed agency relation between the two respondents but also the nature and extent of the authority, and in case either is
where no evidence supports such claim. controverted, the burden of proof is upon them to establish it.
What was finally proven as a matter of fact is that there was no
such contract between Brigida D. Luz and Narciso Deganos, executed VICTORIAS MILLING CO., INC., vs. COURT OF APPEALS and
or partially executed, and no delivery of any of the items subject of this CONSOLIDATED SUGAR CORPORATION
case was ever made to the former. Facts:

St. Therese Merchandising (STM), who regularly bought


Regina Dizon et al v. CA and Overland Express Lines, Inc. sugar from Victorias Milling Co. (VMC), was issued Shipping
G.R. No. 122544 January 28, 1999 List/Delivery Receipts (SLDRs) by the latter as proof of purchases for
bags of sugar. Thereafter, STM sold to Consolidated Sugar Co. (CSC)
FACTS: its rights in one of the SLDRs. CSC communicated to VMC that it had
 Overland Express Lines, Inc. entered into a Contract of Lease with been authorized by STM to withdraw the sugar covered by SLDR.
Option to Buy with petitioners involving a 1,755.80 square meter Enclosed in the letter were a copy of SLDR and a letter of authority
parcel of land situated at corner MacArthur Highway and South “H” from STM authorizing CSC "to withdraw for and in our behalf the
Street, Diliman, Quezon City. The term of the lease was for 1 year
refined sugar covered by SLDR”. CSC surrendered the SLDR to
commencing from May 16, 1974 up to May 15, 1975. During this
VMC’s warehouse and was allowed to withdraw sugar but after several "1. The sum of P1,750,050.00, with interests from the filing of the
bags were released, it was later on refused to allow further withdrawals second amended complaint;
of sugar. CSC communicated to VMC to allow it to withdraw sugar
because the SLDR had been “sold and endorsed” to it by STM. VMC "2. The sum of P50,000.00, as attorney’s fees;
contended that it could not allow any further withdrawals of sugar
against SLDR because STM had already withdrawn sugar covered by
cleared checks. CSC filed complaint against VMC. VMC contended "3. The sum of P20,000.00, as moral damages
that it had no privity of contract with CSC, the dealings between it and
STM were part of a series of transactions involving only one account or "4. And to pay the costs of suit.
one general contract of sale because CSC was an agent of STM. CSC
countered that the sugar purchases involving SLDR were separate and x x x x x x x x x"4
independent transactions.

Issue: The Facts

Whether or not CSC was an agent of STM.


The facts are narrated by the CA as follows:
Held:
"[Respondents] alleged that between the period of May 2, 1988 and
No. CSC was a buyer of the SLDR form, and not an agent of June 5, 1988, spouses Leonilo and Maria Tuazon purchased a total of
STM. CSC was not subject to STM's control. The question of whether 8,326 cavans of rice from [the deceased Bartolome] Ramos
a contract is one of sale or agency depends on the intention of the [predecessor-in-interest of respondents]. That of this [quantity,] x x x
parties as gathered from the whole scope and effect of the language only 4,437 cavans [have been paid for so far], leaving unpaid 3,889
employed. That the authorization given to CSC contained the phrase cavans valued at P1,211,919.00. In payment therefor, the spouses
"for and in our (STM's) behalf" did not establish an agency. CSC Tuazon issued x x x [several] Traders Royal Bank checks.
communicated to VMC that the SLDR had been “sold and endorsed” to
it by STM. The use of the words "sold and endorsed" means that STM xxxxxxxxx
and CSC intended a contract of sale, and not an agency.

The basis of agency is representation. On the part of the [B]ut when these [checks] were encashed, all of the checks bounced
principal, there must be an actual intention to appoint or an intention due to insufficiency of funds. [Respondents] advanced that before
naturally inferable from his words or actions; and on the part of the issuing said checks[,] spouses Tuazon already knew that they had no
agent, there must be an intention to accept the appointment and act on available fund to support the checks, and they failed to provide for the
payment of these despite repeated demands made on them.
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 "[Respondents] averred that because spouses Tuazon anticipated that
control or direction of another - the principal. Indeed, the very word they would be sued, they conspired with the other [defendants] to
"agency" has come to connote control by the principal. The control defraud them as creditors by executing x x x fictitious sales of their
factor, more than any other, has caused the courts to put contracts properties. They executed x x x simulated sale[s] [of three lots] in favor
between principal and agent in a separate category. of the x x x spouses Buenaventura x x x[,] as well as their residential
lot and the house thereon[,] all located at Nueva Ecija, and another
simulated deed of sale dated July 12, 1988 of a Stake Toyota
MARIA TUAZON, ALEJANDRO P. TUAZON, MELECIO P. TUAZON, registered with the Land Transportation Office of Cabanatuan City on
Spouses ANASTACIO and MARY T. BUENAVENTURA vs. HEIRS September 7, 1988. [Co-petitioner] Melecio Tuazon, a son of spouses
OF BARTOLOME RAMOS Tuazon, registered a fictitious Deed of Sale on July 19, 1988 x x x over
a residential lot located at Nueva Ecija. Another simulated sale of a
Toyota Willys was executed on January 25, 1988 in favor of their other
Stripped of nonessentials, the present case involves the collection of a
son, [co-petitioner] Alejandro Tuazon x x x. As a result of the said
sum of money. Specifically, this case arose from the failure of
sales, the titles of these properties issued in the names of spouses
petitioners to pay respondents’ predecessor-in-interest. This fact was
Tuazon were cancelled and new ones were issued in favor of the
shown by the non-encashment of checks issued by a third person, but
[co-]defendants spouses Buenaventura, Alejandro Tuazon and Melecio
indorsed by herein Petitioner Maria Tuazon in favor of the said
Tuazon. Resultantly, by the said ante-dated and simulated sales and
predecessor. Under these circumstances, to enable respondents to
the corresponding transfers there was no more property left registered
collect on the indebtedness, the check drawer need not be impleaded
in the names of spouses Tuazon answerable to creditors, to the
in the Complaint. Thus, the suit is directed, not against the drawer, but
damage and prejudice of [respondents].
against the debtor who indorsed the checks in payment of the
obligation.
"For their part, defendants denied having purchased x x x rice from
[Bartolome] Ramos. They alleged that it was Magdalena Ramos, wife
The Case
of said deceased, who owned and traded the merchandise and Maria
Tuazon was merely her agent. They argued that it was Evangeline
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, Santos who was the buyer of the rice and issued the checks to Maria
challenging the July 31, 2002 Decision 2 of the Court of Appeals (CA) in Tuazon as payments therefor. In good faith[,] the checks were received
CA-GR CV No. 46535. The decretal portion of the assailed Decision [by petitioner] from Evangeline Santos and turned over to Ramos
reads: without knowing that these were not funded. And it is for this reason
that [petitioners] have been insisting on the inclusion of Evangeline
Santos as an indispensable party, and her non-inclusion was a fatal
"WHEREFORE, the appeal is DISMISSED and the appealed decision
error. Refuting that the sale of several properties were fictitious or
is AFFIRMED."
simulated, spouses Tuazon contended that these were sold because
they were then meeting financial difficulties but the disposals were
On the other hand, the affirmed Decision3 of Branch 34 of the Regional made for value and in good faith and done before the filing of the
Trial Court (RTC) of Gapan, Nueva Ecija, disposed as follows: instant suit. To dispute the contention of plaintiffs that they were the
buyers of the rice, they argued that there was no sales invoice, official
receipts or like evidence to prove this. They assert that they were
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs
merely agents and should not be held answerable."5
and against the defendants, ordering the defendants spouses Leonilo
Tuazon and Maria Tuazon to pay the plaintiffs, as follows:
The corresponding civil and criminal cases were filed by respondents This Court finds no reversible error in the findings of the courts a quo
against Spouses Tuazon. Those cases were later consolidated and that petitioners were the rice buyers themselves; they were not mere
amended to include Spouses Anastacio and Mary Buenaventura, with agents of respondents in their rice dealership. The question of whether
Alejandro Tuazon and Melecio Tuazon as additional defendants. a contract is one of sale or of agency depends on the intention of the
Having passed away before the pretrial, Bartolome Ramos was parties.12
substituted by his heirs, herein respondents.
The declarations of agents alone are generally insufficient to establish
Contending that Evangeline Santos was an indispensable party in the the fact or extent of their authority. 13 The law makes no presumption of
case, petitioners moved to file a third-party complaint against her. agency; proving its existence, nature and extent is incumbent upon the
Allegedly, she was primarily liable to respondents, because she was person alleging it.14 In the present case, petitioners raise the fact of
the one who had purchased the merchandise from their predecessor, agency as an affirmative defense, yet fail to prove its existence.
as evidenced by the fact that the checks had been drawn in her name.
The RTC, however, denied petitioners’ Motion.
The Court notes that petitioners, on their own behalf, sued Evangeline
Santos for collection of the amounts represented by the bounced
Since the trial court acquitted petitioners in all three of the consolidated checks, in a separate civil case that they sought to be consolidated
criminal cases, they appealed only its decision finding them civilly with the current one. If, as they claim, they were mere agents of
liable to respondents. 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. 15 Their filing a suit against
Ruling of the Court of Appeals
her in their own names negates their claim that they acted as mere
agents in selling the rice obtained from Bartolome Ramos.
Sustaining the RTC, the CA held that petitioners had failed to prove the
existence of an agency between respondents and Spouses Tuazon.
Second Issue:
The appellate court disbelieved petitioners’ contention that Evangeline
Santos should have been impleaded as an indispensable party.
Inasmuch as all the checks had been indorsed by Maria Tuazon, who Indispensable Party
thereby became liable to subsequent holders for the amounts stated in
those checks, there was no need to implead Santos.
Petitioners argue that the lower courts erred in not allowing Evangeline
Santos to be impleaded as an indispensable party. They insist that
Hence, this Petition.6 respondents’ Complaint against them is based on the bouncing checks
she issued; hence, they point to her as the person primarily liable for
the obligation.
Issues

We hold that respondents’ cause of action is clearly founded on


Petitioners raise the following issues for our consideration:
petitioners’ failure to pay the purchase price of the rice. The trial court
held that Petitioner Maria Tuazon had indorsed the questioned checks
"1. Whether or not the Honorable Court of Appeals erred in ruling that in favor of respondents, in accordance with Sections 31 and 63 of the
petitioners are not agents of the respondents. Negotiable Instruments Law.16 That Santos was the drawer of the
checks is thus immaterial to the respondents’ cause of action.
"2. Whether or not the Honorable Court of Appeals erred in rendering
judgment against the petitioners despite x x x the failure of the As indorser, Petitioner Maria Tuazon warranted that upon due
respondents to include in their action Evangeline Santos, an presentment, the checks were to be accepted or paid, or both,
indispensable party to the suit."7 according to their tenor; and that in case they were dishonored, she
would pay the corresponding amount.17 After an instrument is
dishonored by nonpayment, indorsers cease to be merely secondarily
The Court’s Ruling liable; they become principal debtors whose liability becomes identical
to that of the original obligor. The holder of a negotiable instrument
The Petition is unmeritorious. need not even proceed against the maker before suing the indorser. 18
Clearly, Evangeline Santos -- as the drawer of the checks -- is not an
indispensable party in an action against Maria Tuazon, the indorser of
First Issue: the checks.

Agency Indispensable parties are defined as "parties in interest without whom


no final determination can be had."19 The instant case was originally
Well-entrenched is the rule that the Supreme Court’s role in a petition one for the collection of the purchase price of the rice bought by Maria
under Rule 45 is limited to reviewing errors of law allegedly committed Tuazon from respondents’ predecessor. In this case, it is clear that
by the Court of Appeals. Factual findings of the trial court, especially there is no privity of contract between respondents and Santos. Hence,
when affirmed by the CA, are conclusive on the parties and this Court. 8 a final determination of the rights and interest of the parties may be
Petitioners have not given us sufficient reasons to deviate from this made without any need to implead her.
rule.
WHEREFORE, the Petition is DENIED and the assailed Decision
In a contract of agency, one binds oneself to render some service or to AFFIRMED. Costs against petitioners.
do something in representation or on behalf of another, with the latter’s
consent or authority.9 The following are the elements of agency: (1) the Alvin Patrimonio v. Napoleon Gutierrez , et. al. G.R. No. 187769
parties’ consent, express or implied, to establish the relationship; (2) June 04, 2014
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 FACTS: The petitioner and the respondent Gutierrez entered into a
the agent acts within the scope of his or her authority. 10 As the basis of business venture under the name of Slam Dunk Corporation, a
agency is representation, there must be, on the part of the principal, an production outfit that produced mini-concerts and shows related to
actual intention to appoint, an intention naturally inferable from the basketball.
principal’s words or actions. In the same manner, there must be an
intention on the part of the agent to accept the appointment and act Patrimonio pre-signed several checks to answer for the expenses of
upon it. Absent such mutual intent, there is generally no agency.11 Slam Dunk. Although signed, these checks had no payee’s name, date
or amount. The blank checks were entrusted to Gutierrez with the sufficient to show that the defendant had notice that there was
specific instruction not to fill them out without previous notification to something wrong about his assignor’s acquisition of title, although he
and approval by the petitioner. did not have notice of the particular wrong that was committed. In the
present case, Marasigan’s knowledge that the petitioner is not a party
or a privy to the contract of loan, and correspondingly had no obligation
Without the petitioner’s knowledge and consent, Gutierrez went to
or liability to him, renders him dishonest, hence, in bad faith.
Marasigan to secure a loan in the amount of P200,000.00 on the
excuse that the petitioner needed the money for the construction of his
house. In addition to the payment of the principal, Gutierrez assured Yet, it does not follow that simply because he is not a holder in due
Marasigan that he would be paid an interest of 5% per month. course, Marasigan is already totally barred from recovery.

Marasigan acceded to Gutierrez’ request and gave him P200,000.00. Notably, Gutierrez was only authorized to use the check for business
Gutierrez simultaneously delivered to Marasigan one of the blank expenses; thus, he exceeded the authority when he used the check to
checks the petitioner pre-signed with Pilipinas Bank with the blank pay the loan he supposedly contracted for the construction of
portions filled out with the words “Cash” “Two Hundred Thousand petitioner’s house. This is a clear violation of the petitioner’s instruction
Pesos Only”, and the amount of “P200,000.00.” to use the checks for the expenses of Slam Dunk. It cannot therefore
be validly concluded that the check was completed strictly in
accordance with the authority given by the petitioner.
Marasigan deposited the check but it was dishonored for the reason
“ACCOUNT CLOSED.” It was later revealed that petitioner’s account
with the bank had been closed. Sally Yoshizaki, Petitioner, vs. Joy Training Center of Aurora,
Inc., Respondents
G.R. No. 174978; July 31, 2013
Marasigan sought recovery from Gutierrez, to no avail. He thereafter
sent several demand letters to the petitioner asking for the payment of
Facts: Richard and Linda Johnson were members of Joy Training’s
P200,000.00, but his demands likewise went unheeded. Consequently,
Board of Trustees who sold the real properties, a wrangler jeep, and
he filed a criminal case for violation of B.P. 22 against the petitioner.
other personal properties in favor of the spouses Sally and Yoshio
Yoshizaki. Joy Training filed an action for cancellation of sales alleging
RTC— in favor of Marasigan. It found that the petitioner, in issuing the that the spouses Johnson is without the requisite authority from the
pre-signed blank checks, had the intention of issuing a negotiable Board of Directors. The RTC ruled in favor of the spouses Yoshizaki. It
instrument, albeit with specific instructions to Gutierrez not to negotiate found that Joy Training owned the real properties and it authorized he
or issue the check without his approval. RTC declared Marasigan as a spouses Johnson to sell the real properties. It recognized that there
holder in due course and accordingly dismissed the petitioner’s were only five actual members of the board of trustees; consequently,
complaint for declaration of nullity of the loan. It ordered the petitioner a majority of the board of trustees validly authorized the sale. It also
to pay Marasigan the face value of the check with a right to claim ruled that the sale of personal properties was valid because they were
reimbursement from Gutierrez. CA— affirmed the RTC ruling. registered in the spouses Johnson’s name. The CA upheld the RTC’s
jurisdiction over the case but reversed its ruling with respect to the sale
ISSUE: Whether or not Marasigan is a holder in due course thus may of real properties. It also ruled that the resolution is void because it was
hold Patrimonio liable not approved by a majority of the board of trustees.
HELD: No. Section 14 of the Negotiable Instruments Law provides for
when blanks may be filled. This provision applies to an incomplete but Issue: Was there a contract of agency to sell the real properties
delivered instrument. Under this rule, if the maker or drawer delivers a between Joy Training and the spouses Johnson?
pre-signed blank paper to another person for the purpose of converting
it into a negotiable instrument, that person is deemed to have prima
facie authority to fill it up. It merely requires that the instrument be in Ruling: The SC ruled that there was no contract of agency between
the possession of a person other than the drawer or maker and from Joy Training and the spouses Johnson to sell the parcel of land with its
such possession, together with the fact that the instrument is wanting improvements. Art. 1868 of the Civil Code defines a contract of agency
in a material particular, the law presumes agency to fill up the blanks. 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.” It may be express, or implied from
In order however that one who is not a holder in due course can the acts of the principal, from his silence or lack of action, or his failure
enforce the instrument against a party prior to the instrument’s to repudiate the agency, knowing that another person is acting on his
completion, two requisites must exist: (1) that the blank must be filled behalf without authority. In this case, the presented evidence did not
strictly in accordance with the authority given; and (2) it must be filled convince the SC of the existence of the contract of agency to sell the
up within a reasonable time. If it was proven that the instrument had real properties. The certification is a mere general power of attorney
not been filled up strictly in accordance with the authority given and which comprises all of Joy training. Art. 1877 of CC clearly states that
within a reasonable time, the maker can set this up as a personal an agency couched in general terms comprises only acts of
defense and avoid liability. administration, even if the principal should state that he withholds no
power or that the agent may execute such acts as he may authorize as
Section 52(c) of the NIL states that a holder in due course is one who general and unlimited management.
takes the instrument “in good faith and for value.” It also provides in JUSAYAN, ET. AL v. SOMBILLA
Section 52(d) that in order that one may be a holder in due course, it is
necessary that at the time it was negotiated to him he had no notice of
any infirmity in the instrument or defect in the title of the person
negotiating it. The Court resolves whether a lease of agricultural land between the
respondent and the predecessor of the petitioners was a civil law lease
or an agricultural lease. The resolution is determinative of whether or
Acquisition in good faith means taking without knowledge or notice of not the Regional Trial Court (RTC) had original exclusive jurisdiction
equities of any sort which could beset up against a prior holder of the over the action commenced by the predecessor of the petitioners
instrument. It means that he does not have any knowledge of fact against the respondent.
which would render it dishonest for him to take a negotiable paper. The
absence of the defense, when the instrument was taken, is the
essential element of good faith. The Case

Under review on certiorari is the decision promulgated on October 20,


In order to show that the defendant had “knowledge of such facts that 2003,1 whereby the Court of Appeals (CA) reversed the judgment in
his action in taking the instrument amounted to bad faith,” it is not favor of the petitioners rendered on April 13, 1999 in CAR Case No.
necessary to prove that the defendant knew the exact fraud that was 17117 entitled Timoteo Jusayan, Manuel Jusayan, Alfredo Jusayan
practiced upon the plaintiff by the defendant’s assignor, it being
and Michael Jusayan v. Jorge Sombilla by the RTC, Branch 30, in Iloilo third person; (c) the agent acts as representative and not for himself;
City. and (d) the agent acts within the scope of his authority. 12 Whether or
not an agency has been created is determined by the fact that one is
Antecedents representing and acting for another.13 The law does not presume
agency; hence, proving its existence, nature and extent is incumbent
Wilson Jesena (Wilson) owned four parcels of land situated in New upon the person alleging it.14chanRoblesvirtualLawlibrary
Lucena, Iloilo. On June 20, 1970, Wilson entered into an agreement
with respondent Jorge Sombilla (Jorge),3 wherein Wilson designated
The claim of Timoteo that Jorge was his agent contradicted the verbal
Jorge as his agent to supervise the tilling and farming of his riceland in
agreement he had fashioned with Jorge. By assenting to Jorge’s
crop year 1970-1971. On August 20, 1971, before the expiration of the
agreement, Wilson sold the four parcels of land to Timoteo Jusayan possession of the land sans accounting of the cultivation expenses and
(Timoteo).4 Jorge and Timoteo verbally agreed that Jorge would retain actual produce of the land provided that Jorge annually delivered to
possession of the parcels of land and would deliver 110 cavans of him 110 cavans of palay and paid the irrigation fees belied the very
palay annually to Timoteo without need for accounting of the cultivation nature of agency, which was representation. The verbal agreement
expenses provided that Jorge would pay the irrigation fees. From 1971 between Timoteo and Jorge left all matters of agricultural production to
to 1983, Timoteo and Jorge followed the arrangement. In 1975, the the sole discretion of Jorge and practically divested Timoteo of the right
parcels of land were transferred in the names of Timoteo’s sons, to exercise his authority over the acts to be performed by Jorge. While
namely; Manuel, Alfredo and Michael (petitioners). In 1984, Timoteo in possession of the land, therefore, Jorge was acting for himself
sent several letters to Jorge terminating his administration and instead of for Timoteo. Unlike Jorge, Timoteo did not benefit whenever
demanding the return of the possession of the parcels of land.5 the production increased, and did not suffer whenever the production
decreased. Timoteo’s interest was limited to the delivery of the 110
Due to the failure of Jorge to render accounting and to return the cavans of palay annually without any concern about how the cultivation
possession of the parcels of land despite demands, Timoteo filed on could be improved in order to yield more produce.
June 30, 1986 a complaint for recovery of possession and accounting
against Jorge in the RTC (CAR Case No. 17117). Following Timoteo’s On the other hand, to prove the tenancy relationship, Jorge presented
death on October 4, 1991, the petitioners substituted him as the handwritten receipts15 indicating that the sacks of palay delivered to
plaintiffs. and received by one Corazon Jusayan represented payment of rental.
In this regard, rental was the legal term for the consideration of the
In his answer,6 Jorge asserted that he enjoyed security of tenure as the
lease.16 Consequently, the receipts substantially proved that the
agricultural lessee of Timoteo; and that he could not be dispossessed
of his landholding without valid cause. contractual relationship between Jorge and Timoteo was a lease.

Yet, the lease of an agricultural land can be either a civil law or an


Ruling of the RTC
agricultural lease. In the civil law lease, one of the parties binds himself
In its decision rendered on April 13, 1999, 7 the RTC upheld the to give to another the enjoyment or use of a thing for a price certain,
contractual relationship of agency between Timoteo and Jorge; and and for a period that may be definite or indefinite.17 In the agricultural
ordered Jorge to deliver the possession of the parcels of land to the lease, also termed as a leasehold tenancy, the physical possession of
petitioners. the land devoted to agriculture is given by its owner or legal possessor
(landholder) to another (tenant) for the purpose of production through
Judgment of the CA labor of the latter and of the members of his immediate farm
Jorge appealed to the CA. household, in consideration of which the latter agrees to share the
harvest with the landholder, or to pay a price certain or ascertainable,
In the judgment promulgated on October 20, 2003, 8 the CA either in produce or in money, or in both. 18 Specifically, in Gabriel v.
reversed the RTC and dismissed the case, declaring that the Pangilinan,19 this Court differentiated between a leasehold tenancy and
contractual relationship between the parties was one of agricultural a civil law lease in the following manner, namely: (1) the subject matter
tenancy; and that the demand of Timoteo for the delivery of his share of a leasehold tenancy is limited to agricultural land, but that of a civil
in the harvest and the payment of irrigation fees constituted an
law lease may be rural or urban property; (2) as to attention and
agrarian dispute that was outside the jurisdiction of the RTC, and well
cultivation, the law requires the leasehold tenant to personally attend to
within the exclusive jurisdiction of the Department of Agriculture (DAR)
pursuant to Section 3(d) of Republic Act No. 6657 (Comprehensive and cultivate the agricultural land; the civil law lessee need not
Agrarian Reform Law of 1988). personally cultivate or work the thing leased; (3) as to purpose, the
landholding in leasehold tenancy is devoted to agriculture; in civil law
lease, the purpose may be for any other lawful pursuits; and(4) as to
the law that governs, the civil law lease is governed by the Civil Code,
Issues
but the leasehold tenancy is governed by special laws.
The petitioners now appeal upon the following issues, namely: The sharing of the harvest in proportion to the respective contributions
a.) Whether or not the relationship between the petitioners and of the landholder and tenant, otherwise called share tenancy,20 was
respondent is that of agency or agricultural leasehold; and
abolished on August 8, 1963 under Republic Act No. 3844. To date, the
b.) Whether or not RTC, Branch 30, Iloilo City as Regional Trial Court only permissible system of agricultural tenancy is leasehold
and Court of Agrarian Relations, had jurisdiction over the herein tenancy,21 a relationship wherein a fixed consideration is paid instead
case.9
of proportionately sharing the harvest as in share tenancy.

In Teodoro v. Macaraeg,22 this Court has synthesized the elements of


Ruling of the Court
agricultural tenancy to wit: (1) the object of the contract or the
The petition for review lacks merit. relationship is an agricultural land that is leased or rented for the
purpose of agricultural production; (2) the size of the landholding is
To properly resolve whether or not the relationship between Timoteo such that it is susceptible of personal cultivation by a single person
and Jorge was that of an agency or a tenancy, an analysis of the with the assistance of the members of his immediate farm household;
concepts of agency and tenancy is in order. (3) the tenant-lessee must actually and personally till, cultivate or
operate the land, solely or with the aid of labor from his immediate farm
In agency, the agent binds himself to render some service or to do household; and (4) the landlord-lessor, who is either the lawful owner
something in representation or on behalf of the principal, with the or the legal possessor of the land, leases the same to the tenant-
consent or authority of the latter. 10 The basis of the civil law relationship lessee for a price certain or ascertainable either in an amount of
of agency is representation,11 the elements of which are, namely: (a) money or produce.
the relationship is established by the parties’ consent, express or
implied; (b) the object is the execution of a juridical act in relation to a
It can be gleaned that in both civil law lease of an agricultural land and of the Department of Agriculture and the Department of Environment
agricultural lease, the lessor gives to the lessee the use and and Natural Resources.
possession of the land for a price certain. Although the purpose of the
civil law lease and the agricultural lease may be agricultural cultivation We hold that the CA gravely erred. The rule is settled that the
and production, the distinctive attribute that sets a civil law lease apart jurisdiction of a court is determined by the statute in force at the time of
from an agricultural lease is the personal cultivation by the lessee. An the commencement of an action.36 In 1980, upon the passage of Batas
agricultural lessee cultivates by himself and with the aid of those of his Pambansa Blg. 129 (Judiciary Reorganization Act), the Courts of
immediate farm household. Conversely, even when the lessee is in Agrarian Relations were integrated into the Regional Trial Courts and
possession of the leased agricultural land and paying a consideration the jurisdiction of the Courts of Agrarian Relations was vested in the
for it but is not personally cultivating the land, he or she is a civil law Regional Trial Courts.37 It was only on August 29, 1987, when
lessee. Executive Order No. 229 took effect, that the general jurisdiction of the
Regional Trial Courts to try agrarian reform matters was transferred to
The only issue remaining to be resolved is whether or not Jorge the DAR. Therefore, the RTC still had jurisdiction over the dispute at
personally cultivated the leased agricultural land. the time the complaint was filed in the RTC on June 30, 1986.

Cultivation is not limited to the plowing and harrowing of the land, but WHEREFORE, the Court GRANTS the petition for review
includes the various phases of farm labor such as the maintenance, on certiorari by PARTIALLY AFFIRMING the decision of the Court of
repair and weeding of dikes, paddies and irrigation canals in the Appeals to the extent that it upheld the tenancy relationship of the
landholding. Moreover, it covers attending to the care of the growing parties; DISMISSES the complaint for recovery of possession and
plants,23 and grown plants like fruit trees that require watering, accounting; and ORDERS the petitioners to pay the costs of suit.
fertilizing, uprooting weeds, turning the soil, fumigating to eliminate
plant pests24 and all other activities designed to promote the growth The parties are ordered to comply with their undertakings as
and care of the plants or trees and husbanding the earth, by general agricultural lessor and agricultural lessee.
industry, so that it may bring forth more products or fruits. 25 In Tarona v.
Court of Appeals,26 this Court ruled that a tenant is not required to be SO ORDERED.
physically present in the land at all hours of the day and night provided
ROSA LIM vs. CA
that he lives close enough to the land to be cultivated to make it FACTS:
physically possible for him to cultivate it with some degree of Lim, who arrived from Cebu, received from Suarez 2 pieces of jewelry:
constancy. a diamond ring and a bracelet to be sold on commission basis. Lim
returned the bracelet to Suarez, but failed to return the diamond ring or
Nor was there any question that the parcels of agricultural land with a to turn over the proceeds thereof if sold. Suarez wrote a demand letter
total area of 7.9 hectares involved herein were susceptible of asking for the return of the ring or the proceeds of the sale thereof.
cultivation by a single person with the help of the members of his Lim, however, alleges that she had returned both the ring and the
immediate farm household. As the Court has already observed, an bracelet, hence she no longer has any liability.
agricultural land of an area of four hectares, 27 or even of an area as
large as 17 hectares,28 could be personally cultivated by a tenant by Lim has a different version of the facts. She denies the transaction was
himself or with help of the members of his farm household. for her to sell the 2 pieces of jewelry on commission basis. She told
Suarez that she would consider buying the pieces of jewelry for her
It is elementary that he who alleges the affirmative of the issue has the own use. Lim took the pieces of jewelry and asked Suarez to prepare
burden of proof.29 Hence, Jorge, as the one claiming to be an the necessary papers for her to sign because she was not yet
agricultural tenant, had to prove all the requisites of his agricultural prepared to buy it. The document was prepared, and Lim signed it, but
tenancy by substantial evidence.30 In that regard, his knowledge of and she claims that she didn’t agree to the terms of the receipt regarding
familiarity with the landholding, its production and the instances when the sale on commission basis. Her ‘proof’ is that she signed the
the landholding was struck by drought definitely established that he document on the upper portion and not at the bottom where a space is
personally cultivated the land.31 His ability to farm the seven hectares provided for the signature of the persons receiving the jewelry.
of land despite his regular employment as an Agricultural Technician at
ISSUE:
the Municipal Agriculture Office 32 was not physically impossible for him
Was the real transaction between Lim & Suarez a real contract of
to accomplish considering that his daughter, a member of his agency to sell on commission basis as set out in the receipt or a sale
immediate farm household, was cultivating one of the parcels of the on credit?
land.33 Indeed, the law did not prohibit him as the agricultural lessee
who generally worked the land himself or with the aid of member of his HELD:
immediate household from availing himself occasionally or temporarily The transaction between them was a contract of agency to sell on
of the help of others in specific jobs.34 In short, the claim of the commission basis. Lim’s signature indeed appears on the upper
petitioners that the employment of Jorge as an Agricultural Technician portion of the receipt below, but this fact doesn’t have the effect of
at the Municipal Agriculture Office disqualified him as a tenant lacked altering the terms of the transaction form a contract of agency to sell
factual or legal basis. on commission basis to a contract of sale. The moment she affixed her
signature thereon, Lim became bound by all the terms stipulated in the
Section 7 of Republic Act No. 3844 provides that once there is an receipt.
agricultural tenancy, the agricultural tenant’s right to security of tenure
is recognized and protected. The landowner cannot eject the Contracts shall be obligatory in whatever form they may have been
agricultural tenant from the land unless authorized by the proper court entered into, provided all the essential requisites for their validity are
for causes provided by law. Section 36 of Republic Act No. 3844, as present. However there are some provisions in law w/c require certain
amended by Republic Act No. 6389, enumerates the several grounds formalities for particular contracts. The 1 st is when the form is required
for the valid dispossession of the tenant. 35It is underscored, however, for the validity of the contract; the 2 nd is when it is required to make the
contract effective as against 3rd parties; and the 3rd is for the purpose of
that none of such grounds for valid dispossession of landholding was
proving the existence of the contract, e.g. those included in the Statute
attendant in Jorge’s case.
of Frauds. A contract of agency to sell on commission basis doesn’t
belong to any of these 3 categories, hence it is valid and enforceable in
Although the CA has correctly categorized Jorge’s case as an agrarian
whatever form they may be entered into.
dispute, it ruled that the RTC lacked jurisdiction over the case based
on Section 50 of Republic Act No. 6657, which vested in the There is only 1 type of legal instrument where the law strictly
Department of Agrarian Reform (DAR) the primary jurisdiction to prescribes the location of the signature of the parties thereto. This is in
determine and adjudicate agrarian reform matters and the exclusive case of notarial wills. But in the case at bar, the parties didn’t execute a
original jurisdiction over all matters involving the implementation of notarial will but a simple contract of agency to sell on commission
agrarian reform except disputes falling under the exclusive jurisdiction basis, thus making the position of Lim’s signature immaterial.
as Exhibit A proves that petitioner Rosa Lim received the pieces
of jewelry in trust from Vicky Suarez to be sold on commission
SYLLABUS basis. Second, petitioner misappropriated or converted the
jewelry to her own use; and, third, such misappropriation
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACTS obviously caused damaged and prejudice to the private
ARE OBLIGATORY IN WHATEVER FORM ENTERED; PLACE respondent.
OF SIGNATURE IMMATERIAL; PARTY BOUND THEREON
THE MOMENT SHE AFFIXED HER SIGNATURE. - Rosa Lims
signature indeed appears on the upper portion of the receipt EQUITABLE PCI BANK, formerly EQUITABLE BANKING
immediately below the description of the items taken. We find CORPORATION, petitioner,
that this fact does not have the effect of altering the terms of the vs.
transaction from a contract of agency to sell on commission ROSITA KU, respondent.
basis to a contract of sale. Neither does it indicate absence or
vitiation of consent thereto on the part of Rosa Lim which would
KAPUNAN, J.:
make the contract void or voidable. The moment she affixed her
signature thereon, petitioner became bound by all the terms
stipulated in the receipt. She, thus, opened herself to all the legal Can a person be evicted by virtue of a decision rendered in an
obligations that may arise from their breach. This is clear from ejectment case where she was not joined as a party? This was the
Article 1356 of the New Civil Code which provides: Contracts issue that confronted the Court of Appeals, which resolved the issue in
shall be obligatory in whatever form they may have been entered the negative. To hold the contrary, it said, would violate due process.
into, provided all the essential requisites for their validity are Given the circumstances of the present case, petitioner Equitable PCI
present. In the case before us, the parties did not execute a Bank begs to differ. Hence, this petition.
notarial will but a simple contract of agency to sell on
commission basis, thus making the position of petitioners
On February 4, 1982, respondent Rosita Ku, as treasurer of Noddy
signature thereto immaterial.
Dairy Products, Inc., and Ku Giok Heng, as Vice-President/General
2. ID.; ID.; CONTRACT OF AGENCY; NO FORMALITIES Manager of the same corporation, mortgaged the subject property to
REQUIRED. - There are some provisions of the law which the Equitable Banking Corporation, now known as Equitable PCI Bank
require certain formalities for particular contracts. The first is to secure Noddy Inc.’s loan to Equitable. The property, a residential
when the form is required for the validity of the contract; the house and lot located in La Vista, Quezon City, was registered in
second is when it is required to make the contract effective as respondent’s name.
against the third parties such as those mentioned in Articles
1357 and 1358; and the third is when the form is required for the Noddy, Inc. subsequently failed to pay the loan secured by the
purppose of proving the existence of the contract, such as those mortgage, prompting petitioner to foreclose the property extrajudicially.
provided in the Statute of Frauds in Article 1403. A contract of As the winning bidder in the foreclosure sale, petitioner was issued a
agency to sell on commission basis does not belong to any of certificate of sale. Respondent failed to redeem the property. Thus, on
these three categories, hence, it is valid and enforceable in December 10, 1984, the Register of Deeds canceled the Transfer
whatever form it may be entered into. Certificate of Title in the name of respondent and a new one was
issued in petitioner’s name.
3. REMEDIAL LAW; EVIDENCE; WEIGHT THEREOF NOT
DETERMINED BY SUPERIORITY IN NUMBERS OF
WITNESSES. - Weight of evidence is not determined On May 10, 1989, petitioner instituted an action for ejectment before
mathematically by the numerical superiority of the witnesses the Quezon City Metropolitan Trial Court (MeTC) against respondent’s
testifying to a given fact. It depends upon its practical effect in father Ku Giok Heng. Petitioner alleged that it allowed Ku Giok Heng to
inducing belief on the part of the judge trying the case. remain in the property on the condition that the latter pay rent. Ku Giok
Heng’s failure to pay rent prompted the MeTC to seek his ejectment.
4. ID.; ID.; CREDIBILITY; FINDINGS OF THE TRIAL AND Ku Giok Heng denied that there was any lease agreement over the
APPELLATE COURTS GENERALLY NOT INTERFERED WITH property.1âwphi1.nêt
ON APPEAL. - In the case at bench, both the trial court and the
Court of Appeals gave weight to the testimony of Vicky Suarez
that she did not authorize Rosa Lim to return the pieces of On December 8, 1994, the MeTC rendered a decision in favor of
jewelry to Nadera. We shall not disturb this finding of the petitioner and ordered Ku Giok Heng to, among other things, vacate
respondent court. It is well settled that we should not interfere the premises. It ruled:
with the judgment of the trial court in determining the credibility of
witnesses, unless there appears in the record some fact or x x x for his failure or refusal to pay rentals despite proper
circumstances of weight and influence which has been demands, the defendant had not established his right for his
overlooked or the significance of which has been continued possession of or stay in the premises acquired by
misinterpreted. The reason is that the trial court is in a better the plaintiff thru foreclosure, the title of which had been duly
position to determine questions involving credibility having heard transferred in the name of the plaintiff. The absence of lease
the witnesses and having observed their deportment and agreement or agreement for the payment of rentals is of no
manner of testifying during the trial. moment in the light of the prevailing Supreme Court ruling on
the matter. Thus: "It is settled that the buyer in foreclosure
5. CRIMINAL LAW; ESTAFA WITH ABUSE OF CONFIDENCE;
sale becomes the absolute owner of the property purchased
ELEMENTS. - The elements of estafa with abuse of confidence
if it is not redeemed during the period of one (1) year after
under this subdivision are as follows: (1) That money, goods, or
the registration of the sale is as such he is entitled to the
other personal property be received by the offender in trust, or
possession of the property and the demand at any time
on commission, or for administration, or under any other
following the consolidation of ownership and the issuance to
obligation involving the duty to make delivery of, or to return, the
him of a new certificate of title. The buyer can, in fact,
same; (2) That there be misappropriation or conversion of such
demand possession of the land even during the redemption
money or property by the offender or denial on his part of such
period except that he has to post a bond in accordance with
receipt; (3) That such misappropriation or conversion or denial is
Section 7 of Act No. 3155 as amended. Possession of the
to the prejudice of another; and (4) That there is a demand made
land then becomes an absolute right of the purchaser as
by the offended party to the offender (Note: The 4th element is
confirmed owner. Upon proper application and proof of title,
not necessary when there is evidence of misappropriation of the
the issuance of a writ of possession becomes a ministerial
goods by the defendant).
duty of the court. (David Enterprises vs. IBAA[,] 191 SCRA
6. ID.; ID.; ID.; PRESENT IN CASE AT BAR. All the elements of 116).1
estafa under Article 315, Paragraph 1(b) of the Revised Penal
Code, are present in the case at bench. First, the receipt marked
Ku Giok Heng did not appeal the decision of the MeTC. Instead, he (1) I am an employee of Unique Industrial & Allied Services,
and his daughter, respondent Rosita Ku, filed on December 20, 1994, Inc. (Unique) a corporation duly organized and existing
an action before the Regional Trial Court (RTC) of Quezon City to under Philippine laws with principal place of business at
nullify the decision of the MeTC. Finding no merit in the complaint, the 1206 Vito Cruz St., Malate, Manila, and I am assigned with
RTC on September 13, 1999 dismissed the same and ordered the the Equitable PCI Bank, Mail and Courier Department,
execution of the MeTC decision. Equitable PCI Bank Tower II, cor. Makati Avenue and H.V.
dela Costa St., Makati City, Metro Manila;
Respondent filed in the Court of Appeals (CA) a special civil action
for certiorari assailing the decision of the RTC. She contended that she (2) Under the contract of services between the Bank and
was not made a party to the ejectment suit and was, therefore, Unique, it is my official duty and responsibility to receive and
deprived of due process. The CA agreed and, on March 31, 2000, pick-up from the Manila Central Post Office (CPO) the
rendered a decision enjoining the eviction of respondent from the various mails, letters, correspondence, and other mail
premises. matters intended for the bank’s various departments and
offices at Equitable Bank Building, 262 Juan Luna St.,
Binondo, Manila. This building, however, also houses various
On May 10, 2000, Equitable PCI Bank filed in this Court a motion for
other offices or tenants not related to the Bank.
an extension of 30 days from May 10, 2000 or until June 9, 2000 to file
its petition for review of the CA decision. The motion alleged that the
Bank received the CA decision on April 25, 2000. 2 The Court granted (3) I am not the constituted agent of "Curato Divina Mabilog
the motion for a 30-day extension "counted from the expiration of the Niedo Magturo Pagaduan Law Office" whose former address
reglementary period" and "conditioned upon the timeliness of the filing is at Rm. 405 4/F Equitable Bank Bldg., 262 Juan Luna St.,
of [the] motion [for extension]."3 Binondo, Manila, for purposes of receiving their incoming
mail matters; neither am I any such agent of the various
other tenants of the said Building. On occasions when I
On June 13, 2000,4 Equitable Bank filed its petition, contending that
receive mail matters for said law office, it is only to help them
there was no need to name respondent Rosita Ku as a party in the
receive their letters promptly.
action for ejectment since she was not a resident of the premises nor
was she in possession of the property.
(4) On April 24, 2000, I received the registered letter sent by
the Court of Appeals, covered by Registry Receipt No.
The petition is meritorious.
125234 and Delivery No. 4880 (copy of envelope attached
as Annex "A") together with other mail matters, and brought
Generally, no man shall be affected by any proceeding to which he is a them to the Mail and Courier Department;
stranger, and strangers to a case are not bound by judgment rendered
by the court.5 Nevertheless, a judgment in an ejectment suit is binding
(5) After sorting out these mail matters, on April 25, 2000, I
not only upon the defendants in the suit but also against those not
erroneously recorded them on page 422 of my logbook as
made parties thereto, if they are:
having been received by me on said dated April 25, 2000
(copy of page 422 is attached as Annex "B").
a) trespassers, squatters or agents of the defendant fraudulently
occupying the property to frustrate the judgment;
(6) On April 27, 2000, this letter was sent by the Mail and
Courier Department to said Law Office whose receiving clerk
b) guests or other occupants of the premises with the permission of the Darwin Bawar opened the letter and stamped on the "Notice
defendant; of Judgment" their actual date of receipt: "April 27, 2000"
(copy of the said Notice with the date so stamped is attached
as Annex "C").
c) transferees pendente lite;

(7) On May 8, 2000, Atty. Roland A. Niedo of said law office


d) sub-lessees; inquired from me as to my actual date of receipt of this letter,
and I informed him that based on my logbook, I received it
e) co-lessees; or on April 25, 2000.

f) members of the family, relatives and other privies of the defendant. 6 (8) I discovered this error only on September 6, 2000, when I
was informed by Atty. Niedo that Postmaster VI Alfredo C.
Mabanag, Jr. of the Central Post Office, Manila, issued a
Thus, even if respondent were a resident of the property, a point certification that I received the said mail on April 24, 2000.
disputed by the parties, she is nevertheless bound by the judgment of
the MeTC in the action for ejectment despite her being a non-party
thereto. Respondent is the daughter of Ku Giok Heng, the defendant in (9) I hereby confirm that this error was caused by an honest
the action for ejectment. mistake.

Respondent nevertheless claims that the petition is defective. The Petitioner argues that receipt on April 25, 2000 by Joel Rosales, who
bank alleged in its petition that it received a copy of the CA decision was not an agent of its counsel’s law office, did not constitute notice to
on April 25, 2000. A Certification dated June 6, 2000 issued by the its counsel, as required by Sections 2 10 and 10,11 Rule 13 of the Rules
Manila Central Post Office reveals, however, that the copy "was duly of Court. To support this contention, petitioner cites Philippine Long
delivered to and received by Joel Rosales (Authorized Representative) Distance Telephone Co. vs. NLRC.12 In said case, the bailiff served the
on April 24, 2000."7 Petitioner’s motion for extension to file this petition decision of the National Labor Relations Commission at the ground
was filed on May 10, 2000, sixteen (16) days from the petitioner’s floor of the building of the petitioner therein, the Philippine Long
receipt of the CA decision (April 24, 2000) and one (1) day beyond the Distance Telephone Co., rather than on the office of its counsel, whose
reglementary period for filing the petition for review (May 9, 2000). address, as indicated in the notice of the decision, was on the ninth
floor of the building. We held that:
Petitioner however maintains "its honest representation of having
received [a copy of the decision] on April 25, 2000." 8 Appended as x x x practical considerations and the realities of the situation
Annex "A" to petitioner’s Reply is an Affidavit 9 dated October 27, 2000 dictate that the service made by the bailiff on March 23,
and executed by Joel Rosales, who was mentioned in the Certification 1981 at the ground floor of the petitioner’s building and not at
as having received the decision. The Affidavit states: the address of record of petitioner’s counsel on record at the
9th floor of the PLDT building cannot be considered a valid
service. It was only when the Legal Services Division inherited by the Condes; that Eusebio Amarille was authorized by the
actually received a copy of the decision on March 26, 1981 Condes to repurchase the land; that they received P165 in
that a proper and valid service may be deemed to have been consideration of the sale; and that the Condes, by virtue of the
made. x x x. repurchase, shall repossess the said parcels of land. Neither the
vendees-a-retro, Pio Altera nor Casimira Pasagui, were signatories to
that document. Many years later, the pacto de retro document was
Applying the foregoing provisions and jurisprudence, petitioner submits
found. In June 1965, Pio Altera sold the disputed lot to Ramon and
that actual receipt by its counsel was on April 27, 2000, not April 25,
Catalina Conde, whose relationship to Dominga does not appear on
2000. Following the argument to its logical conclusion, the motion for
record. Consequently, in 1969, Dominga filed with the CFI of Leyte a
extension to file the petition for review was even filed two (2) days
complaint for quieting of title and declaration of ownership against all
before the lapse of the 15-day reglementary period. That counsel
the respondents. The trial court dismissed the complaint and ordered
treated April 25, 2000 and not April 27, 2000 as the date of receipt was
Dominga to vacate the premises and to deliver the disputed land to
purportedly intended to obviate respondent’s possible argument that
respondents. The Court of Appeals affirmed the decision and ruled that
the 15-day period had to be counted from April 25, 2000.
Dominga failed to validly exercise her right to repurchase because the
Memorandum of Repurchase was not signed by the Alteras but by
The Court is not wholly convinced by petitioner’s argument. The Paciente, who was not authorized to sign for the said vendees-a-retro.
Affidavit of Joel Rosales states that he is "not the constituted agent of
‘Curato Divina Mabilog Nedo Magturo Pagaduan Law Office.’" An ISSUE:
agency may be express but it may also be implied from the acts of the Whether or not there was an implied agency when Cordero
principal, from his silence, or lack of action, or his failure to repudiate signed the Memorandum of Repurchase.
the agency, knowing that another person is acting on his behalf without
authority.13 Likewise, acceptance by the agent may also be express, HELD:
although it may also be implied from his acts which carry out the
agency, or from his silence or inaction according to the Yes. Although the contending parties were legally wanting in
circumstances.14 In this case, Joel Rosales averred that "[o]n their respective actuations, for example Dominga did nothing to
occasions when I receive mail matters for said law office, it is only to formalize her repurchase while the Alteras did nothing to clear their title
help them receive their letters promptly," implying that counsel had of the encumbrance therein regarding Dominga’s right to repurchase,
allowed the practice of Rosales receiving mail in behalf of the former. the repurchase by Dominga is supported by her admission that she
There is no showing that counsel had objected to this practice or took had been in possession since 1945, the date of the repurchase, and
steps to put a stop to it. The facts are, therefore, inadequate for the has been paying land taxes thereon since then. No new agreement
Court to make a ruling in petitioner’s favor. was entered into by the parties as stipulated in the deed of pacto de
retro, if the vendors-a-retro failed to exercise their right of redemption
within 10 years. If, as alleged, Dominga did not exert an effort to
Assuming the motion for extension was indeed one day late, petitioner procure Pio Altera’s signature after he had recovered from illness,
urges the Court, in any event, to suspend its rules and admit the neither did the Alteras repudiate the deed signed by their son-in-law for
petition in the interest of justice. Petitioner invokes Philippine National 24 years, from which the Alteras are deemed to have incurred in
Bank vs. Court of Appeals,15 where the petition was filed three (3) days laches. Thus, an implied agency must have been held to have been
late. The Court held: created by their silence or lack of action, or their failure to repudiate the
agency created. (Art. 1869, New Civil Code). Wherefore, Dominga is
It has been said time and again that the perfection of an declared the owner of the land in question.
appeal within the period fixed by the rules is mandatory and
jurisdictional. But, it is always in the power of this Court to
suspend its own rules, or to except a particular case from its Spouses Fernando Viloria and Lourdes Viloria vs Continental
operation, whenever the purposes of justice require it. Airlines, Inc.
Strong compelling reasons such as serving the ends of
In 1997, while the spouses Viloria were in the United States, they
justice and preventing a grave miscarriage thereof warrant
approached Holiday Travel, a travel agency working for Continental
the suspension of the rules.
Airlines, to purchase tickets from Newark to San Diego. The travel
agent, Margaret Mager, advised the couple that they cannot travel by
The Court proceeded to enumerate cases where the rules on train because it was already fully booked; that they must purchase
reglementary periods were suspended. Republic vs. Court of plane tickets for Continental Airlines; that if they won’t purchase plane
Appeals16 involved a delay of six days; Siguenza vs. Court of tickets; they’ll never reach their destination in time. The couple
Appeals,17 thirteen days; Pacific Asia Overseas Shipping Corporation believed Mager’s representations and so they purchased two plane
vs. NLRC,18 one day; Cortes vs. Court of Appeals,19 seven tickets worth $800.00.
days; Olacao vs. NLRC,20 two days; Legasto vs. Court of
Appeals,21 two days; and City Fair Corporation vs. NLRC,22 which also Later however, the spouses found out that the train trip wasn’t really
concerned a tardy appeal.1âwphi1.nêt fully booked and so they purchased train tickets and went to their
destination by train instead. Then they called up Mager to request for a
refund for the plane tickets. Mager referred the couple to Continental
The Court finds these arguments to be persuasive, especially in light of Airlines. As the couple were now in the Philippines, they filed their
the merits of the petition. request with Continental Airline’s office in Ayala. The spouses Viloria
alleged that Mager misled them into believing that the only way to
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. travel was by plane and so they were fooled into buying expensive
The decision of the Court of Appeals is REVERSED. plane tickets.
Continental Airlines refused to refund the amount of the tickets and so
DOMINGA CONDE vs. CA the spouses sued the airline company. In its defense, Continental
FACTS: Airlines claimed that the tickets sold to them by Mager were non-
On 7 April 1938, Margarita Conde, Bernardo Conde and refundable; that, if any, they were not bound by the misrepresentations
Dominga Conde, as heirs of Santiago Conde, sold with right to of Mager because there’s no contract of agency existing between
repurchase, within 10 years from said date, a 1 hectare parcel of Continental Airlines and Mager.
agricultural land situated in Burauen, Leyte to Casimira Pasagui and The trial court ruled in favor of spouses Viloria but the Court of Appeals
Pio Altera for P165. Three years later, Original Certificate of Title No. reversed the ruling of the RTC.
N-534 covering the land in question was issued in the name of the
Alteras subject to the stipulated right of repurchase by the Condes. On ISSUE: Whether or not a contract of agency exists between
28 November 1945, Paciente Cordero, son-in-law of the Alteras and Continental Airlines and Mager.
their representative, signed a document in Bisaya stating that the
Memorandum of Repurchase got lost during World War II despite all HELD: Yes. All the elements of agency are present, to wit:
diligent searches being made; that the two parcels of land were
1. 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.

The first and second elements are present as Continental Airlines does
not deny that it concluded an agreement with Holiday Travel to which
Mager is part of, whereby Holiday Travel would enter into contracts of
carriage with third persons on the airlines’ behalf. The third element is
also present as it is undisputed that Holiday Travel merely acted in a
representative capacity and it is Continental Airlines and not Holiday
Travel who is bound by the contracts of carriage entered into by
Holiday Travel on its behalf. The fourth element is also present
considering that Continental Airlines has not made any allegation that
Holiday Travel exceeded the authority that was granted to it.
Continental Airlines also never questioned the validity of the
transaction between Mager and the spouses. Continental Airlines is
therefore in estoppel. Continental Airlines cannot be allowed to take an
altogether different position and deny that Holiday Travel is its agent
without condoning or giving imprimatur to whatever damage or
prejudice that may result from such denial or retraction to Spouses
Viloria, who relied on good faith on Continental Airlines’ acts in
recognition of Holiday Travel’s authority. Estoppel is primarily based on
the doctrine of good faith and the avoidance of harm that will befall an
innocent party due to its injurious reliance, the failure to apply it in this
case would result in gross travesty of justice.