AGENCY DIGESTS

URBAN BANK v PENA

FACTS: Isabel Sugar Co. (ICSI) owned a piece of land which it was
leasing to a certain person who subleased it, in violation of their
lease contract, to various tenants. Urban expressed its interest
to purchase said land. Both parties entered into a contract to sell
(land was sold for P240M) which contains, among others, that the
last installment of payment shall be withheld by Urban if the
tenants were still present at the time of delivery.

Because of this, ISCI ordered Pena, a director of ISCI, to

take possession of the said land and secure it from the tenants
after the lease contract has expired, and that he will be
reimbursed for any expenses he may incur to accomplish the
same such as costs for legal action and for employing security
guards. Upon the expiry of the lease, Pena did the same but was
however faced with resistance form the tenants: death threats,
violence, etc. Pena filed and got a TRO to prevent the tenants
from returning. However, the TRO was subsequently recalled
because the land was now under the name of Urban, hence Pena
had no more authority to maintain the TRO for he was an agent of
ISCI not Urban.

Pena called ISCI Pres. and confirmed the transfer. Pena told
ISCI Pres. that because Urban now owns it, he will withdraw the
guards etc. from the premises. Pena then had a phone convo w
Borlongan (Pres of Urban). Pena asked authorization from
Borlongan to negotiate with the tenants. Pena said that he be
paid 10% of the purchase price (P24M). Borlongan accepted
provided that if Pena is not successful, he will not get the 10%.
Pena said that the agreement be put into writing. However, NO
MENTION OF THE 10% were mention in the written agreement.

Eventually, Pena was able to relocate the tenants. Urban

occupied the property and installed its own guards. Pena made
several attempts to contact Urban but the officers would not
take his call, hence, this case.
Urban denies that it constituted Pena as their agent and
contends that it should be ISCI that should reimburse Pena
because he was their employee.

RTC  there was a contract of agency

CA  no agency

ISSUE: w/n Pena is entitled to compensation

HELD: YES. In a contract of agency, agents bind themselves to

render some service or to do something in representation or on
behalf of the principal, with the consent or authority of the latter.
The basis of the civil law relationship of agency is
representation, the elements of which include the following: (a)
the relationship is established by the parties’ consent, express or
implied; (b) the object is the execution of a juridical act in
relation to a third person; (c) agents act as representatives and
not for themselves; and (d) agents act within the scope of their
authority.

Whether or not an agency has been created is determined by the

fact that one is representing and acting for another. The law
makes no presumption of agency; proving its existence, nature
and extent is incumbent upon the person alleging it.

Based on the evidence on records and the proceedings below,

the Court concludes that Urban Bank constituted Atty. Peña as
its agent to secure possession of the Pasay property. This
conclusion, however, is not determinative of the basis of the
amount of payment that must be made to him by the bank. The
context in which the agency was created lays the basis for the
amount of compensation Atty. Peña is entitled to.

2. The evidence does not support that conversation between

Pena and ISCI regarding the 10% compensation took place. Only
the letter of authority that it faxed Pena binds Urban.
However, this does not mean that Pena is not entitled to
compensation. Agency is presumed to be for compensation .
Unless the contrary intent is shown, a person who acts as an
agent does so with the expectation of payment according to the
agreement and to the services rendered or results effected.

The SC found that the agency of Peña comprised of services

ordinarily performed by a lawyer who is tasked with the job of
ensuring clean possession by the owner of a property, therefore,
the measure of what he is entitled to will be based on the legal
services rendered. Lawyering is not a business; it is a profession
in which duty to public service, not money, is the primary
consideration. 24M is unconscionable. SC awarded him 5M.

Loadmasters Custom Services Inc v Glodel Brokerage

FACTS: R&B Insurance issued an insurance policy in favor of

Columbia to secure its cargo of cathodes against ALL RISKS. The
cathodes will be delivered via boat from Leyte to Manila.
Columbia then engaged the services of Glodel to unload the
cargo from the boats. Glodel in turn, engaged the services of
Loadmasters to bring the cargoes to Valenzuela and Bulacan. The
cargoes were then divided equally (6/truck). However, only 5
trucks reached Bulucan. The missing truck was found but the
cathodes were missing. Columbia then claimed insurance from
R&B (~P1.9M). R&B then filed a case against Glodel and
Loadmasters for reimbursement.

RTC: Glodel liable

CA: Loadmasters is an agent of Glodel so he’s liable as well

ISSUE: w/n Loadmasters is an agent.

HELD: NO. Article 1868 of the Civil Code provides: “By the
contract of agency a person binds himself to render some service
or to do something in representation or on behalf of another, with
the consent or authority of the latter.” The requisites of agency
are as follows: consent of the parties, object is the execution of a
juridical act in relation to third parties, agent acts a
representative not for himself, agent acts w/in the scope of his
authority.

The basis of agency is Representation. Loadmasters never

represented Glodel. Neither was it given any authority to do
so.

Principal There must be an actual intention or an

intention inferable on the to appoint an agent.
Agent  There must be an intention to accept the
appointment

Such mutual intention was not present in this case.

NOTE:
1. Common carriers – Loadmasters and Glodel are common
carriers thus they should have exercised extraordinary
diligence
2. Loadmasters and Glodel are solidarily liable to R&B Insurance
cos accordging to Art 2194 of the NCC “the responsibility of
two or more who are liable for a quasi-delict are solidary”
3. Glodel cannot collect from Loadmasters cos it did not file a
crossclaim.

BORDADOR v LUZ

FACTS: Spouses Bordador were engaged in the jewelry business.

Respondent Brigida Luz was their regular customer. On several
occasions, Narcisco Deganos (Luz’ bro) got jewelry from the
spouses’ store. This was evidenced by 17 receipts. 11 of the
receipts stated that the jewels were received by a niece of
Brigida while the last 6 were received for Brigida herself.
Deganos was supposed to sell them and give the proceeds to the
Bordadors. Deganos only remitted P53K.
 Bordadors filed a case in the barangay wherein Deganos
and Brigisa executed a compromise agreement stating that
Deganos will pay.
 When Deganos did not pay, Bordadors filed a Civil case in
the RTC
 4 years after filing the civil case, Bordadors filed a case
of Estafa against the bro and sis

In the civil case, Bordadors claim that Deganos is an agent of

Brigida, thus, the latter is solidarily liable with him.

Petitioners: He is an agent cos Brigida sent several letters

stating that she acknowledges her obligation. But court said that
the obligation was for her own obligation, not Deganos’
Respondents: Deganos insisted that he acted alone.
Brigida said he was not her agent.
 Trial Court ruled that it was the Bordadors themselves
which indicated in the receipts that the jewels were for the niece
and Brigida

ISSUE: w/n Deganos is an agent of Brigida.

HELD: NO. The evidence does not support that Brigida authorized
the acts of Deganos. The evidence also does not show that there
was an express or implied agency. The basis for agency is
representation. Here, there is no showing that Brigida consented
to the acts of Deganos or authorized him to act on her behalf,
much less with respect to the particular transactions involved.
The Bordadors were also negligent cos when they dealt with
Deganos, they did not ask for a written authority from Brigida. A
person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent.

NOTE: 1. Re the estafa case  Petitioners said that the CA should

have awaited the decision of the estafa case. SC said NO. Bases
on Art 33 of the NCC “in cases involving alleged fraudulent acts,
a civil action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured party. Such civil
action shall proceed independently of the criminal prosecution
and shall require only a preponderance of evidence.” [Civil and
criminal can proceed independently].

RALLOS v FELIX GO CHAN

FACTS:
Concepcion and Gerundia Rollos were sisters. They were co
owners of a parcel of land in Cebu. They executed an SPOA where
in they authorized their brother, Simon, to sell the land for them.
On March 5, 1955 Concepcion died. On September 12, 1955,
Simon sold the UNDIVIDED shares of the land to Felix Go Chan.
The administrator of Concepcion’s estate filed a case to annul
the sale and that the lot be reconveyed to Concepcion’s estate.
According to Felix Go Chan, the sale should be vaild w re to him
cos he did not know that Concpecion died. There was no Notice
of Death attached to the SPOA of Simon.

ISSUE: w/n the sale was valid despite the fact that the principal
died before the sale.

HELD: SALE NOT VALID. According to our NCC, no one can

contract in the name of another, w/o being authorized by the
latter or he has by law, a right to represent him. Agency is
personal, representative and derivative in nature. The authority of
the agent emanates from the powers granted by the principal –
his act is the act of the principal when done in the scope of his
authority. Thus:

General Rule: the death of either the Principal of the Agent

ext the Agency.

Exceptions:
1. If it has been constituted in the interest of the principal,
the agent or a 3 rd person who has accepted the
stipulation.

2. The agent acted w/o knowledge of the death of the

principal AND the third person who dealt w the agent is in
GF (must concur)
Exception 1 does not apply  there was no interest in the SPOA
Exception 2 does not apply  Simon knew the death of
Concepcion when he sold the land to Felix.

NOTE: 1. Re Felix GF defense  the law distinguishes between

REVOCATION BY ACT OF PRINCIPAL and REVOCATION BY LAW. In
the former, it must be communicated to be effective. In the latter
(such as DEATH), it is instantaneously effective.

EUROTECH INDUSTRIAL TECH INC. v CUIZON

ERwin – Store owner

EDwin – Sales manager

FACTS: Eurotech is engaged in the importation and distribution of

European products. Impact Systems is one of its customer.
Impact Systems is owned by Erwin. The sales manager is Edwin.
Impact Systems ordered 1 sludge pump from Eurotech wherein
they paid a dp of P50k. When the pump arrived Eurotech refused
to release it pending full payment. Thus, EDWIN and another
person executed a Deed of Assignment of Receivables wherein
they will assign their receivabes (from Toledo Corp) to Eurotech.
This will serve as payment. Eurotech gave them the pump.
Despite the Deed of Assignment, Impact Systems continued to
collect the receivables from Toledo. Eurotech demanded that
Impact Sytems pay the balance. When the latter did not, Eurotech
filed a case. EDWIN filed a motion stating that he is NOT a party
in interest cos he was merely an AGENT of Impact. According to
Eurotech, when ERWIN collected the receivables he repudiated
the power of EDWIN to sign the Deed of Assignment. Because
EDWIN did not notify this to Eurotech, he exceed his authority,
thus, should be liable.

ISSUE: w/n EDWIN is liable

HELD: NO.

General Rule: Agent is not personally liable to the party to

whom he contracts. (Principal is liable)

Except: 1. When he expressly binds himself to the obligation

2. exceeds his authority.
(Agent is liable)

The Deed of Assignment states that EDWIN signed it in his

capacity as Sales Manager. The powers of an agent acting as a
MANAGER is unique cos it has broad powers  in the absence of
any contrary agreement, the agent-manager may enter into
contracts that he deems reasonably necessary or necessary to
protect the interest of his principal . In said case, the sludge
pump was necessary for the business. Thus, EDWIN’s
participation in the Deed of Assignment was reasonably
necessary so that Impact Systems can get the sludge pump.
EDWIN was merely acting to protect the interest of his principal,
thus, he did not exceed his authority.

ORIENT AIR SERVICE v CA

FACTS:

American Airlines authorized Orient Air to act as its exclusive

general sales agent w/in the Philippines for the sale of air
passenger transportation. Amerincan Air terminated the
agreement cos Orient Air did not remit the net proceeds of the
Sales of Jan-March. According to Orient Air, it was American
Airlines who in fact owned them money. American Airlines still
owed them a balance of unpaid commission. It also contended
that the actions taken by American Air in termination the
agreement were untenable resulting to prejudice to its business
interest. The main issue is the right of Orient Air to the 3%
overriding commission. According to American Air, the
commission is based only on ticked sales. According to Orient
Air, the commission is based on the total revenue cos Orient Air
has been designated as the exclusive general sales agent of
American Air.

RTC Orient Air is entitled to the total revenue commission

 orders American Air to reinstate Orient Air as its Sales
Agent

CA  affirmed RTC

ISSUE: (for Agency purposes) w/n the order of the court to

reinstate Orient Air was proper.

HELD: NO. The contract of Agency is a contract where in a person

binds himself to render some service or to do something in
behalf or in representation of another with the CONSENT or
AUTHORITY of the latter. Thus, there can only be a contract of
agency if there is consent from the principal – it cannot be
compelled by law or court order.

NOTE: 1. W re first issue  The agreement b/w AA and OA states

that OA is entitled to 2 commissions: 7-8% based on AA tickets
and a 3% override commission based on ticket stock of other air
carriers sold by such carriers. Thus, to limit the sales of the 3%
override commission to AA ticket stocks only and NOT include
TOTAL REVENUE would remove the distinction between the two
provisions. The Court held that such conclusion is “absurd” cos it
would lead to the enactment of a “meaningless provision”. Thus,
the 3% override commission is based on the TOTAL REVENUE 
OA won (hindi ako sure kung tama intindi ko sa part na ‘to. Labo
eh... haha)

DOMINGO v DOMINGO

Vicente – Seller
Gregorio – broker
Oscar – Buyer
Amparo – Oscar’s wife
Purisima – sub-broker of Gregorio

FACTS:

Vicente granted Gregorio, a real estate broker, the exclusive

agency to sell his lot with a commission of 5% of the total price,
if sold by Vicente within the 30-day duration of the agency or if
sold by Vicente within 3 months from the termination of the
agency to a purchaser whom Gregorio presented during the 30-
day duration.

Gregorio authorized Purisima to look for a buyer in consideration

for half of the 5% commission.

Oscar, found by Gregorio, offered to buy the land at a price lower

than P2.00 / sqm. Vicente, through Gregorio, asked if he could
raise it. Oscar raised the offer to P1.20 / sqm and they agreed.
Oscar paid P2,000 as earnest money to show that he will pay.
Vicente gave Gregorio P300 in the meantime. Pursuant to his
promise, Oscar gave Gregorio P1,000 as a gift for succeeding in
lowering the price from P2.00 to P1.20 / sqm, this was not
disclosed by Gregorio to Vicente.

Oscar told him that he was backing out on the sale because he
did not receive the money that he was supposed to receive from
his brother in the US. After some time, Gregorio sensed
something fishy because he had not heard from either Vicente or
Oscar in a while so he met with Oscar.

As it eventually turned out, Gregorio discovered that Vicente had

already sold the property to Oscar and that he offered Oscar an
even lower price if he would agree to “cut off” Gregorio from the
transaction. Upon knowing this, he demanded the payment of his
commission form Vicente who said that he was not entitled to
the commission because he sold not to Oscar, but to Oscar’s
wife, Amparo.

ISSUE:
W/N the failure on the part of Gregorio to disclose to Vicente the
payment to him by Oscar de Leon P1,000.00 as gift or "propina"
for having persuaded Vicente to reduce the purchase price from
P2.00 to P1.20 per square meter, constitutes fraud as to cause a
forfeiture of his commission on the sale price.

HELD:

1. The duties and liabilities of a broker to his employer are

essentially those which an agent owes to his principal:

Art. 1891. Every agent is bound to render an account of his

transactions and to deliver to the principal whatever he may have
received by virtue of the agency, even though it may not be
owing to the principal. Every stipulation exempting the agent
from the obligation to render an account shall be void.

Art. 1909. The agent is responsible not only for fraud but also for
negligence, which shall be judged with more less rigor by the
courts, according to whether the agency was or was not for a
compensation.

The aforecited provisions demand the utmost good faith, fidelity,

honesty, candor and fairness on the part of the agent, the real
estate broker in this case, to his principal, the vendor. The law
imposes upon the agent the absolute obligation to make a full
disclosure or complete account to his principal of all his
transactions and other material facts relevant to the agency, so
much so that the law as amended does not countenance any
stipulation exempting the agent from such an obligation and
considers such an exemption as void. The duty of an agent is
likened to that of a trustee.

Hence, an agent who takes a secret profit in the nature of a

bonus, gratuity or 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 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; because the rule is to
prevent the possibility of any wrong, not to remedy or repair an
actual damage.

NOTE: 1. Where a principal has paid an agent or broker a

commission w/o knowledge that the latter has been unfaithful,
the principal may recover back the commission paid, since an
agent or broker who has been unfaithful is not entitled to any
compensation UNLESS ratified.

General Rule: Every agent is bound to render an account of his

transactions (Art 189)

Except: a. if the “agent” acted only as a middleman

b. if agent informed the principal

2. Teofilo Purisima, the sub-agent of Gregorio Domingo, can only

recover from Gregorio Domingo

SCHIMD & OBERLY Inc. v RJL MARTINEZ

FACTS: RJL Martinez owns a fishing company. RJL wished to buy

electric generators. Schimd is a supplier of such. The companies
engaged in two transactions:
First transaction – 3 generators were sold directly by
Schimd. The 3 generators came from its stockroom
Second transanction – this involved 12 Nagato brand
generators. In this case, RJL bought the generators from the
Nagato company (in Japan) via a letter of credit. Schimd merely
transmitted RJL orders to Nagato. Nagato shipped the generators
DIRECTLY to RJL. Schimd received a commission for its efforts.

The 15 generators then broke down. Nagato sent two technicians.

They found out that the generators should only run at 4volts (the
label said 5v). Schimd replaced 3 generators at once. RJL sent 3
to Japan for replacement. The remaining 9 were not replaced.
Nagato informed Schimd that the latter repair the 9 generators to
be charged to Nagato. Schimd refused. RJL then demanded that
Schimd replace the 9 generators. Shimd refused claiming that it
was not the seller. According to Schimd it was just a contract of
indent. RJL claimed it was a contract of Sale

ISSUE: 1. W/n Schimd was an indentor or vendor

2. if Schimd was an indentor, can he still be liable (Agency)

HELD: 1. Schimd was an INDENTOR. The essence of a contract of

sale is the transfer of ownership in consideration of a price paid
or promised. On the other hand, there is no statutory description
of indent. However, JD states that an indent is similar to a
middleman – an indentor may be best desctibed a person who
acts as a middleman in a contract between a foreign supplier and
a local supplier. In an indent transaction, there are three parties –
the buyer, the indentor and the suppier who is usually a foreign
company. Schimd was not a vendor but merely an indentor in the
2nd transaction. The only participation of Schimd was to act as
middleman between RJL and Nagato. In fact, in the document, it
was stated that the 12 generators were ordered “through indent
order”.

2. NO. Being merely an indentor, Schimd is not liable for any

defects. However, Schimd may be liable IF he bound himself to
the goods. As an agent, he is bound to undertake some of the
obligations of the principal (such as to warrant the generators).
Court found that Schimd DID NOT expressly state that it
warranted the generators. RJL could not even produce
documents of the “Terms and Conditions” of the supposed
warrant.

TAN v GULLAS

FACTS: Spouses Gullas owned a parcel of land. They executed an

SPOA in favor of petitioners authorizing them to be brokers for
the land. The agreement was for a period of one month only and
it was non-exclusive. Eventually, petitioners found a buyer in the
form of the Sisters of Mary. They brought the Sisters to the office
of Gullas wherein the Sisters expressed they want to buy the
property. In fact, the sisters bought the property for P20M.
Petitioners then went to Gullas to get their fee. Gullas refused to
pay them claming that there were not responsible for getting the
Sisters of Mary. Another agent (Pacana) was the responsible.
Petitioners filed a case with the RTC. They claimed that there
were the efficient procuring cause. Gullas claimed that Pacana
was the cause and he was already paid his fee.

ISSUE: w/n petitioners should be paid.

HELD: YES. Gullas failed to prove that petitioners were not the
efficient procuring cause. Pacana was not even presented in
court. The SPOA which allegedly grants his power was undated
and not notarized. A broker is a person whose occupation brings
the parties together in matters of trade, commerce or navigation.
Petitioners were authorized by Gullas to act as brokers. Although,
the agreement was non exclusive (this means that Gullas can
also grant the same authority to other agents), Gullas failed to
prove there were other agents. An AGENT receives compensation
by the consummation of the sale. On the other hand, a BROKER
receives compensation by merely bringing together the parties,
even if no sale was made.

MEDRANO v CA

Medrano – bank manager/seller

Flor & Borbon – brokers
Mr. Lee - buyer
FACTS: Medrano was chairman of a rural bank. The bank had a
mango orchard which it wants to sell. Medrano contacted his
cousin, Flor, to look for a buyer. An asspciate of Flor – Borbon –
informed them that a Mr. Lee from Makati is looking for a mango
orchard. Borbon then instructed Flor to tell Medrano to execute a
letter authorizing them (Flor and Borbon) to negotiate the sale of
the property. The first ocular inspection failed to push thru cos of
the weather. Then, Lee suddenly called Borbon and told her that
he was on his way to Lipa to check on another property and if he
can see the mango orchard. Borbon asked Lee to meet up with
Medrano’s daughter and an officer of the bank. Two days later,
Borbon asked how the inspection went. Lee said that the
mangoes looked “sickly” and that he will first get an agriculturist.
Three weeks later, Borbon again called Lee. Lee told her that he
already bought the orchard. Lee was surprised that Borbon did
not receive any commission. Borbon went to Medrano to claim
her commission. Medrano gave her a measly P5K (haha). Medrano
claimes that the Letter of Authority is not binding and that they
are not entitled to a commission cos they did not “negotiate” the
sale.

ISSUE: 1. w/n the letter is binding

2. w/n Borbon and co are entitled to commission

HELD: 1. YES. The letter is the contract between the parties.

Medrano signed the letter in behalf of the bank.
2. YES. Borbon and Flor were the procuring cause of the
sale. Based on the testimonies, if it were not for Borbon and co,
the sale would not be possible:

 Lee found out about the orchard via Borbon and co

 Lee called Borbon that he wants to see the orchard (this
shows that Borbon was his only contact)
 a rep of the bank testified that no ads were made and
that the bank did not entertain other offers

The court held that if a broker is the procuring cause for the sale,
he is entitled to commission.
NOTE: 1. w/ re Medrano’s argument about “negotiation”  it is not
a prerequisite that a broker negotiate with the potential buyer so
as to get his commission. It has been held in a number of cases
that the brokers can get their commission even if there was no
nego, never saw the customer, etc. In fact, they can still get
commission even if they just put up an ad – provided that this
was the procuring cause of the sale.

LITONJUA Jr., v ETERNIT CORP

Glanville – Pres of EC
Delsax – Regional Dir of ESAC
Marquez – broker/agent
Lintonjua - buyer

FACTS: Eternit Corp manufactures roofing materials and pipe

products. 90% of its stocks were owned by ESAC, a company in
Belguim. Glanville was the President of EC while Delsaux was the
Regional Director of ESAC. Both their offices are in Belguim. Due
to the deteriorating political condition in the Philippines, ESAC
wanted to sell its land. ESAC instructucted Adams (a member of
EC’s board) to dispose of the land. Adams then engaged the
services of real estate broker Marquez to find buyers. Marquez
then contacted the Lintonjua bros. Marquez declared that he was
authorized to sell the properties. He offered them to the Litonjua
brothers (Eduardo and Antonio) of Litonjua & Company Inc for
P27million on Sept 12, 1986, subject to negotiation. The Litonjuas
countered with a P20million cash offer. Marquez told Glanville,
who told Delsaux on Oct 28, 1986, but there was no response. On
Feb 12, 1987, Delsaux responded by telex stating that based on
the "Belgian/Swiss decision", the final offer was US$1million and
P2.5million. Marquez sent the telex to the Litonjuas, who
accepted the proposal. The Litonjuas deposited US$1million to
Security Bank. However, given that the political situation was
improving, Glanville informed Marquez that the sale would not
push through, followed by a letter stating that the board members
of EC decided not to sell the properties. Delsaux also sent a
letter stating that the sale would not push through. The Litonjuas
wrote EC demanding damages on account of the aborted sale,
which EC rejected. They then filed for specific performance and
damages against EC (which became Eterton Multi-Resources
Corporation), claiming, among others, that Marquez was a broker
and not an agent, so no written authority was required; that there
was an agency by estoppel when Marquez was given apparent
authority to sell; and that a contract of sale was perfected. RTC
and CA rejected the complaints, hence this petition.

ISSUE: 1. w/n Marquez was authorized as a broker/agent

2. w/n there is Agency by Estoppel

HELD: 1. NO. An agency may be expressed or implied from the act

of the principal, from his silence or lack of action, or his failure to
repudiate the agency knowing that another person is acting on
his behalf without authority. Acceptance by the agent may be
expressed, or implied from his acts, which carry out the agency,
or from his silence or inaction according to the circumstances.
Agency may be oral unless the law requires a specific form.
However, to create or convey real rights over immovable property
via an agent, it is necessary that it is written. Thus, when a sale
of piece of land is via an agent, it should be in writing otherwise
it is void. The Lintonjas failed to produce such written instrument
coming from the Board of EC. The Board of Directors of EC did
not authorize Marquez, Glanvill or Delsauz as its agents.
According to the Corp Code, corporations are controlled by its
Board and can only act when authorized by such. Absent such
authority, acts by an individual director is void, unless ratified. In
the case, Marquez  Adams and Glanville  Delsaux  ESAC.
Even if ESAC controlled 90% of the shares of EC, the authority of
the Board of EC is a condition sine qua non . Marquez was a
broker only. His authority was merely to look for buyers. He had
no authority sell. Thus such is not binding.

The Litonjuas could not have feigned ignorance. A person dealing

with an agent should not blindly trust such agent. Such person
should not act negligently. He should ascertain whether the
agent acts w/in the bounds of the authority given by the principal

2. NONE. Glanville and Co, expressly stated that they were acting
in behalf of ESAC (Lintonjuas should have known that they do not
have the authority)
NOTE: Req of Agency by Estoppel:

1. Principal manifestoed a rep of A’s authority or knowingly

allowed A to assume such authority

2. 3rd person GF relied upon such rep

3. 3rd person changed his position to his detriment cos of

the rep.

SPOUSES VILLORIA v CONTINENTLAL AIR

FACTS: While in the US the Spouses Villoria approached Holiday

Travel cos they wanted to purchase tickets from San Diego to
Newark. Margaret Mager, the travel agent, told them that all
Amtrak trains are full. Thus, the couple bought two round trip
tickets. The Spouses then want to book an earlier flight. Mager
told them that all flights of Continental Air flights are full so she
booked them with Frontier Air. Since Frontier Air is much more
expensive, the Spouses asked for a refund. Mager denied since
the tickets are non-refundable. The Spouses then went to a
Greyhound station nearby where they found out there were still
Amtrack tickets available. The Spouses purchased two tickets.
Afterwards, they confronted Mager. They told her that her
misrepresentation misled them into buying Continental Air
tickets. They asked for a refund which Mager denied. Back in the
Philippines, the Spouses told Con Air about Mager’s
misrepresentation. They then asked for a refund. Continental Air
denied their request. Instead, Con Air said that they can use their
tickets to purchase other tickets. But when they Spouses wanted
to buy tickets going to LA, it was denied. The Spouses filed a
complaint demanding a refund and other damages.

RTC  granted in favor of the Spouses. Ruled that Holiday Travel

is an agent of Con Air
CA  Reversed RTC. Holiday is not an agent. What happened was
a contract of sale (not agency) cos Holiday Travel buys the
tickets from Con Air then sells it to the customers.
ISSUE: w/n the contract is of sale or of agency

HELD: AGENCY. All the elements of agency are present:

Ž
First and Second elements are present  Con Air did not deny
that it indeed entered into an agreement with Holdiay, where in
Holiday would enter into contracts of carriage with third
persons on Con Air’s behalf
Third element is present  Holiday acted as a mere rep. It was
Con Air that is bound by the contract of carriage, not Holiday.
Fourth element present  Con Air did not say that Holiday
exceeded its authority.

Con Air consistently maintains the validity of the contract of

carriage that Holiday entered on its behalf. In fact, when the
Spouses told them that they bought the tickets from Holdiay, Con
Air did not deny that Holiday is its agent. Con air is also estopped
cos the Spouses acted on Con Air’s representation that Holiday is
its agent. According to Art 1869, “agency may be express, or
implied from the acts of the principal, from his silence or lack of
action, or his failure to repudiate the agency, knowing that
another person is acting on his behalf without authority.”

It is not a contract of sale cos ownership and control of the

tickers are not transferred to Holiday. Also, it is Con Air that is
bound by the contract of carriage not Holiday. The main
difference between agency and contract of sale is the transfer of
ownership:

Sale  the delivery effects a relinquishment of title, control and

ownership (buyer has not more control)
Agency principal retains ownership and control, agency merely
acts on his behalf and instructions (principal retains control)

NOTE: 1. Con Air not liable for the acts of its agent cos Con Air
did not exercise control over Holiday’s employees and that it was
not negligent.
RALLOS v YANGCO

FACTS: Yangco owns a company which buy and sells tobacco leaf
products. On November 27, 1907, Yangco sent a letter to Rallos
telling the latter that he wants to do business with him. Via the
letter, Yangco introduced Florentino Collantes as his agent.
According to Yangco, Collantes is empowered by an SPOA to
perform all acts necessary to carry out his (Yangco’s) plans.
Thus, Rallos did business with Yangco thru his agent, Collantes.
In 1909, Rallos sent to Collantes 218 bundles of tobacco to be
sold on commission (2% commission). Collantes sold the tobacco
for ~P1700. His commission was ~P200. But instead of remitting
the P1500, he appropriated the money. Rallos then demanded
payment from Yangco. Yangco refused. He said that he had
already terminated their agency relationship BEFORE the goods
were deliveted to Collantes. According to him, Collantes was
acting personally and not as his agent. However, this fact was
not communicated to Rallos - no notice of the termination was
given to him.

ISSUE: w/n Yangco is liable.

HELD: YES. Yangco advertised Collantes as his agent. Thus, it

was his duty to inform Rallos that the agency is terminated.
Failing to do so, he is liable for whatever goods Rallos, without
negligence and in good faith, sent to Collantes.

NOTE: 1. Knowledge of termination may be ACTUAL or

CONSTRUCTIVE.

LINTONJUA v FERANDEZ
Brokers of Fernandez – Alimario and Cisco
Rep. of owner – Fernandez
Buyers – Lintonjua bros

FACTS: Lintonjua’s Version - Two brokers, Alimario and Cisco,

offered for sale a parcel of land to the Lintonjua bros. They said
that Fernendez, the representative of the owners, authorized
them to look for a buyer. All of them met in the bros office in
Mandaluyong wherein they agreed to buy the land at P150/sq
meter. They also agreed that the owners would shoulder the tax
and other expenses. They agreed to meet up again on December
8 to finalize the sale. It was on this date that Fernandez would
bring a written authority from the owners authorizing her to sell
the land. On the said date, only Cisco showed up. He said that
Fernandez was not able to go cos of some problem with the
tenants. After a few weeks, the bros wrote Fernandez and
demanded that she sell them the land. Fernandez replied that: 1)
She did not agree that the owners would shoulder the tax
expenses, etc. 2) They did not agree to sign the Deed of Sale on
December 8 and 3) Cos of some problem with the tenants, she
informed his brokers to tell the Lintonjuas that the sale will not
push thru. The bros filed in court for specific performance.
According to them there was a contract of sale based on her
letter:

“My cousin and I have thereby changed our mind and that
the sale will no longer push through. .... In view thereof, I
regret to formally inform you that we are no longer selling
the property until the problems are fully settled.”

Fernandez’ Version: She asked Alimario to look for buyers on a

“best offer basis”. And when she met up with the bros, she
merely wanted to hear their offer. She could not have bound the
owners to the sale cos she has no written authority to sell the
land. After the meeting, she found out that there were “tenants”
in the land thus she could not get the clearance. Also, her cousin
(co owner) would not agree on the P150/sq meter price. Thus, she
informed Alimario and Cisco to relay to the bros the situation.
There was also no earnest money paid by the bros.

ISSUE:1. w/n there is a contract of sale.

2. w/n contract falls w/in the stature of frauds

HELD: 1. NO. It was clear from the letter that Fernandez did not
agree on selling the land. When Fernandez used “changed our
minds”, she was referring to the fact of selling the property AT
ALL. Not selling the property to the bros.

Also, there was no evidence that Fernadez had a WRITTEN

authority, from the owners, to sell the land.

Art 1878 states that an SPOA is needed to enter into any contract
by which the ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable consideration, or to
create or convey real rights over immovable property or for any
other act of strict dominion. Any sale of real property by an agent
NOT IN WRITING is VOID.

Fernandez told the bros that she did not have any authority to sell
the land. The letter she sent was signed by her alone, without
any authority from the owners. Thus, the letter is not binding to
the owners.

2. NO. It presupposes the existence of a perfected contract of

sale. Also, it must be signed by the said party or his agent duly
authorized in writing.

AGGABAO v PARULAN

Elena – wife
Dionisio – husband
Atty. Parulan – Dionisio’s bro
Spouses Aggabao – buyers
FACTS: A real estate broker offered two lands in Paranaque to the
Aggabao Spouses which was owned by Elena and Dionisio, who
are separated in fact. They then met up with Elena. She showed
them: Original TCT of land 1, certified true copy of land 2 and
SPOA from her husband authorizing her to sell the land. The
Aggabao’s gave P20k as earnest money. The spouses then went
to the Register of Deeds to inquire re the lots. They found out
that Land 2 was mortgaged to a bank and that there was a court
order from Dionisio authorizing Elena to mortgage the land. The
court order was necessary cos the land is conjugal property.

When the spouses paid the balance, Elena did not give the
owner’s copy of land 1. She said that it was a relative in HK. The
spouses then found out that the copy was with Atty Parulan. Atty
Parulan was armed by an SPOA from Dionisio authorizing him to
sell the lands. He offered to give the TCT for 800k but the
spouses have already paid Elena. Dioniosio then filed a case to
nullify the sale base on Art 124 of the FC.

RTC and CA  ruled for Dionisio (RTC determined that the Elena’s
SPOA was forged)

 Spouses claim that Art 124 does not apply cos the spouses
were married before the FC thus the Civil Code should apply: Art
177 states that the contract was merely voidable (not void) and
maybe subject to ratification. And such ratification, according to
them, happened when Atty. Parulan made an offer to give the TCT
for 800k. (Agency)

 Spouses contend they are good faith buyers

 Spouses contend that Veloso Doctrine should apply thus sale

valid even if SPOA forged.

ISSUE: 1. w/n Art 124 of the FC applies

2. w/n they are GF buyers
3. w/n the Veloso Doctrine applies (Veloso v Ca)

HELD: 1. YES. The sale was made in 1991, which was after the
effectively of the FC. The FC also provides that it has a
retroactive effect provided that vested rights are not affected.
However, even if it was indeed under the old law, Atty. Parulan
could not have ratified the sale cos the authority given to him
was only to sell the land NOT to administer it . Atty Parulan had
no powers of admin, thus he cannot ratify the contract. Powers of
admin does not include power to encumber or dispose, which are
strict acts of ownership. An authority to dispose cannot proceed
from an authority to admin, and vice versa . The two powers may
only be exercised by an agent, following the laws on ageny.

2. NO. It is true that buyers can rely on the face of the TCT w/o
further inquiry. However, the question here is not the authenticity
of the land but the authenticity of the seller. Case law states that
buyers of conjugal property should exercise two kinds of
diligence: 1) Verify the validity of the title and 2) verify the
authority of the seller. Spouses did not do the latter.

3. NO. Veloso NA cos the property there belonged to the exclusive

prop of the husband. The land in this case is part of the conjugal
property.

NOTE: 1. Art 124 of the FC  The administration and enjoyment of

the conjugal partnership property shall belong to both spouses
jointly xxx In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of the
conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include disposition or
encumbrance without authority of the court or the written
consent of the other spouse. In the absence of such authority or
consent, the disposition or encumbrance shall be VOID.

DOMINION INSURANCE CORP v CA

FACTS: Guevarra is an agent of Dominion Insurance Corp. He paid

several claims out of his own pocket. He filed a case with the
RTC to seek reimbursement.

ISSUE: 1. w/n he acted w/in his authority as an agent.

2. w/n he should be reimbursed.
HELD: 1. NO. Even tho the document has the word “special”,
Insurance Corp only gave general agency to Guevarra. If the
agency agreement is couched in general terms, it is only limited
to acts of administration. In the case, Guevarra paid the claims
out of his own funds. Such act requires a SPOA as stated in Art
1878 (1) of the NCC: SPOAs are needed to make payments not
usually considered as acts of admin. Since an SPOA is needed to
make the payments, he exceeded his authority.

2. YES/NO. If we follow the rules of agency, Guevarra should not

be reimbursed. According to 1918 (1) of the NCC: the principal is
not liable for expenses incurred by the agent if the agent acted in
contravention of the principal’s instructions unless the principal
wants to avail himself of the benefits. In the case, the agreement
was explicit that the claims should be paid out of a revolving
fund in Guevarra’s possession. However, he should be reimbursed
base on natural obligations. To rule otherwise would be unjust
enrichment.

VELOSO v CA

Veloso – owner of land, husband

Irma – seller, wife
Escario - buyer

FACTS: Veloso owns a land in Tondo, Manila. Such land is under

his name and is not part of the conjugal property of their family.
He then found out that his title was cancelled and a new one was
issued in the name of Escario. Veloso claimed that he was in
possession of the title but when his wife left the country, he
found out it was missing. When he went to the Reg of Deeds, he
found out that she sold the land and it was supported by a GPOA.
Veloso claimed that he did not authorize the sale and that he did
not issue any GPOA. He claims that the GPOA was forged and
that his signature was falsified (He showed bank documents to
prove that his signature was different). Veloso filed for a petition
to declare the sale as void. Escario said that she is a buyer in
good faith. She just relied on the face of the GPOA hence sale
should be valid.
ISSUE: w/n the sale is valid.

HELD: YES. The GPOA was valid and regular on its face. The fact
that it was notarized carries evidentiary weight that it was duly
executed. Even tho it was labeled as only a “General” Power of
Attorney, the sale was still valid cos it stated therein an
authority to sell. The courts said that even if the instrument is
captioned as a general power of attorney, but if it states a
specific power (such as the power to sell), then the intention is
to confer such power (not just administration). On the other hand,
even if it is captioned as a special power of attorney, but the
words are couched in a general manner, only powers of admin are
conferred. Essentially, what is controlling extent of the powers
contemplated. The Special power can be included in the general
power  not necessary that it be in a separate document.
Escario is thus an innocent buyer in GF cos she just relied on the
GPOA

NOTE: 1. Veloso failed to prove fraud cos he just presented

signatures claiming they are different from the sigs in the GPOA
 Fraud must be proved by clear and convincing evidence.
2. Equitable Estoppel  where one or two persons will be injured
by the loss, the person who made the loss possible will bear the
loss.  this was applied cos although Veloso admitted that he
possessed the only copy of the TCT, his wife was able to acquire
one. Such possession was deemed as a conclusive authority from
Veloso to the Reg of Deeds to issue a new TCT.

PINEDA v CA

FACTS: Prime Marine Services INC got a group insurance policy

from Insular Life. During the effectivity of the policy, 6 employees
of PMSI died in a ship accident. The families of the victims went
to Capt. Nuval for help in claiming the benefits. Nuval agreed.
The families executed an POA authorizing Nuval to follow up,
demand, serve for their benefit indemnities of sums of money due
them relative to the sinking of the ship. Unknown to them, Nuval
used the SPOA to claim the group insurance policy from Insular
life. He deposited them in his own account. When the families
found out that their deceased members have an insurance policy,
they went to Insular to claim them. Insular said that they already
delivered the payments to Nuval. Insular said that the POA
authorizing Nuval were sufficient. The written authority is
specifically authorizes Nuval to claim any sum of money
pertaining to the sinking of the ship. There is also nothing in the
law that requires a SPOA to claim insurance.

ISSUE: 1. w/n the POA authorizes Nuval to claim the insurance

proceeds.
2. w/n Insular is bound by the acts of Nuval, its agent.

HELD: 1. NO. The POA does not state in unequivocal terms that
Nuval has the authority to receive insurance proceeds. As stated
by the respondent himself, such POA were SPOAs. Thus, their
execution means the exclusion of any intent to grant a GPOA .
SPOAs are strictly construed. It would be highly imprudent to
construe the POAs to include insurance proceeds – especially
since the normal insurance practice is that payments are just
COURSED THRU the and not paid to the employers (PMSI in this
case).

2. YES. Nuval is the agent of Insular life. It has been held that the
employer is the agent of the insurer. An agency relationship is
based upon consent by one person and that another shall act in
his behalf and subject to his control. Such a situation is present
in the employer-insurer relationship: The insurer directs the
performance of the employer's administrative acts, and if these
duties are not undertaken properly, the insurer is in a position to
exercise more constricted control over the employer's conduct.
As regards an employee-employer relationship (the employer
cannot be the agent of the employee) , there is no control cos the
employee has no knowledge or control re employer’s handling of
the policy. Thus, Insular acted negligently when it just relied on
the POA of Nuvali.

NOTE: 1. Group insurance policy  a single insurance covering

numerous individuals. Payments are coursed thru the employer. It
can be contributory (employees help pay for the premiums, to be
deducted from their salaries) or non-contributory (employer pays
100% of the premium).

2. Insurance Commissiojn  stated that the SPOA did not state in

unequivocal terms that Nuval can get from the insurance agency

HOME INSURANCE Co. v USL

FACTS: SS Pioneer Moon arrived in Manila. Its cargo was 200 rolls
of Carbonized machine rolls. It discharged its cargo to the BoC as
arrastre operator. When the machine rolls reached the consignee,
it was damaged. The consignee claimed P2600 damage from
BoC, USL (owner of SS Pioneer Moon) and Home Insurance. Only
Home Insurance paid the damages. It asked BoC and USL for
reimbursement. Both denied. Home Insurance filed a cagose. At
pre trial, only counsel for Home Insurance was present. He said
that, tho he had no written authority to compromise, his client
gave him verbal authority to enter into a compromise. Court
dismissed the case.

ISSUE: w/n the dismissal was proper.

HELD: YES. 1. W re BoC  dismissal proper cos the Phil Govt

cannot be sued
2. w re other defendants and Home Insurance:
Old Rules of Court: court may direct the
attorneys FOR the parties to attend the pre trial
New Rules of Court: court may direct the
attorneys AND the parties to attend the pre trial

Sec 2 Rule 20 of the New Rules of Court states that a party who
does not appear at pre trial may be considered in default. This
shows the purpose of the rules to compel the parties to attend
the pre trial and reach a compromise. Court is given the
discretion to dismiss the case if Plaintiff does not appear. In the
said case, only the lawyer appeared - Home Insurance or any its
rep did not appear. Although the lawyer said he had a verbal
authority to compromise, the Rules state that a “special
authority” is needed. Tho it is not stated that it be in writing, it
must be more than the lawyer’s own assertion. Authority to
compromise cannot be lightly presumed.

ESTATE of OLAGUER v ONGJOCO

Petitioner: Estate of Lino Olaguer namely Sor Mary Edith Olaguer,

Aurora de Guzman, Clarissa Trinidad, Lina Olaguer,
Linda Montayre (legitimate children of Lino Olaguer)
Respondent: Emiliano M. Ongjoco (buyer of properties)
Memory Aid: buyer in good faith; special power of atty. can be
included in general power of atty.

Facts
 Action for annulment of Sales of Real Property and/or
Cancellation of titles in favor of Ongjoco
 The heirs of Lino Olaguer wanted to annul the sale of the
properties belonging to the Estate. They allege that the
properties sold to ESTANISLAO Olaguer were void for being
absolutely simulated or fictitious

 Background: So how did the estate of Lino Olaguer fall into

the hands of ESTANISLAO and eventually to ONGJOCO???
o When Lino Olaguer died, OLIVIA & EDUARDO became
administrators.
o OLIVIA & EDUARDO sold 12 parcels of land to PASTOR
BACANI
o BACANI sold the lots back to OLIVIA & EDUARDO
o OLIVIA & EDUARDO sold the land to ESTANISLAO
o ESTANISLAO sold them to JOSE Olaguer (new husband
of Olivia)
o JOSE sold them to VIRGILIO (son of Jose Olaguer)
o VIRGILIO sold to ONGJOCO (respondent)
 Under a general power of attorney given by
Virgilio, JOSE sold Lots 1 & 2 to EMILIANO
ONGJOCO (this alleged general power of atty
was never presented in court)
 On succeeding dates, JOSE, under general power
of attorney sold Lots 76-D, Lots 76-E and 76-F, Lot
76-G to Ongjoco. All of these lots had 2 deeds of
sale because they were sold TWICE but still to
 Ongjoco.

 Defense of Olivia and Eduardo in selling the lots to Estanislao

– They are VALID because they were judicially approved!

RTC:
 Ruled in favor of plaintiffs – sale of lots to Pastor Bacani
and Estanislao Olaguer were absolutely simulated for lack
of consideration. Approval of court did not make a void sale
valid
 RTC also ruled that Ongjoco cannot claim good faith
because it protects only those who purchased from
registered owners. Having bought only from an agent, it was
his responsibility to investigate on the principal’s title and
agent’s authority.
CA:
 RTC Decision was MODIFIED: Sales of properties to Ongjoco
are VALID while the rest are still null and void.

 Why did it become valid? CA ruled that when the sale of
property is made through an agent, buyer need not
investigate the principal’s title. Law merely requires that
the agent’s authority be in writing.

ISSUE: W/N Ongjoco was a buyer in good faith/innocent purchaser

for value

HELD:
1. For Lots Nos. 1 & 2 – Ongjoco was in BAD FAITH
 The power of attorney purportedly issued by Virgilio
authorizing Jose Olaguer to sell the lots to Ongjoco was
never presented in court.

2. For Lots Nos. 76-D to 76-G – Ongjoco was an INNOCENT

PURCHASER for value
 The fact that the said lots were sold to Ongjoco twice
does not mean he was a buyer in bad faith or that he
knew of any defect in the title
 Ongjoco was able to present a general power of attorney
executed by Virgilio Olaguer. While the law requires a
 special power of attorney, the general power of attorney
was sufficient in this case, as Jose Olaguer was
expressly empowered to sell any of Virgilio’s properties.
 DOCTRINE:
o When the sale of a piece of land is through an agent –
authority must be in writing & with special power of
attorney; otherwise, it is void. (Art. 1874, CC)
o Even if a document is designated as a general power
of attorney, the requirement of a special power of
attorney is met if there is a clear mandate from the
principal specifically authorizing the performance of
the act. The special power of attorney can be included
in the general power when the act or transaction for
which the special power is required is specified
therein.

CITY LITE REALTY v CA

FACTS: F. P. Holdings owns the Violago Property along E. Rod Ave.

The property was being offered for sale. F.P. Holdings sent out
brochures advertising the property. At the bottom of the
brochure, it stated there that the contact person was a Melvin
Roy from Metro Drug. Melvin Roy sent brochures to City Lite. City
Lite expressed their desire to buy only the front part of the
Violago property. After a series of negotiations, Roy and City Lite
met up in Mandarin Hotel wherein the transaction was
consummated. However, F.P. Holdings refused to execute the
Deed of Sale. City Lite filed an adverse claim re the Violago
Property and caused the annotation of the first lis pendens on
the said property. City Lite filed for Specific performance and
annotated the second lis pendens. The Violago Property was then
transferred to Viewmaster Corp with the second lis pendens
attached to the certificate. City Lite claims that there is a
perfected CoS and Roy had the authority to sell.

RTC  Affirmed City Lite

CA  reversed RTC

ISSUE: w/n there is a perfected CoS and w/n Roy had the
authority to sell
HELD: NO. Roy and Metro Drug did not have the authority to sell.
Roy was merely a contact person. Law provides that if a sale of
real property or interest therein is via an agent, it must be in
writing, otherwise it is void. The absence of such authority can
be determined from the letter F.P Holdings sent to Metro Drug. In
the letter, F.P. Holdings asked Metro Drug to ASSIST them to look
for buyers. The final evaluation and acceptance shall be made
only by F.P. Holdings.

PINEDA v CA

FACTS: Spouses Banez and Pineda entered into an exchange

agreement where in they will exchange the Banez’ WP property
with Pineda’s LA property. At the time of the execution of the
agreement, both properties were mortaged: WP  GSIS, LA 
$84000. In the meantime, the Banez can occupy/lease the LA
prop, Pineda can occupy/lease the WP prop. Unknown to the
Banez, Pineda sold the White Plains prop to Duque. Pineda used
the DP of Duque to pay off the mortgage of the White Plains.
Pineda asked for authority from Banez so that GSIS will release
the prop and Pineda can get the title. Banez agreed provided
Pineda will personally deliver the title. When Banez came home,
the WP was already occupied by Duque. Duque said he gave the
money to Pineda in order to clear her LA prop. Pineda said that
he gave the WP title to the Duque. Banez did not get it cos Duque
will want to buy it.

 Agreement b/w Banez and Pineda rescinded cos Pineda failed

to release the mortgage.
 Nego for the WP b/w Banez and Duque failed, thus, Banez
wants Duque to get out.

Banez then found out that the title was already in Pineda’s name
via a Deed of Sale (Banez’ sig was forged).

ISSUE: w/n Duque are the owners

HELD: NO. The sale was not authorized by the Banez. Court held
that in a sale of real property or an interest therein via an agent,
a SPOA is needed. The authority must be in writing otherwise it
is VOID. An SPOA is necessary to enter into a contract wherein
the ownership of a movable is transmitted or acquired for
consideration. Duque himself said that Pineda did not have an
SPOA.

COSMIC LUMBER v CA

FACTS: Cosmic Lumber executed an SPOA in favor of Villamil-

Estrada. It authorized VE to:

“initiate, institute any action for ejectment of squatters on

its lot…in order that the Corporation will take material passion of
the entire lot AND FOR THAT PURPOSE, appear at pre-trial and
enter into any compromise agreement so far as it will protect the
rights and interests of the corp.”

VE then entered into a compromise agreement with Perez. Perez

will pay P20/sq meter for his land. in return, the Corporation will
recognize him as the owner. Although the judgment become final,
it was not executed w/in 5 years from judgment cos the
Corporation failed to give the copy of the TCT. Perez filed a
petition to revive the judgment. As it turns out, it was only at this
point that Cosmic Lumber found out about the Compromise
Agreement. Cosmic Lumber said that the Compromise Agreement
was void. It said that VE did not have authority. Yes, the SPOA
said that VE can enter into a Compromise Agreement but such is
limited to the eviction of the squatters. Cosmic Lumber also did
not get the proceeds from the sale.

ISSUE: w/n the Compromise Agreement is void.

HELD: YES. VE did not have authority. The SPOA did not say that
VE could sell the land. VE could enter into a compromise
agreement… but only FOR THE PURPOSE of evicting the
squatters. The compromise agreement is qualified by “so far as it
will protect the rights and the interests of the Crop.” When a sale
of land or an interest therein is via an agent, it must be in
writing, otherwise it is void. An SPOA is needed to enter into a
contract by which ownership of an immovable is transferred or
acquired.

NOTE: 1. Compromise agreement is void = judgment void

GUITTEREZ HERMANOS v ORENSE

FACTS: Orense owns a parcel of land in Albay. GH said that Jose

Duran, Orense’s nephew, notarized an instrument wherein he sold
the land to GH for P1500 with a right of repurchase within 4
years. Initially, GH cannot enter the property cos of a lease
agreement between GH and Duran. But, after the lapse of the
period of redemption, GH asked Orense to deliver the property.
Orense refused. Orense said that Duran had no authority to sell
the propery  according to Orense, he did not give any written or
verbal authority to Duran to sell the property. Cos of this, GH filed
an Estafa case against Duran for falsely representing that he has
the authority to sell. At the trial, Orense said under oath that he
had consented to the selling of the property by Duran. Cos of this,
Duran was acquitted. Cos also of the statement of Orense, GH
then filed a complaint that Orense be compelled to execute a
deed of transfer.

ISSUE: w/n the sale was valid and w/n Orense can be compelled.

HELD: YES. Even though the sale was void at the beginning (cos
Duran had no written authority), Orense ratified it when he said
that he consented to the sale. It would be unjust if Orense would
not abide by his admission. Orense’s ratification produced the
express authorization to make a sale. It cured the lack of written
authority as required by law. Therefore, the principal is bound to
abide by the consequences of his agency as though it had
actually been given in writing

Ratification  produces the effects of an express power of

Agency

Art 1259 of the NCC provides:

"No one can contract in the name of another without being
authorized by him or without his legal representation according
to law. A contract executed in the name of another by one who
has neither his authorization nor legal representation shall be
void, unless it should be ratified by the person in whose name it
was executed before being revoked by the other contracting
party.”

NOTE: 1. The right of action for nullification that could have been
brought became legally extinguished from the moment the
contract was validly confirmed and ratified.

2. I thought void??? Void contracts cannot be ratified!

SHOPPERS PARADISE REALTY v ROQUE

FACTS: Shoppers Paradise Realty entered into a Contract of

Lease w Roque Sr. The lease was for 25 years. Before the Contact
of Lease was to be annotated to the title of the land, Roque Sr.
died. Roque Jr. then assailed the Contract of Lease stating that
he owns the property (it was given to him via donation in 1978)
thus, Roque Sr. did not have authority to enter into a CoL. Roque
Jr said that he only gave powers of admin to Roque Sr. over the
property.

RTC  dismissed Roque Jr’s complaint. It said that even tho the
Donation is valid, it still has to be registered for it to bind 3 rd
parties. The DoD was registered only after the CoL.

CA  reversed RTC. Cross examination show that Shoppers had

KNOWLEDGE that the property was donated to Roque Jr. This had
the effect of registration insofar as Shoppers is concerned.

ISSUE: w/n CoL is valid.

HELD: NO. Shopper’s knowledge of the donation had the effect of

registration insofar as it is concerned. Roque Sr was also not the
representative of Roque Jr. Agency Law states that an SPOA is
needed in order to lease real property to another person for more
than year. The lease of prop for more than one year is not an act
of admin but an act of strict dominion.

VDA. De CHUA v IAC

FACTS: In this case, there were 4 contracts:

First  Herrera and Tian-on entered into a CoL for a term of 10

years, renewable for another 5 years with a stipulation that
lessee has option to buy. Tian-on constructed a house.

Second  After 4 years, Tian-on “sold” the CoL to Chua Bok

which honors the same stipulation under the original CoL.

Third After the original CoL expired, Chua Bok and Vicente R.
De Reynes (Herrerra’s lawyer) entered into a new CoL for a term
of 5 years and with an option to repurchase. When the lease
expired, Chua Bok and his heirs continued to occupy the land
until 1978 (they continued to pay rentals).

Fourth  Herrerra sold the lot to Spouses Go.

Heirs of Chua Bok claimed that the sale to Spouses Go was void
cos it violated their right of option to buy as stated in their CoL.
They also said that there is tacit renewal on their contract of
lease.

ISSUE: w/n the sale was void

HELD: NO. The CoL (the third contract) between Chua Bok and
Herrarra was unenforceable. The CoL was entered by the lawyer
of Herrerra and not Herrerra herself. The lawyer did not have an
SPOA authorizing him to enter into such a lease. Law states that
an SPOA is needed for the leasing of real property to another
person for more than one year.

NOTE: 1. Tacit renewal  there was tacit renewal but it

contemplated those that are germane for the possession (such
as the lease period, the monthly payments, etc). It does not
contemplate those which are alien to the lease such as the
“option to buy.”

LINTONJUA v FERNANDEZ (same as last case)

BA FINANCE v CA

FACTS: The Spouses Cuady bought a Ford 1300 car from

Suparcars Inc. The purchase was evidenced by a promissory
note. To secure the PN, a Deed of Chattel Mortgage on the car
was done. Supercars then assigned the Deed to BA Finance. The
Spouses then gave their payments to BA Finance. The Spouses
owned BA Finance an unpaid balance of ~P2k and late payment
penalties. As assignee of the Deed, BA Finance renewed the
insurance policy of the car. Under the terms of the insurance
policy, any loss under the policy shall be payable to BA Finance.
The car then got into an accident. Spouses wanted to write the
car as a total loss and apply the money from the insurance to
their unpaid balance. BA Finance refused and instead opted that
the car be repaired instead. When the car “bogged down”,
Spouses again asked that the car is a total loss. When BA
Financed refused, Spouses stopped the payments.

ISSUE: w/n BA Finance waived their right to claim the payments.

HELD: YES. Supercars subrogated its rights to BA Finance. The

Deed of Chattel Mortgage constituted BA Finance as an attorney-
in-fact with the power and authority to file, follow up insurance
claims; to sign, execute and deliver the corresponding papers as
necessary to prove its claim and to collect from the latter the
proceeds in the event that the mortgaged car suffers any
damage. Thus, in granting such powers to BA Finance, the
Spouses created an agency in favor of BA Finance. BA Finance
(agent) is bound to carry out the agency and is liable for
damages, which due to its non-performance, the Spouses
(principal) may suffer. In the said case, the Spouses suffered
pecuniary loss (value of the vehicle, the unpaid balance) when BA
Finance refused to follow their order to write the car off as a
total loss and apply the insurance proceeds to its unpaid
balance. Court said that it would be unfair to require the Spouses
to pay the unpaid balance when the non-payment of which was
due to BA Finance’s refusal.

BRITISH AIRWAYS v CA

FACTS: Mahtani wanted to visit his relatives in India. He obtained

the services of Mr. Gupar to fix his travel plans. Gupar booked
him with BA. Since BA had no direct flight to India, Mahtani had
to take a PAL flight to HK and then from HK, a BA flight to India.
Before he left, Mahtani checked in 2 luggages in the PAL counter
in Manila. However, when he arrived in India, BA lost his bags. BA
said the bags were diverted to London. When Mahtani got back to
the Philippines, he filed a case against BA. BA filed a third-party
complaint against PAL. The court dismissed the third-party
complaint.

ISSUE: w/n the dismissal of the third-party complaint was proper.

HELD: NO. The Contract of Air Transportation was exclusively

between BA and Mahtani. But, when Mahtani boarded PAL going
to HK, PAL was acting as an agent of BA. Such fact is shown in
the ticket  “carriage to be performed by several successive
carriers shall be considered a single operation”. Also, BA and PAL
are both members of International Air Transport Association
wherein member airlines are agents of each other. In this case,
BA is the principal cos it was the one which issued the ticket,
while PAL is its agent. Since the Contact of Air Transpo was
exclusively between BA and Mahtani, Mahtani can only sue BA.
However, PAL cannot escape liability is it is negligent. In Agency
law, an agent is also responsible for negligence in the
performance of its function and is liable for damages which the
principal may suffer cos of it. A third-party complaint is a
procedural remedy wherein a person (PAL) not a party in a case
is brought into the case. The third-party complaint is independent
from the actual complaint. Its purpose is to avoid delay and
circuitry of actions arising from multiple suits that are based on
the same evidences and facts. Since the case is basically about
which of the two airlines are at fault, BA can “drag” PAL into the
case. It is just fair to allow BA to sue PAL if it is proven that it
was negligent.

PACIFIC REHOUSE CORP v EIB SECURITIES (Read Actual)

FACTS:
Pacific engage in the buying and selling of stocks through
their broker, EIB Securities. In the course of its business, Pacific
Rehouse obtained 60,000,000 shares of stock of Kuok Properties
(hereafter ‘KPP’), these were obtained at the average price of
P0.22 a share. Similarly, Petitioner has also been able to obtain
roughly 32,000,000 shares of stock of DM Consunji Inc. (hereafter
‘DMCI’), half through EIB, and the other half through Westlink
Global Equities. These were purchased at the average share
price of P0.38 per share.
Thereafter, Pacific and EIB entered into an agreement to
sell the 60 million shares of KPP to any party, for a price of P0.14
per share, subject to the option that within 30 days, Pacific may
buy back the KPP shares at the price of P0.18 per share. The
collateral for this transaction was the very KPP shares
themselves. This is where the problem occurred. Pacific believed
it had an ‘option’ to redeem the shares, whereas EIB believed it
was obligated to redeem the shares.
The period for redemption having expired, the parties once
more agreed to an extension of the period, because Pacific was
undecided over whether it wanted to exercise its right of
redemption. Pacific eventually decided not to redeem the shares.
Pacific also did not give any buy/back instructions to EIB.
Nevertheless, and unknown to Pacific , EIB sold, w/o authority, its
32 million DMCI shares at a price of P0.24 per share, and
thereafter applied the proceeds thereto in order to repurchase
the KPP shares.
According to EIB, they sold the shares pursuant to Section
7 of the Securities Dealing and Accounts Agreement (SDAA) 
any property of Pacific under the custody of EIB has a lien on it;
such that EIB may dispose of it on order to discharge any
obligations Pacific has with EIB.
According to Pacific, Sec 7 is NA cos the shares were sold
not to answer for Pacific’s obligation to EIB but for its obligation
to the buyers of the KPP shares.

Pacific, upon discovering what transpired, demanded the

DMCI shares back from EIB. Naturally, EIB was unable to comply,
hence this instant petition.

ISSUE: w/n EIB can invoke Sec 7 of the SDA to justify the selling
of the DMCI shares.

HELD: NO. By the express wording of the SDA, the properties of

Pacific under EIB’s custody may be disposed in order to pay off
Pacific’s obligation to EIB. In the case at bar, the scope of
authority of EIB as agent of petitioners is “to retain, apply, sell or
dispose of all or any of the client’s property,” if all or any
indebtedness or other obligations of petitioners to EIB are not
discharged in full by petitioners “when due or on demand in or
towards the payment and discharge of such obligation or
liability.” The right to sell or dispose of the properties of
petitioners by EIB is unequivocally confined to payment of the
obligations and liabilities of petitioners to EIB and none other.
Thus, when EIB sold the DMCI shares to buy back the KKP
shares, it paid the proceeds to the vendees of said shares, the
act of which is clearly an obligation to a third party and, hence, is
beyond the ambit of its authority as agent. Such act is surely
illegal and does not bind petitioners as principals of EIB. Article
1881 of the Civil Code provides that “the agent must act within
the scope of his authority.” Pursuant to the authority given by the
principal, the agent is granted the right “to affect the legal
relations of his principal by the performance of acts effectuated
in accordance with the principal’s manifestation of consent. The
purchase and redemption of the KPP stocks is clearly not an
obligation of Pacific to EIB, hence it clearly exceeded its
authorization when it sold the same in order to purchase KPP
stocks..”

Besides, there is ambiguity in the wording of the SDA when it

states that there is a lien on all of Pacific’s ‘property’. Such
cannot clearly determine which property is determined, and this
ambiguity must be construed against EIB. Sale by EIB is thus
NULL and VOID.

CERVANTES v CA

FACTS: Cervantes was issued a round-trip ticket (Manila-

Honolulu-LA-Honolulu-Manila) by PAL. Cervantes got the ticket via
a compromise agreement between the two in a past case. The
ticket was valid for one year from March 27, 1989  it will expire
on March 27, 1990. On March 23, 1990 (4 days before expiry),
Cervantes went to LA. Upon arriving in LA he booked for the
return flight. The PAL office confirmed his return flight for April 2,
1990. When he learned that the same PAL flight will pass by San
Francisco on April 2, 1990, Cervantes made arrangements with
PAL that he will board there instead. On April 2, 1990, when
Cervantes checked in, he was not allowed to board. PAL said that
his ticket had already expired. Cervantes contends that the
confirmation by the 2 PAL agents extended the validity of the
ticket.

ISSUE: w/n the acts of the PAL agents extended the validity of
the tickets.

HELD: NO. First, the PAL agents did not have authority to extend
the validity of the tickets. Second, Cervantes knew that the PAL
agents did not have authority. The facts show that before
Cervantes left for the US, he called PAL’s Legal Dept re:
extension of the ticket. The Legal Dept told him that he had to
make a written request for extension addressed to the PAL office
in the Philippines. The Court said that this is tantamount to the
fact that Cervantes was fully aware that the PAL agents did not
have authority to extend the tickets. Only the Legal Dept, via a
written request, has the authority. Thus he could not use their
confirmation to his advantage. Art 1898 states that the acts of an
agent beyond the scope of his authority do not bind the principal,
unless the latter ratifies the same expressly or impliedly.
Furthermore, when the third person (Cervantes) knows that the
agent (the two PAL agents) was acting beyond his power or
authority, the principal cannot be held liable for the acts of the
agent. If the said third person is aware of such limits of authority,
he is to blame, and is not entitled to recover damages from the
agent, unless the latter undertook to secure the principal’s
ratification.

NOTE: 1. Cervantes claims that since the “lack of authority of the

PAL agents” were not in the pleadings, such fact is waived by PAL
 court said that even tho evidence is not in pleadings, but
presented by one party, with the express or implied consent of
the adverse party, it shall be treated as if they have been raised
in the pleadings.

GOZUN v MERCADO

Jesus Gozun – owner of publishing house

Don Pepito Mercado – governor of Pampanga
Annie – wife of Mercado

FACTS: Don Pepito Mercado ran for the Governor of Pampanga in

the 1995 elections. Gozun, owner of a publishing house,
submitted to Don Pepito a quotation re the prices of the
campaign materials. According to Gozun, Annie Mercado said
that Don Pepito agreed to the quotations. Thus, Gozun proceeded
with the printing. Given the urgency and time constraints, Gozun
used the services of two printing presses (owned by his daughter
and mother). Meanwhile, Lila Soriano asked for a P253k case
advance for payment to the poll watchers. After all the
accounting, Don Pepito owned Gozun ~P2M (the costs of Gozun’s
publishing + 2 printing press + the cash advance). Annie paid
Gozun P1M. However, Don Pepito did not pay the balance. Gozun
waited for 3 years (cos they were compadres – both were
principal sponsors in their daughter’s wedding). When Don Pepito
still did not pay, Gozun filed an action in court. According to Don
Pepito, he thought that the campaign materials were donations,
he did not authorize Lila Soriano to get the cash advance and the
P1M given by Annie was “compensation”.

RTC  ruled in favor of Gozun

CA  reversed RTC. CA said:
1. No evidence to support that Lila Soriano
borrowed the money on behalf of Don Pepito

ISSUE: w/n Lilo Soriano borrowed the money on behalf of Don

Pepito

HELD: NO. The court said that an agency may be oral unless the
law requires a specific form. An SPOA refers to the nature of
authorization and not its form  it may be written or oral. What is
important is that it must be express. However, if it is oral, it must
be duly established by evidence. Agency Law states that an
SPOA is needed for an agent to borrow money unless it is urgent
and indispensible for the preservation of the things under
administration. In the receipt, it shows there that Lila Soriano
received the amount in behalf of “Annie Mercado”. Thus, court
said that the receipt failed to reflect the fact that Don Pepito was
connected with the transaction. Lila Soriano signed the receipt
alone – w/o any indication that she was representing Don Pepito.
Thus, she bound herself in her own personal capacity. She is not
an agent of anyone. There is also no showing that the money was
urgent and indispensible for the preservation of things. 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 merely that the agent was in fact authorized to make
the mortgage, if he has not acted in the name of the principal.

SAZON v VASQUEZ-MENANCIO
FACTS: VM lives in the US. In 1979, she gave Sazon the power to
administer her properties. VM said that the properties were all
generating income. Sazon said that the properties were not
generating income – and if there were any income, it was
insufficient to cover the operating costs. Over the course of the
administration, VM said that Sazon never rendered any
accounting w re the fruits and income of her properties. VM even
said that Sazon keeps the income. VM also said that she made
repeated demands to Sazon to render an accounting. However,
according to Sazon said she sent five (or four) letters to Sazon re
the accounting. Sazon said that VM never answered her letters.
Thus, in 1997, VM revoked the agency of Sazon.

ISSUE: w/n the letters sent by Sazon were sufficient

HELD: NO. Sazon administered the properties for 18 years. The SC

held that 4 letters in 18 years is not sufficient to keep VM
informed and updated re her properties.

NOTE: 1. The RTC and CA also ordered Sazon to render an

accounting. Agency Law states that every agent is bound to
deliver to the principal whatever he may receive by virtue of the
agency, even though the amount may not be owed to the principal
 SC said that the parties failed to present evidence to back up
their computations re the income and expenses of the properties.
SC asked the parties to present evidence.

HERNANDEZ v HERNANDEZ

Cornelia, Jose, Mena – co-owners of the land

Cecilio – rep/agent/attorney of the owners

FACTS: RP wanted to get a portion of the land of the Hernandezes

in order to expand the South Luzon Expressway. The said land
was co-owned by Cornelia, Jose and Mena. RP offered to buy at
P35/sq meter. H denied. The price increased to P70/sq meter. H
still denied. This forced the govt to file an expo case (1993). H
then executed a letter appointing Cecilio as their representative
in the expo case. The letter stated Cecilio’s compensation:

1. 20 % in excess of P70/sq meter

2. whatever in excess of P300/sq meter will be given as
incentive
3. P1500 for every pleading

On September 1996, Cecilio was appointed as a Commissioner to

determine just compensation. On October 1996, an SPOA was
excuted by H appointing him as their “lawful” attorney. The court
then rendered a decision  P1500/sq meter for a total
compensation of P21M. Thus each owner will receive P7M.
Cecilia then executed another SPA that revoked the SPOA of
Cornelio. Cecilia then wanted to get her share via a new counsel.
But the judge said that the P21M shall only be released to
Cecilio. Cecilio got the P21M. Cecilio then gave Cornelia ~P1.2M.
He stated that that is her share in the just compensation. He also
made her sign a quitclaim that she will not institute any action
against him. Afterwards, Cecilia found out via her neice that her
share was actually P7M. She asked Cecilio to render an account.
Cecilio did not reply. Cornelia filed a case in court. According to
Cecilio, his compensation and the share he gave to Cornelia was
just based in their 1993 letter and the SPOA appointing him as
their “lawful attorney”.

ISSUE: w/n Cecilio is entitled to the compensation.

HELD: NO. The trial court committed a mistake in the just

compensation. The compensation was supposed to be computed
from the time of filing (1993) not at the time of judgment (1998).
Thus, when the RTC used the 1998 price, this was used as a
basis by Cecilio to compute his compensation. Thus he got 83%
of Cornelia’s share – nothing in the 1993 letter shows that
Cornelia agreed that Cecilio will get the 83%. What is proven is
that Cornelia asked Cecilio to render an account, which he did
not do. SC said that Cecilio violated the fiduciary relationship of
the agency when he failed to render an accounting. Agency Law
states that in regards to the subject matter of the agency, the
agent is estopped from asserting or acquiring a title adverse to
that of the principal. With re the SPOA  SC said that it did not
specify any compensation. However, when Cecilio accepted the
position of Commissioner, this barred the SPOA from taking any
effect. He was already a person of the court when he accepted
the SPOA (appointed commish on Sept, accepter SPOA only on
Oct) Cecilio could not be an officer of the court AND a defendant
at the same time.