Nicanora Bucton v. Rural Bank of El Salvador, Inc. v.

Erlinda Concepcion (third-party defendant)

FACTS:

Petitioner claims that she owns the parcel of land. The title of the same was borrowed by Concepcion on
the pretext that she was going to show it to an interested buyer. Subsequently, Concepcion obtained a
loan from respondent bank, and as security for the said loan, Concepcion mortgaged Petitioner’s house
and lot using a special power of attorney (SPA) allegedly executed by petitioner in her favor. But
Concepcion failed to settle the loan, hence, the bank foreclosed the house and lot and in the end, had it
in an auction sale.

Petitioner filed with the Regional Trial Court (RTC) a complaint against Concepcion and respondent bank
on the ground that the mortgage foreclosure should be annuled since the SPA was forged by
Concepcion.

The RTC ruled in favor of petitioner. The respondent bank elevated the case to the Court of Appeals (CA)
wherein the appellate court reversed the RTC’s decision stating that since the SPA was notarized, it
enjoys the presumption of regularity. Hence, this present case.

ISSUE: Whether or not Petitioner should be held liable for the loan entered into by Concepcion in her
own name?

RULING: The court held No.

That under settled jurisprudence, the court held that “in order to bind the principal by a deed executed
by an agent, the deed must upon on its face purport to be made, signed and sealed in the name of the
principal”. Hence, the fact that the agent was authorized to mortgage the property is not sufficient to
bind the principal, unless the deed was executed and signed by the agent for and in behalf of the
principal.

However in this present case, Concepcion, as the agent, failed to indicate in the mortgage that she was
acting for and in behalf of her principal. The contract explicitly shows that it was enetered into by
Concepcion in her own name and in her own personal capacity. Thus, consistent with the law of agency
and jurisprudence, petitioner cannot be bound by the acts of Concepcion.
G.R. No. L-30573 October 29, 1971

VICENTE M. DOMINGO, represented by his heirs, ANTONINA RAYMUNDO VDA. DE DOMINGO, RICARDO,
CESAR, AMELIA, VICENTE JR., SALVADOR, IRENE and JOSELITO, all surnamed DOMINGO, petitioners-
appellants,

vs.

FACTS:

In a document Exhibit "A" executed on June 2, 1956, Vicente M. Domingo granted Gregorio Domingo, a
real estate broker, the exclusive agency to sell his lot No. 883 of Piedad Estate with an area of about
88,477 square meters at the rate of P2.00 per square meter (or for P176,954.00) with a commission of
5% on the total price, if the property is sold by Vicente or by anyone else during the 30-day duration of
the agency or if the property is sold by Vicente within three months from the termination of the agency
to apurchaser to whom it was submitted by Gregorio during the continuance of the agency with notice
to Vicente.

On June 3, 1956, Gregorio authorized the intervenor Teofilo P. Purisima to look for a buyer, promising
him one-half of the 5% commission.

Thereafter, Teofilo Purisima introduced Oscar de Leon to Gregorio as a prospective buyer.

After several conferences between Gregorio and Oscar de Leon, the latter raised his offer to
P109,000.00 on June 20, 1956 as evidenced by Exhibit "C", to which Vicente agreed by signing Exhibit
"C".

Upon demand of Vicente, Oscar de Leon issued to him a check in the amount of P1,000.00 as earnest
money, after which Vicente advanced to Gregorio the sum of P300.00. Oscar de Leon confirmed his
former offer to pay for the property at P1.20 per square meter in another letter, Exhibit "D".
Subsequently, Vicente asked for an additional amount of P1,000.00 as earnest money, which Oscar de
Leon promised to deliver to him.

Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina the sum of One Thousand Pesos
(P1,000.00) for succeeding in persuading Vicente to sell his lot at P1.20 per square meter or a total in
round figure of One Hundred Nine Thousand Pesos (P109,000.00). This gift of One Thousand Pesos
(P1,000.00) was not disclosed by Gregorio to Vicente
When Oscar did not see him after several weeks, Gregorio sensed something fishy. So, he went to
Vicente and read a portion of Exhibit "A" marked habit "A-1" to the effect that Vicente was still
committed to pay him 5% commission, if the sale is consummated within three months after the
expiration of the 30-day period of the exclusive agency in his favor from the execution of the agency
contract on June 2, 1956 to a purchaser brought by Gregorio to Vicente during the said 30-day period.

Upon thus learning that Vicente sold his property to the same buyer, Oscar de Leon and his wife, he
demanded in writting payment of his commission on the sale price of One Hundred Nine Thousand
Pesos (P109,000.00), Exhibit "H". He also conferred with Oscar de Leon, who told him that Vicente went
to him and asked him to eliminate Gregorio in the transaction and that he would sell his property to him
for One Hundred Four Thousand Pesos (P104,000.0 In Vicente's reply to Gregorio's letter, Exhibit "H",
Vicente stated that Gregorio is not entitled to the 5% commission because he sold the property not to
Gregorio's buyer, Oscar de Leon, but to another buyer, Amparo Diaz, wife of Oscar de Leon.

ISSUE: Whether the failure on the part of Gregorio to disclose to Vicente the payment to him by Oscar
de Leon of the amount of One Thousand Pesos (P1,000.00) as gift or "propina" for having persuaded
Vicente to reduce the purchase price from P2.00 to P1.20 per square meter, so constitutes fraud as to
cause a forfeiture of his commission on the sale price;

HELD: The duties and liabilities of a broker to his employer are essentially those which an agent owes to
his principal. 1

Consequently, the decisive legal provisions are in found Articles 1891 and 1909 of the New Civil Code.

Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the principal
whatever he may have received by virtue of the agency, even though it may not be owing to the
principal.

Every stipulation exempting the agent from the obligation to render an account shall be void.

xxx xxx xxx

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

The aforecited provisions demand the utmost good faith, fidelity, honesty, candor and fairness on the
part of the agent, the real estate broker in this case, to his principal, the vendor. The law imposes upon
the agent the absolute obligation to make a full disclosure or complete account to his principal of all his
transactions and other material facts relevant to the agency, so much so that the law as amended does
not countenance any stipulation exempting the agent from such an obligation and considers such an
exemption as void. The duty of an agent is likened to that of a trustee. This is not a technical or arbitrary
rule but a rule founded on the highest and truest principle of morality as well as of the strictest justice. 2

Hence, an agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the
vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the
principal and forfeits his right to collect the commission from his principal, even if the principal does not
suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the
agency is a gratuitous one, or that usage or custom allows it; because the rule is to prevent the
possibility of any wrong, not to remedy or repair an actual damage. 3 By taking such profit or bonus or
gift or propina from the vendee, the agent thereby assumes a position wholly inconsistent with that of
being an agent for hisprincipal, who has a right to treat him, insofar as his commission is concerned, as if
no agency had existed. The fact that the principal may have been benefited by the valuable services of
the said agent does not exculpate the agent who has only himself to blame for such a result by reason of
his treachery or perfidy.

In the case at bar, defendant-appellee Gregorio Domingo as the broker, received a gift or propina in the
amount of One Thousand Pesos (P1,000.00) from the prospective buyer Oscar de Leon, without the
knowledge and consent of his principal, herein petitioner-appellant Vicente Domingo. His acceptance of
said substantial monetary gift corrupted his duty to serve the interests only of his principal and
undermined his loyalty to his principal, who gave him partial advance of Three Hundred Pesos (P300.00)
on his commission. As a consequence, instead of exerting his best to persuade his prospective buyer to
purchase the property on the most advantageous terms desired by his principal, the broker, herein
defendant-appellee Gregorio Domingo, succeeded in persuading his principal to accept the counter-
offer of the prospective buyer to purchase the property at P1.20 per square meter or One Hundred Nine
Thousand Pesos (P109,000.00) in round figure for the lot of 88,477 square meters, which is very much
lower the the price of P2.00 per square meter or One Hundred Seventy-Six Thousand Nine Hundred
Fifty-Four Pesos (P176,954.00) for said lot originally offered by his principal.
SPS. VILLARUZ v. LBP

Sps. Villaruz v. LBP and Register of Deeds of Davao City

G.R. No. 192602

January 18, 2017

FACTS :

Paula Agbisit (Agbisit), mother of petitioner May S. Villaluz (May), requested the latter to provide her
with collateral for a loan. At the time, Agbisit was the chairperson of Milflores Cooperative and she
needed P600,000 to P650,000 for the expansion of her backyard cut flowers business. May convinced
her husband, Johnny Villaluz to allow Agbisit to use their land, located in Calinan, Davao City and
covered by Transfer Certificate of Title as collateral. Spouses Villaluz executed a Special Power of
Attorney in favor of Agbisit authorizing her to, among others, "negotiate for the sale, mortgage, or other
forms of disposition a parcel of land covered by TCT, The one-page power of attorney neither specified
the conditions under which the special powers may be exercised nor stated the amounts for which the
subject land may be sold or mortgaged. Unfortunately, Milflores Cooperative was unable to pay its
obligations to Land Bank. Thus, Land Bank filed a petition for extra-judicial foreclosure sale with the
Office of the Clerk of Court of Davao City. The Spouses Villaluz filed a complaint with the Regional Trial
Court (RTC) of Davao City seeking the annulment of the foreclosure sale. The sole question presented
before the RTC was whether Agbisit could have validly delegated her authority as attorney-in-fact to
Milflores Cooperative.

On appeal, the CA affirmed the RTC Decision.

ISSUES:

WO/N agent has the power to appoint a substitute

RULING:

Although the law presumes that the agent is authorized to appoint a substitute, it also imposes an
obligation upon the agent to exercise this power conscientiously.
The Spouses Villaluz understandably feel shorthanded because their property was foreclosed by reason
of another person's inability to pay. However, they were not coerced to grant a special power of
attorney in favor of Agbisit. Nor were they prohibited from prescribing conditions on how such power
may be exercised. Absent such express limitations, the law recognizes Land Bank's right to rely on the
terms of the power of attorney as written.

The decision was denied and the higher court Affirmed the CA decision dated September 22, 2009 and
Resolution dated May 26, 2010.

Eurotech Industrial Technologies, Inc. v. Edwin Cuizon and Erwin Cuizon

G.R. No. 167552 April 23, 2007

FACTS:

Eurotech is engaged in the business of importation and distribution of various European

industrial equipment. It has as one of its customers Impact Systems Sales which is a sole proprietorship
owned by Erwin Cuizon. Petitioner sold to Impact Systems various products allegedly amounting to
P91,338.00. Cuizons sought to buy from Eurotech 1 unit of sludge pump valued at P250,000.00 with
Cuizons making adown payment of P50,000.00. When the sludge pump arrived from the United
Kingdom, Eurotechrefused to deliver the same to Cuizons without their having fully settled their
indebtedness toEurotech. Thus, Edwin Cuizon and Alberto de Jesus, general manager of Eurotech,
executed a Deedof Assignment of receivables in favor of Eurotech.

Respondents, despite the existence of the Deed of Assignment, proceeded to collect from Toledo
Power Company the amount of P365,135.29. upon learning this,Eurotech made several demands upon
Cuizons to pay their obligations. As a result, Cuizons were able to make partial payments to Eurotech.
Cuizons’ total obligations stood at P295,000.00 excluding interests and attorney’s fees.

Edwin Cuizon alleged that he is not a real party in interest in this case. According to him, he was
acting as mere agent of his principal, which was the Impact Systems, in his transaction with Eurotech
and the latter was very much aware of this fact.

ISSUE:

Whether or not Edwin exceeded his authority when he signed the Deed of Assignment thereby
binding himself personally to pay the obligations to Eurotech.
RULING:

No.

Edwin insists that he was a mere agent of Impact Systems which is owned by Erwin and that his
status as such is known even to Eurotech as it is alleged in the Complaint that he is being sued in his
capacity as the sales manager of the said business venture. Likewise, Edwin points to the Deed of
Assignment which clearly states that he was acting as a representative of Impact Systems in said
transaction.

In a contract of agency, a person binds himself to render some service or to do something in

representation or on behalf of another with the latter’s consent. Its purpose is to extend the personality
of the principal or the party for whom another acts and from whom he or she derives the authority to
act. The basis of agency is representation, that is, the agent acts for and on behalf of the principal on
matters within the scope of his authority and said acts have the same legal effect as if they were
personally executed by the principal.

An agent, who acts as such, is not personally liable to the party with whom he contracts. There are
2 instances when an agent becomes personally liable to a third person. The first is when he expressly
binds himself to the obligation and the second is when he exceeds his authority. In the last instance, the
agent can be held liable if he does not give the third party sufficient notice of his powers. Edwin does
not fall within any of the exceptions contained in Art. 1897.

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.

Edwin Cuizon acted well-within his authority when he signed the Deed of Assignment. Eurotech refused
to deliver the 1 unit of sludge pump unless it received, in full, the payment for Impact Systems’
indebtedness. Impact Systems desperately needed the sludge pump for its business since after it paid
the amount of P50,000.00 as down payment it still persisted in negotiating with Eurotech which
culminated in the execution of the Deed of Assignment of its receivables from Toledo Power Company.
The significant amount of time spent on the negotiation for the sale of the sludge pump underscores
Impact Systems’ perseverance to get hold of the said equipment. Edwin’s participation in the Deed of
Assignment was “reasonably necessary” or was required in order for him to protect the business of his
principal