Agency Case Digest 2019
Agency Case Digest 2019
Agency Case Digest 2019
WEEK 1 Art. 1901. A third person cannot set up the fact that the agent has exceeded his
powers, if the principal has ratified, or has signified his willingness to ratify the
DEFINITION agent's acts.
Art. 1868. By the contract of agency a person binds himself to render some Art. 1910. The principal must comply with all the obligations which the agent may
service or to do something in representation or on behalf of another, with the have contracted within the scope of his authority.
consent or authority of the latter.
As for any obligation wherein the agent has exceeded his power, the principal is
Art. 1869. Agency may be express, or implied from the acts of the principal, from not bound except when he ratifies it expressly or tacitly.
his silence or lack of action, or his failure to repudiate the agency, knowing that
another person is acting on his behalf without authority. Art. 1317. No one may contract in the name of another without being authorized
by the latter, or unless he has by law a right to represent him.
Agency may be oral, unless the law requires a specific form.
Art. 1870. Acceptance by the agent may also be express, or implied from his acts A contract entered into in the name of another by one who has no authority or
which carry out the agency, or from his silence or inaction according to the legal representation, or who has acted beyond his powers, shall be unenforceable,
circumstances. unless it is ratified, expressly or impliedly, by the person on whose behalf it has
been executed, before it is revoked by the other contracting party.
Art. 1871. Between persons who are present, the acceptance of the agency may
also be implied if the principal delivers his power of attorney to the agent and the Art. 1403 (1). The following contracts are unenforceable, unless they are
latter receives it without any objection. ratified:
Art. 1872. Between persons who are absent, the acceptance of the agency (1) Those entered into in the name of another person by one who has
cannot be implied from the silence of the agent, except: been given no authority or legal representation, or who has acted
beyond his powers;
(1) When the principal transmits his power of attorney to the agent, who receives
it without any objection; Rallos v. Felix Go Chan, 81 SCRA 251
(2) When the principal entrusts to him by letter or telegram a power of attorney Facts: Concepcion and Gerundia Rallos were sisters and registered co-owners of
with respect to the business in which he is habitually engaged as an agent, and he the parcel of land in issue. They executed a special power of attorney in favor of
did not reply to the letter or telegram. their brother, Simeon Rallos, authorizing him to sell such land for and in their
behalf. After Concepcion died, Simeon Rallos sold the undivided shares of his
Art. 1898. If the agent contracts in the name of the principal, exceeding the sisters Concepcion and Gerundia to Felix Go Chan & Sons Realty Corporation for
scope of his authority, and the principal does not ratify the contract, it shall be the sum of P10,686.90. New TCTs were issued to the latter.
void if the party with whom the agent contracted is aware of the limits of the Petitioner Ramon Rallos, administrator of the Intestate Estate of Concepcion filed a
powers granted by the principal. In this case, however, the agent is liable if he complaint praying (1) that the sale of the undivided share of the deceased
undertook to secure the principal's ratification. Concepcion Rallos in lot 5983 be unenforceable, and said share be reconveyed to
her estate; (2) that the Certificate of 'title issued in the name of Felix Go Chan &
Sons Realty Corporation be cancelled and another title be issued in the names of
Laws on agency, the terms of which are clear and unmistakable leaving no room Orient Air Services v. CA, 197 SCRA 645
for an interpretation contrary to its tenor, should apply, the law provides that
death of the principal ipso jure extinguishes the authority of the agent to sell Facts:
rendering the sale to a third person in good faith unenforceable unless at the American Airlines, Inc. (American Air), an air carrier offering passenger and air
agent had no knowledge of the principal’s death at that time (exception under Art. cargo transportation in the Philippines, and Orient Air Services and Hotel
1931) Representatives (Orient Air), entered into a General Sales Agency Agreement
(Agreement), whereby the former authorized the latter to act as its exclusive
Dispositive: CA Decision reversed, CFI decision affirmed. Sale was null and void. general sales agent within the Philippines for the sale of air passenger
transportation. In the agreement, Orient Air shall remit in United States dollars to
(Court discussed relevant principles first) American the ticket stock or exchange orders, less commissions to which Orient Air
Relationship of Agency (concept arising from principles under Art 1317 and 1403)- Services is entitled, not less frequently than semi-monthly. On the other hand,
one party, caged the principal (mandante), authorizes another, called the agent American will pay Orient Air Services commission on transportation sold by Orient
(mandatario), to act for and in his behalf in transactions with third persons. Air Services or its sub-agents. Thereafter, American alleged that Orient Air had
-derivative in nature, power emanating from principal reneged on its obligations under the Agreement by failing to promptly remit the
-agent’s acts are acts of the principal net proceeds of sales for the months of January to March 1981 in the amount of
US $254,400.40, American Air by itself undertook the collection of the proceeds of
Essential Elements: tickets sold originally by Orient Air and terminated forthwith the Agreement in
(1) there is consent, express or implied of the parties to establish the accordance with paragraph 13 which authorize the termination of the thereof in
relationship; case Orient Air is unable to transfer to the United States the funds payable by
(2) the object is the execution of a juridical act in relation to a third person; Orient Air Services to American. American Air instituted suit against Orient Air
(3) the agents acts as a representative and not for himself, and with the Court of First Instance of Manila “for Accounting with Preliminary
(4) the agent acts within the scope of his authority. Attachment or Garnishment, Mandatory Injunction and Restraining Order” averring
the aforesaid basis for the termination of the Agreement as well as therein
Orient Air denied the material allegations of the complaint with respect to Uy v.CA,314 SCRA 69
plaintiff's entitlement to alleged unremitted amounts, contending that after
application thereof to the commissions due it under the Agreement, plaintiff in fact Facts: Teodoro Jardeleza, petitioner, filed a petition in the matter of the
still owed Orient Air a balance in unpaid overriding commissions. Further, the guardianship of Dr. Ernesto Jardeleza, Sr., upon learning that one piece of real
defendant contended that the actions taken by American Air in the course of property belonging to the latter spouses was about to be sold. The petitioner
terminating the Agreement as well as the termination itself were untenable. The averred therein that the present physical and mental incapacity of Dr. Ernesto
trial court ruled in its favor which decision was affirmed with modification by Court Jardeleza Sr. prevent him from competently administering his properties, in order
of Appeals. It held the termination made by the latter as affecting the GSA to prevent the loss and dissipation of the Jardeleza’s real and personal assets,
agreement illegal and improper and ordered the plaintiff to reinstate defendant as there was a need for a court-appointed guardian to administer said properties.
its general sales agent for passenger transportation in the Philippines in
accordance with said GSA agreement. Gilda Jardeleza, respondent, filed a petition regarding the declaration of incapacity
of Dr. Ernesto Jardeleza Sr., assumption of sole powers of administration of
Issue: conjugal properties and authorization to sell the property. She alleged that her
Whether the Court of Appeals erred in ordering the reinstatement of the husband’s medical treatment and hospitalization expenses were piling up and that
defendant as its general sales agent for passenger transportation in the she need to sell one piece of real property and its improvements. She prayed for
Philippines in accordance with said GSA Agreement authorization from the court to sell said property.
RTC of Iloilo City rendered its decision, finding that it was convinced that Dr.
Held: Ernesto Jardeleza Sr. was truly incapacitated to participate in the administration of
the conjugal properties. However, Teodoro filed his opposition to the proceedings
Yes. By affirming this ruling of the trial court, respondent appellate being unaware and not knowing that a decision has already been rendered on the
court, in effect, compels American Air to extend its personality to Orient case. He also questioned the propriety of the sale of the lot and its improvements
Air. Such would be violative of the principles and essence of agency, thereon supposedly to pay the accumulated financial obligations and
defined by law as a contract whereby "a person binds himself to render hospitalization.
some service or to do something in representation or on behalf of
another, WITH THE CONSENT OR AUTHORITY OF THE LATTER . In an Issue: Whether or not Gilda Jardeleza may assume sole powers of
agent-principal relationship, the personality of the principal is extended through administration of the conjugal property.
the facility of the agent. In so doing, the agent, by legal fiction, becomes the
principal, authorized to perform all acts which the latter would have him do. Such Ruling: The CA, which the SC affirmed, ruled that in the condition of Dr. Ernesto
a relationship can only be effected with the consent of the principal, which must Jardeleza Sr., the procedural rules on summary proceedings in relation to Article
not, in any way, be compelled by law or by any court. The Agreement itself 124 of the Family Code are not applicable. Because he was unable to take care of
between the parties states that "either party may terminate the himself and manage the conjugal property due to illness that had rendered him
Agreement without cause by giving the other 30 days' notice by letter, telegram or comatose. In such case, the proper remedy is a judicial guardianship proceeding
cable." (emphasis supplied) We, therefore, set aside the portion of the ruling of under Rule 93 of the 1964 Revised Rules of Court.
The bases of the petitioner’s liability are Arts. 1910 and 1911 of the Civil The lower court declared that since the authority of the agents/realtors
Code. The agent’s apparent representation yields to the principal’s true was not in writing, the sale is void and not merely unenforceable.
representation and the contract is considered as entered into between the
principal and the third person. Issue: WON the appellate court committed grave error of law in holding
that Marquez needed a written authority from respondent ETERNIT
The Court also had previously held that banks are liable to innocent 3rd before the sale can be perfected.
persons where the representation is made in the course of its business by an
agent acting within the general scope of his authority, notwithstanding the fact Held: Respondents maintain that Glanville, Delsaux and Marquez had no authority
that the latter may already be abusing his authority in order to commit fraud. from the stockholders of EC and its Board of Directors to offer the properties for
sale to the petitioners.
The bank’s relationship with the public is fiduciary. The bank should have
immediately repaired the injury caused to Cruz. The misdeeds of employees must Petitioners assert that there was no need for a written authority from the
be readily acknowledged and rectified. Board of Directors of EC for Marquez to validly act as broker. As broker, Marquez
was not an ordinary agent because his only job as a broker was to look for a buyer
Litonjua, Jr. v. Eternit Corp. 490 SCRA 204 and to bring together the parties to the transaction. He was not authorized to sell
the properties; hence, petitioners argue, Article 1874 of the New Civil Code does
Facts: The Eternit Corporation (EC) manufactures roofing materials and pipe not apply.
products. Ninety (90%) percent of the shares of stocks of EC were owned by
Eteroutremer S.A. Corporation (ESAC), a corporation registered under the laws of
Art. 1869. Agency may be express, or implied from the acts of the principal, from
The trial court, on the postulate that the spouses Angeles are not the real
his silence or lack of action, or his failure to repudiate the agency, knowing that
parties-in-interest, rendered judgment dismissing their complaint for lack of cause
another person is acting on his behalf without authority.
of action. As held by the court, Lizette was merely a representative of Romualdez
in the withdrawal of scrap or unserviceable rails awarded to him and not an
Agency may be oral, unless the law requires a specific form.
assignee to the latter's rights with respect to the award. Petitioner appealed with
the Court of Appeals which dismissed the appeal and affirmed that of the trial
Art. 1874. When a sale of a piece of land or any interest therein is through an
court.
agent, the authority of the latter shall be in writing; otherwise, the sale shall be
void.
Daluyong Gabriel, through his lawyer, sent a letter on August 30, 1989 to the De Thus, it was incumbent upon appellees to explain what actually convinced them to
los Reyes couple demanding that they cease and desist from continuing with their buy the land from Renato, and because they failed to do so, no proper basis can
construction and to immediately vacate the premises, asserting that the be found to uphold the alleged sale made by Renato as it cannot be determined
construction was unauthorized and that their occupancy of the subject portion was with certainty in what capacity Renato acted. And even assuming that he (Renato)
not covered by any lease agreement. already succeeded to whatever hereditary right or participation he may have over
On September 20, 1989, spouses Claudio and Lydia de los Reyes through counsel the estate of his father, he is still considered a co-owner with his two sisters of the
sent their letter reply explaining that the De los Reyeses are the innocent party subject property and that prior to its partition, Renato cannot validly sell or
who entered into the lease agreement and subsequent sale of subject portion of alienate a specific or determinate part of the property owned in common.
land in good faith and upon the assurance made by the former administratrix,
Maria Rita G. Rey, her nephew Tony Rey, Mrs. Fe S. Gabriel and Mr. Daluyong Renato Gabriel was neither the owner of the subject property nor a duly
Gabriel himself that Renato Gabriel is the new administrator authorized to enter designated agent of the registered owner (Daluyong Gabriel) authorized to sell
into such agreements involving the subject property. subject property in his behalf, and there was also no sufficient evidence adduced
to show that Daluyong Gabriel subsequently ratified Renato's act. In this
Dissatisfied with the explanation, Daluyong Gabriel commenced an action on connection it must be pointed out that pursuant to Article 1874 of the Civil Code,
November 14, 1989 against spouses Claudio and Lydia de los Reyes for the when the sale of a piece of land or any interest therein is through an agent, the
recovery of the subject portion of land before the Regional Trial Court. authority of the latter shall be in writing; otherwise the sale shall be void. In
other words, for want of capacity (to give consent) on the part of Renato
ISSUE: Gabriel, the oral contract of sale lacks one of the essential requisites for
Whether or not the sale between the Spouses Delos Reyes and Reynato its validity prescribed under Article 1318, supra and is therefore null and
Gabriel in the name of his deceased father is valid. void ab initio.
Held:
No. the contract of sale cannot be upheld, mainly because Renato
Gabriel, as vendor, did not have the legal capacity to enter and to give
consent to the agreement, he, being neither the authorized agent (of
Legal Doctrine: Persons dealing with an assumed agent, whether the assumed STATEMENT Folio No. 2494
agency be a general or special one, are bound at their peril, if they would hold the Mr. DOMINGO RODRIGUEZ,
principal, to ascertain not only the fact of the agency but the nature and extent of Iloilo, Iloilo, P.I.
the authority, and in case either is controverted, the burden of proof is upon them In account with
to establish it. HARRY E. KEELER ELECTRIC COMPANY, INC.
221 Calle Echaque, Quiapo, Manila, P.I.
Facts: MANILA, P.I., August 18, 1920.
Plaintiff is Harry E. Keeler Electric Co., a domestic corporation based The answer alleges and the receipt shows upon its face that the plaintiff
in Manila engaged in the electrical business, and among other things sold the plant to the defendant, and that he bought it from the plaintiff. The
in the sale of what is known as the "Matthews" electric plant. receipt is signed as follows:
Defendant is Domingo Rodriguez a resident of Talisay, Occidental Received payment
Negros HARRY E. KEELER ELECTRIC CO. Inc.,
Montelibano, a resident of Iloilo, went to Keeler Electric and made Recibi
arrangement with the latter wherein: (Sgd.) A. C. MONTELIBANO.
o He claimed that he could find purchaser for the "Matthews"
plant Witness (Juan Cenar):
o Keeler Electric told Montelibano that for any plant that he o Cenar was sent by Keeler Electric to install the plant in Rodriguez’s
could sell or any customer that he could find he would be premises in Iloilo
paid a commission of 10% for his services, if the sale was o He brought with him a statement of account for Rodriguez but the
consummated. latter said that he would pay in Manila.
Through Montelibano’s efforts, Keeler was able to sell to Rodriguez one of ***Lower Court: In favor of Rodriguez. It held that:
the "Matthews" plants o Keeler Electric had held out Montelibano to Rodriguez as an agent
Rodriguez paid Montelibano (the purchase price of P2,513.55), after the authorized to collect
installation of the plant and without the knowledge of Keeler Electric, o Payment to Montelibano would discharge the debt of Rodriguez
Keeler Electric filed an action against Rodriguez for the payment of the o The bill was given to Montelibano for collection purposes
purchase price. Keeler Electric appealed. It alleged that:
Rodriguez: Claimed that he already paid the price of the plant. In o Montelibano had no authority to receive the money.
addition, he alleged that: o His services were confined to the finding of purchasers for the
o Montelibano sold and delivered the plant to him, and "was the one "Matthews" plant
who ordered the installation of that electrical plant" o Montelibano was not an electrician, could not install the plant and
o There were evidences: a statement and receipt which did not know anything about its mechanism.
Montelibano signed to whom he paid the money.
b. It was Juan Cenar, and not Montelibano who sold the plant to b. On whether an assumed authority exist – Certain principles must be
Rodiguez considered: (Mechem on Agency, volume I, section 743)
− (1) that the law indulges in no bare presumptions that an agency
o The evidence is in direct conflict with Rodriguez’s own pleadings exists: it must be proved or presumed from facts;
and the receipt statement which he offered in evidence. This − (2) that the agent cannot establish his own authority, either by his
statement also shows upon its face that P81.60 of the bill is round representations or by assuming to exercise it;
trip fare and machine’s transportation costs. − (3) that an authority cannot be established by mere rumor or
general reputation;
− (4)that even a general authority is not an unlimited one; and
Art. 1690. The head of the family shall furnish, free of charge, to the house (1) If the compensation is paid by the day, notice may be given
helper, suitable and sanitary quarters as well as adequate food and medical on any day that the service shall end at the close of the following day;
attendance.
(2) If the compensation is paid by the week, notice may be given,
Art. 1691. If the house helper is under the age of eighteen years, the head of the at the latest on the first business day of the week, that the service shall be
family shall give an opportunity to the house helper for at least elementary terminated at the end of the seventh day from the beginning of the week;
education. The cost of such education shall be a part of the house helper's
compensation, unless there is a stipulation to the contrary. (3) If the compensation is paid by the month, notice may be given, at the latest,
on the fifth day of the month, that the service shall cease at the end of the month.
Art. 1692. No contract for household service shall last for more than two years.
However, such contract may be renewed from year to year. Art. 1699. Upon the extinguishment of the service relation, the house helper may
demand from the head of the family a written statement on the nature and
Art. 1693. The house helper's clothes shall be subject to stipulation. However, duration of the service and the efficiency and conduct of the house helper.
any contract for household service shall be void if thereby the house helper cannot
afford to acquire suitable clothing. B. Employer-employee
Art. 1700. The relations between capital and labor are not merely contractual.
Art. 1694. The head of the family shall treat the house helper in a just and They are so impressed with public interest that labor contracts must yield to the
humane manner. In no case shall physical violence be used upon the house common good. Therefore, such contracts are subject to the special laws on labor
helper. unions, collective bargaining, strikes and lockouts, closed shop, wages, working
conditions, hours of labor and similar subjects.
Art. 1695. House helper shall not be required to work more than ten hours a day.
Every house helper shall be allowed four days' vacation each month, with pay. C. Lease of service
Art. 1644. In the lease of work or service, one of the parties binds himself to
Art. 1696. In case of death of the house helper, the head of the family shall bear execute a piece of work or to render to the other some service for a price certain,
the funeral expenses if the house helper has no relatives in the place where the but the relation of principal and agent does not exist between them.
head of the family lives, with sufficient means therefor.
D. Independent contractor
Art. 1697. If the period for household service is fixed neither the head of the Art. 1713. By the contract for a piece of work the contractor binds himself to
family nor the house helper may terminate the contract before the expiration of execute a piece of work for the employer, in consideration of a certain price or
the term, except for a just cause. If the house helper is unjustly dismissed, he compensation. The contractor may either employ only his labor or skill, or also
shall be paid the compensation already earned plus that for fifteen days by way of furnish the material.
indemnity. If the house helper leaves without justifiable reason, he shall forfeit any
salary due him and unpaid, for not exceeding fifteen days.
E. Trust
Art. 1698. If the duration of the household service is not determined either by Art. 1440. A person who establishes a trust is called the trustor; one in whom
stipulation or by the nature of the service, the head of the family or the house confidence is reposed as regards property for the benefit of another person is
H. Negotiorum gestio/quasi-contract This was firmed up by two resolutions of the board of directors of Tourist World
Art. 2144. Whoever voluntarily takes charge of the agency or management of the Service, Inc. dated Dec. 2, 1961, the first abolishing the office of the manager and
business or property of another, without any power from the latter, is obliged to vice-president of the Tourist World Service, Inc., Ermita Branch, and the second,
continue the same until the termination of the affair and its incidents, or to require authorizing the corporate secretary to receive the properties of the Tourist World
the person concerned to substitute him, if the owner is in a position to do so. This Service then located at the said branch office. It further appears that on Jan. 3,
juridical relation does not arise in either of these instances: 1962, the contract with the appellees for the use of the Branch Office premises
(1) When the property or business is not neglected or abandoned; was terminated and while the effectivity thereof was Jan. 31, 1962, the appellees
no longer used it. As a matter of fact appellants used it since Nov. 1961. Because
(2) If in fact the manager has been tacitly authorized by the owner. of this, and to comply with the mandate of the Tourist World Service, the
corporate secretary Gabino Canilao went over to the branch office, and, finding
In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding the premises locked, and, being unable to contact Lina Sevilla, he padlocked the
unauthorized contracts shall govern. premises on June 4, 1962 to protect the interests of the Tourist World Service.
In the second case, the rules on agency in Title X of this Book shall be applicable.
When neither the appellant Lina Sevilla nor any of her employees could enter the
Art. 2145. The officious manager shall perform his duties with all the diligence of locked premises, a complaint was filed by the herein appellants against the
a good father of a family, and pay the damages which through his fault or appellees with a prayer for the issuance of mandatory preliminary injunction. Both
negligence may be suffered by the owner of the property or business under appellees answered with counterclaims. For apparent lack of interest of the parties
management. therein, the trial court ordered the dismissal of the case without prejudice.
The courts may, however, increase or moderate the indemnity according to the ISSUE:
circumstances of each case. Whether the act of Tourist World Service in abolishing its Ermita branch
proper
No, the act of Tourist World Service in abolishing its Ermita branch is not proper. ISSUE:
The Supreme Court held that when the petitioner, Lina Sevilla, agreed to manage WON Dela Fuente is merely an agent of Shell Co.
Tourist World Service, Inc.'s Ermita office, she must have done so pursuant to a
contract of agency. HELD:
In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of Yes. De la Fuente was the operator of the station "by grace" of the Defendant
her principal, Tourist World Service, Inc. As compensation, she received 4% of the Company which could and did remove him as it pleased; that all the equipments
proceeds in the concept of commissions. And as we said, Sevilla herself, based on needed to operate the station was owned by the Defendant Company which took
her letter of November 28, 1961, presumed her principal's authority as owner of charge of their proper care and maintenance, despite the fact that they were
the business undertaking. We are convinced, considering the circumstances and loaned to him; that the Defendant company did not leave the fixing of price for
from the respondent Court's recital of facts, that the parties had contemplated a gasoline to De la Fuente; That the service station belonged to the company and
principal-agent relationship, rather than a joint management or a partnership. bore its trade name and the operator sold only the products of the company; that
the equipment used by the operator belonged to the company and were just
But unlike simple grants of a power of attorney, the agency that we hereby loaned to the operator and the company took charge of their repair and
declare to be compatible with the intent of the parties, cannot be revoked at will. maintenance.
The reason is that it is one coupled with an interest, the agency having been
created for the mutual interest of the agent and the principal. Accordingly, the As the act of the agent or his employees acting within the scope of his authority is
revocation complained of should entitle the petitioner, Lina Sevilla, to damages. the act of the principal, the breach of the undertaking by the agent is one for
which the principal is answerable. The latter was negligent and the company must
Shell v. Firemen's Insurance Co., 100 Phil. 757 answer for the negligent act of its mechanic which was the cause of the fall of the
car from the hydraulic lifter.
FACTS: This case is about an action for recovery of sum of money, based on the
alleged negligence of the defendants. Dela Cruz v. Northern Theatrical Enterprises, 95 Phil. 739
A car was brought to a Shell gasoline station owned by Dela Fuente for washing Facts: 1941, The Northern Theatrical Enterprises Inc., a domestic corporation
and greasing. The car was placed on a hydraulic lifter for greasing. As some parts operated a movie house in Laoag, Ilocos Norte. Domingo De La Cruz was
of the car couldn’t be reached by the greaseman, the lifter was lowered. employed whose duties were to guard the main entrance, to maintain peace and
Unfortunately, for unknown reasons (probably due to mechanical failure or human order and to report the commission of disorders within premises. He carried a
error), while the lifter was being lowered, the car swung and fell from the revolver.
platform. Said car was insured against loss or damage by Firemen's Insurance
Company of Newark, New Jersey, and Commercial Casualty Insurance Company Benjamin Martin wanted to crash the gate or entrance of the movie house.
jointly for the sum of P10,000. The insurance companies after paying the sum Infuriated by the refusal of De la Cruz to let him in without first providing himself
of P1,651.38 for the damage and charging the balance of P100.00 to Salvador with a ticket, Martin attacked him with a bolo. De la Cruz defendant himself as
Sison, in accordance with the terms of the insurance contract, filed this action best he could until he was cornered, at which moment to save himself he shot
Martin, resulting in Benjamin Martin’s death.
After trial, the court a quo rendered a decision dismissing the complaint with costs. Held: Article 1709 of the Old Civil Code, defining contract of agency, provides that
The court stated that it did not find sufficient evidence to establish LEPANTO's "By the contract of agency, one person binds himself to render some service or do
counterclaim and so it likewise dismissed the same. NIELSON appealed. The something for the account or at the request of another." Article 1544, defining
Supreme Court reversed the decision of the trial court and enter in lieu thereof contract of lease of service, provides that "In a lease of work or services, one of
another, ordering Lepanto to pay Nielson (1) 10% share of cash dividends of the parties binds himself to make or construct something or to render a service to
December, 1941 in the amount of P17,500.00, with legal interest thereon from the the other for a price certain." In both agency and lease of services one of the
date of the filing of the complaint; (2) management fee for January, 1942 in the parties binds himself to render some service to the other party. Agency, however,
amount of P2,500.00, with legal interest thereon from the date of the filing of the is distinguished from lease of work or services in that the basis of agency is
complaint; (3) management fees for the sixty-month period of extension of the representation, while in the lease of work or services the basis is employment. The
management contract, amounting to P150,000.00, with legal interest from the lessor of services does not represent his employer, while the agent represents his
date of the filing of the complaint; (4) 10% share in the cash dividends during the principal. Further, agency is a preparatory contract, as agency "does not stop with
period of extension of the management contract, amounting to P1,400,000.00, the agency because the purpose is to enter into other contracts." The most
with legal interest thereon from the date of the filing of the complaint; (5) 10% of characteristic feature of an agency relationship is the agent's power to bring about
the depletion reserve set up during the period of extension, amounting to business relations between his principal and third persons. "The agent is destined
P53,928.88, with legal interest thereon from the date of the filing of the complaint; to execute juridical acts (creation, modification or extinction of relations with third
(6) 10% of the expenses for capital account during the period of extension, parties). Lease of services contemplate only material (non-juridical) acts." Herein,
amounting to P694,364.76, with legal interest thereon from the date of the filing the principal and paramount undertaking of Nielson under the management
of the complaint; (7) to issue and deliver to Nielson and Co. Inc. shares of stock of contract was the operation and development of the mine and the operation of the
Lepanto Consolidated Mining Co. at par value equivalent to the total of Nielson's mill. All the other undertakings mentioned in the contract are necessary or
10% share in the stock dividends declared on November 28, 1949 and August 22, incidental to the principal undertaking — these other undertakings being
1950, together with all cash and stock dividends, if any, as may have been dependent upon the work on the development of the mine and the operation of
declared and issued subsequent to November 28, 1949 and August 22, 1950, as the mill. In the performance of this principal undertaking Nielson was not in any
fruits that accrued to said shares; provided that if sufficient shares of stock of way executing juridical acts for Lepanto, destined to create, modify or extinguish
Lepanto's are not available to satisfy this judgment, Lepanto shall pay Nielson an business relations between Lepanto and third persons. In other words, in
amount in cash equivalent to the market value of said shares at the time of performing its principal undertaking Nielson was not acting as an agent of
default, that is, all shares of stock that should have been delivered to Nielson Lepanto, in the sense that the term agent is interpreted under the law of agency,
before the filing of the complaint must be paid at their market value as of the date but as one who was performing material acts for an employer, for a compensation.
of the filing of the complaint; and all shares, if any, that should have been It is true that the management contract provides that Nielson would also act as
delivered after the filing of the complaint at the market value of the shares at the purchasing agent of supplies and enter into contracts regarding the sale of
Art. 1903. The commission agent shall be responsible for the goods received by Art. 1911. Even when the agent has exceeded his authority, the principal is
him in the terms and conditions and as described in the consignment, unless upon solidarily liable with the agent if the former allowed the latter to act as though he
receiving them he should make a written statement of the damage and had full powers.
deterioration suffered by the same.
Art. 1921. If the agency has been entrusted for the purpose of contracting with
Art. 1904. The commission agent who handles goods of the same kind and mark, specified persons, its revocation shall not prejudice the latter if they were not
which belong to different owners, shall distinguish them by countermarks, and given notice thereof.
designate the merchandise respectively belonging to each principal.
Art. 1922. If the agent had general powers, revocation of the agency does not
Art. 1905. The commission agent cannot, without the express or implied consent prejudice third persons who acted in good faith and without knowledge of the
of the principal, sell on credit. Should he do so, the principal may demand from revocation. Notice of the revocation in a newspaper of general circulation is a
him payment in cash, but the commission agent shall be entitled to any interest or sufficient warning to third persons.
benefit, which may result from such sale.
Art. 1906. Should the commission agent, with authority of the principal, sell on
credit, he shall so inform the principal, with a statement of the names of the
Art. 1869. Agency may be express, or implied from the acts of the principal, from DOCTRINE: The general doctrine holds the power of a principal to revoke the
his silence or lack of action, or his failure to repudiate the agency, knowing that authority of his agent at will, in the absence of a contract fixing the duration of the
another person is acting on his behalf without authority. agency however, the principal cannot deprive his agent of the commission agreed
upon by canceling the agency and, thereafter, dealing directly with the buyer.
Agency may be oral, unless the law requires a specific form.
FACTS: Sometime in 1974, respondent Teresita Nacianceno succeeded in
Art. 1884 (2). The agent is bound by his acceptance to carry out the agency, and convincing officials of the then Department of Education and Culture, to purchase
is liable for the damages which, through his non-performance, the principal may without public bidding, one million pesos worth of national flags for the use of
suffer. public schools throughout the country. And for her service, she was entitled to a
commission of thirty (30%) percent.
He must also finish the business already begun on the death of the
principal, should delay entail any danger. On October 16, 1974, the first delivery of 7,933 flags was made by the
United Flag Industry. The next day, on October 17, 1974, the respondent's
Art. 1930. The agency shall remain in full force and effect even after the death of authority to represent the United Flag Industry was revoked by petitioner Primitivo
the principal, if it has been constituted in the common interest of the latter and of Siasat. According to the findings of the courts below, Siasat, after receiving the
the agent, or in the interest of a third person who has accepted the stipulation in payment of P469,980.00 on October 23, 1974 for the first delivery, tendered the
his favor. amount of P23,900.00 or five percent (5%) of the amount received, to the
respondent as payment of her commission. The latter allegedly protested. She
Art. 1931. Anything done by the agent, without knowledge of the death of the refused to accept the said amount insisting on the 30% commission agreed upon.
principal or of any other cause which extinguishes the agency, is valid and shall be The respondent was prevailed upon to accept the same because of the assurance
fully effective with respect to third persons who may have contracted with him in of the petitioners that they would pay the commission in full after they delivered
good faith. the other half of the order. The respondent states that she later on learned that
petitioner Siasat had already received payment for the second delivery of 7,833
D. UNIVERSAL, GENERAL, AND SPECIAL flags. When she confronted the petitioners, they vehemently denied receipt of the
payment, at the same time claiming that the respondent had no participation
Art. 1876. An agency is either general or special. whatsoever with regard to the second delivery of flags and that the agency had
already been revoked. She then filed a case in court.
The former comprises all the business of the principal. The latter, one or more
specific transactions. The trial court decided in favor of the respondent.
In assailing the appellate court's decision, the petition tenders the following
E. DURABLE AGENCY arguments: first, the authorization making the respondent the petitioner's
representative merely states that she could deal with any entity in connection with
Art. 1930. The agency shall remain in full force and effect even after the death of the marketing of their products for a commission of 30%. There was no specific
the principal, if it has been constituted in the common interest of the latter and of authorization for the sale of 15,666 Philippine flags to the Department; second,
the agent, or in the interest of a third person who has accepted the stipulation in there were two transactions involved evidenced by the separate purchase orders
his favor. and separate delivery receipts, The revocation of agency effected by the parties
with mutual consent on October 17, 1974, therefore, forecloses the respondent's
The payment of claims is not an act of administration which requires a (6) To make gifts, except customary ones for charity or those made to employees
special power of attorney before Guevarra could settle the insurance claims of in the business managed by the agent;
the insured.
(7) To loan or borrow money, unless the latter act be urgent and indispensable for
Also Guevarra was instructed that the payment for the insured must come the preservation of the things which are under administration;
from the revolving fund or collection in his possession, Gueverra should not have
paid the insured through his own capacity. Under 1918 of civil code an agent who (8) To lease any real property to another person for more than one year;
acted in contravention of the principal’s instruction the principal will not be liable
for the expenses incurred by the agent. (9) To bind the principal to render some service without compensation;
(b) YES. Even if the law on agency prohibits Gueverra from obtaining (10) To bind the principal in a contract of partnership;
reimbursement his right to recover may be justified under the article 1236 of the
civil code.[1] Thus Guevarra must be reimbursed but only to the extent that (11) To obligate the principal as a guarantor or surety;
Dominion has benefited without interest or demand for damages.
(12) To create or convey real rights over immovable property;
F. COUCHED IN GENERAL TERMS; COUCHED IN SPECIFIC TERMS
(13) To accept or repudiate an inheritance;
Art. 1877. An agency couched in general terms comprises only acts of
administration, even if the principal should state that he withholds no power or (14) To ratify or recognize obligations contracted before the agency;
that the agent may execute such acts as he may consider appropriate, or even
though the agency should authorize a general and unlimited management. (15) Any other act of strict dominion.
Art. 1878. Special powers of attorney are necessary in the following cases: Art. 1879. A special power to sell excludes the power to mortgage; and a special
power to mortgage does not include the power to sell.
(1) To make such payments as are not usually considered as acts of
administration; Art. 1880. A special power to compromise does not authorize submission to
arbitration.
(2) To effect novations which put an end to obligations already in existence at the
time the agency was constituted;
PNB v. Sta. Maria, 29 SCRA 303 · The Trial Court rendered judgement in favor of the PNB
· Maximo did not appeal but his siblings appealed and contended that they
Concept: had given their brother Maximo the authority to borrow money but only to
mortgage the real estate jointly owned by them and that if they are liable, the
Art. 1207. The concurrence of two or more creditors or of two or more debtors in liability should not go beyond the value of the property which they had authorized
one and the same obligation does not imply that each one of the former has a to be given as security of the loans obtained by Maximo. They further contended
right to demand, or that each one of the latter is bound to render, entire that they did not benefit whatsoever from the loans.
compliance with the prestation. There is a solidary liability only when the
obligation expressly so states, or when the law or the nature of the obligation Issue: W/N the siblings are only liable for the value of the land?
requires solidarity
Held: Yes, except for Valeriana who issued a separate Special Power of Attorney
Facts: authorizing Maximo to borrow money.
· Special power of the attorney to mortgage real estate is limited to such
authority and does not bind the grantor personally to other obligations contracted · In Bank of P. I. v. De Coster, "where in an instrumentpowers and duties
by the grantee are specified and defined, that all of such powers and duties are limited
andconfined to thosewhich are specified and defined, and all other powers
· The sugar crop loans were obtained by Maximo from the plaintiff bank andduties are excluded.”
under the power of the attorney, executed in his favor by his brothers and sisters
to mortgage a 16-odd hectare parcel of land, jointly owned by all of them · In De Villa vs. Fabricante, where the power of attorneygiven to the
husband by the wife was limited to a grant of authority to mortgage a parcel of
· Valeriana the sister of Maximo, alone also executed in favor of her brother land titled in the wife'sname, the wife may not be held liable for the payment of
Maximo a special power of attorney to borrow money and mortgage any real the mortgage debt contracted by the husband, as theauthority to mortgage does
estate owned by her. not carry with it the authorityto contract obligation.
· Maximo applied for two separate crop loans with the PNB, one in the · Maximo and Valeriana are the only ones liable for the loans and that the
amount of P15,000 but only P13,216.11 was extended by the PNB and the other other siblings’ liability only correspond to real estate mortgage and the foreclosure
for P23,000 but only P12,427.57 was extended by the PNB and sale of mortgage.
· As security for the two loans, Maximo executed it in his own name in favor · Maximo’s argument that "a mortgage is simply anaccessory contract, and
of PNB two chattel mortgages, guaranteed by the surety bonds for the full that to effect the mortgage, aloan has to be secured" falls, far short of the
authorized amounts of loans executed by the Associated Insurance & Surety Co., mark.Maximo had indeed, secured the loan on his own accountand the
Inc. defendants-appellants had authorized him tomortgage their respective undivided
shares of the realproperty jointly owned by them as security for the loan.But that
was the extent of their authority land consequentliability, to have the real property
answer for the loan incase of non-payment.
o Notes to BPI: The sheriff admitted that the summons for Gabriela was given to her husband, Mr.
1. It does not represent any money paid to the defendant by the bank. J. M. Poizat, at her usual place of residence in the City of Manila on March 13,
2. It is exclusively the personal debt of Jean Poizat and J.M. Poizat & Co. 1924. If this were the case of the wife being in Paris on a pleasure or a business
3. It was executed by her husband because the bank asked for more security on trip, then her residence would have continued to be that of her husband. This is
the debt. not the case here.
4. It was executed by her husband in excess of the powers given to him under his
power of attorney. Upon the admitted facts, the Court is clearly of the opinion that the residence of
5. It was the result of a collusion between BPI and Jean Poizat for the purpose of the husband was not the usual place of residence of the wife. Giving full force and
making her liable for the obligation of a third person. effect to the legal presumption that the usual place of residence of the wife is that
of her husband, that presumption is overcome by the admitted fact that the wife
o Mortgage with BPI: was "residing in the City of Paris, France, since the year 1908 up to April 30,
1. It was executed to secure a void obligation. 1924." Without placing a limitation upon the length of time sufficient to overcome
2. Does not guarantee any loan made to Gabriela. the legal presumption, suffice it to say that sixteen years is amply sufficient.
2. On August 25, 1903, Gabriela gave her husband a power of attorney, which This decision as to the bank on this motion is based on the assumption that the
gives him the following powers: facts are true as set forth and alleged in the petition to set aside and vacate the
“5. Loan or borrow any sums of money or fungible things xxxx and making all judgment as to the wife, but the Court is not making any finding as to the actual
these transactions with or without mortgages, pledges or personal guaranty. truth of such facts. That remains for the defendant wife to prove such alleged
facts when the case is tried on its merits.
Jean Poizat did sign a promissory note on behalf of his wife in Dec 1921 and a real
mortgage afterward, also as his wife’s attorney in fact. But facts show that Jean DISPOSITIVE:
owed BPI P290,050.02 prior to July 1921 and thereafter his debt to BPI was 1. Lower court’s opinion in refusing to set aside and vacate the judgment for BPI
converted into 6 promissory notes aggregating to P308,458.58 of which P16,180 against Gabriela is REVERSED; such judgment is set aside and REMANDED to the
were paid; thus the balance of P292,278.58. What happened in Dec 1921 is that lower court for further proceedings.
these 6 promissory notes were cancelled and substituted by a joint and several 2. Judgment of lower court in favor of La Orden de Dominicos is REVERSED,
note signed by Jean in his personal capacity, as an agent of his wife, and as a without prejudice to its right to file an original suit to foreclose its mortgage or to
member of the firm J.M. Poizat & Co. file a good and sufficient plea as intervenor in the instant suit.
Villamor, J., concurring and dissenting: - He agrees that the lower court’s
Under the power of attorney, the husband had no authority for and on behalf of judgment should be set aside so that Gabriela would be given the opportunity to
the wife to execute a joint and severalnote or to make her liable as an appear and to defend herself.
accommodation maker. The debt in question was a preexisting debt of her - But he does not agree with the attempts of the majority to decide on certain
husband and of the firm of which she was not a party and she was not obliged to features of the case raised by defendant- appellant (Gabriela), without waiting for
pay. No new or additional money was lent when the note (of which wife is already the outcome of the new trial wherein the other parties will have the opportunity to
a party) was signed in Dec 1921. There is nothing in the power of attorney which present their defenses against the facts alleged by appellant.
gives the husband the authority to make his wife liable as a surety for the
payment of the preexisting debt of a third person. - The merits of the question should not now be discussed without giving the trial
court an opportunity to pass upon the allegations and evidence of the parties.
3. The real mortgage to the bank was given to secure the note in question and
was not given for any other purpose. The note being void as to the wife, it follows
Hodges v. Salas, 63 Phil. 567 Strong v. Gutierrez Rupide, 6 Phil. 680 (main opinion only)
Facts: On September 2, 1923, the defendants executed a power of attorney in FACTS: Among the lands comprising the friar lands are the Dominican
favor of their brother-in-law Felix S. Yulo to enable him to obtain a loan and lands, the only valuable asset owned by the corporation Philippine Sugar Estates
secure it with a mortgage on the real property described in transfer certificate of Development Company Limited (Philippine Sugar Estates). Francisco Gutierrez
title No. 3335. The power of attorney was registered in the registry of deeds of the Repide (Repide), defendant, was the majority stockholder and one of the five
Province of Occidental Negros. Acting under said power of attorney, Felix S. Yulo, directors of Philippine Sugar Estates. He was likewise elected by the board as the
on March 27, 1926, obtained a loan of P28,000 from the plaintiff, binding his agent and administrator general of such company. The factual backdrop being
principals jointly and severally, to pay it within ten (10) years, together with during US occupation, the US Government wanted to secure title over the friar
interest thereon at 12 per cent per annum payable annually in advance, to which lands. To accomplish this objective, Governor for the Philippines entered into
effect he signed a promissory note for said amount and executed a deed of negotiations for the purchase of the Dominican lands, during which Repide
mortgage of the real property. It was stated in the deed that in case the represented Philippine Sugar Estates. The first offer of the Governor was to
defendants failed to pay the stipulated interest and the taxes on the real property purchase the subject lands in the amount of $6, 043,219.47. As the majority
mortgaged and if the plaintiff were compelled to bring an action to recover his stockholder of Philippine Sugar Estates and without prior consultation with the
credit, said defendants would be obliged to pay 10 per cent more on the unpaid other stockholders, Repide rejected the offer. For the second offer, the purchase
capital, as fees for the plaintiff's attorneys. The mortgage so constituted was price was increased to $7,535,000.
registered in the registry of deeds of the Province of Occidental Negros and noted
on the back of the transfer certificate of title.The defendants failed to pay at While negotiations for the second offer were ongoing and while still holding out for
maturity the interest stipulated which should have been paid one year in a higher price of the Dominican lands, Repide took steps to purchase the 800
advance. Plaintiff therefore brought an action for foreclosure of the mortgage. The shares of stock of Philippine Sugar Estates. These shares were owned by Mrs.
trial court ordered in favor of the defendants and held that the loan and the Eleanor Strong (Strong) which were then in the possession of her agent, F. Stuart
mortgage were illegal. Jones (Jones). Repide, instead of seeing Jones, employed Kauffman who later on
employed Sloan, a broker, to purchase the shares of Strong. Jones sold the 800
Issue: Whether or not the loan obtained and the mortgage executed by shares of Strong for 16,000 Mexican currency. For this sale transaction a check of
Yulo was valid and therefore defendants are bound to pay? one Rueda Ramos was issued. Later on, the negotiations for the purchase of the
Dominican lands were concluded and a contract of sale was subsequently
Ruling: Yes. The loan obtained and the mortgage executed by Yulo was valid and executed. This sale transaction increased the value of the shares of stocks
therefore defendants are bound to pay for it. By virtue of the authority conferred originally owned by Strong from 16,000 Mexican currency to 76,256 US currency.
by the defendants by executing a power of attorney, agent Yulo was authorized to During the negotiations regarding the purchase of the shares of stock of Strong,
borrow money and invest it as he wished, without being obliged to apply it not one word of the facts affecting the value of this stock was made known to her
necessarily for the benefit of his principals. nor her agent, Jones. After the sale of Dominican lands and after the purchase of
the 800 shares of Strong, Repide became the owner of 30,400 out of the 42,030
RULING: Yes. With the factual circumstances of this case, it became the Po Sun Suy and Po Ching are owners of the commercial firm Tai Hing Co.)
duty of Repide, acting in good faith, to state the facts before making the purchase
of Strong’s shares. That Repide was one of the directors of Philippine Sugar FACTS: Po Ejap was the owner of a titled land w/c was mortgaged to PNB in
Estates was but one of the facts upon which liability is asserted. He was not only a 1919-1921, Po Tecsi executed a general power of attorney in favor of his brother
director, but he owned three-fourths of the shares of its stock, and was, at the Po Ejap to perform on his behalf the ff: "to buy, sell, or barter, assign, admit in
time of the purchase of the stock, administrator general of the company with large acquittance or in any other manner to acquire or convey all sorts of property, real
powers and engaged in the negotiations which finally led to the sale of the and personal, businesses and industries, credits, rights, and actions belonging to
company’s lands at a price which greatly enhanced the value of the stock. He was me, for whatever prices and under the conditions which he may stipulate, paying
the negotiator for the sale of the Dominican lands and was acting substantially as and receiving payment in cash or in installments, and to execute the proper
the agent of the shareholders of Philippine Sugar Estates by reason of his instruments with the formalities provided by the law."
ownership of the shares in the company. Because of such ownership and agency,
no one knew as well as he does about the exact condition of the negotiations. He Po Ejap then sold the said land with its improvements to his brother Po Tecsi for
was the only one who knew of the probability of the sale of the Dominican lands the sum of P10,000. In 1923, making use of the power conferred by his brother,
to the government and of the probable purchase price. Under these Po Ejap sold absolutely said land to Katigbak. After said sale, Po Tecsi leased the
circumstances, Repide employed an agent to purchase the stock of Strong, property sold, from Gabino Barreto Po Ejap, who administered it in the name of
concealed his own identity and his knowledge of the state of negotiations and their Jose M. Katigbak, at a rental of P1,500 per month, payable in advance, leaving
probable result. The concealment of his identity while procuring the purchase of unpaid the rents accrued from that date until his death which occurred on
the stock, by his agent, was in itself strong evidence of fraud on the part of November 26, 1926, having paid the accrued rents up to October 22, 1925; from
Repide. By such means, the more easily was he able to avoid questions relative to November 26, 1926, the defendants Po Sun Suy and Po Ching leased said land for
the negotiations for the sale of Dominican lands and actual misrepresentations the sum of P1,500 per month; on February 11, 1927, Po Sun Suy was appointed
regarding that subject. He kept up the concealment as long as he could by giving administrator of the estate of his father Po Tecsi, and filed with the court an
the check of a third person Rueda Ramos, for the purchase money. This move of inventory of said estate including the land inquestion; and on May 23, 1927, Jose
Repide was a studied and intentional omission to be characterized as part of the M. Katigbak sold the same property to Po Sun Boo, Katigbak filed this action for
deceitful machinations to obtain the purchase without giving any information the recovery of the rent. Po Sun Suy contends that Katigbak is not the owner of
whatever as to the state and probable result of the negotiations and to obtain a the property (so not entitled to rents) because Po Ejap was not authorized under
lower price for the shares of Strong. After the purchase of stock, he continued the power executed by Po Tecsi to sell said land, because said power had been
negotiations for the sale of the Dominican lands as the administrator general and executed before Po Ejap sold said land to Tecsi.
eventually entered into a contract of sale. The whole transaction gives conclusive
evidence of the overwhelming influence Repide had in the negotiations and it is ISSUES: WON Po Ejap cannot have sold the property (on behalf of Tecsi)
clear that the final consummation was in his hands at all times. because the power was executed by Tecsi before Tecsi owned the
property.
Dungo had already ratified the compromise agreement as • The plaintiff requested defendants to allow its workers to enter the area in
established by the Tri-Party Agreement where it was stipulated that the question for exploration and development purposes as well as for the extraction of
PAYOR submits and binds himself to the force and effect of the order of minerals, promising to pay the defendants reasonable amounts as damages, but
CFI. When it appears that the client, on becoming aware of the the defendants refused to allow entry of the plaintiff's representatives
compromise and judgment thereon, fails to repudiate promptly the
action of his attorney, he will not be heard to contest its validity. o The defendants were threatening the plaintiff's workers with bodily harm if they
entered the premises, for which reason the plaintiff had suffered irreparable
Although Dungo was not a signatory, the compromise agreement damages due to its failure to work on and develop its claims and to extract
benefited him in that the agreement extended the date of maturity. minerals therefrom, resulting in its inability to comply with its contractual
Petitioner argues that the compromise agreement could not be enforced commitments
because it had been novated by the Tri-Party Agreement. Petitioner was
mistaken. Novation by presumption has never been favored. It needs to • Defendants’ claims:
be established that the old and new contracts are incompatible in all o They are rightful owners of certain portions of the land covered by the supposed
points or that the will to novate is expressly stated. The Tri-Party mining claims of the plaintiff
Agreement was an instrument intended to render effective the
compromise agreement. It merely complemented and ratified the same. o It was the plaintiff and its workers who had committed acts of force and violence
Compromise agreement was valid and enforceable. when they
Petition for certiorari and mandamus filed by petitioner is dismissed • The court then suggested the relocation of the boundaries of the plaintiff's
claims in relation to the properties of the defendants
o The report found that Angeles’ and Vicente’s properties were totally covered by O It is not disputed that the lawyers of respondent had not submitted to the Court
Corporation’s claim while Bernabe’s property was only partially covered – report any written authority from their client to enter into a compromise.
was approved "with the conformity of all the parties in this case.”
• This Court has said that the Rules "require, for attorneys to compromise the
• The counsels of the parties executed and submitted to the court a Compromise litigation of their clients, a special authority. And while the same does not state
Agreement – approved that the special authority be in writing the court has every reason to expect that, if
not in writing, the same be duly established by evidence other than the self-
• On October 21, 1969, Atty. Francisco Ventura (for Hi Cement ), filed with the serving assertion of counsel himself that such authority was verbally given him."
trial court a manifestation stating that on September 1,1969 he sent a copy of the
Compromise Agreement to Mr. Antonio Diokno, President of the corporation, o The law specifically requires that "juridical persons may compromise only in the
requesting the latter to intercede with the Board of Directors for the confirmation form and with the requisites which may be necessary to alienate their property.”
or approval of the commitment made by the plaintiff's lawyers to abide by the
decision of the Court based on the reports of the Commissioners • Under corporation law, the power to compromise or settle claims in favor of or
against the corporation is ordinarily and primarily committed to the Board of
o However, the corporation’s president answered through a letter stating that they Directors.
do not agree with the valuation set by the court. o RTC rendered judgment that o This power may however be delegated either expressly or impliedly to other
plaintiff is ordered to pay defendants per square meter for the subject properties corporate officials or agents.
• Plaintiff filed a motion for new trial on the ground that the decision of above o Thus it has been stated, that as a general rule an officer or agent of the
decision is null and void because it was based on the Compromise Agreement corporation has no power to compromise or settle a claim by or against the
which was itself null and void for want of a special authority by the plaintiff's corporation, except to the extent that such power is given to him either expressly
lawyers to enter into the said agreement. or by reasonable implication from the circumstances.
OTHER ACTS OF STRICT DOMINION – ART. 1878(12) Art. 1881. The agent must act within the scope of his authority. He may do such
acts as may be conducive to the accomplishment of the purpose of the agency.
Insular Drug Co. v. National Bank, 58 Phil. 684
Art. 1882. The limits of the agent's authority shall not be considered exceeded
Facts: 132 checks made out in the name of the Insular Drug Co., Inc., were should it have been performed in a manner more advantageous to the principal
brought to the branch office ofthe Philippine National Bank in Iloilo by Foerster, a than that specified by him.
salesman of the drug company, Foerster's wife, and Foerster's clerk. And said bank
credited those checks to the personal account of Foerster and permittedhim amd Art. 1887. In the execution of the agency, the agent shall act in accordance with
his wife to make withdrawals. Eventually the Manila office of the drug company the instructions of the principal.
investigated the transactions of Foerster. Upon the discovery of anomalies,
Foerster committed suicide. But there is no evidence showing that the bank In default thereof, he shall do all that a good father of a family would do,
knewthat Foerster was misappropriating the funds of his principal. The Insular as required by the nature of the business
Drug Company claims that itnever received the face value of 132 checks.
Issue: WON PNB shall be held liable for permitting Foerster to indorse CARRY OUT THE AGENCY
and withdraw the checks of hisprincipa, Insular Druga Co. Inc.
Art. 1884. The agent is bound by his acceptance to carry out the agency, and is
Held:Yes. The bank could tell by the checks themselves that the money belonged liable for the damages which, through his non-performance, the principal may
to the Insular Drug Co., Inc., and not to Foerster or his wife or his clerk. Moreover, suffer.
the bank did not only permit Foerster to indorse checks and then place them to his
personal account, but it went farther and permitted Foerster's wife and clerk to He must also finish the business already begun on the death of the
indorse the checks. The right of an agent to indorse commercial paper is a very principal, should delay entail any danger.
responsible power and will not be lightly inferred. A sales man with authority to
collect money belonging to his principal does not have the implied authority to Art. 1928. The agent may withdraw from the agency by giving due notice to the
indorse checks received in payment. And it suffices to state in conclusion that bank principal. If the latter should suffer any damage by reason of the withdrawal, the
will have to stand the loss occasioned by the negligence of its agents. agent must indemnify him therefor, unless the agent should base his withdrawal
upon the impossibility of continuing the performance of the agency without grave
detriment to himself.
WEEK 5
Art. 1929. The agent, even if he should withdraw from the agency for a valid
OBLIGATIONS AND LIABILITIES OF AGENTS TO THEIR PRINCIPALS reason, must continue to act until the principal has had reasonable opportunity to
take the necessary steps to meet the situation.
ACT WITHIN SCOPE OF AUTHORITY
Art. 1879. A special power to sell excludes the power to mortgage; and a special
power to mortgage does not include the power to sell.
Art. 1889. The agent shall be liable for damages if, there being a conflict SOLIDARY LIABILITY
between his interests and those of the principal, he should prefer his own.
Art. 1894. The responsibility of two or more agents, even though they have been
Art. 1890. If the agent has been empowered to borrow money, he may himself appointed simultaneously, is not solidary, if solidarity has not been expressly
be the lender at the current rate of interest. If he has been authorized to lend stipulated.
money at interest, he cannot borrow it without the consent of the principal.
Art. 1895. If solidarity has been agreed upon, each of the agents is responsible
Art. 1891. Every agent is bound to render an account of his transactions and to for the non-fulfillment of agency, and for the fault or negligence of his fellows
deliver to the principal whatever he may have received by virtue of the agency, agents, except in the latter case when the fellow agents acted beyond the scope
even though it may not be owing to the principal. of their authority.
Every stipulation exempting the agent from the obligation to render an
account shall be void.
PAY INTEREST
DILIGENCE
Art. 1896. The agent owes interest on the sums he has applied to his own use
Art. 1885. In case a person declines an agency, he is bound to observe the from the day on which he did so, and on those which he still owes after the
diligence of a good father of a family in the custody and preservation of the goods extinguishment of the agency.
forwarded to him by the owner until the latter should appoint an agent or take
charge of the goods. FRAUD; NEGLIGENCE
Art. 1887. In the execution of the agency, the agent shall act in accordance with Art. 1909. The agent is responsible not only for fraud, but also for negligence,
the instructions of the principal. which shall be judged with more or less rigor by the courts, according to whether
the agency was or was not for a compensation.
In default thereof, he shall do all that a good father of a family would do,
as required by the nature of the business. SPECIFIC OBLIGATIONS OF COMMISSION AGENTS
Art. 1909. The agent is responsible not only for fraud, but also for negligence, Art. 1903. The commission agent shall be responsible for the goods received by
which shall be judged with more or less rigor by the courts, according to whether him in the terms and conditions and as described in the consignment, unless upon
the agency was or was not for a compensation. receiving them he should make a written statement of the damage and
deterioration suffered by the same.
ACCOUNT/DELIVER
Art. 1906. Should the commission agent, with authority of the principal, sell on 1. No. To avail of the exemption granted in the law, it is not necessary that
credit, he shall so inform the principal, with a statement of the names of the the persons responsible for the occurrence should be found or punished, it
buyers. Should he fail to do so, the sale shall be deemed to have been made for would only be sufficient to establish that the enforceable event, the
cash insofar as the principal is concerned. robbery in this case did take place without any concurrence fault on the
debtor’s part, and this can be done by preponderance of evidence.
Art. 1907. Should the commission agent receive on a sale, in addition to the
ordinary commission, another called a guarantee commission, he shall bear the A court finding that a robbery has happened would not necessary mean that those
risk of collection and shall pay the principal the proceeds of the sale on the same accused in the criminal action should be found guilty of the crime; nor would a
terms agreed upon with the purchaser. ruling that those actually accused did not commit the robbery be inconsistent with
Art. 1908. The commission agent who does not collect the credits of his principal a finding that a robbery did take place.
at the time when they become due and demandable shall be liable for damages,
unless he proves that he exercised due diligence for that purpose. No. In 1961, when the robbery in question did take place, for at that time
criminality had not by far reached the levels attained in the present day. The
Art. 1909. The agent is responsible not only for fraud, but also for negligence, diligence that Abad portrayed when she went home before she was robbed was
which shall be judged with more or less rigor by the courts, according to whether not a sign of negligence on her part.
the agency was or was not for a compensation.
PNB v. Manila Surety, 14 SCRA 776
Austria v. CA, 39 SCRA 527
FACTS:
Facts:
The PNB opened a letter of credit and advanced $120,000.00 to Edington Oil
Maria G. Abad received from Guillermo Austria one (1) pendant with diamonds to Refinery for 8,000 tons of hot asphalt, of which 2,000 tons worth P279,000.00
be sold on commission basis or to be returned on demand. Maria Abad while were delivered to Adams & Taguba Corp. (ATACO) under a trust receipt
walking home, two men snatched her purse containing jewelry and cash, and ran guaranteed by Manila Surety & Fidelity Co. To pay for the asphalt ATACO
away. Thus, Abad failed to return the jewelry or pay its value notwithstanding constituted PNB its assignee and attorney-in-fact to receive and collect payments
demands. Austria filed an action against Abad and Abad’s husband for recovery of from the Bureau of Public Works. ATACO delivered asphalt worth P431,466.52 to
the pendant or of its value, and damages. Abad raised the defense that the the Bureau of Public Works, PNB regularly collected the payments amounting to
alleged robbery had extinguished their obligation. P106,382.01, until they ceased to collect payments. Then in 1962 PNB found that
there were more payables to ATACO from the Bureau of Public Works. PNB sued
Issue/s: ATACO and the Surety, to recover the balance of P158,563.18 when their
1. Yes. In paragraph VI of the power of attorney, Tan Boon Tiong is Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the
principal may furthermore bring an action against the substitute with respect to
authorized to employ and contract for the services of lawyers upon such
the obligations which the latter has contracted under the substitution.
conditions as he may deem convenient, to take charge of any actions
necessary or expedient for the interests of his principal, and to defend suits Del Rosario v. La Badenia, 33 Phil. 316
brought against her. This power necessarily implies the authority to pay for
the professional services thus engaged. In the present case, Tantoco had Nature: Action to recover sum of P1,795.25 a balance alleged to be due Teofila
to pay Atty. Soriano for services rendered in other cases, for her interests del Rosario de Costa as the agent of the defendant corporation for services
and her other co-heirs. Since the judgment money that was recovered in rendered and expenses incurred in the sale of its products.
Civil case 3154 belongs to Tantoco, such credit can be used to pay Atty. Facts:
Soriano by way of assignment. Being authorized to take charge of any The plaintiffs are residents of Legaspi, Albay, and the defendant corporation is engaged in
the manufacture and sale of tobacco products with its head office in the city of Manila.
action necessary for the interest of Tantoco, Tan Boon Tiong has the 1911: the defendant corporation, a new concern, inaugurated an extensive selling
power to assign Tantoco’s credits to Atty. Soriano. campaign for the purpose of introducing its products to the retail trade.
Celestino Aragon, a general agent of the defendant corporation, was in charge of this
2. No. When a person appoints two attorneys-in-fact independently, the campaign in Albay, Sorsogon, and other provinces in the southern end of Luzon.
consent of the one will not be required to validate the acts of the other He established a central distributing agency or depot at Legaspi with the plaintiff, Teofila
del Rosario de Costa, nominally in charge, though her husband, Bernardino de Costa
unless that appears positively to have been the principal's intention. In the appears to have been the actual manager of the agency.
present case, Tantoco gave each of her attorneys-in-fact separate letters The business relations between the plaintiffs and the defendant extended from February
of attorney, which shows that it was not the principal's intention that the 1, 1911, to March 24, 1912, and during this time no settlement of their accounts was ever
two representatives should act jointly in order to make their acts valid. had.
When Aragon, the general agent, came to Legaspi in 1911 he established his
Thus, the act of Tan Boon Tiong in assigning credits to Soriano without headquarters there and took up his residence with the plaintiffs, using the lower part of
Tan Montano’s consent remains valid. Doctrine: When a person appoints their house as a store room or depository for large quantities of cigarettes and cigars. He
two agents independently, the consent of one will not be required to employed a number of persons as solicitors and paid their salaries; he paid the internal
validate the acts of the other, unless that appears positively to have been revenue fees incident to the conduct of the business in Legaspi, and also the rent of the
the principal's intention. building in which he lived with the plaintiffs and which he made use of as the general
headquarters for the agency.
The record shows that business amounting to more than P24,000 (wholesale) was done
RESPONSIBILITY FOR ACTS OF SUBSTITUTES by the Legaspi agency from February 1, 1911, to March 24, 1912. All goods sent to Legaspi
were charged by the head office at Manila against the general agent, Aragon, while on the
Art. 1892. The agent may appoint a substitute if the principal has not prohibited books kept by Aragon these goods were charged against the plaintiffs, and as goods were
him from doing so; but he shall be responsible for the acts of the substitute: withdrawn by himself, he credited the amount of the withdrawals to the account of the
(1) When he was not given the power to appoint one; plaintiffs.
The business at Legaspi appears to have been that of a distributing agency actively in
(2) When he was given such power, but without designating the person, and the
charge of the plaintiffs but over which the general agent maintained a close supervision.
person appointed was notoriously incompetent or insolvent.
Goods were withdrawn from the depository at Legaspi from time to time by the general
agent for shipment to other points; goods were likewise withdrawn by plaintiffs and shipped
Art. 1898. If the agent contracts in the name of the principal, exceeding the The mortgage deeds as well as the corresponding promissory notes were executed
scope of his authority, and the principal does not ratify the contract, it shall be in Mauro A. Garrucho's own name and signed by him in his personal capacity,
void if the party with whom the agent contracted is aware of the limits of the authorizing the mortgage creditor, the Philippine National Bank, to take possession
powers granted by the principal. In this case, however, the agent is liable if he of the mortgaged properties, by means of force if necessary, in case he failed to
undertook to secure the principal's ratification. comply with any of the conditions stipulated therein.
1717 of the Civil Code provides the following: The trial court rendered a judgment holding Zurich liable but absolved Baylin and
Crame. Philippine Products Company appealed the decision as regards the
"ART. 1717. When an agent acts in his own name, the principal shall have no right dismissal of the three defendants. Philippine Products Company alleges that Zurich
of action against the persons with whom the agent has contracted, or such is a foreign corporation under Sec. 68 of the Corporation Law; its agents here are
persons against the principal. personally liable under Art. 1897 for contracts made in behalf.
"In such case, the agent is directly liable to the person with whom he has ISSUE: Whether or not Primateria Phils, Baylin and Crame may be held
contracted, as if the transaction were his own. Cases involving things belonging to personally liable.
the principal are excepted.
HELD: No, Primateria Phils, Baylin and Crame may not be held personally liable.
"The provisions of this article shall be understood to be without prejudice to
actions between principal and agent." Under Art. 1897 of the New Civil Code, “The agent who acts as such is not
personally liable to the party with whom he contracts, unless he expressly binds
Garrucho executed the promissory notes evidencing the aforesaid loans, under his himself or exceeds the limits of his authority without giving such party sufficient
own signature, without authority from his principals and, therefore, were not notice of his power."
binding upon the latter. Neither is there anything to show that he executed the
promissory notes in question for the account, and at the request, of his respective There is no proof that as agents they exceeded the limits of their authority. The
principals. principal, who should be the one to raise the point, never raised it, denied its
liability on the ground of excess of authority. Art. 1897 does not hold that in cases
Mauro A. Garrucho and not Paz Agudelo y Gonzaga is personally liable for the of excess of authority, both the agent and the principal are liable to the other
amount of the promissory note. contracting party.
Philippine Products v. Primateria, 15 SCRA 301 NPC v. National Merchandising, 117 SCRA 789
Facts: Defendant Primateria Societe Anonyme Pour Le Commerce Exterieur Facts: NPC and National Merchandising Corporation, as the representative of
(hereinafter referred to as Primateria Zurich), is a foreign juridical entity and, at International Commodities Corporation of New York City, executed in Manila a
contract for the purchase by the NPC from the New York Firm sulfur for its Maria
The NPC sued the New York firm, National Merchandising Corporation and the However, the vessel needed repairs before it could be dispatched; and it became
Domestic Insurance Company for the recovery of damages. The trial court in its impracticable to deliver the bill of sale and insurance policy that were required by
order of January 17, 1958 dismissed the case as to the New York firm for lack of PNB in San Francisco at the time the money was needed to effect the transfer. So,
jurisdiction because it was not doing business in the Philippines. Welch in Manila, addressed a letter on August 8, 1918, to the PNB, requesting it to
cable its correspondent in San Francisco to release the money and make payment
ISSUE: Whether or not National Merchandising Corporation acted within for the vessel without requiring the delivery of the bill of sale or policy of
the scope of its authority as agent in signing the contract of sale. insurance, and that La Compañia would just deliver the bill of sale and insurance
policy later. The Bank acceded. After the repair of the Benito Juarez, it was insured
RULING: It was held that National Merchandising Corporation, as agent to the by Welch & Co. for $150,000 and was dispatched to the Philippines.
principal, International Commodities Corporation, acted beyond its authority for
still contracting with NPC despite principal’s prohibition. From the series of cable A few months after, the vessel encountered a storm off Hawaii and became a total
correspondence between International Commodities Corporation and National loss. The proceeds of the insurance came to the hands of Welch, Fairchild & Co. in
Merchandising Corporation, International Commodities Corporation stated that the Manila and has been applied by Welch, Fairchild & Co. in part satisfaction of
sale was subject to the availability of a steamer which would transport the sulfur indebtedness incurred by La Compañía to it (instead of paying the bank). This
cargo. However, National Merchandising Corporation did not disclose that cable to disposition of the insurance money was made with the tacit approval of La
the NPC and, contrary to its principal’s instruction, it agreed that non-availability of Compañía.
a steamer was not a justification for non-payment of damages.
ISSUE: Whether or not PNB has a cause of action against respondent.
Under article 1897 of the Civil Code, the agent who exceeds the limits of his
authority without giving the party with whom he contracts sufficient notice of his RULING: Yes, PNB has a cause of action against respondent.
powers is personally liable to such party.
While it is true that an agent who acts for a revealed principal in the making of a
The truth is that even before the contract of sale was signed National contract does not become personally bound to the other party in the sense that an
Merchandising Corporation was already aware that its principal was having action can ordinarily be maintained upon such contract directly against the agent,
difficulties in booking shipping space. One day before the contract of sale was yet that rule clearly does not control in this case; for even conceding that the
signed, the New York supplier advised National Merchandising Corporation that the obligation created by the letter of August 8, 1918, was directly binding only on the
latter should not sign the contract unless it wished to assume sole responsibility principal, and that in law the agent may stand apart there from, yet one who has
for the shipment. Agent who exceeds authority without giving 3rd party notice of intervened in the making of a contract in the character of agent cannot be
A debt thus incurred by the agent is binding directly upon the principal, provided HELD: The court ruled in favor of PAL. The court held that the ticket issued by
the former acted, as in the present case, within the scope of his authority. PAL constituted the contract between the parties. It was clear and undisputed as
to the expiration date of the ticket. The main issue is whether the validity became
Grupe was authorized by Vargas to mortgage the said property to satisfy any extended by the act of the PAL agents. The court ruled in the negative.
amount advanced to his wife, Orozco. He was therefore, acting within the scope of
his authority when he obtained the debt. Furthermore, it has been accepted that Under Article 1898 of the New Civil Code, the acts of an agent beyond the scope
Orozco received the amount of 2,200 pesos when she signed the instrument of of his authority do not bind the principal, unless the later ratifies the same
debt and mortgage which was subsequently registered. expressly or impliedly. Furthermore, when the third person (herein petitioner)
The provisions of this article shall be understood to be without prejudice to the The contract of agency can subsist only so long as the principal has confidence in
actions between the principal and agent. his agent, because from the moment such confidence disappears and although
there be a fixed period for the exercise of the office of agency, the principal has a
Barreto v. Sta. Marina, 26 Phil. 440 perfect right to revoke the power he had given to the agent.
FACTS: The plaintiff, Antonio M.A. Barreto, was an agent and manager of Jose Diolosa v. CA, 130 SCRA 350
Sta. Maria, the defendant, a resident of Spain and the owner and proprietor of the
business known as the La Insular Cigar and Cigarette Factory. The petitioner FACTS: Baterna is a licensed real estate broker. The spouses Diolosa owned the
alleged that the defendant, without reason, justification or pretext and in violation Villa Alegre Subdivision. On June 20, 1968, they entered into an agreement that
of the contract of agency, summarily and arbitrarily dispensed with the plaintiff’s Baterna would be their exclusive sales agent to sell the lots of the subdivision
services and removed him from the management of the business. “until all the property is fully disposed.” On September 27, 1968 the spouses
terminated the services of Baterna because the remaining unsold lots were
reserved for their 6 grandkids. (27 lots remained unsold). Baterna is claiming that
Appeal from an order of dismissal of the Court of First Instance of Briefly stated, plaintiff’s complaint seeks to enforce against the Republic of the
Manila. Philippines a money claim for the payment of materials it furnished for the
construction of two public school buildings undertaken by contractor Alfonso
On May 8, 1958, the plaintiff lumber company filed in the court below a Mendoza, on the basis of powers of attorney executed by the latter authorizing
complaint against the defendant Republic of the Philippines for the said plaintiff to collect and receive from defendant Republic any amount due or
recovery of a sum of money. The complaint alleges, among other things, may be due to said contractor as contract price for the payment of the materials
that defendant, thru the Director of Schools, entered into a contract with so supplied.
one Alfonso Mendoza to build two school houses; that plaintiff furnished
the lumber materials in the construction of the said buildings; that prior Section one of Public Act No. 3688, entitled "An Act for the protection of persons
to the payment by defendant of any amount due the contractor, the furnishing material and labor for the construction of public works", reads in part as
latter executed powers of attorney in favor of the plaintiff "constituting follows:jgc:chanrobles.com.ph
it as his sole, true and lawful attorney- in-fact with specific and
exclusive authority to collect and receive from the defendant any and all "SECTION 1. Any person, partnership or corporation entering into a formal
amounts due or may be due to said contractor from the defendant in contract with the Government of the Philippine Islands for the construction of any
connection with the construction of the aforesaid school buildings, as public building, or the prosecution and completion of any public work, or for
may be necessary to pay materials supplied by the plaintiff" ; and that repairs upon any public building or public work, shall be required, before
originals of the powers of attorney were received by defendant (thru the commencing such work, to execute the usual penal bond, with good and sufficient
Director of Public Schools) who promised to pay plaintiff, but that it, sureties, with the additional obligation that such contractor or his or its sub-
nevertheless, paid the contractor several amounts on different occasions contractors shall promptly make payments to all persons supplying him or them
without first making payment to plaintiff. The complaint, therefore, with labor and materials in the prosecution of the work provided for in such
prays that defendant be ordered to pay plaintiff the sum of P18,327.15, contract; and any person, company or corporation who has furnished labor or
the unpaid balance of the cost of lumber supplied and used in the materials used in the construction or repair of any public building or public work,
construction of the school buildings, with interest at the legal rate from and payment for which has not been made, shall have the right to intervene and
the date same was due, plus attorney’s fees and costs. be made a party to any action instituted by the Government of the Philippine
Islands on the bond of the contractor, and to have their rights and claims
In the case at bar, it is not disputed that defendant Republic has already instituted "Those who put their labor upon or furnish materials for a piece of work
a suit against the contractor for the forfeiture of the latter’s bond posted to secure undertaken by the contractor have an action against the owner up to the amount
the faithful performance of stipulations in the construction contract with regards to owing from the latter to the contractor at the time the claim is made. . . . ."cralaw
one of the two school buildings (Civil Case No. 26815, Court of First Instance of virtua1aw library
Manila). The contractor has a similar bond with respect to the other school
building. Pursuant to Act 3688, plaintiff’s legal remedy is, not to bring suit against This article, however, as expressly provided in its last paragraph, "is subject to the
the Government, there being no privity of contract between them, but to intervene provisions of special law." The special law governing in the present case, as
in the civil case above-mentioned as an unpaid supplier or materials to the already seen, is Act No. 3688.
contractor, or file an action in the name of the Republic against said contractor on
the latter’s other bond. There is another reason for upholding the order of dismissal complained of.
Plaintiff’s action being a claim for a sum of money arising from an alleged implied
Plaintiff argues than an implied contract between it and the defendant Republic contract between it and the Republic of the Philippines, the same should have
arose, when the latter, thru the Director of Public Schools, on being furnished been lodged with the Auditor General. The State cannot be sued without its
copies of the powers of attorney executed by the contractor, promised to make consent.
payment to plaintiff for the materials supplied for the construction of the school
buildings. It will be observed, however, that defendant was not a party to the In view of the foregoing, the order of dismissal appealed from is affirmed, with
execution of the powers of attorney. Besides, the Director of Public Schools had no costs against plaintiff-appellant.
authority to bind defendant on the payment. While he was the official who entered
into contract with the contractor for the construction of the school buildings,
Art. 1914. The agent may retain in pledge the things which are the object of the FACTS: Macondray & Co. bought a parcel of land from Sellner. The land was
agency until the principal effects the reimbursement and pays the indemnity set flooded by high tides,and Macondray became dissatisfied with its purchase. It then
forth in the two preceding articles. requested Sellner, after the final transfer was made, to find another buyer because
the land was unsuited for use as a coal-yard, the purpose for which it had been
Art. 1918. The principal is not liable for the expenses incurred by the agent in the purchased. It was expressly understood that Macondray was willing to sell the
following cases: land for P17,175 and that Sellner would receive as commission for securing a
(1) If the agent acted in contravention of the principal's instructions, unless the purchaser anything over that amount he could get. Sellner found a purchaser,
latter should wish to avail himself of the benefits derived from the contract; Antonio Barretto, who was willing to buy the land forP18,892.50. Macondray
(2) When the expenses were due to the fault of the agent; executed a formal deed of conveyance which, together with the certificate oftitle,
(3) When the agent incurred them with knowledge that an unfavorable result was delivered to Sellner with the understanding that the latter would consummate
would ensue, if the principal was not aware thereof; thesale, deliver the title to the buyer and receive the purchase price. Barretto
(4) When it was stipulated that the expenses would be borne by the agent, or that asked that he be given time to examine the title deed, if he finds it satisfactory, he
the latter would be allowed only a certain sum. will release the check payment. Monday morning - Young (person from
Macondray) formally notified Sellner that the deal would be off if purchase price
INDEMNIFY was not paid before 5pm of that afternoon. Sellner received the check from
Barretto on Wednesday morning. He immediately turned over the amount of
Art. 1913. The principal must also indemnify the agent for all the damages which P17175 to Macondray, but Macondray’s manager refused to accept the check and
the execution of the agency may have caused the latter, without fault or filed this action, claiming that the sale had been “cancelled” when the purchase
negligence on his part. price was not received on Monday afternoon. There was a letter regarding the
cancellation. Macondray brought an action to recover the sum of P17, 175 by way
HELD: Yes Issue: Whether petitioner was the efficient procuring cause in bringing
about the sale of respondent’s land to the SSS.
RATIO: That petitioner had changed her mind even if respondents had found a
buyer who was willing to close the deal, is a matter that would not give rise to a Ruling:
legal consequence if respondents agree to call off the transaction in deference to
the request of the petitioner. But the situation varies if one of the parties takes The Supreme Court ruled that Prats was not the efficient procuring cause of the
advantage of the benevolence of the other and acts in a manner that would sale. It was not categorical that it was through Prats efforts that meeting with the
promote his own selfish interest. This act is unfair as would amount to bad faith. SSS official to close the sale took place. The court concluded that the meeting took
This act cannot be sanctioned without ac-cording to the party prejudiced the place independently because the SSS had manifested disinterest in Prats
reward which is due him. Petitioner took advantage of the services rendered by intervention. However, in equity, the court noted that Prats had diligently taken
respondents, but believing that she could evade payment of their commission, she steps to bring back together Doronilla and SSS. Prats efforts somehow were
made use of a ruse by inducing them to sign the deed of cancellation. instrumental in bringing them together again and finally consummating the sale
although such finalization was after the expiration of Prats extended exclusive
authority. Doronilla was ordered to pay Prats for his efforts and assistance in the
transaction
FACTS: Marinduque Mining Corporation got hold of a loan from the DBP and FACTS: In a document Exhibit "A" executed on June 2, 1956, Vicente M. Domingo
mortgaged a warehouse lot and an office building lot previously mortgaged by granted Gregorio Domingo, a real estate broker, the exclusive agency to sell his lot
MMC to Caltex, and the mortgage in favor of DBP was entered on their titles as a No. 883 of Piedad Estate with an area of about 88,477 square meters at the rate
second mortgage. The account of the Marinduque Mining Corp., with the DBP was of P2.00 per square meter (or for P176,954.00) with a commission of 5% on the
later transferred to the Assets Privatization Trust (APT). total price, if the property is sold by Vicente or by anyone else during the 30-day
duration of the agency or if the property is sold by Vicente within three months
Caltex foreclosed the mortgage due to the nonpayment of MMC. APT on from the termination of the agency to apurchaser to whom it was submitted by
the other hand offered for sale to the public through DBP its right of redemption Gregorio during the continuance of the agency with notice to Vicente.
on said two lots by public bidding. DBP subsequently retrieved the account from
APT and redeemed said lots from Caltex . A public bidding for the sale of the two On June 3, 1956, Gregorio authorized the intervenor Teofilo P. Purisima to look for
lots was held and the warehouse lot was sold to Charges Realty Corp . The office a buyer, promising him one-half of the 5% commission.
building lot was later sold by DBP to a different buyer. After the aforesaid sale, Thereafter, Teofilo Purisima introduced Oscar de Leon to Gregorio as a prospective
Uniland Resources sent two letters to DBP asking for the payment of its broker's buyer.
fee in instrumenting the sale of it’s the warehouse lot to Charges Realty
Corp. Uniland filed a case to recover from DBP the broker's fee. After several conferences between Gregorio and Oscar de Leon, the latter raised
The Trial Court ordered DBP to pay the brokers’s fee to the petitioner. On appeal, his offer to P109,000.00 on June 20, 1956 as evidenced by Exhibit "C", to which
the Court of Appeals reversed the judgment of the lower court .. Vicente agreed by signing Exhibit "C".
Upon demand of Vicente, Oscar de Leon issued to him a check in the amount of
Issue: P1,000.00 as earnest money, after which Vicente advanced to Gregorio the sum of
Whether or not the petitioner there is a contract of agency between DBP P300.00. Oscar de Leon confirmed his former offer to pay for the property at
and Uniland in the sale of warehouse lot. P1.20 per square meter in another letter, Exhibit "D". Subsequently, Vicente asked
for an additional amount of P1,000.00 as earnest money, which Oscar de Leon
Held: promised to deliver to him.
No. There is no contract of agency, express or implied. The petitioner
was never able to secure the required accreditation from respondent Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina the sum
DBP to transact business on behalf of the latter. It was always made of One Thousand Pesos (P1,000.00) for succeeding in persuading Vicente to sell
clear to petitioner that only accredited brokers may look for buyers on his lot at P1.20 per square meter or a total in round figure of One Hundred Nine
behalf of respondent DBP. The contract of Agency is one founded on Thousand Pesos (P109,000.00). This gift of One Thousand Pesos (P1,000.00) was
mutual consent: the principal agrees to be bound by the acts of the not disclosed by Gregorio to Vicente
agent and the latter in turn consents to render service on behalf or in
representation of the principal. When Oscar did not see him after several weeks, Gregorio sensed something fishy.
So, he went to Vicente and read a portion of Exhibit "A" marked habit "A-1" to the
effect that Vicente was still committed to pay him 5% commission, if the sale is
consummated within three months after the expiration of the 30-day period of the
exclusive agency in his favor from the execution of the agency contract on June 2,
Art. 1909. The agent is responsible not only for fraud but also for negligence,
which shall be judged with more less rigor by the courts, according to whether the
agency was or was not for a compensation.
The aforecited provisions demand the utmost good faith, fidelity, honesty, candor
and fairness on the part of the agent, the real estate broker in this case, to his
principal, the vendor. The law imposes upon the agent the absolute obligation to
OBLIGATIONS AND LIABILITIES OF PRINCIPALS TO THIRD PARTIES Art. 1916. When two persons contract with regard to the same thing, one of
them with the agent and the other with the principal, and the two contracts are
AGENT ACTING WITHIN SCOPE OF AUTHORITY incompatible with each other, that of prior date shall be preferred, without
prejudice to the provisions of Article 1544.
Art. 1883. If an agent acts in his own name, the principal has no right of action
against the persons with whom the agent has contracted; neither have such Art. 1917. In the case referred to in the preceding article, if the agent has acted
persons against the principal. in good faith, the principal shall be liable in damages to the third person whose
contract must be rejected. If the agent acted in bad faith, he alone shall be
In such case the agent is the one directly bound in favor of the person responsible.
with whom he has contracted, as if the transaction were his own, except when the
contract involves things belonging to the principal. FOR CRIMES; FOR TORTS
The provisions of this article shall be understood to be without prejudice Gonzalez v. Haberer, 47 Phil. 380
to the actions between the principal and agent.
Facts:
Art. 1910. The principal must comply with all the obligations which the agent may The plaintiff spouses executed a deed of sale over a tract of land with the
have contracted within the scope of his authority. defendant. It was stipulated in their contract that if the plaintiffs were found by
court to not be the owners of the land, they would return any amount that the
As for any obligation wherein the agent has exceeded his power, the defendant had paid. It was also stipulated that Gomez gave his wife Gonzalez the
principal is not bound except when he ratifies it expressly or tacitly. “marital license” to execute the deed. However, after making an initial payment of
Php30,000, the defendant found that the land was in the adverse possession of
Art. 1917. In the case referred to in the preceding article, if the agent has acted many others. Thus, he stopped making payments. The plaintiffs then filed an
in good faith, the principal shall be liable in damages to the third person whose action to recover the sum of unpaid balance. The defendant claimed that when
contract must be rejected. If the agent acted in bad faith, he alone shall be they entered into this contract, the plaintiffs made false representations and
responsible. mislead him into thinking they had full ownership of the land.
Art. 1902 A third person with whom the agent wishes to contract on behalf of the When the contract provides for deliver as soon as possible; the seller is entitled to
principal may require the presentation of the power of attorney, or the instructions a reasonable time, in view of all the circumstances, such as the necessities of
as regards the agency. Private or secret orders and instructions of the principal do manufacture, or of putting the goods in condition for delivery. The term does not
not prejudice third persons who have relied upon the power of attorney or mean immediately or that the seller must stop all his other work and devote
instructions shown them. himself to that particular order. But the seller must nevertheless act with all
reasonable diligence or without unreasonable delay. It has been held that a
Bell v. Sotelo, 44 Phil. 874 requirement that the shipment of goods should be the earliest possible & must be
construed as meaning that the goods should be sent as soon as the seller could
Facts: Plaintiff corporation undertook to sell and deliver equipment for Mr. Sotelo possibly send them, and that it signified rather more than that the goods should
but no definite dates were fixed for the delivery. The periods were couched in be sent within a reasonable time. The question as to what is a reasonable time for
ambiguous terms such as “within 3 or 4 months”, “in the month of September or the delivery of the goods by the seller is to be determined by the circumstances
as soon as possible”, and “approximate delivery with 90 days- This is not attending the particular transaction, such as the character of the goods, and the
guaranteed.” When the goods arrived, Mr. Sotelo refused to receive them and to purpose for which they are intended, the ability of the seller to produce the goods
pay the prices. Mr. Sotelo then sued for damages because of the delay suffered. if they are to be manufactured, the facilities available for transportation, and the
distance the goods must be carried, and the usual course of business in the
Issue: particular trade." (35 Cyc., 181-184.) The record shows, as we have stated,
Whether Smith Bell incurred delay in the delivery of goods to Sotelo. that the plaintiff did all within its power to have the machinery arrive at Manila as
soon as possible, and immediately upon its arrival it notified the purchaser of the
Held: No, it did not incur delay. From the record it appears that these contracts fact and offered to deliver it to him. Taking these circumstances into account, we
were executed at the time of the world war when there existed connection hold that the said machinery was brought to Manila by the plaintiff within a
with the tanks and Priority Certificate, subject to the United –States Government reasonable time. Therefore, the plaintiff has not been guilty of any delay in the
requirements," with respect to the motors. At the time of the execution of fulfillment of its obligation, and, consequently, it could not have incurred any of
the contracts, the parties were not unmindful of the contingency of the United the liabilities mentioned by the intervenor in its counterclaim or set-off.
States Government not allowing the export of the goods, nor of the fact that the
other foreseen circumstances therein stated might prevent it. Considering these
contracts in the light of the civil law, we cannot but conclude that the term which
Art. 1883. Art 1873. If a person specially informs another or states by public advertisement
If an agent acts in his own name, the principal has noright of action against the that he has given a power of attorney to a third person, the latter thereby
persons with whom the agent hascontracted; neither have such persons against becomes a duly authorized agent, in the former case with respect to the person
the principal. In such case the agent is the one directly bound in favor of who received the special information, and in the latter case with regard to any
theperson with whom he has contracted, as if the transaction werehis own, except person.
when the contract involves things belongingto the principal. The provision of this
article shall be understood to be withoutprejudice to the actions between the The power shall continue to be in full force until the notice is rescinded in the
principal and agent. Consequently, when things belonging to the principal (in this same manner in which it was given.
case, Superior Shipping Corporation) are dealt with, the agent is bound to the
principal although he does not assume the character of such agent and appears Art. 1919. Agency is extinguished:
acting inhis own name . In other words, the agent's apparent representation yields (1) By its revocation;
to theprincipal's true representation and that, in reality and in effect, the (2) By the withdrawal of the agent;
contractmust be considered as entered into between the principal and the third (3) By the death, civil interdiction, insanity or insolvency of the principal or of the
person Corollarily, if the principal can be obliged to perform his duties under the agent;
contract, then it can also demand the enforcement of its rights arising from the (4) By the dissolution of the firm or corporation which entrusted or accepted the
contract agency;
(5) By the accomplishment of the object or purpose of the agency;
- It was undisputed that Medalla was a commission agent of the (6) By the expiration of the period for which the agency was constituted.
company
- Art. 1883 applicable Art. 1920. The principal may revoke the agency at will, and compel the agent to
- Agent’s apparent representation yields to the principal’s true return the document evidencing the agency. Such revocation may be express or
representation, therefore, contract considered to have been implied.
entered into between the principal and the 3rd party
Art. 1921. If the agency has been entrusted for the purpose of contracting with
Gold Star Mining v. Lim Jimenez, 25 SCRA 597 specified persons, its revocation shall not prejudice the latter if they were not
given notice thereof.
- When Lincallo (agent) transferred his mining claims to Gold Star,
even without disclosing that Jimena was part owner, he acted as Art. 1922. If the agent had general powers, revocation of the agency does not
agent of Jimena with respect to Jimena’ share of the claims prejudice third persons who acted in good faith and without knowledge of the
- Art. 1883 applicable
Art. 1924. The agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons. FACTS: By virtue of the powers of attorney executed by the plaintiff-appellant,
the defendant-appellee was appointed attorney-in-fact with authority to manage
Art. 1925. When two or more principals have granted a power of attorney for a his property in the Philippines, consisting of the usufruct of a real property. The
common transaction, any one of them may revoke the same without the consent liquidation of accounts revealed that the plaintiff-appellant owed the defendant
of the others. P1,100, and as misunderstanding arose between them, the defendant-appellee
brought suit against the plaintiff-appellant . The trial court decided in favor of
Art. 1926. A general power of attorney is revoked by a special onxe granted to agent; sheriff levied upon plaintiff-appellant’s right of usufruct, sold it at public
another agent, as regards the special matter involved in the latter. auction and adjudicated it to defendant-appellee in payment of his claim. Plaintiff-
appellant sold his right of redemption to Eduardo Hernandez- Hernandez conveyed
Art. 1927. An agency cannot be revoked if a bilateral contract depends upon it, the same right of redemption himself-but then another person Salvador Vallejo,
or if it is the means of fulfilling an obligation already contracted, or if a partner is who had an execution upon a judgment against the plaintiff rendered in another
appointed manager of a partnership in the contract of partnership and his removal case, levied upon said right of redemption- right of redemption sold to Vallejo and
from the management is unjustifiable. was definitely adjudicated to him. Later, he transferred the said right of
redemption to defendant-appellee. The title was consolidated in his name,thus,
Withdrawal the agent got the title to the right of usufruct to the aforementioned property.
Art. 1919. Agency is extinguished: ISSUE: WON the agency was terminated
(1) By its revocation;
(2) By the withdrawal of the agent; HELD:
(3) By the death, civil interdiction, insanity or insolvency of the principal or of the YES. Art 1732- Agency is terminated by: a) revocation, b)withdrawal of
agent; agent, c)death, interdiction, bankruptcy, or insolvency of the principal or
(4) By the dissolution of the firm or corporation which entrusted or accepted the of the agent. While Art 1736- An agent may withdraw by giving notice to
agency; principal. If principal suffer any damage, agent must indemnify him
(5) By the accomplishment of the object or purpose of the agency; unless the agent’s reason should be the impossibility of continuing to act
(6) By the expiration of the period for which the agency was constituted. as such without serious detriment to himself. The misunderstanding
between the plaintiff and the defendant over the payment of the balance
Art. 1928. The agent may withdraw from the agency by giving due notice to the of P1,000 due the latter more than prove the breach of the juridical
principal. If the latter should suffer any damage by reason of the withdrawal, the relation between them; for, although the agent has not expressly told
agent must indemnify him therefor, unless the agent should base his withdrawal his principal that he renounced the agency, yet neither dignity nor
upon the impossibility of continuing the performance of the agency without grave decorum permits the latter to continue representing a person who has
detriment to himself. adopted such an antagonistic attitude towards him. When the agent filed a