BARRANTES, Hannah R

University of Asia and the Pacific

Eurotech v. Cuizon
GR No. 176552; 23 April 2007
In a contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another with the latters consent.The
underlying principle of the contract of agency is to accomplish results by using the
services of othersto do a great variety of things like selling, buying, manufacturing, and
transporting.Its purpose is to extend the personality of the principal or the party for whom
another acts and from whom he or she derives the authority to act.It is said that the
basis of agency is representation, that is, the agent acts for and on behalf of the principal
on matters within the scope of his authority and said acts have the same legal effect as if
they were personally executed by the principal.By this legal fiction, the actual or real
absence of the principal is converted into his legal or juridical presencequi facit per
aliumfacit per se.The elements of the contract of agency are: (1) consent, express or
implied, of the parties to establish the relationship; (2) the object is the execution of a
juridical act in relation to a third person; (3) the agent acts as a representative and not
for himself; (4) the agent acts within the scope of his authority.
the position of manager is unique in that it presupposes the grant of broad powers with
which to conduct the business of the principal, thus:
The powers of an agent are particularly broad in the case of one acting as a
general agent or manager; such a position presupposes a degree of confidence
reposed and investiture with liberal powers for the exercise of judgment and
discretion in transactions and concerns which are incidental or appurtenant to the
business entrusted to his care and management. In the absence of an
agreement to the contrary, a managing agent may enter into any contracts that
he deems reasonably necessary or requisite for the protection of the interests of
his principal entrusted to his management. xxx.
Respondent EDWINs participation in the Deed of Assignment was reasonably
necessary or was required in order for him to protect the business of his principal. Had
he not acted in the way he did, the business of his principal would have been adversely
affected and he would have violated his fiduciary relation with his principal.
Rallos v. Felix Go Chan
GR No. L-24332; 31 January 1978
By the relationship of agency, one party called the principal authorizes another
called the agent to act for and in his behalf in transactions with third persons. The
essential elements of agency are:(l) there is consent, express or implied, of the parties to
establish the relationship: (2) the object is the execution of a juridical act in relation to a
third person; (3) the agent acts as a representative and not for himself; and (4) the agent
acts within the scope of his authority. Agency is basically personal, representative, and
derivative in nature. The authority of the agent to act emanates from the powers granted
to him by his principal; his act is the act of the principal if done within the scope of the
authority. He who acts through another acts himself.

Reason of the very nature of the relationship between principal and agent,
agency is extinguished by the death of the principal. Manresa explains that the rationale
for the law is found in the juridical basis of agency which is representation. Laurent says
that the juridical tie between the principal and the agent is severed ipso jure upon the
death of either without necessity for the heirs of the principal to notify the agent of the
fact of death of the former. The same rule prevails at common lawthe death of the
principal effects instantaneous and absolute revocation of the authority of the agent
unless the power be coupled with an interest. This is the prevalent rule in American
jurisprudence where it is well-settled that a power without an interest conferred upon an
agent is dissolved by the principals death, and any attempted execution of the power
afterwards is not binding on the heirs or representatives of the deceased.
Severino v. Severino
GR No. 18058; 16 January 1923
The relations of an agent to his principal are fiduciary and it is an elementary and
very old rule that in regard to property forming the subject-matter of the agency, he is
estopped from acquiring or asserting a title adverse to that of the principal. His position
is analogous to that of a trustee and he cannot consistently, with the principles of good
faith, be allowed to create in himself an interest in opposition to that of his principal
or cestuique trust.
Orient Air Services and Hotel Representatives v. Court of Appeals
197 SCRA 645; 1991
In an agent-principal relationship, the personality of the principal is extended
through the facility of the agent. In so doing, the agent, by legal fiction, becomes the
principal, authorized to perform all acts which the latter would have him do. Such a
relationship can only be effected with the consent of the principal, which must not, in any
way, be compelled by law or by any court.
Bordador v. Luz
GR No. 130148; 15 December 1997
The basis for agency is representation. There is no agency when there is no
showing that an alleged principal consented to the acts of the alleged agent or
authorized him to act on his/her behalf.
A person dealing with an agent is put upon inquiry and must discover upon his
peril the authority of the agent.
Apex Mining Co. Inc. v. Southeast Mindanao
GR No. 152613 & 152628; 23 June 2006
For a contract of agency to exist, it is essential that the principal consents that
the other party, the agent, shall act on its behalf, and the agent consents so as to act.
The existence of the elements of agency is a factual matter that needs to be established
or proven by evidence. The burden of proving that agency is extant in a certain case
rests in the party who sets forth such allegation. This is based on the principle that he
who alleges a fact has the burden of proving it. It must likewise be emphasized that the
evidence to prove this fact must be clear, positive and convincing.

Difference of Agency and Assignment

The concept of agency is distinct from assignment. In agency, the agent acts not
on his own behalf but on behalf of his principal.While in assignment, there is total
transfer or relinquishment of right by the assignor to the assignee.The assignee takes
the place of the assignor and is no longer bound to the latter.
On subsidiary ownership
Whole subsidiary ownership is not an agency. A corporation is an artificial being
created by operation of law, having the right of succession and the powers, attributes,
and properties expressly authorized by law or incident to its existence. It is an artificial
being invested by law with a personality separate and distinct from those of the persons
composing it as well as from that of any other legal entity to which it may be related.
Dela Cruz v. Northern Theatrical
GR No. L-7089; 31 August 1954
The relationship between the movie corporation and the plaintiff was not that of
principal and agent because the principle of representation was in no way involved.
Plaintiff was not employed to represent the defendant corporation in its dealings with
third parties. He was a mere employee hired to perform a certain specific duty or task,
that of acting as special guard and staying at the main entrance of the movie house to
stop gate crashers and to maintain peace and order within the premises.
Tuazon v. Heirs of Ramos
GR No. 156262; 14 July 2005
The question of whether a contract is one of sale or of agency depends on the
intention of the parties.
The declarations of agents alone are generally insufficient to establish the fact or
extent of their authority.The law makes no presumption of agency; proving its existence,
nature and extent is incumbent upon the person alleging it.

Victorias Milling v. Court of Appeals

GR No. 117356; 19 June 2000
the basis of agency is representation.On the part of the principal, there must be an
actual intention to appointor an intention naturally inferable from his words or actions;and
on the part of the agent, there must be an intention to accept the appointment and act on
it,and in the absence of such intent, there is generally no agency.One factor which most
clearly distinguishes agency from other legal concepts is control; one personthe agent
agrees to act under the control or direction of anotherthe principal. Indeed, the very
word agency has come to connote control by the principal.The control factor, more than

any other, has caused the courts to put contracts between principal and agent in a
separate category.
The question of whether a contract is one of sale or agency depends on the intention of
the parties as gathered from the whole scope and effect of the language employed.
Anauthorization given containing the phrase for and in our behalf does not establish an
agency. Ultimately, what is decisive is the intention of the parties.The use of the words
sold and endorsed means that the parties intended a contract of sale, and not an
agency.
Loadmasters Customs Services, Inc. v. Glodel Brokerage Corporation
639 SCRA 69; 2011
The elements of a contract of agency are: (1) consent, express or implied, of the
parties to establish the relationship; (2) the object is the execution of a juridical act in
relation to a third person; (3) the agent acts as a representative and not for himself; (4)
the agent acts within the scope of his authority.
Accordingly, there can be no contract of agency between the parties.
Loadmasters never represented Glodel. Neither was it ever authorized to make such
representation. It is a settled rule that the basis for agency is representation, that is, the
agent acts for and on behalf of the principal on matters within the scope of his authority
and said acts have the same legal effect as if they were personally executed by the
principal. On the part of the principal, there must be an actual intention to appoint or an
intention naturally inferable from his words or actions, while on the part of the agent,
there must be an intention to accept the appointment and act on it. Such mutual intent is
not obtaining in this case.
Westmont Investment Corporation v. Amos Francia
661 SCRA 787; 2011
In a contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another with the latters consent. It is said
that the underlying principle of the contract of agency is to accomplish results by using
the services of othersto do a great variety of things. Its aim is to extend the personality
of the principal or the party for whom another acts and from whom he or she derives the
authority to act. Its basis is representation.
Significantly, the elements of the contract of agency are: (1) consent, express or
implied, of the parties to establish the relationship; (2) the object is the execution of a
juridical act in relation to a third person; (3) the agent acts as a representative and not
for himself; (4) the agent acts within the scope of his authority.
In this case, the principal-agent relationship between the Francias and Wincorp
was not duly established by evidence. The records are bereft of any showing that
Wincorp merely brokered the loan transactions between the Francias and Pearlbank and
the latter was the actual recipient of the money invested by the former. Pearlbank did not
authorize Wincorp to borrow money for it. Neither was there a ratification, expressly or

impliedly, that it had authorized or consented to said transaction.

Soriamont Steamship Agencies vs. Sprint Transport Services

1.
The settled rule is that persons dealing with an assumed agent are bound at their
peril, and if they would hold the principal liable, they must ascertain not only the fact of
agency, but also the nature and extent of authority.
2.
It is true that a person dealing with an agent is not authorized, under any
circumstances, to trust blindly the agents statements as to the extent of his powers.
Such person must not act negligently but must use reasonable diligence and prudence
to ascertain whether the agent acts within the scope of his authority.
J. Phil Marine vs. NLRC
1.
Only the employee, not his counsel, who can impugn the consideration of the
compromise as being unconscionable; The relation of attorney and client is in many
respects one of agency, and the general rules of agency apply to such relation.
2.
The circumstances of this case indicate that the employees counsel acted
beyond the scope of his authority in questioning the compromise agreement; That a
client has undoubtedly the right to compromise a suit without the intervention of his
lawyer cannot be gainsaid, the only qualification being that if such compromise is
entered into with the intent of defrauding the lawyer of the fees justly due him, the
compromise must be subject to the said fees.
Filipinas Life Assurance vs. Pedroso
1.
The general rule is that the principal is responsible for the acts of its agent done
within the scope of its authority and should bear the damage caused to third persons;
The acts of an agent beyond the scope of his authority do not bind the principal, unless
the principal ratifies them, expressly or impliedly.
2.
When the agent exceeds his authority, the agent becomes personally liable for
the damage. But even when the agent exceeds his authority, the principal is still
solidarily liable together with the agent if the principal allowed the agent to act as though
the agent had full powers.
3.
In other words, the acts of an agent beyond the scope of his authority do not bind
the principal, unless the principal ratifies them, expressly or impliedly. Ratification in
agency is the adoption or confirmation by one person of an act performed on his behalf
by another without authority.
4.
Innocent third persons should not be prejudiced if the principal failed to adopt the
needed measures to prevent misrepresentation, much more so if the principal ratified his
agents acts beyond the latters authority. The act of the agent is considered that of the
principal itself.

5.
Qui per alium facit per seipsum facere videtur He who does a thing by an agent
is considered as doing it himself.

Tan vs GVT Engineering Services

1.
The essence of agency being the representation of another, it is evident that the
obligations contracted are for and onbehalf of the principal.
2.
A consequence of this representation is the liability of the principal for the acts of
his agent performed within the limits of his authority that is equivalent to the performance
by the principal himself who should answer therefor.

Litonjua vs Eternit Corporation

1.
Any sale of real property of a corporation by a person purporting to be an agent
thereof but without written authority from the corporation is null and void.
2.
Consent of both principal and agent is necessary to create an agency. The
principal must intend that the agent shall act for him; the agent must intend to accept the
authority and act on it, and the intention of the parties must find expression either in
words or conduct between them.
3.
An agency may be expressed or implied from the act of the principal, from his
silence or lack of action, or failure to repudiate the agency.
4.
A person dealing with a known agent is not authorized, under any circumstances,
blindly to trust the agents statements as to the extent of his powers, such person must
not act negligently but must use reasonable diligence and prudence to ascertain whether
the agent acts within the scope of his authority
5.
For an agency by estoppel to exist, the following must be established: (1) the
principal manifested a representation of the agents authority or knowingly allowed the
agent to assume suchauthority; (2) the third person, in good faith, relied upon such
representation; (3) relying upon such representation, such third person has changed his
position to his detriment.
6.
An agency by estoppel, which is similar to the doctrine of apparent authority,
requires proof of reliance upon the representations, and that, in turn, needs proof that
the representations predated the action taken in reliance.

Amon Trading vs Court of Appeals

1.
On the part of the principal, there must be an actual intention to appoint or an
intention naturally inferable from his words or actions and on the part of the agent, there

must be an intention to accept the appointment and act on it, and in the absence of such
intent, there is generally no agency.
2.
One factor which most clearly distinguishes agencyfrom other legal concepts is
control; one person, the agent, agrees to act under the control or direction of another,
the principal. Indeed, the very word agency has come to connote control by the
principal. The control factor, more than any other, has caused the courts to put contracts
between principal and agent in a separate category.
Yu Eng Cho vs. Pan American World Airways
1.
By the contract of agency, 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
latter.
2.
The elements of agency are: (1) consent, express or implied, of the parties to
establish the relationship; (2) the object is the execution of a juridical act in relation to a
third person; (3) the agent acts as a representative and not for himself; (4) the agent acts
within the scope of his authority.
3.
It is a settled rule that persons dealing with an assumed agent are bound at their
peril, if they would hold the principal liable, to ascertain not only the fact of agency but
also the nature and extent of authority, and in case either is controverted, the burden of
proof is upon them to establish it.

Eurotech vs. Cuison

1.
The underlying principle of the contract of agency is to accomplish results by
using the services of othersto do a great variety of things like selling, buying,
manufacturing, and transporting
2.
By this legal fiction, the actual or real absence of the principal is converted into
his legal or juridical presence qui facit per alium facit per se.

Doles vs Angeles
1.
The basis of agency is representation; The question of whether an agency has
been created is ordinarily a question which may be established in the same way as any
other fact, either by direct or circumstantial evidence; Though that fact or extent of
authority of the agents may not, as a general rule, be established from the declarations
of the agents alone, if one professes to act as agent for another, she may be estopped to
deny her agency both as against the asserted principal and the third persons interested
in the transaction in which he or she is engaged.
2.
For an agency to arise, it is not necessary that the principal personally encounter
the third person with whom the agent interacts, precisely, the purpose of agency is to
extend the personality of the principal through the facility of the agent.

3.
If the principals do not actually and personally know each other, such ignorance
does not affect their juridical standing as agents.
4.
If an act done by one person in behalf of another is in its essential nature one of
agency, the former is the agent of the latter notwithstanding he or she is not so called it
will be an agency whether the parties understood the exact nature of the relation or not.

Uy and Roxas vs. Court of Appeals

1.
An agent of the seller is not a party to the contract of sale between his principal
and the buyer; Since a contract may be violated only by the parties thereto as against
each other, the real parties-in-interest, either as plaintiff or defendant, in an action upon
that contract must, generally, either be parties to said contract.
2.
An agent, in his own behalf, may bring an action founded on a contract made for
his principal, as an assignee of such contract
Angeles vs PNR
1.
Normally, the agent has neither rights nor liabilities as against the third party; he
cannot thus sue or be sued on the contract.
2
A power of attorney is only but an instrument in writing by which a person, as
principal, appoints another as his agent and confers upon him the authority to perform
certain specified acts on behalf of the principal. The written authorization itself is the
power of attorney, and this is clearly indicated by the fact that it has also been called a
letter of attorney. Its primary purpose is not to define the authority of the agent as
between himself and his principal but to evidence the authority of the agent to third
parties with whom the agent deals.

Ong vs Court of Appeals

1.
It is a well-settled rule that the law of agency governing civil cases has no
application in criminal cases.When a person participates in the commission of a crime,
he cannot escape punishment on the ground that he simply acted as an agent of another
party.

PNB vs. Ritratto

1.
In a foreclosure of a mortgage undertaken by an attorney-in-fact, the validity of a
loan contract cannot be raised against said agent, as the matter is solely between the
principal and the other party to the contract; An agent not a party to a contract of loan
has no power to re-compute the interest rates set forth in the contract.

2.
The doctrine of piercing the corporate veil of corporate fiction is an equitable
doctrine developed to address situations where the separate corporate personality of a
corporation is abused or used for wrongful purposes.
3.
A suit against an agent cannot without compelling reasons be considered a suit
against the principal.
Francisco vs GSIS.
1.
If a private corporation intentionally or negligently clothes its officers or agents
with apparent power to perform acts for it, the corporation will be estopped to deny that
such apparent authority is real, as to innocent third persons dealing in good faith with
such officers or agents.
SUNACE INTERNATIONAL MANAGEMENT SERVICESv. NATIONAL LABOR
RELATIONS COMMISSION
480 SCRA 146 (2006)
There is an implied revocation of an agency relationship when after the termination of
the original employment contract, the foreign principal directly negotiated with the
employee and entered into a new and separate employment contract. Contrary to the
Court of Appeals finding, the alleged continuous communication was with the Taiwanese
broker Wang, not with the foreign employer.
COSMIC LUMBER CORPORATION V CA G.R. No. 114311
When the sale of a piece of land or any interest thereon is through an agent, the
authority of the latter shall be in writing; otherwise, the sale should be void. Thus, the
authority of an agent to execute a contract for the sale of real estate must be conferred
in writing and must give him specific authority, either to conduct the general business of
the principal or to execute a binding contract containing terms and conditions which are
in the contract he did execute.
For the principal to confer the right upon an agent to sell real estate, a power of attorney
must so express the powers of the agent in clear and unmistakable language.It is
therefore clear that by selling to Perez a portion of Cosmic Lumbers land through a
compromise agreement, Villamil-Estrada acted without or in obvious authority. The sale
ipso jure is consequently void and so is the compromise agreement. This being the
case, the judgment based thereon is necessarily void.
New Life Enterprises and Sy v. Court of Appeals
G.R. No. 94071 31 March 1992
A rule in insurance law that any information material to the transaction, either possessed
by the agent at the time of the transaction or acquired by him before its completion, is
deemed to be the knowledge of the principal, at least so far as the transaction is
concerned, even though in fact the knowledge is not communicated. The knowledge of
such insurance by the insurer's agents, even assuming the acquisition thereof by the
former, is not the "notice" that would estop the insurers from denying the claim.
The theory of imputed knowledge, that is, knowledge of the agent is knowledge of the
principal, is not applicable in this case.

Doles vs. Angeles

GR 149353, 26 June 2006
Yes. Doles was an agent for her friends, Angeles was an agent for Pua. They are not
creditors and debtors of each other.
It is not material if respective principals do not meet, for the purpose of agency is to
extend personality through the use of agents. Agents are estopped from denying the
existence of agency if their actions prove otherwise.
VICTORIAS MILLING CO. vs. COURT OF APPEALS and CONSOLIDATED SUGAR
CORPORATION
GR No. 117356
CSC was a buyer of the SLDR form, and not an agent of STM. CSC was not subject to
STM's control. The question of whether a contract is one of sale or agency depends on
the intention of the parties as gathered from the whole scope and effect of the language
employed. CSC communicated to VMC that the SLDR had been sold and endorsed to
it by STM. The use of the words "sold and endorsed" means that STM and CSC
intended a contract of sale, and not an agency.
The basis of agency is representation. On the part of the principal, there must be an
actual intention to appoint or an intention naturally inferable from his words or actions;
and on the part of the agent, there must be an intention to accept the appointment and
act on it, and in the absence of such intent, there is generally no agency.
Sevilla vs. CA
GR No. L-41182-3
The records show that petitioner, Sevilla, was not subject to control by the private
respondent TWS. That does not make her an employee of TWS, since a true employee
cannot be made to part with his own money in pursuance of his employers business, or
otherwise, assume any liability thereof. It is further admitted that Sevilla was not in the
companys payroll. For her efforts, she retained 4% in commissions from airline
bookings, the remaining 3% going to TWS. Unlike an employee, who earns a fixed
salary, she earned compensation in fluctuating amount depending on her booking
successes.
Lirio v. Genovia- 661 SCRA 126
It was not partnership but an employer-employee relationship. The elements to
determine the existence of an employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employer's power to control the employee's conduct. Lirio failed to prove that his
relationship with respondent was one of partnership. Such claim was not supported by
any written agreement. It is a well-settled doctrine, that if doubts exist between the
evidence presented by the employer and the employee, the scales of justice must be
tilted in favor of the latter. It is a time-honored rule that in controversies between a
laborer and his master, doubts reasonably arising from the evidence or in the
interpretation of agreements and writing should be resolved in the formers favor.
Tongko vs. The Manufacturers Life Insurance Co
G.R. No. 167622

Mere usage of the term Agent/Agency does not automatically make the relationship as
such. The intent and actions of the parties may be different than what is assumed on
face value.
In the instant case, Manulife had the power of control over Tongko that would make him
its employee. Several factors contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is
provided that:
The Agent hereby agrees to comply with all regulations and requirements of the
Company.Under this provision, an agent of Manulife must comply with three (3)
requirements: (1) compliance with the regulations and requirements of the company; (2)
maintenance of a level of knowledge of the company's products that is satisfactory to the
company; and (3) compliance with a quota of new businesses.
Among the company regulations of Manulife are the different codes of conduct such as
the Agent Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial
Code of Conduct Agreement, which demonstrate the power of control exercised by the
company over Tongko.

NIELSON & COMPANY, INCvs. LEPANTO CONSOLIDATED MINING COMPANY - 26

SCRA 540
In the old Civil Code, Article 1709 defines the contract of agency as one person binds
himself to render some service or to do something for the account or at the request of
another. While Article 1544 defines contract of lease of service as in a lease of work or
services, one of the parties binds himself to make or construct something or to render a
service to the other for a price certain.
The court determined the nature of the management contract in question wherein there
was agreement for Nielson for 5 years had the right to renew, to explore, to develop, and
to operate the mining claims of Lepanto. In the performance of this principal undertaking
Nielson was not acting as an agent but one as performing material acts for an employer,
for a compensation.
FresselvsUy Chaco - GR No. 10918 (1916)
Merritt is an independent contractor. Where one party to contract was authorized to do
work according to his own method and without being subject to the other partys control,
except as to the result of the work, he is an independent contractor and not an agent.In
the absence of a statute creating what is known as mechanics liens, the owner of a
building is not liable for the value of the materials purchased by an independent
contractor either as such owner or as the assignee of the contractor.
The Shell Company of the Philippines VS.Firemens Insurance Company
GR No. L-8169

De la Fuente was merely an agent of the station by grace of the defendant company
which could and did remove him as it pleased; As the act of the agent or his employees
acting within the scope of authority, is the act of the principal, the breach of undertaking
by an agent makes the principal liable. The company must answer for the negligent acts
of its mechanic.
LITONJUA VS LITONJUA
GR No. 166299-300
The partnership is void and legally nonexistent. The documentary evidence presented by
Aurelio, did not prove partnership.
The 1973 letter from Eduardo on its face, contains typewritten entries, personal in tone,
but is unsigned and undated. As an unsigned document, there can be no quibbling that
said letter does not meet the public instrumentation requirements exacted under Article
1771 (how partnership is constituted) of the Civil Code. Moreover, being unsigned and
doubtless referring to a partnership involving more than P3,000.00 in money or property,
said letter cannot be presented for notarization, let alone registered with the Securities
and Exchange Commission (SEC), as called for under the Article 1772 (capitalization of
a partnership) of the Code.
The Memorandum is also not a proof of the partnership for the same is not a public
instrument. Article 1773 of the Civil Code requires that if immovable property is
contributed to the partnership an inventory shall be had and attached to the contract.
Deganos v. People
G.R. No. 162826
Novation is not a mode of extinguishing criminal liability under the penal laws of the
country. Only the State may validly waive the criminal action against an accused.
Novation is relevant only to determine if the parties have meanwhile altered the nature
of the obligation prior to the commencement of the criminal prosecution in order to
prevent the incipient criminal liability of the accused.
Angeles vs. Philippine National Railways (PNR)
G.R. No. 150128. August 31, 2006
Agency; Assignee; The legal situation is different where an agent is constituted as an
assignee.The legal situation is, however, different where an agent is constituted as an
assignee. In such a case, the agent may, in his own behalf, sue on a contract made for
his principal, as an assignee of such contract. The rule requiring every action to be
prosecuted in the name of the real party-in-interest recognizes the assignment of rights
of action and also recognizes that when one has a right assigned to him, he is then the
real party-in-interest and may maintain an action upon such claim or right.
Victorias Milling Co., Inc. vs. Court of Appeals
333 SCRA 663(2000)
Agency; The basis of agency is representationon the part of the principal, there must
be an actual intention to appoint or an intention naturally inferable from his words or
actions, while on the part of the agent, there must be an intention to accept the
appointment and act on it; One factor which most clearly distinguishes agency from
other legal concepts is controlone person (the agent) agreeing to act under the control

or direction of another (the principal).It is clear from Article 1868 that the basis of
agency is representation. On the part of the principal, there must be an actual intention
to appoint or an intention naturally inferable from his words or actions; and on the part of
the agent, there must be an intention to accept the appointment and act on it, and in the
absence of such intent, there is generally no agency. One factor which most clearly
distinguishes agency from other legal concepts is control; one personthe agent
agrees to act under the control or direction of anotherthe principal. Indeed, the very
word agency has come to connote control by the principal. The control factor, more
than any other, has caused the courts to put contracts between principal and agent in a
separate category.
An authorization given to another containing the phrase for and in our behalf does not
necessarily establish an agency, as ultimately, what is decisive is the intention of the
parties, and the use of the words sold and endorsed means that the parties intended a
contract of sale, and not an agency.It appears plain to us that private respondent CSC
was a buyer of the SLDFR form, and not an agent of STM. Private respondent CSC was
not subject to STMs control. The question of whether a contract is one of sale or agency
depends on the intention of the parties as gathered from the whole scope and effect of
the language employed. That the authorization given to CSC contained the phrase for
and in our (STMs) behalf did not establish an agency. Ultimately, what is decisive is the
intention of the parties. That no agency was meant to be established by the CSC and
STM is clearly shown by CSCs communication to petitioner that SLDR No. 1214M had
been sold and endorsed to it. The use of the words sold and endorsed means that
STM and CSC intended a contract of sale, and not an agency. Hence, on this score, no
error was committed by the respondent appellate court when it
Hahn vs. Court of Appeals
266 SCRA 537(1997)
Actions; Pleadings and Practice; It is now settled that, for purposes of having summons
served on a foreign corporation in accordance with Rule 14, 14, it is sufficient that it be
alleged in the complaint that the foreign corporation is doing business in the Philippines.
Anyway, private respondent need not apprehend that by responding to the summons it
would be waiving its objection to the trial courts jurisdiction. It is now settled that, for
purposes of having summons served on a foreign corporation in accordance with Rule
14, 14, it is sufficient that it be alleged in the complaint that the foreign corporation is
doing business in the Philippines. The court need not go beyond the allegations of the
complaint in order to determine whether it has jurisdiction. A determination that the
foreign corporation is doing business is only tentative and is made only for the purpose
of enabling the local court to acquire jurisdiction over the foreign corporation through
service of summons pursuant to Rule 14, 14. Such determination does not foreclose a
contrary finding should evidence later show that it is not transacting business in the
country.
Agency; Words and Phrases; Agent and Broker, Distinguished.An agent receives a
commission upon the successful conclusion of a sale. On the other hand, a broker earns
his pay merely by bringing the buyer and the seller together, even if no sale is eventually
made.

The fact that a person invested his own money to put service centers and showrooms
does not necessarily prove that he is not an agent of a car manufacturer.As to the
service centers and showrooms which he said he had put up at his own expense, Hahn
said that he had to follow BMW specifications as exclusive dealer of BMW in the
Philippines. According to Hahn, BMW periodically inspected the service centers to see to
it that BMW standards were maintained. Indeed, it would seem from BMWs letter to
Hahn that it was for Hahns alleged failure to maintain BMW standards that BMW was
terminating Hahns dealership. The fact that Hahn invested his own money to put up
these service centers and showrooms does not necessarily prove that he is not an agent
of BMW. For as already noted, there are facts in the record which suggest that BMW
exercised control over Hahns activities as a dealer and made regular inspections of
Hahns premises to enforce compliance with BMW standards and specifications.
Lim vs. People
133 SCRA 333(1984)
Agency; Estafa is present where contract to sell constituted another as mere agent.
Aside from the fact that Maria Ayroso testified that the appellant asked her to be her
agent in selling Ayrosos tobacco, the appellant herself admitted that there was an
agreement that upon the sale of the tobacco she would be given something. The
appellant is a businesswoman, and it is unbelievable that she would go to the extent of
going to Ayrosos house and take the tobacco with a jeep which she had brought if she
did not intend to make a profit out of the transaction. Certainly, if she was doing a favor
to Maria Ayroso and it was Ayroso who had requested her to sell her tobacco, it would
not have been the appellant who would have gone to the house of Ayroso, but it would
have been Ayroso who would have gone to the house of the appellant and deliver the
tobacco to the appellant.
Sale; There is no contract of sale, but mere agency to sell, where agreement was to pay
over to tobacco owner the proceeds thereof as soon as it was sold.The fact that
appellant received the tobacco to be sold at P1.30 per kilo and the proceeds to be given
to complainant as soon as it was sold, strongly negates transfer of ownership of the
goods to the petitioner. The agreement (Exhibit A) constituted her as an agent with the
obligation to return the tobacco if the same was not sold.
Chua Ngo vs. Universal Trading Co., Inc.
87 Phil. 331(1950)
PURCHASE AND SALE; PART OF GOODS LOST IN TRANSIT; WHO IS TO SUFFER
THE LOSS.Chua Ngo purchased and paid for 300 boxes of oranges from Universal
Trading Co. In turn, the latter purchased from Gabuardi Company of San Francisco F. O.
B. San Francisco sufficient fruit to comply with its contract with Chua Ngo. Part of the
orange consignment from Gabuardi Company of San Francisco was lost in transit and
so Chua Ngo received 120 boxes only. Held, as between Gabuardi Company and
Universal Trading Co., the loss must be borne by the latter, said goods having been
legally delivered to the purchaser at San Francisco on board the vessel; Chua Ngo, as a
consequence, is entitled to be paid back for the price paid for the undelivered goods.
QUIROGA vs. PARSONS HARDWARE Co.
38 Phil. 501(1918)

SALES; INTERPRETATION OF CONTRACT.For the classification of contracts, due

regard must be paid to their essential clauses. In the contract in the instant case, what
was essential, constituting its cause and subject matter, was that the plaintiff was to
furnish the defendant with the beds which the latter might order, at the stipulated price,
and that the defendant was to pay this price in the manner agreed upon. These are
precisely the essential features of a contract of purchase and sale. There was the
obligation on the part of the plaintiff to supply the beds, and, on that of the defendant, to
pay their price. These features exclude the legal conception of an agency or order to sell
whereby the mandatary or agent receives the thing to sell it, and does not pay its price,
but delivers to the principal the price he obtains from the sale of the thing to a third
person, and if he does not succeed in selling it, he returns it.
Held: That this contract is one of purchase and sale, and not of commercial agency.
American Rubber Company vs. Collector of Internal Revenue
64 SCRA 569(1975)
Contracts; Essence of contract determines law applicable to relationship between the
parties.As a general rule the essence of a contract determines what law should apply
to the relation between the parties and not what the parties prefer to call that
relationship. However, only the acts of the contracting parties, subsequent to and in
connection with the execution of the contract, must be considered for the purpose of
interpreting the same.
Ker & Co., Ltd. vs. Lingad
38 SCRA 524(1971)
The mere disclaimer in a contract that an entity like petitioner is not the agent or legal
representative x xx for any purpose whatsoever does not suffice to yield the conclusion
that it is an independent merchant if the control over the goods for resale of the goods
consigned is pervasive in character.

Puyat& Sons, Inc. vs. Arco Amusement Co.

72 Phil. 402(1941)
CONTRACTS; PURCHASE AND SALE; INTERPRETATION.The contract is the law
between the parties and should include all the things they are supposed to have been
agreed upon. What does not appear on the face of the contract should be regarded
merely as "dealer's" or "trader's talk", which can not bind either party. (Nolbrook v.
Conner, 56 So., 576; 11 Am. Rep., 212; Bank v. Brosscell, 120 111., 161; Bank v. Palmer,
47 111., 92; Hosser v. Copper, 8 Allen, 334; Doles v. Merrill, 173 Mass., 411.) The letters,
Exhbits 1 and 2, by which the respondent accepted the prices of $1,700 and $1,600,
respectively, for the sound reproducing equipment subject of its contract with the
petitioner, are clear in their terms and admit of no other interpretation than that the
respondent agreed to purchase from the petitioner the equipment in question at the
prices indicated which are fixed and determinate. The respondent admitted in its
complaint filed with the Court of First Instance of Manila that the petitioner agreed to sell
to it the first sound reproducing equipment and machinery.

Jimenez vs. Rabot.

38 Phil. 378(1918)
SALE OP LAND; POWER OF ATTORNEY; SPECIFIC DESCRIPTION OP PROPERTY
UNNECESSARY.Where the owner of real property desires to confer upon an attorney
in fact authority to sell the same, it is necessary that the authority should be expressed in
writing; but it is not necessary that the property to be sold should be precisely described.
It is sufficient if the authority is so expressed as to determine without doubt the limits of
the agent's authority.
The plaintiff, being the owner of three parcels of land, left the same in the care of his
sister as his agent and went to live in another province. While so absent, he wrote her to
sell one of his parcels and to send him the money. The sister found a purchaser and sold
one of the parcels but failed to forward the proceeds to her brother. Afterwards the
plaintiff returned and instituted an action to recover the parcel which had been sold.
Held: That the authority to sell was sufficient and that the plaintiff could not recover.
City-Lite Realty Corporation vs. Court of Appeals
325 SCRA 385(2000)
Civil Law; Sales; Agency; When the 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.On the issue of whether a contract of sale was perfected between petitioner
CITYLITE and respondent F.P. HOLDINGS acting through its agent Meldin Al G. Roy of
Metro Drug, Art. 1874 of the Civil Code provides: When the 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. Petitioner anchors the authority of Metro Drug and
Meldin Al G. Roy on (a) the testimonies of petitioners three (3) witnesses and the
admissions of Roy and the lawyer of Metro Drug; (b) the sales brochure specifying
Meldin Al G. Roy as a contact person; (c) the guard posted at the property saying that
Metro Drug was the authorized agent; and, (d) the common knowledge among brokers
that Metro Drug through Meldin Al G. Roy was the authorized agent of F.P. HOLDINGS
to sell the property.
The Civil Code requires that an authority to sell a piece of land shall be in writing.The
Civil Code requires that an authority to sell a piece of land shall be in writing. The
absence of authority to sell can be determined from the written memorandum issued by
respondent F.P. HOLDINGS President requesting Metro Drugs assistance in finding
buyers for the property. The memorandum in part stated: We will appreciate Metro
Drugs assistance in referring to us buyers for the property. Please proceed to hold
preliminary negotiations with interested buyers and endorse formal offers to us for our
final evaluation and appraisal.
For lack of a written authority to sell the Violago Property on the part of Meldin Al G.
Roy and/or Metro Drug, the sale should be as it is declared null and void.This
obviously meant that Meldin Al G. Roy and/or Metro Drug was only to assist F.P.
HOLDINGS in looking for buyers and referring to them possible prospects whom they
were supposed to endorse to F.P. HOLDINGS. But the final evaluation, appraisal and
acceptance of the transaction could be made only by F.P. HOLDINGS. In other words,
Meldin Al G. Roy and/or Metro Drug was only a contact person with no authority to
conclude a sale of the property. In fact, a witness for petitioner even admitted that Roy

and/or Metro Drug was a mere broker, and Roys only job was to bring the parties
together for a possible transaction. Consequently, we hold that for lack of a written
authority to sell the Violago Property on the part of Meldin Al G. Roy and/or Metro
Drug, the sale should be as it is declared null and void. Therefore the sale could not
produce any legal effect as to transfer the subject property from its lawful owner, F.P.
HOLDINGS, to any interested party including petitioner CITYLITE.
Cosmic Lumber Corporation vs. Court of Appeals
265 SCRA 168(1996)
Agency; Special Powers of Attorney; Compromise Agreements; Sales; Pre-Trial;
Ejectment; A special power of attorney for an agent to institute any action in court to
eject all persons in the principal's lots so that the principal could take material
possession thereof, and for this purpose, to appear at the pre-trial and enter into any
stipulation of facts and/or compromise agreement but only insofar as this is protective of
the rights and interests of the principal in the property, does not grant any power to the
agent to sell the subject property nor a portion thereof.We agree with petitioner. The
authority granted Villamil-Estrada under the special power of attorney was explicit and
exclusionary: for her to institute any action in court to eject all persons found on Lots
Nos. 9127 and 443 so that petitioner could take material possession thereof, and for this
purpose, to appear at the pre-trial and enter into any stipulation of facts and/or
compromise agreement but only insofar as this was protective of the rights and interests
of petitioner in the property. Nowhere in this authorization was Villamil-Estrada granted
expressly or impliedly any power to sell the subject property nor a portion thereof.
Neither can a conferment of the power to sell be validly inferred from the specific
authority "to enter into a compromise agreement" because of the explicit limitation fixed
by the grantor that the compromise entered into shall only be "so far as it shall protect
the rights and interest of the corporation in the aforementioned lots" In the context of the
specific investiture of powers to Villamil-Estrada, alienation by sale of an immovable
certainly cannot be deemed protective of the right of petitioner to physically possess the
same, more so when the land was being sold for a price of P80.00 per square meter,
very much less than its assessed value of P250.00 per square meter, and considering
further that petitioner never received the proceeds of the sale.
Ching vs. Bantolo
687 SCRA 134
There is no question that the SPA executed by respondents in favor of petitioners
is a contract of agency coupled with interest. This is because their bilateral contract
depends upon the agency. Hence, it cannot be revoked at the sole will of the principal.
Sarsaba vs. Vda. De Te
594 SCRA 410
The contract of agency is extinguished. However, while it may be true that with
the death of Vda. De Te, the Special Power of Attorney she executed is rendered functus
officio, this Court believes that the Attorney-in-fact has not lost his personality to
prosecute this case. When this case was filed, by the Attorney-in-fact, Vda. De Te was

very much alive.The proper remedy is the Substitution of Heirs and not the dismissal of
the case.
Estate of the Late Juliana DiezVda. De Gabriel vs. CIR
421 SCRA 266
The death of the taxpayer automatically severed the legal relationship between
her and her agent and such could not be revived by the mere fact that the agent and
such could not be revived by the mere fact that the agent filed the principals Income Tax
Return.
Therefore, none of Philtrusts acts or omissions could bind the Estate of the
taxpayer. Philtrust was never appointed as administrator of the Estate of the decedent.
Their relationship had been inexistent for 3 years, which indicated that there was no
legal relationship to the deceased or to her Estate.
Rallos vs. Felix Go Chan
81 SCRA 251
No, it was invalid and ineffective. The contract of agency is extinguished by the
death of the principal. Article 1931 is inapplicable in this case because Simeon knew of
the death of his principal at the time he sold the latters share in Lot No. 5983 to Go
Chan. The act is void ab initio.
It is only valid if these two conditions are present: (1) the agent acted without
knowledge of the death of the principal; and (2) the third person who contracted with the
agent himself acted in good faith.
Buason vs. Panuyas
105 Phil. 795
Yes, it was valid and effective. The contention that as the death of the principal
ended the authority of the agent, the sale made by the latter of the land in question after
the death of the principal is null and void, is untenable.
It not having been shown that the agent knew of the principals demise and for
that reason, the sale made by the agent is valid and effective with respect to third
persons who have contracted with him in good faith. Hence, the conditions in Article
1931 apply and were both present in this case.
III. Kinds of Agency
A. As to Form: Oral v. Written
Pahud vs. Court of Appeals
597 SCRA 13(2009)
Under Article 1878, a special power of attorney is necessary for an agent to enter into a
contract by which the ownership of an immovable property is transmitted or acquired,
either gratuitously or for a valuable consideration. Such stringent statutory requirement
has been explained in Cosmic Lumber Corporation v. Court of Appeals, 265 SCRA 168
(1996). We have repeatedly held that the absence of a written authority to sell a piece of
land is, ipso jure, void, precisely to protect the interest of an unsuspecting owner from

being prejudiced by the unwarranted act of another. [Pahud vs. Court of Appeals, 597
SCRA 13(2009)]
Litonjua, Jr. vs. Eternit Corporation
490 SCRA 204(2006)
While a corporation may appoint agents to negotiate for the sale of its real properties,
the final say will have to be with the board of directors through its officers and agents as
authorized by a board resolution or by its by-laws. An unauthorized act of an officer of
the corporation is not binding on it unless the latter ratifies the same expressly or
impliedly by its board of directors. Any sale of real property of a corporation by a person
purporting to be an agent thereof but without written authority from the corporation is null
and void. The declarations of the agent alone are generally insufficient to establish the
fact or extent of his/her authority. An agency may be expressed or implied from the act of
the principal, from his silence or lack of action, or his failure to repudiate the agency
knowing that another person is acting on his behalf without authority. Acceptance by the
agent may be expressed, or implied from his acts which carry out the agency, or from his
silence or inaction according to the circumstances. Agency may be oral unless the law
requires a specific form. However, to create or convey real rights over immovable
property, a special power of attorney is necessary. Thus, when a sale of a piece of land
or any portion thereof is through an agent, the authority of the latter shall be in writing,
otherwise, the sale shall be void.

B. As to Manner of Constitution: Express v. Implied

Equitable PCI Bank vs. Ku
355 SCRA 309(2001)
The Court is not wholly convinced by petitioners argument. The Affidavit of Joel Rosales
states that he is not the constituted agent of Curato Divina Mabilog Nedo Magturo
Pagaduan Law Office. An agency may be express but it may also be implied from the
acts of the principal, from his silence, or lack of action, or his failure to repudiate the
agency, knowing that another person is acting on his behalf without authority. Likewise,
acceptance by the agent may also be express, although it may also be implied from his
acts which carry out the agency, or from his silence or inaction according to the
circumstances. In this case, Joel Rosales averred that [o]n occasions when I receive
mail matters for said law office, it is only to help them receive their letters promptly,
implying that counsel had allowed the practice of Rosales receiving mail in behalf of the
former. There is no showing that counsel had objected to this practice or took steps to
put a stop to it. The facts are, therefore, inadequate for the Court to make a ruling in
petitioners favor.
Calibo, Jr. vs. Court of Appeals
350 SCRA 427(2001)
There also does not appear to be any agency in this case. We agree with the Court of
Appeals that: As indicated in Article 1869, for an agency relationship to be deemed as
implied, the principal must know that another person is acting on his behalf without
authority. Here, appellee categorically stated that the only purpose for his leaving the
subject tractor in the care and custody of Mike Abella was for safekeeping, and definitely
not for him to pledge or alienate the same. If it were true that Mike pledged appellees
tractor to appellant, then Mike was acting not only without appellees authority but

without the latters knowledge as well. Article 1911, on the other hand, mandates that the
principal is solidarily liable with the agent if the former allowed the latter to act as though
he had full powers. Again, in view of appellees lack of knowledge of Mikes pledging the
tractor without any authority from him, it stands to reason that the former could not have
allowed the latter to pledge the tractor as if he had full powers to do so.
De la Pea vs. Hidalgo
16 Phil. 450(1910)
The person who took charge of the administration of property without express
authorization and without a power of attorney executed by the owner thereof, and
performed the duties of his office without opposition or absolute prohibition on the
owner's part, expressly communicated to the said person, is concluded to have
administered the said property by virtue of an 'implied agency, in accordance with the
provisions of article 1710 of the Civil Code, since the said owner of the property, knowing
perfectly well that the said person took charge of the administration of the same, through
designation by such owner's former agent who had to absent himself from the place for
well-founded reasons, remained silent for nearly nine years. Although he did not send a
new power of attorney to the said person who took charge of his property, the fact
remains that, during the .period stated, he neither opposed nor prohibited the new agent
with respect to the administration, nor did he appoint another person in his confidence;
wherefore it must be concluded that this new agent acted by virtue of an implied agency,
equivalent to a legitimate agency, tacitly conferred by the owner of the property
administered.
Conde vs. Court of Appeals
119 SCRA 245(1982)
If, as opined by both the Court a quo and the Appellate Court, petitioner had done
nothing to formalize her repurchase, by the same token, neither have the vendees-aretro done anything to clear their title of the encumbrance therein regarding petitioners
right to repurchase. No new agreement was entered into by the parties as stipulated in
the deed of pacto de retro, if the vendors a retro failed to exercise their right of
redemption after ten years. If, as alleged, petitioner exerted no effort to procure the
signature of Pio Altera after he had recovered from his illness, neither did the Alteras
repudiate the deed that their son-in-law had signed. Thus, an implied agency must be
held to have been created from their silence or lack of action, or their failure to repudiate
the agency.
Uniland Resources vs. Development Bank of the Philippines
200 SCRA 751(1991)
More importantly, petitioners stance goes against the basic axiom in Civil Law that no
one may contract in the name of another without being authorized by the latter, unless
the former has by law a right to represent him. From this principle, among others,
springs the relationship of agency which, as with other contracts, is one founded on
mutual consent: the principal agrees to be bound by the acts of the agent and the latter
in turn consents to render service on behalf or in representation of the principal.
C. As to Extent of Business Covered: General v. Special
Siasat vs. Intermediate Appellate Court

139 SCRA 238(1985)

One does not have to undertake a close scrutiny of the document embodying the
agreement between the petitioners and the respondent to deduce that the latter was
instituted as a general agent. Indeed, it can easily be seen by the way general words
were employed in the agreement that no restrictions were intended as to the manner the
agency was to be carried out or in the place where it was to be executed. The power
granted to the respondent was so broad that it practically covers the negotiations leading
to, and the execution of, a contract of sale of petitioners' merchandise with any entity or
organization.
Dominion Insurance Corporation vs. Court of Appeals
376 SCRA 239(2002)
By the contract of agency, 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
latter. The basis for agency is representation. On the part of the principal, there must be
an actual intention to appoint or an intention naturally inferrable from his words or
actions; and on the part of the agent, there must be an intention to accept the
appointment and act on it, and in the absence of such intent, there is generally no
agency. A general power permits the agent to do all acts for which the law does not
require a special power. Thus, the acts enumerated in or similar to those enumerated in
the Special Power of Attorney do not require a special power of attorney.
Article 1878, Civil Code, enumerates the instances when a special power of attorney is
required. The pertinent portion that applies to this case provides that:
Article 1878. Special powers of attorney are necessary in the following cases:
(1) To make such payments as are not usually considered as acts of administration;
x x x
xxx
xxx
(15) Any other act of strict dominion.
The payment of claims is not an act of administration. The settlement of claims is not
included among the acts enumerated in the Special Power of Attorney, neither is it of a
character similar to the acts enumerated therein. A special power of attorney is required
before respondent Guevarra could settle the insurance claims of the insured.
Woodchild Holdings, Inc. vs. Roxas Electric and Construction Company, Inc.
436 SCRA 235(2004)
Powers of attorney are generally construed strictly and courts will not infer or presume
broad powers from deeds which do not sufficiently include property or subject under
which the agent is to deal. The general rule is that the power of attorney must be
pursued within legal strictures, and the agent can neither go beyond it; nor beside it. The
act done must be legally identical with that authorized to be done.
Shoppers Paradise Realty & Development Corporation vs. Roque
419 SCRA 93(2004)
In a contract of agency, the agent acts in representation or in behalf of another with the
consent of the latter. Article 1878 of the Civil Code expresses that a special power of
attorney is necessary to lease any real property to another person for more than one
year. The lease of real property for more than one year is considered not merely an act
of administration but an act of strict dominion or of ownership. A special power of
attorney is thus necessary for its execution through an agent.

Veloso vs. Court of Appeals

260 SCRA 593(1996)
An examination of the records showed that the assailed power of attorney was valid and
regular on its face. It was notarized and as such, it carries the evidentiary weight
conferred upon it with respect to its due execution. Thus, there was no need to execute
a separate and special power of attorney since the general power of attorney had
expressly authorized the agent or attorney in fact the power to sell the subject property.
The special power of attorney can be included in the general power when it is specified
therein the act or transaction for which the special power is required.
Lim Pin vs. Liao Tan
115 SCRA 290(1982)
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. And more recently, We stated
that, if the special authority is not written, then it must be duly established by evidence.
Dugo vs. Lopena
6 SCRA 1007(1962)
It is true that a compromise is, in itself, a contract. It is as such that the Civil Code
speaks of it in Article 2028. Moreover, under Article 1878 of the Civil Code, a third person
cannot bind another to a compromise agreement unless he, the third person, has
obtained a special power of attorney for that purpose from the party intended to be
bound. However, although the Civil Code expressly requires a special power of attorney
in order that one may compromise an interest of another, it is neither accurate nor
correct to conclude that its absence renders the compromise agreement void. In such a
case, the compromise is merely unenforceable. This results from its nature as a
contract.
Ratification by client of compromise made by his attorney.When it appears that the
client, on becoming aware of the compromise and the judgment thereon, fails to
repudiate promptly the action of his attorney, he will not afterwards be heard to contest
its validity.
Vicente vs. Geraldez
52 SCRA 210(1973)

Special powers of attorney are necessary, among other cases, in the following: to
compromise and to renounce the right to appeal from a judgment. Attorneys have
authority to bind their clients in any case by any agreement in relation thereto made in
writing. and in taking appeals, and in all matters of ordinary judicial procedure, but they

cannot, without special authority, compromise their clients' litigation, or receive anything
in discharge of their clients' claims but the full amount in cash. The compromised
agreement dated January 30, 1969 was signed only by lawyers for petitioners and by the
lawyers for the private respondent corporation. It is not disputed that the lawyers of
respondent corporation had not submitted to the Court any written authority from heir
client to enter into a compromise. The compromise agreement is not binding upon the
respondent corporation.
The law specifically requires that "juridical persons may compromise only in the form and
with the requisites which may be necessary to alienate their property." Under the
corporation law the power to compromise or settle claims in favor of or against the
corporation is ordinarily and primarily committed to the board of directors. This power
may however be delegated either expressly or impliedly to other corporate officials or
agents. Thus, it has been stated, that as a general rule, an officer or agent of the
corporation has no power to compromise or settle a claim by or against the corporation,
except to the extent that such power is given to him either expressly or by reasonable
implication from the circumstances.
Petitioners claim that private respondent's attorneys admitted twice in open court that
they were authorized to compromise their client's case. On the other hand, said
respondent's counsels denied that they ever represented to the court that they were
authorized to enter into a compromise. Nowhere does it appear in the stenographic
notes that respondent's lawyers ever made such representation. In any event, assuming
arguendo that they did, such a self-serving assertion cannot properly be the basis for the
conclusion that the respondent corporation had in fact authorized its lawyers to
compromise the litigation.
The infirmity of the argument, that there was tacit ratification on the part of the
corporation of the compromise agreement because it nominated Mr. Larry Marquez as
its commissioner (to determine value of land in dispute) and Atty. Florentino V.
Cardenas, the corporation's administrative manager, not only did not object but even
affixed his signature to the agreement, is in their assumption that Atty. Cardenas as
administrative manager had authority to bind the corporation or to compromise the case.
Whatever authority the officers or agents of a corporation may have is derived from the
board of directors, or other governing body, unless conferred by the charter of the
corporation. A corporate officer's power as an agent of the corporation must therefore be
sought from the statute, the charter, the by-laws, or in a delegation of authority to such
officer, from the acts of the board of directors, formally expressed or implied from a habit
or custom of doing business. In the case at bar no provision of the charter and bylaws of
the corporation or any resolution or any other act of the board of directors has been cited
from which we could reasonably infer that the administrative manager had been granted
expressly or impliedly the power to bind the corporation or the authority to compromise
the case. The signature of Atty. Cardenas on the agreement would therefore be legally
ineffectual.

As regards the nomination of Mr. Marquez as commissioner, counsel for respondent

corporation has explained, and this has not been disproven, that Atty. Cardenas,
apparently on his own, submitted the same to the court. There is no iota of proof that
when Mr. Marquez' name was submitted, the respondent corporation knew of the
contents of the compromise agreement.

When unauthorized acts of agent binding upon corporation. In order to ratify the
unauthorized act of an agent and make it binding on the corporation, it must be shown
that the governing body or officer authorized to ratify had full and complete knowledge of
all the material facts connected with the transaction to which it relates. It cannot be
assumed also that Atty. Cardenas, as administrative manager of the corporation, had
authority to ratify. For ratification can never be made on the part of the corporation by the
same persons who wrongfully assume the power to make the contract, but the
ratification must be by the officer or governing body having authority to make such
contract, and, as we have seen, must be with full knowledge.

Cosmic Lumber Corporation vs. Court of Appeals

265 SCRA 168(1996)
The authority granted Villamil-Estrada under the special power of attorney was explicit
and exclusionary: for her to institute any action in court to eject all persons found on Lots
Nos. 9127 and 443 so that petitioner could take material possession thereof, and for this
purpose, to appear at the pre-trial and enter into any stipulation of facts and/or
compromise agreement but only insofar as this was protective of the rights and interests
of petitioner in the property. Nowhere in this authorization was Villamil-Estrada granted
expressly or impliedly any power to sell the subject property nor a portion thereof.
Neither can a conferment of the power to sell be validly inferred from the specific
authority "to enter into a compromise agreement" because of the explicit limitation fixed
by the grantor that the compromise entered into shall only be "so far as it shall protect
the rights and interest of the corporation in the aforementioned lots" In the context of the
specific investiture of powers to Villamil-Estrada, alienation by sale of an immovable
certainly cannot be deemed protective of the right of petitioner to physically possess the
same, more so when the land was being sold for a price of P80.00 per square meter,
very much less than its assessed value of P250.00 per square meter, and considering
further that petitioner never received the proceeds of the sale.
The express mandate required by law to enable an appointee of an agency (couched) in
general terms to sell must be one that expressly mentions a sale or that includes a sale
as a necessary ingredient of the action mentioned.When the sale of a piece of land or
any interest thereon is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void. Thus the authority of an agent to execute a contract for

the sale of real estate must be conferred in writing and must give him specific authority,
either to conduct the general business of the principal or to execute a binding contract
containing terms and conditions which are in the contract he did execute. A special
power of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable consideration.
The express mandate required by law to enable an appointee of an agency (couched) in
general terms to sell must be one that expressly mentions a sale or that includes a sale
as a necessary ingredient of the act mentioned. For the principal to confer the right upon
an agent to sell real estate, a power of attorney must so express the powers of the agent
in clear and unmistakable language. When there is any reasonable doubt that the
language so used conveys such power, no such construction shall be given the
document.

When an agent is engaged in the perpetration of a fraud upon his principal for his own
extrinsic benefit, he is not really acting for the principal but is really acting for himself,
entirely outside the scope of his agencythe basic tenets of agency rest on the highest
considerations of justice, equity and fair play, and an agent will not be permitted to
pervert his authority to his own personal advantage.It may be argued that petitioner
knew of the compromise agreement since the principal is chargeable with and bound by
the knowledge of or notice to his agent received while the agent was acting as such. But
the general rule is intended to protect those who exercise good faith and not as a shield
for unfair dealing. Hence there is a well-established exception to the general rule as
where the conduct and dealings of the agent are such as to raise a clear presumption
that he will not communicate to the principal the facts in controversy. The logical reason
for this exception is that where the agent is committing a fraud, it would be contrary to
common sense to presume or to expect that he would communicate the facts to the
principal. Verily, when an agent is engaged in the perpetration of a fraud upon his
principal for his own exclusive benefit, he is not really acting for the principal but is really
acting for himself, entirely outside the scope of his agency. Indeed, the basic tenets of
agency rest on the highest considerations of justice, equity and fair play, and an agent
will not be permitted to pervert his authority to his own personal advantage, and his act
in secret hostility to the interests of his principal trascends the power afforded him.

Mercado vs. Allied Banking Corporation,

528 SCRA 444(2007)
Same; Same; Same; Same; A special power of attorney is necessary in cases where
real rights over immovable property are created or conveyed.Under Article 1878 of the
Civil Code, a special power of attorney is necessary in cases where real rights over
immovable property are created or conveyed. In the SPA executed by Perla in favor of
Julian on 28 May 1992, the latter was conferred with the authority to sell, alienate,
mortgage, lease and deal otherwise the different pieces of real and personal property

registered in Perlas name. The SPA likewise authorized Julian [t]o exercise any or all
acts of strict dominion or ownership over the identified properties, and rights and
interest therein. The existence and due execution of this SPA by Perla was not denied or
challenged by petitioners.
Equally relevant is the rule that a power of attorney must be strictly construed and
pursued. The instrument will be held to grant only those powers which are specified
therein, and the agent may neither go beyond nor deviate from the power of attorney.
Where powers and duties are specified and defined in an instrument, all such powers
and duties are limited and are confined to those which are specified and defined, and all
other powers and duties are excluded. This is but in accord with the disinclination of
courts to enlarge the authority granted beyond the powers expressly given and those
which incidentally flow or derive therefrom as being usual and reasonably necessary and
proper for the performance of such express powers.

Bank of the Philippine Islands vs. De Coster

47 Phil. 594(1925)

Where a person gave a power of attorney to an agent to appear for and represent her in
all court proceedings, and where the .agent fails and neglects to appear and make a
defense, the principal on a proper showing is not estopped from obtaining relief under
section 113 of the Code of Civil Procedure.
Where a wife gave her husband a power of attorney "to loan and borrow money," and for
such purpose to mortgage her property, and where the husband signed his wife's name
to a note and gave a mortgage on her property to secure the note and the amount of the
loan was actually paid to her husband in money at the time the note and mortgage were
executed, the transaction is binding upon the wife under her power of attorney,
regardless of What the husband may have done with the money which he obtained on
the loan.

Philippine National Bank vs. Sta. Maria

29 SCRA 303(1969)
A special power of attorney to mortgage real estate is limited to such authority to
mortgage and does not carry with it the authority to contract obligation, unless the
contrary is shown.
The grantor of a special power of attorney to mortgage a real estate is liable only to the
extent that the real estate authorized by him to be mortgaged would be subject to
foreclosure and sale to respond for the obligations contracted by the grantee of the

power but the grantor cannot be held personally liable for the payment of such
obligations, in the absence of any ratification or other similar act that would estop the
grantor from questioning or disowning such other obligations contracted by the grantee,
Ratification by the grantor or estoppel consist" ing in benefiting from the loan must be
expressly shown and proven during the ,trial in order to hold the grantor liable for the
loans contracted by the grantee of the special power of attorney.
Where a person expressly authorized another to mortgage and borrow money for and in
his name, the liability of the two to the creditor is only joint, not joint and several or
solidary. Pursuant to Article 1207 of Civil Code, "the concurrence of two or more debtors
in one and the same obligation does not imply that x x x each one of them (debtors) is
bound to render entire compliance with the prestation. There is solidary 'liability only
when the obligation expressly so states, or when the law or the nature of the obligation
requires solidarity."
Insular Drug Co. vs. National Bank,
58 Phil. 684(1933)
The right of an agent to indorse commercial paper is a very responsible power and will
not be lightly Inferred. A salesman with authority to collect money belonging to his
principal does not have the implied authority to indorse checks received in payment. Any
person taking checks made payable to a corporation, which can act only by agents does
so at his peril, and must abide by the consequences if the agent who indorses the same
is without authority.
When a bank accepts the indorsements on checks made out to a drug company of a
salesman of the drug company and the indorsements of the salesman's wife and clerk,
and credits the checks to the personal account of the salesman and his wife, permitting
them to make withdrawals, the bank makes itself responsible to the drug company for
the amounts represented by the checks, unless it is pleaded and proved that after the
money was withdrawn from the bank, it passed to the drug company which thus suffered
no loss.

Hodges vs. Salas and Salas

63 Phil. 567(1936)

The pertinent clauses of the power of attorney from which may be determined the
intention of the principals in authorizing their agent to obtain a loan, securing it with their
real property, were quoted at, the beginning of the decision. The terms thereof are
limited; the agent was thereby authorized only to borrow any amount of money which he
deemed necessary. There is nothing, however, to indicate that the defendants had
likewise authorized him to convert the money obtained by him to his personal use. With

respect to a power of attorney of special character, it cannot be interpreted as also

authorizing the agent to use the money as he pleased, particularly when it does not
appear that such was the intention of the principals, and in applying part of the funds to
pay his personal obligations, he exceeded his authority (art. 1714, Civil Code; Bank of
the Philippine Islands vs. De Coster, 47 Phil., 594 and 49 Phil., 574). In cases like the
present one, it should be understood that the agent was obliged to turn over the money
to the principals or, at least, place it at their disposal.

Bravo-Guerrero vs. Bravo

465 SCRA 244(2005)

The Court agree with the trial court that Simona authorized Mauricio to dispose of the
Properties when she executed the GPA. True, Article 1878 requires a special power of
attorney for an agent to execute a contract that transfers the ownership of an
immovable. However, the Court has clarified that Article 1878 refers to the nature of the
authorization, not to its form. Even if a document is titled as a general power of attorney,
the requirement of a special power of attorney is met if there is a clear mandate from the
principal specifically authorizing the performance of the act.

Sargasso Construction & Development Corporation/Pick & Shovel, Inc./Atlantic

Erectors, Inc. (Joint Venture) vs. Philippine Ports Authority
623 SCRA 260(2010)

The authority of government officials to represent the government in any contract must
proceed from an express provision of law or valid delegation of authoritywithout such
actual authority being possessed by Philippine Ports Authoritys (PPAs) general
manager, there could be no real consent, much less a perfected contract, to speak of.
The doctrine of apparent authority, in the realm of government contracts, has been
restated to mean that the government is not bound by unauthorized acts of its agents,
even though within the apparent scope of their authority; Apparent authority, or what is
sometimes referred to as the holding out theory, or doctrine of ostensible agency,
imposes liability, not as the result of the reality of a contractual relationship, but rather
because of the actions of a principal or an employer in somehow misleading the public
into believing that the relationship or the authority exists.
Professional Services, Inc. vs. Agana
513 SCRA 478(2007)

PSIs liability is also anchored upon the agency principle of apparent authority or agency
by estoppel and the doctrine of corporate negligence which have gained acceptance in
the determination of a hospitals liability for negligent acts of health professionals. The
present case serves as a perfect platform to test the applicability of these doctrines,
thus, enriching our jurisprudence. Apparent authority, or what is sometimes referred to
as the holding out theory, or doctrine of ostensible agency or agency by estoppel, has
its origin from the law of agency. It imposes liability, not as the result of the reality of a
contractual relationship, but rather because of the actions of a principal or an employer
in somehow misleading the public into believing that the relationship or the authority
exists. The concept is essentially one of estoppel and has been explained in this
manner: The 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. The question in every case is whether the principal has by his
voluntary act placed the agent in such a situation that a person of ordinary prudence,
conversant with business usages and the nature of the particular business, is justified in
presuming that such agent has authority to perform the particular act in question.

Philippine Aluminum Wheels, Inc. vs. FASGI Enterprises, Inc.,

342 SCRA 722(2000)

In this jurisdiction, it is clear that an attorney cannot, without a clients authorization,

settle the action or subject matter of the litigation even when he honestly believes that
such a settlement will best serve his clients interest.
It is an accepted rule that when a client, upon becoming aware of the compromise and
the judgment thereon, fails to promptly repudiate the action of his attorney, he will not
afterwards be heard to complain about it.

Nichimen Corporation (Manila Branch) vs. Court of Appeals

378 SCRA 443(2002)

A broker, in general, is a middleman who acts for others, on a commission, negotiating

contracts relative to property with the custody of which he has no concernhe is, in
more ways than one, an agent of both parties.A broker, in general, is a middleman
who acts for others, on a commission, negotiating contracts relative to property with the

custody of which he has no concern; he is, in more ways than one, an agent of both
parties. His task is to bring the parties together and to get them to come to an
agreement. A basic characteristic of a broker is that he acts not for himself, but for a third
person, regardless of whether the fee paid to him is a fixed amount, regular or not, or
whether the act performed by him can be performed by the principal or not. Strictly, a
commission merchant differs from a broker in that he may buy and sell in his own name
without having to disclose his principal, for which purpose, the goods are placed in his
session and at his disposal, features that are not true in the case of a broker. The
commission merchant thus maintains a relation not only with the parties but also with the
property subject matter of the transaction. A dealer buys and sells for his own account.

Tan v. Heirs of Antonio Yamson, 684 SCRA 442 (2012)

The Court noted that the Authority to Look for Buyer/Buyers reveals does not
state that the sale of all seven lots was a prerequisite to the payment by petitioners of
Yamsons commission. If petitioners intention was for Yamson to locate a buyer for all
their properties, then they should have stated it clearly in writing. With no such
stipulation, then it could be found that there was no such intention, following Section 9,
Rule 130 of the Revised Rules on Evidence which provides:
Sec.9.Evidence of written agreements.When the terms of an agreement have been
reduced to writing, it is considered as containing all the terms agreed upon and there
can be, between the parties and their successors in interest, no evidence of such terms
other than the contents of the written agreement. [Tan vs. Heirs of Antonio F. Yamson,
684 SCRA 442(2012)]
The petitioners purposely engaged Yamson as their broker and knowingly
authorized him to look for a buyer for their properties. Petitioners offered no other
testimony but their own to bolster their allegations. Their sole witness was Annie Tan and
uncorroborated by any other documentary or testimonial evidence.
The Court found Yamson entitled to his commission for the sale of the two lots.
Urban Bank v. Pea, 659 SCRA 442 (2012)
Yes. Pea should be paid for services rendered under the agency relationship
that existed between him and Urban Bank. In this case however theres no evidence that

Urban Bank agreed to pay Pea a specific amount or percentage of amount for his
services, the Court applied the principle against unjust enrichment and on the basis of
quantum meruit. The agency of Pea comprised of services ordinarily performed by a
lawyer who is tasked with the job of ensuring clean possession by the owner of a
property. Furthermore, whether or not agency has been created is determined by the
fact that one is representing and acting for another.
It must be noted however that the law makes no presumption of agency; proving
its existence, nature and extent is incumbent upon the person alleging it.
Finally, agency is presumed to be for compensation unless the contrary is
stipulated or intended.

Philippine Health-Care Providers, Inc. v. Carmela Estrada, 542 SCRA 616 (2008)
Yes. Contrary to Maxicares assertion, the trial and the appellate courts carefully
considered the facts of the case through records. Both courts concluded that Maxicare
successfully landed the Meralco account for the sale of healthcare plans only by virtue of
Estradas involvement and participation in the negotiations.
Estrada penetrated the Meralco market, initially closed Maxicare and laid the
groundwork for a business relationship. She was unable to participate in the
collection and remittance of premium dues to Maxicare for she was prevented
from doing so by the acts of Maxicare, its officers, and employees. As such she is
entitled to a commission.

PROCURING CAUSE: a cause originating a series of events which,

without break in their continuity, result in the accomplishment of the prime
objective of the employment of the broke.
Sanchez v Medicard Philippines Inc, 469 SCRA 616 (2008)
Yes. There was no aid from Sanchez in the consummation of the contract

creating the new scheme under Medicard and Unilab. The Court noted that in order for
an agent to be entitled to a commission, he must be the procuring cause of the sale. It
means that the measures employed by him and the efforts he exerted must result in a

sale as such the agent receives his commission only upon the successful conclusion of
a sale.
Furthermore, Medicard directly negotiated with Unilab, revoking its agency
contract with petitioner.

Revocation is authorized by Article 1924 wherein agency is

revoked if the principal directly manages the business entrusted to the agent, dealing
directly with third persons.

EXC: In Prats v CA as a measure of equity an agent who is not the efficient

procuring cause is nonetheless entitled to his commission, where said agent,
notwithstanding the expiration of his authority, nonetheless, took diligent steps to
bring back together the parties, such that a sale was finalized and consummated
between them. Manotok Bros. v CA applied this rule - agent (in Manotok) is
entitled to a commission since he was the efficient procuring cause of the sale,
notwithstanding that the sale took place after his authority had lapsed.

Inland Realty Investment Service, Inc. v. CA , 273 SCRA 70 (1997)

The Court stated that where a party is not the efficient procuring cause in
bringing about a sale, he is not entitled to the stipulated brokers commission.
From Sept. 16, 1975 to Jan. 1, 1976, when Inland Realty had the alleged
authority to sell, it had nothing to show that they actively served their principals
interests, pursued to sell the shares in accordance with the terms and conditions, and
performed substantial acts that led to the consummation of the sale to Stanford of
Araneta, Inc.s shares.

Prats v. CA, 81 SCRA 360

The Court ruled that as a measure of equity an agent who is not the efficient
procuring cause is nonetheless entitled to his commission, where said agent,
notwithstanding the expiration of his authority, nonetheless, took diligent steps to bring
back together the parties, such that a sale was finalized and consummated between
them.

Reyes v. Mosqueda, 99 Phil 241

The Court noted that the actual sale was perfected and consummated without
the intervention of plaintiff Reyes, and what is more, before that, her authority to sell the
property had been withdrawn, at a time when there was still no meeting of the minds of
buyer and seller. She was not entitled to commission.
BROKER; DUTY TO PERFORM TO BE ENTITLED TO COMMISSION.In order that a
broker could earn a commission it is not sufficient for him to find a prospective buyer but
to find one who will actually buy the property on the terms and conditions imposed by
thef owner and until that is done his right to commission does not accrue. [Reyes, et al.
vs. Mosqueda and Court of Appeals, 99 Phil. 241(1956)]
Henry v. Velasco, 34 Phil 587
Yes. The Court noted the fact that the appellant took over the operation of
completing the sale with the purchaser furnished by the plaintiff did not abrogate the
contract. Henry complied with his part of the contract by furnishing a purchaser ready,
willing, and able to buy the business and to rent the premises.
PRINCIPAL AND AGENT; AGENT'S COMMISSION.When an agent, who was
employed to sell or lease certain property, has complied with the terms of his contract by
furnishing a purchaser ready, willing and able to buy or lease such property, he is entitled
to his commission. [Henry vs. Velasco., 34 Phil. 587(1916)]
Pahud v. CA, G.R. 160346
Yes. The Court noted that while the sale with respect to the 3/8 portion is void by
express provision of law and not susceptible to ratification, its validity was upheld on the
basis of the common law principle of estoppel.
Art. 1431. Through estoppel an admission or representation is rendered conclusive upon
the person making it, and cannot be denied or disproved as against the person relying
thereon.
Although, at the time of the sale to the Pahuds, Eufemia was not armed with the
requisite special power of attorney to dispose of the 3/8 portion of the property, the 3 coheirs remained silent and left the task of assailing the validity of the sale to Virgilio, who
was not privy to the transaction. Due to their continued silence, Zenaida, Milagros and

Minerva have caused the Pahuds to believe that they have authorized Eufemia to
transact on their behalf. Due to this, they are now estopped from impugning the validity
of the sale from assailing the authority of Eufemia to enter into such transaction.

Eduardo Litonjua, Jr and Antonio Litonjua v. Eternit Corp

GR no. 144805
No. The Court noted that there was no agency by estoppel. The following are the
requisites for agency by estoppel: (1) the principal manifested a representation of the
agents authority or knowingly allowed the agent to assume such authority; (2) the third
person, in good faith, relied upon such representation; (3) relying upon such
representation, such third person has changed his position to his detriment. In the case,
there was lack of proof of reliance on such representation because in the
communications between the Litonjuas and Glanville, Delsaux and Marquez, the latter
parties clearly stated that they were acting in the behalf of ESAC only. There was no
ratification by Eternit for there is no proof showing that the communications between
them were forwarded to Eternits Board of Directors for ratification.
Nogales v. Capitol Medical Center, G.R. No. 142625 December 19, 2006
The Court noted that in general, a hospital is not liable for the negligence of an
independent contractor-physician except under the doctrine of apparent authority.
In the current case, CMC impliedly held out Dr. Estrada as a member of its
medical staff. Through the actions of the hospital, CMC clothed Dr. Estrada with
apparent authority thereby leading the spouses to believe that Dr. Estrada was an
employee or agent of CMC. Due to this, the hospital can no longer repudiate such
authority.
The Court also noted the following:
Doctrine of Apparent Authority: a hospital can be held vicariously liable for the negligent
acts of a physician providing care at the hospital, regardless of whether the physician is
an independent contractor, unless the patient knows, or should have known, that the
physician is an independent contractor. The elements of the action have been set out as
follows:

"For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show
that: (1) the hospital, or its agent, acted in a manner that would lead a reasonable
person to conclude that the individual who was alleged to be negligent was an employee
or agent of the hospital; (2) where the acts of the agent create the appearance of
authority, the plaintiff must also prove that the hospital had knowledge of and acquiesced
in them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its
agent, consistent with ordinary care and prudence."
It is evident that the element of "holding out" on the part of the hospital does not
require an express representation by the hospital that the person alleged to be negligent
is an employee. It is satisfied if the hospital holds itself out as a provider of emergency
room care without informing the patient that the care is provided by independent
contractors.
Justifiable reliance on the part of the plaintiff is satisfied if the plaintiff relies upon
the hospital to provide complete emergency room care, rather than upon a specific
physician.
Naguiat v. CA
G.R. No. 118375, October 3, 2003
The Court noted that there was ample evidence of an agency relationship
between Naguiat and Ruebenfeldt. It was evident that Naguiat instructed Ruebenfeldt to
withhold from Queao the checks she issued or indorsed to Queao, pending delivery
by the latter of additional collateral. Ruebenfeldt also accompanied Queao in her
negotiation with Naguiat.
In the case, the Court stated that there is an existence of an "agency by
estoppels citing Article 1873 of the Civil Code. As a consequence of the interaction
between Naguiat and Ruebenfeldt, Queao got the impression that Ruebenfeldt was the
agent of Naguiat, but Naguiat did nothing to correct Queaos impression. It was stated
by the Court that one who clothes another with apparent authority as his agent, and
holds him out to the public as such, cannot be permitted to deny the authority of such
person to act as his agent, to the prejudice of innocent third parties dealing with such
person in good faith, and in the honest belief that he is what he appears to be.

Woodchild v. Roxas, G.R. 140667, August 12, 2004

No. The Court noted that it bears stressing that apparent authority is based on
estoppel and can arise from two instances: first, the principal may knowingly permit the
agent to so hold himself out as having such authority, and in this way, the principal
becomes estopped to claim that the agent does not have such authority; second, the
principal may so clothe the agent with the indicia of authority as to lead a reasonably
prudent person to believe that he actually has such authority. There can be no apparent
authority of an agent without acts or conduct on the part of the principal and such acts.
In the current case, there is no evidence on record of specific acts made by the
respondent indicating that it had full knowledge of any representations made by Roxas
to the petitioner that the respondent had authorized him to grant to the respondent an
option to buy a portion of Lot No. 491-A-3-B-1 covered by TCT No. 78085, create a
burden or lien thereon, or that the respondent allowed him to do so.
Estoppel; Acts done by corporate officers beyond the scope of their authority cannot bind
the corporation unless it has ratified such acts expressly or tacitly, or is estopped from
denying them. [Woodchild Holdings, Inc. vs. Roxas Electric and Construction Company,
Inc., 436 SCRA 235(2004)]
Yun Kwan Byung vs PAGCOR
December 11, 2009
NO. In the case, during the duration that petitioner played in Casino Filipino, he
was dealing only with ABS Corporation, and availing of the privileges extended only to
players brought in by ABS Corporation. The special treatment upon his arrival in Manila
and special accommodations in Grand Boulevard Hotel, and that he was playing in
special gaming rooms are all indications that petitioner cannot claim good faith that he
believed he was dealing with PAGCOR. The petitioner cannot be considered as an
innocent third party and he cannot claim entitlement to equitable relief as well
The Court stated that an agency by estoppel, which is similar to the doctrine of
apparent authority, requires proof of reliance upon the representations which needs
proof that the representations predated the action taken in reliance. It was further noted

that there can be no apparent authority of an agent without acts or conduct on the part of
the principal and such acts or conduct of the principal must have been known and relied
upon in good faith and as a result of the exercise of reasonable prudence by a third
person and must have produced a change of position to its detriment. There was lack of
such evidence in the case at hand.
Agency By Estoppel
Professional Services vsAgana
GR No. 126297
January 31, 2007
Its liability is also anchored upon the agency principle of apparent authority or
agency by estoppel and the doctrine of corporate negligence which have gained
acceptance in the determination of a hospitals liability for negligent acts of health
professionals. The present case serves as a perfect platform to test the applicability of
these doctrines, thus, enriching our jurisprudence. Apparent authority, or what is
sometimes referred to as the holding out theory, or doctrine of ostensible agency or
agency by estoppel, has its origin from the law of agency. It imposes liability, not as the
result of the reality of a contractual relationship, but rather because of the actions of a
principal or an employer in somehow misleading the public into believing that the
relationship or the authority exists. The concept is essentially one of estoppel and has
been explained in this manner:
The 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. The question in every case is whether
the principal has by his voluntary act placed the agent in such a situation that
a person of ordinary prudence, conversant with business usages and the
nature of the particular business, is justified in presuming that such agent
has authority to perform the particular act in question.
In this case, Professional Services Inc. (PSI) publicly displays in the lobby of the
Medical City Hospital the names and specializations of the physicians associated or
accredited by it, including those of Dr. Ampil and Dr. Fuentes. We concur with the Court
of Appeals conclusion that it is now estopped from passing all the blame to the
physicians whose names it proudly paraded in the public directory leading the public to
believe that it vouched for their skill and competence. Indeed, PSIs act is tantamount to
holding out to the public that Medical City Hospital, through its accredited physicians,
offers quality health care services. By accrediting Dr. Ampil and Dr. Fuentes and publicly
advertising their qualifications, the hospital created the impression that they were its
agents, authorized to perform medical or surgical services for its patients. As expected,
these patients, Natividad being one of them, accepted the services on the reasonable
belief that such were being rendered by the hospital or its employees, agents, or
servants.
February 11, 2008

In the instant cases, PSI merely offered a general denial of responsibility,

maintaining that consultants, like Dr. Ampil, are independent contractors, not
employees of the hospital. Even assuming that Dr. Ampil is not an employee of Medical
City, but an independent contractor, still the said hospital is liable to the Aganas.
Citing Nograles, et al. v. Capitol Medical Center, et al.Carpio, the Court held:

In general, a hospital is not liable for the negligence of an independent

contractor-physician. There is, however, an exception to this principle. The
hospital may be liable if the physician is the ostensible agent of the
hospital. (Jones v. Philpott, 702 F. Supp. 1210 [1988]) This exception is also
known as the doctrine of apparent authority. (Sometimes referred to as the
apparent or ostensible agency theory. [King v. Mitchell, 31 A.D.3rd 958, 819
N.Y. S.2d 169 (2006)].
xxx
The doctrine of apparent authority essentially involves two factors to
determine the liability of an independent contractor-physician.
The first factor focuses on the hospitals manifestations and is sometimes
described as an inquiry whether the hospital acted in a manner which would
lead a reasonable person to conclude that the individual who was alleged to
be negligent was an employee or agent of the hospital. (Diggs v. Novant
Health, Inc., 628 S.E.2d 851 [2006] citing Hylton v. Koontz, 138 N.C. App.
629 [2000]).In this regard, the hospital need not make express
representations to the patient that the treating physician is an
employee of the hospital; rather a representation may be general and
implied. (Id.)
The doctrine of apparent authority is a specie of the doctrine of estoppel.
Article 1431 of the Civil Code provides that [t]hrough estoppel, an admission
or representation is rendered conclusive upon the person making it, and
cannot be denied or disproved as against the person relying thereon.
Estoppel rests on this rule: Whether a party has, by his own declaration, act,
or omission, intentionally and deliberately led another to believe a particular
thing true, and to act upon such belief, he cannot, in any litigation arising out
of such declaration, act or omission, be permitted to falsify it. (De Castro v.
Ginete, 137 Phil. 453 [1969], citing Sec. 3, par. A, Rule 131 of the Rules of
Court. See also King v. Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169 [2006]).
PSI is estopped from passing the blame solely to Dr. Ampil. Its act of displaying his
name and those of the other physicians in the public directory at the lobby of the hospital
amounts to holding out to the public that it offers quality medical service through the
listed physicians. This justifies Atty. Aganas belief that Dr. Ampil was a member of the
hospitals staff. It must be stressed that under the doctrine of apparent authority, the
question in every case is whether the principal has by his voluntary act placed the agent

in such a situation that a person of ordinary prudence, conversant with business usages
and the nature of the particular business, is justified in presuming that such agent has
authority to perform the particular act in question. 6 In these cases, the circumstances
yield a positive answer to the question.
February 2, 2010
There is, however, ample evidence that the hospital (PSI) held out to the patient
(Natividad)48 that the doctor (Dr. Ampil) was its agent. Present are the two factors that
determine apparent authority: first, the hospitals implied manifestation to the patient
which led the latter to conclude that the doctor was the hospitals agent; and second, the
patients reliance upon the conduct of the hospital and the doctor, consistent with
ordinary care and prudence.

Clearly, the decision made by Enrique for Natividad to consult Dr. Ampil was
significantly influenced by the impression that Dr. Ampil was a staff member of Medical
City General Hospital, and that said hospital was well known and prominent. Enrique
looked upon Dr. Ampil not as independent of but as integrally related to Medical City.

By such statement, PSI virtually reinforced the public impression that Dr. Ampil was a
physician of its hospital, rather than one independently practicing in it; that the
medications and treatments he prescribed were necessary and desirable; and that the
hospital staff was prepared to carry them out.

Power to Sellvs Power to Mortgage

Bicol Savings Loan vs CA
G.R. No. 85302. March 31, 1989.
The sale proscribed by a special power to mortgage under Article 1879 is a
voluntary and independent contract, and not an auction sale resulting from extrajudicial
foreclosure, which is precipitated by the default of a mortgagor. Absent that default, no
foreclosure results. The stipulation granting an authority to extrajudicially foreclose a
mortgage is an ancillary stipulation supported by the same cause or consideration for the
mortgage and forms an essential or inseparable part of that bilateral agreement.
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 latters own protection. That power survives the death of the
mortgagor (Perez vs. PNB, supra). In fact, the right of the mortgagee bank to
extrajudicially foreclose the mortgage after the death of the mortgagor Juan de Jesus,
acting through his attorney-in-fact, Jose de Jesus, did not depend on the authorization in
the deed of mortgage executed by the latter. That right existed independently of said
stipulation and is clearly recognized in Section 7, Rule 86 of the Rules of Court.

Parties to a Contract of Agency; Capacity

Commercial Bank & Trust vs Republic Armored Car
Nos. L-18223 & L-18224. September 30, 1963.
Where in accordance with a power of attorney executed by the principal, the
agent was authorized to negotiate for a loan or various loans with banking institutions,
financing or insurance companies etc., in such sum or sums, aforesaid agent may deem
proper and convenient to the interest of the principal, such general power of attorney
was held sufficient authority for the agent to obtain the credits subject of the case at bar.
Where one named Ramon Racelis, as agent of Damaso Perez (principal),
executed a contract of loan, signing the name Damaso Perez by Ramon Racelis, and
in the said contract Damaso Perez agreed jointly and severally to be responsible for
such loan, there would be no merit in the contention that Damaso Perez was only liable
as a guarantor.
Philippine Charter Insurance vs Explorer Maritime
G.R. No. 175409.September 7, 2011.

PCIC alleged that defendant Unknown Owner of the vessel M/V Explorer is a
foreign corporation whose identity or name or office address are unknown to PCIC but is
doing business in the Philippines through its local agent, co-defendant Wallem
Philippines Shipping, Inc., a domestic corporation.PCIC then added that both defendants
may be served with summons and other court processes in the address of Wallem
Philippines Shipping, Inc.,which was correctly donepursuant to Section 12, Rule 14 of
the Rules of Court, which provides:

Sec.12.Service upon foreign private juridical entity.When the

defendant is a foreign private juridical entity which has transacted business
in the Philippines, service may be made on its resident agent designated in
accordance with law for that purpose, or, if there be no such agent, on the
government official designated by law to that effect, or on any of its officers
or agents within the Philippines.

Futhermore, Section 3, Rule 3 of the Rules of Court likewise provides that 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. Since Civil Case No. 95-73340 wherein Philippine Charter Insurance
Corporation (PCIC) filed with a Complaint against respondents to recover P342,605.50
for the allegedly lost or damaged shipment was an action for damages, the agent may
be properly sued without impleading the principal.

Maritime Agenciesvs CA
G.R. No. 77638. July 12, 1990.
G.R. No. 77674. July 12, 1990.
As regards the goods damaged or lost during unloading, the charterer is liable
therefore, having assumed this activity under the charter party free of expense to the
vessel. The difficulty is that Transcontinental has not been impleaded in these cases
and so is beyond our jurisdiction. The liability imposable upon it cannot be borne by
Maritime which, as a mere agent, is not answerable for injury caused by its principal. It is
a well-settled principle that the agent shall be liable for the act or omission of the
principal only if the latter is undisclosed.
Moreover, The charterer did not represent itself as a carrier and indeed assumed
responsibility only for the unloading of the cargo, i.e, after the goods were already
outside the custody of the vessel. In supervising the unloading of the cargo and issuing
Daily Operations Report and Statement of Facts indicating and describing the day-to-day
discharge of the cargo, Maritime acted in representation of the charterer and not of the
vessel. It thus cannot be considered a ship agent. As a mere charterers agent, it cannot
be held solidarily liable with Transcontinental for the losses/damages to the cargo
outside the custody of the vessel. Notably, Transcontinental was disclosed as the
charterers principal and there is no question that Maritime acted within the scope of its
authority.
Gold Star Mining vs Lim-Jimena
G.R. No. L-25301. October 26, 1968
We are of the same opinion with the Court of Appeals that respondents Jimenas have
a cause of action against petitioner corporation and that the latter's joinder as one of the
defendants before the trial court is fitting and proper. Said the Court of Appeals, and we
adopt the same:

From another standpoint, equally valid and acceptable, it can be said

that Lincallo, in transferring the mining claims to Gold Star (without disclosing
that Jimena was a co-owner although Gold Star had knowledge of this fact
as shown by the proofs heretofore mentioned) acted as Jimena's agent with
respect to Jimena's share of the claims,
"Under such conditions, Jimena has an action against Gold Star, pursuant
to Article 1883, New Civil Code, which provides that the principal may sue
the person with whom the agent dealt with in his (agent's) own name, when
the transaction 'involves things belonging to the principal.

Lorca vsDineros
G.R. No. L-10919. February 28, 1958

The appellant insists here that Dineros was responsible in view of sec. 334 of the
Revised Administrative Code and sec. 15, Rule 39, Rules of Court, which provides as
follows:
"SEC. 334Right of Bonded Officer to Require Bond from Deputy or
assistant.A sheriff or other accountable official may require any of his
deputies or assistants, not bonded in the fidelity fund, to give an adequate
personal bond as security against loss by reason of any wrongdoing on the
part of such deputy or assistant. The taking of such security shall in no wise
impair the independent civil liability of any of the parties."
"* * * and in case the sheriff or attaching officer is sued for damages as a
result of the attachment * * *."
In the light of section 330 of the Administrative Code we think the above provisions
apply where the deputy acts in his own name or is guilty of active malfeasance or
possibly where he exceeds the limits of his agency. In this case it is clear from the
certificate of sale attached to the complaint that Dineros acted all the time in the name of
the Ex-Officio Provincial Sheriff of Iloilo; and no allegations of misfeasance are made.
The Sheriff is liable to third persons on the acts of his deputy, in the same manner that
the principal is responsible for the acts of his agent.

Virgie Seronavs CA
G.R. No. 130423. November 18, 2002.
Petitioner did not ipso facto commit the crime of estafa through conversion or
misappropriation by delivering the jewelry to a sub-agent for sale on commission basis.
We are unable to agree with the lower courts conclusion that this fact alone is sufficient
ground for holding that petitioner disposed of the jewelry as if it were hers, thereby
committing conversion and a clear breach of trust.
It must be pointed out that the law on agency in our jurisdiction allows the
appointment by an agent of a substitute or sub-agent in the absence of an express
agreement to the contrary between the agent and the principal. In the case at bar, the
appointment of Labrador as petitioners sub-agent was not expressly prohibited by
Quilatan, as the acknowledgment receipt does not contain any such limitation. Neither
does it appear that petitioner was verbally forbidden by Quilatan from passing on the
jewelry to another person before the acknowledgment receipt was executed or at any
other time. Thus, it cannot be said that petitioners act of entrusting the jewelry to
Labrador is characterized by abuse of confidence because such an act was not
proscribed and is, in fact, legally sanctioned.

The rule is that an accused acquitted of estafa may nevertheless be held civilly
liable where the facts established by the evidence so warrant. Then too, an agent who is
not prohibited from appointing a sub-agent but does so without express authority is
responsible for the acts of the sub-agent. Considering that the civil action for the
recovery of civil liability arising from the offense is deemed instituted with the criminal
action, petitioner is liable to pay complainant Quilatan the value of the unpaid pieces of
jewelry.
Santos vsBuenconsejo
G.R. No. L-20136. June 23, 1965.
The said special power of attorney authorizing him to act on behalf of the children
of Anatolio Buenconsejo could not have possibly vested in him any property right in
his own name; the children of Anatolio Buenconsejo had no authority to execute said
power of attorney, because their father is still alive and, in fact, he and his wife opposed
the petition of Santos.
A special power of attorney authorizing a person to act on behalf of the
children of another cannot vest in the said attorney any property right in his
own name.The children have no authority to execute a power of attorney for
their father who is still alive.

Rights, Obligations, and Liabilities of Agent

DanonvsBrimo
G.R. No. 15823.September 12, 1921
It is perfectly clear and undisputed that his "services" did not in any way
contribute towards bringing about the sale of the factory in question. He was not "the
efficient agent or the procuring cause of the sale."
The broker must be the efficient agent or the procuring cause of the
sale. The means employed by him and his efforts must result in the sale. He
must find the purchaser, and the sale must proceed from his efforts acting as
broker.
In all cases, under all and varying forms of expression, the
fundamental and correct doctrine is, that the duty assumed by the broker is
to bring the minds of the buyer and seller to an agreement for a sale, and the
price and terms on which it is to be made, and until that is done his right to
commissions does not accrue.
xxxxx
A broker is never entitled to commissions for unsuccessful efforts.
The risk of a failure is wholly his. The reward comes only with his success.
The broker may devote his time and labor, and expend his money with ever
so much of devotion to the interest of his employer, and yet if he fails, if
without effecting an agreement or accomplishing a bargain, he abandons the
effort, or his authority is fairly and in good faith terminated, he gains no right

to commissions. He loses the labor and effort which was staked upon
success. And in such event it matters not that after his failure, and the
termination of his agency, what he has done proves of use and benefit to the
principal. This however must be taken with one important and necessary
limitation. If the efforts of the broker are rendered a failure by the fault of the
employer, the broker does not lose his commissions. But this limitation is not
even an exception to the general rule affecting the broker's right for it goes
on the ground that the broker has done his duty, that he has brought buyer
and seller to an agreement, but that the contract is not consummated and
fails though the after-fault of the seller. The cases are uniform in this respect.

Where no time for the continuance of the contract is fixed by its

terms, either party is at liberty to terminate it at will, subject only to the
ordinary requirements of good faith. Usually the broker is entitled to a fair
and reasonable opportunity to perform his obligation, subject of course to the
rightt of the seller to sell independently. But having been granted him, the
right of the principal to terminate his authority is absolute and unrestricted,
except only that he may not do it in bad faith, and as a mere device to
escape the payment of the broker's commissions.
Hahn vs CA
G.R. No. 113074. January 22, 1997.
An agent receives a commission upon the successful conclusion of a sale. On
the other hand, a broker earns his pay merely by bringing the buyer and the seller
together, even if no sale is eventually made.
As to the service centers and showrooms which he said he had put up at his own
expense, Hahn said that he had to follow BMW specifications as exclusive dealer of
BMW in the Philippines. According to Hahn, BMW periodically inspected the service
centers to see to it that BMW standards were maintained. Indeed, it would seem from
BMWs letter to Hahn that it was for Hahns alleged failure to maintain BMW standards
that BMW was terminating Hahns dealership.
The fact that Hahn invested his own money to put up these service centers and
showrooms does not necessarily prove that he is not an agent of BMW. For as already
noted, there are facts in the record which suggest that BMW exercised control over
Hahns activities as a dealer and made regular inspections of Hahns premises to
enforce compliance with BMW standards and specifications.
In addition, BMW held out private respondent Hahn as its exclusive distributor in
the Philippines, even as it announced in the Asian region that Hahn was the official
BMW agent in the Philippines.
Tan vs Gullas
G.R. No. 143978. December 3, 2002.
In Schmid and Oberly v. RJL Martinez Fishing Corporation, we defined a broker
as one who is engaged, for others, on a commission, negotiating contracts relative to
property with the custody of which he has no concern; the negotiator between other

parties, never acting in his own name but in the name of those who employed him. x x x
a broker is one whose occupation is to bring the parties together, in matters of trade,
commerce or navigation.
Private respondent authorized another agent in the person of Mr. Bobby Pacana
to sell the same property. There was nothing illegal or amiss in this arrangement, per
se, considering the non-exclusivity of petitioners authority to sell. The problem arose
when it eventually turned out that these agents were entertaining one and the same
buyer, the Sisters of Mary.Private respondents failed to prove their contention that
Pacana began negotiations with private respondent Norma Gullas way ahead of
petitioners.
Indeed, it is readily apparent that private respondents are trying to evade
payment of the commission which rightfully belong to petitioners as brokers with respect
to the sale. There was no dispute as to the role that petitioners played in the transaction.
At theery least, petitioners set the sale in motion. They were not able to participate in its
consummation only because they were prevented from doing so by the acts of the
private respondents. Petitioners, as brokers, should be entitled to the commission
whether or not the sale of the property subject matter of the contract was concluded
through their efforts.
Philippine Health-Care Providers vs Estrada
G.R. No. 171052. January 28, 2008.
At the very least, Estrada penetrated the Meralco market, initially closed to
Maxicare, and laid the groundwork for a business relationship. The only reason Estrada
was not able to participate in the collection and remittance of premium dues to Maxicare
was because she was prevented from doing so by the acts of Maxicare, its officers, and
employees.
In Tan v. Gullas, 393 SCRA 334 (2002), we had occasion to define a broker and
distinguish it from an agent, thus:
[O]ne who is engaged, for others, on a commission, negotiating
contracts relative to property with the custody of which he has no concern;
the negotiator between the other parties, never acting in his own name but in
the name of those who employed him. [A] broker is one whose occupation is
to bring the parties together, in matter of trade, commerce or navigation.
An agent receives a commission upon the successful conclusion of a sale.
On the other hand, a broker earns his pay merely by bringing the buyer and
the seller together, even if no sale is eventually made.
We have held that the term procuring cause in describing a brokers activity,
refers to a cause originating a series of events which, without break in their continuity,
result in the accomplishment of the prime objective of the employment of the broker
producing a purchaser ready, willing and able to buy on the owners terms. To be
regarded as the procuring cause of a sale as to be entitled to a commission, a brokers
efforts must have been the foundation on which the negotiations resulting in a sale
began. Verily, Estrada was instrumental in the sale of the Maxicare health plans to
Meralco. Without her intervention, no sale could have been consummated.

Sanchez vsMedicard
G.R. No. 141525. September 2, 2005.
It is dictum that in order for an agent to be entitled to a commission, he must be
the procuring cause of the sale, which simply means that the measures employed by
him and the efforts he exerted must result in a sale. In other words, an agent receives
his commission only upon the successful conclusion of a sale. Conversely, it follows that
where his efforts are unsuccessful, or there was no effort on his part, he is not entitled to
a commission.
In Prats vs. Court of Appeals, this Court held that for the purpose of equity, an
agent who is not the efficient procuring cause is nonetheless entitled to his commission,
where said agent, notwithstanding the expiration of his authority, nonetheless, took
diligent steps to bringback together the parties, such that a sale was finalized and
consummated between them. In Manotok Borthers vs. Court of Appeals, where the Deed
of Sale was only executed after the agents extended authority had expired, this Court,
applying its ruling in Prats, held that the agent (in Manotok) is entitled to a commission
since he was the efficient procuring cause of the sale, notwithstanding that the sale took
place after his authority had lapsed. The proximate, close, and causal connection
between the agents efforts and the principals sale of his property can not be ignored.
It may be recalled that through petitioners efforts, Medicard was able to enter into a oneyear Health Care Program Contract with Unilab. As a result, Medicard paid petitioner his
commission. Again, through his efforts, the contract was renewed and once more, he
received his commission. Before the expiration of the renewed contract, Medicard,
through petitioner, proposed an increase in premium, but Unilab rejected this proposal.
Medicard then requested petitioner to reduce his commission should the contract be
renewed on its third year, but he was obstinate. Meantime, on October 3, 1990, Unilab
informed Medicard it was no longer renewing the Health Care Program contract.

In order not to prejudice its personnel, Unilab, through respondent Ejercito,

negotiated with respondent Dr. Montoya of Medicard, in order to find mutually beneficial
ways of continuing the Health Care Program. The negotiations resulted in a new contract
wherein Unilab shall pay Medicard the hospitalization expenses actually incurred by
each employees, plus a service fee. Under the cost plus system which replaced the
premium scheme, petitioner was not given a commission.

It is clear that since petitioner refused to reduce his commission, Medicard directly
negotiated with Unilab, thus revoking its agency contract with petitioner. We hold that
such revocation is authorized by Article 1924 of the Civil Code which provides:
Art. 1924. The agency is revoked if the principal directly manages the
business entrusted to the agent, dealing directly with third persons.

INFANTE vs CUNANAN TO FRANCISCO vs GSIS

Infante vs Cunanan
It was seen that Infante took advantage of the benevolence of the petitioners and acted
in a manner that would promote his own selfish interest. This act is unfair and amounts
to bad faith. Petitioner took advantage of the services rendered by respondents, but
believing that she could evade payment of their commission, she induced them to sign
the deed of cancellation. This act of subversion cannot be sanctioned and cannot serve
as basis for petitioner to escape payment of the commission agreed upon.
That petitioner had changed her mind even if respondents had found a buyer who was
willing to close the deal, is a matter that would not give rise to a legal consequence if
respondents agree to call off the transaction in deference to the request of the petitioner.
But the situation varies if one of the parties takes 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 to the
party prejudiced the reward which is due him. This is the situation in which respondents
were placed by petitioner. Petitioner took advantage of the services rendered by
respondents, 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 Exhibit 1. This act of
subversion cannot be sanctioned and cannot serve as basis for petitioner to escape
payment of the commission agreed upon.
Lim vs Saban
To deprive Saban of his commission subsequent to the sale which was consummated
through his efforts would be a breach of his contract of agency with Ybaez which
expressly states that Saban would be entitled to any excess in the purchase price after
deducting the P200,000.00 due to Ybaez and the transfer taxes and other incidental
expenses of the sale. In Macondray & Co. v. Sellner, the Court recognized the right of a
broker to his commission for finding a suitable buyer for the sellers property even
though the seller himself consummated the sale with the buyer. The Court held that it
would be in the height of injustice to permit the principal to terminate the contract of
agency to the prejudice of the broker when he had already reaped the benefits of the
brokers efforts. Saban had completely performed his obligations under his contract of
agency with Ybaez by finding a suitable buyer to preparing the Deed of Absolute
Sale between Ybaez and Lim and her co-vendees. Moreover, the contract of agency
very clearly states that Saban is entitled to the excess of the mark-up of the price of the
lot after deducting Ybaezs share of P200,000.00 and the taxes and other incidental
expenses of the sale.
Prats vs CA
Prats was not the efficient procuring cause in bringing about the sale proceeding from
the fact of expiration of his exclusive authority. But, the Court notes that Prats had
Monthly taken steps to bring back together respondent Doronila and the SSS. Prats
communicated with the Office of the Presidential Housing Commission on February 23,
1968 offering the Doronila property. Prats wrote a follow-up letter on April 1968 which
was answered by the Commission with the suggestion that the property be offered
directly to the SSS. Prats wrote toSSS on March 16, 1968, inviting Chairman Ramon
Gaviola, Jr. to discuss the offer of the sale of the property in question to the SSS. On
May 6, 1968, Prats made a formal written offer to the Social Security System to self the
300 hectare land of Doronila at the price of P6.00 per square meter. Doronila received
on May 17, 1968 from the SSS Administrator a telegram that the SSS was considering
the purchase of Doronilas property for its housing project. Prats and his witness Raagas

testified that Prats had several dinner and lunch meetings with Doronila and/or his
nephew, Atty. Manuel D. Asencio, regarding the progress of the negotiations with the
SSS.
Even if Prats was not the procuring cause in bringing about the sale, the Court grants in
equity the sum of One Hundred Thousand Pesos (P100,000.00) by way of
compensation for his efforts and assistance in the transaction, which however was
finalized and consummated after the expiration of his exclusive authority
Manotok Brothers vs CA
At first sight, it would seem that private respondent is not entitled to any commission as
he was not successful in consummating the sale between the parties, for the sole reason
that when the Deed of Sale was finally executed, his extended authority had already
expired. By this alone, one might be misled to believe that a broker or agent is not
entitled to any commission until he has successfully done the job given to him. But
following the decision in Prats, Saligumba should be paid his commission, While in Prats
vs. Court of Appeals, the agent was not even the efficient procuring cause in bringing
about the sale, unlike in the case at bar, it was still held therein that the agent was
entitled to compensation. In the case at bar, private respondent is the efficient procuring
cause for without his efforts, the municipality would not have anything to pass and the
Mayor would not have anything to approve.
Uniland Resources vs DBP
From the very beginning, petitioner was aware that it had no express authority from DBP
to find buyerin equity, the Court recognizes the efforts of petitioner in bringing together
respondent DBP and an interested and financially-able buyer. While not actively involved
in the actual bidding and transfer of ownership of the warehouse property, petitioner may
be said to have initiated, albeit without proper authority, the transaction that eventually
took placethere is sufficient reason to believe that the DBP became more confident to
venture and redeem the properties from the APT due to the presence of a ready and
willing buyer, as communicated and assured by petitioner. Thus the Court in equity,
granted Uniland Resources the sum of P100,000.00 for the role it played in the
transaction between respondent DBP and buyer Glaxo, Philippines.
Domingo vs Domingo
Article 1909 of the New Civil Code is essentially a reinstatement of Article 1726 of the
old Spanish Civil Code which reads thus: Art. 1726. The agent is liable not only for fraud,
but also for negligence, which shall be judged with more or less severity by the courts,
according to whether the agency was gratuitous or for a price or reward.
The provisions demand the utmost good faith, fidelity, honesty, candor and fairness on
the part of the agent, the real estate broker in this case, to his principal, the vendor. The
law imposes upon the agent the absolute obligation to make a full disclosure or complete
account to his principal of all his transactions and other material facts relevant to the
agency, so much so that the law as amended does not countenance any stipulation
exempting the agent from such an obligation and considers such an exemption as void.
The duty of an agent is likened to that of a trustee. This is not a technical or arbitrary rule
but a rule founded on the highest and truest principle of morality as well as of the
strictest justice. Hence, an agent who takes a secret profit in the nature of a bonus,
gratuity or personal benefit from the vendee, without revealing the same to his principal,
the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to
collect the commission from his principal, even if the principal does not suffer any injury

by reason of such breach of fidelity, or that he obtained better results or that the agency
is a gratuitous one, or that usage or custom allows it; because the rule is to prevent the
possibility of any wrong, not to remedy or repair an actual damage. By taking such profit
or bonus or gift or propina from the vendee, the agent thereby assumes a position wholly
inconsistent with that of being an agent for his principal, who has a right to treat him,
insofar as his commission is concerned, as if no agency had existed. The fact that the
principal may have been benefited by the valuable services of the said agent does not
exculpate the agent who has only himself to blame for such a result by reason of his
treachery or perfidy. In the case at bar, defendant-appellee Gregorio Domingo as the
broker, received a gift or propina in the amount of One Thousand Pesos (P1,000.00)
from the prospective buyer Oscar de Leon, without the knowledge and consent of his
principal, herein petitioner-appellant Vicente Domingo.
His acceptance of said substantial monetary gift corrupted his duty to serve the interests
only of his principal and undermined his loyalty to his principal
Instead of exerting his best to persuade his prospective buyer to purchase the property
on the most advantageous terms desired by his principal, the broker, herein defendantappellee Gregorio Domingo, succeeded in persuading his principal to accept the
counter-offer of the prospective buyer to purchase the property at P1.20 per square
meter or One Hundred Nine Thousand Pesos (P109,000.00). As a necessary
consequence of such breach of trust, defendant-appellee Gregorio Domingo must forfeit
his right to the commission and must return the part of the commission he received from
his principal.
Baltazar vs Ombudsman
For one, petitioners principal, Faustino Mercado, is an agent himself and as such cannot
further delegate his agency to another. Otherwise put, an agent cannot delegate to
another the same agency. The legal maxim potestas delegata non delegare potest; a
power once delegated cannot be re-delegated, while applied primarily in political law to
the exercise of legislative power, is a principle of agency. For another, a re-delegation of
the agency would be detrimental to the principal as the second agent has no privity of
contract with the former. In the instant case, petitioner has no privity of contract with
Paciencia Regala, owner of the fishpond and principal of Faustino Mercado.
Moreover, while the Civil Code under Article 1892 allows the agent to appoint a
substitute, such is not the situation in the instant case. The SPA clearly delegates the
agency to petitioner to pursue the case and not merely as a substitute. Besides, it is
clear in the aforecited Article that what is allowed is a substitute and not a delegation of
the agency.

Serona vs People
Serona did not ipso facto commit estafa through conversion or misappropriation by
delivering the jewelry to a sub-agent for sale on commission basis.
It must be pointed out that the law on agency in our jurisdiction allows the appointment
by an agent of a substitute or sub-agent in the absence of an express agreement to the
contrary between the agent and the principal. In the case at bar, the appointment of
Labrador as petitioners sub-agent was not expressly prohibited by Quilatan. Neither
does it appear that petitioner was verbally forbidden by Quilatan from passing on the

jewelry to another person before the acknowledgment receipt was executed or at any
other time.
Thus, it cannot be said that petitioners act of entrusting the jewelry to Labrador is
characterized by abuse of confidence because such an act was not proscribed and is, in
fact, legally sanctioned
It cannot be said that petitioner misappropriated the jewelry or delivered them to
Labrador "without right." Aside from the fact that no condition or limitation was imposed
on the mode or manner by which petitioner was to effect the sale, it is also consistent
with usual practice for the seller to necessarily part with the valuables in order to find a
buyer and allow inspection of the items for sale.
Where, as in the present case, the agents to whom personal property was entrusted for
sale, conclusively proves the inability to return the same is solely due to malfeasance of
a subagent to whom the first agent had actually entrusted the property in good faith, and
for the same purpose for which it was received; there being no prohibition to do so and
the chattel being delivered to the subagent before the owner demands its return or
before such return becomes due, we hold that the first agent cannot be held guilty of
estafa by either misappropriation or conversion. The abuse of confidence that is
characteristic of this offense is missing under the circumstance
Woodchild vs Roxas
Court ruled that the agent was not specifically authorized to grant a right of way or to
agree to sell to a portion thereof. It found that the authority of the agent, under the
resolution, did not include the authority to sell a portion of the adjacent lot, or to create or
convey real rights thereon.
Powers of attorney are generally construed strictly and courts will not infer or presume
broad powers from deeds which do not sufficiently include property or subject under
which the agent is to deal. The general rule is that the power of attorney must be
pursued within legal structures, and the agent can neither go beyond it; nor beside it.
The act done must be legally identical with that authorized to be done.
This case demonstrates a strict application of the rule that the agent must act within the
scope of his authority
Guinhawa vs People
Case law has it that wherever the doing of a certain act or the transaction of a given
affair, or the performance of certain business is confided to an agent, the authority to so
act will, in accordance with a general rule often referred to, carry with it by implication the
authority to do all of the collateral acts which are the natural and ordinary incidents of the
main act or business authorized.
Board of Liquidators vs Heirs of Maximo Kalaw
It is possible for any corporate officer intrusted with the general management and
control of the corporations business (e.g. president, CEO, manager) to perform an act
without prior approval from the board of directors provided that the act is necessary or
appropriate to conduct the ordinary business of the corporation. The Court added that
such acts must be an ordinary nature, which by usage or necessity are incident to his
office. In this case, the Court looked at the nature of the business of the corporation and
the previous practice of the corporation and determined that the contracts in question
were within the general authority granted to the corporate officer.
San Juan vs CA

The issue in this case revolved around the authority of the corporate treasurer to enter
into the disputed contract of sale on behalf of the corporation. The Court ruled that the
contract was not binding on Motorich because it never authorized or ratified the sale. It
explained that because the corporation has a separate juridical personality distinct from
its stockholders, the property of the corporation is not the property of the stockholders
and may not be sold without express authorization from the board of directors.
A corporation may act only through its board of directors or, when authorized either by its
bylaws or by its board resolution, through its officers or agents in the normal course of
business. The general principles of agency govern the relation between the corporation
and its officers or agents, subject to the articles of incorporation, bylaws, or relevant
provisions of law. Thus, this Court has held that "a corporate officer or agent may
represent and bind the corporation in transactions with third persons to the extent that
the authority to do so has been conferred upon him, and this includes powers which
have been intentionally conferred, and also such powers as, in the usual course of the
particular business, are incidental to, or may be implied from, the powers intentionally
conferred, powers added by custom and usage, as usually pertaining to the particular
officer or agent, and such apparent powers as the corporation has caused persons
dealing with the officer or agent to believe that it has conferred."
AF Realty vs Dieselman
Here, a member of the board of directors of the corporation issued a letter authorizing a
real estate broker to look for buyers and negotiate the sale of a parcel of land owned by
the corporation. The Court stated the relevant rule as follows:
Section 23 of the Corporation Code expressly provides that the corporate powers of all
corporations shall be exercised by the board of directors. Just as a natural person may
authorize another to do certain acts in his behalf, so may the board of directors of a
corporation validly delegate some of its functions to individual officers or agents
appointed by it.19 Thus, contracts or acts of a corporation must be made either by the
board of directors or by a corporate agent duly authorized by the board.20 Absent such
valid delegation/authorization, the rule is that the declarations of an individual director
relating to the affairs of the corporation, but not in the course of, or connected with, the
performance of authorized duties of such director, are held not binding on the
corporation.
The Court ruled that the director had no written authority from the board to sell or
negotiate the sale of the lot much less to appoint other persons for the same purpose.
Francisco vs GSIS
The issue was whether alleged acceptance made by a corporate officer was binding on
the corporation. The court ruled that GSIS was bound by the acceptance.
The terms of the offer were clear, and over the signature of defendant's general
manager, Rodolfo Andal, plaintiff was informed telegraphically that her proposal had
been accepted. There was nothing in the telegram that hinted at any anomaly, or gave
ground to suspect its veracity, and the plaintiff, therefore, can not be blamed for relying
upon it. There is no denying that the telegram was within Andal's apparent authority, but
the defense is that he did not sign it, but that it was sent by the Board Secretary in his
name and without his knowledge. Assuming this to be true, how was appellee to know
it? Corporate transactions would speedily come to a standstill were every person dealing
with a corporation held duty-bound to disbelieve every act of its responsible officers, no

matter how regular they should appear on their face. This Court has observed
in Ramirez vs. Orientalist Co., 38 Phil. 634, 654-655, that
In passing upon the liability of a corporation in cases of this kind it is always well to keep
in mind the situation as it presents itself to the third party with whom the contract is
made. Naturally he can have little or no information as to what occurs in corporate
meetings; and he must necessarily rely upon the external manifestations of corporate
consent. The integrity of commercial transactions can only be maintained by holding the
corporation strictly to the liability fixed upon it by its agents in accordance with law; and
we would be sorry to announce a doctrine which would permit the property of a man in
the city of Paris to be whisked out of his hands and carried into a remote quarter of the
earth without recourse against the corporation whose name and authority had been used
in the manner disclosed in this case. As already observed, it is familiar doctrine that if a
corporation knowingly permits one of its officers, or any other agent, to do acts within the
scope of an apparent authority, and thus holds him out to the public as possessing
power to do those acts, the corporation will, as against any one who has in good faith
dealt with the corporation through such agent, be estopped from denying his authority;
and where it is said "if the corporation permits" this means the same as "if the thing is
permitted by the directing power of the corporation."
Thus, the court was saying that third persons have every right to rely on corporate
communications, particularly in this case where there was nothing to alert Francisco of
any anomaly. If the telegram was sent by the board secretary and not by the general
manager, there was no way for Francisco to know that.
OBLIGATIONS
British Airways vs. Court of Appeals
285 SCRA 450(1998)
An agent is also responsible for any negligence in the performance of its function and is
liable for damages which the principal may suffer by reason of its negligent act.
Parenthetically, the Court of Appeals should have been cognizant of the well-settled rule
that an agent is also responsible for any negligence in the performance of its function
and is liable for damages which the principal may suffer by reason of its negligent act.
Hence, the Court of Appeals erred when it opined that BA, being the principal, had no
cause of action against PAL, its agent or subcontractor.
Also, it is worth mentioning that both BA and PAL are members of the International Air
Transport Association (IATA), wherein member airlines are regarded as agents of each
other in the issuance of the tickets and other matters pertaining to their relationship.
Therefore, in the instant case, the contractual relationship between BA and PAL is one of
agency, the former being the principal, since it was the one which issued the confirmed
ticket, and the latter the agent.
Severino vs. Severino
44 Phil. 343(1923)
The relations of an agent to his principal are fiduciary and in regard to the property
forming the subject-matter of the agency, he is estopped from acquiring or asserting a
title adverse to that of the principal.

An action in personam will lie against an agent to compel him to return or retransfer to
his principal, or the latter's estate, the real property committed to his custody as such
agent and also to execute the necessary documents of conveyance to effect such
retransfer
Gregorio Araneta, Inc. vs. De Paterno and Vidal
91 Phil. 786(1952)
An agent, in the sense used in article 1459 of the Civil Code, is one who accepts
another's representation to perform in his name certain acts of more or less
transcendancy.
The ban of paragraph 2 of article 1459 connotes the idea of trust and confidence; and
so, where the relationship does not involve considerations of good faith and integrity, the
prohibition should not, and does not apply. To come under the prohibition, the agent
must be in a fiduciary relation with his principal.
A person who acts as a go-between or middleman between the vendor and the vendee,
bringing them together to make the contract themselves, without any power or discretion
whatsoever which he could abuse to his advantage and to the owner's prejudice, is not
an agent within the meaning of article 1459 of the Civil Code.
Domingo vs. Domingo
42 SCRA 131(1971)
Articles 1891 and 1909 of the Civil Code demand the utmost good faith, fidelity, honesty,
candor and fairness on the part of the agent to his principal. The agent has an absolute
obligation to make a full disclosure or complete account to his principal of all his
transactions and other material facts relevant to the agency, so much so that the law as
amended does not countenance any stipulation exempting the agent from such an
obligation and considers such an exemption as void.
An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit
from the vendee, without revealing the same to bis principal is guilty of a breach of his
loyalty to the latter and forfeits his right to collect the commission that may be due him,
even if the principal does not suffer any injury by reason of such breach of fidelity, or that
he obtained better results or that the agency is a gratuitous one, or that usage or custom
allows it; because the rule is to prevent the possibility of any wrong, not to remedy or
repair an actual damage.
The duty embodied in Article 1891 of the Civil Code does not apply if the agent or broker
acted only as a middleman with the task of merely bringing together the vendor and
vendee, who themselves thereafter will negotiate on the terms and conditions of the
transaction.
Murao vs. People
462 SCRA 366(2005)
Private complainants right to a commission does not make him a joint owner of the
money paid to LMICE by the City Government of Puerto Princesa but merely establishes
the relation of agent and principal.His right to a commission does not make private
complainant Federico a joint owner of the money paid to LMICE by the City Government
of Puerto Princesa, but merely establishes the relation of agent and principal. It is

unequivocal that an agency existed between LMICE and private complainant Federico.
Article 1868 of the Civil Code defines agency as a special contract 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 latter. Although private complainant
Federico never had the opportunity to operate as a dealer for LMICE under the terms of
the Dealership Agreement, he was allowed to act as a sales agent for LMICE. He can
negotiate for and on behalf of LMICE for the refill and delivery of fire extinguishers,
which he, in fact, did on two occasionswith Landbank and with the City Government of
Puerto Princesa.
All profits made and any advantage gained by an agent in the execution of his agency
should belong to the principal.All profits made and any advantage gained by an agent
in the execution of his agency should belong to the principal. In the instant case, whether
the transactions negotiated by the sales agent were for the sale of brand new fire
extinguishers or for the refill of empty tanks, evidently, the business belonged to LMICE.
Consequently, payments made by clients for the fire extinguishers pertained to LMICE.
When petitioner Huertazuela, as the Branch Manager of LMICE in Puerto Princesa City,
with the permission of petitioner Murao, the sole proprietor of LMICE, personally picked
up Check No. 611437 from the City Government of Puerto Princesa, and deposited the
same under the Current Account of LMICE with PCIBank, he was merely collecting what
rightfully belonged to LMICE. Indeed, Check No. 611437 named LMICE as the lone
payee.
Metropolitan Bank and Trust Company vs. Court of Appeals
194 SCRA 169(1991)
The agent is responsible not only for fraud, but also for negligence, which shall be
judged with more or less rigor by the courts, according to whether the agency was or
was not for a compensation.The negligence of Metro-bank has been sufficiently
established. To repeat for emphasis, it was the clearance given by it that assured Golden
Savings it was already safe to allow Gomez to withdraw the proceeds of the treasury
warrants he had deposited. Metrobank misled Golden Savings. There may have been no
express clearance, as Metrobank insists (although this is refuted by Golden Savings) but
in any case that clearance could be implied from its allowing Golden Savings to withdraw
from its account not only once or even twice but three times. The total withdrawal was in
excess of its original balance before the treasury warrants were deposited, which only
added to its belief that the treasury warrants had indeed been cleared.
Thomas vs. Pineda
89 Phil. 312(1951)
The relations of an agent to his principal are fiduciary and it is an elementary and very
old rule that in regard to property forming the subject matter of the agency, an agent is
estopped from acquiring or asserting a title adverse to that of the principal. His position
is analogous to that of a trustee and he cannot, consistently with the principles of good
faith, be allowed to create in himself an interest in opposition to that of his principal or
cestui que trust
Palma vs. Cristobal
77 Phil. 712(1946)

The relations of an agent to his principal are fiduciary and in regard to property forming
the subject matter of the agency, he is estopped from acquiring or asserting a title
adverse to that of 'the principal. His position is analogous to that of a trustee and he
cannot consistently, with the principles of good faith, be allowed to create in himself an
interest in opposition to that of his principal or cestui que trust.
Ramos vs. Caoibes
94 Phil. 440(1954)
Where an agent makes use of his power of attorney after the death of his principal, the
agent has the obligation to deliver the amount collected by him by virtue of said power to
the administratrix of the estate of his principal.
People vs. Chowdury
325 SCRA 572(2000)
The law of agency, as applied in civil cases, has no application in criminal cases, and no
man can escape punishment when he participates in the commission of a crime upon
the ground that he simply acted as an agent of any party.The law of agency, as
applied in civil cases, has no application in criminal cases, and no man can escape
punishment when he participates in the commission of a crime upon the ground that he
simply acted as an agent of any party. The culpability of the employee therefore hinges
on his knowledge of the offense and his active participation in its commission. Where it
is shown that the employee was merely acting under the direction of his superiors and
was unaware that his acts constituted a crime, he may not be held criminally liable for an
act done for and in behalf of his employer.
Agents or representatives appointed by a licensed recruitment agency whose
appointments are not previously approved by the Philippine Overseas Employment
Administration are considered non-licensee or non-holder of authority and therefore
not authorized to engage in recruitment activity.Evidence shows that accusedappellant interviewed private complainants in the months of June, August and
September in 1994 at Craftrades office. At that time, he was employed as interviewer of
Craftrade which was then operating under a temporary authority given by the POEA
pending renewal of its license. The temporary license included the authority to recruit
workers. He was convicted based on the fact that he was not registered with the POEA
as employee of Craftrade. Neither was he, in his personal capacity, licensed to recruit
overseas workers. Section 10 Rule II Book II of the Rules and Regulation Governing
Overseas Employment (1991) requires that every change, termination or appointment of
officers, representatives and personnel of licensed agencies be registered with the
POEA. Agents or representatives appointed by a licensed recruitment agency whose
appointments are not previously approved by the POEA are considered non-licensee
or non-holder of authority and therefore not authorized to engage in recruitment
activity.
The obligation to register its personnel with the Philippine Overseas Employment
Administration belongs to the officers of the agency.Upon examination of the records,
however, we find that the prosecution failed to prove that accused-appellant was aware
of Craftrades failure to register his name with the POEA and that he actively engaged in
recruitment despite this knowledge. The obligation to register its personnel with the

POEA belongs to the officers of the agency. A mere employee of the agency cannot be
expected to know the legal requirements for its operation. The evidence at hand shows
that accused-appellant carried out his duties as interviewer of Craftrade believing that
the agency was duly licensed by the POEA and he, in turn, was duly authorized by his
agency to deal with the applicants in its behalf. Accused-appellant in fact confined his
actions to his job description. He merely interviewed the applicants and informed them of
the requirements for deployment but he never received money from them. Their
payments were received by the agencys cashier, Josephine Ong. Furthermore, he
performed his tasks under the supervision of its president and managing director. Hence,
we hold that the prosecution failed to prove beyond reasonable doubt accusedappellants conscious and active participation in the commission of the crime of illegal
recruitment. His conviction, therefore, is without basis.
Olaguer vs. Purugganan, Jr.
515 SCRA 460(2007)
It is a general rule that a power of attorney must be strictly construed; the instrument will
be held to grant only those powers that are specified, and the agent may neither go
beyond nor deviate from the power of attorney.Petitioners arguments are
unpersuasive. It is a general rule that a power of attorney must be strictly construed; the
instrument will be held to grant only those powers that are specified, and the agent may
neither go beyond nor deviate from the power of attorney. However, the rule is not
absolute and should not be applied to the extent of destroying the very purpose of the
power. If the language will permit, the construction that should be adopted is that which
will carry out instead of defeat the purpose of the appointment. Clauses in a power of
attorney that are repugnant to each other should be reconciled so as to give effect to the
instrument in accordance with its general intent or predominant purpose. Furthermore,
the instrument should always be deemed to give such powers as essential or usual in
effectuating the express powers.
Article 1882 of the Civil Code provides that the limits of an agents authority shall not be
considered exceeded should it have been performed in a manner advantageous to the
principal than that specified by him.Article 1882 of the Civil Code provides that the
limits of an agents authority shall not be considered exceeded should it have been
performed in a manner more advantageous to the principal than that specified by him.
The prohibition against agents purchasing property in their hands for sale or
management is, however, clearly, not absolute.It is, indeed, a familiar and universally
recognized doctrine that a person who undertakes to act as agent for another cannot be
permitted to deal in the agency matter on his own account and for his own benefit
without the consent of his principal, freely given, with full knowledge of every detail
known to the agent which might affect the transaction. The prohibition against agents
purchasing property in their hands for sale or management is, however, clearly, not
absolute. It does not apply where the principal consents to the sale of the property in the
hands of the agent or administrator.
In re Bamberger
49 Phil. 962(1924)

Lawyers are bound to promptly account for money or property received by them on
behalf of their clients and failure to do so constitutes professional misconduct.
The fact that a lawyer has a lien for fees on money in his hands collected for his clients
does not relieve him from the duty of promptly accounting for the funds received
Escueta vs. Lim
512 SCRA 411(2007)
The agent may appoint a substitute if the principal has not prohibited him from doing so.
Article 1892 of the Civil Code provides: 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 x xx.
Applying the above-quoted provision to the special power of attorney executed by
Ignacio Rubio in favor of his daughter Patricia Llamas, it is clear that she is not
prohibited from appointing a substitute. By authorizing Virginia Lim to sell the subject
properties, Patricia merely acted within the limits of the authority given by her father, but
she will have to be responsible for the acts of the sub-agent, among which is precisely
the sale of the subject properties in favor of respondent.
A contract executed by an agent without authority to sell is not void but simply
unenforceable.Even assuming that Virginia Lim has no authority to sell the subject
properties, the contract she executed in favor of respondent is not void, but simply
unenforceable, under the second paragraph of Article 1317 of the Civil Code which
reads: Art. 1317. x xx A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf
it has been executed, before it is revoked by the other contracting party.
The acceptance and encashment by the owner of a check representing the purchase
price of his property sold through his agent constitute ratification of the contract of sale
and produce the effects of an express power of agency.Ignacio Rubio merely denies
the contract of sale. He claims, without substantiation, that what he received was a loan,
not the down payment for the sale of the subject properties. His acceptance and
encashment of the check, however, constitute ratification of the contract of sale and
produce the effects of an express power of agency. [H]is action necessarily implies
that he waived his right of action to avoid the contract, and, consequently, it also implies
the tacit, if not express, confirmation of the said sale effected by Virginia Lim in favor of
respondent.

Baltazar vs. Ombudsman, 510 SCRA 74(2006)

The legal maxim potestasdelegata non delegarepotest; a power once delegated cannot
be re-delegated, while applied primarily in political law to the exercise of legislative
power, is a principle of agencyfor another, a redelegation of the agency would be
detrimental to the principal as the second agent has no privity of contract with the former.
The legal maxim potestasdelegata non delegarepotest; a power once delegated
cannot be re-delegated, while applied primarily in political law to the exercise of
legislative power, is a principle of agency. For another, a re-delegation of the agency

would be detrimental to the principal as the second agent has no privity of contract with
the former.
Mendezona vs. Ciudad de Giota
Yes, Article 1724 of the Civil Code, ( Art. 1896 of the New Civil Code)which provides that
an agent shall be liable for interest upon any sums he may have applied to his own use,
from the day on which he did so, and upon those which. he still owes, after the expiration
of the agency, from the time of his default.
Metrobank vs. Court of Appeals
Yes, Art. 1909 provides that the agent is responsible not only for fraud, but also for
negligence, which shall be judged with more or less rigor by the courts, according to
whether the agency was or was not for a compensation. As the agent, Metrobank acted
negligently; as they did not wait for the treasury warrants to cleared rather they
accommodated the repeated inquires of a valued client. The carelessness resulted in
loss which could be avoided by mere exercise of caution and prudence.
Austria vs. Court of Appeals
Yes, it is not necessary that there be a conviction for robbery for Abad to be relieved
from civil liability of
returning the pendant under Art, 1174, New Civil Code, as it would only be sufficient to
establish that the unforseeable event, the robbery in this case, did take place without
any concurrent fault on the debtor's part, and this can be done by preponderant
evidence. To require, moreover prior conviction in order to establish robbery as a fact,
would demand proof beyond reasonable doubt to prove a fact in a civil case.
International Films vs. Lyric Film
No, Ace Navigations duty was only limited to informing the consignee Heindenrich of the
arrival of the vessel in order for the latter to immediately take possession of the goods.
Art. 1897 cannot apply due to lack of evidence showing that Ace Navigation exceeded its
authority in the discharge of its obligation.
National Power Corp. vs. National Merchandising Corp.
Yes, NAMERCO is liable for damages under article 1897 of the Civil Code the agent who
exceeds the limits of his authority without giving the party with whom he contracts
sufficient notice of his powers is personally liable to such party. NAMERCO never
disclosed to the NAPOCOR the cabled or written instructions of its principal. For that
reason and because NAMERCO exceeded the limits of its authority, it virtually acted in
its own name and not as agent and it is, therefore, bound by the contract of sale which,
however, is not enforceable against its principal.
Phil Products Co, vs. Primateria, Societe Anonyme Pour Le Commerce Exterieur:
Primateria (Phil.) Inc .
No, Art. 1897 states that The agent who acts as such is not personally liable to the party
with whom he contracts, unless he expressly binds himself or exceeds the limits of his

authority without giving such party sufficient notice of his powers. The article does not
hold that in cases of excess of authority, both the agent and the principal are liable to the
other contracting party. There is no proof that, as agents, they exceeded the limits of
their authority, In fact, the principalPrimateria Zurichwho should be the one to raise
the point, never raised it, denied its liability on the ground of excess of authority.
Development Bank of the Philippines vs. Court of Appeals
Yes, Dans, DBP was wearing two legal hats: the first as a lender, and the second as an
insurance agent.
As an insurance agent, DBP made Dans go through the motion of applying for said
insurance, thereby leading him and his family to believe that they had already fulfilled all
the requirements for the MRI and that the issuance of their policy was forthcoming.
Apparently, DBP had full knowledge that Danss application was never going to be
approved. In this case, DBP acted beyond the scope of its authority when it accepted the
application of Juan Dans knowing full well that he is ineligible. On the part of the Dans
there was no showing that they knew of DBPs limitation of authority.
Macias vs. Weaver
No, Warner, Barnes & Co. did not insure the property of the plaintiff, or in any manner
agree to pay the plaintiff the amount of any loss. There is no contract of any kind, either
oral or written, between the plaintiff and Warner, Barnes & Co. Plaintiff's contracts are
with the insurance companies. The present case shows that the Warner, Barnes & Co
acted with the scope of its authority and therefore is not liable for any actions of the
principal with regards to third parties.
Country Bankers vs. Keppel Cebu
No, presenting the special power of attorney that Quinians scope is only limited to
transactions not exceeding 500000 and only in favor of the DPWH and NAPOCOR and
other government agencies. Neither did it ratify the contract entered into by Quinian or
was estopped by receiving premiums from Unimarine. Cebu Shipyard did not exert
proper diligence in dealing with Quinian when it did not bother to inquire about the
latters authority.
Manila Memorial vs. Linsangan
No, Baluyot in this case acted beyond the scope of her authority, Article 1897 provides
that The agent who acts as such is not personally liable to the party with whom he
contracts, unless he expressly binds himself or exceeds the limits of his authority without
giving such party sufficient notice of his powers. She is now personally liable for her
own actions.
Safic Aclan vs. Imperial Vegetable
No, Monteverde had no blanket authority to bind Imperial Vegetable. The Board of
Directors did not know or authorize any contract entered into by Monteverde. The Court
stressed that Every person dealing with an agent is put upon inquiry and must discover
upon his peril the authority of the agent. If he does not make such inquiry, he is

chargeable with knowledge of the agents authority, and his ignorance of that authority
will not be any excuse. (Bacaltos Coal Mines v. Court of Appeals)

Siredy Enterprises vs. Court of Appeals

Yes, the letter of authority of Yanga to Santos clearly provides that Santos is authorized
to enter into contracts for the construction of housing units. Santos acted within the
scope of his authority. Article. 1900 provides that So far as third persons are concerned,
an act is deemed to have been performed within the scope of the agents authority, if
such act is 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 between the
principal and the agent.
Toyota Shaw vs. Court of Appeals
No, Sosa was not dealing with Toyota rather it was dealing with Bernardo in his personal
capacity. Bernardo did not misrepresent that he had the authority to sell any Toyota
vehicle. He knew that Bernardo was only a sales representative of Toyota and hence a
mere agent of the latter. It was incumbent upon Sosa to act with ordinary prudence and
reasonable diligence to know the extent of Bernardos authority as an agent in respect of
contracts to sell Toyotas vehicles. A person dealing with an agent is put upon inquiry and
must discover upon his peril the authority of the agent
LIABILITIES
BACALTOS COAL MINES VS CA
245 SCRA 460
The conclusion then of the Court of Appeals that the Authorization includes the power to
enter into the Trip Charter Party because the five prerogatives are prefaced by such
clause, is seriously flawed. It fails to note that the broadest scope of Savellons authority
is limited to the use of the coal operating contract and the clause cannot contemplate
any other power not included in the enumeration or which are unrelated either to the
power to use the coal operating contract or to those already enumerated. In short, while
the clause allows some room for flexibility, it can comprehend only additional
prerogatives falling within the primary power and within the same class as those
enumerated. The trial court, however, went further by hastily making a sweeping
conclusion that a company such as a coal mining company is not prohibited to engage
in entering into a Trip Charter Party contract. But what the trial court failed to consider
was that there is no evidence at all that Bacaltos Coal Mines as a coal mining company
owns and operates vessels, and even if it owned any such vessels, that it was allowed to
charter or lease them. The trial court also failed to note that the Authorization is not a
general power of attorney. It is a special power of attorney for it refers to a clear
mandate specifically authorizing the performance of a specific power and of express acts
subsumed therein.

Furthermore, assuming that the transaction was permitted in the Authorization, the check
should still have been drawn in favor of the principal. SMC then made possible the
wrong done. There is an equitable maxim that between two innocent parties, the one
who made it possible for the wrong to be done should be the one to bear the resulting
loss. For this rule to apply, the condition precedent is that both parties must be innocent.
In the present case, however, SMC is guilty of not ascertaining the extent and limits of
the authority of Savellon. In not doing so, SMC dealt with Savellon at its own peril.

BA FINANCE VS. CA
211 SCRA 112
Although Wong was clearly authorized to approve loans even up to P350,000.00 without
any security requirement, which is far above the amount subject of the guaranty in the
amount of P60,000.00, nothing in the said memorandum expressly vests on the credit
administrator power to issue guarantees. We cannot agree with respondents contention
that the phrase contingent commitment set forth in the memorandum means
guarantees. It has been held that a power of attorney or authority of an agent should not
be inferred from the use of vague or general words. Guaranty is not presumed, it must
be expressed and cannot be extended beyond its specified limits (Director v. Sing Juco,
53 Phil. 205). In one case, where it appears that a wife gave her husband power of
attorney to loan money, this Court ruled that such fact did not authorize him to make her
liable as a surety for the payment of the debt of a third person (Bank of Philippine
Islands v. Coster, 47 Phil. 594).
The sole allegation of the credit administrator in the absence of any other proof that he is
authorized to bind petitioner in a contract of guaranty with third persons should not be
given weight. The representation of one who acts as agent cannot by itself serve as
proof of his authority to act as agent or of the extent of his authority as agent (Velasco v.
La Urbana, 58 Phil. 681). Wongs testimony that he had entered into similar transactions
of guaranty in the past for and in behalf of the petitioner, lacks credence due to his
failure to show documents or records of the alleged past transactions. The actuation of
Wong in claiming and testifying that he has the authority is understandable. He would
naturally take steps to save himself from personal liability for damages to respondent
bank considering that he had exceeded his authority. The rule is clear that an agent who
exceeds his authority is personally liable for damages.
EUGENIO VS. CA
239 SCRA 207
The substantive law is that payment shall be made to the person in whose favor the
obligation has been constituted, or his successor-in-interest or any person authorized to
receive it. As far as third persons are concerned, an act is deemed to have been
performed within the scope of the agents authority, if such is 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 between the principal and his agent. In fact,
Atty. Rosario, private respondents own witness, admitted that it is the responsibility of
the collector to turn over the collection.

EUROTECH VS. CUISON

G.R. 167552
Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is not
personally liable to the party with whom he contracts. The same provision, however,
presents two instances when an agent becomes personally liable to a third person. The
first is when he expressly binds himself to the obligation and the second is when he
exceeds his authority. In the last instance, the agent can be held liable if he does not
give the third party sufficient notice of his powers.
The Court ruled that the agent in this case acted within the scope of his authorit, which
made Article 1897 inapplicable. In addition, the Court took note of the fact that the third
party is seeking to recover both from principal and agent which is not contemplated
under the article. To reiterate, the first part of Article 1897 declares that the principal is
liable in cases when the agent acted within the bounds of his authority. Under this, the
agent is completely absolved of any liability. The second part of the said provision
presents the situations when the agent himself becomes liable to a third party when he
expressly binds himself or he exceeds the limits of his authority without giving notice of
his powers to the third person. However, it must be pointed out that in case of excess of
authority by the agent, like what petitioner claims exists here, the law does not say that a
third person can recover from both the principal and the agent.
BEAUMONT VS. PRIETO
41 PHIL 670
Although, according to article 1717 of the Civil Code, when the agent acts in his own
name he is not personally liable to the person with whom he enters into a contract when
things belonging to the principal are the object thereof, yet such third person has a right
of action not only against the principal but also against the agent, when the rights and
obligations which are the subject matter of the litigation cannot be legally and juridically
determined without hearing both of them.
OBLIGATIONS
FILPINAS LIFE VS. PERDROSO
543 SCRA 542

It appears indisputable that respondents Pedroso and Palacio had invested P47,000 and
P49,550, respectively. These were received by Valle and remitted to Filipinas Life, using
Filipinas Lifes official receipts, whose authenticity were not disputed. Valles authority to
solicit and receive investments was also established by the parties. When respondents
sought confirmation, Alcantara, holding a supervisory position, and Apetrior, the branch
manager, confirmed that Valle had authority. While it is true that a person deal ing with
an agent is put upon inquiry and must discover at his own peril the agents authority, in

this case, respondents did exercise due diligence in removing all doubts and in
confirming the validity of the representations made by Valle.
Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle. By
the contract of agency, 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
latter.The general rule is that the principal is responsible for the acts of its agent done
within the scope of its authority, and should bear the damage caused to third persons.
When the agent exceeds his authority, the agent becomes personally liable for the
damage. But even when the agent exceeds his authority, the principal is still solidarily
liable together with the agent if the principal allowed the agent to act as though the agent
had full powers. In other words, the acts of an agent beyond the scope of his authority do
not bind the principal, unless the principal ratifies them, expressly or impliedly.
Ratification in agency is the adoption or confirmation by one person of an act performed
on his behalf by another without authority.
Filipinas Life cannot profess ignorance of Valles acts. Even if Valles representations
were beyond his authority as a debit/insurance agent, Filipinas Life thru Alcantara and
Apetrior expressly and knowingly ratified Valles acts. It cannot even be denied that
Filipinas Life benefited from the investments deposited by Valle in the account of
Filipinas Life. In our considered view, Filipinas Life had clothed Valle with apparent
authority; hence, it is now estopped to deny said authority. Innocent third persons should
not be prejudiced if the principal failed to adopt the needed measures to prevent
misrepresentation, much more so if the principal ratified his agents acts beyond the
latters authority. The act of the agent is considered that of the principal itself. Qui per
alium facit per seipsum facere videtur. He who does a thing by an agent is considered
as doing it himself.
MANILA MEMORIAL VS. LINSANGAN
G.R. 151319
Facts: Florencia Baluyot wass authorized by the Manila Memorial Park Inc. (MMPI) to
sell burial lots to those interested in purchasing. Herein respondent Atty. Linsangan was
approached by Florencia with an offer to sell to the former a lot that she alleges to have
already been previously sold but the owner thereof has cancelled and thus, Atty.
Linsangan shall only continue the payment thereof amounting to P95,000, Atty.
Linsangan
agreed
and
payed
an
initial
P35,000.
Thereafter, Florencia advised Atty. Linsangan that there were changes in the contract
and that she needed him to sign a new contract stipulating the total price of P132,000
but Florencia assured Atty. Linsangan that he would only pay the agreed P95,000.
In the new contract, Atty. Linsangan acceded that he has read and understood all
the stipulations therein. The payment was made in installments for two years which Atty.
Linsangan completed, however, after two years, Florencia informed Linsangan that their

contract was cancelled and offered a different lot, Atty. Linsangan refused the offer and
filed a suit for breach of contract against MMPI and Florencia. MMPI avers that Florencia
acted beyond the scope of her authority as MMPIs agent since the latter did not allow
her to renegotiate existing contracts but only to sell new contracts. Atty. Linsangan on
the other hand argues that MMPI should be liable for the acts of its agents.
Held: The acts of an agent beyond the scope of his authority do not bind the principal,
unless he ratifies them, expressly or impliedly. Only the principal can ratify; the agent
cannot ratify his own unauthorized acts. Moreover, the principal must have knowledge of
the acts he is to ratify.
Ratification in agency is the adoption or confirmation by one person of an act
performed on his behalf by another without authority. The substance of the doctrine is
confirmation after conduct, amounting to a substitute for a prior authority. Ordinarily, the
principal must have full knowledge at the time of ratification of all the material facts and
circumstances relating to the unauthorized act of the person who assumed to act as
agent.
No ratification can be implied in the instant case. A perusal of Baluyots Answer reveals
that the real arrangement between her and Atty. Linsangan was for the latter to pay a
monthly installment of P1,800.00 whereas Baluyot was to shoulder the counterpart
amount of P1,455.00 to meet the P3,255.00 monthly installments as indicated in the
contract. However, it appears that while Atty. Linsangan issued the post-dated checks,
Baluyot failed to come up with her part of the bargain. As far as MMPCI is concerned,
the contract price was P132,250.00, as stated in the Offer to Purchase signed by Atty.
Linsangan and MMPCIs authorized officer. MMPCI received only P1,800.00 checks,
which were clearly insufficient payment. If MMPCI was aware of the arrangement, it
would have refused the latters check payments for being insufficient.
BOARD OF LIQUIDATORS vs. HEIRS OF MAXIMO KALAW
20 SCRA 987
A corporate officer, entrusted with the general management and control of its business,
has implied authority to make any contract or do any other act which is necessary or
appropriate to the conduct of the ordinary business of the corporation. As such officer, he
may, without any special authority from the Board of Directors, perform all acts of an
ordinary nature, which by usage or necessity are incident to his office, and may bind the
corporation by contracts in matters arising in the usual course of business.
Where similar acts have been approved by the directors as a matter of general
practice, custom, and policy, the general manager may bind the company without formal
authorization of the board of directors. In varying language, existence of such authority is
established by proof of the course of business, the usages and practices of the company
and by theknowledge which the board of directors has, or must be presumedto have, of
acts and doings of its subordinates in and about the affairs of the corporation. Where the
practice of the corporation has been to allow its general manager to negotiate and
execute contracts in its copra trading activities for and in Nacoco's behalfwithout prior
board approval, and the board itself, by its acts and through acquiescence, practically

laid aside the by-law requirement of prior approval, the contracts of the general
manager, under the given circumstances, are valid corporate acts.
Ratification by a corporation of an unauthorized act or contract by its officers or
others relates back to the time of the act or contract ratified and is equivalent to original
authority. The corporation and the other party to the transaction are in precisely the
same position as if the act or contract had been authorized at the time. The adoption or
ratif ication of a contract by a corporation is nothing more nor less than the making of an
original contract. The theory of corporate ratification is predicated on the right of a
corporation to contract, and any ratification or adoption is equivalent to a grant of prior
authority.
FRANCISCO VS. GSIS
7 SCRA 577
The terms of the offer were clear, and over the signature of defendants general
manager, Rodolfo Andal, plaintiff was informed telegraphically that her proposal had
been accepted. There was nothing in the telegram that hinted at any anomaly, or gave
ground to suspect its veracity, and the plaintiff, therefore, can not be blamed for relying
upon it. There is no denying that the telegram was within Andals apparent authority, but
the defense is that he did not sign it, but that it was sent by the Board Secretary in his
name and without his knowledge. Assuming this to be true, how was appellee to know
it? Corporate transactions would speedily come to a standstill were every person dealing
with a corporation held duty-bound to disbelieve every act of its responsible officers, no
matter how regular they should appear on their face.
This Court has observed in Ramirez vs. Orientalist Co., 38 Phil. 634, 654-655, that
In passing upon the liability of a corporation in cases of this kind it is always well to keep
in mind the situation as it presents itself to the third party with whom the contract is
made. Naturally he can have little or no information as to what occurs in corporate
meetings; and he must necessarily rely upon the external manifestations of corporate
consent. The integrity of commercial transactions can only be maintained by holding the
corporation strictly to the liability fixed upon it by its agents in accordance with law; and
we would be sorry to announce a doctrine which would permit the property of a man in
the city of Paris to be whisked out of his hands and carried into a remote quarter of the
earth without recourse against the corporation whose name and authority had been used
in the manner disclosed in this case. As already observed, it is familiar doctrine that if a
corporation knowingly permits one of its officers, or any other agent, to do acts within the
scope of an apparent authority, and thus holds him out to the public as possessing
power to do those acts, the corporation will, as against any one who has in good faith
dealt with the corporation through such agent, be estopped from denying his authority;
and where it is said if the corporation permits this means the same as if the thing is
permitted by the directing power of the corporation.
A corporation cannot evade the binding effect produced by a telegram sent by its board
secretary, and the addressee of such telegram cannot be blamed for relying upon it,
because if every person dealing with a corporation were held duty-bound to disbelieve
every act of its responsible officers no matter how regular it should appear on its face,
corporate transactions would speedily come to a standstill.
WOODCHILD VS. ROXAS

436 SCRA 235

The agent was not specifically authorized to grant a right of way or to agree to sell to a
portion thereof. It found that the authority of agent, under the resolution did not include
the authority to sell a portion of the agacent lot, or to create or convey real rights
thereon. Regarding an implied authority it said:
Neither may such authority be implied from the authority granted to Roxas to sell
Lot No. 491-A-3-B-2 to the petitioner on such terms and conditions which he
deems most reasonable and advantageous. Under paragraph 12, Article 1878 of
the New Civil Code, a special power of attorney is required to convey real rights
over immovable property.26 Article 1358 of the New Civil Code requires that
contracts which have for their object the creation of real rights over immovable
property must appear in a public document. 27 The petitioner cannot feign
ignorance of the need for Roxas to have been specifically authorized in writing by
the Board of Directors to be able to validly grant a right of way and agree to sell a
portion of Lot No. 491-A-3-B-1. The rule is that if the act of the agent is one which
requires authority in writing, those dealing with him are charged with notice of
that fact.28
The Court reiterated that:
Powers of attorney are generally construed strictly and courts will not infer or
presume broad powers from deeds which do not sufficiently include property or
subject under which the agent is to deal.The general rule is that the power of
attorney must be pursued within legal strictures, and the agent can neither go
beyond it; nor beside it. The act done must be legally identical with that
authorized to be done.
Thus, this case demonstrates a strict application of the rule that the agent must
act within the scope of his authority.
RURAL BANK of MILAOR VS. OCFEMIA
325 SCRA 99
In failing to file its answer specifically denying under oath the Deed of Sale, the bank
admitted the due execution of the said contract. Such admission means that it
acknowledged that Tena was authorized to sign the Deed of Sale on its behalf.
In any event, the bank acknowledged, by its own acts or failure to act, the authority of Fe
S. Tena to enter into binding contracts. After the execution of the Deed of Sale,
respondents occupied the properties in dispute and paid the real estate taxes due
thereon. If the bank management believed that it had title to the property, it should have
taken some measures to prevent the infringement or invasion of its title thereto and
possession thereof. Likewise, Tena had previously transacted business on behalf of the
bank, and the latter had acknowledged her authority. A bank is liable to innocent third
persons where representation is made in the course of its normal business by an agent
like Manager Tena, even though such agent is abusing her authority. Clearly, persons
dealing with her could not be blamed for believing that she was authorized to transact
business for and on behalf of the bank.
CUISON vs. CA

227 SCRA 391

As to the merits of the case, it is a well-established rule that one who clothes another
with apparent authority as his agent and holds him out to the public as such cannot be
permitted to deny the authority of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good faith and in the honest belief that
he is what he appears to be.
Petitioner is now estopped from disclaiming liability for the transaction entered into by
Tiu Huy Tiac on his behalf. It matters not whether the representations are intentional or
merely negligent so long as innocent third persons relied upon such representations in
good faith and for value.
BEDIA vs WHITE
204 SCRA 273
Hontiveros itself has not repudiated Bedias agency as it would have if she had really not
signed in its name. In the answer it filed with Bedia, it did not deny the latters allegation
in Paragraph 4 thereof that she was only acting as its agent when she solicited Whites
participation. In fact, by filing the answer jointly with Bedia through their common
counsel, Hontiveros affirmed .this allegation. If the plaintiffs had any doubt about the
capacity in which Bedia was acting, what they should have done was verify the matter
with Hontiveros. They did not. Instead, they simply accepted Bedias representation that
she was an agent of Hontiveros and dealt with her as such. Under Article 1910 of the
Civil Code, the principal must comply with all the obligations which the agent may have
contracted within the scope of his authority. Hence, the private respondents cannot now
hold Bedia liable for the acts performed by her for, and imputable to, Hontiveros as her
principal.
Our conclusion is that since it has not been found that Bedia was acting beyond the
scope of her authority when she entered into the Participation Contract on behalf of
Hontiveros, it is the latter that should be held answerable for any obligation arising from
that agreement. By moving to dismiss the complaint against Hontiveros, the plaintiffs
virtually disarmed themselves and forfeited whatever claims they might have proved
against the latter under the contract signed for it by Bedia. It should be obvious that
having waived these claims against the principal, they cannot now assert them against
the agent.
PNB vs. Ritratto Group
362 SCRA 216
The contract questioned is one entered into between respondent and PNB-IFL, not PNB.
In their complaint, respondents admit that petitioner is a mere attorney-in-fact for the
PNB-IFL with full power and authority to, inter alia, foreclose on the properties
mortgaged to secure their loan obligations with PNB-IFL. In other words, herein
petitioner is an agent with limited authority and specific duties under a special power of
attorney incorporated in the real estate mortgage. It is not privy to the loan contracts
entered into by respondents and PNB-IFL.
In any case, the parent-subsidiary relationship between PNB and PNB-IFL is not the
significant legal relationship involved in this case since the petitioner was not sued
because it is the parent company of PNB-IFL. Rather, the petitioner was sued because it

acted as an attorney-in-fact of PNB-IFL in initiating the foreclosure proceedings. A suit

against an agent cannot without compelling reasons be considered a suit against the
principal. Under the Rules of Court, every action must be prosecuted or defended in the
name of the real party-in-interest, unless otherwise authorized by law or these Rules. In
mandatory terms, the Rules require that parties-in-interest without whom no final
determination can be had, an action shall be joined either as plaintiffs or defendants. In
the case at bar, the injunction suit is directed only against the agent, not the principal.
John Fortis vs. Gutierrez Hermanos
G.R. No. L-2484 April 11, 1906
Doctrine:
1. General rule: receipt by a person of share of profits of business is prima
facie evidence that he is a partner; Exception: profit was for payment as
wages of employee.
2. Articles of partnership prevail as to the division of profits among partners.
3. It is the net profit, after all expenses (including salary of employee) have
been deducted that is shared between partners.
No. The judgment of the court below was affirmed. Case was remanded to the lower
court for execution.
First, it was a mere contract of employment. The plaintiff had neither voice nor vote in
the management of the affairs of the company.
Second, the articles of partnership between the defendants provided that the profits
should be divided among the partners named in a certain proportion, and the contract
made between the plaintiff and the then manager of the defendant partnership did not in
any way vary or modify this provision of the articles of partnership.
The profits of the business could not be determined until all of the expenses had been
paid. A part of the expenses to be paid for the year 1902 was the salary of the plaintiff.
That salary had to be deducted before the net profits of the business, which were to be
divided among the partners, could be ascertained. It was necessary to determine what
the profits of the business were after paying all of the expenses except his, in order to
determine what the salary of the plaintiff was. But such determination does not arrive at
the net profits of the business yet. It was only made for the purpose of fixing the basis
upon which his compensation should be determined.

ALBALADEJO Y CIA., S. EN C. v. PHILIPPINE REFINING CO. 48 PHIL 556

The relation between the parties was not that of principal and agent in so far as relates
to the purchase of copra by Albaladejo. WhileVRC made Albaladejo one of its
instruments

for

the

collection

of

copra,in

making

its

purchases

from

the

producers,Albaladejo was buying upon its own account.When Albaladejo turned over the
copra to VRC, a second sale was effected.
In the contract, it is declared that during the continuance of theagreement,VRC would
not appoint any other agent for the purchase of copra in Legaspi; and this gives rise
indirectly to the inference that Albaladejo was considered its buying agent. However, the
use of this term in one clause of the contract cannot dominate the real nature of the
agreement as revealed in other clauses, no less than in the caption of the agreement
itself. This designation was used for convenience. The title to all of the copra purchased
by Albaladejo remained in it until it was delivered by way of subsequent sale to VRC.
Lastly, the letters from VRC to Albaladejo that the Court quoted did not indicate anything
to the effect that VRC is liable for the such expenses incurred by Albaladejo, as the
letters only noted the dire condition of VRCs copra business, as well as its hopes to
enter the market on a more extensive scale [which was unfortunately unrealized].
Perez vs Luzon Surety

38 OG 1213

Doctrine: A Principal is obligated to give compensation to the broker/agent who is the

proximate cause of the deal/contract. The compensation being referred here is the
commission of the agent as a result of his services to the principal.
Constante de Castro vs CA 384 SCRA 607
Doctrine: When the law expressly provides for solidarity of the obligation, as in the
liability of co-principals in a contract of agency, each obligor may be compelled to pay
the entire obligation.12 The agent may recover the whole compensation from any one of
the co-principals. If there are two or more principals, each has the same obligation to
compensate the agent for his services as they are held to be solidarily liable to the
agent.

Sta Romana vs Imperio 15 SCRA 625

Doctrine: A principal may in some cases act as a vendor through his agent. In these
cases, he is obligated to reimburse to the vendee, in the event of eviction, the value of
the thing sold at the time of the eviction even if it be of a greater or lesser price of the
sale.
Syjuco vs Syjuco G.R. No. 13471
Doctrine: Whenever an agent enters into a contract under his own name, the principal is
not bound by what the agent does or contracts thereby not being liable. However, the
exception to this general rule is when the thing being dealt with belongs to the principal.
In this instance, the contract is deemed to have been entered by the principal and the
third person. As a result of this, the principal assumes all rights, obligations and liabilities
that arise from the contract made by the agent with third persons.

PNB vs Aguedo

G.R. No. 39037

Doctrine: When an agent negotiates a loan in his own name and executes a promissory
note under his personal signature without express authority from his principal, giving as
security therefor real estate belonging to the latter, also in his own name and not in the
name and in representation of said principal, the obligation so contracted by him is
personal and is not binding upon the af oresaid principal.

Keeler vs Rodriguez

G.R. No. 19001

Doctrine: Persons dealing with an assumed agent, whether the assumed agency be a
general or special one, are bound at their peril, if they would hold the principal, to
ascertain not only the fact of the agency but the nature and extent of the authority, and in
case either is controverted, the burden of proof is upon them to establish it.
BA Finance vs CA G.R. No. 94566
Doctrine: It is a settled rule that persons dealing with an assumed agent, whether the
assumed agency be a general or special one are bound at their peril, if they would hold
the principal liable, to ascertain not only the fact of agency but also the nature and extent
of authority, and in case either is controverted, the burden of proof is upon them to

establish it. Hence, the burden is on respondent bank to satisfactorily prove that the
credit administrator with whom they transacted acted within the authority given to him by
his principal, petitioner corporation.
Also, Guaranty is not presumed, it must be expressed and cannot be extended
beyond its specified limits.

NAPOCOR vs National Merchandising

G.R. No. L-33819

Doctrine: The rule that a person dealing with an agent must inquire into the limits of the
agent's authority does not apply where the agent is being held directly responsible for
taking chances in exceeding its authority meaning the agent is acting in his own name.

Apex Minig vs Southeast Mindanao

G.R. No. 152613

Doctrine: The concept of agency is distinct from assignmentin agency, the agent acts
not on his own but on behalf of his principal, while in assignment, there is total transfer
or relinquishment of right by the assignor to the assignee.

Bacaltos vs CA

G.R. NO. 114091

Doctrine: Every person dealing with an agent is put upon inquiry and must discover upon
his peril the authority of the agent. If he does not make such inquiry, he is chargeable
with knowledge of the agents authority, and his ignorance of that authority will not be
any excuse. Persons dealing with an assumed agent, whether the assumed agency be a
general or special one, are bound at their peril, if they would hold the principal, to
ascertain not only the fact of the agency but also the nature and extent of the authority,
and in case either is controverted, the burden of proof is upon them to establish it.
Del Rosario vs Abad G.R. No. L-10881
Doctrine: The power of attorney executed by the homesteader in favor of defendant did
not create an agency with interest nor did it clothe the agency with irrevocable character.
A mere statement in the power of attorney that it is coupled With interest is not enough.
In what does such interest consist must be stated in the power of attorney.
VICENTE M. COLEONGCO vs. EDUARDO L. CLAPAROLS

G.R. No. L-18616, March 31, 1964

Facts: Eduardo L. Claparols (appellee) operates the Claparols Steel and Nail Plant in
Talisay, Occidental Negros. Due to losses, Claparols was compelled to look for someone
to finance his imports of raw material (nail wire). At first, Kho To agreed to finance but
eventually introduced Vicente Coleongco (appellant) to Claparols recommending the
former to be the latters financier. Claparols agreed and on the same date, a contract
was perfected between them whereby Coleongco undertook to finance and put up the
funds required for the importation of the nail wire, which Claparols bound himself to
convert into nails at his plant. Sometime in 1953, Claparols executed in favor of
Coleongco at the latters behest, a special power of attorney to open and negotiate
letters of credit, to sign contracts, bills of lading, invoices and papers covering
transactions, to represent appellee and the nail factory and the acceptance of payments
and cash advances from dealers and distributors. Around mid-November 1956,
Claparols learned from the Philippine National Bank (PNB) that Coleongco wrote the
bank trying to discredit him, causing the bank to issue an alias writ of execution. Behind
Claparols back, Coleongco wrote the bank alleging that Claparols was not serious in
meeting his financial obligations by selling the machines. Claparols was able to settle the
matter with the bank but because of this, he revoked the SPA. Coleongco denies the
allegations and claims that the revocation of the SPA was illegal and that he was entitled
to the share of the profits as well as moral damages.
Issue: Whether Claparols had the legal power to revoke the power of attorney?
Held: Yes. Coleongco acting in bad faith towards his principal Claparols, is on the
record, unquestionable. His letters to the PNB attempting to undermine the credit of the
principal and to acquire the factory of the latter, without the principals knowledge are
plain acts of deliberate sabotage by the agent that fully justified the revocation of the
power of attorney. The basic rule of contracts requires parties to act loyally toward each
other in the pursuit of the common end, and appellant clearly violated the rule of good
faith prescribed by Article 1315 of the New Civil Code. Furthermore, it must not be
forgotten that a power of attorney can be made irrevocable by contract only in the sense
that the principal may not recall it at his pleasure but coupled with interest or not, the
authority certainly can be revoked for a just cause, such as when the attorney-in-fact
betrays the interest of the principal, as what happened in this case. It is not open to
serious doubt that the irrevocability of the power of attorney may not be used to shield
the perpetration of acts in bad faith, breach of confidence, or betrayal of trust, by the
agent for that would amount to holding that a power coupled with an interest authorizes
the agent to commit frauds against the principal. Our new Civil Code, in Article 1172,
expressly provides the contrary in prescribing that responsibility arising from fraud is
demandable in all obligations, and that any waiver of action for future fraud is void. It is
also on this principle that the Civil Code, in its Article 1800, declares that the powers of a
partner, appointed as manager, in the articles of co-partnership are irrevocable without
just or lawful cause and an agent with power coupled with an interest can not stand on
better ground than such a partner in so far as irrevocability of the power is concerned.
GENEVIEVE LIM vs. FLORENCIO SABAN
G.R. No. 163720, December 16, 2004
Facts: Under an Agency Agreement, Ybaez authorized Saban to look for a buyer of the

lot for P200,000.00 and to mark up the selling price to include the amounts needed for
payment of taxes, transfer of title and other expenses incident to the sale, as well as
Saban's commission for the sale. Through Saban's efforts, Ybaez and his wife were
able to sell the lot to Genevieve Lim and the spouses Benjamin and Lourdes Lim at
P600,000.00 inclusive of taxes and other incidental expenses of the sale. After the sale,
Lim remitted to Saban the amounts of P113,257 for payment of taxes due on the
transaction as well as P50,000.00 as broker's commission. Lim also issued in the name
of Saban four postdated checks in the aggregate amount of P236,743.00. Subsequently,
Ybaez sent a letter to Lim asking the latter to cancel all the checks issued by her in
Saban's favor and to extend another partial payment for the lot in his (Ybaez's)
favor. After the four checks in his favor were dishonored upon presentment, Saban filed
a complaint for collection of sum of money and damages against Ybaez and Lim.
Saban alleged that Ybaez told Lim that he (Saban) was not entitled to any commission
for the sale since he concealed the actual selling price of the lot from Ybaez and
because he was not a licensed real estate broker. Ybaez was able to convince Lim to
cancel all four checks. In his Answer, Ybaez claimed that Saban was not entitled to any
commission because he concealed the actual selling price from him and because he
was not a licensed real estate broker.
Issue: Whether there was revocation of the agency that would make Saban ineligible to
receive a commission from the sale?
Held: The agency was not revoked making Saban entitled to receive commission from
the sale. There was no revocation since Ybaez requested that Lim make stop payment
orders for the checks payable to Saban only after the consummation of the sale. At that
time, Saban had already performed his obligation as Ybaezs agent when, through his
(Sabans) efforts, Ybaez executed the Deed of Absolute Sale of the lot with Lim and the
Spouses Lim. To deprive Saban of his commission subsequent to the sale which was
consummated through his efforts would be a breach of his contract of agency with
Ybaez which expressly states that Saban would be entitled to any excess in the
purchase price after deducting the P200,000.00 due to Ybaez and the transfer taxes
and other incidental expenses of the sale. However, the Court does not agree that
Sabans agency was one coupled with an interest. Under Article 1927 of the Civil Code,
an agency cannot be revoked if a bilateral contract depends upon it, or if it is the means
of fulfilling an obligation already contracted, or if a partner is appointed manager of a
partnership in the contract of partnership and his removal from the management is
unjustifiable. Stated differently, an agency is deemed as one 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 persons, and it cannot be revoked by the principal so
long as the interest of the agent or of a third person subsists. In an agency coupled with
an interest, the agents interest must be in the subject matter of the power conferred and
not merely an interest in the exercise of the power because it entitles him to
compensation. When an agents interest is confined to earning his agreed
compensation, the agency is not one coupled with an interest, since an agents interest
in obtaining his compensation as such agent is an ordinary incident of the agency
relationship.
ARTURO P. VALENZUELA and HOSPITALITA N. VALENZUELA vs. COURT OF
APPEALS, BIENVENIDO M. ARAGON, ROBERT E. PARNELL, CARLOS K.
CATOLICO and THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY,
INC.
G.R. No. 83122, October 19, 1990

Facts: Petitioner Valenzuela, a General Agent respondent Philamgen, was authorized to

solicit and sell all kinds of non-life insurance. He had a 32.5% commission rate. From
1973 to 1975, Valenzuela solicited marine insurance from Delta Motors, Inc. in the
amount of P4.4 Million from which he was entitled to a commission of 32%. However,
Valenzuela did not receive his full commission, which amounted to P1.6 Million from the
P4.4 Million. Premium payments amounting to P1,946,886.00 were paid directly to
Philamgen. Valenzuelas commission amounted to P632,737.00. Philamgen wanted to
cut Valenzuelas commission to 50% of the amount. He declined. When Philamgen
offered again, Valenzuela firmly reiterated his objection. Philamgen took drastic action
against Valenzuela. They reversed the commission due him, threatened the cancellation
of policies issued by his agency and started to leak out news that Valenzuela has a
substantial debt with Philamgen. His agency contract was terminated. The petitioners
sought relief by filing the complaint against the private respondents.
Issue: Whether the agency is one coupled with an interest and, therefore, should not be
freely revocable at the unilateral will of the company?
Held: Yes. Records show that the agency is one coupled with an interest and, therefore,
should not be freely revocable at the unilateral will of the company. The records sustain
the finding that the private respondent started to covet a share of the insurance business
that Valenzuela had built up, developed and nurtured. The company appropriated the
entire insurance business of Valenzuela. Worse, despite the termination of the agency,
Philamgen continued to hold Valenzuela jointly and severally liable with the insured for
unpaid premiums. Under these circumstances, it is clear that Valenzuela had an interest
in the continuation of the agency when it was unceremoniously terminated not only
because of the commissions he procured, but also Philamgens stipulation liability
against him for unpaid premiums. The respondents cannot state that the agency
relationship between Valenzuela and Philamgen is not coupled with interest. There is an
exception to the principle that an agency is revocable at will and that is when the agency
has been given not only for the interest of the principal but also for the mutual interest of
the principal and the agent. The principal may not defeat the agent's right to
indemnification by a termination of the contract of agency. Also, if a principal violates a
contractual or quasi-contractual duty, which he owes his agent, the agent may as a rule
bring an appropriate action for the breach of that duty.
ALBERT M. CHING and ROMEO J. BAUTISTA vs. FELIX M. BANTOLO, ANTONIO O.
ADRIANO and EULOGIO STA. CRUZ, JR., substituted by his children, represented
by RAUL STA. CRUZ, JR.
G.R. No. 177086, December 5, 2012
Facts: Respondents Felix M. Bantolo (Bantolo), Antonio O. Adriano and Eulogio Sta.
Cruz, Jr. are owners of several parcels of land situated in Tagaytay City. On April 3,
2000, respondents executed in favor of petitioners Albert Ching (Ching) and Romeo J.
Bautista a Special Power of Attorney (SPA) authorizing petitioners to obtain a loan using
respondents properties as collateral. However, without notice to petitioners, respondents
executed a Revocation of Power of Attorney effective on July 17, 2000. On July 18,
2000, the Philippine Veterans Bank (PVB) approved the loan application of Ching in the
amount of P25 million. On July 31, 2000, Ching thru a letter informed respondents of the
approval of the loan. Sometime in the first week of August 2000, petitioners learned
about the revocation of the SPA. Consequently, petitioners sent a letter to respondents

demanding that the latter comply with the agreement by annulling the revocation of the
SPA. On September 8, 2000, petitioners filed before the Regional Trial Court a
Complaint for Annulment of Revocation of SPA, Enforcement of SPA and/or interest in
the properties covered by said SPA and Damages against respondents.
Issue: Whether the SPA executed by respondents in favor of petitioners is a contract of
agency coupled with interest and, therefore, should not be freely revocable at the
unilateral will of the company?
Held: Yes. The Court ruled that there is no question that the SPA executed by
respondents in favor of petitioners is a contract of agency coupled with interest. This is
because their bilateral contract depends upon the agency. Hence, it cannot be revoked
at the sole will of the principal.
NATIONAL SUGAR TRADING and/or the SUGAR REGULATORY ADMINISTRATION
vs. PHILIPPINE NATIONAL BANK
G.R. No. 151218 January 28, 2003
Facts: Philippine Exchange Company, Inc. (PHILEXCHANGE) had an agreement with
PNB for the latter to finance its sugar trading operations wherein the proceeds of the
said operations were to be used to pay its liabilities. PNB then extended loans to
PHILEXCHANGE. However, PHILEXCHANGE defaulted in the payments. Three years
after, the National Sugar Trading Corporation (NASUTRA) replaced PHILEXCHANGE
but NASUTRA was not required to immediately pay PHILEXCHANGE. Notwithstanding
this concession, NASUTRA still failed to pay the sugar stocks covered by quedans to
PHILEXCHANGE. As a consequence, PHILEXCHANGE was not able to pay its
obligations to PNB. To finance its sugar trading operations, NASUTRA applied for and
was granted a P408 Million Revolving Credit Line by PNB. Every time NASUTRA availed
of the credit line, its Executive Vice-President, Jose Unson, executed a promissory note
in favor of PNB. Subsequently, NASUTRA was not able to pay the interest. After the
Edsa Revolution, the SRA (Sugar Regulatory Administration) was created, abolishing
PHILSUCOM. NASUTRA then established a trusteeship to liquidate and settle its
accounts. This notwithstanding, NASUTRA still defaulted in the payment of its loans to
PNB. In the meantime, PNB received remittances from foreign banks, which represented
the proceeds of NASUTRAs sugar exports. Said remittances were then applied by PNB
to the unpaid accounts of NASUTRA with PNB and PHILEXCHANGE.
Issue: Whether PNB can apply the foreign remittances on the long-overdue obligations
of NASUTRA?
Held: Yes. When NASUTRA availed of the credit line from PNB, evidence showed that
its Executive Vice President, Jose Unson, executed a promissory note in favor of PNB
with the following proviso: In the event that this note is not paid at maturity or when the
same becomes due under any of the provisions hereof, I/We hereby authorize the Bank,
at its option and without notice, to apply to the payment of this note, any and all moneys,
securities and things of values which may be in the hands on deposit or otherwise
belonging to me/us and for this purpose, I/We hereby, jointly and severally, irrevocably
constitute and appoint the Bank to be my/our true Attorney-in-Fact with full power and
authority for me/us and in my/our name and behalf and without prior notice to negotiate,
sell and transfer any moneys, securities and things of value which it may hold, by public
or private sale and apply the proceeds thereof to the payment of this note.

PNB correctly treated the subject remittances for the account of NASUTRA as
moneys in its hands, which may be applied for the payment of the note. The
relationship between NASUTRA/SRA and PNB when the former constituted the latter as
its attorney-in-fact is not a simple agency. NASUTRA/SRA has assigned and practically
surrendered its rights in favor of PNB for a substantial consideration. To reiterate,
NASUTRA/SRA executed promissory notes in favor of PNB every time it availed of the
credit line. The agency established between the parties is one coupled with interest,
which cannot be revoked or cancelled at will by any of the parties.
BISAYA LAND TRANSPORTATION CO., INC. vs. MARCIANO C. SANCHEZ
G.R. No. L-74623, August 31, 1987.
Facts: Bisaya Land Transportation Company, Inc. (BISTRANCO) has been engaged in
the shipping business and one of its ports of call is in Butuan City. W hen BISTRANCO
was under receivership, Mariano Sanchez (Sanchez) was appointed by BISTRANCO as
its acting shipping agent for its vessels in Butuan City by its Receiver, Atty. Adolfo V.
Amor (Amor) "pending the execution of the formal contract of agency". Thereafter a
formal Contract of Agency was executed between BISTRANCO, represented by
Receiver Atty. Adolfo V. Amor and Marciano C. Sanchez, represented by his authorized
representative Exequiel Aranas. Sanchez, after finding out that Paragraph 16 of the
Contract of Agency was quite prejudicial to him, he executed with BISTRANCO a
Supplemental Shipping Agency Contract, which was duly signed by both parties.
However, both the Contract of Agency and the Supplemental Shipping Agency Contract
were never submitted by Atty. Amor to the receivership court for its approval. By virtue of
the Contracts, Sanchez performed his duties as shipping agent of BISTRANCO. Under
Sanchezs endeavors, he had managed to increase the volume of the shipping business
of BISTRANCO at Butuan City and helped it flourished. Then one day, BISTRANCO
wrote Sanchez that they would commence operating its branch office at Butuan City and
thereafter actually operated a branch office, which in effect repudiated the Contracts.
Issue: Whether the Contract of Agency and the Supplemental Shipping Agency Contract
are void which would make the opening by BISTRANCO of a branch in Butuan City
legal?
Held: The 2 contracts are unenforceable which were later on ratified by BISTRANCO.
The ratification made the opening by BISTRANCO of a branch in BUTUAN city a
violation of the said contracts.
It is undisputed that Atty. Adolfo Amor was entrusted, as receiver, with the
administration of BISTRANCO and its business. But the act of entering into a contract is
one, which requires the authorization of the court, which appointed him receiver.
Consequently, the questioned Contracts can rightfully be classified as unenforceable for
having been entered into by one who had acted beyond his powers, due to Receiver
Amor's failure to secure the court's approval of said Contracts. These unenforceable
Contracts were nevertheless deemed ratified by a letter from the company informing
Sanchez that, "we (petitioners) are abiding strictly with the terms of the contracts
executed between Marciano C. Sanchez and Atty. Adolfo V. Amor in behalf of
BISTRANCO" Furthermore, BISTRANCO received material benefits from the
contracts of agency of Sanchez, based upon the monthly statements of income of
BISTRANCO, upon which the commissions of Sanchez were based. A perusal of the

Contracts will also show that there is no single provision therein that can be said as
prejudicial or not beneficial to BISTRANCO.
ANTONIO M. BARRETTO vs. JOSE SANTA MARINA
G.R. No. 8238, December 2, 1913
Facts: The La Insular cigar and cigarette factory is a joint account association with a
nominal capital of P865,000, the plaintiff's share being P20,000, or 4/173 of the whole.
On March 14, 1910, the plaintiff's attorneys wrote the defendant's local representative a
letter offering to sell to the defendant plaintiff's participation in the factory. The result of
the correspondence between the parties and their representatives was that Exhibit G
was duly executed on May 3, 1910. In accordance with the terms of this exhibit a
committee of appraisers was appointed to ascertain and fix the actual value of La
Insular. The committee rendered its report on November 14, 1910, fixing the net value at
P4,428,194.44. Of this amount 4/173 part represented the plaintiff 's share on his
P20,000 of the nominal capital. In Exhibit J, which was executed on November 22, 1910,
the plaintiff acknowledged to have received from the defendant that amount.
Subsequently to the execution of Exhibit J, demand was made by the plaintiff upon the
defendant for his share of the profits from June 30, 1909, to November 22, 1910. This
demand was refused and thereupon this action was instituted to recover said profits. The
plaintiff admits that if the agreement of May 3, 1910, was a perfected sale he cannot
recover any profits after that date. The defendant, on the other hand, concedes that if
said agreement was only a promise to sell in the future, it, standing alone, would not
prevent recovery in this action.
Issue: Whether the agreement of May 3, 1910, was a perfected sale, extinguishing the
agency between plaintiff and defendant making the former ineligible to recover any
profits after that date?
Held: Yes. The plaintiff sold his share of the accumulated profits. Plaintiff executed a
document whereby he agreed to transfer to the defendant "the whole of the right, title,
and interest" he had in a joint stock association, at the same time agreeing that the
ascertainment of the price of his share should depend unreservedly upon the
appraisement made by three appraisers of the total value of the association's property.
The appraisers occupied about six months in making the appraisement and in their
report there was no indication that any attempt had been made to segregate
accumulated profits from other assets of the association. Plaintiff had participated in 'the
last distribution of profits made by the association prior to the time he accepted payment
for his share. Upon the completion of the defendant's report plaintifF executed a
document whereby he acknowledged receipt of the price arrived at by the appraisers,
and further stated that he relinquished from that date all intervention, claim, right, or
action that he had in said business.

Eulogio Del Rosario, Aurelio del Rosario, Benito del Rosario, Bernardo del
Rosario, Isidra del Rosario, Dominga del Rosario and Concepcion Borromeo vs.
Primitivo Abad and Teodorico Abad
G.R. No. L-10881, September 30, 1958

Facts: On December 1936, the Secretary of Agriculture and Commerce issued under
the provisions of the Public Land Act a homestead patent situated in Nueva Ecija to
Tiburcio del Rosario. On February 1937, the Registrar of Deeds issued to him an original
certificate of title. On February 24, 1937, del Rosario obtained a loan from Primitivo Abad
in the sum of P2000 with interest payable on December 3, 1941. del Rosario executed
an irrevocable special power of attorney coupled with interest in favor of the
mortgagee, authorizing him to sell and convey the parcel of land. del Rosario died in
December 1945 leaving the debt unpaid. Primitivo Abad, acting as attorney-in-fact of del
Rosario sold the parcel of land to his son Teodorico Abad in consideration of the token
sum of P1.00 and the payment of the mortgage debt of the late del Rosario. Teodorico
too possession of the land, cancelled the original certificate of title and reigistered the
land under his name in a transfer certificate of title. The heirs of del Rosario filed this
case to recover the possession and ownership of the parcel of land, damages, etc.
Issue: Whether the power of attorney executed by the homesteader in favor of
defendant created an agency coupled with interest?
Held: No. The power of attorney executed by del Rosario in favor of Primitivo Abad
providing, among others that, it is coupled with an interest in the subject matter thereof
and are therefore irrevocable, and conferring upon my said attorney full and ample
power and authority to do and perform all things reasonably necessary and proper for
the due carrying out of the said powers according to the true tenor and purport of the
same, does not create an agency coupled with an interest nor does it clothe the agency
with an irrevocable character. A mere statement in the power of attorney that it is
coupled with interest is not enough. What such interest consist must be stated in the
power of attorney. The mortgage has nothing to do with the power of attorney and may
be foreclosed by the mortgagee upon failure of the mortgagor to comply with his
obligation. As the agency was not coupled with an interest, it was terminated upon the
death of the principal, and the agent could no longer validly convey the land.

DY BUNCIO & COMPANY, INC. vs. ONG GUAN CAN ET AL.

G.R. No. 40681, October 2, 1934
Facts: This is a suit over a rice-mill and camarn situated at Dao, Province of Capiz.
Plaintiff claims that the property belongs to its judgment debtor, Ong Guan Can, while
defendants Juan Tong and Pua Giok Eng claim as owner and lessee of the owner by
virtue of a deed dated July 31, 1931, by Ong Guan Can, jr. After trial the Court of First
Instance of Capiz held that the deed was invalid and that the property was subject to the
execution which had been levied on said properties by the judgment creditor of the
owner. Defendants Juan Tong and Pua Giok Eng bring this appeal and insist that the
deed of the 31st of July, 1931, is valid.
The first recital of the deed is that Ong Guan Can, jr., as agent of Ong Guan Can,
the proprietor of the commercial firm of Ong Guan Can 4, Sons, sells the rice-mill and
camarn for P13,000 and gives as his authority the power of attorney dated the 23d of
May, 1928, a copy of this public instrument being attached to the deed and recorded with

the deed in the office of the register of deeds of Capiz. The receipt of the money
acknowledged in the deed was to the agent, and the deed was signed by the agent in
his own name and without any words indicating that he was signing it for the principal.
Leaving aside the irregularities of the deed and coming to the power of attorney referred
to in the deed and registered therewith, it is at once seen that it is not a general power of
attorney but a limited one and does not give the express power to alienate the properties
in question. (Article 1713 of the Civil Code.) Appellants claim that the defect is cured by
Exhibit 1, which purports to be a general power of attorney given to the same agent in
1920.
Issues: Whether the deed of sale executed by Ong Guan Can Jr. was valid?
Held: NO. Article 1732 of the Civil Code is silent over the partial termination of an
agency. The making and accepting of a new power of attorney, whether it enlarges or
decreases the power of the agent under a prior power of attorney, must be held to
supplant and revoke the latter when the two are inconsistent. If the new appointment
with limited powers does not revoke the general power of attorney, the execution of the
second power of attorney would be a mere futile gesture.
JUAN GARCIA vs. JOSEFA DE MANZANO
G.R. No. 13414, February 4, 1919
Facts: Narciso Lopez Manzano gave a general power-of-attorney to his son, Angel L.
Manzano on the 9th of February, 1910, and on the 25th of March a second general
power of attorney to his wife, Josefa Samson. Manzano was the owner of a half interest
in a small steamer, the San Nicolas, the other half owned by Ocejo, Perez & Co under a
partnership agreement. When the agreement expired Ocejo, Perez & Co demanded
that Manzano buy or sell. As he did not want to sell at the price offered and could not
buy, Juan Garcia bought the half interest held by Ocejo, Perez & Co. Angel L. Manzano,
acting under his power-of-attorney, sold in July, 1911, the other half of the boat to the
plaintiff, but as Garcia is a Spaniard and could not register the boat in his name at the
Custom House, the boat was registered in the name of Agustin Garcia, a son of the
plaintiff, who at that time, July 2, 1913, was a minor about twenty years old. Agustin
Garcia shortly thereafter died, leaving his parents as his heirs at law, and as such heirs
plaintiff's wife was made a party. The defendants allege that Narciso L. Manzano was the
owner of one-half of the small steamer San Nicolas and that Angel L. Manzano had no
authority to sell the interest in the steamer, because the power of attorney given to
Josefa revoked the one given to the son.
Issue: Whether the powerof attorney issued to the wife revoked the one issued to the
son?
Held: No. A second power of attorney revokes the first one only after notice given to first
agent. There is no proof in the record that the first agent, the son, knew of the power-ofattorney to his mother. It was necessary under the law for the defendants, in order to
establish their counterclaim, to prove that the son had notice of the second power-ofattorney. They have not done so and it must be considered that Angel L. Manzano was
acting under a valid power-of-attorney from his father which had not been legally
revoked on the date of the sale of the half interest in the steamer to the plaintiff's son,
which half interest was legally inherited by the plaintiffs.

CMS LOGGING, INC vs. THE COURT OF APPEALS and D.R. AGUINALDO
CORPORATION
G.R. No. 41420, July 10, 1992
Facts: CMS Logging and DRACOR entered into a contract of agency whereby the
former appointed the latter as its exclusive export and sales agent for all logs that the
former may produce, for a period of 5 years. Out of this agreement, DRACOR was
entitled to 5% commission of the gross sales of the logs sold. CMS was then able to sell
through DRACOR a total of 77,264,672 board feet of logs in Japan, from September 20,
1957 to April 4, 1962. About six months prior to the expiration of the agreement, while on
a trip to Japan, CMS's president, general manager and legal counsel, discovered that
DRACOR had used Shinko Trading as agent in selling CMS's logs in Japan for which
Shinko earned a commission of U.S. $1.00 per 1,000 board feet from the buyer of the
logs. Under this arrangement, Shinko was able to collect a total of U.S. $77,264.67.
CMS claimed that this commission paid to Shinko was in violation of the agreement and
that they are entitled to this amount as part of the proceeds of the sale of the logs. CMS
contended that since DRACOR had been paid the 5% commission under the agreement,
it is no longer entitled to the additional commission paid to Shinko as this is tantamount
to DRACOR receiving double compensation for the services it rendered. After this
discovery, CMS sold and shipped logs directly to several firms in Japan without the aid
or intervention of DRACOR.
Issue: Whether DRACOR is entitled to its commission from the sales made by CMS to
Japanese firms?
Held: No. The principal may revoke a contract of agency at will, and such revocation
may be express, or implied, and may be availed of even if the period fixed in the contract
of agency has not yet expired. As the principal has this absolute right to revoke the
agency, the agent cannot object thereto. Neither may he claim damages arising from
such revocation, unless it is shown that such was done in order to evade the payment of
agent's commission.
In the case at bar, CMS appointed DRACOR as its agent for the sale of its logs to
Japanese firms. Yet, during the existence of the contract of agency, DRACOR admitted
that CMS sold its logs directly to several Japanese firms. This act constituted an implied
revocation of the contract of agency under Article 1924 of the Civil Code, which provides:
The agency is revoked if the principal directly manages the business entrusted to the
agent, dealing directly with third persons. Since the contract of agency was revoked by
CMS when it sold its logs to Japanese firms without the intervention of DRACOR, the
latter is no longer entitled to its commission from the proceeds of such sale and is not
entitled to retain whatever money it may have received as its commission for said
transactions. Neither would DRACOR be entitled to collect damages from CMS, since
damages are generally not awarded to the agent for the revocation of the agency, and
the case at bar is not one falling under the exception mentioned, which is to evade the
payment of the agent's commission.

ADORACION LUSTAN vs. COURT OF APPEALS, NICOLAS PARANGAN and

SOLEDAD PARANGAN, PHILIPPINE NATIONAL BANK
G.R. No. 111924, January 27, 1997
Facts: Petitioner Adoracion Lustan is the registered owner of a parcel of land in Calinog,
Iloilo containing an area of 10.0057 hectares. Petitioner leased the above described
property to private respondent Nicolas Parangan for a term of ten (10) years and an
annual rent of One Thousand (P1,000.00) Pesos. During the period of lease, Parangan
was regularly extending loans in small amounts to petitioner to defray her daily expenses
and to finance her daughter's education. On July 29, 1970, petitioner executed a
Special Power of Attorney in favor of Parangan to secure an agricultural loan from
private respondent Philippine National Bank (PNB) with the aforesaid lot as collateral.
On February 18, 1972, a second Special Power of Attorney was executed by petitioner,
by virtue of which, Parangan was able to secure four (4) additional loans. The last three
loans were without the knowledge of herein petitioner and all the proceeds therefrom
were used by Parangan for his own benefit. These encumbrances were duly annotated
on the certificate of title. On April 16, 1973, petitioner signed a Deed of Pacto de Retro
Sale in favor of Parangan which was superseded by the Deed of Definite Sale dated
May 4, 1979 which petitioner signed upon Parangan's representation that the same
merely evidences the loans extended by him unto the former. For fear that her property
might be prejudiced by the continued borrowing of Parangan, petitioner demanded the
return of her certificate of title. Instead of complying with the request, Parangan asserted
his rights over the property, which allegedly had become his by virtue of the
aforementioned Deed of Definite Sale. Under said document, petitioner conveyed the
subject property and all the improvements thereon unto Parangan absolutely for and in
consideration of the sum of Seventy Five Thousand (P75,000.00) Pesos.
Issue: Whether petitioner's property is liable to PNB for the loans contracted by
Parangan by virtue of the special power of attorney?
Held: Yes, the mortgages can be enforced against petitioner. It is admitted that petitioner
is the owner of the parcel of land mortgaged to PNB on five (5) occasions by virtue of the
Special Powers of Attorney executed by petitioner in favor of Parangan. Petitioner
argues that the last three mortgages were void for lack of authority. She totally failed to
consider that said Special Powers of Attorney are a continuing one and absent a valid
revocation duly furnished to the mortgagee, the same continues to have force and effect
as against third persons who had no knowledge of such lack of authority. Article 1921 of
the Civil Code provides, If the agency has been entrusted for the purpose of contracting
with specified persons, its revocation shall not prejudice the latter if they were not given
notice thereof.
The Special Power of Attorney executed by petitioner in favor of Parangan duly
authorized the latter to represent and act on behalf of the former. Having done so,
petitioner clothed Parangan with authority to deal with PNB on her behalf and in the
absence of any proof that the bank had knowledge that the last three loans were without
the express authority of petitioner, it cannot be prejudiced thereby. As far as third
persons are concerned, an act is deemed to have been performed within the scope of
the agent's authority if such is 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 the understanding
between the principal and the agent.

The Special Power of Attorney particularly provides that the same is good not only for
the principal loan but also for subsequent commercial, industrial, agricultural loan or
credit accommodation that the attorney-in-fact may obtain and until the power of attorney
is revoked in a public instrument and a copy of which is furnished to PNB. 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 though he had full powers (Article 1911, Civil Code).
The mortgage directly and immediately subjects the property upon which it is imposed.
The property of third persons which has been expressly mortgaged to guarantee an
obligation to which the said persons are foreign, is directly and jointly liable for the
fulfillment thereof. It is therefore subject to execution and sale for the purpose of paying
the amount of the debt for which it is liable. However, petitioner has an unquestionable
right to demand proportional indemnification from Parangan with respect to the sum paid
to PNB from the proceeds of the sale of her property in case the same is sold to satisfy
the unpaid debts.

CARLOS SANCHEZ vs. MEDICARD PHILIPPINES, INC., DR. NICANOR MONTOYA

and CARLOS EJERCITO
G.R. No. 141525, September 2, 2005.
Facts: Sometime in 1987 Medicard Inc. appointed petitioner Sanchez as its special
corporate agent and they gave him a commission based on the "cash brought in." In
1988, through petitioner's efforts, Medicard and Unilab executed a Health Care Program
Contract. Unilab paid Medicard P4,148,005.00 representing the premium for one year.
Medicard then handed petitioner 18% of said amount or P746,640.90 representing his
commission. Again, through petitioner's initiative, the agency contract between Medicard
and Unilab was renewed for another year. Prior to the expiration of the renewed
contract, Medicard proposed an increase of the premium, which Unilab rejected "for the
reason that it was too high". Unilab, through a letter, confirmed its decision not to renew
the health program. Meanwhile, in order not to prejudice its personnel by the termination
of their health insurance, Unilab negotiated with Dr. Montoya and other officers of
Medicard, to discuss new ways in order to continue the insurance coverage. Under the
new scheme, Unilab shall pay Medicard only the amount corresponding to the actual
hospitalization expenses incurred by each personnel plus 15% service fee. Medicard did
not give petitioner any commission under the new scheme.
Issue: Whether the contract of agency has been revoked by Medicard, hence, petitioner
is not entitled to a commission?
Held: Yes, the Contract of Agency has been revoked, thus the petitioner is not entitled to
any commission. It is dictum that in order for an agent to be entitled to a commission, he
must be the procuring cause of the sale, which simply means that the measures
employed by him and the efforts he exerted must result in a sale. In other words, an
agent receives his commission only upon the successful conclusion of a sale.
Conversely, it follows that where his efforts are unsuccessful, or there was no effort on
his part, he is not entitled to a commission. Based on the facts, it may be recalled that
through petitioner's efforts, Medicard was able to enter into a Contract with Unilab, two
times, However before the expiration of the renewed contract, Unilab rejected the
proposal. Medicard then requested petitioner to reduce his commission should the

contract be renewed on its third year, but he was obstinate. It is clear that since
petitioner refused to reduce his commission, Medicard directly negotiated with Unilab,
thus revoking its agency contract with petitioner. Such revocation is authorized by Article
1924 of the Civil Code which provides: "The agency is revoked if the principal directly
manages the business entrusted to the agent, dealing directly with third persons."
Moreover, as found by the lower courts, petitioner did not render services to
Medicard, his principal, to entitle him to a commission. There is no indication from the
records that he exerted any effort in order that Unilab and Medicard, after the expiration
of the Health Care Program Contract, can renew it for the third time. In fact, his refusal to
reduce his commission constrained Medicard to negotiate directly with Unilab. We find
no reason in law or in equity to rule that he is entitled to a commission.

FEDERICO VALERA vs. MIGUEL VELASCO

G.R. No. 28050, March 13, 1928
Fact: The defendant was appointed attorney-in-fact of the said plaintiff with authority to
manage his property in the Philippines, consisting of the usufruct of a real property
located at Echague Street, City of Manila. The defendant, by virtue of the power of
attorney, managed plaintiff's property, reported his operations and rendered accounts of
his administration On March 31, 1923 presented to plaintiff the final account of his
administration for said month, wherein it appears that there is a balance of 3,058.33 in
favor of the plaintiff. The liquidation accounts revealed that the plaintiff owed the
defendant P1,100, and as a misunderstanding arose between them, the defendant
brought suit against the plaintiff. Judgment was rendered in his favor and after the writ of
execution was issued, the sheriff levied upon the plaintiffs right of usufruct, sold it at
public auction and adjudicated it to the defendant in payment of all of his claim.
Subsequently, the plaintiff sold his right of redemption to one Eduardo Hernandez. Later
on, the purchaser conveyed the same right of redemption, to the plaintiff, Frederico
Valera. After the plaintiff had recovered his right of redemption, one Salvador Vallejo,
who had an execution upon a judgment against the plaintiff rendered in a civil case
against the latter, levied upon said right of redemption, which was sold by the sheriff at
public auction to Salvador Vallejo and was definitely adjudicated to him. Later, he
transferred said right of redemption to the defendant Velasco.
Issue: Whether the acquisition of the usufructuary and right of redemption thereto are
valid because the agency between Valera and Velasco has been extinguished by virtue
of the agents filing of a suit against his principal?
Held: Yes. The fact that an agent institutes an action against his principal for the
recovery of the balance in his favor resulting from the liquidation of the accounts
between them arising from the agency, and renders a final account of his operations, is
equivalent to an express renunciation of the agency, and terminates the juridical relation
between them. Article 1732 of the New Civil Code provides: Agency is terminated by: 1.
revocation, 2. withdrawal of the agent and 3. the death, interdiction, bankruptcy or
insolvency of the principal or of the agent. and article 1736 of the same code provides
that: An agent may withdraw from the agency by giving notice to the principal. Should
the latter suffer any damage through the withdrawal, the agent must indemnify him
therefore, unless the agents reason for his withdrawal should be the impossibility of

continuing to act as such without serious detriment to himself. The misunderstanding

between the plaintiff and the defendant over the payment of the due the latter and the
fact that the said defendant brought suit against the said principal for the payment of
said balance, more than prove the breach of the juridical relation between them. For,
although the agent has not expressly told his principal that he renounced the agency, yet
neither dignity nor decorum permits the latter to continue representing a person who has
adopted such an antagonistic attitude towards him. When the agent filed a complaint
against his principal for recovery of a sum of money arising from the liquidation of the
accounts between them in connection with the agency, Federico Valera could not have
understood otherwise that Miguel Velasco renounced the agency because his act was
more expressive than words and could not have caused any doubt.