[G.R. No. 102784.

February 28, 1996]

Rosa Lim v. CA and People

Facts:

Rosa Lim acquired one ring and one bracelet from private respondent Victoria Suarez. The said
jewelry was to be sold on a commission basis by Lim. The agreement was reflected in a receipt. After
demands from Suarez to return the jewelry, Lim only returned the bracelet. Consequently, Suarez sued
Lim for estafa. She was convicted by the trial court. Her subsequent appeal to the CA was denied.
Hence this petition to the SC.

Petitioner contends that she cannot be liable for estafa because she did not receive the jewelries in
trust or on a commission basis. According to Suarez, her agreement with private responded was a
sale on credit. She tries to prove this allegation by arguing that instead of placing her signature on the
blank space provided in the contract (a receipt which expressly states that said jewelries were to be
sold on a commission basis), she instead signed the top portion of the contract. Suarez contends this
act should be construed as proof that she did not agree to the terms stipulated therein.

Issue: Was the agreement between Lim and Suarez a contract of agency to sell on a commission basis
or a contract of sale on credit?

Held:
The agreement between them was a contract of agency to sell on a commission basis. While Lim
did sign the top portion of the receipt, this has no effect of altering the terms thereof in such a way that
transforms it to a contract of sale. Neither does it indicate absence or vitiation of consent thereto on the
part of Rosa Lim which would make the contract void or voidable. The moment she affixed her
signature, she bound herself by all the terms stipulated in the receipt. Article 1356 provides that
contracts shall be obligatory in whatever form they may have entered into, provided all the requisites
for their validity are present.

However, there are some provisions of the law which require certain formalities for particular
contracts. The first is when the form is required for the validity of the contract (ex. donation). The
second is when form is required to make a contract binding against third persons such as those
mentioned in Art. 1357 and Art. 1358. The third is when the form is required to prove the existence of
the contract such as those mentioned in the Statute of Frauds. A contract of agency to sell on
commission basis does not belong to any of these three categories, hence it is valid and enforceable in
whatever form it may be entered into.

Furthermore, there is only one type of legal instrument where the law strictly prescribes the location of
the signature of the parties thereto. This is in the case of notarial wills found in Article 805 of the Civil
Code. The position of the signature in the said receipt is thus immaterial.

Decision of CA affirmed.
 BORDADOR V LUZ (Nicolin)
December 15, 1997 | Regalado, J. | BASIS OF AGENCY
PETITIONERS: Jose Bordador and Lydia Bordador
RESPONDENTS: Brigida Luz, Ernesto Luz, Narciso Deganos
SUMMARY: Bordador Spouses were engaged in the business of purchase and sale of jewelry, while
respondent Brigida Luz was their regular customer. Narciso Deganos, Luz's brother, received several
pieces of jewelry from the Bordador amounting to P382,816.00, which items were indicated in 17
receipts covering the same--11 of the receipts stated that they were received by Deganos for a certain
Evelyn Aquino, while the remaining 6indicated that they were received by Deganos for Luz. Deganos
was supposed to sell the items at a profit and remit the proceeds and return the unsold items to
the Bordadors. Deganos remitted only P53,207.00. He neither paid the balance of the sales proceeds,
nor did he return any unsold item to Bordadors, which led them to file an action for recovery of a sum
of money and damages against Deganos and Luz with the RTC. The Bordadors claimed that Deganos
acted as the agent of Luz when he received the items of jewelry, and because he failed to pay for the
same, Luz, as principal, became solidarily liable with him. Deganos asserted that it was he alone who
was involved in the transaction with the Bordadors; that he neither acted as agent for nor was he
authorized to act as an agent by Luz, notwithstanding the fact that 6 of the receipts indicated that the
items were received by him for Luz. He added that he never delivered any of the items to Luz. Luz
corroborated the claims of Deganos. The RTC found that only Deganos was liable to the Bordadors. It
further found that it was petitioner Lydia Bordador who indicated in the receipts that the items were
received by Deganos for Evelyn Aquino and for Luz. It said that it was "persuaded that Brigida D. Luz
was behind Deganos,"but because there was no memorandum to this effect, the agreement between the
parties was unenforceable under the Statute of Frauds. Absent the required memorandum or any
written document connecting Luz with the subject receipts or authorizing Deganos to act on her behalf,
the alleged agreement between the Bordadors and Luz was unenforceable.
Bordadors elevated the case to the CA which affirmed said judgment, hence the instant petition.
DOCTRINE: The basis for agency is representation. Here, there is no showing that Brigida consented
to the acts of Deganos or authorized him to act on her behalf, much less with respect to the particular
transactions involved. Petitioners attempt to foist liability on respondent spouses through the supposed
agency relation with Deganos is groundless and ill-advised.
FACTS
1. Spouses Bordador are engaged in the business of purchase and sale of jewelry and Brigida
Luz was their regular customer.
2. On several occasions, Narciso Deganos (brother of Brigida) received several pieces of gold
and jewelry from Spouses Bordador amounting to P382,816, evidenced in 17 receipts. (11
receipts stated that they were received for a certain Evelyn Aquino, niece of Deganos, 6
receipts were received for Brigida).
3. The brother was supposed to sell the items at a profit and remit the proceeds and return the
unsold items to the Spouses. The brother only remitted the sum of P53,207.00. He neither
paid the balance of the sales proceeds nor return any unsold item. By Jan 1990, the total
unpaid account, including interest, reached P725, 463.98. So the Spouses filed a complaint in
the barangay court against the brother to recover the said amount.
4. The sister (Brigida) was not impleaded, but appeared as a witness for her brother. Ultimately,
Brigida and her husband, together with her brother, signed a compromise agreement with the
Spouses. The compromise agreement obligation the brother to pay the Spouses, on installment
basis, the balance plus interest (but the brother failed to comply)
5. June 25, 1990, Spouses instituted a civil case in the RTC of Malolos, Bulacan against the
siblings (Deganos and Brigida) for recovery of a sum of money and damages.
6. CRIMINAL CASE: 4 years later, the siblings were charged with estafa in the RTC (criminal
case still pending)
7. CIVIL CASE: Spouses claimed that the brother acted as agent of his sister (Brigida) when he
received the jewelry. Because he failed to pay for the same, Brigida, as principal, and her
husband are solidarily liable.
a. The Brother asserts that his unpaid obligation only amounts to P283, 816 not P725,
463.98.
b. He also asserts that he was the only one involved in the transaction with the Spouses;
that he neither acted as agent for nor was he authorized to act as an agent of his
Brigida. (notwithstanding that the items were received by him for Brigida)
c. He also claims that he never delivered any of the items he received from Spouses to
Brigida.
d. Brigida denied any transaction between Spouses and her brother. She said she never
authorized him to receive any item of jewelry.
8. Trial court: Agreement between parties was unenforceable under the Statute of Frauds (no
memorandum or any written document connecting Spouses with Brigida)
a. Brother ordered to pay Spouses the whole 725k plus legal interest; Brigida ordered to
pay 21k representing the interest on her own personal loan.
9. CA affirmed the judgment; recognized the brother acted as Brigidas agent but was never
authorized by the same.
ISSUE:
1. W/N Luz Spouses (Brigida and Ernesto) are liable to Bordador Spouses for the claim for
money and damages in the sum of P725,463.98 plus interest and attorneys fees NO, Luzs
not liable to Bordadors
RULING: WHEREFORE, no error having been committed by the Court of Appeals in affirming the
judgment of the court a quo, its challenged decision and resolution are hereby AFFIRMED and the
instant petition is DENIED, with double costs against petitioners
RATIO:
1. Borador Spouses insists that the Brother was the agent of Brigida because she clothed him
with apparent authority as her agent and held him out to the public as such; hence, Brigida
cannot be permitted to deny said authority to innocent third parties who dealth with the
Brother.
a. The basis for agency is representation .SC held that there is no showing that
Brigida consented to the acts of Deganos or authorized him to act on her behalf,
much less with respect to the particular transactions involved. Bordador
 Spouses attempt to foist liability on Luz spouses through the supposed agency
relation with Deganos is groundless and ill-advised.
b. Bordador spouses were grossly negligent in entrusting to the brother on at least six
occasions (evidenced by the 6 receipts) several pieces of jewelry of substantial value
without requiring any written authorization from his alleged principal.
c. Records show there was neither express or implied agency between Deganos and
Brigida. Borador Spouses cannot seek relief from the effects of their negligence by
conjuring a supposed agency relation between the siblings where no evidence
supports such claim.
2. SC held that this civil case may proceed independently of the criminal case specially because
while both cases are based on the same facts, the quantum of proof required for holding the
parties liable therein differ. Thus, it is improvident of petitioners to claim that the decision and
resolution of the Court of Appeals in the present case would be preemptive of the outcome of
the criminal case.
3. It should be emphasized that neither the trial court nor the appellate court categorically stated
that there was such a contractual relation between these two respondents. The trial court
merely said that if there was such an agency existing between them, the same is unenforceable
as the contract would fall under the Statute of Frauds which requires the presentation of a note
or memorandum thereof in order to be enforceable in court. That was merely a preparatory
statement of a principle of law. What was finally proven as a matter of fact is that there was
no such contract between Brigida D. Luz and Narciso Deganos, executed or partially
executed, and no delivery of any of the items subject of this case was ever made to the former.
 to update his calendar, is a matter of carelessness and indifference to pre-trial. This is unreasonable.
Spouses Rolando and Hermina Salvador v Rogelio and Elizabeth Rabaja and Rosario Thus, RTC can only render judgment based on the evidence presented during the trial.
Gonzales
2. W the receipts, the SPA and the contract to sell are valid
Mendoza, J. GR 199990 February 04, 2015
Petition for Review on Certiorari
-YES -The contract entered into by the parties is a not a contract to sell but a contract of sale which
could be validly rescinded. -The contention that Spouses Salvador did not receive payments from
DOCTRINE: Gonzales is governed by Art 1900, 1902 and 1910 of the New Civil Code, where persons dealing with
an agent must ascertain not only the fact of agency, but also the nature and extent of the agents
Persons dealing with an agent must ascertain both the fact of agency and the nature and extent of his
authority. There is sufficient performance of the role of the agent when such performed what is written authority. - According to Article 1990 of the New Civil Code, insofar as third persons are concerned,
within the terms of the power of attorney. an act is deemed to have been performed within the scope of the agent's authority, if such act is
within the terms of the power of attorney, as written. -In this case, Spouses Rabaja did not recklessly
FACTS: enter into a contract to sell with Gonzales. They required her presentation of the power of attorney
before they transacted with her principal. And when Gonzales presented the SPA to Spouses Rabaja,
1. From 1994 to 2002, Spouses Rabaja were leasing an apartment on a parcel of land in
the latter had no reason not to rely on it. -As the agent acted within the scope of his authority, the
Mandaluyong, which is registered in the names of Spouses Salvador. -Spouses Rabaja
principal must comply with all the obligations. -Gonzales did not exceed her authority, thus, she
learned that Spouses Salvador were looking for a buyer of the subject property. -Petitioner
Herminia Salvador personally introduced Gonzales to them as the administrator of the said cant be solidarily liable. -It is also to be noted that it was Herminia herself who personally
property and handed the duplicate certificate of title over the subject property.
introduced Gonzales to Spouses Rabaja as the administrator of the subject property. -Finally, we
2. On July, 3, 1998, Spouses Rabaja made an initial payment of P48,000.00 to Gonzales in the
conclude that the SPA was valid and binding to the parties.
presence of Herminia. -Gonzales then presented the SPA executed by Rolando Salvador and
then and there made a Contract to Sell
3. In June, 1999, Spouses Salvador complained to Spouses Rabaja that they did not receive any HELD: Petition is PARTLY GRANTED.
payment from Gonzales. This caused Spouses Rabaja to suspend further payment and they
received a notice to vacate the subject property. - Spouses Salvador instituted an action for
ejectment against while Spouses Rabaja filed the present action for rescission of contract
against Spouses Salvador and Gonzales.
4. MeTC and CA ruled in favor of Spouses Salvador and ordered Rabaja to pay back rentals. -
In the rescission case, Spouses Salvador contended that there was no meeting of the minds
between the parties and that the SPA in favor of Gonzales was falsified. They even argued
that they did not receive any payment from Spouses Rabaja through Gonzales. -Gonzales
answered, stating that the SPA was not falsified and that the payments were all handed over to
Spouses Salvador. -RTC rendered a decision in favor of Rabaja, which was affirmed by the
CA. -Thus, this petition.

ISSUES:

1. W Spouses Salvador was right in contending that the order of default must be lifted because
reasonable grounds exist to justify their failure to attend the pre-trial conference -NO -The excuse of
Spouses Salvador averring that their non-attendance was due to the fault of their counsel, that he forgot
 Country Bankers v. Keppel Cebu Shipyard
G.R. No. 166044 | 18 June 2012
FACTS
Unimarine, a corporation engaged in the shipping industry, contracted the services of Keppel Cebu
Shipyard for dry docking and ship repair works on its vessel, M/V Pacific Fortune. Cebu Shipyard
issued a bill to Ubimarine in consideration for its services which initially amounted to Php
4,486,052.00, but was reduced to Php 3.85 M. The terms of the agreement were embodied in Cebu
Shipyards letter to the President/General Manager of Unimarine.
In compliance with the agreement, Unimarine, secured from Country Bankers Insurance Corp (CBIC),
through CBICs agent, Quinain, a suretybond of Php 3M. The expiration of the surety bond was
extended through the endorsement, which was later on attached to the surety bond. In a ddition to this,
Unimarine, obtained another bond from Plaridel Surety in the amount of Php 1.62M.
Due to Unimarines failure to heed Cebu Shipyards repeated demands, Cebu Shipyard wrote the
sureties CBIC and Plaridel to inform them of Unimarines nonpayment and ask them to fulfill their
obligations as sureties, and to respond within 7 days from receipt of demand.
However, even the sureties failed to discharge their obligations, and so Cebu Shipyard filed a
Complaint before the RTC against Unimarine, CBIC, and Plaridel. CBIC in its answer stated that the
complaint has no cause of action since the alleged surety bond was issued by its agent, Quinain, in
excess of his authority.
After the trial, the RTC was faced with the lone issue of whether or not CBIC was liable to Cebu
Shipyard based on the surety bond. he RTC found CBICs contention that Quinain acted in excess of
his authority in issuing the surety bond untenable. The RTC held that CBIC is bound by the surety
bond issued by its agent who acted within the apparent scope of his authority. CA affirmed RTCs
decision.
ISSUE
Whether the CBIC is liable for the unauthorized acts of its agent
HELD
No. In the case at bar, CBIC could be held liable even if Quinain exceeded the scope of his authority
only if Quinains act of issuing the surety bond is deemed to have been performed within the written
terms of the power of attorney he was granted. However, contrary to what the RTC held, the Special
Power of Attorney accorded to Quinain clearly states the limits of his authority and particularly
provides that in case of surety bonds, it can only be issued in favor of the Department of Public Works
and Highways, the National Power Corporation, and other government agencies; furthermore, the
amount of the surety bond is limited to P500,000.00.
CBIC does not anchor its defense on a secret agreement, mutual understanding, or any verbal
instruction to Quinain. CBICs stance is grounded on its contract with Quinain, and the clear, written
terms therein. This Court finds that the terms of the foregoing contract specifically provided for the
extent and scope of Quinains authority, and Quinain has indeed exceeded them.
Under Articles 1898 and 1910, an agents act, even if done beyond the scope of his authority, may bind
the principal if he ratifies them, whether expressly or tacitly. It must be stressed though that only the
principal, and not the agent, can ratify the unauthorized acts, which the principal must have knowledge
of.
Under Articles 1898 and 1910, an agents act, even if done beyond the scope of his authority, may bind
the principal if he ratifies them, whether expressly or tacitly. It must be stressed though that only the
principal, and not the agent, can ratify the unauthorized acts, which the principal must have knowledge
of.
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. Thus, if material facts were suppressed or unknown, there can be no valid
ratification and this regardless of the purpose or lack thereof in concealing such facts and regardless of
the parties between whom the question of ratification may arise. xxx. However, in the absence of
circumstances putting a reasonably prudent man on inquiry, ratification cannot be implied as against
the principal who is ignorant of the facts.
Neither Unimarine nor Cebu Shipyard was able to repudiate CBICs testimony that it was unaware of
the existence of surety bond and the endorsement. There were no allegations either that CBIC should
have been put on alert with regard to Quinains business transactions done on its behalf. It is clear, and
undisputed therefore, that there can be no ratification in this case, whether express or implied.
Article 1911, on the other hand, is based on the principle of estoppel, which is necessary for the
protection of third persons. It states that the principal is solidarily liable with the agent even when the
latter has exceeded his authority, if the principal allowed him to act as though he had full powers.
However, for an agency by estoppel to exist, the following must be established:
1. The principal manifested a representation of the agents authority or knowingly allowed the agent to
assume such authority;
2. The third person, in good faith, relied upon such representation; and
3. Relying upon such representation, such third person has changed his position to his detriment.
CBIC not only clearly stated the limits of its agents powers in their contracts, it even stamped its surety
bonds with the restrictions, in order to alert the concerned parties. CBIC cannot be faulted for Quinains
deliberate failure to notify it of his transactions with Unimarine. In fact, CBIC did not even receive the
premiums paid by Unimarine to Quinain.

Furthermore, nowhere in the decisions of the lower courts was it stated that CBIC let the public, or
specifically Unimarine, believe that Quinain had the authority to issue a surety bond in favor of
companies other than the Department of Public Works and Highways, the National Power Corporation,
and other government agencies. Neither was it shown that CBIC knew of the existence of the surety
bond before the endorsement extending the life of the bond, was issued to Unimarine. For one to
successfully claim the benefit of estoppel on the ground that he has been misled by the representations
of another, he must show that he was not misled through his own want of reasonable care and
circumspection.

In light of the foregoing, this Court is constrained to release CBIC from its liability on Surety Bond
and the endorsement.

WHEREFORE, this petition is hereby GRANTED and the complaint against CBIC is DISMISSED for
lack of merit.
 Republic v. Baez
772 SCRA 297 | October 14, 2015 Perez, J.
DOCTRINE
In an agency by estoppel or apparent authority, 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.
FACTS
4. Respondents Antonio V. Baez, Luisita Baez Valera and Nena Banez Hojilla offered for sale a
parcel of land to Cellophil Resources Corporation.
5. Pursuant to the offer to sell, respondents executed a Letter Agreement irrevocably giving Cellophil
the option to purchase the subject property, which Cellophil accepted.
6. The pertinent provisions of the Letter Agreement provide that:
o The co-owners shall take all necessary steps to cause the Cellophil Portion to be brought under the
operation of RA 496 (The Land Registration Act). o To cause the issuance in their name of the
corresponding original certificate of title. o All of the foregoing to be accomplished within a
reasonable time from date hereof. o The co-owners confirm their agreement and permission to
Cellophils entry into construction of buildings,
improvements and occupancy of the property. o An absolute deed of sale shall be executed by the co-
owners in favor of Cellophil or its assignees and the
same shall be delivered together with the original certificate of title upon payment of purchase price. o
Payment shall be made by Cellophil only upon presentation of certificates and clearances.
Respondents asked for several cash advances which reached the total amount of P217,000, which is
to be deducted from the purchase price of P400,000.
Cellophil constructed staff houses and improvements on the subject property.
As respondents would be staying abroad for a time, they executed a Special Power of Attorney
(SPA) in favor of Edgardo B. Hojilla, which authorized the latter to perform the following:
o To take all steps necessary to cause the lot to be brought under the operation of RA 496 and to cause
the
issuance of the corresponding original certificate of title. o To do all acts and things and to execute
all papers and documents of whatever nature or kind required for
the accomplishment of the aforesaid purpose.
Cellophil stopped its operations and was turned over to the petitioner Privatization and Management
Office (formerly Asset Privatization Trust) as represented by the Republic.
Later on, respondents rented out to third parties the staff houses that petitioner constructed and
ordered its guards to prohibit the petitioner from entering the compound.
This impelled the petitioner to file a complaint for specific performance, recovery of possession and
damages against respondents, including Hojilla.
Petitioner alleged that there is no justification for the respondents to dispossess the petitioner from
the subject property and that the respondents violated the terms of the letter agreement (i.e.,
to permit entry into and occupancy of the subject property)
RTC ruling:
o Action was barred by the Statute of Limitations pursuant to Art. 1144 (1) of the Civil Code (10-year
prescription period for written contracts)
o The letters petitioner sent to respondents were not demands for respondents to comply with their
obligation to deliver the title so as to interrupt the running of the prescriptive period.
o The complaint was filed more than 18 years since the contract was executed, and within that period,
no act on the part of petitioner, whether judicial or extrajudicial, to interrupt prescription.
CA ruling: o Affirmed the ruling of the RTC. o The letters were not considered as demand letters
because they simply called the attention of Hojilla to
return the properties and unlock the gates. o Hojilla was only an attorney-in-fact authorized to
register the property so it was not binding upon the
respondents. W/N the complaint for specific performance was filed beyond the prescriptive period
ISSUE
HELD
NO, the action has not prescribed.
Prescriptive period is interrupted when there is extrajudicial demand by the creditors and when there
is any written acknowledgment of the debt by the debtor.
Letters that were exchanged by the parties are material to the case at bar:
First: Hojillas letter dated August 15, 1984
o Hojilla updated petitioner of the status of the subject propertys title which serves as an
acknowledgement of respondents commitment under the contract.
o It interrupted the running of the prescriptive period and set the same running anew with a new expiry
period of August 15, 1994.
Second: Petitioners letters dated May 29 1991 and October 24, 1991 o The letters demanded
respondents to return the properties, discontinue the construction, repair, demolition
and occupancy of staff houses, and unlock the gates. o As such, the letter interrupted the running of
the prescriptive period which commenced to run anew.
Third: Petitioners letter dated July 6, 1999 o Petitioner demanded Hojilla to produce the title of the
subject property.
The SPA executed in favor of Hojilla cannot be construed to just mean that Hojilla was authorized
solely to register the subject property.
o The strict construction of the tenor of the SPA will render the obligatory force of the contract
ineffective. o To favor the lower courts interpretation of the scope of Hojillas power is to defeat the
juridical tie of the
contract.
The present case is a case of an express agency, where, Hojilla, the agent, binds himself to represent
another, the principal, who are herein respondents, with the latters express consent or
authority.
Because there is an express authority granted upon Hojilla to represent the respondents as evidenced
by the SPA, Hojillas actions bind the respondents.
o The representations and guarantees of Hojilla are considered representation and guarantees of the
principal. o This is the principle of agency by promissory estoppel.
Having received the several demand letters from petitioner, Hojilla continuously represented himself
as the duly authorized agent of respondents, authorized not only to administer and/or manage
the subject property, but also authorized to register the subject property and represent the
respondents with regard to the latter's obligations in the contract.
Clearly, the respondents are estopped by the acts and representations of their agent.
A party may not go back on his own acts and representations to the prejudice of the other party who
relied upon them.
Even assuming that Hojilla exceeded his authority, the respondents are still solidary liable because
they allowed Hojilla to act as though he had full powers by impliedly ratifying Hojilla's
actionsthrough action by omission.
o This is the import of the principle of agency by estoppel or the doctrine of apparent authority.
In an agency by estoppel or apparent authority, 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 respondents' acquiescence of Hojilla's acts was made when they failed to repudiate the latter's
acts.
They knowingly permitted Hojilla to represent them and petitioners were clearly misled into
believing Hojilla's authority.
Thus, the respondents are now estopped from repudiating Hojilla's authority, and Hojilla's actions
are binding upon
the respondents.
Petition is GRANTED.
 Bautista-Spille v. NICORP (Celaje)
G.R. No. 214057 | October 19, 2015 | Mendoza, J. | SPA needed to sell property
PETITIONER: Florentina Bautista-Spille represent by her attorney-in-fact,
Manuel B. Flores, Jr.
RESPONDENTS: NICORP Management and Development Corporation,
Benjamin G. Bautista and International Exchange Bank
SUMMARY: Petitioner Florentina Bautista-Spille is the registered owner of a
parcel of land covered by TCT No. T-197, located in Imus City, Cavite. On
June 20, 1996, petitioner and her spouse, Harold E. Spille, executed a
document denominated as General Power of Attorney in favor of her
brother, respondent Benjamin Bautista (Benjamin), authorizing the latter
to ADMINISTER all her businesses and properties in the Philippines. On
August 13, 2004, Benjamin and respondent NICORP entered into a contract to
sell which pertained to the parcel of land covered by TCT No. T-197 for the
agreed amount of P15,000,000.00. When petitioner discovered the sale, her
lawyer immediately sent demand letters to respondents informing them that she
was opposing the sale of the subject property and that Benjamin was not clothed
with authority to enter into a contract to sell. RTC eventually nullified the sale,
but CA reversed.
The Supreme Court ruled the sale was invalid. It ruled that a SPA in the
conveyance of real rights over immovable property is necessary. Nowhere in the
General Power of Attorney was Benjamin granted, expressly or impliedly, any
power to sell the subject property or a portion thereof. He was only grated
powers of administration, and this Court has stressed repeatedly that the power
of administration does not include acts of disposition, which are acts of strict
ownership. In the same vein, NICORP cannot be considered a purchaser in good
faith. Here, the Court agrees with the RTC that NICORP was fully aware that
Benjamin was not properly authorized to enter into any transaction regarding
the sale of petitioner's property, as it required Benjamin to show the SPA.
DOCTRINE: 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.
FACTS:
1. Petitioner Florentina Bautista-Spille (petitioner) is the registered owner of a parcel of land
covered by TCT No. T-197, located in Imus City, Cavite, with an area of more or less
33,052 square meters (subject property).
2. On June 20, 1996, petitioner and her spouse, Harold E. Spille, executed a document
denominated as General Power of Attorney in favor of her brother, respondent
Benjamin Bautista (Benjamin), authorizing the latter to ADMINISTER all her
businesses and properties in the Philippines. The said document was notarized before
the Consulate General of the Philippines, New York, United States of America.
3. On August 13, 2004, Benjamin and NICORP Management and Development Corporation
(NICORP) entered into a contract to sell which pertained to the parcel of land covered by TCT
No. T-197 for the agreed amount of P15,000,000.00. In the said contract, NICORP agreed to
give a down payment equivalent to 20% of the purchase price and pay the remaining balance
in eight (8) months. It was also agreed that upon receipt of the down payment, the TCT of the
subject property would be deposited with the International Exchange Bank (IE Bank) and
placed in escrow. It would only be released upon full payment of the agreed amount.
Furthermore, Benjamin was required to submit a special power of attorney (SPA) covering the
sale transaction, otherwise, the payment of the balance would be suspended and a penalty of
P150,000.00 every month would be imposed.
4. Pursuant thereto, an Escrow Agreement, dated October 13, 2004, was executed designating IE
Bank as the Escrow Agent, obliging the latter to hold and take custody of TCT No. T-197, and
to release the said title to NICORP upon full payment of the subject property.
5. On October 14, 2004, NICORP issued a check in the amount of P2,250,000.00, representing
the down payment of the subject property. Thereafter, the TCT was deposited with IE Bank
and placed in escrow.
6. When petitioner discovered the sale, her lawyer immediately sent demand letters to
NICORP and Benjamin, both dated October 27, 2004, and to IE pank, dated October
28, 2004, informing them that she was opposing the sale of the subject property and that
Benjamin was not clothed with authority to enter into a contract to sell and demanding
the return of the owner's copy of the certificate of title to her true and lawful attorney-
in-fact, Manuel B. Flores, Jr. (Flores). NICORP, Benjamin and IE Bank, however, failed
and refused to return the title of the subject property.
7. Consequently, petitioner filed a complaint before the RTC against Benjamin, NICORP and IE
Bank for declaration of nullity of the contract to sell. Petitioner denied receiving the down
payment for the subject property. Injunction was granted.
8. On May 24, 2010, the RTC rendered its judgment, declaring the contract to sell null and
void. It explained that the general power of authority only pertained to acts of
administration over petitioner's businesses and properties in the Philippines and did not
include authority to sell the subject property. Aggrieved, NICORP appealed before the
CA.
9. In the assailed decision, the CA reversed the RTC decision, explaining that the general power
of attorney executed by petitioner in favor of Benjamin authorized the latter not only to
perform acts of administration over her properties but also to perform acts of dominion which
included, among others, the power to dispose the subject property. MR denied. Hence, this
petition.
10. Petitioner argues that the general power of attorney did not clothe Benjamin with the authority
to enter into a contract to sell the subject property. She contends that the general power of
 attorney pertained to the power to buy, sell, negotiate and contract over the business and
personal property but did not specifically authorize the sale of the subject property.
11. NICORP counters that the general power of attorney sufficiently conferred authority on
Benjamin to enter into the contract to sell. It asserts that the written authority, while
denominated as a general power of attorney, expressly authorized him to sell the subject
property. NICORP insists that it was a buyer in good faith and was never negligent in
ascertaining the extent of his authority to sell the property.
ISSUES:
1. (1) W/N Benjamin was authorized to sell the subject property. No.
RULING: WHEREFORE, the petition is GRANTED. The March 19, 2014 Decision and the August
18, 2014 Resolution of the Court of Appeals in CA-G.R. CV No. 97682 are REVERSED and SET
ASIDE. The May 24, 2010 Decision of the Regional Trial Court, Branch 90, Dasmarias, Cavite,
is REINSTATED.
RATIO:
1. The well-established rule is when a sale of a parcel 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.
Articles 1874 and 1878 of the Civil Code explicitly provide:
a. Art. 1874. When a sale of a piece of land or any interest therein is through an agent,
the authority of the latter shall be in writing; otherwise, the sale shall be void.
b. Art. 1878. Special powers of attorney are necessary in the following cases:
(5) To enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration;
2. From the foregoing, it is clear that an SPA in the conveyance of real rights over immovable
property is necessary. In Cosmic Lumber Corporation v. Court of Appeals, the Court
enunciated,
a. 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.
3. To reiterate, such authority must be conferred in writing and must express the powers of the
agent in clear and unmistakable language in order for the principal to confer the right upon an
agent to sell the real property. It is a general rule that a power of attorney must be strictly
construed, and courts will not infer or presume broad powers from deeds which do not
sufficiently include property or subject under which the agent is to deal. Thus, when the
authority is couched in general terms, without mentioning any specific power to sell or
mortgage or to do other specific acts of strict dominion, then only acts of administration are
deemed conferred.
4. In the case at bench, the only evidence adduced by NICORP to prove Benjamin's authority to
sell petitioner's property was the document denominated as General Power of Attorney, dated
June 20, 1996. The pertinent portions of the said document reads:
a. THAT I/WE [petitioners] do hereby appoint, name and constitute BENJAMIN G.
BAUTISTA resident(s) of x x x to be my/our true and lawful attorney(s), , to do
and execute any or all of the following acts, deeds and things to wit:
i. To exercise administration, general control and supervision over my/our
business and property in the Philippines, and to act as my/our general
representative(s) and agent(s) with full authority to buy, sell, negotiate and
contract for me/us and my/our behalf;
5. Doubtless, there was no perfected contract to sell between petitioner and NICORP. Nowhere
in the General Power of Attorney was Benjamin granted, expressly or impliedly, any power to
sell the subject property or a portion thereof. The authority expressed in the General Power of
Attorney was couched in very broad terms covering petitioner's businesses and properties.
Time and again, this Court has stressed that the power of administration does not include acts
of disposition, which are acts of strict ownership. As such, an authority to dispose cannot
proceed from an authority to administer, and vice versa, for the two powers may only be
exercised by an agent by following the provisions on agency of the Civil Code.
6. In the same vein, NICORP cannot be considered a purchaser in good faith. The well-settled
rule is that a person dealing with an assumed agent is bound to ascertain not only the fact of
agency but also the nature and extent of the agent's authority. The law requires a higher degree
of prudence from one who buys from a person who is not the registered owner.
7. Here, the Court agrees with the RTC that NICORP was fully aware that Benjamin was not
properly authorized to enter into any transaction regarding the sale of petitioner's property. In
fact, in the contract to sell, NICORP required Benjamin to secure the SPA from petitioner
within ninety (90) days from the execution of the contract and even imposed a substantial
amount of penalty in the amount of P150,000.00 a month in case of non-compliance plus
suspension of payment of the balance of the contract price.
8. Petitioner's explanation that it obliged Benjamin to secure the SPA in order to comply with
the requirements of the Register of Deeds and the Bureau of Internal Revenue is bereft of
merit. NICORP is a real estate company which is familiar with the intricacies of the realty
business. Moreover, there was no evidence that petitioner ratified Benjamin's act of selling the
subject property. On the contrary, immediately after the execution of the contract to sell,
petitioner wrote NICORP, IE Bank and Benjamin to inform them of her opposition to the sale
of the subject property and of his lack of authority to sell it and demand the return of the
certificate of title. Clearly, NICORP was negligent in its dealings with Bautista.
9. In sum, the Court agrees with the findings and conclusion of the RTC. The consent of
petitioner in the contract to sell was not obtained, hence, not enforceable. Furthermore,
because NICORP is considered a buyer in bad faith, it has no right to be refunded the value of
whatever improvements it introduced on the subject property
 Patrimonio v. Gutierrez requirement under Article1878 of the Civil Code refers to the nature of the authorization and
not to its form. Be that as it may, the authority must be duly established by competent and
Facts: convincing evidence other than the self serving assertion of the party claiming that such
authority was verbally given.
Patrimonio and Gutierrez entered into a business venture under the name of Slam Dunk Corporation
(Slum Dunk), a production outfit that produced mini-concerts and shows related to basketball. In the
course of their business, Patrimonio pre-signed several blank checks to serve as payment for the 8. The records of the court reveal that Gutierrez did not have any authority to borrow money in behalf
expenses of Slam Dunk. Said blank check were entrusted to Gutierrez and was instructed to not fill of the petitioner. Records do not show that the petitioner executed any special power of
them out without Patrimonios notification and approval. attorney (SPA) in favor of Gutierrez. In fact, the petitioners testimony confirmed that he
never authorized Gutierrez (or anyone for that matter), whether verbally or in writing,
Sometime in 1993, Guitierrez went to Marisigan (Patrimonio former teammate) to secure a loan for the to borrow money in his behalf, nor was he aware of any such transaction.
amount of P 200, 000 on the excuse that Patrimonio needed such for the construction of his house. In
Feb 1994 Marsigan gave the 200,000 to Gutierrez. Gutierrez simultaneously delivered to Marasigan
(2) Yes, because Gutierrez was not Patrimonios agent.
one of the blank checks the petitioner pre- signed with the blank portions filled out with the words
200,000.00 as for the amount and May 23, 1994 as for the date.
For a contract of agency to exist, the consent of both parties is essential, the principal consents
that the other party, the agent, shall act on his behalf, and the agent consents so to act. It must
Marasigan deposited the check but it was dishonored for the reason "ACCOUNT CLOSED." It was
exist as a fact. The law makes no presumption thereof. The person alleging it has the
later revealed that petitioners account with the bank had been closed since May 28, 1993. Marasigan
failed to sought recovery from Gutierrez and Patrimonio. Consequently, he filed a criminal case for burden of proof to show, not only the fact of its existence, but also its nature and extent.
violation of B.P. 22 against Patrimonio. Patrimonio then filed before the Regional Trial Court (RTC) a
Complaint for Declaration of Nullity of Loan and Recovery of Damages against Gutierrez and
In the absence of any showing of any agency relations or special authority to act for and in behalf of
correspondent Marasigan. He completely denied authorizing the loan or the checks negotiation, and
Patrimonio, the loan agreement Gutierrez entered into with Marasigan is null and void. Thus,
asserted that he was not privy to the parties loan agreement.
the Patrimonio is not bound by the parties loan agreement. Marisigan merly relied on the
RTC ruled in favor of Marisigan. Patrimonio appelead to the CA which affirmed the decision of RTC words of Gutierrez
with different factual findings CA also concluded that the check had been strictly filled out by
Gutierrez in accordance with the petitioners authority. Patrimonio filed for petition for certiorari
arguing that: (1) there was no loan between him and Marasigan since he never authorized the without securing a copy of SPA.
borrowing of money (2) Under Article 1878 of the Civil Code, a special power of attorney is necessary
for an individual to make a loan or borrow money in behalf of another. (3) the check had not been Furthermore, Patrimonio entrusted the blank presigned checks to Gutierrez is not legally sufficient
completely and strictly filled out in accordance with his authority since the condition that the subject because the authority to enter into a loan can never be presumed. The contract of agency
check can only be used provided there is prior approval from him, was not complied with. Therefore he and the special fiduciary relationship inherent in this contract must exist as a matter of
should not be held liable for the face value of the check. fact. The person alleging it has the burden of proof to show, not only the fact of agency,
but also its nature and extent.
Issues: (1) Whether or not Patrimonio authorized Gutierrez to borrow money from Marasigan? (2)
Whether or not the contract of loan may be nullified?

(1) No, Gutierrez was not authorized by Patrimonio

As a general rule, a contract of agency may be oral. However, it must be written when the law
requires a specific form, for example, in a sale of a piece of land or any interest therein through an
agent. Article 1878 paragraph 7 of the Civil Code expressly requires a special power of authority
before an agent can loan or borrow money in behalf of the principal.

7. Article 1878 does not state that the authority be in writing. As long as the mandate is express, such
authority may be either oral or written. It was declared in Lim Pin v. Liao Tian, et al., that the
 DOMINION INSURANCE V COURT OF APPEALS (Regine)
February 6, 2002 | Pardo, J. | Special Powers of Attorney
PETITIONER: DOMINION INSURANCE CORPORATION
RESPONDENTS: COURT OF APPEALS, RODOLFO S. GUEVARRA, AND
FERNANDO AUSTRIA
SUMMARY: Rodolfo S. Guevarra (Guevarra) instituted a civil case for a sum of
money against Dominion Insurance Corporation (Dominion). Guevarra sought to
recover thereunder the sum of P156,473.90 which he claimed to have advanced in
his capacity as manager of Dominion to satisfy certain claims filed by its clients.
However, Dominion denied any liability to Guevarra and asserted a counterclaim
for P249,672.53, representing premiums that Guevarra allegedly failed to remit.
Pre-trial was set on different dates. However, there were dates where the pre-trial
conferences were postponed. And when it was called again, Dominion requested
for postponement. However, Guevarras counsel objected to the desired
postponement and moved to have Dominion declared in default. This was granted
by the trial court. Dominion filed a Motion to Lift Order of Default. But this was
denied by the trial court and ordered it to pay Guevarra the total amount he
advanced in the payment of the claims of the clients of Dominion. CA affirmed the
decision. In resolving whether or not Guevarra acted within his authority as agent
of Dominion. SC said that 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 Guevarra could settle the insurance
claims of the insured. Further, the instruction of petitioner as the principal could not
be any clearer. Guevarra was authorized to pay the claim of the insured, but the
payment shall come from the revolving fund or collection in his possession. Having
deviated from the instructions of the principal, the expenses that Guevarra incurred
in the settlement of the claims of the insured may not be reimbursed from
Dominion. However, while the law on agency prohibits Guevarra from obtaining
reimbursement, his right to recover may still be justified under the general law on
obligations and contracts.
DOCTRINE: Although document is entitled Special Power of Attorney its
wordings show that it sought only to establish an agency that comprises all the
business of the principal within the designated locality, but couched in general
terms, and consequently was limited only to acts of administration. A general
power permits the agent to do all acts for which the law does not require a special
power, and only covers acts of administration.
FACTS:
1. Rodolfo S. Guevarra (Guevarra) instituted Civil Case No. 8855 for sum of money against
Dominion Insurance Corporation (Dominion)
2. Guevarra sought to recover thereunder the sum of P156,473.90 which he claimed to have
advanced in his capacity as manager of Dominion to satisfy certain claims filed by its clients.
3. However, Dominion denied any liability to Guevarra and asserted a counterclaim for
P249,672.53, representing premiums that Guevarra allegedly failed to remit.
4. Dominion filed a third-party complaint against Fernando Austria, who, at the time relevant to
the case, was its Regional Manager for Central Luzon area.
5. In due time, Austria filed his answer.
6. Pre-trial was set on the following dates: October 18, 1991, November 12, 1991, March 29,
1991, December 12, 1991, January 17, 1992, January 29, 1992, February 28, 1992, March 17,
1992 and April 6, 1992, in all of which dates no pre-trial conference was held. The record
shows that except for the settings on October 18, 1991, January 17, 1992 and March 17, 1992
which were cancelled at the instance of Dominion, Austria and Guevarra, respectively, the
rest were postponed upon joint request of the parties.
7. The case was again called for pre-trial conference. Only Guevarra and counsel were present.
Despite due notice, Dominion and counsel did not appear, although a messenger, Roy
Gamboa, submitted to the trial court a handwritten note sent to him by Dominions counsel
which instructed him to request for postponement.
8. Guevarras counsel objected to the desired postponement and moved to have Dominion
declared in default.
9. This was granted by the trial court and declared Dominion in default.
10. Guevarra presented his evidence and this was followed by a written offer of documentary
exhibits and supplemental offer of additional exhibits.
11. Dominion filed MOTION TO LIFT ORDER OF DEFAULT. It alleged therein that the failure
of counsel to attend the pre-trial conference was due to an unavoidable circumstance and that
counsel had sent his representative on that date to inform the trial court of his inability to
appear.
12. However, this was denied by the trial court.
13. Dominion moved for reconsideration and for the first time, counsel revealed that the reason
for his nonappearance at the pre- trial conference was his illness.
14. However, said motion was denied by the trial court and it ordered Dominion to pay Guevarra
the total amount advanced by Guevarra in the payment of the claims of the clients of
Dominion.
15. CA affirmed the decision of the trial court.
16. Hence, this appeal.
ISSUE/s:
1. Whether or not Guevarra acted within his authority as agent for Dominion. NO
2. Whether or not Guevarra is entitled to reimbursement of amounts he paid out of his personal
money in settling the claims of several insured. YES
RULING: IN VIEW WHEREOF, we DENY the Petition. However, we MODIFY the decision of the
Court of Appeals and that of the Regional Trial Court, Branch 44, San Fernando, Pampanga, in that
petitioner is ordered to pay respondent Guevarra the amount of P112,672.11 representing the total
amount advanced by the latter in the payment of the claims of petitioners clients.
RATIO:
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. 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.
2. A perusal of the Special Power of Attorney would show that Dominion (represented by
Austria) and Guevarra intended to enter into a principal- agent relationship. Despite the word
special in the title of the document, the contents reveal that what was constituted was actually
a general agency.
3. The terms of the agreement read:
That we, FIRST CONTINENTAL ASSURANCE COMPANY, INC., a corporation duly
organized and existing under and by virtue of the laws of the Republic of the Philippines, xxx
represented by the undersigned as Regional Manager, xxx do hereby appoint RSG Guevarra
Insurance Services represented by Mr. Rodolfo Guevarra xxx to be our Agency Manager in
San Fdo., for our place and stead, to do and perform the following acts and things:
1. To conduct, sign, manager (sic), carry on and transact Bonding and Insurance business as
usually pertain to a Agency Office, or FIRE, MARINE, MOTOR CAR, PERSONAL
ACCIDENT, and BONDING with the right, upon our prior written consent, to appoint agents
and sub-agents.
2. To accept, underwrite and subscribed (sic) cover notes or Policies of Insurance and Bonds
for and on our behalf.
3. To demand, sue, for (sic) collect, deposit, enforce payment, deliver and transfer for and
receive and give effectual receipts and discharge for all money to which
the FIRST CONTINENTAL ASSURANCE COMPANY, INC., may hereafter become due,
owing payable or transferable to said Corporation by reason of or in connection with the
above-mentioned appointment.
4. To receive notices, summons, and legal processes for and in behalf of the FIRST
CONTINENTAL ASSURANCE COMPANY, INC., in connection with actions and
all legal proceedings against the said Corporation.
4. The agency comprises all the business of the principal, but, couched in general terms, it is
limited only to acts of administration.
5. 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.
6. 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; (15) Any other act of strict dominion.
7. 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 Guevarra could settle the insurance claims of the insured.
8. Guevarras authority to settle claims is embodied in the Memorandum of Management
Agreement dated February 18, 1987 which enumerates the scope of Guevarras duties and
responsibilities as agency manager for San Fernando, Pampanga, as follows:
1. You are hereby given authority to settle and dispose of all motor car claims in the amount
of P5,000.00 with prior approval of the Regional Office.
2. Full authority is given you on TPPI claims settlement.
In settling the claims mentioned above, respondent Guevarras authority is further limited by
the written standard authority to pay, which states that the payment shall come from
respondent Guevarras revolving fund or collection. The authority to pay is worded as
follows:
This is to authorize you to withdraw from your revolving fund/collection the amount of
PESOS __________________ (P) representing the payment on the _________________
claim of assured _______________ under Policy No. ______ in that accident of ___________
at ____________.
It is further expected, release papers will be signed and authorized by the concerned and
attached to the corresponding claim folder after effecting payment of the claim.
(sgd.) FERNANDO C. AUSTRIA Regional Manager
9. The instruction of petitioner as the principal could not be any clearer. Guevarra was
authorized to pay the claim of the insured, but the payment shall come from the revolving
fund or collection in his possession.
10. Having deviated from the instructions of the principal, the expenses that Guevarra incurred in
the settlement of the claims of the insured may not be reimbursed from Dominion. This
conclusion is in accord with Article 1918, Civil Code, which states that: The principal is not
liable for the expenses incurred by the agent in the following cases: (1) If the agent acted in
contravention of the principals instructions, unless the latter should wish to avail himself of
the benefits derived from the contract.
11. However, while the law on agency prohibits Guevarra from obtaining reimbursement, his
right to recover may still be justified under the general law on obligations and contracts.
12. Article 1236, second paragraph, Civil Code, provides:
Whoever pays for another may demand from the debtor what he has paid, except that if he
paid without the knowledge or against the will of the debtor, he can recover only insofar as
the payment has been beneficial to the debtor.
13. In this case, when the risk insured against occurred, Dominions liability as insurer arose. This
obligation was extinguished when Guevarra paid the claims and obtained Release of Claim
Loss and Subrogation Receipts from the insured who were paid.
14. Thus, to the extent that the obligation of the Dominion has been extinguished, Guevarra may
demand for reimbursement from his principal. To rule otherwise would result in unjust
enrichment of Dominion
15. The extent to which Dominion was benefited by the settlement of the insurance claims could
best be proven by the Release of Claim Loss and Subrogation Receipts which were attached
to the original complaint
16. However, the amount of the revolving fund/collection that was then in the possession of
Guevarra as reflected in the statement of account would be deducted from the above amount.
 Gutierrez Hermanos v. Engacio Orense
G.R. No. L-9188 | Dec. 4, 1914
FACTS
1. This suit involves the validity and efficacy of the sale under right of redemption of a parcel of
land and a masonry house with the nipa roof erected thereon, effected by Jose Duran, a
nephew of the owner of the property, Engracio Orense, for the sum of P1,500 by means of a
notarial instrument executed and ratified on February 14, 1907.
2. On March 5, 1913, counsel for Gutierrez Hermanos filed a complaint in the Court of First
Instance of Albay against Engacio Orense. Hermanos alleged:
3. That on and before February 14, 1907, the defendant-appellant Orense had been the
owner of a parcel of land, with the buildings and improvements thereon, situated in the pueblo
of Guinobatan, Albay.
4. That the said property has up to date been recorded in the new property registry in the name of
the said Orense, according to certificate No. 5, with the boundaries therein given.
5. That on February 14, 1907, Jose Duran, a nephew of the defendant, with the latter's
knowledge and consent, executed before a notary a public instrument whereby he sold and
conveyed to the plaintiff company, for P1,500, the aforementioned property, the vendor Duran
reserving to himself the right to repurchase it for the same price within a period of four years
from the date of the said instrument.
6. That plaintiff Hermanos had not entered into possession of the purchased property, owing to
its continued occupancy by the defendant and his nephew, Jose Duran, by virtue of a contract
of lease executed by the plaintiff to Duran, which contract was in force up to February 14,
1911.
7. That the said instrument of sale of the property, executed by Jose Duran, was publicly and
freely confirmed and ratified by the defendant Orense; that, in order to perfect the title to the
said property, but that the defendant Orense refused to do so, without any justifiable cause or
reason. The record also shows that plaintiff-appellee Hermanos charged Jose Duran, in the
CFI of the said province, with estafa and during trial, Engracio Orense was called as a witness
and interrogated by the fiscal as to whether he and consented to Duran's selling the said
property under right of redemption to the firm of Gutierrez Hermanos and replied that he had.
In view of this statement by the defendant, the court acquitted Jose Duran of the charge of
estafa.
ISSUE AND HOLDING
1. Whether the sale of the property is valid. Yes.
The record in this case shows that he did give his consent in order that his nephew, Jose
Duran, might sell the property in question to Gutierrez Hermanos, and that he did thereafter
confirm and ratify the sale by means of a public instrument executed before a notary.
It having been proven at the trial that he gave his consent to the said sale, it follows that the
defendant conferred verbal, or at least implied, power of agency upon his nephew Duran, who
accepted it in the same way by selling the said property. The principal must therefore fulfill
all the obligations contracted by the agent, who acted within the scope of his authority.
Even should it be held that the said consent was granted subsequently to the sale, it is
unquestionable that the defendant, the owner of the property, approved the action of his
nephew, who in this case acted as the manager of his uncle's business, and Orense's
ratification produced the effect of an express authorization to make the said sale.
The sale of the said property made by Duran to Gutierrez Hermanos was indeed null and void
in the beginning, but afterwards became perfectly valid and cured of the defect of nullity it
bore at its execution by the confirmation solemnly made by the said owner upon his stating
under oath to the judge that he himself consented to his nephew Jose Duran's making the said
sale. Moreover, pursuant to article 1309 of the same Code, the right of action for nullification
that could have been brought became legally extinguished from the moment the contract was
validly confirmed and ratified, and, in the present case, it is unquestionable that the defendant
did confirm the said contract of sale and consent to its execution.
The contract of sale of the said property contained in the notarial instrument of February 14,
1907, is alleged to be invalid, null and void under the provisions of the Code of Civil
Procedure, because the authority which Orense may have given to Duran to make the said
contract of sale is not shown to have been in writing and signed by Orense, but the record
discloses satisfactory and conclusive proof that the defendant Orense gave his consent to the
contract of sale executed in a public instrument by his nephew Jose Duran. Such consent was
proven in a criminal action by the sworn testimony of the principal and presented in this civil
suit by other sworn testimony of the same principal and by other evidence to which the
defendant made no objection. Therefore the principal is bound to abide by the consequences
of his agency as though it had actually been given in writing.
 COSMIC LUMBER v. COURT OF APPEALS (PAT)
November 29, 1996 | Bellosillo, J. | Special Power of Attorney: Sale of land
Petitioner: Cosmic Lumber Corporation
Respondents: Court of Appeals and Isidro Perez
Summary: CLC executed a SPA appointing Paz as atty-in-fact. The SPA grants her the power to institute
any action to eject the squatters from the subject properties so that CLC can take material possession of
the lots and also, she can enter into compromise agreements but only insofar as these protect the rights and
interests of CLC in the properties. Paz instituted the ejectment case, but entered into a Compromise
Agreement with Isidro. The Compromise Agreement, in essence, sold a portion of the property to Isidro
for Php 80.00/sq.m. The RTC approved this. CLC received summons because they were not able to
furnish Isidro the copy of the title. CLC claimed that they only found out about the Compromise
Agreement when the summons were served upon them and said that they did not authorize any sale with
regard to the property, and that Paz is only allowed to institute an action for the ejectment. CLC sought to
annul the decision of the RTC but the CA dismissed the complaint. Hence, the petition. The issue in this
case is whether or not Paz exceeded the authority granted in the SPA. The SC held that the actions of Paz
exceeded the authority granted to her in the SPA. The authority granted under the SPA was explicit and
exclusionary. Nowhere was she expressly or impliedly granted the authority to sell the property or even a
portion thereof. Although she can enter into a Compromise Agreement, it is with a limitation that it should
only be so far as it protects the rights and interests of CLC re the property. When the sale of a piece of
land or any interest is through an agent, the authority shall be in writing, otherwise it shall be void.
Doctrine: A power of attorney must so express the powers of the agent in clear and unmistakable
language. The authority of an agent to execute a contract of sale of real estate must be conferred in writing
and must give him specific authority. A special power of attorney is necessary to enter into any 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 agency 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.
Facts:
1. Cosmic Lumber Corp. (CLC) through its General Manager executed a Special Power of
Attorney appointing Paz Estrada (Paz) as atty-in-fact. The following are the stipulations:
a. Initiate, institute, file any court action for ejectment of squatters of lot 9127 and 443 for
the squatters to remove their houses and vacate, so that CLC can take material possession
of the entire lot;
b. To appear at pre-trial conference and enter into any stipulation of facts and or
compromise agreement so far as it shall protect the rights and interests of the company.
2. By virtue of the SPA, Paz instituted an action for ejectment of Isidro Perez (Isidro) and to
recover possession of the lot 443.
3. But Paz entered into a Compromise Agreement with Isidro, which in effect sold the said lot
for Php 80.00/sq.m. to Isidro; trial court approved this.
4. The decision has already been final and executor but it wasnt executed within the 5-year
period from date of finality because of failure of CLC to produce the copy of the title.
5. CLC claims that they only became aware of the Compromise Agreement when summons
were served unto them and upon learning of the fraudulent transaction, they sought to annul
the decision of the trial court with the CA based on the following:
a. Paz did not have the authority to dispose, sell, encumber the lot;
b. Power granted was only limited to filing and institution of ejectment case;
c. Although there was a mention of a Compromise Agreement, it is with the connection
with the eviction, in order that CLC may take material possession of the lot;
d. The amount from the transaction was never received by CLC;
e. Paz was in bad faith;
f. Disposal of corporate property requires a board resolution.
6. CA dismissed the complaint on the basis that not one of the grounds for annulment was shown
to exist; they likewise denied the MR. Hence, the petition.
Issue: WON Paz exceeded the authority granted in the SPA. YES.
Held: WHEREFORE, the petition is GRANTED. The decision and resolution of the CA as well as the
decision of the RTC are NULLIFIED and SET ASIDE. The Compromise Agreement entered into
between Paz and Isidro is declared VOID.
Ratio:
On whether Paz exceeded the authority granted in the SPA
CLC: The authority granted to Paz under the SPA was explicit and exclusionary: institute any
action to eject the squatters so that CLC can take material possession of the lot and to enter
into Compromise Agreements but only insofar as this furthers the rights and interests of CLC
in the lot.
o SC: Agrees with CLC.
Nowhere in the SPA did it grant Paz the authority to sell the property.
It cant also be inferred that a Compromise Agreement in general can be entered into
because it is with the condition that it would protect the interests of CLC in the
property.
The authority of an agent to sell real property must be conferred in writing, otherwise
it shall be void.
Given that the selling of Paz to Isidro was done without authority, the Compromise
Agreement is void, thus the decision of the RTC is necessarily void.
On whether the petition to annul was proper
SC: Petition to annul is proper
o Given that the Compromise Agreement is void, the RTC has no jurisdiction to render a
judgment.
o The judgment should have been struck down since the conduct of Paz constituted an
extrinsic or collateral fraud.
o Extrinsic fraud any fraudulent act of the prevailing party in the litigation which is
committed outside of the trial of the case, whereby the defeated party has been prevented
from exhibiting fully his side of the case by fraud or deception practiced on him by his
opponent.
o It can be argued that CLC knew of the Compromise Agreement, since the general rule is
that principal is bound by such, but the general rule is intended to protect those who
exercise good faith, but this admits of an exception 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.
 City-Lite Realty Corp. v. CA [G.R. No. 138639. February 10, 2000] The CA reversed an set aside the RTC judgment.

Facts:
FP HOLDINGS, was the registered owner of a parcel of land situated along E. Rodriguez Avenue,
Quezon City, also known as the "Violago Property with an area of 71,754 square meters, more or less.
The property was offered for sale to the general public through the circulation of a sales brochure. (The
front portion consisting of 9,192 square meter is the subject of this litigation).
Respondent Meldin Roy sent a sales brochure, location plan and copy of the TCT to Atty. Gelacio
Mamaril, a practicing lawyer and a licensed real estate broker. Atty. Mamaril in turn passed on these
documents to Antonio Teng, EVP, and Atty. Victor P. Villanueva, Legal Counsel, of CITY-LITE.
City-Lite conveyed its interest to purchase 12 of the front portion of the subject property. Roy
informed City-Lites representative that it would take time to subdivide the lot and FP Holdings wasnt
receptive to a 12 purchase.
Atty. Mamaril sent a letter to Metro Drug (Meldin Roy) expressing City-Lites desire to buy the entire
front lot of the subject property provided that the price per square meter will be reduced and that
payment be in installments. Roy made a counter offer in another letter.
City-Lite and Mamaril met with Roy to consummate the transaction; Roy agreed to sell the property
provided City-Lite submit its acceptance in writing to the terms and conditions in Roys letter. Later
that afternoon Mamaril and Teng of City-Lite conveyed their formal acceptance of the terms and
conditions set forth by Roy in his letter.
However, FP Holdings refused to execute the corresponding deed of sale. City-Lite registered an
adverse claim to the title of the property with the Register of Deeds of QC, annotated in the
memorandum of encumbrance in the TCT.
Issue:
Was there a perfected contract of sale between City-Lite and FP Holdings through its agent Meldin
Roy of Metro Drug?
Held: No.
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.
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 Drug's assistance in finding buyers for the property. The
memorandum in part stated: "We will appreciate Metro Drug's 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." 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. Consequently, due to the 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.
WHEREFORE, the appealed Decision of the Court of Appeals being in accord with law and the
evidence is AFFIRMED.

FP Holdings filed a petition for the cancellation of the adverse claim against City-Lite. The President
of FP Holdings tried to amicably settle with City-Lite by offering different properties. City-Life
refused and caused the annotation of the first notice of lis pendens which was recorded in the title of
the property.

RTC dismissed FP Holdings petition for cancellation; City-Lite had factual basis.

City-Lite instituted a complaint against FP Holdings for specific performance and damages and caused
the annotation of the second notice of lis pendens.

The property was transferred to Viewmaster Construction Co. for which a TCT was issued; the lis
pendens was carried over to the new title. (viewmaster impleaded)

The RTC rendered a decision in favor of City-Lite ordering FP Holdings to execute a deed of sale of
the property and ordering the Register of Deed QC to cancel Viewmasters TCT.
 PAHUD v. CA (KC)
August 25, 2009 | Nachura, J. | Estoppel in the absence of SPA
PETITIONER: Purita Pahud, et al.
RESPONDENTS: Court of Appeals, Spouses Isagani Belarino and Leticia
Ocampo, et al.
SUMMARY: 8 siblings are heirs to a parcel of lan. Eufemia, one of the heirs,
with her two brothers, sold the undivided shares of her three sisters without an
SPA to petitioner Pahuds. Later, when the siblings tried to execute an
extrajudicial partition of the land, their brother Virgilio refused to do so. They
went to court for a judicial partition. While pending, they drafted a compromise
agreement to sell the 7/8 portion to Virgilio. This was not approved by the Court
but they proceeded with the sale (Eufemia now with an SPA in favor of her from
her three sisters). Virgilio then sold the entire property to Sps. Balerminos who
constructed a building thereon. Alarmed, petitioner Pahuds filed a complaint of
intervention on the judicial partition. The RTC ruled in favor of them but the CA
reversed the decision. The Supreme Court ruled that there was no valid agency
between Eufemia and the three sisters because there was no SPA mandated by
the law executed in favor of her during the sale. In principle, the sale was void
but due to estoppel, the SC upheld the validity.
DOCTRINE: Authority of an agent to execute a contract of 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. THIS
MEANS that there must be a specific authority. The express mandate required
by law to enable an appointee of an agency in general terms to sell MUST BE
ONE THAT EXPRESSLY MENTIONS SALE OR THAT INCLUDES A SALE
AS A NECESSARY INGREDIENT OF THE ACT MENTIONED. Absence of a
written authority to sell of a piece of land is ipso jure void to protect the interest
of an unsuspecting owner from being prejudiced by the unwarranted act of
another.
FACTS:
1. This is a petition for review on certiorari assailing the Decision and Resolution of the Court of
Appeals, which reversed the RTC Decision that favored petitioner Pahuds (for brevity).
2. Sps. San Pedro Agustin and Agatona Genil were owners of a 246-square meter parcel of land
in Laguna. Both spouses died intestate and was survived by their 8 children: Eufemia, Raul,
Ferdinand, Zenaida, Milagros, Minerva, Isabelita, and Virgilio.
3. Eufemia, Raul, and Ferdinand executed a Deed of Absolute Sale of Undivided Shares,
converying in favor of petitioner Pahuds their respective shares from the lot they inherited.
The said shares were worth P525,000.
4. Eufemia also signed the deed on behalf of 4 other siblings, namely: Isabelita, Milagros,
Minerva and Zenaida but only Isabelita executed an SPA in favor of Eufemia.
5. Petitioner Pahuds paid P35k to the bank where the lot was mortgaged (Rural Bank) which
issued a released of mortageg and turned over the owners copy of the OCT to petitioner
Pahuds.
6. They made more payments to Eufemia and her siblings and the remaining P87k was to be
used for taxes and expenses in transferring the title.
7. Eufemia and her siblings drafted an extra-judicial settlement of estate to facilitate the transfer
of the title to petitioner Pahuds but Virgilio (other brother) refused to sign it.
8. They filed for a judicial partition of the property
9. 7 of the heirs entered into a compromise agreement to sell their undivided shares to Virgilio
but the compromise agreement was not approved by the court because the lawyer (Atty.
Hilbero) of the 7 heirs refused to sign the compromise agreement. (He knew of the previous
sale)
10. Later, Eufemia acknowledged having received P700k from Virgilio in consideration of the
undivided shares. (Note that according to the SC decision, the three sisters who did not
execute SPAs earlier, executed SPAs before the sale of the undivided shares to their brother)
11. Virgilio then sold the entire property to Sps. Belarminos who constructed a building thereon.
12. Petitioner Pahuds were alarmed by the construction that they confronted Eufemia. Eufemia
confirmed the sale of Virgilio to Berlaminos. This prompted petitioner Pahuds to file a
complain in intervention in the pending case for judicial partition. (YES, the siblings sold the
shares to their brother and the brother to Sps. Belarminos while their judicial partition case
was still pending)
13. The RTC ruled that 7/8 portion of the property was validly sold to petitioner Pahuds and
ordered said petitioners to pay the complete payment so that the sale may be formalized.
14. On appeal, respondents Belarminos said that the sale should have been void and inexistent
due to want of written authority of Eufemia from her co-heirs (the three sisters)
15. The CA set aside the RTC decision and orderd the partition case closed and terminated, for
the money paid by petitioner Pahuds to be returned, and that the sale of Virgilio to Belarminos
is valid.
16. Hence this petition.
ISSUE/s:
1. WoN there was a valid agency between Eufemia and her three sisters Zenaida, Minerva, and
Milagros NO
2. WoN there was a valid sale between petitioner Pahuds and 7 of the siblings? YES but only
because of ESTOPPEL
3. WoN the Belarminos buyers in good faith NO
RULING: WHEREFORE, premises considered, the April 23, 2003 Decision of the Court of Appeals
as well as its October 8, 2003 Resolution in CA-G.R. CV No. 59426, are REVERSED and SET
ASIDE. Accordingly, the January 14, 1998 Decision of Branch 92 of the Regional Trial Court of
Calamba, Laguna is REINSTATED with the MODIFICATION that the sale made by respondent
Virgilio San Agustin to respondent spouses Isagani Belarmino and Leticia Ocampo is valid only with
respect to the 1/8 portion of the subject property. The trial court is ordered to proceed with the partition
of the property with dispatch.
RATIO:
1. On Agency:
 a. Art. 1874 provides that sale of a piece of land through an agent need the authority to
be in writing; otherwise the sale is void.
b. Art. 1878 further provides that SPA is necessary to enter into a contract by w/c the
ownership of an immovable property is transmitted or acquired either gratuitously or
for valuable consideration.
c. According to the case of Cosmis Lumber Corporation v. CA: authority of an agent to
execute a contract of 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.
d. THIS MEANS that there must be a specific authority. The express mandate required
by law to enable an appointee of an agency in general terms to sell MUST BE ONE
THAT EXPRESSLY MENTIONS SALE OR THAT INCLUDES A SALE AS A
NECESSARY INGREDIENT OF THE ACT MENTIONED.
e. Absence of a written authority to sell of a piece of land is ipso jure void to protect
the interest of an unsuspecting owner from being prejudiced by the unwarranted act
of another
f. Based on the foregoing, it is not difficult to conclude, in principle, that the sale
made by Eufemia, Isabelita and her two brothers to petitioner Pahuds should be valid
only with respect to the 4/8 portion of the subject (because the other three sisters did
not execute SPA)
g. Petitioner Pahuds argue that the 3/8 should have been ratified when subsequently the
3 sisters executed SPAs. While the sale with respect to the 3/8 is void by express
provision of law and NOT susceptible to ratification, the sale was never uphelf due
to ESTOPPEL.
2. Estoppel
a. Art. 1431 provides: 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
b. True, at the time of the sale to petitioner Pahuds, Eufemia was not armed with the
requisite SPA to dispose of the 3/8 portion of the property. Initially, in their answer
to the complaint in intervention Eufemia and her other co-heirs even denied having
sold their shares to the Pahuds. During the pre-trial conference, however, they
admitted that they had indeed sold 7/8 of the property to the Pahuds.
c. Interestingly, in no instance did the 3 sisters concerned assail the validity of the
transaction made by Eufemia to petitioner Pahuds on the basis of want of written
authority to sell.
d. The silence and passivity of the three co-heirs on the issue bar them from making the
contrary claim
e. Principal is liable for loss caused to another by the latters reliance upon a deceitful
representation by an agent in the course of his employment when:
i. representation is authorized
ii. it is within the implied authority of the agent to make for the principal
iii. if it is apparently authorized
f. 3 sisters silence made petitioner Pahuds believe that they have indeed clothed
Eufemia with the authority to transact on their behalf
g. Therefore they could no longer alienate the property to Virgilio; because they no
longer have any interest over the property
3. On Belarminos good faith:
a. As a general rule, a purchaser of a real property is not required to make any further
inquiry beyond what the certificate of title indicates on its face
b. But the rule excludes those who purchase with knowledge of the defect in the title of
the vendor or of facts sufficient to induce a reasonable and prudent person to inquire
into the status of the property
c. petitioner Belarminos were fully aware that the property was registered not in the
name of the immediate transferor, Virgilio, but remained in the name of Pedro San
Agustin and Agatona Genil
d. Furthermore, had they verified the status of the property by asking the neighboring
residents, they would have been able to talk to the Pahuds who occupy an adjoining
business establishment and would have known that a portion of the property had
already been sold.
Carpio-Morales, concurring and dissenting:
4. the validity of the sale to petitioner Belarminos extends to 4/8 or one-half of the property,
inclusive of the combined 3/8 share of respondents-sisters Zenaida, Milagros and Minerva (so
1/8 of Virgilio plus 3/8 of the sisters)
5. The subsequent execution by the three sisters of the respective special powers of attorney only
means that they considered the previous sale null and recognized the salability of their 3/8
portion, thus paving the way for its transfer to Virgilio San Agustin and its eventual sale to
petitioner Belarminos
6. Estoppel cannot apply because equity cannot supplant or contravene the law
7. Article 1432 of the Civil Code expressly states that the principles of estoppel are adopted
insofar as they are not in conflict with the provisions of this Code
8. Estoppel being a principle in equity, cannot be applied in the presence of a law clearly
applicable to the case.
9. Assuming arguendo that estoppel can contradict positive law, I submit that Article 1431 of
the Civil Code does not apply since it speaks of ones prior admission or representation,
without which the other person could not have relied on it before acting accordingly.
10. The ponencia cited acts or omissions on the part of the three sisters which came after the fact
such as their admission and continued silence which, however, could not retroact to the
time of the previous sale as to consider petitioners to have accordingly relied on such
admission or representation before buying the property from Eufemia. The application of the
principle of estoppel is proper and timely in heading off shrewd efforts at renouncing ones
previous acts to the prejudice of another who had dealt honestly and in good faith
11. Estoppel cannot give validity to an act that is prohibited by law or one that is against public
policy.
12. Neither can their (three sisters) admission to a question of law bind them.
a. They could only admit to the statement of fact that the sale took place, but not to the
conclusion of law that the sale was valid
13. Article 1900 of the Civil Code is inapplicable.
a. The qualifying phrase in the course of his employment presupposes that an agency
relationship is existing.
b. In this case, there was no agency relationship to speak of.
 BA Finance Corporation v. CA
211 SCRA 112 | July 3, 1992
MEDIALDEA, J.
FACTS
1. 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.
2. Persons or corporations dealing with an assumed agent, whether the assumed agency be a
general or special one, should 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 the person
or corporation to establish it, in order to hold the principal liable. FACTS Renato
Gaytano doing business under the name Gebbs Inernational, applied for and was granted a loan
with respondent Traders Royal Bank amounting to 60,000. Gaytano spouses executed a deed of
suretyship where they agreed to pay jointly and severally o respondent bank the amount of the
loan including interest, penalty and other bank charges. Philip Wong as credit administrator of BA
Finance Corporation for and in behalf of said corporation, wrote a letter to the respondent bank
guaranteeing the loan of the Gaytano spouses. Partial payments were made on the loan leaving an
unpaid balance of 85,807.25. The spouses refused to pay so the respondent bank filed with the trial
court a complaint for sum of money against Gaytano spouses and petitioner-corporation. The
spouses did not present evidence for the defense. Petitioner-corporation raised the defense of lack
of authority of its credit administrator (Philip Wong) to bind the corporation. The trial court ruled
in favor of plaintiff ordering the spouses and defendants to pay the plaintiff the unpaid balance,
accumulated interest, penalties, and bank charges, among others. The trial court also stated in the
dispositive portion that the dismissal of the case against defendant BA Finance Corporation is
hereby ordered without pronouncement to cost. Not satisfied with the decision, respondent bank
appealed with the Court of Appeals. The appellate court modified the decision of the trial court
which order Gaytano spouses and alternative defendant BA Finance Corporation to pay plaintiff
jointly and severally. Hence this petition filed by the petitioner corporation.
Finance Corporation. The only evidence presented by respondent bank was the testimony of Philip
Wong, credit administrator, who testified that he had authority to issue guarantees as can be deduced
from the wording of a memorandum given to him by BA Finance Corporation. By virtue of the said
memorandum, Wong was clearly authorized to approve loans up to 350,000 without any security
requirement, which is far above the amount subject of the guaranty amounting to 60,000. However,
nothing in the said memorandum expressly vests on the credit administrator power to issue guarantees.
Respondents contention was that the phrase contingent commitment in the memorandum means
guarantees. The Court does not agree and 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.
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. Wong's 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. Wong claims that he has authority is for him to
negate personal liability. 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 than an
agent who exceeds his authority is personally liable for damages.
Petition GRANTED. The complaint for sum of money against BA Finance Corporation is
dismissed.

ISSUE AND HOLDING

1. Whether or not petitioner-corporation is liable to Traders Royal Bank as guarantor of spouses

Gaytano. No

Petitioners contention is that the letter guaranty is ultra vires and therefore unenforceable; that said
letter-guaranty was issued by an employee of BA Finance beyond the scope of his authority since the
petitioner itself is not even empowered by its articles of incorporation and by- laws to issue guaranties.

The Supreme Court find the petitioners contention meritorious. The Court held 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. In this case, 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, in this case, BA