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Historical Context On 26 June 1998, Eurotech filed a Motion to Declare Erwin Cuizon in Default with Motion for

Philippines Summary Judgment. The trial court granted petitioner’s motion for Erwin Cuizon’s failure to answer
within the prescribed period but it denied motion for summary judgment. A pre-trial was scheduled,
Nature, Concept, and Purpose but was deferred due to Edwin Cuizon's raised special and affirmative defences.

1. Eurotech v. CA After the filing of Edwin Cuizon's Memorandum in support of his special and affirmative defenses
and Eurotech's opposition, the trial court rendered a decision dropping Edwin Cuizoon as a
CHICO-NAZARIO, J.: defendant.The trial court reasoned that in the Deed of Assignment, Edwin Cuizon acted in behalf
of Impact Systems, it was apparent during the time that the deposit was made, Eurotech was
Facts aware that Edwin Cuizon acted on behalf of Impact Systems, as such, Eurotech cannot say it was
deceived by Edwin Cuizon.
Eurotech imports and distributes European industrial equipments in the Philippines and it has
Impact Systems sales as its customers. Impact system is owned by Erwin Cuizon and has Edwin Eurotech then appealed before the CA, which affirmed the decision
Cuizon as its sales manager.
Issues:
From January to April 1995, Eurotech sold to Impact Systems various products allegedly
amounting ₱91,000. Subsequently, Impact Systems sought to buy from Eurotech a sludge pump 1. Whether the CA committed reversible error when it ruled that Edwin Cuizon, acting as an agent
for ₱250,000.00 and made a down payment of ₱50,000.00. of Impact Systes, is not personally liable for neither acting beyond the scope of his agency nor did
he perform acts of fraud
When the sludge pump arrived from the United Kingdom, Eurotech refused to deliver without
Impact Systems paying the rest of the amount due. On 28 June 1995, respondent EDWIN Cuizon Held:
and Alberto de Jesus, general manager of Impact Systems, executed a Deed of Assignment of
receivables in favor of Eurotech -- Eurotech was to receive ₱365,000.00 from Toledo Power No. The Court reasoned that in a contract of agency, a person binds himself to render some
Corporation, whom owes Impacts Systems the stated amount. service or to do something in representation or on behalf of another with the latter’s consent. The
underlying principle of the contract of agency is to accomplish results by using the services of
Following the execution of the Deed of Assignment, Eurotech delivered the sludge pump on 30 others. Its purpose is to extend the personality of the principal or the party for whom another acts
June 1995.8 and from whom he or she derives the authority to act. It is said that the basis of agency is
representation, that is, the agent acts for and on behalf of the principal on matters within the scope
Unknown to Eurotech, Impact Systems proceeded to collect from Toledo Power Company despite of his authority and said acts have the same legal effect as if they were personally executed by
the Deed of Assignment on 15 August 1995. the principal.

Eurotech then made several demands upon Impact Systems to pay their obligations. As a result, The elements of the contract of agency are:
Impact Systems were able to make partial payments. On 7 October 1996, Eurotech’s counsel sent (1) consent, express or implied, of the parties to establish the relationship;
Impact System a final demand letter, it was stated that as of 11 June 1996, total obligations stood (2) the object is the execution of a juridical act in relation to a third person;
at ₱295,000.00 excluding interests and attorney’s fees. (3) the agent acts as a representative and not for himself;
(4) the agent acts within the scope of his authority.
Impact Systems did not comply with the final demand letter, which forced Eurotech to institute a
complaint for sum of money, damages, and preliminary attachment at the Regional Trial Court of In this case, the parties did not dispute the existence of the agency relationship between
Cebu City. Said court granted the issuance of preliminary attachment. respondents Erwin Cuizon as principal and Edwin Cuizon as agent. The only cause of the present
dispute is whether respondent Edwin Cuizon exceeded his authority when he signed the Deed of
Edwin Cuizon filed his Answer, he admitted Eurotech’s allegations with respect to the sale Assignment
transactions entered, however, disputed the total amount of Impact Systems’ indebtedness.
According to him, the debt only amounted to only ₱220,000.00. Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is not personally
liable to the party with whom he contracts. The same provision, however, presents two instances
By way of special and affirmative defenses, Edwin Cuizon alleged he is not a real party in interest when an agent becomes personally liable to a third person. The first is when he expressly binds
in this case. According to him, he was acting as mere agent of Impact Systems, in his transaction himself to the obligation and the second is when he exceeds his authority. In the last instance, the
with Eurotech and Impact Systems aware of this fact. In support of this argument, Edwin Cuizon agent can be held liable if he does not give the third party sufficient notice of his powers. We hold
even pointed to paragraphs 1.2 and 1.3 of petitioner’s Complaint stating – that respondent Edwin Cuizon did not fall within any of the exceptions contained in this provision.

1.2. Erwin H. Cuizon, as the proprietor of a single proprietorship business known as Impact The Deed of Assignment stating Edwin Cuizon signed as the sales manager of Impact Systems.
Systems Sales The position of manager is unique in that it presupposes the grant of broad powers with which to
conduct the business of the principal, thus: such a position presupposes a degree of confidence
reposed and investiture with liberal powers for the exercise of judgment and discretion in
1.3. Edwin B. Cuizon as the Sales Manager of Impact Systems and is sued in this action in such transactions and concerns which are incidental or appurtenant to the business entrusted to his
capacity. care and management. In the absence of an agreement to the contrary, a managing agent may
enter into any contracts that he deems reasonably necessary or requisite for the protection of the
interests of his principal entrusted to his management. payment of costs of suit. Named party defendants were Felix Go Chan & Sons Realty Corporation
and Simeon Rallos. Felix Go Chan & Sons Realty Corporation's Answer contained a crossclaim
Court held that Edwin Cuizon acted well-within his authority when he signed the Deed of against Simon Rallos and Simon Rallos filed third-party complaint against Gerundia Rallos. While
Assignment. Eurotech refused to deliver the one unit of sludge pump unless it received full the case was pending in the trial court, both Simon and Gerundia died and they were substituted
payment. The significant amount of time spent on the negotiation for the sale of the sludge pump by the respective administrators of their estates.
underscores Impact Systems’ perseverance to get hold of the said equipment. There is, therefore,
no doubt in our mind that Edwin Cuizon's participation in the Deed of Assignment was "reasonably After trial the court rendered judgment found that selling of the share of Concepcion Rallos was
necessary" or was required in order for him to protect the business of his principal. Had he not null and void, amendment of the new TCT with respect to removal of Concepcion Rallos's share,
acted in the way he did, the business of his principal would have been adversely affected and he and Felix Go Chan & Sons Realty Corporation to return the possession of Concepcion Rallos's
would have violated his fiduciary relation with his principal. share of the property as well as payment of attorney's fees

As we declare that Edwin Cuizon acted within his authority as an agent, who did not acquire any With respect to Felix Go Chan & Sons Realty Corporation's cross claim, the administrator of the
right nor incur any liability arising from the Deed of Assignment, it follows that he is not a real party Estate of Simeon Rallos was made to reimburse payments it received from selling Concepcion
in interest who should be impleaded in this case. A real party in interest is one who "stands to be Rallos's share of the lot to Felix Go Chan & Sons Realty Corporation as well as attorney's fees.
benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit."
On the Third-Party Complainty of Simeon Rallos's Estate Administrator against the special
Agency as a Contract administratrix of the Estate of Gerundia Rallos it was dismissed without prejudice to filing either a
complaint against the regular administrator of the Estate of Gerundia Rallos or a claim in the
Critiques Intestate-Estate of Cerundia Rallos, covering the same subject-matter.

Spanish term for principal is, “mandante”. For agents, it can be, “mandatario”, “attorney-in-fact”, Felix Go Chan & Sons Realty Corporation appealed before the Court of Appeals from the
“proxy”, “delegate” or “representative” foregoing judgment insofar as it set aside the share of Concepcion Rallos, CA ruled against both
appeals and motion for reconsideration.
Espiritu, XV Lawyers Journal 297
J.B.L. Reyes, XVI Lawyers Journal 138 Issues

1. Was the sale of the share of Concepcion Rallos in the lot valid although it was executed by the
Elements agents after the principal's death;

1. Rallos vs. Felix Go Chan & Sons Realty Corp. 2. Can the agent still perform on behalf of his principal after the principals death;

MUÑOZ PALMA, J.: 3. Does the knowledge of the death of the principal determine the legal effect of the acts performed
after such knowledge by the agent.
Facts:
Held:
Attorney-in-fact, Simeon Rallos, after of his death of his principal, Concepcion Rallos, sold the
Concepcion Rallos's undivided share in a parcel of land pursuant to a power of attorney which the 1. No. The Court in this case cited Article 1919 that provides for grounds when agency is
Concepcion Rallos had executed in Simeon Rallos's favor. The administrator of the estate of the deemed extinguished, particularly paragraph 3 that provides extinguishment of the relationship By
went to court to have the sale declared uneanforceable and to recover the disposed share. The the death, civil interdiction, insanity or insolvency of the principal or of the agent. The Spanish Civil
trial court granted the relief prayed for, but upon appeal the Court of Appeals uphold the validity Code Article 1709 even reasoned that the reason for the extinguishment is the juridical basis of
of the sale and the complaint. agency which is representation is that the integration of the personality of the principal and of the
agent can not continue to exist once the death of either is establish. The juridical tie between the
Concepcion and Gerundia Rallos were sisters and registered co-owners of a parcel of land. On principal and the agent is severed ipso jure upon the death of either without necessity for the heirs
April 21, 1954, the sisters executed a special power of attorney in favor of their brother, Simeon of the fact to notify the agent of the fact of death of the former.
Rallos, authorizing him to sell for and in their behalf their lot. On March 3, 1955, Concepcion Rallos
died. On September 12, 1955, Simeon Rallos sold the undivided shares of his sisters Concepcion Death of the principal instantly and absolutely revoked the authority of the agent, unless the
and Gerundia to Felix Go Chan & Sons Realty Corporation for P10,686.90. The deed of sale was authorization is coupled with interest. Any attempted execution of the power afterward is not
registered in the Registry of Deeds of Cebu, its Transfer Certificate Title was cancelled, and a new binding on the heirs or representatives of the deceased.
one was issued in the named of the Felix Go Chan & Sons Realty Corporation.
2. No. In the case at hand, Simeon Rallos special power of attorney was not coupled with an
On May 18, 1956 Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos filed interest.
a complaint docketed, praying (1) that the sale of the undivided share of deceased Concepcion
Rallos in be declared unenforceable, and said share be reconveyed to her estate; (2) that the 3. Yes. Article 1931 provides that the agent to be exempted from the general rule of the
Certificate of 'title issued in the name of Felix Go Chan & Sons Realty Corporation be cancelled extinguishment
and another title be issued in the names of the corporation and the "Intestate estate of Concepcion
Rallos" in equal undivided and (3) that plaintiff be indemnified by way of attorney's fees and
THE FACTS:

Elements of Agency On August 28, 2001, R&B Insurance issued Marine Policy in favor of Columbia to insure the
shipment of electric copper cathodes against All Risks. On August 28, 2001, the cargoes were
1. Consent of the principal (mandate) and the agent (mandatario) to establish a relationship; shipped on board "Richard Rey” Leyte, to Manila. They arrived on the same date.

2. Object is the execution of a juridical act in relation to a third person; Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the
pier and the subsequent delivery to its warehouses/plants. Glodel, in turn, engaged the services
3. Agent acts as a representative, not for himself; of Loadmasters for the use of its delivery trucks to transport the cargoes to Columbia’s
warehouses/plants in Bulacan and Valenzuela City.
4. Agent acts within the scope of his authority.
The goods were loaded on board twelve trucks owned by Loadmasters, driven by its employed
drivers and accompanied by its employed truck helpers. Six truckloads of copper cathodes were
to be delivered to Bulacan, while the other six were destined for Valenzuela City. The cargoes in
six truckloads for Valenzuela City were duly delivered in Columbia’s warehouses there. Of the six
Exception to the instant and absolute revocation of the authority of the agent upon the trucks en route to Bulacan, only five reached the destination. One truck failed to deliver its cargo.
death of the principal are:
The said truck, Isuzu was recovered but without the copper cathodes. Because of this incident,
1. The agency shall remain in full force and effect even after the death of the principal, if it has Columbia filed with R&B Insurance a claim for insurance indemnity in the amount of
been constituted in the common interest of the latter and of the agent, or in the interest of a third ₱1,900,000.00. R&B Insurance paid Columbia the amount of ₱1,896,789.62 as insurance
person who has accepted the stipulation in his favor. (Article 1930) indemnity.

2. Anything done by the agent, without knowledge of the death of the principal or of any other R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and Glodel
cause which extinguishes the agency, is valid and shall be fully effective with respect to third Regional Trial Court in Manila for reimbursement of the amount it had paid to Columbia. It claimed
persons who may have contracted with him in good. faith. (1931) Good faith here means that the that it had been subrogated "to the right of the consignee to recover from the party/parties who
third person was not aware of the death of the principal at the time he contracted with said agent. may be held legally liable for the loss."2
These two requisites must concur the absence of one will render the act of the agent invalid and
unenforceable. On November 19, 2003, RTC rendered a decision holding Glodel liable for damages for the loss
of the subject cargo and dismissing Loadmasters’ counterclaim for damages and attorney’s fees
* Execeptions to the rules are strictly construed, it is not to be given an interpretation or application against R&B Insurance.
beyond the clear import of its terms for otherwise the courts will be involved in a process of
legislation outside of their judicial function. Both R&B Insurance and Glodel appealed the RTC decision to the CA.

If the agency has been granted for the purpose of contracting with certain persons, the revocation On August 24, 2007, the CA rendered the assailed decision which reads in part:
must be made known to them. But if the agency is general in nature, without reference to particular
person with whom the agent is to contract, it is sufficient that the principal exercise due diligence
to make the revocation of the agency publicity known. Considering that appellee is an agent of appellant Glodel, whatever liability the latter owes to
appellant R&B Insurance Corporation as insurance indemnity must likewise be the amount it shall
be paid by appellee Loadmasters.
In case of a general power, the general opinion is all acts executed with third persons who
contracted in good faith, without knowledge of the revocation, are valid. In such case, the principal
may exercise his right against the agent, who, knowing of the revocation, continued to assume a ISSUES
personality which he no longer had.
1. Can Loadmasters be held liable to Respondent Glodel in spite of the fact that the latter
if a person purchases a registered land from one who acquired it in bad faith — even to the extent respondent Glodel did not file a cross-claim against Loadmasters?
of foregoing or falsifying the deed of sale in his favor — the registered owner has no recourse
against such innocent purchaser for value but only against the forger. 2. Can petitioner Loadmasters be legally considered as an Agent of respondent Glodel?

As between two innocent persons, one of whom must suffer the consequence of a breach of trust,
the one who made it possible by his act of coincidence bear the loss – this does not apply in this
case. HELD:

1. No. , Glodel has a definite cause of action against Loadmasters for breach of contract
of service as the latter is primarily liable for the loss of the subject cargo. In this case,
2. Loadmasters vs Glodel however, it cannot succeed in seeking judicial sanction against Loadmasters because
the records disclose that it did not properly interpose a cross-claim against the latter.
Glodel did not even pray that Loadmasters be liable for any and all claims that it may
MENDOZA, J.:
be adjudged liable in favor of R&B Insurance. Under the Rules, a compulsory presumed to know his contractual obligations and is fully aware that he cannot belatedly and
counterclaim, or a cross-claim, not set up shall be barred.25Thus, a cross-claim cannot unilaterally change the terms of the contract without the consent, of MMPCI. MMPCI did not agree
be set up for the first time on appeal. to a change in the contract and in fact implemented the same pursuant to its clear terms. According
to MMPCI, Atty. Linsangan did not even bother to verify Baluyot's authority or ask copies of official
2. No. there can be no contract of agency between the parties. Loadmasters never receipts for his payments.
represented Glodel. Neither was it ever authorized to make such representation. The
basis for agency is representation, that is, the agent acts for and on behalf of the MMPCI further alleged that it cannot be held jointly and solidarily liable with Baluyot as the latter
principal on matters within the scope of his authority and said acts have the same legal exceeded the terms of her agency, neither did MMPCI ratify Baluyot's acts
effect as if they were personally executed by the principal. On the part of the principal,
there must be an actual intention to appoint or an intention naturally inferable from his The Court of Appeals affirmed the decision of the trial court. Baluyot was an agent of MMPCI
words or actions, while on the part of the agent, there must be an intention to accept having represented MMPCI's interest and acting on its behalf in the dealings with clients and
the appointment and act on it.23 Such mutual intent is not obtaining in this case. customers. Hence, MMPCI is considered estopped when it allowed Baluyot to act and represent
MMPCI even beyond her authority. While Baluyot's authority "may not have been expressly
conferred upon her, the same may have been derived impliedly by habit or custom, which may
3. Manila Memorial vs. Linsangan have been an accepted practice in the company for a long period of time." Court of Appeals noted,
innocent third persons such as Atty. Linsangan should not be prejudiced where the principal failed
TINGA, J.: to adopt the needed measures to prevent misrepresentation. Furthermore, if an agent
misrepresents to a purchaser and the principal accepts the benefits of such misrepresentation, he
cannot at the same time deny responsibility for such misrepresentation. 22
Facts:
MMPCI filed its Motion for Reconsideration, but the same was denied for lack of merit.25
In 1984, Baluyot offered Atty. Linsangan a lot at the Holy Cross Memorial Park owned by MMPCI.
According to Baluyot, a former owner of a memorial lot was no longer interested in acquiring the
lot and had opted to sell his rights subject to reimbursement of the amounts he already paid. The
contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made
to the former buyer, the contract would be transferred to him. Atty. Linsangan agreed and gave Issues:
Baluyot P35,295.00 representing the amount to be reimbursed to the original buyer and to
complete the down payment to MMPCI. Baluyot issued handwritten and typewritten receipts for 1. Whether the CA erred in disregarding the plain terms of the written contract and Atty.
these payments.4 Linsangan's failure to abide by the terms thereof, which justified its cancellation.
2. Whether assuming that Baluyot was an agent of MMPCI, she clearly exceeded her
On March 1985, Baluyot informed Atty. Linsangan that he would be a contract covering the subject authority and Atty. Linsangan knew or should have known about this considering his
lot in the name of the Atty. Linsangan. On April 1986, Atty. Linsangan issued twelve postdated status as a long-practicing lawyer.
checks in favor of MMPCI. 3. Whether Court of Appeals erred in failing to consider that the facts and the applicable
law do not support a judgment against Baluyot only "up to the extent of costs."
On 25 May 1987, Baluyot verbally advised Atty. Linsangan the new contract was cancelled for
reasons the he could not explain, and presented to him another proposal for the purchase of an Held:
equivalent property. Atty. Linsangan refused the new proposal and insisted that Baluyot and
MMPCI honor their undertaking. 1. Yes. The Court found MMPCI cannot be bound by the contract procured by Atty.
Linsangan and solicited by Baluyot. Baluyot was authorized to solicit and remit to
For the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan filed MMPCI offers to purchase interment spaces obtained on forms provided by MMPCI.
a Complaint7 for Breach of Contract and Damage. The terms of the offer to purchase, therefore, are contained in such forms and, when
signed by the buyer and an authorized officer of MMPCI, becomes binding on both
Baluyot did not present any evidence. For its part, MMPCI alleged that the new contract was parties.
cancelled conformably with the terms of the contract because of non-payment of arrearages.
MMPCI stated that Baluyot was not an agent but an independent contractor, and as such was not In the contract, was clearly stated therein that "Purchaser agrees that he has read or
authorized to represent MMPCI or to use its name except as to the extent expressly stated in the has had read to him this agreement, that he understands its terms and conditions, and
Agency Manager Agreement. Moreover, MMPCI was not aware of the arrangements entered into that there are no covenants, conditions, warranties or representations other than those
by Atty. Linsangan and Baluyot. contained herein." By signing the Offer to Purchase, Atty. Linsangan signified that he
understood its contents. That he and Baluyot had an agreement different from that
contained in the Offer to Purchase is of no moment, and should not affect MMPCI, as it
The trial court held MMPCI and Baluyot jointly and severally liable. It found that Baluyot was an
was obviously made outside Baluyot's authority. To repeat, Baluyot's authority was
agent of MMPCI and that the latter was estopped from denying this agency, having received and
limited only to soliciting purchasers. She had no authority to alter the terms of the written
enchased the checks issued by Atty. Linsangan and given to it by Baluyot. While MMPCI insisted
contract provided by MMPCI.
that Baluyot was authorized to receive only the down payment, it allowed her to continue to receive
postdated checks from Atty. Linsangan, which it in turn consistently encashed.
2. Yes. It is a settled rule that persons dealing with an agent are bound at their peril, if they
would hold the principal liable, to ascertain not only the fact of agency but also the nature
MMPCI appealed to the Court of Appeals. It claimed that Atty. Linsangan is bound by the written and extent of authority, and in case either is controverted, the burden of proof is upon
contract with MMPCI. It also alleged that Atty. Linsangan, a lawyer for over thirteen years, is them to establish it. The basis for agency is representation and a person dealing with
an agent is put upon inquiry and must discover upon his peril the authority of the agent. easily become a most convenient and effective means of injustice.
If he does not make such an inquiry, he is chargeable with knowledge of the agent's
authority and his ignorance of that authority will not be any excuse. Likewise, this Court does not find favor in the Court of Appeals' findings that "the
authority of defendant Baluyot may not have been expressly conferred upon her;
In the instant case, it has not been established that Atty. Linsangan even bothered to however, the same may have been derived impliedly by habit or custom which may
inquire whether Baluyot was authorized to agree to terms contrary to those indicated in have been an accepted practice in their company in a long period of time." A perusal of
the written contract, much less bind MMPCI by her commitment with respect to such the records of the case fails to show any indication that there was such a habit or custom
agreements. in MMPCI that allows its agents to enter into agreements for lower prices of its interment
spaces, nor to assume a portion of the purchase price of the interment spaces sold at
Atty. Linsangan should have been alerted by the fact that Baluyot failed to effect the such lower price.
transfer of rights earlier promised, and was unable to make good her written
commitment, nor convince MMPCI to assent thereto.. As properly pointed out by 3. Yes. Atty. Linsangan from instituting a separate action to recover damages from
MMPCI, as a lawyer, a greater degree of caution should be expected of Atty. Linsangan Baluyot, not as an agent of MMPCI, but in view of the latter's breach of their separate
especially in dealings involving legal documents. He did not even bother to ask for agreement. To review, Baluyot obligated herself to pay P1,455.00 in addition to Atty.
official receipts of his payments, nor inquire from MMPCI directly to ascertain the real Linsangan's P1,800.00 to complete the monthly installment payment under the contract,
status of the contract, blindly relying on the representations of Baluyot. which, by her own admission, she was unable to do due to personal financial difficulties.
It is undisputed that Atty. Linsangan issued the P1,800.00 as agreed upon, and were it
Civil Code: not for Baluyot's failure to provide the balance, Contract No. 28660 would not have been
cancelled. Thus, Atty. Linsangan has a cause of action against Baluyot, which he can
Art. 1898. If the agent contracts in the name of the principal, exceeding the scope of his pursue in another case.
authority, and the principal does not ratify the contract, it shall be void if the party with
whom the agent contracted is aware of the limits of the powers granted by the principal. Contract of agency
In this case, however, the agent is liable if he undertook to secure the principal's
ratification. - 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.
Art. 1910. The principal must comply with all the obligations that the agent may have
contracted within the scope of his authority.
Elements of Agency
As for any obligation wherein the agent has exceeded his power, the principal is not
bound except when he ratifies it expressly or tacitly. 1. consent, express or implied, of the parties to establish the relationship;
2. the object is the execution of a juridical act in relation to a third person;
Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily 3. the agent acts as a representative and not for himself; and
liable with the agent if the former allowed the latter to act as though he had full powers. 4. the agent acts within the scope of his authority.

Thus, the acts of an agent beyond the scope of his authority do not bind the principal, Elements of Estoppel:
unless he ratifies them, expressly or impliedly. Only the principal can ratify; the agent
cannot ratify his own unauthorized acts. Moreover, the principal must have knowledge 1. conduct of a party amounting to false representation or concealment of material facts
of the acts he is to ratify. or at least calculated to convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to assert;
Nevertheless, this principle does not apply if the principal's ignorance of the material 2. intent, or at least expectation, that this conduct shall be acted upon by, or at least
facts and circumstances was willful, or that the principal chooses to act in ignorance of influence, the other party; and
the facts. However, in the absence of circumstances putting a reasonably prudent man 3. knowledge, actual or constructive, of the real facts.
on inquiry, ratification cannot be implied as against the principal who is ignorant of the
facts.
4. See first case Eurotech v. Cuison
If MMPCI was aware of the arrangement, it would have refused the latter's check
payments for being insufficient.

Neither is there estoppel in the instant case. While there is no more question as to the 4. Tuazon v. Hiers of Ramos
agency relationship between Baluyot and MMPCI, there is no indication that MMPCI let
the public, or specifically, Atty. Linsangan to believe that Baluyot had the authority to TUAZON V. HEIRS OF BARTOLOME RAMOS
alter the standard contracts of the company.
463 SCRA 408
Even assuming that Atty. Linsangan was misled by MMPCI's actuations, he still cannot
invoke the principle of estoppel, as he was clearly negligent in his dealings with Baluyot, FACTS:
and could have easily determined, had he only been cautious and prudent, whether said
agent was clothed with the authority to change the terms of the principal's written Respondents alleged that on a relevant date, spouses Tuazon purchased from their
contract. Estoppel must be intentional and unequivocal, for when misapplied, it can predecessor-in-interest cavans of rice. That on the total number of cavans, only a certain
portion has been paid for. In payment thereof, checks have been issued but on presentment, the Issues:
checks were Whether TWSI is a duly authorized ticketing agent of Pan-Am
dishonored. Respondents alleged that since spouses anticipated the forthcoming suit Whether Tagunicar is a sub-agent of TWSI
against them, they made fictitious sales over their properties. As defense, the spouses averred
that it was the wife of Bartolome who effected the sale and that Maria was merely her agent in Held:
selling the rice. The true buyer of the cavans was Santos. The spouses further averred that when No. In a contract of agency, a person binds himself to render some service or to do something in
Ramos got the check from Santos, she took it in good faith and didn't knew that the same were representation or on behalf of another, with the consent or authority of the latter.
unfunded.
Elements of agency are:
HELD: 1. Consent of the parties to establish the relationship
2. Object is the execution of the juridical act in relation to a third person
First, there is no contract of agency. 3. Agent acts as a representative and not for himself
4. Agent acts within the scope of his authority.
If it was truly the intention of the parties to have a contract of agency, then when the
spouses sued Santos on a separate civil action, they should have instituted the same on behalf The Court upon taking scrutiny of the facts found that Tagunicar was only engaged in a contract
and for the respondents. They didn't do so. The filing in their own names negate their claim that of sale. Tagunicar when she pays TWSI, she deducts her commissions in advance and gives the
they acted as net amount. There was nothing in the records to show that Tagunicar was employed by Pan Am
mere agents in selling the rice. as its agent except the bare allegations of the petitioner.

Second, the spouses are liable on the check. 6. Orient Air Service vs. Court of Appeals
As indorser, Tuazon warranted that upon due presentment, according to
their tenor, and that in case they were dishonored, she would pay the PADILLA, J.:
corresponding amount. After the instrument is dishonored by non-
payment, indorsers cease to be merely secondarily liable. They became Facts:
principal debtors whose liability becomes identical to that of the original
obligor. The holder of a negotiable instrument need not even proceed On 15 January 1977, American Airlines, Inc. and Orient Air Services and Hotel Representatives,
against the maker before suing the indorser. Santos is not an indispensable party entered into a General Sales Agency Agreement, whereby the American Air authorized the Orient
to the suit against the spouses. Air to act as its exclusive general sales agent within the Philippines for the sale of air passenger
transportation.
5. Yu neg Cho v. Pan American World Airways
On 11 May 1981, alleging that Orient Air had reneged on its obligations under the Agreement by
Facts: failing to promptly remit the net proceeds of sales for the months of January to March 1981,
Yu Eng Cho is the owner of Young Hardware Co. and Achilles Marketing. In connection to his American Air undertook the collection of the proceeds of tickets sold originally by Orient Air and
business, he travels to Malaysia, Taipei, and Hong Kong. On 1976 July 10, Cho bought tickets terminated the Agreement in accordance with Paragraph 13. On 15 May 1981, American Air
from Tagunicar who represented herself as an agent of Tourist World Services, Inc – however, instituted suit against Orient Air with the Court of First Instance of Manila, for Accounting with
Tagunicar was only a travel solicitor who assisted passengers with their documents. TWSI Preliminary Attachment or Garnishment, Mandatory Injunction and Restraining Order averring the
destinations are Hong Kong, Tokyo, San Francisco, for PhP 25,000. The purpose of the purchase basis for the termination of the Agreement as well as therein Orient Air’s previous record of failures
of tickets to New Jersey was to buy two lines of infrared heating system processing textured plastic "to promptly settle past outstanding refunds of which there were available funds in the possession
article. of the defendant, . . . to the damage and prejudice of plaintiff."

On the said date, only the flight from Manila to Hong Kong to Tokyo were confirmed. The flight Orient Air denied the material allegations of the complaint with respect to plaintiff's entitlement to
from Tokyo to San Francisco was on request. Per instruction of Tagunicar, Cho returned after a alleged unremitted amounts, contending that after application thereof to the commissions due it
few dats fro the confirmation of the Tokyo-San Francisco segment. Tagunicar informed the CHos under the Agreement, American Air in fact still owed Orient Air a balance in unpaid overriding
that their flight were confirmed and attached the confirmation stickers on their tickets. commissions. Further, the Orient Air contended that the actions taken by American Air in the
course of terminating the Agreement as well as the termination itself were untenable, Orient Air
1978 July 23, the Chos left for Hong Kong and stayed their for five days. Upon their arrival at claiming that American Air's precipitous conduct had occasioned prejudice to Orient Air’s business
Tokyo, they called the Pan-Am office for confirmation of their flight to San Francisco. However, interests.
they were informed that their names were not included in the manifest. Since the Chos could not
stay for more than 72 hours in Tokyo, they were then forced to fly to Taipei. Trial Court ruled in favor of Orient Air, holding the termination made by American Air as affecting
the GSA agreement illegal and improper and ordered the American Air to reinstate Orient Air as
Upon reaching Taipei, there were not flights available, the Chos were then forced to fly back to its general sales agent for passenger transportation in the Philippines. American Air was also
Manila. Because of the Chos’s failure to aarive at the Radiant Heat Enterprise’s premises, the ordered to pay defendant the balance of the overriding commission on total flown revenue.
company cancelled Chos’s option to purchase the two lines of infrared heating systems. This lead
to Cho being unable to realizes a profit of PhP 300,000 to PhP 400,000. On appeal, the Court of Appeals affirmed the findings of the court. Motion of Reconsideration was
denied.
The Chos’s then filed a case holding Pan-Am liable as principals for the actions of Tagunicar.
Issue REGALADO, J.:

1. Whether Orient Air only has a right to 3% of the overriding commission of the sales it Facts:
made;
2. Whether the termination by American Air of their agreement was proper; The Bordadors were engaged in the business of purchase and sale of jewelry and Luz was their
3. Whether CA erred in restoring Orient Air as the General Sales Agent of American Air regular customer. On several occasions during the period from April 27, 1987 to September 4,
1987, Deganos, the brother of Luz, received several pieces of gold and jewelry from the
Held Bordadors. These items and their prices were indicated in seventeen receipts, eleven of the
receipts stated that they were received for a certain Aquino, a niece of Deganos, and the remaining
1. No. The Court found merit in the contention of Orient Air that the Agreement, when six indicated that they were received forx Luz.
interpreted in in its whole, entitles it to the 3% overriding commission based on total
revenue. Deganos was supposed to sell the items at a profit and remit the proceeds and return the unsold
items to petitioners. Deganos remitted only a fraction of the value of the jewelries. He neither paid
As the designated exclusive General Sales Agent of American Air, Orient Air was the balance of the sales proceeds, nor did he return any unsold item to the Bordados. The
responsible for the promotion and marketing of American Air's services for air Bordados eventually filed a complaint in the barangay court against Deganos to recover the money
passenger transportation, and the solicitation of sales therefor Orient Air was to be paid due.
commissions of two (2) kinds: first, a sales agency commission, based on tariff fares
and charges from sales by Orient Air when made on American Air ticket stock; and In the barangay proceedings, Luz, who was not impleaded in the case, appeared as a witness for
second, an overriding commission of 3% of tariff fares and charges for all sales of Deganos and she and her husband, together with Deganos, signed a compromise agreement with
passenger transportation over American Air services. the Bordados. In that compromise agreement, Deganos obligated himself to pay the Bordados,
on installment basis, the balance of his account plus interest thereon. However, he failed to comply
It is immediately observed that the precondition attached to the first type of commission with his undertakings.
does not obtain for the second type of commissions. The latter type of commissions
would accrue for sales of American Air services made not on its ticket stock but on the
On June 25, 1990, the Bordados instituted files a case in the Regional Trial Court of, Bulacan
ticket stock of other air carriers sold by such carriers or other authorized ticketing
against Deganos Luz for recovery of a sum of money and damages, with an application for
facilities or travel agents. To rule otherwise, i.e., to limit the basis of such overriding
preliminary attachment. Luz’s husband was impleaded therein as the spouse of Brigida.
commissions to sales from American Air ticket stock would erase any distinction
between the two (2) types of commissions and would lead to the absurd conclusion that
the parties had entered into a contract with meaningless provisions. Such an On March 29, 1994, Deganos and Luz were charged with estafa in the. That criminal case appears
interpretation must at all times be avoided with every effort exerted to harmonize the to be still pending in said trial court.
entire Agreement.
During the trial of the civil case, the Bordados claimed that Deganos acted as the agent of Luz
Also the contract of adhesion provides that a contract is to be construed against the when he received the jewelris and, because he failed to pay for the same, Luz, as principal, and
party who caused the ambiguity and could have avoided it by the exercise of a little her spouse are solidarily liable.
more care. Thus, Article 1377 of the Civil Code provides that the interpretation of
obscure words or stipulations in a contract shall not favor the party who caused the On the other hand, while Deganos admitted that he had an unpaid of a smaller amount. He further
obscurity. In this case, American Air caused its ambiguity. asserted that it was he alone who was involved in the transaction; that he neither acted as agent
for nor was he authorized to act as an agent by Luz, notwithstanding that six of the receipts
2. No. The Court found that although Orient withheld remittances, such action finds indicated that the items were received by him for the Luz. He further claimed that he never
justification from paragraph 4 of the Agreement, , which provides for remittances to delivered any of the items he received from the Bordados to Luz.
American less commissions to which Orient is entitled, and from paragraph 5(d) which
specifically allows Orient to retain the full amount of its commissions. Since, as stated
ante, Orient is entitled to the 3% override. American's premise, therefore, for the Brigida, on her part, denied that she had anything to do with the transactions between the
cancellation of the Agreement did not exist. Bordados and Deganos. She claimed that she never authorized Deganos to receive any item of
jewelry in her behalf and, for that matter, neither did she actually receive any of the articles in
3. Yes. To compel American Air to extend its personality to Orient Air would be violative of question.
the principles and essence of agency, defined by law as a contract whereby "a person
binds himself to render some service or to do something in representation or on behalf After trial, RTC found that only Deganos was liable to for the amount and damages claimed. It
of another, WITH THE CONSENT OR AUTHORITY OF THE LATTER. In an agent- held that while Luz did have transactions with the Bordados in the past, the items involved were
principal relationship, the personality of the principal is extended through the facility of already paid for and all that Luz owed the Bordados was the interest on the principal account
the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to which she had previously paid for.
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 The trial court also found that it was Lydia Bordador who indicated in the receipts that the items
law or by any court were received by Deganos for Evelyn Aquino and Luz. Said court was "persuaded that Luz was
behind Deganos," but because there was no memorandum to this effect, the agreement between
7. Bordador v. Luz the parties was unenforceable under the Statute of Frauds.
The Bordados appealed to the Court of Appeals which affirmed said judgment. Motion for requires that the assignment of a mining right be made with the prior approval of the Secretary of
reconsideration was dismissed. the Department of Environment and Natural Resources (DENR). Moreover, the Assailed
Decision pointed out that EP 133 expired by non-renewal since it was not renewed before or
Issue: after its expiration. It likewise upheld the validity of Proclamation No. 297 absent any question
against its validity. In view of this, and
considering that under Section 5 of Republic Act No. 7942, otherwise known as the “Mining Act
1. Whether the Luz spouses are liable to the Bordados for claim for money and damages of 1995,” mining operations in mineral re
as they engaged Deganos as their agent to receive jewelries on their behalf; servations may be undertaken directly by the State or through a contractor, the Court deemed
2. Whether the CA erred in ignoring the trial court’s decision that there was sufficient the issue of ownership of priority right over the contested Diwalwal Gold Rush Area as having
evidence/proof in the estafa case; been overtaken by the said proclamation. Thus, it was held in the Assailed Decision that it is
3. Whether the CA erred in holding that agency between Luz and Deganos is now within the prerogative of the Executive Department to undertake directly the mining
unenforceable under the Statute of Frauds. operations of the disputed area or to award the operations to private entities including petitioners
Apex and Balite, subject to applicable laws, rules and regulations, and provided that these
Held: private entities are qualified. Apex, for its part, filed a Motion for Clarification of the Assailed
Decision, praying that the
1. No. Agency under Article 1868 of the Civil Code provides that the basis for agency is Court elucidate on the Decision’s pronouncement that “mining operations, are
representation. There is no showing that Brigida consented to the acts of Deganos or now, therefore within the
authorized him to act on her behalf, much less with respect to the particular transactions full control of the State through the executive branch.” Moreover, Apex asks this Court to order
involved. The Bordados’s attempt to foist liability on respondent spouses through the the
supposed agency relation with Deganos is groundless and ill-advised. Mines and Geosciences Board (MGB) to accept its application for an exploration permit. Balite
echoes the same concern as that of Apex on the actual takeover by the State of the mining
Besides, it was grossly and inexcusably negligent of petitioners to entrust to Deganos, industry in the disputed area to the exclusion of the private sector. In addition, Balite prays for
not once or twice but on at least six occasions as evidenced by six receipts, several this Court to direct MGB to accept its application for an exploration permit. CamiloBanad, et al.,
pieces of jewelry of substantial value without requiring a written authorization from his likewise filed a motion for reconsideration and prayed that the disputed area be awarded to
alleged principal. A person dealing with an agent is put upon inquiry and must discover them. In the Resolution, the Court En Banc resolved to accept the instant cases.
upon his peril the authority of the agent. The Bordados were negligent in their
transactions with Deganos, cannot seek relief from the effects of their negligence by ISSUES:
conjuring a supposed agency relation between the two respondents where no evidence 1. Whether the transfer or assignment of Exploration Permit (EP) 133 by MMC to SEM was
supports such claim. validly made without violating any of the terms and conditions set forth in Presidential
Decree No. 463 and EP 133 itself.
2. No. Under Article 33 of the Civil Code provides that in cases involving alleged fraudulent
acts, a civil action for damages, entirely separate and distinct from the criminal action, 2. Whether Southeast Mindanao Mining Corp. acquired a vested right over the disputed area,
may be brought by the injured party. Such civil action shall proceed independently of which constitutes a property right protected by the Constitution.
the criminal prosecution and shall require only a preponderance of evidence.
3. Whether the assailed Decision dated 23 June 2006 of the Third Division in this case is
The civil case was instituted four years before the criminal case for estafa was filed. It contrary to and overturns the earlier Decision of this Court in Apex v. Garcia (G.R. No. 92605, 16
was the duty of the two branches of the Regional Trial Court concerned to independently July 1991, 199 SCRA 278).
proceed with the civil and criminal cases. A final judgment rendered in a civil action
absolving the defendant from civil liability is no bar to a criminal action. 4. Whether the issuance of Proclamation No. 297 declaring the disputed area as mineral
reservation outweighs the claims of SEM, Apex Mining Co. Inc. and Balite Communal Portal
The civil case may proceed independently of the criminal case especially because while Mining Cooperative over the Diwalwal Gold Rush Area.
both cases are based on the same facts, the quantum of proof required for holding the
parties liable therein differ. 5. Whether the issue of the legality/constitutionality of Proclamation No. 297 was belatedly
raised.
3. No. The Court explained neither the trial court nor the appellate court categorically
stated that there was such a contractual relation between the two respondents. The trial HELD:
court merely said that if there was such an agency existing between them, the same is
unenforceable as the contract would fall under the Statute of Frauds which requires the 1. The assailed Decision did not overturn the 16 July 1991 Decision in Apex Mining Co., Inc. v.
presentation of a note or memorandum thereof in order to be enforceable in court. That Garcia. The former was decided on facts and issues that were not attendant in the latter, such
was merely a preparatory statement of a principle of law. as the expiration of EP 133, the violation of the condition embodied in EP 133 prohibiting its
assignment, and the unauthorized and invalid assignment of EP 133 by MMC to SEM, since this
assignment was effected without the approval of the Secretary of DENR;
8. Apex Mining Co., Inc. vs. Southeast Mindanao Gold Corp
2. SEM did not acquire vested right over the disputed area because its supposed right was
FACTS: extinguished by the expiration of its exploration permit and by its violation of the condition
A motion for reconsideration was filed by SEM. The Assailed Decision held that the assignment prohibiting the assignment of EP 133 by MMC to SEM. In addition, even assuming that SEM has
of Exploration Permit (EP) 133 in favor of SEM violated one of the conditions stipulated in the a valid exploration permit, such is a mere license that can be withdrawn by the State. In fact, the
permit. It also ruled that the transfer of EP 133 violated Presidential Decree No. 463, which
same has been withdrawn by the issuance of Proclamation No. 297, which places the disputed fully withdrawn and hence, there would be no more deliveries of the commodity to STM's account.
area under the full control of the State through the Executive Department; VMC also noted that CSC had represented itself to be STM's agent as it had withdrawn the 2,000
bags "for and in behalf" of STM.
3. The approval requirement under Section 97 of Presidential Decree No. 463 applies to the
assignment of EP 133 by MMC to SEM, since the exploration permit is an interest in a mining CSC filed a complaint for specific performance, against Sy and STM. Since the Sy could not be
lease contract; served with summons, the case proceeded only against the STM. During the trial, it was
discovered that Go who testified for CSC was the same Sy who could not be reached through
4. The issue of the constitutionality and the legality of Proclamation No. 297 was raised summons. CSC did not bother to pursue its case against her, but instead used her as its witness.
belatedly, as SEM questions the same for the first time in its Motion for Reconsideration. Even if
the issue were to be entertained, the said proclamation is found to be in harmony with the CSC's complaint alleged that STM had fully paid VMC for the sugar covered by SLDR. Therefore,
Constitution and other existing statutes; the VMC had no justification for refusing delivery of the sugar. CSC prayed that STM be ordered
to deliver the 23,000 bags and sought the award of unrealized profits, exemplary damages,
5. The motion for reconsideration of CamiloBanad, et al. cannot be passed upon because they attorney's fees and litigation expenses.
are not parties to the instant cases;

6. The prayers of Apex and Balite asking the Court to direct the MGB to accept their VMC’s primary defense a quo was that it was an unpaid seller for the 23,000 bags. Since STM
applications for exploration permits cannot be granted, since it is the Executive Department that had already drawn in full all the sugar corresponding to the amount of its cleared checks, it could
has the prerogative to accept such applications, if ever it decides to award the mining operations no longer authorize further delivery of sugar to CSC. VMC also contended that it had no privity of
in the disputed area to a private entity; contract with CSC.

VMC explained that the SLDRs, which it had issued were delivery receipts. The SLDRs prescribed
delivery of the sugar to the party specified therein and did not authorize the transfer of said party's
rights and interests.
9. Victorias Milling vs. CA
VMC also alleged that CSC did not pay for the SLDR and was actually STM's co-conspirator to
defraud it through a misrepresentation that CSC was an innocent purchaser for value and in good
QUISUMBING, J.: faith. VMC then prayed CSC be ordered to pay moral damages, exemplary damages and
attorney's fees. VMC also prayed that STM be to pay it exemplary damages and attorney's fees.
Facts:
Trial court ruled in favor of CSC. The trial court was convinced that Go paid the purchase price for
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co., Inc., (VMC). the 25,000 bags of sugar covered by the SLDR and that the checks issued by STM to pay for their
In the course of their dealings, VMC issued several Shipping List/Delivery Receipts (SLDRs) to own purchased bags of sugar also covered the same SLDR. VMC also also stated that the SLDR
STM as proof of purchases. On October 16, 1989, a SLDRcovers 25,000 bags of sugar. The in concern has been fully paid.
transaction it covered was a "direct sale." The SLDR also contains an additional note which reads:
"subject for (sic) availability of a (sic) stock at NAWACO (warehouse)." VMC appealed to the Court of Appeals. VMC claimed that it can only release bags if sugar had
their checks cleared. With respect to the SLDR in dispute, STM had already withdrawn all its sugar
On October 25, 1989, STM sold to Consolidated Sugar Corporation (CSC) its rights in subject quota as such, CSC was already precluded from seeking delivery of the 23,000 bags of sugar.
SLDR. CSC issued one check dated October 25, 1989 and three checks postdated November 13, CSC countered that the sugar purchases involving SLDR were separate and independent
1989 in payment. That same day, CSC wrote VMC that it had been authorized by STM to withdraw transactions from the ones entered into by STM at a latter date.
the sugar covered by the SLDR. Enclosed in the letter were a copy of SLDR and a letter of
authority from STM authorizing CSC to withdraw the 25,000 bags of refined sugar. CA decided that VMC was to deliver to CSC 12,500 bags of sugar and to pay CSC 10% of the
undelivered bags of refined sugar. A Motion of Reconsideration was made and VMC was made
On October 27, 1989, STM issued 16 checks with VMC as payee. The VMC, in turn, issued Official to deliver 23,000 bags of sugar and cost of suit
Receipt acknowledging receipt of the said checks in payment of 50,000 bags.
Issues:
CSC surrendered SLDR to the VMC’s NAWACO warehouse and was allowed to withdraw sugar.
However, after 2,000 bags had been released, VMC refused to allow further withdrawals of sugar. 1. Whether the Court of Appeals erred in not ruling that CSC was an agent of STM and
CSC then sent VMC a letter dated January 23, 1990 informing it that SLDR had been "sold and hence, estopped to sue upon SLDR as an assignee;
endorsed" to it but that it had been refused further withdrawals of sugar from VMC’s warehouse 2. Whether the Court of Appeals erred in applying the law on compensation to the as to
despite the fact that only 2,000 bags had been withdrawn. CSC thus inquired when it would be preclude petitioner from offsetting its credits on the other SLDRs;
allowed to withdraw the remaining 23,000 bags. 3. Whether the Court of Appeals erred in not ruling that the sale of sugar SLDR was a
conditional sale or a contract to sell and hence freed VMC from further obligations;
VMC replied that it could not allow any further withdrawals of sugar against SLDR because STM 4. Whether the Court of Appeals committed an error of law in not applying the "clean hands
had already withdrawn all the sugar covered by the cleared checks. CSC then sent VMC a letter doctrine" to preclude CSC from seeking judicial relief.
demanding the release of the balance of 23,000 bags.
Held:
VMC reiterated that all the sugar corresponding to the amount of STM's cleared checks had been
1. No. The issue was raised for the first time on appeal It is settled that an issue which
was not raised during the trial in the court below could not be raised for the first time on
appeal as to do so would be offensive to the basic rules of fair play, justice, and due As to the fourth issue, petitioner submits that STM and private respondent CSC have entered into
process. The Court of Appeals opted to address this issue, hence, the SC has discretion a conspiracy to defraud it of its sugar. This conspiracy is allegedly evidenced by: (a) the fact that
to tackle the issue or not. STM's selling price to CSC was below its purchasing price; (b) CSC's refusal to pursue its case
Also, the basis of agency is representation. This Court has ruled that where the relation against Teresita Ng Go; and (c) the authority given by the latter to other persons to withdraw sugar
of agency is dependent upon the acts of the parties, the law makes no against SLDR No. 1214M after she had sold her rights under said SLDR to CSC. Petitioner prays
presumption of agency, and it is always a fact to be proved, with the burden of that the doctrine of "clean hands" should be applied to preclude CSC from seeking judicial relief.
proof resting upon the persons alleging the agency, to show not only the fact of However, despite careful scrutiny, we find here the records bare of convincing evidence
its existence, but also its nature and extent whatsoever to support the petitioner's allegations of fraud. We are now constrained to deem this
matter purely speculative, bereft of concrete proof.
Here, VMC failed to sufficiently establish the existence of an agency relation between
CSC and STM. The fact that STM authorized withdrawal of sugar by CSC "for and in WHEREFORE, the instant petition is DENIED for lack of merit. Costs against petitioner.
our (STM's) behalf" should not be eyed as pointing to the existence of an agency
relation ...It should be viewed in the context of all the circumstances obtaining. Although
it would seem STM represented CSC as being its agent by the use of the phrase "for SO ORDERED.
and in our (STM's) behalf" the matter was cleared when on 23 January 1990, CSC
informed VMC that SLDFR No. 1214M had been "sold and endorsed" to it by STM
(Exhibit I, Records, p. 78). Further, CSC has shown that the 25, 000 bags of sugar
covered by the SLDR No. 1214M were sold and transferred by STM to it ...A 9. Dominion Insurance v. CA
conclusion that there was a valid sale and transfer to plaintiff-appellee may, therefore,
be made thus capacitating CSC to sue in its own name. A conclusion that there was
FACTS:
a valid sale and transfer to plaintiff-appellee may, therefore, be made thus capacitating
Rodolfo Guevarra (Guevarra) filed a civil case for sum of money against Dominion Insurance Corp.
CSC to sue in its own name.
(Dominion) for the amount advanced by Guevarra in his capacity as manager of defendant to
satisfy certain claims filed by defendant’s client.
2. No. the SLDR in dispute is a separate and independent transaction Evidence on record
shows, without being rebutted, that VMC had been paid for the sugar purchased under
The pre-trial was always postponed, and during one of the pre-trial conference dominion failed to
SLDR. VMC had the obligation to deliver said commodity to STM or its assignee. Since
arrive therefore the court declared them to be in default. Dominion filed several Motions to Lift
said sugar had been fully paid for, vmc and CSC, as assignee of STM, were not mutually
Order of Default but was always denied by the court. The RTC rendered its decision making
creditors and debtors of each other and offsetting could not be done
Dominion liable to repay Guevarra for the sum advanced and other damages and fees. Dominion
appealed but CA affirmed the decision of RTC and denied the appeal of Dominion.
3. No. The SLDR contained terms and conditions that provided that VMC transferred title
to the sugar to the buyer or his assignee upon payment of the purchase price. Said
ISSUE:
terms clearly establish a contract of sale, not a contract to sell. VMC is now estopped
(a) W/N Guevarra acted within his authority as agent of petitioner.
from alleging the contrary.
(b) W/N Guevarra must be reimbursed for the amount advanced.
Agency HELD:
(a) NO. Even though the contact entered into by Guevarra and Dominion was with the word
Civil Code Article 1868 “special” the contents of the document was actually a general agency. A general power permits
the agent to do all acts for which the law does not require a special power and the contents in the
By the contract of agency a person binds himself to render some service or to do something in document did not require a special power of attorney.
representation or on behalf of another, with the consent or authority of the latter."
Art 1878 of the civil code provides instances when a special power of attorney is required.:
The basis of agency is representation. 1) To make such payment as are not usually considered as acts of administration.
15) any other act of dominion
On the part of the principal, there must be an actual intention to appoint or an intention naturally
The payment of claims is not an act of administration which requires a special power of attorney
inferable from his words or actions; and on the part of the agent, there must be an intention to
before Guevarra could settle the insurance claims of the insured.
accept the appointment and act on it, and in the absence of such intent, there is generally no
agency. One factor which most clearly distinguishes agency from other legal concepts is
Also Guevarra was instructed that the payment for the insured must come from the revolving fund
control; one person - the agent - agrees to act under the control or direction of another - the
or collection in his possession, Gueverra should not have paid the insured through his own
principal.
capacity. Under 1918 of civil code an agent who acted in contravention of the principal’s instruction
the principal will not be liable for the expenses incurred by the agent.
"This Court has ruled that where the relation of agency is dependent upon the acts of the
parties, the law makes no presumption of agency, and it is always a fact to be proved, with (b) YES. Even if the law on agency prohibits Gueverra from obtaining reimbursement his right to
the burden of proof resting upon the persons alleging the agency, to show not only the fact recover may be justified under the article 1236 of the civil code. [1] Thus Guevarra must be
of its existence, but also its nature and extent reimbursed but only to the extent that Dominion has benefited without interest or demand for
damages.

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