LIM VS.

SABAN
FACTS:
1. The late Eduardo Ybaez (Ybaez), the owner of a 1,000-square meter lot in Cebu City (the
"lot"), entered into an Agreement and Authority to Negotiate and Sell (Agency Agreement)
with respondent Florencio Saban (Saban) on February 8, 1994. Under the Agency Agreement,
Ybaez authorized Saban to look for a buyer of the lot for Two Hundred Thousand Pesos
(P200,000.00) and to mark up the selling price to include the amounts needed for payment of
taxes, transfer of title and other expenses incident to the sale, as well as Sabans commission for
the sale.3
2. The price of the lot as indicated in the Deed of Absolute Sale is Two Hundred Thousand Pesos
(P200,000.00).4 It appears, however, that the vendees agreed to purchase the lot at the price
of Six Hundred Thousand Pesos (P600,000.00),
3. . After the sale, Lim remitted to Saban the amounts of One Hundred Thirteen Thousand Two
Hundred Fifty Seven Pesos (P113,257.00) for payment of taxes due on the transaction as well as
Fifty Thousand Pesos (P50,000.00) as brokers commission.5 Lim also issued in the name of
Saban four postdated checks in the aggregate amount of Two Hundred Thirty Six Thousand
Seven Hundred Forty Three Pesos (P236,743.00).
4. Ybaez sent a letter dated June 10, 1994 addressed to Lim. In the letter Ybaez asked Lim to
cancel all the checks issued by her in Sabans favor and to "extend another partial payment" for
the lot in his (Ybaezs) favor.6
5. Saban alleged that Ybaez told Lim that he (Saban) was not entitled to any commission for
the sale since he concealed the actual selling price of the lot from Ybaez and because he
was not a licensed real estate broker. Ybaez was able to convince Lim to cancel all four
checks.
6. Ybaez claimed that Saban was not entitled to any commission because he concealed the actual
selling price from him and because he was not a licensed real estate broker.
7. Lim, for her part, argued that she was not privy to the agreement between Ybaez and Saban,
and that she issued stop payment orders for the three checks because Ybaez requested her to
pay the purchase price directly to him, instead of coursing it through Saban. She also alleged that
she agreed with Ybaez that the purchase price of the lot was only P200,000.00.

ISSUE: whether Saban is entitled to receive his commission from the sale; and, assuming that
Saban is entitled thereto, whether it is Lim who is liable to pay Saban his sales commission.

HELD: The Court affirms the appellate courts finding that the agency was not revoked since Ybaez
requested that Lim make stop payment orders for the checks payable to Saban only after the
consummation of the sale on March 10, 1994. At that time, Saban had already performed his obligation as
Ybaezs agent when, through his (Sabans) efforts, Ybaez executed the Deed of Absolute Sale of the
lot with Lim and the Spouses Lim.
To deprive Saban of his commission subsequent to the sale which was consummated through his
efforts would be a breach of his contract of agency with Ybaez which expressly states that
Saban would be entitled to any excess in the purchase price after deducting the P200,000.00 due
to Ybaez and the transfer taxes and other incidental expenses of the sale. 22
the contract of agency very clearly states that Saban is entitled to the excess of the mark-up of the
price of the lot after deducting Ybaezs share of P200,000.00 and the taxes and other incidental
expenses of the sale.

Lims act of issuing the four checks amounting to P236,743.00 in Sabans favor belies her claim that she
and her co-vendees did not agree to purchase the lot at P600,000.00. If she did not agree thereto, there
would be no reason for her to issue those checks which is the balance of P600,000.00 less the amounts
of P200,000.00 (due to Ybaez), P50,000.00 (commission), and the P113,257.00 (taxes). The only
logical conclusion is that Lim changed her mind about agreeing to purchase the lot at P600,000.00
after talking to Ybaez and ultimately realizing that Sabans commission is even more than what
Ybaez received as his share of the purchase price as vendor
The appellate court therefore had sufficient basis for concluding that Ybaez and Lim connived to deprive
Saban of his commission by dealing with each other directly and reducing the purchase price of the lot
and leaving nothing to compensate Saban for his efforts.
Considering the circumstances surrounding the case, and the undisputed fact that Lim had not yet paid
the balance of P200,000.00 of the purchase price of P600,000.00, it is just and proper for her to pay
Saban the balance of P200,000.00.
Furthermore, since Ybaez received a total of P230,000.00 from Lim, or an excess of P30,000.00 from
his asking price of P200,000.00, Saban may claim such excess from Ybaezs estate, if that remedy is
still available,32 in view of the trial courts dismissal of Sabans complaint as against Ybaez, with Sabans
express consent, due to the latters demise on November 11, 1994. 33

WHI. VS. RECCI.

FACTS:
1. The respondent Roxas Electric and Construction Company, Inc. (RECCI), formerly the Roxas
Electric and Construction Company, was the owner of two parcels of land,
2. At a special meeting on May 17, 1991, the respondent's Board of Directors approved a resolution
authorizing the corporation, through its president, Roberto B. Roxas, to sell Lot
3. terms and conditions which he deemed most reasonable and advantageous to the
corporation; and to execute, sign and deliver the pertinent sales documents and receive
the proceeds of the sale for and on behalf of the company.
4. Roxas, as President of RECCI, as vendor, and Dy, as President of WHI, as vendee, executed a
contract to sell in which RECCI bound and obliged itself to sell to Dy Lot No. 491-A-3-B-2 covered
by TCT No. 78086 for P7,213,000.6 On September 5, 1991, a Deed of Absolute Sale 7 in favor of
WHI was issued, under which Lot No. 491-A-3-B-2 covered by TCT No. 78086 was sold for
P5,000,000, receipt of which was acknowledged by Roxas under the following terms and
conditions:
5. The Vendor agree (sic), as it hereby agrees and binds itself to give Vendee the beneficial use of
and a right of way from Sumulong Highway to the property herein conveyed consists of 25 square
meters wide to be used as the latter's egress from and ingress to and an additional 25 square
meters in the corner of Lot No. 491-A-3-B-1, as turning and/or maneuvering area for Vendee's
vehicles.
6. The Vendor agrees that in the event that the right of way is insufficient for the Vendee's use (ex
entry of a 45-foot container) the Vendor agrees to sell additional square meters from its current
adjacent property to allow the Vendee full access and full use of the property.

7. WHI complained to Roberto Roxas that the vehicles of RECCI were parked on a portion of the
property over which WHI had been granted a right of way.
8. On April 15, 1992, the WHI wrote the RECCI, reiterating its verbal requests to purchase a portion
of the said lot as provided for in the deed of absolute sale, and complained about the latter's
failure to eject the squatters within the three-month period agreed upon in the said deed
9. June 17, 1992, the WHI filed a complaint against the RECCI with the Regional Trial Court of
Makati, for specific performance
ISSUE : WON RECCI IS BOUND WITH THE STIPULATION / AGREEEMENT BETWEEN ROXAS AND
WJI
HELD: NO.

1. Generally, the acts of the corporate officers within the scope of

their authority are binding on the corporation. However, under
Article 1910 of the New Civil Code, acts done by such officers
beyond the scope of their authority cannot bind the corporation
unless it has ratified such acts expressly or tacitly, or is
estopped from denying them:

2.

3.

Art. 1910. The principal must comply with all the obligations which the agent may have contracted
within the scope of his authority.
As for any obligation wherein the agent has exceeded his power, the principal is not bound except
when he ratifies it expressly or tacitly.
Thus, contracts entered into by corporate officers beyond the scope of authority are
unenforceable against the corporation unless ratified by the corporation. 23
if they would hold the principal liable, to ascertain not only the fact of agency but also the nature
and extent of authority, and in case either is controverted, the burden of proof is upon them to
establish it.

Evidently, Roxas was not specifically authorized under the said

resolution to grant a right of way in favor of the petitioner on a
portion of Lot No. 491-A-3-B-1 or to agree to sell to the petitioner
a portion thereof.

4. Neither may such authority be implied from the authority granted to Roxas to sell Lot No. 491-A3-B-2 to the petitioner "on such terms and conditions which he deems most reasonable and
advantageous.
5. Powers of attorney are generally construed strictly and courts will not infer or presume
broad powers from deeds which do not sufficiently include property or subject under
which the agent is to deal.29
6. There can be no apparent authority of an agent without acts or conduct on the part of the
principal and such acts or conduct of the principal must have been known and relied upon
in good faith and as a result of the exercise of reasonable prudence by a third person as
claimant and such must have produced a change of position to its detriment.
7. For an act of the principal to be considered as an implied ratification of an unauthorized
act of an agent, such act must be inconsistent with any other hypothesis than that he
approved and intended to adopt what had been done in his name. 36 Ratification is based on
waiver the intentional relinquishment of a known right. Ratification cannot be inferred from
acts that a principal has a right to do independently of the unauthorized act of the agent.
Moreover, if a writing is required to grant an authority to do a particular act, ratification of that act
must also be in writing.37 Since the respondent had not ratified the unauthorized acts of
Roxas, the same are unenforceable.38

OLAGUER VS. PURUGGANAN

FACTS:
1. Petitioner Eduardo B. Olaguer alleges that he was the owner of 60,000 shares of stock of
Businessday Corporation (Businessday) with a total par value of P600,000.00,
2. Locsin, Joaquin, and Hector Holifea had an unwritten agreement that, in the event that petitioner
was arrested, they would support the petitioners family by the continued payment of his
salary.4 Petitioner also executed a Special Power of Attorney (SPA), on 26 May 1979, appointing
as his attorneys-in-fact Locsin, Joaquin and Hofilea for the purpose of selling or transferring
petitioners shares of stock with Businessday. During the trial, petitioner testified that he agreed to
execute the SPA in order to cancel his shares of stock, even before they are sold, for the purpose
of concealing that he was a stockholder of Businessday, in the event of a military crackdown
against the opposition.5 The parties acknowledged the SPA before respondent Emilio
Purugganan, Jr., who was then the Corporate Secretary of Businessday, and at the same time, a
notary public for Quezon City.6
3. On 24 December 1979, petitioner was arrested by the Marcos military by virtue of an Arrest,
Search and Seizure Order and detained for allegedly committing arson. During the petitioners
detention, respondent Locsin ordered fellow respondent Purugganan to cancel the petitioners
shares in the books of the corporation and to transfer them to respondent Locsins name.7
4. The first issue that the petitioner raised is that there was no valid sale since respondent Locsin
exceeded his authority under the SPA27 issued in his, Joaquin and Holifenas favor. He alleged
that the authority of the afore-named agents to sell the shares of stock was limited to the following
conditions: (1) in the event of the petitioners absence and incapacity; and (2) for the limited
purpose of applying the proceeds of the sale to the satisfaction of petitioners subsisting
obligations with the companies adverted to in the SPA. 28
5. Petitioner sought to impose a strict construction of the SPA by limiting the definition of the word
"absence" to a condition wherein "a person disappears from his domicile, his whereabouts being
unknown, without leaving an agent to administer his property,"
6. Petitioner also puts forward that the word "incapacity" would be limited to mean "minority, insanity,
imbecility, the state of being deaf-mute, prodigality and civil interdiction." Petitioner, thus, claims
that his arrest and subsequent detention are not among the instances covered by the terms
"absence or incapacity," as provided under the SPA he executed in favor of respondent Locsin
ISSUE: WON THERE WAS A VALID SPA TO EFFECT THE TRANSFER OF STOCK FROM
PETITIONER TO LOCSIN
HELD:
SPA has effect. It is a general rule that a power of attorney must be strictly construed; the instrument
will be held to grant only those powers that are specified, and the agent may neither go beyond nor
deviate from the power of attorney. However, the rule is not absolute and should not be applied to the
extent of destroying the very purpose of the power. If the language will permit, the construction that

should be adopted is that which will carry out instead of defeat the purpose of the appointment.
Clauses in a power of attorney that are repugnant to each other should be reconciled so as to give
effect to the instrument in accordance with its general intent or predominant purpose. Furthermore,
the instrument should always be deemed to give such powers as essential or usual in effectuating the
express powers.31
In the present case, limiting the definitions of "absence" to that provided under Article 381 of the Civil
Code and of "incapacity" under Article 38 of the same Code negates the effect of the power of
attorney by creating absurd, if not impossible, legal situations.
On the other hand, defining the terms "absence" and "incapacity" by their everyday usage makes for
a reasonable construction, that is, "the state of not being present" and the "inability to act," given the
context that the SPA authorizes the agents to attend stockholders meetings and vote in behalf of
petitioner, to sell the shares of stock, and other related acts. This construction covers the situation
wherein petitioner was arrested and detained.

NIEVERA vs. HERNANDEZ