ATP Case-Digest Kinds-of-Agency Compilation PDF

AGENCY,
TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019

II. KINDS OF AGENCY CA – affirmed the RTC’s decision which dismissed the complaint for
specific performance and damages thereat commenced by the
petitioner against the herein respondents
Case #1 Angeles v. Phil National Railways, (G.R. No. 150128. August
31, 2006) ISSUE/S:
• WON Lizette Angeles is considered as assignee of Romualdez.
DOCTRINE: A power of attorney must be strictly construed and pursued. The (NO)
instrument will be held to grant only those powers which are specified • WON the CA erred in affirming the trial court's holding that
therein, and the agent may neither go beyond nor deviate from the power of petitioner and his spouse, as plaintiffs a quo, had no cause of
attorney. action as they were not the real parties-in-interest in this case.
(NO. – TN: It all boils down to the authorization letter given by Romualdez
Where agency exists, the third party's (in this case, PNR's) liability on a authorizing Lizette Angeles to withdrawal of scrap or unserviceable rails)
contract is to the principal and not to the agent and the relationship of the
third party to the principal is the same as that in a contract in which there is RULING:
no agent. Normally, the agent has neither rights nor liabilities as against the 1. Upon scrutiny of the subject Romualdez's letter to Atty. Cipriano
third party. He cannot thus sue or be sued on the contract. Since a contract Dizon, it is at once apparent that Lizette was to act just as a
may be violated only by the parties thereto as against each other, the real representative of Romualdez in the withdrawal of rails, and not an
party-in-interest, either as plaintiff or defendant in an action upon that assignee.
contract must, generally, be a contracting party. 2. The legal situation is, however, different where an agent is
constituted as an assignee. In such a case, the agent may, in his
FACTS: own behalf, sue on a contract made for his principal, as an
1. The respondent Philippine National Railways (PNR) informed a assignee of such contract.
certain Gaudencio Romualdez (Romualdez) that it has accepted 3. The rule requiring every action to be prosecuted in the name of
the latters offer to buy the PNRs scrap/unserviceable rails located the real party-in-interest recognizes the assignment of rights of
in Pampanga. action and also recognizes that when one has a right assigned to
2. After paying the stated purchase price, Romualdez addressed a him, he is then the real party-in-interest and may maintain an
letter to Atty. Cipriano Dizon, PNRs Acting Purchasing Agent. action upon such claim or right.
4. If Lizette was without legal standing to sue and appear in this
Dear Atty. Dizon: case, there is more reason to hold that her petitioner husband,
either as her conjugal partner or her heir, is also without such
This is to inform you as President of San Juanico Enterprises, that I standing.
have authorized the bearer, LIZETTE R. WIJANCO xxx, to be my 5. In the absence of statute, no form or method of execution is
lawful representative in the withdrawal of the required for a valid power of attorney; it may be in any form
scrap/unserviceable rails awarded to me. clearly showing on its face the agents authority. A power of
attorney is only but an instrument in writing by which a person, as
For this reason, I have given her the ORIGINAL COPY of the principal, appoints another as his agent and confers upon him the
AWARD, xxx which will indicate my waiver of rights, interests and authority to perform certain specified acts on behalf of the
participation in favor of LIZETTE R. WIJANCO. principal.
6. The written authorization itself is the power of attorney, and this
Thank you for your cooperation. is clearly indicated by the fact that it has also been called a letter
of attorney. Its primary purpose is not to define the authority of
Very truly yours, the agent as between himself and his principal but to evidence
(Sgd.) Gaudencio Romualdez the authority of the agent to third parties with whom the agent
deals. The letter under consideration is sufficient to constitute a
3. The PNR granted said request and allowed Lizette to withdraw power of attorney. Except as may be required by statute, a power
scrap/unserviceable rails in Tarlac instead. However, the PNR of attorney is valid although no notary public intervened in its
subsequently suspended the withdrawal in view of what it execution.
considered as documentary discrepancies coupled by reported
pilferages of over P500,000.00 worth of PNR scrap properties in
Tarlac. Case #2 Jimenez vs. Rabot (G.R. No. L-12579. July 27, 1918)
4. Consequently, the spouses Angeles demanded the refund of the
amount of P96,000.00. The PNR, however, refused to pay, alleging
that as per delivery receipt duly signed by Lizette, 54.658 metric DOCTRINE: The purpose in giving a power of attorney is to substitute the
tons of unserviceable rails had already been withdrawn which, at mind and hand of the agent for the mind and hand of the principal; and if the
P2,100.00 per metric ton, were worth P114,781.80, an amount character and extent of the power is so far defined as to leave no doubt as to
that exceeds the claim for refund. the limits within which the agent is authorized to act, and he acts within
5. The spouses Angeles filed suit against the PNR and its corporate those limits, the principal cannot question the validity of his act.
secretary, Rodolfo Flores, among others, for specific performance
and damages before the RTC of Quezon City. FACTS:
1. This action was instituted by the plaintiff, Gregorio Jimenez, to
RTC – Sps. Angeles are not the real parties-in-interest rendered recover from the defendant, Pedro Rabot, a parcel of land
judgment dismissing their complaint for lack of cause of action. As held situated in the municipality of Alaminos, in the Province of
by the court, Lizette was merely a representative of Romualdez in the Pangasinan.
withdrawal of scrap or unserviceable rails awarded to him and not an 2. Jimenez wrote his sister a letter from Vigan in which he informed
assignee to the latter's rights with respect to the award. her that he was pressed for money and requested her to sell one
of his parcels of land and send him the money in order that he
might pay his debts. This letter contains no description of the land
UC COLLEGE OF LAW | By: Kong | Gatillo | Yase | Rodriguez | Lanzaderas | Galinato | Mondigo | Lanticse | Ruaya | Ismael | Pogosa | Elnar | Ortiz | Quiles | Inot | Boquilon
AGENCY, TRUST & PARTNERSHIP| CASE DIGEST | S.Y. 2018 - 2019

to be sold other than is indicated in the words "one of my parcels
of land". Case #3 City-Lite vs. CA (G.R. No. 138639. February 10, 2000)
3. Acting upon this letter Nicolasa approached the defendant Pedro
Rabot, and the latter agreed to buy the parcel in question for the DOCTRINE: When the sale of a piece of land or any interest therein is
sum of P500. Two hundred and fifty peso were paid at once, with through an agent, the authority of the latter shall be in writing; otherwise,
the understanding that a deed of conveyance would be executed the sale shall be void (Art. 1874).
when the balance should be paid. Nicolasa admits having received
this payment of P250 at the time stated; but there is no evidence FACTS:
that she sent any of it to her brother. 1. Respondent F.P. HOLDINGS was the registered owner of a parcel
4. About one year later Gregorio came down to Alaminos and of land situated along E. Rodriguez Avenue, Quezon City (known
demanded that his sister should surrender this piece of land to as the "Violago Property" or the "San Lorenzo Ruiz Commercial
him, it being then in her possession. She refused upon some Center,"). This property was offered for sale to the general public
pretext or other to do so; and as a result Gregorio, in conjunction through the circulation of a sales brochure indicating Meldin Al G.
with others of his brothers and sisters, whose properties were Roy and Metro Drug Inc as “contact persons”.
also in the hands of Nicolasa, instituted an action in the CFI for the 2. CITY-LITE expressed its desire to purchase the entire front lot of
purpose of recovering their land from her control. This action was the said property. The following day, CITY-LITE's officers and Atty.
decided favorably to the plaintiffs (Jimenez) upon August 12, Mamaril (CITY-LITE’s counsel) met with Roy at the Manila
1913; and no appeal was taken from the judgment. Mandarin Hotel (Makati) to consummate the transaction. After
5. Meanwhile, upon May 31, 1912, Nicolasa Jimenez executed and some discussions, the parties finally reached an agreement and
delivered to Pedro Rabot a deed purporting to convey to him the Roy agreed to sell the property to CITY-LITE provided only that the
parcel of land which is the subject of this controversy. The deed latter submit its acceptance in writing to the terms and conditions
recites that the sale was made in consideration of the sum of of the sale. Such letter of acceptance was conveyed by Atty.
P500, the payment of which is acknowledged. Mamaril and CITY-LITE that afternoon.
6. Pedro Rabot went into possession, and the property was found in 3. However, for some reason or another and despite demand,
his hands at the time when final judgment was entered in favor of respondent F.P. HOLDINGS refused to execute the corresponding
the plaintiffs in the action above mentioned. It will thus be seen deed of sale in favor of CITY-LITE of the front lot of the property.
that Pedro Rabot acquired possession under the deed from Hence, CITY-LITE instituted a complaint against F.P. HOLDINGS
Nicolasa during the pendency of the litigation appear that he was originally for specific performance and damages. However, during
at the time cognizant of that circumstance. the pendency of the suit, the property was transferred to
VIEWMASTER and a new title was issued on its name.
ISSUE/S:
• WON the authority conferred on Nicolasa by the letter was RTC QC favored CITY-LITE and ordered F.P HOLDINGS to execute a deed
sufficient to enable her to bind her brother. (YES. The authority of sale in CITY-LITE’s favor.
expressed in the letter is sufficient.) CA - Reversed the ruling of the RTC.
• WON the act performed by Nicolasa Jimenez was within the scope
of the authority which had been conferred upon her (YES) ISSUE: WON a contract of sale was perfected between CITY-LITE and F.P.
HOLDINGS acting through its agent Meldin Al G. Roy of Metro Drug. (Simply,
RULING: WON Roy and Metro drug have the authority to sell the property)
1. There is ample authority to the effect that a person may by a
general power of attorney an agent to sell "all" the land possessed RULING:
by the principal, or all that he possesses in a particular city, 1. No, the Civil Code requires that an authority to sell a piece of land
county, or state. shall be in writing. Art. 1874 of the Civil Code provides: "When the
2. IN the present case the agent was given the power to sell either of sale of a piece of land or any interest therein is through an agent,
the parcels of land belonging to the plaintiff. We can see no the authority of the latter shall be in writing; otherwise, the sale
reason why the performance of an act within the scope of this shall be void”.
authority should not bind the plaintiff to the same extent as if he 2. The absence of authority to sell can be determined from the
had given the agent authority to sell "any or all" and she had written memorandum issued by respondent F.P. HOLDINGS'
conveyed only one. President requesting Metro Drug's assistance in finding buyers for
3. It is well-settled in the jurisprudence of England and the United the property. Meldin Al G. Roy and/or Metro Drug, therefore, was
States that when the owner, or his agent, comes to make a only a contact person with no authority to conclude a sale of the
contract to sell, or a conveyance to effect a transfer, there must property.
be a description of the property which is the subject of the sale or 3. For lack of a written authority to sell the "Violago Property" on
conveyance. This is necessary of course to define the object of the the part of Meldin Al G. Roy and/or Metro Drug, the sale should
contract. be declared null and void. Therefore, the sale could not produce
4. The general rule here applicable is that the description must be any legal effect as to transfer the subject property from its lawful
sufficiently definite to identify the land either from the recitals of owner, F.P. HOLDINGS, to any interested party including
the contract or deed or from external facts referred to in the petitioner CITY-LITE.
document, thereby enabling one to determine the identity of the
land and if the description is uncertain on its face or is shown to
be applicable with equal plausibility to more than one tract, it is
insufficient.
5. The principle embodied in these decisions is not, in our opinion,
applicable to the present case, which relates to the sufficiency of
the authorization, not to the sufficiency of the contract or
conveyance.


ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration.
Case #4 Cosmic Lumber vs. CA (G.R. No. 114311 November 29, 3. It is therefore clear that by selling to respondent Perez a portion
1996) of petitioner's land through a compromise agreement, Villamil-
Estrada acted without or in obvious authority. The sale ipso jure is
DOCTRINE: When the sale of a piece of land or any interest thereon is consequently void. So is the compromise agreement. This being
through an agent, the authority of the latter shall be in writing; otherwise, the case, the judgment based thereon is necessarily void.
the sale shall be void. Thus the authority of an agent to execute a contract
for the sale of real estate must be conferred in writing and must give him
specific authority. A special power of attorney is necessary to enter into any Case #5 San Juan Structural Steel vs. CA (G.R. No. 129459.
contract by which the ownership of an immovable is transmitted or acquired September 29, 1998)
either gratuitously or for a valuable consideration.

FACTS: FACTS:
1. COSMIC LUMBER CORPORATION (CLC), through its General - San Juan Structural and Steel Fabricators, Inc. alleged that it entered into an
Manager, executed a Special Power of Attorney appointing Paz G. agreement with Motorich Sales Corporation for the transfer to it of a parcel
Villamil-Estrada as attorney-in-fact “to initiate, institute and file of land, through the latter’s treasurer, Nenita Gruenberg. The subject of the
any court action for the ejectment of third persons and/or sale was a parcel of land owned by Motorich. San Juan advanced P100k to
squatters” on the lot that CLC owned and “to appear at the pre- Nenita as earnest money.
trial conference and enter into any stipulation of facts and/or
compromise agreement so far as it shall protect the rights and - On the day agreed upon on which Nenita was supposed to deliver the title
interest of the corporation in the aforementioned lots”. By virtue of the land to Motorich, Nenita did not show up. Nenita and Motorich did
of the SPA, Villamil-Estrada, instituted an action for the ejectment not heed the subsequent demand of San Juan to comply with the contract
of private respondent Isidro Perez in RTC Dagupan. hence San Juan sued Motorich. Motorich, in its defense, argued that it is not
2. Subsequently, Villamil-Estrada and Perez entered into a bound by the acts of its treasurer, Nenita, since her act in contracting with
Compromise Agreement stipulating that Perez will pay plaintiff San Juan was not authorized by the corporate board.
(CLC), through its attorney-in-fact (Villamil-Estrada), a sum
P26,640.00 and in turn, plaintiff will recognize the ownership and - San Juan raised the issue that Nenita was actually the wife of the President
possession of the Perez over a portion of the said lot. Such of Motorich; that Nenita and her husband owns 98% of the corporation’s
compromise agreement was approved by the RTC. capital stocks; that as such, it is a close corporation and that makes Nenita
3. Although the decision became final and executory, it was not and the President as principal stockholders who do not need any
executed within the 5-year period from date of its finality. Thus, authorization from the corporate board.
respondent filed a complaint to revive the judgment.
4. CLC asserts that it was only when the summons for the revival of RTC Ruling: Dismissed both the Complaint and the Counterclaim filed by the
judgment was served upon it that it came to know of the parties
compromise agreement entered into between Villamil-Estrada
and Perez. Thus, CLC sought the annulment of the decision of the CA Ruling: AFFIRMED WITH MODIFICATION ordering defendant-appellee
trial court before the CA on the ground that the compromise Nenita Lee Gruenberg to REFUND or return to plaintiff-appellant the
agreement was void because Attorney-in-fact Villamil-Estrada did downpayment of P100,000.00 which she received from plaintiff-appellant
not possess the authority to sell or was she armed with a Board
Resolution authorizing the sale of its property. She was merely RULING:
empowered to enter into a compromise agreement in the No. A corporation is a juridical person separate and distinct from its
recovery suit she was authorized to file against persons squatting stockholders or members. Accordingly, the property of the corporation is not
on the subject lot. the property of its stockholders or members and may not be sold by the
5. CA, however, dismissed the complaint on the basis of its finding stockholders or members without express authorization from the
that not one of the grounds for annulment, namely, lack of corporations board of directors. a corporation may act only through its board
jurisdiction, fraud or illegality was shown to exist. of directors, or, when authorized either by its bylaws or by its board
resolution, through its officers or agents in the normal course of business.
ISSUE: WON the compromise agreement entered by the Attorney-in-fact and The general principles of agency govern the relation between the
the respondent valid. corporation and its officers or agents, subject to the articles of incorporation,
bylaws, or relevant provisions of law.
RULING:
1. No. The authority granted to Villamil-Estrada under the SPA was Thus, this Court has held that a corporate officer or agent may represent and
explicit and exclusionary: for her to institute any action in court bind the corporation in transactions with third persons to the extent that the
to eject all persons found on CLC’s lots and for this purpose, to authority to do so has been conferred upon him, and this includes powers
appear at the pre-trial and enter into any stipulation of facts which have been intentionally conferred, and also such powers as, in the
and/or compromise agreement but only insofar as this was usual course of the particular business, are incidental to, or may be implied
protective of the rights and interests of petitioner in the property. from, the powers intentionally conferred, powers added by custom and
Nowhere in this authorization was Villamil-Estrada granted usage, as usually pertaining to the particular officer or agent, and such
expressly or impliedly any power to sell the subject property nor a apparent powers as the corporation has caused persons dealing with the
portion thereof. officer or agent to believe that it has conferred. Articles 1874 and 1878 of the
2. When the sale of a piece of land or any interest thereon is Civil Code of the Philippines provides:
through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void. Thus the authority of an agent to ART. 1874. When a sale of a piece of land or any interest therein is through
execute a contract for the sale of real estate must be conferred in an agent, the authority of the latter shall be in writing; otherwise, the sale
writing and must give him specific authority. A special power of shall be void.
attorney is necessary to enter into any contract by which the


ART. 1878 Special powers of attorney are necessary in the following case: CA Ruling:
x x x x x x x x x Reversed and set aside the decision of the Regional Trial Court and rendered
(5) To enter any contract by which the ownership of an immovable is a new one ORDERING appellee spouses Claudio and Lydia delos Reyes to
transmitted or acquired either gratuitously or for a valuable consideration; immediately vacate the 300 square meter portion of that land covered by
TCT No. T-17932 which they presently occupy and to turn over possession
In the case at bar, Respondent Motorich categorically denies that it ever thereof to the appellants.
authorized Nenita Gruenberg, its treasurer, to sell the subject parcel of land.
Consequently, petitioner had the burden of proving that Nenita Gruenberg The Court of Appeals ruled that the contract of sale cannot be upheld, mainly
was in fact authorized to represent and bind Motorich in the transaction. because Renato Gabriel, as vendor, did not have the legal capacity to enter
Petitioner failed to discharge this burden. and to give consent to the agreement, he, being neither the authorized agent
(of Daluyong Gabriel) nor the owner of the property subject of the sale.

Case #6 Delos Reyes vs. CA (G.R. No. 129103. September 3, 1999) ISSUE: Whether or not the sale of land through an agent is valid

FACTS: RULING:
- Daluyong Gabriel, the registered owner of a 5,010 square meter parcel of No. Renato Gabriel was neither the owner of the subject property nor a duly
land situated in Barrio Magugpo, Tagum, Davao del Norte, sent his son designated agent of the registered owner (Daluyong Gabriel) authorized to
Renato Gabriel to Tagum reportedly to take over from Maria Rita G. de Rey sell subject property in his behalf, and there was also no sufficient evidence
as administrator of the said parcel of land. adduced to show that Daluyong Gabriel subsequently ratified Renatos act. In
this connection it must be pointed out that pursuant to Article 1874 of the
- Upon agreement of the parties, the contract between de los Reyes and Civil Code, when the sale of a piece of land or any interest therein is through
Maria Rita was novated and replaced by a Contract of Lease executed by and an agent, the authority of the latter shall be in writing; otherwise the sale
between RENATO GABRIEL and Lydia de los Reyes. The term of the lease was shall be void. In other words, for want of capacity (to give consent) on the
changed to 6 years from and after June 15, 1985 or up to June 15, 1991; part of Renato Gabriel, the oral contract of sale lacks one of the essential
receipt of the payment in advance of the total rental amount of 14,400.00
was acknowledged by Lessor Renato Gabriel. requisites for its validity prescribed under Article 1318, supra and is therefore
null and void abinitio.
- During the effectivity of the lease contract, Lydia verbally agreed to buy 300
square meters of Daluyong Gabriels registered property, at 300 per square
Case #7 AF Realty v. Dieselman Freight (G.R. No. 111448. January
meter or for a total amount of P90,000.00. No deed of sale was executed
16, 2002)
covering the transaction. Purchaser Lydia de los Reyes however proceeded
with the construction of a two-storey commercial building on the said 300
square meter lot after obtaining a building permit from the Engineers Office FACTS:
in Tagum. - Dieselman is a domestic corporation and a registered owner of a parcel of
commercial lot located at Barrio Ugong, Pasig City, Metro Manila.
- Upon knowing that spouses Claudio and Lydia de los Reyes were
constructing a two-storey building on a portion of his land, Daluyong Gabriel, - Manuel C. Cruz, Jr., a member of the board of directors of Dieselman, issued
through his lawyer, to the De los Reyes couple demanding that they cease an Authority To Sell Real Estate" to Cristeta N. Polintan, a real estate broker,
and desist from continuing with their construction and to immediately vacate authorizing Polintan "to look for a buyer/buyers and negotiate the sale" of
the premises, asserting that the construction was unauthorized and that the lot at P3,000.00 per square meter. Cruz, Jr. has no written authority from
their occupancy of the subject portion was not covered by any lease Dieselman to sell the lot.
agreement.
- Cristeta Polintan authorized Felicisima Noble to sell the same lot. Felicisima
- Claudio and Lydia de los Reyes explained that they are the innocent party Noble then offered for sale the property to AF Realty) at P2,500.00 per
who entered into the lease agreement and subsequent sale of subject square meter.
portion of land in good faith and upon the assurance made by the former
administratrix, Maria Rita G. Rey, her nephew Tony Rey, Mrs. Fe S. Gabriel - Zenaida Ranullo, board member and vice-president of AF Realty, accepted
and Mr. Daluyong Gabriel himself that Renato Gabriel is the new the offer and issued a check in the amount of P300,000.00 payable to the
administrator authorized to enter into such agreements involving the subject order of Dieselman. The amount of P300,000.00 represents the partial
property. payment of the property but refundable within two weeks should AF Realty
disapprove Ranullo's action on the matter.
- Daluyong Gabriel commenced an action against spouses Claudio and Lydia
de los Reyes for the recovery of the subject portion of land before the RTC. - AF Realty confirmed its intention to buy the lot. Hence, Ranullo asked
Daluyong maintained that his son Renato was never given the authority to Polintan for the board resolution of Dieselman authorizing the sale of the
lease nor to sell any portion of his land as his instruction to him (Renato) was property. However, Polintan could only give Ranullo the original copy of TCT
merely to collect rentals. No. 39849, the tax declaration and tax receipt for the lot, and a photocopy of
the Articles of Incorporation of Dieselman.
RTC Ruling:
Daluyong Gabriel, Renato Gabriel, Maria Luisa Esteban and Maria Rita G. - Manuel F. Cruz, Sr., president of Dieselman, acknowledged receipt of the
Bartolome are hereby ordered to execute a Deed of Conveyance and other said P300,000.00 as "earnest money" but required AF Realty to finalize the
necessary documents in favor of Claudio delos Reyes and Lydia delos Reyes. sale at P4,000.00 per square meter. AF Realty replied that it has paid an
The trial court held that the oral contract of sale was valid and enforceable initial down payment of P300,000.00 and is willing to pay the balance.
stating that while it is true that at the time of the sale, Renato Gabriel was
not the owner and that it was Daluyong Gabriel who was the registered - However, on August 13, 1988, Mr. Cruz, Sr. terminated the offer and
owner of the subject property, Daluyong Gabriel knew about the transaction demanded from AF Realty the return of the title of the lot earlier delivered
and tacitly authorized his son Renato Gabriel (whom he earlier designated as by Polintan.
administrator of his 5,010 square meter registered property) to enter into it.


- Claiming that there was a perfected contract of sale between them, AF RTC – Denied Yun’s complaint because based on PAGCORs charter, it
Realty filed with the Regional Trial Court, Branch 160, Pasig City a complaint has no authority to lease any portion of the gambling tables to a private
for specific performance (Civil Case No. 56278) against Dieselman and Cruz, party like ABS Corporation, therefore the Junket Agreement is void,
Jr. Dieselman alleged that there was no meeting of the minds between the consequently, the mutual rights and obligations of the parties to this
parties in the sale of the property and that it did not authorize any person to case would be resolved based on agency and estoppel.
enter into such transaction on its behalf.
CA – Affirmed the RTC’s decision because the Junket Agreement, being
- Meanwhile, on July 30, 1988, Dieselman and Midas Development void from the beginning, cannot give rise to an implied agency case.
Corporation (Midas) executed a Deed of Absolute Sale of the same property. Article 1883 of the Civil Code applies only to a situation where the
agent is authorized by the principal to enter into a particular
RTC Ruling: The lower court ruled that the acts of Cruz, Jr. bound Dieselman transaction, but instead of contracting on behalf of the principal, the
in the sale of the lot to AF Realty. agent acts in his own name. The CA concluded that no such legal fiction
existed between PAGCOR and ABS Corporation. Representation is the
CA Ruling: Court of Appeals reversed the judgment of the trial court holding basis of agency but unfortunately for petitioner none is found in this
that since Cruz, Jr. was not authorized in writing by Dieselman to sell the case.
subject property to AF Realty, the sale was not perfected.
ISSUE/S:
ISSUE: Whether or not the Dieselman is bound by the acts of Cruz, Jr. 1. WON there was an implied agency or agency by estoppel between
ABS Corp and PAGCOR?
RULING:
No. It is undisputed that respondent Cruz, Jr. has no written authority from RULING:
the board of directors of respondent Dieselman to sell or to negotiate the 1. NEITHER. Article 1869 of the Civil Code states that implied agency
sale of the lot, much less to appoint other persons for the same purpose. is derived from the acts of the principal, from his silence or lack of
Respondent Cruz, Jr.s lack of such authority precludes him from conferring action, or his failure to repudiate the agency, knowing that
any authority to Polintan involving the subject realty. Necessarily, neither another person is acting on his behalf without authority.
could Polintan authorize Felicisima Noble. Clearly, the collective acts of 2. There is no implied agency in this case because PAGCOR did not
respondent Cruz, Jr., Polintan and Noble cannot bind Dieselman in the hold out to the public as the principal of ABS Corporation.
purported contract of sale. Moreover, when a sale of piece of land or any PAGCORs actions did not mislead the public into believing that an
interest therein is through an agent, the authority of the latter shall be in agency can be implied from the arrangement with the junket
writing; otherwise, the sale shall be void. Considering that respondent Cruz, operators, nor did it hold out ABS Corporation with any apparent
Jr., Cristeta Polintan and Felicisima Ranullo were not authorized by authority to represent it in any capacity. The Junket Agreement
respondent Dieselman to sell its lot, the supposed contract is void. Being a was merely a contract of lease of facilities and services.
void contract, it is not susceptible of ratification. 3. In an agency by estoppel, there is no agency at all, but the one
assuming to act as agent has apparent or ostensible, although not
real, authority to represent another. Apparent authority is based
Case #8 Yun Kwan Byung vs. Philippine Amusement Gaming on estoppel and can arise from two instances. First, the principal
Corporation (G.R. No. 163553, Dec. 11, 2009) may knowingly permit the agent to hold himself out as having
such authority, and the principal becomes estopped to claim that
DOCTRINE: Implied agency is derived from the acts of the principal, from his the agent does not have such authority. Second, the principal may
silence or lack of action, or his failure to repudiate the agency, knowing that clothe the agent with the indicia of authority as to lead a
another person is acting on his behalf without authority. In an agency by reasonably prudent person to believe that the agent actually has
estoppel, there is no agency at all, but the one assuming to act as agent has such authority.
apparent or ostensible, although not real, authority to represent another. 4. An agency by estoppel, which is similar to the doctrine of
The law makes no presumption of agency and proving its existence, nature apparent authority requires proof of reliance upon the
and extent is incumbent upon the person alleging it. representations, and that, in turn, needs proof that the
representations predated the action taken in reliance There can
FACTS: be no apparent authority of an agent without acts or conduct on
1. PAGCOR launched its Foreign Highroller Marketing Program the part of the principal and such acts or conduct of the principal
(Program) to invite patrons from foreign countries to play at the must have been known and relied upon in good faith and as a
dollar pit of designated PAGCOR-operated casinos under specified result of the exercise of reasonable prudence by a third person as
terms and conditions and industry practice. claimant, and such must have produced a change of position to its
2. The Korean-based ABS Corporation availed of the Program and in detriment. Such proof is lacking in this case.
a letter-agreement (Junket Agreement) agreed to bring in foreign 5. The basis for agency is representation, that is, the agent acts for
players to play at the designated casinos (Casino Filipino). and on behalf of the principal on matters within the scope of his
3. Petitioner (Yun), a Korean national was one of those brought into authority and said acts have the same legal effect as if they were
the Philippines by ABS Corporation and is a junket player who personally executed by the principal. On the part of the principal,
played in the dollar pit exclusively leased by ABS Corporation for there must be an actual intention to appoint or an intention
its junket players. naturally inferable from his words or actions, while on the part of
4. Yun alleges that he came to the Philippines four times to play for the agent, there must be an intention to accept the appointment
high stakes at the Casino Filipino. and act on it. Absent such mutual intent, there is generally no
5. Yun was able to accumulate gambling chips worth US$2.1 million agency.
but when he presented them to PAGCOR for encashment, 6. In the entire duration that petitioner played in Casino Filipino, he
PAGCOR refused to redeem them. was dealing only with ABS Corporation, and availing of the
6. Yun filed a complaint for a sum of money before the RTC Manila, privileges extended only to players brought in by ABS Corporation.
Branch 13. 7. Furthermore, PAGCOR, in posting notices stating that the players
7. Yun contends that an implied agency existed between PAGCOR are playing under special rules, exercised the necessary
and ABS Corporation. precaution to warn the gaming public that no agency relationship
exists.

8. The law makes no presumption of agency and proving its particular place, would be ordinarily deemed a general agent. A
existence, nature and extent is incumbent upon the person special agent is one authorized to do some particular act or to act
alleging it. upon some particular occasion. A scrutiny of the document
embodying the agreement between the petitioners and the
respondent deduce that the 'latter was instituted as a general
Case #9 Siasat v. IAC (G.R. No. L-67889 October 10, 1985) agent. The power granted to the respondent was so broad that it
practically covers the negotiations leading to, and the execution
DOCTRINE: The principal has the power to revoke the authority of his agent of, a contract of sale of petitioners' merchandise with any entity
at will, in the absence of a contract fixing the duration of the agency or organization.
however, the principal cannot deprive his agent of the commission agreed 2. YES. The revocation of agency could not prevent Teresita from
upon by canceling the agency and, thereafter, dealing directly with the earning her commission because it came too late, the contract of
buyer. sale having been already perfected and partly executed. The
principal cannot deprive his agent of the commission agreed upon
FACTS: by cancelling the agency and, thereafter, dealing directly with the
1. Teresita convinced then Department of Education and Culture, to buyer.
purchase one million pesos worth of national flags for the use of 3. The decision of the respondent court is hereby MODIFIED. The
public schools throughout the country. petitioners are ordered to pay the respondent the amount of ONE
2. Respondent Teresita Nacianceno was authorized to represent HUNDRED FOURTY THOUSAND NINE HUNDRED AND NINETY
United Flag Industry to deal with any entity or organization, FOUR PESOS (P140,994.00) as her commission on the second
private or government in connection with the marketing of their delivery of flags with legal interest from the date of the trial
products-flags and all its accessories and to be paid the court's decision.
commission of 30%.
3. On October 16, 1974, the first delivery of 7,933 flags was made by
the United Flag Industry (United Flag). Case #10 Dominion Insurance v. CA (G.R. No. 129919. February 6,
4. On October 17, 1974, the respondent's authority to represent the 2002)
United Flag was revoked by petitioner Primitivo Siasat, Owner and
Gen. Manager of United Flag. DOCTRINE: When a special power of attorney is required for the agent to do
5. It was found out by the court that Siasat, after receiving the a certain act, the agent, in the performance of such act, must comply with
payment of P469, 980 for the first delivery, tendered the amount the specifications embodied in the special power of attorney giving him
of P23,900.00 or five percent (5%) of the amount received, to the authority to do such.
Teresita as payment of her commission. Teresita protested but
was forced to accept it after Siasat assured her that they would FACTS:
pay the commission in full after they delivered the other half of 1. Rodolfo Guevarra instituted a civil case in RTC Pampanga, for the
the order. recovery of a sum of money against Dominion Insurance. He
6. Teresita later on learned that petitioner Siasat had already sought to recover P156,473.90, which he claimed to have
received payment for the second delivery of 7,833 flags. When advanced in his capacity as manager of Dominion to satisfy claims
she confronted the petitioners, they vehemently denied receipt of filed by Dominion’s clients.
the payment, at the same time claiming that the respondent had 2. Dominion denied any liability to Guevarra.
no participation whatsoever with regard to the second delivery of
flags and that the agency had already been revoked. RTC – Granted Guevarra’s complaint and ordered Dominion was to pay
7. Teresita filed an action in the Court of First Instance of Manila to Guevarra the P156,473.90 claimed as the total amount advanced by the
recover the following commissions: 25%, as balance on the first latter in the payment of the claims of Dominion’s clients.
delivery and 30%, on the second delivery. CA – Affirmed the RTC’s decision.
8. Siasat contend that the authorization making the respondent the
petitioner's representative merely states that she could deal with ISSUE/S:
any entity in connection with the marketing of their products for a 1. WON Guevarra acted within his authority as agent for Dominion?
commission of 30%; that there was no specific authorization for 2. WON Guevarra is entitled to reimbursement of amounts he paid
the sale of 15,666 Philippine flags to the Department; and that the out of his personal money in settling the claims of several
revocation of agency effected by the parties with mutual consent insured?
on October 17, 1974, therefore, forecloses the respondent's claim
of 30% commission on the second transaction. RULING:
A. NO.
RTC – Granted Teresita’s complaint. 1. A perusal of the “Special Power of Attorney” would show that Dominion
IAC – Affirmed the RTC’s decision. and Guevarra intended to enter into a principal-agent relationship.

ISSUE/S: 2. Guevarra’s authority to settle claims is embodied in the Memorandum of
1. WON Teresita is a general agent of United Flag? Management Agreement which enumerated the scope of Guevarra’s duties
2. WON Teresita is entitled to the commission for the second and responsibilities including his authority to pay the claim of the insured,
delivery? but the payment shall come from the revolving fund or collection in his
possession. By advancing his own money to satisfy claims filed by Dominion’s
RULING: clients, Guevarra clearly acted outside of his authority.
1. YES. An agent may be (1) universal: (2) general, or (3) special. A
universal agent is one authorized to do all acts for his principal B. YES.
which can lawfully be delegated to an agent. A general agent is 1. Under the law on agency, Guevarra may not be reimbursed from
one authorized to do all acts pertaining to a business of a certain petitioner Dominion but his right to recovery may still be justified under the
kind or at a particular place, or all acts pertaining to a business of general law on Obligations and Contracts.
a particular class or series. An agent who is empowered to
transact all the business of his principal of a particular kind or in a

2. Having deviated from the instructions of the Dominion, the expenses that
Guevarra incurred in the settlement of the claims of the insured may not be
Case #12 Bank of PI v. De Coster (G.R. No. L-23181. March 16, 1925)
reimbursed from petitioner Dominion. This conclusion is in accord with
Article 1918, Civil Code, which states that:
Principal - Respondent wife/Gabriela De Coster
The principal is not liable for the expenses incurred by the agent in the Agent - husband/Jean Poizat
following cases:
(1) If the agent acted in contravention of the principals instructions, FACTS:
unless the latter should wish to avail himself of the benefits 1. December 29, 1921, Husband, acting as agent of respondent wife
derived from the contract. via special power of attorney, made a promissory note for Php
292,000 to BPI payable within 1 year with a 9% interest per
3. The petition is DENIED and the decision of the CA and that of the RTC are annum.
MODIFIED in that petitioner is ordered to pay respondent Guevarra the 2. To secure payment, husband executed chattel mortgage to BPI
amount of P112,672.11 representing the total amount advanced by the latter over the steamers, machinery, and materials belonging to Poizat
in the payment of the claims of petitioners clients. Vegetable Oil Mills (company owned by husband) and also
delivered to BPI a mortgage on a real property situated in Manila.
3. Real property was subject to a prior mortgage in favor of La Orden
Case #11 PNB v. Sta. Maria (G.R. No. L-24765. August 29, 1969) de Dominicos.
4. Note in question is long past due and so, plaintiff filed an action in
Principal - Defendant Sta Maria Siblings (emphasis on Valeriana) CFI Manila to take immediate possession of the property
Agent - Dr. Maximo Sta Maria 5. April 24, 1924, La Orden/Dominican Fathers appeared in the suit
and pleaded that husband and wife have also not paid the
FACTS: principal nor interests stipulated in December 1921.
1. Defendant Maximo obtained sugar crop loans from plaintiff PNB 6. CFI Manila declared defendants in default and rendered opinion
under a special power of attorney executed in his favor by his 6 that both BPI and Dominican Fathers be paid by defendants.
brothers and sisters. 7. Respondent wife filed a suit praying that she be absolved;
2. Said loans were mortgaged with a 16-odd hectare land jointly contending that she has been residing in Paris from 1908 to April
owned by the defendant and siblings. 1924 and that her husband executed the mortgage transactions
3. Valeriana, one of the siblings, executed a special power of without her consent.
attorney to Maximo authorizing him to borrow money and
mortgage any real estate owned by her. ISSUE: WON transactions entered by husband as agent of his wife were valid
4. By virtue of 2 powers of attorney, Maximo applied for 2 separate
crop loans and as security of the loans, Maximo executed, in his RULING: NO.
name, two chattel mortgages guaranteed by surety bonds
executed Associated Insurance & Surety Co., in favor of plaintiff Paragraph 5 of the power of attorney authorizes the husband “to loan or
PNB borrow any sums of money or fungible things, etc.” - This should be
5. Records show that securities included the land owned by the Sta construed to mean that the husband had power only to loan his wife’s
Maria siblings. money and to borrow money for or on account of his wife as her agent and
6. Plaintiff Bank filed a case for collection if unpaid balances against attorney in fact. That does not carry with it or imply that he had the legal
Maximo and his siblings. right to make his wife liable as surety for the pre-existing debt of a third
7. RTC ruled in favor of PNB, ordering defendants to pay jointly and person.
SEVERALLY.
8. Siblings (except Maximo and his surety) appealed The foregoing are clauses in the power of attorney upon which the bank
relies for the authority of the husband to execute promissory notes for and
ISSUE: WON siblings can be held personally liable for the payment of on behalf of his wife as her agent. No provision in either of them which
Maximo’s obligations authorizes or empowers him to make his wife liable as a surety for a pre-
existing debt.
RULING: NO, siblings, except Valeriana, cannot be held liable.
The fact that an agent failed and neglected to perform his duties and to
Defendants, except Valeriana, only granted Maximo authority to mortgage represent the interests of his principal is not a bar to the principal obtaining
property owned by them and not the authority to contract for any other legal relief for the negligence of her agent, provided that the application for
loans in their names or behalf. Thus, defendants’ liability is that the real such a relief is duly and properly made under the provisions of section 113.
estate will be foreclosed and sold but they cannot be held personally liable.
It is very apparent from the face of the instrument that the whole purpose
The Bank failed to require Maximo to present additional special power of and intent of the power of attorney was to empower and authorize the
authority, from his other siblings, authorizing him to borrow money. He only husband to look after and protect the interests of the wife and for her and in
had additional SPA issued by Valeriana. her name to transact any and all of her business. But nowhere does it
provide or authorize him to make her liable as a surety for the payment of
Defendant siblings did not ratify nor benefit from the acts of Maximo which the preexisting debt of a third person.
means there can be NO ESTOPPEL.
Thus, judgment of CFI, as to wife, is reversed and set aside. As to bank, case
Thus, RTC judgment reversed and set aside. Defendant siblings’ liability is is remanded to lower court. As to Dominican fathers, judgment cannot be
only up to real estate foreclosure; Valeriana is declared jointly, not solidarily, sustained.
liable.


• This decision was reversed by the Supreme Court of the Philippines and
Case #13 Hodges v. Salas (G.R. No. L-42958. October 21, 1936) thereafter reversed by the Supreme Court of the United States and affirming
the judgment of the trial court and was thereafter satisfied by the defendant
Principal - Defendant Salas by returning the shares evidenced by certificates.
Agent - Yulo/Defendant’s brother in law
• Subsequently, it was found out, that from the date of the Fraudulent sale,
FACTS: the defendant collected the dividends earned by said shares amounting to a
1. On September 2, 1923, the defendants executed a power of total of P19,200, which sum the defendant retained and refused to pay over
attorney in favor of their brother-in-law Felix S. Yulo to enable to the plaintiff.
him to obtain a loan and secure it with a mortgage on the real
property described in transfer certificate of title No. 3335. The • After demand upon and refusal by the defendant, the plaintiff began this
power of attorney was registered in the registry of deeds of the action for the recovery of said sum.
Province of Occidental Negros.
2. Acting under said power of attorney, Felix S. Yulo, on March 27, • The plaintiff then again instituted a separate action which was ruled in
1926, obtained a loan of P28,000 from the plaintiff, binding his favor of the plaintiff for the said sum of P19,200, with interest thereon at the
principals jointly and severally to pay it within ten (10) years, rate of 6 per cent per annum from the date of the filing of the complaint.
together with interest thereon at 12 per cent per annum payable
annually in advance, to which effect he signed a promissory note • Both parties excepted to this judgment and filed motions for a new trial,
for said amount and executed a deed of mortgage of the real and the court upon the hearings modified its judgment by allowing
property described in transfer certificate of title No. 3335 and the defendant to offset against plaintiff's judgment interest on P14,159.29 at the
improvements thereon consisting in concrete buildings. rate of 6 per cent per annum from the 10th day of October, 1903, to the 12th
3. The sum of P28,000 was not delivered to Felix S. Yulo, but by day of January, 1904.
agreement between him and the plaintiff, was applied to Yulo’s
personal debts to plaintiff Hodges (Php 10, 188.29) Trial Court Ruling: The trial court found in favor of the plaintiff, declaring the
4. The defendants failed to pay at maturity the interest stipulated, sale of the stock to have been fraudulently obtained and setting aside the
which would have been paid one year in advance. sale absolutely, as is indicated by that portion of its opinion heretofore
5. Action was brought by the plaintiff to foreclose the real estate quoted. On the appeal to the Supreme Court of the United States the
mortgage. fraudulent character of the representations by which the plaintiff had been
6. CFI Negros Occidental absolved defendants contending that held induced to part with her stock was fully affirmed after a thorough
that the loan and the mortgage were usurious and illegal for two consideration of the facts and circumstances of the case and the judgment of
reasons: First, because the plaintiff charged compound interest the trial court setting aside the sale on the ground of fraud was affirmed in
notwithstanding the fact that it had not been stipulated, and every particular.
second, because the plaintiff charged interest yearly in advance in
accordance with the agreement ISSUE:
Whether or Not the plaintiff had been deprived of the shares of stock in
ISSUE: WON agent was authorized to borrow money for personal use question by false and fraudulent representations and fraudulent
concealment on the part of the defendant, or of his agents?
RULING: NO.
RULING:
The pertinent clauses of the power of attorney from which may be • YES. The fraudulent sale having been made to him, it is unquestionable that
determined the intention of the principals in authorizing their agent to he became responsible to the plaintiff from that moment forward. So far as
obtain a loan, securing it with their real property, were quoted at the the responsibility of the defendant was concerned, it is of no consequence
beginning of the decision. The terms thereof are limited; the agent was who actually collected and retained the dividends. The plaintiff had a right to
thereby authorized only to borrow any amount of money which he deemed look to the defendant and to him alone.
necessary. There is nothing, however, to indicate that the defendants had
likewise authorized him to convert the money obtained by him to his • The judgment of the trial court, as affirmed by the Supreme Court of the
personal use. With respect to a power of attorney of special character, it United States, set aside the sale as fraudulent, and, therefore, by necessary
cannot be interpreted as also authorizing the agent to use the money as he result, the title to the shares of stock in question passed to the plaintiff if it
pleased, particularly when it does not appear that such was the intention of be conceded that the title ever legally passed from her.
the principals, and in applying part of the funds to pay his personal
obligations, he exceeded his authority. In cases like the present one, it should • The delivery of those shares to her by the defendant under that judgment
be understood that the agent was obliged to turn over the money to the was an admission of her title as declared by the court and was a delivery of
principals or, at least, place it at their disposal possession in pursuance of that declaration of ownership. Under the
decisions referred to, as between the parties thereto, the plaintiff was legally
the owner of said stock from the time when she was fraudulently deprived of
Case #14 Strong v. Gutierrez Rupide (G.R. No. L-7154 it until the time it was returned to her as fully and as completely as she was
February 21, 1912) after the adjudication of the title and return of the stock itself. Whoever,
therefore, during that period collected the dividends upon the said stock
FACTS: took from the plaintiff something which belonged to her.
• Eleanor Erica Strong, was the owner of 800 shares of the capital stock of
the Philippine Sugar Estates Development Company, Limited, that was Case #15 Katigbak v. Tai Hung Co. (G.R. No. L-29917. December 29,
thereafter found to have been obtained fraudulently by Francisco Gutierrez 1928
Repide.

• Plaintiff’s commenced an action asking that the fraudulent sale be declared DOCTRINE: While it is true that a power of attorney not recorded in the
null and void and that they be returned to her, which was ruled in her favor. registry of deeds is ineffective in order that an agent or attorney-in-fact may
validly perform acts in the name of his principal, and that any act performed
by the agent by virtue of said power with respect to the land is ineffective

against a third person who, in good faith, may have acquired a right thereto, Barreto Po Ejap prevents the sale made by the latter of the litigated land in
it does, however, bind the principal to acknowledge the acts performed by favor of Jose M. Katigbak from being recorded in the registry of deeds, it is
his attorney-in-fact regarding said property not ineffective to compel Tecsi to acknowledge said sale.

FACTS: • The record contains many indications that Po Tecsi was not unaware of said
Principal: Po Tecsi sale. His several letters complaining of the pressing demands of his brother
Agent: Gabino Barreto Po Ejap Gabino Barreto Po Ejap to send him the rents of the land, his promises to
Buyer: Katigbak send them to him, and the remittance of the same were a tacit
acknowledgment that he occupied the land in question no longer as an
• Po Ejap was the owner of the land in litigation. owner but only as lessee.

• In November 1921, Po Tecsi executed a general power of attorney in favour • The sale made on November 22, 1923, by Gabino Barreto Po Ejap, as
of his brother Po Ejap. attorney-in-fact of Po Tecsi, in favor of Jose M. Katigbak of the land in
question is valid
• In April 1923, Po Ejap sold the land in litigation with its improvements to his
brother Po Tecsi. • By virtue whereof, and with the modifications above indicated, the
judgment appealed from is affirmed, without special pronouncement as to
• In November 1923, Po Ejap, making use of the power conferred on him by costs. So ordered.
his brother Po Tecsi, sold absolutely the aforesaid land with its
improvements to herein plaintiff-appellee Katigbak.
Case #16 Chua v. IAC (G.R. No. 70909 January 5, 1994)
• Notwithstanding said sale Po Tecsi remained in possession of said property
and leased a part of said land to Uy Chia for a period of five years from
October 1, 1923. The contract drawn up to that end was recorded in the
Case #17 Dungo vs. Lopena (G.R. No. L-18377 December 29, 1962)
proper certificate of title

• In February 1927, Po Tecsi’s son Po Sun Suy was appointed administrator of Doctrine: Although the Civil Code expressly requires a special power of
the estate of Po Tecsi. attorney in order that one may compromise an interest of another, it is
neither accurate nor correct to conclude that its absence renders the
• In May 1927, Katigbak sold the property in question to Po Sun Boo, Po compromise agreement void. In such a case, the compromise is merely
Ejap’s son who then informed Po Sun Suy and Po Ching about the purchase unenforceable. This results from its nature is a contract. It must be governed
and that they were to deal with him concerning the payment of their rents: by the rules and the law on contracts.
Po Sun Suy as administrator of Po Tecsi who continued renting the property
in which stood Po Ching’s store. FACTS:
1. Petitioner Anastacio Duñgo and one Rodrigo S. Gonzales purchased 3
• As Po Tecsi had not paid part of the rent due until his death, and Po Sun parcel of land from the respondents Adriano Lopena and Rosa Ramos with
Suy had not paid the rent due from his father's death until Katigbak the agreement that the balance of P241,804.00 would be paid in 6 monthly
transferred the ownership of the property to Po Sun Boo on May 23, 1927, installments.To secure the payment, petitioners executed over the same 3
Katigbak filed an action in CFI-Manila for the recovery of said rent which parcels of land Deed of Real Estate Mortgage in favor of the respondent
amounts to P45,280, first against the commercial firm Tai Hing Company, and Adriano Lopena and Rosa Ramos.
later against the members of said firm, Po Sun Suy and Po Ching, by an
amendment to the original complaint. 2. Respondents Adriano Lopena and Rosa Ramos, filed a complaint for the
foreclosure of the aforementioned real estate mortgage with the Court of
• Po Sun Suy, as the judicial administrator of the estate of Po Tecsi, filed an First Instance of Rizal the Hon. Judge Andres Reyes, presiding. Meanwhile,
intervention praying that judgment be rendered against plaintiff Katigbak, there were 2 other civil cases filed in the same lower court against the same
declaring him not to be the owner of the property and therefore, not entitled defendants Anastacio Duñgo and Rodrigo S. Gonzales.
to the rents of the property in question
3. Before the cases could be tried, a compromise agreement dated January
• Po Sun Suy and Po Ching contended that Po Ejap was not authorized under 15, 1960 was submitted to the lower court for approval. It was signed by
the power executed by Po Tecsi to sell said land, for the reason that said herein respondents Adriano Lopena and Rosa Ramos on one hand, and
power had been executed before Po Ejap sold said land to Po Tecsi. Rodrigo S. Gonzales, on the other. It was not signed by the herein petitioner.
However, Rodrigo S. Gonzales represented that his signature was for both
COURT OF FIRST INSTANCE himself and the herein petitioner. Moreover, Anastacio Duñgo's counsel of
• Question of Ownership being raised by the intervenors. record, Atty. Manuel O. Chan, the same lawyer who signed and submitted for
• The power is general and authorizes Gabino Po Ejap to sell any kind of him the answer to the complaint, was present at the preparation of the
realty "belonging" (pertenezcan) to the principal. The use of the subjunctive compromise agreement and this counsel affixed his signature thereto.
"pertenezcan" (might belong) and not the indicative "pertenecen" (belong),
means that Po Tecsi meant not only the property he had at the time of the 4. May 3, 1960, a so-called Tri-Party Agreement was drawn. The signatories
execution of the power, but also such as he might afterwards have during the to it were Anastacio Duñgo (herein petitioner) and Rodrigo S. Gonzales as
time it was in force. debtors, Adriano Lopena and Rosa Ramos (herein respondents) as creditors,
and, one Emma R. Santos as pay or.
ISSUE: Whether or Not Po Ejap was authorized to sell the land in question
given that the power of agency was executed before the said land was 5. August 31, 1960, Anastacio Duñgo filed a motion to set aside all the
owned by Po Tecsi ? proceedings on the ground that the compromise agreement dated January
15, 1960 was void ab initio with respect to him because he did not sign the
RULING: same. Upon denial of the said motion to set aside, Anastacio Duñgo filed a
• YES. In the present case, while it is true that the non-registration of the Notice of Appeal from the order of August 31, 1960 approving the
power of attorney executed by Po Tecsi in favor of his brother Gabino foreclosure sale of August 25, 1960, as well as the order of December 14,

1960, denying his motion to set aside. Soon thereafter, the lower court FACTS:
dismissed the appeal. (CFI RIZAL) 1. In 1967, HI Cement Corporation was granted authority to operate mining
facilities in Bulacan. However, the areas allowed for it to explore cover areas
ISSUE/S: which were also being explored by Ignacio Vicente, Juan Bernabe, and
(1) Was the compromise agreement of January 15, 1960, the Order of the Moises Angeles. And so a dispute arose between the three and HI Cement as
same date approving the same, and, all the proceedings subsequent thereto, neither side wanted to give up their mining claims over the disputed areas.
valid or void insofar as the petitioner herein is concerned? YES
(2) Did the lower court abuse its discretion when it dismissed the appeal of 2. Eventually, HI Cement filed a civil case before CFI Bulacan against the
the herein petitioner? NO three. During pre-trial, the possibility of an amicable settlement was
explored where HI Cement offered to purchase the areas of claims of Vicente
RULING: et al at the rate of P0.90 per square meter. Vicente et al however wanted
Although the Civil Code expressly requires a special power of attorney in P10.00 per square meter.
order that one may compromise an interest of another, it is neither accurate
nor correct to conclude that its absence renders the compromise agreement 3. In 1969, the lawyers of HI Cement agreed to enter into a compromise
void. In such a case, the compromise is merely unenforceable. This results agreement with the three whereby commissioners shall be assigned by the
from its nature is a contract. It must be governed by the rules and the law on court for the purpose of assessing the value of the disputed areas of claim.
contracts. An assessment was subsequently made pursuant to the compromise
agreement and the commissioners recommended a price rate of P15.00 per
ART. 1403. The following contracts are unenforceable, unless they are square meter.
ratified:
4. One of the lawyers of HI Cement, Atty. Francisco Ventura, then notified
(1) Those entered into in the name of another person by one who has been the Board of Directors of HI Cement for the approval of the compromise
given no authority or legal representation, or who has acted beyond his agreement. But the Board disapproved the compromise agreement hence
powers; Atty. Ventura filed a motion with the court to disregard the compromise
agreement.
The ratification of the compromise agreement was conclusively established
by the Tri-Party Agreement of May 1960. It is to be noted that the 5. Vicente et al naturally assailed the motion. Vicente et al insisted that the
compromise agreement was submitted to and approved by the lower court compromise agreement is binding because prior to entering into the
January 15, 1960. Now, the Tri-Party Agreement referred itself to that order compromise agreement, the three lawyers of HI Cement declared in open
when it stipulated thus: court that they are authorized to enter into a compromise agreement for HI
Cement; that one of the lawyers of HI Cement, Atty. Florentino Cardenas, is
“WHEREAS, the MAYOR, hereby submits and binds herself to the force and an executive official of HI Cement; that Cardenas even nominated one of the
effect of the order dated January 15, 1960, of the Court of First Instance of commissioners; that such act ratified the compromise agreement even if it
Pasig, Rizal, Branch which order is hereby made an integral part of this was not approved by the Board.
agreement as Annex "A".l”
6. HI Cement, in its defense, averred that the lawyers were not authorized
The Tri-Party Agreement was an instrument intended to render effective the and that in fact there was no special power of attorney executed in their
compromise agreement. It merely complemented an ratified the same. That favor for the purpose of entering into a compromise agreement.
a third person was involved in it is inconsequential. Nowhere in the new
agreement may the release of the herein petitioner be even inferred. 7. Judge Ambrosio Geraldez ruled in favor of HI Cement.

The compromise agreement was validity and enforceable against the herein ISSUE: Whether or not a compromise agreement entered into by a lawyer
petitioner, it follows that the lower court committed no abuse of discretion purportedly in behalf of the corporation is valid without a written authority.
when it dismissed the appeal of the herein petitioner.
RULING: NO.
1. The Compromise Agreement dated January 30, 1969 was signed only by
Case #18 Vicente vs. Geraldez (G.R. No. L-32473 July 31, 1973) the lawyers for petitioners and by the lawyers for private respondent
corporation. It is not disputed that the lawyers of respondent corporation
DOCTRINE: had not submitted to the Court any written authority from their client to
1. Special powers of attorney are necessary, among other cases, in the enter into a compromise.
following: to compromise and to renounce the right to appeal from a
judgment.1 Attorneys have authority to bind their clients in any case by any The Rules3 "require, for attorneys to compromise the litigation of their
agreement in relation thereto made in writing, and in taking appeals, and in clients, a special authority. And while the same does not state that the
all matters of ordinary judicial procedure, but they cannot, without special special authority be in writing the court has every reason to expect that, if
authority, compromise their clients' litigation, or receive anything in not in writing, the same be duly established by evidence other than the self-
discharge of their clients' claims but the full amount in cash. serving assertion of counsel himself that such authority was verbally given
him."
2. The Rules "require, for attorneys to compromise the litigation of their
clients, a special authority. And while the same does not state that the 2. In private respondent's "Reply to Defendant Bernabe's Answer Dated
special authority be in writing the court has every reason to expect that, if November 8, 1969," said counsels categorically denied that they ever
not in writing, the same be duly established by evidence other than the self- represented to the court that they were authorized to enter into a
serving assertion of counsel himself that such authority was verbally given compromise. In any event, assuming arguendo that they did, such a self-
him." serving assertion cannot properly be the basis for the conclusion that the
respondent corporation had in fact authorized its lawyers to compromise the
3. Law specifically requires that "juridical persons may compromise only in litigation.
the form and with the requisites which may be necessary to alienate their
property." 3. Whatever authority the officers or agents of a corporation may have is
derived from the board of directors, or other governing body, unless

conferred by the charter of the corporation. A corporation officer's power as RULING: YES.
an agent of the corporation must therefore be sought from the statute, the
charter, the by-laws, or in a delegation of authority to such officer, from the In this is a case where 132 checks made out in the name of the Insular Drug
acts of board of directors, formally expressed or implied from a habit or Co., Inc., were brought to the branch office of the Philippine National Bank in
custom of doing business. In the case at bar no provision of the charter and Iloilo by Foerster, a salesman of the drug company, Foerster's wife, and
by-laws of the corporation or any resolution or any other act of the board of Foerster's clerk. The bank could tell by the checks themselves that the money
directors of HI Cement Corporation has been cited, from which We could belonged to the Insular Drug Co., Inc., and not to Foerster or his wife or his
reasonably infer that the administrative manager had been granted expressly clerk.
or impliedly the power to bind the corporation or the authority to
compromise the case. Absent such authority to enter into the compromise, When the bank credited those checks to the personal account of Foerster
the signature of Atty. Cardenas on the agreement would be legally and permitted Foerster and his wife to make withdrawals without there
ineffectual. being made authority from the drug company to do so, the bank made itself
responsible to the drug company for the amounts represented by the checks.
4. In order to ratify the unauthorized act of an agent and make it binding on
the corporation, it must be shown that the governing body or officer The bank could relieve itself from responsibility by pleading and proving that
authorized to ratify had full and complete knowledge of all the material facts after the money was withdrawn from the bank it passed to the drug
connected with the transaction to which it relates.9 It cannot be assumed company which thus suffered no loss, but the bank has not done so. Much
also that Atty. Cardenas, as administrative manager of the corporation, had more could be said about this case, but it suffices to state in conclusion that
authority to ratify. For ratification can never be made "on the part of the bank will have to stand the loss occasioned by the negligence of its agents.
corporation by the same persons who wrongfully assume the power to make
the contract, but the ratification must be by the officer or governing body
having authority to make such contract and, as we have seen, must be with Case #20 Equitable PCIBank vs. Ku (G.R. No. 142950. March 26,
full knowledge." 2001)

Case #19 Insular Drug Co. v. National Bank (G.R. No. L-38816 FACTS:
November 3, 1933) 1. Respondent Rosita Ku, as treasurer of Noddy Dairy Products, Inc., and Ku
Giok Heng, as Vice-President/General Manager of the same corporation
incurred a loan from Equitable PCI. As a security, they mortgaged their
DOCTRINE: The right of an agent to indorse commercial paper is a very property a residential house and lot located in La Vista, Quezon City.
responsible power and will not be lightly inferred. A salesman with authority
to collect money belonging to his principal does not have the implied 2. When respondents failed to pay the loan, Equitable foreclosed the
authority to indorse checks received in payment. Any person taking checks property extrajudicially and was issued a certificate of sale after winning in
made payable to a corporation, which can act only by agent does so at his the foreclosure sale. On the other hand, respondent failed to redeem the
peril, and must same by the consequences if the agent who indorses the property.
same is without authority
3. Petitioner instituted an action before MeTC- decision in favor of them; RTC
FACTS: dismissed the case for no merit; CA agreed with Rosita rendered a decision
1. The Insular Drug Co., Inc., is a Philippine corporation with offices in the City enjoining the eviction of respondent from the premises.
of Manila.
4. Petitioner filed a motion for extension and it was granted by SC.
2. U.E. Foerster was formerly a salesman of drug company for the Islands of
Panay and Negros. Foerster also acted as a collector for the company. He was 5. Rosita argued that the said petition is defective because the bank alleged
instructed to take the checks which came to his hands for the drug company in its petition that it received a copy of the CA decision on April 25, 2000,
to the Iloilo branch of the Chartered Bank of India, Australia and China and however, the copy "was duly delivered to and received by Joel Rosales
deposit the amounts to the credit of the drug company. Instead, the checks (Authorized Representative) on April 24, 2000."
were in that bank placed in the personal account of Foerster. Some of the
checks were drawn against the Bank of Philippine National Bank. After the ISSUE:
indorsement on the checks was written "Received payment prior Whether Joel Rozales can be considered an agent of the bank counsel and
indorsement guaranteed by Philippine National bank, Iloilo Branch, Angel thus service to him is service to the Bank.
Padilla, Manager. As a consequence of the indorsements on checks the
amounts therein stated were subsequently withdrawn by U. E., Foerster and RULING:
Carmen E. de Foerster. Yes. An agency may be express but it may also be implied from the acts of
the principal, from his silence, or lack of action, or his failure to repudiate the
3. The Insular Drug Company claims that it never received the face value of agency, knowing that another person is acting on his behalf without
132 checks here in the question covering a total of P18,285.92. authority. Likewise, acceptance by the agent may also be express, although it
may also be implied from his acts which carry out the agency, or from his
4. The Court of First Instance of Manila requiring bank to pay to the Insular silence or inaction according to the circumstances.
Drug Co., Inc., the sum of P18,285.92 with legal interest and costs.The record
consists of the testimony of Alfred Von Arend, President and Manager of the In this case, Joel Rosales averred that "[o]n occasions when I receive mail
Insular Drug Co., Inc., and of exhibits obtained from the Philippine National matters for said law office, it is only to help them receive their letters
Bank showing transactions of U.E. Foerster with the bank. promptly," implying that counsel had allowed the practice of Rosales
receiving mail in behalf of the former. There is no showing that counsel had
5. Bank argues that the drug company was never defrauded at all. Further, objected to this practice or took steps to put a stop to it.
bank, to the effect that Foerster had implied authority to indorse all checks
made out in the name of the Insular Drug Co., Inc., has even less force.

ISSUE: WON Philippine National Bank as agent, liable.

appellant, then Mike was acting not only without appellees
Case #21 Calibo vs. CA (G.R. No. 120528. January 29, 2001) authority but without the latters knowledge as well.
2. Article 1911, on the other hand, mandates that the principal is
solidarily liable with the agent if the former allowed the latter to
DOCTRINE: Article 1869, for an agency relationship to be deemed as implied, act as though he had full powers. Again, in view of Pablo Abella
the principal must know that another person is acting on his behalf without lack of knowledge of Mikes pledging the tractor without any
authority. authority from him, it stands to reason that the former could not
have allowed the latter to pledge the tractor as if he had full
FACTS: powers to do so.
1. Pablo U. Abella purchased an MF 210 agricultural tractor which he 3. There is likewise no valid deposit in this case.
used in his farm. 4. Consequently, petitioner had no right to refuse delivery of the
2. Pablo Abella’s son, Mike Abella rented for residential purposes tractor to its lawful owner. On the other hand, private
the house of defendant-appellant Dionisio R. Calibo, Jr. respondent, as owner, had every right to seek to repossess the
3. Pablo Abella pulled out his aforementioned tractor from his farm tractor, including the institution of the instant action for replevin.
and left it in the safekeeping of his son, Mike Abella.
4. Calibo confronted Mike about his rental arrears and the unpaid SC – Affirmed CA’s decision.
electric and water bills.
5. Mike also assured Calibo that he would be settling his account
with the latter, offering the tractor as security. Mike even asked Case #22 Conde vs. CA (G.R. No. L-40242 December 15, 1982)
Calibo to help him find a buyer for the tractor so he could sooner
pay his outstanding obligation.
6. After a long while, or on November 22, 1988, Mikes father, Pablo DOCTRINE: An implied agency must be held to have been created from their
Abella, came to Tagbilaran City to claim and take possession of silence or lack of action, or their failure to repudiate the agency
the tractor.
7. Calibo, however, informed Pablo that Mike left the tractor with FACTS:
him as security for the payment of Mikes obligation to him. 1. On 7 April 1938. Margarita Conde, Bernardo Conde and the
8. Calibo told Pablo that he would accept the P2,000.00-check only if petitioner Dominga Conde, as heirs of Santiago Conde, sold with
the latter would execute a promissory note in his favor to cover right of repurchase, within ten (10) years from said date, a parcel
the amount of the unpaid electric and water bills. of agricultural land to Casimira Pasagui, married to Pio Altera
9. Pablo was not amenable to this proposal. The two of them having (hereinafter referred to as the Alteras), for P165.00.
failed to come to an agreement, Pablo left and went back to Cebu 2. The "Pacto de Retro Sale" further provided:
City, unsuccessful in his attempt to take possession of the tractor. ... (4) if at the end of 10 years the said land is not
10. On November 25, 1988, Pablo Abella instituted an action for repurchased, a new agreement shall be made between the
replevin, claiming ownership of the tractor and seeking to recover parties and in no case title and ownership shall be vested in
possession thereof from petitioner (Atty. Calibo). the hand of the party of the SECOND PART (the Alteras).
3. On 17 April 1941, the Cadastral Court of Leyte adjudicated Lot No.
RTC – Favored Abella and against Calibo. 840 to the Alteras "subject to the right of redemption by Dominga
CA – Affirmed RTC’s decision declaring Abella as the lawful possessor of Conde, within ten (10) years counting from April 7, 1983, after
a tractor subject of a replevin suit and ordering Calibo to pay private returning the amount of P165.00.
respondent actual damages and attorneys fees. 4. On 28 November 1945, private respondent Paciente Cordero, son-
in-law of the Alteras, signed a document in the Visayan dialect,
The Court of Appeals sustained the ruling of the trial court that Mike the English translation of MEMORANDUM OF REPURCHASE OVER
Abella could not have validly pledged the subject tractor to petitioner A PARCEL OF LAND SOLD WITH REPURCHASE WHICH DOCUMENT
since he was not the owner thereof, nor was he authorized by its owner GOT LOST.
to pledge the tractor. 5. To be noted is the fact that neither of the vendees-a-retro, Pio
Altera nor Casimira Pasagui, was a signatory to the deed.
Calibo’s Argument: Maintains that even if Mike Abella were not the owner of Petitioner (Conde) maintains that because Pio Altera was very ill
the tractor, a principal-agent relationship may be implied between Mike at the time, Paciente Cordero executed the deed of resale for and
Abella and private respondent. on behalf of his father-in-law. Petitioner (Conde) further states
that she redeemed the property with her own money as her co-
He contends that the latter failed to repudiate the alleged agency, knowing heirs were bereft of funds for the purpose.
that his son is acting on his behalf without authority when he pledged the 6. The pacto de retro document was eventually found.
tractor to petitioner. 7. On 30 June 1965 Pio Altera sold the disputed lot to the spouses
Ramon Conde and Catalina T. Conde, who are also private
ISSUE: WON there was an implied agency created between Pablo and Mike respondents herein. Their relationship to petitioner does not
Abella. (NO) appear from the records. Nor has the document of sale been
exhibited.
RULING: 8. Contending that she had validly repurchased the lot in question in
1. There also does not appear to be any agency in this case. 1945, Dominga Conde filed a Complaint, against Paciente Cordero
and his wife Nicetas Altera, Ramon Conde and his wife Catalina T.
As indicated in Article 1869, for an agency relationship to be Conde, and Casimira Pasagui Pio Altera having died in 1966, for
deemed as implied, the principal must know that another person quieting of title to real property and declaration of ownership.
is acting on his behalf without authority. Here, Pablo Abella 9. There is no question that neither of the vendees-a-retro signed
categorically stated that the only purpose for his leaving the the "Memorandum of Repurchase", and that there was no formal
subject tractor in the care and custody of Mike Abella was for authorization from the vendees for Paciente Cordero to act for
safekeeping, and definitely not for him to pledge or alienate the and on their behalf.
same. If it were true that Mike pledged appellees tractor to

RTC – dismissing the Complaint and the counterclaim and ordering CA reversed it, ruling that Lilian was not authorized to borrow
petitioner "to vacate the property in dispute and deliver its peaceful money on his behalf and was thus unenforceable and that
possession to the defendants Ramon Conde and Catalina T. Conde". petitioner had not cause of action because he was not the real
party-in-interest because it was not shown he was authorized to
CA – Affirming CFI’s decision which dismissed petitioner’s complaint for prosecute for Metro Angeles and St. Joseph.
Quieting of Title and ordered her to vacate the property in dispute and
deliver its possessin to private respondents Ramon Conde and Catalina ISSUE:
Conde. • WON Soriano had the special authority to borrow on behalf of
respondent. (NO)
ISSUE: • WON Petitioner is the real party-in-interest. (YES)
WON there is an implied agency created between Alteras and Cordero. (YES)
RULING:
RULING: 1. NO. Generally, the agency may be oral, unless the law requires a
1. Thus, an implied agency must be held to have been created from specific form.
their silence or lack of action, or their failure to repudiate the 2. The requirement of a special power of attorney refers to the
agency. If, as alleged, petitioner exerted no effort to procure the nature of the authorization and not to its form. If the special
signature of Pio Altera after he had recovered from his illness, authority is not written, then it must be duly established by
neither did the Alteras repudiate the deed that their son-in-law evidence.
had signed. 3. However, Lilian signed in the receipt in her name alone, without
2. Cordero must be held bound by the clear terms of the indicating therein that she was acting for and in behalf of
Memorandum of Repurchase that he had signed wherein he respondent. She thus bound herself in her personal capacity and
acknowledged the receipt of P165.00 and assumed the obligation not as an agent of respondent or anyone for that matter
to maintain the repurchasers in peaceful possession should they 4. YES. Petitioner is the real party in interest in this case. One who is
be "disturbed by other persons". It was executed in the Visayan not a party to a contract, and for whose benefit it was not
dialect which he understood. He cannot now be allowed to expressly made, cannot maintain an action on it. One cannot do
dispute the same. "... If the contract is plain and unequivocal in its so, even if the contract performed by the contracting parties
terms he is ordinarily bound thereby. It is the duty of every would incidentally inure to one's benefit.
contracting party to learn and know its contents before he signs
and delivers it."
Case #24 MCIAA vs. Unchuan (G.R. No. 182537, June 01, 2016)
3. In sum, although the contending parties were legally wanting in
their respective actuations, the repurchase by petitioner is
supported by the admissions at the pre-trial that petitioner has FACTS:
been in possession since the year 1945, the date of the deed of 1. Atanacio Godinez is the supposed attorney-in-fact and agent, of
repurchase, and has been paying land taxes thereon since then. the surviving heirs of the registered owner, Eugenio Godinez.
The imperatives of substantial justice, and the equitable principle 2. Unchuan moved for the declaration of nullity of the sale made by
of laches brought about by private respondents' inaction and Atanacio of their parcels of land to Civil Aeronautics
neglect for 24 years, loom in petitioner's favor. Administration (CAA) and later to Mactan-Cebu International
Airport Authority (MCIAA) on the grounds that the registered
SC – Reversed CA’s decision and Dominga Conde is hereby declared the owners and their heirs did not authorize him.
owner of the disputed property.
RTC ruled in favor of Unchuan, declaring it to be VOID insofar as the
shares of his co-owners are concerned because he was not legally
Case #23 Gozun vs. Mercado (G.R. No. 167812 December 19, 2006)
authorized to act as the attorney-in-fact for his siblings and he was not
clothed with a special power of attorney;
FACTS:
1. Respondent vied for the gubernational post in Pampanga and CA affirmed, stating that he had no authority to act as agent.
requested the Petitioner, owner of JMG Publishing House, to
submit draft samples and quotations. ISSUE:
2. However, it was respondent’s wife who told him that respondent • WON Atanacio Gomez was authorized to convey the said lots.
already approved his quotation and that he could start printing. (NO)
Due to the urgency, petitioner availed of the services and facilities
of Metro Angeles Printing and of St. Joseph Printing Press. RULING:
3. Respondents’ sister in law Soriano, obtained from petitioner cash 1. NO, the sale transaction executed by Anatacio and the appellants
advance of 253,000.00, allegedly for the allowances of poll is void insofar as the other registered owners are concerned.
watchers who were attending a seminar and for other related 2. Article 1874 provides that a sale of a piece of land or any interest
expenses. therein is through an agent, the authority of the latter shall be in
4. Petitioner later sent respondent a Statement of Account in the writing; otherwise, the sale shall be void.
total amount of P2,177,906. 3. Art. 1878. Special powers of attorney are necessary in the
5. It was respondent’s wife who partially paid P1,000,000. following cases:
6. Despite repeated demands, respondent failed to pay balance.
7. Petitioner filed with the RTC to collect the remaining Php x x x
1,177,906.00 plus inflationary adjustment and attorney’s fees;
Respondent denied entering into a contract with petitioner, or (5) To enter into any contract by which the ownership of an
giving Soriano the authority to receive the amount, and his wife to immovable is transmitted or acquired either gratuitously or for a
enter into a contract with petitioner valuable consideration;

RTC ruled in petitioner’s favor;

4. Thus, the authority of an agent to execute a contract for the sale
of real estate must be conferred in writing and must give him Case #26 Yoshizaki vs. Joy Training Center of Aurora (G.R. No.
specific authority. 174978, July 31, 2013)
5. Atanacio's act of conveying Lot No. 4810-A and Lot No. 4810-B
cannot be a valid source of obligation to bind all the other DOCTRINE: As a general rule, a contract of agency may be oral. However, it
registered co-owners and their heirs because he was not clothed must be written when the law requires a specific form. Specifically, Article
with any authority to enter into a contract with CAA. 1874 of the Civil Code provides that the contract of agency must be written
6. By Atanacio and CAA, however, was not entirely void because the for the validity of the sale of a piece of land or any interest therein.
lack of consent by the other co-owners in the sale was with Otherwise, the sale shall be void. A related provision, Article 1878 of the Civil
respect to their shares only Code, states that special powers of attorney are necessary to convey real
rights over immovable properties.
Case #25 Patrimonio vs. Gutierrez (G.R. No. 187769 June 4, 2014)
An agency couched in general terms comprises only acts of administration,
even if the principal should state that he withholds no power or that the
FACTS: agent may execute such acts as he may consider appropriate, or even though
1. Alvin Patrimonio was the principal, while Respondent Guiterrez the agency should authorize a general and unlimited management.
was the agent.
2. Petitioner (Patrimonio) entrusted several pre-signed checks to FACTS:
answer for the expenses of their business venture, Slam Dunk, a 1. The alleged principal is Joy Training Center of Aurora Inc. and the
production outfit that produces mini shows and concerts related alleged agent is the spouses Richard and Linda Johnson.
to basketball, with the specific instruction not to fill them out 2. Joy Training is a non-stock, non-profit religious educational
without previous notice to and approval by the petitioner. institution where the spouses Johnson are among the five (5)
3. Without the petitioner’s knowledge and consent, Guiterrez board of trustees of the said institution.
secured a loan for Php 200,000.00 from Masarigan, a former 3. Real properties of the institution, a Wrangler jeep, and other
teammate, telling the latter that petitioner needed the money to personal properties were sold in favor of the spouses Sally and
construct his house. Yoshio Yoshizaki. Deed of Absolute Sale and a Deed of Sale of
4. Sometime later, he filled up the blank checks and paid Masarigan. Motor Vehicle were executed on the same day.
After the check was dishonored because the account was closed, 4. Reuben V. Rubio, the acting Chairperson of Joy Training filed an
Masarigan sought recovery and sent several demand letters, and action for the Cancellation of Sales and Damages against the
filed a criminal case against petitioner. Petitioner filed a complaint spouses Yoshizaki and the spouses Johnson. Joy training alleged
for Nullity of Loan and Damages against Respondents Guiterrez that the properties were sold without the requisite authority from
and Masarigan. the Board of Directors.
5. The spouses Johnson assailed the validity of a board resolution
RTC ruled in favor of Masarigan, finding him to be a holder in due which granted the spouses the authority to sell its real properties.
course despite the specific instructions not to issue without his However, it was averred that only a minority of the board,
approval; composed of the spouses Johnson and Alexander Abadayan,
authorized the sale through the resolution. Additionally, the
CA affirmed and held that the check had been strictly filled out. Certificate of Transfer of Title states that the spouses Johnson are
Joy Training’s representative.
ISSUE: 6. After the presentation of their testimonial evidence, the spouses
• WON the Contract of Loan may be nullified because Respondent Yoshizaki formally offered in evidence photocopies of the
was not authorized. (YES) resolution and certification, among others. Joy Training objected
to the formal offer of the photocopied resolution and certification
RULING: on the ground that they were not the best evidence of their
1. YES, Contracts of Agency may be oral, unless the law requires a contents.
specific form.
2. Under ARTICLE 1878, a special power of attorney is required: To RTC: Ruled in favor of the spouses Yoshizaki. It found that Joy Training
loan or borrow money, unless the latter act be urgent and owned the real properties. However, it held that the sale was valid
indispensable for the preservation of the things which are under because Joy Training authorized the spouses Johnson to sell the real
administration. properties. It recognized that there were only five actual members of
3. The provision does not state that the authority has to be in the board of trustees; consequently, a majority of the board of trustees
writing. As long as the mandate is express, such authority may be validly authorized the sale. It also ruled that the sale of personal
oral or written. It refers to the nature of the authorization, not its properties was valid because they were registered in the spouses
form. Be that as it may, the authority must be duly established by Johnson's name.
competent and convincing evidence other than the self-serving
assertion of the party claiming that such authority was verbally CA: Reversed its ruling with respect to the sale of real properties. It
given maintained that the present action is cognizable by the RTC because it
4. Guiterrez was not authorized to borrow money in behalf of the involves recovery of ownership from third parties. It also ruled that the
petitioner. There was no showing that petitioner executed a resolution is void because it was not approved by a majority of the
Special Power of Attorney, whether verbally or in writing, to board of trustees. The CA did not also give any probative value to the
borrow money in his behalf. certification. It stated that the certification failed to indicate the date
5. Masarigan was thus bound by the risk accompanying his trust on and the names of the trustees present in the meeting. Moreover, the
the mere assurances of Gutierrez. While there may be a meeting spouses Yoshizaki did not present the minutes that would prove that
of the minds between Gutierrez and Marasigan, such agreement the certification had been issued pursuant to a board resolution. The
cannot bind the petitioner whose consent was not obtained and CA also denied the spouses Yoshizaki's motion for reconsideration,
who was not privy to the loan agreement. Hence, only Gutierrez is prompting Sally to file the present petition.
bound by the contract of loan.


ISSUE: The RTC denied the Motion to Dismiss and assumed jurisdiction over
• Whether or not there was a contract of agency to sell the real the case because the issues pertain to a determination of the real
properties between Joy Training and the spouses Johnson. (NO) agreement between the parties and rescission of the contract to sell
the property.
RULING:
1. No. There is no contract of agency between Joy Training and the The appellate court also held that respondent, as Revelens agent, did
spouses Johnson to sell the parcel of land with its improvements. not have a written authority to enter into such contract of sale; hence,
2. Article 1868 of the Civil Code defines a contract of agency as a the contract entered into between petitioners and respondent is void.
contract whereby a person "binds himself to render some service A void contract creates no rights or obligations or any juridical relations.
or to do something in representation or on behalf of another, Therefore, the void contract cannot be the subject of rescission.
with the consent or authority of the latter."
3. It may be express, or implied from the acts of the principal, from ISSUE:
his silence or lack of action, or his failure to repudiate the agency, • Whether or not the appellate court gravely erred in ruling that the
knowing that another person is acting on his behalf without contract entered into by respondent, in representation of her
authority. daughter, and former defendant Eduardo Rubi (deceased), is void.
4. The special power of attorney mandated by law must be one that (NO)
expressly mentions a sale or that includes a sale as a necessary
ingredient of the authorized act. A special power of attorney must RULING:
express the powers of the agent in clear and unmistakable 1. No. Articles 1874 and 1878 of the Civil Code provide: Art. 1874.
language for the principal to confer the right upon an agent to sell When a sale of a piece of land or any interest therein is through
real estate. an agent, the authority of the latter shall be in writing; otherwise,
5. The documents presented by the spouses Johnson did not the sale shall be void.
convince the Court the existence of the contract of agency to sell. 2. Art. 1878. Special powers of attorney are necessary in the
6. It merely gave them the representative capacity in land following cases: (5) To enter into any contract by which the
registration. ownership of an immovable is transmitted or acquired either
7. Moreover, the certification presented by the spouses Johnson is a gratuitously or for a valuable consideration.
mere general power of attorney which comprises all of Joy 3. Article 1874 of the Civil Code explicitly requires a written
Training's business. authority before an agent can sell an immovable property. Based
on a review of the records, there is absolutely no proof of
respondents written authority to sell the lot to petitioners.
Case #27 Sps. Alcantara vs. Nido (G.R. No. 165133, April 19, 2010) 4. In fact, during the pre-trial conference, petitioners admitted that
at the time of the negotiation for the sale of the lot, petitioners
were of the belief that respondent was the owner of lot.
DOCTRINE: Art. 1874 provides that when a sale of a piece of land or any 5. Petitioners only knew that Revelen was the owner of the lot
interest therein is through an agent, the authority of the latter shall be in during the hearing of this case. Consequently, the sale of the lot
writing; otherwise, the sale shall be void. by respondent who did not have a written authority from Revelen
is void.
FACTS: 6. A void contract produces no effect either against or in favor of
1. The principal is Revelen N. Srivastava and the agent if Brigida L . anyone and cannot be ratified.
Nido. 7. A special power of attorney is also necessary to enter into any
2. Revelen, who is respondent’s daughter and of legal age, is the contract by which the ownership of an immovable is transmitted
owner of an unregistered land with an area of 1,939 square or acquired for a valuable consideration. Without an authority in
meters located in Cardona, Rizal for which 200 meters portion writing, respondent cannot validly sell the lot to petitioners.
was sold to the spouses Alcantara. Hence, any sale in favor of the petitioners is void.
3. Petitioners (Sps. Alcantara) paid P3,000 as down payment and the 8. Respondent did not have the written authority to enter into a
balance was payable on installment and occupied additional 150 contract to sell the lot. As the consent of Revelen, the real owner
square meters of the lot. of the lot, was not obtained in writing as required by law, no
4. Petitioners had already paid 17,500 before they defaulted on their contract was perfected. Consequently, petitioners failed to validly
installment payments. acquire the lot.
5. The respondent acting as administrator and attorney-in-fact of
Revelen, filed a complaint for recovery of possession with
damages and prayer for preliminary injunction against petitioners Case #28 Estate of Lino Olaguer vs. Ongjoco (G.R. No. 173312,
with the RTC. August 26, 2008)

RTC: Revelen owns the lot and respondent was verbally authorized to Doctrine: According to the provisions of Article 1874 of the Civil Code on
sell 200 square meters to petitioners. The RTC ruled that since Agency, when the sale of a piece of land or any interest therein is made
respondents authority to sell the land was not in writing, the sale was through an agent, the authority of the latter shall be in writing. Absent this
void under Article 1876 of the Civil Code. The RTC ruled that rescission requirement, the sale shall be void. Also, under Article 1878, a special power
is the proper remedy. of attorney is necessary in order for an agent to enter into a contract by
which the ownership of an immovable property is transmitted or acquired,
CA: The appellate court reversed the RTC decision and dismissed the either gratuitously or for a valuable consideration.
civil case. The appellate court explained that this is an unlawful
detainer case. The prayer in the complaint and amended complaint was FACTS:
for recovery of possession and the case was filed within one year from 1. The principal is Lino Olaguer and the agents are Olivia P. Olaguer
the last demand letter. Even if the complaint involves a question of and Eduardo Olaguer.
ownership, it does not deprive the Municipal Trial Court (MTC) of its 2. The plaintiffs are the legitimate children of the spouses Olaguer.
jurisdiction over the ejectment case. Petitioners raised the issue of lack Lino Olaguer died so Special Proceedings for probate of will was
of jurisdiction in their Motion to Dismiss and Answer before the RTC.

filed and defendant Olivia P. Olaguer was appointed as Furthermore, the evidence adduced by petitioners was ruled to be
administrator pursuant to the will. inadequate to support the conclusion that Ongjoco knew of facts
3. In the order of the probate court some properties of the estate indicative of the defect in the title of Olivia Olaguer or Virgilio Olaguer.
were authorized to be sold to pay obligations of the estate. A
subdivision agreement was entered into among Domingo ISSUE: WON respondent Ongjoco can be considered an innocent purchaser
Candelaria, Olivia P. Olaguer, Domingo O. de la Torre and Emiliano for value.
M. [Ongjoco]. Jose A. Olaguer claiming to be the attorney-in-fact
of his son Virgilio Olaguer under a general power of attorney, RULING:
those lot sold to defendant Emiliano M. Ongjoco. Thus, they filed 1. The court hold that respondent Emiliano M. Ongjoco was in bad
an action for the Annulment of Sales of Real Property and/or faith when he bought Lots Nos. 1 and 2 from Jose A. Olaguer, as
Cancellation of Titles by the CFI of Albay. the latter was not proven to be duly authorized to sell the said
4. An Amended Complaint was filed in order to implead respondent properties. However, respondent Ongjoco was an innocent
Emiliano M. Ongjoco as the transferee of Virgilio Olaguer. In his purchaser for value with regard to Lots Nos. 76-D, 76-E, 76-F and
Answer with Counterclaim and Motion to Dismiss, respondent 76-G since it was entirely proper for him to rely on the duly
Ongjoco denied the material allegations of the amended notarized written power of attorney executed in favor of Jose A.
complaint and interposed, as affirmative defenses the statute of Olaguer.
limitations, that he was a buyer in good faith, that plaintiffs had 2. According to the provisions of Article 1874 of the Civil Code on
no cause of action against him, and that the sale of property to Agency, when the sale of a piece of land or any interest therein is
Pastor Bacani, from whom Ongjoco derived his title, was judicially made through an agent, the authority of the latter shall be in
approved. writing. Absent this requirement, the sale shall be void. Also,
5. Plaintiffs filed a Re-Amended Complaint, in which the heirs of under Article 1878, a special power of attorney is necessary in
Estanislao Olaguer were identified, namely, Maria Juan Vda. de order for an agent to enter into a contract by which the
Olaguer, Peter Olaguer, Yolanda Olaguer and Antonio Bong ownership of an immovable property is transmitted or acquired,
Olaguer. either gratuitously or for a valuable consideration. The court
6. The heirs of Estanislao Olaguer and petitioner Ma. Linda Olaguer noted that the resolution of this case, therefore, hinges on the
Montayre submitted a compromise agreement, which was existence of the written power of attorney upon which
approved by the trial court. The RTC ruled in favor of the respondent Ongjoco bases his good faith.
plaintiffs. Both the petitioners and respondent filed their 3. Unfortunately for respondent, the power of attorney that was
respective Notices of Appeal to the CA. purportedly issued by Virgilio in favor of Jose Olaguer with respect
to the sale of Lots Nos. 1 and 2 was never presented to the trial
RTC Ruling: The entirety of the evidence adduced clearly show that the court. Neither was respondent able to explain the omission. Other
sale of the 12 lots to Pastor Bacani and the sale of the 10 lots to than the self-serving statement of respondent, no evidence was
Estanislao Olaguer were absolutely simulated sales and thus void ab offered at all to prove the alleged written power of attorney. This
initio. The two deeds of sales are even worse than fictitious, they are of course was fatal to his case. As it stands, there is no written
completely null and void for lack of consideration and the parties power of attorney to speak of. The trial court was thus correct in
therein never intended to be bound by the terms thereof and the disregarding the claim of its existence. Accordingly, respondent
action or defense for the declaration of their inexistence does not Ongjocos claim of good faith in the sale of Lots Nos. 1 and 2 has
prescribe. (Art. 1410, Civil Code) Aside from being simulated they were no leg to stand on.
clearly and unequivocally intended to deprive the compulsory heirs of 4. As regards Lots Nos. 76-D, 76-E, 76-F and 76-G, Ongjoco was able
their legitime. to present a general power of attorney that was executed by
Virgilio Olaguer. While the law requires a special power of
The deeds of sale are void ab initio, they are deemed as non-existent attorney, the general power of attorney was sufficient in this case,
and the approval thereof by the probate court becomes immaterial and as Jose A. Olaguer was expressly empowered to sell any of
of no consequence, because the approval by the probate court did not Virgilios properties; and to sign, execute, acknowledge and deliver
change the character of the sale from void to valid. any agreement therefor. Even if a document is designated as a
general power of attorney, the requirement of a special power of
CA Ruling - In denying the appeal interposed by petitioners, the attorney is met if there is a clear mandate from the principal
appellate court reasoned that the claim for the value of the lots specifically authorizing the performance of the act. The special
mortgaged with the PNB were not prayed for in the original Complaint, power of attorney can be included in the general power when the
the Amended Complaint or even in the Re-Amended Complaint. What act or transaction for which the special power is required is
was sought therein was merely the declaration of the nullity of the specified therein.
mortgage contract with PNB. As the relief prayed for in the appeal was 5. On its face, the written power of attorney contained the signature
not contained in the complaint, the same was thus barred. of Virgilio Olaguer and was duly notarized. As such, the same is
considered a public document and it has in its favor the
The Court of Appeals also ruled that the evidence of petitioners failed presumption of authenticity and due execution, which can only be
to rebut the presumption that PNB was a mortgagee in good faith. contradicted by clear and convincing evidence.
Contrarily, what was proven was the fact that Olivia Olaguer and Jose A. 6. No evidence was presented to overcome the presumption in favor
Olaguer were the persons responsible for the fraudulent transactions of the duly notarized power of attorney. Neither was there a
involving the questioned properties. Thus, the claim for restitution of showing of any circumstance involving the said document that
the value of the mortgaged properties should be made against them. would arouse the suspicion of respondent and spur him to inquire
beyond its four corners, in the exercise of that reasonable degree
As regards the appeal of respondent Ongjoco, the appellate court of prudence required of a man in a similar situation.
found the same to be meritorious. The said court ruled that when the 7. The court therefore rule that respondent Ongjoco had every right
sale of real property is made through an agent, the buyer need not to rely on the power of attorney in entering into the contracts of
investigate the principals title. What the law merely requires for the sale of Lots Nos. 76-D to 76-G with Jose A. Olaguer.
validity of the sale is that the agents authority be in writing.


George de Castro lacked the authority to sign the Verification and
the Certificate of Non-Forum Shopping.
Case #29 Wee vs. Castro (G.R. No. 176405 August 20, 2008)

DOCTRINE: A power of attorney is an instrument in writing by which one Case #30 Oesmer vs. Paraiso Development Corporation (G.R. No.
person, as principal, appoints another as his agent and confers upon him the 157493 February 5, 2007)
authority to perform certain specified acts or kinds of acts on behalf of the
principal. DOCTRINE: When a sale of a piece of land or any interest therein is through
an agent, the authority of the latter shall be in writing; otherwise, the sale
FACTS: shall be void (Art. 1874).
1. Respondents alleged that they are the registered owners of the
subject property, a two-storey building erected on a parcel of land FACTS:
registered in the Registry of Deeds of Pangasinan. 1. Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and
2. Both parties agreed that effective 1 October 2001, the rental Enriqueta, all surnamed Oesmer, together with Adolfo Oesmer
payment shall be increased from P9,000.00 to P15,000.00. (Adolfo) and Jesus Oesmer (Jesus), are brothers and sisters, and
Petitioner failed to pay the increase on rent. the co-owners of undivided shares of two parcels of agricultural
3. The rental dispute was brought to the Lupon Tagapagpamayapa and tenanted land situated in Barangay Ulong Tubig, Carmona,
of Poblacion, Alaminos, Pangasinan, in an attempt to amicably Cavite, identified as Lot 720 and Lot 834 with a total land area of
settle the matter but the parties failed to reach an agreement, 55,276 sq. m.
resulting in the issuance by the Barangay Lupon of a Certification 2. Both lots are unregistered and originally owned by their parents,
to file action in court. Bibiano Oesmer and Encarnacion Durumpili, who declared the lots
4. Respondents George de Castro, together with his siblings and co- for taxation purposes.
owners, Annie de Castro, Felomina Peaches de Castro Uban and 3. When the spouses Oesmer died, petitioners, together with Adolfo
Jesus de Castro, filed the Complaint for ejectment before the and Jesus, acquired the lots as heirs of the former by right of
MTC. succession.
5. Although the Complaint stated that it was being filed by all of the 4. Respondent Paraiso Development Corporation is known to be
respondents, the Verification and the Certificate of Non-Forum engaged in the real estate business.
Shopping were signed by George de Castro alone. He 5. Sometime in March 1989, Rogelio Paular, a resident and former
subsequently attached the Special Powers of Attorney (SPAs) Municipal Secretary of Carmona, Cavite, brought along petitioner
executed by his sisters Annie and Felomina, authorizing him to Ernesto to meet with a certain Sotero Lee, President of
institute the ejectment case against petitioner. respondent Paraiso Development Corporation, at Otani Hotel in
6. Petitioner defended that there was no agreement between the Manila.
parties to increase the rents demand for an increase was 6. The said meeting was for the purpose of brokering the sale of
exorbitant, and he was religiously paying P9,000.00 every month. petitioners’ properties to respondent corporation.
7. Petitioner said that respondents failed to comply with the 7. Pursuant to the said meeting, a Contract to Sell was drafted by
jurisdictional requirement of conciliation before the Barangay the Executive Assistant of Sotero Lee, Inocencia Almo. On 1 April
Lupon prior to the filing before the courts. Also, he asserted that 1989, petitioners Ernesto and Enriqueta signed the aforesaid
MTC lacked jurisdiction over the ejectment suit, since resps' Contract to Sell. A check in the amount of ₱100,000.00, payable to
Complaint was devoid of any allegation that there was an Ernesto, was given as option money. Sometime thereafter,
"unlawful withholding" of the subject property by the petitioner. Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said
Contract to Sell. However, two of the brothers, Adolfo and Jesus,
MTC: Judgment is rendered ordering the dismissal of the case for did not sign the document.
failure to comply with the prior conciliation requirement before the 8. On 5 April 1989, a duplicate copy of the instrument was returned
Barangay Lupon, with costs against respondents. to respondent corporation. On 21 April 1989, respondent brought
the same to a notary public for notarization.
RTC: Affirmed MTC’s decision in toto. 9. In a letter dated 1 November 1989, addressed to respondent
corporation, petitioners informed the former of their intention to
CA: Granted the respondents' Petition and ordering petitioner to vacate rescind the Contract to Sell and to return the amount of
the subject property and turn over the same to respondents. ₱100,000.00 given by respondent as option money.
10. Respondent did not respond to the aforesaid letter. On 30 May
ISSUE/S: WON respondent George de Castro cannot maintain an action for 1991, herein petitioners, together with Adolfo and Jesus, filed a
ejectment for failure to attach the SPAs on the Complaint. Complaint for Declaration of Nullity or for Annulment of Option
Agreement or Contract to Sell with Damages before the RTC of
RULING: Bacoor, Cavite.
1. Failure by respondent George de Castro to attach the said SPAs to 11. During trial, petitioner Rizalino died. Upon motion of petitioners,
the Complaint is innocuous, since it is undisputed that he was the trial court issued an Order, dated 16 September 1992, to the
granted by his sisters the authority to file the action for ejectment effect that the deceased petitioner be substituted by his surviving
against petitioner prior to the institution of Civil Case No. 1990. spouse, Josefina O. Oesmer, and his children, Rolando O. Oesmer
2. A power of attorney is an instrument in writing by which one and Fernando O. Oesmer. However, the name of Rizalino was
person, as principal, appoints another as his agent and confers retained in the title of the case both in the RTC and the Court of
upon him the authority to perform certain specified acts or kinds Appeals.
of acts on behalf of the principal. The written authorization itself
is the power of attorney, and this is clearly indicated by the fact MTC: In favor of respondent. The assailed Contract to Sell is valid and
that it has also been called a "letter of attorney.” binding only to co-owner Ernesto Durumpili Oesmer. The latter is
3. Even then, the Court views the SPAs as mere surplusage, such that hereby ordered to execute the Contract of Absolute Sale concerning his
the lack thereof does not in any way affect the validity of the 1/8 share over the subject two parcels of land in favor of respondent,
action for ejectment instituted by respondent George de Castro. and to pay the latter the attorney’s fees in the sum of ₱10,000.00 plus
This also disposes of petitioner's contention that respondent costs of suit.

Rules in the Higher Interest of Substantial Justice, all of which
RTC: Modified in favor of respondent. The assailed Contract to Sell is have been denied by SC after 1999.
valid and binding with respect to the undivided proportionate share of 3. The following facts were derived from the 1999 SC Decision (since
the 6 signatories of this document, namely, Ernesto, Enriqueta, Librado, the 2003 SC Decision is already a Resolution):
Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The latter are Overland Express Lines, Inc. entered into a Contract of Lease with
hereby ordered to execute the Deed of Absolute Sale concerning their Option to Buy with petitioners involving a 1,755.80 square meter
6/8 share over the subject two parcels of land and in favor of parcel of land situated at corner MacArthur Highway and South
respondent, and to pay the latter the attorney’s fees in the sum of “H” Street, Diliman, Quezon City. The term of the lease was for 1
₱10,000.00 plus costs of suit. year commencing from May 16, 1974 up to May 15, 1975. During
this period, Overland Express Lines was granted an option to
CA: Modified in favor of respondent. Aside from the RTC decision, purchase for the amount of P3,000.00 per square meter.
respondent is likewise ordered to tender payment to the petitioners in Thereafter, the lease shall be on a per month basis with a monthly
the amount of ₱3,216,560.00 representing the balance of the purchase rental of P3,000.00.
price of the subject two parcels of land.
For failure of Overland Express Lines to pay the increased rental of
ISSUE: WON the Contract to Sell is valid and binding among the five P8,000.00 per month effective June 1976, petitioners filed an
petitioners despite lack of authority given to petitioner Ernesto as agent. action for ejectment against it. The lower court rendered
judgment ordering Overland Express Lines to vacate the leased
RULING: premises and to pay the sum of P624,000.00 representing rentals
1. As can be clearly gleaned from the contract itself, it is not only in arrears and/or as damages in the form of reasonable
petitioner Ernesto who signed the said Contract to Sell; the other compensation for the use and occupation of the premises during
five petitioners also personally affixed their signatures thereon. the period of illegal detainer from June 1976 to November 1982
Therefore, a written authority is no longer necessary in order to at the monthly rental of P8,000.00, less payments made, plus 12%
sell their shares in the subject parcels of land because, by affixing interest per annum from November 18, 1976, the date of filing of
their signatures on the Contract to Sell, they were not selling their the complaint, until fully paid, the sum of P8,000.00 a month
shares through an agent but, rather, they were selling the same starting December 1982, until Overland Express Lines fully vacates
directly and in their own right. the premises, and to pay P20,000.00 as and by way of attorney’s
2. It is well-settled that contracts are perfected by mere consent, fees.
upon the acceptance by the offeree of the offer made by the
offeror. From that moment, the parties are bound not only to the City Court (now Metropolitan TC) on 01/28/1999 Decision:
fulfillment of what has been expressly stipulated but also to all Rendered judgment ordering private respondent to vacate the
the consequences which, according to their nature, may be in leased premises and pay for the rentals in arrears.
keeping with good faith, usage and law.
3. To produce a contract, the acceptance must not qualify the terms RTC: on 01/28/1999 Decision: Dismissed private respondent's
of the offer. However, the acceptance may be express or implied. complaint.
For a contract to arise, the acceptance must be made known to
the offeror. Accordingly, the acceptance can be withdrawn or CA: on 01/28/1999 Decision: Upheld the jurisdiction of the City
revoked before it is made known to the offeror. Court of Quezon City in the ejectment case. It also concluded that
4. In the case at bar, the Contract to Sell was perfected when the there was a perfected contract of sale between the parties on the
petitioners consented to the sale to the respondent of their leased premises and that pursuant to the option to buy
shares in the subject parcels of land by affixing their signatures on agreement, private respondent had acquired the rights of a
the said contract. Such signatures show their acceptance of what vendee in a contract of sale.
has been stipulated in the Contract to Sell and such acceptance
was made known to respondent corporation when the duplicate SC: Decision on 01/28/1999: Both petitions are granted, reversing
copy of the Contract to Sell was returned to the latter bearing CA’s decision.
petitioners’ signatures.
ISSUE: WON Alice Dizon was authorized to receive the sum of ₱300,000.00
Case #31 Regina Dizon, et al. vs. CA (G.R. No. 122544, 28 January on behalf of petitioners.
2003)
RULING:
1. It necessarily follows, therefore, that petitioners cannot be
DOCTRINE: When the sale of a piece of land or any interest thereon is deemed to have received partial payment of the supposed
through an agent, the authority of the latter shall be in writing; otherwise, purchase price for the land through Alice Dizon. It cannot even be
the sale shall be void. A special power of attorney is necessary to enter into said that Alice Dizon’s acceptance of the money bound at least
any contract by which the ownership of an immovable is transmitted or the share of Fidela Dizon, in the absence of a written power of
acquired either gratuitously or for a valuable consideration. attorney from the latter. It should be borne in mind that the
Receipt dated June 20, 1975, while made out in the name of
FACTS: Fidela Dizon, was signed by Alice Dizon alone.
1. There were 2 consolidated cases (G.R. No. 122544 and G.R. No. 2. When the sale of a piece of land or any interest thereon is
124741) in which both cases involved the same parties: Regina P. through an agent, the authority of the latter shall be in writing;
Dizon, Amparo D. Bartolome, Fidelina D. Balza, Ester Abad Dizon otherwise, the sale shall be void. Thus the authority of an agent to
and Joseph Anthony Dizon, Raymund A. Dizon, Gerard A. Dizon execute a contract for the sale of real estate must be conferred in
And Jose A. Dizon, Jr. as Petitioners, and Court Of Appeals, Hon. writing and must give him specific authority, either to conduct the
Maximiano C. Asuncion And Overland Express Lines, Inc. as general business of the principal or to execute a binding contract
Respondents. containing terms and conditions which are in the contract he did
2. Private respondent filed a Motion for Reconsideration, Second execute.
Motion for Reconsideration, and Motion to Suspend Procedural

3. A special power of attorney is necessary to enter into any contract
by which the ownership of an immovable is transmitted or Case #33 Woodchild Holdings, Inc. vs. Roxas Electric and
acquired either gratuitously or for a valuable consideration. Construction Co., Inc. (G.R. No. 140667. August 12, 2004)
4. The express mandate required by law to enable an appointee of
an agency (couched) in general terms to sell must be one that DOCTRINE: Contracts entered into by corporate officers beyond the scope of
expressly mentions a sale or that includes a sale as a necessary authority are unenforceable against the corporation unless ratified by the
ingredient of the act mentioned. corporation.
5. For the principal to confer the right upon an agent to sell real
estate, a power of attorney must so express the powers of the FACTS:
agent in clear and unmistakable language. When there is any 1. Roxas Electric and Construction Company, Inc (RECCI), through its
reasonable doubt that the language so used conveys such power, Board of Directors approved a resolution authorizing the
no such construction shall be given the document. corporation, through its president, Roberto B. Roxas, to sell the
lots, at a price and under such terms and conditions which he
deemed most reasonable and advantageous to the corporation;
Case #32 Citylite Realty Corporation vs. CA (G.R. No. 138639. and to execute, sign and deliver pertinent sales documents and
February 10, 2000) receive the proceeds of the sale for and on behalf of the
company.
2. Woodchild Holdings, Inc. (WHI) bought said property and entered
DOCTRINE: When the sale of a piece of land or any interest therein is into an agreement with Roxas granting them beneficial use of and
through an agent, the authority of the latter shall be in writing; otherwise, option to buy an adjacent property to be used as egress from and
the sale shall be void. ingress to the subject property
3. WHI filed a complaint for specific performance and damages
FACTS: against RECCI but RECCI posits that it did not authorize Roxas to
1. F.P. Holdings and Realty Corporation engaged the assistance of impose a burden or to grant a right of way in favor of petitioner,
Metro Drug through Meldin Al G. Roy in selling a parcel of land nor convey a portion thereof
known as the “Violago Property” or the “San Lorenzo Ruiz
Commercial Center” RTC ruled in favor of WHI; CA reversed the decision
2. City-Lite conveyed its interest to purchase initially a ½ portion of
the front lot of the property but later on agreed to buy its ISSUE: WON the respondent is bound by the provisions in the deed of
entirety. absolute sale granting the petitioner WHITE beneficial use and a right of way
3. City-Lite’s officers and Atty. Mamaril later met with Roy and over a portion of Lot accessing to the Sumulong Hwy and granting the option
reached an agreement and Roy agreed to sell the property to City- to the petitioner to buy a portion thereof, and, if so, whether such
Lite provided that the latter submit its acceptance in writing to agreement is enforceable against the respondent.
the terms and conditions of the sale.
4. However, F.P Holdings refused to execute the corresponding deed HELD:
of sale in favor of City-Lite; City-Lite registered an adverse claim to 1. No. Generally, the acts of the corporate officers within the scope
the title of the property of their authority are binding on the corporation. However, under
5. Property was later transferred to VIEWMASTER CONSTRUCTION Art 1910, acts done by such officers beyond the scope of their
CORP; City-Lite filed a complaint for specific performance and authority cannot bind the corporation unless it has ratified such
damages acts expressly or tacitly, or is estopped from denying them.
2. Roxas was not specifically authorized under the board resolution
RTC ordered to F.P. Holdings to execute a deed of sale of the to grant a right of way in favor of the petitioner or to agree to sell
property in favor of City-Lite plus damages; a portion of the adjacent property.
CA reversed the decision 3. 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
ISSUE: WON a contract of sale was perfected between City-Lite and F.P. the principal must have been known and relied upon in good faith
Holdings through its agent Meldin Al G. Roy and as a result of the exercise of reasonable prudence by a third
person as claimaint and such must have produced a change of
RULING: position to its detriment.
1. No. Art 1874 of the Civil Code provides: “When the sale of a piece 4. For the principle of apparent authority to apply, the petitioner
of land or any interest therein is through an agent, the authority was burdened to prove the following: (a) the acts of the
of the latter shall be in writing; otherwise, the sale shall be void.” respondent justifying belief in the agency by the petitioner; (b)
2. The absence of authority to sell can be determined from the knowledge thereof by the respondent is sought to be held; and,
written memorandum issued by respondent F.P. Holdings’ (c) reliance thereon by the petitioner consistent with ordinary
President requesting Metro Drug’s assistance in referring to them care and prudence.
buyers for the property.
3. This meant that Meldin Al G. Roy and/or Metro Drug was only to
assist F.P. Holdings in looking for buyers and referring them to Case #34 Shopper’s Paradise Realty and Development Corporation
possible prospects who they were supposed to endorse. They vs. Efren Roque (G.R. No. 148775. January 13, 2004)
were only contact person with no authority to conclude a sale of
the property. FACTS:
1. Petitioner SPRDC, represented by its president, Veredigno
Atienza, entered into a twenty-five year lease with Dr. Filepe C.
Roque over a parcel of land in Roque’s name and simultaneously
entered into a memorandum of agreement for the construction,
development and operation of a commercial building complex on
the properlty


2. The contract of lease and the MOA, both notarized, were not need for an SPA when the special power was already mentioned
annotated on the Certificate of title because of the death of in the general one. It also declared that plaintiff failed to
Roque. substantiate his allegation of fraud.
3. The petitioner was constrained to deal with respondent Efren
Roque, one of the surviving sons of Dr. Roque, who later filed a CA affirmed in toto. Hence, petition for review.
case for annulment of the contract of lease and the MOA, with a ISSUES:
prayer for the issuance of a preliminary injunction, alleging that 1. (Agency-related issue) Whether there is a need to execute a
he had long been the absolute owner of the subject property by separate and special power of attorney to sell the subject land.
virtue of a deed of donation inter vivos executed in his favor 2. (In case Atty asks) Whether respondent is a buyer in good faith
which, nevertheless, was not registered.
RTC ruled in favor of petitioner and ordered respondent Efren RULING:
Roque to surrender TCT No. 109754 to the Register of Deeds of 1. No. Whether the instrument be denominated as general power of
QC for the annotation of the questioned Contract of Lease and attorney or special power of attorney, what matters is the extent
MOA; of the power or powers contemplated upon the agent or attorney
in fact. If the power is couched in general terms, then such power
CA reversed the decision holding to be invalid the Contract of cannot go beyond acts of administration. However, where the
Lease and MOA power to sell is specific, it not being merely implied, much less
couched in general terms, there cannot be any doubt that the
ISSUE: WON Dr. Roque had been an authorized agent of respondent, and if attorney in fact may execute a valid sale.
so, whether the COL and MOA were valid.
While it is true that it was denominated as a general power of
RULING: attorney, a perusal thereof revealed that it stated an authority to
1. No. It was not shown that Dr. Roque had been an authorized sell. Thus, there was no need to execute a separate and special
agent of respondent. power of attorney since the general power of attorney had
2. Art. 1878 expresses that a special power of attorney is necessary expressly authorized the agent or attorney in fact the power to
to lease any real property to another person for more than one sell the subject property. The special power of attorney can be
year. The lease of real property for more than one year is included in the general power when it is specified therein the act
considered not merely an act of administration but an act of strict or transaction for which the special power is required.
dominion or of ownership. An SPA is thus necessary for its 2. Yes. It has been consistently held that a purchaser in good faith is
execution. one who buys property of another, without notice that some
3. Testimonial evidence showed that petitioner had prior knowledge other person has a right to, or interest in such property and pays a
of the status of said property. full and fair price for the same, at the time of such purchase, or
4. The non-registration of the deed of donation did not affect its before he has notice of the claim or interest of some other person
validity. Donation results in an effective transfer of title over the in the property.
property from the donor to the done. However, the law provides
that it must be registered in the registry of Property in order to Respondent was an innocent purchaser for value. The questioned
bind third persons. Knowledge of the third person of that prior power of attorney and deed of sale, were notarized and
unregistered interest would have the effect of registration as therefore, presumed to be valid and duly executed. Respondent
regards to him. Aglaloma relied on the power of attorney presented by
petitioners wife, Irma. Being the wife of the owner and having
Case #35 Veloso vs. CA (G.R. No. 102737. August 21, 1996) with her the title of the property, there was no reason for the
private respondent not to believe in her authority. Moreover, the
power of attorney was notarized and as such, carried with it the
PARTIES: presumption of its due execution.
Petitioner = principal; his wife = agent with General PA including SPA to sell;
Respondent = third party who bought the lot from the agent
Case #36 Sargasso Construction & Development Corp., et al., vs.

PPA (G.R. No. 170530. July 5, 2010)
FACTS:
1. Petitioner Veloso was the owner of a parcel of land whose title
was canceled. A new one was issued in the name of respondent PARTIES:
Escario. The transfer of property was supported by a General Respondent = principal; General Manager Dayan = agent; Petitioner = third
Power of Attorney and Deed of Absolute Sale executed by wife of party
the petitioner (appearing as his attorney-in-fact), and defendant
Escario. FACTS:
2. Veloso alleged that he was the absolute owner of the subject 1. Petitioner, a joint venture, was awarded the construction of R.C.
property and he never authorized anybody, not even his wife, to Pier 2 after a public bidding conducted by the defendant PPA.
sell it. He denied having executed the power of attorney and Petitioner offered to undertake the reclamation between the
alleged that his signature was falsified. Timber Pier and Pier 2 of the Port of San Fernando, La Union, as
3. Respondent in her answer alleged that she was a buyer in good an extra work to its existing construction of R.C. Pier 2.
faith and denied any knowledge of the alleged irregularity. She Respondent replied with a counteroffer.
allegedly relied on the general power of attorney of petitioner’s 2. A Notice of Award signed by PPA General Manager Dayan was
wife which was sufficient in form and substance and was duly sent to petitioner for the phase I Reclamation Contract and
notarized. instructing it to enter into and execute the contract agreement
with PPA. Hence, then General Manager Agustin presented for
RTC – in favor of respondent. Adjudged the lawful owner of the consideration by the PPA Board of Directors the contract proposal
property as she was deemed an innocent purchaser for value. The for the reclamation project.
assailed general power of attorney was held to be valid and 3. PPA did not formally advise the petitioner of the Boards action on
sufficient for the purpose. The trial court ruled that there was no their contract proposal. As petitioner learned that the Board was

not inclined to favor its Supplemental Agreement, Petitioner 2. RTC – in favor of respondent, Petitioner with others solidarily
wrote General Manager Agustin requesting that the same be liable
presented again to the Board meeting for approval. However, no 3. CA affirmed with modifications
reply was received by petitioner from respondent. 4. PSI alleged in its petition with SC that the CA erred in holding that:
(1) it is estopped from raising the defense that Dr. Ampil is not its
RTC - Petitioner filed a complaint for specific performance and employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not
damages. Respondent PPA thru the Office of the Government entitled to its counterclaim against the Aganas. PSI contends that
Corporate Counsel filed its Answer contending that the alleged Dr. Ampil is not its employee, but a mere consultant or
Notice of Award has already been properly revoked when the independent contractor. As such, he alone should answer for his
Supplemental Agreement which should have implemented the negligence.
award was denied approval by defendants Board of Directors. RTC
in favor of petitioner - in the case of the PPA, the power to enter ISSUE: WON PSI Is Liable for the Negligence of Dr. Ampil
into contracts is not only vested on the Board of Directors, but
also to the manager. RULING:
1. Yes. Apparent authority, or "holding out" theory, or doctrine of
CA – reversed – In the execution of contracts, the general ostensible agency or agency by estoppel – The principal is bound
manager only exercised a delegated power, in reference to which, by the acts of his agent with the apparent authority which he
evidence was wanting that the PPA Board delegated to its general knowingly permits the agent to assume, or which he holds the
manager the authority to enter into a supplementary contract for agent out to the public as possessing. The question in every case
the reclamation project. is whether the principal has by his voluntary act placed the agent
in such a situation that a person of ordinary prudence, conversant
Hence, this petition. Petitioner insists that the Notice of Award with business usages and the nature of the particular business, is
itself already embodies a perfected contract having passed the justified in presuming that such agent has authority to perform
negotiation stage despite the clear absence thereon of a condition the particular act in question.
requiring the prior approval of respondents higher authority. 2. In this case, PSI publicly displays in the lobby of the Medical City
Hospital the names and specializations of the physicians
ISSUE: WON PPA’s General Manager Dayan had the power to enter into a associated or accredited by it, including those of Dr. Ampil and Dr.
contract with petitioner’s Fuentes. It "is now estopped from passing all the blame to the
physicians whose names it proudly paraded in the public directory
RULING: leading the public to believe that it vouched for their skill and
1. No. A government contract is perfected only upon approval by a competence." By accrediting Dr. Ampil and Dr. Fuentes and
competent authority, where such approval is required. The publicly advertising their qualifications, the hospital created the
contracting official who gives his consent as to the subject matter impression that they were its agents, authorized to perform
and the consideration ought to be empowered legally to bind the medical or surgical services for its patients. As expected, these
Government and that his actuations in a particular contractual patients, Natividad being one of them, accepted the services on
undertaking on behalf of the government come within the ambit the reasonable belief that such were being rendered by the
of his authority. On top of that, the approval of the contract by a hospital or its employees, agents, or servants.
higher authority is usually required by law or administrative
regulation as a requisite for its perfection.
2. P.D. 857 states that one of the corporate powers of respondents Case #38 Cosmic Lumber vs. CA (G.R. No. 114311. November 29,
Board of Directors is to reclaim any part of the lands vested in the 1996)
Authority. It also exercises all the powers of a corporation under
the Corporation Law. On the other hand, the law merely vests the PARTIES:
general manager the general power to sign contracts and to Petitioner = principal; Estrada = general manager of petitioner; agent with
perform such other duties as the Board may assign Therefore, SPA to file action; Respondent = third party
unless respondents Board validly authorizes its general manager,
the latter cannot bind respondent PPA to a contract. FACTS:
3. The petitioner failed to prove that the respondent’s general 1. Petitioner through its General Manager executed an SPA
manager possessed such actual authority delegated either by the appointing Estrada as attorney-in-fact to initiate, institute and file
Board of Directors, or by statutory provision. The authority of any court action for the ejectment of third persons and/or
government officials to represent the government in any contract squatters of certain lots.
must proceed from an express provision of law or valid delegation 2. Estrada instituted an action for the ejectment of respondent
of authority. Without such actual authority being possessed by Perez and recover the possession of a portion of a certain lot. The
PPAs general manager, there could be no real consent, much less agent entered into a Compromise Agreement with respondent:
a perfected contract, to speak of. that to buy peace respondent pays thru agent the value of the
portion occupied by respondent and that petitioner hereby
Case #37 Professional Services, Inc. vs. CA (G.R. No. 126297, 11 recognizes ownership and possession of the respondent by virtue
February 2008) of the compromise agreement over said portion of lot.

RTC approved the compromise agreement and rendered its
PARTIES: Petitioner = principal; Dr. Ampil = agent; third party = private decision. But the decision was not executed. Thus respondent
respondent filed a complaint to revive the judgment.

FACTS: Petitioner asserts that it was only when the summons for the
1. RTC - Respondent alleged that PSI, Dr. Ampil, Medical City revival of judgment was served upon it that it came to know of
Hospital, and Dr. Fuentes are liable for negligence for leaving two the compromise agreement entered into between Estrada and
pieces of gauze inside Natividad’s body and malpractice for respondent. Petitioner sought annulment of the decision of the
concealing their acts of negligence. RTC before CA.

FPS in any other country where assets of FPS or PAWI may be
CA denied. Petitioner challenges this verdict. It argues that the located.
decision of the trial court is void because the compromise 6. The Supplemental Settlement Agreement, as well as the motion
agreement upon which it was based is void. Estrada did not for the entry of judgment, was executed by FASGI president Elena
possess the authority to sell or was she armed with a Board Buholzer and PAWI counsel Mr. Thomas Ready.
Resolution authorizing the sale of its property. She was merely 7. PAWI again failed to comply. This FASGI filed an entry of judgment
empowered to enter into a compromise agreement in the in the District Court of the Central District of California.
recovery suit she was authorized to file against persons squatting 8. Unable to obtain satisfaction of the final judgment within the
on subject lots. United States, FASGI filed a complaint for "enforcement of foreign
judgment” before the RTC Makati.
ISSUE: WON Estrada had the power to sell the property
RTC - Dismissed on the ground that the Supplemental Settlement
RULING: Agreement and motion for entry of judgment were a nullity for
1. No. For the principal to confer the right upon an agent to sell real having been entered into by Mr. Thomas Ready, counsel for
estate, a power of attorney must so express the powers of the PAWI, without authorization.
agent in clear and unmistakable language. When there is any
reasonable doubt that the language so used conveys such power, CA - Reversed the decision of the trial court and ordered the full
no such construction shall be given the document. enforcement of the California judgment.
2. Nowhere in the authorization was Estrada granted expressly or
impliedly any power to sell the subject property nor a portion ISSUE: WON Mr. Ready as counsel of PAWI was authorized to execute the
thereof. Neither can a conferment of the power to sell be validly Supplemental Settlement Agreement and Motion for Entry of Judgment.
inferred from the specific authority "to enter into a compromise
agreement" because of the explicit limitation fixed by the grantor RULING:
that the compromise entered into shall only be "so far as it shall 1. Yes. Mr. Ready was authorized to execute the Supplemental
protect the rights and interest of the corporation in the Settlement Agreement and Motion for Entry of Judgment.
aforementioned lots." 2. The supplemental settlement agreement was signed on October
3. Here, alienation by sale of an immovable certainly cannot be 1980. The agreement was lodged in the California case (2) days
deemed protective of the right of petitioner to physically possess after the pre-trial conference held on 24 November 1980. If
the same, more so when the land was being sold for a price of agreement, PAWI failed to signified to FASGI a disclaimer that Mr.
P80.00 per square meter, very much less than its assessed value Ready was not authorized by PAWI to enter into the supplemental
of P250.00 per square meter, and considering further that settlement.
petitioner never received the proceeds of the sale. 3. The PAWI President sent a communication to FASGI that failed to
4. Thus, by selling to respondent Perez a portion of petitioner's land mention Mr. Ready's supposed lack of authority. In fact, the letter
through a compromise agreement, Estrada acted without or in confirmed the terms of the agreement more than a year after its
obvious authority. The sale ipso jure is consequently void. So is execution.
the compromise agreement. This being the case, the judgment 4. From the time the stipulation for judgment was entered into until
based thereon is necessarily void. the certificate of finality of judgment was issued by the California
court,no notification was issued by PAWI to FASGI regarding its
termination of Mr. Ready's services.
Case #39 Philippine Aluminum Wheels, Inc. vs. FASGI (G.R. No. 5. When a client, upon becoming aware of the compromise and the
137378. October 12, 2000) judgment thereon, fails to promptly repudiate the action of his
attorney, he cannot afterwards be heard to complain about it.
DOCTRINE: When a client, upon becoming aware of the compromise and the
judgment thereon, fails to promptly repudiate the action of his attorney, he Case #40 Nichimen Corporation (Manila Branch) vs. CA, CTA (G.R.
cannot afterwards be heard to complain about it. No. 139674, 06 March 2002)

FACTS:
1. FASGI Enterprises Inc. entered into a Distributorship Arrangement DOCTRINE: A Branch Office liasing with 3rd parties and receiving
with Philippine Aluminum Wheels, Inc. ("PAWI"), and Fratelli compensation in its own name is considered a broker.
Pedrini Sarezzo S.P.A. an Italian corporation for the purchase,
importation and distributorship in the United States of aluminum FACTS:
wheels manufactured by PAWI. 1. Petitioner Nichimen Corporation is a resident foreign corporation,
2. PAWI shipped 8,594 wheels to FASGI. Later, it was found out that that maintains a Manila branch in dealing with its Philippine
the shipment was defective and in non-compliance of customers.
requirements. 2. Petitioner received a demand letter with an accompanying notice
3. FASGI filed an action against PAWI and FPS for breach of contract assessing it for deficiency income tax, fixed tax, expanded
and recovery of damages before the US District Court for the withholding tax, and percentage tax from the Commissioner of
Central District of California. During the pendency of the case, the Internal Revenue in the aggregate amount of P1,092,459.94.
parties entered into a settlement, entitled "Transaction", 3. Petitioner agreed to pay its deficiency income tax, expanded
stipulating the return of the wheels after restoring to FASGI of withholding tax, and withholding tax on compensation amounting
thepurchase price via four (4) irrevocable letters of credit to P313,953.84; however, it opposed the assessment for
4. PAWI failed to comply and open first Letters of Credit prompting deficiency percentage tax amounting to P767,531.10.
FASGI to pursue its complaint for damages before the California 4. Petitioner filed a petition for review with the Court of Tax
district court. Appeals, arguing it was merely liasing for its own Head Office and
5. Parties entered into a "Supplemental Settlement Agreement” was not subject to broker’s tax. Respondent countered that the
wherein FASGI was given the right to apply immediately for entry assessment for deficiency percentage tax was based on receipts
of Judgment as well as enforce said judgment against PAWI and showing sales between Philippine customers and foreign
manufacturers resulting from the liaising services of petitioner

therefore the branch office should be considered a commercial appears, then it is fair to conclude that the petitioners had no
broker. such intention.

CTA - Court of Tax Appeals sustained the Commissioner’s
assessment of tax.
Case #42 Urban Bank vs. Peña, et al. (G.R. No. 145817. October 19,

2011)
CA - Sustained the findings of CTA holding petitioner to be a
commercial broker DOCTRINE: An agency relationship could exist between an agent and two or
more principals for the purpose of pursuing a shared goal.
ISSUE: WON The Manila Branch of Nichimen Corp is a commercial broker.
Agency is presumed to be for compensation. Unless the contrary intent is
RULING: shown, a person who acts as an agent does so with the expectation of
1. Yes. The Manila Branch of Nichimen Corp. is a commercial broker. payment according to the agreement and to the services rendered or results
2. A broker, in general, is a middleman who acts for others, on a effected.
commission, negotiating contracts relative to property with the
custody of which he has no concern; he is, in more ways than one, FACTS:
an agent of both parties. He acts not for himself, but for a third 1. Isabel Sugar Company, Inc. (ISCI). ISCI sold it’s parcel of land in
person, regardless of whether the fee paid to him is a fixed Pasay to Urban Bank, executed a Contract to Sell, whereby the
amount, regular or not, or whether the act performed by him can latter would pay ISCI the amount of PhP241,612,000 in
be performed by the principal or not. instalments for the Pasay property. Both parties agreed that the
3. Petitioner received compensations and commissions from its final installment of PhP25,000,000 would be released by the bank
home office, over and above its fixed periodical subsidy. These upon ISCI’s delivery of full and actual possession of the land, free
represented income from import-export transactions in the from any tenants( as there are tenants in the property). In the
Philippines of the petitioner and others, and import-export meantime, the amount of the final instalment would be held by
transactions in the Philippines of certain affiliates of the Nichimen the bank in escrow.
Corporation (Japan) and other parties. 2. ISCI then instructed Peña, who was its director and corporate
secretary, to take over possession of the Pasay property against
the tenants upon the expiration of the lease. ISCI’s president, Mr.
Case #41 Tan vs. Heirs of Antonio Yamson (G.R. No. 163182 Enrique G. Montilla III (Montilla), faxed a letter to Peña,
October 24, 2012) confirming the latter’s engagement as the corporation’s agent to
handle the eviction of the tenants from the Pasay property. The
DOCTRINE: Stipulations involving compensation and performance of an tenants questioned Peñas authority to take over the property,
agent must be in writing prompting a representative of ISCI to fax a letter to the bank’s
Senior Vice-President and two days latter to its President
FACTS: requesting the issuance of a formal authority for Peña. Later that
1. Petitioners issued an Authority to Look for Buyer/Buyers in favor same day, Peña allegedly spoke over the phone with Borlongan
of Yamson to facilitate the selling of 7 parcels of land in Mandaue (Urban Banks President) where he was asked by the latter “to
City to pay their unpaid obligations to a certain Philip Lo. This maintain possession of the Pasay property and to represent Urban
afforded Yamson with a 5% commission on sale. Bank in any legal action that might be instituted relative to the
2. 2 lots were sold through Yamson to Oscar Chua. The remaining 5 property” and he was allegedly promised with 10% of the market
lots were transferred to Lo as payment for petitioners’ value of the property. Later Peña received a banks letter which
outstanding obligations. asked him to “ the said property and/or interfere with your
3. Petitioners refused to pay Yamson, arguing that he was not possession of the said property for and in our behalf.”
entitled to his commission because it was petitioners themselves 3. Peña was able to clear the property from tenants and spend
who introduced him to the buyer and that the agreement was to P3,000,000.00, hence the bank was able to take actual possession
sell all seven lots, which he failed to accomplish. of the property. Afterwhich, Peña demanded from Urban Bank
the 10% compensation (or P24, 000 , 0000) plus reimbursement.
RTC – Ruled in favor of Yamson. Task to purchase all seven lots Urban Bank argued that it was ICSI as the original owners,
was not put in writing. Also, the Authority to Look for engaged the services of Peña, and not them. Peña filed for of
Buyer/Buyers did not reflect any such agreement. agent’s compensation and expenses, damages and attorney’s fees
in RTC-Bago City in the province of Negros Occidental.
CA - Affirmed RTC ruling. Nothing in the Authority to Look for
Buyer/Buyers mandated Yamson to find a buyer for all seven RTC: Favored Peña (awarded him PhP28,500,000)
parcels of land of petitioners. CA: Annulled decision, ruled that no agency relationship existed
between Peña and Urban Bank, awarded compensation for P3, 000,
ISSUE: WON Yamson was entitled to the payment by petitioners of his 000)
broker’s commission.
ISSUES:
RULING: 1. WON an agency relationship between Urban Bank and Peña and
1. Yes. Yamson was entitled to the payment of broker’s commission. ICSI.
2. Petition must be denied as it only raises questions of fact. 2. WON Peña is entitled to the compensation he asked for
3. Nowhere in Authority to Look for Buyer/Buyers is it indicated that (PhP28,500,000).
the sale of all seven lots was a prerequisite for the payment of
commission. RULING:
4. If petitioners’ intention was to locate a buyer for all their 1. YES, an agency relationship exist between Peña and Urban Bank
properties, it should have been reduced to writing and included in and ICSI. The Civil Code expressly acknowledged instances when
the Authority to Look for Buyer/s. Since no such stipulation two or more principals have granted a power of attorney to an
agent for a common transaction. The agency relationship

between an agent and two principals may even be considered doing business under the name of CARA HEALTH [SERVICES] to
extinguished if the object or the purpose of the agency is promote and sell the prepaid group practice health care delivery
accomplished. In this case, Peña’s services as an agent of both ISCI program called MAXICARE Plan with the position of Independent
and Urban Bank were engaged for one shared purpose or Account Executive. [Maxicare] formally appointed her as its
transaction, which was to deliver the property free from "General Agent." In the compensation plan, it is stipulated that
unauthorized sub-tenants to the new owner – a task that Peña “shall pay you a commission equivalent to 15 to 18% from
was able to achieve and is entitled to receive payment for. individual, family, group accounts; 2.5 to 10% on tailored fit plans;
and 10% on standard plans of commissionable amount on
Both sides readily admit that it was Peña who was responsible for corporate accounts from all membership dues collected and
clearing the property of the tenants and other occupants, and remitted by you.”
who turned over possession of the Pasay property to petitioner- 2. Maxicare alleged that it followed a "franchising system" in dealing
respondent bank. When the latter received full and actual with its agents whereby an agent had to first secure permission
possession of the property from him, it did not protest or refute from Maxicare to list a prospective company as client. Estrada
his authority as an agent to do so. Neither did Urban Bank contest alleged that it did apply with Maxicare for the MERALCO account
Peña’s occupation of the premises, or his installation of security and other accounts, and in fact, its franchise to solicit corporate
guards at the site, starting from the expiry of the lease until the accounts, MERALCO account included, was renewed on February
property was turned over to the bank, by which time it had 11, 1991.
already been vested with ownership thereof. Furthermore, when 3. On November 28, 1991, MERALCO eventually subscribed to the
Peña filed the Second Injunction Complaint in the RTC-Makati City MAXICARE Plan and signed a Service Agreement directly with
under the name of petitioner-respondent bank, the latter did not Maxicare, but on the negotiation of the terms and conditions,
interpose any objection or move to dismiss the complaint on the Estrada was left out.
basis of his lack of authority to represent its interest as the owner 4. Estrada demanded commissions for the Meralco account and nine
of the property. When he successfully negotiated with the tenants others, to which Maxicare denied because Maxicare directly
regarding their departure from its Pasay property, still no protest negotiated with MERALCO and the other accounts,and that no
was heard from it. After possession was turned over to the bank, agent was given the go signal to intervene in the negotiations for
the tenants accepted PhP1,500,000 from Peña, in "full and final the terms and conditions and the signing of the service agreement
settlement" of their claims against Urban Bank, and not against with MERALCO and the other accounts. Estrade field a complaint
ISCI. with the RTC Makati City.

In any case, the subsequent actions of Urban Bank resulted in the RTC: Favored Estrada (found Maxicare liable for breach of contract and
ratification of Peña’s authority as an agent acting on its behalf ordered it to pay actual danages)
with respect to the Pasay property. By ratification, even an CA: Affirmed the decision in toto said that Estrada is the "efficient
unauthorized act of an agent becomes an authorized act of the procuring cause" in the execution of the service agreement.
principal
ISSUE: WON Estrada is entitled to commission for the execution of the
2. NO, Peña is not entitled to the P28, 500, 000 of compensation. service agreement between Meralco and Maxicare and the two (2)
Agency is presumed to be for compensation. Unless the contrary consecutive renewals of the service agreement.
intent is shown, a person who acts as an agent does so with the
expectation of payment according to the agreement and to the RULING:
services rendered or results effected. But because in this case we 1. YES, Maxicare is entitled to the to commission for the execution
find no evidence that Urban Bank agreed to pay Peña a specific of the service agreement . Estrada is the “procuring cause” or the
amount or percentage of amount for his services, we turn to the cause originating a series of events which, without break in their
principle against unjust enrichment and on the basis of quantum continuity, result in the accomplishment of the prime objective of
meruit. the employment of the broker—producing a purchaser ready,
willing and able to buy on the owner’s terms,in the execution of
A stipulation on a lawyer’s compensation in a written contract for the service agreement.
professional services ordinarily controls the amount of fees that 2. There is no dispute as to the role that Estrada played in selling
the contracting lawyer may be allowed to collect, unless the court Maxicare’s health insurance plan to Meralco. Plaintiff-appellee
finds the amount to be unconscionable.In the absence of a Estrada’s efforts consisted in being the first to offer the Maxicare
written contract for professional services, the attorney’s fees are plan to Meralco, using her connections with some of Meralco
fixed on the basis of quantum meruit, i.e., the reasonable worth Executives, inviting said executives to dinner meetings, making
of the attorney’s services. When an agent performs services for a submissions and representations regarding the health plan,
principal at the latter’s request, the law will normally imply a sending follow-up letters, etc. Estrada’s efforts were instrumental
promise on the part of the principal to pay for the reasonable in introducing the Meralco account to [Maxicare in regard to the
worth of those services. The intent of a principal to compensate latter’s Maxicare health insurance plans. Plaintiff-appellee Estrada
the agent for services performed on behalf of the former will be was the efficient "intervening cause" in bringing about the service
inferred from the principal’s request for the agents. agreement with Meralco. Without her intervention, no sale could
have been consummated.
Case #43 Philippine Health-Care Providers vs. Estrada (G.R. No.
Case #44 Sanchez vs. Medicard Phils., Inc., et al., (G.R. No. 141525.
171052. January 28, 2008)
September 2, 2005)

DOCTRINE: When the agent is the “procuring cause” of the sale, he is
entitled to compensation. DOCTRINE: In order for an agent to be entitled to a commission, he must be
the procuring cause of the sale, which simply means that the measures
FACTS: employed by him and the efforts he exerted must result in a sale
1. Maxicare, a a domestic corporation engaged in selling health
insurance plans engaged the services of Carmela Estrada who was

FACTS: FACTS:
1. Sometime in 1987, Medicard Philippines, Inc. (Medicard), 1. On September 16, 1975, ROMAN M. DE LOS REYES (the general
respondent, appointed petitioner as its special corporate agent, manager of Inland Realty Investment) was granted by Araneta
whose commission is based on the cash brought in. Inc., through its Assistant General Manager J. Armando Eduque, a
2. In September, 1988, through petitioners’ efforts, Medicard and 30-day authority to sell its 9,800 shares of stock in Architects'
United Laboratories Group of Companies (Unilab) executed a Bldg., Inc, which was renewed, last renewal of which was
Health Care Program Contract, where Unilab is to pay December 2, 1975.
P4,148,005.00 representing the premium for one year. 2. Inland sent proposal letters to prospective buyers, one of those
Petitioners’ commission was 18% of said amount or P746,640.90. who responded was Stanford Microsystems, Inc. who sent a
Said contract was renewed the following year with an increase counter-offer. Upon plaintiffs receipt thereof, it immediately
premium to P7,456,896.00. wrote Araneta a letter to register Stanford Microsystems, Inc. as
3. The following year, Unilab rejected petitioners proposal to renew one of its prospective buyers. Araneta replied that the price
contract for the reason that it was too high, prompting Medicard’s offered by Stanford was too low and suggested that plaintiffs see
president to request petitioner to reduce his commission, but the if the price and terms of payment can be improved upon by
latter refused. Stanford.
4. Meanwhile, Unilab negotiated with Dr. Montoya(Medicards 3. On July 8, 1977, plaintiffs finally sold the 9,800 shares of stock in
president) and other officers of Medicard, to discuss ways in order Architects' Bldg., Inc. to Stanford Microsystems, Inc. for
to continue the insurance coverage of their personnel, which P13,500,000.00, the plaintiff demanded for payment of the 5%
consist of a new scheme where Unilab shall pay Medicard only brokers commission but was denied because their(de los Reyes an
the amount corresponding to the actual hospitalization expenses Inland) authority to sell expired thirty (30) days from December 2,
incurred by each personnel plus 15% service fee for using 1975, or on January 1, 1976.
Medicard facilities, which amount shall not be less than
P780,000.00. No commission was given to the petitioner, RTC: Dismissed petitioners complaint
prompting him to file with the RTC Makati City a complaint for CA: Affirmed RTC decision(Dismissed appeal)
sum of money against Medicard.
ISSUE: WON petitioner is entitled for commission.
RTC: Favored Medicard (Dismissed complaint)
CA: Affirm RTC RULING:
1. NO, petitioners are not entitled for commission. Petitioners did
ISSUE: WON the contract of agency has been revoked by Medicard, hence, not succeed in outrightly selling said shares under the
petitioner is not entitled to a commission. predetermined terms and conditions set out by Araneta, Inc., e.g.,
that the price per share is P1,500.00. They admit that they could
RULING: not dissuade Stanford from haggling for the price of P1,000.00 per
1. YES, the contract of agency has been revoked by Medicare, and in share with the balance of 50% of the total purchase price payable
such, petitioner is not entitled to commission. in five (5) years at 12% interest per annum. From September 16,
2. It is dictum that in order for an agent to be entitled to a 1975 to January 1, 1976, when petitioners' authority to sell was
commission, he must be the procuring cause of the sale, which subsisting, if at all, petitioners had nothing to show that they
simply means that the measures employed by him and the efforts actively served their principal's interests, pursued to sell the
he exerted must result in a sale. In other words, an agent receives shares in accordance with their principal's terms and conditions,
his commission only upon the successful conclusion of a sale. and performed substantial acts that proximately and causatively
Conversely, it follows that where his efforts are unsuccessful, or led to the consummation of the sale to Stanford of Araneta, Inc.'s
there was no effort on his part, he is not entitled to a commission. 9,800 shares in Architects'.
Article 19224 of the Civil Code states that “The agency is revoked 2. Petitioners were not the efficient procuring cause[6] in bringing
if the principal directly manages the business entrusted to the about the sale in question on July 8, 1977 and are, therefore, not
agent, dealing directly with third persons.” entitled to the stipulated broker's commission of "5% on the total
3. It is clear that since petitioner refused to reduce his commission, price."
Medicard directly negotiated with Unilab, thus revoking its agency
contract with petitioner. Petitioner did not render services to
Case #46 Prats vs. CA (G.R. No. L-39822 January 31, 1978)
Medicard, his principal, to entitle him to a commission. There is
no indication from the records that he exerted any effort in order
that Unilab and Medicard, after the expiration of the Health Care DOCTRINE: The principal has the obligation to pay commissions to his agent.
Program Contract, can renew it for the third time. In fact, his
refusal to reduce his commission constrained Medicard to FACTS:
negotiate directly with Unilab. Obviously, he was not the agent or 1. Respondent was the registered owner of a 300-ha parcel of land.
the procuring cause of the third Health Care Program Contract In 1967, he tried to sell this property with SSS but such sale was
between Medicard and Unilab. not consummated.
2. Respondent, in 1968, gave Prats, a real estate broker, an exclusive
Case #45 Inland Realty Investment vs. CA (G.R. No. 76969. June 9, option and authority in writing to negotiate the sale of the
1997) property. As stipulated in the authority:

This exclusive option and authority is good for a period of sixty
DOCTRINE: A broker is not automatically entitled to the stipulated (60) days from the date of your conformity…
commission merely upon securing for, and introducing to, the seller the XXX
particular buyer who ultimately purchases from the former the object of the If no written offer is made to you until the last day of this
sale, regardless of the expiration of the broker's contract of agency and authorization, this option and authority shall expire and become
authority to sell. Where he is not the efficient procuring cause in bringing null and void;
about the sale, he is not entitled to commission.


With the intervention of Prats, Doronilla and SSS once again 7. Summons could not be served upon Concepcion, Burgos moved to
commenced with their negotiation. drop her as a defendant – RTC granted
3. However, before the sale was finalized, the exclusive option and 8. Rural Bank of El Salvador filed a Third-Party Complaint against
authority has expired. No written offer was made to Prats yet spouses Concepcion and Agnes Bucton Lugod (Lugod), the
hence, Doronilla sent him a letter that since no written offer was daughter of petitioner. Respondent bank claimed that it would
made, the authority given to him now is considered null and void. not have granted the loan and accepted the mortgage were it not
4. Doronilla continued with the negotiation with SSS and the land for the assurance of Concepcion and Lugod that the SPA was valid.
was finally sold. Prats then asked for the respondent for the
payment of his professional fee as a real estate broker – Bank defense:
amounting to P138M. Denied the allegation of Bucton that the SPA was forged and
5. When respondent declined to pay, Prats instituted against averred that Bucton went to the bank and promised to settle the
Doronila and PNB a complaint for collection of sum of money in loan of Concepcion
CFI Rizal.
As to the alleged irregularities in the foreclosure proceedings,
RTC favored Prats and ordered Doronilla to pay the plaintiff the sum of respondent bank asserted that it complied with the requirements
P138M as his professional fee. of the law in foreclosing the house and lot
CA reversed the RTC decision.
Relies on the presumption of regularity of the notarized SPA
ISSUE: WON Prats is entitled to receive his professional fee pursuant to the
written authority given to him. Cause of Action: Annulment of Mortgage, Foreclosure, and Special
Power of Attorney (SPA) against Erlinda Concepcion (Concepcion)
RULING: No. It is clear that the offer of Doronila (in 1967) to sell the 300 and respondents Rural Bank of El Salvador, Misamis Oriental, and
hectares of land in question to the SSS was formally accepted by the System Sheriff Reynaldo Cuyong
only on June 20, 1968 after the exclusive authority in favor of the plaintiff
had expired. Prats, therefore, was not the procuring cause in bringing about RTC Cagayan de Oro – spouses Concepcion were declared in
the sale proceeding from the fact of the expiration of his exclusive option. default for failing to file a responsive pleading sustaining the claim
of Bucton that the SPA was forged as the signatures appearing on
In equity, however, the Court notes that petitioner had taken steps to bring the SPA are different from the genuine signatures presented by
back together respondent Doronila and the SSS. Prats' efforts somehow were petitioner bank should have conducted a thorough inquiry on the
instrumental in bringing them together again and finally consummating the authenticity of the SPA considering that petitioner’s residence
transaction, although such finalization was after the expiration of Prats' certificate was not indicated in the acknowledgement of the SPA
extended exclusive authority
Court hereby declares null and void or annuls the following:
The Court grants in equity the sum P100,000.00 by way of compensation for
his efforts and assistance in the transaction, which however was finalized and The special power of attorney which was purportedly executed by
consummated after the expiration of his exclusive authority and sets aside [petitioner];
the P10,000.00 — attorneys' fees award adjudged against him by respondent
court. The real estate mortgage

The sheriff’s sale of Lot No. 2078-B-1-E, and the certificate of title
Case #47 Bucton vs. Rural Bank of El Salvador, Inc., Misamis
issued in favor of the Rural Bank of El Salavador [by] virtue
Oriental (G.R. No. 179625, February 24, 2014)
thereof, as well as the sheriff’s sale of the two-storey house
described in the real estate mortgage.
DOCTRINE: A mortgage executed by an authorized agent who signed in his
own name without indicating that he acted for and on behalf of his principal The certificate of title in the name of the Rural Bank of El Salvador
binds only the agent and not the principal. if any, issued [by] virtue of the sheriff’s sale.

FACTS: On reconsideration: rendered judgment on the Third-Party
1. Nicanor Bucton (PRINCIPAL) alleged that she is the owner of a Complaint filed by respondent bank against third-party
parcel of land, covered by Transfer Certificate of Title (TCT) No. T- defendants Erlinda Concepcion and her husband: To indemnify or
3838, located in Cagayan de Oro City reimburse [respondent bank] all sums of money plus interests
2. Concepcion (AGENT) borrowed the title on the pretext that she thereon or damages that [respondent bank] has in this case been
was going to show it to an interested buyer forced to pay, disburse or deliver to [petitioner] including the
3. Concepcion obtained a loan in the amount of P30,000.00 from costs
Rural Bank of El Salvador (3rd PARTY)
4. As security for the loan, Concepcion mortgaged Bucton’s house CA –
and lot (without the latter’s knowledge) to respondent bank using
a SPA (signed as Nicanora Gabar, Bucton’s maiden name) CA reversed the findings of the RTC. The CA found no cogent
allegedly executed by Bucton in favor of Concepcion. Bucton also reason to invalidate the SPA, the Real Estate Mortgage, and
denied appearing before the notary public, who notarized the SPA Foreclosure Sale as it was not convinced that the SPA was forge
5. Both the Promissory Note and the Real Estate Mortgage, which
were dated June 11, 1982, were signed by Concepcion in her own Declared that although the Promissory Note and the Real Estate
personal capacity Mortgage did not indicate that Concepcion was signing for and on
6. Concepcion failed to pay the loan Bucton’s house and lot were behalf of her principal, petitioner is estopped from denying
foreclosed by respondent sheriff without a Notice of Extra-Judicial liability since it was her negligence in handing over her title to
Foreclosure or Notice of Auction Sale and were sold in an auction Concepcion that caused the loss
sale in favor of respondent bank

Emphasized that under the Principle of Equitable Estoppel, where
Case #48 Bicol Savings Loan vs. CA (G.R. No. 85302 March 31, 1989)
one or two innocent persons must suffer a loss, he who by his
conduct made the loss possible must bear it.
DOCTRINE: The power to foreclose is not an ordinary agency that
ISSUE/S: contemplates exclusively the representation of the principal by the agent but
1. WHETHER THE [CA] WAS RIGHT IN DECLARING THE PETITIONER is primarily an authority conferred upon the mortgagee for the latter's own
LIABLE ON THE LITIGATED LOAN/MORTGAGE WHEN (i) SHE DID protection
NOT EXECUTE EITHER IN PERSON OR BY ATTORNE-IN-FACT
SUBJECT MORTGAGE; (ii) IT WAS EXECUTED BY CONCEPCION IN FACTS:
HER PERSONAL CAPACITY AS MORTGAGOR, AND (iii) THE LOAN 1. Juan de Jesus (PRINCIPAL) was the owner of a parcel of land,
SECURED BY THE MORTGAGE WAS CONCEPCION’S EXCLUSIVE containing an area of 6,870 sq. ms., more or less, situated in Naga
LOAN FOR HER OWN COCONUT PRODUCTION. City.
2. WHETHER THE [CA] WAS RIGHT WHEN IT FOUND THAT IT WAS 2. Juan executed a Special Power of Attorney in favor of his son, Jose
PETITIONER’S NEGLIGENCE WHICH MADE THE LOSS POSSIBLE, de Jesus (AGENT) –
DESPITE [THE FACT] THAT SHE HAS NO PART IN [THE] SUBJECT
LOAN/MORTGAGE, THE BANK’S [FAILURE] TO CONDUCT CAREFUL "To negotiate, mortgage my real property in any bank either
EXAMINATION OF APPLICANT’S TITLE AS WELL AS PHYSICAL private or public entity preferably in the Bicol Savings Bank, Naga
INVESTIGATION OF THE LAND OFFERED AS SECURITY, AND TO City, in any amount that may be agreed upon between the bank
INQUIRE AND DISCOVER UPON ITS OWN PERIL THE AGENT’S and my attorney-in-fact Jose de Jesus obtained a loan of twenty
AUTHORITY, ALSO ITS INORDINATE HASTE IN THE PROCESSING, thousand pesos (P20,000.00) from Bicol Savings Bank To secure
EVALUATION AND APPROVAL OF THE LOAN. payment, Jose de Jesus executed a deed of mortgage on the real
3. WHETHER THE [CA] WAS RIGHT WHEN IT DISREGARDED property referred to in the Special Power of Attorney
ESTABLISHED FACTS AND CIRCUMSTANCES PROVING THAT THE
[SPA] IS A FORGED DOCUMENT AND/OR INFECTED BY INFIRMITIES Mortgage contract stipulation:“If at any time the Mortgagor shall
DIVESTING IT OF THE PRESUMPTION OF REGULARITY CONFERRED refuse to pay the obligations herein secured, or any of the
BY LAW ON NOTARIZED DEEDS, AND EVEN IF VALID, THE POWER amortizations of such indebtedness when due, or to comply with
WAS NOT EXERCISED BY CONCEPCION. any of the conditions and stipulations herein agreed .... then all
the obligations of the Mortgagor secured by this Mortgage, all the
RULING: amortizations thereof shall immediately become due, payable and
1. NO. Authorized agent failed to indicate in the mortgage that she defaulted and the Mortgagee may immediately foreclose this
was acting for and on behalf of her principal. The Real Estate mortgage in accordance with the Rules of Court, or extrajudicially
Mortgage, explicitly shows on its face, that it was signed by in accordance with Act No. 3135, as amended, or Act No. 1508.
Concepcion in her own name and in her own personal capacity. In For the purpose of extrajudicial foreclosure, the Mortgagor
fact, there is nothing in the document to show that she was acting hereby appoints the Mortgagee his attorney-in-fact to sell the
or signing as an agent of petitioner. Thus, consistent with the law property mortgaged”
on agency and established jurisprudence, Burgos cannot be bound
by the acts of Concepcion. 3. Juan de Jesus died
2. NO. we find it significant to mention that respondent bank has no 4. By reason of his failure to pay the loan obligation even during his
one to blame but itself. Not only did it act with undue haste when lifetime, petitioner bank caused the mortgage to be extrajudicially
it granted and released the loan in less than three days, it also foreclosed → public auction →Bicol Savings Bank highest bidder
acted negligently in preparing the Real Estate Mortgage as it → issued with Provisional Cert of Sale
failed to indicate that Concepcion was signing it for and on behalf 5. Jose de Jesus and heirs failed to redeem property after 1yr →
of petitioner. issued Definite Cert of Sale to Bicol Bank
6. De jesus negotiated with the bank for the repurchase of the
Words: as attorney-in-fact of, as agent of, or for and on behalf of, property. Offers and counter-offers were made, but no
are vital in order for the principal to be bound by the acts of his agreement was reached so the bank sold the property instead to
agent. Without these words, any mortgage, although signed by other parties in instalments → conditional deed of sale between
the agent, cannot bind the principal as it is considered to have bank ang other parties
been signed by the agent in his personal capacity. 7. De Jesus’ filed a Complaint with the then Court of First Instance of
Naga City for the annulment of the foreclosure sale or for the
There is no need to delve on the issues of forgery of the SPA and repurchase by them of the property
the nullity of the foreclosure sale. For even if the SPA was valid,
the Real Estate Mortgage would still not bind petitioner as it was Cause of action: seeking for reversal of CA decision which ruled against
signed by Concepcion in her personal capacity and not as an agent Bicol Savings Loan
of petitioner. Simply put, the Real Estate Mortgage is void and
unenforceable against petitioner. CFI Naga - dismissed the case, ruling that the title of the bank over the
mortgaged property had become absolute upon the issuance and
Concepcion, on the other hand, is liable to pay respondent bank registration of the said deed in the favor of Bicol Bank
her unpaid obligation under the Promissory Note dated June 11,
1982, with interest. As we have said, Concepcion signed the CA – reversed CFI. Applied Article 1879 of the Civil Code and stated that
Promissory Note in her own personal capacity; thus, she cannot since the special power to mortgage granted to Jose de Jesus did not
escape liability. She is also liable to reimburse respondent bank include the power to sell, it was error for the lower Court not to have
for all damages, attorneys fees, and costs the latter is adjudged declared the foreclosure proceedings -and auction sale held in 1978
to pay petitioner in this case. null and void because the Special Power of Attorney given by Juan de
Jesus to Jose de Jesus was merely to mortgage his property, and not to
extrajudicially foreclose the mortgage and sell the mortgaged property
in the said extrajudicial foreclosure. Bank should resorted to judicial
foreclosure - annulled the extrajudicial foreclosure sale, the Provisional

and Definite Deeds of Sale, the registration thereof, and the Writ of
Possession issued to Bicol Bank

ISSUE/S: Validity of the extrajudicial foreclosure sale of the mortgaged
property instituted by petitioner bank which, in turn hinges on whether or
not the agent-son exceeded the scope of his authority in agreeing to a
stipulation in the mortgage deed that petitioner bank could extrajudicially
foreclose the mortgaged property.

RULING:
1. Art. 1879 cited by CA, not applicable in this case. Reversed CA’s
decision extrajudicial foreclosure of the subject mortgaged
property, as well as the Deeds of Sale, the registration thereof,
and the Writ of Possession in petitioner bank's favor, are hereby
declared VALID and EFFECTIVE.
2. The sale proscribed by a special power to mortgage under Article
1879 is a voluntary and independent contract, and not an auction
sale resulting from extrajudicial foreclosure, which is precipitated
by the default of a mortgagor. Absent that default, no foreclosure
results. The stipulation granting an authority to extrajudicially
foreclose a mortgage is an ancillary stipulation supported by the
same cause or consideration for the mortgage and forms an
essential or inseparable part of that bilateral agreement
3. The power to foreclose is not an ordinary agency that
contemplates exclusively the representation of the principal by
the agent but is primarily an authority conferred upon the
mortgagee for the latter's own protection. That power survives
the death of the mortgagor
4. In fact, the right of the mortgagee bank to extrajudicially foreclose
the mortgage after the death of the mortgagor Juan de Jesus,
acting through his attorney-in-fact, Jose de Jesus, did not depend
on the authorization in the deed of mortgage executed by the
latter.
5. That right existed independently of said stipulation and is clearly
recognized in Section 7, Rule 86 of the Rules of Court, which
grants to a mortgagee three remedies that can be alternatively
pursued in case the mortgagor dies, to wit:

a. to waive the mortgage and claim the entire debt from the
estate of the mortgagor as an ordinary claim;
b. to foreclose the mortgage judicially and prove any deficiency
as an ordinary claim; and
c. to rely on the mortgage exclusively, foreclosing the same at
any time before it is barred by prescription, without right to
file a claim for any deficiency


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