Agency Digests Set 1

Agency, Trusts, Partnerships and Joint Ventures Case Digests | Atty.
Joaquin Obieta | 2014
AGENCY
1.W.G. PHILPOTTS v. PHILIPPINE MANUFACTURING COMPANY
and F.N. BERRY
Partners right to a formal account as to partnership affairs
CASE: Petitioner Philpotts, a stockholder of respondent Philippine
DIGESTS Manufacturing Company, wishes to examine the records and

transactions of said company, in person or by some authorized agent
or attorney. Respondent company refuses, hence, petitioner
instituted this case to compel the company to allow him to exercise
his right to inspect the company records as provided in the
SET 1 Corporation Law. The Court granted Philpotts petition. The right of
inspection given to a stockholder found in the Corporation Law can
be exercised either by himself or by any proper representative or
attorney-in-fact, and either with or without the presence of the
stockholder himself. This decision is in line with the rule that what a
CONTENTS man may do in person, he may do through another.
1.Philpotts v. Philippine Mfg. Co.
2. Quiroga v. Parsons FACTS:
3. Shell v. Firemen's Insurance Co. Petitioner, W.G. Philpotts, a stockholder in respondent
4. Dela Cruz v. Northern Enterprises Philippine Manufacturing Company, seeks to obtain a writ of
5. Guardex v. NLRC mandamus to company respondents to permit him, in person
6. Bordador v. Luz or by some authorized agent or attorney, to inspect and
7. Hahn v. CA examine the records of the business transacted by said
8. Dela Pena v. Hidalgo company since 1 January 1918.
9. Conde v. CA F.N. Berry, the secretary of the company, was made co-
10. PNB v. CA respondent since he is customarily charged with the custody
11. Rallos v. Yangco of all documents, correspondence and records of a
12. Macke v. Camps corporation, and he is presumably the person against whom
13. Jimenez v. Rabot the personal orders of the court would be made effective in
14. Cosmic Lumber v. CA case this writ should be granted. (This case has few facts.)
15. Raet v. CA Petitioner hinges his argument on certain provisions of the
16. Aguna v. Larena Corporation Code; the pertinent one is: The record of all
17. Insular Drug v. PNB business transactions of the corporation and the minutes of
18. Municipal Council of Iloilo vs. Evangelista any meeting shall be open to the inspection of any director,
19. Rural Bank of Caloocan v. CA member or stockholder of the corporation at reasonable
hours.
ISSUE: W/N the right to inspect the records can be exercised by a

proper agent or attorney
Ayson Dagdag Dela Cruz De Mesa Kalaw Ledesma Lim Millan Miranda Molaer Pacamarra Rivera Rubinos Santos So Chan Sorongon Tamondong
Torcuator Velena Yogue
Agency, Trusts, Partnerships and Joint Ventures Case Digests | Atty. Joaquin Obieta | 2014
2.QUIROGA v. PARSONS
HELD & RATIO: Contract of SALE, not of Agency.
YES, the right of inspection given to a stockholder found in the
Corporation Law can be exercised either by himself or by any proper CASE:
representative or attorney-in-fact, and either with or without the Quiroga and Parsons entered into a contract for the exclusive sale of
presence of the stockholder himself. Quiroga beds in Visayas. Parsons violated some of the terms and
1. The Court ruled that this decision is in keeping with the general conditions such as
rule that what a man may do in person, he may do through (1) not to sell the beds at higher prices,
another. (2) pay for the advertisement expenses, and
2. In several American cases, it was held that the right of inspection (3) to order beds by the dozen.
must be construed liberally, and that said right maybe exercised Quiroga alleged that Parsons was his agent and that the obligations
through any other properly authorized person. are implied in a commercial agency contract.
3. This right is limited by the procedures of the corporation itself. Issue: W/N Parsons entered into a contract of AGENCY instead of a
For example, if the company is engaged in manufacturing, and it contract of SALE
has found a special formula of some kind, of course, it would be Held: No. It was a contract of SALE not of agency.
counterproductive if anyone can examine such formula at any Quiroga supplied the beds, which Parsons had the obligation to pay
given time. Right of inspection must be exercised in such a way the purchase price. These are essential features of a contract of
that the secrets of the company will be kept from the public. purchase and sale. None of the clauses conveys the idea of an
4. In this case, there is nothing to indicate that petitioner would agency where an agent received the thing to sell it and does not pay
want to discover anything which the corporation deems a secret. the price but delivers to the principal the price he obtains from the
sale to a third person, and if he does not sell it, he returns it.
FINAL VERDICT: The writ of mandamus shall issue as prayed, The word agency used in the contract only expresses that Parsons
unless within 5 days from notification thereof the respondents was the only one who could sell the petitioners beds in the Visayan
answer to the merits. Islands. A contract is what the law defines it to be and not what the
parties call it.
FACTS:
Quiroga and Parsons entered into a contract for the
exclusive sale of Quiroga beds in Visayas. They agreed on
the following terms:
o a) Quiroga shall furnish the beds and shall give a
25% discount on the invoiced prices as commission
sales and Parsons shall order by the dozen;
o b) Payment shall be made within 60 days from date
of shipment;
o c) Transportation and shipment expenses shall be
borne by Quiroga while freight, insurance, and cost
of unloading by Parsons;
o d) If before an invoice falls due, Quiroga should
request payment, payment made shall be prompt
payment and a deduction of 2% shall be given; 3.SHELL v. FIREMENS INSURANCE CO.

same discount if payment is in cash; (Right to demand for a formal accounting)
o e) Notice from Quiroga shall be given at least 15
days before any change in price; CASE:
o f) Parsons binds himself not to sell any other kind of A Plymouth car owned by Salvador Sision was brought to
bed; and Shell Gasoline and Service Station in Manila for washing, greasing
o g) Contract is for an unlimited period and spraying. While doing the service, the car swung and fell from
Parsons violated some of the conditions not to sell the beds the platform.
at higher prices, pay for the advertisement expenses, and to
order beds by the dozen. The car was repaired through the expense of the insurance
Quiroga alleged that Parsons was his agent and that the companies herein in the amount of P1,651.38. Now, the insurance
obligations are implied in a commercial agency contract. companies brought this action against Shell Company and Porfirio
de la Fuente (operator of the gasoline and service station in Manila
ISSUES: where the incident happened) for recovery of the amount, jointly and
1. Whether or not Parsons entered into a contract of AGENCY severally.
instead of a contract of SALE.
The court held that De la Fuente is a mere agent of Shell
HELD & RATIO: Company. One justification was that when an employee of the
company (Shell) supervised the operator and conducted periodic
1. NO, It was a contract of SALE not of agency.
inspection of the companys gasoline and service station, the
In order to classify a contract, due regard must be operator herein is an agent of the company and not an independent
given to the essential clauses. contractor. Therefore, as the act of the agent or his employees acting
In this case, there was an obligation on Quirogas within the scope of his authority is the act of the principal, the breach
part to supply beds while an obligations on Parsons of the undertaking by the agent is one for which the principal is
part to pay the price. These are essential features of answerable.
a contract of purchase and sale.
None of the clauses conveys the idea of an agency FACTS:
where an agent received the thing to sell it and does This is an action for recovery of sum of money, based on
not pay the price but delivers to the principal the alleged negligence of the defendants.
price he obtains from the sale to a third person, and
A Plymouth car owned by Salvador Sison was brought to the
if he does not sell it, he returns it.
Shell Gasoline and Service Station in Manila for washing,
The word agency used in the contract only greasing and spraying. The operator of the station, having
expresses that Parsons was the only one who could agreed to do service, the car was placed on the hydraulic
sell the petitioners beds in the Visayan Islands. A lifter under the direction of the personnel of the station.
contract is what the law defines it to be and not what While doing the service, the car swung and fell from the
the parties call it. platform when the lifter was lowered.
The case was immediately reported to the Manila Adjustor
FINAL VERDICT: The judgment appealed is AFFIRMED, with costs Company, the adjustor for the Firemens Insurance
against the appellant. Company and the Commercial Casualty Insurance
Company, as the car was insured with these insurance
companies. After having been inspected by one Mr. Baylon, the undertaking by the agent is one for which the principal is
representative of the Manila Adjustor Company, the answerable.
damaged car was taken to the shops of the Philippines
Motors for repair. Eventually, the car was restored to running FINAL VERDICT: The judgment under review is affirmed, with
condition after said repairs herein amounting to P1,651.38. costs against petitioner.
On December 6, 1947, the insurers and the owner of the car
brought an action in the Court of First Instance of Manila
against Shell Company and Porfirio de la Fuente
(OPERATOR of the said gasoline and service station in
Manila) to recover from them, jointly and severally, the sum
of P1,651.38 with legal interests.
ISSUES:
1. Whether or not Porfirio de la Fuente (operator of said
gasoline and service station in Manila where the incident
herein happened) is an agent of Shell Company, thus
making the Shell Company liable as principal in this case.
HELD & RATIO:

5. YES. De la Fuente is a mere agent of Shell Company herein.
Therefore, Shell Company is principally liable in this case.
Taking into consideration the fact that the operator owed his
position to the company and the latter could remove him or
terminate his services at will; that the service station
belonged to the company and bore its tradename and the
operator sold only the products of the company; that the
equipment used by the operator belonged to the company
and were just loaned to the operator and the company took
charge of their repair and maintenance; that an employee of
the company supervised the operator and conducted
periodic inspection of the companys gasoline and service
station; that the price of the products sold by the operator
was fixed by the company and not by the operator; and that
the receipts signed by the operator indicated that he was a
mere agent the operator herein is an agent of the company
and not an independent contractor.
As the act of the agent or his employees acting within the

scope of his authority is the act of the principal, the breach of
4.DELA CRUZ v. NORTHERN THEATRICAL ENTERPRISES, INC., reimbursement of his expenses but was refused, after which
ET AL. he filed the present action against the movie corporation and
the three members of its board of directors, to recover not
only the amounts he had paid his lawyers but also moral
CASE: damages said to have been suffered, due to his worry, his
Northern Theatrical Enterprises operated a movie house neglect of his interests and his family as well in the
where Dela Cruz worked as a guard. One day, a gate crasher supervision of the cultivation of his land, a total of P15,000.
attacked Dela Cruz as he refused to let him in, and he shot him in Dela Cruz argues that he was an agent of the defendants
defending himself. He was charged with homicide but was later and as such, he was entitled to reimbursement of the
acquitted. He sought for reimbursement of the expenses he incurred expenses incurred by him in connection with the agency.
such as fees for employing a lawyer, arguing that he was an agent of
the defendants while he performed his duties as an employee. The ISSUES:
Court held that there was no agency between the parties. Dela Cruz 2. Whether or not an agency exists between Dela Cruz and his
was not employed to represent the corporation in dealing with third former employers (slash-movie corporation).
parties. There is also no law applicable to this case of employer- (Whether an employee or servant who in line of duty
employee being an agency. Defendants have no legal obligation to and while in the performance of the task assigned to
reimburse the expenses Dela Cruz incurred. him, performs an act which eventually results in his
incurring in expenses, caused not directly by his
master or employer or his fellow servants or by
FACTS: reason of his performance of his duty, but rather by
In 1941, the Northern Theatrical Enterprises Inc., a domestic a third party or stranger not in the employ of his
corporation operated a movie house in Laoag, Ilocos Norte. employer, may recover said damages against his
Plaintiff Domingo Dela Cruz is one of the persons employed employer)
by it and works as a special guard whose job is to guard the
main entrance of the cinema, to maintain peace and order HELD & RATIO:
and to report the commission of disorders within the 6. NO, the relationship between the movie corporation and
premises. As such, he carried a revolver. Dela Cruz was not that of principal and agent because the
In the afternoon of July 4, 1941, one Benjamin Martin principle of representation was in no way involved.
wanted to crash the gate or entrance of the movie house. Dela Cruz was not employed to represent the
Martin was mad due to Dela Cruz refusal to let him in corporation in its dealings with third parties. He was
without first providing a ticker so Martin attacked him with a a mere employee hired to perform a certain specific
bolo. Dela Cruz defended himself until he was cornered, he duty or task.
was able to save himself when he shot the gate crasher, There is no law or judicial authority that is directly
resulting in the latters death. applicable to the present case (master-servant /
Dela Cruz was charged with homicide. After a re- employer-employee)
investigation, the fiscal filed a motion to dismiss the In a case of a driver employed by a transportation
complaint. Later on, he was again accused of homicide. company, who while in the course of employment
After trial, he was finally acquitted of the charge. runs over and inflicts physical injuries on or causes
In both criminal cases De la Cruz employed a lawyer to the death of a pedestrian; and such driver is later
defend him. He demanded from his former employer charged criminally in court, one can imagine that it
would be to the interest of the employer to give legal 5.GUARDEX ENTERPRISES V. NLRC
help to and defend its employee in order to show When there is no implied agency
that the latter was not guilty of any crime either
deliberately or through negligence, because should CASE: Orbeta, a freelance salesman learned of Escandors offers to
the employee be finally held criminally liable and he sell a firetruck to Rubberworld. He asked Escandor if he could
is found to be insolvent, the employer would be mediate in the sale, and Escandor approved promising a commission
subsidiarily liable. However, there is no legal of P15,000 IF Orbeta successfully negotiated the sale. However,
obligation. Orbeta neither followed-up nor reported his progress to Escandor,
If the employer is not legally obliged to give legal causing Escandor to again contract directly with Rubberworld, this
assistance to its employee and provide him with a time offering a new price which the latter company accepted. Orbeta
lawyer, naturally said employee may not recover the now reappears asking for the commission since the sale was
amount he may have paid a lawyer hired by him. consummated. Is he entitled?
Also, the shooting to death of the deceased by the
plaintiff was not the proximate cause of the damages No. He is not. The agreements between him and Esacndor was
suffered but may be regarded as only a remote merely to follow-up the already existing transactions between
cause, because from the shooting to the damages Escandor and Rubberworld. It could not be seen as an agency to
suffered there was not that natural and continuous sell. Assuming that it was, for arguments sake, he did not fulfill the
sequence required to fix civil responsibility. obligation that he agreed to do for Escandor, neither did he report his
progress. In fact, he literally disappeared from the picture. He could
FINAL VERDICT: Judgment in favor of defendants not lawfully be entitled to any commission.
Petitioner: Marcelina A. Escandor (engaged in the manufacture and

sale of fire-fighting equipment and the building or fabrication of fire
trucks under Guardex Enterprises)
Private respondent: Jumbee Orbeta (a freelance salesman).
FACTS:
A claim for alleged unpaid commissions of an agent is what is
basically involved in the action at bar.
It appears that Orbeta somehow learned that Escandor had

offered to fabricate a fire truck for Rubberworld (Phil) Inc.
o He wrote to Escandor inquiringabout the amount of
commission for the sale of a fire truck. Escandor
wroteback on the same day to advise that it was
P15,000 per unit.
o Four days later, Orbeta offered to follow up
Escandors pending proposal to sell a fire truck to
Rubberworld, and asked for P250 as representation
expenses. Escandor agreed and gave him the Indeed, months prior to Orbetas approaching Escandor, the
money. latter had already made a written offer of a fire truck to
o When no word was received by Escandor from Rubberworld.
Orbeta after 3 days, she herself inquired in writing o All that she consented to was for Orbeta to "follow
from Rubberworldabout her offer of sale of a fire up" that pending offer. In truth, it does not even
truck. appear that on the strength of this "arrangement"
o After 7 months, Escandor finally concluded a vague as it was Orbeta undertook the promised
contract with Rubberworld for the latters follow-up at all. He reported nothing of his efforts
purchase of a fire truck. or their fruits to Escandor. It was Escandor who,
in the months that followed her initial meeting
At this point, Orbeta suddenly reappeared and asked for his with Orbeta, determinedly pushed the
commission for the sale of the fire truck to Rubberworld. Escandor Rubberworld deal. Orbeta was simply nowhere to
refused, saying that he hadnothing to do with the offer, negotiation be found.
and consummation of the sale. o Neither does the P250 "representation allowance" to
cover for the follow-up give rise to a presumption
Orbeta claims that an implied agency was created that an agency was created
between Escandor and Orbeta on the basis of the
following circumstances: Even finding that under these circumstances, an agency had
indeed been constituted nothing in the record tends to prove
1) the alleged verbal authority given to him to offer a fire that he succeeded in carrying out its terms or ever as much
truck to Rubberworld; as attempted to do so. The evidence in fact clearly indicates
otherwise.
2) the alleged written authority to sell the truck contained o The terms of Escandors letter assuming that it
in a letter of Escandors dated August 14, 1978; was indeed an authority to sell, as Orbeta insists --
are to the effect that entitlement to the P15,000
3) Escandors having given Orbeta P250.00 as commission is contingent on the purchase by a
representation expenses; and customer of a fire truck, the implicit condition being
that the agent would earn the commission if he was
4) Orbetas submission of a price quotation to instrumental inbringing the sale about. Orbeta
Rubberworld and his having arranged a meeting between certainly had nothing to do with the sale of the
Escandor and Rubberworlds Purchasing Manager. fire truck, and is not therefore entitled to any
commission at all.
ISSUE:
Whether or not Orbeta (acting as an agent) is entitled to commission Furthermore, even if Orbeta is considered to have been
with regard to the sale of a fire truck to Rubberworld? Escandors agent for the time he was supposed to "follow
up" the offer to sell, such agency would have been deemed
HELD: revoked upon the resumption of direct negotiations between
No. He is not entitled to any commission. Escandor and Rubberworld, Orbeta having in the meantime
abandoned all efforts (if indeed any were exerted) to secure
the deal in Escandors behalf.: red
6. BORDADOR vs. LUZ Petitioners filed a complaint in RTC of Malolos Bulacan, and
Agency needs consent of the principal 4 years later, filed a case of Estafa vs Deganos and Luz.
Petitioners claimed that Deganos acted as the agent of
CASE: Brigida D. Luz when he received the subject items of jewelry
Deganos received pieces of jewelry from Bordador. After failing to and, because he failed to pay for the same, Brigida, as
comply with his obligation of remitting the proceeds of sale, he was principal, and her spouse are solidarily liable with him
sued for the amount outstanding. Brigida Luz was also impleaded therefor.
and sued as principal while Deganos was alleged to be Luzs agent. After trial, the court below found that only Deganos was
Court held that Deganos is not an agent of Luz due to lack of liable to petitioners for the amount and damages claimed.
evidence. There is no evidence that Luz consented to acts of Court of Appeals affirmed such judgment
Deganos or authorized him on her behalf. Even if he is an agent, she Minor issue: Also, court was persuaded that Brigida D. Luz
did not authorize Deganos regarding the transactions on the was behind Deganos, (meaning Deganos acted as agent of
jewelries Luz) 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
FACTS: any written document, authorizing Deganos to act on their
behalf, such alleged agreement was unenforceable.
Petitioners Bordador were engaged in the business of
purchase and sale of jewelry and respondent Aida D. Luz, ISSUES:
was their regular customer.
Whether or not Deganos acted as an agent of Luz, and therefore Luz
On several occasions during April 27, 1987 to September 4,
be held solidarily liable
1987, respondent Narciso Deganos, the brother of Brigida
D. Luz, received several pieces of gold and jewelry from
petitioners amounting to P382,816.00. 17 receipts were HELD & RATIO:
issued, 6 of which were named to Brigida Luz.
Deganos was supposed to sell the items at a profit and NO, evidence does not show Deganos was an agent of Brigida D.
thereafter remit the proceeds and return the unsold items to Luz and that the she, and as such, she is not solidarily liable. Luz
petitioners. Deganos remitted only the sum never authorized her brother (Deganos) to act for and in her behalf in
of P53,207.00. By January 1990, the total of his unpaid any transaction with Petitioners
account to petitioners, including interest, reached the sum Art. 1868. By the contract of agency a person binds himself to
of P725,463.98. render some service or to do something in representation or on
Petitioners eventually filed a complaint in the barangay court behalf of another, with the consent or authority of the latter.
against Deganos to recover said amount. In The basis for agency is representation. There is no
the barangay proceedings, Brigida and her husband, evidence that Brigida consented to the acts of Deganos
together with Deganos, signed a compromise agreement or authorized him to act on her behalf, much less with
with petitioners wherein Deganos obligated himself to pay respect to the particular transactions involved.
petitioners, on installment basis, the balance of his account Besides, it was grossly and inexcusably negligent of
plus interest thereon. However, he failed to comply with his petitioners to entrust to Deganos, not once or twice but on at
aforestated undertakings. least six occasions as evidenced by six receipts, several
pieces of jewelry of substantial value without requiring a
written authorization from his alleged principal. A person 7.Hahn v. CA

dealing with an agent is put upon inquiry and must discover G.R. No. 113074; January 22, 1997
upon his peril the authority of the agent
The records show that neither an express nor an implied CASE:
agency was proven to have existed between Deganos and Hahn is doing business under the name and style Hahn-Manila.
Brigida D. Luz. Evidently, petitioners, who were negligent in Hahn executed in favor of BMW a Deed of Assignment with Special
their transactions with Deganos, cannot seek relief from the Power of Attorney covering the trademark and in consideration
effects of their negligence by conjuring a supposed agency thereof, under its first whereas clause, Hahn was duly acknowledged
relation between the two respondents where no evidence as the "Exclusive Dealer of the Assignee in the Philippines.
supports such claim. However, Hahn was informed that BMW was arranging to grant the
Even assuming that Deganos acted as an agent of Brigida, exclusive dealership of BMW cars and products to CMC, which had
the latter never authorized him to act on her behalf with expressed interest in acquiring the same. BMW terminated its
regard the transactions of the jewelries exclusive relationship with Hahn. Hahn later filed a complaint for
specific performance and damages against BMW to compel it to
continue the exclusive dealership.
The relevant issue in this case is whether or not Hahn is the agent or
Additional information: distributor in the Philippines of private respondent BMW. SC ruled
that Hahn is an agent of BMW in the Philippines. SC stated that
Lastly, petitioners fault the trial courts holding that whatever contract the arrangement of BMW and Hahn shows an agency. An agent
of agency was established between Brigida D. Luz and Narciso receives a commission upon the successful conclusion of a
Deganos is unenforceable under the Statute of Frauds as that aspect sale. On the other hand, a broker earns his pay merely by
of this case allegedly is not covered thereby. Petitioners claim is bringing the buyer and the seller together, even if no sale is
speciously unmeritorious. It should be emphasized that neither eventually made. (refer to the ratio #2 for full discussion) Since, it
the trial court nor the appellate court categorically stated that there was established that Hahn is an agent of BMW then the trial court
was such a contractual relation between these two acquired jurisdiction over BMW despite it being a foreign corporation
respondents. The trial court merely said that assuming there was (see ratio#1).
such an agency existing between them, the same is unenforceable
as the contract would fall under the Statute of Frauds which requires
FACTS:
the presentation of a note or memorandum thereof in order to be
PARTIES:
enforceable in court. That was merely a preparatory statement of a
o Alfred Hahn is a Filipino citizen doing business under the
principle of law. What was finally proven as a matter of fact is that
name and style "Hahn-Manila."
there was no such contract between Brigida D. Luz and Narciso
o Private respondent Bayerische Motoren Werke
Deganos, executed or partially executed, and no delivery of any of
Aktiengesellschaft (BMW) is a nonresident foreign
the items subject of this case was ever made to the former.
corporation existing under the laws of the former Federal
Republic of Germany, with principal office at Munich,
Germany.
Hahn executed in favor of BMW a Deed of Assignment with
Special Power of Attorney covering the trademark and in
consideration thereof, under its first whereas clause, Hahn was
duly acknowledged as the "Exclusive Dealer of the Assignee in and Industry, because it (BMW) was a foreign corporation and it
the Philippines. was not doing business in the Philippines. Yes, the trial
Per the agreement, parties "continued business relations as court acquired jurisdiction over BMW.
has been usual in the past without a formal contract." But, in a 2. Whether or not Hahn is the agent or distributor in the
meeting with a BMW representative and the president of Philippines of private respondent BMW. Yes, Hahn is an
Columbia Motors Corporation (CMC), Jose Alvarez, Hahn was agent of BMW in the Philippines.
informed that BMW was arranging to grant the exclusive
RATIO:
dealership of BMW cars and products to CMC, which had
1. On the issue of jurisdiction, Rule 14, sec 14 Rules of Court,
expressed interest in acquiring the same.
read in conjunction with the provisions of the foreign investment
Nonetheless, BMW expressed willingness to continue act of 1991, RA 7042, confers jurisdiction on the trial court over
business relations with the petitioner on the basis of a foreign corporations like BMW fundamentally the aforementioned
"standard BMW importer" contract, otherwise, it said, if this statutory authorities read together allowed the trial court to serve
was not acceptable to petitioner, BMW would have no summons to foreign companies via the DTI and hence gained
alternative but to terminate petitioner's exclusive dealership jurisdiction thereover as long as they are considered to be doing
effective June 30, 1993. business in the Philippines, this includes appointing
Hahn protested, claiming that the termination of his exclusive representatives or distributors in the Philippines but not when
dealership would be a breach of the Deed of Assignment. their rep or distributor transacts business in its name and for its
Hahn insisted that as long as the assignment of its trademark own account. The question left to be solved then is whether or
and device subsisted, he remained BMW's exclusive dealer in not Hahn is an agent of BMW. If it is in the affirmative, then the
the Philippines because the assignment was made in trial court acquired jurisdiction over BMW.
consideration of the exclusive dealership.
Because of Hahn's insistence on the former business relation, 2. Hahn is an agent of BMW in the Philippines.
BMW withdrew on March 26, 1993 its offer of a "standard (Hahn) PETITIONERS CONTENTIONS:
importer contract" and terminated the exclusive dealer o BMW was doing business in the Philippines through him
relationship effective June 30, 1993. as its agent, as shown by the fact that BMW invoices and
Hahn filed a complaint for specific performance and damages order forms were used to document his transactions;
against BMW to compel it to continue the exclusive dealership. o that he gave warranties as exclusive BMW dealer; and
BMW moved to dismiss the case, contending that the trial o that BMW officials periodically inspected standards of
court did not acquire jurisdiction over it through the service of service rendered by him; and that he was described in
summons on the Department of Trade and Industry, because it service booklets and international publications of BMW as
(BMW) was a foreign corporation and it was not doing a "BMW Importer" or "BMW Trading Company" in the
business in the Philippines. Philippines.
RTC dismissed the motion to dismiss of BMW. BMW then (BMW) RESPONDENTS CONTENTIONS:
appealed to CA which reversed the decision of the lower and o the execution of the Deed of Assignment was an isolated
granting the motion to dismiss based on the ground raised by transaction;
BMW. o that Hahn was not its agent because the latter undertook
ISSUE+HELD: to assemble and sell BMW cars and products without the
participation of BMW and sold other products; and
1. Whether or not the trial court acquired jurisdiction over it o that Hahn was an indentor or middleman transacting
through the service of summons on the Department of Trade business in his own name and for his own account.
SC RULING: announced in the Asian region that Hahn was the "official
o There is nothing to support the CAs finding that Hahn BMW agent" in the Philippines.
solicited orders alone and for his own account and
without "interference from, let alone direction of, BMW." FINAL VERDICT: decision of the Court of Appeals is REVERSED
To the contrary, Hahn claimed he took orders for BMW and the case is REMANDED to the trial court for further proceedings.
cars and transmitted them to BMW. Upon receipt of the
orders, BMW fixed the down payment and pricing
charges, notified Hahn of the scheduled production month
for the orders, and reconfirmed the orders by signing and
returning to Hahn the acceptance sheets. Payment was
made by the buyer directly to BMW. Title to cars
purchased passed directly to the buyer and Hahn never
paid for the purchase price of BMW cars sold in the
Philippines. Hahn was credited with a commission equal
to 14% of the purchase price upon the invoicing of a
vehicle order by BMW. Upon confirmation in writing that
the vehicles had been registered in the Philippines and
serviced by him, Hahn received an additional 3% of the
full purchase price. Hahn performed after-sale services,
including, warranty services, for which he received
reimbursement from BMW. All orders were on invoices
and forms of BMW.
Contrary to the CAs conclusion, this
arrangement shows an agency. An agent
receives a commission upon the successful
conclusion of a sale. On the other hand, a broker
earns his pay merely by bringing the buyer and
the seller together, even if no sale is eventually
made.
o The fact that Hahn invested his own money to put up
these service centers and showrooms does not
necessarily prove that he is not an agent of BMW. For as
already noted, there are facts in the record which suggest
that BMW exercised control over Hahn's activities as a
dealer and made regular inspections of Hahn's premises
to enforce compliance with BMW standards and
specifications.
o In addition, BMW held out private respondent Hahn as its
exclusive distributor in the Philippines, even as it
8.DELA PENA vs. HIDALGO FACTS:

Art. 1868-1872
Before Jose de la Pea y Gomiz embarked for Spain, he
CASE: executed before a notary a power of attorney in favor of Federico
The principal Jose de la Pea, before going to Spain, Hidalgo, Antonio L. Rocha, Francisco Roxas and Isidro Llado, so
executed a power of attorney in favor of four persons but Federico that, as his agents, they might represent him and administer, in
Hidalgo alone took charge of the administration of the said the order in which they were appointed, various properties he
properties. After several years of administering the properties, owned and possessed in Manila. The first agent, Federico
Federico Hidalgo wrote a letter to his principal requesting him to Hidalgo, took charge of the administration of the said property.
designate a substitute person in the event of his being obliged to After Hidalgo had occupied the position of agent and
leave the country. For reasons of health and by order of his administrator of De la Pea's property for several years, the
physician, Federico Hidalgo was obliged to go to Spain. He sent the former wrote to the latter requesting him to designate a person
accounts of his administration to his principal Jose de la Pea y who might substitute him in his said position in the event of his
Gomiz. He likewise turned over his administration to Antonio Hidalgo being obliged to absent himself from these Islands.
ordering his principal to send a new power of attorney to Antonio but Pea y Gomiz, did not even answer his letters, to approve or
Antonio never replied to these letters. There are three issues in thjis object to the former's accounts, and did not appoint or designate
case: (1) WoN Federico Hidalgo has repudiated the agency. The another person who might substitute the defendant in his
Court ruled that YES, he has validly repudiated the agency although administration of his constituent's property.
the letters he sent did not contain the word renounce. He timely For reasons of health and by order of his physician, Federico
informed his principal, he turned over the properties to a third person Hidalgo was obliged to embark for Spain, and, on preparing for
after he had abandoned them, he rendered an account of the his departure, he rendered the accounts of his administration
revenues and collectibles and he asked the principal to execute a and forwarded them to his constituent with a general statement
new power of attorney in favor of another person. These of all the partial balances by letter addressed to his principal,
circumstances warrant for a valid renouncement of agency. For the Pea y Gomiz.
second issue (2) WoN there was implied agency on the part of Plaintiff Dela Pena avers that he found no such letter among his
Antonio Hidalgo. The Court likewise ruled in the affirmative saying father's papers after the latter's death, for which reason he did
that since the principal did not disapprove the designation nor did he not have it in his possession, but on the introduction of a copy
appoint another nor send a new power of attorney to the same, it can thereof by the defendant at the trial, it was admitted without
be deduced from the foregoing that what transpired was a case of an objection by the plaintiff. It is deduced that the principal was
implied agency. And for the last issue (3) WoN Federico Hidalgo is informed of the departure of his agent from these Islands for
liable for the transactions that transpired after the period of his reasons of health and because of the physician's advice, of the
administration. The Court held that No, the administrator is only latter's having turned over the administration of the property to
responsible for the result and consequences of his administration Antonio Hidalgo, and of his agent's the defendant's petition that
during the period when he had charge of his principal's property. His he send a new power of attorney to the substitute.
responsibility cannot be held to extend beyond the period of his
administration especially when his administration has been ISSUES:
successfully terminated. 3. WoN Federico Hidalgo has repudiated the agency.
4. WoN there was implied agency on the part of Antonio
Hidalgo (Federicos successor)
5. WoN Federico Hidalgo is absolved from liability.
administrator who abandoned his charge; and the

HELD & RATIO: trial record certainly contains no proof that the
7. YES, Federico Hidalgo has repudiated the agency. defendant, since he left these Islands until he
From the procedure followed by the agent, Federico Hidalgo, returned to this city, took any part whatever, directly
it is logically inferred that he had definitely renounced his or even indirectly, in the said administration of the
agency was duly terminated, according to the provisions of principal's property.
article 1732 of the Civil Code, because, although in the said Antonio Hidalgo was the only person who was in
letter of March 22, 1894, the word "renounce" was not charge of the aforementioned administration of De la
employed in connection with the agency or power of attorney Pea y Gomiz's property and the one who was to
executed in his favor, yet when the agent: represent the latter in his business affairs, with his
o informs his principal that for reasons of health and tacit consent.
by medical advice he is about to depart from the From all of which it is perfectly concluded that
place where he is exercising his trust and where the Antonio Hidalgo acted in the matter of the
property subject to his administration is situated, administration of the property of Jose de la Pea y
o abandons the property, Gomiz by virtue of an implied agency derived from
o turns it over a third party, without stating when he the latter, in accordance with the provisions of article
may return to take charge of the administration, 1710 of the Civil Code.
o renders accounts of its revenues up to a certain date Antonio Hidalgo administered the aforementioned
and property of De la Pea y Gomiz, not in the character
o transmits to his principal a general statement which of business manager, but as agent by virtue of an
summarizes and embraces all the balances of his implied agency vested in him by its owner who was
accounts since he began to exercise his agency to not unaware of the fact, who knew perfectly well that
the date when he ceased to hold his trust, and the said Antonio Hidalgo took charge of the
o asks that a power of attorney in due form in due administration of that property on account of the
form be executed and transmitted to another person obligatory absence of his previous agent for whom it
who substituted him and took charge of the was an impossibility to continue in the discharge of
administration of the principal's property, his duties.
It is then reasonable and just to conclude that the said agent The person who took charge of the administration of
expressly and definitely renounced his agency, and it may property without express authorization and without a
not be alleged that the designation of Antonio Hidalgo to power of attorney executed by the owner thereof,
take charge of the said administration was that of a mere and performed the duties of his office without
proceed lasted for more than fifteen years, for such an opposition or absolute prohibition on the owner's
allegation would be in conflict with the nature of the agency. part, expressly communicated to the said person, is
concluded to have administered the said property by
8. YES, there was implied agency on the part of Antonio virtue of an 'implied agency, in accordance with the
Hidalgo. provisions of article 1710 of the Civil Code, since the
Since the principal Pea did not disapprove the said owner of the property, knowing perfectly well
designation of Antonio Hidalgo, nor did he appoint that the said person took charge of the
another, nor send a new power of attorney to the administration of the same, through designation by
same, as he was requested to by the previous such owner's former agent who had to absent
himself from the place for well-founded reasons, 9.DOMINGA CONDE, petitioner, vs. THE HONORABLE COURT
remained silent for nearly nine years. OF APPEALS, MANILA, PACIENTE CORDERO, together with his
9. YES. Federico Hidalgo is not liable. wife, NICETAS ALTERA, RAMON CONDE, together with his wife,
The agent and administrator who was obliged to CATALINA T. CONDE, respondents.
leave his charge for a legitimate cause and who duly No. L-40242. December 15, 1982.
informed his principal, is thenceforward released
and freed from the results and consequences of the Civil Law; Agency; Implied agency created from silence or lack of
management of the person who substituted him with action or failure to repudiate the agency.If, as opined by both
the consent, even tacit though it be, of his principal. the Court a quo and the Appellate Court, petitioner had done
For this reason, the latter has no right to claim nothing to formalize her repurchase, by the same token, neither
damages against his former agent whose conduct have the vendees-a-retro done anything to clear their title of the
was in accordance with the provisions of article 1736 encumbrance therein regarding petitioners right to repurchase.
of the Civil Code, for the care of the property and No new agreement was entered into by the parties as stipulated
interests of another can not require that the agent in the deed of pacto de retro, if the vendors a retro failed to
make the sacrifice of his health, of his life, and of his exercise their right of redemption after ten years. If, as alleged,
own interests, it having been shown that it was petitioner exerted no effort to procure the signature of Pio Altera
impossible for the latter to continue in the discharge after he had recovered from his illness, neither did the Alteras
of his duties. repudiate the deed that their son-in-law had signed. Thus, an
The administrator is only responsible for the result implied agency must be held to have been created from
and consequences of his administration during the their silence or lack of action, or their failure to repudiate
period when he had charge of his principal's the agency.
property. His responsibility can not be held to extend Laches; Respondents delay for 24 years in instituting action for
beyond the period of his administration, especially quieting of title and adverse and uninterrupted possession of the
as the representative of the testate succession of lot by the petitioner renders respondent guilty of laches.
the deceased owner of the property ad issued in his Possession of the lot in dispute having been adversely and
favor an instrument whereby he acknowledges that uninterruptedly with petitioner from 1945 when the document of
the said administration was satisfactorily terminated. repurchase was executed, to 1969, when she instituted this
action, or for 24 years, the Alteras must be deemed to have
FINAL VERDICT: Petitioner is acquitted / Case is dismissed / incurred in laches.
Petition granted / whichever
CASE:
This is a pacto de retro sale for a 1-hectare property in Leyte,
wherein it was only after 24 years, that the petitioner, Dominga
Conde filed with the CFI Leyte a civil case for quieting of title
against the ALTERAS and the spouses CONDE. Dominga
contended that Paciente Cordero signed the Memorandum of
Resale in representation of his Alteras in-laws, (Pio Altera was
very ill on that occasion). The Alteras, on the other hand,
contended that Pio was not their agent and Pio signed because
he has no objection to the repurchase.
There is no question that neither of the vendees-a-retro signed WHICH DOCUMENT GOT LOST. In substance, the said
the Memorandum of Repurchase, and that there was no formal provides that the original document was lost in spite of diligent
authorization from the vendees for Paciente Cordero to act for efforts to locate the same; that the representative of the
and on their behalf. CONDES, Eusebio Amarille, repurchased the subject lot; that
Alteras and Pio Cordero received the payment for the
Although the contending parties were legally wanting in their repurchase; and that if Dominga et. al., will be disturbed by other
respective actuations, the repurchase by petitioner is supported persons, Altera and Pio will defend in behalf of Dominga el. al.,
by the admissions at the pre-trial that petitioner has been in because the same was already repurchased by them.
possession since the year 1945, the date of the deed of To be noted is the fact that neither of the vendees-a-retro,
repurchase, and has been paying land taxes thereon since then. Pio Altera nor Casimira Pasagui, was a signatory to the
The imperatives of substantial justice, and the equitable principle deed. Petitioner maintains that because Pio Altera was very ill at
of laches brought about by private respondents inaction and the time, and his wife was out of town. Paciente Cordero
neglect for 24 years, loom in petitioners favor. executed the deed of resale for and on behalf of his father-in-
law. Petitioner further states that she redeemed the property with
FACTS: her own money as her co-heirs were bereft of funds for the
7 April 1938, Margarita Conde, Bernardo Conde and the purpose. Cordero received the repurchase price of P165.00.
petitioner Dominga Conde, as heirs of Santiago Conde, sold The pacto de retro document was eventually found.
with right of repurchase, within ten (10) years from said But, on 30 June 1965, Pio Altera sold the disputed lot to the
date, a parcel of agricultural land located in Maghubas, spouses Ramon Conde and Catalina Conde. Their
Burauen, Leyte, (Lot 840), with an approximate area of one relationship to petitioner was not established. The sale
(1) hectare, to Casimira Pasagui, married to Pio Altera document has never been exhibited.
(hereinafter referred to as the Alteras), for P165.00. Contending that she had validly repurchased the lot in question
The Pacto de retro sale provided that if the end of 10 in 1945, petitioner filed, on 16 January 1969, in the Court of First
years the said land is not repurchased, a new agreement Instance of Leyte, a Complaint (Civil Case No. B-110), against
shall be made between the parties and in no case title and Paciente Cordero and his wife Nicetas Altera, Ramon Conde and
ownership shall be vested in the hand of the ALTERAS. his wife Catalina T. Conde, and Casimira Pasagui (Pio Altera
On 17 April 1941, the Cadastral Court of Leyte adjudicated Lot having died in 1966), for quieting of title to real property and
No. 840 to the Alteras subject to the right of redemption by declaration of ownership.
Dominga Conde, within ten (10) years counting from April 7, The CFI dismissed the complaint and the counterclaim, and
1983, after returning the amount of P165.00 and the amounts ordered petitioner to vacate the property in dispute and deliver
paid by the spouses in concept of land tax x x x (Exhibit 1). its peaceful possession to the defendants Ramon Conde and
Original Certificate of Title No. N-534 in the name of the spouses Catalina T. Conde.
Pio Altera and Casimira Pasagui, subject to said right of On appeal, CA upheld the findings of the Court a quo that
repurchase, was transcribed in the Registration Book of the petitioner had failed to validly exercise her right of repurchase in
Registry of Deeds of Leyte on 14 November 1956 (Exhibit 2). view of the fact that the Memorandum of Repurchase was signed
by Paciente Cordero and not by Pio Altera, the vendee-a-retro,
On 28 November 1945, private respondent Paciente and that there is nothing in said document to show that Cordero
Cordero, son-in-law of the Alteras, signed a document (in was specifically authorized to act for and on behalf of the vendee
the Visayan dialect)- MEMORANDUM OF REPURCHASE a retro, Pio Altera. Hence, this petition.
OVER A PARCEL OF LAND SOLD WITH REPURCHASE
ISSUE: 10.PNB vs. Court of Appeals

Whether Pio Cordero, in signing the memorandum, acted in G.R. No. L-30831 & L-31176, November 21, 1979
representation of the ALTERAS.
Fact:
HELD & RATIO: The spouses Leandro Solomon and Leocadia Bustamante
YES (Solomon spouses, for short) were the registered owners of Lot
There was an implied agency. The Alteras did not repudiate No. 230 of the cadastral survey of Davao, with an area of
the deed that Pio Cordero had signed. If, as alleged, Dominga 126,497 square meters, situated in the Municipality (now city)
never exerted any effort to procure the signature of Pio Altera of Davao, and registered under Original Certificate of Title No.
after he had recovered from his illness, neither did the Alteras 152 of the Registry of Deeds of Davao.
repudiate the deed that Pio executed. Thus, an implied agency In 1932, the Solomon spouses mortgaged the land in favor of
must be held to have been created from their silence or lack the Banco Nacional Filipino, now the Philippine National Bank
of action, or their failure to repudiate the agency. The (briefly referred to as the Bank), to secure a loan of five
Alteras must be held bound by the clear terms of the hundred pesos (P500.00) For failure to pay the loan on
Memorandum of Repurchase. If the contract is plain and maturity, the mortgage was foreclosed, the property was sold
unequivocal in its terms he is ordinarily bound thereby. at public auction, and a Certificate of Sale was executed in
If, as opined by both the Court a quo and the Appellate Court, favor of the Bank on December 28, 1934. It was not until "June
petitioner had done nothing to formalize her repurchase, by the 27, 1958, 4 P.M.", however, that the Certificate of Sale was
same token, neither have the vendees-a-retro done anything to registered, OCT No. 152 cancelled, and in its stead, TCT No.
clear their title of the encumbrance therein regarding petitioners 8042 issued in the name of the Bank.
right to repurchase. No new agreement was entered into by the The next day, after the execution of the Certificate of Sale, or
parties as stipulated in the deed of pacto de retro, if the vendors on December 29, 1934, the Solomon spouses and the Bank,
a retro failed to exercise represented by Amado F. Cortes, Manager of the Davao
(The court also held that the ALTERAS were guilty of laches. Branch entered into a contract denominated as "Promesa de
They, for 24 years, slept on their right to institute an action for Venta" whereby the Bank, as the owner of the property, bound
quieting of title against petitioner. Furthermore, the court also itself to sell to the Solomon spouses for the consideration of
ruled that the spouses Conde were not purchasers in good faith. P802.26, all its rights, title and interest to said property, the
They bought the disputed property despite the notice of the said amount to be payable in eight equal annual amortizations
condition in the title that the property was subject to repurchase.) commencing on December 29, 1935; and that upon full
payment of the amortizations, the Bank would execute a final
deed of sale in favor of the Solomon spouses.
FINAL VERDICT: Judgment of respondent Court of Appeals is Possession of the property was likewise turned over to said
hereby REVERSED and SET ASIDE, and petitioner Dominga Conde spouses upon the execution of the contract. Further, it was
is hereby declared the owner of the disputed property. stipulated that if the Solomon spouses should fail to pay any of
the amortizations or to comply with any provision, the contract
shall be automatically rescinded and cancelled and all
payments made by the spouses shall be considered as rentals
for the use and occupation of the property, and the Bank shall
be free to take possession of the land and sell it to a third
person.
Payments were regularly made by the Solomon spouses under offer. On July 1, 1959, the Bank sold the property of the
said contract except for the seventh and eighth amortizations spouses, Joaquin de Castro and Graciana Pasia, and on July
due on December 29, 1941 and on December 29, 1942, 2, 1959, 'Transfer Certificate of Title No. T-8583 was issued in
respectively, thus leaving an outstanding balance of P217.23. the name of the De Castro spouses.
War broke out on December 8, 194 1. Leandro Solomon died Upon learning that the Bank had sold the property, Perez filed,
on January 8, 1943 and Leocadia Bustamante died on March on July 7, 1959, a Complaint for Specific Performance and
20, 1943. Delfin Perez as sole heir of the deceased spouses Damages against the Bank, which was amended on July
(he being the son of Leocadia Bustamante by her first husband 21,1959, Lo include the De Castro spouses as defendants
Jose Perez, and the stepson of Leandro Solomon), succeeded (Civil Case No. 3064, CFI, Davao, Branch 11, "Delfin Perez vs.
into the possession of the land in question. Philippine National Bank, et al.,).,The Complaint, as amended,
On May 9, 1957, Delfin Perez notified the Bank of the Court prayed that the Bank be ordered to accept from Perez payment
Order declaring him as such heir and manifested his desire to of the outstanding balance in the amount of P535.45 in
pay off the remaining obligation of his deceased parents. On accordance with the document "Promesa de Venta" which
June 13, 1957, upon request of Delfin Perez, the Bank allegedly is, in effect, a perfected contract of sale; that the
Manager, B. Maceda, issued a statement of account on the Register of Deeds of Davao be ordered to cancel Transfer
loan of the deceased spouses showing that the total amount Certificate of Title No. 8042, and, in lieu thereof, to issue
due the Bank as of June 15, 1957 was P535.45, and informed another in the name of Perez; and that defendants be ordered
Delfin Perez that "as soon as (he) could cause full payment of to pay Perez, jointly and severally, the amount of P1,000.00 as
the above account, (they) shall cause the release of the actual damages and P2,000.00 as attorney's fees.
mortgage. 6 Delfin Perez offered to pay the balance but the On July 9, 1959, the Bank wrote Perez informing him of the
Bank 'manager asked him to increase the price. 7 On June 26, disapproval of his ofter to purchase the property and returning
1958, Delfin Perez wrote the Bank asking that he be allowed to to him, by way of a manager's check, the amount of P800.00
buy the land in question for P600.00. This was followed by which represented the "earnest money " for said offer to buy.
another letter, dated July 22, 1958, wherein Perez reiterated The Trial Court dismissed Perez' complaint, while the CA
his offer, this time for P3,000.00, accompanied by a tender of reversed the ruling of the RTC.
payment, of P300.00. Perez at the same time requested that
the Bank permit him to pay the said sum of P3,000.00 in ten Issues:
(10) years, in ten (10) equal installments with interest at 8% Whether or not the Bank is bound to accept the payment of
per annum. earnest money and honor the contract of sale under the the
On August 15, 1958, Perez wrote the Bank that he was raising agreement of "Promesa de Venta".
his "offer to buy" from P3,000.00 to P5,000.00 payable in five
(5) years or in five (5) equal yearly installments with 8% Held:
interest per annum. The offer of P5,000.00 was later increased Yes, the bank is bound under the doctrine of estoppel.
to P7,000.00 and finally to P8,000.00. However, all these offers On equitable principles, particularly on the ground of estoppel,
were turned down by the Bank. we must rule against petitioner Bank. "The doctrine of estoppel
On October 6, 1958, Perez had his adverse claim inscribed on is based upon the grounds of public policy, fair dealing, good
the Bank's Certificate of Title. faith and justice, and its purpose is to forbid one to speak
On May 18, 1959, the Bank advised Perez that a third party against his own act, representations, or commitments to the
was offering to buy the property for P13,500.00 and asked him injury of one to whom they were directed and who reasonably
if he would equal the offer. Delfin Perez failed to equal the
relied thereon. The doctrine of estoppel springs from equitable issued a statement of account on the loan
principles and the equities in the case. showing that the total amount due as of June 15,
- Applied to the case at bar, these special 1957 was P535.45, and informed Perez that "as
circumstances may be stated thus: Firstly the soon as (he) could cause full payment of the
clear intendment of the Bank was to allow the above account, (they) shall cause the release of
Solomon spouses to reacquire ownership of the the mortgage." Perez relied on this commitment,
property. Thus, the day after the Certificate of offered to pay the outstanding balance but the
Sale was issued in favor of the Bank, the latter Bank Manager asked him to increase the "price"
executed the "Promesa de Venta" in favor of the offered. Perez made subsequent tenders until his
Solomon spouses giving the latter eight years offer reached the amount of P8,000.00 but the
within which to reacquire their land. During those Bank still refused to allow him to redeem the
eight years, the spouses were allowed to remain same. In other words, during all the ten years of
in continued possession of the subject property. negotiation the Bank led Perez to believe that he
- Secondly, notwithstanding the sale in its favor in would be allowed to redeem the property, only to
1934, the Bank did not register the same until renege on that commitment when it sold the
June 27, 1958, or 24 years later. And from the property for P13,500.00 to the De Castro
death of his last surviving parent in 1943, the spouses.
Bank never disturbed Perez's possession of the Perez justifiably and reasonably relied upon the assurance
property. of the Bank's Manager that he would be allowed to pay the
- 'Thirdly, when on March 12, 1948, Perez offered remaining obligation of his deceased parents and he acted
on that basis. Even fair dealing alone would have requited
to pay the last two amortizations on the land, plus
the Bank to abide by its representations, but Id did not.
accrued interest, with the request that a Deed of
Clearly, the equities of the case are with Perez.
Sale be executed in his favor, his offer was
rejected by the Bank Manager, Amado
- The Bank's argument that it is not bound by
Lagdameo, not on the ground that the "Promesa the acts of its Branch Manager in Davao, is not
de Venta " had been automatically rescinded and well taken for well settled is the rule that if a
the right to redeem was lost, as now alleged by private corporation intentionally or negligently
petitioners, but on the ground that the "Promesa clothes its officers or agents with apparent
de Venta" was executed by the Bank in favor of power to perform acts for it, the corporation
the Solomon spouses. It was, in fact, suggested will be estopped to deny that such apparent
by the Bank Manager that Perez file an action in authority is real as to innocent third persons
Court for declaration of heirship, which the latter dealing in good faith with such officers or
did, and on September 25, 1956, the Court of First agents.
Instance of Davao in Special Case No. 441,
declared him as the sole and only heir of the Final Verdict: Wherefore, the decision of the CA is hereby
Solomon spouses. Perez notified the Bank on AFFIRMED.
May 9, 1957 of that Court Order and again
manifested his desire to pay off the remaining
obligation of his deceased parents. upon Perez'
request, the Bank Manager, this time, B. Maceda,
11.Rallos v. Yangco, goods may have been in good faith and without neglig ence
20 Phil 269 sent to the a g e n t w i t h o u t k n o w l e d g e , a c t u a l o r
constructive, of the termination of such
FACTS: relationship.
Yangco sent Rallos a letter inviting the latter to be the
consignor in buying and selling leaf tobacco and other native (NOTE: this is a temporary digest, from
products. Terms and conditions were also contained in the letter. http://www.scribd.com/doc/160406998/Rallos-v-yangco-case-digest-
Accepting the invitation, Rallos proceeded to do a considerable doc)
business with Y a n g c o t h r o u g h t h e s a i d C o l l a n t e s , a s
h i s f a c t o r , s e n d i n g t o h i m a s a g e n t f o r Yangco a good
deal of produce to be sold on commission. R a l l o s s e n t t o t h e
said Collantes, as agent for Yangco, 218 bun dles
o f tobacco in the leaf to be sold on commission, as had been other
produce previously. The said Collantes received said tobacco
and sold it for the sum of P1,744. The charges for such sale
were P206.96, leaving in the hands of said Collantes the sum of
1,537.08 belonging to Rallos. This sum was, apparently,
converted to his own use by said agent. It appears, however,
that prior to the sending of said tobacco Yangco had
severed his relations with C ollantes and that the latter was
no longer acting as his factor. This fact was not known to
Rallos; and it is conceded in the case that no notice of any
kind was given by Yangco of the termination of the relations between
Yangco and his agent, Collantes. Y a n g c o t h u s r e f u s e d t o
pay the said sum upon demand of Rallos, placing
such refusal upon the ground that at the time the said
tobacco was received and sold by Collantes, he was acting
personally and not as agent of Yangco.
ISSUE :W h e t h e r o r n o t Y a n g c o a s p r i n c i p a l is
l i a b l e b r o u g h t b y t h e s a l e o f t h e produce
HELD: Yes. Yangco, as principal is liable.

Having advertised the fact that Collantes w a s h i s a g e n t
and having given special notice to Rallos of that
f a c t , a n d h a v i n g given them a special invitation to deal
with such agent, it was the duty of Yangco on the
termination of the relationship of the principal and agent to
give due and t i m e l y n o t i c e t h e r e o f t o R a l l o s . F a i l i n g
t o d o s o , h e i s r e s p o n s i b l e t o t h e m f o r whatever
12.MACKE ET AL. VS. CAMPS carrying on that business, the defendant obligating himself not to
sublet or subrent the building or the business without the consent
Plaintiff: B.H. Macke and W.H. Chandler (partners partners doing of the said Galmes.
business under the firm name of Macke, Chandler & Company) o This contract was signed by the defendant and the name
Defendant: Camps (owner of Washington Caf) Flores of Ricardo Flores appears thereon as a witness, and
(managing agent) attached thereto is an inventory of the furniture and
fittings which also is signed by the defendant with the
SUMMARY: word "sublessee" (subarrendatario) below the name, and
Camps is the owner of Washington Caf and he left Flores in charge at the foot of this inventory the word "received" (recibo)
as managing agent of the Caf. As manager, Flores purchased followed by the name "Ricardo Flores," with the words
goods from Mache et al. Camps refused to pay the said purchase "managing agent" (el manejante encargado) immediately
and claimed that he is not bound to do so because he is only following his name.
subletting the Caf. The SC held that Camps is liable to pay the Galmes was called to the stand and identified the
goods. Flores as his managing agent of Washington Caf had the abovedescribed document as the contract and inventory
authority to buy such reasonable quantities of supplies as might from delivered to him by the defendant, and further stated that he
time to time be necessary in carrying the business of the Caf. could not tell whether Flores was working for himself or for some
one elsethat is to say, whether Elores was managing the
FACTS: business as agent or sublessee.
B. H. Macke, one of the plaintiffs, testified that on the order of
one Ricardo Flores, who represented himself to be the agent ISSUE: W/N Camps liable for the purchase price of the goods
of the defendant.
The plaintiffs in this action allege that: HELD & RATIO:
o During the months of February and March, 1905, they 1. YES, Camps is liable to pay the goods. Flores as his managing
sold to the defendant and delivered at his place of agent of Washington Caf had the authority to buy such reasonable
business, known as the "Washington Caf," various bills quantities of supplies as might from time to time be necessary in
of goods amounting to P351.50; carrying the business of the Caf.
o that defendant has only paid on account of said goods PRESUMPTION: In the absence of proof to the contrary we think
the sum of P174; that this evidence is sufficient to sustain a finding that Flores was
o that there is still due them on account of said goods the the agent of the defendant in the management of the bar of the
sum of P177.50; Washington Caf, with authority to bind the defendant, his
o that before instituting this action they made demand for principal, for the payment of the goods mentioned in the
the payment thereof; and complaint.
o that defendant had failed and refused to pay the said o The contract introduced in evidence sufficiently
balance or any part of it up to the time of the filing of the establishes the fact that the defendant was the owner of
complaint. the business and of the bar, and the title of "managing
A written contract dated May 25, 1904, was introduced in agent" attached to the signature of Flores which appears
evidence, from which it appears that one Galmes, the former on that contract, together with the fact that, at the time
owner of the business now known as the "Washington Caf," the purchases in question were made, Flores was
subrented the building wherein the business was conducted, to apparently in charge of the business, performing the
the defendant for a period of one year, for the purpose of duties usually intrusted to a managing agent, leave little
room for doubt that he was there as the authorized agent 13.JIMENEZ v. RABOT
of the defendant. Communication of Power of Attorney thru a Letter
o That Flores, as managing agent of the Washington Caf, CASE:
had authority to buy such reasonable quantities of Gregorio Jimenez owned parcels of land in Alaminos,
supplies as might from time to time be necessary in Pangasinan. When he had difficulty in his finances when he was in
carrying on the business of a hotel bar may fairly be Vigan, Ilocos Sur, Gregorio sent a ***LETTER*** to his sister,
presumed from the nature of the business, especially in Nicolasa, who was in Alaminos, Pangasinan informing her that he
view of the fact that his principal appears to have left him was pressed for money and requested her to sell one of his
in charge during more or less prolonged periods of parcels of land and send him the money in order that he might
absence; from an examination of the items of the pay his debts. The ***LETTER*** did not contain any description of
account attached to the complaint, we are of opinion that the land to be sold other than is indicated in the words "ONE OF MY
he was acting within the scope of his authority in PARCELS OF LAND".
ordering these goods, and that his admissions as to the Nicolasa was able to find a buyer in the person of Rabot who
receipt of these goods are binding on his principal, and agreed to buy the disputed parcel of land for P500. P250 were paid
in the absence of evidence to the contrary, furnish at once with the understanding that a deed of conveyance would be
satisfactory proof of their delivery as alleged in the executed when the balance should be paid. Nicolasa admits having
complaint received the P250 but theres no evidence that she sent any of it to
AGENCY; ESTOPPEL: One who clothes another with apparent Gregorio.
authority as his agent, and holds him out to the public as such, Gregorio filed and won a case against Nicolasa when he
can not be permitted to deny the authority of such person to act went back to Alaminos and Nicolasa refused to surrender the land to
as his agent, to the prejudice of innocent third parties dealing Gregorio. During the pendency of Rabot acquired possession under
with such person in good faith and in the honest belief that he is the deed from Nicolasa during the pendency of the litigation. It
what he appears to be, for the following presumptions or appeared that he was at the time aware of such circumstance.
deductions, which the law expressly directs to be made from
particular facts, are deemed conclusive: Issue # 1 Whether or not a power of attorney to convey real property
ought to appear in public document
JUDGMENT: Judgment Affitmed. Ruling: NO, a power of attorney can bind the parties even if it is in a
private document. A private document is competent to create,
transmit, modify, or extinguish a right in real property. Thus, it follows
that a power of attorney to convey such property, even though in the
form of a private document, will operate with effect.
Issue # 2 Whether or not the authority conferred on Nicolasa by the

***LETTER*** sent on Feb. 7, 1911 by Gregorio was sufficient to
enable her to bind her brother
Ruling: YES, the ***LETTER*** was sufficient to confer authority to
Nicolasa as Gregorios agent. The authority expressed in the letter
complied with the requirements of the Civil Code and the Code of
Civil Procedure. Art. 1713 requires that the authority to alienate land
shall be contained in an EXPRESS MANDATE. Section 335(5) of the
Code of Civil Procedure states that the authority of the agent must o The parcel of land in question and the 2 other
be in writing and subscribed by the party to be charged. parcels of land in the same locality originally
belonged to the heirs in the division of the estate of
Issue # 3 Whether or not the ***LETTER*** contained a sufficient Jimenez's father.
description of the property to be conveyed o While Gregorio was staying at Vigan during the year
Ruling: The Sufficiency of Description is not applicable to the present 1911, his property in Alaminos was confided by him
action. It is unquestionable that the deed which Nicolasa executed to the care of his elder sister Nicolasa Jimenez
contains a proper description of the property which she purported to o [Feb 7, 1911] Gregorio wrote a letter to Nicolosa
convey. The General rule is that description must be sufficiently informing her that he was pressed for money and
definite to identify the land whether from: (1) the recitals of the requested her to sell one of his parcels of land and
contract; (2) deed or (3) external facts referred to in the document to send him the money in order that he might pay his
enable one to determine the identity of the land. According to debts.
Jurisprudence, stipulations pointing to the property to be conveyed o ***LETTER***: did not contain any description of the
as (1) "any or all tracts, lots, or parcels"; (2) "all" the land possessed land to be sold other than is indicated in the words
by the principal, or all that he possesses in a particular city, county, "ONE OF MY PARCELS OF LAND"
or state; (3) my farm; (4) "the interests" possessed by the principal Acting upon Gregorio's letter, Nicolasa approached Rabot
in the municipality of Tarlac and to that end he was authorized to who later agreed to buy the parcel in question for P500.
purchase, sell, collect, and pay, etc are sufficient descriptions. P250 were paid at once with the understanding that a deed
of conveyance would be executed when the balance should
be paid.
Finally, the SC ruled that the Agent (Nicolasa) thru the ***LETTER*** Nicolasa admits having received the P250 but there's no
was given the power to sell either of the parcels of lands belonging to evidence that she sent any of it to her brother.
the principal (Gregorio). IT MUST BIND GREGORIO. When Gregorio came back to Alaminos, he demanded that
his sister should surrender this piece of land to him, it being
FACTS: then in her possession.
Gregorio Jimenez instituted the instant action to recover Nicolasa refused.
from Rabot a parcel of land in Alaminos, Pangasinan. Thus, Gregorio, in conjunction with his other brothers and
Land: sisters, whose properties were also in the hands of Nicolasa,
o 3 hectares instituted an action in the CFI to recover their land from her
o bounded on the North and West with the land of control.
Pedro Reynoso [August 12, 1913] The CFI favored Gregorio et al.
o on the South with land of Nicolasa Jimenez [May 31, 1912] Nicolasa executed and delivered to Rabot a
o on the East with land of Calixta Apostol before, at deed purporting to convey to him the parcel of land in
present with Juan Montemayor and Simon del Barrio question.
o Location: Dinmayat Tancaran, barrio of Alos, o DEED: recites that the sale was made in
Alaminos, Pangasinan consideration of the sum of P500, payment of which
The lower court ruled in favor of Jimenez. is acknowledged.
Rabot appealed. Rabot went into possession and the property was found in
Admitted facts: his possession at the time when the final judgment was
entered in favor of Gregorio et al.
Rabot acquired possession under the deed from Nicolasa o requires that the authority to alienate land
during the pendency of the litigation. It appeared that he was shall be contained in an EXPRESS
at the time aware of such circumstance. MANDATE
Section 335(5) of the Code of Civil Procedure
ISSUES: o authority of the agent must be in writing and
1. Whether or not a power of attorney to convey real property subscribed by the party to be charged
ought to appear in public document (just as any other The purpose in giving a power of attorney is to
instrument intended to transmit or convey an interest in such substitute the mind and hand of the agent for the
property ought to appear in a public instrument) mind and hand of the principal
2. Whether or not the authority conferred on Nicolasa by the o if the character and extent of the power is
***LETTER*** sent on Feb. 7, 1911 by Gregorio was so far defined as to leave no doubt as to the
sufficient to enable her to bind her brother limits within which the agent is authorized to
3. Whether or not the ***LETTER*** contained a sufficient act, and he acts within those limits, the
description of the property to be conveyed principal cannot question the validity of
his act.
HELD & RATIO: It is not necessary that the particular act to be
10. NO, a power of attorney can bind the parties even if it is in a accomplished should be predestinated by the
private document. language of the power.
A private document is competent to create, transmit, Question to be answered: Was the act which the
modify, or extinguish a right in real property. agent performed within the scope of his authority?
It follows that a power of attorney to convey such o Instant case: Whether the act performed
property, even though in the form of a private by Nicolasa Jimenez was within the
document, will operate with effect. scope of the authority which had been
Supposing the letter contained adequate authority conferred upon her YES!
for Nicolasa to sell the property in question, her
action in convering the property in her own name, 12. The Sufficiency of Description is not applicable to the
without showing the capacity in which she acted, present action. It is unquestionable that the deed which
was IRREGULAR. Nicolasa executed contains a proper description of the
o Nonetheless, such deed would in any event property which she purported to convey.
bind her brother. General rule: Description must be sufficiently
Supposing that the authority was sufficient, definite to identify the land whether from:
o Gregorio could be compelled by a proper o the recitals of the contract;
judicial proceeding to execute a document to o deed or
carry such contract into effect. o external facts referred to in the document
to enable one to determine the identity of the land
11. YES, the ***LETTER*** was sufficient to confer authority to If the description is uncertain on its face or is shown
Nicolasa as Gregorios agent. The authority expressed in the to be applicable with equal plausibility to more than
letter complied with the requirements of the Civil Code and one tract INSUFFICIENT
the Code of Civil Procedure. Accoding to Jurisprudence,
Article 1713 of the Civil Code
o There is ample authority to the effect that a 14.Cosmic Lumber vs CA

person may by a general power of attorney
an agent to sell "all" the land possessed by CASE:
the principal, or all that he possesses in a Cosmic Lumber gave Villamir-Estrada a Special Power of
particular city, county, or state. Attorney to initiate and pursue any case against any Third Persons
o It is also held that where a person that occupy or squat in their property. Estrada filed an ejectment suit
authorizes an agent to sell a farm ("my entered into a Compromise Agreement with one squatter and
farm") in a certain county SUFFICIENT if allowing him to buy the land with the agreement of the Trial Court.
it be shown that such party has only one Cosmic Lumber refuses and argues that Estrada went beyond her
farm in that country. authority. The Court held that the Compromise Agreement is not
o "the power authorized the agent to sell or binding since Estrada acted beyond her authority, she is not allowed
convey "any or all tracts, lots, or parcels" of to sell any property or a portion and not allowed to enter a
land belonging to the plaintiff." Compromise Agreement that will deprive Cosmic Lumber of the use
SUFFICIENT! of their property.
o the authority granted was to the effect that
the agent might administer "the interests"
possessed by the principal in the FACTS:
municipality of Tarlac and to that end he was Cosmic Corporation, through its General Manager executed
authorized to purchase, sell, collect, and a Special Power of Attorney appointing Paz G. Villamil-
pay, etc. SUFFICIENT! Estrada as attorney-in-fact to initiate, institute and file any
court action for the ejectment of third persons and/or
Agent was given the power to sell either of the parcels of lands squatters of the entire lot 9127 and 443 for the said
belonging to Gregorio. MUST BIND GREGORIO squatters to remove their houses and vacate the premises in
order that the corporation may take material possession of
FINAL VERDICT: Judgment is reversed. the entire lot.
Paz G. Villamil Estrada, by virtue of her power of attorney,
instituted an action for the ejectment of private respondent
Isidro Perez and recover the possession of a portion of lot
443 before the RTC
Estrada entered into a Compromise Agreement with Perez,
the terms and conditions such as:
In order for Perez to buy the said lot he is presently
occupying, he has to pay to plaintiff through Estada the sum
of P26,640 computed at P80/square meter and that Cosmic
Lumber recognizes ownership and possession of Perez by
virtue of this compromise agreement over said portion of 333
sqm of lot 443 and whatever expenses of subdivision,
registration and other incidental expenses shall be
shouldered by Perez
although the agreement was approved by the trial court and

the decision became final and executory it was not executed FINAL VERDICT:
within the 5 year period from date of its finality allegedly due WHEREFORE, the petition is GRANTED. The decision and
to the failure of Cosmic Lumber to produce the owners resolution of respondent Court of Appeals dated 29 October 1993
duplicate copy of title needed to segregate from lot 443 the and 10 March 1994, respectively, as well as the decision of the
portion sold by the attorney-in-fact, Paz Estrada to Perez Regional Trial Court of Dagupan City in Civil Case No. D-7750 dated
under the compromise agreement 27 November 1985, are NULLIFIED and SET ASIDE. The
ISSUE: Compromise Agreement entered into between Attorney-in-fact Paz
W/N there is a contract of agency between Cosmic Lumber, G. Villamil-Estrada and respondent Isidro Perez is declared
principal and Paz Estrada, agent thus binding the principal VOID. This is without prejudice to the right of petitioner to pursue its
over the compromise agreement made by the agent to a complaint against private respondent Isidro Perez in Civil Case No.
third person, Perez in selling the portion of the said property D-7750 for the recovery of possession of a portion of Lot No. 443.
HELD:
NO. The authority granted Villamil-Estrada under the special
power of attorney was explicit and exclusionary: for her to
institute any action in court to eject all persons found on lots
number 9127 and 443 so that Cosmic Lumber could take
material possession thereof and for this purpose, to appear
at the pre-trial and enter into any stipulation of facts and/or
compromise agreement but only insofar as this was
protective of the rights and interests of Cosmic Lumber in the
property
Nowhere in this authorization was Villamil-Estrada granted
expressly or impliedly any power to sell the subject property
nor a portion thereof
Neither can a conferment of the power to sell be validly
inferred from the specific authority to enter into a
compromise agreement because of the explicit limitation
fixed by the grantor that the compromise entered into shall
only be so far as it shall protect the rights and interest of the
corporation in the aforementioned lots.
When the sale of a piece of land or any interest thereon is
through an agent, the authority of the latter shall be in
writing; otherwise, the sale should be void. Thus, the
authority of an agent to execute a contract for the sale of real
estate must be conferred in writing and must give him
specific authority, either to conduct the general business of
the principal or to execute a binding contract containing
terms and conditions which are in the contract he did
execute
15.SPOUSES RAET AND SPOUSES MITRA vs. CA

G.R. No. 128016, September 17, 1998 The spouses Raet and the spouses Mitra paid Gatus the
total amounts of P40,000.00 and P35,000.00, respectively,
for which they were issued receipts by Gatus in her own
CASE: name.
Spouses Raet and spouses Mitra negotiated with Amparo Gatus
concerning the possibility of buying certain units at the Las Villas de Spouses Raet and the spouses Mitra applied directly with
Sto. Nio Subdivision which was developed by PVDHC for parties private respondent PVDHC for the purchase of units in the
qualified to obtain loans from GSIS. The spouses Raet and the said subdivision. As they were not GSIS members, they
spouses Mitra paid Gatus sum of money, for which they were issued looked for members who could act as accommodation
receipts by Gatus in her own name. Subsequently, the spouses parties by allowing them to use their policies.
applied directly with private respondent PVDHC for the purchase of
units. As they were not GSIS members, they engaged The spouses Raet presented the GSIS policy of Ernesto
accommodation parties. The spouses Raet and spouses Mitra also Casidsid, while the spouses Mitra that of Edna Lim. The
paid certain sums to PVDHC on the understanding that these spouses Raet and spouses Mitra paid certain sums to
amounts would be credited to the purchase prices of the units which private respondent PVDHC on the understanding that these
will be determined after the approval of their loan applications with amounts would be credited to the purchase prices of the
the GSIS. GSIS disapproved the loan applications of petitioners. units which will be determined after the approval of their loan
Owing to the failure of petitioners to raise money, private respondent applications with the GSIS. Meanwhile, the spouses Raet
PVDHC asked them to vacate the units. Spouses Raet and the and Mitras were allowed to occupy units in the subdivision.
spouses Mitra then filed a complaint for specific performance GSIS disapproved the loan applications of petitioners.
contending that there is a perfected sale between them and PVDHC.
The SC ruled that the parties in this case had not reached any Upon complaint of petitioner Elvira Raet, Amparo Gatus was
agreement. Aside from the fact that there is no evidence that the charged with estafa in the RTC of Malolos,
parties agreed to the total purchase price as well as the terms of Bulacan. However, the case was dismissed on the ground
payment, petitioners dealt with Gatus who was not the agent of that Gatus never misrepresented herself as an agent of
private respondent PVDHC. Also, Art. 1874 of the Civil Code private respondent PVDHC and accordingly acquitted her.
requires for the validity of a sale involving land that the agent
should have an authorization in writing, which Gatus did not Owing to the failure of petitioners to raise money, private
possess. respondent PVDHC asked them to vacate the units they
were occupying and filed ejectment suits against them.
FACTS: Spouses Raet and the spouses Mitra then filed a complaint
The spouses Raet and spouses Mitra negotiated with for specific performance and damages against Amparo
Amparo Gatus concerning the possibility of buying the rights Gatus and private respondent PVDHC with the HLURB
of the latter to certain units at the Las Villas de Sto. Nio which gave judgment in petitioners favor:
Subdivision.
This subdivision was developed by private respondent Phil- From the foregoing, the conclusion that thus can be drawn
Ville Development and Housing Corporation (PVDHC) is that respondent Gatus is an agent of respondent Phil-Ville
primarily for parties qualified to obtain loans from the GSIS. with respect to the sale of the subject properties to
complainants. Respondent Gatus is thus duty bound to petitioners only upon the approval of the latters loan
remit to respondent Phil-Ville all payments made by applications with the GSIS which, as mentioned
complainants in connection with the purchase of the subject earlier, failed to materialize.
properties. Respondent Phil-Ville on the other hand is Lastly, there are no written contracts to evidence the alleged
bound to respect the terms and conditions for the purchase sales. If petitioners and private respondent PVDHC had
of the subject premises as agreed upon by the respondent indeed entered into contracts involving the subject units, it is
Gatus and complainants. rather strange that contracts of such importance have not
been reduced to writing.
ISSUES:
6. Whether or not there is a perfected contract of sale between FINAL VERDICT: Petition is DISMISSED.
petitioners and private respondent.
HELD & RATIO:
NO, parties in this case had not reached any agreement with regard
to the sale of the units in question.
First, records do not show the total costs of the units in
question and the payment schemes therefor.
Second, petitioners dealt with Gatus. But Gatus was not
the agent of private respondent PVDHC.
o Indeed, the criminal case for estafa against her was
dismissed because it was found that she never
represented herself to be an agent of private
respondent PVDHC.
o Art. 1874 of the Civil Code requires for the validity of
a sale involving land that the agent should have an
authorization in writing, which Gatus did not
possess.
o Petitioners knew from the beginning that Gatus was
negotiating with them in her own behalf, and not as
an agent of private respondent PVDHC.
Third, since private respondent PVDHC had no knowledge

of the figures Amparo Gatus gave to petitioners as estimates
of the costs of the units in question, it could not have ratified
the same at the time the latter applied for the purchase of
the units.
o Private respondent PVDHC was to enter into
agreements concerning the subject units with
16.AGUNA v. LARENA 17.INSULAR DRUG CO., INC. v. THE PHILIPPINE NATIONAL

CASE: BANK, ET AL., THE PHILIPPINE NATIONAL BANK
No agency here! Short case super.
CASE:
FACTS: Insular Drug Co., Inc., was a Philippine corporation with offices in
In Aguna rendered services to the Larena consisting in the Manila. U.E. Foerster, a former salesman of Insular, acted as a
collection of the rents due from the Larenas tenants and collector and was instructed to deposit the checks he received for the
attending to the repairs of the houses, when necessary. company to the Iloilo branch of Chartered Bank of India, Australia
Aguna did not receive any compensation for 8 years but he and China to the credit of the company. Instead of doing this,
occupied a house belonging to Larena without paying any Foerster, deposited the checks including those of Juan Llorente,
rent. Dolores Salcedo, Estanislao Salcedo and a fourth party, with the
A building was erected in the Larenas land and the Iloilo branch of PNB. The checks were placed under the personal
expenses were paid by Aguna but the owner of the account of Foerster. Some of the checks were drawn against PNB.
investment money is in question. After the indorsement on the checks was written Recieved payment
Larena died and, now, Aguna filed an action to recover prior indorsement guaranteed by PNB, Iloilo branch, Angel Padilla,
P29,600 from Larenas estate for the 2 services rendered Manager. Manila office investigated the transactions of Foerster and
upon discovery of anomalies, Foerster committed suicide. There is
ISSUE: no evidence showing that the bank knew the misappropriation of the
funds. Insular Drug claimed it never received the face value of the
Whether or not Aguna is entitled to compensation for
checks amounting to a total of Php 18,285.92. The issue here is
services rendered
whether or not the bank will have to stand the loss occasioned by the
HELD:
negligence of its agents. The SC decided in the affirmative.
No, Aguna is not entitled to compensation. For the first
cause, the compensation was the gratuitous use and
The bank could tell by the check themselves belonged to the drug
occupation of some of the houses of Larena by Aguna and
company and not to Foerster. When the bank credited those checks
his family.
to the personal account of Foerster and permitted the same and his
For the second cause, Aguna did not have any source of wife to make withdrawals without there being authorized to do so, the
income that could produce such a large amount of money for bank made itself responsible to the drug company for the amounts
the investment and Larena had more than the necessary represented by the checks.
amount to build the house.
Moreover, the books of accounts showed that the several The bank could relieve itself by pleading and proving that the money
items purports to have been advanced by Larena for the was withdrawn from the bank if it passed the drug company which
construction of the building and the investment money did thus suffered no loss but the bank has not done so.
not belong to Aguna.
Thus, Aguna has no cause of action against Larena and
Aguna is not entitled to any compensation.
This is an appeal taken by Philippine National Bank from a judgment
The compensation was the gratuitous use and occupation of
of the Court of First Instance of Manila requiring bank to pay to the
some of the houses of Larena by Aguna and his family.
Insular Drug Co., Inc., the sum of P18,285.92 with legal interest and
FINAL VERDICT: Petition dismissed
costs.
The Insular Drug Company claims that it never received the face
FACTS: value of 132 checks here in the question covering a total of
Insular Drug Co., Inc. Philippine corporation with offices in the P18,285.92.lawphil.net
City of Manila.
Bank argues that the drug company was never defrauded at all.
U.E. Foerster was formerly a salesman of drug company for the
Islands of Panay and Negros. While the evidence on the extent of the loss suffered by the drug
o He also acted as a collector for the company. company is not nearly as clear as it should be, it is a sufficient
o He was instructed to take the checks which came to his answer to state that no such special defense was relied upon by
hands for the drug company to the Iloilo branch of the the bank in the trial court.
Chartered Bank of India, Australia and China and
deposit the amounts to the credit of the drug company. The drug company saw fit to stand on the proposition that
checks drawn in its favor were improperly and illegally cashed by
Instead, Foerster deposited checks, including those of Juan the bank for Foerster and placed in his personal account, thus
Llorente, Dolores Salcedo, Estanislao Salcedo, and a fourth making it possible for Foerster to defraud the drug company, and
party, with the Iloilo branch of the Philippine National Bank. the bank did not try to go back of this proposition.
The checks were in that bank placed in the personal account of The next point that Foerster had implied authority to indorse all
Foerster. Some of the checks were drawn against the Bank of checks made out in the name of the Insular Drug Co., Inc., has
Philippine National Bank. even less force.
o Not only did the bank permit Foerster to indorse checks
After the indorsement on the checks was written "Received and then place them to his personal account, but it
payment prior indorsement guaranteed by Philippine National permitted Foerster's wife and clerk to indorse the
bank, Iloilo Branch, Angel Padilla, Manager." checks.
ISSUES:
The indorsement on the checks took various forms. 7. Whether or not the bank will have to stand the loss occasioned
by the negligence of its agents.
Carmen E. de Foerster was his stenographer.
HELD & RATIO:
As a consequence of the indorsements on checks the amounts 1. YES.
therein stated were subsequently withdrawn by U. E., Foerster The right of an agent to indorse commercial paper is a
and Carmen E. de Foerster. very responsible power and will not be lightly inferred.
Any person taking checks made payable to a corporation,
Manila office of the drug company investigated the transactions which can act only by agent does so at his peril, and must
of Foerster. same by the consequences if the agent who indorses the
same is without authority.
Upon the discovery of anomalies, Foerster committed suicide. No trust fund was involved; that the fact that bank acted in
good faith does not relieve it from responsibility; that no
There is no evidence showing that the bank knew that Foerster proof was adduced, admitting that Foerster had right to
was misappropriating the funds of his principal. indorse the checks, indicative of right of his wife and clerk to
do the same , and that the checks drawn on the Bank of the 18. Municipal Council of Iloilo v. Evangelista et al
Philippine Islands can not be differentiated from those drawn G.R. No. L-32977 November 17, 1930
on the Philippine National Bank because of the indorsement
by the latter. CASE:
The bank could tell by the checks themselves that the CFI of Iloilo rendered judgment in a civil case in favor of Mrs.
money belonged to the Insular Drug Co., Inc., and not to Tan for the value of a strip of land belonging to her which was taken
Foerster or his wife or his clerk. by the municipality to widen a public street. Various adverse
When the bank credited those checks to the personal claimants on the amount of judgment appeared. After due hearing,
account of Foerster and permitted Foerster and his wife the court declared as valid and binding the deed of assignment of the
to make withdrawals without there being made authority credit executed by Mrs. Tan, through her attorney-in-fact Tan Boon
from the drug company to do so, the bank made itself Tiong, in favor of Antero Soriano as well as the subsequent
responsible to the drug company for the amounts assignment executed by Soriano in favor of Mauricio Cruz & Co., Inc.
represented by the checks. W/N the assignment made by Tan Boon Tiong, as attorney-in-fact of
The bank could relieve itself from responsibility by pleading Mrs. Tan, to Atty. Antero Soriano, of all the credits, rights and
and proving that after the money was withdrawn from the interests of Mrs. Tan in the civil case judgment in consideration of
bank it passed to the drug company which thus suffered no the professional services rendered by said attorney to Mrs. Tan and
loss, but the bank has not done so. her coheirs was valid. The Court held that the assignment made by
Tan Boon Tiong was valid. In paragraph VI of the power of attorney,
FINAL VERDICT: Overruling the errors assigned, judgment of the Tan Boon Tiong is authorized to employ and contract for the services
trial court will be affirmed, the costs of this instance to be paid by of lawyers upon such conditions as he may deem convenient, to take
appellant. charge of any actions necessary or expedient for the interests of his
principal, and to defend suits brought against her. This power
necessarily implies the authority to pay for the professional services
thus engaged. An agent of attorney-in-fact empowered to pay the
debts of the principal, and to employ lawyers to defend the
latter's interests, is impliedly empowered to pay the lawyer's
fees for services rendered in the interests of said principal, and
may satisfy them by an assignment of a judgment rendered in
favor of said principal.
FACTS:
On March 20, 1924, the CFI of Iloilo rendered judgment in a
civil case wherein Tan Ong Sze Vda. de Tan Toco (Mrs.
Tan) sought to recover from the Municipality of Iloilo the
value of a strip of land belonging to Tan which was taken by
the municipality to widen a public street; the judgment
entitled Tan to recover P42,966.40, representing the value of
said strip of land.
After the case was remanded to the court of origin, and the services of lawyers upon such conditions as he may
judgment rendered therein had become final and executory, deem convenient, to take charge of any actions
Atty. Jose Evangelista, in his own behalf and as counsel for necessary or expedient for the interests of his
the administratrix of Jose Ma. Arroyo's intestate estate, filed principal, and to defend suits brought against her.
a claim in the same case for professional services rendered This power necessarily implies the authority to
by him, which the court, acting with the consent of the pay for the professional services thus engaged.
appellant widow, fixed at 15% of the amount of the In the present case, the assignment made by Tan
judgment. Boon Tiong, as Attorney-in-fact for Mrs. Tan, in favor
At the hearing on said claim, various adverse claimants of Atty. Soriano for professional services rendered in
appeared. other cases in the interests of the appellant and her
After hearing all the adverse claims on the amount of the coheirs, was that credit which she had against the
judgment, the court ordered that the attorney's lien in the municipality of Iloilo, and such assignment was
amount of 15% of the judgment, be recorded in favor of Atty. equivalent to the payment of the amount of said
Evangelista and directed the municipality to file an action of credit to Atty. Soriano for professional services.
interpleading against the adverse claimants, the PNB, With regard to the failure of the other attorney-in-fact
Antero Soriano, Mauricio Cruz & Co., Jose Evangelista and of the appellant, Tan Montano, to consent to the
Jose Arroyo, as was done. deed of assignment, the latter being also authorized
After due hearing, the court declared as valid and binding to pay, in the name and behalf of the principal, all
the deed of assignment of the credit executed by Tan, her debts and the liens and encumbrances her
through her attorney-in-fact Tan Boon Tiong, in favor of property, the very fact that different letters of
Antero Soriano; likewise the assignment executed by attorney were given to each of these two
Soriano during his lifetime in favor of Mauricio Cruz & Co., representatives shows that it was not the
Inc., and the plaintiff is hereby ordered to pay the said principal's intention that they should act jointly
Mauricio Cruz & Co., Inc., the balance of P30,966.40; xxx in order to make their acts valid. Furthermore, the
appellant was aware of that assignment and she not
ISSUE: only did not repudiate it, but she continued
8. W/N the assignment made by Tan Boon Tiong, as attorney- employing Attorney Antero Soriano to represent her
in-fact of Mrs. Tan, to Atty. Antero Soriano, of all the credits, in court.
rights and interests of Mrs. Tan in the civil case judgment in For the foregoing considerations, the court is of
consideration of the professional services rendered by said opinion and so holds:
attorney to Mrs. Tan and her coheirs was valid. o That an agent of attorney-in-fact empowered
to pay the debts of the principal, and to
HELD & RATIO: employ lawyers to defend the latter's
1. YES, the assignment made by Tan Boon Tiong, as attorney- interests, is impliedly empowered to pay
in-fact of Mrs. Tan, to Atty. Antero Soriano, of all the credits, the lawyer's fees for services rendered in
rights and interests of Mrs. Tan in the civil case judgment in the interests of said principal, and may
consideration of the professional services rendered by said satisfy them by an assignment of a
attorney to Mrs. Tan and her coheirs was valid. judgment rendered in favor of said
In paragraph VI of the power of attorney, Tan Boon principal;
Tiong is authorized to employ and contract for the
o that when a person appoints two attorneys- 19.Rural Bank of Caloocan v. CA

in-fact independently, the consent of the one (G.R. No. L-32116 April 2l, 1981)
will not be required to validate the acts of the Article 1342: Misrepresentation by a Third Person
other unless that appears positively to have
been the principal's attention; and CASE:
o that the assignment of the amount of a Maxima Castro was accompanied by Severino Valencia in applying
judgment made by a person to his attorney, for a loan with Rural Bank of Caloocan. The latter assisted in
who has not taken any part in the case complying with the bank requirements in order to secure the loan.
wherein said judgment was rendered, made The loan was approved. Spouses Valencia obtained another loan
in payment of professional services in other with Castro as co-maker. Both loans were secured by a real estate
cases, does not contravene the prohibition mortgage on Castros real estate property. When the property was
of article 1459, case 5, of the Civil Code. about to be sold at public auction, Castro instituted a complaint that
she had no knowledge insofar as the separate loan made by
Spouses Valencia. The Supreme Court ruled that the mortgage
FINAL VERDICT: Judgment appealed from is affirmed in its entirety, contract between the bank and Castro is invalid on the ground of
with costs against the appellant. substantial mistake, citing Art. 1342 of the Civil Code.
FACTS:
Maxima Castro, accompanied by Severino Valencia, went to

the Rural Bank of Caloocan in order to apply for an industrial
loan. Valencia personally took care of the entire requirement
in order for Castro to secure said loan. The loan of
P3,000.00 was approved and Castro, accompanied by
Valencia spouses, signed a promissory note. On the same
day, Valencia spouses also secured a separate loan of
P3,000.00 and was also signed by Castro as co-maker.
The two loans were secured by a real estate mortgage on
Castros house and lot.
Sheriff informed Castro that her property will be sold at a

public aution which shall cover the promissory note plus
interest and attorneys fee. Castro claims that she has no
knowledge of the mortgage contract up until a notice from
the sheriff was given.
Castro filed a case against the bank.
Bank argued that they were led to believe that Valencia In Hill vs. Veloso, the SC ruled that a contract may be
was Castros agent. annulled on the ground of vitiated consent if deceit by a
third person, even without connivance or complicity
CA Decision: The consent of Castro to the promissory note with one of the contracting parties, resulted in mutual
where she signed as co-maker with the Valencias as error on the part of the parties to the contract.
principal borrowers and her acquiescence to the mortgage
contract where she encumbered her property to secure the FINAL VERDICT: CA decision is AFFIRMED.
amount of P6,000.00 was obtained by fraud perpetrated on
her by the Valencias who had abused her confidence, taking
advantage of her old age and ignorance of her financial
need. Respondent court added that "the mandate of fair play
decrees that she should be relieved of her obligation under
the contract" pursuant to Articles 24 and 1332 of the Civil
Code.
ISSUES:
1. Whether or not the promissory note is invalid insofar as

they affect Castro and the Bank?
HELD & RATIO:
YES. CA is correct in declaring that the promissory note is

invalid between Castro and the Bank, and the mortgage
contract is not binding on Castro beyond the amount of
P3,000.00.
While the contracts may not be invalidated insofar as they

affect the bank and Castro on the ground of fraud because
the bank was not a participant thereto, such may however be
invalidated on the ground of substantial mistake mutually
committed by them as a consequence of the fraud and
misrepresentation inflicted by the Valencias.
Art. 1342 of the Civil Code provides that misrepresentation

by a third person does not vitiate consent, unless such
misrepresentation has created substantial mistake and
the same is mutual.

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Agency, Trusts, Partnerships and Joint Ventures Case Digests | Atty.

Joaquin Obieta | 2014

CASE: Petitioner Philpotts, a stockholder of respondent Philippine

DIGESTS Manufacturing Company, wishes to examine the records and

ISSUE: W/N the right to inspect the records can be exercised by a

payment and a deduction of 2% shall be given; 3.SHELL v. FIREMENS INSURANCE CO.

HELD & RATIO:

As the act of the agent or his employees acting within the

Petitioner: Marcelina A. Escandor (engaged in the manufacture and

Private respondent: Jumbee Orbeta (a freelance salesman).

It appears that Orbeta somehow learned that Escandor had

written authorization from his alleged principal. A person 7.Hahn v. CA

8.DELA PENA vs. HIDALGO FACTS:

administrator who abandoned his charge; and the

ISSUE: 10.PNB vs. Court of Appeals

HELD: Yes. Yangco, as principal is liable.

Issue # 2 Whether or not the authority conferred on Nicolasa by the

o There is ample authority to the effect that a 14.Cosmic Lumber vs CA

although the agreement was approved by the trial court and

15.SPOUSES RAET AND SPOUSES MITRA vs. CA

HELD & RATIO:

Third, since private respondent PVDHC had no knowledge

16.AGUNA v. LARENA 17.INSULAR DRUG CO., INC. v. THE PHILIPPINE NATIONAL

o that when a person appoints two attorneys- 19.Rural Bank of Caloocan v. CA

Maxima Castro, accompanied by Severino Valencia, went to

Sheriff informed Castro that her property will be sold at a

Castro filed a case against the bank.

1. Whether or not the promissory note is invalid insofar as

HELD & RATIO:

YES. CA is correct in declaring that the promissory note is

While the contracts may not be invalidated insofar as they

Art. 1342 of the Civil Code provides that misrepresentation

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