Sally Yoshizaki vs. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013, BRION, J. Issue

Civil Law Review 2 | Atty.
Legarda 1
Case Digest 2018 - AGENCY
SALLY YOSHIZAKI vs. JOY TRAINING CENTER OF AURORA, INC., G.R. No. under Section 40 of the Corporation Code. It also posits that the certification
174978, July 31, 2013, BRION, J. is void because it lacks material particulars.
Article 1868 of the Civil Code defines a contract of agency as a contract Issue:
whereby a person "binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the
Whether or not there was a contract of agency to sell the real properties
latter."
between Joy Training and the spouses Johnson.
Facts:
Ruling:
Respondent Joy Training Center of Aurora, Inc. (Joy Training) is a non-stock,

No.
non-profit religious educational institution. It was the registered owner of a
parcel of land and the building thereon (real properties) located in San Luis
Extension Purok No. 1, Barangay Buhangin, Baler, Aurora. There is no contract of agency between Joy Training and the spouses
Johnson to sell the parcel of land with its improvements
On November 10, 1998, the spouses Richard and Linda Johnson sold the
real properties, a Wrangler jeep, and other personal properties in favor of Article 1868 of the Civil Code defines a contract of agency as a contract
the spouses Sally and Yoshio Yoshizaki. On the same date, a Deed of whereby a person "binds himself to render some service or to do something
Absolute Sale and a Deed of Sale of Motor Vehicle were executed in favor of in representation or on behalf of another, with the consent or authority of
the spouses Yoshizaki. The spouses Johnson were members of Joy the latter." It may be express, or implied from the acts of the principal, from
Training’s board of trustees at the time of sale. his silence or lack of action, or his failure to repudiate the agency, knowing
that another person is acting on his behalf without authority.
On December 8, 1998, Joy Training, represented by its Acting Chairperson
Reuben V. Rubio, filed an action for the Cancellation of Sales and Damages As a general rule, a contract of agency may be oral. However, it must be
with prayer for the issuance of a Temporary Restraining Order and/or Writ written when the law requires a specific form. Specifically, Article 1874 of
of Preliminary Injunction against the spouses Yoshizaki and the spouses the Civil Code provides that the contract of agency must be written for the
Johnson before the Regional Trial Court of Baler, Aurora (RTC). On January validity of the sale of a piece of land or any interest therein. Otherwise, the
4, 1999, Joy Training filed a Motion to Amend Complaint with the attached sale shall be void. A related provision, Article 1878 of the Civil Code, states
Amended Complaint. The amended complaint impleaded Cecilia A. Abordo, that special powers of attorney are necessary to convey real rights over
officer-in-charge of the Register of Deeds of Baler, Aurora, as additional immovable properties.
defendant.
The special power of attorney mandated by law must be one that expressly
In the complaint, Joy Training alleged that the spouses Johnson sold its mentions a sale or that includes a sale as a necessary ingredient of the
properties without the requisite authority from the board of directors. It authorized act.
assailed the validity of a board resolution dated September 1, 1998 which
purportedly granted the spouses Johnson the authority to sell its real
In the present case, Sally presents three pieces of evidence which allegedly
properties. It averred that only a minority of the board, composed of the
prove that Joy Training specially authorized the spouses Johnson to sell the
spouses Johnson and Alexander Abadayan, authorized the sale through the
real properties: (1) TCT No. T-25334, (2) the resolution, (3) and the
resolution. It highlighted that the Articles of Incorporation provides that the
certification. We quote the pertinent portions of these documents for a
board of trustees consists of seven members, namely: the spouses Johnson,
thorough examination of Sally’s claim. TCT No. T-25334, entered in the
Reuben, Carmencita Isip, Dominador Isip, Miraflor Bolante, and Abelardo
Registry of Deeds on March 5, 1998, states:
Aquino.
A parcel of land x x x is registered in accordance with the provisions of the

Cecilia and the spouses Johnson were declared in default for their failure to
Property Registration Decree in the name of JOY TRAINING CENTER OF
file an Answer within the reglementary period. On the other hand, the
AURORA, INC., Rep. by Sps. RICHARD A. JOHNSON and LINDA S. JOHNSON,
spouses Yoshizaki filed their Answer with Compulsory Counterclaims on
both of legal age, U.S. Citizen, and residents of P.O. Box 3246, Shawnee, Ks
June 23, 1999. They claimed that Joy Training authorized the spouses
66203, U.S.A. (emphasis ours)
Johnson to sell the parcel of land. They asserted that a majority of the board
of trustees approved the resolution. They maintained that the actual
members of the board of trustees consist of five members, namely: the On the other hand, the fifth paragraph of the certification provides:
spouses Johnson, Reuben, Alexander, and Abelardo. Moreover, Connie
Dayot, the corporate secretary, issued a certification dated February 20,
Further, Richard A. and Linda J. Johnson were given FULL AUTHORITY for
1998 authorizing the spouses Johnson to act on Joy Training’s behalf.
ALL SIGNATORY purposes for the corporation on ANY and all matters and
Furthermore, they highlighted that the Wrangler jeep and other personal
decisions regarding the property and ministry here. They will follow
properties were registered in the name of the spouses Johnson. Lastly, they
guidelines set forth according to their appointment and ministerial and
assailed the RTC’s jurisdiction over the case. They posited that the case is an
missionary training and in that, they will formulate and come up with by-
intra-corporate dispute cognizable by the Securities and Exchange
laws which will address and serve as governing papers over the center and
Commission (SEC).
corporation. They are to issue monthly and quarterly statements to all
members of the corporation. (emphasis ours)
Sally argues that the spouses Johnson were authorized to sell the parcel of
land and that she was a buyer in good faith because she merely relied on
The resolution states:
TCT No. T-25334. The title states that the spouses Johnson are Joy
Training’s representatives.
We, the undersigned Board of Trustees (in majority) have authorized the
sale of land and building owned by spouses Richard A. and Linda J. Johnson
Joy Training maintains that it did not authorize the spouses Johnson to sell
(as described in the title SN No. 5102156 filed with the Province of Aurora
its real properties. TCT No. T-25334 does not specifically grant the
last 5th day of March, 1998. These proceeds are going to pay outstanding
authority to sell the parcel of land to the spouses Johnson. It further asserts
loans against the project and the dissolution of the corporation shall follow
that the resolution and the certification should not be given any probative
the sale. This is a religious, non-profit corporation and no profits or stocks
value because they were not admitted in evidence by the RTC. It argues that
are issued. (emphasis ours)
the resolution is void for failure to comply with the voting requirements
Civil Law Review 2 | Atty. Legarda 2
The above documents do not convince us of the existence of the contract of

agency to sell the real properties. TCT No. T-25334 merely states that Joy
Training is represented by the spouses Johnson. The title does not explicitly
confer to the spouses Johnson the authority to sell the parcel of land and the
building thereon. Moreover, the phrase "Rep. by Sps. RICHARD A. JOHNSON
and LINDA S. JOHNSON" only means that the spouses Johnson represented
Joy Training in land registration.
The resolution which purportedly grants the spouses Johnson a special

power of attorney is negated by the phrase "land and building owned by
spouses Richard A. and Linda J. Johnson." Even if we disregard such phrase,
the resolution must be given scant consideration. We adhere to the CA’s
position that the basis for determining the board of trustees’ composition is
the trustees as fixed in the articles of incorporation and not the actual
members of the board. The second paragraph of Section 25 of the
Corporation Code expressly provides that a majority of the number of
trustees as fixed in the articles of incorporation shall constitute a quorum
for the transaction of corporate business.
Moreover, the certification is a mere general power of attorney which

comprises all of Joy Training’s business. Article 1877 of the Civil Code
clearly states that "an agency couched in general terms comprises only acts
of administration, even if the principal should state that he withholds no
power or that the agent may execute such acts as he may consider
appropriate, or even though the agency should authorize a general and
unlimited management."
Necessarily, the absence of a contract of agency renders the contract of sale

unenforceable; Joy Training effectively did not enter into a valid contract of
sale with the spouses Yoshizaki. Sally cannot also claim that she was a buyer
in good faith. She misapprehended the rule that persons dealing with a
registered land have the legal right to rely on the face of the title and to
dispense with the need to inquire further, except when the party concerned
has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry. This rule applies when the
ownership of a parcel of land is disputed and not when the fact of agency is
contested.
NATIONAL FOOD AUTHORITY, (NFA) vs. INTERMEDIATE APPELLATE It is contended by petitioner NFA that it is not liable under the exception to
COURT, SUPERIOR (SG) SHIPPING CORPORATION, G.R. No. 75640, April the rule (Art. 1883) since it had no knowledge of the fact of agency between
5, 1990, PARAS, J. respondent Superior Shipping and Medalla at the time when the contract
was entered into between them (NFA and Medalla). Petitioner submits that
"(A)n undisclosed principal cannot maintain an action upon a contract made
Art. 1883. If an agent acts in his own name, the principal has no right of
by his agent unless such principal was disclosed in such contract. One who
action against the persons with whom the agent has contracted; neither have
deals with an agent acquires no right against the undisclosed principal."
such persons against the principal.
Petitioner NFA's contention holds no water. It is an undisputed fact that Gil

In such case the agent is the one directly bound in favor of the person with
Medalla was a commission agent of respondent Superior Shipping
whom he has contracted, as if the transaction were his own, except when the
Corporation which owned the vessel "MV Sea Runner" that transported the
contract involves things belonging to the principal.
sacks of rice belonging to petitioner NFA. The context of the law is clear. Art.
1883, which is the applicable law in the case at bar provides:
The provision of this article shall be understood to be without prejudice to the
actions between the principal and agent.
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
Facts: contracted; neither have such persons against the principal.
On September 6, 1979 Gil Medalla, as commission agent of the plaintiff In such case the agent is the one directly bound in favor of the
Superior Shipping Corporation, entered into a contract for hire of ship person with whom he has contracted, as if the transaction were his
known as "MV Sea Runner" with defendant National Grains Authority. own, except when the contract involves things belonging to the
Under the said contract Medalla obligated to transport on the "MV Sea principal.
Runner" 8,550 sacks of rice belonging to defendant National Grains
Authority from the port of San Jose, Occidental Mindoro, to Malabon, Metro
The provision of this article shall be understood to be without
Manila.
prejudice to the actions between the principal and agent.
Upon completion of the delivery of rice at its destination, plaintiff on

Consequently, when things belonging to the principal (in this case, Superior
October 17, 1979, wrote a letter requesting defendant NGA that it be
Shipping Corporation) are dealt with, the agent is bound to the principal
allowed to collect the amount stated in its statement of account. The
although he does not assume the character of such agent and appears acting
statement of account included not only a claim for freightage but also claims
in his own name. In other words, the agent's apparent representation yields
for demurrage and stevedoring charges amounting to P93,538.70.
to the principal's true representation and that, in reality and in effect, the
contract must be considered as entered into between the principal and the
On November 5, 1979, plaintiff wrote again defendant NGA, this time third person. Corollarily, if the principal can be obliged to perform his
specifically requesting that the payment for freightage and other charges be duties under the contract, then it can also demand the enforcement of its
made to it and not to defendant Medalla because plaintiff was the owner of rights arising from the contract.
the vessel "MV Sea Runner". In reply, defendant NGA on November 16, 1979
informed plaintiff that it could not grant its request because the contract to
transport the rice was entered into by defendant NGA and defendant
Medalla who did not disclose that he was acting as a mere agent of plaintiff.
Thereupon on November 19, 1979, defendant NGA paid defendant Medalla
the sum of P25,974.90, for freight services in connection with the shipment
of 8,550 sacks of rice.
On December 4, 1979, plaintiff wrote defendant Medalla demanding that he

turn over to plaintiff the amount of P27,000.00 paid to him by defendant
NFA. Defendant Medalla, however, "ignored the demand."
Plaintiff was therefore constrained to file the instant complaint.
Defendant-appellant National Food Authority admitted that it entered into a

contract with Gil Medalla whereby plaintiffs vessel "MV Sea Runner"
transported 8,550 sacks of rice of said defendant from San Jose, Mindoro to
Manila.
For services rendered, the National Food Authority paid Gil Medalla
P27,000.00 for freightage.
Issue:
Whether or not the instant case falls within the exception of the general rule
provided for in Art. 1883 of the Civil Code of the Philippines.
Ruling:
No
MARCOS V. PRIETO vs. THE HON. COURT OF APPEALS (Former Ninth Marcos, as borne out by his execution of the letter of acknowledgement on
Division), HON. ROSE MARY R. MOLINA-ALIM, In Her Capacity as September 12, 1996, whose text is quoted in full, viz:
Pairing Judge of Branch 67 of the RTC, First Judicial Region, Bauang, La
Union, FAR EAST BANK & TRUST COMPANY, now the BANK OF THE
12 Sept. 1996 (handwritten)
PHILIPPINE ISLANDS, through ATTY. EDILBERTO B. TENEFRANCIA, and
SPOUSES ANTONIO and MONETTE PRIETO, G.R. No. 158597, June 18,
2012, BERSAMIN, J. FAR EAST BANK & TRUST COMPANY
San Fernando
La Union
Ratification or confirmation may validate an act done in behalf of another
without authority from the latter. The effect is as if the latter did the act
himself. Gentlemen:
Facts: It is my/our understanding that your Bank has granted a

DISCOUNTING Line/Loan in favor of SPS. ANTONIO & MONETTE
PRIETO over my/our real property located in Calumbayan, Bauang, La
On October 27, 1997, the Spouses Marcos V. Prieto (Marcos) and Susan M.
Unionand covered by Transfer Certificate of Title No./s. 40223 of the
Prieto filed in the Regional Trial Court (RTC) in Bauang, La Union a
Registry of Deeds for La Union. This confirms that the said property/ies
complaint against Far East Bank and Trust Company (FEBTC) and the
was/were offered as collateral (illegible) SPS. ANTONIO & MONETTE
Spouses Antonio Prieto (Antonio) and Monette Prieto to declare the nullity
PRIETO’S line/loan with my/our consent, and that I/we agree with all the
of several real estate mortgage contracts. The plaintiffs narrated that in
terms and conditions of the mortgage executed on the same. I/we further
January 1996, they had executed a special power of attorney (SPA) to
confirm that the proceeds of the aforesaid Discounting Line line/loan was
authorize Antonio to borrow money from FEBTC, using as collateral their
released to SPS. MONETTE & ANTONIO PRIETO for his/her its own benefit.
real property consisting of a parcel of land located in Calumbaya, Bauang, La
Union (the property); that defendant spouses, using the property as
collateral, had thereafter obtained from FEBTC a series of loans totaling We thank you for your support to SPS. MONETTE & ANTONIO.
₱5,000,000.00, evidenced by promissory notes, and secured by separate
real estate mortgage contracts; that defendant spouses had failed to pay the
Very truly yours,
loans, leading FEBTC to initiate the extra-judicial foreclosure of the
mortgages; that the foreclosure sale had been scheduled on October 31,
1997; and that the promissory notes and the real estate mortgage contracts (signed)
were in the name of defendant spouses for themselves alone, who had ATTY. MARCOS PRIETO
incurred the obligations, rendering the promissory notes and the mortgage
contracts null and void ab initio.
But Marcos insists that the letter of acknowledgment was only a mere
"letter (written) on a mimeographic paper … a mere scrap of paper, a
Issue: document by adhesion."
Whether or not Marcos is liable to FEBTC for the loans obtained by Antonio The Court is confounded by Marcos’ dismissal of his own express written
ratification of Antonio’s act. Being himself a lawyer, Marcos was aware of
the import and consequences of the letter of acknowledgment. The Court
Ruling:
cannot agree with his insistence that the letter was worthless due to its
being a contract of adhesion. The letter was not a contract, to begin with,
Yes. because it was only a unilateral act of his. Secondly, his insistence was
fallacious and insincere because he knew as a lawyer that even assuming
that the letter could be treated as a contract of adhesion it was nonetheless
The complaint was anchored on the supposed failure of FEBTC to duly
effective and binding like any other contract. The Court has consistently
investigate the authority of Antonio in contracting the "exceptionally and
held that a contract of adhesion was not prohibited for that reason. In
relatively immense" loans amounting to ₱5,000,000.00. Marcos alleged
Pilipino Telephone Corporation v. Tecson, for instance, the Court said that
therein that his property had thereby become "unlawfully burdened by
contracts of adhesion were valid but might be occasionally struck down
unauthorized real estate mortgage contracts," because the loans and the
only if there was a showing that the dominant bargaining party left the
mortgage contracts had been incurred by Antonio and his wife only for
weaker party without any choice as to be "completely deprived of an
themselves, to the exclusion of petitioner. Yet, Marcos could not deny that
opportunity to bargain effectively." That exception did not apply here, for,
under the express terms of the SPA, he had precisely granted to Antonio as
verily, Marcos, being a lawyer, could not have been the weaker party. As the
his agent the authority to borrow money, and to transfer and convey the
tenor of the of acknowledgment indicated, he was fully aware of the
property by way of mortgage to FEBTC; to sign, execute and deliver
meaning and sense of every written word or phrase, as well as of the legal
promissory notes; and to receive the proceeds of the loans on the former’s
effect of his confirmation thereby of his agent’s act. It is axiomatic that a
behalf. In other words, the mortgage contracts were valid and enforceable
man’s act, conduct and declaration, wherever made, if voluntary, are
against petitioner, who was consequently fully bound by their terms.
admissible against him, for the reason that it is fair to presume that they
correspond with the truth, and it is his fault if they do not.
Moreover, even if it was assumed that Antonio’s obtaining the loans in his
own name, and executing the mortgage contracts also in his own name had
exceeded his express authority under the SPA, Marcos was still liable to
FEBTC by virtue of his express ratification of Antonio’s act. Under Article
1898 of the Civil Code, the acts of an agent done beyond the scope of his
authority do not bind the principal unless the latter expressly or impliedly
ratifies the same.
In agency, ratification is the adoption or confirmation by one person of an

act performed on his behalf by another without authority.1âwphi1 The
substance of ratification is the confirmation after the act, amounting to a
substitute for a prior authority. Here, there was such a ratification by
COUNTRY BANKERS INSURANCE CORPORATION vs. KEPPEL CEBU CBIC, in its Answer, said that Cebu Shipyard’s complaint states no cause of
SHIPYARD, UNIMARINE SHIPPING LINES, INC., PAUL RODRIGUEZ, action. CBIC alleged that the surety bond was issued by its agent, Quinain, in
PETER RODRIGUEZ, ALBERT HONTANOSAS, and BETHOVEN excess of his authority. CBIC claimed that Cebu Shipyard should have
QUINAIN, G.R. No. 166044, June 18, 2012, LEONARDO-DE CASTRO, J. doubted the authority of Quinain to issue the surety bond based on the
following:
Facts:
1. The nature of the bond undertaking (guarantee payment), and
the amount involved.
On January 27, 1992, Unimarine Shipping Lines, Inc. (Unimarine), a
corporation engaged in the shipping industry, contracted the services of
Keppel Cebu Shipyard, formerly known as Cebu Shipyard and Engineering 2. The surety bond could only be issued in favor of the
Works, Inc. (Cebu Shipyard), for dry docking and ship repair works on its Department of Public Works and Highways, as stamped on the
vessel, the M/V Pacific Fortune. upper right portion of the face of the bond. This stamp was
covered by documentary stamps.
On February 14, 1992, Cebu Shipyard issued Bill No. 26035 to Unimarine in
consideration for its services, which amounted to ₱4,486,052.00. 3. The issuance of the surety bond was not reported, and the
Negotiations between Cebu Shipyard and Unimarine led to the reduction of corresponding premiums were not remitted to CBIC.
this amount to ₱3,850,000.00. The terms of this agreement were embodied
in Cebu Shipyard’s February 18, 1992 letter to the President/General
CBIC added that its liability was extinguished when, without its knowledge
Manager of Unimarine, Paul Rodriguez, who signed his conformity to said
and consent, Cebu Shipyard and Unimarine novated their agreement several
letter
times. Furthermore, CBIC stated that Cebu Shipyard’s claim had already
been paid or extinguished when Unimarine executed an Assignment of
Unimarine in consideration of the credit terms extended by CSEW and the Claims of the proceeds of the sale of its vessel M/V Headline in favor of Cebu
release of the vessel before full payment of the above debt, agree to present Shipyard. CBIC also averred that Cebu Shipyard’s claim had already
CSEW surety bonds equal to 120% of the value of the credit extended. The prescribed as the endorsement that extended the surety bond’s expiry date,
total bond amount shall be ₱4,620,000.00. was not reported to CBIC. Finally, CBIC asseverated that if it were held to be
liable, its liability should be limited to the face value of the bond and not for
exemplary damages, attorney’s fees, and costs of litigation.
In compliance with the agreement, Unimarine, through Paul Rodriguez,
secured from Country Bankers Insurance Corp. (CBIC), through the latter’s
agent, Bethoven Quinain (Quinain), CBIC Surety Bond No. G (16) 29419 (the Subsequently, CBIC filed a Motion to Admit Cross and Third Party Complaint
surety bond) on January 15, 1992 in the amount of ₱3,000,000.00. The against Unimarine, as cross defendant; Paul Rodriguez, Albert Hontanosas,
expiration of this surety bond was extended to January 15, 1993, through and Peter Rodriguez, as signatories to the Indemnity Agreement they
Endorsement No. 33152 (the endorsement), which was later on attached to executed in favor of CBIC; and Bethoven Quinain, as the agent who issued
and formed part of the surety bond. In addition to this, Unimarine, on the surety bond and endorsement in excess of his authority, as third party
February 19, 1992, obtained another bond from Plaridel Surety and defendants.
Insurance Co. (Plaridel), PSIC Bond No. G (16)-00365 in the amount of
₱1,620,000.00.
CBIC claimed that Paul Rodriguez, Albert Hontanosas, and Peter Rodriguez
executed an Indemnity Agreement, wherein they bound themselves, jointly
Because Unimarine failed to remit the first installment when it became due and severally, to indemnify CBIC for any amount it may sustain or incur in
on May 30, 1992, Cebu Shipyard was constrained to deposit the peso check connection with the issuance of the surety bond and the endorsement. As
corresponding to the initial installment of ₱2,350,000.00. The check, for Quinain, CBIC alleged that he exceeded his authority as stated in the
however, was dishonored by the bank due to insufficient funds. Cebu Special Power of Attorney, wherein he was authorized to solicit business
Shipyard faxed a message to Unimarine, informing it of the situation, and and issue surety bonds not exceeding ₱500,000.00 but only in favor of the
reminding it to settle its account immediately. Department of Public Works and Highways, National Power Corporation,
and other government agencies.
On June 24, 1992, Cebu Shipyard again faxed a message to Unimarine, to
confirm Paul Rodriguez’s promise that Unimarine will pay in full the The crux of the controversy lies in CBIC’s liability on the surety bond
₱3,850,000.00, in US Dollars on July 1, 1992. Quinain issued to Unimarine, in favor of Cebu Shipyard.
Since Unimarine failed to deliver on the above promise, Cebu Shipyard, on CBIC avers that the Court of Appeals erred in interpreting and applying the
July 2, 1992, through a faxed letter, asked Unimarine if the payment could rules governing the contract of agency. It argued that the Special Power of
be picked up the next day. This was followed by another faxed message on Attorney granted to Quinain clearly set forth the extent and limits of his
July 6, 1992, wherein Cebu Shipyard reminded Unimarine of its promise to authority with regard to businesses he can transact for and in behalf of
pay in full on July 28, 1992. On August 24, 1992, Cebu Shipyard again faxed CBIC. CBIC added that it was incumbent upon Cebu Shipyard to inquire and
Unimarine, to inform it that interest charges will have to be imposed on look into the power of authority conferred to Quinain. CBIC said:
their outstanding debt, and if it still fails to pay before August 28, 1992,
Cebu Shipyard will have to enforce payment against the sureties and take
The authority to bind a principal as a guarantor or surety is one of those
legal action.
powers which requires a Special Power of Attorney pursuant to Article
1878 of the Civil Code. Such power could not be simply assumed or inferred
Due to Unimarine’s failure to heed Cebu Shipyard’s repeated demands, Cebu from the mere existence of an agency. A person who enters into a contract
Shipyard, through counsel, wrote the sureties CBIC on November 18, 1992, of suretyship with an agent without confirming the extent of the latter’s
and Plaridel, on November 19, 1992, to inform them of Unimarine’s authority does so at his peril. x x x.
nonpayment, and to ask them to fulfill their obligations as sureties, and to
respond within seven days from receipt of the demand.
CBIC claims that the foregoing is true even if Quinain was granted the
authority to transact in the business of insurance in general, as "the
However, even the sureties failed to discharge their obligations, and so Cebu authority to bind the principal in a contract of suretyship could nonetheless
Shipyard filed a Complaint dated January 8, 1993. never be presumed." Thus, CBIC claims, that:
[T]hird persons seeking to hold the principal liable for transactions entered Art. 1902. A third person with whom the agent wishes to contract on behalf
into by an agent should establish the following, in case the same is of the principal may require the presentation of the power of attorney, or
controverted: the instructions as regards the agency. Private or secret orders and
instructions of the principal do not prejudice third persons who have relied
upon the power of attorney or instructions shown to them.
6.6.1. The fact or existence of the agency.
Art. 1910. The principal must comply with all the obligations which the
6.6.2. The nature and extent of authority.
agent may have contracted within the scope of his authority.
To go a little further, CBIC said that the correct Civil Code provision to apply
As for any obligation wherein the agent has exceeded his power, the
in this case is Article 1898. CBIC asserts that "Cebu Shipyard was charged
principal is not bound except when he ratifies it expressly or tacitly.
with knowledge of the extent of the authority conferred on Mr. Quinain by
its failure to perform due diligence investigations."55
Art. 1911. Even when the agent has exceeded his authority, the principal is
solidarily liable with the agent if the former allowed the latter to act as
Cebu Shipyard, in its Comment first assailed the propriety of the petition for
though he had full powers.
raising factual issues. In support, Cebu Shipyard claimed that the Court of
Appeals’ application of Article 1911 of the Civil Code was founded on
findings of facts that CBIC now disputes. Thus, the question is not purely of Our law mandates an agent to act within the scope of his authority. The
law. scope of an agent’s authority is what appears in the written terms of the
power of attorney granted upon him. Under Article 1878(11) of the Civil
Code, a special power of attorney is necessary to obligate the principal as a
Issue:
guarantor or surety.
Whether or not Article 1911 of the Civil Code holding petitioner liable for
In the case at bar, CBIC could be held liable even if Quinain exceeded the
the acts done by its agent in excess of authority is applicable in this case
scope of his authority only if Quinain’s act of issuing Surety Bond No. G (16)
29419 is deemed to have been performed within the written terms of the
Ruling: power of attorney he was granted.
No. However, contrary to what the RTC held, the Special Power of Attorney
accorded to Quinain clearly states the limits of his authority and particularly
provides that in case of surety bonds, it can only be issued in favor of the
The fact that Quinain was an agent of CBIC was never put in issue. What has
Department of Public Works and Highways, the National Power
always been debated by the parties is the extent of authority or, at the very
Corporation, and other government agencies; furthermore, the amount of
least, apparent authority, extended to Quinain by CBIC to transact insurance
the surety bond is limited to ₱500,000.00.
business for and in its behalf.
CBIC does not anchor its defense on a secret agreement, mutual

In a contract of agency, a person, the agent, binds himself to represent
understanding, or any verbal instruction to Quinain. CBIC’s stance is
another, the principal, with the latter’s consent or authority. Thus, agency is
grounded on its contract with Quinain, and the clear, written terms therein.
based on representation, where the agent acts for and in behalf of the
This Court finds that the terms of the foregoing contract specifically
principal on matters within the scope of the authority conferred upon him.
provided for the extent and scope of Quinain’s authority, and Quinain has
Such "acts have the same legal effect as if they were personally done by the
indeed exceeded them.
principal. By this legal fiction of representation, the actual or legal absence
of the principal is converted into his legal or juridical presence."
Under Articles 1898 and 1910, an agent’s act, even if done beyond the scope
of his authority, may bind the principal if he ratifies them, whether
The RTC applied Articles 1900 and 1911 of the Civil Code in holding CBIC
expressly or tacitly. It must be stressed though that only the principal, and
liable for the surety bond. It held that CBIC could not be allowed to disclaim
not the agent, can ratify the unauthorized acts, which the principal must
liability because Quinain’s actions were within the terms of the special
have knowledge of. Expounding on the concept and doctrine of ratification
power of attorney given to him. The Court of Appeals agreed that CBIC
in agency, this Court said:
could not be permitted to abandon its obligation especially since third
persons had relied on Quinain’s representations. It based its decision on
Article 1911 of the Civil Code and found CBIC to have been negligent and Ratification in agency is the adoption or confirmation by one person of an
less than prudent in conducting its insurance business for its failure to act performed on his behalf by another without authority. The substance of
supervise and monitor the acts of its agents, to regulate the distribution of the doctrine is confirmation after conduct, amounting to a substitute for a
its insurance forms, and to devise schemes to prevent fraudulent prior authority. Ordinarily, the principal must have full knowledge at the
misrepresentations of its agents. time of ratification of all the material facts and circumstances relating to the
unauthorized act of the person who assumed to act as agent. Thus, if
material facts were suppressed or unknown, there can be no valid
This Court does not agree. Pertinent to this case are the following
ratification and this regardless of the purpose or lack thereof in concealing
provisions of the Civil Code:
such facts and regardless of the parties between whom the question of
ratification may arise. Nevertheless, this principle does not apply if the
Art. 1898. If the agent contracts in the name of the principal, exceeding the principal’s ignorance of the material facts and circumstances was willful, or
scope of his authority, and the principal does not ratify the contract, it shall that the principal chooses to act in ignorance of the facts. However, in the
be void if the party with whom the agent contracted is aware of the limits of absence of circumstances putting a reasonably prudent man on inquiry,
the powers granted by the principal. In this case, however, the agent is ratification cannot be implied as against the principal who is ignorant of the
liable if he undertook to secure the principal’s ratification. facts. (Emphases supplied.)
Art. 1900. So far as third persons are concerned, an act is deemed to have Neither Unimarine nor Cebu Shipyard was able to repudiate CBIC’s
been performed within the scope of the agent’s authority, if such act is testimony that it was unaware of the existence of Surety Bond No. G (16)
within the terms of the power of attorney, as written, even if the agent has 29419 and Endorsement No. 33152. There were no allegations either that
in fact exceeded the limits of his authority according to an understanding CBIC should have been put on alert with regard to Quinain’s business
between the principal and the agent.
transactions done on its behalf. It is clear, and undisputed therefore, that

there can be no ratification in this case, whether express or implied.
Article 1911, on the other hand, is based on the principle of estoppel, which
is necessary for the protection of third persons. It states that the principal is
solidarily liable with the agent even when the latter has exceeded his
authority, if the principal allowed him to act as though he had full powers.
However, for an agency by estoppel to exist, the following must be
established:
1. The principal manifested a representation of the agent’s

authority or knowingly allowed the agent to assume such
authority;
2. The third person, in good faith, relied upon such

representation; and
3. Relying upon such representation, such third person has

changed his position to his detriment.
This Court cannot agree with the Court of Appeals’ pronouncement of

negligence on CBIC’s part. CBIC not only clearly stated the limits of its
agents’ powers in their contracts, it even stamped its surety bonds with the
restrictions, in order to alert the concerned parties. Moreover, its company
procedures, such as reporting requirements, show that it has designed a
system to monitor the insurance contracts issued by its agents. CBIC cannot
be faulted for Quinain’s deliberate failure to notify it of his transactions with
Unimarine. In fact, CBIC did not even receive the premiums paid by
Unimarine to Quinain.
Furthermore, nowhere in the decisions of the lower courts was it stated that
CBIC let the public, or specifically Unimarine, believe that Quinain had the
authority to issue a surety bond in favor of companies other than the
Department of Public Works and Highways, the National Power
Corporation, and other government agencies. Neither was it shown that
CBIC knew of the existence of the surety bond before the endorsement
extending the life of the bond, was issued to Unimarine. For one to
successfully claim the benefit of estoppel on the ground that he has been
misled by the representations of another, he must show that he was not
misled through his own want of reasonable care and circumspection.
It is apparent that Unimarine had been negligent or less than prudent in its
dealings with Quinain.
Unimarine undoubtedly failed to establish that it even bothered to inquire if

Quinain was authorized to agree to terms beyond the limits indicated in his
special power of attorney. While Paul Rodriguez stated that he has done
business with Quinain more than once, he was not able to show that he was
misled by CBIC as to the extent of authority it granted Quinain. Paul
Rodriguez did not even allege that he asked for documents to prove
Quinain’s authority to contract business for CBIC, such as their contract of
agency and power of attorney. It is also worthy to note that even with the
Indemnity Agreement, Paul Rodriguez signed it on Quinain’s mere
assurance and without truly understanding the consequences of the terms
of the said agreement. Moreover, both Unimarine and Paul Rodriguez could
have inquired directly from CBIC to verify the validity and effectivity of the
surety bond and endorsement; but, instead, they blindly relied on the
representations of Quinain.
In light of the foregoing, this Court is constrained to release CBIC from its
liability on Surety Bond No. G (16) 29419 and Endorsement No. 33152.
PETRON CORPORATION vs. Spouses CESAR JOVERO and ERMA F. herein defendants, spouses Cesar J. Jovero and Erma Cudilla-Jovero,
CUDILLA, Spouses LONITO TAN and LUZVILLA SAMSON, and Spouses amounting to ₱1,500,000; of spouses Leonito Tan and Luzvilla Samson,
ROGELIO LIMPOCO and LUCIA JOSUE, being represented by PIO JOSUE, amounting to ₱800,000; and of spouses Rogelio Limpoco and Lucia Josue
G.R. No. 151038, January 18, 2012, SERENO, J. Limpoco, amounting to ₱4,112,000.
Facts: Herein respondents thereafter filed separate actions for damages against
petitioner, Villaruz, Rubin Uy, and Dortina Uy. The cases, having arisen from
the same set of facts, were subsequently consolidated. Respondents alleged
On 25 April 1984, Rubin Uy entered into a Contract of Lease with Cesar J.
that the negligence of petitioner and its co-defendants in the conduct of
Jovero over a property located at E. Reyes Ave., Estancia, Iloilo for the
their businesses caused the fire that destroyed the former’s properties.
purpose of operating a gasoline station for a period of five (5) years.
In its separate Answer, petitioner Petron alleged that the petroleum

On 30 April 1984, petitioner, a domestic corporation engaged in the
products were already paid for and owned by Rubin Uy and Dortina Uy.
importation and distribution of gasoline and other petroleum products,
Moreover, it alleged that Villaruz was responsible for the safe delivery of the
entered into a Retail Dealer Contract with Rubin Uy for the period 1 May
products by virtue of the hauling contract. Thus, petitioner asserted,
1984 to 30 April 1989. Under the dealership contract, petitioner sold its
liability for the damages caused by the fire rested on Rubin Uy and Villaruz.
products in quantities as ordered by the dealer. It likewise obligated itself to
Petitioner likewise filed a cross-claim against its co-defendants for
deliver the products to the dealer at the places agreed upon by the parties.
contribution, indemnity, subrogation, or other reliefs for all expenses and
The dealer, meanwhile, obligated himself to exclusively maintain
damages that it may have suffered by virtue of the incident. It also filed a
petitioner’s trademarks and brand names in his gasoline station. The parties
counterclaim against respondents herein.
also agreed that the dealer shall make good, settle and pay, and hold
petitioner harmless against all losses and claims including those of the
parties, their agents and employees – for death, personal injury or property In the present case, petitioner does not implead its co-defendants Villaruz,
damage arising out of any use or condition of the dealer’s premises or the Rubin Uy and Dortina Uy. Neither does it assail the dismissal by the lower
equipment and facilities thereon, regardless of any defects therein; the courts of the cross-claim or counterclaim it filed against its co-defendants
dealer’s non-performance of the contract; or the storage and handling of and herein respondents, respectively. Nor is there any question on
products on the premises. respondents’ right to claim damages. Petitioner merely prays for absolution
from liability resulting from the fire by claiming that it had no direct
participation in the incident.
In order to comply with its obligation to deliver the petroleum products to
the dealer, petitioner contracted the hauling services of Jose Villaruz, who
did business under the name Gale Freight Services. The hauling contract In support of the issues raised above, petitioner contends that, first, there
was executed in March 1988 for a period of three years, renewable for was an implied renewal of the dealership contract – Rubin Uy remained as
another three upon agreement of the parties. the operator of the gasoline station. It further contends that there is no law
supporting the conclusion of the CA that, upon expiration of the contract,
the dealer automatically became the supplier’s agent.
Under the hauling contract, Villaruz specifically assigned three (3) units of
tank trucks exclusively for the hauling requirements of petitioner for the
delivery of the latter’s products, namely tank trucks with the plate numbers Second, petitioner asserts that there was no rational link between its
FVG 605, FVG 581 and FVG 583. The parties also agreed that Villaruz shall alleged neglect in renewing the dealership agreement and the act that
save petitioner from any and all claims of third persons arising out of, but caused the fire.
not necessarily limited to, his performance of the terms and conditions of
the contract. Furthermore, Villaruz obligated himself to be answerable to
Third, petitioner insists that ownership of the petroleum products was
petitioner for damage to its plant, equipment and facilities, including those
transferred when the dealer’s representative, Ronnie Allanaraiz, went to
of its employees, dealers and customers, resulting from his negligence
petitioner’s oil depot, bought and paid for the gasoline, and had Villaruz’s
and/or lack of diligence.
tank truck receive the products for delivery.
Meanwhile, on 27 October 1988, Rubin Uy executed a Special Power of

Moreover, petitioner points out, neither Igdanis nor Villaruz was its
Attorney (SPA) in favor of Chiong Uy authorizing the latter to manage and
employee and, thus, it cannot be held vicariously liable for the damages to
administer the gasoline station. Chiong Uy and his wife, Dortina M. Uy,
respondents caused by Igdanis. Furthermore, it asserted that the tank truck
operated the gasoline station as agents of Rubin Uy. However, on 27
transporting the petroleum – though not included in the enumeration in the
November 1990, Chiong Uy left for Hong Kong, leaving Dortina Uy to
hauling contract – had complied with the standards required of Villaruz.
manage the gasoline station.
Petitioner also alleges that there was no evidence that the fire was
On 3 January 1991, around ten o’clock in the morning, Ronnie Allanaraiz, an
attributable to its distribution and storage safety measures.
employee of the gasoline station, ordered from petitioner various
petroleum products. Petitioner then requested the services of Villaruz for
the delivery of the products to the gasoline station in Estancia, Iloilo. He, Finally, petitioner states that both hauler and dealer must bear the costs of
however, used a tank truck different from the trucks specifically their acts and those of their employees, considering that this was an explicit
enumerated in the hauling contract executed with petitioner. Petitioner provision in their respective contracts with it.
nevertheless allowed the transport and delivery of its products to Estancia
in the tank truck driven by Pepito Igdanis.
Issue:
During the unloading of the petroleum from the tank truck into the fill pipe
Whether or not as the dealer was concerned with regard to the terms of the
that led to the gasoline station’s underground tank, for reasons unknown, a
dealership contract, acts of Villaruz and his employees are also acts of
fire started in the fill pipe and spread to the rubber hose connected to the
petitioner
tank truck. During this time, driver Pepito Igdanis was nowhere to be found.
Bystanders then tried to put out the flames. It was then that Igdanis
returned to the gasoline station with a bag of dried fish in hand. Seeing the Ruling:
fire, he got into the truck without detaching the rubber hose from the fill
pipe and drove in reverse, dragging the burning fuel hose along the way. As
Yes
a result, a conflagration started and consumed the nearby properties of
Respondents have a claim against petitioner based on the dealership pursue a claim against the dealer for the incident. Therefore, both are
agreement. solidarily liable to respondents for damages caused by the fire.
The RTC and the CA ruled that, by virtue of the expiration of the dealership Petitioner was likewise negligent in allowing a tank truck different from
contract, the dealer was relegated to being petitioner’s agent. On this point, that specifically provided under its hauling contract with Villaruz.
we agree with petitioner that the expiration or nonexistence of a dealership
contract did not ipso facto transform the relationship of the dealer and
With respect to the claims of third persons, it is not enough for petitioner to
petitioner into one of agency. As far as the parties to the dealership contract
allege that the tank truck met the same requirements provided under the
were concerned, the rights and obligations as to them still subsisted, since
contract; it must duly prove its allegations. This, petitioner failed to do. To
they continued to mutually benefit from the agreement. Thus, neither party
reiterate, it was not able to prove the proximate cause of the fire, only the
can claim that it is no longer bound by the terms of the contract and the
involvement of the tank truck and the underground storage tank. Notably,
expiration thereof.
both pieces of equipment were under its responsibility. Absent any positive
determination of the cause of the fire, a presumption exists that there was
We then judiciously reviewed the terms of the contract and found that something wrong with the truck or the underground storage tank, or both.
petitioner is liable to respondents for the damages caused by the fire. Petitioner, which had the obligation to ensure that the truck was safe, is
likewise liable for the operation of that truck.
As petitioner itself points out, it owns the equipment relevant to the
handling and storage of gasoline, including the gasoline pumps and the Petitioner maintains that by virtue of the hauling contract, Villaruz must be
underground tank. It is also responsible for the delivery of the petroleum to held responsible for the acts of Igdanis, the driver of the tank truck. In this
the dealer. The incident occurred at the time the petroleum was being aspect, petitioner is correct. While it may be vicariously liable to third
unloaded to the underground tank petitioner owned. Aside from failing to persons for damages caused by Villaruz, the latter is nevertheless liable to
show the actual cause of the fire, it also failed to rebut the presumption that petitioner by virtue of the non-liability clause in the hauling contract. Under
it was negligent in the maintenance of its properties and in the conduct of this provision, he saved petitioner from any and all claims of third persons
its business. arising out of, but not necessarily limited to, his performance of the terms
and conditions of this agreement. Petitioner even obligated him to maintain
an acceptable Merchandise Floater Policy to provide insurance coverage for
Petitioner contends that under paragraph 8 of the dealership contract, the
the products entrusted to him; and a Comprehensive General Liability
dealer’s liability is as follows:
Insurance to cover any and all claims for damages for personal injury,
including death or damages to property, which may arise from operations
LOSSES AND CLAIMS. BUYER shall make good, settle and pay, and hold under the contract.
SELLER harmless against all losses and claims (including those of the
parties, their agents and employees) for death, personal injury or property
Thus, Villaruz is also liable to petitioner based on the hauling contract.
arising out of (1) any use or condition of BUYER’s premises or the
Under Rule 6, Sec. 8 of the Rules of Court, petitioner may enforce the terms
equipment and facilities thereon, regardless of any defects therein (2)
of the hauling contract against him. However, considering that it did not
BUYER’s non-performance of this contract, or (3) the storage and handling
implead Villaruz in the present case, nor did it assail the Decision of the CA
of products on the premises.
in dismissing the cross-claim, petitioner can no longer go after him based on
that cross-claim.
While both parties to the contract have the right to provide a clause for non-
liability, petitioner admits that they both share the maintenance of its
Nonetheless, this is not the same as saying that Villaruz is no longer
equipment. Petitioner states that its responsibility extended to "the
solidarily liable to respondents.
operating condition of the gasoline station, e.g. whether the fuel pumps
were functioning properly."
As the employer of Igdanis, Villaruz was impleaded by herein respondents
in the lower court and was found to be solidarily liable with his other co-
Moreover, it cannot be denied that petitioner likewise obligated itself to
defendants. Absent an appeal before this Court assailing the ruling of the
deliver the products to the dealer. When the incident occurred, petitioner,
lower court and the CA, Villaruz remains to be solidarily liable with
through Gale Freight Services, was still in the process of fulfilling its
petitioner and co-defendants Rubin Uy and Dortina Uy. Thus, petitioner
obligation to the dealer. We disagree with its contention that delivery was
may only claim contribution from him in accordance with Article 1217 of
perfected upon payment of the goods at its depot. There was yet no
the Civil Code, and not by virtue of its hauling contract, in the event that
complete delivery of the goods as evidenced by the aforementioned hauling
respondents decide to proceed against petitioner alone for the satisfaction
contract petitioner executed with Villaruz. That contract made it clear that
of judgment. Art. 1217 states:
delivery would only be perfected upon the complete unloading of the
gasoline.
Payment made by one of the solidary debtors extinguishes the obligation. If
two or more solidary debtors offer to pay, the creditor may choose which
Thus, with regard to the delivery of the petroleum, Villaruz was acting
offer to accept.
as the agent of petitioner Petron. For a fee, he delivered the petroleum
products on its behalf. Notably, petitioner even imposed a penalty
clause in instances when there was a violation of the hauling contract, He who made the payment may claim from his co-debtors only the
wherein it may impose a penalty ranging from a written warning to share which corresponds to each, with the interest for the payment
the termination of the contract. Therefore, as far as the dealer was already made. If the payment is made before the debt is due, no interest for
concerned with regard to the terms of the dealership contract, acts of the intervening period may be demanded. (Emphasis supplied)
Villaruz and his employees are also acts of petitioner. Both the RTC and
the CA held that Villaruz failed to rebut the presumption that the employer
The share, meanwhile, of solidary debtors is contained in Art. 1208, to wit:
was negligent in the supervision of an employee who caused damages to
another; and, thus, petitioner should likewise be held accountable for the
negligence of Villaruz and Igdanis. If from the law, or the nature of the wording of the obligations to which the
preceding article refers the contrary does not appear, the credit of debt
shall be presumed to be divided into as many equal shares as there are
To reiterate, petitioner, the dealer Rubin Uy – acting through his agent,
creditors or debtors, the credits or debts being considered distinct
Dortina Uy – shared the responsibility for the maintenance of the
from one another, subject to the Rules of Court governing the
equipment used in the gasoline station and for making sure that the
multiplicity of suits. (Emphasis supplied)
unloading and the storage of highly flammable products were without
incident. As both were equally negligent in those aspects, petitioner cannot
To put it simply, based on the ruling of the lower courts, there are four (4)
persons who are liable to pay damages to respondents. The latter may
proceed against any one of the solidary debtors or some or all of them
simultaneously, pursuant to Article 1216 of the Civil Code. These solidary
debtors are petitioner Petron, the hauler Villaruz, the operator Dortina Uy
and the dealer Rubin Uy. To determine the liability of each defendant to one
another, the amount of damages shall be divided by four, representing the
share of each defendant. Supposedly, under the hauling contract, petitioner
may require Villaruz to indemnify it for its share. However, because it was
not able to maintain the cross-claim filed against him, it shall be liable for its
own share under Article 1208 and can no longer seek indemnification or
subrogation from him under its dismissed cross-claim. Petitioner may not
pursue its cross-claim against Rubin Uy and Dortina Uy, because the cross-
claims against them were also dismissed; moreover, they were all equally
liable for the conflagration as discussed herein.
Finally, the incident occurred in 1992. Almost 20 years have passed; yet,
respondents, who were innocent bystanders, have not been compensated
for the loss of their homes, properties and livelihood. In the interest of
substantial justice, we deem it necessary to impose legal interest on the
awarded actual damages at the rate of 6% per annum from the time the
cases were filed with the lower court; and 12% from the time the judgment
herein becomes final and executory up to the satisfaction of such judgment.
SPOUSES FERNANDO and LOURDES VILORIA vs. CONTINENTAL the dubious circumstances under which the subject tickets were issued,
AIRLINES, INC., G.R. No. 188288, January 16, 2012, REYES, J. Fernando claimed that CAI’s act of charging him with US$1,867.40 for a
round trip ticket to Los Angeles, which other airlines priced at US$856.00,
and refusal to allow him to use Lourdes’ ticket, breached its undertaking
In actions based on quasi-delict, a principal can only be held liable for the tort
under its March 24, 1998 letter.
committed by its agent’s employees if it has been established by
preponderance of evidence that the principal was also at fault or negligent or
that the principal exercise control and supervision over them. On September 8, 2000, Spouses Viloria filed a complaint against CAI,
praying that CAI be ordered to refund the money they used in the purchase
of the subject tickets with legal interest from July 21, 1997 and to pay
Facts: On or about July 21, 1997 and while in the United States, Fernando
₱1,000,000.00 as moral damages, ₱500,000.00 as exemplary damages and
purchased for himself and his wife, Lourdes, two (2) round trip airline
₱250,000.00 as attorney’s fees.
tickets from San Diego, California to Newark, New Jersey on board
Continental Airlines. Fernando purchased the tickets at US$400.00 each
from a travel agency called "Holiday Travel" and was attended to by a CAI interposed the following defenses: (a) Spouses Viloria have no right to
certain Margaret Mager (Mager). According to Spouses Viloria, Fernando ask for a refund as the subject tickets are non-refundable; (b) Fernando
agreed to buy the said tickets after Mager informed them that there were no cannot insist on using the ticket in Lourdes’ name for the purchase of a
available seats at Amtrak, an intercity passenger train service provider in round trip ticket to Los Angeles since the same is non-transferable; (c) as
the United States. Per the tickets, Spouses Viloria were scheduled to leave Mager is not a CAI employee, CAI is not liable for any of her acts; (d) CAI, its
for Newark on August 13, 1997 and return to San Diego on August 21, 1997. employees and agents did not act in bad faith as to entitle Spouses Viloria to
moral and exemplary damages and attorney’s fees. CAI also invoked the
following clause printed on the subject tickets:
Subsequently, Fernando requested Mager to reschedule their flight to
Newark to an earlier date or August 6, 1997. Mager informed him that
flights to Newark via Continental Airlines were already fully booked and 3. To the extent not in conflict with the foregoing carriage and other
offered the alternative of a round trip flight via Frontier Air. Since flying services performed by each carrier are subject to: (i) provisions contained
with Frontier Air called for a higher fare of US$526.00 per passenger and in this ticket, (ii) applicable tariffs, (iii) carrier’s conditions of carriage and
would mean traveling by night, Fernando opted to request for a refund. related regulations which are made part hereof (and are available on
Mager, however, denied his request as the subject tickets are non- application at the offices of carrier), except in transportation between a
refundable and the only option that Continental Airlines can offer is the re- place in the United States or Canada and any place outside thereof to which
issuance of new tickets within one (1) year from the date the subject tickets tariffs in force in those countries apply.
were issued. Fernando decided to reserve two (2) seats with Frontier Air.
According to CAI, one of the conditions attached to their contract of carriage
As he was having second thoughts on traveling via Frontier Air, Fernando is the non-transferability and non-refundability of the subject tickets.
went to the Greyhound Station where he saw an Amtrak station nearby.
Fernando made inquiries and was told that there are seats available and he
Issue:
can travel on Amtrak anytime and any day he pleased. Fernando then
purchased two (2) tickets for Washington, D.C.
1.Whether or not a principal-agent relationship exist between CAI and
Holiday Travel?
From Amtrak, Fernando went to Holiday Travel and confronted Mager with
the Amtrak tickets, telling her that she had misled them into buying the
Continental Airlines tickets by misrepresenting that Amtrak was already 2. Assuming that an agency relationship exists between CAI and Holiday
fully booked. Fernando reiterated his demand for a refund but Mager was Travel, is CAI bound by the acts of Holiday Travel’s agents and employees
firm in her position that the subject tickets are non-refundable. such as Mager?
Upon returning to the Philippines, Fernando sent a letter to CAI on February Ruling:
11, 1998, demanding a refund and alleging that Mager had deluded them
into purchasing the subject tickets.
1. A principal-agent relationship exists between CAI and Holiday
Travel.
In a letter dated February 24, 1998, Continental Micronesia informed
Fernando that his complaint had been referred to the Customer Refund
The CA erred in characterizing the contractual relationship between CAI
Services of Continental Airlines at Houston, Texas.
and Holiday Travel as a contract of sale, the CA failed to apply the
fundamental civil law principles governing agency and differentiating it
In a letter dated March 24, 1998, Continental Micronesia denied Fernando’s from sale.
request for a refund and advised him that he may take the subject tickets to
any Continental ticketing location for the re-issuance of new tickets within
In Rallos v. Felix Go Chan & Sons Realty Corporation, this Court explained the
two (2) years from the date they were issued. Continental Micronesia
nature of an agency and spelled out the essential elements thereof:
informed Fernando that the subject tickets may be used as a form of
payment for the purchase of another Continental ticket, albeit with a re-
issuance fee. Out of the above given principles, sprung the creation and acceptance of
the relationship of agencywhereby one party, called the principal
(mandante), authorizes another, called the agent (mandatario), to act for
On June 17, 1999, Fernando went to Continental’s ticketing office at Ayala
and in his behalf in transactions with third persons. The essential elements
Avenue, Makati City to have the subject tickets replaced by a single round
of agency are: (1) there is consent, express or implied of the parties to
trip ticket to Los Angeles, California under his name. Therein, Fernando was
establish the relationship; (2) the object is the execution of a juridical act in
informed that Lourdes’ ticket was non-transferable, thus, cannot be used for
relation to a third person; (3) the agent acts as a representative and not for
the purchase of a ticket in his favor. He was also informed that a round trip
himself, and (4) the agent acts within the scope of his authority.1avvphi1
ticket to Los Angeles was US$1,867.40 so he would have to pay what will
not be covered by the value of his San Diego to Newark round trip ticket.
Agency is basically personal, representative, and derivative in nature. The
authority of the agent to act emanates from the powers granted to him by
In a letter dated June 21, 1999, Fernando demanded for the refund of the
his principal; his act is the act of the principal if done within the scope of the
subject tickets as he no longer wished to have them replaced. In addition to
authority. Qui facit per alium facit se. "He who acts through another acts An examination of this Court’s pronouncements in China Air Lines will
himself." reveal that an airline company is not completely exonerated from any
liability for the tort committed by its agent’s employees. A prior
determination of the nature of the passenger’s cause of action is necessary.
Contrary to the findings of the CA, all the elements of an agency exist in this
If the passenger’s cause of action against the airline company is premised
case. The first and second elements are present as CAI does not deny that it
on culpa aquiliana or quasi-delict for a tort committed by the employee of
concluded an agreement with Holiday Travel, whereby Holiday Travel
the airline company’s agent, there must be an independent showing that the
would enter into contracts of carriage with third persons on CAI’s behalf.
airline company was at fault or negligent or has contributed to the
The third element is also present as it is undisputed that Holiday Travel
negligence or tortuous conduct committed by the employee of its agent. The
merely acted in a representative capacity and it is CAI and not Holiday
mere fact that the employee of the airline company’s agent has committed a
Travel who is bound by the contracts of carriage entered into by Holiday
tort is not sufficient to hold the airline company liable. There is no vinculum
Travel on its behalf. The fourth element is also present considering that CAI
juris between the airline company and its agent’s employees and the
has not made any allegation that Holiday Travel exceeded the authority that
contractual relationship between the airline company and its agent does not
was granted to it. In fact, CAI consistently maintains the validity of the
operate to create a juridical tie between the airline company and its agent’s
contracts of carriage that Holiday Travel executed with Spouses Viloria and
employees. Article 2180 of the Civil Code does not make the principal
that Mager was not guilty of any fraudulent misrepresentation. That CAI
vicariously liable for the tort committed by its agent’s employees and the
admits the authority of Holiday Travel to enter into contracts of carriage on
principal-agency relationship per se does not make the principal a party to
its behalf is easily discernible from its February 24, 1998 and March 24,
such tort; hence, the need to prove the principal’s own fault or negligence.
1998 letters, where it impliedly recognized the validity of the contracts
entered into by Holiday Travel with Spouses Viloria. When Fernando
informed CAI that it was Holiday Travel who issued to them the subject On the other hand, if the passenger’s cause of action for damages against the
tickets, CAI did not deny that Holiday Travel is its authorized agent. airline company is based on contractual breach or culpa contractual, it is not
necessary that there be evidence of the airline company’s fault or
negligence.
Prior to Spouses Viloria’s filing of a complaint against it, CAI never refuted
that it gave Holiday Travel the power and authority to conclude contracts of
carriage on its behalf. As clearly extant from the records, CAI recognized the Spouses Viloria’s cause of action on the basis of Mager’s alleged fraudulent
validity of the contracts of carriage that Holiday Travel entered into with misrepresentation is clearly one of tort or quasi-delict, there being no pre-
Spouses Viloria and considered itself bound with Spouses Viloria by the existing contractual relationship between them. Therefore, it was
terms and conditions thereof; and this constitutes an unequivocal testament incumbent upon Spouses Viloria to prove that CAI was equally at fault.
to Holiday Travel’s authority to act as its agent. This Court cannot therefore
allow CAI to take an altogether different position and deny that Holiday
However, the records are devoid of any evidence by which CAI’s alleged
Travel is its agent without condoning or giving imprimatur to whatever
liability can be substantiated. Apart from their claim that CAI must be held
damage or prejudice that may result from such denial or retraction to
liable for Mager’s supposed fraud because Holiday Travel is CAI’s agent,
Spouses Viloria, who relied on good faith on CAI’s acts in recognition of
Spouses Viloria did not present evidence that CAI was a party or had
Holiday Travel’s authority. Estoppel is primarily based on the doctrine of
contributed to Mager’s complained act either by instructing or authorizing
good faith and the avoidance of harm that will befall an innocent party due
Holiday Travel and Mager to issue the said misrepresentation.
to its injurious reliance, the failure to apply it in this case would result in
gross travesty of justice. Estoppel bars CAI from making such denial.
It may seem unjust at first glance that CAI would consider Spouses Viloria
bound by the terms and conditions of the subject contracts, which Mager
As categorically provided under Article 1869 of the Civil Code, "[a]gency
entered into with them on CAI’s behalf, in order to deny Spouses Viloria’s
may be express, or implied from the acts of the principal, from his silence or
request for a refund or Fernando’s use of Lourdes’ ticket for the re-issuance
lack of action, or his failure to repudiate the agency, knowing that another
of a new one, and simultaneously claim that they are not bound by Mager’s
person is acting on his behalf without authority."
supposed misrepresentation for purposes of avoiding Spouses Viloria’s
claim for damages and maintaining the validity of the subject contracts. It
Considering that the fundamental hallmarks of an agency are present, this may likewise be argued that CAI cannot deny liability as it benefited from
Court finds it rather peculiar that the CA had branded the contractual Mager’s acts, which were performed in compliance with Holiday Travel’s
relationship between CAI and Holiday Travel as one of sale. The distinctions obligations as CAI’s agent.
between a sale and an agency are not difficult to discern and this Court, as
early as 1970, had already formulated the guidelines that would aid in
However, a person’s vicarious liability is anchored on his possession of
differentiating the two (2) contracts. In Commissioner of Internal Revenue v.
control, whether absolute or limited, on the tortfeasor. Without such
Constantino, this Court extrapolated that the primordial differentiating
control, there is nothing which could justify extending the liability to a
consideration between the two (2) contracts is the transfer of ownership or
person other than the one who committed the tort.
title over the property subject of the contract. In an agency, the principal
retains ownership and control over the property and the agent merely acts
on the principal’s behalf and under his instructions in furtherance of the It is incumbent upon Spouses Viloria to prove that CAI exercised control or
objectives for which the agency was established. On the other hand, the supervision over Mager by preponderant evidence. The existence of control
contract is clearly a sale if the parties intended that the delivery of the or supervision cannot be presumed and CAI is under no obligation to prove
property will effect a relinquishment of title, control and ownership in such its denial or nugatory assertion.
a way that the recipient may do with the property as he pleases.
Therefore, without a modicum of evidence that CAI exercised control over
2. No. In actions based on quasi-delict, a principal can only be held Holiday Travel’s employees or that CAI was equally at fault, no liability can
liable for the tort committed by its agent’s employees if it has been be imposed on CAI for Mager’s supposed misrepresentation.
established by preponderance of evidence that the principal was also
at fault or negligent or that the principal exercise control and
Even on the assumption that CAI may be held liable for the acts of Mager,
supervision over them.
still, Spouses Viloria are not entitled to a refund. Mager’s statement cannot
be considered a causal fraud that would justify the annulment of the subject
Considering that Holiday Travel is CAI’s agent, does it necessarily follow contracts that would oblige CAI to indemnify Spouses Viloria and return the
that CAI is liable for the fault or negligence of Holiday Travel’s employees? money they paid for the subject tickets.
Citing China Air Lines, Ltd. v. Court of Appeals, et al., CAI argues that it cannot
be held liable for the actions of the employee of its ticketing agent in the
Even assuming that Mager’s representation is causal fraud, the subject
absence of an employer-employee relationship.
contracts have been impliedly ratified when Spouses Viloria decided to
exercise their right to use the subject tickets for the purchase of new ones.
Under Article 1392 of the Civil Code, "ratification extinguishes the action to
annul a voidable contract."
REMAN RECIO vs. HEIRS OF THE SPOUSES AGUEDO and MARIA an Amended Complaint impleading the Spouses Lajarca and adding as a
ALTAMIRANO, namely: ALEJANDRO, ADELAIDA, CATALINA, ALFREDO, cause of action the annulment of the sale between the Altamiranos and the
FRANCISCO, all surnamed ALTAMIRANO; VIOLETAALTAMIRANO Spouses Lajarca.
OLFATO, and LORETAALTAMIRANO VDA. DE MARALIT and SPOUSES
LAURO and MARCELINA LAJARCA, G.R. No.182349, July 24, 2013,
Issue:
REYES, J.
Whether or not Alejandro has authority to sell the parcel of land

Articles 1874 and 1878 of the Civil Code explicitly provide:
Ruling:
Art. 1874. When a sale of a piece of land or any interest therein is through an
agent, the authority of the latter shall be in writing; otherwise, the sale shall
be void. No, Alejandro only sold his aliquot share of the subject property to the
petitioner.
Art. 1878. Special powers of attorney are necessary in the following cases:
At the core of the present petition is the validity of the verbal contract of
sale between Alejandro and the petitioner; and the Deed of Absolute Sale
xxxx
between the Altamiranos and the Spouses Lajarca involving the subject
property.
(5) To enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration;
A valid contract of sale requires: (a) a meeting of minds of the parties to
transfer ownership of the thing sold in exchange for a price; (b) the subject
Facts: matter, which must be a possible thing; and (c) the price certain in money
or its equivalent.
In the 1950’s, Nena Recio (Nena), the mother of Reman Recio (petitioner),
leased from the respondents Alejandro, Adelaida, Catalina, Alfredo, In the instant case, all these elements are present. The records disclose that
Francisco, all surnamed Altamirano, Violeta Altamirano Olfato, and Loreto the Altamiranos were the ones who offered to sell the property to Nena but
Altamirano Vda. De Maralit (referred to as the Altamiranos) a parcel of land the transaction did not push through due to the fault of the respondents.
with improvements, situated at No. 39 10 de Julio Street (now Esteban Thereafter, the petitioner renewed Nena’s option to purchase the property
Mayo Street), Lipa City, Batangas. to which Alejandro, as the representative of the Altamiranos verbally
agreed. The determinate subject matter is Lot No. 3, which is covered under
TCT No. T-102563 and located at No. 39 10 de Julio Street (now Esteban
Nena used the ground floor of the subject property as a retail store for
Mayo Street), Lipa City, Batangas. The price agreed for the sale of the
grains and the upper floor as the family’s residence. The petitioner claimed
property was Five Hundred Thousand Pesos (₱500,000.00). It cannot be
that in 1988, the Altamiranos offered to sell the subject property to Nena for
denied that the oral contract of sale entered into between the petitioner and
Five Hundred Thousand Pesos (₱500,000.00). The latter accepted such
Alejandro was valid.
offer, which prompted the Altamiranos to waive the rentals for the subject
property. However, the sale did not materialize at that time due to the fault
of the Altamiranos. Nonetheless, Nena continued to occupy and use the However, the CA found that it was only Alejandro who agreed to the
property with the consent of the Altamiranos. sale.1âwphi1 There is no evidence to show that the other co-owners
consented to Alejandro’s sale transaction with the petitioner. Hence, for
want of authority to sell Lot No. 3, the CA ruled that Alejandro only sold his
In the latter part of 1994, the petitioner renewed Nena’s option to buy the
aliquot share of the subject property to the petitioner.
subject property. The petitioner conducted a series of negotiations with
respondent Alejandro who introduced himself as representing the other
heirs. After the said negotiations, the Altamiranos through Alejandro In Alcantara v. Nido, the Court emphasized the requirement of an SPA
entered into an oral contract of sale with the petitioner over the subject before an agent may sell an immovable property.
property. In January 1995, in view of the said oral contract of sale, the
petitioner made partial payments to the Altamiranos in the total amount of
Articles 1874 and 1878 of the Civil Code explicitly provide:
One Hundred Ten Thousand Pesos (₱110,000.00). Alejandro duly received
and acknowledged these partial payments as shown in a receipt dated
January 24, 1995. On April 14, 1995, the petitioner made another payment Art. 1874. When a sale of a piece of land or any interest therein is through
in the amount of Fifty Thousand Pesos (₱50,000.00), which Alejandro again an agent, the authority of the latter shall be in writing; otherwise, the sale
received and acknowledged through a receipt of the same date. shall be void.
Subsequently, the petitioner offered in many instances to pay the remaining
balance of the agreed purchase price of the subject property in the amount
of Three Hundred Forty Thousand Pesos (₱340,000.00), but Alejandro kept
on avoiding the petitioner. Because of this, the petitioner demanded from
the Altamiranos, through Alejandro, the execution of a Deed of Absolute xxxx
Sale in exchange for the full payment of the agreed price.
(5) To enter into any contract by which the ownership of an immovable is
Thus, on February 24, 1997, the petitioner filed a complaint for Specific transmitted or acquired either gratuitously or for a valuable consideration;
Performance with Damages. On March 14, 1997, the petitioner also caused
to annotate on the TCT No. T-102563 a Notice of Lis Pendens.
The petitioner insists that the authority of Alejandro to represent his co-
heirs in the contract of sale entered into with the petitioner had been
Pending the return of service of summons to the Altamiranos, the petitioner adequately proven during the trial. He alleges that the other Altamiranos
discovered that the subject property has been subsequently sold to are deemed to have knowledge of the contract of sale entered into by
respondents Lauro and Marcelina Lajarca (Spouses Lajarca). TCT No. T- Alejandro with the petitioner since all of them, either personally or through
102563 was cancelled and a new title, TCT No. 112727, was issued in the their authorized representatives participated in the sale transaction with
name of the Spouses Lajarca by virtue of a Deed of Sale executed by the the Spouses Lajarca involving the same property covered by TCT No. T-
latter and the Altamiranos on February 26, 1998. Thus, the petitioner filed 102563. In fact, said TCT even contained a notice of lis pendens which
should have called their attention that there was a case involving the
property. Moreover, the petitioner points out that Alejandro represented a

considerable majority of the co-owners as can be observed from other
transaction and documents, i.e., three (3) Deeds of Sale executed in favor of
the Spouses Lajarca and the two other buyers of the parcels of land co-
owned by the Altamiranos.
The petitioner’s contentions are untenable. Given the expressed

requirement under the Articles 1874 and 1878 of the Civil Code that there
must be a written authority to sell an immovable property, the petitioner’s
arguments must fail. The petitioner asserts that since TCT No. T-102563
contained a notice of lis pendens, the Altamiranos very well knew of the
earlier sale to him by Alejandro. While this may be true, it does not negate
the fact that Alejandro did not have any SPA. It was a finding that need not
be disturbed that Alejandro had no authority from his co-owners to sell the
subject property.
Moreover, the fact that Alejandro allegedly represented a majority of the co-
owners in the transaction with the Spouses Lajarca, is of no moment. The
Court cannot just simply assume that Alejandro had the same authority
when he transacted with the petitioner.
When the petitioner relied only on the words of respondent Alejandro

without securing a copy of the SPA in favor of the latter, the petitioner is
bound by the risk accompanying such trust on the mere assurance of
Alejandro.
Apparent authority of an agent arises only from "acts or conduct on the part
of the principal and such acts or conduct of the principal must have been
known and relied upon in good faith and as a result of the exercise of
reasonable prudence by a third person as claimant and such must have
produced a change of position to its detriment." In the instant case, the sale
to the Spouses Lajarca and other transactions where Alejandro allegedly
represented a considerable majority of the co-owners transpired after the
sale to the petitioner; thus, the petitioner cannot rely upon these acts or
conduct to believe that Alejandro had the same authority to negotiate for
the sale of the subject property to him.
Indeed, the petitioner can only apply the principle of apparent authority if
he is able to prove the acts of the Altamiranos which justify his belief in
Alejandro’s agency; that the Altamiranos had such knowledge thereof; and if
the petitioner relied upon those acts and conduct, consistent with ordinary
care and prudence.
The instant case shows no evidence on record of specific acts which the
Altamiranos made before tile sale of the subject property to the petitioner,
indicating that they fully knew of the representation of Alejandro. All that
the petitioner relied upon were acts that happened after the sale to him.
Absent the consent of Alejandro's co-owners, the Court holds that the sale
between the other Altamiranos and the petitioner is null and void. But as
held by the appellate court, the sale between the petitioner and Alejandro is
valid insofar as the aliquot share of respondent Alejandro is concerned.
Being a co-owner, Alejandro can validly and legally dispose of his share
even without the consent of all the other co-heirs. Since the balance of the
full price has not yet been paid, the amount paid shall represent as payment
to his aliquot share. This then leaves the sale of the lot of the Altamiranos to
the Spouses Lajarca valid only insofar as their shares are concerned,
exclusive of the aliquot part of Alejandro, as ruled by the CA.
SALLY YOSHIZAKI vs. JOY TRAINING CENTER OF AURORA, INC., G.R. No. Joy Training maintains that it did not authorize the spouses Johnson to sell
174978, July 31, 2013, BRION, J. its real properties. TCT No. T-25334 does not specifically grant the
authority to sell the parcel of land to the spouses Johnson. It further asserts
that the resolution and the certification should not be given any probative
Specifically, Article 1874 of the Civil Code provides that the contract of agency
value because they were not admitted in evidence by the RTC. It argues that
must be written for the validity of the sale of a piece of land or any interest
the resolution is void for failure to comply with the voting requirements
therein. Otherwise, the sale shall be void. A related provision, Article 1878 of
under Section 40 of the Corporation Code. It also posits that the certification
the Civil Code, states that special powers of attorney are necessary to convey
is void because it lacks material particulars.
real rights over immovable properties.
Issues:
Facts:
1. Whether or not there was a contract of agency to sell the real properties
Respondent Joy Training Center of Aurora, Inc. (Joy Training) is a non-stock,
between Joy Training and the spouses Johnson.
non-profit religious educational institution. It was the registered owner of a
parcel of land and the building thereon (real properties) located in San Luis
Extension Purok No. 1, Barangay Buhangin, Baler, Aurora. 2. As a consequence of the second issue, whether or not there was a valid
contract of sale of the real properties between Joy Training and the spouses
Yoshizaki.
On November 10, 1998, the spouses Richard and Linda Johnson sold the
real properties, a Wrangler jeep, and other personal properties in favor of
the spouses Sally and Yoshio Yoshizaki. On the same date, a Deed of Ruling:
Absolute Sale and a Deed of Sale of Motor Vehicle were executed in favor of
the spouses Yoshizaki. The spouses Johnson were members of Joy
1. There is no contract of agency between Joy Training and the
Training’s board of trustees at the time of sale.
spouses Johnson to sell the parcel of land with its improvements
On December 8, 1998, Joy Training, represented by its Acting Chairperson

Article 1868 of the Civil Code defines a contract of agency as a contract
Reuben V. Rubio, filed an action for the Cancellation of Sales and Damages
whereby a person "binds himself to render some service or to do something
with prayer for the issuance of a Temporary Restraining Order and/or Writ
in representation or on behalf of another, with the consent or authority of
of Preliminary Injunction against the spouses Yoshizaki and the spouses
the latter." It may be express, or implied from the acts of the principal, from
Johnson before the Regional Trial Court of Baler, Aurora (RTC).
his silence or lack of action, or his failure to repudiate the agency, knowing
that another person is acting on his behalf without authority.
In the complaint, Joy Training alleged that the spouses Johnson sold its
properties without the requisite authority from the board of directors. It
As a general rule, a contract of agency may be oral. However, it must be
assailed the validity of a board resolution dated September 1, 1998 which
written when the law requires a specific form. Specifically, Article 1874 of
purportedly granted the spouses Johnson the authority to sell its real
the Civil Code provides that the contract of agency must be written for the
properties. It averred that only a minority of the board, composed of the
validity of the sale of a piece of land or any interest therein. Otherwise, the
spouses Johnson and Alexander Abadayan, authorized the sale through the
sale shall be void. A related provision, Article 1878 of the Civil Code, states
resolution. It highlighted that the Articles of Incorporation provides that the
that special powers of attorney are necessary to convey real rights over
board of trustees consists of seven members, namely: the spouses Johnson,
immovable properties.
Reuben, Carmencita Isip, Dominador Isip, Miraflor Bolante, and Abelardo
Aquino.
The special power of attorney mandated by law must be one that expressly
mentions a sale or that includes a sale as a necessary ingredient of the
Cecilia and the spouses Johnson were declared in default for their failure to
authorized act. We unequivocably declared in Cosmic Lumber Corporation
file an Answer within the reglementary period. On the other hand, the
v. Court of Appeals that a special power of attorney must express the
spouses Yoshizaki filed their Answer with Compulsory Counterclaims on
powers of the agent in clear and unmistakable language for the principal to
June 23, 1999. They claimed that Joy Training authorized the spouses
confer the right upon an agent to sell real estate. When there is any
Johnson to sell the parcel of land. They asserted that a majority of the board
reasonable doubt that the language so used conveys such power, no such
of trustees approved the resolution. They maintained that the actual
construction shall be given the document. The purpose of the law in
members of the board of trustees consist of five members, namely: the
requiring a special power of attorney in the disposition of immovable
spouses Johnson, Reuben, Alexander, and Abelardo. Moreover, Connie
property is to protect the interest of an unsuspecting owner from being
Dayot, the corporate secretary, issued a certification dated February 20,
prejudiced by the unwarranted act of another and to caution the buyer to
1998 authorizing the spouses Johnson to act on Joy Training’s behalf.
assure himself of the specific authorization of the putative agent.
Furthermore, they highlighted that the Wrangler jeep and other personal
properties were registered in the name of the spouses Johnson.
In the present case, Sally presents three pieces of evidence which allegedly
prove that Joy Training specially authorized the spouses Johnson to sell the
After the presentation of their testimonial evidence, the spouses Yoshizaki
real properties: (1) TCT No. T-25334, (2) the resolution, (3) and the
formally offered in evidence photocopies of the resolution and certification,
certification. We quote the pertinent portions of these documents for a
among others. Joy Training objected to the formal offer of the photocopied
thorough examination of Sally’s claim. TCT No. T-25334, entered in the
resolution and certification on the ground that they were not the best
Registry of Deeds on March 5, 1998, states:
evidence of their contents.
A parcel of land x x x is registered in accordance with the provisions of the

Sally argues that the spouses Johnson were authorized to sell the parcel of
Property Registration Decree in the name of JOY TRAINING CENTER OF
land and that she was a buyer in good faith because she merely relied on
AURORA, INC., Rep. by Sps. RICHARD A. JOHNSON and LINDA S. JOHNSON,
TCT No. T-25334. The title states that the spouses Johnson are Joy
both of legal age, U.S. Citizen, and residents of P.O. Box 3246, Shawnee, Ks
Training’s representatives.
66203, U.S.A. (emphasis ours)
She also argues that it is a basic principle that a party dealing with a
On the other hand, the fifth paragraph of the certification provides:
registered land need not go beyond the certificate of title to determine the
condition of the property.
Further, Richard A. and Linda J. Johnson were given FULL AUTHORITY for At this point, we reiterate the established principle that persons dealing
ALL SIGNATORY purposes for the corporation on ANY and all matters and with an agent must ascertain not only the fact of agency, but also the nature
decisions regarding the property and ministry here. They will follow and extent of the agent’s authority. A third person with whom the agent
guidelines set forth according to their appointment and ministerial and wishes to contract on behalf of the principal may require the presentation of
missionary training and in that, they will formulate and come up with by- the power of attorney, or the instructions as regards the agency. The basis
laws which will address and serve as governing papers over the center and for agency is representation and a person dealing with an agent is put upon
corporation. They are to issue monthly and quarterly statements to all inquiry and must discover on his own peril the authority of the agent. Thus,
members of the corporation. (emphasis ours) Sally bought the real properties at her own risk; she bears the risk of injury
occasioned by her transaction with the spouses Johnson.
The resolution states:
We, the undersigned Board of Trustees (in majority) have authorized the
sale of land and building owned by spouses Richard A. and Linda J. Johnson
(as described in the title SN No. 5102156 filed with the Province of Aurora
last 5th day of March, 1998. These proceeds are going to pay outstanding
loans against the project and the dissolution of the corporation shall follow
the sale. This is a religious, non-profit corporation and no profits or stocks
are issued. (emphasis ours)
The above documents do not convince us of the existence of the contract of

agency to sell the real properties. TCT No. T-25334 merely states that Joy
Training is represented by the spouses Johnson. The title does not explicitly
confer to the spouses Johnson the authority to sell the parcel of land and the
building thereon. Moreover, the phrase "Rep. by Sps. RICHARD A. JOHNSON
and LINDA S. JOHNSON"only means that the spouses Johnson represented
Joy Training in land registration.
The lower courts should not have relied on the resolution and the
certification in resolving the case.1âwphi1 The spouses Yoshizaki did not
produce the original documents during trial. They also failed to show that
the production of pieces of secondary evidence falls under the exceptions
enumerated in Section 3, Rule 130 of the Rules of Court. Thus, the general
rule – that no evidence shall be admissible other than the original document
itself when the subject of inquiry is the contents of a document – applies.
Nonetheless, if only to erase doubts on the issues surrounding this case, we

declare that even if we consider the photocopied resolution and
certification, this Court will still arrive at the same conclusion.
The resolution which purportedly grants the spouses Johnson a special

power of attorney is negated by the phrase "land and building owned by
spouses Richard A. and Linda J. Johnson." Even if we disregard such phrase,
the resolution must be given scant consideration. We adhere to the CA’s
position that the basis for determining the board of trustees’ composition is
the trustees as fixed in the articles of incorporation and not the actual
members of the board.
Moreover, the certification is a mere general power of attorney which

comprises all of Joy Training’s business. Article 1877 of the Civil Code
clearly states that "an agency couched in general terms comprises only acts
of administration, even if the principal should state that he withholds no
power or that the agent may execute such acts as he may consider
appropriate, or even though the agency should authorize a general and
unlimited management."
2. The contract of sale is unenforceable
Necessarily, the absence of a contract of agency renders the contract of sale

unenforceable; Joy Training effectively did not enter into a valid contract of
sale with the spouses Yoshizaki. Sally cannot also claim that she was a buyer
in good faith. She misapprehended the rule that persons dealing with a
registered land have the legal right to rely on the face of the title and to
dispense with the need to inquire further, except when the party concerned
has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry. This rule applies when the
ownership of a parcel of land is disputed and not when the fact of agency is
contested.
ALVIN PATRIMONIO vs. NAPOLEON GUTIERREZ and OCTAVIO check’s negotiation to the latter; (2) under Article 1878 of the Civil Code, a
MARASIGAN III, G.R. No. 187769, June 4, 2014, BRION, J. special power of attorney is necessary for an individual to make a loan or
borrow money in behalf of another; (3) the loan transaction was between
Gutierrez and Marasigan, with his check being used only as a security; (4)
Article 1878 paragraph 7 of the Civil Code expressly requires a special power
the check had not been completely and strictly filled out in accordance with
of authority before an agent can loan or borrow money in behalf of the
his authority since the condition that the subject check can only be used
principal, to wit:
provided there is prior approval from him, was not complied with; (5) even
if the check was strictly filled up as instructed by the petitioner, Marasigan
Art. 1878. Special powers of attorney are necessary in the following cases: is still not entitled to claim the check’s value as he was not a holder in due
course; and (6) by reason of the bad faith in the dealings between the
respondents, he is entitled to claim for damages.
xxxx
Issue:
(7) To loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which are under
administration. (emphasis supplied) Whether or not the petitioner authorized the contract of loan in the amount
of ₱200,000.00 granted by respondent Marasigan through respondent
Gutierrez
Facts:
Ruling:
The petitioner and the respondent Napoleon Gutierrez (Gutierrez) entered
into a business venture under the name of Slam Dunk Corporation (Slum
Dunk), a production outfit that produced mini-concerts and shows related NO.
to basketball. Petitioner was already then a decorated professional
basketball player while Gutierrez was a well-known sports columnist.
The petitioner seeks to nullify the contract of loan on the ground that he
never authorized the borrowing of money. He points to Article 1878,
In the course of their business, the petitioner pre-signed several checks to paragraph 7 of the Civil Code, which explicitly requires a written authority
answer for the expenses of Slam Dunk. Although signed, these checks had when the loan is contracted through an agent. The petitioner contends that
no payee’s name, date or amount. The blank checks were entrusted to absent such authority in writing, he should not be held liable for the face
Gutierrez with the specific instruction not to fill them out without previous value of the check because he was not a party or privy to the agreement.
notification to and approval by the petitioner. According to petitioner, the
arrangement was made so that he could verify the validity of the payment
Contracts of Agency May be Oral Unless The Law Requires a Specific Form
and make the proper arrangements to fund the account.
Article 1868 of the Civil Code defines a contract of agency as a contract

In the middle of 1993, without the petitioner’s knowledge and consent,
whereby a person "binds himself to render some service or to do something
Gutierrez went to Marasigan (the petitioner’s former teammate), to secure a
in representation or on behalf of another, with the consent or authority of
loan in the amount of ₱200,000.00 on the excuse that the petitioner needed
the latter." Agency may be express, or implied from the acts of the principal,
the money for the construction of his house. In addition to the payment of
from his silence or lack of action, or his failure to repudiate the agency,
the principal, Gutierrez assured Marasigan that he would be paid an interest
knowing that another person is acting on his behalf without authority.
of 5% per month from March to May 1994.
As a general rule, a contract of agency may be oral. However, it must be

After much contemplation and taking into account his relationship with the
written when the law requires a specific form, for example, in a sale of a
petitioner and Gutierrez, Marasigan acceded to Gutierrez’ request and gave
piece of land or any interest therein through an agent.
him ₱200,000.00 sometime in February 1994. Gutierrez simultaneously
delivered to Marasigan one of the blank checks the petitioner pre-signed
with Pilipinas Bank, Greenhills Branch, Check No. 21001764 with the blank Article 1878 paragraph 7 of the Civil Code expressly requires a special
portions filled out with the words "Cash" "Two Hundred Thousand Pesos power of authority before an agent can loan or borrow money in behalf of
Only", and the amount of "₱200,000.00". The upper right portion of the the principal, to wit:
check corresponding to the date was also filled out with the words "May 23,
1994" but the petitioner contended that the same was not written by
Gutierrez.
xxxx
On May 24, 1994, Marasigan deposited the check but it was dishonored for
the reason "ACCOUNT CLOSED." It was later revealed that petitioner’s
account with the bank had been closed since May 28, 1993. (7) To loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which are under
administration. (emphasis supplied)
Marasigan sought recovery from Gutierrez, to no avail. He thereafter sent
several demand letters to the petitioner asking for the payment of
₱200,000.00, but his demands likewise went unheeded. Consequently, he Article 1878 does not state that the authority be in writing. As long as the
filed a criminal case for violation of B.P. 22 against the petitioner, docketed mandate is express, such authority may be either oral or written. Be that as
as Criminal Case No. 42816. it may, the authority must be duly established by competent and convincing
evidence other than the self serving assertion of the party claiming that
such authority was verbally given, thus:
On September 10, 1997, the petitioner filed before the Regional Trial Court
(RTC) a Complaint for Declaration of Nullity of Loan and Recovery of
Damages against Gutierrez and co-respondent Marasigan. He completely
denied authorizing the loan or the check’s negotiation, and asserted that he
was not privy to the parties’ loan agreement.
The petitioner argues that: (1) there was no loan between him and
Marasigan since he never authorized the borrowing of money nor the
The requirements of a special power of attorney in Article 1878 of the Civil

Code and of a special authority in Rule 138 of the Rules of Court refer to the
nature of the authorization and not its form. The requirements are met if
there is a clear mandate from the principal specifically authorizing the
performance of the act. As early as 1906, this Court in Strong v. Gutierrez-
Repide (6 Phil. 680) stated that such a mandate may be either oral or
written, the one vital thing being that it shall be express.
The Contract of Loan Entered Into by Gutierrez in Behalf of the Petitioner

Should be Nullified for Being Void; Petitioner is Not Bound by the Contract
of Loan.
A review of the records reveals that Gutierrez did not have any authority to
borrow money in behalf of the petitioner.1âwphi1Records do not show that
the petitioner executed any special power of attorney (SPA) in favor of
Gutierrez. In fact, the petitioner’s testimony confirmed that he never
authorized Gutierrez (or anyone for that matter), whether verbally or in
writing, to borrow money in his behalf, nor was he aware of any such
transaction.
Marasigan however submits that the petitioner’s acts of pre-signing the

blank checks and releasing them to Gutierrez suffice to establish that the
petitioner had authorized Gutierrez to fill them out and contract the loan in
his behalf.
Marasigan’s submission fails to persuade us.
In the absence of any authorization, Gutierrez could not enter into a

contract of loan in behalf of the petitioner.
In the absence of any showing of any agency relations or special authority to

act for and in behalf of the petitioner, the loan agreement Gutierrez entered
into with Marasigan is null and void. Thus, the petitioner is not bound by
the parties’ loan agreement.
Furthermore, that the petitioner entrusted the blank pre-signed checks to

Gutierrez is not legally sufficient because the authority to enter into a loan
can never be presumed. The contract of agency and the special fiduciary
relationship inherent in this contract must exist as a matter of fact. The
person alleging it has the burden of proof to show, not only the fact of
agency, but also its nature and extent.
The records show that Marasigan merely relied on the words of Gutierrez
without securing a copy of the SPA in favor of the latter and without
verifying from the petitioner whether he had authorized the borrowing of
money or release of the check. He was thus bound by the risk accompanying
his trust on the mere assurances of Gutierrez.
ZARSONA MEDICAL CLINIC vs. PHILIPPINE HEALTH INSURANCE On appeal, the Court of Appeals dismissed the petition for failure on the part
CORPORATION, G.R. No. 191225, October 13, 2014, PEREZ, J. of ZMC to attach a valid SPA. The appellate court found the SPA defective on
the ground that it does not explicitly authorize Dr. Bragat to sign and
execute the required verification and certification of nonforum shopping in
Facts:
this case. The appellate court noted that the powers granted to Dr. Bragat
pertain only to her administrative functions as Medical Director of ZMC.
A complaint was filed against petitioner Zarsona Medical Clinic (ZMC) for
violation of Section 149 of the Revised Implementing Rules and Regulations
Issue:
of Republic Act No. 7875 or the National Health Insurance Act of 1995.
Section 149 penalizes any health care provider that increases the period of
actual confinement of any patient with revocation of accreditation. Whether or not a SPA executed in favor of Dr. Sylvia P. Bragat was
insufficient to cover the authority granted upon her to sign the verification
and certification of non-forum shopping of the instant case
ZMC filed a claim with the Philippine Health Insurance Corporation
(Philhealth) on the confinement of National Health Insurance Program
(NHIP) member Lorna M. Alestre (Alestre) on 10-12 August 2003. Said Ruling:
claim was denied on the ground of "extended confinement." It was stated on
the claim form that Alestre was admitted to ZMC on 6 August 2003 and was
Yes, the defects in the SPA notwithstanding, we rule in favor of ZMC.
discharged on 12 August 2003. It was also revealed in her Salaysay dated 12
January 2004 that Alestre’s actual confinement at ZMC was on 10-11 August
2003. Alestre, who is a teacher at Rizal Elementary School, was found to ZMC insists that the SPA provided that the Attorney-in-fact can make,
have reported for work on 12 August 2003. execute and sign any contract, documents or all other writing of whatever
kind and nature which are necessary to the power granted to it which is to
represent, process, follow-up, transact and facilitate claims in Philhealth.
In defense of ZMC, Dr. Sylvia Bragat (Dr. Bragat), its Medical Director, stated
This also covers the execution of verification and certification of non-forum
that ZMC’s Midwife/Clerk Jennifer R. Acuram (Acuram) committed an
shopping. ZMC then asserts that it will not gain anything in extending the
honest mistake when she wrote 6-12 August 2003 as the confinement
period of confinement and reiterates that its clerk committed a mistake in
period in the claim form. Dr. Bragat asserted that the hospital had in fact
entering the exact period of confinement.
claimed only for two (2) days. Acuram acknowledged her mistake in her
Affidavit of Explanation.
At the outset, the issues revolve on the sufficiency of the SPA authorizing Dr.
Bragat to sign the verification and certification of non-forum shopping in
ZMC also presented an Affidavit of Explanation dated 21 January 2005 from
the petition filed before the Court of Appeals.
Alestre recanting her previous Salaysay. Alestre explained that the previous
statement she gave does not reflect the truth because she was protecting
herself when she logged-in at the school’s time record on 12 August 2003 Verification of a pleading is a formal, not jurisdictional, requirement
when she was supposedly still confined at ZMC. Alestre narrated that she intended to secure the assurance that the matters alleged in a pleading are
and her son were admitted at ZMC on 10 August 2003 at around 1:30 p.m. true and correct. Thus, the court may simply order the correction of
and was discharged on 12 August 2003. In the morning of 12 August 2003, unverified pleadings or act on them and waive strict compliance with the
after her attending physician went to check on her, she managed to slip out rules. It is deemed substantially complied with when one who has ample
of the hospital. She proceeded to the school, which was a mere ten minute knowledge to swear to the truth of the allegations in the complaint or
drive away from ZMC. She reported for work and came back to the hospital petition signs the verification, and whenmatters alleged inthe petition have
at noon to take her medicines and look after her child. Thereafter, she again been made in good faith orare true and correct.
went back to the school and at about 1:30 p.m., she asked permission from
the school principal that she needed to go back to the hospital. She then
As to certification against forum shopping, non-compliance therewith or a
went back to ZMC to attend to her child and process her discharge papers.
defect therein, unlike in verification, is generally not curable by its
At around 2:00 p.m., she finally came back to the school.
subsequent submission or correction thereof, unless there is a need to relax
the Rule on the ground of "substantial compliance" or presence of "special
Dr. Ariel dela Cruz, attending physician of Alestre, confirmed that he circumstances or compelling reasons."Rule 7, Section 5 of the Rules of the
ordered Alestre’s discharge inthe morning of 12 August 2003. Court, requires that the certification should be signed by the "petitioner or
principal party" himself.
On 12 December 2007, ZMC was found liable for the charge of "Extending
Period of Confinement" in violation of Section 149 of the Revised Rules and The submission of an SPA authorizing an attorney-infact to sign the
Regulations of Republic Act No. 7875 and was meted the penalty of verification and certification against forum-shopping in behalf of the
suspension from participating in the NHIP for a period of three (3) months principal party is considered as substantial compliance with the Rules.
and a fine of ₱10,000.00.
In this case, Philhealth found the SPA defective.
While Health Insurance Arbiter Michael Troy Polintan considered the
admission date of 6 August 2003 reflected in Alestre’s clinical record as a
The SPA granted by Dr. Zarsona tohis attorneys-in-fact, Dr. Bragat and
mere clerical error, he refused to believe Alestre’s claim that she was
William Bragat, authorizes the latter to do the following:
discharged only on 12 August 2003 but on that day, she was travelling back
and forth from hospital to the school where she teaches. The Philhealth
Arbiter gave more evidentiary weight to the signature of Alestre in the A) To represent(,) process, follow up, transact and facilitate all
school’s attendance logbook which established the fact that she reported for claims, benefits and privileges belonging to or owing to Zarsona
work on 12 August 2003. Medical Clinic in the Philippine Health Insurance Corporation,
Department of Health and in other agencies, may it be private or
government;
ZMC appealed but on 24 July 2008, the Philhealth Board of Directors (the
Board) issued Philhealth Board Resolution No. 1151, Series of 2008
dismissing the appeal and affirming the 12 December 2007 Decision of the B) To receive, withdraw, and encash any check or checks
Philhealth Arbiter. belonging to or in the name of Zarsona Medical Clinic;
C) To make, execute, and sign any contract, documents or all

other writings of whatever kind and nature which are necessary
to the foregoing powers.
Indeed, a reading of the SPA reveals that the powers conferred by Dr.
Zarsona to his attorneys-in-fact pertain to administrative matters. The
phrase "claims, benefits and privileges belonging to or owing to Zarsona
Medical Clinic" clearly does not include the filing of cases before the courts
or any quasi-judicial agencies. The term"claims" in particular refers to those
claims for payment of services rendered by the hospital during a Philhealth
member’s confinement. These claims are filed by the hospital with
Philhealth. Furthermore, the SPA makes no mention of any court, judicial or
quasi-judicial bodies. The enumeration of agencies in the first paragraph of
the SPA, such as Philhealth and Department of Health, refers to those
agencies which are health-related. There is no explicit authorization for Dr.
Bragat to sign and execute the requirement verification and certification in
this case. At the very least, the SPA should have granted the attorneys-in-
fact the power and authority to institute civil and criminal actions which
would necessarily include the signing of the verification and certification
against forum-shopping.
The defects in the SPA notwithstanding, we rule in favor of ZMC. We agree

with the Dissent registered by Associate Justice Ruben Ayson when he
suggested that ZMC should be given the opportunity to rectify the defects in
the petition. We are aware that the Court of Appeals in its Resolution dated
28 January 2009 had directed ZMC to submit an SPA. ZMC had in good faith
complied by submitting an SPA which it thought was sufficient and
encompasses the filing of the instant suit. Time and again, we had espoused
the doctrine that provisions of the Rules of Court should be liberally
construed in order to promote their objective of securing a just, speedy and
inexpensive disposition of every action and proceeding.
V-GENT, INC. vs. MORNING STAR TRAVEL and TOURS, INC., G.R. No. acted in his own name during the transaction; (2) the agent acted for the
186305, July 22, 2015, BRION, J. benefit of an undisclosed principal; and (3) the transaction did not involve
the property of the principal.
action against the persons with whom the agent has contracted; neither have When these elements are present, the agent becomes bound as if the
such persons against the principal. In such case, the agent is the one directly transaction were its own. This rule is consistent with Article 1883 of the
bound in favor of the person with whom he has contracted, as if the Civil Code which says:
transaction were his own, except when the contract involves things belonging
to the principal.
action against the persons with whom the agent has contracted; neither
Facts: have such persons against the principal. In such case, the agent is the one
directly bound in favor of the person with whom he has contracted, as if the
transaction were his own, except when the contract involves things
Sometime in June and in September 1998, the petitioner V-Gent, Inc. (V-
belonging to the principal.
Gent) bought twenty-six (26) two-way plane tickets (Manila-Europe-
Manila) from the respondent Morning Star Travel and Tours, Inc. (Morning
Star). The provisions of this article shall be understood to be without prejudice to
the actions between the principal and agent.
On June 24, 1998 and September 28, 1998, V-Gent returned a total of fifteen
(15) unused tickets worth $8,747.50 to the defendant. Of the 15, Morning In the present case, only the · first element is present; the purchase order
Star refunded only six (6) tickets worth $3,445.62. Morning Star refused to and the receipt were in the name of V-Gent. However, the remaining
refund the remaining nine (9) unused tickets despite repeated demands. elements are absent because: (1) V-Gent disclosed the names of the
passengers to Morning Star - in fact the tickets were in their names; and (2)
the transaction was paid using the passengers' money. Therefore, Rule 3,
On December 15, 2000, petitioner V-Gent filed a money claim against
Section 3 of the Rules of Court cannot apply.
Morning Star for payment of the unrefunded $5,301.88 plus attorney's fees.
To define the actual factual situation, V-Gent, the agent, is suing to recover
Morning Star countered that V-Gent was not entitled to a refund because
the money of its principals - the passengers - who are the real parties-in-
the tickets were bought on the airline company's "buy one, take one"
interest because they stand to be injured or benefited in case Morning Star
promo. It alleged that there were only fourteen (14) unused tickets and only
refuses or agrees to grant the refund because the money belongs to them.
seven (7) of these were refundable; considering that it had already
From this perspective, V-Gent evidently does not have a legal standing to
refunded six (6) tickets (which is more or less 50o/o of 14), then there was
file the complaint.
nothing else to refund.
Finally, V-Gent argues that by making a partial refund, Morning Star was
Morning Star also questioned V-Gent's personality to file the suit. It asserted
already estopped from refusing to make a full refund on the ground that V-
that the passengers, in whose names the tickets were issued, are the real
Gent is not the real party-in-interest to demand reimbursement.
parties-in-interest.
We find no merit in this argument.

Issue:
The power to collect and receive payments on behalf of the principal is an

Whether or not V-Gent acting as an agent of the passengers can file the
ordinary act of administration covered by the general powers of an
present action
agent. On the other hand, the filing of suits is an act of strict dominion.
Ruling:
Under Article 1878 (15) of the Civil Code, a duly appointed agent has no
power to exercise any act of strict dominion on behalf of the principal
No unless authorized by a special power of attorney. An agent's authority to file
suit cannot be inferred from his authority to collect or receive payments;
the grant of special powers cannot be presumed from the grant of general
Every action must be prosecuted or defended in the name of the real party-
powers. Moreover, the authority to exercise special powers must be duly
in-interest - the party who stands to be benefited or injured by the
established by evidence, even though it need not be in writing.
judgment in the suit. In suits where an agent represents a party, the
principal is the real party-in-interest; an agent cannot file a suit in his own
name on behalf of the principal. By granting the initial refund, Morning Star recognized V-Gent's authority to
buy the tickets and collect refunds on behalf of the passengers. However,
Morning Star's recognition of V-Gent's authority to collect a refund for the
Rule 3, Section 3 of the Rules of Court provides the exception when an agent
passengers is not equivalent to recognition of V-Gent's authority to initiate a
may sue or be sued without joining the principal.
suit on behalf of the passengers. Morning Star therefore, is not estopped
from questioning V-Gent's legal standing to initiate the suit.
Section 3. Representatives as parties. - Where the action is allowed to be
prosecuted and defended by a representative or someone acting in a
fiduciary capacity, the beneficiary shall be included in the title of the case
and shall be deemed to be the real party-in-interest. A representative may
be a trustee of an express trust, a guardian, an executor or administrator, or
a party authorized by law or these Rules. An agent acting in his own name
and for the benefit of an undisclosed principal may sue or be sued without
joining the principal except when the contract involves things belonging to
the principal. (Emphasis supplied.)
Thus an agent may sue or be sued solely in its own name and without
joining the principal when the following elements concur: (1) the agent
SPOUSES ROLANDO and HERMINIA SALVADOR vs. SPOUSES ROGELIO The Court agrees with the courts below in finding that the contract entered
AND ELIZABETH RABAJA and ROSARIO GONZALES, G.R. No. 199990, into by the parties was essentially a contract of sale which could be validly
February 4, 2015, MENDOZA, J. rescinded. Spouses Salvador insist that they did not receive the payments
made by Spouses Rabaja from Gonzales which totalled ₱950,000.00 and
that Gonzales was not their duly authorized agent. These contentions,
According to Article 1990 of the New Civil Code, insofar as third persons are
however, must fail in light of the applicable provisions of the New Civil Code
concerned, an act is deemed to have been performed within the scope of the
which state:
agent's authority, if such act is within the terms of the power of attorney, as
written.
Art. 1900. So far as third persons are concerned, an act is deemed to have
been performed within the scope of the agent's authority, if such act is
Facts:
within the terms of the power of attorney, as written, even if the agent has
in fact exceeded the limits of his authority according to an understanding
This case stemmed from a dispute involving the sellers, petitioner spouses between the principal and the agent.
Rolando and Herminia Salvador (Spouses Salvador); the sellers' agent,
Rosario Gonzales (Gonzales) and the buyers, respondent Spouses Rogelio
xxxx
and Elizabeth Rabaja (Spouses Rabaja), over a parcel of land situated at No.
25, Merryland Village, 375 Jose Rizal Street, Mandaluyong City (subject
property),covered by Transfer Certificate of Title (TCT) No. 13426 and Art. 1902. A third person with whom the agent wishes to contract on behalf
registered in the names of Spouses Salvador. From 1994 until 2002, of the principal may require the presentation of the power of attorney, or
Spouses Rabaja were leasing an apartment in the subject lot. the instructions as regards the agency. Private or secret orders and
instructions of the principal do not prejudice third persons who have relied
upon the power of attorney or instructions shown them.
Sometime in July 1998, Spouses Rabaja learned that Spouses Salvador were
looking for a buyer of the subject property. Petitioner Herminia Salvador
(Herminia) personally introduced Gonzales to them as the administrator of xxxx
the said property. Spouses Salvador even handed to Gonzales the owner’s
duplicate certificate of title over the subject property. On July, 3, 1998,
Art. 1910. The principal must comply with all the obligations which the
Spouses Rabaja made an initial payment of ₱48,000.00 to Gonzales in the
agent may have contracted within the scope of his authority.
presence of Herminia. Gonzales then presented the Special Power of
Attorney (SPA),executed by Rolando Salvador (Rolando) and dated July 24,
1998. On the same day, the parties executed the Contract to Sell which Persons dealing with an agent must ascertain not only the fact of agency,
stipulated that for a consideration of ₱5,000,000.00, Spouses Salvador sold, but also the nature and extent of the agent’s authority. A third person with
transferred and conveyed in favor of Spouses Rabaja the subject property. whom the agent wishes to contract on behalf of the principal may require
Spouses Rabaja made several payments totalling ₱950,000.00, which were the presentation of the power of attorney, or the instructions as regards the
received by Gonzales pursuant to the SPA provided earlier as evidenced by agency. The basis for agency is representation and a person dealing with an
the check vouchers signed by Gonzales and the improvised receiptssigned agent is put upon inquiry and must discover on his own peril the authority
by Herminia. of the agent.
Sometime in June 1999, however, Spouses Salvador complained to Spouses According to Article 1990 of the New Civil Code, insofar as third persons are
Rabaja that they did not receive any payment from Gonzales. This prompted concerned, an act is deemed to have been performed within the scope of the
Spouses Rabaja to suspend further payment of the purchase price; and as a agent's authority, if such act is within the terms of the power of attorney, as
consequence, they received a notice to vacate the subject property from written. In this case, Spouses Rabaja did not recklessly enter into a contract
Spouses Salvador for non-payment of rentals. to sell with Gonzales. They required her presentation of the power of
attorney before they transacted with her principal. And when Gonzales
presented the SPA to Spouses Rabaja, the latter had no reason not to rely on
Thereafter, Spouses Salvador instituted an action for ejectment against
it.
Spouses Rabaja. In turn, Spouses Rabaja filed an action for rescission of
contract against Spouses Salvador and Gonzales, the subject matter of the
present petition. The law mandates an agent to act within the scope of his authority which
what appears in the written terms of the power of attorney granted upon
him. The Court holds that, indeed, Gonzales acted within the scope of her
Spouses Salvador filed their answer with counterclaim and cross-
authority. The SPA precisely stated that she could administer the property,
claim contending that there was no meeting of the minds between the
negotiate the sale and collect any document and all payments related to the
parties and that the SPA in favor of Gonzales was falsified. In fact, they filed
subject property. As the agent acted within the scope of his authority, the
a case for falsification against Gonzales, but it was dismissed because the
principal must comply with all the obligations. As correctly held by the CA,
original of the alleged falsified SPAcould not be produced. They further
considering that it was not shown that Gonzales exceeded her authority or
averred that they did not receive any payment from Spouses Rabaja
that she expressly bound herself to be liable, then she could not be
through Gonzales. In her defense, Gonzales filed her answer stating that the
considered personally and solidarily liable with the principal, Spouses
SPA was not falsified and that the payments of Spouses Rabaja amounting to
Salvador.
₱950,000.00 were all handed over to Spouses Salvador.
Perhaps the most significant point which defeats the petition would be the
Issue:
fact that it was Herminia herself who personally introduced Gonzalez to
Spouses Rabaja as the administrator of the subject property. By their own
Whether or not Gonzales, as agent of Spouses Salvador could validly receive ostensible acts, Spouses Salvador made third persons believe that Gonzales
the payments of Spouses Rabaja was duly authorized to administer, negotiate and sell the subject property.
This fact was even affirmed by Spouses Salvador themselves in their
petition where they stated that they had authorized Gonzales to look for a
Ruling:
buyer of their property. It is already too late in the day for Spouses Salvador
to retract the representation to unjustifiably escape their principal
YES obligation.
As correctly held by the CA and the RTC, considering that there was a valid defunct APT.
SPA, then Spouses Rabaja properly made payments to Gonzales, as agent of
Spouses Salvador; and it was as if they paid to Spouses Salvador. It is of no As alleged by petitioner, respondents declared afterwards the subject
moment, insofar as Spouses Rabaja are concerned, whether or not the property as Urbano Bañ ez property, rented out to third parties the staff
payments were actually remitted to Spouses Salvador. Any internal matter, houses petitioner constructed, and ordered its guards to prohibit the
arrangement, grievance or strife between the principal and the agent is petitioner from entering the compound, which impelled petitioner to file a
theirs alone and should not affect third persons. If Spouses Salvador did not complaint for specific performance, recovery of possession, and damages
receive the payments or they wish to specifically revoke the SPA, then their against respondents, including Hojilla, on 10 April 2000. Among others, the
recourse is to institute a separate action against Gonzales. Such action, complaint prayed for respondents to surrender and deliver the title of the
however, is not any more covered by the present proceeding. subject property, and execute a deed of absolute sale in favor of petitioner
upon full payment. It mentioned three letters sent to respondents on 29
May 1991, 24 October 1991, and 6 July 1999.
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE
PRIVATIZATION AND MANAGEMENT OFFICE (PMO) v. ANTONIO V.
Issue:
BAÑEZ, LUISITA BAÑEZ VALERA, NENA BAÑEZ HOJILLA, AND EDGARDO
B. HOJILLA, JR., G.R. No. 169442, October 14, 2015, PEREZ, J.:
Whether or not the respondents are estopped by the acts and
representations of their agent, Hojilla
In a contract of agency, the agent acts for and in behalf of the principal on
matters within the scope of the authority conferred upon him, such that, the
Ruling:
acts of the agent have the same legal effect as if they were personally done by
the principal. Because there is an express authority granted upon Hojilla to
represent the respondents as evidenced by the SPA, Hojilla's actions bind the YES.
respondents.
We refer to the SPA, which granted the authority of Hojilla.
Facts: When respondents went abroad pending the performance of their
obligations in the Contract, they authorized Hojilla to register the subject
In 1976, Antonio V. Bañ ez, Luisita Bañ ez Valera, and Nena Bañ ez Hojilla property— a single obligation in the whole range of obligations in the
(collectively, respondents) offered for sale a parcel of land (subject Contract. The SPA appeared to have left no representative to fulfill
property), with an area of 20,000 sq m in Barangay Calaba, Bangued, Abra respondents' obligations in the Contract on their behalf except for Hojilla's
to Cellophil Resources Corporation (CRC). Pursuant to the offer to sell on 7 authority to register the subject property. The pertinent portion of the SPA
December 1981, respondents executed a Letter Agreement irrevocably reads:
giving CRC the option to purchase the subject property, which CRC
accepted.
1. To take all steps necessary to cause a portion of the lot covered by
Tax Declaration No. 40185 in the name of Urbano Baflez which is the
Respondents asked for several cash advances which reached the total subject of our "Offer to Sell" to Cellophil Resources Corporation
amount of, more or less, Two Hundred Seventeen Thousand Pesos containing an area xxx to be brought under the operation of Republic
(P217,000.00), to be deducted from the purchase price of Four Hundred Act No. 496, as amended, and to cause the issuance in our name of the
Thousand Pesos (P400,000.00). After paying cash advances to respondents, corresponding original certificate of title.
CRC constructed staff houses and introduced improvements on the subject
property. As respondents would be staying abroad for a time, they executed 2. To do all acts and things and to execute all papers and documents of
a Special Power of Attorney (SPA) in favor of Edgardo B. Hojilla (Hojilla). whatever nature or kind required for the accomplishments of the aforesaid
The SPA authorized Hojilla to perform the following: purpose.
1. To take all steps necessary to cause a portion of the lot covered by Tax HEREBY GRANTING AND GIVING unto our said attorney full power and
Declaration No. 40185 in the name of Urbano Bañ ez which is the subject of authority whatsoever requisite or necessary or proper to be done in or
our "Offer to Sell" to Cellophil Resources Corporation containing an area xxx about the premises as fully to all intents and purposes as we might or could
to be brought under the operation of Republic Act No. 496, as amended, and lawfully do if personally present (with power of substitution and
to cause the issuance in our name of the corresponding original certificate revocation), and hereby ratifying and confirming all that our said attorney
of title. shall do or cause to be done under and by virtue of these presents.
(Emphasis and underscoring ours)
2. To do all acts and things and to execute all papers and documents of
whatever nature or kind required for the accomplishments of the aforesaid This was read simply by the lower courts as limiting Hojilla's authority to
purpose. the registration of the subject property under the name of his principal, and
all the necessary acts for such purpose. It observed that nowhere in the SPA
HEREBY GRANTING AND GIVING unto our said attorney full power and was Hojilla authorized as administrator or agent of respondents with
authority whatsoever requisite or necessary or proper to be done in or respect to the execution of the Contract.
about the premises as fully to all intents and purposes as we might or could
lawfully do if personally present (with power of substitution and In the case at bar, the reliefs prayed for by petitioner include the execution
revocation), and hereby ratifying and confirming all that our said attorney of the Contract such as delivery of the subject title, recovery of possession of
shall do or cause to be done under and by virtue of these presents. the subject property, execution of the deed of sale or transfer of absolute
ownership upon full payment of the balance, and damages for alleged
However, CRC stopped its operation. The Development Bank of the violation of respondents of the Contract for non-delivery of the title and
Philippines and National Development Company took over CRC's operation refusal to vacate the subject property. Indeed, following the reading of the
and turned over CRC's equity to Asset Privatization Trust (APT), which is a lower courts of the scope of Hojilla's authority, Hojilla is neither the proper
government agency created by virtue of Proclamation No. 50, as amended. party to execute the Contract nor the proper party to receive the demand
The APT's function is to take title to and possession of, provisionally letters on behalf of respondents.
manage and dispose of nonperforming assets of government financial
institutions. Upon the expiration of APT's term on 31 December 2000, the This strict construction of the tenor of the SPA will render the obligatory
government issued Executive Order (E.O.) No. 323, which created the force of the Contract ineffective. Construction is not a tool to prejudice or
Privatization and Management Office (PMO). By virtue of E.O. No. 323, the commit fraud or to obstruct, but to attain justice. Ea Est Accipienda
powers, functions, and duties of APT were transferred to the PMO. Thus, the Interpretatio Quae Vitio Caret. To favor the lower court's interpretation of
original party, CRC, is now represented by the Republic of the Philippines the scope of Hojilla's power is to defeat the juridical tie of the Contract—
through the PMO (hereinafter referred to as petitioner), the successor of the the vinculum juris of the parties. As no one was authorized to represent
respondents in the Contract, then petitioner cannot enforce the Contract, as

it were. This is an absurd interpretation of the SPA. It renders the Contract
ineffective for lack of a party to execute the Contract.
Contrary to the findings of the lower court, the present case is a case of an
express agency, where, Hojilla, the agent, binds himself to represent
another, the principal, who are herein respondents, with the latter's express
consent or authority. In a contract of agency, the agent acts for and in behalf
of the principal on matters within the scope of the authority conferred upon
him, such that, the acts of the agent have the same legal effect as if they
were personally done by the principal. Because there is an express authority
granted upon Hojilla to represent the respondents as evidenced by the SPA,
Hojilla's actions bind the respondents.
As agent, the representations and guarantees of Hojilla are considered

representations and guarantees of the principal. This is the principle of
agency by promissory estoppel. We refer to the evidence on record. It was
Hojilla who administered and/or managed the subject property. Based on
Hojilla's letter dated 15 August 1984 to petitioner, Hojilla made the
representation that besides being the attorney-in-fact of the respondents
with limited authority to register the property, he was also their agent with
regard to respondents' other obligations related to the Contract. The
pertinent portion of the 15 August 1984 letter of Hojilla to petitioner reads:
Regarding our loan with the National Electrification Administration (NEA),

Hon. Mel Mathay who is helping the Bafiez heirs has initiated negotiations
with NEA for Abreco to purchase our lot in front of the Provincial Jail to
offset our loan with NEA.
Also, one glaring fact that cannot escape us is Hojilla's representation and
guarantee that petitioner's obligation will only arise upon presentation of a
clean title and execution of a Deed of Sale signed by the respondents' heirs,
which reads, "[t]he Bañez heirs will only claim for the full payment of
the property upon presentation of a clean title and execution of a Deed
of Sale signed by the heirs."
If Hojilla knew that he had no authority to execute the Contract and receive
the letters on behalf of respondents, he should have opposed petitioner's
demand letters. However, having received the several demand letters from
petitioner, Hojilla continuously represented himself as the duly authorized
agent of respondents, authorized not only to administer and/or manage the
subject property, but also authorized to register the subject property and
represent the respondents with regard to the latter's obligations in the
Contract. Hojilla also assured petitioner that petitioner's obligation to pay
will arise only upon presentation of the title.
Clearly, the respondents are estopped by the acts and representations of

their agent. Falling squarely in the case at bar is our pronouncement
in Philippine National Bank v. IAC (First Civil Cases Div.),24 "[h]aving given
that assurance, [Hojilla] may not turn around and do the exact opposite of
what [he] said [he] would do. One may not take inconsistent positions. A
party may not go back on his own acts and representations to the prejudice
of the other party who relied upon them." ralawred\\
Assuming further that Hojilla exceeded his authority, the respondents are
still solidarity liable because they allowed Hojilla to act as though he had full
powers by impliedly ratifying Hojilia's actions—through action by omission.
This is the import of the principle of agency by estoppel or the doctrine of
apparent authority.
In an agency by estoppel or apparent authority, "[t]he principal is bound by

the acts of his agent with the apparent authority which he knowingly
permits the agent to assume, or which he holds the agent out to the public
as possessing."27
The respondents' acquiescence of Hojilla's acts was made when they failed
to repudiate the latter's acts. They knowingly permitted Hojilla to represent
them and petitioners were clearly misled into believing Hojilla's authority.
Thus, the respondents are now estopped from repudiating Hojilla's
authority, and Hojilla's actions are binding upon the respondents.
FLORENTINA BAUTISTA SPILLE represented by her Attorney-in-fact, authority when he executed the contract to sell, the agreement was still
Manuel B. Flores, Jr. vs. NICORP MANAGEMENT ND DEVELOPMENT valid and enforceable as the agency was already "coupled with interest"
CORPORATION, BENJAMIN G. BAUTISTA and INTERNATIONAL because of the partial payment in the amount of P3,000,000.00; and that the
EXCHANGE BANK, October 19, 2015, G.R. No. 214057, MENDOZA, J. contract could not just be revoked without NICORP being reimbursed of its
down payment and the costs for the initial development it had incurred in
developing the subject property into a residential subdivision.
For its part, IE Bank denied any liability and alleged that petitioner had no
(1)x xx
cause of action against it. IE Bank asserted that, at the time of its
constitution as an escrow agent, Benjamin possessed the necessary
(5)To enter into any contract by which the ownership of an immovable authority from petitioner; that because the contract to sell remained valid, it
is transmitted or acquired either gratuitously or for a valuable was duty-bound to observe its duties and obligations under the Escrow
consideration; Agreement; and that in the absence of any order from the court, it was
proper for the bank not to comply with petitioner's demand for the
surrender of the certificate of title.12
Facts:
Issue:
Petitioner Florentina Bautista-Spille (petitioner) is the registered owner of
a parcel of land covered by Transfer Certificate of Title (TCT) No. T-197,
located in Imus City, Cavite, with an area of more or less 33,052 square Whether or not Benjamin was authorized to sell the subject property.
meters (subject property).
Ruling:
On June 20, 1996, petitioner and her spouse, Harold E. Spille, executed a
document denominated as General Power of Attomey in favor of her
No.
brother, respondent Benjamin Bautista (Benjamin), authorizing the latter to
administer all her businesses and properties in the Philippines. The said
document was notarized before the Consulate General of the Philippines, The well-established rule is when a sale of a parcel of land or any interest
New York, United States of America. therein is through an agent, the authority of the latter shall be in writing,
otherwise the sale shall be void. Articles 1874 and 1878 of the Civil Code
explicitly provide:
On August 13, 2004, Benjamin and NICORP Management and Development
Corporation (NJCORP) entered into a contract to sell which pertained to the
parcel of land covered by TCT No. T-197 for the agreed amount of Art. 1874. When a sale of a piece of land or any interest therein is through
P15,000,000.00. In the said contract, NICORP agreed to give a down an agent, the authority of the latter shall be in writing; otherwise, the sale
payment equivalent to 20% of the purchase price and pay the remaining shall be void.
balance in eight (8) months. It was also agreed that upon receipt of the
down payment, the TCT of the subject property would be deposited with the
International Exchange Bank (IE Bank) and placed in escrow. It would only
be released upon full payment of the agreed amount. Furthermore,
Benjamin was required to submit a special power of attorney (SPA) (1)x xx
covering the sale transaction, otherwise, the payment of the balance would
be suspended and a penalty of P150,000.00 every month would be imposed.
(5)To enter into any contract by which the ownership of an immovable
is transmitted or acquired either gratuitously or for a valuable
On October 14, 2004, NICORP issued a check in the amount of consideration;
P2,250,000.00, representing the down payment of the subject property.
Thereafter, the TCT was deposited with IE Bank and placed in escrow.
x x x . [Emphasis Supplied]
When petitioner discovered the sale, her lawyer immediately sent demand
From the foregoing, it is clear that an SPA in the conveyance of real rights
letters to NICORP and Benjamin, both dated October 27, 2004, and to IE
over immovable property is necessary.
Bank, dated October 28, 2004, informing them that she was opposing the
sale of the subject property and that Benjamin was not clothed with
authority to enter into a contract to sell and demanding the return of the To reiterate, such authority must be conferred in writing and must express
owner's copy of the certificate of title to her true and lawful attorney-in-fact, the powers of the agent in clear and unmistakable language in order for the
Manuel B. Flores, Jr. (Flores). NICORP, Benjamin and IE Bank, however, principal to confer the right upon an agent to sell the real property. It is a
failed and refused to return the title of the subject property. general rule that a power of attorney must be strictly construed, and courts
will not infer or presume broad powers from deeds which do not
sufficiently include property or subject under which the agent is to
Consequently, petitioner filed a complaint before the RTC against Benjamin,
deal. Thus, when the authority is couched in general terms, without
NICORP and IE Bank for declaration of nullity of the contract to sell,
mentioning any specific power to sell or mortgage or to do other specific
injunction, recovery of possession and damages with prayer for the
acts of strict dominion, then only acts of administration are deemed
issuance of a temporary restraining order and/or preliminary injunction
conferred.
because NICORP was starting the development of the subject property into
a residential subdivision and was planning to sell the lots to prospective
buyers. Petitioner denied receiving the down payment for the subject In the case at bench, the only evidence adduced by NICORP to prove
property. Benjamin's authority to sell petitioner's property was the document
denominated as General Power of Attorney, dated June 20, 1996. The
pertinent portions of the said document reads:
In its Answer, NICORP asked for the dismissal of the case for lack of a cause
of action and averred that Benjamin was empowered to enter into a
contract to sell by virtue of the general power of attorney; that the said KNOW ALL MEN BY THESE PRESENTS:
authority was valid and subsisting as there was no specific instrument that
specifically revoked his authority; that assuming Bautista exceeded his
THAT I/WE FLORENTINA B. SPILLE, of legal age, single/married to

HAROLD E. SPILLE and residents of x x x do hereby appoint, name and
constitute BENJAMIN G. BAUTISTA resident(s) of x x x to be my/our
truelawfuland attorney(s), to administer and conduct all my/our affairs and
for that purpose in my/our name(s) and on my/our behalf, to do and
execute any or all of the following acts, deeds and things to wit:
1.To exercise administration, general control and supervision over my/our

business and property in the Philippines, and to act as my/our general
representative(s) and agent(s) with full authority to buy, sell, negotiate and
contract for me/us and my/our behalf;
2. To ask, demand, sue for, recover and receive all sums of money, debts,
dues, goods, wares, merchandise, chattels, effects and thing of whatsoever
nature or description, which now or hereafter shall be or become due,
owing, payable or belonging to me/us in or by any right, title, ways or
means howsoever, and upon receipt thereof or any part thereof, to make,
sign, execute and deliver such receipts, releases or other discharges ;
xxx
Doubtless, there was no perfected contract to sell between petitioner and

NICORP. Nowhere in the General Power of Attorney was Benjamin granted,
expressly or impliedly, any power to sell the subject property or a portion
thereof. The authority expressed in the General Power of Attorney was
couched in very broad terms covering petitioner's businesses and
properties. Time and again, this Court has stressed that the power of
administration does not include acts of disposition, which are acts of strict
ownership. As such, an authority to dispose cannot proceed from an
authority to administer, and vice versa, for the two powers may only be
exercised by an agent by following the provisions on agency of the Civil
Code.
In the same vein, NICORP cannot be considered a purchaser in good faith.

The well-settled rule is that a person dealing with an assumed agent is
bound to ascertain not only the fact of agency but also the nature and extent
of the agent's authority. The law requires higher a degree of prudence from
one who buys from a person who is not the registered owner. He is
expected to examine all factual circumstances necessary for him to
determine if there are any flaws in the title of the transferor, or in his
capacity to transfer the land. In ascertaining good faith, or the lack of it,
which is a question of intention, courts are necessarily controlled by the
evidence as to the conduct and outward acts by which alone the inward
motive may, with safety, be determined. Good faith, or want of it, is not a
visible, tangible fact that can be seen or touched, but rather a state or
condition of mind which can only be judged by actual or fancied token or
signs.
Here, the Court agrees with the RTC that NICORP was fully aware that
Benjamin was not properly authorized to enter into any transaction
regarding the sale of petitioner's property. In fact, in the contract to sell,
NICORP required Benjamin to secure the SPA from petitioner within ninety
(90) days from the execution of the contract and even imposed a substantial
amount of penalty in the amount of P150,000.00 a month in case of non-
compliance plus suspension of payment of the balance of the contract price.
Petitioner's explanation that it obliged Benjamin to secure the SPA in order

to comply with the requirements of the Register of Deeds and the Bureau of
Internal Revenue is bereft of merit. NICORP is a real estate company which
is familiar with the intricacies of the realty business. Moreover, there was
no evidence that petitioner ratified Benjamin's act of selling the subject
property. On the contrary, immediately after the execution of the contract to
sell, petitioner wrote NICORP, IE Bank and Benjamin to inform them of her
opposition to the sale of the subject property and of his lack of authority to
sell it and demand the return of the certificate of title. Clearly, NICORP was
negligent in its dealings with Bautista.
FARIDA YAP BITTE v. SPS. FRED AND ROSA ELSA SERRANO JONAS mother, Andrea, as her attorney-in-fact/agent, she later gave her
GR No. 212256, Dec 09, 2015, J. Mendoza instructions not to sell the property; that her revocation barred the
Under the doctrine of apparent authority, acts and contracts of the agent consummation of the contract to sell; that it was her belief that her return to
within the apparent scope of the authority conferred on him, although no the Philippines was in connection with the sale of another property situated
actual authority to do such acts or has been beforehand withdrawn, revoked in Cawag, San Isidro, Davao Oriental; that it was a surprise to her when she
or terminated, bind the principal. Thus, as to a third person, "apparent learned that Cipriano was still negotiating for the sale of the subject
authority, when present, trumps restrictions that the principal has privately property; that for said reason, she asked for a meeting with Spouses Bitte to
imposed on the agent. discuss the issue; that in the meeting, upon learning of the source of her air
Facts: fare, she offered to refund it and to return the unused ticket for her return
On July 19, 1985, before Rosa Elsa went to Australia, she had executed a trip, but Spouses Bitte refused her offer; that no authority was given to
Special Power of Attorney (SPA) authorizing her mother, Andrea C. Serrano Cipriano to receive any advance payment for the property; and that
(Andrea), to sell the property. Andrea's authority was revoked through a Deed of Revocation of the Special
Power of Attorney (SPA), dated October 10, 1996.
Sometime in May 1996, Cipriano Serrano (Cipriano), son of Andrea and
brother of Rosa Elsa, offered the property for sale to Spouses Benjamin and Civil Case No. 27,667-99
Farida Yap Bitte (Spouses Bitte) showing them the authority of Andrea. (Spouses Fred Jonas and Rosa Elsa Serrano Jonas v. Sps. Benjamin Bitte and
Upon the arrival of Rosa Elsa here in the Philippines, Rosa Elsa revoked the Farida Yap Bitte, Andrea C. Serrano, Reg. of Deeds and the Clerk of Court, RTC,
SPA, through an instrument of even date, and handed a copy thereof to Davao City)
Andrea.
The next day, on October 11, 1996, the parties met at Farida Bitte's office, On November 16, 1999, Spouses Jonas filed before the RTC Civil Case No.
but no final agreement was reached. The next day, Rosa Elsa withdrew from 27,667-99, a complaint for Annulment of Deed of Absolute Sale,
the transaction. Cancellation of TCT and Recovery of Possession, Injunction, and Damages
against Spouses Bitte.
On October 17, 1996, Spouses Bitte filed before the RTC a Complaint for
Specific Performance with Damages seeking to compel Rosa Elsa, Andrea In the Complaint, Spouses Jonas alleged that Rosa Elsa acquired the
and Cipriano to transfer to their names the title over the subject property. property before marriage; that on July 19, 1985, when she decided to leave
The case was docketed as Civil Case No. 24,771-96and raffled to RTC- for Australia to reside there, she executed an SPA of even date, granting her
Branch 13. Immediately thereafter, Rosa Elsa asked Andrea about the sale. mother, Andrea, the authority to sell the subject property; that while in
Her questions about the sale, however, were ignored and her pleas for the Australia, she decided that she would no longer sell the property; that she
cancellation of the sale and restoration of the property to her possession instructed her mother to stop offering the property to prospective buyers;
were disregarded. that upon arrival here in the Philippines in 1996, she revoked the SPA,
through an instrument, dated October 10, 1996, and handed a copy thereof
Undisputed by the parties is the fact that Rosa Elsa earlier mortgaged the to Andrea; that later, she received information that the property was
subject property to Mindanao Development Bank. Upon failure to pay the subsequently sold to Spouses Bitte, through a Deed of Absolute Sale, dated
loan on maturity, the mortgage was foreclosed and sold at a public auction February 25, 1997, signed by her mother, Andrea; and that she then
on December 14, 1998 as evidenced by the annotation on the title, Entry No. pleaded for the return of the property, but Andrea repeatedly ignored her.
1173153.[5] Armed with the deed of absolute sale executed by Andrea,
Spouses Bitte were able to redeem the property on September 14, 1998 Spouses Jonas eventually sought judicial recourse through the filing of a
from the highest bidder, Thelma Jean Salvana, for P1.6 Million Pesos. complaint for the Annulment of the Deed of Absolute Sale and
Thereafter, Spouses Bitte sold the property to Ganzon Yap (Ganzon), Reconveyance of the Property which was raffled to RTC-Branch 9.
married to Haima Yap.[6]
Civi Case No. 24,771-96 Issue: WON the deed of sale executed by Andrea was valid and legal?
(Spouses Bitte v. Rosa Elsa Serrano Jonas, Andrea C. Serrano and Cipriano Ruling: the deed of absolute sale executed by Andrea in favor of Spouses
Serrano, Jr.) Bitte is unenforceable against Rosa Elsa because of their notice of the
revocation of the agency.
As earlier recited, on October 17, 1996, Spouses Bitte filed before the The genuineness and due execution of the deed of sale in favor of Spouses
RTC Civil Case No. 24,771-96, a Complaint for Specific Performance with Bitte not having been established, the said deed can be considered non-
Damages seeking to compel Rosa Elsa, Andrea and Cipriano to transfer the existent.
title of the subject property to their names.
Spouses Bitte, however, are questioning the "non-existent" deed of sale.
In their Complaint, Spouses Bitte alleged that sometime in May 1996, the
property was offered to them for sale by Cipriano, who showed them the Granting that its genuineness and due of execution were proven, the deed of
SPA in favor of Andrea; that on September 3, 1996 and September 10, 1996, sale is still unenforceable; Doctrine of Apparent Authority
Cipriano received from them the respective amounts of P200,000.00 and
then P400,000.00 as advance payments for the property; that they sought a Granting arguendo that the deed of sale may still be considered, the
meeting for final negotiation with Rosa Elsa, then the registered owner of transaction is, nevertheless, unenforceable.
the subject property; that at that time, Rosa Elsa was in Australia and had
no funds to spare in order to return to the Philippines; that to enable her to In this regard, petitioners posit that the deed must be recognized and
come to the country, they paid for her round trip ticket; that on October 11, enforced for the reason that, despite the revocation of the authority of
1996, they and Rosa Elsa met at Farida Bitte's office; that an agreement of Andrea prior to the execution of the deed, they should not be bound by that
sale of the subject property for the total purchase price of P6.2 Million Pesos revocation for lack of notice. Consequently, they contend that as far as they
was reached; that P5 Million thereof would be paid on October 18, 1996 and are concerned, the contract of sale should be given effect for having been
the balance, thirty (30) days thereafter; that on the following day, Rosa Elsa executed by someone appearing to them as authorized to sell.
withdrew from the transaction; and that on the same date, they demanded,
through a letter, the execution of the necessary documents to effect the They further argue that the failure of Rosa Elsa to register, file and enter the
transfer of the property to their names, but to no avail. deed of revocation in the Registry of Deeds did not bind Spouses Bitte under
Section 52 of the Property Registration Decree. Said section provides that
On October 18, 1996, RTC-Branch 13 granted the prayer for the issuance of "[e]very conveyance, mortgage, lease, lien, attachment, order, judgment,
a Temporary Restraining Order (TRO) preventing Rosa Elsa and her agents instrument or entry affecting registered land shall, if registered, filed or
from disposing the subject property. Subsequently, on November 8, 1996, a entered in the Office of the Register of Deeds for the province or city where
Writ of Preliminary Injunction (WPI) was issued in favor of Spouses Bitte. the land to which it relates lies, be constructive notice to all persons from
the time of such registering, filing or entering." It is their position that
In response, Rosa Elsa countered that despite her appointment of her
without the registration of the revocation, they cannot be bound by it and Persons dealing with an agent are bound at their peril, if they would hold
the Court must respect the sale executed by her agent, Andrea. the principal liable, to ascertain not only the fact of agency but also the
nature and extent of the agents authority, and in case either is controverted,
Basic is the rule that the revocation of an agency becomes operative, as to the burden of proof is upon them to establish it.[26]
the agent, from the time it is made known to him. Third parties
dealing bona fide with one who has been accredited to them as an agent, Legal Consequence
however, are not affected by the revocation of the agency, unless notified of
such revocation.[20] This refers to the doctrine of apparent authority. Under "It is a basic axiom in civil law embodied in our Civil Code that no one may
the said doctrine, acts and contracts of the agent within the apparent scope contract in the name of another without being authorized by the latter, or
of the authority conferred on him, although no actual authority to do such unless he has by law a right to represent him. A contract entered into in the
acts or has been beforehand withdrawn, revoked or terminated, bind the name of another by one who has no authority or legal representation, or
principal.[21] Thus, as to a third person, "apparent authority, when present, who has acted beyond his powers, shall be unenforceable, unless it is
trumps restrictions that the principal has privately imposed on the agent. ratified, expressly or impliedly, by the person on whose behalf it has been
The relevant appearance is that the principal has conferred authority on an executed, before it is revoked by the other contracting
agent. An actor may continue to possess apparent authority although the party."[27] Considering that the sale was executed by an agent whose
principal has terminated the actor's actual authority or the agency authority, be it actual or apparent, had been revoked, the transaction
relationship between them. This is so because a third party may reasonably is unenforceable pursuant to Article 1317 and 1403(1) of the Civil Code
believe that the actor continues to act as an agent and within the scope of which read:
actual authority on the basis of manifestations previously made by the
principal. Such a manifestation, once made, remains operative until the
Article 1317. No one may contract in the name of another
third party has notice of circumstances that make it unreasonable to believe
without being authorized by the latter, or unless he has by law a
that the actor continues to have actual authority." [22] Hence, apparent
right to represent him.
authority may survive the termination of actual authority or of an agency
relationship.[23]
A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his
To persons who relied in good faith on the appearance of authority, no
powers, shall be unenforceable, unless it is ratified, expressly or
prejudice must be had by virtue of such reliance on what appeared to them
impliedly, by the person on whose behalf it has been executed,
as perfectly in accordance with the observable authority of an agent. It must
before it is revoked by the other contracting party. (1259a)
not be disturbed unless it can be shown that they had been notified or
became aware of the termination of the agency. Stated differently, a third
ART. 1403. The following contracts are unenforceable, unless
party cannot be bound by a revocation unless he had notice or knowledge of
they are ratified:
such revocation.
(1) Those entered into the name of another person by one who
The notice or knowledge may be actual or implied. In either case, there is no
has been given no authority or legal representation, or who has
apparent authority to speak of and all contracts entered into by the former
acted beyond his powers;
agent with a third person cannot bind the principal. The reason behind this
is that a third person cannot feign ignorance of facts which should have put
him on guard and which he had a means of knowing. "Apparent authority xxx. [Emphases Supplied]
ends when it is no longer reasonable for the third party with whom an agent Considering that the deed of absolute sale was executed at a time when
deals to believe that the agent continues to act with actual Spouses Bitte were deemed notified of the termination of the agency, the
authority."[24] In Cervantes v. Court of Appeals [25] the Court wrote that "when sale must be treated as having been entered into by Andrea in her personal
the third person, knows that the agent was acting beyond his power or capacity. One can sell only what one owns or is authorized to sell, and the
authority, the principal cannot be held liable for the acts of the agent." buyer can acquire no more right than what the seller can transfer legally.
[28]
Accordingly, Spouses Bitte acquired no better title than what Andrea had
Generally, implied notice, also known as constructive notice, is attributed to over the property, which was nil.
third persons through the registration of the termination in the Registry of
Deeds. In sum, the deed of absolute sale executed by Andrea in favor of Spouses
Bitte is unenforceable against Rosa Elsa because of their notice of the
Under Article 1924 of the New Civil Code, "an agency is revoked if the revocation of the agency.
principal directly manages the business entrusted to the agent, dealing
directly with third persons." Logic dictates that when a principal disregards Spouses Bitte did not possess the required personality to redeem the subject
or bypasses the agent and directly deals with such person in an property
incompatible or exclusionary manner, said third person is deemed to have
knowledge of the revocation of the agency. They are expected to know Obviously, Spouses Bitte acquired no interest in the subject property
circumstances that should have put them on guard as to the continuing because the deed that they were anchoring their claims on did not bind
authority of that agent. The mere fact of the principal dealing directly with Rosa Elsa. Hence, they did not have the personality to redeem the foreclosed
the third person, after the latter had dealt with an agent, should be enough property as provided under Act No. 3135, as amended by Act No. 4118, and
to excite the third person's inquiring mind on the continuation of his of Section 27, Rule 39 of the Rules of Court.
authority.
Act No. 3135, as amended, provides:
In the case at bench, records show that Spouses Bitte initially transacted
with Andrea as Rosa Elsa's agent on the basis of the SPA, dated July 19, SEC. 6. In all cases in which an extrajudicial sale is made under
1985. Thereafter, however, Rosa Elsa returned to the Philippines and the special power hereinbefore referred to, the debtor,
directly negotiated with them on October 11, 1996. Rosa Elsa's act of taking his successors in interest or any judicial creditor or judgment
over in the actual negotiation for the sale of the property only shows that creditor of said debtor, or any person having a lien on the
Andrea's authority to act has been revoked pursuant to Article 1924. At that property subsequent to the mortgage or deed of trust under
point, Spouses Bitte had information sufficient enough to make them which the property is sold, may redeem the same at any time
believe that Andrea was no longer an agent or should have compelled them within the term of one year from and after the date of the sale;
to make further inquiries. No attempt was shown that Spouses Bitte took and such redemption shall be governed by the provisions of
the necessary steps to inquire if Andrea was still authorized to act at that sections four hundred and sixty-four to four hundred and sixty-
time. Despite their direct negotiation with Rosa Elsa, they still entered into a six, inclusive, of the Code of Civil Procedure, in so far as these are
contract with Andrea on February 25, 1997. not inconsistent with the provisions of this Act.
[Emphases Supplied] the same.

Section 27 of Rule 39 of the Rules of Court enumerates the persons who
may exercise the right of redemption of a foreclosed property:
A purchaser cannot close his eyes to facts which should put a reasonable
man upon his guard, and then claim that he acted in good faith under the
Section 27. Who may redeem real property so sold. — Real property sold as belief that there was no defect in the title of the vendor. [33]
provided in the last preceding section, or any part thereof sold separately,
may be redeemed in the manner hereinafter provided, by the following In sum, the transfer to Spouses Yap was null and void as Spouses Bitte had
persons: nothing to sell or transfer to them.
The judgment obligor; or his successor in interest in the whole or any

(a)
part of the property; and
A creditor having a lien by virtue of an attachment, judgment or
mortgage on the property sold, or on some part thereof, subsequent to
(c)
the lien under which the property was sold. Such redeeming creditor is
termed a redemptioner.
In Castro v. IAC,[29] as correctly cited by the CA, "only such persons as are
authorized to do so by statute can redeem from an execution sale." Spouses
Bitte were not so authorized considering that they were not among those
enumerated in Act No. 3135 and Section 27 of Rule 39.
Spouses Yap were also not Purchasers in Good Faith and For Value
After the purported "transfer" to Spouses Yap, the subject property was
registered and a new title was issued in their names. Despite being
impleaded in the case, however, they were silent and did not even join
Spouses Bitte in the subject petition. It is Spouses Bitte who have been
taking the cudgels for them.
On the issue, Spouses Bitte contend that Spouses Yap were purchasers in
good faith and for value, and, for that reason, should have been recognized
to have good title over the subject property.
Settled is the rule that the burden of proving the status of a purchaser in
good faith and for value lies upon one who asserts that status. [30]This onus
probandi cannot be discharged by mere invocation of the ordinary
presumption of good faith.[31] Considering that the title was still registered
in the name of Rosa Elsa when Spouses Yap bought it from Spouses Bitte,
the burden was on them to prove that they were purchasers in good faith. In
this regard, they failed. Not an iota of evidence was adduced by them to
prove their ignorance of the true situation.
Through Spouses Bitte, Spouses Yap are invoking good faith for want of
notice on their part that Andrea's authority had already been revoked. They
point out that Ganzon, being a layman, could not have been expected to
know the intricacies of the law for which reason that he could not attribute
any fault in the deed of sale executed by a person with a SPA.
The Court is not persuaded.
Spouses Yap were not purchasers in good faith and for value. Significantly,
Ganzon transacted with someone who was not even the registered owner of
the property. At the time of the transfer, the property was still registered in
the name of Rosa Elsa.
The rule is that a person who buys from one who is not the registered
owner is expected to examine not only the certificate of title but all factual
circumstances necessary for [one] to determine if there are any flaws in the
title of the transferor, or in [the] capacity to transfer the land. A higher
degree of prudence is thus expected from that person even if the land object
of the transaction is registered. [32]
Here, no evidence was presented to show that Spouses Yap exerted that
required diligence in determining the factual circumstances relating to the
title and authority of Spouses Bitte as sellers of the property. The records
are bereft of any proof that Spouses Yap showed eagerness to air their side
despite being impleaded.
Hence, the protection the law accords to purchasers in good faith and for
value cannot be extended to them. They have failed to show the required
diligence needed in protecting their rights as buyers of property despite
knowledge of facts that should have led them to inquire and investigate the
possible defects in the title of the seller. Thus, in the same way that Spouses
Bitte cannot claim valid title over the property, Spouses Yap cannot also do
SPOUSES MAY S. VILLALUZ AND JOHNNY VILLALUZ, JR. v. LAND BANK becomes the agent of the principal. As a result, the principal is bound by the
OF THE PHILIPPINES AND THE REGISTER OF DEEDS FOR DAVAO CITY acts of the substitute as if these acts had been performed by the principal's
G.R. No. 192602 January 18, 2017 J. Jardaleza appointed agent. Concomitantly, the substitute assumes an agent's
ob1igations to act within the scope of authority, to act in accordance with
The law creates a presumption that an agent has the power to appoint a the principal's instructions, and to carry out the agency, among others. In
substitute. The consequence of the presumption is that, upon valid order to make the presumption inoperative and relieve himself from its
appointment of a substitute by the agent, there ipso jure arises an agency effects, it is incumbent upon the principal to prohibit the agent from
relationship between the principal and the substitute, i.e., the substitute appointing a substitute.
becomes the agent of the principal. As a result, the principal is bound by the
acts of the substitute as if these acts had been performed by the principal's Although the law presumes that the agent is authorized to appoint a
appointed agent. Concomitantly, the substitute assumes an agent's substitute, it also imposes an obligation upon the agent to exercise this
ob1igations to act within the scope of authority, to act in accordance with the power conscientiously. To protect the principal, Article 1892 allocates
principal's instructions, and to carry out the agency, among others. responsibility to the agent for the acts of the substitute when the agent was
not expressly authorized by the principal to appoint a substitute; and, if so
Facts: Paula Agbisit (Agbisit), mother of petitioner May S. Villaluz (May), authorized but a specific person is not designated, the agent appoints a
requested the latter to provide her with collateral for a loan. At the time, substitute who is notoriously incompetent or insolvent. In these instances,
Agbisit was the chairperson of Milflores Cooperative and she needed the principal has a right of action against both the agent and the substitute if
P600,000 to P650,000 for the expansion of her backyard cut flowers the latter commits acts prejudicial to the principal.
business.4 May convinced her husband, Johnny Villaluz (collectively, the
Spouses Villaluz), to allow Agbisit to use their land, located in Calinan, In the present case, the Special Power of Attorney executed by the Spouses
Davao City and covered by Transfer Certificate of Title (TCT) No. T-202276, Villaluz contains no restrictive language indicative of an intention to
as collateral.5 On March 25, 1996, the Spouses Villaluz executed a Special prohibit Agbisit from appointing a substitute or sub-agent. Thus, we agree
Power of Attorney6in favor of Agbisit authorizing her to, among others, with the findings of the CA and the RTC that Agbisit's appointment of
"negotiate for the sale, mortgage, or other forms of disposition a parcel of Milflores Cooperative was valid.
land covered by Transfer Certificate of Title No. T-202276" and "sign in our
behalf all documents relating to the sale, loan or mortgage, or other
disposition of the aforementioned property."7 The one-page power of
attorney neither specified the conditions under which the special powers
may be exercised nor stated the amounts for which the subject land may be
sold or mortgaged.
On June 19, 1996, Agbisit executed her own Special Power of Attorney,8
appointing Milflores Cooperative as attorney-in-fact in obtaining a loan
from and executing a real mortgage in favor of Land Bank of the Philippines
(Land Bank). On June 21, 1996, Milflores Cooperative, in a representative
capacity, executed a Real Estate Mortgage9 in favor of Land Bank in
consideration of the P3,000,000 loan to be extended by the latter. On June
24, 1996, Milflores Cooperative also executed a Deed of Assignment of the
Produce/Inventory10 as additional collateral for the loan.
Unfortunately, Milflores Cooperative was unable to pay its obligations to

Land Bank. Thus, Land Bank filed a petition for extra-judicial foreclosure
sale with the Office of the Clerk of Court of Davao City. Sometime in August,
2003, the Spouses Villaluz learned that an auction sale covering their land
had been set tor October 2, 2003. Land Bank won the auction sale as the
sole bidder.
Issue: WON Agbisit could have validly delegated her authority as

attonery-in-fact to Milflores Cooperative?
Ruling: YES
Articles 1892 and 1893 of the Civil Code provide the rules
regarding the appointment of a substitute by an agent:
Art. 1892. The agent may appoint a substitute if the principal has
not prohibited him from doing so; but he shall be responsible for
the acts of the substitute:
(1) When he was not given the power to appoint

one;chanrobleslaw
(2) When he was given such power, but without designating the
person, and the person appointed was notoriously incompetent
or insolvent.
All acts of the substitute appointed against the prohibition of the
principal shall be void.
Art. 1893. Tn 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 the obligations which the
latter has contracted under the substitution.
The law creates a presumption that an agent has the power to appoint a
substitute. The consequence of the presumption is that, upon valid
appointment of a substitute by the agent, there ipso jure arises an agency
relationship between the principal and the substitute, i.e., the substitute
GENEVIEVE LIM vs. FLORENCIO SABAN The pronouncements of the Court in the aforecited cases are applicable to
G.R. No. 163720 December 16, 2004 J. Tinga the present case, especially considering that Saban had completely
the Court upheld the right of the brokers to their commissions although the performed his obligations under his contract of agency with Ybaez by
seller revoked their authority to act in his behalf after they had found a buyer finding a suitable buyer to preparing the Deed of Absolute Sale between
for his properties and negotiated the sale directly with the buyer whom he Ybaez and Lim and her co-vendees. Moreover, the contract of agency very
met through the brokers efforts. The Court ruled that the sellers withdrawal clearly states that Saban is entitled to the excess of the mark-up of the price
in bad faith of the brokers authority cannot unjustly deprive the brokers of of the lot after deducting Ybaezs share of P200,000.00 and the taxes and
their commissions as the sellers duly constituted agents. other incidental expenses of the sale.
Facts: The late Eduardo Ybaez (Ybaez), the owner of a 1,000-square meter However, the Court does not agree with the appellate courts
lot in Cebu City (the lot), entered into an Agreement and Authority to pronouncement that Sabans agency was one coupled with an interest.
Negotiate and Sell (Agency Agreement) with respondent Florencio Saban Under Article 1927 of the Civil Code, an agency cannot be revoked if a
(Saban) on February 8, 1994. Under the Agency Agreement, Ybaez bilateral contract depends upon it, or if it is the means of fulfilling an
authorized Saban to look for a buyer of the lot for Two Hundred Thousand obligation already contracted, or if a partner is appointed manager of a
Pesos (P200,000.00) and to mark up the selling price to include the partnership in the contract of partnership and his removal from the
amounts needed for payment of taxes, transfer of title and other expenses management is unjustifiable. Stated differently, an agency is deemed as one
incident to the sale, as well as Sabans commission for the sale. coupled with an interest where it is established for the mutual benefit of the
principal and of the agent, or for the interest of the principal and of third
Through Sabans efforts, Ybaez and his wife were able to sell the lot to the persons, and it cannot be revoked by the principal so long as the interest of
petitioner Genevieve Lim (Lim) and the spouses Benjamin and Lourdes Lim the agent or of a third person subsists. In an agency coupled with an
(the Spouses Lim) on March 10, 1994. The price of the lot as indicated in the interest, the agents interest must be in the subject matter of the power
Deed of Absolute Sale is Two Hundred Thousand Pesos (P200,000.00).[4] It conferred and not merely an interest in the exercise of the power because it
appears, however, that the vendees agreed to purchase the lot at the price entitles him to compensation. When an agents interest is confined to
of Six Hundred Thousand Pesos (P600,000.00), inclusive of taxes and other earning his agreed compensation, the agency is not one coupled with an
incidental expenses of the sale. After the sale, Lim remitted to Saban the interest, since an agents interest in obtaining his compensation as such
amounts of One Hundred Thirteen Thousand Two Hundred Fifty Seven agent is an ordinary incident of the agency relationship.
Pesos (P113,257.00) for payment of taxes due on the transaction as well as
Fifty Thousand Pesos (P50,000.00) as brokers commission.[5] Lim also Sabans entitlement to his commission having been settled, the Court must
issued in the name of Saban four postdated checks in the aggregate amount now determine whether Lim is the proper party against whom Saban
of Two Hundred Thirty Six Thousand Seven Hundred Forty Three Pesos should address his claim.
(P236,743.00).
Sabans right to receive compensation for negotiating as broker for Ybaez
Subsequently, Ybaez sent a letter dated June 10, 1994 addressed to Lim. In arises from the Agency Agreement between them. Lim is not a party to the
the letter Ybaez asked Lim to cancel all the checks issued by her in Sabans contract. However, the record reveals that she had knowledge of the fact
favor and to extend another partial payment for the lot in his (Ybaezs) that Ybaez set the price of the lot at P200,000.00 and that the
favor. P600,000.00the price agreed upon by her and Sabanwas more than the
amount set by Ybaez because it included the amount for payment of taxes
After the four checks in his favor were dishonored upon presentment, and for Sabans commission as broker for Ybaez.
Saban filed a Complaint for collection of sum of money and damages against
Ybaez and Lim with the Regional Trial Court (RTC) of Cebu City on August 3, According to the trial court, Lim made the following payments for the lot:
1994 P113,257.00 for taxes, P50,000.00 for her broker, and P400.000.00 directly
to Ybaez, or a total of Five Hundred Sixty Three Thousand Two Hundred
Issue: whether Saban is entitled to receive his commission from the Fifty Seven Pesos (P563,257.00).[27] Lim, on the other hand, claims that on
sale; and, assuming that Saban is entitled thereto, whether it is Lim March 10, 1994, the date of execution of the Deed of Absolute Sale, she paid
who is liable to pay Saban his sales commission. directly to Ybaez the amount of One Hundred Thousand Pesos
(P100,000.00) only, and gave to Saban P113,257.00 for payment of taxes
Ruling: Yes, Saban is entitled to receive his commission from the sale. and P50,000.00 as his commission,[28] and One Hundred Thirty Thousand
The Court affirms the appellate courts finding that the agency was not Pesos (P130,000.00) on June 28, 1994,[29] or a total of Three Hundred
revoked since Ybaez requested that Lim make stop payment orders for the Ninety Three Thousand Two Hundred Fifty Seven Pesos (P393,257.00).
checks payable to Saban only after the consummation of the sale on March Ybaez, for his part, acknowledged that Lim and her co-vendees paid him
10, 1994. At that time, Saban had already performed his obligation as P400,000.00 which he said was the full amount for the sale of the lot.[30] It
Ybaezs agent when, through his (Sabans) efforts, Ybaez executed the Deed thus appears that he received P100,000.00 on March 10, 1994,
of Absolute Sale of the lot with Lim and the Spouses Lim. acknowledged receipt (through Saban) of the P113,257.00 earmarked for
taxes and P50,000.00 for commission, and received the balance of
To deprive Saban of his commission subsequent to the sale which was P130,000.00 on June 28, 1994. Thus, a total of P230,000.00 went directly to
consummated through his efforts would be a breach of his contract of Ybaez. Apparently, although the amount actually paid by Lim was
agency with Ybaez which expressly states that Saban would be entitled to P393,257.00, Ybaez rounded off the amount to P400,000.00 and waived the
any excess in the purchase price after deducting the P200,000.00 due to difference.
Ybaez and the transfer taxes and other incidental expenses of the sale.
Lims act of issuing the four checks amounting to P236,743.00 in Sabans
In Macondray & Co. v. Sellner,[23] the Court recognized the right of a broker favor belies her claim that she and her co-vendees did not agree to purchase
to his commission for finding a suitable buyer for the sellers property even the lot at P600,000.00. If she did not agree thereto, there would be no
though the seller himself consummated the sale with the buyer.[24] The reason for her to issue those checks which is the balance of P600,000.00
Court held that it would be in the height of injustice to permit the principal less the amounts of P200,000.00 (due to Ybaez), P50,000.00 (commission),
to terminate the contract of agency to the prejudice of the broker when he and the P113,257.00 (taxes). The only logical conclusion is that Lim
had already reaped the benefits of the brokers efforts. changed her mind about agreeing to purchase the lot at P600,000.00 after
talking to Ybaez and ultimately realizing that Sabans commission is even
In Infante v. Cunanan, et al.,[25] the Court upheld the right of the brokers to more than what Ybaez received as his share of the purchase price as vendor.
their commissions although the seller revoked their authority to act in his Obviously, this change of mind resulted to the prejudice of Saban whose
behalf after they had found a buyer for his properties and negotiated the efforts led to the completion of the sale between the latter, and Lim and her
sale directly with the buyer whom he met through the brokers efforts. The co-vendees. This the Court cannot countenance.
Court ruled that the sellers withdrawal in bad faith of the brokers authority
cannot unjustly deprive the brokers of their commissions as the sellers duly The ruling of the Court in Infante v. Cunanan, et al., cited earlier, is
constituted agents. enlightening for the facts therein are similar to the circumstances of the
present case. In that case, Consejo Infante asked Jose Cunanan and Juan
Mijares to find a buyer for her two lots and the house built thereon for
Thirty Thousand Pesos (P30,000.00) . She promised to pay them five
percent (5%) of the purchase price plus whatever overprice they may
obtain for the property. Cunanan and Mijares offered the properties to Pio
Noche who in turn expressed willingness to purchase the properties.
Cunanan and Mijares thereafter introduced Noche to Infante. However, the
latter told Cunanan and Mijares that she was no longer interested in selling
the property and asked them to sign a document stating that their written
authority to act as her agents for the sale of the properties was already
cancelled. Subsequently, Infante sold the properties directly to Noche for
Thirty One Thousand Pesos (P31,000.00). The Court upheld the right of
Cunanan and Mijares to their commission, explaining that
[Infante] had changed her mind even if respondent had found a buyer who
was willing to close the deal, is a matter that would not give rise to a legal
consequence if [Cunanan and Mijares] agreed to call off the transaction in
deference to the request of [Infante]. But the situation varies if one of the
parties takes advantage of the benevolence of the other and acts in a
manner that would promote his own selfish interest. This act is unfair as
would amount to bad faith. This act cannot be sanctioned without according
the party prejudiced the reward which is due him. This is the situation in
which [Cunanan and Mijares] were placed by [Infante]. [Infante] took
advantage of the services rendered by [Cunanan and Mijares], but believing
that she could evade payment of their commission, she made use of a ruse
by inducing them to sign the deed of cancellation.This act of subversion
cannot be sanctioned and cannot serve as basis for [Infante] to escape
payment of the commission agreed upon.
The appellate court therefore had sufficient basis for concluding that Ybaez
and Lim connived to deprive Saban of his commission by dealing with each
other directly and reducing the purchase price of the lot and leaving nothing
to compensate Saban for his efforts.
Considering the circumstances surrounding the case, and the undisputed

fact that Lim had not yet paid the balance of P200,000.00 of the purchase
price of P600,000.00, it is just and proper for her to pay Saban the balance
of P200,000.00.
Furthermore, since Ybaez received a total of P230,000.00 from Lim, or an

excess of P30,000.00 from his asking price of P200,000.00, Saban may claim
such excess from Ybaezs estate, if that remedy is still available,[32] in view
of the trial courts dismissal of Sabans complaint as against Ybaez, with
Sabans express consent, due to the latters demise on November 11, 1994.
AMPARO G. PEREZ, ET AL. vs. PHILIPPINE NATIONAL BANK, and foreclose the same at any time within the period of the
Binalbagan Branch, ET AL. statute of limitations, and in that event he shall not be admitted
G.R. No. L-21813 July 30, 1966 J. Reyes as a creditor and shall receive no share in the distribution of the
other assets of the estate, but nothing herein contained shall
In Pasno vs. Ravina, both the majority and the dissenting opinions conceded prohibit the executor or administrator from redeeming the
that the power to foreclose extrajudicially survived the death of the property mortgaged or pledged, by paying the debt for which it is
mortgagor, even under the law prior to the Civil Code of the Philippines now held as security, under the direction of the court, if the court shall
in force. adjudge it to be for the best interest of the estate that such
redemption shall be made.
Facts: Vicente Perez mortgaged a parcel of lan to the appellant Philippine
National Bank, Bacolod Branch, in order to secure payment of a loan of
The lower court held that the Rule inhibits any extrajudicial foreclosure of
P2,500, plus interest, payable in yearly installments. On October 7, 1942,
the mortgage constituted by a deceased debtor-mortgagor, following the
Vicente Perez, mortgagor, died intestate, survived by his widow and
majority opinion of five justices in Pasno vs. Ravina, 54 Phil. 382 said the
children (appellees herein). At that time, there was an outstanding balance
Court in that case (382):
of P1,917.00, and corresponding interest, on the mortgage indebtedness.
On October 18, 1956, the widow of Perez instituted Special Proceedings No. The power of sale given in a mortgage is a power coupled with an
512 of the Court of First Instance of Occidental Negros for the settlement of interest which survives the death of the grantor. One case, that
the estate of Vicente Perez. The widow was appointed Administratrix and of Carter vs. Slocomb ([1898], 122 N.C., 475), has gone so far as to
notice to creditors was duly published. The Bank did not file a claim. The hold that a sale after the death of the mortgagor is valid without
project of partition was submitted on July 18, 1956; it was approved and the notice to the heirs of the mortgagor. However that may be,
properties distributed accordingly. Special Proceedings No. 512 was then conceding that the power of sale is not revoked by the death of
closed. the mortgagor, nevertheless in view of the silence of Act No. 3135
and in view of what is found in section 708 of the Code of Civil
It appears also that, as early as March of 1947, the widow of the late Vicente Procedure, it would be preferable to reach the conclusion that the
Perez inquired by letter from the Bank the status of her husband's account; mortgage with a power of sale should be made to foreclose the
and she was informed that there was an outstanding balance thereon of mortgage in conformity with the procedure pointed out in
P2,758.84 earning a daily interest of P0.4488. She was furnished a copy of section 708 of the Code of Civil Procedure. That would safeguard
the mortgage and, on April 2, 1947, a copy of the Tax Declaration (Rec. App. the interests of the estate by putting the estate on notice while it
pp. 45-48). would not jeopardize any rights of the mortgagee. The only result
is to suspend temporarily the power to sell so as not to interfere
On January 2, 1963, the Bank, pursuant to authority granted it in the with the orderly administration of the estate of a decedent. A
mortgage deed, caused the mortgaged properties to be extrajudicially contrary holding would be inconsistent with the portion of the
foreclosed. The Provincial Sheriff accordingly sold Lot No. 286-E at auction, settlement of estates of deceased persons.
and it was purchased by the Bank. In the ordinary course after the lapse of
the year of redemption, Certificate of Title No. T-29530 in the name of
A vigorous and able dissenting opinion, subscribed by Justices Street,
Vicente Perez was cancelled, and Certificate T-32066, dated May 11, 1962,
Villamor and Ostrand, held that an extrajudicial foreclosure was authorized
was issued in the name of the Bank. The widow and heirs were not notified.
(cas. cit. pp. 383-385).
Three months later, on August 15, 1962, the widow and heirs of Vicente
Perez instituted this case against the Bank in the court below, seeking to The dissent argues:
annul the extra-judicial foreclosure sale and the transfer of the Certificate of
Title as well as to recover damages, claiming that the Bank had acted
The opinion of the Court refers to section 708 of the Code of Civil
illegally and in bad faith. The Bank answered, denying the charges. After
Procedure as determining the proposition that, after the death of
trial, the court a quo, on December 15, 1962, rendered judgment holding
the mortgagor, foreclosure can be effected only by an ordinary
that, according to the doctrine of this Supreme Court in Pasno vs. Ravina 54
action in court; but if this section be attentively examined, it will
Phil. 382, the Bank should have foreclosed its mortgage in court; that the
be seen that the bringing of an action to foreclose is necessary
power to sell contained in the deed of mortgage had terminated upon the
only when the mortgagee wishes to obtain a judgment over for
death of the mortgagor, Vicente Perez.
the deficiency remaining unpaid after foreclosure is effected. In
fact this section gives to the mortgagee three distinct
Issue: WON the foreclosure by the Bank under its power of sale is barred
alternatives, which are first, to waive his security and prove his
upon death of the debtor, because agency is extinguished by the death of the
credit as an ordinary debt against the estate of the deceased;
principal?
secondly to foreclose the mortgage by ordinary action in court
and recover any deficiency against the estate in administration;
Ruling: NO.
and, thirdly, to foreclose without action at any time within the
period allowed by the statute of limitations.
The main issue in this appeal is the application of section 7, Rule 87, of the
original Rules of Court adopted in 1941 (now Section 7, Rule 68, of the 1964
The third mode of procedure is indicated in that part of section
Revised Rules), and which was, in turn, a reproduction of section 708 of the
708 which is expressed in these words:
Code of Civil Procedure (Act 190). The text is as follows:
"Or he may rely upon his mortgage or other security alone, and
SEC. 7. Mortgage debt due from estate. — A creditor holding a
foreclose the same at any time, within the period of the statute of
claim against the deceased secured by mortgage or other,
limitations, and in that event he shall not be admitted as a
collateral security, may abandon the security and prosecute his
creditor, and shall receive no share in the distribution of the
claim in the manner provided in this rule, and share in the
other assets of the estate."
general distribution of the assets of the estate; or he may
foreclose his mortgage or realize upon his security, by action in
court, making the executor or administrator a party defendant, The alternative here contemplated is, evidently, foreclosure
and if there is a judgment for a deficiency, after the sale of the under power of sale contained in the mortgage. It must be so,
mortgaged premises, or the property pledged, in the foreclosure since there are no other modes of foreclosure known to the law
or other proceeding to realize upon the security, he may claim his than by ordinary action and foreclosure under power, and the
deficiency judgment in the manner provided in the preceding procedure by action is covered in that part of section 708 which
section; or he may rely upon his mortgage other security alone, immediately precedes the words which we have quoted above. It
will be noted that the result of adopting the last mode of Ravina, 54 Phil. 382, both the majority and the dissenting opinions
foreclosure is that the creditor waives his right to recover any conceded that the power to foreclose extrajudicially survived the death of
deficiency from the estate. the mortgagor, even under the law prior to the Civil Code of the Philippines
now in force.
In addition to what is said above, we submit that the policy of the
court in requiring foreclosure by action in case of the death of a Nevertheless, while upholding the validity of the appellant Bank's
mortgagor, where a power of sale is inserted in the mortgage, will foreclosure, We can not close our eyes to the fact that the Bank was
prove highly prejudicial to the estates of deceased mortgagors. apprised since 1947 of the death of its debtor, Vicente Perez, yet it failed
Nowadays nearly every mortgage executed in this country and neglected to give notice of the foreclosure to the latter's widow and
contains a stipulation for the payment of attorney's fees and heirs as expressly found by the court a quo. Such failure, in effect, prevented
expenses of foreclosure, usually in an amount not less than 20 or them from blocking the foreclosure through seasonable payment, as well as
25 per cent of the mortgage debt. This means, in practical effect, impeded their effectuating a seasonable redemption. In view of these
that the creditor can recover, for attorney's fee and expenses, circumstances, it is our view that both justice and equity would be served
whatever the Court will allow a reasonable, within the stipulated by permitting herein appellees to redeem the foreclosed property within a
limit. On the other hand, if an extra-judicial foreclosure is effected reasonable time, by paying the capital and interest of the indebtedness up to
under the power of sale, the expenses of foreclosure are limited the time of redemption, plus foreclosure and useful expenses, less any rents
to the cost of advertising and other actual expenses of the sale, and profits obtained by the Bank from and after the same entered into its
not including the attorney's fee. possession.
Again, if foreclosure is effected extrajudicially, under the power, Wherefore, the judgment appealed from is hereby modified, as follows:
in conformity with the provisions of Act No. 3135, the mortgagor
or his representative has a full year, from the date of the sale,
(1) Declaring valid and effective the extra-judicial foreclosure of
within which to redeem the property, this being the same period
the mortgage over Lot 286-E of the Kabankalan Cadastre;
of time that is allowed to judgment debtors for redeeming after
sale under execution. On the other hand, the provisions of the
Code of Civil Procedure relative to the foreclosure of mortgages (2) Upholding and confirming the cancellation of Transfer
by action allows no fixed period for redemption after sale; and Certificate of Title No. 29350 of the Registry of Deeds of
although, in the closing words of section 708 of the Code of Civil Occidental Negros in the name of the late Vicente Perez, as well
Procedure the court is authorized to permit the administrator to as its replacement by Certificate of Title T-32066 of the same
redeem mortgaged property, this evidently refers to redemption Registry in the name of appellant Philippine National Bank;
to be effected before the foreclosure becomes final.
(3) Declaring the appellees herein, widow and other heirs of
When account is further taken of the fact that a creditor who Vicente Perez entitled to redeem the property in question by
elects to foreclose by extrajudicial sale waives all right to recover paying or tendering to the Bank the capital of the debt of Vicente
against the estate of the deceased debtor for any deficiency Perez, with the stipulated interest to the date of foreclosure, plus
remaining unpaid after the sale, it will be readily seen that the interest thereafter at 12% per annum; and reimbursing the Bank
decision in this case will impose a burden upon the estates of the value of any useful expenditures on the said property but
deceased persons who have mortgaged real property for the deducting from the amounts thus payable the value of any rents
security debts, without any compensatory advantage. and profits derived by the appellee National Bank from the
property in question. Such payment to be made within sixty (60)
days after the balance is determined by the court of origin.
The ruling in Pasno vs. Ravina not having been reiterated in any other case,
We have carefully reexamined the same after mature deliberation have
reached the conclusion that the dissenting opinion is more in conformity
with reason and law. Of the three alternative courses that section 7, Rule 87
(now Rule 86), offers the mortgage creditor, to wit, (1) to waive the
mortgage and claim the entire debt from the estate of the mortgagor as an
ordinary claim; (2) to foreclose the mortgage judicially and prove any
deficiency as an ordinary claim; and (3) to rely on the mortgage exclusively,
foreclosing the same at any time before it is barred by prescription, without
right to file a claim for any deficiency, the majority opinion in Pasno vs.
Ravina, in requiring a judicial foreclosure, virtually wipes out the third
alternative conceded by the Rules to the mortgage creditor, and which
would precisely include extra-judicial foreclosures by contrast with the
second alternative. This result we do not consider warranted by the text of
the Rules; and, in addition, the recognition of creditor's right to foreclose
extra-judicially presents undoubted advantages for the estate of the
mortgagor, as pointed out by the dissenting opinion in Pasno vs. Ravina,
supra. In the light of these considerations, we have decided to overrule the
majority decision in said case, and uphold the right of the mortgage creditor
to foreclose extra-judicially in accordance with section 7, Rule 86, of the
Revised Rules (old Rule 87).
The argument that foreclosure by the Bank under its power of sale is barred
upon death of the debtor, because agency is extinguished by the death of the
principal, under Article 1732 of the Civil Code of 1889 and Article 1919 of
the Civil Code of the Philippines, neglects to take into account that the
power to foreclose is not an ordinary agency that contemplates exclusively
the representation of the principal by the agent but is primarily an authority
conferred upon the mortgagee for the latter's own protection. It is, in fact,
an ancillary stipulation supported by the same causaor consideration for
the mortgage and forms an essential and inseparable part of that bilateral
agreement. As can be seen in the preceding quotations from Pasno vs.

Sally Yoshizaki vs. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013, BRION, J. Issue

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Sally Yoshizaki vs. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013, BRION, J. Issue

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Civil Law Review 2 | Atty.

Respondent Joy Training Center of Aurora, Inc. (Joy Training) is a non-stock,

A parcel of land x x x is registered in accordance with the provisions of the

The above documents do not convince us of the existence of the contract of

The resolution which purportedly grants the spouses Johnson a special

Moreover, the certification is a mere general power of attorney which

Necessarily, the absence of a contract of agency renders the contract of sale

Petitioner NFA's contention holds no water. It is an undisputed fact that Gil

Upon completion of the delivery of rice at its destination, plaintiff on

On December 4, 1979, plaintiff wrote defendant Medalla demanding that he

Plaintiff was therefore constrained to file the instant complaint.

Defendant-appellant National Food Authority admitted that it entered into a

Facts: It is my/our understanding that your Bank has granted a

In agency, ratification is the adoption or confirmation by one person of an

CBIC does not anchor its defense on a secret agreement, mutual

transactions done on its behalf. It is clear, and undisputed therefore, that

1. The principal manifested a representation of the agent’s

2. The third person, in good faith, relied upon such

3. Relying upon such representation, such third person has

This Court cannot agree with the Court of Appeals’ pronouncement of

Unimarine undoubtedly failed to establish that it even bothered to inquire if

In its separate Answer, petitioner Petron alleged that the petroleum

Meanwhile, on 27 October 1988, Rubin Uy executed a Special Power of

Whether or not Alejandro has authority to sell the parcel of land

property. Moreover, the petitioner points out that Alejandro represented a

The petitioner’s contentions are untenable. Given the expressed

When the petitioner relied only on the words of respondent Alejandro

On December 8, 1998, Joy Training, represented by its Acting Chairperson

A parcel of land x x x is registered in accordance with the provisions of the

The above documents do not convince us of the existence of the contract of

Nonetheless, if only to erase doubts on the issues surrounding this case, we

The resolution which purportedly grants the spouses Johnson a special

Moreover, the certification is a mere general power of attorney which

2. The contract of sale is unenforceable

Necessarily, the absence of a contract of agency renders the contract of sale

Article 1868 of the Civil Code defines a contract of agency as a contract

As a general rule, a contract of agency may be oral. However, it must be

The requirements of a special power of attorney in Article 1878 of the Civil

The Contract of Loan Entered Into by Gutierrez in Behalf of the Petitioner

Marasigan however submits that the petitioner’s acts of pre-signing the

Marasigan’s submission fails to persuade us.

In the absence of any authorization, Gutierrez could not enter into a

In the absence of any showing of any agency relations or special authority to

Furthermore, that the petitioner entrusted the blank pre-signed checks to

C) To make, execute, and sign any contract, documents or all

The defects in the SPA notwithstanding, we rule in favor of ZMC. We agree

We find no merit in this argument.

The power to collect and receive payments on behalf of the principal is an

respondents in the Contract, then petitioner cannot enforce the Contract, as

As agent, the representations and guarantees of Hojilla are considered

Regarding our loan with the National Electrification Administration (NEA),

Clearly, the respondents are estopped by the acts and representations of

In an agency by estoppel or apparent authority, "[t]he principal is bound by

THAT I/WE FLORENTINA B. SPILLE, of legal age, single/married to

1.To exercise administration, general control and supervision over my/our

Doubtless, there was no perfected contract to sell between petitioner and

In the same vein, NICORP cannot be considered a purchaser in good faith.

Petitioner's explanation that it obliged Benjamin to secure the SPA in order

[Emphases Supplied] the same.