Agency Trust Digested Cases 16-17

1 ATP 2016-2017- DIGESTED CASES: AGENCY AND TRUSTS
AGENCY 2.4 | Dominion Insurance Corporation vs. CA | G. R. No.

129919.......... 14
SECTION ONE. NATURE AND OBJECT OF AGENCY 2.5 | Veloso vs. CA | G.R. No. 102737................................. 15
2.6 | Pineda vs. CA | GR. No.
1|Rallos v. Felix Go Chan & Sons Realty Corp.| G.R. No. L- 105562 .............................................. 17
24332……........ 3 2.7 | Home Insurance Co. vs. USL | GR L-
2 | Bordador v. Luz | G.R. No. 25593............................................. 18
130148.................................................................. 3 2.8 | Estate of Liano Olaguer vs. Ongjoco | GR No.
3 | Orient Air Services v. Court of Appeals | G.R. No. 173312.................... 19
76931 .......................... 5 2.9 |Bautista vs. Spouses Jalandoni | GR No.
4 | Eurotech Industrial Technologies, Inc. v. Cuizon | G.R. No. 171464................................20
167552........ 5 2.10 | Gutierrez Hermanos vs. Orense | GR No. L-
6 | Domingo v. Domingo | G.R. No. L- 9188....................... 21
30573..................................................... 6 2.11 | Cosmic Lumber vs. CA | GR No.
7| Manotok Bros, Inc. vs. CA | GR No. 114311.................................. 23
94753……........................................... 7 2.12 | Pahud vs. CA | GR No.
8 | Inland Realty vs. CA | GR 160346.................................................. 25
76969………………………............................. 8 2.13 | Yoshizaki vs. Joy Training Center of Aurora, Inc. | G.R.
9 | Tan vs. Gullas | G.R. No. No. 174978.....27
143978………………………............................. 9 2.14 | City-Lite Realty Corp. vs. CA | GR No.
9 | Medrano vs. CA | GR No. 138639.................................30
150678………………………........................... 10
11 | Litonjua vs. Eternit Corp. | GR No.
144805…............................................ 11
SECTION THREE. POWERS AND OBLIGATIONS OF
SECTION TWO. FORMS AND KINDS OF AGENCY THE AGENT.
2.1 | Rallos vs. Yangco | GR No. 6906...................................... 3.1 | BA Finance vs. CA | GR No. 82040.....................31
11 3.2 | British Airways vs. CA | GR No. 121824..............33
2.2 | Litonjua vs. Fernandez | GR No. 148116............... 12 3.3| Cervantes vs. CA | GR No. 125138.................................34
2.3 | Aggabao vs. Parulan, Jr. | G.R. No. 165803...................... 3.4| Borja, Sr. vs. Sulyap, Inc. | GR No.
13 150718............................................34
3.5 | Gozun vs. Mercado | GR No. 3.15 | DBP vs. CA | GR No. L-

167812........................................36 109937......................................................42
3.6 | Sazon vs. Vasquez-Menancio | GR No. 3.16 | Eugenio vs. CA | GR No.
192085.........................................37 103737....................................................43
3.7 | Hernandez vs. Hernandez | GR 3.17 | Toyota Shaw vs. CA | L-
158576.................................................37 116650.............................................................44
3.8| Escueta vs. Lim | GR No. 3.18 | Bacaltos Coal Mines vs. CA | GR No.
137162.........................................................37 114091....................................45
3.9 | Serona vs. CA | GR No. 3.19 | Yu Eng Cho vs. PANAM | G.R. No.
130423..................................................................37 123560.............................46
3.10 | Municipal Council of Iloilo vs. Evangelista | GR No. L- 3.20 | Manila Memorial Park Cemetery, Inc. vs. Linsangan |
32977.................40 GR No. 151319...46
3.11 | Chemphil Export vs. CA | GR Nos. 112438- 3.21 | Green Valley vs. IAC | GR No. L-
39...................................40 49395......................................46
3.12 | Uy vs. CA | GR No.
120465.........................................................41 SECTION FOUR. OBLIGATIONS OF THE PRINCIPAL
3.13 | Angeles vs. PNR | GR No.
150128..............................................41 4.1 | Bucton vs. Rural Bank of El Salvador, Inc. | GR No.
3.14 | NAPOCOR vs. NAMERCO | GR No. L-33819 and L- 179625............53
22897.................41 4.2 | Panlilio vs. Citibank | GR No.
156335...........................................40
4.7 | Hahn vs. CA | GR No. 113074........................................ 45

4.8. Albaladejo y Cia vs. PRC | GR L-20726................................. 46
4.9 | De Castro vs. CA | GR No. 115838....................................... 47
4.3| Cuison vs. CA | GR No. 88539 ...................... 40 SECTION FIVE. EXTINGUISHMENT OF AGENCY
.4.4 | Pleasantville Development vs. CA | GR No.
79688.......................... 41 5.1 | Garcia vs. De Manzano | GR L-13414................................... 48
4.5 | Filipinas Life Assurance Co. vs. Pedroso | GR No. 5.2 | CMS Logging vs. CA | GR No. 41420............................. 49
159489............. 42 5.3. Dy Buncio & Co. vs. Ong Guan Ca | GR No
4.6 | Manila Remnant Co., Inc. vs. CA | GR No. 40681........................ 49
82978............................. 43 5.4 | Republic vs. Evangelista | GR No. 156015.................................
50
5.5 | Sevilla vs. CA | G.R. Nos. 41182-83....................................... 50

5.6 | Valenzuela vs. CA | GR No. 83122................................... 51
5.7. National Sugar Trading vs. PNB | GR No.
151218........................ 52
5.8. Ching vs. Bantolo | GR No. 177086................................ 53
5.9 | Coleongco vs. Claparols | L-18616.............................................
54
5.10| Lustan vs. CA | GR No. 111924........................................... 55
5.11| Perez vs. PNB | GR No. 21813............................................. 56
5.12| Terrado vs. CA | GR No. 58794........................................... 57
SECTION ONE
1. RAMON RALLOS, Administrator of the Estate of

CONCEPCION RALLOS, vs. FELIX GO CHAN &
SONS REALTY CORPORATION and COURT OF

APPEALS, G.R. No. L-24332 January 31, 1978, ISSUE: Whether or not the sale fell within the exception
to the general rule that death extinguishes the
authority of the agent?
FACTS:
RULING: Yes, the sale is void!
Concepcion and Gerundia Rallos were sisters and
registered co-owners of a parcel of land known as Lot The court held that no one may contract in the name of
No. 5983 of the Cadastral Survey of Cebu covered by another without being authorized by the latter, or unless he
Transfer Certificate of Title No. 11116 of the Registry of has by law a right to represent him (ARTICLE 1317 of the
Cebu.They executed a special power of attorney in favor Civil Code) Simon’s authority as agent was extinguished
of their brother, Simeon Rallos, authorizing him to sell such upon Concolacion’s death.
land for and in their behalf.
After Concepcion died, Simeon Rallos sold the The sale did not fall under the exceptions to the
undivided shares of his sisters Concepcion and Gerundia to general rule that death ipso jure extinguishes the authority of the
Felix Go Chan & Sons Realty Corporation for the sum of P10, agent! Article 1913 inapplicable since SPA in favor of Simon Rallos
686.90. New TCTs were issued to the latter. was not coupled with interest and ARTICLE 1931 inapplicable
Petitioner Ramon Rallos, administrator of the Intestate because Rallos knew of principal Concepcion’s death! For ARTICLE
Estate of Concepcion filed acomplaint praying (1) that the 1931 to apply, both requirements must be present laws on agency,
sale of the undivided share of the deceased Concepcion the terms of which are clear and unmistakable leaving no room for an
Rallos in lot 5983 be unenforceable, and said share be interpretation contrary to its tenor, should apply, the law
reconveyed to herestate; (2) that the Certificate of 'title provides that death of the principal ipso jure extinguishes the
issued in the name of Felix Go Chan & SonsRealty authority of the agent to sell rendering the sale to a third
Corporation be cancelled and another title be issued in the person in good faith unenforceable unless at the agent had
names of thecorporation and the "Intestate estate no knowledge of the principal’s death at that time /exception
of Concepcion Rallos" in equal undivided and(3) that plaintif under ARTICLE 1931.
be indemnified by way of attorney's fees and payment of
costs of suit. Sale was null and void.
CFI ruled that theSale of land was null and void insofar
as the one-half pro-indiviso share of Concepcion Rallos 2. JOSE BORDADOR and LYDIA BORDADOR,
CA:CFI Decision reversed, upheld the sale vs. BRIGIDA D. LUZ, ERNESTO M. LUZ and
of Concepcion’s share. NARCISO DEGANOS, G.R. No. 130148. December
MR:denied 15, 1997
FACTS: Petitioners instituted a complaint for recovery of sum of

money and damages, with an application for preliminary
Petitioners were engaged in the business of purchase attachment against Deganos and Luz.
and sale of jewelry and respondent Brigida Luz, also known
as Aida Luz, was their regular customer. Deganos and Luz was also charged with estafa
On several occasions, respondent Deganos, brother of During the trial of the civil cae, petitioners claimed that
Luz, received several pieces of gold and jewelry from Deganos acted as agent of Luz when received the subject
petitioners amounting to P382, 816. These items and their items of jewelry, and because he failed to pay for the same,
prices were indicated in seventeen receipts covering the Luz, as principal, and her spouse are solidarily liable with
same. 11 of the receipts stated that they were received for a him
certain Aquino, a niece of Deganos, and the remaining 6
receipts indicated that they were received for Luz. Trial court ruled that only Deganos was liable to
Bordador for the amount and damages claimed. It held that
Deganos was supposed to sell the items at a profit and while Luz did have transactions with petitioners in the past,
thereafter remit the proceeds and return the unsold items to the items involved were already paid for and all that Luz
Bordador. Deganos remitted only the sum of P53, 207. He owed Bordador was the sum or P21, 483 representing
neither paid the balance of the sales proceeds, nor did he interest on the principal account which she had previously
return any unsold item to petitioners. paid for.
The total of his unpaid account to Bordador, including CA afirmed RTC’s decision
interest, reached the sum of P725, 463.98. Petitioners
eventually filed a complaint in the barangay court against ISSUE: Whether or not Luz are liable to petitioners for
Deganos to recover said amount. the latter’s claim for money and damages?
In the barangay proceedings, Luz, who was not RULING: No

impleaded in the cases, appeared as a witness for Deganos
Evidence does not support the theory of Bordador that
and ultimately, she and her husband, together with Deganos
Deganos was an agent of Luz and that the latter should
signed a compromise agreement with petitioners.
consequently be held solidarily liable with Deganos in his
In that compromise agreement, Deganos obligated obligation to petitioners.
himself to pay petitioners, on installment basis , the balance
of his account plus interest thereon. However, he failed to
comply with his aforestated undertakings.
The basis for agency is representation. Here, there is 3. ORIENT AIR SERVICES & HOTEL
no showing that Luz consented to the acts of Deganos or REPRESENTATIVES, vs.
authorized him to act on her behalf, much less with respect COURT OF APPEALS and AMERICAN AIR-LINES
to the particular transactions involved. INCORPORATED, G.R. No. 76933, May 29, 1991
It was grossly and inexcusably negligent of petitioner FACTS:
to entrust to Deganos, not once or twice but on at least six
occasions as evidenced by 6 receipts, several pieces of American Air, an air carrier ofering passenger and air
jewelry of substantial value without requiring a written cargo transportation, entered into a General Sales Agency
authorization from his alleged principal. Agreement with Orient Air, authorizing the latter to act as its
A person dealing with an agent is put upon inquiry and exclusive general sales agent for the sale of air passenger
must discover upon his peril the authority of the agent. transportation.
Records show that neither an express nor an implied Orient air failed to remit the net proceeds of sales for
agency was proven to have existed between Deganos and several months prompting American Air to undertake the
Luz. Evidently, Bordador who were negligent in their collection of the proceeds of tickets sold originally by
transactions with Deganos cannot seek relief from the efects Orient Air and terminating their agreement. American air
of their negligence by conjuring a supposed agency relation instituted suit against Orient Air for the settlement of past
between the two respondents where no evidence supports outstanding funds in possession of the latter. Orient Air
such claim. contended that because of the unpaid overriding
commissions it retained the sales proceeds before remitting
The trial court also found that it was petitioner Lydia the balance to American Air. American Air contended that
Bordador who indicated in the receipts that the items were the sale must be made by Orient Air and the sale must be
received by Deganos for Evelyn Aquino and Brigida D. done with the use of American Air's ticket stocks in order for
Luz. [7]Said court was persuaded that Brigida D. Luz was it to be entitled to the overriding commission.
behind Deganos, but because there was no memorandum to
this efect, the agreement between the parties was On the other hand, Orient Air contends that the
unenforceable under the Statute of Frauds. Absent the contractual stipulation of a 3% overriding commission covers
required memorandum or any written document connecting the total revenue of American Air and not merely that derived
the respondent Luz spouses with the subject receipts, or from ticketed sales undertaken by Orient Air because it was
authorizing Deganos to act on their behalf, the alleged an exclusive General Sales Agent. CA held that Orient Air is
agreement between petitioners and Brigida D. Luz was entitled to commissions and ordered American Airto reinstate
unenforceable. Orient Air as its General Sales Agent
with the consent of the principal, which must not, in any way,
ISSUE: 1. Whether or not Orient Air is entitled be compelled by law or by any court.
to commissions.
4. EUROTECH INDUSTRIAL TECHNOLOGIES, INC.,
2. Whether CA is correct in ordering - versus –EDWIN CUIZON and ERWIN CUIZON,
reinstatement of Orient Air as an agent. G.R. No. 167552 April 23, 2007
RULING: FACTS:
1. Yes. Orient Air was entitled to an overriding From January to April 1995, petitioner sold to Impact
commission based on total flown revenue. American Air's Systems various products allegedly amounting to P91, 338.00
perception that Orient Air was remiss or in default of its pesos. Subsequently, respondents sought to buy from
obligations under the Agreement was, in fact, a situation petitioner one unit of sludge pump valued at P250, 000.00
where the latter acted in accordance with the Agreement— with respondents making a down payment of P50, 000.00.
that of retaining from the sales proceeds its accrued When the sludge pump arrived from the United Kingdom,
commissions before remitting the balance to American Air. petitioner refused to deliver the same to respondents without
Since the latter was still obligated to Orient Air by way of their having fully settled their indebtedness to petitioner.
such commissions. Orient Air was clearly justified in Thus, on 28 June 1995, respondent Edwin and Alberto de
retaining and refusing to remit the sums claimed by Jesus, general manager of petitioner, executed a Deed of
American Air. The latter's termination of the Agreement was, Assignment of receivables in favor of petitioner. Impact
therefore, without cause and basis, for which it should be systems are owed by Erwin Cuizon.
held liable to Orient Air.
Despite the existence of the Deed of Assignment,
2. No. CA in efect compels American Air to extend its respondents proceeded to collect from Toledo Power
personality to Orient Air. Such would be violative of the Company the amount of P365, 135.29. Alarmed by this
principles and essence of agency, defined by law as a development, petitioner made several demands upon
contract whereby "a person binds himself to render some respondents to pay their obligations. As a result, respondents
service or to do something in representation or on behalf were able to make partial payments to petitioner. On 7
of another, WITH THE CONSENTOR AUTHORITY OF October 1996, petitioner's counsel sent respondents a final
THE LATTER. In an agent-principal relationship, the demand letter wherein it was stated that as of 11 June 1996,
personality of the principal is extended through the facility of respondents' total obligations stood at P295, 000.00
the agent. In so doing, the agent, by legal fiction, becomes excluding interests and attorney's fees. Because of
the principal, authorized to perform all acts which the latter respondents' failure to abide by said final demand letter,
would have him do. Such a relationship can only be efected petitioner instituted a complaint for sum of money, damages,
with application for preliminary attachment against herein who should be impleaded in this case. A real party in interest
respondents is one who stands to be benefited or injured by the judgment
in the suit, or the party entitled to the avails of the suit. In
By way of special and afirmative defenses, respondent this respect, we sustain his exclusion as a defendant in the
EDWIN alleged that he is not a real party in interest in this suit before the court a quo.
case. According to him, he was acting as mere agent of his
principal, which was the Impact Systems, in his transaction 5. VICENTE M. DOMINGO, represented by his heirs,
with petitioner and the latter was very much aware of this ANTONINA RAYMUNDO VDA. DE DOMINGO,
fact. RICARDO, CESAR, AMELIA, VICENTE JR.,
ISSUE: Whether or not the act of Edwin Cuizon as sales SALVADOR, IRENE and JOSELITO, all surnamed
manager in signing the Deed of Assignment binds his DOMINGO, petitioners-appellants, vs.GREGORIO
principal Impact Systems? M. DOMINGO, respondent-appellee, TEOFILO P.
PURISIMA, intervenor-respondent. G.R. No. L-
RULING: Yes, the act of Edwin in signing the Deed of 30573 October 29, 1971
Assignment binds Impact Systems
FACTS:
The Supreme Court held that in a contract of agency, a
person binds himself to render some service or to do On June 2, 1956, Vicente M. Domingo granted Gregorio
something in representation or on behalf of another with the Domingo, a real estate broker, the exclusive agency to sell his
latter's consent. Its purpose is to extend the personality of lot No. 883 of Piedad Estate with an area of about 88,477
the principal or the party for whom another acts and from square meters at the rate of P2.00 per square meter (or for
whom he or she derives the authority to act. It is said that P176,954.00) with a commission of 5% on the total price, if
the basis of agency is representation, that is, the agent acts the property is sold by Vicente or by anyone else during the
for and on behalf of the principal on matters within the scope 30-day duration of the agency or if the property is sold by
of his authority and said acts have the same legal efect as if Vicente within three months from the termination of the
they were personally executed by the principal. agency to a purchaser to whom it was submitted by Gregorio
during the continuance of the agency with notice to Vicente.
In this case at hand, the parties do not dispute the
The said agency contract was in triplicate, one copy was
existence of the agency relationship between respondents
given to Vicente, while the original and another copy were
ERWIN as principal and EDWIN as agent.Respondent Edwin
retained by Gregorio.
Cuizon acted within his authority as an agent, who did not
acquire any right nor incur any liability arising from the Deed
On June 3, 1956, Gregorio authorized the intervenor
of Assignment, it follows that he is not a real party in interest
Teofilo P. Purisima to look for a buyer, promising him one-half
of the 5% commission.Thereafter, Teofilo Purisima introduced P 1,000 given to Gregorio as propina or gift.
Oscar de Leon to Gregorio as a prospective buyer.
When Oscar did not see him after several weeks,
Oscar de Leon submitted a written ofer which was Gregorio sensed something fishy. So, he went to Vicente and
very much lower than the price of P2.00 per square meter. read a portion to the efect that Vicente was still committed
Vicente directed Gregorio to tell Oscar de Leon to raise his to pay him 5% commission. Vicente grabbed the original of
ofer. After several conferences between Gregorio and Oscar the document and tore it to pieces.
de Leon, the latter raised his ofer to P109, 000.00 on June 20
and Vicente agreed. From his meeting with Vicente, Gregorio proceeded to
the ofice of the Register of Deeds of Quezon City, where he
Upon demand of Vicente, Oscar de Leon issued to him discovered a deed of sale executed on September 17, 1956 by
a check in the amount of P1, 000.00 as earnest money, after Amparo Diaz.
which Vicente advanced to Gregorio the sum of P300.00.
Oscar de Leon confirmed his former ofer to pay for the Upon thus learning that Vicente sold his property to the
property at P1.20 per square meter in another letter. same buyer, Oscar de Leon and his wife, he demanded in
Subsequently, Vicente asked for an additional amount of P1, writing payment of his commission on the sale price of P109,
000.00 as earnest money, which Oscar de Leon promised to 000.00.Vicente stated that Gregorio is not entitled to the 5%
deliver to him. commission because he sold the property not to Gregorio's
buyer, Oscar de Leon, but to another buyer, Amparo Diaz,
Pursuant to his promise to Gregorio, Oscar gave him as wife of Oscar de Leon
a gift or propina the sum of 1,000.00 for succeeding in
persuading Vicente to sell his lot at P1.20 per square meter ISSUE: Whether Gregorio was entitled to receive the
or a total in round figure of P109, 000.00. This gift of P1, 5% commission?
000.00 was not disclosed by Gregorio to Vicente. Neither did
Oscar pay Vicente the additional amount of P1, 000.00 by RULING: No, Gregorio is not entitled to receive the 5%
way of earnest money. commission.
When the deed of sale was not executed on August 1, The Supreme Court held that the law imposes upon the
1956 as stipulated nor on August 16, 1956 as extended by agent the absolute obligation to make a full disclosure or
Vicente, Oscar told Gregorio that he did not receive his complete account to his principal of all his transactions and
money from his brother in the United States, for which other material facts relevant to the agency, so much so that
reason he was giving up the negotiation including the the law as amended does not countenance any stipulation
amount of P 1,000 given as earnest money to Vicente and the exempting the agent from such an obligation and considers
such an exemption as void. private respondent said amount as the former does not
recognize the latter's role as agent in the transaction.
Hence, by taking such profit or bonus or gift or propina
from the vendee, the agent thereby assumes a position Issue: Whether or not Salvador Salumbiga was entitled
wholly inconsistent with that of being an agent for his to the 5% agent’s commission?
principal, who has a right to treat him, insofar as his
Commission is concerned, as if no agency had existed. The Holding and Ratio Decidendi
fact that the principal may have been benefited by the
valuable services of the said agent does not exculpate the The Court ruled that when there is a close, proximate
agent who has only himself to blame for such a result by and causal connection between the agent's eforts and labor
reason of his treachery or perfidy. and the principal's sale of his property, the agent is entitled
to a commission. They agreed with the respondent Court that
the City of Manila ultimately became the purchaser of
6. Manotok Bros., Inc. vs CA | GR no. 94753 (221 petitioner's property mainly through the eforts of private
SCRA 224) | 7 April 1993 respondent. Without discounting the fact that when
Municipal Ordinance No. 6603 was signed by the City Mayor
FACTS: on May 17, 1968, private respondent's authority had already
expired, it is to be noted that the ordinance was approved on
Manotok Brothers, Inc. is the owner of a certain parcel April 26, 1968 when private respondent's authorization was
of land and building. The land was leased by the City of still in force. Moreover, the approval by the City Mayor came
Manila and used by the Claro M. Recto High School, at M.F. only three days after the expiration of private respondent's
Jhocson Street, Sampaloc Manila. They authorized a certain authority. It is also worth emphasizing that from the records,
Salvador Salumbiga to negotiate with the City of Manila the the only party given a written authority by petitioner to
sale of the aforementioned property in the amount of negotiate the sale from July 5, 1966 to May 14, 1968 was
P425,000.00. In the same writing, Manotok agreed to pay private respondent.
Salumbiga a five percent (5%) commission in the event the
sale is finally consummated and paid. The Municipal Board of 7. Inland realty vs. CA | GR No. 76969 273 SCRA 70 |
the City of Manila eventually passed Ordinance No. 6603, 9 June 1997
appropriating the sum of P410,816.00 for the purchase of the
property which private respondent was authorized to sell. FACTS:
Notwithstanding the realization of the sale, Salumbiga never
received any commission, which should have amounted to Inland realty Invetsment Services, Inc. is a corporation
P20,554.50. This was due to the refusal of petitioner to pay engaged in the real estate business and brokages. Gregotio
Araneta Inc., through its Assistant Manger Armando Eduque, failed in selling said shares under the terms and agreements
granted Inland Realty the Authority to sell on a first comoe set out by Araneta, Inc.
first served basis the holdings of Gregorio Araneta, Inc.
After receiving a proposal letter from the Inalnd Realty, The Court of Appeals cannot be faulted for emphasizing
Stanford Microsystem, Inc. a Prospective buyer, counter- the lapse of more than one (1) year and five (5) months
proposed to nuy the shares. The authority to sell given to between the expiration of petitioners' authority to sell and
Inland Realty by Gregorio Araneta Inc. was extended for the consummation of the sale to Stanford, to be a significant
three times. On july 8, 1977, Inland Realty finally sold the index of petitioners' non-participation in the really critical
shares of stock in Architect’s Building Inc. to Stanford events leading to the consummation of said sale, i.e., the
Microsystems, Inc. for 13.5M. thereafter, Inland Realty sent a negotiations to convince Stanford to sell at Araneta, Inc.'s
demand letter to Gregorio Araneta, Inc., for the Payment of asking price, the finalization of the terms and conditions of
their 5% Broker’s Commission which was declined by the sale, the drafting of the deed of sale, the processing of
Gregorio Araneta Inc., claiming that that after their authority pertinent documents, and the delivery of the shares of stock
to sell expired 30 days where the petitioners were no to Stanford.
longerprivy to the consummation of the sale.
Inland Realty filed as case in RTC for the collection of its 8. Tan vs Gullas GR no. 143978 33 SCRA 334 |
broker commission from Gregorio Araneta Inc. however, the December 3 2002 | Justice Ynares-Santiago
RTC dismissed the case. CA also dismissed the petition since
the inland realty’s contract of agency and autjprity to sell FACTS:
already expired.
Spouses Eduardo and Norma Gullas, were the
Issue: Whether or not the Inland realty was entiled to registered owners of a parcel of land in the Municipality of
the broker’s commission upon the expiration of the Minglanilla, Province of Cebu. On June 29, 1992, they
contract of agency and authority to sell? executed a special power of attorney authorizing Manuel B.
Tan, a licensed real estate broker, and his associates Gregg
Holding and ratio Decidendi M. Tecson and Alexander Saldaa, to negotiate for the sale of
the land at Five Hundred Fifty Pesos (P550.00) per square
Inland Realty was not entitled to the Broker’s meter, at a commission of 3% of the gross price. The power of
Commission since the petitioner was not eficient in attorney was non-exclusive and efective for one month from
procuring cause in bringing about the sale on July, 7, 1977. June 29, 1992.
Inland Realty had nothing to show that they performed
substantial acts that led to the consummation of the sale to Tan accompanied Sisters Michaela Kim and Azucena
Stanford of Araneta, Inc’s shares in Architects’. Inland Realty Gaviola, representing the Sisters of Mary, to see Eduardo
Gullas in his ofice at the University of Visayas. The Sisters, consummation only because they were prevented from doing
who had already seen and inspected the land, found the same so by the acts of the private respondents.
suitable for their purpose and expressed their desire to buy
it.[8] However, they requested that the selling price be The Supreme Court ruled that an agent receives a
reduced to Five Hundred Thirty Pesos (P530.00) per square commission upon the successful conclusion of a sale. On the
meter instead of Five Hundred Fifty Pesos (P550.00) per other hand, a broker earns his pay merely by bringing the
square meter. Private respondent Eduardo Gullas referred buyer and the seller together, even if no sale is eventually
the prospective buyers to his wife. made. Clearly, therefore, petitioners, as brokers, should be
entitled to the commission whether or not the sale of the
It was the first time that the buyers came to know that property subject matter of the contract was concluded
private respondent Eduardo Gullas was the owner of the through their eforts.
property. The land was subsequently bought by the sisters.
However, the Gullas refused to pay Tan their commission. 9. Medrano vs. CA | GR No. 150678 452 SCRA 77 | 18
This was on the ground that they were not the eficient February 2005
procuring cause in bringing about the consummation of the
sale because another broker, Roberto Pacana, introduced the FACTS:
property to the Sisters of Mary ahead of the petitioners.
Private respondents maintained that when petitioners Bienvenido R. Medrano was the Vice-Chairman of Ibaan
introduced the buyers to private respondent Eduardo Gullas, Rural Bank, a bank owned by the Medrano family. In 1986,
the former were already decided in buying the property Mr. Medrano asked Mrs. Estela Flor, a cousin-in-law, to look
through Pacana, who had been paid his commission. Private for a buyer of a foreclosed asset of the bank, a 17-hectare
respondent Eduardo Gullas admitted that petitioners were in mango plantation priced at P2,200,000.00, located in Ibaan,
his ofice on July 3, 1992, but only to ask for the Batangas.
reimbursement of their cellular phone expenses.
Mr. Dominador Lee, a businessman from Makati City,
Issue: Whether or not the petitioner was entitled to was a client of respondent Mrs. Pacita G. Borbon, a licensed
their commission? real estate broker. The two met through a previous
transaction where Lee responded to an ad in a newspaper
Holding and Ration Decidendi put up by Borbon for an 8-hectare property in Lubo,
Batangas, planted with atistrees. Lee expressed that he
There was no dispute as to the role that petitioners preferred a land with mango trees instead. Borbon promised
played in the transaction. At the very least, petitioners set to get back to him as soon as she would be able to find a
the sale in motion. They were not able to participate in its property according to his specifications.
Borbon relayed to her business associates and friends Issue:Whether or not the brokers are entitled to
that she had a ready buyer for a mango orchard. Flor then commission for the sale of the subject property?
advised her that her cousin-in-law owned a mango plantation
which was up for sale. She told Flor to confer with Medrano Holding and ratio Decidendi
and to give them a written authority to negotiate the sale of
the property. The brokers were entitled to the commission. The
Supreme Court that the aggrieved brokers were the
Upon being informed by Flor that Medrano was selling procuring causes in the transaction although they did not
his mango orchard, Borbon lost no time in informing Lee that participate in the negotiation of the sale. Armed with an
they had found a property according to his specifications. An authority to procure a purchaser and with a license to act as
ocular inspection of the property together with Lee was broker, we see no reason why the respondents cannot
immediately planned; unfortunately, it never pushed through recover compensation for their eforts when, in fact, they are
for reasons beyond the respondents control. Since Lee was in the procuring cause of the sale.
a hurry to see the property, he asked the respondents the
exact address and the directions on how to reach Ibaan, Procuring cause is meant to be the proximate cause.
Batangas. The respondents thereupon instructed him to look The term procuring cause, in describing a brokers activity,
for Teresa Ganzon, an oficer of the Ibaan Rural Bank and the refers to a cause originatinga series of events which, without
person to talk to regarding the property. While the letter- break in their continuity, result in accomplishment of prime
authority issued in favor of the respondents was non- objective of the employment of the broker producing a
exclusive, no evidence was adduced to show that there were purchaser ready, willing and able to buy real estate on the
other persons, aside from the respondents, who informed Lee owners terms.
about the property for sale. Ganzon testified that no
advertisement was made announcing the sale of the lot, nor A broker will be regarded as the procuring cause of a
did she give any authority to other brokers/agents to sell the sale, so as to be entitled to commission, if his eforts are the
subject property. foundation on which the negotiations resulting in a sale are
begun. The broker must be the eficient agent or the
However, despite of the respondent’s participation in procuring cause of the sale. The means employed by him and
finding a buyer for the petitioner’s property, the petitioners his eforts must result in the sale. He must find the
refuse to pay them commission, asserting that they are not purchaser, and the sale must proceed from his eforts acting
the eficient procuring cause of the sale. It was alleged that as broker. Indeed, the evidence on record shows that the
they since they did not participate in the negotiation of the respondents were instrumental in the sale of the property to
sale, they were thus not entitled to their commission. Lee. Without their intervention, no sale could have been
consummated. They were the ones who set the sale of the Litonjuas, filed a complaint for specific performance and
subject land in motion. payment for damages on account of the aborted sale. Both
the trial court and appellate court rendered judgment in
favor of defendants and dismissed the complaint. The lower
court declared that since the authority of the agents/realtors
was not in writing, the sale is void and not merely
10. Litonjua vs Etermit Corp. | GR No. 144805 unenforceable.
452 SCRA 77 | 18 February 2005
Issue: Whether or not the written authority from the
FACTS: Eternit was necessary before the sale can be perfected?
The Eternit Corporation (EC) manufactures roofing Holding and Ration Decidendi
materials and pipe products. Ninety (90%) percent of the
shares of stocks of EC were owned by Eteroutremer S.A. It appears that Marquez acted not only as real estate
Corporation (ESAC), a corporation registered under the laws broker for the petitioners but also as their agent. As gleaned
of Belgium. Glanville was the General Manager and President from the letter of Marquez to Glanville, on February 26,
of EC, while Delsauxwas the Regional Director for Asia of 1987, he confirmed, for and in behalf of the petitioners, that
ESAC. In 1986, because of the political situation in the the latter had accepted such ofer to sell the land and the
Philippines the management of ESAC wanted to stop its improvements thereon.
operations and to dispose the land in Mandaluyong City. They The Supreme Court agrees with the ruling of the
engaged the services of realtor/broker Lauro G. Marquez. appellate court that Marquez had no authority to bind
Marquez thereafter ofered the land to Eduardo B. Litonjua, respondent EC to sell the subject properties. A real estate
Jr. for P27,000,000.00. Litonjua counter ofered broker is one who negotiates the sale of real properties. His
P20,000,000.00 cash. Marquez apprisedGlanville & Delsaux business, generally speaking, is only to find a purchaser who
of the ofer. Delsaux sent a telex stating that, based on the is willing to buy the land upon terms fixed by the owner. He
"Belgian/Swiss decision," the final ofer was has no authority to bind the principal by signing a contract of
"US$1,000,000.00 andP2,500,000.00. The Litonjua brothers sale. Indeed, an authority to find a purchaser of real property
deposited US$1,000,000.00 with the Security Bank & Trust does not include an authority to sell.
Company, and drafted an Escrow Agreement to expeditethe
sale.Meanwhile, with the assumption of Corazon C. Aquino as
President, the politicalsituation improved. Marquez received SECTION TWO
a letter from Delsaux that the ESAC Regional Ofice decided
not to proceed with the sale. When informed of this, the
11. │ Rallos vs Yangco │ G.R. No. 6906 (20 Phil defendant refused to pay the said sum upon demand of the
269) │ September 27, 1911 │ Justice Moreland plaintifs, placing such refusal upon the ground that at the
time the said tobacco was received and sold by Collantes he
FACTS: was acting personally and not as agent of the defendant. This
Defendant Yangco sent a letter to Plaintif Rallos on action was brought to recover said sum.
November 27, 1907 ofering a consignment agreement. In
such letter, Yangco made known that he conferred upon ISSUE: Whether or not Yangco is liable to Rallos for
Florentino Collantes a public power of attorney notarized by having failed to notify that Collantes was no longer in
Mr.Perfecto Salas Rodriguez dated November 16, 1907 to his employ?
perform in his name and on his behalf all acts necessary for
carrying out his plans.
Accepting this invitation, the plaintifs proceeded to do RULING:

a considerable business with the defendant through the said Yes, Yangco is liable. Having advertised the fact that
Collantes, as his factor, sending to him as agent for the Collantes was his agent and having given them a special
defendant a good deal of produce to be sold on commission. invitation to deal with such agent, it was the duty of the
Later, and in the month of February, 1909, the plaintifs sent defendant on the termination of the relationship of principal
to the said Collantes, as agent for the defendant, 218 bundles and agent to give due and timely notice thereof to the
of tobacco in the leaf to be sold on commission, as had been plaintifs. Failing to do so, he is responsible to them for
other produce previously. The said Collantes received said whatever goods may have been in good faith and without
tobacco and sold it for the sum of P1,744. The charges for negligence sent to the agent without knowledge, actual or
such sale were P206.96. leaving in the hands of said constructive, of the termination of such relationship.
Collantes the sum of P1,537.08 belonging to the plaintifs.
This sum was apparently, converted to his own use by said
agent.
It appears, however, that prior to the sending of said

tobacco the defendant had severed his relations with
Collantes and that the latter was no longer acting as his
12. │ Litonjua vs Fernandez │G.R. No. 148116
factor. This fact was not known to the plaintifs; and it is
(427 SCRA 478) │April 14, 2004│ Justice Callejo
conceded in the case that no notice of any kind was given by
Sr.,
the defendant to the plaintifs of the termination of the
relations between the defendant and his agent. The
FACTS: remit the purchase price to the owners, through respondent

Fernandez.
Sometime in September 1995, Mrs. Lourdes Alimario
and Agapito Fisico who worked as brokers, ofered to sell to However, only Agapito Fisico attended the meeting. He
the petitioners, Antonio K. Litonjua and Aurelio K. Litonjua, informed the petitioners that respondent Fernandez was
Jr., the parcels of land covered by TCT Nos. 36754 and encountering some problems with the tenants and was trying
36766. The petitioners were shown a locator plan and copies to work out a settlement with them. After a few weeks of
of the titles showing that the owners of the properties were waiting, the petitioners wrote respondent Fernandez on
represented by Mary Mediatrix Fernandez and Gregorio T. January 5, 1995, demanding that their transaction be
Eleosida, respectively. The brokers told the petitioners that finalized by January 30, 1996. When the petitioners received
they were authorized by respondent Fernandez to ofer the no response from respondent Fernandez, the petitioners sent
property for sale. The petitioners, thereafter, made two her another Letter dated February 1, 1996, asking that the
ocular inspections of the property, in the course of which Deed of Absolute Sale covering the property be executed in
they saw some people gathering coconuts. accordance with their verbal agreement dated November 27,
1995. The petitioners also demanded the turnover of the
In the afternoon of November 27, 1995, the petitioners subject properties to them within fifteen days from receipt of
met with respondent Fernandez and the two brokers at the the said letter; otherwise, they would have no option but to
petitioners ofice in Mandaluyong City. The petitioners and protect their interest through legal means.
respondent Fernandez agreed that the petitioners would buy
the property consisting of 36,742 square meters, for the Respondent Fernandez wrote the petitioners on
price of P150 per square meter, or the total sum of February 14, 1996, clarifying that their claims are not true.
P5,098,500. They also agreed that the owners would On April 2, 1996, the petitioners filed the instant complaint
shoulder the capital gains tax, transfer tax and the expenses for specific performance with damages against respondent
for the documentation of the sale. The petitioners and Fernandez and the registered owners of the property.
respondent Fernandez also agreed to meet on December 8,
1995 to finalize the sale. The trial court rendered judgement in favor of
petitioners while the appellate court reversed the decision.
It was also agreed upon that on the said date,
respondent Fernandez would present a special power of ISSUE: Whether or not the letter signed by Respondent
attorney executed by the owners of the property, authorizing
Fernandez is binding on the registered owners of the
her to sell the property for and in their behalf, and to execute
subject properties?
a deed of absolute sale thereon. The petitioners would also
RULING:
13. │ Aggabao vs Parulan Jr.│G.R. No. 165803

No.The Letter relied upon by the petitioners was signed (629 SCRA 562) │September 1, 2010│ Justice
by respondent Fernandez alone, without any authority from Bersamin
the respondents-owners. There is no evidence on record that
the respondents-owners ratified all the actuations of FACTS:
respondent Fernandez in connection with her dealings with
the petitioners. As such, said letter is not binding on the In January 1991, real estate broker Marta K. Atanacio
respondents as owners of the subject properties. ofered the property to spouses Aggabao, who initially did not
show interest due to the rundown condition of the
Article 1878 of the New Civil Code provides that a improvements. But Atanacio’s persistence prevailed upon
special power of attorney is necessary to enter into any them, so that on February 2, 1991, they and Atanacio met
contract, by which the ownership of an immovable is with Ma. Elena at the site of the property.During their
transmitted or acquired either gratuitously or for a valuable meeting, Ma. Elena showed to them the owners original copy
consideration, or to create or convey real rights over of TCT No. 63376, a certified true copy of TCT No. 63377,
immovable property, or for any other act of strict dominion. three tax declarations, and a copy of the special power of
Any sale of real property by one purporting to be the agent of attorney (SPA) dated January 7, 1991 executed by Dionisio,
the registered owner without any authority therefor in authorizing Ma. Elena, to sell the property. Before the
writing from the said owner is null and void. The declarations meeting ended, they paid P20, 000.00 as earnest money, for
of the agent alone are generally insuficient to establish the which Ma. Elena executed a handwritten Receipt of Earnest
fact or extent of her authority. Money, whereby the parties stipulated that: (a) they would
pay an additional payment of P130,000.00 on February
In this case, the only evidence adduced by the 4,1991; (b) they would pay the balance of the bank loan of
petitioners to prove that respondent Fernandez was the respondents amounting to P650,000.00 on or before
authorized by the respondents owners is the testimony of February 15, 1991; and (c) they would make the final
petitioner Antonio Litonjua that respondent Fernandez payment of P700,000.00 once Ma. Elena turned over the
openly represented herself to be the representative of the property on March 31, 1991.
respondents owners, and that she promised to present to the
petitioners on December 8, 1996 a written authority to sell On March 18, 1991, the petitioners delivered the final
the properties. amount of P700,000.00 to Ma. Elena, who executed a deed of
absolute sale in their favor. However, Ma. Elena did not
turn over the owners duplicate copy of TCT No. 63376,
claiming that said copy was in the possession of a relative
who was then in Hongkong. She assured them that the
owners duplicate copy of TCT No. 63376 would be turned The RTC ruled in favor of Plaintif Parulan and declared
over after a week. the sale of both lots null and void, declaring that the SPA in
the hands of Elena was a forgery. The CA afirmed the
On March 19, 1991, TCT No. 63377 was cancelled and decision of the RTC.
a new one was issued in the name of the petitioners. Ma.
Elena did not turn over the duplicate owner’s copy of TCT ISSUE: Whether or not the sale of the conjugal party
No. 63376 as promised. In due time, the petitioners learned executed without the consent of Dionisio valid on the
that the duplicate owners copy of TCT No. 63376 had been ground that his power of administration had been
all along in the custody of Atty. Jeremy Z. Parulan, who delegated to his brother through an SPA?
appeared to hold an SPA executed by his brother Dionisio
authorizing him to sell both lots. At Atanacios instance, the RULING:
petitioners met on March 25, 1991 with Atty. Parulan at the
Manila Peninsula. For that meeting, they were accompanied No, the sale is not valid. The petitioners failed to
by one Atty. Olandesca. They recalled that Atty. Parulan substantiate their contention that Dionisio, while holding the
smugly demanded P800,000.00 in exchange for the duplicate administration over the property, had delegated to his
owners copy of TCT No. 63376, because Atty. Parulan brother, Atty. Parulan, the administration of the property,
represented the current value of the property to be P1.5 considering that they did not present in court the SPA
million. As a counterofer, however, they tendered granting to Atty. Parulan the authority for the administration.
P250,000.00, which Atty. Parulan declined, giving them only
until April 5, 1991 to decide. Nonetheless, the Supreme court stress that the power
of administration does not include acts of disposition or
Hearing nothing more from the petitioners, Atty. encumbrance, which are acts of strict ownership. As such, an
Parulan decided to call them on April 5, authority to dispose cannot proceed from an authority to
1991, but they informed him that they had already fully paid administer, and vice versa, for the two powers may only be
to Ma. Elena. exercised by an agent by following the provisions on agency
of the Civil Code (from Article 1876 to Article 1878).
Thus, on April 15, 1991, Dionisio, through Atty. Parulan, Specifically, the apparent authority of Atty. Parulan, being a
commenced an action, praying for the declaration of the special agency, was limited to the sale of the property in
nullity of the deed of absolute sale executed by Ma. Elena, question, and did not include or extend to the power to
and the cancellation of the title issued to the petitioners by administer the property.
virtue thereof.
14. │ Dominion Insurance Corp. vs CA│G.R. No. our prior written consent, to appoint agents and
129919 (376 SCRA 239) │February 6, 2002│ subagents.
Justice Pardo 2. To accept, underwrite and subscribed (sic) cover
notes or Policies of Insurance and Bonds for and on our
FACTS: behalf.
3. To demand, sue, for (sic) collect, deposit, enforce
On January 25, 1991, plaintif Rodolfo S. Guevarra payment, deliver and transfer for and receive and give
instituted Civil Case No. 8855 for sum of money against efectual receipts and discharge for all money to which the
defendant Dominion Insurance Corporation. Plaintif sought FIRST CONTINENTAL ASSURANCE COMPANY, INC.,
to recover thereunder the sum of P156, 473.90 which he may hereafter become due, owing payable or transferable
claimed to have advanced in his capacity as manager of to said Corporation by reason of or in connection with the
defendant to satisfy certain claims filed by defendants abovementioned appointment.
clients. In its traverse, defendant denied any liability to 4. To receive notices, summons, and legal processes for
plaintif and asserted a counterclaim for P249, 672.53, and in behalf of the FIRST CONTINENTAL ASSURANCE
representing premiums that plaintif allegedly failed to remit. COMPANY, INC., in connection with actions and all legal
proceedings against the said Corporation.
The terms of the agreement read:
Respondent Guevarra’s authority to settle claims is
That we, FIRST CONTINENTAL ASSURANCE embodied in the Memorandum of Management
COMPANY, INC., a corporation duly organized and Agreement[23] dated February 18, 1987 which enumerates
existing under and by virtue of the laws ofthe Republic of the scope of respondent Guevarras duties and responsibilities
the Philippines, xxx represented by the undersigned as as agency manager for San Fernando, Pampanga, as follows:
Regional Manager, xxx do hereby appoint RSG
Guevarra Insurance Services represented by Mr. 1. You are hereby given authority to settle and dispose of all
Rodolfo Guevarra xxx to be our Agency Manager in San Fdo., motor car claims in the amount of P5,000.00 with prior
for our place and stead, to do and perform the following approval of the Regional Ofice.2. Full authority is given you
acts and things: on TPPI claims settlement.Respondent Guevarra’s authority
is further limited by the written standard authority to pay,
1. To conduct, sign, manager (sic), carry on and which states that the payment shall come from respondent
transact Bonding and Insurance business as usually pertain Guevarra’s revolving fund or collection.
to a Agency Ofice, or FIRE, MARINE, MOTOR CAR,
PERSONAL ACCIDENT, and BONDING with the right, upon
ISSUE:Whether or not respondent Guevarra acted claims of the insured may not be reimbursed from petitioner
within his authority as agent for petitioner in Dominion.
accordance with the Special Power of Attorney?
RULING: 15. │ Veloso vs CA│ G.R. No. 102737 (260 SCRA

593) │ August 21, 1996│ Justice Torres Jr.
No. A perusal of the Special Power of Attorney would
show that petitioner (represented by third-party defendant FACTS:
Austria) and respondent Guevarra intended to enter into a
principal-agent relationship. Despite the word special in the Petitioner Francisco Veloso was the owner of a parcel
title of the document, the contents reveal that what was of land situated in the district of Tondo, Manila, with an area
constituted was actually a general agency of one hundred seventy seven (177) square meters and
covered by Transfer Certificate of Title No. 49138 issued by
The agency comprises all the business of the principal, the Registry of Deeds of Manila. The title was registered in
but, couched in general terms, it is limited only to acts of the name of Francisco A. Veloso, single, on October 4, 1957.
administration. A general power permits the agent to do all The said title was subsequently canceled and a new one,
acts for which the law does not require a special power. Thus, Transfer Certificate of Title No. 180685, was issued in the
the acts enumerated in or similar to those enumerated in the name of Aglaloma B. Escario, married to Gregorio L. Escario,
Special Power of Attorney do not require a special power of on May 24, 1988.
attorney.
On August 24, 1988, petitioner Veloso filed an action
The payment of claims is not an act of administration. for annulment of documents, reconveyance of property with
The settlement of claims is not included among the acts damages and preliminary injunction and/or restraining order.
enumerated in the Special Power of Attorney, neither is it of a The complaint, docketed as Civil Case No. 8845926, was
character similar to the acts enumerated therein. A special raffled to the Regional Trial Court, Branch 45, Manila.
power of attorney is required before respondent Guevarra Petitioner alleged therein that he was the absolute owner of
could settle the insurance claims of the insured. the subject property and he never authorized anybody, not
even his wife, to sell it. He alleged that he was in possession
Respondent Guevarra was authorized to pay the claim of the title but when his wife, Irma, left for abroad, he found
of the insured, but the payment shall come from the out that his copy was missing. He then verified with the
revolving fund or collection in his possession. Having Registry of Deeds of Manila and there he discovered that his
deviated from the instructions of the principal, the expenses title was already canceled in favor of defendant Aglaloma
that respondent Guevarra incurred in the settlement of the Escario. The transfer of property was supported by a General
Power of Attorney dated November 29, 1985 and Deed of

Absolute Sale, dated November 2, 1987, executed by Irma RULING:
Veloso, wife of the petitioner and appearing as his
attorneyinfact, and defendant Aglaloma Escario. Yes. An examination of the records showed that the
assailed power of attorney was valid and regular on its face.
Petitioner Veloso, however, denied having executed the It was notarized and as such, it carries the evidentiary weight
power of attorney and alleged that his signature was conferred upon it with respect to its due execution. While it
falsified. He also denied having seen or even known is true that it was denominated as a general power of
Rosemarie Reyes and Imelda Santos, the supposed witnesses attorney, a perusal thereof revealed that it stated an
in the execution of the power of attorney. He vehemently authority to sell.
denied having met or transacted with the defendant. Thus, he
contended that the sale of the property, and the subsequent Thus, there was no need to execute a separate and
transfer thereof, were null and void. Petitioner Veloso, special power of attorney since the general power of attorney
therefore, prayed that a temporary restraining order be had expressly authorized the agent or attorney in fact the
issued to prevent the transfer of the subject property; that power to sell the subject property. The special power of
the General Power of Attorney, the Deed of Absolute Sale and attorney can be included in the general power when it is
the Transfer Certificate of Title No. 180685 be annulled; and specified therein the act or transaction for which the special
the subject property be reconveyed to him. power is required.
Whether the instrument be denominated as general
Defendant Aglaloma Escario in her answer alleged that power of attorney or special power of attorney, what matters
she was a buyer in good faith and denied any knowledge of is the extent of the power or powers contemplated upon the
the alleged irregularity. She allegedly relied on the general agent or attorney in fact. If the power is couched in general
power of attorney of Irma Veloso which was suficient in form terms, then such power cannot go beyond acts of
and substance and was duly notarized. She contended that administration. However, where the power to sell is specific,
plaintif (herein petitioner), had no cause of action against it not being merely implied, much less couched in general
her. In seeking for the declaration of nullity of the terms, there can not be any doubt that the attorney in fact
documents, the real party in interest was Irma Veloso, the may execute a valid sale. An instrument may be captioned as
wife of the plaintif. She should have been impleaded in the special power of attorney but if the powers granted are
case. In fact, Plaintifs cause of action should have been couched in general terms without mentioning any specific
against his wife, Irma. power to sell or mortgage or to do other specific acts of strict
dominion, then in that case only acts of administration may
ISSUE: Whether or not the general power of attorney is be deemed conferred.
valid and regular on its face?
PMSI, in its capacity as employer and policyholder of the life

16. │ Pineda vs CA│ G.R. No. 105562 (226 SCRA insurance of its deceased workers, filed with respondent-
754) │ September 27, 1993│ Justice Davide Jr. appellant formal claims for and in behalf of the beneficiaries,
through its President, Capt. Nuval. Among the documents
FACTS: submitted by the latter for the processing of the claims were
five special powers of attorney executed by complainants-
On 23 September 1983, Prime Marine Services, Inc., a appellees.
crewing/manning outfit, procured Group PoIicy No. G004694
from respondent-appellant Insular Life Assurance Co., Ltd. to On the basis of these and other documents duly
provide life insurance coverage to its sea-based employees submitted, respondent-appellant drew against its account
enrolled under the plan. On 17 February 1986, during the with the Bank of the Philippine Islands on 27 May 1986 six
efectivity of the policy, six covered employees of the PMSI (6) checks, four for P200,00.00 each, one for P50,000.00 and
perished at sea when their vessel, M/V Nemos, a Greek cargo another for P40,00.00, payable to the order of complainants-
vessel, sunk somewhere in El Jadida, Morocco. They were appellees. These checks were released to the treasurer of
survived by complainants-appellees, the beneficiaries under PMSI upon instructions of Capt. Nuval over the phone to Mr.
the policy. Mariano Urbano, Assistant Department Manager for Group
Administration Department of respondent-appellant. Capt.
Following the tragic demise of their loved ones, Nuval, upon receipt of these checks from the treasurer, who
complainants-appellees sought to claim death benefits due happened to be his son-in-law, endorsed and deposited them
them and, for this purpose, they approached the President in his account with the Commercial Bank of Manila, now
and General Manager ofPMSI, Capt. Roberto Nuval. Capt. Boston Bank.
Nuval evinced willingness to assist complainants-appellees to
recover Overseas Workers Welfare Administration (OWWA) On 3 July 1989, after complainants-appellees learned
benefits from the POEA and to work for the increase of their that they were entitled, as beneficiaries, to life insurance
PANDIMAN and other benefits arising from the deaths of benefits under a group policy with respondent-appellant, they
their husbands/sons. They were thus made to execute, with sought to recover these benefits from Insular Life but the
the exception of the spouses Alarcon, special powers of latter denied their claim on the ground that the liability to
attorney authorizing Capt. Nuval to, among others, "follow complainants-appellees was already extinguished upon
up, ask, demand, collect and receive" for their benefit delivery to and receipt by PMSI of the six (6) checks issued in
indemnities of sums of money due them relative to the their names.
sinking of M/V Nemos. By virtue of these written powers of
attorney, complainants-appellees were able to receive their ISSUE: Whether or not the power of attorney relied
respective death benefits. Unknown to them, however, the upon by Insular Life sufficient to convey absolute
authority to Capt. Nuval to collect the insurance either refuse to deal with the agent at all, or should ascertain
proceeds? from the principal the true condition of afairs.
RULING: 17. DOMINION INSURANCE CORPORATION VS.

CA G. R. NO. 129919, FEBRUARY 6, 2002
No. The special powers of attorney "do not contain in
unequivocal and clear terms authority to Capt. Nuval to FACTS:
obtain, receive, receipt from respondent company insurance
proceeds arising from the death of the seaman-insured. On On January 25, 1991, plaintif Rodolfo S. Guevarra
the contrary, the said powers of attorney are couched in instituted Civil Case No. 8855 for sum of money against
terms which could easily arouse suspicion of an ordinary defendant Dominion Insurance Corporation. Plaintif sought
man." to recover thereunder the sum of P156,473.90 which he
claimed to have advanced in his capacity as manager of
There is nothing in the law which mandates a specific defendant to satisfy certain claims filed by defendants
or special power of attorney to be executed to collect clients.
insurance proceeds. Such authority is not included in the
enumeration of Art. 1878 of the New Civil Code. Neither does The Special Power of Attorney executed between the
the Supreme Court perceive collection of insurance claims as petitioner, represented by third-party defendant Austria, and
an act of strict dominion as to require a special power of respondent Gueverra intended to enter into a principal-agent
attorney. relationship.
The terms of the agreement read that the First Continental
The person dealing with an agent must also act with Assurance Company, Inc appointed RSG Guevarra Insurance
ordinary prudence and reasonable diligence. Obviously, if he Services represented by Mr. RodolfoGuevarra xxx to be our
knows or has good reason to believe that the agent is Agency Manager in San Fdo., for our place and stead, to do
exceeding his authority, he cannot claim protection. So if the and perform the following acts and things:
suggestions of probable limitations be of such a clear and
reasonable quality, or if the character assumed by the agent to conduct, sign, manager (sic), carry on and transact
is of such a suspicious or unreasonable nature, or if the bonding and insurance business as usually pertain to a
authority which he seeks to exercise is of such an unusual or agency office, or fire, marine, motor car, personal accident,
improbable character, as would sufice to put an ordinarily and bonding with the right, upon our prior written consent,
prudent man upon his guard, the party dealing with him may to appoint agents and sub-agents.
not shut his eyes to the real state of the case, but should
to accept, underwrite and subscribed (sic) cover notes or

policies of insurance and bonds for and on our behalf. to The payment of claims is not an act of administration
demand, sue, for (sic) collect, deposit, enforce payment, which requires a special power of attorney before Guevarra
deliver and transfer for and receive and give effectual could settle the insurance claims of the insured.
receipts and discharge for all money to which the company
may hereafter become due, owing payable or transferable to Also Guevarra was instructed that the payment for the
said corporation by reason of or in connection with the insured must come from the revolving fund or collection in
above-mentioned appointment. to receive notices, summons, his possession, Gueverra should not have paid the insured
and legal processes for and in behalf of the first continental through his own capacity.
assurance company, inc., in connection with actions and all
legal proceedings against the said corporation. Under 1918 of civil code an agent who acted in
contravention of the principal‘s instruction the principal will
The trial court rendered judgement in favor of Rodolfo not be liable for the expenses incurred by the agent.
S. Guevarra. Although a ―Special Power of Attorney‖ was issued by the
The Court of Appeals promulgated a decision afirming insurance company to its agency manager, it wordings show
that of thetrial court. that it sought only to establish an agency that comprises all
the business of the principal within the designated locality,
ISSUE: Whether respondent Guevarra acted within his but couched in general terms, and consequently was limited
authority as agent for petitioner? only to acts of administration.
RULING: A general power permits the agent to do all acts for

which the law does not require a special power. Thus, the
No. Even though the contact entered into by Guevarra acts enumerated in or similar to those enumerated in the
and Dominion was with the word ―special‖ the contents of ―Special Power of Attorney‖ (i.e., really a general power of
the document was actually a general agency. A general power attorney) did not require a special power of attorney, and
permits the agent to do all acts for which the law does not could only cover acts of administration.
require a special power and the contents in the document did
not require a special power of attorney. In the case of the area manager of an insurance
company, it was held that the payment of claims is not an act
Art 1878 of the civil code provides instances when a of administration, and that since the settlement of claims was
special power of attorney is required.: 1) To make such not included among the acts enumerated in the Special
payment as are not usually considered as acts of Power of Attorney issued by the insurance company, nor is of
administration. 2) Any other act of dominion. a character similar to the acts enumerated therein, then a
special power of attorney was required before such area authority to compromise, assured the court that though he
manager could settle the insurance claims of the insured. had no written authority, he had such authority verbally given
Consequently, the amounts paid by the area manager to by the plaintif. On the same day, the court dismissed the
settle such claims cannot be reimbursed from the principal case for failure of the plaintif to appear at the pre-trial
insurance company. conference.
ISSUE: Whether or not the lower court correctly

18. HOME INSURANCE CO. VS. USL, GR L- dismiss the case for failure of the plaintiff to appear at
25593, 15 NOVEMBER 1967 the pre-trial conference who allegedly gave his attorney
a verbal authority to compromise?
FACTS:
RULING:
Sometime in 1964, SS "Pioneer Moon" arrived in
Manila and discharged unto the custody of the Bureau of YES. The lower court was correct in dismissing the
Customs, as arrastre operator, two hundred (200) cartons of case. True, said counsel asserted that he had verbal authority
carbonized adding machine rolls consigned to Burroughs, to compromise the case. The Rules, however, require, for
Limited. When the cargo was delivered to the consignee, attorneys to compromise the litigation of their clients, a
however, several cartons were damaged. ―special authority‖ (Section 23, Rule 138, Rules of Court).
The consignee claimed the P2,605.64 worth of damage And while the same does not state that the special
from the Bureau of Customs, the United Lines Company authority be in writing, the court has every reason to expect,
owner of the vessel, and the Home Insurance Company which that, if not in writing, the same be duly established by
had insured the cargo. The latter paid the claim and evidence other than the self-serving assertion of counsel
demanded reimbursement from either arrastre operator or himself that such authority was verbally given to him.
the carrier.
When both rejected the claim, the Home Insurance Company For, authority to compromise cannot lightly be
filed an action against the Republic of the Philippines, the presumed. And if, with good reason, the judge is not satisfied
Bureau of Customs and the United States Lines, in the that said authority exists, as in this case, dismissal of the suit
alternative, for the recovery of P2,605.64, with interest plus for non-appearance of plaintif in pre-trial is sanctioned by
costs. the Rules. The dismissal should therefore be sustained in
toto, with respect to all the defendants.
On the date set for pre-trial, only the counsel for the
plaintif appeared, who upon being asked for written
19. ESTATE OF LIANO OLAGUER VS. ONGJOCO, On the same date, Estanislao Olaguer executed a
GR NO. 173312 26 AUGUST 2008 Special Power of Attorney in favor of Jose A. Olaguer
authorizing the latter to "sell, mortgage, assign, transfer,
FACTS: endorse and deliver" the 9 properties.
The plaintifs Sor Mary Edith Olaguer, Aurora O. de By virtue of this Special Power of Attorney, on March 1,
Guzman, Clarissa O. Trinidad, Lina Olaguer and Ma. Linda O. 1967, Jose A. Olaguer as Attorney-in-Fact of Estanislao
Montayre are the legitimate children of the spouses Lino Olaguer mortgaged Lots 7589, 7593 and 7396 to defendant
Olaguer and defendant Olivia P. Olaguer. Lino Olaguer died PNB as security for a loan of 10,000 Pesos. The mortgage
on October 3, 1957 so Special Proceedings No. 528 for was foreclosed by the PNB on June 13, 1973 and the
probate of will was filed in the then Court of First Instance of properties mortgage were sold at public auction to PNB. On
Albay. Defendant Olivia P. Olaguer was appointed as December 10, 1990, the PNB transferred the properties to
administrator pursuant to the will. Later, defendant Eduardo the Republic of the Philippines pursuant to Exec. Order No.
Olaguer was appointed as coadministrator. On October 15, 407 dated June 14, 1990 for agrarian reform purposes.
1959 defendant Olivia P. Olaguer got married to defendant
Jose A. Olaguer before the then Justice of the Peace of Sto. On October 29, 1966, Estanislao Olaguer executed a
Domingo (Libog) Albay. On January 24, 1965 they were General Power of Attorney in favor of Jose A. Olaguer,
married in church. authorizing the latter to exercise general control and
supervision over all of his business and properties, and
In the order of the probate court dated April 4, 1961, among others, to sell or mortgage any of his properties.
some properties of the estate were authorized to be sold to On December 29, 1966, Estanislao Olaguer sold to Jose A.
pay obligations of the estate. Olaguer for 15,000 the 10 parcels of land he bought from
Relying upon the order, but without prior notice or Olivia P. Olaguer and Eduardo Olaguer.
permission from the Probate Court, defendants Olivia P. On March 16, 1968, Estanislao Olaguer sold to Jose A.
Olaguer and Eduardo Olaguer on November 1, 1965 sold to Olaguer for 1 Peso and other valuable consideration 2 parcels
Estanislao Olaguer 10 parcels of land. The sale to was of land which have a total area of 2.5 hectares.
approved by the Probate Court on November 12, 1965.
On June 5, 1968, Estanislao Olaguer sold another 2 lots
On July 7, 1966, defendant Olivia P. Olaguer executed a to Jose A. Olaguer for 1 Peso and other valuable
Special Power of Attorney in favor of defendant Jose A. consideration.
Olaguer, authorizing the latter to "sell, mortgage, assign, On May 13, 1971, Jose A. Olaguer in his capacity as Attorney
transfer, endorse and deliver" of 6 properties. in-Fact of Estanislao Olaguer sold to his son Virgilio Olaguer
for 1 Peso and other valuable consideration.
On July 15, 1974, Jose A. Olaguer sold to his son ISSUE: Whether General Power of Attorney was
Virgilio Olaguer Lot No. 4521 and Lot No. 4522 for 1,000 sufficient to effect the sale of the subject properties?
Pesos.
On September 16, 1978 Virgilio Olaguer executed a General RULING:
Power of Attorney in favor of Jose A. Olaguer authorizing the
latter to exercise general control and supervision over all of Yes, the general power of attorney was suficient The
his business and properties and among others, to sell or Supreme Court held that while the law requires a special
mortgage the same. power of attorney, the general power of attorney was
suficient in this case, as Jose A. Olaguer was expressly
Olivia P. Olaguer and Eduardo Olaguer were removed empowered to sell any of Virgilio's properties; and to sign,
as administrators of the estate and on February 12, 1980, execute, acknowledge and deliver any agreement therefor.
plaintif Ma. Linda Olaguer Montayre was appointed
administrator by the Probate Court. As regards Lots Nos. 76D, 76E, 76F and 76G, Ongjoco
was able to present a general power of attorney that was
The decedent Lino Olaguer have had three marriages. executed by Virgilio Olaguer. While the law requires a special
He was first married to Margarita Ofemaria who died April 6, power of attorney, the general power of attorney was
1925. His second wife was Gloria Buenaventura who died on suficient in this case, as Jose A. Olaguer was expressly
July 2, 1937. The third wife was the defendant Olivia P. empowered to sell any of Virgilio'sproperties; and to sign,
Olaguer. execute, acknowledge and deliver any agreement
therefor.Even if a document is designated as a general power
Jose Olaguer acting upon the general power of attorney of attorney, the requirement of a special power of attorney is
sold 8 parcels of land to Emilio Ongjoco. met if there is a clear mandate from the principal specifically
authorizing the performance of the act.
On 28 January 1980, the Estate of Lino Olaguer filed an
action for the Annulment of Sales of Real Property and/or The special power of attorney can be included in the
Cancellation of Titles in the then Court of First Instance of general power when the act or transaction for which the
Albay. The plaintifs therein alleged that the sales of the special power is required is specified therein.
following properties belonging to the Estate of Lino Olaguer On its face, the written power of attorney contained the
to Estanislao Olaguer were absolutely simulated or fictitious, signature of Virgilio Olaguer and was duly notarized. As
the plaintifs likewise prayed that the resulting Transfer such, the same is considered a public document and it has in
Certificates of Title issued to Jose Olaguer, Virgilio Olaguer, its favor the presumption of authenticity and due execution,
Cipriano Duran and the PNB be annulled.
which can only be contradicted by clear and convincing In the afternoon of November 27, 1995, the petitioners
evidence. met with respondent Fernandez and the two brokers at the
petitioners ofice in Mandaluyong City.The petitioners and
According to the provisions of Article 1874of the Civil respondent Fernandez agreed that the petitioners would buy
Code on Agency, when the sale of a piece of land or any the property consisting of 36,742 square meters, for the
interest therein is made through an agent, the authority of price of P150 per square meter, or the total sum of
the latter shall be in writing. Absent this requirement, the P5,098,500. They also agreed that the owners would
sale shall be void. Also, under Article 1878,a special power of shoulder the capital gains tax, transfer tax and the expenses
attorney is necessary in order for an agent to enter into a for the documentation of the sale. The petitioners and
contract by which the ownership of an immovable property is respondent Fernandez also agreed to meet on December 8,
transmitted or acquired, either gratuitously or for a valuable 1995 to finalize the sale.
consideration.
It was also agreed upon that on the said date,
20. LITONJUA VS. FERNANDEZ, GR NO. 148116, respondent Fernandez would present a special power of
14 APRIL 2004 attorney executed by the owners of the property, authorizing
her to sell the property for and in their behalf, and to execute
FACTS: a deed of absolute sale thereon. The petitioners would also
remit the purchase price to the owners, through respondent
Sometime in September 1995, Mrs. Lourdes Alimario Fernandez.
and Agapito Fisico who worked as brokers, ofered to sell to However, only Agapito Fisico attended the meeting. He
the petitioners, Antonio K. Litonjua and Aurelio K. Litonjua, informed the petitioners that respondent Fernandez was
Jr., the parcels of land covered by TCT Nos. 36754 and encountering some problems with the tenants and was trying
36766. The petitioners were shown a locator plan and copies to work out a settlement with them. After a few weeks of
of the titles showing that the owners of the properties were waiting, the petitioners wrote respondent Fernandez on
represented by Mary Mediatrix Fernandez and Gregorio T. January 5, 1995, demanding that their transaction be
Eleosida, respectively. finalized by January 30, 1996.
The brokers told the petitioners that they were ISSUE: Whether or not the letter signed by Fernandez
authorized by respondent Fernandez to ofer the property for alone without any authority from the respondents-
sale. The petitioners, thereafter, made two ocular inspections owners binding on the latter as owners of the subject
of the property, in the course of which they saw some people properties?
gathering coconuts.
RULING:
case either is controverted, the burden of proof is upon them

No. In this case, we agree with the findings of the to prove it. In this case, respondent Fernandez specifically
appellate court that there was no perfected contract of sale denied that she was authorized by the respondents-owners to
between the respondents-owners, as sellers, and the sell the properties, both in her answer to the complaint and
petitioners, as buyers. There is no documentary evidence on when she testified. The Letter dated January 16, 1996 relied
record that the respondents-owners specifically authorized upon by the petitioners was signed by respondent Fernandez
respondent Fernandez to sell their properties to another, alone, without any authority from the respondents-owners.
including the petitioners.
There is no evidence on record that the respondents-
Article 1878 of the New Civil Code provides that a owners ratified all the actuations of respondent Fernandez in
special power of attorney is necessary to enter into any connection with her dealings with the petitioners. As such,
contract by which the ownership of an immovable is said letter is not binding on the respondents as owners of the
transmitted or acquired either gratuitously or for a valuable subject properties.
consideration or to create or convey real rights over
immovable property, or for any other act of strict dominion.
Any sale of real property by one purporting to be the agent of 21. BAUTISTA VS. SPOUSES JALANDONI, GR
the registered owner without any authority therefor in NO. 171464, 27 NOVEMBER 2013
writing from the said owner is null and void. The declarations
of the agent alone are generally insuficient to establish the FACTS:
fact or extent of her authority.
In May 1997, the Spouses Jalandoni applied for a loan
In this case, the only evidence adduced by the with a commercial bank and, as a security thereof, they
petitioners to prove that respondent Fernandez was ofered to constitute a real estate mortgage over the two lots
authorized by the respondents-owners is the testimony of they were allegedly the absolute owners of.
petitioner Antonio Litonjua that respondent Fernandez After a routine credit investigation, it was discovered that
openly represented herself to be the representative of the their titles over the two lots had been cancelled and new
respondents-owners, and that she promised to present to the TCTs were issued in the names of Spouses Baustista. Upon
petitioners on December 8, 1996 a written authority to sell further investigation, they found out that the bases for the
the properties. cancellation of their titles were two deeds of absolute sale,7
The settled rule is that persons dealing with an dated April 4, 1996 and May 4, 1996, purportedly executed
assumed agent are bound at their peril, and if they would and signed by them in favor of Spouses Baustista.
hold the principal liable, to ascertain not only the fact of
agency but also the nature and extent of authority, and in
Spouses Bautista claimed that in March 1996, a certain RULING:

Teresita Nasino (Nasino) ofered to Eliseo Baustista (Eliseo)
two parcels of land located in Muntinlupa City; that the No. Article 1874 and Aritcle 1875 (5) explicitly require
parcels of land were sold at a bargain price because the a written authority when the sale of a piece of land is through
owners were in dire need of money; that upon their request, an agent, whether the sale is gratuitously or for a valuable
Nasino showed them the photocopies of the titles covering consideration.
the subject lands; that Nasino told them that she would Articles 1874 of the Civil Code provides: When a sale of a
negotiate with the Spouses Jalandoni, prepare the necessary piece of land or any interest therein is through an agent, the
documents and cause the registration of the sale with the authority of the latter shall be in writing; otherwise, the sale
Register of Deeds; and that since Nasino was a wife of a shall be void.
friend, Spouses Baustista trusted her and gave her the Likewise, A1iicle 1878 paragraph 5 of the Civil Code
authority to negotiate with Spouses Jalandoni on their behalf. specifically mandates that the authority of the agent to sell a
real property must be conferred in writing, to wit:
On December 17, 2004, the RTC rendered judgment Art. 1878. Special powers of attorney are necessary in the
declaring the sale of the subject lots void. following cases:
(5) To enter into any contract by which the ownership of an
The RTC explained that Nasino had no authority to immovable is transmitted or acquired either gratuitously or
negotiate for the Spouses Jalandoni, much less to receive the for a valuable consideration;
consideration of the sale. Spouses Bautista were not innocent
purchasers in good faith and for value for their failure to Absent such authority in writing, the sale is null and
personally verify the original copies of the titles of the void.
subject properties and to ascertain the authority of Nasino
since they were not dealing with the registered owner. In the case at bar, it is undisputed that the sale of the
subject lots to Spouses Bautista was void. Based on the
The RTC, nonetheless, found MCC a mortgagee in good records, Nasino had no written authority from Spouses
faith and upheld the validity of the mortgage contract Jalandoni to sell the subject lots. The testimony of Eliseo that
between Spouses Bautista and MCC. Nasino was empowered by a special power of attorney to sell
the subject lots was bereft of merit as the alleged special
ISSUE: Whether or not Nasino has the authority to power attorney was neither presented in co urt nor was it
negotiate for the Spouses Jalandoni in the contract of referred to in the deeds of absolute sale. Bare allegations,
sale made to Spouses Bautista? unsubstantiated by evidence, are not equivalent to proof
under the Rules of Court.
In additon Spouses Bautista cannot be deemed

purchasers in good faith. There were several circumstances 22. GUTIERREZ HERMANOS VS. ORENSE, GR
that should have placed them on guard and prompted them NO. L-9188 04 DECEMBER 1914
to conduct an investigation that went beyond the face of the
title of the subject lots. Their failure to take the necessary FACTS:
steps to determine the status ofthe subject lots and the
extent of Nasino’s authority puts them into bad light. On and before Februaru 14, 1907, Engracio Orense had
been the owner of a parcel of land in Guinobatan, Albay.
Spouses Bautista’s claim of good faith is negated by
their failure to verify the extent and nature of Nasino’s On February 14, 1907, Jose Duran, a nephew of Orense,
authority. Since Spouses Bautista did not deal with the sold the property for P1,500 to Gutierrez Hermanos, with
registered owners but with Nasino, who merely represented Orense‘s knowledge and consent, executed before a notary a
herself to be their agent, they should have scrutinized all public instrument. The said public instrument contained a
factual circumstances necessary to determine her authority provision giving Duran the right to repurchase it for the same
to insure that there are no flaws in her title or her capacity to price within a period of four years from the date of the said
transfer the land.They should not have merely relied on her instrument.
verbal representation that she was selling the subject lots on Orense continued occupying the land by virtue of a contract
behalf of Spouses Jalandoni. of lease. After the lapse of four years, Gutierrez asked
Moreover, Eliseo’s claim that he did not require Nasino Orense to deliver the property to the company and to pay
to give him a copy of the special power of attorney because rentals for the use of the property.
he trusted her is unacceptable. Well settled is the rule that
persons dealing with an assumed agency are bound at their Orense refused to do so. He claimed that the sale was
peril, if they would hold the principal liable, to ascertain not void because it was done without his authority and that he
only the fact of agency but also the nature and extent did not authorize his nephew to enter into such contract.
ofauthority, and in case either is controverted, the burden of During trial, Orense was presented as witness of the
proof is upon them to establish it. defense. He states that the sale was done with his knowledge
and consent. Because of such testimony, it was ascertained
As stated, Spouses Bautista’s failure to observe the that he did give his nephew, Duran, authority to convey the
required degree of caution in ascertaining the genuineness land. Duran was acquitted of criminal charges and the
and extent of Nasino’s authority is tantamount to bad faith company demanded that Orense execute the proper deed of
that precludes them from claiming the rights of a purchaser conveyance of the property.
in good faith.
ISSUE: Whether or not Orense is bound by Duran‘s act 23. COSMIC LUMBER CORPORATION vs. CA
of selling the former‘s property? and PEREZ,
G.R. No. 114311 November 29, 1996
RULING:
FACTS:
Yes. It was proven during trial that he gave his consent Cosmic Lumber Corporation through its General Manager
to the sale. Such act of Orense impliedly conferred to Duran executed on 28 January1985 a Special Power of Attorney appointing
the power of agency. The principal must therefore fulfill all Paz G. Villamil-Estrada as attorney-in-fact among others to initiate,
the obligations contracted by the agent, who acted within the institute and file any court action for the ejectment of third persons
scope of his jurisdiction. and/or squatters of the entire lot 9127 and 443 and covered by TCT
Where the nephew in his own name sold a parcel of land with Nos. 37648 and 37649, for the said squatters to remove their houses
a masonry house constructed thereon to the company, when and vacate the premises in order that the corporation may take
in fact it was property owned by the uncle, but in the estafa material possession of the entire lot, and for this purpose, to
case filed by the company against the nephew, the uncle appear at the pre-trial conference and enter into any stipulation of
swore under oath that he had authorized his nephew to sell facts and or compromise agreement so far as it shall protect the
the property, the uncle can be compelled in the civil action to rights and interest of the corporation in the aforementioned lots.
execute the deed of sale covering the property.
On 11 March 1985, Paz G. Villamil-Estrada, by virtue of her
It having been proven at the trial that he gave his power of attorney, instituted an action for the ejectment of private
consent to the said sale, it follows that the defendant respondent Isidro Perez and recover the possession of a portion of Lot
conferred verbal, or at least implied, power of agency upon No. 443.
his nephew Duran, who accepted it in the same way by On November 25, 1985 Villamil-Estrada entered into a
selling the said property. Compromise Agreement with respondent Perez
and on November 27, 1985 the "Compromise Agreement"
The principal must therefore fulfill all the obligations was approved by the trial court and judgment was rendered in
contracted by the agent, who acted within the scope of his accordance the terms.
authority. Although the decision became final and executor, it was not executed
within the 5-year period from date of its finality allegedly due to the
failure of petitioner to produce the owner's duplicate copy of Title No.
37649 needed to segregate from Lot No. 443 which is the portion
sold by the attorney-in-fact, Paz G. Villamil-Estrada, to private
respondent under the compromise agreement. Thus on January 25,
1993 respondent filed a complaint to revive the judgment, docketed
as CivilCase No. D-10459 Petitioner asserts that it was only when the sale or that includes a sale as a necessary ingredient of the act
summons in Civil Case No. D-10459 for the revival of judgment was mentioned. For the principal to confer the right upon an agent to sell
served upon it that it came to know of the compromise agreement real estate, a power of attorney must so express the powers of the
entered into between Paz G. Villamil-Estrada and respondent Isidro agent in clear and unmistakable language. When there is any
Perez upon which the trial court based its decision of 26 July 1993 in reasonable doubt that the language so used conveys such power, no
Civil Case No. D-7750. Forthwith, upon learning of the fraudulent such construction shall be given the document. It is therefore clear
transaction, petitioner sought annulment of the decision of the trial that by selling to respondent Perez a portion of petitioner's land
court before respondent Court of Appeals on the ground that the through a compromise agreement,Villamil-Estrada acted without or
compromise agreement was void. in obvious authority. The saleIp so jureis consequently void. So is the
compromise agreement. This being the case, the judgment based
thereon is necessarily void. Antipodal to the opinion expressed by
ISSUE:Whether Villamil-Estrada exceeded her authority as respondent court in resolving petitioner's motion for reconsideration,
specified in the SPA? the nullity of the settlement between Villamil-Estrada and Perez
impaired the jurisdiction of the trial court to render its decision based
RULING: on the compromise agreement.
The authority granted Villamil-Estrada under the special power InAlviar v Court of First Instance of La Union,the Court
of attorney was explicit and exclusionary. The alienation by sale of an held --“As the judgment inquestion is null and voidab initio, it is
immovable certainly cannot be deemed protective of the right of evident that the court acquired no jurisdiction to render it, much less
petitioner more so when the land was being sold for a price of to order the execution thereof . . .”
P80.00per square meter, much less than its assessed value of
P250.00 per square meter, which was not even received by the
corporation. Verily, when an agent is engaged in the perpetration of a fraud
When the sale of a piece of land or any interest thereon is upon his principal for his ownexclusive benefit, he is not really
through an agent, the authority of the latter shall be in writing; acting for the principal but is really acting for himself,
otherwise, the sale shall be void. Thus the authority of an agent to entirely outside the scope of his agency. Indeed, the basic tenets
execute a contract for the sale of real estate must be conferred in of agency rest on the highest considerations of justice, equity and fair
writing and must give him specific authority. A special power of play, and an agent will not be permitted to pervert his authority to his
attorney is necessary to enter into any contract by which the own personal advantage, and his act in secret hostility to the interests
ownership of an immovable is transmitted or acquired either of his principal transcends the power aforded him. WHEREFORE,
gratuitously or for a valuable consideration. The express mandate the petition is GRANTED.
required by law to enable an appointee of an agency (couched) in
general terms to sell must be one that expressly mentions a
24. LUZ PINEDA, MARILOU MONTENEGRO, to the order of complainants-appellees. Capt. Nuval, upon
VIRGINIA ALARCON, DINA LORENA AYO, receipt of these checks endorsed and deposited them in his
CELIA CALUMBAG and LUCIA LONTOK,vs.HON. own account. When the complainants-appellees learned that
COURT OF APPEALS and THE INSULAR LIFE they were entitled, as beneficiaries, to life insurance benefits
ASSURANCE COMPANY, LIMITED. under a group policy, they sought to recover these benefits
from Insular Life but the latter denied their claim on the
FACTS: ground that the liability to complainants-appellees was
This is an action for the payment of insurance claims already extinguished.
and prayer for administrative sanctions. Prime Marine ISSUE:Whether or not Insular Life is bound by the
Services, Inc. (PMSI), a crewing/manning outfit, procured a misconduct of the employer?
Group Policy from Insular Life Assurance Co., Ltd. to provide
life insurance coverage to its sea-based employees. During RULING:
the efectively of the policy, six covered employees perished
A cursory reading of the questioned powers of attorney
at sea when their vessel sunk.
would disclose that they do not contain in clear and
They were survived by the complainants-appellees, the unequivocal terms authority to Captain Nuval to obtain,
beneficiaries under the policy. The beneficiaries, except the receive, receipt from respondent company insurance proceed
spouses Alarcon, executed special powers of attorney arising from the death of the seaman-insured. On the
authorizing Capt. Nuval,President and General Manager of PMSI, contrary, the said powers of attorney are couched in terms
to , among others, “followup, ask, demand, collect and receive” for which could easily arouse suspicion of an ordinary man.
theirbenefit indemnities of sums of money due them relative
Thus: We are convinced that the employer is the agent
to the sinking of the vessel.
of the insurer in performing the duties of administering
By virtue of these written powers of attorney, group insurance policies. It cannot be said that the employer
complainants-appellees were able to receive their respective acts entirely for its own benefit or for the benefit of its
death benefits. employees in undertaking administrative functions. While a
reduced premium may result if the employer relieves the
Unknown to them, however, PMSI, in its capacity as insurer of these tasks, and this, of course, is advantageous to
employer and policyholder of the life insurance of its the employer and the employees, the insurer also enjoys
deceased workers, filed with Insular Life formal claims for significant advantages from the arrangement.
and in behalf of the beneficiaries, through Capt. Nuval. On
the basis of the five special powers of attorney, Insular Life The reduction in the premium which results from
drew against its account six (6) checks, four for P200,000.00 employer-administration permits the insurer to realize a
each, one for P50,000.00 and another for P40,000.00 payable
larger volume of sales, and at the same time the insurers own acted as the agent of Insular Life. The latter is thus bound by
administrative costs are markedly reduced. the misconduct of its agent
The most persuasive rationale for adopting the view
that the employer acts as the agent of the insurer, however, is
that the employee has no knowledge of or control over the 25. Eduardo Litonjua, Jr. and Antonio
employer's actions in handling the policy or its Litonjua
administration. An agency relationship is based upon consent vs. Eternit Corp. (Eteroutremer, S.A. and Far
by one person that another shall actin his behalf and be East Bank & Trust Co.G.R. No. 144805 June 8, 2006
subject to his control. It is clear from the evidence regarding FACTS:
procedural techniques here that the insurer-employer
relationship meets this agency test with regard to the Eternit Corp. is engaged in the
administration of the policy, whereas that between the manufacture of roofingmaterials and pipe pro
employer and its employees fails to reflect true agency. The d u c t s . I t s manufacturing operations were conducted on 8
insurer directs the performance of the employer's parcels of land located in Mandaluyong City, covered by TCTs
administrative acts, and if these duties are not undertaken with Far East Bank & Trust Company, as trustee. 90% of
properly the insurer is in a position to exercise more the shares of stocks of Eternit Corp. were owned by
constricted control over the employer's conduct. Eteroutremer S.A. Corporation (ESAC), a corporation
organized and registered under the laws of Belgium. Jack
InNeider vsContinental Assurance Company which was Glanville, an Australian citizen, was the General Manager
cited inElfstromit was held that: “the employer owes to the and President of Eternit Corp., while Claude Frederick
employeethe duty of good faith and due carein attending to the Delsaux was the Regional Director for Asia of ESAC.
policy, and that the employer should make clear to
the employee anything required of him to keep the policy in
efect, and the time that the obligations are due. In its In 1986, the management of ESAC grew concerned
position as administrator of the policy, we feel also that the about the political situation in the Philippines and wanted to
employer should be considered as the agent of the insurer, stop its operations in the country. The Committee for
andany omission of duty to the employee in its administration Asia of ESAC instructed Michael Adams, a member of
should be attributable to the insurer” Eternit Corp.’s Board of Directors, to dispose of the
In the light of the above disquisitions and after an eight parcels of land. Adams engaged the services of
examination of the facts of this case, we hold that PMSI, realtor/broker Lauro G. Marquez so that the properties
through its President and General Manager, Capt. Nuval, could be ofered for sale to prospective buyers.
Marquez ofered the parcels of land and the Company, Ermita Branch, and drafted an Escrow Agreement
improvements thereon to Eduardo B. Litonjua, Jr. of the to expedite the sale.
Litonjua
With the assumption of Corazon Aquino as President of
& C o m p a n y, I n c . M a r q u e z d e c l a r e d t h a t h e was
RP, the political situation in the Philippines had improved.
a u t h o r i z e d t o s e l l t h e p r o p e r t i e s f o r P27,000,000.00
Marquez received a telephone call from Glanville,
and that the terms of the sale were subject to negotiation.
advising that the sale would no longer proceed. Glanville
Eduardo Litonjua, Jr. responded to the ofer. Marquez followed it up with a letter, confirming that he had been
showed the property to Eduardo Litonjua, Jr., instructed by his principal to inform Marquez that the
and his brother Antonio K. Litonjua. decision has been taken at a Board Meeting not to sell
the properties on which Eternit Corp. is situated.
The Litonjua siblings of ered to buy the
p r o p e r t y f o r P20,000,000.00 in cash. When apprised of this development, the Litonjuas,
through counsel, wrote Eternit Corp., demanding payment
Marquez apprised Glanville of the Litonjua siblings’ for damages they had sufered on account of the aborted
ofer and relayed the same to Delsaux in Belgium, but the sale. EC, however, rejected their demand.
latter did not respond. Glanville telexed Delsaux in Belgium,
inquiring on his position/ counterproposal to the ofer of the
Litonjua siblings. Delsaux sent a telex to Glanville
stating that, ISSUE:WON Marquez, Glanville, and Delsaux were
based on the “Belgian/Swiss decision,” the fi nal of er authorized by respondent Eternit Corp. to act as its
was “US$1,000,000.00 andP2,500,000.00 to cover all agents relative to the sale of the properties of Eternit
existing obligations prior to final liquidation. Corp., and if so, what are the boundaries of their
authority as agents?
L i t o n j u a , J r. a c c e p t e d t h e c o u n t e r p r o p o s a l o f
D e l s a u x . M a r q u e z c o n f e r r e d w i t h G l a n v i l l e , a n d co
nfirmed that the Litonjua siblings had accepted the counter- RULING:
proposal of Delsaux. He also stated that the Litonjua siblings
would confirm full payment within 90 days after execution No.A corporation is a juridical person separate and distinct
and preparation of all documents of sale, together with from its members or stockholders and is not afected by the
the necessary governmental clearances. personal rights, obligations and transactions of the latter. It
may act only through its board of directors or, when
authorized either by its by-laws or by its board
The Litonjua brothers deposited the amount of resolution, through its of icers or agents in
US$1,000,000.00 with the Security Bank & Trust the normal course of business. The general
principles of agency govern the relation between the failure to repudiate the agency knowing that another
corporation and its oficers or agents, subject to the articles person is acting on his behalf without autho rity.
of incorporation, by-laws, or relevant provisions of law. Acceptance by the agent may be expressed, or implied
from his acts which carry out the agency, or from his
silence or inaction according to the circumstances. Agency
The property of a corporation is not the property of the may be oral unless the law requires a specifi c form.
stockholders or members, and as such, may not be sold However, to create or convey real rights over
without express authority from the board of directors. immovable property, a special power of attorney is necessary.
Physical acts, like the ofering of the properties of the The Litonjuas failed to adduce in evidence any
corporation for sale, or the acceptance of a counter-ofer of resolution of the Board of Directors of Eternit Corp.
prospective buyers of such properties and the execution of empowering Marquez, Glanville or Delsaux as its agents, to
the deed of sale covering such property, can be performed by sell, let alone ofer for sale, for and in its behalf, the 8 parcels
the corporation only by of icers or agents duly of land owned by Eternit Corp. including the improvements
authorized for the purpose by corporate by-laws or by thereon. The bare fact that Delsaux may have been
specific acts of the board of directors. Absent such valid authorized to sell to Ruperto Tan the shares of stock of
delegation/authorization, the rule is that the declarations of respondent ESAC cannot be used as basis for Litonjua’s claim
an individual director relating to the afairs of the that he had likewise been authorized by Eternit Corp. to sell
corporation, but not in the course of,or connected with, the the parcels of land.
performance of authorized duties of such director,
are not binding on the corporation. While Glanville was the President and General
Manager of Eternit Corp., and Adams and Delsaux were
While a corporation may appoint agents to negotiate members of its Board of Directors, the three acted for and in
for the sale of its real properties, the final say will have behalf of respondent ESAC, and not as duly authorized
to be with the board of directors through its of icers agents of Eternit Corp.; a board resolution evincing
and agents as authorized by a board resolution or by its the grant of such authority is needed to bind
by-laws.30 An unauthorized act of an oficer of the Eternit Corp. to any agreement regarding the sale of the
corporation is not binding on it unless the latter ratifi es subject properties. Such board resolution is not a mere
the same expressly or impliedly by its board of formality but is a condition sine qua non to bind Eternit
directors. Any sale of real property of a corporation by a Corp.Requisites of an agency by estoppels: (1) the principal
person purporting to be an agent thereof but without written manifested a representation of the agent’s authority or
authority from the corporation is null and void. knowingly allowed the agent to assume such authority;
An agency may be expressed or implied from the act of (2) the third person, in good faith, relied upon such
the principal, from his silence or lack of action, or his representation;
(3) relying upon such representation, such third person has Virgilio's co-heirs filed a complaint for judicial partition
changed his position to his detriment. of the subject property before the RTC of Calamba,
Laguna.In the course of the proceedings for judicial partition,
a Compromise Agreement was signed with seven (7) of the
26. PURITA PAHUD VS. CA, G.R. NO. 160346, co-heirs agreeing to sell their undivided shares to Virgilio ..
AUGUST 25, 2009 The compromise agreement was, however, not approved by
the trial court because Atty. Dimetrio Hilbero, lawyer for
FACTS: Eufemia and her six (6) co-heirs, refused to sign the
agreement because he knew of the previous sale made to the
Spouses Pedro San Agustin and Agatona Genil were Pahuds.
able to acquire a 246-square meter parcel of land situated
in Barangay Anos, Los Baños, Laguna and covered by Eufemia acknowledged having received the payments
Original Certificate of Title . Agatona Genil and Pedro San from Virgilio. Virgilio then sold the entire property to spouses
Agustin died , left with children: respondents, Eufemia, Isagani Belarmino and Leticia Ocampo (Belarminos) . The
Raul, Ferdinand, Zenaida, Milagros, Minerva, Isabelita and Belarminos immediately constructed a building on the
Virgilio. subject property.
Eufemia, Ferdinand and Raul executed a Deed of Alarmed by the ongoing construction on the lot they
Absolute Sale of Undivided Shares conveying in favor of purchased, the Pahuds immediately confronted Eufemia who
petitioners their respective shares . Eufemia also signed the confirmed to them that Virgilio had sold the property to the
deed on behalf of her four (4) other co-heirs, Only Isabelita Belarminos. Then the Pahuds filed a complaint in
has the Power of attorney while the other three (3) co-heirs intervention in the pending case for judicial partition.
has no written consent authorizing such sale. It was not
notarized. ISSUE: Whether or not the sale of the subject property
by Eufemia and co-heirs are valid?
The Pahuds paid the accounts into the Los Baños Rural
Bank where the property was mortgaged. The bank issued a RULING:
release of mortgage and turned over the ownership Pahuds,
the Pahuds made more payments to Eufemia and her The sale made by Eufemia, Isabelita and her two
siblings. When Eufemia and her co-heirs drafted an extra- brothers to the Pahuds should be valid only with respect to
judicial settlement of estate to facilitate the transfer of the the authorized share of Eufemia While the sale with respect
title to the Pahuds, Virgilio refused to sign it. to the other portion of the lot representing the shares of
Zenaida, Milagros, and Minerva, is void because Eufemia
could not dispose of the interest of her co-heirs in the said lot ISSUE: Was there a contract of agency to sell the real
absent any written authority from the latter, as required by properties between Joy Training and the spouses
law. Johnson?
RULING:
27. SallyYoshizaki, vs. Joy Training Center of
Aurora, Inc., G.R. No. 174978; July 31, 2013 The Supreme Court ruled that there was no contract of
agency between Joy Training and the spouses Johnson to sell
FACTS: the parcel of land with its improvements. Art. 1868 of the
Civil Code defines a contract of agency as a contract whereby
Richard and Linda Johnson were members of Joy
a person “binds himself to render some service or to do
Training’s Board of Trustees who sold the real properties, a
something in representation or on behalf of another, with the
wrangler jeep, and other personal properties in favor of the
consent or authority of the latter.”
spouses Sally and Yoshio Yoshizaki.
It may be express, or implied from the acts of the
Joy Training filed an action for cancellation of sales
principal, from his silence or lack of action, or his failure to
alleging that the spouses Johnson is without the requisite
repudiate the agency, knowing that another person is acting
authority from the Board of Directors. The RTC ruled in favor
on his behalf without authority.
of the spouses Yoshizaki.
In this case, the presented evidence did not convince
It found that Joy Training owned the real properties
the SC of the existence of the contract of agency to sell the
and it authorized he spouses Johnson to sell the real
real properties.
properties.
The certification is a mere general power of attorney
It recognized that there were only five actual members
which comprises all of Joy training. Art. 1877 of the Civil
of the board of trustees; consequently, a majority of the board
Code clearly states that an agency couched in general terms
of trustees validly authorized the
comprises only acts of administration, even if the principal
It also ruled that the sale of personal properties was should state that he withholds no power or that the agent
valid because they were registered in the spouses Johnson’s may execute such acts as he may authorize as general and
name. unlimited management.
The CA upheld the RTC’s jurisdiction over the case but
reversed its ruling with respect to the sale of real properties.
28. CITY-LITE REALTY CORPORATION, vs.
It also ruled that the resolution is void because it was not
COURT OF APPEALS and F.P. HOLDINGS &
approved by a majority of the board of trustees.
REALTY CORP., et al.G.R. No. 138639. February and F.P. HOLDINGS was not receptive to the purchase of only
10, 2000 half of the front lot
FACTS: Atty. Mamaril wrote Metro Drug (Al G. Roy) expressing
City-Lite’s desire to buy the entire front lot of the subject
Private Respondent F.P. Holdings and Realty property instead of only half thereof provided the asking
Corporation (F.P. Holdings), formerly the Sparta Holdings price of P6,250/sqm was reduced and that payment be in
Inc, was the registered owner of a parcel of land situated installment for a certain period
along E. Rodriguez Avenue, Quezon City also known as the
“Violago Property” or the “San Lorenzo Ruiz Commercial The parties reached an agreement and Roy agreed to
Center,” with an area of 71,754 sqm. sell the property to City-Lite provided only the latter submit
its acceptance in writing to the terms and conditions of the
The property was ofered for sale to the general public sale
through the circulation of a sales brochure containing the
description of the property and the asking price of For some reason or another and despite demand, F.P.
P6,250/sqm with terms of payment negotiable. In addition, HOLDINGS refused to execute the corresponding deed of
broker’s commission was 2% of selling price, net of sale in favor of City-Lite of the front lot of the property
withholding taxes and other charges. Contact person was
Trial court ruled in favor of City-Lite ordering F.P.
Meldin Al G. Roy, Metro Drug Inc.
HOLDINGS to execute a deed of sale of the property in favor
The front portion consisting of 9,192 sqm is the subject of the former for the total consideration of P55,056,250
of this litigation payable as follows: P15 M as downpayment to be payable
immediately upon execution of the deed of sale and the
balance within 6 months from downpayment without interest
Al G. Roy sent a sales brochure, together with the location CA reversed TC’s decision
plan and copy of the TCT to Atty. Gelacio Mamaril, a
practicing lawyer and a licensed real estate broker. Mamaril ISSUE: W/N there was a perfected contract of sale
passed in turn passed on these documents to Antonio Teng, between City-Lite and respondent F.P. HOLDINGS
Executive Vice President, and Atty Victor Villanueva, Legal because of a lack of definite agreement on the manner
Counsel of City-Lite of paying the purchase price and that Metro Drug and
Meldin Al G. Roy were not authorized to sell the
City-Lite conveyed its interest to purchase a portion or
property to City-Lite, and that the authority of Roy was
one-half (1/2) of the front lot of the “Violago Property”
only limited to that of mere liaison or contact person?
Apparently, Roy subsequently informed City-Lite’s
representative that it would take time to subdivide the lot RULING:
No, Roy is a mere contact person. FACTS:

Art. 1874 of NCC: “When the sale of a piece of land or
Private respondents Manuel Cuady and Lilia Cuady
any interest therein is through an agent, the authority of the
acquired from Supercars, Inc. a credit of P39,574.80, which
latter shall be in writing, otherwise, the sale shall be void.”
covered the cost of a unit of four-door sedan, Ford Escort
The absence of authority to sell can be determined 1300 on July 15, 1977. A promissory note was executed by
from the written memorandum issued by respondent F.P. private respondents in favor of Supercars, Inc., obligating
HOLDINGS President requesting Metro Drug’s assistance in themselves to pay the latter or order the sum of P39,574.80,
finding buyers for the property inclusive of interest at 14% per annum, payable on monthly
installments of P1,098.00 starting August 16, 1977, and on
The Memorandum indicates that Meldin G. Roy and/or the 16th day of the next 35 months from September 16, 1977
Metro Drug was only to assist F.P. Holdings in looking for until full payment thereof. It was also stipulated that a
buyers and referring to them possible prospects whom they penalty of P10.00 for every month of late installment will be
were supposed to endorse to F.P. Holdings. paid. To incur no delays in payment and secure compliance of
But the final evaluation, appraisal and acceptance of the obligation, said spouses constituted a chattel mortgage.
the transaction could be made only by F.P. Holdings. In other
words, Roy and/or Metro Drug was only a contact person On July 25, 1977, the promissory note, together with
with no authority to conclude a sale of the property the chattel mortgage were assigned to B.A. Finance
Corporation. The Cuadys paid a total of P36,730.15 to the
Roy and/or Metro Drug was a mere broker and Roy/s B.A. Finance Corporation, thus leaving an unpaid balance of
only job was to bring parties the parties together for a P2,344.65 as of July 18, 1980. In addition thereto, the Cuadys
possible transaction owe B.A. Finance Corporation P460.00 representing
The Supreme Court ruled that due to the lack of a penalties or surcharges for tardy monthly installments.
written authority to sell the “Violago Property” on the part of
Roy and/or Metro Drug, the sale should be as it is declared When the Cuadys failed to renew insurance coverage of
null and void said motor vehicle, the B.A. Finance Corporation, as the
assignee of the mortgage, obtained the renewal of its
insurance coverage for the year 1980 with Zenith Insurance
Corporation. Under the terms and conditions of the said
SECTION THREE
insurance coverage, any loss under the policy shall be
29. BA Finance vs. CA GR No. 82040 (201 SCRA payable to the B.A. Finance Corporation. On April 18, 1980,
157)27 August 1991 the motor vehicle met an accident and was badly damaged. It
was reported to the B.A. Finance Corporation and to the Corporation is bound by the terms and conditions of the
insurer, Zenith Insurance Corporation. chattel mortgage executed between the Cuadys and
Supercars, Inc.
The Cuadys asked the B.A. Finance Corporation to
consider the same as a total loss, and to claim from the Under the deed of chattel mortgage, B.A. Finance was
insurer the face value of the car insurance policy and apply constituted attorney-in-fact with full power and authority to
the same to the payment of their remaining account and give file, follow-up, prosecute, compromise or settle insurance
them the surplus thereof, if any. But instead of heeding the claims; to sign execute and deliver the corresponding papers,
request of the Cuadys, B.A. Finance Corporation prevailed receipts and documents to the Insurance Company as may be
upon the former to just have the car repaired. Not long necessary to prove the claim, and to collect from the latter
thereafter, however, the car bogged down. the proceeds of insurance to the extent of its interests, in the
event that the mortgaged car sufers any loss or damage.
The Cuadys wrote B.A. Finance Corporation requesting
the latter to pursue their prior instruction of enforcing the In granting B.A. Finance Corporation said powers and
total loss provision in the insurance coverage. When B.A. prerogatives, the Cuady spouses created in the former's favor
Finance Corporation did not respond favorably to their an agency. When the finance company executes a mortgage
request, the Cuadys stopped paying their monthly contract that contains a provision that in the event of
installments on the promissory note . accident or loss, it shall make a proper claim against the
ISSUE: WON B.A. Finance Corporation is bound by its insurance company, was in efect an agency relation, and that
acceptance to carry out the agency, and is liable for under Article 1884, the finance company was bound by its
damages which, through its non-performance, the acceptance to carry out the agency, and in spite of the
principal may suffer? instructions of the borrowers to make such claims instead
insisted on having the vehicle repaired but eventually
RULING: resulting in loss of the insurance coverage, the finance
company had breached its duty of diligence, and must
Yes. B.A. Finance Corporation is bound by its assume the damages sufered by the borrowers, and
acceptance to carry out the agency, and is liable for damages consequently can no longer collect on the balance of the
which, through its non-performance, the Cuadys, the mortgage loan secured thereby.
principal may sufer. B.A. Finance Corporation was
subrogated to the rights and obligations of Supercars, Inc. 30. BRITISH AIRWAYS VS. CA, GR No. 121824
when the Supercars assigned the promissory note, together (285 SCRA 450), 29 JANUARY 1998
with the chattel mortgage constituted on the motor vehicle in
question in favor of B.A.. Consequently, B.A. Finance FACTS:
On April 16, 1989, Gop Mahtani, private respondent, RULING:

had decided to visit his relatives in Bombay, India. He
obtained the services of Mr. Gumar to arrange his travel Yes. The SC ruled in the afirmative.
plans. A ticket from British Airways (BA) was purchased. Settled is the rule that an agent is also responsible for
Since BA had no direct flights from Manila to Bombay, Gop the negligence in the performance of its function (Art. 1909
Mahtani took a flight to Hong Kong via PAL, and upon of the Civil Code) and is liable for the damages which the
arriving in Hong Kong he took a connecting flight to Bombay principal may sufer by reason of its negligent act (Art. 1884
on board BA. Before departure, Mahtani checked in at PAL of the Civil Code).
counter his two pieces of luggage containing his clothing and
personal efects, confident that upon reaching Hong Kong, BA is liable for the negligence of its agent, PAL. The
the same would be transferred to the BA f light bound for court observed that the contract of air transportation was
Bombay. Upon arrival in Bombay, Mahtani discovered that his exclusively between the Mahtani and BA, the latter merely
luggage was missing and that upon inquiry from endorsing the Manila to Hong Kong connecting flight to
the BA representatives, he was told that the same might have Bombay with the PAL, acts as it agent. It is undeniable that in
been diverted to London. After waiting patiently for 1 week, transporting Mahtani from Manila to Hong Kong by PAL
BA finally advised him to file a claim by accomplishing the acted as BA’s agent. BA and PAL moreover, are members of
"Property Irregularity Report. International Air Transport Association (IATA), wherein
member airlines are regarded as agents of each other in the
In the Philippines, on June 11, 1990 Mahtani filed his issuance of tickets and other matters pertaining to their
complaint for damages and attorney's feesagainst BA and relationship. The contractual relationship between BA and
Mr.Gumar before the RTC. He alleged that the reason for the PAL is one of agency.
non-transfer of the luggage was due to the PAL’s late arrival
in Hong Kong, thus leaving hardly for the proper transfer of
his luggage to BA aircraft bound for Bombay. The RTC
rendered its decision in favor of Mahtani. BA is ordered to
pay Mahtani P7,000 for the value of the 2 suitcases of $400
and for the value of the contents of the luggage P50,000 and
for moral and exemplary damages and 20% for attorney’s
fees and cost of the action. This decision was afirmed by CA.
ISSUE:WON British Airways is liable for the negligence

of it agent, PAL?
31. CERVANTES VS CA, GR No. 125138 (304 No. The SC ruled in the negative.The plane ticket itself
SCRA 25), 02 MARCH 1999 provides that it is not valid after March 27, 1990. It is also
stipulated in paragraph 8 of the Conditions of Contract that
FACTS: this ticket is good for carriage for one year from date of
issue, except as otherwise provided. Cervantes theorized that
Cervantes bought a round trip ticket for Manila- the confirmation by the PAL's agents in Los Angeles and San
Honolulu-Los Angeles-Honolulu-Manila to PAL on March 27, Francisco changed the compromise agreement between the
1989. This ticket expressly provides that 1 year from parties. He was aware of the risk that his ticket could expire,
issuance or until March 27, 1990 it will be expired. The ticket as it did, before he returned to the Philippines. The 2
was issued in compliance with a Compromise Agreement personnel from PAL did not have an authority to extend the
entered between PAL and Cervantes. On March 3, 1990, 4 validity of the ticket. Cervantes knew this from the start
days before the expiry date, Cervantes used it. He arrived in when he called up the Legal Department of appellee in the
LA on the same day and immediately booked his return flight Philippines before he left for the United States of America.
ticket with the PAL’s ofice which was confirmed for April 2, He had firsthand knowledge that the ticket in question would
1990 flight. However, he learned that the same PAL plane expire on March 27, 1990 and that to secure an extension, he
would make a stop-over in San Francisco, so he made would have to file a written request for extension at the PAL's
arrangements with PAL’s agent for him to board flight in San ofice in the Philippines.
Francisco instead of boarding in LA. Cervantes believed that
everything was set for his return to PH upon confirmation of However, despite this knowledge, he persisted to use
PAL’s agent. On said return date, when he checked in at PAL the ticket in question. Since the PAL agents are not privy to
counter, he was not allowed to board the arranged flight due the said Agreement and Cervantes knew that a written
to the expiration of the validity of the ticket. PAL personel request to the legal counsel of PAL was necessary, he cannot
made annotation on his ticket “TICKET NOT ACCEPTED DUE use what the PAL agents did to his advantage. The said
TO EXPIRATION OF THE VALIDITY. Aggrived, Cervantes agents, according to the Court of Appeals,acted without
filed a complaint for damages for Breach of Contract of authority when they confirmed the flights of the petitioner.
Carriage. RTC dismissed the case which was upheld by the
CA.
ISSUE:WON the act of the PAL agents in confirming the

ticket of Cervantes extended the period of validity?
RULING:
Under Article 1989of the New Civil Code, the acts Borja filed a motion for the quashal of said writ. But this
an agent beyond the scope of his authority do not bind the time, he contended that there was fraud in the execution of
principal, unless the latter ratifies the same expressly or the compromise agreement when he was assisted by Atty.
impliedly. Furthermore, when the third person (herein Leonardo Cruz, and that the agreement is void. Said
petitioner) knows that the agent was acting beyond his power compromise agreement contained no stipulation as to the
or authority, the principal cannot be held liable for the acts of payment of 2% monthly interest and 25% attorney’s fee in
the agent. If the said third person is aware of such limits of case of default in payment. He alleged that his former
authority, he is to blame, and is not entitled to recover counsel, Atty. Cruz, removed the page of the genuine
damages from the agent, unless the latter undertook compromise agreement where he afixed his signature and
to secure the principal's ratification. fraudulently attached the same to the compromise agreement
submitted to the court. So it could make appear that the
penalty clause embodied therein was consented.
32. BORJA VSSULYAP, GR No. 150718 (399 SCRA
601), 26 MARCH 2003 Sulyap then presented Atty. Cruz as witness, who
declared that the petitioner gave his consent to the inclusion
FACTS: of the penalty clause of 2% monthly interest and
25% attorney’s fees in the compromise agreement. He added
A contract of lease involving a one-story ofice building that the compromise agreement approved by the court was in
located at New Manila, Quezon City was entered upon by the fact signed by the petitioner inside the courtroom before the
petitioner-owner Borja, as lessor, and respondent Sulyap, same was submitted for approval. Atty. Cruz stressed that
Inc., as lessee. Sulyap paid advance rentals, association dues the penalty clause of 2% interest per month until full
and deposits pursuant to lease. Upon the expiration of the payment of the amount due, plus 25% thereof as attorney’s
contract of lease, respondent demanded for the return of the fees, in case of default in payment, was actually chosen
same, but the owner Borja declined. Thus, a complaint for by the petitioner.
sum of money against Borja was filed by Sulyap with the RTC
of QC. The trial court ruled in favored of Sulyap because it
gave credence to the testimony of Atty. Cruz and even noted
Both parties entered into and submitted to thetrial that it was more than one year from receipt of the
court a “Compromise agreements” stating that Borja isbound judgment on compromise when he questioned the inclusion
to return the advances and deposit and in case any amount of the penalty clause in the approved compromise agreement
due is not paid within the period stated shall earninterest despite several opportunities to raise said objection.
until fully paid plus the attorney’s fee. But,Borja failed to pay
ISSUE:WON the petitioner Borja is bound by the
said amounts. So Sulyap filed a writ of execution. Thus, the
penalty clause in the compromise agreement?
so was tantamount to ratification. Hence, he is estopped from

RULING: assailing the validity thereof.
YES. Borja is bound by the penalty clause in the

compromise agreement. While a judicial compromise may be 33. JESUS M. GOZUN VS. JOSE TEOFILO T.
annulled or modified on the ground of vitiated consent or MERCADO a.k.a.‘DON PEPITO MERCADO, GR No.
forgery, we find that the testimony of the petitioner failed 167812 (511 SCRA 305), 19 DECEMBER 2006
to establish the attendance of fraud. No evidence was
presented by petitioner other than his bare allegation that his FACTS:
former counsel fraudulently attached the page of the genuine
compromise agreement where he afixed his signature to During the local elections of 1995, Don Pepito, the
the compromise agreement submitted to the court. respondent, vied for gubernatorial post in Pampanga.Upon
Gozun’s request, the petitioner, owner of JMG Publishing
Petitioner cannot feign ignorance of the existence of House, a printing shop locatedin San Fernando, Pampanga,
the penalty clause in the compromise agreement approved by submitted to Don Pepito draft samples and price quotation
the court. When he received the judgment reproducing the of campaign materials.By petitioner’s (Gozun) claim,
full text of the compromise agreement he never raised the respondent’s wife had told him that respondent (Don Pepito)
issue of the fraudulent inclusion of the penalty clause in their already approved his pricequotation, and thus, Gozun could
agreement. It was also noted that petitioner is a doctor of start printing the campaign materials, hence, he did print
medicine. He must have read and understood the contents of campaign materials like posters bearing respondent’s
the judgment on compromise. In fact he filed, without the photograph, leaflets containing the slate of party
assistance of counsel, a motion praying that a certain amount candidates,sample ballots,poll watcher identification
be withheld from his total obligation and instead be applied cards,and stickers. However, petitioner availed of the
to the expenses for the repair of the leased premises which services and facilities of Metro Angeles Printing and of St.
was allegedly vandalized by the private respondent Joseph Printing Press, owned by his daughter Jennifer Gozun
and mother Epifania Macalino Gozun, due to the urgency and
Even assuming that Atty. Leonardo Cruz exceeded his limited time to do said job order.
authority in inserting the penalty clause, the status of the
said clause is not void but merely voidable, i.e., capable of In the meantime, on March 31, 1995, respondent’s
being ratified. Indeed, petitioner’s failure to question the sister-in-law, Lilian Soriano obtained from petitioner "cash
inclusion of the 2% monthly interest and 25% attorney’s fees advance" of P253,000 purportedly for the allowances,
in the judicial compromise despite several opportunities to do seminars and for other related expenses of poll watchers. It
was acknowledged on petitioner’s 1995 diary receipt of the service or to do something in representation or on behalf of
amount said Lilian’s cash advance. another, with the consent or authority of the latter. (Art. 1898
of the Civil Code) Contracts entered into in the name of
However, aside from the partial payment amounting to another person by one who has been given no authority or
Php 1 million, Mercado failed to settle the total amount of legal representation or who has acted beyond his powers are
Php 2,177,906 he owed to Gozun. The debt included the cash classified as unauthorized contract sand are declared
advance obtained by Lilian. unenforceable, unless they are ratified.
This prompted the Gozun to file a complaint for Generally, the agency may be oral, unless the law
collection of sum of money. In his defense, Don Pepito requires a specific form. However, a special power of
claimed that he was not aware of the said liability. He attorney is necessary for an agent to, as in this case, borrow
purportedly thought that the campaign materials printed money, unless it be urgent and indispensable for the
were donations from third parties. preservation of the things which are under administration
(Art. 1878 of the Civil Code). Since nothing in this case
The trial court ruled in favour of Gozun, however, involves the preservation of things under administration, a
reversed by the Court of Appeals. determination of whether Soriano had the special authority
to borrow money on behalf of respondent is in order.
As to the cash advance obtained by Lilian, the court
ruled that there was no evidence that she was authorized by It is a settled rule that in order to bind the principal by
Don Pepito to scrounge money on his behalf. Even on the a mortgage on real property executed by an agent,it must
acknowledgement receipt, which she signed, she did not upon its face purport to be made, signed and sealed in the
specify in what capacity she received the money. Therefore, it name of the principal, otherwise, it will bind the agent only. It
held that the Gozun‘s claim for Php 253,000 was is not enough merely that the agent was in fact authorized to
unenforceable. make the mortgage, if he has not acted in the name of the
principal.
ISSUE: WON Lilian R. Soriano was sanctioned by Don
Pepito to receive the cash advance from Gozun?
34. VICENTE M. DOMINGO, vs. GREGORIO M.
RULING: DOMINGO. G.R. No. L-30573 October 29, 1971
See case number 5 at Section 1.
No. Lilian was not empowered to receive the cash
advance from Gozun. (Art. 1868 of the Civil Code) By the
contract of agency a person binds himself to render some
35. Sazon vs. Vasquez-Menancio | GR No. 192085

(666 SCRA 707) 22 February 2012 |Justice Sereno Holding and Ratio:
FACTS: Yes. Petitioner insisted, however, that Article 1891 of

the Civil Code contains a few of the obligations owed by an
Respondent Letecia Vasquez-Menancio, a US resident, agent to his principal, viz:
entrusted the management, care and preservation of several Art. 1891. Every agent is bound to render an account of his
of her nine (9) properties to petitioner Caridad Sazon. transactions and to deliver to the principal whatever he may
Letecia claimed that the said lots were all productive, and all have received by virtue of the agency, even though it may not
the fruits and income accruing therefrom were apparently be owing to the principal.
received by Caridad. In contrast, Caridad alleged that several Every stipulation exempting the agent from the obligation to
of the properties do not produce any fruit nor generate any render an account shall be void.
income. She claimed that any supposed income derived
therefrom was not even suficient to answer for all the It is evident that the reason behind the failure of
expenses incurred to maintain them. petitioner to render an accounting to respondent is
immaterial. What is important is that the former fulfill her
Letecia further averred that despite repeated demands, duty to render an account of the relevant transactions she
Caridad failed to render a proper accounting and to remit the entered into as respondent‘s agent.
owner‘s share of the profits. Thus, sometime in October
1997, she filed a complaint against Carida praying that the Petitioner claims that in the course of her
lower court will order her to render an accounting and remit administration of the properties, the letters she sent to
all the fruits and income the latter received from the respondent should be considered as a fulfillment of her
properties as administrator. obligation, as respondent‘s agent, to render an accounting of
In her defense, Caridad averred that she can turn over the her administration.
possession of certain 3 lots because they were allegedly Both the RTC and the CA found these letters insuficient. We
subject of valid lease agreements. It appeared that when the agree. Petitioner was the administrator of respondent‘s
petitioner entered into these agreements, she acted within properties for 18 years or from 1979 to 1997, and four letters
her authority as Letecia‘s agent. within 18 years can hardly be considered as suficient to keep
In its decision, the RTC ruled in favour of Letecia, and the the principal informed and updated of the condition and
same was afirmed by the CA. status of the latter‘s properties.
ISSUE: Whether or not the agent fulfilled her
obligation in rendering the accounting of properties?
36. Hernandez vs. Hernandez | GR 158576 645 action and will not pursue her complaint or opposition to the
SCRA 24 | 9 March 2011 release to Cecilio or his heirs or assigns.
In a Letter dated 22 June 2000 after she learned of her true
FACTS share in the expropriation proceedings Cornelia demanded
the accounting of the proceeds.The letter was left
On 11 November 1993, the owners of the Hernandez unanswered. She then decided to have the courts settle the
property, which includes petitioner Cornelia Hernandez, issue.A Complaint for the Annulment of Quitclaim and
executed a letter indicating: (1) respondent Cecilio Recovery of Sum of Money and Damages was filed before the
Hernandez as the representative of the owners of the land; RTC. Cecilio was declared in default, but this was reversed
and (2) the compensation he gets in doing such job. Such by the CA.
property was subject of an expropriation case for a DPWH
project. During the course of the expropriation proceedings,
ISSUE Whether or not the agent exceeded the scope of
an Order was issued by the RTC, Cecilio was appointed as
her authority?
one of the commissioners in the expropriation case. On 18
October 1996, Cornelia, and her other co-owners who were
also signatories of the 11 November 1993 letter, executed an Holding and Ratio Decidendi
irrevocable Special Power of Attorney (SPA) appointing
Cecilio Hernandez as their "true and lawful attorney" with A contract where consent is given through mistake, violence,
respect to the expropriation of the subject property. There intimidation, undue influence, or fraud is voidable. In
was no mention of the compensation scheme for Cecilio, the determining whether consent is vitiated by any of the
attorney-in-fact. The just compensation for the condemned circumstances mentioned, courts are given a wide latitude in
properties was fixed subsequently, with Cornelias share weighing the facts or circumstances in a given case and in
amounting to P7,321,500.00the amount a pro-indiviso owner deciding in their favor what they believe to have actually
is to receive. At this point, Cecilios SPA was revoked by occurred, considering the age, physical infirmity, intelligence,
Cornelia. On 7 February 2000, however, Cornelia received relationship, and the conduct of the parties at the time of the
from Cecilio a check amounting to P1,123,000.00. The check making of the contract and subsequent thereto. Here, the
was accompanied by a Receipt and Quitclaim document in service contract of 11 November 1993 (appointing Cecilio as
favor of Cecilio. In essence it states that: (1) the amount representative), as well as the quitclaim and receipt, are
received will be the share of Cornelia in the just voidable the first due to mistake, the second due to fraud.
compensation paid by the government in the expropriated First, the service contract gave Cecilio compensation based
property; (2) in consideration of the payment, it will release on "1998 skyrocketing" prices that essentially will give
and forever discharge Cecilio from any action, damages, Cecilio 83.07% of the just compensation due Cornelia as the
claims or demands; and (3) Cornelia will not institute any co-owner of the land. No evidence on record would show that
Cornelia agreed, by way of the 11 November 1993 letter, to respondent Isidro Perez and recover the possession of a
give Cecilio 83.07% of the proceeds of the sale of her land. portion of lot 443 before the RTC
Second, quitclaims are also contracts and can be voided if
Estrada entered into a Compromise Agreement with
there was fraud or intimidation that leads to lack of consent.
Perez, the terms and conditions such as:
The facts show that a simple accounting of the proceeds of
the just compensation will be enough to satisfy the curiosity “ In order for Perez to buy the said lot he is presently
of Cornelia. However, Cecilio did not disclose the truth and occupying, he has to pay to plaintif through Estada the sum
instead of coming up with the request of his aunt, he made a of P26,640 computed at P80/square meter and that Cosmic
contract intended to bar Cornelia from recovering any Lumber recognizes ownership and possession of Perez by
further sum of money from the sale of her property. virtue of this compromise agreement over said portion of 333
Moreover, when Cecilio accepted the position as sqm of lot 443 and whatever expenses of subdivision,
commissioner, he created a barrier that prevented his registration and other incidental expenses shall be
performance of his duties under the SPA. Cecilio could not shouldered by Perez
have been a hearing oficer and a defendant at the same
time. Indeed, Cecilio foisted fraud on both the Court and the Although the agreement was approved by the trial
Hernandez’s when, after his appointment as commissioner, court and the decision became final and executory it was not
he accepted the appointment by the Hernandez to executed within the 5 year period from date of its finality
"represent" and "sue for" them. allegedly due to the failure of Cosmic Lumber to produce the
owner’s duplicate copy of title needed to segregate from lot
443 the portion sold by the attorney-in-fact, Paz Estrada to
37. COSMIC LUMBER CORPORATION V CA Perez under the compromise agreement
FACTS:
Cosmic Corporation, through its General Manager ISSUE: Whether or not there is a contract of agency
executed a Special Power of Attorney appointing Paz G. between Cosmic Lumber, principal and Paz Estrada,
Villamil-Estrada as attorney-in-fact to initiate, institute and agent thus binding the principal over the compromise
file any court action for the ejectment of third persons and/or agreement made by the agent to a third person, Perez
squatters of the entire lot 9127 and 443 for the said in selling the portion of the said property?
squatters to remove their houses and vacate the premises in
order that the corporation may take material possession of
the entire lot RULING:
Paz G. Villamil Estrada, by virtue of her power of
attorney, instituted an action for the ejectment of private
No. The authority granted Villamil-Estrada under the the principal or to execute a binding contract containing
special power of attorney was explicit and exclusionary: for terms and conditions which are in the contract he did
her to institute any action in court to eject all persons found execute
on lots number 9127 and 443 so that Cosmic Lumber could
For the principal to confer the right upon an agent to
take material possession thereof and for this purpose, to
sell real estate, a power of attorney must so express the
appear at the pre-trial and enter into any stipulation of facts
powers of the agent in clear and unmistakable language
and/or compromise agreement but only insofar as this was
protective of the rights and interests of Cosmic Lumber in It is therefore clear that by selling to Perez a portion of
the property Cosmic Lumber’s land through a compromise agreement,
Villamil-Estrada acted without or in obvious authority. The
Nowhere in this authorization was Villamil-Estrada
sale ipso jure is consequently void and so is the compromise
granted expressly or impliedly any power to sell neither the
agreement. This being the case, the judgment based thereon
subject property nor a portion thereof.
is necessarily void
Neither can a conferment of the power to sell be validly
When an agent is engaged in the perpetration of a
inferred from the specific authority “to enter into a
fraud upon his principal for his own exclusive benefit, he is
compromise agreement” because of the explicit limitation
not really acting for the principal but is really acting for
fixed by the grantor that the compromise entered into shall
himself, entirely outside the scope of his agency
only be “so far as it shall protect the rights and interest of
the corporation in the aforementioned lots”.
In the context of special investiture of powers to 38. BRITISH AIRWAYS VS CA
Villamil-Estrada, alienation by sale of an immovable certainly See: Case Number 31
cannot be deemed protective of the right of Cosmic Lumber
to physically possess the same, more so when the land was 39. ESCUETA VS LIM. G.R. No. 137162 January
being sold for a price of P80/sqm , very much less than its 24, 2007.
assessed value of P250/sqm and considering further that FACTS:
plaintif never received the proceeds of the sale
This case involves 10 lots owned by Ignacio Rubio and
When the sale of a piece of land or any interest thereon the Heirs of Baloloy allegedly sold by Virginia Rubio Lim to
is through an agent, the authority of the latter shall be in Rufina Lim. Rufina avers that she paid Ᵽ102, 169.86 and
writing; otherwise, the sale should be void. Thus, the Ᵽ450, 000 respectively to Rubio and the heirs of Baloloy as
authority of an agent to execute a contract for the sale of real partial payment for these lots with the understanding that
estate must be conferred in writing and must give him
specific authority, either to conduct the general business of
the Certificate of Title will be delivered to her upon payment so, but he shall be responsible for the acts of the substitute
of the balance. when he has not given the power to appoint one”Applying
this provision to the special power of attorney executed by
However both Rubio and the heirs refused her Ignacio
payment and did not deliver the Certificate of Title. Thus,
Rufina was constrained to file an action which originally Rubio in favor of Patricia Llamas, it is clear that she is
sought to remove cloud or quiet title to real property with a not prohibited from appointing a substitute. By authorizing
prayer for the issuance of Preliminary Injunction and a hold- Virginia Lim to sell the subject properties Patricia merely
departure order against Rubio which was later amended to acted within the limits of her authority. However, she will be
include Specific Performance and Damages. held responsible for the act of the sub-agent, among which is
precisely the sale in favor of the Rufina.
Corazon Escueta was impleaded for allegedly
purchasing the same lots in spite of her knowledge that the Virginia Serona vs Court of Appeals.G.R. No. 130423.
same were already sold and for executing a simulated Deed November 18, 2002.
of Sale which raised doubts and cloud over Rufina’s title. The
heirs of Baloloy and Rubio denied the allegations and claimed
among others, that Virginia Lim was never authorized to sell
the lots as it was in fact Patricia Lllamas, Rubio’s daughter,
who had this authority. 40. SERONA VS CA, G.R. No. 130423. November
18, 2002.
The Baloloy’s and Rubio failed to appear at the pre-
trial and were declared in default. Their motion to lift the FACTS:
order of default having been denied, they appealed to the Leonida Quilatan delivered several pieces of jewelry to
Court of Appeals which was likewise denied. Hence this Virginia Serona to be sold on commission basis. It was
petition. agreed upon that the jewelry will be returned within 30 days
ISSUE: Whether or not Rubio is bound by the contract if not sold. Virginia failed to pay for the sold items, thus
of sale considering that he did not authorize Virginia to Leonida required her to execute an acknowledgment receipt
transact on his behalf? indicating their agreement and the total amount due which
was later signed by Virginia, and a certain Rufina Navarete
RULING: as witness.
Yes, Rubio is bound by the Contract of Sale. The Court Unknown to Leonida, Virginia entrusted the jewelries
cited Art. 1892 which provides that “an agent may appoint a to Marichu Labrador also to be sold on commission basis.
substitute if the principal has not prohibited him from doing Virginia failed to collect from Marichu as the person whom
she sold these jewelries to absconded. Consequently, Virginia ISSUE: Whether the contract of sale between
failed to pay Leonida. Thus, an information for Estafa was petitioners and respondent is valid?
filed against the former alleging that she misappropriated the
proceeds of the jewelries and converted the same for her RULING:
personal use and benefit. The Trial Court subsequently found
Virginia guilty of Estafa and upon appeal, the Court of Yes, the Court held that in even assuming that Virginia
Appeals merely afirmed this decision. Hence this petition. Lim had no authority to sell the subject properties, the
contract she executed in favor of respondent is not void, but
ISSUE: Whether or not there was abuse of confidence simply unenforceable, under the second paragraph of Article
when Virginia entrusted the jewelry to Marichu? 1317 of the Civil Code which reads:
RULING:
Art. 1317. “A contract entered into in the name of
No, the Court held that Virginia did not ipso facto another by one who has no authority or legal representation,
commit Estafa through conversion or misappropriation by
or who has acted beyond his powers, shall be unenforceable,
delivering the jewelries to Marichu, her sub-agent and that it
unless it is ratified, expressly or impliedly, by the person on
must be pointed out that the law on agency allows the
appointment by an agent of a substitute or sub-agent in the whose behalf it has been executed, before it is revoked by the
absence of express agreement to the contrary between the other contracting party.”
agent and the principal under the provisions of Art. 1892.
The appointment of Marichu as sub-agent was not expressly Ignacio Rubio merely denies the contract of sale and
prohibited by Leonida as the acknowledgment receipt does claims without substantiation, that what he received was a
not contain any such limitation. Neither does it appear that loan, not the down payment for the sale of the subject
Virginia was verbally forbidden. properties. His acceptance and encashment of the check,
however, constituted ratification of the contract of sale and
Thus, the act of entrusting the jewelry is not
characterized by abuse of confidence, was not proscribed and "produce the efects of an express power of agency." His
is in fact legally sanctioned. action implies that he waived his right of action to avoid the
contract, and, consequently, it also implies the tacit, if not
express, confirmation of the said sale efected" by Virginia
41. ESCUETA VS LIM. G.R. No. 137162 January Lim in favor of respondent.
24, 2007.
FACTS: In addition, the Baloloys have ratified the contract of
sale when they accepted and enjoyed its benefits. The
See facts in case number 39 of section 3.
doctrine of estoppel applicable here is not only that which The CFI declared the deed of assignment of the credit valid
prohibits a party from assuming inconsistent positions, based and binding.
on the principle of election, but that which precludes him As such the municipal treasurer with the approval of the
from repudiating an obligation voluntarily assumed after auditor of the provincial treasurer of Iloilo and of the
having accepted benefits therefrom. To countenance such Executive Bureau, paid the late Antero Soriano the amount of
repudiation would be contrary to equity, and would put a P6,000 in part payment of the judgment. The municipal
premium on fraud or misrepresentation. treasurer of Iloilo deposited a total of 12,000 with the Clerk
of Court of the CFI of Iloilo. Consequently the judgment for
Ᵽ42,966.40 was reduced to Ᵽ30,966.40. Hence this petition.
42. MUNICIPAL COUNCIL OF ILOILO VS ISSUE: Whether or not the assignment by Tan Boon
EVANGELISTA Tiong as attorney in fact of Tan Ong Tze to Atty. Antero
Soriano of all her interests was valid?
FACTS:
RULING:
In a previous case, Tan Ong Tze sought to recover the
value of a strip of land belonging to her which was taken by Yes, the Court held that the Deed of Assignment in
the municipality to widen a public street. The judgment favor of Antero Soriano was valid as Tan Boon Tiong was
entitled her to Ᵽ42, 966.40. When the judgment became final authorized to employ and contract for the services of lawyers
and executory, Atty. Jose Evangelista as counsel for the upon such condition as he may deem convenient to defend
Intestate Estate of Atty. Jose Ma. Arroyo, filed a claim for Tan Ong Tze’s interest and as such was impliedly empowered
payment of fees for professional services that he and Atty. to pay the lawyer’s fees for services rendered in the interest
Arroyo rendered in the said case. of the principal.
At the hearing, several other claimants appeared, Likewise with regard to the failure of the other attorney-
including Atty. Antero Soriano who claimed that Tan Boon in-fact Tan Montano to consent to the Deed of Assignment,
Tiong- one of Tan Ong Tze’s attorney-in-fact assigned the Tan Boon Tiong being authorized to pay in the name of the
amount to him and that he in turn assigned this amount to principal-the very fact that diferent letters of attorney were
Mauricio Cruz & Co. Inc. The Court ordered that the atty.’s given to each of these representatives show that it was not
lien in the amount of 15% of the judgment be recorded in the principal’s intention that they should act jointly in order
favor of Jose Evangelista and directed the municipality to file to make their acts valid.
an interpleader against the claiming parties PNB, Antero
Soriano, Jose Ma. Arroyo represented by Jose Evangelista.
43. CHEMPIL EXPORT VS CA
FACTS:
Ferro in turn assigned the rights to said stock to
This is a consolidation of two petitions for review filed Chemphil Export & Import (CEIC) which was registered in
by Dynetics Inc. and Antonio Gracia; one sought the judicial the corporate books of CEIC and the corresponding stock
declaration, construction and interpretation of the validity of certificates were issued to it.
a Surety Agreement that they entered into with the
Consortium of banks while the other sought declaratory relief When Garcia failed to comply with the compromise
and/or injunction against Security Bank & Trust Co. In both agreement the consortium caused the shares of stocks to be
cases Dynetics and Garcia lost. The Consortium and SBTC sold on execution. The Consortium acquired the same and a
filed their respective counterclaims with prayer for the certificate of sale was issued in the name of the bank
issuance of writ of attachment which the Trial Court granted consortium. The consortium filed a motion to order the
and while the writ in favor of SBTC was lifted, it was corporate secretary of Chemphil to enter in its stock and
subsequently reinstated. Consequently, various properties transfer books the sherif's certificate of sale which was
owned by Dynetics and Garcia were garnished including granted.As such CEIC filed a motion to intervene on the
Garcia’s shares of stocks in CIP/ Chemphil. ground that it was the rightful owner of the shares. The trial
PCIB which in a previous case against CEIC sought court granted CEIC's motion allowing it to intervene. The
the annulment of a Court of Appeals decision, filed a motion consortium filed a manifestation and motion to lift this order
to dismiss the complaint of Dynetics and Garcia for lack of which was denied. The consortium and PCIB filed separate
interest to prosecute and to submit its counterclaims for motions for reconsideration which was likewise denied thus
decision. The motion to dismiss was granted but the motion the consortium appealed to the Court of Appeals which
to submit its counterclaim for decision was denied. The ordered theconsolidation of these cases.
Consortium filed motions for reconsideration which were
denied. The consortium thus appealed to the Court of ISSUE: Whether or not CEIC had been subrogated to
Appeals and while the same was pending, they entered into a the rights of SBTC, its predecessor in interest?
compromise agreement with Garcia where it was stipulated
that Garcia will pay Ᵽ145M which shall earn interest of RULING:
eighteen percent from the date of the compromise.
No, the Court held that by definition subrogation is the
It appears that a year before, Garcia sold the same transfer of all rights of the creditor to a third person who
shares of stock to Ferro Chemicals Inc. for Ᵽ79M. It was substitutes him in all his rights. But when Ferro issued a
agreed upon that the purchase price shall be paid directly to check in favor of SBTC it was in fact paying with Garcia’s
Security Bank. But SBTC refused the payment as it was not money, no longer with its own because said amount was part
suficient, as such the payment was consigned to the RTC.
of the purchase price which Ferro owed Garcia in payment DENR that the remaining area is located at an active
for the sale of the disputed shares. landslide area and therefore, not suitable for development
into a housing project.
Since the money used to discharge Garcia's debt
The NHA issued two (2) resolutions cancelling the sale
rightfully belonged to him, FCI cannot be considered a third
over the three (3) parcels of land and subsequently ofered
party payor under Art. 1302 (2). It was but a conduit, or as
the amount of P1.255 million to the landowners as daos
aptly categorized, merely an agent as defined in Art. 1868.
perjuicious.
By the contract of agency a person binds himself to render
some service or to do something in representation or on Petitioners filed before Regional Trial Court (RTC) a
behalf of another, with the consent or authority of the latter. Complaint for Damages against NHA and its General
FCI was merely fulfilling its obligation under the Manager Robert Balao. After trial, the RTC rendered a
aforementioned Deed of Sale. decision declaring the cancellation of the contract to be
justified and awarded damages to plaintifs in the sum of
The money “paid’’ by Ferro to SBTC thus properly P1.255 million, the same amount initially ofered by NHA to
belonged to Garcia. It is as if Garcia paid his own debt to petitioners as damages.
SBTC through a third party, which was Ferro.
Upon appeal by petitioners, the Court of Appeals
44. UY vs. COURT OF APPEALS, G.R. No. reversed the decision of the RTC and entered new one
120465, 314 SCRA 69, 09 September 1999 dismissing the complaint. It held that since there was
justifiable basis cancelling the sale, it saw no reason for the
FACTS: award of damages.
Petitioners William Uy and Rodel Roxas are agents to ISSUE: Were the petitioners the real parties in interest?
authorized to sell eight (8) parcels of land by the owners. By
virtue of such authority, petitioners ofered to sell the lands, RULING:
located at Benguet to respondent National Housing Authority No, petitioners are not parties to the contract of sale
(NHA) to be utilized and developed as housing project. between their principals and NHA. They are mere agents of
NHA passed a resolution approving the acquisition of the owners of the land subject sale of the sale. As agents,
said lands with an area of 31.8231 hectares, at the cost of they only render some service or do something in
P23.867 million, pursuant to which the parties executed a representation or on behalf of their principals. The rendering
series of Deeds of Absolute Sale covering the subject lands. of such service did not make them parties to the contracts of
However, only five (5) were paid for by NHA because of the sale executed in behalf of the latter. Since a contract may be
report it received from the Land Geosciences Bureau of the violated only by the parties thereto as against each other, the
real parties-in-interest, either as plaintif or defendant, in an On August 10, 1988, the spouses Angeles file suit
action upon that contract must, generally, either be parties to against PNR and its corporate secretary, Rodolfo Flores,
said contract. among others, for specific performance and damages before
RTC of Quezon City, and praying that PNR be directed to
deliver 46 metric tons of scrap/unserviceable rails and to pay
45. ANGELES vs. PNR, G.R. No. 150128, 500 them damages and attorney’s fees. Meanwhile, Lizette
SCRA 444, 31 August 2006 passed away and was substituted by her heirs, among whom
is her husband, herein petitioner Laureano Angeles.
FACTS:
On April 16, 1996, the trial court, on the postulate that
On May 5, 1980, respondent Philippine National the spouses Angeles are not the real parties-in-interest,
Railways (PNR) informed a certain Gaudencio Romualdez rendered judgment dismissing their complaint for lack of
that it has accepted the latters to buy, on an AS IS WHERE IS cause of action. As held by the court, Lizette was merely a
basis, the PNRs scrap/unserviceable rails located in Del representative of Romualdez in the withdrawal of scrap or
Carmen and Lubao, Pampanga at P1,300.00 and P2,100.00 unserviceable rails awarded to him and not an assignee to
per metric ton, respectively, for the total amount of the latter’s rights with respect to the award. Upon appeal,
P96,600.00 Romualdez authorized Lizette R. Wijanco- the CA afirmed the trial court’s decision.
Angeles, the wife of petitioner Laureano Angeles to be his
representative in the withdrawal of the scrap/unserviceable ISSUE: Whether or not the petitioner merely an agent
rails. The PNR granted said request and allowed Lizette to or assignee of the rights of Romualdez’ interest in the
withdraw scrap/unserviceable rail in Murcia, Capas and San scrap rails awarded?
Miguel, Tarlac instead in Pampanga. However, the PNR
subsequently suspended the withdrawal in view of what it RULING:
considered as documentary discrepancies coupled by Lizette was not an assignee, but merely an agent whose
reported pilferages of over P500,000.00 worth of PNR scrap authority was limited to the withdrawal of the scrap rails,
properties in Tarlac. hence, without personality to sue.
Consequently, the spouses Angeles demanded the Where agency exists, the third party’s (PNR) liability on
refund of the amount of P96,000.00. The PNR, however, a contract is to the principal and not to the agent and the
refused to pay, alleging that as per delivery receipt duly relationship of the third party to the principal is the same as
signed by Lizette, 54.658 metric tons of unserviceable rails that in a contract in which there is no agent. Normally, the
had already been withdrawn which, at P2,100 per metric ton, agent has neither rights nor liabilities as against the third
were worth of P114,781.80, an amount that exceed the claim party. He cannot thus sue and be sued on the contract. Since
for refund.
a contract may be violated only by the parties thereto as damages from both NAMERCO and the surety. Thereafter,
against each other, the real party-in-interest, either as NPC sued for recovery of the stipulated liquidated damages.
plaintif or defendant in an action upon that contract must, After trial, the Court of First Instance rendered judgment
generally, be a contracting party. ordering the defendants-appellants to pay solidarity to the
NPC reduced liquidated damages with interest.
46. NATIONAL POWER CORPORATION vs.
NAMERCO, G.R. Nos. L-33819 & L-33897 117 ISSUE: Whether NAMERCO exceeded its authority?
SCRA 789, 23 October 1982
RULING:
FACTS:
Yes, NAMERCO exceeded their authority. Article 1897
On October 17, 1956, plaintif National Power implies that the agent who acts in excess of his authority is
Corporation (NPC) and defendant National Merchandising personally liable to the party with whom he contracted. And
Corporation (NAMERCO), as the representative of the that the rule is complimented by Article 1898 of the Civil
International Commodities Corporation, executed a contract Code which provides that “if the agent contracts, in the name
for the purchase by the NPC from the New York firm of four of the principal, exceeding the scope of his authority, and the
thousand long tons of crude sulfur with a stipulation for principal does not ratify the contract, it shall be void if the
liquidated damages in case of breach. party with whom the agent contracted is aware of the limits
of the powers granted by the principal. NAMERCO never
Defendant-appellant Domestic Insurance Company disclosed to the NPC the cabled or written instructions of its
executed a performance bond in favor of NPC to guarantee principal. For that reason and because NAMERCO exceeded
the seller’s obligation. In entering into another contract, the limits of its authority, it virtually acted in its own name
NAMERCO, however, did not disclose to NPC that and not as agent and it is, therefore, bound by the contract of
NAMERCO’s principal, in a cables instruction, stated that the sale which, however, it not enforceable against its principal.
sale was subject to availability of steamer, and contrary to its If, as contemplated in Articles 1897 and 1898, NAMERCO is
principal’s instruction, NAMERCO agreed that non- bound under the contract of sale, then it follows that it is
availability of a steamer was not a justification for non- bound by the stipulation for liquidated damages in the
payment of liquidated damages. contract.
The New York supplier was not able to deliver the 47. BA Finance vs. Court of Appeals, G.R. No.
sulfur due to its inability to secure shipping space. 94566, 211 SCRA 112, 03 July 1992
Consequently, the Government Corporate Counsel rescinded
the contract of sale due to the supplier’s non-performance of FACTS:
its obligations, and demanded payment of liquidated
Renato Gaytano, doing business under the name Gebbs persons. The rule is clear that an agent who exceeds his
International, applied for and was granted a loan with authority is personally liable for damaged.
respondent Traders Royal Bank. Philip Wong as credit
administrator of BA Finance Corporation for and in behalf of 48. Pineda vs. Court of Appeals, G.R. No.
the latter undertook to guarantee the loan of the Gaytano 105562, 226 SCRA 754, 27 September 1993
spouses.
FACTS:
Partial payments were made on the loan leaving an
Prime Marine Services, Inc. (PMSI) obtained a group
unpaid balance which the Gaytano spouses refused to pay.
insurance policy for its sailors. During the efectivity of the
Respondent bank filed with the trial court complaint for sum
policy, six covered employees of the PMSI perished at sea
of money against the Gaytano spouses and petitioner
when their vessel sunk somewhere in Morocco. Petitioners
Corporation as alternative defendant.
sought to claim death benefits due to them and asked for
The trial court rendered a decision in favor of the assistance with the President and General Manager of PMSI,
plaintif and against Gaytano spouses. Not satisfied with the Captain Roberto Nuval. They were made to execute, with the
decision the respondent bank appealed with the Court of exception of the spouses, Alarcon, special powers of attorney
Appeals, modifying the decision of the trial court, wherein authorizing Captain Nuval to “follow up, ask, demand, collect
Gaytano spouses and BA Finance Corp., were solidarily and receive” for their benefit indemnities of sums money due
liable. to them.
ISSUE: Whether Philip Wong as agent who exceeded his Petitioners were able to receive their respect death
authority is liable? benefits. Unknown to them, however, the PMSI, in its
capacity as employer and policyholder of the life insurance of
RULING: its deceased workers, filed with the Insular Life (respondent)
formal claims for and in behalf of the beneficiaries, through
The special power to approve loans does not carry with Captain Nuval. Insular issued checks payable to the order of
it the power to bind the principal to a contract of guaranty the petitioners. These checks were released to the treasurer
even to the extent of the amount for which a loan could have of PMSI, and upon instructions by Captain Nuval, it was
been granted by the agent. “Guaranty is not presumed, it deposited in his personal account.
must be expressed and cannot be extended beyond its
specified limits. In one case, where it appears that a wife Petitioners learned that they were entitled, as
gave her husband power of attorney to loan money, this beneficiaries, to life insurance benefits under a group policy
Court ruled that such fact did not authorized him to make her but when they sought to recover these benefits, their claims
liable as a surety for the payment of the debt of a third
was denied on the ground that the liability to petitioners was Juan B. Dans, 76 years of age, together with his family,
already extinguished upon delivery to and receipt by PMSI. applied for a loan worth Php 500, 000 at the Development
Bank of the Philipppines on May 1987. The loan was
ISSUE: Whether or not Insular Life acted with approved by the bank dated August 4, 1987 but in the
negligence? reduced amount of Php 300, 000. Mr. Dans was advised by
DBP to obtain a mortgage redemption insurance at DBP MRI
RULING:
pool. DBP deducted the amount to be paid for MRI Premium
Yes. The practice in group insurance business, which is that is worth Php 1476.00. The insurance of Mr. Dans, less
consistent with the jurisprudence thereon in the State of the DBP service fee of 10%, was credited by DBP to the
California from whose laws our Insurance Code has been savings account of DBP MRI-Pool. Accordingly, the DBP MRI
mainly patterned, is that the employer-policyholder who Pool was advised of the credit.
takes out the insurance for its oficers and employees, is the On September 3, 1987, Mr. Dans died of cardiac arrest.
agent of the insurer who has authority to collect the proceeds DBP MRI notified DBP was not eligible for the coverage of
from the insurer. In this case, the insurer, through the insurance for he was beyond the maximum age of 60. The
negligence of its agent, allowed a purported attorney-in-fact wife, Candida, filed a complaint to the Regional Trial Court
whose instrument does not clearly show such power to Branch I Basilan against DBP and DBP MRI pool for
collect the proceeds, it was liable therefore under the ‘Collection of Sum of Money with Damages’. Prior to that,
doctrine that the principal is bound by the misconduct of its DBP ofered the administratrix (Mrs. Dans) a refund of the
agent. MRI payment but she refused for insisting that the family of
49. BA Finance vs. CA GR No. 82040 (201 SCRA the deceased must receive the amount equivalent of the loan.
157)27 August 1991 DBP also ofered and ex gratia for settlement worth Php 30,
See case number 29 000. Mrs. Dans refused to take the ofer. The decision of the
RTC rendered in favor of the family of the deceased and
50. DEVELOPMENT BANK OF THE against DBP. However, DBP appealed to the court.
PHILIPPINES, petitioner
ISSUE: Whether or not the DBP MRI Pool should be
vs. Court of Appeals and the ESTATE OF THE
held liable on the ground that the contract was already
LATE JUAN B. DANS, represented by CANDIDA G.
perfected?
DANS, and the DBP MORTGAGE REDEMPTION
INSURANCE POOL, respondents. RULING:
FACTS: No. DBP MRI Pool is not liable. Though the power to
approve the insurance is lodged to the pool, the DBP MRI
Pool did not approve the application of the deceased. There
was no perfected contract between the insurance pool and FACTS:

Mr. Dans.
Nora Eugenio was a dealer of Pepsi. She had one store
DBP was wearing two legal hats: as a lender and in Marikina but had a regular charge account in Q.C. And
insurance agent. As an insurance agent, DBP made believed Muntinlupa. Her husband Alfredo used to be a route manager
that the family already fulfilled the requirements for the said for Pepsi in its Q.C. Plant. Pepsi filed a complaint for a sum of
insurance although DBP had a full knowledge that the money against Eugenio spouses. since according to them the
application would never be approved. DBP acted beyond the spouses (1) had an outstanding balance since it purchased
scope of its authority for accepting applications for MRI. If and received on credit various products from both its Q.C.
the third person who contracted is unaware of the authority and Muntinlupa plant and (2) had an unpaid obligation for
conferred by the principal on the agent and he has been the loaned “empties” from Pepsi. They contend that the total
deceived, the latter is liable for damages. The limits of the outstanding account was P94,651.xx. Eugenio's in their
agency carries with it the implication that a deception was defense presented four Trade Provisional Receipts (TPR)
perpetrated—Articles 19-21 come into play. allegedly issued to and received by them from Pepsi's Route
Manager (Malate Warehouse) Jovencio Estrada showing that
However, DBP is not entitled to compensate the family
they paid a total sum of P80,500.xx. They also claim that the
of the deceased with the entire value of the insurance policy.
signature of Nora Eugenio in a Sales Invoice (85366) for the
Speculative damages are too remote to be included in the
amount of P5,631.xx which was included in the computation
cost of damages. Mr. Dans is entitled only to moral damages.
of their debt was falsified. Therefore, without these errors,
Such damages do not need a proof of pecuniary loss for
petitioner contend that (1) they do not have any outstanding
assessment. The court granted only moral damages (Php 50,
debt, and (2) it is Pepsi who owes them P3,546.02. RTC found
000) plus attorney fees’s (Php 10, 000) and the
in favor of Pepsi. CA afirmed the decision.
reimbursement of the MRI fees with legal interest from the
date of the filing of the complaint until fully paid. ISSUE: W/N the amounts in the TPR should be credited
in favor of the spouses.?
51. BA Finance vs. CA GR No. 82040 (201 SCRA
157)27 August 1991 RULING:
See case number 29
CA decision is annulled and set-aside. Pepsi is ordered
52. NORA S. EUGENIO and ALFREDO Y. to pay Eugenio. Background: Eugenio submitted the TPR's to
EUGENIO, Atty. Rosario (Pepsi's lawyer). Thereafter, Rosario ordered
vs.HON. COURT OF APPEALS and PEPSI-COLA Daniel Azurin (asst.personnel manager) to conduct an
BOTTLING COMPANY OF THE PHILIPPINES, investigation to verify the claim of the petitioners. According
INC., G.R. No. 103737 December 15, 1994 to Azurin, Estrada denied that he issued and signed the
TPR's. Azurin testified to this in Court (However, Estrada collections made, are turned over by the sales representative
never did. He failed to appear and was never found. to the appropriate company oficer.
Therefore, his testimony- as told by Azurin- is barred by 53. TOYOTA SHAW, INC., vs.COURT OF
the Hearsay Evidence Rule). Furthermore, the APPEALS and LUNA L. SOSA, G.R. No. L-116650
“investigation” conducted was really more of an interview May 23, 1995
without any safeguards and did not give Eugenio opportunity
to object or cross-examine Estrada. The other points of FACTS:
Estrada (and Pepsi) were all invalid since Estrada was
nowhere to be found and Pepsi failed to comply with the Luna L. Sosa & Popong Bernardo, an agent of Toyota
pertinent rules for the admission of the evidence by which it Shaw, entered into an agreement stating that Luna Sosa will
sought to prove its contentions. give P100K as downpayment for a yellow light ace which
Toyota will release on June 17. It was agreed that the balance
Pepsi therefore was unable to rebut the aforestated would be paid through financing by BA. On June 17, Mr Sosa
presumptions in favor of valid payment by petitioners, In was not able to get the car because according to Bernardo,
relation to Agency: Assuming in this case that Pepsi never “nasulot ng iba” but as it turns out, the credit financing was
received the amounts reflected in the TPR's, Pepsi still failed not approved by BA. Toyota then gave Mr Sosa the option to
to prove that Estrada (its duly authorized agent) did not purchase the unit by paying full price in cash but Sosa
receive the amounts. In so far as Eugenio is concerned, their refused. Furthermore, Mr. Sosa claims that Popong Bernardo
obligation is extinguished when they paid Estrada using acted in his authority as agent of Toyota, thereby binding
Pepsi's oficial receipt. Toyota in the agreement that they executed.
The substantive law is that payment shall be made to ISSUE: W/N the agreement could bind Toyota?
the person in whose favor the obligation has been
constituted, or his successor in interest, or any person RULING:
authorized to receive it. *TPR: Trade Provisional Receipts are No.The title of the agreement between the two parties
bound and given in booklets to the company sales was “AGREEMENTS BETWEEN MR. SOSA AND POPONG
representatives, under proper acknowledgement by them and BERNARDO OF TOYOTA SHAW INC”, therefore, Popong
with a record of the distribution thereof. After every Bernardo was acting on his personal capacity and did not
transaction, when a collection is made the customer is given represent Toyota in said agreement, something that Mr. Sosa
by the sales representative a copy of the TPR, that is, the should have been aware of. Mr. Sosa knew that Popong
triplicate copy or customer's copy, properly filled up to reflect Bernado was only a sales representative of Toyota, and thus,
the completed transactions. All unused TPR's,as well as the a mere agent and was therefore limited in his authority to
enter into contracts of sale of Toyota’s vehicles.
A person dealing with an agent is put upon inquiry and within seven days after the execution of the contract, it "lets,
must discover upon his peril the authority of the agent. demises" the vessel to charterer SMC "for three round trips
to Davao."
54. BACALTOS COALMINES Vs.THE Petitioners alleged that Savellon was not their Chief
HONORABLE COURT OF APPEALS, G.R. No. Operating Oficer and that the powers granted to him are
114091, JUNE 29, 1995 only those clearly expressed in the Authorization which do
FACTS: dot include the power to enter into any contract with SMC.
In an “Authorization” petitioner Bacaltos authorized ISSUE: Whether or not Savellon was duly authorized by
Savellon, to use the coal operating contract of Bacaltos Coal the petitioners to enter into the Trip Charter Party?
Mine of which he is the proprietor. For any legitimate
purpose that it may serve particularly
(1) To acquire purchase orders for and in behalf of
BACALTOS COAL MINES;(2) To engage in trading under the
RULING:
style of BACALTOS COAL MINES/RENE SAVELLON;(3) To
collect all receivables due or in arrears from people or
companies having dealings under BACALTOS COAL NO., The broadest scope of Savellon’s authority is
MINES/RENE SAVELLON;(4) To extend to any person or limited to the use of the coal operating contract an the clase
company by substitution the same extent of authority that is cannot contemplate any other power not included in the
granted to Rene Savellon;(5) In connection with the enumeration or which are unrelated either to the power to
preceeding paragraphs to execute and sign documents, use the coal operating contract or to those already
contracts, and other pertinent papers. enumerated.
On 19 October 1988 a Trip Charter Party was executed
55. Yu Eng Cho vs. PANAM | G.R. No. 123560
"by and between BACALTOS COAL MINES, represented by (328 SCRA 717) | 27 March 2000
its Chief Operating Oficer, RENE ROSEL SAVELLON" and
private respondent San Miguel Corporation (hereinafter FACTS:
SMC), represented by Francisco B. Manzon, Jr., its "SAVP Plaintif Yu Eng Cho is the owner of Young Hardware
and Director, Plant Operations-Mandaue" Thereunder, Co. and Achilles Marketing. In connection with [this]
Savellon claims that Bacaltos Coal Mines is the owner of the business, he travels from time to time to Malaysia, Taipei and
vessel M/V Premship II and that for P650,000.00 to be paid Hongkong. On July 10, 1976, plaintifs bought plane tickets
from defendant Claudia Tagunicar who represented herself to The trial court held that the defendants jointly and
be an agent of defendant Tourist World Services, Inc. (TWSI). severally liable, except defendant Julieta Canilao. On appeal,
After calling up Canilao of TWSI, defendant Tagunicar told the CA held private respondent Tagunicar solely liable
plaintifs that their flight is now confirmed all the way. therefor, and absolving respondents Pan Am and TWSI from
Thereafter, she attached the confirmation stickers on the any and all liability,
plane tickets. A few days before the scheduled flight of
Petitioners still asserted that Tagunicar is a sub-agent
plaintifs, their son, Adrian Yu, called the Pan Am ofice to
of TWSI while TWSI is a duly authorized ticketing agent of
verify the status of the flight. According to said Adrian Yu,
Pan Am. Proceeding from this premise, they contend that
personnel of defendant Pan Am told him over the phone that
TWSI and Pan Am should be held liable as principals for the
plaintifs' booking[s] are confirmed.
acts of Tagunicar. Petitioners stubbornly insist that the
Upon their arrival in Tokyo, they called up Pan-Am existence of the agency relationship has been established by
ofice for reconfirmation of their flight to San Francisco. Said the judicial admissions allegedly made by respondents
ofice, however, informed them that their names are not in herein, to wit: (1) the admission made by Pan Am in its
the manifest. Since plaintifs were supposed to leave on the Answer that TWSI is its authorized ticket agent; (2) the
29th of July, 1978, and could not remain in Japan for more afidavit executed by Tagunicar where she admitted that she
than 72 hours, they were constrained to agree to accept is a duly authorized agent of TWSI; and (3) the admission
airline tickets for Taipei instead, per advise of JAL oficials. made by Canilao that TWSI received commissions from ticket
This is the only option left to them because Northwest sales made by Tagunicar.
Airlines was then on strike, hence, there was no chance for
the plaintifs to obtain airline seats to the United States ISSUE: WON TWSI and Pan Am be held liable as
within 72 hours. Plaintifs paid for these tickets. principals?
Upon their return to Manila, a complaint for damages RULING:

was filed by petitioners against private respondents Pan No, TWSI and Pan Am should not be held liable for the
American World Airways, Inc. (Pan Am), Tourist World acts of Tagunicar who represented herself as their agent.
Services, Inc. (TWSI), Julieta Canilao (Canilao), and Claudia
Tagunicar (Tagunicar) for expenses allegedly incurred such It is a settled rule that persons dealing with an
as costs of tickets and hotel accommodations when assumed agent are bound at their peril, if they would hold
petitioners were compelled to stay in Hongkong and then in the principal liable, to ascertain not only the fact of agency
Tokyo by reason of the non-confirmation of their booking with but also the nature and extent of authority, and in case either
Pan-Am. is controverted, the burden of proof is upon them to establish
it.
In the case at bar, petitioners rely on the afidavit of 56. Litonjua vs. Fernandez | GR No. 148116 ( 427
respondent Tagunicar where she stated that she is an SCRA 478) | 14 April 2004
authorized agent of TWSI. This purported admission of
respondent Tagunicar cannot be used by petitioners to prove FACTS:
their agency relationship. At any rate, even if such afidavit is Mrs. Lourdes Alimario and Agapito Fisico who worked
to be given any probative value, the existence of the agency as brokers, ofered to sell to the petitioners, Antonio K.
relationship cannot be established on its sole basis. The Litonjua and Aurelio K. Litonjua, Jr., the parcels of land.
declarations of the agent alone are generally insuficient to
establish the fact or extent of his authority. The owners of the properties were represented by
Mary Mediatrix Fernandez and Gregorio T. Eleosida,
In addition, as between the negative allegation of respectively. The brokers told the petitioners that they were
respondents Canilao and Tagunicar that neither is an agent authorized by respondent Fernandez to ofer the property for
nor principal of the other, and the afirmative allegation of sale.
petitioners that an agency relationship exists, it is the latter
who have the burden of evidence to prove their allegation, 19 The petitioners and respondent Fernandez agreed that
failing in which, their claim must necessarily fail. the petitioners would buy the property consisting of 36,742
square meters, for the price of P150 per square meter, or the
We stress that respondent Tagunicar categorically total sum of P5,098,500. They also agreed that the owners
denied in open court that she is a duly authorized agent of would shoulder the capital gains tax, transfer tax and the
TWSI, and declared that she is an independent travel agent. expenses for the documentation of the sale.
We have consistently ruled that in case of conflict between
statements in the afidavit and testimonial declarations, the The petitioners and respondent Fernandez also agreed
latter command greater weight. to meet on December 8, 1995 to finalize the sale. It was also
agreed upon that on the said date, respondent Fernandez
The documents presented by the petitioner cannot would present a special power of attorney executed by the
justify the decision that Tagunicar was paid a commission owners of the property, authorizing her to sell the property
either by TWSI or Pan Am. On the contrary, Tagunicar for and in their behalf, and to execute a deed of absolute sale
testified that when she pays TWSI, she already deducts in thereon. The petitioners would also remit the purchase price
advance her commission and merely gives the net amount to to the owners, through respondent Fernandez. However, only
TWSI. From all sides of the legal prism, the transaction is Agapito Fisico attended the meeting. He informed the
simply a contract of sale wherein Tagunicar buys airline petitioners that respondent Fernandez was encountering
tickets from TWSI and then sells it at a premium to her some problems with the tenants and was trying to work out a
clients. settlement with them. After a few weeks of waiting, the
petitioners wrote respondent Fernandez on January 5, 1995,
demanding that their transaction be finalized by January 30, RULING:

1996.
No. The settled rule is that persons dealing with an
When the petitioners received no response from assumed agent are bound at their peril, and if they would
respondent Fernandez, the petitioners sent her another hold the principal liable, to ascertain not only the fact of
Letter dated February 1, 1996, asking that the Deed of agency but also the nature and extent of authority, and in
Absolute Sale covering the property be executed in case either is controverted, the burden of proof is upon them
accordance with their verbal agreement dated November to prove it. In this case, respondent Fernandez specifically
27,1995. The petitioners also demanded the turnover of the denied that she was authorized by the respondents-owners to
subject properties to them within fifteen days from receipt of sell the properties, both in her answer to the complaint and
the said letter; otherwise, they would have no option but to when she testified. The Letter dated January 16, 1996 relied
protect their interest through legal means. upon by the petitioners was signed by respondent Fernandez
alone, without any authority from the respondents-
Fernandez, however rejected the claims of the
owners. There is no evidence on record that the respondents-
petitioner.
owners ratified all the actuations of respondent Fernandez in
On April 12, 1996, the petitioners filed the instant connection with her dealings with the petitioners. As such,
Complaint for specific performance with damages against said letter is not binding on the respondents as owners of the
respondent Fernandez and the registered owners of the subject properties.
property.
Held:
After trial on the merits, the trial court rendered
No. The Civil Code provides that a special power of
judgment in favor of the petitioners .
attorney is necessary to enter into any contract involving
The appellate court promulgated its decision reversing immovable property or real rights. Any sale of real property
and setting aside the judgment of the trial court and by one purporting to be the registered owner's agent must
dismissing the petitioners’ complaint, as well as the show his authority in writing otherwise the sale is null and
respondents’ counterclaim. void. The agent's declarations alone are generally insuficient
to establish his authority. In this case, there's no
ISSUE/S: documentary evidence to show Property X's owners
   Whether or not the agent acted within the scope specifically authorized Fernandez to sell Property X to
of his authority? Litonjua. Fernandez specifically denied authority to sell
Property X. The purported letter Fernandez sent Litonjua
   Whether or not Fernandez has the authority to
representing herself to have authority to do so is signed by
sell the property?
Fernandez alone. Further, Property X's owners never ratified independent contractor, and as such was not authorized to
any of Fernandez's actions. represent MMPCI or to use its name except as to the extent
expressly stated in the Agency Manager Agreement.
57. Manila Memorial Park Cemetery, Inc. vs.
Linsangan | GR No. 151319 443 SCRA 377 | 2 ISSUE/S: Whether or not a contract of agency exists
November 2004 between Baluyot and MMPCI?
FACTS: RULING:
Florencia Baluyot ofered Atty. Pedro L. Linsangan a lot NO. The acts of an agent beyond the scope of his
called Garden State at the Holy Cross Memorial Park owned authority do not bind the principal, unless he ratifies them,
by petitioner (MMPCI). According to Baluyot, a former owner expressly or impliedly. Only the principal can ratify; the agent
of a memorial lot under Contract No. 25012 was no longer cannot ratify his own unauthorized acts.
interested in acquiring the lot and had opted to sell his rights
Moreover, the principal must have knowledge of the
subject to reimbursement of the amounts he already paid.
acts he is to ratify. No ratification can be implied in the
The contract was for P95,000.00. Baluyot reassured Atty.
instant case. Atty. Linsangan failed to show that MMPCI had
Linsangan that once reimbursement is made to the former
knowledge of the arrangement. As far as MMPCI is
buyer, the contract would be transferred to him. Atty.
concerned, the contract price was P132,250.00, as stated in
Linsangan agreed and gave Baluyot P35,295.00 representing
the Ofer to Purchase signed by Atty. Linsangan and MMPCI's
the amount to be reimbursed to the original buyer and to
authorized oficer. Likewise, this Court does not find favor in
complete the down payment to MMPCI. Baluyot issued
the Court of Appeals' findings that "the authority of
handwritten and typewritten receipts for these payments.
defendant Baluyot may not have been expressly conferred
Baluyot verbally advised Atty. Linsangan that Contract No.
upon her; however, the same may have been derived
28660 was cancelled for reasons the latter could not explain,
impliedly by habit or custom which may have been an
and presented to him another proposal for the purchase of an
accepted practice in their company in a long period of time."
equivalent property.
A perusal of the records of the case fails to show any
He refused the new proposal and insisted that Baluyot indication that there was such a habit or custom in MMPCI
and MMPCI honor their undertaking. For the alleged failure that allows its agents to enter into agreements for lower
of MMPCI and Baluyot to conform to their agreement, Atty. prices of its interment spaces, nor to assume a portion of the
Linsangan filed a Complaint for Breach of Contract and purchase price of the interment spaces sold at such lower
Damages against the former. For its part, MMPCI alleged price. No evidence was ever presented to this efect.
that Contract No. 28660 was cancelled conformably with the
terms of the contract because of non-payment of arrearages.
MMPCI stated that Baluyot was not an agent but an
58. Green Valley vs. IAC | GR No. L-49395 133 Yes, Green Valley is liable. The Supreme Court held
SCRA 697 | 26 December 1984 | Justice Abad that whether viewed as an agency to sell or as a contract of
Santos sale, the liability of Green Valley is indubitable. Adopting
Green Valley's theory that the contract is an agency to sell, it
FACTS: is liable because it sold on credit without authority from its
E.R. Squibb and Sons Phil. Corp. appointed petitioner principal. The Civil Code has a provision exactly in point. It
Green Valley Poultry and Alliend Products Inc. as a non- reads:
exclusive distributor for Squibb Veterinary Products. Art. 1905. The commission agent cannot, without the
However, Green Valley defaulted in the payment of goods express or implied consent of the principal, sell on credit.
delivered by Squibbs. This prompted the latter to file a Should he do so, the principal may demand from him
collection suit. The lower court ruled in favour of Squibbs, payment in cash, but the commission agent shall be entitled
which was afirmed by the Court of Appeals. to any interest or benefit, which may result from such sale.
Green Valley claimed that the contract with Squibb was
a mere agency to sell; that it never purchased goods from
Squibb; that the goods received were on consignment only SECTION FOUR
with the obligation to turn over the proceeds, less its
59. Bucton vs. Rural Bank of El Salvador, Inc. |
commission, or to return the goods f not sold, and since it
GR No. 179625 24 February 2014
had sold the goods but had not been able to collect from the
purchasers thereof, the action was premature. FACTS:
Upon the other hand, Squibb claimed that the contract Petitioner Nicanora G. Bucton owned a parcel of land in
was one of sale so that Green Valley was obligated to pay for Cagayan De Oro City, the title of which was borrowed by
the goods received upon the expiration of the 60-day credit Erlinda Concepcion on the pretext that she was only going to
period. Both lower courts ruled that there was a contract of show it to an interested buyer.
sale.
Little did Bucton knew that Concepcion used the said
ISSUE/S: Should Green Valley be held liable for selling title to mortgage the former‘s house lot as security for a Php
on credit? Does the distinction whether the contract 30,000 loan she sought to obtain from Rural Bank of El
was that of sale or contract to sell material to its Salvador. Inc., Misamis Oriental thru an SPA allegedly
liability? executed by Bucton. Bucton defaulted in payment.
Consequently, Bucton‘s house and lot were foreclosed.
RULING:
Aggrieved, Bucton filed with RTC a case for annulment negligently in preparing the Real Estate Mortgage as it failed
of mortgage, foreclosure and SPA against Concepcion, the to indicate that Concepcion was signing it for and on behalf
bank and the sherif who foreclosed her property. of petitioner. We need not belabor that the words "as
attorney-in-fact of," "as agent of," or "for and on behalf of,"
Bucton furthermore alleged that she cannot be held are vital in order for the principal to be bound by the acts of
liable as both the promissory note and the real estate his agent. Without these words, any mortgage, although
mortgage were signed by Concepcion in her own personal signed by the agent, cannot bind the principal as it is
capacity. The lower court ruled in favor of Bucton. However, considered to have been signed by the agent in his personal
the same was reversed by the CA, declaring that although the capacity.
promissory note and REM did not indicate that Concepcion
was signing for an on behalf of her principal, Bucton is 60. PANLILIO VS. CITIBANK N.A. (G.R. No.
estopped from denying liability since it was her negligence in 156335 November 28, 2007)
handling her title over to Concepcion that caused the loss.
FACTS:
ISSUE/S: Whether or not the Real Estate Mortgage was
entered into by Concepcion in her personal capacity?
Spouses Raul and Amalia Panlilio's initial intention was
RULING: to invest money in a Citibank product which had a high
interest but since it was not available, they put their
Yes. For the principal to be bound by a deed executed PhP1,000,000.00 in a savings account instead. More than a
by an agent, the deed must be signed by the agent for and in month later, petitioners placed another amount
behalf of his principal. of PhP2,134,635.87 in the Citibank’s Long-Term Commercial
In this case, the authorized agent failed to indicate in Paper (LTCP), a debt instrument that paid a high interest,
the mortgage that she was acting for and on behalf of her issued by the corporation Camella and Palmera Homes (C&P
principal. The Real Estate Mortgage, explicitly shows on its Homes). Months after signing with the debt instrument and
face, that it was signed by Concepcion in her own name and after receiving interests, petitioners contested the
in her own personal capacity. In fact, there is nothing in the investment contract and demanded that the respondent bank
document to show that she was acting or signing as an agent to return their investment money. This happened when
of petitioner. Thus, consistent with the law on agency and newspaper reports came out that C&P Homes' stock had
established jurisprudence, petitioner cannot be bound by the plunged in value.
acts of Concepcion. At this point, we find it significant to
mention that respondent bank has no one to blame but itself. ISSUES:
Not only did it act with undue haste when it granted and
released the loan in less than three days, it also acted
   Whether the investment contract creates a to the former buyer, the contract would be transferred to
trusteeship or agency. him. Atty. Linsangan agreed and gave Baluyot P35,295.00
   Whether the respondent is under the obligation to representing the amount to be reimbursed to the original
return the investment money of the petitioners. buyer and to complete the down payment to MMPCI.
RULING: Baluyot issued handwritten and typewritten receipts

Having bound themselves under the contract of agency, for these payments. Baluyot verbally advised Atty. Linsangan
petitioners as principals in an agency relationship are solely that Contract No. 28660 was cancelled for reasons the latter
obliged to observe the solemnity of the transaction entered could not explain, and presented to him another proposal for
into by the agent on their behalf, absent any proof that the the purchase of an equivalent property. He refused the new
latter acted beyond its authority. Concomitant to this proposal and insisted that Baluyot and MMPCI honor their
obligation is that the principal also assumes the risks that undertaking.
may arise from the transaction. Indeed, as in the instant
case, bank regulations prohibit banks from guaranteeing For the alleged failure of MMPCI and Baluyot to
profits or the principal in an investment management conform to their agreement, Atty. Linsangan filed a
account. Complaint for Breach of Contract and Damages against the
former. For its part, MMPCI alleged that Contract No. 28660
was cancelled conformably with the terms of the contract
because of non-payment of arrearages. MMPCI stated that
61. MANILA MEMORIAL PARK CEMETERY, INC., Baluyot was not an agent but an independent contractor, and
vs. LINSANGAN (G.R. No. 151319 November 22, as such was not authorized to represent MMPCI or to use its
2004) name except as to the extent expressly stated in the Agency
Manager Agreement.
FACTS:
ISSUE: Whether or not a contract of agency exists
Florencia Baluyot ofered Atty. Pedro L. Linsangan a lot between Baluyot and MMPCI?
called Garden State at the Holy Cross Memorial Park owned
by petitioner (MMPCI). According to Baluyot, a former RULING:
owner of a memorial lot under Contract No. 25012 was no
longer interested in acquiring the lot and had opted to sell NO. The acts of an agent beyond the scope of his
his rights subject to reimbursement of the amounts he authority do not bind the principal, unless he ratifies them,
already paid. The contract was for P95,000.00. Baluyot expressly or impliedly. Only the principal can ratify; the agent
reassured Atty. Linsangan that once reimbursement is made cannot ratify his own unauthorized acts. Moreover, the
principal must have knowledge of the acts he is to ratify. No Kue Cuison is a sole proprietorship engaged in the
ratification can be implied in the instant case. purchase and sale of newsprint, bond paper and scrap.
Atty. Linsangan failed to show that MMPCI had Valiant Investment Associates delivered various kinds of
knowledge of the arrangement. As far as MMPCI is paper products to a certain Tan. The deliveries were made by
concerned, the contract price was P132,250.00, as stated in Valiant pursuant to orders allegedly placed by Tiac who was
the Ofer to Purchase signed by Atty. Linsangan and MMPCI's then employed in the Binondo ofice of petitioner. Upon
authorized oficer. Likewise, this Court does not find favor in
delivery, Tan paid for the merchandise by issuing several
the Court of Appeals' findings that "the authority of
checks payable to cash at the specific request of Tiac. In
defendant Baluyot may not have been expressly conferred
upon her; however, the same may have been derived turn, Tiac issued nine (9) postdated checks to Valiant as
impliedly by habit or custom which may have been an payment for the paper products. Unfortunately, sad checks
accepted practice in their company in a long period of time." were later dishonored by the drawee bank.
A perusal of the records of the case fails to show any

indication that there was such a habit or custom in MMPCI
that allows its agents to enter into agreements for lower Thereafter, Valiant made several demands upon
prices of its interment spaces, nor to assume a portion of the petitioner to pay for the merchandise in question, claiming
purchase price of the interment spaces sold at such lower that Tiac was duly authorized by petitioner as the manager of
price. No evidence was ever presented to this efect. his Binondo ofice, to enter into the questioned transactions
with Valiant and Tan. Petitioner denied any involvement in
the transaction entered into by Tiac and refused to pay
Valiant.
62. CUISON vs. CA (G.R. No. 88539 October 26,
1993) Left with no recourse, private respondent filed an
action against petitioner for the collection of sum of money
representing the price of the merchandise. After due hearing,
the trial court dismissed the complaint against petitioner for
FACTS: lack of merit. On appeal, however, the decision of the trial
court was modified, but was in efect reversed by the CA. CA
ordered petitioner to pay Valiant with the sum plus interest,
AF and costs.
ISSUE: Whether or not Tiac possessed the required The above-quoted article is intended to protect the
authority from petitioner sufficient to hold the latter rights of innocent persons. In such a situation, both the
liable for the disputed transaction? principal and the agent may be considered as joint
tortfeasors whose liability is joint and solidary.
It is evident from the records that by his own acts and

RULING: admission, petitioner held out Tiac to the public as the
manager of his store in Binondo. More particularly, petitioner
explicitly introduced to Villanueva, Valiant’s manager, as his
(petitioner’s) branch manager as testified to by Villanueva.
YES. As to the merits of the case, it is a well- Secondly, Tan, who has been doing business with petitioner
established rule that one who clothes another with apparent for quite a while, also testified that she knew Tiac to be the
authority as his agent and holds him out to the public as such manager of the Binondo branch. Even petitioner admitted his
cannot be permitted to deny the authority of such person to close relationship with Tiu Huy Tiac when he said that they
act as his agent, to the prejudice of innocent third parties are “like brothers” There was thus no reason for anybody
dealing with such person in good faith and in the honest especially those transacting business with petitioner to even
belief that he is what he appears to be.It matters not whether doubt the authority of Tiac as his manager in the Binondo
the representations are intentional or merely negligent so branch.
long as innocent, third persons relied upon such
representations in good faith and for value. Tiac, therefore, by petitioner’s own representations and
manifestations, became an agent of petitioner by estoppel,
an admission or representation is rendered conclusive upon
the person making it, and cannot be denied or disproved as
Article 1911 of the Civil Code provides:“Even when the against the person relying thereon (Article 1431, Civil Code
agent has exceeded his authority, the principal is solidarily of the Philippines). A party cannot be allowed to go back on
liable with the agent if the former allowed the latter to act as his own acts and representations to the prejudice of the other
though he had full powers.” party who, in good faith, relied upon them. Taken in this
light,.petitioner is liable for the transaction entered into by
Tiac on his behalf. Thus, even when the agent has exceeded
his authority, the principal is solidarily liable with the agent if
the former allowed the latter to fact as though he had full agent of the petitioner. Under the contract Keewas allowed to
powers (Article 1911 Civil Code), as in the case at bar. take possession of the property even before full payment of
the price.
Finally, although it may appear that Tiac defrauded his
principal (petitioner) in not turning over the proceeds of the CTTEI through an employee, Zenaida Octaviano
transaction to the latter, such fact cannot in any way relieve accompanied Kee’s wife Donabelle to inspect Lot No. 8.
nor exonerate petitioner of his liability to private respondent. Octaviano however mistakenly pointed towards Lot 9. Hence
spouses Kee had their residence, an auto repair shop, a store
For it is an equitable maxim that as between two innocent
and other improvements constructed on the wrong lot. Upon
parties, the one who made it possible for the wrong to be
discovery of the blunder both Kee and Jardinico tried to
done should be the one to bear the resulting loss. reach an amicable settlement but they failed. Jardinico
demanded that the improvements be removed but as Kee
refused, Jardinico filed acomplaint for ejectment with
damages against Kee at the Municipal Trial Court in Cities
(MTCC) of Bacolod City. Kee filed a third-party complaint
against herein petitioner and CTTEI. The MTCC found that
the error was attributable to CTTEI also since at present the
63. PLEASANTVILLE DEVELOPMENT contract withKee has rescinded for Kee’s failure to pay
CORPORATION VS. installments. Kee no longer had any right over the subject
property and must pay rentals for its use.
CA(G.R. No. 79688 February 1, 1996)
FACTS: The Regional Trial Court (RTC) of Bacolod City ruled
that petitioner and CTTEI were not at fault or were not
Edith Robillo purchased from Pleasantville negligent. It argued that Kee was a builder in bad faith. Even
Development Corporation, herein petitioner a parcel of land if assuming that he was in good faith, he was no longer so
at Pleasantville Subdivision, Bacolod City. The property was and must pay rentals from the time that he was given notice
designated as Lot 9, Phase II. In 1975, herein respondent to vacate the lot. The Court of Appeals ruled that Kee was a
Eldred Jardinico bought the said subject lot from the former builder in good faith as he was unaware of the mix-up when
purchaser. Eldred later discovered that the property he he constructed the improvements. It was in fact due to the
purchased had improvements introduced therein by negligence and wrongful delivery of CTTEI which included its
respondent Wilson Kee. Kee on the other hand bought on principal the herein petitioner. It further ruled that the award
installments Lot 8 of the same subdivision from C.T. Torres of rental was without basis. Pending the resolution of the
Enterprises, Inc. (CTTEI) which is the exclusive real estate case at the Court of Appeals Jardinico and Kee entered into a
deed of sale, wherein Lot 9 was sold to Kee. In the said deed See case number 61
a provision stating that regardless of the outcome of the
decision, such shall not be pursued by the parties and shall
be considered dismissed and without efect. The appellate
court was not informed of this deal. 65. Filipinas Life Assurance Co. (Now Ayala Life
Assurance, Inc.) v Clemente Pedroso, Teresita
Pedroso and Jennifer Palacio, G.R. No. 159489,
ISSUE: Whether or not CTTEI is liable for the acts of its
February 04, 2008
agent for the damage caused to the third party?
FACTS:
RULING:
Teresita Pedroso is a policyholder of a 20-year
The principal is responsible for the acts of the agent,
endowment life insurance issued by Filipinas LifeAssurance
done within the scope of his authority, and should bear the
Co. Pedroso claims Renato Valle was her insurance agent
damage caused to third persons. On the other hand, the
since 1972 and Valle collected her monthly premiums. In the
agent who exceeds his authority is personally liable for the
first week of January 1977, Valle told her that the Filipinas
damages. In the present case, CTTEI was acting within its
Life EscoltaOfice was holding a promotional investment
authority as the sole real estate representative of
program for policyholders. It was ofering 8% prepaid
Pleasantville when it made the delivery to Kee. In acting
interest a month for certain amounts deposited on a monthly
within its scope of authority, it was, however, negligent. It is
basis. Enticed, she initially invested and issued a post-dated
this negligence that is the basis of Pleasantville’s liability, as
check for P10, 000. In return, Valle issued Pedroso his
principal of CTTEI, per Articles 1909 and 1910 of the Civil
personal check forP800 for the 8% prepaid interest and
Code.
a Filipinas Life Agent receipt.
Pleasantville’s liability lies in the negligence of its
agent CTTEI. For such negligence, Pleasantville’s should be Pedroso called the Escolta ofice and talked to
held liable for damages. The extent and/or amount of Francisco Alcantara, the administrative assistant, who
damages to be awarded is a factual issue which should be referred her to the branch manager,
determined after evidence is adduced. However, there is no Angel Apetrior. Pedroso inquired about the promotional
showing that such evidence was actually presented in the investment and Apetrior confirmed that there was such a
trial court; hence no damages could be awarded. promotion. She was even told she couldpush through with
the check she issued. From the records, the check, with the
64. MANILA MEMORIAL PARK CEMETERY, INC., endorsement of Alcantara at the back, was deposited in the
vs. LINSANGAN (G.R. No. 151319 November 22, account of Filipinas Life with the Commercial Bank and Trust
2004) Company, Escolta Branch.
Relying on the representations made by Filipinas Life’s exercisedue diligence in removing all doubts and in
duly authorized representatives Apetrior andAlcantara, as confirming the validity of the representations made byValle.
well as having known agent Valle for quite some time,
Pedroso waited for the maturity of her initial Filipinas Life, as the principal, is liable for obligations
investment. A month after, her investment of P10,000 contracted by its agent Valle. By the contract of agency, a
was returned to her after shemade a written request for its person binds himself to render some service or to do
refund. To collect the amount, Pedroso personally went to the something in representation or onbehalf of another, with the
Escoltabranch where Alcantara gave her the P10,000 in cash. consent or authority of the latter. The general rule is that the
After a second investment, she made 7 to 8more investments principal isresponsible for the acts of its agent done within
in varying amounts, totaling P37,000 but at a lower rate of the scope of its authority, and
5% prepaid interest a month. Upon maturity of shouldbearthedamage caused to third persons. When the age
Pedroso’s subsequent investments, Valle would take back nt exceeds his authority, the agent becomespersonally liable
from Pedroso thecorresponding agent’s receipt he issued to for the damage. But even when the agent exceeds
the latter. his authority, the principal is stillsolidarily liable together
with the agent if the principal allowed the agent to act as
Pedroso toldrespondent Jennifer Palacio, also though the agenthad full powers. The acts of an agent
a Filipinas Life insurance policyholder, about theinvestment p beyond the scope of his authority do not bind the
lan. Palacio made a total investment of P49,550 but at only principal,unless the principal ratifies them, expressly or
5% prepaid interest.However, when Pedroso tried to impliedly.
withdraw her investment, Valle did not want to return
some P17,000worth of it. Palacio also tried to withdraw hers, The adoption or confirmation by one person of an
but Filipinas Life, despite demands, refused to returnher act performed on his behalf by anotherwithout authority
money. Even if Valle’s representations were beyond his
ISSUE:WON Filipinas Life is jointly and severally liable authority as a debit/insurance agent, Filipinas Lifethru
with Apetrior and Alcantara on the claim of Pedroso Alcantara and Apetrior expressly and knowingly ratified
and Palacio or WON its agent Renato Valle is solely Valle’s acts. Filipinas Life benefited fromthe investments
liable to Pedroso and Palacio? deposited by Valle in the account of Filipinas Life.
RULING: 66. THE MANILA REMNANT CO., INC vs. THE

HONORABLE COURT OF APPEALS, OSCAR
Yes. While it is true that a person dealing with an agent VENTANILLA, JR. and CARMEN GLORIA DIAZ
is put upon inquiry andmust discover at his own peril the
agent’s authority, in this case, Pedroso and Palacio did FACTS:
installments. A.U. Valencia and Co. sued Manila Remnant to

Petitioner Manila Remnant Co., Inc. is the owns parcels impugn the abrogation of their agency agreement. The court
of land situated in Quezon City and constituting the Capital ordered all lot buyers to deposit their monthly amortizations
Homes Subdivision Nos. I and II. Manila Remnant and A.U. with the court. But A.U. Valencia and Co. wrote the
Valencia & Co. Inc. entered into a contract entitled Ventanillas that it was still authorized by the court to collect
"Confirmation of Land Development and Sales Contract" to the monthly amortizations and requested them to continue
formalize a prior verbal agreement whereby A.U. Valencia remitting their amortizations with the assurance that said
and Co., Inc. was to develop the aforesaid subdivision for a payments would be deposited later in court.
consideration of 15.5% commision. At that time the President
of both A.U. Valencia and Co. Inc. and Manila Remnant Co., Thereafter, the trial court issued an order prohibiting
Inc. was Artemio U. Valencia. Manila Remnant thru A.U. A.U. Valencia and Co. from collecting the monthly
Valencia and Co. executed two "contracts to sell" covering installments. Valencia complied with the court's order of
Lots 1 and 2 of Block 17 in favor of Oscar C. Ventanilla and submitting the list of all his clients but said list excluded the
Carmen Gloria Diaz. Ten days after the signing of the name of the Ventanillas. Manila Remnant caused the
contracts with the Ventanillas, Artemio U. Valencia, without publication in the Times Journal of a notice cancelling the
the knowledge of the Ventanilla couple, sold Lots 1 and 2 of contracts to sell of some lot buyers. To prevent the efective
Block 17 again, to Carlos Crisostomo, one of his sales agents cancellation of their contracts, Artemio Valencia filed a
without any consideration. Artemio Valencia then transmitted complaint for specific performance with damages against
the fictitious Crisostomo contracts to Manila Remnant while Manila Remnant
he kept in his files the contracts to sell in favor of the
Ventanillas. All the amounts paid by the Ventanillas were The Ventanillas, believing that they had already
deposited in Valencia's bank account. Upon orders of Artemio remitted enough money went directly to Manila Remnant and
Valencia, the monthly payments of the Ventanillas were ofered to pay the entire outstanding balance of the purchase
remitted to Manila Remnant as payments of Crisostomo price. Unfortunately, they discovered from Gloria Caballes
for which the former issued receipts in favor of Crisostomo. that their names did not appear in the records of A.U.
Valencia and Co. as lot buyers. Also, Manila Remnant refused
General Manager Karl Landahl, wrote Artemio Valencia the ofer of the Ventanillas to pay for the remainder of the
informing him that Manila Remnant was terminating its contract price. The Ventanillas then commenced an action for
existing collection agreement with his firm on account of the specific performance, annulment of deeds and damages
considerable amount of discrepancies and irregularities. As a against Manila Remnant, A.U. Valencia and Co. and Carlos
consequence, Artemio Valencia was removed as President by Crisostomo.
the Board of Directors of Manila Remnant. Therefore,
Valencia stopped transmitting Ventanilla's monthly The trial court found that Manila Remnant could have
not been dragged into this suit without the fraudulent was chargeable with the knowledge or constructive notice of
manipulations of Valencia. Subsequently, Manila Remnant that fact and not having done anything to correct such an
and A.U. Valencia and Co. elevated the lower court's decision irregularity was deemed to have ratified the same. More in
to the Court of Appeals through separate appeals. On point, we find that by the principle of estoppel, Manila
October 13, 1987, the Appellate Court afirmed in toto the Remnant is deemed to have allowed its agent to act as
decision of the lower court. Reconsideration sought by though it had plenary powers.
petitioner Manila Remnant was denied, hence the instant
petition. Article 1911 of the Civil Code provides: "Even when the
agent has exceeded his authority, the principal
ISSUE: Whether or not petitioner Manila Remnant is solidarily liable with the agent if the former allowed
should be RULING: solidarily liable together with A.U. the latter to act as though he had full powers." In such a
Valencia and Co. and Carlos Crisostomo for the situation, both the principal and the agent may be considered
payment of moral, exemplary damages and attorney's as joint feasors whose liability is joint and solidary (Verzosa
fees in favor of the Ventanillas? vs. Lim, 45 Phil. 416). In essence, therefore, the basis for
Manila Remnant's solidary liability is estoppel which, in turn,
RULING: is rooted in the principal's neglectfulness in failing to
properly supervise and control the afairs of its agent and to
YES. In the case at bar, the Valencia realty firm had adopt the needed measures to prevent further
clearly overstepped the bounds of its authority as agent — misrepresentation. As a consequence, Manila Remnant is
and for that matter, even the law — when it undertook the considered estopped from pleading the truth that it had no
double sale of the disputed lots. Such being the case, the direct hand in the deception employed by its agent. That the
principal, Manila Remnant, would have been in the clear principal might not have had actual knowledge of the agent's
pursuant to Article 1897 of the Civil Code which states that misdeed is of no moment.
"(t)he agent who acts as such is not personally liable to that
party with whom he contracts, unless he expressly binds
himself or exceeds the limits of his authority without giving 67. LITONJUA JR VS ETERNITY CORP, G.R. No.
such party suficient notice of his powers." However, the 144805; June 8, 2006, PONENTE: Callejo, Sr.
unique relationship existing between the principal and the See Section 1 case
agent at the time of the dual sale must be underscored. Bear
in mind that the president then of both firms was Artemio U.
Valencia, the individual directly responsible for the sale 68. MANOTOK BROTHERS, INC. VS. COURT OF AP
scam. Hence, despite the fact that the double sale was PEALS, G.R. No. 94753, April 7, 1993.,Campos Jr., J.
beyond the power of the agent, Manila Remnant as principal See Section 1 case
On February 24, 1993, Hahn received confirmation of

the information from BMW which, in a letter, expressed
dissatisfaction with various aspects of Hahn's business,
mentioning among other things, decline in sales,
deteriorating services, and inadequate showroom and
warehouse facilities, and petitioner's alleged failure to
comply with the standards for an exclusive BMW dealer.
Nonetheless, BMW expressed willingness to continue
69. ALFRED HAHN, vs. COURT OF APPEALS and business relations with Hahn on the basis of a "standard
BAYERISCHE MOTOREN WERKE BMW importer" contract, otherwise, it said, if this was not
AKTIENGESELLSCHAFT (BMW), G.R. No. 113074 acceptable to Hahn,
January 22, 1997 BMW would have no alternative but to terminate Hahn's
exclusive dealership efective June 30, 1993.
FACTS: Hahn protested, claiming that the termination of his
exclusive dealership would be a breach of the Deed of
Alfred Hahn is a Filipino citizen doing business under Assignment. Hahn insisted that as long as the assignment of
the name its trademark and device subsisted, he remained BMW's
and style "Hahn-Manila." On the other hand, BMW is a exclusive dealer in the Philippines because the assignment
nonresident was made in consideration of the exclusive dealership. BMW
foreign corporation existing under the laws of the former terminated Hahn’s exclusive dealership, and suggested
Federal that Hahn and CMC jointly import and distribute BMW cars
Republic of Germany. On March 7, 1967, Hahn executed in in the Philippines. Thus, Hahn filed a complaint for specific
favor of BMW a "Deed of Assignment with Special Power of performance and damages, application for temporary
Attorney". Per the agreement, the parties "continue[d] restraining order and for writs
business relations as has been usual in the past without a of preliminary, mandatory and prohibitory injunction against
formal contract." BUT on February 16, 1993, in a meeting BMW. RTC granted said prayers.
with a BMW representative and the president of Columbia
Motors Corporation BMW CONTENTIONS: BMW moved to dismiss the
(CMC), Jose Alvarez, Hahn was informed that BMW was case, contending that the trial court did not acquire
arranging to grant the exclusive dealership of BMW cars and jurisdiction over it through the service of summons on the
products to CMC, which had expressed interest in acquiring Department of Trade and Industry, because it (BMW) was a
the same. foreign corporation and it was not doing business in the
Philippines. It contended that the execution of the Deed of
Assignment was an isolated transaction; that Hahn was not the invoicing of a vehicle order by BMW. Upon
its agent because the latter undertook to assemble and sell confirmation in writing that the vehicles had been registered
BMW cars and products without the participation of BMW in the Philippines and serviced by him, Hahn received an
and sold other products; and that Hahn was an indentor or additional 3% of the full purchase price. Hahn performed
middleman transacting business in his own name and for his after-sale services, including, warranty services, for which he
own account. Hahn’s contention, BMW was doing business received reimbursement from BMW. This arrangement shows
in the Philippines through him as its agent, as shown by the an agency. An agent receives a commission upon the
fact that BMW invoices and order forms were used to successful conclusion of a sale. On the other hand, a broker
document his transactions; that he gave warranties as earns his pay merely by bringing the buyer and the
exclusive BMW dealer; that BMW oficials periodically seller together, even if no sale is eventually made.
inspected standards of service rendered by him; and that he
was described in service booklets and international
publications of BMW as a "BMW Importer" or "BMW Trading 70. |DOMINION INSURANCE CORPORATION VS.
Company" in the Philippines. CA enjoined the RTC from COURT OF APPEALS| G. R. No. 129919, February
further deciding the case. CA ruling: dismissed the 06, 2002| PARDO, J.:
complaint. FACTS:
On January 25, 1991, Rodolfo S. Guevarra instituted

ISSUE: Whether or not Hahn is an agent of BMW? Civil Case for sum of money against Dominion Insurance
Corporation (DIC). Guevarra sought to recover the sum of
RULING: P156,473.90 which he claimed to have advanced in his
YES, Hahn is an agent of BMW and not a broker. capacity as manager of defendant to satisfy certain claims
Hahn claimed he took orders for BMW cars and filed by DIC’s clients.
transmitted them to BMW. Upon receipt of the orders, BMW In its traverse, DIC denied any liability to Guevarra and
fixed the down payment and pricing charges, notified Hahn asserted a counterclaim for P249,672.53, representing
of the scheduled production month premiums that Guevarra allegedly failed to remit.
for the orders, and reconfirmed the orders by signing and
returning to Hahn the acceptance sheets. Payment was made When the case was called for pre-trial, but only Guevarra
by the buyer directly to BMW. Title to cars purchased passed appeared.
directly to the buyer and Hahn never paid for the purchase
price of BMW cars sold in the Philippines. Hahn was credited Guevarra moved that the DIC be declared in default for its
with a commission equal to 14% of the purchase price upon failure to appear in court despite due notice.
Finding the motion meritorious and considering that the pre- the principal, there must be an actual intention to appoint or
trial conference has been repeatedly postponed on motion of an intention naturally inferrable from his words or actions;
the DIC, the corporation has been declared in default. and on the part of the agent, there must be an intention to
accept the appointment and act on it, and in the absence of
On November 18, 1992, the court a quo rendered judgment: such intent, there is generally no agency.
DIC to pay Guevarra the sum of P156,473.90 representing A perusal of the Special Power of Attorney would show
the total amount advanced by Guevarra in the payment of the that DIC and Guevarra intended to enter into a principal-
claims of DIC’s clients; agent relationship. Despite the word “special” in the title of
the document, the contents reveal that what was constituted
On December 14, 1992, DIC appealed the decision to the
was actually a general agency.
Court of Appeals.
The agency comprises all the business of the principal,
On July 19, 1996, the Court of Appeals promulgated a
but, couched in general terms, it is limited only to acts of
decision afirming that of the trial court.
administration.
A general power permits the agent to do all acts for

ISSUE: which the law does not require a special power.
(1) Whether or not Guevarra acted within his authority Article 1878, Civil Code, enumerates the instances
as agent for DIC, and when a special power of attorney is required. The pertinent
portion that applies to this case provides that: “Article 1878.
(2) Whether Guevarra is entitled to reimbursement of Special powers of attorney are necessary in the
amounts he paid out of his personal money in settling following cases:“(1) To make such payments as are not
the claims of several insured? usually considered as acts of administration; (15) Any other
act of strict dominion.”
HOLDING and RATIO:
Yes, Guevarra acted within his authority as agent for The payment of claims is not an act of administration.
DIC. The settlement of claims is not included among the acts
enumerated in the Special Power of Attorney, neither is it of a
By the contract of agency, a person binds himself to character similar to the acts enumerated therein. A special
render some service or to do something in representation or power of attorney is required before Guevarra could settle
on behalf of another, with the consent or authority of the the insurance claims of the insured.
latter. The basis for agency is representation. On the part of
But Guevarra’s authority to settle claims is embodied in Dominion. This conclusion is in accord with Article 1918,
the Memorandum of Management Agreement dated February Civil Code, which states that:
18, 1987 which enumerates the scope of Guevarra’s duties
and responsibilities as agency manager as follows: “The principal is not liable for the expenses incurred by the
agent in the following cases:“(1) If the agent acted in
“xxx xxx xxx contravention of the principal’s instructions, unless the latter
should wish to avail himself of the benefits derived from the
contract;
“1. You are hereby given authority to settle and dispose of all
motor car claims in the amount of P5,000.00 with prior “xxx xxx xxx”
approval of the Regional Ofice.
However, while the law on agency prohibits respondent
“2. Full authority is given you on TPPI claims settlement. Guevarra from obtaining reimbursement, his right to recover
may still be justified under the general law on obligations and
“xxx xxx xxx” contracts.
In settling the claims mentioned above, respondent Article 1236, second paragraph, Civil Code,
Guevarra’s authority is further limited by the written provides:“Whoever pays for another may demand from the
standard authority to pay, which states that the payment debtor what he has paid, except that if he paid without the
shall come from Guevarra’s revolving fund or collection. knowledge or against the will of the debtor, he can recover
only insofar as the payment has been beneficial to the
The instruction of DIC as the principal could not be any
debtor.”
clearer. Guevarra was authorized to pay the claim of the
insured, but the payment shall come from the revolving fund In this case, when the risk insured against occurred,
or collection in his possession. DIC’s liability as insurer arose. This obligation was
extinguished when Guevarra paid the claims and obtained
Release of Claim Loss and Subrogation Receipts from the
Yes, Guevarra is entitled to reimbursement of insured who were paid.
amounts he paid out of his personal money in settling
Thus, to the extent that the obligation of the DIC has
the claims of several insured.
been extinguished, Guevarra may demand for reimbursement
Having deviated from the instructions of the principal, from his principal. To rule otherwise would result in unjust
the expenses that Guevarra incurred in the settlement of the enrichment of Dominion Insurance Corporation.
claims of the insured may not be reimbursed from petitioner
71. |ALBALADEJO VS. THE PHILIPPINE Refining Co. closed down its factory at Opon and withdrew
REFINING CO., | G.R. No. 20726, December 20, from the copra market.
1923|STREET, J.:
When the contract was originally made, Albaladejo
apparently had only one commercial establishment, i. e., that
FACTS: at Legaspi; but the large requirements of the Visayan
Refining Co. for copra appeared so far to justify the extension
Albaladejo y Cia., S. en C, instituted an action to
of the plaintif's business that during the course of the next
recover a sum of money from the Philippine Refining Co.
two or three years it established some twenty agencies, or
(RPC), as successor to the Visayan Refining Co., two causes
subagencies, in various ports and places of the Province of
of action being stated in the complaint. Upon hearing the
Albay and neighboring provinces.
cause the trial judge absolved the RPC from the first cause of
action but gave judgment for the Albaladejo to recover the After the Visayan Refining Co. had ceased to buy copra,
sum of P49,626.68, with costs, upon the second cause of of which fact the Albaladejo was duly notified, the supplies of
action. From this judgment the Albaladejo appealed with copra already purchased by the Albaladejo were gradually
respect to the action taken upon the first cause of action, and shipped out and accepted by the Visayan Refining Co., and in
the RPC appealed with respect to the action taken upon the the course of the next eight or ten months the accounts
second cause of action. between the two parties were liquidated. The last account
rendered by the Visayan Refining Co. to the Albaladejo was
Albaladejo y Cia. is a limited partnership, engaged in
for the month of April, 1921, and it showed a balance of P288
the buying and selling of the products of the country,
in favor of the defendant. Under date of June 25, 1921,
especially copra.
Albaladejo addressed a letter from Legaspi to the Philippine
The Visayan Refining Co. is a corporation engaged in Refining Co. (which had now succeeded to the rights and
operating its extensive plant for the manufacture of coconut liabilities of the Visayan Refining Co.), expressing its
oil. approval of said account. In this letter no dissatisfaction was
expressed by the Visayan Refining Co.) as to the state of
On August 28, 1918, the Albaladejo made a contract afairs between the parties; but about six weeks thereafter
with the Visayan Refining Co., that during the year therein the present action was begun.
contemplated, Albaladejo shall buy copra extensively for the
Visayan Refining Co. At the end of said year both parties In the course of the appealed decision the trial judge
found themselves satisfied with the existing arrangement, makes a careful examination of the proof relative to the
and they therefore continued by tacit consent to govern their movements of the fleet of boats maintained by the Visayan
future relations by the same agreement. In this situation Refining Co. for the purpose of collecting copra from the
afairs remained until July 9, 1920, when the Visayan various ports where it was gathered for said company, as well
as of the movements of other boats chartered or hired by said As a second cause of action Albaladejo seeks to recover
company for the same purpose; and upon consideration of all the sum of P110,000, the alleged amount expended by
the facts revealed in evidence, the Trial Court found that the Albaladejo in maintaining and extending its organization as
Visayan Refining Co. had used reasonable promptitude in its above stated. As a basis for the Visayan Refining Co’s liability
eforts to get out the copra from the places where it had been in this respect it is alleged that said organization was
deposited for shipment, notwithstanding occasional maintained and extended at the express request, or
irregularities due at times to the condition of the weather as requirement, of the defendant, in conjunction with repeated
related to transportation by sea and at other times to the assurances that the defendant would soon resume activity as
inability of the Visayan Refining Co. to dispatch boats to the a purchaser of copra.
more remote ports. This finding of the trial judge, that no
negligence of the kind alleged can properly be imputed to the With reference to this cause of action the trial judge
Visayan Refining Co., is in our opinion supported by the found that the Albaladejo, as claimed, had incurred expenses
proof. at the request of the Visayan Refining Co and upon its
representation that the plaintif would be fully compensated
It appears that in the first six months of the year 1919, therefor in the future. Instead, however, of allowing the
the Albaladejo found that its transactions with the Visayan Albaladejo the entire amount claimed, his Honor gave
Refining Co. had not been productive of reasonable profit, a judgment for only thirty per centum of said amount, in view
circumstance which Albaladejo attributed to loss of weight or of the fact that the plaintif's transactions in copra had
shrinkage in. the copra from the time of purchase to its amounted in the past only to about thirty per centum of the
arrival at Opon; and the matter was taken up with the total business transacted by it. Estimated upon this basis, the
oficials of said company, with the result that a bounty amount recognized as constituting a just claim was found to
amounting to P15,610.41 was paid to the plaintif by the be P49,626.68, and for this amount judgment was rendered
Visayan Refining Co. against the defendant.
As already stated purchases of copra by the Visayan ISSUE:Whether or not Visayan Refining Co is liable for
Refining Co were suspended in the month of July, 1920. At Albaladejo’s expenses in maintaining and extending its
this time the Albaladejo had an expensive organization which organization for the purchase of copra in the period
had been built up chiefly, we suppose, with a view to the between July, 1920, to July, 1921?
buying of copra; and this organization was maintained
practically intact for nearly a year after the suspension of HOLDING and RATIO:
purchases by the Visayan Refining Co. Indeed in October,
1920, the Albaladejo added an additional agency at Gubat to No, such liability does not exist.
the twenty or more already in existence.
The contention is advanced that the contract between undoubtedly remained in it until it was delivered by way of
the Albaladejo and the Visayan Refining Co. created the subsequent sale to said company.
relation of principal and agent between the parties, and
reliance is placed upon article 1729 of the Civil Code which For the reasons stated, no liability on the part of the
requires the principal to indemnify the agent for damages Visayan Refining Co is shown upon the Albaladejo 's second
incurred in carrying out the agency. cause of action, and the judgment of the trial court on this
part of the case is erroneous.
Attentive perusal of the contract is, however,
convincing to the efect that the relation between the parties The appealed judgment will therefore be afirmed in so
was not that of principal and agent in so far as relates to the far as it absolves the defendant from the first cause of action
purchase of copra by Albaladejo. It is true that the Visayan and will be reversed in so far as it gives judgment against the
Refining Co. made Albaladejo one of its instruments for the defendant upon the second cause of action; and the
collection of copra; but it is clear that in making its defendant will be completely absolved from the complaint.
purchases from the producers Albaladejo was buying upon its
72. |DE CASTRO VS. COURT OF APPEALS |G.R.
own account and that when it turned over the copra to the
No. 115838, July 18, 2002| CARPIO, J.:
Visayan Refining Co., pursuant to that agreement, a second
sale was efected.
FACTS:
The contract declared that during the continuance of Constante authorized Artigo to act as agent in the sale
the contract, the Visayan Refining Co. would not appoint any of two lots in Cubao, Quezon City. The handwritten
other agent for the purchase of copra in Legaspi; and this authorization letter signed by Constante clearly established a
gives rise indirectly to the inference that the Albaladejo was contract of agency between Constante and Artigo. Thus,
considered its buying agent. But the use of this term in one Artigo sought prospective buyers and found Times Transit
clause of the contract cannot dominate the real nature of the Corporation. Artigo facilitated the negotiations which
agreement as revealed in other clauses, no less than in the eventually led to the sale of the two lots.
caption of the agreement itself. In some of the trade letters
also the various instrumentalities used by the Visayan The Trial Court and Court of Appeals decided that
Refining Co. for the collection of copra are spoken of as Artigo is entitled to the 5% commission on the purchase price
agents. But this designation was evidently used for as provided in the contract of agency; that Artigo’s complaint
convenience; and it is very clear that in its activities as a is not dismissible for failure to implead as indispensable
buyer the Albaladejo was acting upon its own account and parties the other co-owners of the two lots; and that it is not
not as agent, in the legal sense, of the Visayan Refining Co. necessary to implead the other co-owners since the action is
The title to all of the copra purchased by the Albaladejo
exclusively based on a contract of agency between Artigo and However, the rule on mandatory joinder of
Constante. indispensable parties is not applicable to the instant case.
ISSUE: Whether or not co-principals are solidary liable There is no dispute that Constante appointed Artigo in
in a contract of agency? a handwritten note dated January 24, 1984 to sell the
properties of the De Castros for P23 million at a 5 percent
HOLDING and RATIO: commission.
Yes, for solidarity of the obligation, as in the liability of Constante signed the note as owner and as
co-principals in a contract of agency, each obligor may be representative of the other co-owners. Under this note, a
compelled to pay the entire obligation. contract of agency was clearly constituted between
Constante and Artigo. Whether Constante appointed Artigo
The De Castros argue that Artigo’s complaint should as agent, in Constante’s individual or representative capacity,
have been dismissed for failure to implead all the co-owners or both, the De Castros cannot seek the dismissal of the case
of the two lots. The De Castros claim that Artigo always knew for failure to implead the other co-owners as indispensable
that the two lots were co-owned by Constante and Corazon parties. The De Castros admit that the other co-owners are
with their other siblings Jose and Carmela whom Constante solidarily liable under the contract of agency, citing Article
merely represented. The De Castros contend that failure to 1915 of the Civil Code, which reads: Art. 1915. If two or more
implead such indispensable parties is fatal to the complaint persons have appointed an agent for a common transaction
since Artigo, as agent of all the four co-owners, would be or undertaking, they shall be solidarily liable to the agent for
paid with funds co-owned by the four co-owners. all the consequences of the agency.
The De Castros’ contentions are devoid of legal basis. The solidary liability of the four co-owners, however,
militates against the De Castros’ theory that the other co-
An indispensable party is one whose interest will be owners should be impleaded as indispensable parties. A
afected by the court’s action in the litigation, and without noted commentator explained Article 1915 thus–
whom no final determination of the case can be had. The
joinder of indispensable parties is mandatory and courts “The rule in this article applies even when the appointments
cannot proceed without their presence. Whenever it appears were made by the principals in separate acts, provided that
to the court in the course of a proceeding that an they are for the same transaction. The solidarity arises from
indispensable party has not been joined, it is the duty of the the common interest of the principals, and not from the act of
court to stop the trial and order the inclusion of such party. constituting the agency. By virtue of this solidarity, the agent
can recover from any principal the whole compensation and
indemnity owing to him by the others. The parties, however,
may, by express agreement, negate this solidary Narciso Lopez Manzano was a merchant in Atimonan,
responsibility. The solidarity does not disappear by the mere Tayabas, who went to Spain in May, 1910, and died there the
partition efected by the principals after the accomplishment 8th of September, 1913. He gave a general power-of-attorney
of the agency. to his son, Angel L. Manzano on the 9th of February, 1910,
and on the 25th of March a second general power-of-attorney
If the undertaking is one in which several are to his wife, Josefa Samson.
interested, but only some create the agency, only the latter
are solidarily liable, without prejudice to the efects of Manzano was the owner of a half interest in a small
negotiorum gestio with respect to the others. And if the steamer, the San Nicolas, the other half being owned by
power granted includes various transactions some of which Ocejo, Perez & Co., with whom there was a partnership
are common and others are not, only those interested in each agreement to run the steamer for a few years. When this
transaction shall be liable for it.” period expired Ocejo, Perez & Co., refused to continue the
contract and demanded that Manzano buy or sell. As he did
When the law expressly provides for solidarity of the
not want to sell at the price ofered and could not buy, Juan
obligation, as in the liability of co-principals in a contract of
Garcia bought the half interest held by Ocejo, Perez & Co., on
agency, each obligor may be compelled to pay the entire
the 15th of October, 1910. Angel L. Manzano, acting under
obligation. The agent may recover the whole compensation
his power-of-attorney, sold in July, 1911, the other half of the
from any one of the co-principals, as in this case.
boat to the Garcia.
Indeed, Article 1216 of the Civil Code provides that a
On the 23d of July, 1912, Angel L. Manzano, by virtue of
creditor may sue any of the solidary debtors. This article
the power-of-attorney from his father, Narciso L. Manzano,
reads: Art. 1216. The creditor may proceed against any one
executed a contract, by which Juan Garcia agreed to extend a
of the solidary debtors or some or all of them simultaneously.
credit to Narciso L. Manzano in the sum of P12,000, and this
The demand made against one of them shall not be an
credit was used by the house of Manzano. To secure it a
obstacle to those which may subsequently be directed
mortgage was given in the same document on three parcels
against the others, so long as the debt has not been fully
of land in Atimonan, with their improvements.
collected.
The defendants also filed a counter-claim against Juan
SECTION FIVE
Garcia and his wife, Conception Castro, in which they allege
73. |GARCIA VS. DE MANZANO, |G.R. No. 13414, that Narciso L. Manzano was the owner of one-half of the
February 04, 1919|MOIR, J. small steamer San Nicolas and Juan Garcia the owner of the
other half; that Garcia taking advantage of the youth and
inexperience of Angel L. Manzano falsely and maliciously
FACTS: made him believe that he had authority under the power of-
attorney from his father to sell the half interest in the San the half interest in the steamer to the plaintif's son, which
Nicolas, and that he did so. That Angel L. Manzano had no half interest was legally inherited by the plaintifs.
authority to sell the interest in the steamer, but that since the
date of said sale, July, 1912, the plaintif had illegally The defendant's next argument is that the power-of
appropriated all rents and profits of the boat to his own use, attorney, if valid, does not authorize the sale of the half
which amount to P30,000 per year, after paying for all interest in the boat to the plaintif.
repairs, etc., and they ask the court to absolve them from the There is no pretense that the boat was not sold for a
complaint, to declare them the owners of one-half of the fair price, there is no denial that the value was received in
steamer San Nicolas, and to order the plaintifs to render a full, but the defendants allege that the power-of-attorney
detailed account of all the profits received from the San under which Angel L. Manzano acted, even if a valid power,
Nicolas, arid to order one half of the profits paid to the did not authorize the sale of the boat, and they want it back
defendants. with one-half of the profits derived from its use by the
plaintif.
ISSUE:Whether or not that the power of attorney
executed in favor of the wife revoked the one to the The power-of-attorney authorizes the sale of real
son? property, the buying of real property and mortgaging the
same, the borrowing of money and in fact is general and
HOLDING and RATIO: complete.
"The appointment of a new agent for the same business The power does not expressly state that the agent may
produces a revocation of the previous agency from the day on sell the boat, but a power so full and complete and
which notice was given to the former agent, excepting the authorizing the sale of real property; must necessarily carry
provisions of the next preceding article" with it the right to sell a half interest in a small boat. The
record further shows the sale was necessary in order to get
There is no proof in the record that the first agent, the
money or a credit without which it would be impossible to
son, knew of the power-of-attorney to his mother.
continue the business which was being conducted in the
name of Narciso L. Manzano and for his benefit.
It was necessary under the law for the defendants, in
order to establish their counterclaim, to prove that the son The Court consider that the authorization is so
had notice of the second power-of-attorney. They have not complete that it carries with it full authority to sell the one-
done so, and it must be considered that Angel L. Manzano half interest in the boat which was then owned by Narciso L.
was acting under a valid power-of-attorney from his father Manzano.
which had riot been legally revoked on the date of the sale of
74. CMS LOGGING VS. COURT OF APPEALS|G.R. After this discovery, CMS sold and shipped logs valued
No. L-41420, July 10, 1992|NOCON, J. at U.S. $739,321.13 or P2,883,351.90,[4] directly to several
firms in Japan without the aid or intervention of DRACOR.
FACTS:
CMS sued DRACOR for the commission received by
CMS is a forest concessionaire engaged in the logging Shinko and for moral and exemplary damages, while
business, while DRACOR is engaged in the business of DRACOR counterclaimed for its commission, amounting to
exporting and selling logs and lumber. On August 28, 1957, P144,167.59, from the sales made by CMS of logs to
CMS and DRACOR entered into a contract of agency Japanese firms. In its reply, CMS averred as a defense to the
whereby the former appointed the latter as its exclusive counterclaim that DRACOR had retained the sum of
export and sales agent for all logs that the former may P101.167.59 as part of its commission for the sales made by
produce, for a period of five (5) years. CMS. Thus, as its counterclaim to DRACOR's counterclaim,
CMS demanded DRACOR return the amount it unlawfully
About six months prior to the expiration of the retained. DRACOR later filed an amended counterclaim,
agreement, while on a trip to Tokyo, Japan, CMS's president, alleging that the balance of its commission on the sales made
Atty. Carlos Moran Sison, and general manager and legal by CMS was P42,630.82,[6] thus impliedly admitting that it
counsel, Atty. Teodoro R. Dominguez, discovered that retained the amount alleged by CMS.
DRACOR had used Shinko Trading Co., Ltd. (Shinko for
brevity) as agent, representative or liaison oficer in selling In dismissing the complaint, the trial court ruled that
CMS's logs in Japan for which Shinko earned a commission of no evidence was presented to show that Shinko received the
U.S. $1.00 per 1,000 board feet from the buyer of the logs. commission of U.S. $77,264.67 arising from the sale of CMS's
Under this arrangement, Shinko was able to collect a total of logs in Japan, though the trial court stated that "Shinko was
U.S. $77,264.67.[3] able to collect the total amount of $77,264.67 US Dollars
(Exhs. M and M-1)."[7] The counterclaim was likewise
CMS claimed that this commission paid to Shinko was dismissed, as it was shown that DRACOR had waived its
in violation of the agreement and that it (CMS) is entitled to rights to the balance of its commission in a letter dated
this amount as part of the proceeds of the sale of the logs. February 2, 1963 to Atty. Carlos Moran Sison, president of
CMS contended that since DRACOR had been paid the 5% CMS.[8] From said decision, only CMS appealed to the Court
commission under the agreement, it is no longer entitled to of Appeals.
the additional commission paid to Shinko as this tantamount
to DRACOR receiving double compensation for the services it The Court of Appeals, afirmed the dismissal of the
rendered. complaint since "[t]he trial court could not have made a
categorical finding that Shinko collected commissions from
the buyers of Sison's logs in Japan, and could not have held
that Sison is entitled to recover from Dracor the amount constituted an implied revocation of the contract of agency
collected by Shinko as commissions, plaintif-appellant under Article 1924 of the Civil Code, which provides:
having failed to prove by competent evidence its claims."
"Art. 1924 - The agency is revoked if the principal directly
ISSUE:Whether or not the principal may revoke a manages the business entrusted to the agent, dealing directly
contract of agency at will, and may be availed of even if with third persons."
the period fixed in the contract of agency as not yet In New Manila Lumber Company, Inc. vs. Republic of
expired? the Philippines, this Court ruled that the act of a contractor,
who, after executing powers of attorney in favor of another
HOLDING and RATIO: empowering the latter to collect whatever amounts may be
Yes, the principal may revoke a contract of agency at due to him from the Government, and thereafter demanded
will, and may be availed of even prior to the expiration of the and collected from the government the money the collection
contract of agency. of which he entrusted to his attorney-in-fact, constituted
revocation of the agency in favor of the attorney-in-fact.
The Court find merit in CMS's contention that the
appellate court erred in holding that DRACOR was entitled to Since the contract of agency was revoked by CMS
its commission from the sales made by CMS to Japanese when it’s sold its logs to Japanese firms without the
firms. intervention of DRACOR, the latter is no longer entitled to its
commission from the proceeds of such sale and is not entitled
The principal may revoke a contract of agency at will, to retain whatever moneys it may have received as its
and such revocation may be express, or implied,[20] and may commission for said transactions. Neither would DRACOR be
be availed of even if the period fixed in the contract of entitled to collect damages from CMS, since damages are
agency as not yet expired. As the principal has this absolute generally not awarded to the agent for the revocation of the
right to revoke the agency, the agent cannot object thereto; agency, and the case at bar is not one falling under the
neither may he claim damages arising from such revocation, exception mentioned, which is to evade the payment of the
unless it is shown that such was done in order to evade the agent's commission.
payment of agent's commission.
The Court reversed the ruling of the Court of Appeals
In the case at bar, CMS appointed DRACOR as its agent with regard to DRACOR's right to retain the amount of
for the sale of its logs to Japanese firms. Yet, during the P101,536.77 as part of its commission from the sale of logs
existence of the contract of agency, DRACOR admitted that by CMS, and hold that DRACOR has no right to its
CMS sold its logs directly to several Japanese firms. This act commission.
75. CMS LOGGING VS. COURT OF APPEALS|G.R. The first recital of the deed is that Ong Guan Can, Jr.,
No. L-41420, July 10, 1992|NOCON, J. as agent of Ong Guan Can, the proprietor of the commercial
See Case Number 74 firm of Ong Guan Can & Sons, sells the rice-mill and camarin
for P13,000 and gives as his authority the power of attorney
dated the 23d of May, 1928, a copy of this public instrument
76. DY BUNCIO & COMPANY INC. vs ONG GUAN being attached to the deed and recorded with the deed in the
CAN ET. AL./ G.R. NO. L-40681 / 2 October 1934 / ofice of the register of deeds of Capiz. The receipt of the
Justice Hull money acknowledged in the deed was to the agent, and the
deed was signed by the agent in his own name and without
FACTS: any words indicating that he was signing it for the principal.
This is a suit over a rice mill and camarin situated at Leaving aside the irregularities of the deed and coming
Dao, Province of Capiz. Plaintif claims that the property to the power of attorney referred to in the deed and
belongs to its judgment debtor, Ong Guan Can, while registered therewith, it is at once seen that it is not a general
defendants Juan Tong and Pua Giok Eng claim as owner and power of attorney but a limited one and does not give the
lessee of the owner by virtue of a deed dated July 31, 1931, express power to alienate the properties in question. (Article
by Ong Guan Can, Jr. 1713 of the Civil Code.)
After trial the Court of First Instance of Capiz held that Appellants claim that this defect is cured by Exhibit 1,
the deed was invalid and that the property was subject to the which purports to be a general power of attorney given to the
execution which has been levied on said properties by the same agent in 1920.
judgment creditor of the owner. Defendants Juan Tong and
Pua Giok bring this appeal and insist that the deed of the ISSUE:
31st of July, 1931, is valid.
WoN the disputed land is subject to execution and
attachment?
RULING:
Yes. Article 1732 of the Civil Code is silent over the

partial termination of an agency. The making and accepting
of a new power of attorney, whether it enlarges or decreases
the power of the agent under a prior power of attorney, must
be held to supplant and revoke the latter when the two are
inconsistent. If the new appointment with limited powers thereon to intimidate Legaspi and other occupants of the
does not revoke the general power of attorney, the execution area from going near the subject land.
of the second power of attorney would be a mere futile
gesture.lawphi1.net On February 15, 2000, Legaspi executed a special
power of attorney (SPA) appointing his nephew, private
The title of Ong Guan Can not having been divested by respondent Gutierrez, as his attorney-in-fact. Gutierrez was
the so-called deed of July 31, 1931, his properties are subject given the power to deal with the treasure hunting activities
to attachment and execution. on Legaspis land and to file charges against those who may
enter it without the latters authority. Legaspi agreed to give
A special power of attorney giving the son the authority Gutierrez 40% of the treasure that may be found in the land.
to sell the principal’s property is deemed revoked by a
subsequent general power of attorney that does not give such On February 29, 2000, Gutierrez filed a case for
power to the son, and any sale efected thereafter by the son damages and injunction against petitioners for illegally
in the name of the father would be void. entering Legaspis land. He hired the legal services of Atty.
Homobono Adaza. Their contract provided that as legal fees,
77. REPUBLIC vs. EVANGELISTA / G.R. NO. Atty. Adaza shall be entitled to 30% of Legaspis share in
156015 / 11 August 2005 / Justice Puno whatever treasure may be found in the land. In addition,
Gutierrez agreed to pay Atty. Adaza P5,000.00 as appearance
FACTS:
fee per court hearing and defray all expenses for the cost of
The Complaint alleged that private respondent Legaspi the litigation.
is the owner of a land located in Bigte, Norzagaray, Bulacan.
On March 14, 2000, petitioners filed a Motion to
In November 1999, petitioner Calimlim, representing the
Dismiss contending: first, there is no real party-in-interest as
Republic of the Philippines, and as then head of the
the SPA of Gutierrez to bring the suit was already revoked by
Intelligence Service of the Armed Forces of the Philippines
Legaspi on March 7, 2000, as evidenced by a Deed of
and the Presidential Security Group, entered into a
Revocation.
Memorandum of Agreement (MOA) with one Ciriaco Reyes.
The MOA granted Reyes a permit to hunt for treasure in a On March 23, 2000, the trial court granted private
land in Bigte, Norzagaray, Bulacan. Petitioner Diciano signed respondents application for a writ of preliminary injunction
the MOA as a witness. It was further alleged that thereafter, on the ground that he SPA granted to Gutierrez continues to
Reyes, together with petitioners, started, digging, tunneling be valid.
and blasting works on the said land of Legaspi. The
complaint also alleged that petitioner Calimlim assigned On appeal, the Court of Appeals afirmed the decision
about 80 military personnel to guard the area and encamp of the trial court.
Issue: principal but also that of the agent and third persons which
are afected. Hence, the law provides that in such cases, the
WoN the contract of agency between Legaspi and agency cannot be revoked at the sole will of the principal.
Guiterrez has been efectively revocked by Legaspi?
In the case at bar, we agree with the finding of the trial
Ruling: and appellate courts that the agency granted by Legaspi to
Gutierrez is coupled with interest as a bilateral contract
No. petitioners claim that the special power of attorney depends on it. It is clear from the records that Gutierrez was
of Gutierrez to represent Legaspi has already been revoked given by Legaspi, inter alia, the power to manage the
by the latter. Private respondent Gutierrez, however, treasure hunting activities in the subject land; to file any case
contends that the unilateral revocation is invalid as his against anyone who enters the land without authority from
agency is coupled with interest. Legaspi; to engage the services of lawyers to carry out the
The Court agrees with private respondent. agency; and, to dig for any treasure within the land and enter
into agreements relative thereto. It was likewise agreed upon
Art. 1868 of the Civil Code provides that by the that Gutierrez shall be entitled to 40% of whatever treasure
contract of agency, an agent binds himself to render some may be found in the land. Pursuant to this authority and to
service or do something in representation or on behalf of protect Legaspis land from the alleged illegal entry of
another, known as the principal, with the consent or petitioners, agent Gutierrez hired the services of Atty. Adaza
authority of the latter. to prosecute the case for damages and injunction against
petitioners. As payment for legal services, Gutierrez agreed
A contract of agency is generally revocable as it is a to assign to Atty. Adaza 30% of Legaspis share in whatever
personal contract of representation based on trust and treasure may be recovered in the subject land. It is clear that
confidence reposed by the principal on his agent. As the the treasure that may be found in the land is the subject
power of the agent to act depends on the will and license of matter of the agency; that under the SPA, Gutierrez can enter
the principal he represents, the power of the agent ceases into contract for the legal services of Atty. Adaza; and, thus
when the will or permission is withdrawn by the principal. Gutierrez and Atty. Adaza have an interest in the subject
Thus, generally, the agency may be revoked by the principal matter of the agency, i.e., in the treasures that may be found
at will. in the land. This bilateral contract depends on the agency
and thus renders it as one coupled with interest, irrevocable
However, an exception to the revocability of a contract
at the sole will of the principal Legaspi. When an agency is
of agency is when it is coupled with interest, i.e., if a bilateral
constituted as a clause in a bilateral contract, that is, when
contract depends upon the agency. The reason for its
the agency is inserted in another agreement, the agency
irrevocability is because the agency becomes part of another
ceases to be revocable at the pleasure of the principal as the
obligation or agreement. It is not solely the rights of the
agency shall now follow the condition of the bilateral anyhow losing, the Tourist World Service considered closing
agreement. Consequently, the Deed of Revocation executed down its ofice. This was firmed up by two resolutions of the
by Legaspi has no efect. The authority of Gutierrez to file board of directors of Tourist World Service, Inc. dated Dec. 2,
and continue with the prosecution of the case at bar is 1961 (Exhibits 12 and 13), the first abolishing the ofice of
unafected. the manager and vice-president of the Tourist World Service,
Inc., Ermita Branch, and the second,authorizing the
corporate secretary to receive the properties of the Tourist
World Service then located at the said branch ofice. It
78. SEVILLA vs. CA / G.R. NO. L- 41182-3 / 16
further appears that on Jan. 3, 1962, the contract with the
April 1988 / Justice Sarmento
appellees for the use of the Branch Ofice premises was
FACTS: terminated and while the efectivity thereof was Jan. 31,
1962, the appellees no longer used it. As a matter of fact
On the strength of a contract (Exhibit A for the appellants used it since Nov. 1961. Because of this, and to
appellant Exhibit 2 for the appellees) entered into on Oct. 19, comply with the mandate of the Tourist World Service, the
1960 by and between Mrs. Segundina Noguera, party of the corporate secretary Gabino Canilao went over to the branch
first part; the Tourist World Service, Inc., represented by Mr. ofice, and, finding the premises locked, and, being unable to
Eliseo Canilao as party of the second part, and hereinafter contact Lina Sevilla, he padlocked the premises on June 4,
referred to as appellants, the Tourist World Service, Inc. 1962 to protect the interests of the Tourist World Service.
leased the premises belonging to the party of the first part at When neither the appellant Lina Sevilla nor any of her
Mabini St., Manila for the former-s use as a branch ofice. In employees could enter the locked premises, a complaint wall
the said contract the party of the third part held herself filed by the herein appellants against the appellees with a
solidarily liable with the party of the part for the prompt prayer for the issuance of mandatory preliminary injunction.
payment of the monthly rental agreed on. When the branch Both appellees answered with counterclaims. For apparent
ofice was opened, the same was run by the herein appellant lack of interest of the parties therein, the trial court ordered
Una 0. Sevilla payable to Tourist World Service Inc. by any the dismissal of the case without prejudice.
airline for any fare brought in on the eforts of Mrs. Lina
Sevilla, 4% was to go to Lina Sevilla and 3% was to be The appellee Segundina Noguera sought
withheld by the Tourist World Service, Inc. reconsideration of the order dismissing her counterclaim
which the court a quo, in an order dated June 8, 1963,
On or about November 24, 1961 (Exhibit 16) the granted permitting her to present evidence in support of her
Tourist World Service, Inc. appears to have been informed counterclaim.
that Lina Sevilla was connected with a rival firm, the
Philippine Travel Bureau, and, since the branch ofice was In this appeal, appealant Lina Sevilla claims that a joint
bussiness venture was entered into by and between her and
appellee TWS with ofices at the Ermita branch ofice and convinced, considering the circumstances and from the
that she was not an employee of the TWS to the end that her respondent Court's recital of facts, that the ties had
relationship with TWS was one of a joint business venture. contemplated a principal agent relationship, rather than a
joint managament or a partnership.
The trial court held for the private respondent on the
premise that the private respondent, Tourist World Service, But unlike simple grants of a power of attorney, the
Inc., being the true lessee, it was within its prerogative to agency that we hereby declare to be compatible with the
terminate the lease and padlock the premises. It likewise intent of the parties, cannot be revoked at will. The reason is
found the petitioner, Lina Sevilla, to be a mere employee of that it is one coupled with an interest, the agency having
said Tourist World Service, Inc. and as such, she was bound been created for mutual interest, of the agent and the
by the acts of her employer. The respondent Court of Appeal principal. It appears that Lina Sevilla is a bona fide travel
rendered an afirmance. agent herself, and as such, she had acquired an interest in
the business entrusted to her. Moreover, she had assumed a
ISSUE: personal obligation for the operation thereof, holding herself
solidarily liable for the payment of rentals. She continued the
WoN the private respondent has the prerogative to
business, using her own name, after Tourist World had
terminate the lease and padlock the premisses since Lina
stopped further operations. Her interest, obviously, is not to
Sevilla is a mere employee of the private respondent and was
the commissions she earned as a result of her business
bound by the acts of her employer?
transactions, but one that extends to the very subject matter
Ruling: of the power of management delegated to her. It is an agency
that, as we said, cannot be revoked at the pleasure of the
No. It is the Court's considered opinion, that when the principal. Accordingly, the revocation complained of should
petitioner, Lina Sevilla, agreed to (wo)man the private entitle the petitioner, Lina Sevilla, to damages.
respondent, Tourist World Service, Inc.'s Ermita ofice, she
must have done so pursuant to a contract of agency. It is the 79. VALENZUELA vs CA / G.R. NO. 83122 / 19
essence of this contract that the agent renders services "in October 1990
representation or on behalf of another. In the case at bar, FACTS:
Sevilla solicited airline fares, but she did so for and on behalf
of her principal, Tourist World Service, Inc. As compensation, Petitioner Arturo P. Valenzuela (Valenzuela for short) is
she received 4% of the proceeds in the concept of a General Agent of private respondent Philippine American
commissions. And as we said, Sevilla herself based on her General Insurance Company, Inc. (Philamgen for short) since
letter of November 28, 1961, pre-assumed her principal's 1965. As such, he was authorized to solicit and sell in behalf
authority as owner of the business undertaking. We are of Philamgen all kinds of non-life insurance, and in
consideration of services rendered was entitled to receive the Robert E. Parnell took drastic action against Valenzuela.
full agent's commission of 32.5% from Philamgen under the They: (a) reversed the commission due him by not crediting
scheduled commission rates (Exhibits "A" and "1"). From in his account the commission earned from the Delta Motors,
1973 to 1975, Valenzuela solicited marine insurance from one Inc. insurance (Exhibit "J" and "2"); (b) placed agency
of his clients, the Delta Motors, Inc. (Division of Electronics transactions on a cash and carry basis; (c) threatened the
Airconditioning and Refrigeration) in the amount of P4.4 cancellation of policies issued by his agency (Exhibits "H" to
Million from which he was entitled to a commission of 32% "H-2"); and (d) started to leak out news that Valenzuela has a
(Exhibit "B"). However, Valenzuela did not receive his full substantial account with Philamgen. All of these acts resulted
commission which amounted to P1.6 Million from the P4.4 in the decline of his business as insurance agent (Exhibits
Million insurance coverage of the Delta Motors. During the "N", "O", "K" and "K-8"). Then on December 27, 1978,
period 1976 to 1978, premium payments amounting to Philamgen terminated the General Agency Agreement of
P1,946,886.00 were paid directly to Philamgen and Valenzuela (Exhibit "J", pp. 1-3, Decision Trial Court dated
Valenzuela's commission to which he is entitled amounted to June 23, 1986, Civil Case No. 121126, Annex I, Petition).
P632,737.00.
The petitioners sought relief by filing the complaint
In 1977, Philamgen started to become interested in and against the private respondents in the court a quo (Complaint
expressed its intent to share in the commission due of January 24, 1979, Annex "F" Petition). After due
Valenzuela (Exhibits "III" and "III-1") on a fifty-fifty basis proceedings, the trial court found:
(Exhibit "C"). Valenzuela refused (Exhibit "D").
xxx xxx xxx
On February 8, 1978 Philamgen and its President,
Bienvenido M. Aragon insisted on the sharing of the Defendants tried to justify the termination of plaintif
commission with Valenzuela (Exhibit E). This was followed by Arturo P. Valenzuela as one of defendant PHILAMGEN's
another sharing proposal dated June 1, 1978. On June General Agent by making it appear that plaintif Arturo P.
16,1978, Valenzuela firmly reiterated his objection to the Valenzuela has a substantial account with defendant
proposals of respondents stating that: "It is with great PHILAMGEN particularly Delta Motors, Inc.'s Account,
reluctance that I have to decline upon request to signify my thereby prejudicing defendant PHILAMGEN's interest
conformity to your alternative proposal regarding the (Exhibits 6,"11","11- "12- A"and"13-A").
payment of the commission due me. However, I have no Defendants also invoked the provisions of the Civil
choice for to do otherwise would be violative of the Agency Code of the Philippines (Article 1868) and the provisions of
Agreement executed between our goodselves." (Exhibit B-1) the General Agency Agreement as their basis for terminating
Because of the refusal of Valenzuela, Philamgen and its plaintif Arturo P. Valenzuela as one of their General Agents.
oficers, namely: Bienvenido Aragon, Carlos Catolico and
In its questioned decision the Court of Appeals persuasion of the prospective clients to buy insurance
observed that: policies. Normally, agents would encounter much
embarrassment, dificulties, and oftentimes frustrations in
In any event the principal's power to revoke an agency the solicitation and procurement of the insurance policies. To
at will is so pervasive, that the Supreme Court has sell policies, an agent exerts great efort, patience,
consistently held that termination may be efected even if the perseverance, ingenuity, tact, imagination, time and money.
principal acts in bad faith, subject only to the principal's In the case of Valenzuela, he was able to build up an Agency
liability for damages. from scratch in 1965 to a highly productive enterprise with
gross billings of about Two Million Five Hundred Thousand
The lower court, however, thought the termination of
Pesos (P2,500,000.00) premiums per annum. The records
Valenzuela as General Agent improper because the record
sustain the finding that the private respondent started to
will show the principal cause of the termination of the
covet a share of the insurance business that Valenzuela had
plaintif as General Agent of defendant Philamgen was his
built up, developed and nurtured to profitability through over
refusal to share his Delta commission.
thirteen (13) years of patient work and perseverance. When
ISSUE: Valenzuela refused to share his commission in the Delta
account, the boom suddenly fell on him.
WoN Philamgen and/or its oficers can be held liable for
damages due to the termination of the General Agency The private respondents by the simple expedient of
Agreement it entered into with the petitioners? terminating the General Agency Agreement appropriated the
entire insurance business of Valenzuela. With the termination
RULING: of the General Agency Agreement, Valenzuela would no
longer be entitled to commission on the renewal of insurance
Yes. After a painstaking review of the entire records of policies of clients sourced from his agency. Worse, despite
the case and the findings of facts of both the court a quo and the termination of the agency, Philamgen continued to hold
respondent appellate court, the court is constrained to afirm Valenzuela jointly and severally liable with the insured for
the trial court's findings and rule for the petitioners. unpaid premiums. Under these circumstances, it is clear that
Valenzuela had an interest in the continuation of the agency
It is also evident from the records that the agency
when it was unceremoniously terminated not only because of
involving petitioner and private respondent is one "coupled
the commissions he should continue to receive from the
with an interest," and, therefore, should not be freely
insurance business he has solicited and procured but also for
revocable at the unilateral will of the latter.
the fact that by the very acts of the respondents, he was
In the insurance business in the Philippines, the most made liable to Philamgen in the event the insured fail to pay
dificult and frustrating period is the solicitation and the premiums due. They are estopped by their own positive
averments and claims for damages. Therefore, the proceeds of sugar trading operations of PHILEXCHANGE
respondents cannot state that the agency relationship shall be used to pay its liabilities with PNB.
between Valenzuela and Philamgen is not coupled with
interest. "There may be cases in which an agent has been Similarly, in February 1975, PD 659 was issued,
induced to assume a responsibility or incur a liability, in constituting PHILEXCHANGE and/or PNB as the exclusive
reliance upon the continuance of the authority under such sugar trading agencies of the government for buying sugar
circumstances that, if the authority be withdrawn, the agent from planters or millers and selling or exporting them. PNB
will be exposed to personal loss or liability". then extended loans to PHILEXCHANGE for the latter's sugar
trading operations.
Furthermore, there is an exception to the principle that
an agency is revocable at will and that is when the agency At first, PHILEXCHANGE religiously paid its
has been given not only for the interest of the principal but obligations to PNB by depositing the proceeds of the sale of
for the interest of third persons or for the mutual interest of sugar with the bank. Subsequently, however, with the fall of
the principal and the agent. In these cases, it is evident that sugar prices in the world market, PHILEXCHANGE defaulted
the agency ceases to be freely revocable by the sole will of in the payments of its loans amounting to P206, 070,172.57.
the principal. In July 1977, the National Sugar Trading Corporation
80. |National Sugar Trading vs. PNB |G.R. No. (NASUTRA) replaced PHILEXCHANGE as the marketing
151218|January 28, 2003| Justice Ynares- agent of PHILSUCOM. Accordingly, PHILEXCHANGE sold
Santiago| and turned over all sugar quedans to NASUTRA. However, no
physical inventory of the sugar covered by the quedans was
FACTS: made.
Sometime in February 1974, then President Ferdinand To finance its sugar trading operations, NASUTRA
E. Marcos issued Presidential Decree No. 388 constituting applied for and was granted a P408 Million Revolving Credit
the Philippine Sugar Commission (PHILSUCOM), as the sole Line by PNB in 1981. Every time NASUTRA availed of the
buying and selling agent of sugar on the quedan permit level. credit line, its Executive Vice-President, Jose Unson,
executed a promissory note in favor of PNB.
In November of the same year, PD 579 was issued,
authorizing the Philippine Exchange Company, Inc. Despite the liquidation scheme,
(PHILEXCHANGE), a wholly owned subsidiary of Philippine NASUTRA/PHILSUCOM still failed to remit the interest
National Bank (PNB) to serve as the marketing agent of payments to PNB and its branches, which interests amounted
PHILSUCOM. Pursuant to PD 579, PHILEXCHANGE's to P65, 412,245.84 in 1986. As a result thereof, then
purchases of sugar shall be financed by PNB and the President Marcos issued PD 2005 dissolving NASUTRA
efective January 31, 1986. NASUTRA's records of its sugar Dissatisfied, and believing that PNB failed to provide
trading operations, however, were destroyed during the Edsa them with said documents, NASUTRA and SRA filed a
Revolution in February 1986. petition for arbitration with the Department of Justice which
held that the act of PNB was valid and legal. Both parties
On May 28, 1986, then President Corazon C. Aquino appealed before the Ofice of the President which afirmed
issued Executive Order (EO) No. 18 creating the Sugar the decision of the Secretary of Justice.
Regulatory Administration (SRA) and abolishing
PHILSUCOM. All the assets and records of PHILSUCOM Thereafter, petitioners filed a petition for review with
including its beneficial interests over the assets of NASUTRA the Court of Appeals, alleging, inter alia, that the Ofice of
were transferred to SRA. the President erred when it relied solely on the documents
submitted by PNB to determine the amount of the subject
On January 24, 1989, before the completion of the remittances and in not ordering PNB to render an accounting
three-year winding up period, NASUTRA established a of the said remittances; in declaring as valid and legal PNB's
trusteeship to liquidate and settle its accounts. This application of the subject remittances to alleged NASUTRA's
notwithstanding, NASUTRA still defaulted in the payment of accounts with PNB and PHILEXCHANGE without
its loans amounting to P389, 246,324.60 (principal and NASUTRA's knowledge, consent and authority. Consequently,
accrued interest) to PNB. the appellate court dismissed the petition. Hence, this
petition.
In the meantime, PNB received remittances from
foreign banks totaling US$36,564,558.90 or the equivalent of ISSUE: Whether or not the agency NASUTRA/SRA and
P696, 281,405.09 representing the proceeds of NASUTRA's PNB can be cancelled and revoked at will by any
sugar exports. Said remittances were then applied by PNB to parties?
the unpaid accounts of NASUTRA/PHILSUCOM with PNB
and PHILEXCHANGE. HOLDING and RATIO:
Subsequently, PNB applied the P19, 688,763.29 to NO, the agency being coupled with interest is an
PHILSUCOM's account with PHILEXCHANGE which in turn exception of revocability of a contract of agency.
was applied to PHILEXCHANGE's account with PNB.
The relationship between NASUTRA/SRA and PNB
when the former constituted the latter as its attorney-in-fact
Accordingly, NASUTRA requested PNB to furnish it
is not a simple agency. NASUTRA/SRA has assigned and
with the necessary documents and/or explanation concerning
practically surrendered its rights in favor of PNB for a
the disposition/application, accounting and restitution of the
substantial consideration.
remittances in question.
To reiterate, NASUTRA/SRA executed promissory notes Attorney efective at the end of business hours of July 17,
in favor of PNB every time it availed of the credit line. The 2000.
agency established between the parties is one coupled with
interest which cannot be revoked or cancelled at will by any On July 18, 2000, the Philippine Veterans Bank (PVB)
of the parties. approved the loan application of petitioner Ching in the
amount of P25 million for a term of five years subject to
Obligations arising from contract have the force of law certain conditions. On July 31, 2000, petitioner Ching thru a
between the contracting parties and should be complied with letterinformed respondents of the approval of the loan.
in good faith. Sometime in the first week of August 2000, petitioners
learned about the revocation of the SPA. Consequently,
Verily, parties may freely stipulate their duties and petitioners sent a letterto respondents demanding that the
obligations which perforce would be binding on them. Not latter comply with the agreement by annulling the revocation
being repugnant to any legal proscription, the agreement of the SPA.
entered into by NASUTRA/SRA and PNB must be respected
and have the force of law between them. On September 8, 2000, petitioners filed before the
Regional Trial Court (RTC) of Quezon City a Complaint for
Therefore, the act of PNB in ofsetting the subject Annulment of Revocation of SPA, Enforcement of SPA and/or
remittances to alleged accounts of NASUTRA with PNB and interest in the properties covered by said SPA and Damages
PHILEX is legal and valid. against respondents. Petitioners later amended the
Complaint to include an alternative prayer to have them
81. |Ching vs. Bantolo |G.R. No. 177086| declared as the owners of one-half of the properties covered
December 5, 2012| Justice Del Castillo| by the SPA.
FACTS: Petitioners alleged that the SPA is irrevocable because
it is a contract of agency coupled with interest.According to
Respondents Felix M. Bantolo (Bantolo), Antonio O. them, they agreed to defray the costs or expenses involved in
Adriano and Eulogio Sta. Cruz, Jr. are owners of several processing the loan because respondents promised that they
parcels of land situated in Tagaytay City. On April 3, 2000, would have an equal share in the proceeds of the loan or the
respondents executed in favor of petitioners Albert Ching subject properties.
(Ching) and Romeo J. Bautista a Special Power of Attorney
(SPA] authorizing petitioners to obtain a loan using In their Answer, respondents contended that
respondents’ properties as collateral. Without notice to petitioners have no cause of action.Respondents alleged that
petitioners, respondents executed a Revocation of Power of they executed the SPA in favor of petitioners because of their
assurance that they would be able to get a loan in the amount ISSUE:Whether or not the revocation of the SPA by the
of P50 million and that P30 million would be given to principal is done in bad faith, thus, petitioner is
respondents within a month’s time. When the one-month entitled to the award of exemplary damages?
period expired, respondents complained to petitioner Ching
and asked him to advance the amount of P500, 000.00. HOLDING and RATIO:
Petitioner Ching acceded to their request on the condition
that they hand over to him the original titles for NO.There is no question that the SPA executed by
safekeeping.Respondents, in turn, asked petitioner Ching to respondents in favor of petitioners is a contract of agency
give them P1 million in exchange for the titles. Petitioner coupled with interest. This is because their bilateral contract
Ching agreed and so they gave him the titles. However, he depends upon the agency. Hence, it “cannot be revoked at
never gave them the money. They asked him to return the the sole will of the principal.”
titles, but he refused. Later, they were informed that the loan
Article 2229of the Civil Code provides that exemplary
was approved in the amount of P25 million and that their
damages may be imposed “by way of example or correction
share would be P6 million.Since it was not the amount
for the public good, in addition to the moral, temperate,
agreed upon, respondents revoked the SPA and demanded
liquidated or compensatory damages.” They are, however,
the return of the titles.
not recoverable as a matter of right. They are awarded only if
The RTC in its decision upheld the validity of the SPA the guilty party acted in a wanton, fraudulent, reckless,
and declared its revocation illegal and unjust. But although oppressive or malevolent manner.
the SPA was declared valid, the RTC held that it could no
In this case, we agree with the CA that although the
longer be enforced because the circumstances present at the
revocation was done in bad faith, respondents did not act in a
time of its execution have changed. The RTC also held
wanton, fraudulent, reckless, oppressive or malevolent
petitioners owners of one-half of the subject properties.
manner. They revoked the SPA because they were not
On appeal, the appellate court declared the revocation satisfied with the amount of the loan approved. Thus,
of the SPA null and void. It further ruled that petitioners are petitioners are not entitled to exemplary damages.
not entitled to one-half of the subject properties and that
82. |Coleongco vs. Claparols|G.R. No. L-18616|
they are not entitled to reimbursement for their failure to
March 31, 1964| Justice J.B.L. Reyes|
show that the receipts presented in evidence were incurred
in relation to the loan application.Hence, this petition.
FACTS:
Since 1951, defendant-appellee, Eduardo L. Claparols, Two days after the execution of the basic agreement,
operated a factory for the manufacture of nails in Talisay, Claparols executed in favor of Coleongco, at the latter's
Occidental Negros, under the style of "Claparols Steel & Nail behest a special power of attorney to open and negotiate
Plant". The raw material, nail wire, was imported from letters of credit, to sign contracts, bills of lading, invoices,
foreign sources, especially from Belgium; and Claparols had and papers covering transactions; to represent appellee and
a regular dollar allocation therefor, granted by the Import the nail factory; and to accept payments and cash advances
Control Commission and the Central Bank. The marketing of from dealers and distributors. Thereafter, Coleongco also
the nails was handled by the "ABCD Commercial" of Bacolod, became the assistant manager of the factory, and took over
which was owned by a Chinaman named Kho To its business transactions, while Claparols devoted most of his
time to the nail manufacture processes.
The Chinaman introduced his compadre, appellant
Vicente Coleongco, to the appellee, recommending said Claparols was disagreeably surprised by service of an
appellant to be the financier in the stead of Kho To. Claparols alias writ of execution to enforce a judgment obtained
agreed, a contract was perfected between them whereby against him by the Philippine National Bank, despite the fact
Coleongco undertook to finance and put up the funds that on the preceding September he had submitted an
required for the importation of the nail wire, which Claparols amortization plan to settle the account. Worried and alarmed,
bound himself to convert into nails at his plant. Claparols immediately left for Manila to confer with the bank
authorities. Upon arrival, he learned to his dismay that the
It was agreed that Coleongco would have the exclusive execution had been procured because of derogatory
distribution of the product, and the "absolute care in the information against appellee that had reached the bank from
marketing of these nails and the promotion of sales all over his associate, appellant Coleongco.
the Philippines", except the Davao Agency; that Coleongco
would "share the control of all the cash" from sales or Incensed at what he regarded as disloyalty of his
deposited in banks; that he would have a representative in attorney-in-fact, he consulted lawyers. The upshot was that
the management; that all contracts and transactions should appellee revoked the power of attorney, and informed
be jointly approved by both parties; that proper books would Coleongco thereof, by registered mail, demanding a full
be kept and annual accounts rendered; and that profits and accounting at the same time. Coleongco, as could be
losses would be shared "on a 50-50 basis". The contract was expected, protested these acts of Claparols, but the latter
renewed from one year to year until 1958, and Coleongco's insisted, and dismissed Coelongco as assistant manager of
share subsequently increased by 5% of the net profit of the the plant and asked C. Miller & Company, auditors, to go
factory. over the books and records of the business with a view to
adjusting the accounts of the associates.
These last steps were taken in view of the revelation interest of the principal, as happened in this case. It is not
made by his machinery superintendent, Romulo Agsam, that open to serious doubt that the irrevocability of the power of
in the course of the preceding New Year celebrations attorney may not be used to shield the perpetration of acts in
Coleongco had drawn Agsam aside and proposed that the bad faith, breach of confidence, or betrayal of trust, by the
latter should pour acid on the machinery to paralyze the agent for that would amount to holding that a power coupled
factory. with an interest authorizes the agent to commit frauds
against the principal.
As the parties could not amicably settle their accounts,
Coleongco filed a suit against Claparols charging breach of Our new Civil Code, in Article 1172, expressly provides
contract, asking for accounting, and praying for P528, 762.19 the contrary in prescribing that responsibility arising from
as damages, and attorney's fees, to which Claparols fraud is demandable in all obligations, and that any waiver of
answered, denying the charge, and counter-claiming for the action for future fraud is void. It is also on this principle that
rescission of the agreement with Coleongco for P561, 387.99 the Civil Code, in its Article 1800, declares that the powers of
by way of damages. a partner, appointed as manager, in the articles of co-
partnership are irrevocable without just or lawful cause; and
The trial court dismissed the action for damages. On an agent with power coupled with an interest cannot stand
appeal, Coleongco contended that the power of attorney was on better ground than such a partner in so far as
made to protect his interest under the financing agreement irrevocability of the power is concerned.
and was one coupled with an interest that Claparols had no
legal power to revoke. That the appellee Coleongco acted in bad faith towards
his principal Claparols is, on the record, unquestionable. His
ISSUE:Whether or not the power of attorney coupled letters to the Philippine National Bank attempting to
with an interest can be revoked? undermine the credit of the principal and to acquire the
factory of the latter, without the principal's knowledge;
HOLDING and RATIO: Coleongco's letter to his cousin, Kho To, instructing the latter
to reduce to one-half the usual monthly advances to
YES. Claparols on account of nail sales in order to squeeze said
appellee and compel him to extend the contract entitling
It must not be forgotten that a power of attorney can
Coleongco to share in the profits of the nail factory on better
be made irrevocable by contract only in the sense that the
terms, and ultimately "own his factory", a plan carried out by
principal may not recall it at his pleasure; but coupled with
Kho's letter, reducing the advances to Claparols; Coleongco's
interest or not, the authority certainly can be revoked for a
attempt to, have Romulo Agsam pour acid on the machinery;
just cause, such as when the attorney-in-fact betrays the
his illegal diversion of the profits of the factory to his own
benefit; and the surreptitious disposition of the Yates band This sum was apparently, converted to his own use by said
resaw machine in favor of his cousin's Hong Shing Lumber agent.
Yard, made while Claparols was in Baguio in July and August
of 1956, are plain acts of deliberate sabotage by the agent It appears, however, that prior to the sending of said
that fully justified the revocation of the power of attorney by tobacco the defendant had severed his relations with
Claparols and his demand for an accounting from his agent Collantes and that the latter was no longer acting as his
Coleongco. factor. This fact was not known to the plaintifs; and it is
conceded in the case that no notice of any kind was given by
83. |Rallos vs. Yangco|G.R. No. L-6906| the defendant to the plaintifs of the termination of the
September 27, 1911| Justice Moreland| relations between the defendant and his agent. The
defendant refused to pay the said sum upon demand of the
FACTS: plaintifs, placing such refusal upon the ground that at the
time the said tobacco was received and sold by Collantes he
Defendant Yangco sent a letter to Plaintif Rallos on was acting personally and not as agent of the defendant. This
November 27, 1907 ofering a consignment agreement. In action was brought to recover said sum.
such letter, Yangco made known that he conferred upon
Florentino Collantes a public power of attorney notarized by ISSUE:Whether or not the revocation of power of
Mr.Perfecto Salas Rodriguez dated November 16, 1907 to attorney is valid against clients whom the agent is
perform in his name and on his behalf all acts necessary for specified to deal with?
carrying out his plans.
HOLDING and RATIO:
Accepting this invitation, the plaintifs proceeded to do
a considerable business with the defendant through the said NO.
Collantes, as his factor, sending to him as agent for the
defendant a good deal of produce to be sold on commission. Having advertised the fact that Collantes was his agent
Later, and in the month of February, 1909, the plaintifs sent and having given them a special invitation to deal with such
to the said Collantes, as agent for the defendant, 218 bundles agent, it was the duty of the defendant on the termination of
of tobacco in the leaf to be sold on commission, as had been the relationship of principal and agent to give due and timely
other produce previously. The said Collantes received said notice thereof to the plaintifs. Failing to do so, he is
tobacco and sold it for the sum of P1,744. The charges for responsible to them for whatever goods may have been in
such sale were P206.96. leaving in the hands of said good faith and without negligence sent to the agent without
Collantes the sum of P1,537.08 belonging to the plaintifs. knowledge, actual or constructive, of the termination of such
relationship.
Where principal had expressly revoked the agent’s The last three loans were without the knowledge of
power to handle business, but such revocation was not herein petitioner and all the proceeds therefrom were used
conveyed to a long standing client to whom the agent had by Parangan for his own benefit. These encumbrances were
been specifically endorsed in the past by the principal, the duly annotated on the certificate of title. On April 16, 1973,
revocation was not deemed efective as to such client and the petitioner signed a Deed of Pacto de Retro Sale in favor of
contracts entered into by the agent in the name of the Parangan which was superseded by the Deed of Definite
principal after the revocation would still be valid and binding Sale dated May 4, 1979 which petitioner signed upon
against his principal. Parangan's representation that the same merely evidences
the loans extended by him unto the former.
84. |Lustan vs. CA et.al.|G.R. No. 111924|
January 27, 1997| Justice Francisco| For fear that her property might be prejudiced by the
continued borrowing of Parangan, petitioner demanded the
FACTS: return of her certificate of title. Instead of complying with the
request, Parangan asserted his rights over the property
Petitioner Adoracion Lustan leased a parcel of land in which allegedly had become his by virtue of the
Iloilo, which he owns, to Nicolas Parangan for a term of ten aforementioned Deed of Definite Sale. Under said document,
(10) years and an annual rent of One Thousand (P1,000.00) petitioner conveyed the subject property and all the
Pesos. improvements thereon unto Parangan absolutely for and in
During the period of lease, Parangan was regularly consideration of the sum of Seventy Five Thousand
extending loans in small amounts to petitioner to defray her (P75,000.00) Pesos.
daily expenses and to finance her daughter's education. On Aggrieved, petitioner filed an action for cancellation of
July 29, 1970, petitioner executed a Special Power of liens, quieting of title, recovery of possession and damages
Attorney in favor of Parangan to secure an agricultural loan against Parangan and PNB in the Regional Trial Court of
from private respondent Philippine National Bank (PNB) with Iloilo City.
the aforesaid lot as collateral.
The trial court rendered its judgment in favor of the
On February 18, 1972, a second Special Power of petitioner. On appeal, the appellate court reversed the trial
Attorney was executed by petitioner, by virtue of which, court’s decision. Hence, this petition.
Parangan was able to secure four (4) additional loans, to wit:
the sums of P24,000.00, P38,000.00, P38,600.00 ISSUE:Whether or not the revocation of agent’s general
and P25,000.00 on December 15, 1975, September 6, 1976, powers effective against the mortgagee bank?
July 2, 1979 and June 2, 1980, respectively.
HOLDING and RATIO:
NO. As far as third persons are concerned, an act is deemed

to have been performed within the scope of the agent's
Third persons who are not parties to a loan may secure authority if such is within the terms of the power of attorney
the latter by pledging or mortgaging their own property. So as written even if the agent has in fact exceeded the limits of
long as valid consent was given, the fact that the loans were his authority according to the understanding between the
solely for the benefit of Parangan would not invalidate the principal and the agent.
mortgage with respect to petitioner's property. In consenting
thereto, even granting that petitioner may not be assuming The Special Power of Attorney particularly provides
personal liability for the debt, her property shall nevertheless that the same is good not only for the principal loan but also
secure and respond for the performance of the principal for subsequent commercial, industrial, agricultural loan or
obligation. It is admitted that petitioner is the owner of the credit accommodation that the attorney-in-fact may obtain
parcel of land mortgaged to PNB on five (5) occasions by and until the power of attorney is revoked in a public
virtue of the Special Powers of Attorney executed by instrument and a copy of which is furnished to PNB. Even
petitioner in favor of Parangan. Petitioner argues that the last when the agent has exceeded his authority, the principal is
three mortgages were void for lack of authority. She totally solidarily liable with the agent if the former allowed the
failed to consider that said Special Powers of Attorney are a latter to act as though he had full powers (Article 1911, Civil
continuing one and absent a valid revocation duly furnished Code).
to the mortgagee, the same continues to have force and
efect as against third persons who had no knowledge of such The mortgage directly and immediately subjects the
lack of authority. Article 1921 of the Civil Code provides: property upon which it is imposed. The property of third
persons which has been expressly mortgaged to guarantee
"Art. 1921. If the agency has been entrusted for the purpose an obligation to which the said persons are foreign, is
of contracting with specified persons, its revocation shall not directly and jointly liable for the fulfilment thereof; it is
prejudice the latter if they were not given notice thereof." therefore subject to execution and sale for the purpose of
paying the amount of the debt for which it is liable.
The Special Power of Attorney executed by petitioner in
favor of Parangan duly authorized the latter to represent and However, petitioner has an unquestionable right to
act on behalf of the former. Having done so, petitioner demand proportional indemnification from Parangan with
clothed Parangan with authority to deal with PNB on her respect to the sum paid to PNB from the proceeds of the sale
behalf and in the absence of any proof that the bank had of her propertyin case the same is sold to satisfy the unpaid
knowledge that the last three loans were without the express debts.
authority of petitioner, it cannot be prejudiced thereby.
85. AMPARO G. PEREZ ET AL. VS. THE

PHILIPPINE NATIONAL BANK G.R. No. L-21813, RULING:
July 30, 1966
No. The SC overruled the decision in Pasno v. Ravina
FACTS: as it virtually wipes out the third alternative given to
Vicente Perez, mortgaged Lot No. 286-E of the creditor-mortgagee, that is to rely on the mortgage
Kabankalan Cadastre to the appellant Philippine National exclusively, foreclosing the same at any time before it is
Bank-Bacolod Branch. Said mortgaged was made to secure barred by prescription, without a claim for any deficiency.
payment of a loan plus interests, payable in yearly Such is not in accord with reason and law, as said option
instalments. Subsequently, Vicente died intestate, survived presents undoubted advantages for the estate of the
by his widow and children and leaving behind outstanding mortgagor.
balance on the mortgaged indebtedness. The widow of Perez
instituted Special Proceedings with the CIF for the The argument that foreclosure by the bank under its
settlement of the estate where the widow was appointed as power of sale is barred upon the death of the debtor, because
Administratix and notice to the creditors was duly published, agency is distinguished by the death of the principal neglects
however, PNB did not file a claim. to take into account that the power to foreclose is not an
In 1956, the bank pursuant to the authority granted it ordinary agency that contemplates exclusively the
in the mortgaged deed, caused the mortgaged properties to representation of the principal by the agent is primarily an
be extra-judicially foreclosed, however, the widow and the authority conferred upon the mortgagee for the latter’s own
heirs were not notified. Hence, they instituted a case against protection. It is an ancillary stipulation supported by the
PNB seeking to annul the extrajudicial foreclosure sale and same causa or consideration for the mortgage and forms an
the transfer of the Certificate of Title as well as to recover essential and inseparable part of that bilateral agreement.
damages, claiming that the bank had acted illegally and in The SC also upheld the validity of PNB’s foreclosure,
bad faith. Using the decision set in Pasno V. Ravina, the Trial however, as it did not suficient notice to the heirs of Vicente
Court (TC) declared null and void the extrajudicial Perez, the court permitted them to redeem the foreclosed
foreclosure sale, the cancellation of the Certificate of Title of property within the reasonable time.
Perez and ordered payment of damages to the plaintifs.
86. TERRADO ET AL. V. COURT OF APPEALS ET
The bank appealed directly to the Supreme Court. AL., G.R. No. L-58794; August 24, 1984
ISSUE: Whether or not the extra-judicial foreclosure by FACTS:

PNB under its power of sale is extinguished by the
death of Perez?
In connection with Resolution No. 35, enacting

Ordinance No. 8, private respondent Geruncio Lacuesta was Having reached the Supreme Court, the Highest
designated, appointed and constituted by the Sangggunian Tribunal traced the origin of the protracted legal controversy
Bayan of Bayambang, Pangasinan as Manager-Administrator in the enactment and implementation of Municipal Ordinance
of the Bayambang Fishery and Hunting Park and Municipal No. 8.
Watershed for a period of 25 years. However, as the
ordinance was disapproved by the Secretary of Agriculture ISSUES:
and Natural Resources, Lacuesta was directed to refrain and    Whether or not Municipal Ordinance No.8 is
desist from acting as Administrator-Manager, which the valid?
latter refused. Meanwhile, spouses Lydia Terrado and Martin    Whether or not the death of private respondent
Del Rosario and Domingo Fernandez were awarded the right Lacuesta extinguished the Management and
for four years over the Mangabul Fisheries. Lacuesta Administration Contract entered into in relation
obtained a restraining order prohibiting the execution of the to Municipal Ordinance No. 8?
contract of lease awarded to winning bidders by the
municipality. Upon appeal, the CA set aside the order of RULING:
Judge Saroca thereby upholding the possession of Lydia No, the ordinance is invalid for it is clearly against the
Terrado and Martin Rosario. provisions of the law for it granted exclusive fishery
privileges to the private respondent for a period exceeding
In the meantime, the Municipality of Bayambang, five (5) years without benefit of public bidding. Under the
represented by the Mayor and the Sangguniang Bayan filed Fisheries Act, the Municipality may not delegate to a private
with the CIF of Pangasinan against Geruncio Lacuesta for individual as Manager-Administrator. The said ordinance and
annulment of the contract entered into between the the contract of management executed in accordance
Municipality and Lacuesta under Ordinance No.8. The TC therewith were null and void ab initio.
ruled in favour of the plaintifs. Lacuesta, went straight to
the SC who denied his motion for reconsideration. Lacuesta, From the foregoing, perforce the contract of
then filed another case, this time with the CIF of Pangasinan, management and administration between the Municipality
Dagupan City, a Motion to Dissolve the Injunction and to and Lacuesta is likewise null and void. It also follows that
order plaintifs to vacate and turn all the fisheries to the complaint filed by Lacuesta to enjoin the Municipal
defendants. Said motion was granted by Judge Carandang- Council of Bayambang from leasing the Mangabul Fisheries
Villalon on the ground that the plaintifs have recognized and upon public bidding is without basis and merit for Lacuesta
confirmed the validity of the resolution and the contract. has no right or interest under the void ordinance and
During the course of litigation, private respondent Geruncio contract.
Lacuesta died.
Ruling on the death of Lacuesta, the Supreme Court

held that his death is an irreversible fact that throws an Celso Avelino, plaintifs’ predecessor in interest,
entirely new bearing on the legal controversy at hand. For purchased the land in question consisting of two adjoining
essentially, the contract of management and administration parcels while he was still a bachelor, through a escritura de
between the Municipality and Lacuesta is one of agency venta. He then caused the transfer of the tax declarations of
whereby a person binds himself to render some service or to the two parcels in his name, had the area surveyed and built
do something in representation or on behalf of another, with therein a residential house. He subsequently took in his
the consent or authority of the latter. In the case, Lacuesta parents, Rosendo Avelino and Juana Ricaforte, and his sister,
bound himself as Manager-Administrator of the Bayambang Aurea, who took care of the couple, to live there until their
Fishing and Hunting Park and Municipal Watershed to render deaths. He later became a Judge of the Court of First
service or perform duties and responsibilities in Instance in Cebu, resulting to his sister, Aurea, taking care of
representation or on behalf of the Municipality of the premises in question. In spite of the transfer, Celso paid
Bayambang, with the consent or authority of the latter the corresponding realty taxes, keeping intact receipts which
pursuant to Ordinace No. 8. Under Article 1919 of the New he comes to get or Aurea would go to Cebu to give it to him.
Civil Code, agency is extinguished by the death of the agent. Without the knowledge and consent of Celso, the defendant,
His rights and obligations arising from the contract are not constructed a small beauty shop in the questioned property.
transmissible to his heirs.
Meanwhile, the plaintifs, who are the purchasers of
As correctly ruled by the CA, the resulting diference in the other properties of Celso Avelino, were also ofered to
the beginning inventory of the stocks of the hardware store buy the questioned property. After visiting the premises and
(before management was transferred to respondent spouses talked with the defendant of said intended sale by Celso, they
Ramos) and the second inventory thereof (after management paid the purchased price and subsequently a deed of sale
was returned to petitioner), by itself, is not conclusive proof was executed between the parties. However, despite due
that the said amount was used to pay the purchase price of notice from Celso, defendants refused to vacate the
the Bonifacio property, such as would make it the property of premises. Plaintifs demanded, orally and in writing to
petitioner held in trust by respondent spouses Ramos. vacate the premises, the defendant also refused. As they
were to undertake urgent repairs on the dilapidated
SECTION SIX residential building, the defendant had already occupied the
same, taking in paying boarders and claiming already
87. MORALES V. COURT OF APPEALS, G.R. No. ownership of the premises in question, hence, plaintifs filed
117228, June 19, 1997 an action for recovery of land, praying therein that they be
declared owners of the questioned property, defendants be
FACTS: ordered to remove whatever improvements constructed
thereon, vacate the premises and pay for damages and other the situation is governed by or falls within the exception
fees. under the third sentence of Article 1448. The SC held that
on this basis alone, the case for petitioners must fall. The
Both the trial court and appellate courts ruled in favour preponderance of evidence, as found by the trial court and
of plaintifs. Undaunted with said decision, defendants filed afirmed by the CA, established positive acts of Celso
a petition alleging errors committed by both courts. The High indicating, without doubt, that he considered the property
Court, nevertheless, granted the defendants’ motion for purchased from the Mendiolas as his exclusive property. He
reconsideration. had its tax declaration transferred in his name, caused the
property surveyed for him by the Bureau of Lands, and
ISSUES: faithfully pad the realty taxes. Finally, he sold the property to
   Whether or not an implied trust is created private respondents.
between Celso Avelino and his parents in relation
to the questioned property?
   Whether or not the disputed property is a trust
property? 88. PEALBER V. RAMOS ET AL., G. R. No.
178645, January 30, 2009
RULING:
FACTS:
NO. Article 1448 of the Civil Code states that, “There
is an implied trust when property is sold, and the legal estate Petitioner Lina Pealber, for many years, owned and
is granted to one party but the price is paid by another for operated a hardware store prior to 1984 in a building she
the purpose of having the beneficial interest of the property. owned along Bonifacio St., Tugueguerao, Cagayan (Bonifacio
The former is the trustee, while the latter is the beneficiary. Property). However, the lot on which the building is erected
However, if the person to whom the title is conveyed is a is owned by Maria Mendoza (Mendoza), from whom
child, legitimate or illegitimate, of the one paying the price of petitioner rented the same. On March 22, 1982, petitioner
the sale, no trust is implied by law, it being disputably allowed Spouses Ramos, the wife being her daughter, to take
presumed that there is a gift in favour of the child.” over the management of the business with the verbal
agreement that that the accumulated earnings of the store
In the case, it is petitioners’ contention that Rosendo would be used to purchase the lot which Mendoza was selling
Avelino owned the money for the purchase of the property that time. Petitioner further alleged that based on the same
and that he requested Celso, his son, to buy the property agreement, the Ramos spouses having the better credit
allegedly in trust for the former. The fact remains, however, standing, they would be made to appear as vendees so that
that title to the property was conveyed to Celso. Accordingly, the title to be issued in their names could be used to secure
a loan with which to build a bigger building and expand the

hardware business. Consequently respondent spouses RULING:
Ramos allegedly entered in to a contract of sale with
Mendoza over the Bonifacio property as a result of which a No. The Supreme Court held that petitioner’s
Transfer Certtificate Title over said lot was issued in their allegations as to the existence of an express trust agreement
names. with respondent spouses Ramos, supported by her own
testimonies and her son, do not hold water.
In 1984, spouses Ramos returned the management of
the business to petitioner. She later found out that the Express trusts are those which are created by the
Bonifacio Property was already fully paid. Petitioner direct and positive acts of the parties, by some writing or
demanded from the spouses the reconveyance of the title of deed, or will or by words either expressly or impliedly
the property, however the latter refused. Petitioner asserted evincing an intention to create a trust. No particular words
that respondent spouses Ramos were mere trustees, thus, are required for the creation of an express trust, it being
they were under moral and legal obligation to reconvey title suficient that a trust is clearly intended. However, in
over the said property. She then filed a petition with the RTC accordance with Article 1443 of the Civil Code, when an
of Cagayan with the prayer that she be declared the owner of express trust concerns an immovable property or any interest
the Bonifacio property. Respondents countered that they therein, the same may not be proved by parol or oral
acquired the questioned property after redeeming it from evidence.
DBP to avoid foreclosure of the mortgage debt of the
petitioner. Allegedly, after said incident, petitioner executed Though the SC held that Article 1443 takes the nature
a Deed of Donation of the questioned property on their favor. of a statue of frauds, spouses Ramos did indeed fail to
interpose their objections regarding the admissibility of the
The trial court held that petitioner is the owner of the testimonies when the same were ofered to prove the alleged
Bonifacio property and ordered the respondents to reconvey verbal trust agreement between and petitioner.
the same to her. On appeal to the Court of Appeals, said Consequently, the testimonies were admissible in evidence.
decision was reversed and the lower court’s decision was Nevertheless, while admissibility of evidence is an afair of
assailed on the ground that the alleged express trust created logic and law, determined as it is by relevance and
between the parties involving the questioned property could competence, the weight to be given to such evidence, once
not be proven by parol evidence. Thus, petitioner elevated admitted, still depends on judicial intervention. The court
her case to the Supreme Court. holds that the same carried little weight in proving the
alleged verbal trust agreement between petitioner and
ISSUE:Whether or not an express trust was created by respondent spouses.
the parties over the Bonifacio property?
SECTION SEVEN Hence, this appeal.
89. VICTORIA JULIO V. EMILIANO DALANDAN ISSUE: Whether or not the statement (salaysay)
and MARIA DALANDAN, G.R. No. L-19012, entered into between Clemente and Victoriana
October 30, 1967 constitute a trust?
FACTS: RULING:
On September 8, 1950, Clemente Dalandan, deceased Yes. The contention of the defendants that recognition
father of defendants Emiliano and Maria duly subscribed and of trust may not be proved by evidence allunde is of no
sworn an afidavit which terms indicated that a four-piece of moment. They likewise argue that by the express terms of
Riceland in Las Pinas, Rizal belonging to Victoriana Dalandan Article 11443 of the Civil Code, “no express trust concerning
was posted as security for an obligation which Clemente an immovable or any interest therein may be proved by parol
assumed but, however, Victoriana failed to fulfill. As said evidence.” Such argument overlooks the fact the no oral
land was foreclosed, the pertinent provisions of the afidavit evidence is necessary . The expressed trust imposed upon
stated that the riceland is owned by Victoriana and she used defendants by their predecessor appears in the document
the same to secure an obligation; that Victoriana held herself itself. For while it is true that said deed did not in definitive
liable to Victoria Julio, her sole heir, for the foreclosure of words institute defendants as trustees, a duty is therein
said land; that herein defendants may not be forced to give imposed them – when the proper time comes – to turn over
up the harvest of the said farm nor the return of said land be the fruits and possession of the property to Victoria Julio.
demanded immediately. Victoriana attested to the truth of all Not that this view is without statutory support. Article 1444
the statements in the document. of the Civil Code states that: “No particular words are
required for the creation of an express trust, it being
After the death of Clemente, plaintif Victoria requested suficient that a trust is clearly intended.” In reality the
from defendants, Clemente’s legitimate and surviving heirs development of the trust as a method of disposition of
to deliver the same to her. Defendants argued that based on property, so jurisprudence teaches, “seems to its freedom
the agreement, neither delivery of the land nor the fruits from formal requirements.” This principle perhaps account
thereof could be immediately demanded. The trial court for the provisions in Article 1444 just quoted. For “technical
granted the motion to dismiss filed by defendants on the or particular forms of words or phrases are not essential to
ground of prescription of plaintif’s action; pendency of the manifestation of intention to create a trust or the
another suit between the same parties for the same cause; establishment thereof.Nor would the use of the word “trust”
and release and/or abandonment of the claim set forth in the or “trustee” essential to the constitution of a trust.
plaintif’s complaint. Conversely, the mere fact that the word trust or trustee was
employed would not necessarily prove an intention to create together the parties actually residing in the same barangay
a trust. What is important is whether the trustor manifested for amicable settlement, or in diferent barangays within the
an intention to create the kind of relationship which in law is same city or municipality. Lupon shall have no authority over
known as trust. It is unimportant that the trustor should disputes “involving parties who actually reside in barangays
know that the relationship “which he intends to create is of diferent cities or municipalities,” except where such
called a trust, or whether or not he knows the precise barangays adjoin each other. Torbela siblings and the
characteristics of the relationship which is called a trust.” spouses Rosario do not reside in the same barangay, or in
Here the trust is efective as against defendants and in favor diferent barangays within the same city or municipality, or in
of the beneficiary thereof, plaintif Victoria Julio, who diferent barangays of diferent cities or municipalities but
accepted it in the document itself. are adjoining each other. The Lupon had no jurisdiction over
the dispute and barangay conciliation was not a pre-condition
90. Torbela vs. Spouses Rosario [GR No. 140528, for the filing of the said civil case.
December 7, 2011]
91. CAEZO v ROJAS, G.R. No. 148788 (November 23,
FACTS:
2007)
Petitioner Torbela siblings filed before the RTC of
FACTS:
Urdaneta, Pangasinan a Complaint for recovery of ownership
and possession of a parcel of land in Urdaneta City,
Soledad Canezo filed a complaint for the recovery of
Pangasinan, plus damages, against the spouses Rosario. RTC
real property plus damages against Conception Rojas (2nd wife of
and CA, on appeal, ordered Rosario to reconvey land to
her father). Canezo alleged thatshe bought the said land from
Torbela siblings and to pay damages. Rosario, on appeal to
Crisogono Limpiado although the transaction was not in
SC, avers that Torbela siblings failed to avail of barangay
writing. Then she entrusted it to her father when she and her
conciliation, a pre-requisite to filing above civil case.
husband had to go Mindanao. The father took possession of the said
land and then one day Canezo found out that Rojas was in
ISSUE: Whether or not the case is covered by barangay
possession of the said land and the taxdeclarations were
conciliation requirement?
under his father’s name.
RULING:
Rojas contends that her husband (father of Canezo)
bought the land from the same seller. The father took
No. Sections 2 and 3 of PD No. 1508, which was then
possession and cultivated it. Canezo has knowledge of it
still in efect when the case was instituted, state that the
because it was included in the estate of the father (father died) and
Lupon of each barangay shall have the authority to bring
Canezo did not protest meaning she abandoned herright Resulting trust is presumed always to have been
assuming Canezo’scontentions were true. Canezo is barred contemplated. The intention as to which can be found in the nature
by laches and estoppel. of their transaction although not expressed in a deed or
instrument based on the equitable doctrine that it is more
MTC was in favor of Canezo. Rojas appealed to RTC, valuable consideration than the legal title that determines the
decision was reversed because action has not yet prescribed equitable interest in property. Trustworthy evidence is
because it is a trust. Canezo filed a motion for required in here. Express trust and resulting trust–trustee
reconsideration; RTC reversed again the decision (in favor of cannot acquire by prescription a property entrusted to him
Canezo). Rojas filed a motion to reconsider the decision but denied by unless he repudiates a trust. This is because, in an express
RTC. Rojas then filed a petition for review with CA - reversed trust, the possession of a trustee is not adverse, therefore, he
the decision of RTC(ground is laches and prescription). does not acquire by prescription the property. The burden of
proving the existence of trust is on the party asserting it. In
ISSUEWhether or not there was a trust exist? this case, Canezo failed to provide clear and satisfactorily
proof of its existence. Elements: (1) trustor who executes the
HELD / RATIO: instrument creating the trust; (2) a trustee who is the person
expressly designated to carry out the trust; (3) the trust res
No.The court said, the grant or denial of a motion from consisting of duly identified and definite real property; and
extension of time is addressed to the sound discretion of the court (4) beneficiaries whose identity must be
and there was a reasonable basis for the said extension. clear.Canezo’s only evidence was her self-serving testimony
Trust is a legal relationship between one person having an of the petitioner. Express trust may not be established by
equitable ownership of property and another person owning parol evidence. One exception–when there was a clear intention
the legal title to such property, the equitable ownership of the former of such. However, it cannot be inferred from Canezo’s testimony
entitling him to the performance of certain duties and the attendant facts and circumstances.What they agreed is to
and exercise of certain powers by the latter. Trusts are either give Canezo a share of the copra in land.
express or implied. Express trust is those which are created by the
direct and positive acts of the parties by some writing or deed, or will, 92. PNB v. Aznar, et al. [G.R. 171805 May 30,
or by words evidencing and intention to create a trust. Implied 2011]
trusts are those which, without being expressed, are deducible from
the nature of the transaction as matters of intent or, FACTS:
independently, of the particular intention of the parties, as
being super induced on the transaction by operation of law Rural Insurance and Surety Company, Inc. (RISCO)
basically by reason of equity. It can be either resulting trust ceased operation due to business reverses
or constructive trust.
In plaintifs’ (Anzar et al.) desire to rehabilitate RISCO, they Court of Appeals opined that the monetary contributions
contributed a total amount of P212, 720.00. This was used to made by Aznar, et al. to RISCO can only be characterized as a
purchase 3 parcels of land in Cebu, two (2)in the load secured by a lien on the subjected lots, rather than an
Municipality of Talisay and one (1) in the District of Lahug, expressed trust.
Cebu City. After the purchase of the lots, titles were issued in
the name of RISCO. ISSUE:Whether or not there was a trust contract
between RISCO and Aznar?
The amount contributed by plaintifs constituted as
liens and encumbrances on the properties as annotated in RULING:
the titles of said lots. Such annotation was made pursuant to
theMinutes of the Special Meeting of the Boardof NO.At the outset, the Court agrees with the Court of
Directors of RISCO on March 14, 1961, and a part of it says: Appeals that the agreement contained in the Minutes of the
“And that the respective contributions above-mentioned Special Meeting of the RISCO Board of Directors held on
(Aznar et al.) shall constitute as their lien or interest on the March 14, 1961 was a loan by the therein named
property described above, if and when said property are stockholders to RISCO. Careful perusal of the Minutes relied
titled in the name of RISCO, subject to registration as their upon by plaintifs-appellees in their claim, showed that their
adverse claim in pursuance of the Provision of Land contributions shall constitute as “lien or interest on the
Registration Act, until such time their property.” The term lien as used in the Minutes is defined as
respective contributions are refunded to them completely” "a discharge on property usually for the payment of some
debt or obligation. Hence, from the use of the word "lien" in
Thereafter, various subsequent annotations were made on the Minutes, We find that the money contributed by plaintifs-
the same titles, including theNotice of Attachment and appellees was in the nature of a loan, secured by their liens
Writ of Execution both dated August 3, 1962 in favour and interests duly annotated on the titles. The annotation of
of Philippine National Bank (PNB). As a result, a their lien serves only as collateral and does not in any way
Certificate of Sale was issued in favor of PNB, being the lone vest ownership of property to plaintifs. We are not
and highest bidder of the 3 parcels of land. This prompted persuaded by the contention of Aznar, et al., that the
Aznar et al. to file the instant case seeking the quieting of language of the subject Minutes created an express trust.
their supposed title to the subject properties.
Trial court ruled against PNB on the basis that there was an
express trust created over the subject properties whereby 93. HEIRS OF TRANQUILINO LABISTE v HEIRS OF
RISCO was the trustee and the stockholders, Aznar, et al., JOSE LABISTE
were the beneficiaries. 587 SCRA 417 (May 8, 2009)
When World War II broke out however, Lino’s heirs fled the
DOCTRINE city. Whenthey came back after the war, they found their
If a trust relationship has been created between the parties homes and possessions and therecords in the government
whether expressly or impliedly, prescription does not run ofices burned and destroyed with squatters occupying their
until the said trust is repudiated. entire property.Lino’s heirs subsequently learned that one of the
heirs of Jose filed apetition for reconstitution of title over the Lot on
FACTS: September 17, 1993. So in October 1993 they opposed the said
petition but later on withdrew the same on the basis of a
The case involved a parcel of Friar Land with an area of compromise agreement they entered with the heirs of Jose to
13,308 square meters known at Cebu City which was purchased expedite the reconstitution of title. So on December 14, 1994,
from the Bureau of Lands way back on 1919 by Emilio in his own the Register of Deed issued the reconstituted Title in the
behalf and on behalf of his brothers and sisters who were names of the heirs of Jose. The heirs of Jose however did not
the heirs of Jose. (Collectively known as Heirs of Jose)The honor the compromise agreement. Soon January 13, 1995,
money that was used to purchase the land came from both the heirs of Lino filed a complaint for annulment of title, re-
Emilio and their Uncle Lino so after full payment of the conveyance of property with damages. Jose’s heirs however said that
purchase price but prior to the issuance of the deed of the action of Lino’s heirs had long prescribed or barred by
conveyance by the Bureau of Lands, Emilio executed an laches.
Afidavit in Spanish dated on 1923 afirming that he, as one
of the heirs of Jose and his Uncle Lino then co-owned the lot. ISSUE:
Thereafter or on 1924 the Bureau of Lands executed the a) Whether or not Lino’s heirs had long prescribed or barred
Deed of Conveyance in favor of Emilio and his siblings, or the by laches.
heirs of Jose by virtue of which a TCT was issued by the
Register of Deeds. On 1928, the lot was subdivided by HELD / RATIO:
Deputy Land Surveyor, Engineer Bunag into two (2) equal
parts with an area of 6,664 square meters for Lino and an No. The rules on prescription and the principle of laches
area of 6,664 square meters for Emilio and the other heirs of cannot be applied here because of the existence of a trust
Jose. This was approved by the Director of Lands on 1928.On relationship. b) Trust is the right to the beneficial enjoyment
1939, the heirs of Lino purchased the share of the lot of the of property, the legal title to which is vested in another. It
heirs of Jose as evidenced by the Calig-onan sa Panagpalit may either be express or implied. An express trust is created by
executed by the parties in Visayan dialect. So the heirs of direct and positive acts of the parties, by some writing or deed or
Lino immediately took possession of the entire13, 308 sq.m. lot. will. No particular words are required for the creation of an
express trust it being suficient that a trust is clearly
intended (Article 144, Civil Code). An implied trust comes
into being by operation of law. The Afidavit of Emilio which is the former assigned, transferred, and sold to the latter the
genuine and authentic beyond cavil is in the nature of an express full amount of said judgment against Mindoro Sugar Co.
trust. In said afidavit, Emilio confirmed that Lot1054 bought in his together with all its rights thereto and the latter ofered
name was co-owned by him as one of the heirs of Jose, and satisfactory consideration thereto. The agreement further
his uncle Lino. And by agreement, each of them has been in stipulated that upon signing of the agreement, Phil Trust
possession of half of the property as corroborated by the shall pay Tan Sen the sum of P5000; should the Mindoro
subdivision plan prepared by Engineer Bunag and approved Sugar
by the Bureau of Lands. As such prescription and laches will be sold or its ownership be transferred, an additional
run only if it is shown that: (a) the trustee has performed unequivocal P10,000pesos will be paid to TanSen upon perfection of the
acts of repudiation amounting to an ouster of the beneficiary; sale; in case any other creditor of Mindoro Sugar obtains
(b) such positive acts of repudiation have been made known inthe payment of his credit a greater proportion than the
to the beneficiary, and (c) the evidence thereon is clear price paid to Tan Sen, the Phil Trust shall pay to the latter
and conclusive. whatever sum may be necessary to be proportioned the claim
Jose’s heirs cannot rely on the fact that the Torrens title was of the creditor. However, if the Mindoro Sugar is sold to any
issued intheir names. Trustees who obtain a Torrens title person who does not pay anything to the creditors or pay
over a property held in trust by them for another cannot them equal or less than 70 percent of their claim, or should
repudiate the trust by relying on the registration. Theonly act the creditors obtain from other sources the payment of their
that can be construed as repudiation was when one of Jose’s claim equal to or less than 70 percent, the Phil Trust will only
heirs filed the petition for reconstitution in October 1993. And since pay to Tan Sen the additional sum of P10,000 upon the sale
Lino’s heirs filed theircomplaint in January 1995 their cause of or transfer of the Mindoro Sugar as above stated. The
action has not yet prescribed. properties of Mindoro Sugar were later on sold at public
auction to the Roman Catholic Archbishop of Manila and base
on the agreement plaintif Tan Sen brought suit against
94. TAN SENGUIAN & CO., INC VS. PHILIPPINE defendant Phil Trust for the sum of P10,000.
TRUST COMPANY, G.R. NO. L-38810, November 6,
1933 Issues: (1) Whether or Not the defendant is
personally responsible for the claim of the
FACTS: plaintiff based on the deed of assignment because of
having executed the same in its capacity as trustee of
Plaintif Tan Sen Guan & Co. secured a judgment for a the properties of the Mindoro Sugar.
sum of P21,426 against the Mindoro Sugar Co. of which the
Philippine Trust is the trustee. The plaintif entered into an .
agreement with the defendant Philippine Trust Co. wherein
Held: said land to her father, Crispulo Rojas, who took possession
of, and cultivated the property. She found out in 1980, her
(1) YES, The Phil Trust Company in its individual stepmother, was in possession of the property and was
capacity is responsible for the contract as there was no cultivating the same. She also discovered that the tax
express stipulation that the trust estate and not the trustee declaration over the property was already in the name of
should be held liable on the contract in question. Not only is Crispulo Rojas.
there no express stipulation that the trustee should not be
held responsible but the ‘Wherefore’ clause of the contract The respondent asserted that her husband, Crispulo
states the judgment was expressly assigned in favor of Phil Rojas, who bought the property from Crisgono Limpiado in
Trust Company and not Phil Trust Company, the trustee. It 194, which for the tax declaration named in Crispulo Rojas.
therefore follows that appellant had a right to proceed Her husband possessed and cultivated the property until he
directly against the Phil Trust on its contract and has no died in 1978. The petitioner, as heir, even received her share
claim against either Mindoro Sugar or the trust estate. her share in the produce of the estate. The respondent
Section Seven further contended that the petitioner filed the complaint only
in 1997 means that she had already abandoned her right over
95. Caezo vs. Rojas / G.R. No. 148788538 SCRA the property.
242 / November 23, 2007/ Justice Ynares-Santiago
The MTC rendered a Decision in favour of the
FACTS: petitioner.
The respondent appealed to RTC of Naval. The RTC
The petitioner Soledad Caezo filed a complaint against reversed the decision on the ground that the action had
her father’s second wife, respondent Concepcion Rojas for already prescribed and acquisitive prescription had set in.
the recovery of real property. The subject property is an
unregistered land with an area of 4,169 square meters The petitioner filed a motion for reconsideration, the
situated at Higatangan, Naval, Biliran. Caezo attached to the RTC amended its original decision on the ground that the
complaint o Joint Afidavit executed by Isidro Catandijan and action not yet prescribed considering that the petitioner my
Maximina Caezo attesting to her acquisition of the property. entrusted the property to her father. The ten year
prescription for the recovery of property held in trust would
The petitioner alleged that she bought the parcel of commence to run only from the time the trustee repudiated
land in 1939 from Crisogono Limpiado,although the the trust.
transaction was not reduced into writing. Thereafter, she The respondent filed a motion to reconsider but RTC denied.
immediately took possession of the property. 1948, Soledad She filed a petition for review with the Court of Appeals.
Caezo and her husband left for Mindanao. She entrusted the
Issue:Whether or not there exist a trust relationship relationship. And petitioner sadly failed to discharge that
between the petitioner and Father, Express or implied? burden.
Holding and Ratio Decidendi In light of the disquisitions, we hold that there was no
express trust or resulting trust established between the
A trust is the legal relationship between one person petitioner and her father. Thus, in the absence of a trust
having an equitable ownership of property and another relation, we can only conclude that Crispulos uninterrupted
person owning the legal title to such property, the equitable possession of the subject property for 49 years, coupled with
ownership of the former entitling him to the performance of the performance of acts of ownership, such as payment of
certain duties and the exercise of certain powers by the real estate taxes, ripened into ownership. The statutory
latter. Trusts are either express or implied. Express trusts are period of prescription commences when a person who has
those which are created by the direct and positive acts of the neither title nor good faith, secures a tax declaration in his
parties, by some writing or deed, or will, or by words name and may, therefore, be said to have adversely claimed
evincing an intention to create a trust. Implied trusts are ownership of the lot. While tax declarations and receipts are
those which, without being expressed, are deducible from the not conclusive evidence of ownership and do not prove title
nature of the transaction as matters of intent or, to the land, nevertheless, when coupled with actual
independently, of the particular intention of the parties, as possession, they constitute evidence of great weight and can
being super induced on the on the transaction by operation be the basis of a claim of ownership through prescription.
of law basically by reason of equity. An implied trust may Moreover, Section 41 of Act No. 190 allows adverse
either be a resulting trust or a constructive trust. possession in any character to ripen into ownership after the
lapse of ten years. There could be prescription under the said
As a rule, however, the burden of proving the existence section even in the absence of good faith and just title.
of a trust is on the party asserting its existence, and such
proof must be clear and satisfactorily show the existence of 96. Torbela V. Spouses Rosario/ G. R. No.
the trust and its elements. The presence of the following 140528, 661 SCRA 633/ December 7, 2011/ Justice
elements must be proved: (1) a trustor or settlor who C. J. Corona
executes the instrument creating the trust; (2) a trustee, who
is the person expressly designated to carry out the trust; (3) FACTS:
the trust res, consisting of duly identified and definite real
properties; and (4) the cestio que trust, or beneficiaries The controversy began with a parcel of land, with an
whose identity must be clear. Accordingly, it was incumbent area of 374 square meters located in Urdaneta City,
upon petitioner to prove the existence of the trust Pangasinan (Lot No. 356-A). It was part of larger parcel
which given by Valeriano Semilla to his sister Marta Semilla
wife of Eugenio Torbela. Upon death of of the Spouses basis of the Cancellation and Discharge of Mortgage
Torbela, Lot No 356-A was adjudicated in equal shares executed by Dr. Rosario.
among their children, the Torbela siblings, by virtue of Deed
of Extrajudicial Partition dated December 3, 1962. December 8, 1981, Dr. Rosario and his wife, acquired a
After the partition, the Torbela siblings executed a Deed of third loan in the amount of P1,200,000.00 from Banco
Absolute Quitclaim on December 12, 1964 I which they Filipino Savings and Mortgage Bank. To secure said loan, the
transferred and conveyed the Lot to Dr. Rosario for the spouses Roasario again constituted mortgages three (3) lots.
consideration of P 9.00. However, the Torbela siblings Since the construction of a two-storey commercial building
explained that they only executed the Deed as an still incomplete, the value reduce to P830,064.00 as
accommodation so that Dr. Rosario could have Lot registered maximum loan value.
in his name and used said property to secure a loan from On February 13, 1986, the Torbela sibling filed a Complaint
DBP, the proceeds of which would be used for construction of for recovery of ownership and possession of Lot No 356-A,
improvements. plus damages before the Regional Trial Court of Urdanete,
Pangasinan against the Spouses Rosario.
On May 16, 1967, Cornelio T. Tosino executed an
Afidavit of Adverse Claim, on behalf of the Torbela siblings. The spouses Rosario afterwards failed to pay their loan
The very next day the Adverse claim was annotated on TCT from Banco Filipino. Due to failure to pay, Banco Filipino
No. 52721 respectively. extrajudicially foreclosed the mortgage Lots, through public
The construction of a four-storey building was eventually auction Banco Filipino was the lone bidder for the three
completed. The building was initially used as a hospital, but foreclosed properties. The Certificate of Sale in favor of
later on converted into a commercial building. Banco Filipino was annotated.
On December 9, 1987, The Torbela siblings filed before the
Dr. Rosario was able to fully pay his loan from DBP and RTC their Amended Complaint, impleading Banco Filipino as
was cancelled as per Cancellation and Discharge of Mortgage additional defendant in Civil Case and praying that the
executed by DBP in favor of Dr. Rosario and ratified before spouses Rosario be ordered to redeem Lot No. 356-A from
the notary public. Banco Filipino.
Sometime in 1979-1981, Dr. Rosario acquired another loan
from the Philippine National Bank (PNB) amounting to The spouses Rosario instituted before the RTC a case
P450,000.00. the loan secured by three (3) properties for annulment of extrajudicial foreclosure and damages, with
including Lot No. 356-A. prayer for writ of preliminary injunction and temporary
Five days later, on March 11, 1981, another annotation was restraining order against Banco Filipino, the Provincial Ex
made, cancelling the adverse claim on Lot No. 356-A on the Oficio Sherif and his Deputy, and Register of Deeds of
Pangasinan.
The Torbela siblings tried to redeem Lot No. 356-A from with title. Placing a parcel of land under the mantle of the
Banco Filipino, but their efort were unsuccessful. Upon the Torrens system does not mean that ownership thereof can no
expiration of one-year redemption period. The Certificate of longer be disputed.
Final Sale and Afidavit of Consolidation covering all three
foreclosed properties were executed. New certificates of title Ownership is diferent from a certificate of title. The
were issued in name of Banco Filipino. TCT is only the best proof of ownership of a piece of land.
The Torbela siblings filed before the RTC a complaint for the Besides, the certificate cannot always be considered as
annulment of the Certificate of Final Sale, judicial conclusive evidence of ownership. Mere issuance of the
cancelation of TCT No. 165813 and damages. The Decision of certificate of title in the name of any person does not
RTC in favor of Banco Filipino. foreclose the possibility that the real property may be under
Court of Appeals afirmed the Decision of RTC with co-ownership with persons not named in the certificate or
modification. They appeal via Petition for Review. that the registrant may only be a trustee or that other parties
may have acquired interest subsequent to the issuance of the
Issue: Whether or not is express trust susceptible to certificate of title. To repeat, registration is not the
prescription? equivalent of title, but is only the best evidence thereof. Title
as a concept of ownership should not be confused with the
Holding and Ratio Decidendi: certificate of title as evidence of such ownership although
both are interchangeably used.
Among the notable evidence presented by the Torbela Registration does not vest title; it is merely the evidence of
siblings is the testimony of Atty. Alcantara, who had no such title. Land laws do not give the holder any better title
apparent personal interest in the present case. When she still than what he actually has.
a boarder at the house of Eufrosina Torbela Rosario (Dr.
Rosarios mother), was consulted by the Torbela siblings as Dr. Rosario testified that he obtained Lot No. 356-A
regards the extrajudicial partition of Lot No. 356-A. she also after paying the Torbela siblings, pursuant to a verbal
witnessed the execution of the two Deeds of Absolute agreement with the latter. The Court though observes that
Quitclaim by the Torbela siblings and Dr. Rosario. Dr. Rosarios testimony on the execution and existence of the
verbal agreement with the torbela siblings lacks significant
Upon presented the title by Dr. Rosario, the court made details and is not corroborated by independent evidence.
a clear distinction between title and the certificate of title:
The certificate referred to is that document issued by the The Parol of Evidence Rule provides that when the
Register of Deeds known as the Transfer Certificate of Title. terms of the agreement have been reduced into writing, it is
By title, the law refers to ownership which is represented by considered as containing all the terms agreed upon and there
that document. Petitioner apparently confuses certificate can be, between the parties and their successors in interest,
no evidence of such terms other than the contents of the

written agreement. Dr. Rosario may not modify, explain, or Express trusts are created by direct and positive acts of
add to the terms in the two Deeds of Absolute Quitclaim the parties, by some writing or deed, or will, or by words
since he did not put in issue in his pleadings (1) an intrinsic either expressly or impliedly evincing an intention to create a
ambiguity, mistake, or imperfection in the Deeds; (2) failure trust. Under Article 1444 of the Civil Code, no particular
of the Deeds of Express the true intent and the agreement of words are required for the creation of an express trust, it
the parties thereto; (3) the validity of the Deeds; or (4) the being suficient that a trust is clearly intended. It is possible
exercise of other terms agreed to by the Torbela siblings and to create a trust without using the word trust or trustee.
Dr. Rosario after the execution of the Deeds. Conversely , mere fact that these words are used does not
necessarily indicate an intention to create a trust. The
It can also be said that Sr. Rosario is estopped from question in each case is whether the trustor manifested an
claiming or asserting ownership over Lot no. 356-A based on intention to create the kind of relationship which to lawyers
his Deed of Absolute Quitclaim. Dr. Rosario’s Admission in is known as trust. It is immaterial whether or not he knows
the said Deed that he merely borrowed Lot No. 356-A is that the relationship which he intends to create is called a
deemed conclusive upon him. Under Article 1431 of the Civil trust, and whether or not he knows the precise
Code, through estoppel an admission or representation is characteristics of the relationship which is called trust.
rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying thereon. In Tamayo v. Callejo, the Court recognized that a trust
That admission cannot now be denied by Sr. Rosario as may have a constructive or implied nature in the beginning,
against the Torbela siblings, the latter having relied upon his but the registered owners subsequent express
representation. acknowledgement in a public documents of a previous sale of
the property to another party, had the efect of imparting to
Considering the foregoing, the Court agrees with the the aforementioned trust the nature of an express trust. The
RTC and the Cour of Appeals that Dr. Rosario only holds Lot same situation exist in this case. When Dr. Rosario was able
No. 356-A in Trust for the Torbela siblings. to register Lot No. 356-a I his name under TCT No 52751, an
implied trust was initially established between himand the
Trust is the right to the beneficial enjoyment of Torbela siblings under Article 1451 of the civil Code.
property, the legal title to which is vested in another. It is a Article 1451. When land passed by succession to any person
fiduciary relationship that obliges the trustee to deal with the and he causes the legal title to be put in the name of another,
property for the benefit og the beneficiary. Trust relations a trust is established by implication of law for the benefit of
between parties may either be express or implied. An express the true owner.
trust is created by the intention of the trust or of the parties,
while an implied trust comes into being by operation of law.
Dr. Rosario execution of the Deed of Absolute Quitclaim In an express trust, the delay of the beneficiary is directly
containing his express admission that he only borrowed Lot attributable to the trustee who undertakes to hold the
no. 356-A from the Torbela siblings, eventually transformed property for the former, or who is linked to the beneficiary by
the nature of the trust to an express one. The express trus confidential or fiduciary relations. The trustee’s possession
continued despite Dr. Rosario stating in his Deed of Absolute is, therefore, not adverse to the beneficiary, until and unless
Quitcalim that he was already returning Lot No. 356-A to the the latter is made aware that the trust has been repudiated.
Torbela siblings as Lot No. 356-A remained registered in Dr.
Rosario’s name under TCT No. 52751 and Dr. Rosario kept
possession of said property, together with the improvements.
On the issue of prescription, we had the opportunity to 97. Heirs of Tranquilino Labiste vs. Heirs of Jose
rule in case Bueno v. Reyes that unrepudiated written Labiste / G.R. No. 162033, 587 SCRA 417 / May 08,
express are imprescriptible. While there are some decisions 2009 / Justice Quisumbing
ehich hold that an action upon a trust is imprescriptible,
without distinguishing between express ans implied trusts, FACTS:
the better rule, as laid down by this court in other decisions,
is that prescription does supervene where the trust is merely The late Epifanio Labiste, on his own and behalf of his
an implied one. brothers and sisters who were the heirs of Jose Labiste,
purchased from th Bureau of Lands Lot No. 1054 of the
The prescriptive period for the enforcement of an Banilad Friar Lands Estate, with an area of 13,308 square
express trust of ten(10) years starts upon the repudiation of meters, located at Guadalupe, Cebu City. The Bureau of Land
the trust by the trustee. Director Jorge Vargas executed Deed of Conveyance in favor
To apply the 10 years prescription period, which would bar a to Epifanio and his brothers and sisters who were the heirs of
beneficiarys action to recover in an express trust, the Jose Labiste.
repudiation of the trust must be proven by clear and After full payment of the purchase price but prior to the
convincing evidence and made known to the beneficiary. The issuance of the deed of conveyance, Epifanio executed an
express trust disables the trustee from acquiring for his own Afidavit in Spanish afirming that he, as one of the heris of
benefit the property committed to hid management or Jose, and his uncle Tranquilino Labiste (petitioner), then co-
custody, at least while he does not openly repudiate the trust, owned the said Lot because the money that was paid to the
and makes such repudiation known to the beneficiary or government came from the two of them.
cestui que trust. For this reason, the old Code of Civil
Procedure (Act 190) declared that the rules on adverse The Register of Deeds of Cebu City issued Original
possession do not apply to continuing and subsisting trusts. Certificate of Title No. 3878. The lot subdivided into lots: Lot
1054-A for Tranquilino and Lot 1054-B for Epifanio, both claimed that the Afidavit of Epifanio and the Calig-onan sa
with an area of 6,664 square meters. The subdivision plan Panagpalit were forgeries and that petitioners action had
prepared by Engr. Buangan was approved by Jose Dan, long prescribed or barred by laches.
Acting Director of Lands.
Subsequently, the heirs of Tranquilino purchased the one-half The RTC decision ruled in favor of petitioners
interest of the heirs of Jose over the Lot No, 1054, as evaluating the documents presented was genuine and
evidenced by the Calig-onan sa Panagpalit executed by the authentic as ancient documents and that they are valid and
parties in the Visayan dialect. The heirs of Tranquilino enforceable.
immediately took possession of the entire lot.
On appeal, the Court of Appeals, while afirming
When World War II broke out, the heirs of Tranquilino petitioners right to the property, nevertheless reversed the
fled Cebu City and when they came back they found their RTCs decision on the ground of prescription and laches.
homes and possessions destroyed. The records in the Ofice Afirmed the RTCs findings that the Afidavit and the Calig-
of Register of Deeds, Ofice of the City Assessor and other onan sa Panagpalit are genuine and authentic, and that the
government ofices were also destroyed during the war. same are valid and enforceable documents.
Squatters have practically overrun the entire property, such
that neither petitioners nor respondents possess it. Issue: Whether or not the court can resolve the case
Asuncion Labiste filed a petition for reconstitution of title applying the rules on prescription and principle of
over Lot No. 1054 against the petitioners. Petitioners laches involving express trust?
opposed the petition and end up by a comprise agreement.
Under comprise agreement, petitioners were to be given time Holding and Ratio Decidendi:
to file a complaint so that the issues could be litigated in an
ordinary action and the reconstituted title was to be Citing Article 1144 of the Civil Code, it held that
deposited with the clerk of court for a period of sixty (60) petitioners cause of action had prescribed for the action
days to allow petitioners to file an action for reconveyance must be brought within ten(10) years from the time of right
and to a notice of lis pendens. Register of Deeds issued of actions accrues upon the written contract which in this
reconstituted title in the name of Epifanio Labiste , his case was when petitioners predeccessors-in-interest lost
brothers and sisters, heirs of Jose Labiste. possession over the property after World War II. Also, the
lapse of time to file the action constitutes neglect on
However, respondents did not honor the compromise petitioners part so the principle of laches is applicable.
agreement.
Petitioners filed a complaint for annulment of title seeking Express trust are created by direct and positive acts of
the reconveyance of property and damages. Respondents the parties, by some writing or deed, or will, or by words
either expressly or impliedly evincing an intention to create a Spouses Martin Ramos and Candida Tanate died on October
trust. The Afidavit of Epifanio is in the nature of trust 4, 1906 and October 26, 1880, respectively. They were
agreement. Epifanio afirmed that the lot brought in his name survived by their 3 children. Moreover, Martin was survived
was co-owned by him, as one of the heirs of Jose, and his by his 7 natural children. In December 1906, a special
uncle Tranquilino. And by agreement, each of them has been proceeding for the settlement of the intestate estate of said
in possession of half of the property. Their arrangement was spouses was conducted. Rafael Ramos, a brother of Martin,
corroborated by the subdivision plan. administered the estate for more than 6 years. Eventually, a
partition project was submitted which was signed by the 3
As such, prescription and laches will run only from the legitimate children and 2 of the 7 natural children. A certain
time the express trust is repudiated. The court has held that Timoteo Zayco signed in representation of the other 5 natural
for acquisitive prescription to bar the action of the children who were minors. The partition was sworn to before
beneficiary against trustee in an express trust for the a justice of peace.
recovery of the property held in trust it must be shown that:
(a) the trustee has performed unequivocal acts of The conjugal hereditary estate was appraised at P74,984.93,
repudiation amounting to an ouster of the cestui que trust; consisting of 18 parcels of land, some head of cattle and the
(b) such positive acts of repudiation have been made known advances to the legitimate children. ½ thereof represented
to the cestui que trust, and (c) the evidence thereon is clear the estate of Martin. 1/3 thereof was the free portion or
and conclusive. Respondents cannot rely on the fact that the P12,497.98. The shares of the 7 natural children were to be
Torrens title was issued in the name of Epifanio and the other taken from that 1/3 free portion. Indeed, the partition was
heirs of Jose. It has been held that a trustee who obtains a made in accordance with the Old Civil code. Thereafter,
Torrens title over property held in trust by him for another Judge Richard Campbell approved the partition project. The
cannot repudiation of the trust duly communicated to the court declared that the proceeding will be considered closed
beneficiary. The only act that can be construed as repudiation and the record should be archived as soon as proof was
was when respondents filed the petition for reconstitution. submitted that each he3ir had received the portion
And since petitioners filed their complaint, their cause of adjudicated to him.
action has not yet prescribed, laches cannot be attributed to
them. On February 3, 1914, Judge Nepumoceno asked the
administrator to submit a report showing that the shares of
the heirs had been delivered to them as required by the
RAMOS VS. RAMOS previous decision. Nevertheless, the manifestation was not in
strict conformity with the terms of the judge’s order and with
FACTS: the partition project itself. 8 lots of the Himamaylan Cadastre
were registered in equal shares in the names of Gregoria
(widow of Jose Ramos) and her daughter, when in fact the latter ids further subdivided into resulting and constructive
administrator was supposed to pay the cash adjudications to trusts. Applying it now to the case at bar, the plaintifs did
each of them as enshrined in the partition project. Plaintifs not prove any express trust. Neither did they specify the kind
were then constrained to bring the suit before the court of implied trust contemplated in their action. Therefore, its
seeking for the reconveyance in their favor their enforcement maybe barred by laches and prescription
corresponding participations in said parcels of land in whether they contemplate a resulting or a constructive trust.
accordance with Article 840 of the old Civil Code. Note that
1/6 of the subject lots represents the 1/3 free portion of
martin’s shares which will eventually redound to the shares 98. SOLEDAD CAEZO VS. CONCEPCION ROJAS
of his 7 legally acknowledged natural children. The
petitioners’ action was predicated on the theory that their Facts:
shares were merely held in trust by defendants. Nonetheless,
no Deed of Trust was alleged and proven. Ultimately, the On January 29, 1997, petitioner Soledad Caezo filed a
lower court dismissed the complaint on the grounds of res Complaint for the recovery of real property plus damages
judicata, prescription and laches. with the Municipal Trial Court (MTC) of Naval, Biliran,
against her father’s second wife, respondent Concepcion
ISSUE: Whether or not the plaintifs’ action was barred by Rojas. The subject property is an unregistered land with an
prescription, laches and res judicata to the efect that they area of 4,169 square meters, situated at Higatangan, Naval,
were denied of their right to share in their father’s estate. Biliran. Caezo attached to the complaint a Joint Afidavit
[executed on May 10, 1979 by Isidro Catandijan and
HELD: YES, there was inexcusable delay thereby making the Maximina Caezo attesting to her acquisition of the property.
plaintifs’ action unquestionably barred by prescription and Petitioner alleged that she bought the parcel of land in 1939
laches and also by res judicata. Inextricably interwoven with from Crisogono Limpiado, although the transaction was not
the questions of prescription and res judicata is the question reduced into writing. Thereafter, she immediately took
on the existence of a trust. It is noteworthy that the main possession of the property. When she and her husband left
thrust of plaintifs’ action is the alleged holding of their for Mindanao in 1948, she entrusted the said land to her
shares in trust by defendants. Emanating from such, the father, Crispulo. Rojas, who took possession of, and
Supreme Court elucidated on the nature of trusts and the cultivated, the property. In 1980, she found out that the
availability of prescription and laches to bar the action for respondent, her stepmother, was in possession of the
reconveyance of property allegedly held in trust. It is said property and was cultivating the same. She also discovered
that trust is the right, enforceable solely in equity to the that the tax declaration over the property was already in the
beneficial enjoyment of property, the legal title to which is name of his father Crispulo Rojas. They contented that
vested in another. It may either be express or implied. The contrary to the petitioners claim, it was her husband,
Crispulo Rojas, who bought the property from Crisogono - As a rule, however, the burden of proving the existence of a
Limpiado in 1948, which accounts for the tax declaration trust is on the party asserting its existence, and such proof
being in Crispulos name. From then on, until his death in must be clear and satisfactorily show the existence of the
1978, Crispulo possessed and cultivated the property. Upon trust and its elements. The presence of the following
his death, the property was included in his estate. The elements must be proved: (1) a trustor or settlor who
petitioner, as heir, even received her share in the produce of executes the instrument creating the trust; (2) a trustee, who
the estate. The respondent further contended that the is the person expressly designated to carry out the trust; (3)
petitioner ought to have impleaded all of the heirs as the trust res, consisting of duly identified and definite real
defendants. She also argued that the fact that petitioner filed properties; and (4) the cestui que trust, or beneficiaries
the complaint only in 1997 means that she had already whose identity must be clear. Accordingly, it was incumbent
abandoned her right over the property. MTC Ruled in Favor upon petitioner to prove the existence of the trust
of Soledad. On appeal to the RTC, the Decision of MTC was relationship. And petitioner sadly failed to discharge that
reversed and ruled in favour of Conception, but subsequently, burden.
amended its decision and ruled in favour of Soledad.
Issue: Whether or not there exist a trust relationship between

the petitioner and her Father, Express or implied? 99. RAMOS VS. RAMOS
Held: No. A trust is the legal relationship between one FACTS:

person having an equitable ownership of property and
another person owning the legal title to such property, the Spouses Martin Ramos and Candida Tanate died on October
equitable ownership of the former entitling him to the 4, 1906 and October 26, 1880, respectively. They were
performance of certain duties and the exercise of certain survived by their 3 children. Moreover, Martin was survived
powers by the latter. Trusts are either express or implied. by his 7 natural children. In December 1906, a special
Express trusts are those which are created by the direct and proceeding for the settlement of the intestate estate of said
positive acts of the parties, by some writing or deed, or will, spouses was conducted. Rafael Ramos, a brother of Martin,
or by words evincing an intention to create a trust. Implied administered the estate for more than 6 years. Eventually, a
trusts are those which, without being expressed, are partition project was submitted which was signed by the 3
deducible from the nature of the transaction as matters of legitimate children and 2 of the 7 natural children. A certain
intent or, independently, of the particular intention of the Timoteo Zayco signed in representation of the other 5 natural
parties, as being superinduced on the transaction by children who were minors. The partition was sworn to before
operation of law basically by reason of equity. An implied a justice of peace.
trust may either be a resulting trust or a constructive trust. –
The conjugal hereditary estate was appraised at P74,984.93, lower court dismissed the complaint on the grounds of res
consisting of 18 parcels of land, some head of cattle and the judicata, prescription and laches.
advances to the legitimate children. ½ thereof represented
the estate of Martin. 1/3 thereof was the free portion or ISSUE: Whether or not the plaintifs’ action was barred by
P12,497.98. The shares of the 7 natural children were to be prescription, laches and res judicata to the efect that they
taken from that 1/3 free portion. Indeed, the partition was were denied of their right to share in their father’s estate.
made in accordance with the Old Civil code. Thereafter,
Judge Richard Campbell approved the partition project. The RULING: YES, there was inexcusable delay thereby making
court declared that the proceeding will be considered closed the plaintifs’ action unquestionably barred by prescription
and the record should be archived as soon as proof was and laches and also by res judicata. Inextricably interwoven
submitted that each he3ir had received the portion with the questions of prescription and res judicata is the
adjudicated to him. question on the existence of a trust. It is noteworthy that the
main thrust of plaintifs’ action is the alleged holding of their
On February 3, 1914, Judge Nepumoceno asked the shares in trust by defendants. Emanating from such, the
administrator to submit a report showing that the shares of Supreme Court elucidated on the nature of trusts and the
the heirs had been delivered to them as required by the availability of prescription and laches to bar the action for
previous decision. Nevertheless, the manifestation was not in reconveyance of property allegedly held in trust. It is said
strict conformity with the terms of the judge’s order and with that trust is the right, enforceable solely in equity to the
the partition project itself. 8 lots of the Himamaylan Cadastre beneficial enjoyment of property, the legal title to which is
were registered in equal shares in the names of Gregoria vested in another. It may either be express or implied. The
(widow of Jose Ramos) and her daughter, when in fact the latter ids further subdivided into resulting and constructive
administrator was supposed to pay the cash adjudications to trusts. Applying it now to the case at bar, the plaintifs did
each of them as enshrined in the partition project. Plaintifs not prove any express trust. Neither did they specify the kind
were then constrained to bring the suit before the court of implied trust contemplated in their action. Therefore, its
seeking for the reconveyance in their favor their enforcement maybe barred by laches and prescription
corresponding participations in said parcels of land in whether they contemplate a resulting or a constructive trust.
accordance with Article 840 of the old Civil Code. Note that
1/6 of the subject lots represents the 1/3 free portion of
martin’s shares which will eventually redound to the shares 100. DIAZ V. GORRICHO & AGUADO G.R. No. L-
of his 7 legally acknowledged natural children. The 11229 March 29, 1958
petitioners’ action was predicated on the theory that their
shares were merely held in trust by defendants. Nonetheless, DOCTRINE: In constructive trusts, laches constitutes a bar to
no Deed of Trust was alleged and proven. Ultimately, the actions to enforce the trust, and repudiation is not required,
unless there is concealment of the facts giving rise to the trust in siblings Diaz’ favor arose when defendant Gorricho
trust… although the concealment must be adequately took advantage of the error of the provincial sherif in
pleaded by the plaintif in a suit to declare a trust, where the conveying to her the whole of the lots and obtained title in
delay is apparent on the face of his pleading. herself, the action of plaintifs was, however, barred by
laches and prescription. So, the plaintifs appealed.
FACTS: Spouses Francisco Diaz and Maria Sevilla originally
owned Lot Nos. 1941 and 3073. Francisco Diaz died in 1919, ISSUES: 1. Whether or not a constructive trust was created
survived by his widow Maria Sevilla and their three children in favor of the siblings Diaz.
— Manuel, Lolita and Constancia. In 1935, defendant Carmen 2. Whether or not the action for reconveyance of the two lots
J. Gorricho filed an action against Sevilla, wherein a writ of to siblings Diaz was barred by laches. 3. Whether or not the
attachment was issued upon the shares of Sevilla in said lots, action for reconveyance of the two lots to siblings Diaz was
which were later on sold at a public auction to Gorricho. barred by prescription.
Since Sevilla failed to redeem the lots in one year, the acting
provincial sherif executed a final deed of sale in favor of HELD: 1. YES. Art. 1456 of the NCC provides that “if
Gorricho; however, the sherif wrongfully conveyed to property is acquired through mistake or fraud, the person
Gorricho the whole of the two lots, instead of only the half- obtaining it is, by force of law, considered a trustee of an
interest of Sevilla therein. In 1951, Sevilla died. A year later, implied trust for the benefit of the person from whom the
Sevilla’s children, plaintifs Manuel, Constancia and Lolita property comes.” Since Gorricho acquired the whole of the
filed an against defendants Gorricho and her husband disputed lots through the error of the sherif, when in fact
Francisco Aguado, compelling the latter to execute in their Gorricho was only entitled to the half of it, then a
favor a deed of reconveyance over an undivided one-half constructive trust was created in favor of the siblings Diaz.
interest over the two lots – the share of their deceased father,
Francisco Diaz, which was illegally conveyed by the 2. YES. The action for reconveyance of the two lots to siblings
provincial sherif to Gorricho. The siblings Diaz contend that Diaz was barred by laches. Express trusts are created by
Gorricho acquired their father’s half of the disputed property intention of the parties, while implied or constructive trusts
through an error of the provincial sherif, so it was subject to are exclusively created by law and are not trusts in their
an implied trust, under Article 1456 of the New Civil Code. technical sense. The express trusts disable the trustee from
Furthermore, they allege that since the trust is continuing acquiring for his own benefit the property committed to his
and subsisting, the siblings Diaz may compel reconveyance of management or custody, at least while he does not openly
the property despite the lapse of time, because prescription repudiate the trust, and makes such repudiation known to
does not run against titles registered under Act 496. the beneficiary. Thus, the oldCode of Civil Procedure (Act
Defendants denied and alleged that plaintifs' action had 190) declared that rules on adverse possession do not apply
prescribed. The trial court held that while a constructive to "continuing and subsisting" (i.e., unrepudiated) trusts. In
the case of an express trust, a beneficiary is entitled to rely age in 1939, more than suficient time (thirteen years) had
upon the fidelity of the trustee. No laches exists until a been allowed to elapse to extinguish appellant's action.
reasonable time after a beneficiary is notified of a breach or
other cause of suit against the trustee. However, laches 3. YES. Under the old Code of Civil Procedure in force at the
exists where suit is not commenced within such reasonable time, the longest period of extinctive prescription was only
time. In constructive trusts, laches constitutes a bar to ten years. Since 15 years lapsed from the time the cause of
actions to enforce the trust, and repudiation is not required, action arose before plaintifs sought for remedy, then their
unless there is concealment of the facts giving rise to the action for reconveyance was barred by prescription. The
trust. Time runs from the moment that the law creates the judgment appealed from is afirmed.
trust, which is the time when the cause of action arises. But
laches does not exist while the trustee, fraudulently and 101. SOLEDAD CAEZO VS. CONCEPCION ROJAS
successfully conceals the facts giving rise to the trust,
although the concealment must be adequately pleaded by the Facts: -On January 29, 1997, petitioner Soledad Caezo filed a
plaintif in a suit to declare a trust, where the delay is Complaint for the recovery of real property plus damages
apparent on the face of his pleading. The reason for the with the Municipal Trial Court (MTC) of Naval, Biliran,
diference in treatment is that on one hand, in express trusts, against her father’s second wife, respondent Concepcion
the delay of the beneficiary is directly attributable to the Rojas. The subject property is an unregistered land with an
trustee who holds the property for the former, thus creating a area of 4,169 square meters, situated at Higatangan, Naval,
fiduciary relation between them. The trustee's possession is, Biliran. Caezo attached to the complaint a Joint Afidavit
therefore, not adverse to the beneficiary, until and unless the [executed on May 10, 1979 by Isidro Catandijan and
latter is made aware that the trust has been repudiated. On Maximina Caezo attesting to her acquisition of the property.
the other hand, in constructive trusts, there is neither Petitioner alleged that she bought the parcel of land in 1939
promise nor fiduciary relation; the trustee does not recognize from Crisogono Limpiado, although the transaction was not
any trust and has no intent to hold for the beneficiary; reduced into writing. Thereafter, she immediately took
therefore, the beneficiary is not justified in delaying action to possession of the property. When she and her husband left
recover his property. It is his fault if he delays; hence, he may for Mindanao in 1948, she entrusted the said land to her
be estopped by his own laches. Since the cause of action of father, Crispulo. Rojas, who took possession of, and
siblings Diaz to attack the sherif's deed and cancel the cultivated, the property. In 1980, she found out that the
transfer certificates of title issued to spouses Gorricho and respondent, her stepmother, was in possession of the
Aguado accrued since its issuance and recording in 1937, property and was cultivating the same. She also discovered
and plaintifs had allowed fifteen (15) years to elapse before that the tax declaration over the property was already in the
seeking remedy in 1952, then the dismissal of the case must name of his father Crispulo Rojas. They contented that
be upheld. Even considering that Constancia only became of contrary to the petitioners claim, it was her husband,
Crispulo Rojas, who bought the property from Crisogono - As a rule, however, the burden of proving the existence of a
Limpiado in 1948, which accounts for the tax declaration trust is on the party asserting its existence, and such proof
being in Crispulos name. From then on, until his death in must be clear and satisfactorily show the existence of the
1978, Crispulo possessed and cultivated the property. Upon trust and its elements. The presence of the following
his death, the property was included in his estate. The elements must be proved: (1) a trustor or settlor who
petitioner, as heir, even received her share in the produce of executes the instrument creating the trust; (2) a trustee, who
the estate. The respondent further contended that the is the person expressly designated to carry out the trust; (3)
petitioner ought to have impleaded all of the heirs as the trust res, consisting of duly identified and definite real
defendants. She also argued that the fact that petitioner filed properties; and (4) the cestui que trust, or beneficiaries
the complaint only in 1997 means that she had already whose identity must be clear. Accordingly, it was incumbent
abandoned her right over the property. MTC Ruled in Favor upon petitioner to prove the existence of the trust
of Soledad. On appeal to the RTC, the Decision of MTC was relationship. And petitioner sadly failed to discharge that
reversed and ruled in favour of Conception, but subsequently, burden.
amended its decision and ruled in favour of Soledad.
Issue: Whether or not there exist a trust relationship between 102. G.R. No. 165696 April 30, 2008
the petitioner and her Father, Express or implied? ALEJANDRO B. TY, petitioner, vs. SYLVIA S. TY, in
her capacity as Administratrix of the Intestate
Held: No. A trust is the legal relationship between one Estate of Alexander Ty, respondent.
person having an equitable ownership of property and
another person owning the legal title to such property, the FACTS:
equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain Alexander Ty, son of Alejandro Ty and husband of
powers by the latter. Trusts are either express or implied. Sylvia Ty, dies of cancer at the age of 34. Sylvia files petition
Express trusts are those which are created by the direct and for the settlement of Alexander’s intestate estate. She also
positive acts of the parties, by some writing or deed, or will, asks court to sell or mortgage properties in order to pay the
or by words evincing an intention to create a trust. Implied estate tax amounting to P4,714,560.02 assessed by the BIR.
trusts are those which, without being expressed, are The properties include a parcel of land in EDSA Greenhills, a
deducible from the nature of the transaction as matters of residential land in Wack Wack, and the Meridien condo unit
intent or, independently, of the particular intention of the in Annapolis, Greenhills.
parties, as being superinduced on the transaction by
operation of law basically by reason of equity. An implied Alejandro Ty opposed the move and filed for recovery of the
trust may either be a resulting trust or a constructive trust. – property with prayer for preliminary injunction and/or
temporary restraining order. Plaintif Alejandro claims that exception: “if the person to whom the title is conveyed is a
he owns the EDSA, Wack Wack and Meridien condo unit child, legitimate or illegitimate, of the one paying the price of
because he paid for them. The property was supposedly the sale, NO TRUST is IMPLIED by LAW, it being disputable
registered in trust for Alexander’s brothers and sisters in presumed that there is a gift in favor of the child.” The Court
case plaintif dies. Plaintif also claimed that Alex had no also noted that plaintif failed to prove that he did not intend
financial capacity to purchase the disputed property, as the a donation.
latter was only dependent on the former.
Regarding the Meridien Condo and Wack Wack property, the
Sylvia countered that Alexander had purchased the property court said that plaintif failed to prove that purchase money
with his money. Alexander was financially capable of came from him. They also said that Alexander was capable of
purchasing it because he had been managing the family purchasing the property as he had been working for nine
corporations since he was 18 years old and was also engage years, had a car care business, and was actively engaged in
in other profitable businesses. the business dealings of several family corporations from
which he received emoluments and other benefits. Hence, no
The RTC granted the application for preliminary injunction implied trust created because there was no proof that
and decides in favor of plaintif regarding the recovery of the plaintif had paid for said properties.
property. CA reversed the RTC stating that the implication
created by law under Art. 1448 does not apply if the property 103. G.R. No. 202247 June 19, 2013SIME DARBY
was in the name of the purchaser’s child. They agreed that PILIPINAS, INC., Petitioner, vs. JESUS B.
plaintif partly paid for the EDSA property. Plaintif appealed. MENDOZA, Respondent.
ISSUE: FACTS:
Whether or not there was an implied trust under Art. 1448 of Petitioner Sime Darby Pilipinas, Inc. (Sime Darby)
the Civil Code? employed Jesus B. Mendoza (Mendoza) as sales manager to
handle sales, marketing, and distribution of the company's
RULING: tires and rubber products. On 3 July 1987, Sime Darby
bought a Class "A" club share4 in Alabang Country Club
No. There was no implied trust created in relation to (ACC) from Margarita de Araneta as evidenced by a Deed of
the EDSA property. If the person to whom the title is Absolute Sale.5 The share, however, was placed under the
conveyed is the child of the one paying the price of the sale, name of Mendoza in trust for Sime Darby since the By-
no trust is implied by law under Art. 1448, the so-called Laws6 of ACC state that only natural persons may own a club
purchase money resulting trust. The said article provides an share.7 As part of the arrangement, Mendoza endorsed the
Club Share Certificate8 in blank and executed a Deed of the usufruct, or the use and enjoyment of the club’s facilities
Assignment,9 also in blank, and handed over the documents and privileges while employed with the company.
to Sime Darby. From the time of purchase in 1987, Sime
Darby paid for the monthly dues and other assessments on In Thomson v. Court of Appeals,20 we held that a trust
the club share. arises in favor of one who pays the purchase price of a
property in the name of another, because of the presumption
When Mendoza retired in April 1995, Sime Darby fully that he who pays for a thing intends a beneficial interest for
paid Mendoza his separation pay amounting to more himself. While Sime Darby paid for the purchase price of the
thanP3,000,000. Nine years later, or sometime in July 2004, club share, Mendoza was given the legal title. Thus, a
Sime Darby found an interested buyer of the club share resulting trust is presumed as a matter of law. The burden
for P1,101,363.64. Before the sale could push through, the then shifts to the transferee to show otherwise.
broker required Sime Darby to secure an authorization to sell
from Mendoza since the club share was still registered in
Mendoza’s name. However, Mendoza refused to sign the
required authority to sell or special power of attorney unless 104. G.R. No. 181844 September 29,
Sime Darby paid him the amount of P300,000, claiming that 2010SPS. FELIPE and JOSEFA
this represented his unpaid separation benefits. As a result, PARINGIT, Petitioner,
the sale did not push through and Sime Darby was compelled vs. MARCIANA PARINGIT BAJIT, ADOLIO
to return the payment to the prospective buyer. PARINGIT and ROSARIO PARINGIT
ORDOÑO, Respondents.
On 13 September 2005, Sime Darby filed a complaint10 for
damages with writ of preliminary injunction against Mendoza FACTS:
with the Regional Trial Court (RTC) of Makati City.
During their lifetime, spouses Paringit leased a lot in
ISSUE: Sampaloc, Manilafrom Terocel Realty. They built their home
there and raised five children. For having occupied the lot for
Whether or not there is trust arises in favor of one who pays years, Terocel Realty ofered to sell it to Julian but he did not
for the purchase price? have enough money at that time to meet the payment
deadline. Julian sought the help of his children so he can buy
RULING: the property but only his so nFelipe and wife Josefa had the
financial resources he needed at that time. To bring about the
Yes. While the share was bought by Sime Darby and purchase, Julian executed a deed of assignment of lease hold
placed under the name of Mendoza, his title is only limited to right in favor of Felipe and his wife that would enable them
to acquire the lot. The latter then bought the same from RULING:
Terocel Realty and a TCT was subsequently issued in favor of
spouses Felipe and Josefa. Yes, the Court ruled that the case at bar falls under the
rubric of the implied trust provided in Article 1450 of the
Later on, due to issues among Julian’s children regarding the Civil Code. Implied trust under Article 1450 presupposes a
ownership of the lot, Julian executed an afidavit clarifying situation where a person, using his own funds, buys property
the nature of Felipe and his wife’s purchase of the lot. He on behalf of another, who in the meantime may not have the
claimed that it was bought for the benefit of all his children. funds to purchase it. Title to the property is for the time
being placed in the name of the trustee, the person who pays
Despite the title being under their name, the spouses moved for it, until he is reimbursed by the beneficiary, the person for
to another house on the same street in 1988. Marciana, et al, whom the trustee bought the land. It is only after the
on the other hand, continued to occupy the lot with their beneficiary reimburses the trustee of the purchase price that
families without paying rent. This was the situation when the former can compel conveyance of the property from the
their father died in 1994. A year later, Felipe and his wife latter. The circumstances of this case are actually what
sent a demand letter to his siblings who occupy the lot, implied trust is about. Although no express agreement
asking them to pay rental arrearages for occupying the covered
property. They refused to pay or reply to the letter, believing
that they had the right to occupy the house and lot, it being Felipe and his wife’s purchase of the lot for the siblings
their inheritance from their parents. Because of this, Felipe and their father, it came about by operation of law and is
and his wife filed an ejectment suita gainst them. The suit protected by it. The nature of the transaction established the
prospered, resulting in the ejectment of Marciana, et a land implied trust and this in turn gave rise to the rights
their families from the property. and obligations provided by law. Implied trust is a rule
of equity, independent of the particular intention of the
To vindicate what they regarded as their right to the lot and parties. Here, the evidence shows that Felipe and his wife
the house, the other children filed the present action against bought the lot for the benefit of Julian and his children,
Felipe and his wife for annulment of title and reconveyance rather than for themselves. There is no question that the
of property. house originally belonged to Julian and Aurelia who built it.
ISSUE: First, if Julian really intended to sell the entire house

and assign the right to acquire the lot to Felipe and his wife,
Whether or not Felipe and his wife purchased the subject lot he would have arranged for Felipe’s other siblings to give
under an implied trust for the benefit of all the children of their conformity as co-owners to such sale.
Julian?
Second, Julian said in his afidavit that Felipe and his bedridden, he sold his share to his brother Emilio who
wife bought the lot from Terocel Realty on his behalf and on continued to pay the purchase price until the obligation to
behalf of his other children. Felipe and his wife advanced the pay had been fully satisfied. The TCT was however issued
payment because Julian and his other children did not then under the name of
have the money needed to meet the realty company’s Lucas.Nevertheless, Lucas acknowledges that he merelyheld
deadline for the purchase. Notably, Felipe, acting through his the title in trust for his brother with theunderstanding
wife, countersigned Julian’s afidavit the way his siblings did. that “the necessary documents of transfer will be made later”
and this fact was known not only to him but also to the
Third, if Felipe and his wife really believed that they defendants. However upon his death, his heirs refused to
were the absolute owners of the lot, then their moving out of reconvey the lotto plaintif despite repeated demands.
the house in 1988 and letting Marciana, et al continue to Plaintif brought an action in the CFI for a
occupy the house did not make sense. Fourth, Felipe and his complaint for reconveyance of real
wife demanded rent from Marciana, et al only a year property. Thelower court however dismissed the case on theg
following Julian’s death. This shows that for over 10 years, round that an express trust, and not an impliedtrust, was
Felipe and his wife respected the right of the siblings to created and that the action had already prescribed.
reside on the property. This is incompatible with their claim
that they bought the house and lot for themselves back in ISSUE:
1984. Until they filed the suit, they did nothing to assert their
supposed ownership of the house and lot. What kind of trust was created? Express or implied trust?
Implied trust.
RULING:
105. G.R. No. L-12149 September 30, 1960 HEIRS
OF EMILIO CANDELARIA, ETC., vs. LUISA Where the grantee takes the property under
ROMERO, ET AL., an agreement to convey to another on certain conditions,
a trust results for the benefit of such other or his heirs. It is
FACTS: also the rule that there is an implied trust when a person
purchases land with his own money and
Parties to this case are the heirs of Emilio takes conveyance thereof in the name of another. In such a
Candelaria as plaintif and Luisa Romero, and the heirs of case, the property is held on a resulting trust in favor of the
Lucas as defendants. Emilio and Lucas Candelaria bought a one furnishing the consideration for the transfer. This kind of
lot on an installment basis. Lucas paid the first two trust is from equity and arises by implication or operation
installments but because of sickness which caused him to be of law. In the present case, it is apparent that Emilio
furnished the consideration intending to obtain 1962, Violeta and husband, Lino obtained a loan from PNB
a beneficial interest in the property in question. Having by executing a mortgage on the land, while Homero Adaza,
supplied the money, it is presumed that he intended brother of Violeta remainedad ministrator of the same.
to purchase the lot for his own benefit. Moreover, by entering
into an agreement with Emilio that “the necessary documents In 1971, Horacio invited his brothers and sisters for a
of transfer will be made later,” family gathering where he asked Violeta to sign a Deed of
Waiver with respect to the property inSinonok. The Deed
Lucas acknowledged the he merely held stated that the land was owned in common by Violeta and
the property in trust for his brother with the understanding Horacio even though the OCT was in her name only. The
that it will eventually be conveyed Deed also providedfor the waiver, transfer and conveyance of
tothe plaintif’s predecessor in interest. Lastly, by Violeta to Horacio of ½ of the property and
acknowledging the presence of trust, the plaintif’s action its improvements.Violeta and Horacio signed the Deed with
cannot be said to have been barred by lapse of time. The case Homero as a witness. A few months later, Violeta and
is therefore remanded for further proceedings. husband Lino filed a complaint for annulment of the Deed
of waiver and for damages against Horacio and wife Felisa.
The complaint alleged that (1) she was absolute owner of the
land by virtue of an unconditional donation executed by her
106. G.R. No. 47354 March 21, 1989 HORACIO G. father in her favor; (2) she was registered owner; (3) she
ADAZA and FELICIDAD signed the Deed of waiver because of fraud,
MARUNDAN, petitioners, vs.THE HONORABLE misrepresentation and undue influence; and (4) because of
COURT OF APPEALS and VIOLETA G. ADAZA, such malicious acts, she is entitled to damages from Horacio.
assisted by her husband LINO AMOR,
respondents. Trial Court
FACTS: Declared Deed of Waiver as valid and binding upon

Violeta, that Horacio was co-owner of ½ of the land, and
In 1953, Victor Adaza Sr. executed a Deed of Donation, ordering Violeta to pay Horacion the proceeds of his share.
covering the disputed land in this case,located in Sinonok,
Zamboanga del Norte in favor of Respondent Violeta. The CA
land being disposable publicland had been held and
cultivated by Victor, Sr. With the help of her brother, Horacio, Reversed Trial court decision, declaring that though
Violeta filed a homestead application over the land and a free the deed was signed voluntarily, such Deed was without
patent was issued in 1956. An OCT was issued in1960. In
consideration or cause because the land had been

unconditionally donated to Violeta alone.
ISSUE:
Who owns the disputed parcel of land?
RULING:
Petitioners owned the parcel of land.
Deed of donation had a crossed-out provision: That the donee

shall share ½ of the entire property with one of her brothers
and sisters after the death of the donor. The record is bereft
of any indication of any evil intent or malice on the part of 115. VDA. DE OUANO vs. REPUBLIC, G.R. NO. 168770,
Homero, Victor, Jr. and Teresita (siblings of Violeta) that 9 FEBRUARY 2011
would suggest deliberate collusion against Violeta. Their
father had executed the Deed of Donation with the FACTS:
understanding that the same would be divided between
In 1949, the National Airport Corporation (NAC), MCIAA’s
Horacio and Violeta and that Violeta had signed the Deed of
predecessor agency pursued a program to expand the Lahug
Waiver freely and voluntarily. Victor Adaza, Sr. left 4 parcels
Airport in Cebu City. As an assurance from the government,
of land divided among the 6 children through the practice
there is a promise of reconveyance or repurchase of said
of having the lands acquired by him titled to the name of one
property so long as Lahug ceases its operation or transfer its
of his children. The property involved in the instant case is
operation to Mactan – Cebu Airport. Some owners refused to
owned in common by Violeta and brother, Horacio even
sell, and that the Civil Aeronautics Administration filed a
though the OCT was only in her name. She held half of the
complaint for the expropriation of said properties for the
land in trust for petitioner Horacio—implied trust based on
expansion of the Lahug Airport.
Article 1449 of the Civil Code: There is also an implied
trust when a donation is made to person but It appears that The trial court then declared said properties to be used upon
although the legal estate is transmitted to the donee, he the expansion of said projects and order for just
nevertheless is either to have no beneficial interest of only a compensation to the land owners, at the same time directed
part thereof. The doctrine of laces is not to be applied the latter to transfer certificate or ownership or title in the
mechanically as between near relatives. name of the plaintif.
At the end of 1991, Lahug Airport completely ceased its abandoned, then the former owner, if he so desires, may seek
operation while the Mactan-Cebu airport opened to its reversion subject of course to the return at the very least
accommodate incoming and outgoing commercial flights. of the just compensation received.
This then prompted the land owners to demand for the
In expropriation, the private owner is deprived of property
reconveyance of said properties being expropriated by the
against his will. The mandatory requirement of due process
trial court under the power of eminent domain. Hence these
ought to be strictly followed such that the state must show, at
two consolidated cases arise.
the minimum, a genuine need, an exacting public purpose to
In G.R. No. 168812 MCIAA is hereby ordered by court to take private property, the purpose to be specifically alleged
reconvey said properties to the land owners plus attorney’s or least reasonably deducible from the complaint.
fee and cost of suit, while in G.R. No. 168770, the RTC ruled
Public use, as an eminent domain concept, has now acquired
in favor of the petitioners Oaunos and against the MCIAA for
an expansive meaning to include any use that is of
the reconveyance of their properties but was appealed by the
“usefulness, utility, or advantage, or what is productive of
latter and the earlier decision was reversed, the case went up
general benefit [of the public].” If the genuine public
to the CA but the CA afirmed the reversed decision of the
necessity—the very reason or condition as it were—allowing,
RTC.
at the first instance, the expropriation of a private land
ISSUE:Should MCIAA reconvey the lands to petitioners? ceases or disappears, then there is no more cogent point for
the government’s retention of the expropriated land. The
HELD: same legal situation should hold if the government devotes
Yes. The notion that the government via expropriation the property to another public use very much diferent from
proceedings acquires unrestricted ownership over or a fee the original or deviates from the declared purpose to benefit
simple title to the covered land is no longer tenable. another private person. It has been said that the direct use
Expropriated lands should be diferentiated from a piece of by the state of its power to oblige landowners to renounce
land, ownership of which was absolutely transferred by way their productive possession to another citizen, who will use it
of an unconditional purchase and sale contract freely entered predominantly for that citizen’s own private gain, is ofensive
by two parties, one without obligation to buy and the other to our laws.
without the duty to sell. In that case, the fee simple concept The government cannot plausibly keep the property it
really comes into play. There is really no occasion to apply expropriated in any manner it pleases and in the process
the “fee simple concept” if the transfer is conditional. dishonor the judgment of expropriation. A condemnor should
The taking of a private land in expropriation proceedings is commit to use the property pursuant to the purpose stated in
always conditioned on its continued devotion to its public the petition for expropriation, failing which it should file
purpose. Once the purpose is terminated or peremptorily another petition for the new purpose. If not, then it behooves
the condemnor to return the said property to its private

owner, if the latter so desires.
Hence, equity and justice demand the reconveyance by
MCIAA of the litigated lands in question to the Ouanos and
Inocians. In the same token, justice and fair play also dictate
that the Ouanos and Inocian return to MCIAA what they
received as just compensation for the expropriation of their
respective properties plus legal interest to be computed from
default, which in this case should run from the time MCIAA
complies with the reconveyance obligation.
116. LOPEZ v. CA G.R. No. 157784 December 16, 2008

FACTS:
On 23 March 1968, Juliana executed a notarial will, whereby
she expressed that she wished to constitute a trust fund for
her paraphernal properties, denominated as Fideicomiso de
Juliana Lopez Manzano (Fideicomiso), to be administered by
her husband. If her husband were to die or renounce the
obligation, her nephew, Enrique Lopez, was to become
administrator and executor of the Fideicomiso. Two-thirds
(2/3) of the income from rentals over these properties were
to answer for the education of deserving but needy honor
students, while one-third 1/3 was to shoulder the expenses
and fees of the administrator.
As to her conjugal properties, Juliana bequeathed the portion The properties which Jose had alleged as registered in his
that she could legally dispose to her husband, and after his and Juliana’s names, including the disputed lots, were
death, said properties were to pass to her biznietos or great adjudicated to Jose as heir, subject to the condition that Jose
grandchildren. Juliana initiated the probate of her will five (5) would settle the obligations charged on these properties.
days after its execution, but she died on 12 August 1968,
The probate court, thus, directed that new certificates of title
before the petition for probate could be heard.
be issued in favor of Jose as the registered owner thereof in
The petition was pursued instead in Special Proceedings its Order dated 15 September 1969. On even date, the
(S.P.) No. 706 by her husband, Jose, who was the designated certificates of title of the disputed properties were issued in
executor in the will. On 7 October 1968, the Court of First the name of Jose. The Fideicomiso was constituted in S.P No.
Instance, Branch 3, Balayan,Batangas, acting as probate 706 encompassing one-half (1/2) of the Abra de Ilog lot on
court, admitted the will to probate and issued the letters Mindoro, the 1/6 portion of the lot in Antorcha St. in Balayan,
testamentary to Jose. Jose then submitted an inventory of Batangas and all other properties inherited ab intestato by
Juliana’s real and personal properties with their appraised Juliana from her sister, Clemencia, in accordance with the
values, which was approved by the probate court. Thereafter, order of the probate court in S.P. No. 706. The disputed lands
Jose filed a Report dated 16 August 1969, which included a were excluded from the trust. Jose died on 22 July 1980,
proposed project of partition. leaving a holographic will disposing of the disputed
properties to respondents. The will was allowed probate on
Jose proceeded to ofer a project of partition. Then, Jose 20 December 1983 in S.P. No. 2675 before the RTC of Pasay
listed those properties which he alleged were registered in City.
both his and Juliana’s names, totaling 13 parcels in all. The
disputed properties consisting of six (6) parcels, all located in Pursuant to Jose’s will, the RTC ordered on 20 December
Balayan, Batangas, were included in said list. On 25 August 1983 the transfer of the disputed properties to the
1969, the probate court issued an order approving the respondents as the heirs of Jose. Consequently, the
project of partition. certificates of title of the disputed properties were cancelled
and new ones issued in the names of respondents.
As to the properties to be constituted into the Fideicomiso,
the probate court ordered that the certificates of title thereto Petitioner’s father, Enrique Lopez, also assumed the
be cancelled, and, in lieu thereof, new certificates be issued trusteeship of Juliana’s estate. On 30 August 1984, the RTC
in favor of Jose as trustee of the Fideicomiso covering one- of Batangas, Branch 9 appointed petitioner as trustee of
half (1/2) of the properties listed under paragraph 14 of the Juliana’s estate in S.P. No. 706.
project of partition; and regarding the other half, to be
On 11 December 1984, petitioner instituted an action for
registered in the name of Jose as heir of Juliana.
reconveyance of parcels of land with sum of money before
the RTC of Balayan, Batangas against respondents. The
complaint essentially alleged that Jose was able to register in

his name the disputed properties, which were the
paraphernal properties of Juliana, either during their
conjugal union or in the course of the performance of his
duties as executor of the testate estate of Juliana and that
upon the death of Jose, the disputed properties were included
in the inventory as if they formed part of Jose’s estate when
in fact Jose was holding them only in trust for the trust estate
of Juliana.
The RTC dismissed the petition on the ground of
prescription. The CA denied the appeals filed by both parties.
ISSUE: Whether an implied trust was constituted over the
disputed properties when Jose, the trustee, registered them
in his name?
HELD:
The disputed properties were excluded from the Fideicomiso
at the outset. Jose registered the disputed properties in his
name partly as his conjugal share and partly as his
inheritance from his wife Juliana, which is the complete
reverse of the claim of the petitioner, as the new trustee, that
the properties are intended for the beneficiaries of the
Fideicomiso. Furthermore, the exclusion of the disputed
properties from the Fideicomiso was approved by the probate
court and, subsequently, by the trial court having jurisdiction 117. SALAO VS SALAO, G.R. NO. L-26699, March 16,
over the Fideicomiso. The registration of the disputed 1976
properties in the name of Jose was actually pursuant to a Facts:
court order. The apparent mistake in the adjudication of the
disputed properties to Jose created a mere implied trust of The spouses Manuel Salao and Valentina Ignacio of Barrio
the constructive variety in favor of the beneficiaries of the Dampalit, Malabon, Rizal begot four children named Patricio,
Fideicomiso. Alejandra, Juan (Banli) and Ambrosia. Manuel Salao died in
1885. His eldest son, Patricio, died in 1886 survived by his
only child. Valentin Salao. After Valentina’s death, her estate any interest in the two fishponds and that the sole owners
was administered by her daughter Ambrosia. The thereof his father Banli and his aunt Ambrosia, as shown in
documentary evidence proves that in 1911 or prior to the the Torrens titles issued in 1911 and 1917, and that he Juani
death of Valentina Ignacio her two children, Juan Y. Salao, Sr. was the donee of Ambrosia’s one-half share.
and Ambrosia Salao, secured a Torrens title, OCT No. 185 of
Benita Salao and her nephews and niece asked for the
the Registry of Deeds of Pampanga, in their names.
annulment of the donation to Juan S. Salao, Jr. and for the
The property in question is the forty-seven-hectare fishpond reconveyance to them of the Calunuran fishpond as Valentin
located at Sitio Calunuran, Lubao, Pampanga, wherein Benita Salao’s supposed one-third share in the 145 hectares of
Salao-Marcelo daughter of Valentin Salao claimed 1/3 fishpond registered in the names of Juan Y. Salao, Sr. and
interest on the said fishpond. The defendant Juan Y. Salao Jr. Ambrosia Salao.
inherited from his father Juan Y. Salao, Sr. ½ of the fishpond
and the other half from the donation of his auntie Ambrosia Issue: Whether or not the Calunuran fishpond was held in
Salao. trust for Valentin Salao by Juan Y. Salao, Sr. and Ambrosia
Salao.
It was alleged in the said case that Juan Y. Salao, Sr and
Ambrosia Salao had engaged in the fishpond business. Where Held:
they obtained the capital and that Valentin Salao and There was no resulting trust in this case because there never
Alejandra Salao were included in that joint venture, that the was any intention on the part of Juan Y. Salao, Sr., Ambrosia
funds used were the earnings of the properties supposedly Salao and Valentin Salao to create any trust. There was no
inherited from Manuel Salao, and that those earnings were constructive trust because the registration of the two
used in the acquisition of the Calunuran fishpond. There is no fishponds in the names of Juan and Ambrosia was not vitiated
documentary evidence to support that theory. by fraud or mistake. This is not a case where to satisfy the
The lawyer of Benita Salao and the Children of Victorina demands of justice it is necessary to consider the Calunuran
Salao in a letter dated January 26, 1951 informed Juan S. fishpond ” being held in trust by the heirs of Juan Y. Salao, Sr.
Salao, Jr. that his clients had a one-third share in the two for the heirs of Valentin Salao.
fishponds and that when Juani took possession thereof in A Torrens Title is generally a conclusive evidence of the
1945, in which he refused to give Benita and Victorina’s ownership of the land referred to therein. (Sec. 47, Act 496).
children their one-third share of the net fruits which A strong presumption exists that Torrens titles were
allegedly amounted to P200,000. However, there was no regularly issued and that they are valid. In order to maintain
mention on the deeds as to the share of Valentin and an action for reconveyance, proof as to the fiduciary relation
Alejandra. Juan S. Salao, Jr. in his answer dated February 6, of the parties must be clear and convincing.
1951 categorically stated that Valentin Salao did not have
The plaintifs utterly failed to prove by clear, satisfactory and The real purpose of the Torrens system is, to quiet title to
convincing evidence. It cannot rest on vague and uncertain land. “Once a title is registered, the owner may rest secure,
evidence or on loose, equivocal or indefinite declarations. without the necessity of waiting in the portals of the court, or
sitting in the mirador de su casa, to avoid the possibility of
Trust and trustee; establishment of trust by parol evidence; losing his land”.
certainty of proof. — Where a trust is to be established by
oral proof, the testimony supporting it must be suficiently
strong to prove the right of the alleged beneficiary with as
much certainty as if a document proving the trust were
shown. A trust cannot be established, contrary to the recitals
of a Torrens title, upon vague and inconclusive proof.
Trusts; evidence needed to establish trust on parol testimony.
— In order to establish a trust in real property by parol
evidence, the proof should be as fully convincing as if the act
giving rise to the trust obligation were proven by an
authentic document. Such a trust cannot be established upon
testimony consisting in large part of insecure surmises based
on ancient hearsay. (Syllabus, Santa Juana vs. Del Rosario 50
Phil. 110).
The foregoing rulings are good under article 1457 of the Civil
Code which, as already noted, allows an implied trust to be
proven by oral evidence. Trustworthy oral evidence is
required to prove an implied trust because, oral evidence can
be easily fabricated.
On the other hand, a Torrens title is generally a conclusive of
the ownership of the land referred to therein (Sec. 47, Act
496). A strong presumption exists. that Torrens titles were
regularly issued and that they are valid. In order to maintain
an action for reconveyance, proof as to the fiduciary relation
of the parties must be clear and convincing.
118. MUNICIPALITY OF VICTORIAS VS. CA
Facts:
Norma Leuenberger, respondent, inherited aparcel of land Issue: W/N the notary public of sale is suficient to
from her grandmother, Simeona Vda.de Ditching in 1941. substantiate the municipality’s claim that it acquired the
disputed land by means of a Deed of Sale.
In 1963, she discovered that apart of the parcel of land was
being used by petitioner Municipality of Victorias as a Held:
cemetery. By reason of the discovery, respondent wrote a
letter to the Mayor of Victorias demanding payment of Yes.The fact that the notary public of sale showed the nature
pastrentals over the land used a cemetery and requesting of the instrument, the subject of the sale, the parties of the
delivery of the illegally occupied land by the petitioner. contract, the consideration and the date of sale, the Court
held that it was a suficient evidence of the Deed of Sale.
The Mayor replied that themunicipality bought the land but Thus, when Norma inherited the land from her grandmother,
however refused to show the papers concerning the sale. a portion of it has already been sold by the latter to the
Apparently, the municipality failed to register the Deed of Municipality of Victorias in1934. Her registration of the
Sale of the lot in dispute. parcel of land did not therefore transfer ownership but
merely confirmed it. As the civil code provides, where the
Respondent filed a complaint in the Court of First Instance of
land is decreed in the name of a person through fraud or
Negros Occidental for recovery of possession of the parcel of
mistake, such person is by operation of law considered a
land occupied by the municipal cemetery. In its answer,
trustee of an implied trust for the benefit of the persons from
petitioner Municipality alleged ownership of the lot having
whom the property comes. Consequently, she only held the
bought it from Simeona Vda. de Ditching sometime in 1934.
land in dispute in trust for the petitioner hence private
The lower court decided in favor of the petitioner respondent is inequity bound to reconvey the subject land to
municipality. On appeal, petitioner presented an entry in the the cestui que trust , the Municipality of Victorias.
notarial register form the Bureau of Records Management in
Manila of a notary public of a sale purporting to be that of
the disputed parcel of land. Included within it are the parties
to the sale, Vda. De Ditching, as the vendor and the
Municipal Mayor of Victorias in 1934, as vendee.
The Court of Appeals however claimed that this evidence is
not a suficient Deed of Sale. It therefore reversed the ruling
of the CFI and ordered the petitioner to deliver the
possession of the land in question to respondents.
130. ROSARIOGAYONDATO , vs.THE TREASURER OF

THE PHILIPPINE ISLANDS, ET AL., G.R. No. L-24597 The Attorney-General in his brief for the Insular Treasurer
August 25, 1926 raises the point that Domingo and Adela prior to the
registration must be considered to have held the property in
FACTS: trust and for the benefit of Rosario; thus, the relation of
trustee and cestui que trust was created making this case fall
Three parcels of land (subject lots) were inherited by under Section106 of the Land Registration Act, which
Domingo Gayondato from his mother. Domingo then provides that "the assurance fund shall not be liable to pay
married Adela Gasataya (Adela) and they had one for any loss or damage or deprivation occasioned by breach of
child, Rosario Gayondato. Domingo died in 1902 and six trust, whether express, implied, or constructive, by any registered
years later, Adela married Domingo Cuachon.The subject lots owner who is a trustee, or by the improper exercise of any
were included in a cadastral case where Domingo appeared on sale in mortgage-foreclosure proceedings. “The use of the
behalf of Adela and Rosario, who was then fifteen years old. word "trust" in this sense is not technically accurate. As Perry
says, such trusts "are not trusts at all in the strict and proper
Despite Domingo’s claims that the subject lots were owned by both signification of the word "trust"; but as courts are agreed in
Adela andRosario, Court of First Instance erroneously decreed administering the same remedy in a certain class of frauds
the registration of the aforesaid lots in the name of Adela as are administered in fraudulent breaches of trusts, and as
Gasataya alone. Subsequently Adela, with the consent of her courts and the profession have concurred in calling such
husband, mortgaged the property to the National Bank and in frauds constructive trusts, there can be no misapprehension in
the year 1920, sold it to the Francisco Rodriguez (Francisco), continuing the same phraseology, while a change might lead to
the latter assuming the liability for the mortgage and for confusion and misunderstanding. “If this is the kind of
certain other debts. Rosario filed a complaint against Adela, constructive trust referred to in Section 106, it must be
Domingo, Francisco, and Insular Treasurer to recover conceded that Rosario cannot recover damages from the assurance
damages for the erroneous registration of the subject lots in fund. But that such is not the case, becomes quite apparent
the name of Adela. Trial court ruled in favor of Rosario upon an examination of sections 101 and 102, of the same
ordering Adela and Domingo tosolidarily indemnify Rosario, Act, in which the right of recovery from the assurance fund in
but absolving Insular Treasurer and Francisco cases of registration through fraud or wrongful acts is expressly
recognized, then it clearly shows that the term trust as
ISSUE used in section106 must be taken in its technical and more
restricted sense. Indeed, if it were to be regarded in its
WON Insular Treasurer should be held secondarily liable? broadest sense, the assurance fund would, under the
conditions here prevailing, be of little or no value
HELD
ISSUE Does the possession of legal title preclude the

operation of a trust agreement?
HELD
No. The trial court plainly erred. The complaint did not seek
the review of the decree or the reopening of the cadastral
131. EUSEBIA ESCOBARVS RAMON LOCSIN, in his case, but the enforcement of a trust. Hence, section 38 of Act
capacity as special administrator of the intestate estate No. 496 does not apply. The estate of Juana Ringor as the
of Juana Ringor, G.R. No. L-48309 January 30, 1943 successor in interest of the trustee, Domingo Sumangil, is in
equity bound to execute a deed of conveyance of this lot to
FACTS
the plaintif-appellant. The remedy herein prayed for has
The complaint alleges that the plaintif is the owner of the been upheld by this Court in previous cases, one of which is
subject lot; and that in the course of the cadastral Severino vs. Severino (44 Phil., 343, year 1923). There is no
proceedings, plaintif being illiterate, asked Sumangil to indication there of an intention to cut of, through the
claim the same for her (plaintif) but Sumangil committed a issuance of a decree of registration, equitable rights or
breach of trust by claiming the lot for himself, so it was remedies such as those here in question. On the contrary,
adjudicated in favor of Sumangil. The defendant is the section 70 of the Act provides: Registered lands and
special administrator of the estate of Juana Ringor, to whom ownership therein, shall in all respects be subject to the
the parcel of land in question was assigned by partition in the same burdens and incidents attached by law to unregistered
intestate estate of Sumangil and Duque. The CFI found that land. Nothing contained in this Act shall in any way be
the plaintif is the real owner of the lot which she had construed to relieve registered land or the owners thereof
acquired in 1914 by donation propter nuptias from Pablo from any rights incident to the relation of husband and wife,
Ringor; that plaintif had since that year been in possession or from liability to attachment on mesne process or levy on
of the land; and that the same had been decreed in the execution, or from liability to any lien of any description
cadastral proceedings in favor of Domingo Sumangil. The established by law on land and the buildings thereon, or the
trial court, while recognizing that the plaintif had the interest of the owner in such land or buildings, or to change
equitable title and the defendant the legal title, nevertheless the laws of descent, or the rights of partition between
dismissed the complaint because the period of one year coparceners, joint tenants and other cotenants, or the right
provided for in section 38 of the Land Registration Act for the to take the same by eminent domain, or to relieve such land
review of a decree had elapsed and the plaintif had not from liability to be appropriated in any lawful manner for the
availed herself of this remedy. payment of debts, or to change or afect in any other way any
other rights or liabilities created by law and applicable to
unregistered land, except as otherwise expressly provided in
this Act or in the amendments hereof. A trust — such as that of susana filed a complaint for reconveyance and recovery of
which was created between the plaintif and Domingo the said property with damages before RTC against Perfecta
Sumangil — is sacred and inviolable. The Courts have (daughter of castor). Heirs of susana contends that Perfecta
therefore shielded fiduciary relations against every manner intruded upon and excluded them from the subject lots –
of chicanery or detestable design cloaked by legal unlawful occupancy – Perfecta planted and harvested crops
technicalities. The Torrens system was never calculated to on the land. In addition, the land was registered under the
foment betrayal in the performance of a trust. The judgment name of Perfecta. (Perfecta was in possession of the land)
appealed from is hereby reverse, and the defendant is Perfecta then contends that the land sold by castor’s heir to
ordered to convey that lot in question to the plaintif within him and castor has possession and lots covered by tax
fifteen days from the entry of final judgment herein; and declaration. Then castor sold it to perfecta who took
upon his failure or refusal to do so, this judgment shall possession and filed with the Bureau of Lands an application
constitute suficient authorization for the Register of Deeds for the issuance of title over her name and it was granted.
of Nueva Ecija, in lieu of a deed of conveyance, to transfer Furthermore, the Confirmation of Extrajudicial Partition was
the certificate of title for said lot No. 692 to the plaintif a nullity. The intention of such document was to
Eusebia Escobar. The defendant shall pay the costs of both accommodate susana who thenneeded security for the loan
instances she was trying to obtain from the Rural bank. RTC was in
favor of Perfecta because her evidence was more worthy of
credence. Heirs of susana appealed before CA and it
reversed the decision alleging that the confirmation of
extrajudicial partition was not a simulated document. It was
132. CAVILE v LITANIA-HONG susana who paid the taxes before. Perfecta then filed a
FACTS motion for reconsideration but was denied. Perfecta then
filed this petition.
A deed of partition was entered into by the heirs of spouses
Bernardo Cavile and Tranquilina Galon. Subject of the deed ISSUE Whether or not Perfecta has a the better right to the
of partition were several parcels of lant all under the name of subject lots?
Bernardo. Some of the legal heirs sold their shares to Castor HELD
(father of Perfecta – petitioner) making him sole owner of the
properties. Castor and Susana (legal heir, sister of castor) Yes. In civil cases, the party having the burden of proof must
executed a confirmation of extrajudicial partition, it was establish his case by a preponderance of evidence. It is the
recognized and confirmed in the document that Susana has a weight, credit, and value of the aggregate evidence on either
just and lawful share on the said properties and she was in side and is usually considered to be synonymous with the
actual possession of the said properties. 14 years after, heirs term “greater weight of the evidence or greater weight of the
credible evidence”. It is the probability of truth. The heirs of allegation of fraud is not enough. Intentional acts to deceive
Susana were only able to provide as evidence the document and deprive another party of his right must be proved.
of the Confirmation of Extrajudicial Partition and the tax
declaration. Tax declarations are not conclusive evidence of
ownership but it can be used to support such claim. In 133. Estrella Tiongco Yared vs Jose B. Tiongco, (G.R.
addition, Susana failed to shed light on why or how the said No. 161360 October 19, 2011
properties wholly pertained to her when her parents
Bernardo and Tranquilina clearly had other heirs who also FACTS:
had shares in the inheritance. No information was provided Matilde, Jose, Vicente, Felipe are the HEIRS OF MARIA LUIS
as to how said possession of the lots was actually exercised DE TIONGCO. Although the HEIRS OF MARIA LUIS DE
or demonstrated by Susana. On the side of perfecta, the land TIONGCO have all died, there were survived by their
was registered under her name; a patent was legally issued children and descendants. Among them are the legitimate
by the government in her name. Possession of lots was children of Jose, Estrella Tiongco Yared and Carmelo
established not just by the testimony of Perfecta but was Tiongco, father of the respondent Jose. In 1965, Estrella built
corroborated by the testimony of Luciana Navarra, whose a house on Lot 1404 and sustained herself by collecting
husband was a tenant working on the subject lots. Moreover, rentals from the tenants of Lots 3244 and 3246. In 1968,
they planted coconuts, rice, and corn on which the heirs of Estrella, as one of the heirs of Jose, filed an adverse claim
Susana were unable to refute. Therefore, the court was afecting all the rights, interest and participation of her
convinced that the evidence adduced by perfecta deceased father on the disputed lots, but the adverse claim
preponderated over that of the heirs of Susanna. It is was only annotated on the OCTs covering Lots 3244 and
important to note that the heirs of Susana brought the action 1404. In 1983, the NEPHEW prohibited Estrella from
for reconveyance of the subject lots before RTC only more collecting rentals from the tenants of Lots 3244 and 3246.
than 12 years after the Torrens titles were issued in favor of The NEPHEW filed a suit for recovery of possession against
perfecta. The remedy then was already time-barred (implied several tenants of Lots 324 and 3246 wherein he obtained a
or constructive trust – 10 years from the date of the issuance judgment in his favour. The NEPHEW also filed a case for
of certificate of title over the property provided not unlawful detainer against Estrella as she was staying on Lot
transferred to innocent purchaser for value). And even if it 1404. The RTC ruled in favour of the NEPHEW.
has not been barred, still perfecta will win because of the
preponderance of evidence. The CA reversed and ruled in favour of Estrella. As such, the
NEPHEW never took possession of the properties. In 1988,
In addition, the heirs of Susana alleged fraud and breach of when Estrella inquired at the Ofice of the RD, she discovered
trust in the part of perfecta. But the court said that mere that, sometime in 1974, the NEPHEW had already executed
an Afidavit of Adjudication declaring that he is the only
surviving heir of the registered owners and adjudicating unto the properties, as such, she is in a position to file the
himself Lots 3244, 3246, and 1404. The OCTs were cancelled complaint to protect her rights and clear whatever doubts
and new TCTs were issued in respondent Jose’s name. Based had been cast on her title by the issuance of the TCTs in the
on the records of the RD, the NEPHEW sold Lots 3244 and NEPHEW’s name. The circuitous sale transaction of the
1404 to Catalino Torre. Lot 3246 was sold to Antonio properties from the NEPHEW to Torre to Doronilla, and back
Doronila. Torre sold the Lots 3244 and 1404 to Doronila. again to the NEPHEW were unusual. However, these
Doronila sold back to Jose Lots 1404, 3244, and 3246. In successive transfers of title from one hand to another could
1990, Estrella filed a complaint against the NEPHEW and not cleanse the illegality of the NEPHEW’s act of
Doronila. RTC ruled in favour of Jose for prescription has set adjudicating to himself all the disputed properties so as to
since the complaint was filed in 1990 or some 16 years after entitle him the protection of the law as a buyer in good faith.
the NEPHEW caused to be registered the afidavit of The NEPHEW cannot claim lack of knowledge of the defects
adjudication. The CA AFFIRMED. surrounding the cancellation of the OCTs over the properties
and benefit from his fraudulent actions. The subsequent sales
ISSUE Who has a better right to the properties? will not cure the nullity of the certificates of title obtained by
RULING The CA decision is reversed and set aside. The RD the NEPHEW on the basis of the false and fraudulent
is ordered to restore the OCTs under the name/s of the Afidavit of Adjudication.
registered original owners.
HELD 134. PNB v JUMANOY
Generally, an action for reconveyance can barred by
prescription. An action for reconveyance based on implied or
constructive trust must perforce prescribe in 10 years from FACTS:
the issuance of the Torrens title over the property. However,
On December 27, 1989, the RTC, Branch 19, of Digos City,
there is an exception to this rule: when the plaintif is in
Davao del Sur, rendered a Decision5 in Civil Case No. 2514 (a
possession of the land to be reconveyed, prescription cannot
case for Reconveyance and Damages), ordering the exclusion
be invoke in an action for reconveyance. The action is
of 2.5002 hectares from Lot 13521. The trial court found that
imprescriptible so long as the land has not passed to an
said 2.5002 hectares which is part of Lot 13521, a 13,752-
innocent buyer for value. This is based on the theory that
square meter parcel of land covered by Original Certificate of
registration proceedings cannot be used as a shield for fraud
Title (OCT) No. P- 49526 registered in the name of Antonio
or enriching a person at the expense of another. In this case,
Go Pace (Antonio) on July 19, 1971 actually pertains to
Estrella’s possession was disturbed in 1983 when the
Sesinando Jumamoy (Sesinando), Ciriaco’s predecessor-
NEPHEW filed a case for recovery of possession. The RTC
ininterest.
ruled in favour of Estrella. Estrella never lost possession of
The RTC found that said 2.5002-hectare lot was erroneously The RTC and CA ruled that Ciriaco is correct and that PNB
included in Antonio’s free patent application which became must reconvey the land to Ciriaco. Thus PNB filed this case to
the basis for the issuance of his OCT. It then ordered the question the ruling of the RTC and CA.
heirs of Antonio (the Paces [represented by Rosalia Pace
(Rosalia)]) to reconvey said portion to Ciriaco. In so ruling, ISSUE Whether or not PNB canrecover the land to Ciriaco?
the RTC acknowledged Ciriaco’s actual and exclusive HELD
possession, cultivation, and claim of ownership over the
subject lot which he acquired from his father Sesinando, who Yes. PNB is not an innocent purchaser/ mortgagee for value.
occupied and improved the lot way back in the early 1950s.7 PNB In this case is considered a trustee in a constructive
The December 27, 1989 ruling then became final but could trust holding the land in trust for Ciriaco. Also, since Ciriaco
not be annotated since the OCT was already cancelld. is in possession of the land, the action based on constructive
Apparently, Antonio and his wife Rosalia mortgaged Lot trust is imprescriptible. Undoubtedly, our land registration
13521 to PNB as security for a series of loans which Antonio statute extends its protection to an innocent purchaser for
defaulted and PNB foreclosed the mortgage on July 14, value, defined as "one who buys the property of another,
198610 and the title was transferred to PNB. without notice that some other person has a right or interest
in such property and pays the full price for the same, at the
Thus, in February 1996, Ciriaco filed the instant complaint time of such purchase or before he has notice of the claims or
against PNB and the Paces for Declaration of Nullity of interest of some other person in the property."25 An
Mortgage, Foreclosure Sale, Reconveyance and Damages, "innocent purchaser for value" includes an innocent lessee,
docketed as Civil Case No. 3313 and raffled to Branch 18 of mortgagee, or other encumbrancer for value .26 Here, we
RTC, Digos City, Davao del Sur. In his complaint, Ciriaco agree with the disposition of the RTC and the CA that PNB is
averred that Antonio could not validly mortgage the entire not an innocent purchaser for value. As we have already
Lot 13521 to PNB as a portion thereof consisting of 2.5002 declared: A banking institution is expected to exercise due
hectares belongs to him (Ciriaco), as already held in Civil diligence before entering into a mortgage contract. The
Case No. 2514. He claimed that PNB is not an innocent ascertainment of the status or condition of a property ofered
mortgagee/purchaser for value because prior to the to it as security for a loan must be a standard and
execution and registration of PNB’s deed of sale with the indispensable part of its operations. PNB’s contention that
Register of Deeds, the bank had prior notice that the Ciriaco failed to allege in his complaint that PNB failed to
disputed lot is subject of litigation. It would appear that take the necessary precautions before accepting the
during the pendency of Civil Case No. 2514, a notice of lis mortgage is of no moment. It is undisputed that the 2.5002-
pendens was annotated at the back of OCT No. P-4952 as hectare portion of the mortgaged property has been
Entry No. 16554712 on November 28, 1988. adjudged in favor of Ciriaco’s predecessor-in-interest in Civil
Case No. 2514.
Hence, PNB has the burden of evidence that it acted in good opportunity to dispute factual allegations pass. Had PNB
faith from the time the land was ofered as collateral. really taken the necessary precautions, it would have
However, PNB miserably failed to overcome this burden. discovered that a large portion of Lot 13521 is occupied by
There was no showing at all that it conducted an Ciriaco. Ciriaco’s action for reconveyance is imprescriptible.
investigation; that it observed due diligence and prudence by If a person claiming to be the owner thereof is in actual
checking for flaws in the title; that it verified the identity of possession of the property, as the defendants are in the
the true owner and possessor of the land; and, that it visited instant case, the right to seek reconveyance, which in efect
subject premises to determine its actual condition before seeks to quiet title to the property, does not prescribe. The
accepting the same as collateral. reason for this is that one who is in actual possession of a
piece of land claiming to be the owner thereof may wait until
Both the CA and the trial court correctly observed that PNB his possession is disturbed or his title is attacked before
could not validly raise the defense that it relied on Antonio’s taking steps to vindicate his right, the reason for the rule
clean title. The land, when it was first mortgaged, was then being, that his undisturbed possession gives him a continuing
unregistered under our Torrens system. The first mortgage right to seek the aid of a court of equity to ascertain and
was on February 25, 197128 while OCT No. P-4952 was determine the nature of the adverse claim of a third party
issued on July 19, 1971. Since the Paces ofered as collateral and its efect on his own title, which right can be claimed
an unregistered land, with more reason PNB should have only by one who is in possession.34 In Ciriaco’s case, as it
proven before the RTC that it had verified the status of the has been judicially established that he is in actual possession
property by conducting an ocular inspection before granting of the property he claims as his and that he has a better right
Antonio his first loan. Good faith which is a question of fact to the disputed portion, his suit for reconveyance is in efect
could have been proven in the proceedings before the RTC, an action for quieting of title. Hence, petitioner’s defense of
but PNB dispensed with the trial proper and let its prescription against Ciriaco does.

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1 ATP 2016-2017- DIGESTED CASES: AGENCY AND TRUSTS

AGENCY 2.4 | Dominion Insurance Corporation vs. CA | G. R. No.

3.5 | Gozun vs. Mercado | GR No. 3.15 | DBP vs. CA | GR No. L-

4.7 | Hahn vs. CA | GR No. 113074........................................ 45

5.5 | Sevilla vs. CA | G.R. Nos. 41182-83....................................... 50

1. RAMON RALLOS, Administrator of the Estate of

SONS REALTY CORPORATION and COURT OF

FACTS: Petitioners instituted a complaint for recovery of sum of

In the barangay proceedings, Luz, who was not RULING: No

Accepting this invitation, the plaintifs proceeded to do RULING:

It appears, however, that prior to the sending of said

FACTS: remit the purchase price to the owners, through respondent

13. │ Aggabao vs Parulan Jr.│G.R. No. 165803

RULING: 15. │ Veloso vs CA│ G.R. No. 102737 (260 SCRA

Power of Attorney dated November 29, 1985 and Deed of

PMSI, in its capacity as employer and policyholder of the life

RULING: 17. DOMINION INSURANCE CORPORATION VS.

to accept, underwrite and subscribed (sic) cover notes or

RULING: A general power permits the agent to do all acts for

ISSUE: Whether or not the lower court correctly

case either is controverted, the burden of proof is upon them

Spouses Bautista claimed that in March 1996, a certain RULING:

In additon Spouses Bautista cannot be deemed

No, Roy is a mere contact person. FACTS:

On April 16, 1989, Gop Mahtani, private respondent, RULING:

ISSUE:WON British Airways is liable for the negligence

ISSUE:WON the act of the PAL agents in confirming the

so was tantamount to ratification. Hence, he is estopped from

YES. Borja is bound by the penalty clause in the

35. Sazon vs. Vasquez-Menancio | GR No. 192085

FACTS: Yes. Petitioner insisted, however, that Article 1891 of

was no perfected contract between the insurance pool and FACTS:

Upon their return to Manila, a complaint for damages RULING:

demanding that their transaction be finalized by January 30, RULING:

RULING: Baluyot issued handwritten and typewritten receipts

A perusal of the records of the case fails to show any

It is evident from the records that by his own acts and

RULING: 66. THE MANILA REMNANT CO., INC vs. THE

installments. A.U. Valencia and Co. sued Manila Remnant to

On February 24, 1993, Hahn received confirmation of

On January 25, 1991, Rodolfo S. Guevarra instituted

A general power permits the agent to do all acts for

Yes. Article 1732 of the Civil Code is silent over the

NO. As far as third persons are concerned, an act is deemed

85. AMPARO G. PEREZ ET AL. VS. THE

ISSUE: Whether or not the extra-judicial foreclosure by FACTS:

In connection with Resolution No. 35, enacting

Ruling on the death of Lacuesta, the Supreme Court

a loan with which to build a bigger building and expand the

SECTION SEVEN Hence, this appeal.

no evidence of such terms other than the contents of the

Issue: Whether or not there exist a trust relationship between

Held: No. A trust is the legal relationship between one FACTS:

ISSUE: First, if Julian really intended to sell the entire house

FACTS: Declared Deed of Waiver as valid and binding upon

consideration or cause because the land had been

Who owns the disputed parcel of land?

Petitioners owned the parcel of land.

Deed of donation had a crossed-out provision: That the donee