MANILA MEMORIAL PARK CEMETERY v. LINSANGAN (Olan, C2020) of P132,250 under the new contract.
of P132,250 under the new contract. Baluyot even executed a document
Nov. 22, 2004 | Tinga, J. | When Principal Ratifies, Expressly or Impliedly (Art.
1901)
PETITIONER: Manila Memorial Park Cemetery, Inc. (MMPCI)
RESPONDENTS: Atty. Pedro Linsangan
SUMMARY:
Baluyot, an agent of MMPCI, offered to Linsangan a previously
owned cemetery lot owned by MMPCI for P95,000. Linsangan agreed. Instead of
reforming the old contract with the old owner, Baluyot offered a new contract
covering the same lot and assured Linsangan that he would still be paying the old
price of P95,000, instead of P132,250 under the new contract. Linsangan signed the
contract and faithfully complied in paying his monthly installments. It turns out that
MMPCI was not aware of the arrangement between Linsangan and Baluyot. MMPCI
claims that Baluyot exceeded his authority and did not have authority to change the
MMPCI's terms (purchase price). MMPCI cancelled the new contract for
nonpayment of arrearages. SC held that the acts of an agent beyond the scope of his
authority do not bind the principal, unless the principal ratifies the same. There was
no ratification in this case since MMPCI never knew of the agreement between
Baluyot and Linsangan. Hence, MMPCI cannot be bound to the terms of said
contact.
DOCTRINE: In agency, ratification is the adoption or confirmation by the principal
of an act performed on his behalf by another without authority. The substance is
confirmation after conduct, amounting to substitute for a prior authority. For
ratification to take place, the principal must have full knowledge, at the time of
ratification, of all the material facts and circumstances relating to the unauthorized
act of the person assumed to act as agent. If material acts were suppressed or
unknown, there can by no valid ratification. Nevertheless, if the principal's ignorance
of such was willful or the he chooses to act in ignorance of the facts, there would still
be ratification. Only the principal can ratify; the agent cannot ratify his own
unauthorized acts. Moreover, the principal must have knowledge of the acts he is to
ratify.
FACTS:
 Florencia Baluyot, an Agency Manager for MMPCI, offered to Atty. Pedro
Linsangan a lot at the Holy Cross Memorial Park owned by MMPCI for
P95,000. The lot's former owner was not interested in acquiring the lot
anymore and agreed to sell it after reimbursement of the amounts he already
paid.
 Atty. Linsangan agreed to the offer and gave Baluyot the reimbursement
that would be given to the former owner and down payment to be paid to
MMPCI. Baluyot gave him handwritten and typewritten receipts (not OR).
 However, instead of the old contract with the old owner being reformed so
that Linsangan would become the new owner of the lot, Baluyot offered a
new contract covering the same lot. Linsangan objected, but Baluyot
assured him that he would still be paying the old price of P95,000, instead
confirming their agreement that while the contract price is P132,250,
Linsangan would only pay the original price of P95,000.
 Linsangan signed the contract. Baluyot issued an O.R. Linsangan tendered
payment in checks in accordance to the old agreement between him and
Balutot (Linsangan would pay P1800/month via checks for 5 years).
 It turns out that MMPCI was not aware of the arrangement between
Linsangan and Baluyot, that Baluyot was only authorized under her Agency
Management Contract to solicit and remit to MMPCI offers to purchase lots
owned and sold by MMPCI. Thus, even if Linsangan complied with the
agreed payment, MMPCI still cancelled the new contract for nonpayment of
arrearages.
 Linsangan filed a complaint for breach of contract and damages against
Buluyot and MMPCI.
 RTC: Baluyot and MMPCI solidarily liable; Baluyot was an agent of
MMPCI; MMPCI was estopped from denying agency, having received and
encashed the checks issued by Linsangan and given to it by Baluyot
 CA: AFFIRMED + Baluyot's authority, although not expressly conferred,
have been derived impliedly by habit or custom which may have been the
accepted company practice for a long time
ISSUE/s
1. W/N Baluyot was an agent of MMPCI? – YES
2. W/N MMPCI is bound by the contract entered into by Baluyot? – NO
3. W/N MMPCI is estopped from denying liability to Linsangan? – NO
RULING: SC REVERSED the RTC and CA decision.
RATIO:
1. Baluyot was an agent of MMPCI
 By a contract of agency a person binds himself to render some service or to
do something in representation of on behalf of another, with the consent of
authority of the latter. The elements of Agency are: (1) consent; (2) object,
which is the execution of a juridical act in relation to a third person; (3) the
agent acts as a representative and not for himself; (4) the agent acts within
the scope of his authority.
 In this case, notwithstanding the claim of MMPCI that Baluyot was merely
an independent contractor, Baluyot was authorized to solicit solely for and
in behalf of MMPCI. Thus Baluyot was an agent of MMPCI, having
represented the interest of the latter, and having been allowed by MMPCI to
represent it in her dealings with its clients and prospective buyers.
2. MMPCI is not bound bound by the contract entered into by Baluyot
 Baluyot was only authorized to solicit and to remit to MMPCI offers to
purchase lots on terms provided by MMPCI. The contract signed by
Linsangan (P132,350) clearly stated that there were no terms other than
 those stated. The different agreement Linsangan had with Baluyot should the new contacts, MMPCI has any knowledge of Baluyot's agreement with
not affect MMPCI since it was made outside Baluyot's authority. The new Linsangan.
contract was executed by Baluyot alone. Nowhere is there any indication  Even assuming that Atty. Linsangan was misled by MMPCI's activations,
that it came from MMPCI or any of its officers. he still cannot invoke the principle of estoppel, since he was clearly
 The acts of an agent beyond the scope of his authority do not bind the negligent in his dealings with Baluyot, and could have easily determined, if
principal, unless the principal ratifies the same. When the third person he was cautious and prudent, whether said agent had authors to change the
knows that the agent is acting beyond its authority, the principal cannot be terms of the principal's written contact.
held liable for the acts of the agent. If the said third person was aware of  SC HELD THAT:
The contract, insofar as the P95,000 price is
such limits of authority, he is to blame and cannot recover damages from concerned, is VOID and cannot be enforced against MMPCI. Linsangan
the agent, unless the agent undertook to secure the principal's ratification. cannot claim damages against Baluyot under their separate agreement since
 In this case, there was no proof that Linsangan even bothered to inquire as there is no proof that Baluyot undertook to secure MMPCI's ratification. At
to the extent of Baluyot's authority, blindly relying on his representation. As best, the separate agreement bound only the two of them. Atty. Linsangan
a lawyer, Atty. Linsangan should have exercised a greater degree of caution. can institute a separate action to recover damages from Baluyot, not as
 On ratification: Ratification in agency is the adoption or confirmation by agent of MMPCI, but regarding Baluyot's breach of their agreement. Were
one person of an act performed on his behalf by another without authority. it not for Baluyot's failure to provide the balance, the contact would not
The substance of this doctrine is confirmation after conduct, amounting to have been cancelled.
substitute for a prior authority. Ordinarily, the principal must have full
knowledge, at the time of ratification, of all the material facts and
circumstances relating to the unauthorized act of the person assumed to act
as agent. Thus, if material acts were suppressed or unknown, there can
by no valid ratification. Nevertheless, if the principal's ignorance of
such was willful or the he chooses to act in ignorance of the facts, there
would still be ratification. However, in the absence of circumstances
putting a reasonably prudent man on inquiry, ratification cannot be implied
as against the principal who is ignorant of the facts.
 No ratification can be implied in this case.
Baluyot acted in excess of
the authority granted to her by MMPCI. The original agreement
between her and Linsangan (that Linsangan would pay P1,800/month and
Baluyot would shoulder P1,400/month to meet the monthly installments to
reach P132,250) was unknown to MMPCI. Thus, MMPCI cannot be
bound to their agreement. As far as MMPCI was concerned, the contract
price was P132,250 and not P95,000.

3. MMPCI is not estopped from denying liability to Linsangan

 The essential elements of estoppel are: (1) conduct of a party amounting to
false representation or concealment of material facts or at least calculated to
convey the impression that the facts are inconsistent with those the party
attempts to assert; (2) intent that this conduct shall be acted upon by or at
least influence the other party; (3) knowledge, actual or constructive, of the
real facts.
 One who claims the benefit of estoppel on the ground that he has misled by
representations of another must not have been misled by his own
negligence. Estoppel must be intentional and unequivocal.
 There is no indication that MMPCI let the public, specifically Atty.
Linsangan, to believe that Baluyot had the authority to alter the standard
contracts of the company. Neither is here any showing that prior to signing
 HARRY KEELER v. RODRIGUEZ (Gonzales, C2020)
November 11, 1992 | Johns, J. | Obligations of the Principal
PETITIONER: Harry E. Keeler Electric Co., Inc.
RESPONDENTS: Domingo Rodriguez
SUMMARY: Montelibano offered his services to Keeler to find a buyer for the
plant. Through Montelibano’s efforts, the plant was sold to Rodriguez. Without the
knowledge of Keeler, Rodriguez gave the payment to Montelibano. Keeler asked for
the payment but Rodriguez refused claiming that he already gave it to Montelibano.
The issue is WoN Keeler can collect the purchase price from Rodriguez – YES.
Keeler never authorized Montelibano to receive or receipt for money in its behalf,
and that Rodriguez had no right to assume by any act or deed of Keeler that
Montelibano was authorized to receive the money, and that Rodriguez made the
payment at his own risk and on the sole representations of Montelibano that he was
authorized to receipt for the money.
DOCTRINE: It is therefore declared to be a fundamental rule, never to be lost sight
of and not easily to be overestimated, 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, to ascertain not only the fact of the agency but the
nature and extent of the authority, and in case either is controverted, the burden of
proof is upon them to establish it.
FACTS:
1. Keeler is a domestic corporation with its principal office in the city of
Manila and engaged in the electrical business, and among other things in the
sale of what is known as the "Matthews" electric plant. 

2. Having this information, Montelibano approached Keeler at its Manila
office, claiming that he was from Iloilo and lived with Governor Yulo; that
he could find purchaser for the "Matthews" plant, and was told by the
Keeler that for any plant that he could sell or any customer that he could
find he would be paid a commission of 10 per cent for his services, if the
sale was consummated. 
 STATEMENT Folio No. 2494
3. Montelibano interviews the Rodriguez, and, through his efforts, one of the
"Matthews" plants was sold by the Keeler to the Rodriguez, and was
shipped from Manila to Iloilo, and later installed on Rodriguez’ premises
after which, without the knowledge of the Keeler, Rodriguez paid the
purchase price to Montelibano. 
 HARRY E. KEELER ELECTRIC COMPANY, INC.
4. Keeler commenced this action against Rodriguez to collect the payment for
the electric plant. 
 P.I.
MANILA, P.I., August 18, 1920.
5. The lower court ruled in favor of Rodriguez. It ruled that the payment to A.
C. Montelibano would discharge the debt of Rodriguez, the bill was given
to Montelibano for collection purposes, and Keeler had held out
Montelibano to the defendant as an agent authorized to 
collect. 

ISSUE:
WoN Keeler can collect the purchase price from Rodriguez – YES
RULING: The judgment of the lower court is reversed, and one will be entered here
in favor of the plaintiff and against the defendant for the sum of P2,513.55 with
interest at the legal rate from January 10, 1921, with costs in favor of the appellant.
RATIO:
1. It appears from the testimony of H. E. Keeler that Montelibano had no
authority from the plaintiff to receive or receipt for money. That in truth and
in fact his services were limited and confined to the finding of purchasers
for the "Matthews" plant to whom Keeler would later make and
consummate the sale. That Montelibano was not an electrician, could not
install the plant and did not know anything about its mechanism. 

2. Cenar, as a witness for the Keeler, testified that he went with shipment of
the plant from Manila to Iloilo, for the purpose of installing, testing it, and
to see that everything was 
satisfactory. That Rodriguez asked to see the
statement, and that he gave it to him, and Rodriguez said, "he was going to
keep it." "I made no effort at all to collect the amount from him because Mr.
Rodriguez told me he was going to pay for the plant here in Manila."
3. On the other hand, Rodriguez claims that Montelibano sold and delivered
the plant to him, and "was the one who ordered the installation of that
electrical plant," and he introduced in evidence as part of his deposition a
statement and receipt 1 which Montelibano signed to whom he paid the
money. He paid the money to Montelibano because he was the one who
sold, delivered, and installed the electrical plant, and he presented to me the
account, and he assured me that he was duly authorized to collect the value
of the electrical plant. 

4. There is nothing on the face of this receipt to show that Montelibano
was the agent of, or that he was acting for, the plaintiff. It is his own
personal receipt and his own personal signature. Outside of the fact that
Montelibano received the money and signed this receipt, there is no
1
Mr. DOMINGO RODRIGUEZ,
Iloilo, Iloilo, P.I.
In account with
221 Calle Echaque, Quiapo, Manila,
Received payment
HARRY E. KEELER ELECTRIC CO. Inc.,
Recibi
(Sgd.) A. C. MONTELIBANO.
 evidence that he had any authority, real or apparent, to receive or receipt for 14. In Ormachea Tin-Conco vs. Trillana: The repayment of a debt must be
the money. Neither is there any evidence that the plaintiff ever delivered the made to the person in whose favor the obligation is constituted, or to
statement to Montelibano, or authorized anyone to deliver it to him, and it is another expressly authorized to receive the payment in his name. 

very apparent that the statement in question is the one which was delivered 15. Mechem on the case of Agency, volume I, section 743, says: 

by Keeler to Cenar, and is the one which Cenar delivered to Rodriguez at 16. In approaching the consideration of the inquiry whether an assumed
the request of Rodriguez. 
 authority exist in a given case, there are certain fundamental principles
5. The evidence of Rodriguez that Montelibano was the one who sold him the which must not be overlooked. Among these are, as has been seen,
plant is in direct conflict with his own pleadings and the receipt statement a. (1) that the law indulges in no bare presumptions that an agency
which he offered in evidence. This statement also shows upon its face that exists: it must be proved or presumed from facts;
P81.60 of the bill is for: 
 b. (2) that the agent cannot establish his own authority, either by his
a. To Passage round trip, 1st Class P40.80 a trip representations or by assuming to exercise it;
........................................... P81.60. c. (3) that an authority cannot be established by mere rumor or
b. Plus Labor @ P5.00 per day – Machine’s transportation ................. general reputation;
9.85. d. (4) that even a general authority is not an unlimited one; and
6. This claim must be for the expenses of Cenar in going to Iloilo from Manila e. (5) that every authority must find its ultimate source in some act or
and return, to install the plant, and is strong evidence that it was Cenar and omission of the principal.
not Montelibano who installed the plant. 
 17. It is therefore declared to be a fundamental rule, never to be lost sight
7. If Montelibano installed the plant, as Rodriguez claims, there would not of and not easily to be overestimated, that persons dealing with an
have been any necessity for Cenar to make this trip at the expense of assumed agent, whether the assumed agency be a general or special
Rodriguez. After Cenar's return to Manila, Keeler wrote a letter to one, are bound at their peril, if they would hold the principal, to
Rodriguez requesting the payment of its account, in answer to which ascertain not only the fact of the agency but the nature and extent of
Rodriguez sent the following telegram: “Electric plant accessories and the authority, and in case either is controverted, the burden of proof is
installation are paid to Montelibano about three weeks Keeler Company did upon them to establish it.
not present bill.” 18. The person dealing with the agent must also act with ordinary prudence and
8. This is in direct conflict with the receipted statement, which Rodriguez reasonable diligence. Obviously, if he knows or has good reason to believe
offered in evidence, signed by Montelibano. That shows upon its face that it that the agent is exceeding his authority, he cannot claim protection.
was an itemized statement of the account of Keeler with Rodriguez. 
 19. This was a single transaction between Keeler and Rodriguez.
17.!
9. The receipt which Montelibano signed is not dated, and it does not show Applying the above rules, the testimony is conclusive that Keeler never
when the money was paid 
 authorized
10. Rodriguez also testified: "and Montelibano assured me that he was duly 20. Montelibano to receive or receipt for money in its behalf, and that
authorized to collect the value of the electrical plant." This shows upon its Rodriguez had no right to assume by any act or deed of Keeler that
face that the question of Montelibano's authority to receive the money must Montelibano was authorized to receive the money, and that Rodriguez
have been discussed between them, and that, in making the payment, made the payment at his own risk and on the sole representations of
Rodriguez relied upon Montelibano's own statements and representation, as Montelibano that he was authorized to receipt for the money.
to his authority, to receipt for the money. 

11. In the final analysis, the plant was sold by Keeler to Rodriguez, and was
consigned by Keeler to Keeler at Iloilo where it was installed by Cenar,
acting for, and representing, Keeler, whose expense for the trip is included
in, and made a part of, the bill which was receipted by Montelibano. 

12. Article 1162: Payment must be made to the persons in whose favor the
obligation is constituted, or to another authorized to receive it in his name.


13. Article 1727 provides: The principal shall be liable as to matters with
respect to which the agent has exceeded his authority only when he ratifies
the same expressly or by implication. 

 FILIPINAS LIFE ASSURANCE CO. v. PEDROSO (Gueco, C2020)
February 4, 2008 | Quisumbing, J. | When principal ratifies agent’s excess of
authority
PETITIONER: Filipinas Life Assurance Company (now Ayala Life Assurance,
Inc.)
RESPONDENTS: Clemente N. Pedroso, Teresita O. Pedroso, and Jennifer N.
Palacio through her Attorney-in-fact Ponciano C. Marquez
SUMMARY: Pedroso is a policyholder of a life insurance from Filipinas Life. Valle,
Pedroso’s insurance agent, collected Pedroso’s monthly premiums. Some time
during January, Valle told Pedroso that Filipinas life was holding a promotional
investment wherein Pedroso could deposit certain amounts of money on a monthly
basis, and in turn, Pedroso would earn 8% prepaid interest based on the amounts that
she will deposit. Enticed by this, Pedroso made an initial investment of P10, 000.
Valle then issued to her a check worth P800 representing the 8% prepaid interest of
the amount she deposited, as well as a Filipinas Life Agent’s receipt. Pedroso,
exercising diligence to confirm Valle’s authority, called Filipinas Life to inquire
whether there was really such a promotion. She spoke to Alcantara and Apetrior, the
administrative assistant and branch manager of Filipinas Life, and the latter
confirmed that they had such a promotion. The latter even encouraged Pedroso to
push through with the check that issued. Relying on these representations, Pedroso
made several other investments, amounting to P37, 000, but this time at a lower rate
of 5%. She also encouraged Palacio, also a policyholder in Filipinas Life, to make
investments with Filipinas Life. However, when Pedroso subsequently came to
collect her investments from Valle, the latter refused. Palacio, likewise, couldn’t
recover her investments from Valle despite demands. As such, they filed an action
for the recovery of a sum of money. Both the RTC and CA ruled that Filipinas Life is
solidarily liable with Valle, Alcantara, and Apetrior to Pedroso and Palacio.
ISSUE: WON Filipinas Life should be held solidarily liable to Pedroso and
Palacio—YES.
RULING: The investments that Pedroso and Palacio made were received by Valle
and remitted to Filipinas Life, using the company’s official receipts, whose
authenticity was not disputed. Valle’s authority as the company’s agent was also
established thus: When Pedroso and Palacio sought to confirm Valle’s authority,
Alcantara, holding a supervisory position, and Apetrior, the branch manager,
confirmed that Valle had such authority. While it is true that a person dealing with an
agent is put upon inquiry and must discover at his own peril the agent’s authority, in
this case, Pedroso and Palacio exercised due diligence in removing all doubts and in
confirming the validity of the representations made by Valle. Filipinas Life, as
principal, is liable for obligations contracted by its agent. Read Doctrine for the
ratio behind the decision.
DOCTRINE:
The general rule is that the principal is responsible for the acts of its
agent done within the scope of its authority, and should bear the damage caused to
third persons. And when the agent exceeds his authority, it is the agent who becomes
personally liable for the damage. However, when the agent exceeds his authority,
the principal is still solidarily liable with the agent if the principal allowed the
agent to act as though the agent had full powers. In other words, the acts of an
agent beyond the scope of his authority do not bind the principal, unless the
principal ratifies them, expressly of impliedly. Ratification in agency is the
adoption or confirmation by one person of an act performed on his behalf by
another without authority.
*NOTE: Read the footnotes for more information.
FACTS:
1. Teresita O. Pedroso (“Pedroso”) is a policyholder of a life insurance issued
by Filipinas Life Assurance Company (“Filipinas Life”). 

2. Renato Valle (“Valle”) was Pedroso’s insurance agent. It was Valle who
collected Pedroso’s monthly premiums. 

3. Some time during January, Valle told Pedroso that Filipinas Life was
holding a promotional investment for its policyholders—that is, it was
offering 8% prepaid interest a month for 
certain amounts deposited on a
monthly basis.2
4. Enticed by the said promotion, Pedroso invested and issued a post-dated a
check worth P10, 
000. 

5. In return, Valle issued to Pedroso a check for P8003 and a Filipinas Life
Agent’s Receipt. 

6. To confirm Valle’s authority to hold promotional investments, Valle called
the office of 
Filipinas life and talked to Alcantara and Apetrior, the
administrative assistant and branch manager respectively. Alcantara and
Apetrior confirmed that they had such promotion. They even told Valle that
she should push through with the check that issued. 

7. Relying on the above representations of Apetrior and Alcantara, and since
Valle had known Pedroso for a long time, Pedroso made seven to eight
more investments in varying amounts, totaling P37, 000 but this time, at a
lower rate of 5%. 

8. Also, Pedroso told Palacio, another Filipinas Life policyholder, about the
investment plan, so Palacio likewise invested in the company’s promotion.


9. Subsequently, when Pedroso came to collect her investments already due,
Valle refused to return the same. 

10. Palacio, likewise, tried to withdraw hers, but Valle refused despite demands.
11. They sought the assistance of their lawyers but also to no avail; thus, they
filed an action for 
the recovery of a sum of money. 

2 Basically, you deposit a certain amount of money on a monthly basis and you get prepaid
interest based on that amount. And it’s only after a month that you can refund the amount that
you initially deposited.
3 The 8% of P10,000
 12. The RTC and CA held that Filipinas Life is solidarily liable with Valle, confirmation by one person of an act performed on his behalf by
Apetrior, and 
Alcantara to Pedroso and Palacio. 
 another without authority.
13. Filipinas Life does not dispute that Valle was its agent. But it contends that, 5. Filipinas Life cannot profess ignorance of Valle's acts. Even if Valle's
as an insurance 
company, it is not engaged in the business of collecting representations were beyond his authority as a debit/insurance agent,
investment money. It alleged that the investment scheme offered by Valle, Filipinas Life, through Alcantara and Apetrior, expressly and knowingly
Apetrior, and Alcantara was outside the scope of their authority as agents of ratified Valle's acts. It cannot even be denied that Filipinas Life benefited
Filipinas Life; hence, the former should be personally liable for the damages from the investments deposited by Valle in the account of Filipinas Life. In
suffered by Palacio and Pedroso. 
 such a case, Filipinas Life had clothed Valle with apparent authority; hence,
14. Meanwhile, Palacio and Pedroso contend that Filipinas Life authorized it is now estopped from denying Valle’s authority. Innocent third persons
Valle to solicit investments from them. In fact, the official documents and should not be prejudiced if the principal failed to adopt the needed measures
facilities of Filipinas Life were used in consummating their transactions. to prevent misrepresentation, much more so if the principal ratified his
And it was the company’s officers, Apetrior and Alcantara, who confirmed agent's acts beyond the latter's authority. The act of the agent is considered
these transactions. 
 that of the principal itself.
15. Palacio and Pedroso further assert that they exercised all diligence in
ascertaining the authority of the company’s agents. 


ISSUES:
WoN Filipinas Life should be held solidarily liable with Valle—YES.

RULING: WHEREFORE, the petition is DENIED for lack of merit. The Decision
and Resolution, dated November 29, 2002 and August 5, 2003, respectively, of the
Court of Appeals in CA-G.R. CV No. 33568 are AFFIRMED.

RATIO:
1. The investments that Pedroso and Palacio made were received by Valle and
remitted to Filipinas Life, using the company’s official receipts, whose
authenticity were not disputed. 

2. Valle’s authority as the company’s agent was also established thus: When
Pedroso and Palacio 
sought to confirm Valle’s authority, Alcantara,
holding a supervisory position, and Apetrior, 
the branch manager,
confirmed that Valle had such authority. 

3. While it is true that a person dealing with an agent is put upon inquiry and
must discover at his 
own peril the agent’s authority, in this case, Pedroso
and Palacio exercised due diligence in 
removing all doubts and in
confirming the validity of the representations made by Valle. 

4. Filipinas Life, as principal, is liable for obligations contracted by its agent.
The general rule is that the principal is responsible for the acts of its agent
done within the scope of its authority, and should bear the damage caused to
third persons. And when the agent exceeds his authority, it is the agent who
becomes personally liable for the damage. However, when the agent
exceeds his authority, the principal is still solidarily liable with the
agent if the principal allowed the agent to act as though the agent had
full powers. In other words, the acts of an agent beyond the scope of his
authority do not bind the principal, unless the principal ratifies them,
expressly of impliedly. Ratification in agency is the adoption or
 BITTE v. JONAS (Candelaria, C2020)
December 9, 2015 | Mendoza, J. | Revocation of Agency
PETITIONER: Farida Yap Bitte and the Heirs of Benjamin Bitte
RESPONDENTS: Spouses Fred and Rosa Elsa Serrano Jonas
SUMMARY: A contract entered by an agent without the authority of the Principal is
deemed unenforceable. Third parties are, as a general rule, not bound by revocation,
and are deemed bound with the principal when the agent acts pursuant to the agency.
The only exception to this is when the third party is notified of such, actual or
implied. Under this exception, principal is not bound by the acts of the agent. Agent
acts in his personal capacity with the third party.
DOCTRINE: Implied Revocation of Agency (Art. 1924) || Doctrine of Apparent
Authority || Agent acts BEYOND the authority given to him
FACTS:
 Consolidated case from two civil cases filed by both parties against each
other in relation to a purported contract of Sale involving a piece of property
in Davao City (subject property).
 1985: Respondent Rosa Elsa Jonas (herein Principal) executed a Special
Power of Attorney (SPA) authorizing her mother Andrea (herein Agent) to
sell the subject property.
 May 1996: Cipriano (Brother of principal) offered subject property for sale
to a third-party, Bitte (herein Buyer), showing the authority of the agent.
 Brother of principal received a total of Php 600K for advance payment for
the subject property from buyer.
 Buyer sought final negotiations with the principal; paid for principal’s flight
ticket from Australia back to Philippines.
 October 1996: Principal REVOKED the SPA with Agent and handed
the agent a copy thereof.
 No final agreement was made between Principal and Buyer. Principal
withdrew the transaction.
ISSUE: W/N the DoAS was valid, despite the revocation of the agency.
 Buyer filed before RTC a Complaint for Specific performance with
damages to transfer title.
RULING: The SC DENIED the petition of Buyer. CA decision affirmed.
 1997: Agent SOLD the subject property to Buyer, with a Deed of
Absolute Sale (DoAS) notarized by an attorney.
RATIO:
 Agent disregarded pleas of principal to cancel sale.
 The Genuineness and Due execution of the DoAS with Buyers were not
 1998: Undisputed is the fact that the subject property was mortgaged by
Principal. Upon failure to pay, the mortgage was foreclosed and sold at
public auction.
 With the DoAS, Buyer redeemed from the highest bidder in the auction
the subject property for Php 1.6M.
 Buyer then sold the property to another party Yap (2nd Buyer)
 Civil Case No. 1 (Specific Performance and Damages against Principal):
Buyer contends that they had an agreement of sale with the brother of the
Principal for Php 6.2M; and that they paid a down payment, subject to
subsequent payments. But the principal withdrew transaction.
 Principal countered that despite her appointment to the agent, she later
gave instructions not to sell the property, and that her revocation
barred the consummation of the contract to sell. Principal reiterated that,
upon arriving in the PH, she offered to refund for the tickets paid by Buyer
but they refused. Principal asserted that her brother DID NOT have
authority to receive payment for the property and that, again, the
agency had been revoked prior.
 Civil Case No. 2 (Annulment of DoAS, Cancellation of TCT and Recovery
against Buyer): Principal and Buyer reiterated same arguments in Civil
Case No. 1.
 The cases were consolidated.
 Joint Decision of RTC: Ruled in favor of Buyer, ordered Principal to
receive the outstanding balance for the sale.
 Principal appealed to the CA.
 CA reversed the decision, Ruled in favor of Principal: Agency already
revoked. By virtue of this revocation, the DoAS was VOID and
UNENFORCEABLE; being done without authority of the principal nor her
consent. They was also NO VALID conveyance of property, and that the
Buyer had no right to redeem. The 2nd buyer was also deemed not a
buyer in good faith in not exercising due diligence despite the lack of DoAS
and TCT.
 Buyer moved for MR. Denied by CA. Hence this current petition.
 Buyer (Petitioner): Argues that the DoAS executed by Andrea was valid
and legal because the SPA was not validly revoked as the revocation was
not registered in the Office of the Register of Deeds of Davao. Buyer
argues that lack of notice does not bind them with the revocation of
agency.
 Principal (Respondent): SPA not enforceable and DoAS void because
Buyer acted with knowledge that Agent acted beyond his authority.
proven. The executed DoAS on 1997 between Agent and Buyer did not
have a copy file with the national archives. Article 1358 requires that these
kinds of contracts should be made in a public document. An accepted rule is
that no form is required to have a binding contract. However, a contract in
dispute must be proven; onus probandi with the party invoking its validity.
Buyer failed to discharge such burden. Presumption of regularity only
applies with public documents; not private.
 Rule: Revocation of an agency becomes operative, as to the agent, from
the time it is made known to him. Third parties are generally not affected
by revocation, unless notified of such.
 DOCTRINE OF APPARENT AUTHORITY: Acts and contracts of the
agent within the apparent scope of the authority given to him, although no
actual authority to do such acts or has been beforehand withdraw, revoked
or terminated, bind the principal. The purpose is that a third party may
reasonably believe that agent acts within the scope of authority on the
basis of manifestations previously made by principal. The exception is
when the third party is given sufficient notice; actual or implied.
 Implied Revocation under Article 1924: An agency is revoked if the
principal directly manages the business entrusted to the agent, dealing with
third persons. This must be direct, in an incompatible or exclusionary
manner, wherein the third party is deemed to have knowledge of the
revocation of agency.
 Buyers were notified of the revocation when, upon the return of the
Principal she had taken over the actual negotiation for the sale of
property. The authority of the agent to act has been revoked pursuant to
Article 1924. Buyer had sufficient notice.
 Sale must be treated as having been entered into by Agent in her personal
capacity. The DoAS is unenforceable due to the notice of revocation of
agency to both agent and buyer.
 LITONJUA, JR. v. ETERNIT CORPORATION (Mica, C2020)
June 8, 2006 | Callejo, Sr., J. | Agency by Estoppel
PETITIONER: Eduardo V. Litonjua, Jr. and Antonio K. Litonjua
RESPONDENTS: Eternit Corporation (now Eterton Multi-Resources Corporation),
Eteroutremer, S.A. and Far East Bank & Trust Company
SUMMARY: Eternit Corporation is a corporation engaged in the manufacture of
roofing materials and pipe products. Their manufacturing operations were conducted
in 8 parcels of land located in Mandaluyong. 90% of Eternit’s shares of stocks are
owned by by Eteroutremer S.A. Corporation (ESAC). Glanville is the president and
general manager of this corp while Delsaux is the regional director for Asia of
ESAC. In 1986, ESAC’s management grew concerned about the political situation in
the Philippines and wanted to stop its operations in the country. So the Committee
for Asia of ESAC instructed Adams, a member of EC’s board to dispose of the 8
parcels of land. He engaged the services of realtor/broker Marquez. He offered the
properties to Litonjua, Jr. and his brother (Litonjua siblings). They offered to pay
P20,000,000 for it. Glanville telexed Delsaux asking for his position but only replied
on Feb. 12, 1987. He said that their final offer is $1,000,000 and P2,500,000.
Litonjua sibs accepted this. Through a letter dated Feb 26, 1987, Marquez confirmed
the acceptance of the sibs and even stated that the sibs would confirm full payment
within 90 days after execution and preparation of all documents of sale, together with
the necessary government clearances. They deposited the $1,000,000 with Security
Bank. They inquired on when the implementation of the sale would be. When Cory
Aquino assumed the presidency, Glanville called Marquez and told him that the sale
won’t proceed. Delsaux also sent him a letter to confirm this. Sibs demanded
payment for the damages they incurred due to the aborted sale. EC rejected this. So,
sibs filed a complaint for specific performance and damages. RTC ruled in favor of
Eternit because the sale was not in writing so there was no valid sale. It’s void and
so, not ratifiable. The plaintiffs could not assume the authorization from the
corporation. Plaintiffs contended that Marquez only acted merely as a broker and not
an agent so the written authority was not necessary. They also claimed that an
agency by estoppel was created when the corporation clothed Marquez with apparent
authority to negotiate for the sale of the properties. However, since it was a bilateral
contract to buy and sell, it was equivalent to a perfected contract of sale. Same
allegations by EC. CA: affirmed the decision of the RTC. MR was denied. CA held
that Marquez, being a real estate broker, was a special agent according to Art. 1874
of the NCC and under Sec. 23 of the Corporatin Code, he needed a special authority
from EC’s BOD. Delsaux was also just a representative of ESAC and not even a
member of the BOD of EC. Sibs also failed to prove that an agency by estoppel had
been created. SC denied the petition.
DOCTRINE: For an agency by estoppel to exist, following must be proved: (1)
principal manifested a representation of the agent’s authority or knowingly allowed
the agent to assume such authority; (2) third person, in good faith, relied upon such
representation; (3) relying upon such representation, such third person has changed
his position to his deteriment. An agency by estoppel, which is similar to doctrine of
apparent authority, requires proof of reliance upon representations, which needs
proof that the representations predated the action taken in reliance.
FACTS:
1. Eternit Corporation (Eternit) is a corporation duly organized and registered
under Philippine laws. It had been engaged in the manufacture of roofing
materials and pipe products since 1950 

2. Its manufacturing operations were conducted on 8 parcels of land (total
area of 47,233 square meters) located in Mandaluyong. All are covered by
TCTs under the name of Far East 
Bank & Trust Company, as trustee. 

3. 90% of the shares of stocks of Eternit were owned by Eteroutremer
S.A. Corporation 
(ESAC), a corporation organized and registered under
the laws of Belgium. 

4. Jack Glanville, an Australian citizen, was the general manager and
president of Eternit, while Claude Frederick Delsaux was the regional
director for Asia of ESAC. Both had their 
offices in Belgium 

5. 1986—management of ESAC grew concerned about the political situation
in the Philippines 
and wanted to stop its operations in the country
6. The Committee for Asia of ESAC instructed Michael Adams, a member of
EC’s board of directors, to dispose the 8 parcels of land (important to note
na ESAC ang nagbenta)
7. He engaged the services of realtor/broker Lauro G. Marquez. Glanville
was the one who showed the properties to Marquez
8. Marquez offered the parcels of land and the improvements to Eduardo
B. Litonjua, Jr. and his brother Antonio K. Litonjua. They offered to
buy it for P20,000,000 cash
9. So Marquez apprised Glanville of the offer and relayed the same to
Delsaux. The latter did not respond
10. Oct. 28, 1986- Glanville telexed Delsaux in Belgium, inquiring on his
position
11. Feb. 12, 1987 – Delsaux sent a telex to Glanville “Belgian/Swiss decision,
the final offer was US$1,000,000 and P2,500,000 to cover all existing
obligations prior to final liquidation”
12. Feb. 26-Litonjua, Jr. accepted. Marquez sent a letter confirming the
acceptance of the Litonjua siblings and that they would confirm full
payment within 90 days after execution and preparation of all the
documents of sale.
13. The brothers deposited the amount of $1000000 with Security Bank and
drafted an Escrow Agreement to expedite the same
14. When Cory Aquino assumed the presidency, Glanville called Marquez
and told him that the sale won’t proceed. Delsaux also sent him a letter
to confirm this. He said that “...considering the new political situation since
the departure of Marcos and a certain stabilization in the Philippines, the
Committee has decided not to stop our operations in Manila. In fact,
production has started again last week.”
 15. Litonjuas, through counsel, wrote EC demanding payment for damages 4. WoN Eternit is estopped to deny the existence of a principal-agency
they had suffered on account of the aborted sale. EC rejected the demand. relationship between it and Glanville or Delsaux – no
16. Litonjuas filed a complaint for specific performance and damages
against EC and the Far East Bank and Trust Company, and ESAC. EC RULING: Petition is Denied for lack of merit
was substituted by Eterton Multi-Resources Corporation. The controlling
stockholders of EC were also impleaded as additional defendants. RATIO:
17. Answer to the complaint: Petitioners’ allegations:
a. ESAC wasn’t doing business in the Phil so it cannot be the subject 1. There was a perfected contract of sale because they had accepted the
to the 
jurisdiction of Philippine courts 
 counter-offer before it 
was withdrawn by the respondents. The
b. Board and stockholders of EC never approved any resolution to acceptance was made known to them through real 
estate broker Marquez
sell the properties 
nor authorized Marquez to sell it 
 

c. The telex dated Oct. 28, 1986, Glanville did it on his own personal 2. No need for a written authority from the Board of Directors of EC because
making which 
did not bind EC 
 he was not an 
ordinary agent because his authority was of a special and
18. RTC: in favor of Eternit (no vaid sale wrt to ESAC and EC, and no cause of limited character. His only job as a 
broker was to look for a buyer and to
action against Far East Bank and Trust Company) bring together the parties to the transaction. 

a. Since the authority of the agents/realtors was not in writing, the 3. Since he was not authorized to sell the properties, he does not fall under Art.
sale is void and not remerly unenforceable, and as such, could not 1874 of the NCC 

have been ratified by the principal 4. What is important and decisive was that Marquez was able to communicate
b. In any event, such ratification cannot be given any retroactive both the offer and 
counter-offer and their acceptance 

effect 
 5. The testimonial and documentary evidence on record shows that Glanville
c. Plaintiffs could not assume that defendants had agreed to sell the (as president and 
GM) and Delsaux (RD) had the necessary authority to
property without a clear authorization from the corporation sell the property or, at least, had been 
allowed by EC 

concerned, that is, through resolutions of 
the Board of Directors 6. Evidences: Testimony of Marquez, Negotiations for several months,
and stockholders. 
 Counter-offer, Good faith 
of petitioners as show by their acceptance,
d. Also, the supposed sale involves substantially all the assets of Deposited the price and the escrow agreement, Glanville’s telex to Delsaux
defendant EC which 
would result in the eventual total cessation inquiring “when WE will implement action to buy and sell”, Petitioner’s
of its operation 
 offer was allegedly rejected by both Glanville and Delsaux, Letter from
19. CA held that Marquez, being a real estate broker, was a special agent Delsaux saying, “We regret that we could not make a deal with you this
according to Art. 1874 of the NCC and under Sec. 23 of the Corporation time, but in case the policy would change at a later stage we would consult
Code, he needed a special authority from EC’s BOD. Delsaux was also just you again.” 

a representative of ESAC and not even a member of the BOD of EC. Sibs
also failed to prove that an agency by estoppel had been created. Affirmed Respondents
the decision of RTC. 1. Issues raised are factual 

2. Glanville, Delsaux and Marquez had no authority from EC 

ISSUE/s:
1. WoN the issues raised by petitioner is factual – YES Petitioner: EC, through Glanville and Delsaux, conformed to the written authority of
2. WoN the Court of Appeals erred in not holding that Glanville and Delsaux Marquez to sell the properties. This was evidenced by the fact that Glanville and
have the necessary authority to sell the subject properties, or at the very Delsaux negotiated for the sale of 90% of stocks of EC to Ruperto Tan
least, were knowingly permitted by respondent Eternit to do acts within the 1. Their positions and duties and that ESAC owns 90% of the shares – show
scope of an apparent authority, and thus held them out to the public as that a formal resolution of the BOD would be a mere ceremonial formality
possessing power to sell the said properties (Basically, whether or not
Glanville and Delsaux has the authority or at least, knowingly permitted by (Basically, EC and ESAC alleged that the Board and stockholders of EC never
Eternit to do acts within the scope of an apparent authority) - no approved any resolution to sell subject properties nor authorized Marquez to
3. WoN Marquez need a written authority from respondent Eternit before the sell the same; and the offer of Jack Glanville and Delsaux were of his own
sale can be perfected – yes personal making and did not bind them.)
SC:
1. In the absence of express written terms creating the relationship of an
agency, the existence of an agency is a fact question
2. Whether an agency by estoppel was created or whether a person acted
within the bounds of his apparent authority, and whether the principal is
estopped to deny the apparent authority – all questions of fact. So the
findings of the RTC and CA are conclusive
3. Under Rule 45 of the Rules of Court, issues of facts may not be raised in the
SC because it is not a trier of facts. No exceptions to this can be found in
this case
4. It was the duty of the petitioners to prove that EC had decided to sell its
properties and that it had empowered Adams, Glanville and Delsaux or
Marquez to offer the properties for sale to prospective buyers and to accept
any counter-offer
5. Petitioners also failed to prove that their counter-offer was accepted
6. When specific performance is sought of a contract made with an agent,
the agency must be established by clear, certain and specific proof
7. Sec. 23 of the Corp. Code of the Phil. provides that the coporate powers and
the control of the corp properties shall be exercised and managed by the
BOD or trustees to be elected from the holders of stocks (governed by the
gen. principles of agency)
8. Sec. 36 of the Corp Code: a corporation may sell or convey its real
properties, subject to the limitations prescribed by law and the
Constitution
9. The property of a corporation, however, is not the property of the
stockholders or members, thus, may not be sold without express
authority from the BOD
10. Physical acts, like the offering of the properties of the corporation for sale,
or the acceptance of a counter-offer of prospective buyers of such properties
and the execution of the deed of sale covering such property, can be
performed by only by officers or agents duly authorized for the purpose by
corporate by-laws or by specific acts of the board of directors. Otherwise, it
will not be binding
11. An unauthorized act of an officer of the corporation is not binding on it
unless the latter ratifies the same expressly or impliedly by its board of
directors.
12. 12.! Any sale of real property of a corporation by a person purporting
to be an agent thereof but without written authority from the
corporation is null and void. The declarations of the agent alone are
generally insufficient to establish the fact or extent of his/her authority.
13. 13.! By the contract of agency, a person binds himself to render some
service or to do something in representation on behalf of another, with
the consent or authority of the latter. Consent of both principal and
agent is necessary to create an agency.
14. 14.! 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
15. In this case, the petitioners as plaintiffs below, failed to adduce in
evidence any resolution of the Board of Directors of respondent EC
empowering Marquez, Glanville or Delsaux as its agents, to sell, let
alone offer for sale, for and in its behalf, the eight parcels of land owned
by respondent EC including the improvements thereon.
16. The bare fact that Delsaux may have been authorized to sell to Ruperto
Tan the shares of stock of respondent ESAC, on June 1, 1997, cannot be
used as basis for petitioners' claim that he had likewise been authorized
by respondent EC to sell the parcels of land. CIAHDT
17. Moreover, the evidence of petitioners shows that Adams and Glanville
acted on the authority of Delsaux, who, in turn, acted on the authority
of respondent ESAC, through its Committee for Asia, the Board of
Directors of respondent ESAC, and the Belgian/Swiss component of the
management of respondent ESAC.
18. As such, Adams and Glanville engaged the services of Marquez to offer to
sell the properties to prospective buyers.
19. This is shown when Delsaux responded to Glanville on February 12, 1987,
he made it clear that, based on the "Belgian/Swiss decision" the final offer
of respondent ESAC was US$1,000,000.00 plus P2,500,000. The offer of
Delsaux emanated only from the "Belgian/Swiss decision," and not the
entire management or Board of Directors of respondent ESAC.
20. While it is true that petitioners accepted the counter-offer of respondent
ESAC, respondent Eternit was not a party to the transaction between them;
hence, Eternit was not bound by such acceptance.
21. While Glanville was the President and General Manager of respondent
Eternit, and Adams and Delsaux were members of its Board of
Directors, the three acted for and in behalf of respondent ESAC, and
not as duly authorized agents of Eternit; a board resolution evincing
the grant of such authority is needed to bind Eternit to any agreement
regarding the sale of the subject properties.
22. Such board resolution is not a mere formality but is a condition sine qua
non to bind Eternit.
23. Admittedly, respondent ESAC owned 90% of the shares of stocks of
respondent EC; however, the mere fact that a corporation owns a majority
of the shares of stocks of another, or even all of such shares of stocks, taken
alone, will not justify their being treated as one corporation.
24. It bears stressing that 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 action, 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.
25. The settled rule is that, persons dealing with an assumed agent are bound
 at their peril, and 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
prove it. In this case, the petitioners failed to discharge their burden; hence,
petitioners are not entitled to damages from respondent EC.
26. It appears that Marquez acted not only as real estate broker for the
petitioners but also as their agent. As gleaned from the letter of Marquez
to Glanville, on February 26, 1987, he confirmed, for and in behalf of the
petitioners, that the latter had accepted such offer to sell the land and the
improvements thereon. However, we agree with the ruling of the appellate
court that Marquez had no authority to bind respondent EC to sell the
subject properties. A real estate broker is one who negotiates the sale of real
properties. His business, generally speaking, is only to find a purchaser who
is willing to buy the land upon terms fixed by the owner. He has no
authority to bind the principal by signing a contract of sale. Indeed, an
authority to find a purchaser of real property does not include an authority
to sell.

Topic in the syllabus:

27. Equally barren of merit is petitioners' contention that respondent
Eternit is estopped to deny the existence of a principal-agency
relationship between it and Glanville or Delsaux. 

28. For an agency by estoppel to exist, the following must be established:
(1) the principal 
manifested a representation of the agent's authority
or knowlingly allowed the agent to assume such authority; (2) the third
person, in good faith, relied upon such representation; (3) relying upon
such representation, such third person has changed his position to his
detriment. 

29. An agency by estoppel, which is similar to the doctrine of apparent
authority, requires proof of reliance upon the representations, and that,
in turn, needs proof that the representations predated the action taken
in reliance. Such proof is lacking in this case. 

30. In their communications to the petitioners, Glanville and Delsaux positively
and unequivocally declared that they were acting for and in behalf of
respondent ESAC. 

31. Neither may Eternit be deemed to have ratified the transactions between the
petitioners and respondent ESAC, through Glanville, Delsaux and Marquez.
The transactions and the various communications inter se were never
submitted to the Board of Directors of respondent EC for ratification 

 HAHN v. COURT OF APPEALS (C2020)
January 22, 1997 | Mendoza, J. | Where Principal Not Liable to Agent for Expenses
Incurred
PETITIONER: Alfred Hahn
RESPONDENTS: Court of Appeals and Bayerische Motoren Werke
Aktiengesellschaft (BMW)
SUMMARY: Hahn is the exclusive dealer of BMW in the Philippines. BMW
terminated the exclusive dealership, so Hahn filed a complaint for specific
performance and damages against BMW to compel it to continue with the exclusive
dealership. BMW claimed that Hahn is not an agent but a middleman transacting
business in his own name and for his own account. The CA ruled that Hahn was a
mere broker and not an agent of BMW. The SC reversed the CA’s decision and held
that Hahn was indeed BMW’s agent in the Philippines since there are facts that
suggest that BMW exercised control over Hahn’s activities: He had to follow BMW
specifications for the service centers and showroom and BMW would regularly
inspect to see to it that BMW standards are followed.
DOCTRINE: The fact that Hahn invested his own money to put these service
centers and showroom does not necessarily prove that he is not an agent of BMW for
there are facts which suggest that BMW exercised control over Hahn’s activities as a
dealer.
FACTS:
 March 7, 1967: Hahn executed a Deed of Assignment with Special Power
of Attorney in favor of BMW.
 Feb 16, 1993: In a meeting with a BMW representative and the president of
Columbia Motors Corporation (CMC), Hahn was informed that BMW was
arranging to grant the exclusive ownership of BMW cars and products to
CMC.
 Feb 24, 1993: Hahn received a letter from BMW, wherein it expressed
dissatisfaction with various aspects of Hahn’s business: Decline in sales,
deteriorating services, inadequate showroom and warehouse facilities, and
Hahn’s failure to comply with the standards for an exclusive BMW dealer.
 Hahn: The termination of his exclusive dealership would be a breach of the
Deed of Assignment. As long as the assignment of its trademark and device
subsisted, he remained BMW’s exclusive dealer in the Philippines because
the assignment was made in consideration of the exclusive ownership.
 Hahn was insisting on the former business relations, but BMW terminated
the exclusive dealer relationship.
 At a conference of BMW Regional Importers held in Singapore, Hahn was
surprised to find CMC’s President among those invited.
 BMW then proposed that Hahn and CMC jointly import and distribute
BMW cars and parts.
 Hahn did not accept the proposal and filed a complaint for specific
performance and damages against BMW to compel it to continue the
exclusive dealership.
 BMW moved to dismiss the case: Hahn was not an agent because he
undertook to assemble and sell BMW cars and products without the
participation of BMW and sold other products. Also claimed that Hahn was
a middleman transacting business in his own name and for his own account.
 CA: Hahn was a mere indentor or broker and not an agent through whom
BMW transacted business in the Philippines.
 Hence, this petition.
ISSUE:
WON Hahn is the agent or distributor in the Philippines of BMW: YES
RULING: WHEREFORE, the decision of the Court of Appeals is REVERSED and
the case is REMANDED to the trial court for further proceedings.
HELD:
 There is nothing to support the CA’s finding that Hahn solicited orders
alone and for his own account and without interference from and direction
of BMW.
 As to the service centers and showroom, Hahn said that he had to follow
BMW specifications as exclusive dealer of BMW in the Philippines. BMW
would periodically inspect the service centers to see to it that BMW
standards were maintained.
 The fact that Hahn invested his own money to put these service centers and
showroom does not necessarily prove that he is not an agent of BMW for
there are facts which suggest that BMW exercised control over Hahn’s
activities as a dealer and made regular inspections of Hahn’s premises to
enforce compliance with BMW standards and specification.
 Communications Materials, Inc. v. CA: A foreign corporation entered into a
“Representative Agreement” and a “Licensing Agreement” with a domestic
corporation wherein the latter was appointed “exclusive representative” in
the Philippines. The domestic corporation sold products exported by the
foreign corporation and put up a service center for the products sold locally.
The Court held that the arrangement showed that the foreign corporation’s
purpose was to penetrate the Philippines market and establish its presence in
the Philippines.
 In addition, BMW held out Hahn as its exclusive distributor in the
Philippines and even announced in the Asian region that Hahn was the
“official BMW agent” in the Philippines.