Agency Case Doctrines Guzrev

AGENCY CASE DOCTRINE LIST
THE CASE DOCTRINES ARE BASED ON ATTY. LAO’S SYLLABUS
I DEFINITION
Sps. Viloria purchased roundtrip tickets from San Diego to Newar on board Continental Airlines, amounting $400 from “Holiday Travel” and
was attended by Mager. Mager said that there were no available Amtrak seats so she recommended that they take a roundtrip flight via
Frontier Air. After buying the ticket, Fernando (the husband) went to the Greyhound station and found that there were still seats available.
Fernando then went to have a refund of the tickets, but CAI said that it is not liable because Mager is not a CAI employee.
1. Sps. Viloria v.
SC ruled that Holiday Travel, through Mager, acted in a representative capacity of CAI as it is an authorized agent. It is CAI and not Holiday
Continental
Travel who is the party to the contracts of carriage executed by Holiday Travel with third persons who desire to travel via Continental Airlines,
Airlines, GRN
and this conclusively indicates the existence of a principal-agent relationship.
188288, January
16, 2012
Elements of agency are present, to wit:
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.
STM, regularly bought sugar from Victorias. In their dealings, VMC, issued several Shipping List / Delivery receipts to STM as proof of
purchases. Among these was SLDR No. 1214M, which covers 25k bags of sugar. Now, STM sold to Consolidated Sugar Corp., its rights in the
said SLDR. The same day, CSC, wrote VMC that it had been authorized by STM to withdraw the sugar covered in the said SLDR. Thereafter,
CSC surrendered the said SLDR to VMC’s warehouse which was allowed to withdraw the sugar. However, after 2k bags had been released.
2. Victorias Milling v. VMC refused to allow further withdrawals of sugar because according to it, STM had already withdrawn all the sugar covered by the cleared
CA, GRN 117356, checks.
June 19, 2000
SC ruled that the CSC was a buyer of the said SLDR, and not an agent of STM. CSC was not even subject to STM’s control. “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, while on the part of the agent, there must be an intention to accept the appointment and act on it.” However, in the case
at bar, there was no agency meant to be established by the CSC and STM.
Deganos, received several pieces of jewelry from Petitioners. Deganos was supposed to sell the jewelry and remit the proceeds, but did not
remit the full balance and return the unsold jewelry. Petitioners filed a brgy complaint. The parties, including Luz Spouses, signed a
compromise agreement obligating Deganos to pay. But again, did not do it. Petitioner then filed a complaint against Deganos and spouses
3. Bordador v. Luz, Luz, stating that Deganos was an agent of Brigida.
GRN 130148
The Court ruled that Deganos is not an agent since it was found out that Brigida never authorized Deganos to act on her behalf with regard
to the transaction subject of this case. The basis of an agency is representation. No evidence was found that Brigida consented to the acts
of Deganos.
II PARTIES
Concepcion and Gerundia Rallos were sisters and that they owned a parcel of land at Cebu. They executed a Special Power of Attorney in
behalf of their brother, Simeon Rallos to authorize him to sell the land on their behalf. Concepcion later on died and that Simeon sold such
lot afterwards to Felix Go Chan & Sons Realty Corporation for the sum of P10, 686.90. Ramon Rallos, the administrator of the intestate estate
of Concepcion filed for a complaint of the sale and prayed that the shares should be returned back to Concepcion’s estate for the contract
being an unenforceable contract. CFI declared that the sale was null and void concerning the shares of Concepcion while the sale of the
4. Rallos v. Felix Go shares of Gerundia was valid . CFI then ordered Juan T. Borromeo (Simeon Rallos died during the pendency of the case) to pay Felix Go Chan
Chan & Realty & Sons Realty Corporation the other half amounting to P5, 343.35. CA reversed the decision of the CFI.
Corp., G.R. L-
24332 (1978) SC ruled that 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. In the case at hand, Simon’s authority as agent was extinguished upon Concolacion’s death.
The sale did not fall under the exceptions to the general rule that death ipso jure extinguishes the authority of the agent. Furthermore, laws
on agency, the terms of which are clear and unmistakable leaving no room for an interpretation contrary to its tenor, should apply, the law
provides that death of the principal ipso jure extinguishes the authority of the agent to sell rendering the sale to a third person in good
faith unenforceable unless at the agent had no knowledge of the principal’s death at that time.
American Air entered into a General Sales Agency Agreement with Orient Air. American alleged that Orient Air had reneged on its obligations
under the Agreement by failing to promptly remit the net proceeds of sales for the months of January to March. American Air instituted suit
against Orient Air with the Court of First Instance of Manila “for Accounting with Preliminary Attachment or Garnishment, Mandatory
Injunction and Restraining Order in which Orient Air denied the material allegations of the complaint. Orient Air contended that the actions
taken by American Air in the course of terminating the Agreement as well as the termination itself were untenable. The trial court ruled in
5. Orient Air Services
its favor which decision was affirmed with modification by Court of Appeals.
v. CA, GRN 76931
(1991)
SC affirmed the decision of the appellate court however it erred in ordering American Air to reinstate Orient Air as its general sales agent for
passenger transportation in the Philippines in accordance with said GSA Agreement. In an agent-principal relationship, the personality of
the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to
perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must
not, in any way, be compelled by law or by any court.
GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 1 OF 13

Petitioners William Uy and Rodel Roxas are agents authorized to sell eight parcels of land by the owners. They sold it NHA however NHA only
paid for 5 parcels because the other 3 parcels are locted in landslide area according to DENR. NHA offered to pay the amoun of 1.225m to
the landowners as daños perjuicios (liquidated damages). Petitoners filed to RTC for complaint and damages agains NHA. RTC rendered that
cancellation of contract was justified and still awarded the owners for the liquidated damages. CA reversed the decisions of RTC and entered
a new one dismissing the complaint.
6. Uy v. CA, GRN
120465 (1999) SC said that since petitioners are not parties, heirs, assignees, or beneficiaries of a stipulation pour autrui under the contracts of sale, they
do not, under substantive law, possess the right they seek to enforce. Therefore, they are not the real parties-in-interest in this case. Also it
is clear that NHA would not have entered into a contract were land not suitable for housing. The condition of the land is implied condition
for NHA to enter into a contract. Petitioners are mere agents of the owners of the land subject of the sale. As agents, they only render some
service or do something in representation or on behalf of their principals. The rendering of such service did not make them parties to the
contracts of sale executed in behalf of the latter.
Eternit Corp, manufactures roofing materials and pipe products. 90% of the shares of stocks of former, were owned by ESAC. Glanville was
the GM and Pres. Of EC, while Delsaux was the Regional Director for Asia of ESAC. In 1986, because of the political situation in the Philippines,
the management of ESAC wanted to stop its operations and to dispose the land in Mandaluyong City. They engaged the services of
realtor/broker. Thereafter, the broker, offered the land to Litonjua for amount of cash. However, Delsaux sent a telegram stating that the
final offer was US$1,000,000, and P2,500,000. Then, Litonjua brothers deposited the US$ 1m, and drafted an ESCROW agreement to expedite
the sale. Marque received a letter from Delsaux that the regional director decided not to proceed with the sale. When informed, Litonjuas
filed a complaint. Both RTC and CA rendered judgement in favor of the corporations and dismissed the complaint. It declared that since the
7. Litonjua v. Eternit, authority of the agent was not in writing, the sale is void and not merely unenforceable.
GRN 164340
(1969) SC ruled that the petitioners failed to adduce in evidence any resolution of the Board of Directors of EC empowering Marquez, Glanville, or
Delsaux as its agents, to sell, let alone offer for sale, for and in its behalf, the 8 parcels of land owned by it. A corporation is a juridical person
separate and distinct from its stockholders and is not affected by the personal rights, obligations and transactions of the latter. It may act
only through its board of directors or, when authorized by its board resolution, through its officers or agents. The general principles of
agency govern the relation between the corporation and its officers or agents, subject to the articles of incorporation, by-laws, or relevant
provisions of law. Agency may be oral unless the law requires a specific form. However, to create or convey real rights over immovable
property, a special power of attorney is necessary. Thus, when a sale of a piece of land or any portion thereof is through an agent, the authority
of the latter shall be in writing, otherwise, the sale shall be void.
Business partners Macke and Chandler delivered various goods worth P351.50 to Camps, allegedly represented by Flores. Flores only paid
P174 to Macke, and refused to pay the balance of P177.50 even after demand. Camps denies that Flores is his agent. The evidence presented
was a contract and inventory where Flores was named “managing agent.” Camps still believes it is insufficient proof of his receipt of the
goods to hold him accountable for them. The court held that Flores in his agent as he repeatedly represented Camps in various transactions,
8. Macke v. Camps, including the witness Galmes.
GRN 2962 (1907)
SC ruled that Flores is an agent of Camps and was acting within the scope of his authority in ordering these goods are binding on his principal,
and in the absence of evidence to the contrary, furnish satisfactory proof of their delivery as alleged in the complaint. One who clothes
another apparent authority as his agent, and holds him out to the public as such, cannot be permitted to deny the authority of such person
to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith.
Private respondents, Cruz, invested P200k with petitioner bank. The transaction was evidence by a Confirmation Sale and Debit Memo
delivered to the former. Bank employee Quimbo issued the documents. Upon maturity, Cruz returned to the bank to renew her investment.
Quimbo issued the documents, but asked Cruz to sign a Withdrawal Slip representing the amount to be reinvested, alleging it was a new
requirement of the bank. When Cruz returned to the bank to withdraw the money, she found out that the money have already withdrawn.
The bank had no copy of the documents which issued by Quimbo. Also, the latter, stopped reporting to the bank. Cruz demanded the bank
to return the money, however, the bank denied the request and she allegedly had withdrawn the money. Cruz now filed a complaint for
9. Prudential v. CA, breach of contract against the Prudential Bank. TC and CA ruled in favor of Cruz, on the basis that the bank is liable, for the acts committed
GRN 108957 by Quimbo.
(1993)
SC ruled that the principal bank should be held liable for the acts committed by its agent, Quimbo. The agent’s apparent representation
yields to the principal’s true representation and the contract is considered as entered into between the principal and the third person.
Furthermore, banks are liable to innocent 3rd persons where the representation is made in the course of its business by an agent acting within
the general scope of his authority, notwithstanding the fact that the latter may already be abusing his authority in order to commit fraud.
The bank’s relationship with the public is fiduciary. The bank should have immediately repaired the injury caused to Cruz. The misdeeds of
employees must be readily acknowledged and rectified.
III AGENT NOT REAL PARTY-IN-INTEREST
Eurotech is engaged in the business of importation and distribution of various European industrial equipment. It has as one of its customers
Impact System Sales which owned by Erwin Cuizon. Eurotech sold to impact systems various products. Cuizons sought to buy 1 unit sludge
pump from Eurotech. When the sludge pum arrived from the UK, Eurotech refused to deliver to Cuizon without their having fully settled
10. Eurotech
their debt. Thus, Edwin Cuizon and de Jesus, general manager of Eurotech executed a deed of assignment of receivables in favor of Eurotech.
Industrial
Despite the existence of DoA, Cuizons proceeded to collect from Toledo Power Company. Eurotech made several demands upon Cuizons to
Technologies, Inc.
pay their obligations. As a result, Cuizons were able to make partial payments to former. When petitioner’s counsel sent a final demand to
v. Cuizon, GRN
Cuizon, latter failed to pay such. Petitioner filed a complaint for recovery of sum of money. In its answer, Edward alleged that he is not a
167552, (2007)
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
transactions with Eurotech and the latter was very much aware of this fact.

SC ruled that Edwin did not exceed his authority when he signed the DoA, which the principal binds itself to pay the obligations to Eurotech.
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 the case at hand, the parties do not dispute the existence of the agency relationship between respondents ERWIN as principal and EDWIN
as agent.
PNR informed a certain Romualdez, that it has accepted latter’s offer to buy the PNR’s scrap/unserviceable rails located in Pampanga.
Romualdez paid the purchase price and addressed a letter to PNR’s acting purchasing agent. The letter authorized Lizette Wijanco to be
Romualdez’s representative in the withdrawal of the scrap/unserviceable rails awarded to him. Furthermore, the original copy of the award
which indicates the waiver of rights, interest and participation in favor of Lizette was also given. Now, Lizette requested the PNR to transfer
the location of withdrawal for the reason that the scrap rails were not ready for hauling. The pnr granted said request and allowed Lizette to
withdraw, however, PNR subsequently suspended the withdrawal in view of what it considered as documentary discrepancies. Spouses
Angeles, demanded the refund the amount they paid. However, PNR refused to pay, alleging that as per delivery receipt duly signed by
Lizette that the rails had already been withdrawn. The petitioner filed a suit for specific performance against the PNR. TC held that the
11. Angeles v. PNR,
spouses are not the real parties-in-interest rendered judgment dismissing their complaint for lack of cause of action. It held that Lizette was
GRN 159127,
merely a representative of Romualdez in the withdrawal of scrap awarded to him and not an assignee to the latter’s right with respect to
(2006)
the award. CA affirmed the decision.
SC affirmed the decisions of lower court. Lizette was not an assignee, but merely an agent whose authority was limited to the withdrawal of
the scrap rails, hence, without personality to sue. Where agency exists, the third party’s (in this case, PNR) liability on a contract is to the
principal and not to the agent and relationship of the third party to the principal is the same as that in a contract in which there is no
agent. Normally, the agent has neither rights nor liabilities as against the third party. He cannot thus sue or be sued on the contract. Since
a contract may be violated only by the parties against each other, the real party-in-interest, either as plaintiff or defendant in an action upon
that contract must, generally be a contracting party.
The petitioners, Ong were charged with 2 counts of estafa. It was alleged that petitioner, representing ARMAGRI allegedly defrauded the
SolidBank Corp. The said accused received in trust from Soldbank which specified in Trust Receipt Agreement in favor of Fertiphil Corp. Under
the obligations on the part of the petitioner, to account for said goods to Soldbank and remit the proceeds of the sale. However, the
petitioner misappropriated and converted the goods to his own personal use and benefit. TC found the petitioners guilty. Petitioner argued
that he cannot be held liable for the default of ARMAGRI, as he merely acting as an agent.
12. Ong v. CA, GRN
SC ruled that petitioners are liable and guilty of violating the Trust Receipt Law. The Trust Receipts Law is violated when entrustee fails to;
119858, (2003)
(1) turn over the proceeds of the sale of goods, or (2) return the goods covered by the trust receipts if not sold. Mere failure to account or
return gives rise to the crime wish malum prohibitum, no requirement to prove intent to defraud. In this case, the Bank was the entruster,
while ARMAGRI was the entrustee. Being the entrustee, ARMAGRI was the one responsible to account for the goods. Petitioner. who admits
being the agent of ARMAGRI, is the person responsible for the offense for 2 reasons. When a person participates in the commission of a
crime, he cannot escape punishment on the ground that he simply acted as an agent of another party. The signatory to the two trust
receipts, made him a direct participant to the crime making him a person responsible for the offense.
Section 2, Rule 3 of the Rules of Court requires that every action must be prosecuted and defended in the name of the real party-in-interest.
The real party-in-interest is the party who stands to be beneffited or injured by the judgment or the party entitled to the avails of the suit.
The applicable substantive law in this case is Article 1311 of the Civil Code, which states:
Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights and obligations arising from the
13. Uy v. CA, supra
contract are not transmissible by their nature, or by stipulation, or by provision of law. …
If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his
acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties
must have clearly and deliberately conferred a favor upon a third person.
PNB International Finance, extended a letter of credit in favor of the respondents, Ritratto secured by REM. PNB-IFL through its attorney-in-
fact, PNB, notified the respondents of the foreclosure of all the REM and that the properties subjects were to be sold at a public auction.
Respondent filed a complaint for injunction, on the other hand, petitioner filed a motion to dismiss on the grounds of failure of to state a
cause of action and the absence of any privity between the petitioner and respondents. TC and CA dismissed the motion to dismiss.
SC ruled that the contract questioned here is one entered by Respondent with PNBI, not PNB. Respondents admit that PNB is a mere attorney-
14. PNB v Ritratto
in-fact for PNBI authorized to foreclose the properties mortgaged. In other words, PNB is an agent with limited authority and specific duties
Group, GRN
under a special power of attorney incorporated in the real estate mortgage. It is not privy to the loan contracts entered into by Respondents
142616 (2001)
and PNBI. Hence, the validity of the loan contract is a matter between PNBI and the Respondents. Yet, despite recognizing PNB as an agent,
Respondents wants an order for PNB to re-compute the interest to be paid by them. PNB is not a party to the contract, therefore, it has no
power to re-compute the interest demanded. Hence, Respondents do not have a cause of action against PNB. A suit against an agent cannot
without compelling reasons be considered a suit against the principal. According to the ROC, every action must be filed in the name of the
real party-in-interest unless authorized by law. In the case at bar, the injunction suit is directed only against the agent, not the principal. In
view of the foregoing, petition is granted.
IV FORM AND MANNER OF CREATION

Ganas, purchased from Air France, through Imperial Travels, a duly authorized travel agent, nine open dated air passage tickets for the
Manila-Osaka-Tokyo-Manila Route. Air France, exchanged or substituted the tickets with other tickets for the same route. At this. Time,
Ganas, were booked for the. Said trip. The tickets were valid until May 8, 1971. However, the Ganas, did not depart before of the said date.
Jose Gana, sought the assistance of a secretary, Teresita to extend the validity of their tickets. However, the travel bureau, informed the
former, that the extension was not possible. When Ganas, had scheduled their departure one day before the expiry date. The secretary of
15. Air France v. CA,
Gana, requested travel Agent Ella to arrange the revalidation of the tickets. Ella gave the same negative answer and warned her that although
GRN 136109
the tickets could be used by the Ganas, the tickets would no longer be valid for the rest of their trip because it would have expired on May
(2002)
8, 1971. When the GANAS were going to return to Manila, the Japan Airlines refused to honor the tickets because of their expiration and the
Ganas had to purchase new tickets.
SC held that Teresita (the secretary) was the agent of the Ganas and notice to her of the rejection of the request for extension of the validity
of the tickets was notice to the Ganas, her principals.
In 1988, Manuel Cruz, Jr., a board member of Dieselman Freight Services, Co. (DFS) authorized Cristeta Polintan to sell parcel of land owned
by DFS. Polintan in turn authorized Felicisima Noble to sell the same lot. Noble then offered AF Realty & Development, Co., represented by
Zenaida Ranullo, the land at the rate of P2,500.00 per sq. m. AF Realty accepted the offer and issued a P300,000 check as down payment.
However, it appeared that DFS did not authorize Cruz, Jr. to sell the said land. Nevertheless, Manuel Cruz, Sr. (father) and president of DFS,
accepted the check but modified the offer. He increased the selling price to P4,000.00 per sq. m. AF Realty, in its response, did not exactly
agree nor disagree with the counter-offer but only said it is willing to pay the balance (but was not clear at what rate). Eventually, DFS sold
16. AF Realty v. the property to someone else. Now AF Realty is suing DFS for specific performance. It claims that DFS ratified the contract when it accepted
Dieselman the check and made a counter-offer.
Freight, 373 SCRA
385 SC ruled that There was no valid agency created. The Board of Directors of DFS never authorized Cruz, Jr. to sell the land. Hence, the
agreement between Cruz, Jr. and Polintan, as well as the subsequent agreement between Polintan and Noble, never bound the corporation.
Contracts or acts of a corporation must be made either by the board of directors or by a corporate agent duly authorized by the board;
Absent such valid delegation/authorization the rule is that the declarations of an individual director relating to the affairs of the
corporation, but not in the course of, or connected with, the performance of authorized duties of such director, are held not binding on
the corporation. Therefore, the sale transacted by Noble purportedly on behalf of Polintan and ultimately purportedly on behalf of DFS is
void.
Respondent, owned a parcel of land, which was offered for sale to the general public through a sales brochure. Roy, one of the respondents,
sent a sales brochure, to Atty. Mamaril. Mamaril passed on the documents to the petitioner’s executive VP. It conveyed its interest to
purchase ½ of the front portion. Then, the former, sent a letter to Metro Drug, expressing City Lite’s desire to buy the said land. Thereafter,
the sale was consummated, and Roy agreed to sell the property provided the petitioner submit its acceptance in writing to the terms and
conditions in Roy’s letter. However, FP refused to execute the deed of sale. FP holdings, filed a petition for the cancellation of the adverse
claim against City-Lite with the RTC. RTC dismissed the petition. City-Lite instituted a complaint against FP Holdings for specific performance
and damages. RTC rendered decision in favor of City Lite, however, it was reversed by CA.
17. City-Lite v. CA, 325
SCRA 385 SC affirmed the decision of the CA, hence the sale is void for lack of written authority to sell the land. The absence of authority to sell can be
determined from the written memorandum issued by respondent F.P. HOLDINGS President requesting Metro Drug’s assistance in finding
buyers for the property. Memorandum indicates that Meldin G. Roy and/or Metro Drug was only to assist F.P. Holdings in looking for buyers
and referring to them possible prospects whom they were supposed to endorse to F.P. Holdings. But the final evaluation, appraisal and
acceptance of the transaction could be made only by F.P. Holdings. In other words, Roy and/or Metro Drug was only a contact person with
no authority to conclude a sale of the property. Roy and/or Metro Drug was a mere broker and Roy/s only job was to bring parties the parties
together for a possible transaction. For lack of a written authority to sell the “Violago Property” on the part of Roy and/or Metro Drug,
the sale should be as it is declared null and void.
The President of San Juan Inc. entered into an agreement with the Treasurer of Motorich Corp, the former purchasing the lot owned by
Motorich Corp. However, the TCT of the said lot was never delivered to San Juan Inc.
18. San Juan
The SC held that the agreement was void because the Treasurer of Motorich Corp. was without authority to sell Motorich Corp.’s property.
Structural Steel v.
The general principles of agency govern the relation between the corporation and its officers or agents, subject to the articles of
CA, 296 SCRA 631
incorporation, bylaws, or relevant provisions of law. Selling is obviously foreign to a corporate treasurer’s function, which generally has
been described as “to receive and keep the funds of the corporation, and to disburse them in accordance with the authority given him by
the board or the properly authorized officers.”
Cosmic Corp, through its GM executed a Special Power of Attorney appointing Estrada, as attorney-in-fact to initiate, institute and file any
court action for the ejectment of third persons and squatters of the entire subject lots and to remove their houses and vacate the premises.
Estrada here entered into a compromise agreement with Isidro Perez which stipulates that Perez shall pay the plaintiff through Estrada which
will recognize his ownership of the subject lots. The RTC approved the compromise agreement. However, it was not executed within the 5
year period from date of its finality, allegedly due to the failure of Cosmic Lumber to produce the owner’s a duplicate copy of title needed.
19. Cosmic Lumber v.
SC ruled that the Villamil-Estrada acted without authority. The sale ipso jure is consequently void. So is the compromise agreement. This
CA, 265 SCRA 168
being the case, the judgment based thereon is necessarily void. When the sale of a piece of land or any interest thereon is through an agent,
the authority of the latter shall be in writing; otherwise, the sale shall be void. Thus the authority of an agent to execute a contract for
the sale of real estate must be conferred in writing and must give him specific authority, either to conduct the general business of the
principal or to execute a binding contract containing terms and conditions which are in the contract he did execute. A special power of
attorney is necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or
for a valuable consideration.

Petitioners, are siblings and co-owners of undivided shares of two parcels of land. Respondent bought from petitioners their respective share
of the lot except two siblings of the petitioner’s shares. After the said meeting, a Contract to Sell was created between the parties, on which
the petitioners affirming their signatures in the said contract. Then, the petitioner’s withdrew from the said contract and ask for the rescission
to which they allege that they never sign the contract, the agent has no authority from the petitioners, that said petitioner was illiterate to
20. Oesmer v. Paraiso
sign the contract.
Development,
GRN 157493,
SC ruled that despite one of the petitioner’s lack of written authority from the five petitioners to sell their shares in the subject parcels of
(2007)
land, the Contract to Sell remains valid and binding upon the latter. The law itself explicitly requires a written authority before an agent
can sell an immovable. The conferment of such an authority should be in writing, in as clear and precise terms as possible. In the case at
hand, the Contract is absolutely silent on the establishment of any principal-agent relationship between the five petitioners and their brother
and co-petitioner Ernesto as to the sale of the subject parcels of land.
Sps. San Agustin and Genil acquired a land. Both died intestate, and survived by their 8 children. 3 children executed a Deed of Absolute Sale
of Undivided shares of their shares from the lot they inherited in favor of the Pahud. Eufemia, signed the deed on behalf of her other 4 co-
heirs on the basis of SPA, and also for 3 others but without their apparent written authority. The Pahuds paid the balance to Eufemia and
her siblings. When Eufemia and her co-heirs drafted and etra-judicial settlement of estate to facilitate the transfer of the title to Pahuds,
Virgilio refused to sign. Virgilio’s co-heirs filed a complaint for judicial partition. In the course of preceedings, a Compromise agreement was
signed with 7 of the co-heirs agreeing to sell their undivided shares to Virgilio. Virgilio then sold the property to another spouses and
21. Pahud v. CA, GRN immediately constructed a building on the said property. Pahuds immediately confronted Eufemia who confirmed to them that Virgilio had
160346, (2006) sold the property, thus filing a complaint against the latter. RTC upheld the validity of sale to the Pahuds. However, CA set aside the decision.
SC ruled in favor of the Pahuds. However, the sale is valid only to the 4/8 shares of the land, while the 3/8 portions declared void. Under
Art. 1874, a sale of a piece of land or any interest through an agent, requires that the authority of the latter shall be in writing; otherwise,
the sale shall be void. Also, Article 1878, a special power of attorney is necessary for an agent to enter into a contract by which the ownership
of an immovable property is transmitted or acquired. Absence of a written authority to sell a piece of land is, ipso jure, void, precisely to
protect the interest of an unsuspecting owner from being prejudiced by the unwarranted act of another.
A pregnant patient was under exclusive prenatal care of one doctor in the Capitol Medical. When the preggy patient started to experience
mild labor pains, the former went to the doctor at his home. After examining of the doctor, the former advised to immediate admit herself
to the hospital. The patient started experience convulsion, then the doctors applied low forceps to extract the baby. In the process, a piece
of cervical tissues was allegedly torn. Thereafter, the patient began to manifest moderate vaginal bleeding which rapidly became profuse
which caused the death of the former. Petitioners filed a complaint, contended that the physicians and CMC personnel were negligent in the
22. Nogales v. Capitol treatment and management of Corazon's condition. Petitioners charged CMC with negligence in the selection and supervision of defendant
Medical, GRN physicians and hospital staff.
142625, (2006)
The SC ruled that the hospital is liable. In general, a hospital is not liable for the negligence of an independent contractor-physician. There
is, however an exception to this principle. The hospital may be liable if the physician is the ostensible agent of the hospital. This exception
is also known as the doctrine of apparent authority. A hospital can be held vicariously liable for the negligent acts of a physician providing
care at the hospital, regardless of whether the physician is an independent contractor, unless the patient knows, or should have known, that
the physician is an independent contractor.
The Court finds that the signature of Abcede binds the authority of PRHC. As the construction manager his act of signing indicated his
authority to represent PHRC. Throughout the existence and execution of the construction agreements, LCDC’s practice each time it had
concerns about the projects or something to discuss with PRHC was to approach Abcede and Santos as representatives of the latter
corporation. As far as LCDC was concerned, these two individuals were the fully authorized representatives of PRHC.
23. Philippine Realty
v. Ley
The Court also provides that the Escalation agreement is valid assuming Abcede and Santos were beyond authority given by PRHC due to the
Construction, GRN
doctrine of apparent authority. Jurisprudence tells that “although an officer or agent acts without, or in excess of, his actual authority if
165548, (2011)
he acts within the scope of an apparent authority with which the corporation has clothed him by holding him out or permitting him to
appear as having such authority, the corporation is bound thereby in favor of a person who deals with him in good faith in reliance on
such apparent authority.” The Court rule that Santos and Abcede held themselves out as possessing the authority to act, negotiate and sign
documents on behalf of PRHC; and that PRHC sanctioned these acts.
V SCOPE OF AGENCY
The Supreme Court held that a contract of agency is never presumed but must be thoroughly established through preponderance of
24. Yu Eng Cho v. Pan
evidence. Hence in this case, there was no contract of agency between Tagunicar and Pan American or TWSI since it was later found out that
American, 328
she was really indeed an independent travel solicitor. Tagunicar had a business relationship with Canilao since Tagunicar buys ticket from
SCRA 717
Canilao and just deduct whatever commission Tagunicar was able to sell at a premium price.
VII. CLASSIFICATION
Defendants-appellants (siblings of Maximo) authorized through SPA, Maximo, to mortgage a property jointly owned by them. On the other
hand, Valeriana executed another SPA in favor of Maximo, to borrow money and mortgage any real estate owned by her. Maximo, obtained
a sugar crop loan from the plaintiff, PNB, as a security, he mortgaged the said property owned by them. Plaintiff, filed a complaint against
the defendants to recover the unpaid balances on two sugar crop loans. The TC rendered decision in favor of the Plaintiff, stating that all of
25. PNB v Sta Maria, the defendants are jointly and severally liable for the payment of the unpaid balances made by Maximo. On appeal, the siblings argued that
GRN L-24765 they are only liable to the mortgaged property and not the loan, in which they contended that they did not authorized Maximo, to enter
such loan.
SC ruled in favor of the petitioner, stating that siblings are only liable for the said mortgage and not the loan, since they did not authorize
Maximo to enter such loan. Meanwhile, Valeriana and Maximo must be held liable for the said loan and mortgage. A special power of

attorney to mortgage real estate is limited to such authority to mortgage and does not bind the grantor personally to other obligations
contracted by the grantee, in the absence of any ratification or other similar act that would estop the grantor from questioning or
disowning such other obligations contracted by the grantee.
Defendants, Salas, executed a power of attorney in favor of Felix Yulo, to obtain a loan and secure it with a mortgage. The power of attorney
was annotated and registered with the registry of deeds. Thereafter, Yulo, obtained a loan from the Plaintiffs, Hodges. However, Salas failed
to pay the loan at maturity. CFI absolved Salas from the complaint. On appeal, he alleged that Salas should be liable, because the fact that
he authorized Yulo to borrow money and therefore, Salas must be held liable.
26. Hodges v. Salas,
GRN 52958 (1936) SC ruled Yulo not acted within the scope of the authority provided in his SPA. Held that Yulo must be held liable to the personal expense he
incurred while Salas, must be held liable for the original amount plus interest that Yulo loaned. With respect to a power of attorney of
special character, it cannot be interpreted as also authorizing the agent to use the money as he pleased, particularly when it does not
appear that such was the intention of the principals, and in applying part of the funds to pay his personal obligations, he exceeded his
authority
LSC, one of the co-owners of land, filed an unlawful detainer before the MTC against Garlito which she availed the services of Atty. Lezema.
Then, LSC executed a SPA in favor of the lawyer, to represent and act ony her behalf, to appear during the preliminary conference, and lastly
to make an amicable settlement if necessary. Thereafter, Atty. Lezema (on the basis of SPA), entered into a Compromising Agreement
(eventually approved by the MTC), to sell the subject property with the defendant of the unlawful detainer case. Because of this, LSC, filed
an administrative complaint against Atty. Lezema, contending that the respondent misrepresented/misinterpreted that she was willing to
27. LSC v. Attyl. SSL sell the subject property and she did not authorize the respondent to sell such. IBP Board of Governors found Atty. Lezema, guilty of violating
(2017) Canons 15 and 17 of the CPR.
SC ruled that nowhere in the SPA that respondent is authorized to compromise on the sale of the property or to sell the property of the
complainant. Therefore, respondent is guilty of the said canons. As the SPA granted to him by the complainant did not contain the power
to sell the property, respondent clearly acted beyond the scope of his authority in entering into the compromise agreement wherein the
property was sold to the defendant Carmelita S. Garlito.
Where no actual power to sell is given, the principal may be estopped by an appearance of power for which he is responsible, but not where
28. Strong v. Repide his acts are consistent with the power of administration only. Under article 1713 of the Civil Code an agent, in order to compromise, alienate,
(1906) mortgage, or to execute any other act of strict ownership, must have an express commission so to do. The power of the agent under which
the shares of the plaintiff in this case were sold to the defendant was not an express power and therefore the sale was without authority.
Po Ejap was authorized by his brother, Po Tecsi, to sell latter’s property. Po Ejap then sold to Katigbak the property. Notwithstanding with
the sale, Po Tecsi remained in possession of said property by entering into an oral contract of lease with Katigbak. Later, Po Tecsi leased a
part of land to Po Ching. Po Tecsi died, wherein Po Sun Suy was appointed as administrator of the estate of Po Tecsi. Thereafter, Katigbak
sold the property to Po Sun Boo (Po Ejap’s son). Katigbak filed an action for the recovery of said rent against the company. Contending that
Po Tecsi, until his death and Po Sun Suy had not yet paid the rent due. The defendants and defendants-appellants, contended that Katigbak
do not own the said property because Po Ejap was not authorized to sell the said property.
29. Katigbak v.Tai
Hing Co (1928)
However, SC ruled that Po Ejap was authorized to sell the land. Further it was held that Katigbak was the absolute owner of the property in
controversy and that his claim for the rents of the property must be presented to the court having cognizance of the intestate proceedings
for the settlement of Po Tecsi’s estate. The power of attorney given by the principal authorized the agent to sell any kind of realty that
"might belong" ,to the principal. The use of the subjunctive "pertenezcan" (might belong) and not the indicative "pertenecen" (belong)
means that the authority given by the principal referred not only to the property he had at the time the power was conferred, but also to
such as he might afterwards have during the time it was in force.
Herrera executed a contract of lease in favor of Tian On. Then Tian On sold the lots to Chua Bok wherein latter was assigned to the rights of
Tian On to pay or comply with the terms and conditions provided in the first contract of lease between Herrera and Tian On. The deed of
sale was contracted and represented by the attorney-in-fact, Vicente Reynes. When the contract of lease between Tian On and Chua Bok
got expired, Herrera through an attorney-in-fact with SPA, sold the lot to the sps Go. Because of this, Chua filed a complaint seeking to annul
the said sale. CFI dismissed the complaint and ordering the Chuas to vacate the lot and remove the improvements which the IAC (CA) affirmed
30. Chua v. IAC (1994) the decision and also stating that the contract of lease between Tian On and Chua Bok was void.
SC denied the petition of the petitioners, affirming the decision of CA, that the contract of lease between Tian On and Chua Bok was void on
the basis that the attorney-in-fact of Chua Bok was not armed with SPA. The lease contract, the linchpin of petitioners' cause of action,
involves the lease of real property for a period of more than one year. The contract was entered into by the agent of the lessor and not
the lessor herself. In such a case, the law requires that the agent be armed with a special power of attorney to lease the premises.
The fact that Cardenas, an officer of HI Cement, acted in effecting the compromise agreement, i.e. nominating a commissioner, does not
ratify the compromise agreement. There is no showing that Cardenas’ act binds HI Cement; no proof that he is authorized by the Board; no
proof that there is a provision in the articles of incorporation of HI Cement that he can bind the corporation.
The law specifically requires that "juridical persons may compromise only in the form and with the requisites which may be necessary to
alienate their property." Corporations may compromise only in the form and with the requisites which may be necessary to alienate their
31. Vicente v.
property. Under the corporation law the power to compromise or settle claims in favor of or against the corporation is ordinarily and primarily
Geraldez (1973)
committed to the Board of Directors but such power may be delegated. The delegation must be clearly shown for as a general rule an
officer or agent of the corporation has no power to compromise or settle a claim by or against the corporation, except to the extent that
such power is given to him either expressly or by reasonable implication from the circumstances. In the case at bar, there was no special
power of attorney authorizing the three lawyers to enter into a compromise agreement. This is even if the lawyers declared in open court
that they are authorized to do so by the corporation (in this case, the transcript of stenographic notes does not show that the lawyers indeed
declare such in open court).

Foerster, formerly a salesman and collector of Insular Drug Co., Inc (Insular) for the Islands of Panay and Negros instructed to take the checks
which came to his hands to the Iloilo branch of the Chartered Bank of India, Australia and China and deposit the amounts to the credit of the
Insular. Instead, placed the checks in his personal account. Some of the checks were drawn against the Bank of Philippine National Bank. .
After the indorsement on the checks was written "Received payment prior indorsement guaranteed by Philippine National bank, Iloilo
Branch, Angel Padilla, Manager." Insular Manila office discovered the anomalies and Foerster committed suicide. Insular filed against the
32. Insular v. PNB
bank for total of 132 checks.
(1933)
SC ruled that PNB is liable for the negligence of its agent. The right of an agent to indorse commercial paper is a very responsible power and
will not be lightly inferred. A salesman with authority to collect money belonging to his principal does not have the implied authority to
indorse checks received in payment. Any person taking checks made payable to a corporation, which can act only by agents does so at his
peril and must abide by the consequences if the agent who indorses the same is without authority.
VIII. AGENT OBLIGATIONS AND LIABILITIES TO PRINCIPAL
Mahtani booked a flight going to Bombay, India via British Airways. However, BA has no direct flight going to the destination, thus, making
PAL (as a sub-contractor agent) to transport the passenger to Hong Kong. Upon arriving to India, Mahtani was informed that the 2 luggages
were lost. It was lost during the connecting flight. When he returned in the Philippines, Mahtani filed a complaint for damages against the
British Airways. On the other hand, British airways, filed a third-party complaint against PAL. RTC decided in favor of Mahtani, ordering BA
to pay the former, it also ruled, dismissing the third-party complaint. Upon appeal, CA affirmed the TC’s decision.
SC ruled that BA and PAL are liable for the damages. Because BA as principal and PAL as agent in this case.
(1) Lufthansa German Airlines v. IAC: benefits of limited liability are subject to waiver such as when the air carrier failed to raise timely
objections during the trial when questions and answers regarding the actual claims and damages sustained by the passenger were
33. British Airways v.
asked.
CA, GRN 121824,
(2) Abrenica v. Gonda: The proper time to make a protest or objection is when, from the question addressed to the witness, or from
(1998)
the answer thereto, or from the presentation.
a. Well-settled doctrine: where the proponent offers evidence deemed by counsel of the adverse party to be inadmissible
for any reason, the latter has the right to object.
i. However, such right is a mere privilege which can be waived. Necessarily, the objection must be made at
the earliest opportunity, thus, silence when there is opportunity to speak may operate as a waiver of
objections.
(3) In a contract of carriage, carriage performed by successive carrier, regarded as single operation and issuing ticket considered the
principal while the others are sub-contractors or agents, thus, an agent responsible for any negligence and liable for damages
which the principal may suffer.
Feredico’s right to a commission does not make private complainant Federico a joint owner of the money , but merely establishes the
relation of agent and principal.
34. Murao v. People
The element “that money received by the offender in trust, or on commission, or for administration, or under any other obligation involving
GRN
the duty to make delivery” is lacking. Feredico’s right to a commission does not make private complainant Federico a joint owner of the
141475,(2005)
money, but merely establishes the relation of agent and principal. It is unequivocal that an agency existed between LMICE and private
complainant Federico. In fact, he was authorized to act as a sales agent. He can only negotiate for or in behalf of LMICE for the refill and
delivery of fire extinguishers.
Respondent Roxas Electric and Construction Company, Inc. (RECCI) is the owner of 2 parcels of land (Lot No. 491-A-3-B-1 and Lot No. 491-A-
3-B-2). Its Board of Directors approved a resolution authorizing the corporation, through its president Roberto B. Roxas, to sell the second
parcel of land on behalf of the company. Roxas and petitioner Woodchild Holdings, Inc. (WHI) as vendee, subsequently executed a contract
to sell and a Deed of Absolute Sale was issued under the condition that WHI be given beneficial use of and right of way from Sumulong
Highway to the property conveyed consisting of 25 sq. m. wide to be used as the latter's egress from and ingress to and an additional 25 sq.
m. in the corner of Lot No. 491-A-3-B-1, as turning and/or maneuvering area for WHI's vehicles. In the event that the right of way is
insufficient, RECCI shall sell additional sq. m. from its current adjacent property. Because of RECCI’s refusal to allow WHI to purchase a portion
35. Woodchild v.
of the adjacent lot, the latter filed a complaint for specific performance and damages with the Makati RTC. The RTC ruled in favor of WHI.
Roxas GRN
CA reversed the decision.
140667 (2004)
SC ruled that Since the respondent had not ratified the unauthorized acts of Roxas, the same are unenforceable. Hence, by the respondents
retention of the amount, it cannot thereby be implied that it had ratified the unauthorized acts of its agent, Roberto Roxas. Generally, the
acts of the corporate officers within the scope of their authority are binding on the corporation. However, under Article 1910 of the New
Civil Code, acts done by such officers beyond the scope of their authority cannot bind the corporation unless it has ratified such acts
expressly or tacitly, or is estopped from denying them. Thus, contracts entered into by corporate officers beyond the scope of authority are
unenforceable against the corporation unless ratified by the corporation.
Green Valley Poulty and E.R. Squibb & Sons entered into a letter agreement. The details of the agreement state that Green Valley will be the
nonexclusive distributor of the products of Squibb Veterinary Products. Squibb filed a suit to collect for goods delivered to Green Valley but
unpaid. The trial court and CA ruled in favor of E.R. Squibb, holding that the agreement was a sales contract.
36. Green Valley
Poultry v. IAC 133 The Court upheld the ruling of the TC and CA, but it discussed that even if the contract is an agency to sell, Green Valley will be liable to E.R.
SCRA 697 Squibb because in such contract, the agent is liable to pay the principal for goods sold by the agent without the principal’s consent. In an
agency to sell, the agent is liable to pay the principal for goods sold by the agent without the principal’s consent. The commission agent
cannot without the express or implied consent of the principal, sell on credit. Should he do so, the principal may demand from him payment
in cash, but the commission agent shall be entitled to any interest or benefit, which may result from such sale.

Gregorio Domingo, Vicente Domingo’s broker and agent, received P1,000 from Oscar de Leon as gift or propina. Oscar gave him said amount
after Gregorio succeeded in persuading Vicente to accept his offer to buy the lot for P1.20 instead of P2.
The sc ruled that as a necessary consequence of such breach of trust, Gregorio Domingo must forfeit his right to the commission and must
37. Domingo v
return the part of the commission he received from his principal. An agent who takes a secret profit in the nature of a bonus, gratuity or
Domingo, 42 SCRA
personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal
131
and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach
of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage or custom allows it. The fact that the
principal may have been benefited by the valuable services of the said agent does not exculpate the agent who has only himself to blame
for such a result by reason of his treachery or perfidy.
The negligence of Metrobank has been sufficiently established. To repeat for emphasis, it was the clearance given by it that assured Golden
38. Metrobank v. CA Savings it was already safe to allow Gomez to withdraw the proceeds of the treasury warrants he had deposited. Metrobank misled Golden
GRN 88866, (1991) Savings. There may have been no express clearance, as Metrobank insists (although this is refuted by Golden Savings) but in any case that
clearance could be implied from its allowing Golden Savings to withdraw from its account not only once or even twice but three times.
The Court of Appeals did not hold the Bank answerable for negligence in failing to collect from the principal debtor but for its neglect in
collecting the sums due to the debtor from the Bureau of Public Works, contrary to its duty as holder of an exclusive and irrevocable power
39. PNB v Manila
of attorney to make such collections, since an agent is required to act with the care of a good father of a family (Civ. Code, Art. 1887) and
Surety, 14 SCRA
becomes liable for the damages which the principal may suffer through his non-performance (Civ. Code, Art. 1884). Certainly, the Bank
776
could not expect that the bank would diligently perform its duty under its power of attorney, but because they could not have collected from
the Bureau even if they had attempted to do so.
The relations of an agent to his principal are fiduciary. Guillermo’s position as agent is analogous to that of a trustee and he cannot
consistently, with the principles of good faith, be allowed to create in himself an interest in opposition to that of his principal or cestui que
40. Severino v.
trust. Whatever a trustee does for the advantage of the trust estate inures to the benefit of the cestui que trust.
Severino, 44 Phil.
343
SC reiterated that an agent, who has entered and surveyed a portion of that land for himself and obtained a patent for it in his own name,
becomes a trustee for his principal. He cannot hold the land under an entry for himself otherwise than as trustee for his principal.
La Badenia began a selling campaign for its products. Celestino Aragon was appointed the general agent of the company to some of the
provinces in Luzon. As general agent, he established a depot at Legaspi with Teofila del Rosario de Costa, who was nominally in charge of the
depot, and her husband Bernardino Costa, who appeared to have been the actual manager. From the arrangement between Aragon and the
Spouses Costa, the business in Legaspi seemed to have been in the charge of the spouses over which Aragon, as general agent, kept close
supervision. In the final settlement of accounts, Aragon acknowledged that the Spouses had, in their favor, a balance of P1,795.25, However,
41. Del Rosario v. La La Badenia refused to pay the balance, saying that they had been improperly allowed a credit which represented unpaid accounts due the
Badenia, 33 Phil business in Legaspi for some items sold by it. The lower court ruled that the Spouses Costa were not agents, considering that the goods sold
316 to the delinquent debtors, whose unpaid accounts form the basis of the claim, had already been paid by the said spouses.
The SC reversed, saying that the spouses were, in fact, agents, and thus should be paid the balance owed to it by La Badenia. The principal
is liable upon sub-agency contracts entered into by a general agent in the name of the principal, when it appears that the general agent
was clothed with such broad powers as to justify the inference that he was authorized to execute contracts of this kind, and it not
appearing from the record what limitations, if any, were placed upon his powers to act for his principal.
Lyric Film Exchange, as subagent of the International Films in the exhibition of the film "Monte Carlo Madness", was not obliged to insure it
against fire, not having received any express mandate to that effect, and it is not liable for the accidental destruction thereof by fire.
The preponderance of evidence shows that the verbal agreement had between Bernard Gabelman, the former agent of the International
42. International
Films, and Vicente Albo, chief of the film department of the Lyric Film Exchange, was that said film "Monte Carlo Madness" would remain
Films v. Lyric Film,
deposited in the safety vault of the defendant company under the responsibility of said former agent and that the defendant company, as
63 Phil 778
his subagent, could show it in its theaters. The verbal contract between Bernard Gabelman, the former agent of the plaintiff company, and
Vicente Albo, chief of the film department of the defendant company, was a sub-agency or a sub-mandate, the defendant company is not
civilly liable for the destruction by fire of the film in question because as a mere sub-mandatary or subagent, it was not obliged to fulfill
more than the contents of the mandate and to answer for the damages caused to the principal by his failure to do so.
IX. AGENT: OBLIGATIONS AND LIABILITIES TO THIRD PARTIES
Private respondent PAL issued to herein petitioner Nicholas Cervantes a round trip ticket for Manila-Honolulu-Los Angeles-Honolulu-Manila,
which is valid until March 27, 1990. On March 23, 1990, petitioner used it. Upon his arrival in Los Angeles, he immediately booked a flight to
Manila, which was confirmed on April 2. Upon learning that the plane would make a stop-over in San Francisco, and because he would be
there on April 2, petitioner made arrangements to board in San Francisco. On April 2, he was not allowed to board due to the expiration of
his ticket. He filed a complaint for damages. It was not given due course by both the trial court and the Court of Appeals.
43. Cervantes v. CA,
304 SCRA 25 SC ruled that PAL agents did not have the authority to do so. Lufthansa v CA which reiterates that the contract is the law between the parties.
The Court held that the ticket constitute the contract between the parties. It is axiomatic that when the terms are clear and leave no doubt
as to the intention of the contracting parties, contracts are to be interpreted according to their literal meaning. Thus, you cannot hold an
agent responsible when you compel him to do an act that of which he has no authority to do so. Since the PAL agents are not privy to the
said Agreement and petitioner knew that a written request to the legal counsel of PAL was necessary, he cannot use what the PAL agents
did to his advantage.

Plaintiff-appellant National Power Corporation (NPC) and defendant- appellant National Merchandising Corporation (NAMERCO), the
Philippine representative of New York-based International Commodities Corporation, executed a contract of sale of sulfur with a stipulation
for liquidated damages in case of breach. Defendant-appellant Domestic Insurance Company executed a performance bond in favor of NPC
to guarantee the seller's obligation. In entering into the contract, Namerco, however, did not disclose to NPC that Namerco's principal, in a
cabled instruction, stated that the sale was subject to availability of a steamer, and contrary to its principal's instruction, Namerco agreed
that non-availability of a steamer was not a justification for non-payment of liquidated damages. The New York supplier was not able to
deliver the sulfur due to its inability to secure shipping space. Consequently, the Government Corporate Counsel rescinded the contract of
44. NPC v. National
sale due to the supplier's non-performance of its obligations, and demanded payment of liquidated damages from both Namerco and the
Merchandising,
surety. Thereafter, NPC sued for recovery of the stipulated liquidated damages. After trial, the Court of First Instance rendered judgment
117 SCRA 789
ordering defendants-appellants to pay solidarity to the NPC reduced liquidated damages with interest.
The Supreme Court held that Namerco is liable for damages because under Article 1897 of the Civil Code the agent who exceeds the limits
of his authority without giving the party with whom he contracts sufficient notice of his powers is personally liable to such party. The Court,
however, further reduced the solidary liability of defendants-appellants for liquidated damages. Thus, A contract entered into in the name
of another person by one who has acted beyond his powers is unenforceable, refers to the unenforceability of the contract against the
principal
Primateria Zurich entered into an agreement with Philippine Products Company (petitioner) through its agents (defendants). Primateria
Zurich was unable to pay for whatever reason, which lead to this collection suit. CFI rendered judgement in favor of petitioners, ordering
45. Philippine
Primateria Zurich to pay petitioners, but absolved the agents. Petitioners appealed the portion where the court absolved the agents invoking
Products v.
Art. 1897.
Primateria, 15
SCRA 301
SC ruled agents are not liable under Art. 1897 because they failed to show excess of authority. Also, they cannot recover from BOTH principal
AND agents in absence of such.
Juan Dans applied for a loan of P500k with DBP. However, due to the advanced age of Juan (he was 76 then), DBP advised him to obtain a
mortgage redemption insurance (MRI) with DBP MRI Pool. The loan was approved by DBP but was reduced to P300k. DBP collected P1,476
from the loan as payment for the MRI premium whilst Dans submitted the MRI application. The MRI premium and the DBP service fee was
also credited to the savings account of the DBP MRI Pool. Dans died of cardiac arrest. DP informed DBP MRI Pool of the death. DPB MRI Pool
informed DBP that Dans was not eligible for MRI coverage since the acceptance age limit was only up to (60) years of age. DBP informed
46. DBP v. CA, GRN Candida of the disapproval of the application and offered the refund of the premium but Candida refused to accept, demanding the payment
109937 March 21 of the value of the MRI or the amount of the loan. Estate of Juan filed a complaint against DBP and DBP MRI Pool for collection of sum of
1994 money with damages. RTC rendered in favor of Estate. CA affirmed.
SC ruled that the DBP exceeded his authority when it approved the application of Dans. The liability of an agent who exceeds the scope of
his authority depends upon whether the third person is aware of the limits of the agent's powers. If the third person dealing with an agent
is unaware of the limits of the authority conferred by the principal on the agent and he (third person) has been deceived by the nondisclosure
thereof by the agent, then the latter is liable for damages to him.
The President of San Juan Inc. entered into an agreement with the Treasurer of Motorich Corp, the former purchasing the lot owned by
Motorich Corp. However, the TCT of the said lot was never delivered to San Juan Inc.
The SC held that the agreement was void because the Treasurer of Motorich Corp. was without authority to sell Motorich Corp.’s property.
1. The property of the corporation is not the property of its stockholders or members and may not be sold by the stockholders or members
47. San Juan v. CA
without express authorization from the corporations board of directors.
GRN 129549, Sep
2. The general principles of agency govern the relation between the corporation and its officers or agents, subject to the articles of
19 1998
incorporation, bylaws, or relevant provisions of law.
3. Selling is obviously foreign to a corporate treasurer’s function, which generally has been described as “to receive and keep the funds of
the corporation, and to disburse them in accordance with the authority given him by the board or the properly authorized officers.”
4. Where a corporation never gave a written authorization to its treasurer to sell a parcel of land it owns, any agreement to sell entered into
by the latter with a third party is void.
Benito Legarda owns a parcel of land known as the Nagtajan Hacienda which he wanted to sell through his agent – Benito Valdez; who is
also his attorney in fact. Negotiations as to the purchase of land has been had between Benito Valdez and W. Borck. However, the parties
eventually had a misunderstanding as to the three (3) month period which the agent Benito Valdez gave to Borck. It is an option period to
buy the property.
SC ruled the following:

48. Beuamont v. (1) Borck has a cause of action against Legarda, the principal.
Prieto GRN 8988 (2) There is no option contract.
March 30, 1916 (3) The withdrawal of the defendants of their offer were invalid.
(4) There is no perfected and binding contract.
Although, according to article 1717 of the Civil Code when the agent acts in his own name he is not personally liable to the person with whom
he enters into a contract when things belonging to the principal are the object thereof, yet such third person has a right of action not only
against the principal but also against the agent, when the rights and obligations which are the subject-matter of the litigation cannot be
legally and juridically determined without hearing both of them.
49. Smith Bell v. Plaintiff corporation undertook to sell and deliver equipment for Mr. Sotelo but no definite dates were fixed for the delivery. The periods
Sotelo, 44 Phil. were couched in ambiguous terms such as “within 3 or 4 months”, “in the month of September or as soon as possible”, and “approximate
874

delivery with 90 days-This is not guaranteed.” When the goods arrived, Mr. Sotelo refused to receive them and to pay the prices. Mr. Sotelo
then sued for damages because of the delay suffered.
SC held that the plaintiff has not been guilty of any delay in the fulfillment of its obligation, and, consequently, it could not have incurred any
of the liabilities mentioned by the intervenor in its counterclaim or set-off. When the fulfillment of the condition depends partly upon the
will of a party to the obligation and partly upon chance and/or will of a third person.
Medalla, as commission agent of the plaintiff Superior Shipping Corporation, entered into a contract for hire of ship known as MV Sea Runner
with NFA (then National Grain Authority). Under the said contract Medalla obligated to transport on the "MV Sea Runner" 8,550 sacks of
rice belonging to defendant National Grains Authority from the port of San Jose, Occidental Mindoro, to Malabon, Metro Manila. Upon
completion of the delivery, Superior Shipping wrote a letter requesting NGA that it be allowed to collect the amount for the transaction.
Superior Shipping wrote another letter to NGA, this time specifically requesting that the payment for freightage and other charges be made
to it and not to defendant Medalla because plaintiff was the owner of the vessel "MV Sea Runner". In reply, NGA informed Superior Shipping
that it could not grant its request because the contract to transport the rice was entered into by NGA and Medalla who did not disclose that
he was acting as a mere agent of Superior Shipping. NGA then made the payment to Medalla. Superior shipping demandad Medalla to turn
50. National Food over to it the payment by NGA but Medalla did not do so.
Authority v. IAC
184 SCRA 166 SC ruled that NFA is liable to Superior Shipping. Art. 1883. If an agent acts in his own name, the principal has no right of action against the
persons with whom the agent has contracted; neither have such persons against the principal. In such case the agent is the one directly
bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things
belonging to the principal. Consequently, when things belonging to the principal (in this case, Superior Shipping Corporation) are dealt with,
the agent is bound to the principal although he does not assume the character of such agent and appears acting in his own name. In other
words, the agent's apparent representation yields to the principal's true representation and that, in reality and in effect, the contract must
be considered as entered into between the principal and the third person (Sy Juco and Viardo v. Sy Juco, 40 Phil. 634). Corollarily, if the
principal can be obliged to perform his duties under the contract, then it can also demand the enforcement of its rights arising from the
contract.
The existence of a common subject-matter supplies the juridical link. Jimena repeatedly made demands upon God Star for the payment of
51. Gold star mining his 1⁄2 share of the royalties, but all in vain, so he was forced to implead Gold Star for having refused to recognize his right. Furthermore,
v. Lim-Jimena, 25 under such conditions wherein Jimena was repeatedly denied of his interests, Jimena has an action against Gold Star, pursuant to Art. 1883,
SCRA 597 NCC, which provides that the principal may sue the person with whom the agent dealt with in his (agent’s) own name, when the transaction
‘involves things belonging to the principal.’
It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real property executed by an agent, it must
upon its face purport to be made, signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is not enough
52. Far East Bank and
merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal. Neither is it ordinarily
Trust Company
sufficient that in the mortgage the agent describes himself as acting by virtue of a power of attorney, if in fact the agent has acted in his own
and Borja v. Sps
name and has set his own hand and seal to the mortgage. This is especially true where the agent himself is a party to the instrument.
Cayetano (2010)
However, clearly the body of the mortgage may show and intend that it shall be the act of the principal, yet, unless in fact it is executed by
the agent for and on behalf of his principal and as the act and deed of the principal, it is not valid as to the principal.
The defendant Mauro A. Garrucho’s sister, Amparo A. Garrucho, and aunt, Paz Agudelo y Gonzaga, executedSpecial Power of Attorney in his
favour, authorizing him to sell, alienate and mortgage in the manner and form he might deem convenient several of their (his sister’s and
aunt’s) real properties, though no without mention that he may use these properties to secure his own personal obligations. Mauro then
used some of these properties to secure his obligations with the plaintiff in the amounts of P6,000 and P16,000. These obligations were later
novated with Mauro issuing a promissory note in favour of the bank for 21,000. In the meanwhile, Amparo sold her property (which Mauro
53. PNB v. Agudelo, had mortgaged to the plaintiff) to Paz.
58 Phil 655
Sc ruled that Paz is not liable for the obligations of Mauro to the plaintiff because nowhere in the mortgage deeds was it mentioned that
Mauro obtained the loans on behalf of his aunt or sister which means that he was acting in his personal capacity. When an agent negotiates
a loan in his own name and executes a promissory note under his personal signature without express authority from his principal, giving
as security therefor real estate belonging to the latter, also in his own name and not in the name and in representation of said principal,
the obligation so contracted by him is personal and is not binding upon the aforesaid principal.
X. PRINCIPAL: OBLIGATIONS AND LIABILITIES TO THIRD PARTIES
The solidarity arises from the common interest of the principals, and not from the act of constituting the agency. By virtue of this solidarity,
the agent can recover from any principal the whole compensation and indemnity owing to him by the others. The parties, however, may, by
54. De Castro v. CA
express agreement, negate this solidary responsibility. The solidarity does not disappear by the mere partition effected by the principals
GRN 115838, July
after the accomplishment of the agency. When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in
18, 2002
a contract of agency, each obligor may be compelled to pay the entire obligation. The agent may recover the whole compensation from any
one of the co-principals, as in this case. Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the solidary debtors.
Sellner sold a parcel of land to Macondray & Co. Unsatisfied with the purchase, Macondray told Sellner to find a buyer and sell it at the price
Macondray bought it for. All excess proceeds would belong to Sellner as commission. Sellner found a buyer who would buy it at a higher
price. However, during negotiations, the buyer needed time to examine the documents for him to accept the land. Macondray pressured
55. Macondra v. Sellner to close the deal as soon as possible. He said that if the price was not paid on a certain day, the sale is off. Sellner tendered the price
Sellner, 33 Phil. 2 days after the deadline. Macondray now sues Sellner for unauthorized sale and for damages.
370
SC ruled that Macondra is not entitled for damages. The business of a real estate broker or agent, generally, is only to find a purchaser,
and the settled rule as stated by the courts is that, in the absence of an express contract between broker and his principal, the implication
generally is that the broker becomes entitled to the usual commissions whenever he brings to his principal a party who is able and willing

to take the property and enter into a valid contract upon the terms then named by the principal, although the particulars may be arranged
and the matter negotiated and completed between the principal and the purchaser directly.
Danon's action here is not one for damages for breach of contract; it is an action to recover "the reasonable value" of services rendered.
Hence, to determine whether Danon is entitled to recover the commission agreed upon, the pivotal question to be resolved is whether
Danon had performed all that was required of him under his contract with Brimo. It is perfectly clear that his "services" did not in any way
56. Danon v. Brim &
contribute towards bringing about the sale of the factory in question. He was not "the efficient agent or the procuring cause of the sale."
Co. 42 Phil 133
This is in accordance in the case of Wylie vs. Marine National Bank: "The broker must be the efficient agent or the procuring cause of the
sale. The means employed by him and his efforts must result in the sale. He must find the purchaser, and the sale must proceed from his
efforts acting as broker."
The Court ruled that since Inland Realty was not the efficient procuring cause in bringing about the sale on July 8, 1977, therefore it is not
entitled to the 5% broker's commission. During the subsistence of its authority to sell, Inland Realty had nothing to show that they performed
57. Inland Realty v.
substantial acts that proximately and causatively led to the consummation of the sale to Stanford of Araneta, Inc.'s 9,800 shares in Architects'.
CA 273 SCRA 70
Inland Realty failed in selling said shares under the terms and conditions set out by Araneta, Inc.; it did nothing but submit Stanford's name
as prospective buyer.
In the course of petitioner's dealings with the DBP, it was always made clear to petitioner that only accredited brokers may look for buyers
on behalf of respondent DBP. This is not a situation wherein a third party was prejudiced by the refusal of respondent DBP to recognize
58. Uniland Resources
petitioner as its broker. The basic axiom in Civil Law that no one may contract in the name of another without being authorized by the latter,
v. DBP 200 SCRA
unless the former has by law a right to represent him (Art. 1317, Civil Code). From this principle, among others, springs the relationship of
757
agency which, as with other contracts, is one founded on mutual consent: the principal agrees to be bound by the acts of the agent and the
latter in turn consents to render service on behalf or in representation of the principal.
Estrada was the “efficient procuring cause” in the execution of the service agreement, and is therefore entitled to commission.
• It is readily apparent that Maxicare is attempting to evade payment of the commission which rightfully belongs to Esrada as the
broker who brought the parties together.
• Estrada was the one who penetrated the Meralco market, initially closed to Maxicare, and laid down the groundwork for their
business relationship.
o Maxicare’s former Chairman testified that Maxicare had been trying to land the Meralco account 2 years prior to
59. Philippine Health engaging Estrada’s services.
Care Providers v. o Meralco’s Assistant VP categorically stated in a letter that they received the proposal of Maxicare from Estrada, who
Estrada GRN introduced Maxicare to them.
171052, Jan 28 • BROKER: one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which
2008 he has no concern; the negotiator between the other parties, never acting in his own name but in the name of those who
employed him.
o A broker is one whose occupation is to bring the parties together, in matter of trade, commerce or navigation.
• PROCURING CAUSE: a cause originating a series of events which, without break in their continuity, result in the accomplishment
of the prime objective of the employment of the broke.
o Estrada was evidently instrumental in the sale of the Maxicare health plans to Meralco and her efforts were the
foundation on which the negotiations resulting in the sale began.
The Supreme Court ruled that Prats was not the efficient procuring cause of the sale. It was not categorical that it was through Prats efforts
that meeting with the SSS official to close the sale took place. The court concluded that the meeting took place independently because the
60. Prats v. CA GRN L- SSS had manifested disinterest in Prats intervention. However, in equity, the court noted that Prats had diligently taken steps to bring back
39822 Jan 31 1978 together Doronilla and SSS. Prats efforts somehow were instrumental in bringing them together again and finally consummating the sale
although such finalization was after the expiration of Prats extended exclusive authority. Doronilla was ordered to pay Prats for his efforts
and assistance in the transaction
Agent was working a deal. His Agency powers expired, but in the expiry his actions cause the deal to work. Now he asks for compensation
but employer does not want to pay him because he made the sale no longer as an agent.
61. Manotoc Brothers
v. CA, GRN 94753, Court proved that without the agent, there would have been no sale to begin with. While in Prats vs. Court of Appeals, the agent was not
Apr 7, 1993 even the efficient procuring cause in bringing about the sale, unlike in the case at bar, it was still held therein that the agent was entitled to
compensation. In the case at bar, private respondent is the efficient procuring cause for without his efforts, the municipality would not have
anything to pass and the Mayor would not have anything to approve.
XI. PRINCIPAL: OBLIGATIONS AND LIABILITIES TO THIRD PARTIES
Gomez, as agent-representative is liable to pay for damages. Where a sale of land is effected on the strength of misrepresentations of the
agent of the vendor, the latter cannot accept the benefit of such representations and at the same time deny the responsibility for them. In
62. Gonzalez v.
this case, since Gomez, in negotiating for the sale of the land acted as the agent and representative of his wife Gonzales; having accepted
Haberes, 47 Phi.
the benefit of the land acted as the agent and representative of the Gonzales, his wife; having accepted the benefit of the representations
380
of her agent she cannot, of course, escape liability for them. Therefore, Gonzales could not deny responsibility as she accepted the benefit
of the representations of Gomez.
Vargas, husband of Dolores Orozco, executed a Power of Attorney in favor of Enrique Grupe, authorizing the latter: (1) to dispose of all his
property, particularly, a house and lot; and (2) to mortgage the house for the purpose of securing the payment of any amount advanced to
Dolores. Grupe and Orozco obtained a loan from Gonzalo Tuason. The instrument evidencing the debt was duly recorded in the Registry of
63. Tuazon v. Orosco,
Property, and it appears therefrom that Grupe, as attorney in fact for Vargas, received from Tuason a loan of P2,200 and delivered the same
5 Phil. 596
to the Orozco; and that to secure its payment, he mortgaged the property of Vargas with Orozco’s consent. But Orozco denies having received
the loan.

SC ruled that the principal is liabl.e A debt this incurred by the agent is binding directly upon the principal, provided the former acted, as in
the present case, within the scope of his authority. (Art. 1727) The fact that the agent has also bound himself to pay the debt does not relieve
from liability the principal for whose benefit the debt was incurred. The individual liability of the agent constitutes only a further security in
favor of the creditor. The law does not provide that the agent cannot bind himself personally to the fulfillment of an obligation incurred by
him in the name and on behalf of his principal. (Art. 1725)
The Supreme Court held that the petitioner/plaintiff had precisely granted the defendant Antonio as his agent the authority to borrow
money, and to transfer and convey the property by way of mortgage to FEBTC; to sign, execute and deliver promissory notes; and to receive
the proceeds of the loans on the former’s behalf. In other words, the mortgage contracts were valid and enforceable against
petitioner/plaintiff, who is fully bound by their terms.
64. Prieto v. CA, GRN o It is stipulated under Article 1898 of the Civil Code, the acts of an agent done beyond the scope of his authority do not
158596, June 18, bind the principal unless the latter expressly or impliedly ratifies the same.
2012 o As to the ratification by the contract of adhesion, although his agent, the defendant, had exceeded the express
authority, the petitioner/plaintiff is liable by virtue of the expressed ratification.
o In agency, ratification is the adoption or confirmation by one person of an
act performed on his behalf by another without authority.
o The substance of ratification is the confirmation after the act, amounting to a substitute for a prior authority.
By contract of agency, a person binds himself to render some service in representation or on behalf of another, with the consent of the
latter.
General Rule: Principal is responsible for the acts of its agent done within the scope of its authority and bears the damages to third person.
When the agent exceeds its authority, agent becomes liable. But even when the agent exceeds, the principal is still solidarily liable with the
65. Filipinas Life v.
agent if the principal allowed the agent to act as though the latter had full powers.
Pedrosa, GRN
159489 Feb 4 2008
In other words, the acts of an agent beyond the scope of his authority do not bind the principal, unless the principal ratifies expressly or
impliedly.
Innocent third persons should not be prejudiced if the principal failed to adopt the needed measures to prevent misrepresentation, much
more if the principal ratified the agent’s acts.
66. Country Bankers For an agency by estoppel to exist, the following must be established:
v. Keppel GRN 1. The principal manifested a representation of the agent’s authority or knowingly allowed the agent to assume such authority;
166044, June 18 2. The third person, in good faith, relied upon such representation
2012 3. Relying upon such representation, such third person has changed his position to his detriment.
In this case, the bank acknowledges, by its own acts or failure to act, the authority of Fe S. Tena to enter into binding contracts. After the
execution of the Deed of Sale, respondents occupied the properties in dispute and paid the real estate taxes. If the bank management
67. Rural Bank of
believed that it had title to the property, it should have taken measured to prevent the infringement and invasion of title thereto and posses-
Milaor v. Ocfemia,
sion thereof. Likewise, Tena had previously transacted business on behalf of the bank, and the latter had acknowledged her authority. A
GRN 137686, Feb
bank is liable to innocent third persons where representation is made in the course of its normal business by an agent like Manager Tena
8, 2000
even though such agent is abusing her authority. Clearly, persons dealing with her could not be blamed for believing that she was authorized
to transact business for and on behalf of the bank. 
XII. RIGHTS AND DUTIES OF THIRD PARTIES DEALING WITH AGENT
68. Keeler Electric v. Persons dealing with an assumed agent, whether the assumed agency be a general or special one, rare bound at their peril, if they would, if
Rodriguez GRN they would hold the principal, to ascertain not only the fact of the agency but the nature and extent of the authority, and in case either is
19001, Nov. 11, controverted, the burden of proof is upon them to establish it. The agent alone remove limitations or waive conditions imposed by his
1922 principal. To charge the principal in such a case, the principal's consent or concurrence must be shown.
Renato Gaytano, doing business under the name Gebbs International, applied for and was granted a loan with respondent Traders Royal
Bank in the amount of P60,000.00. As security for the payment of said loan, the Gaytano spouses executed a deed of suretyship whereby
they agreed to pay jointly and severally to respondent bank the amount of the loan including interests, penalty and other bank charges. In
a letter dated December 5, 1980 addressed to respondent bank, Philip Wong as credit administrator of BA Finance Corporation for and in
behalf of the latter, undertook to guarantee the loan of the Gaytano spouses. Partial payments were made on the loan leaving an unpaid
balance in the amount of P85,807.25. Upon complaint by respondent, petitioner refused to pay because Wong has no authority to answer
69. BA Finance v. CA, for guaranty.
GRN 94566, July 3
1992 SC ruled that the Respondent cannot collect from petitioner because what was conducted by Wong is considered an ultra vires act and
cannot bind the petitioner corporation. Authority given to officer to approve loans does not include power to issue guarantees to 3rd
persons in principal’s name. It is a settled rule that persons dealing with an assumed agent, whether the assumed agency be a general or
special one are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and
extent of authority, and in case either is controverted, the burden of proof is upon them to establish it (Harry Keeler v. Rodriguez, 4 Phil. 19).
Hence, the burden is on respondent bank to satisfactorily prove that the credit administrator with whom they transacted acted within the
authority given to him by his principal, petitioner corporation.
XIII. EXTINGUISHMENT OF AGENCY
70. CMS Logging v. CA The principal may revoke a contract of agency at will, and such revocation may be express, or implied, and may be availed of even if the
GRN 41420, July period fixed in the contract of agency as not yet expired. As the principal has this absolute right to revoke the agency, the agent can not
10, 1992

object thereto; neither may he claim damages arising from such revocation, unless it is shown that such was done in order to evade the
payment of agent's commission.
In the case at bar, CMS appointed DRACOR as its agent for the sale of its logs to Japanese firms. Yet, during the existence of the contract of
agency, DRACOR admitted that CMS sold its logs directly to several Japanese firms. This act constituted an implied revocation of the contract
of agency under Article 1924 of the Civil Code.
Lustan owns a parcel of land in Iloilo. Lustan leased the property to Parangan. During the period of lease, Parangan was regularly extending
loans in small amounts to Lustan. Lustan executed a Special Power of Attorney (SPA) in favor of Parangan to secure an agricultural loan from
PNB with the aforesaid lot as collateral. A second SPA was executed by Lustan, by virtue of which, Parangan was able to secure 4 additional
loans. The last 3 loans were without the knowledge of Lustan and all the proceeds therefrom were used by Parangan for his own benefit.
Lustan signed a Deed of Definite Sale in favor of Parangan, upon the latter’s representation that the same merely evidences the loans
71. Lustan v. CA, GRN
extended by him. For fear that her property might be prejudiced, Lustan demanded the return of her certificate of title. Instead of complying,
111924, Jan. 27
Parangan asserted his rights over the property. Lustan filed an action for cancellation of liens, quieting of title, recovery of possession and
1997
damages against Parangan and PNB. RTC ruled in favor of Lustan. Upon appeal, CA reversed RTC’s decision.
SC ruled that Lustan's property is liable to PNB for the loans contracted by Parangan by virtue of the special power of attorney. In this case,
the SPAs are a continuing one and absent a valid revocation duly furnished to the mortgagee, the same continues to have force and effect
as against third persons who had no knowledge of such lack of authority.
A contract of agency is generally revocable as it is a personal contract of representation based on trust and confidence reposed by the
principal on his agent. As the power of the agent to act depends on the will and license of the principal he represents, the power of the agent
72. Republic v
ceases when the will or permission is withdrawn by the principal. Thus, generally, the agency may be revoked by the principal at will.
Evangelista GRN
However, an exception to the revocability of a contract of agency is when it is coupled with interest, i.e., if a bilateral contract depends upon
156015, August
the agency. The reason for its irrevocability is because the agency becomes part of another obligation or agreement. It is not solely the rights
11, 2005
of the principal but also that of the agent and third persons which are affected. Hence, the law provides that in such cases, the agency cannot
be revoked at the sole will of the principal.
73. Barreto v. Sta The time during which the agent may hold his position is indefinite or undetermined, when no period has been fixed in his commission and
Maria, 26 Phil. so long as the confidence reposed in him by the principal exists; but as soon as this confidence disappears the principal has a right to revoke
440 the power he conferred upon the agent, especially when the latter has resigned his position for good reasons.
Under the said agreement, herein petitioners allowed the private respondent "to dispose of, sell, cede; transfer and convey . . . until all the
subject property as subdivided is fully disposed of." The authority to sell is not extinguished until all the lots have been disposed of. When,
therefore, the petitioners revoked the contract with private respondent in a letter, they become liable to the private respondent for damages
for breach of contract.
74. Dialosa v. CA, 130
SCRA 350
It may be added that since the subject agency agreement is a valid contract, the same may be rescinded only on grounds specified in Articles
1381 and 1382 of the Civil Code. In the case at bar, not one of the grounds mentioned is present which may be the subject of an action of
rescission, much less can petitioners say that the private respondent violated the terms of their agreement — such as failure to deliver to
them (Subdivision owners) the proceeds of the purchase price of the lots.
The Supreme Court held that the SPA may be made irrevocable by contract only in the sense that the principal may not recall it at his pleasure;
but couple with interest or not, the authority certainly can be revoked for a just cause. Especially in this case wherein it was sufficiently
proven that Coleongco was indeed acting adversely to his principal’s interest. The Supreme Court further ratiocinated that the irrevocability
75. Coleongco v.
of the SPA may not be used as a shield for perpetrations of acts in bad faith, breach of confidence or betrayal of trust even though such SPA
Claparols, 10 SCRA
is coupled with interest. Art. 1315 of the NCC even provides that responsibilities arising from fraud are demandable in all obligations. Art.
577 (1964)
1800 also provides that when a partner acted in bad faith, the consequence is that the other partners may revoke such agreement coupled
with interest since the partner in bad faith is not anymore representing his partners’ interest. Since it was evident that Coleongco acted in
bad faith, Claparols is therefore given a right to revocation of such agreement between them.
Summarizing, the conclusion is reached that the disagreements between an agent and his principal with respect to the agency, and the filing
76. Valera v. Velasco, of a civil action by the former against the latter for the collection of the balance in favor of the agent, resulting from a liquidation of the
51 Phil. 695 (1928) agency accounts, are facts showing a rupture of relations, and the complaint is equivalent to an express renunciation of the agency, and is
more expressive than if the agent had merely said, "I renounce the agency."
GENERAL RULE:
The death of the principal effects instantaneous and absolute revocation of the authority of the agent unless the power be coupled with an
interest
77. Rallos v. Felx Go EXCEPTION:

Chan, supra An act done by the agent after the death of his principal is valid and effective only under two conditions: (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
The power of sale given in a mortgaged is a power coupled with an interest which survives the death of the grantor. One case, that of Carter
78. Pasno v. Ravina
v.s. Slocomb [4898, 122 N.C. 475] has gone so far as to hold that a sale after the death of the mortgagor is valid without notice to the heirs
54 Phil. 378
of the mortgagor. However, that may be conceding that the power of sale is not revoked by the death of the mortgagor.
79. Herrera v. Luy Kim SC ruled here that the transactions were not null and void because they are executed after the death of the principal.
Guan, 1 SCRA 406 The death of the principal does not render the act of an agent unenforceable, where the latter had no knowledge of such extinguishment.

Agency Case Doctrines Guzrev

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AGENCY CASE DOCTRINE LIST

THE CASE DOCTRINES ARE BASED ON ATTY. LAO’S SYLLABUS

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 1 OF 13

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 2 OF 13

IV FORM AND MANNER OF CREATION

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 3 OF 13

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 4 OF 13

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 5 OF 13

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 6 OF 13

VIII. AGENT OBLIGATIONS AND LIABILITIES TO PRINCIPAL

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 7 OF 13

IX. AGENT: OBLIGATIONS AND LIABILITIES TO THIRD PARTIES

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 8 OF 13

SC ruled the following:

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 9 OF 13

X. PRINCIPAL: OBLIGATIONS AND LIABILITIES TO THIRD PARTIES

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 10 OF 13

XI. PRINCIPAL: OBLIGATIONS AND LIABILITIES TO THIRD PARTIES

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 11 OF 13

XII. RIGHTS AND DUTIES OF THIRD PARTIES DEALING WITH AGENT

XIII. EXTINGUISHMENT OF AGENCY

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 12 OF 13

77. Rallos v. Felx Go EXCEPTION:

GUZREV AGENCY DOCTRINES| DE LA SALLE UNIVERSITY – COLLEGE OF LAW 13 OF 13

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