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21) MACKE vs.

CAMPS
CASE NUMBER: G.R. No. 2962 DATE: 27 February 1907 PONENTE: CARSON, J.

FACTS: The plaintiffs are partners doing business under the firm name of Macke, Chandler & Company, allege that during the
months of February and March, 1905, they sold to the defendant and delivered at his place of business, known as the "Washington
Cafe," various bills of goods amounting to P351.50. The plaintiffs further alleged that the defendant has only paid on account of
said accounts the sum of P174; that there is still due sum of P177.50; that before instituting this action they made demand for the
payment but the defendant had failed and refused to pay.
The plaintiffs, testified that on the order of one Ricardo Flores, who represented himself to be agent of the defendant, he shipped
the said goods to the defendants at the Washington Cafe; that Flores later acknowledged the receipt of said goods and made various
payments amounting in all to P174.
On demand for payment of balance of the account Flores informed him that he did not have the necessary funds on hand, and that
he would have to wait the return of his principal, the defendant, who was at that time visiting in the provinces. The plaintiffs
were satisfied as to the credit of the defendant and as to the authority of Flores to act as his agent who was apparently in charge of
the business and claiming to be the business manager of the defendant. A written contract (for the hotel with a bar and restaurant
business of the defendant) dated May 25, 1904, was introduced in evidence to establish the relationship between the defendant and
Flores. The defendant relies wholly on his contention that the foregoing facts are not sufficient to establish the fact that he received
the goods for which payment is demanded.

ISSUE: WON Flores was managing the business as agent?

RULING: YES, the evidence is sufficient to sustain a finding that Flores was the agent of the defendant in the management of the
bar of the Washington Cafe with authority to bind the defendant, his principal, for the payment of the goods mentioned in the
complaint. Lastly, from an examination of the items of the account attached to the complaint, we are of opinion that Flores was
acting within the scope of his authority. It is a well settled rule that: One who clothes another apparent authority as his agent, and
holds him out to the public as such, can not be permitted to deny the authority of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good faith and in the honest belief that he is what he appears to be.

22) LINAN VS. PUNO


CASE NUMBER: G.R. No. L-9608 DATE: August 7, 1915 PONENTE: Johnson, J.

FACTS:
1) Linan was the owner of a certain parcel of subject land. He executed a document, which conferred upon the Puno the power,
duties and obligations to administer the interest Linan including to purchase, sell, collect and pay, as well as sue and be sued before
any authority, appear before the courts of justice and administrative officers in any proceeding or business concerning the good
administration and advancement of Linans said interests, and may, in necessary cases, appoint attorneys at law or attorneys in fact
to represent him.
2) The meaning, purport, and power conferred by this document constitute the very gist of the present action. 3) Defendant Puno,
for the sum of P800, sold and delivered said parcel of land to the other defendants. The plaintiff alleges that the said document
(Exhibit A) did not confer upon the defendant Puno the power to sell the land and prayed that the sale be set aside; that the land be
returned to him, together with damages.

ISSUE: Did the document (Exhibit A)give Puno authority to sell the land?

RULING:
1) Contracts of agency as well as general powers of attorney must be interpreted in accordance with the language used by the
parties. The real intention of the parties is primarily to be determined from the language used. The intention is to be gathered from
the whole instrument. In case of doubt resort must be had to the situation, surroundings and relations of the parties. The intention
of the parties must be sustained rather than defeated. If the contract be open to two constructions, one of which would uphold
while the other would overthrow it, the former is to be chosen. The acts of the parties will be presumed to have been done in
conformity with and not contrary to the intent of the contract.
2) The lower court held that the "only power conferred was the power to administer." Reading the contract we find it says that the
plaintiff "I confer ... power ... that ... he may administer ... purchase, sell, collect and pay ... in any proceeding or business concerning
the good administration and advancement of my said interests." The words "administer, purchase, sell," etc., seem to be used
coordinately. Each has equal force with the other. There seems to be no good reason for saying that Puno had authority to
administer and not to sell when "to sell" was as advantageous to the plaintiff in the administration of his affairs as "to administer."
3) To hold that the power was "to administer" only when the power "to sell" was equally conferred would be to give to special
words of the contract a special and limited meaning to the exclusion of other general words of equal import.
4) The record contains no allegation on proof that Puno acted in bad faith or fraudulently in selling the land. It will be presumed that
he acted in good faith and in accordance with his power as he understood it. That his interpretation of his power, as gathered from
the contract (Exhibit A), is tenable cannot, we believe, be successfully denied. Neither have we overlooked the fact in the brief of the
appellants that the plaintiff has not returned, nor offered to return, nor indicated a willingness to return, the purchase price. (Art.
1308 of the Civil Code; Manikis vs. Blas, No. 7585.). Disposition: In view of all the foregoing, we are of the opinion that the lower
court committed the error complained of in the second assignment, and, without discussing the other assignments of error, we are
of the opinion, and so hold, that the judgment of the lower court should be and is hereby revoked and that the appellants should be
relieved from all liability under the complaint. Without any finding as to costs, it is so ordered.

23) DANONA vs. BRIMO & CO.


CASE NUMBER: G.R. No. 15823 DATE: September 12, 1921 PONENTE: JOHNSON, J.:

FACTS: Danon was employed byHolland American Oil Co thru its manager, Antonio A. Brimo,to look for a purchaser of its
factoryfor the sum of P1,200,000, payable in cash; Brimopromised to pay the Danon, as compensation for his services, a
commission of five per cent on the said sum of P1,200,000, if the sale was consummated, or if he should find a purchaser ready, able
and willing to buy said factory for the said sum of P1,200,000; No definite period of time was fixed where Danon should effect the
sale. It seems that another broker, Sellner, was also negotiating the sale, or trying to find a purchaser for the same property and that
the plaintiff was informed of the fact either by Brimo himself or by someone else; at least, it is probable that Dano was aware that
he was not alone in the field, and his whole effort was to forestall his competitor by being the first to find a purchaser and effect the
sale. Danon found such a purchaser, but Brimo refused to sell the said factory without any justifiable motive or reason therefor
and without having previously notified Danon of its desistance or variation in the price and terms of the sale. RTC ruled in favor of
Danon CA affirmed RTCs ruling

ISSUE: Was Danon as broker entitled to payment of his commission?

RULING: NO The broker must be the efficient agent or the procuring cause of sale. The means employed by him and his efforts must
result in the sale. He must find the purchaser, and the sale must proceed from his efforts acting as broker. Under the proofs in this
case, the most that can be said as to what the plaintiff had accomplished is, that he had found a person who might have bought the
defendant's factory if the defendant had not sold it to someone else. The evidence does not show that the Santa Ana Oil Mill had
definitely decided to buy the property in question at the fixed price of P1,200,000.
The board of directors of said corporation had not resolved to purchase said property; and even if its president could legally make
the purchase without previous formal authorization of the board of directors, yet said president does not pretend that he had
definitely and formally agreed to buy the factory in question on behalf of his corporation at the price stated. In all the cases, under
all and varying forms of expression, the fundamental and correct doctrine, is, that the duty assumed by the broker is to bring the
minds of the buyer and seller to an agreement for a sale, and the price and terms on which it is to be made, and until that is done his
right to commissions does not accrue. It follows, as a necessary deduction from the established rule, that a broker is never entitled
to commissions for unsuccessful efforts. The risk of a failure is wholly his.
The undertaking to procure a purchaser requires of the party so undertaking, not simply to name or introduce a person who may be
willing to make any sort of contract in reference to the property, but to produce a party capable, and who ultimately becomes the
purchaser. Where no time for the continuance of the contract is fixed by its terms either party is at liberty to terminate it at will ,
subject only to the ordinary requirements of good faith. Usually the broker is entitled to a fair and reasonable opportunity to
perform his obligation, subject of course to the right of the seller to sell independently. But having been granted him, the right of the
principal to terminate his authority is absolute and unrestricted, except only that he may not do it in bad faith, and as a mere device
to escape the payment of the broker's commissions.

24) INFANTE vs. CUNANAN


CASE NUMBER: G.R. No. L-5180 DATE: August 31, 1953

FACTS: 1. 2. Consejo Infante owns of two parcels of land with a house built thereon in Manila Infante contracted the services of Jose
Cunanan and Juan Mijares, to sell the property for a price of P30,000 subject to the condition that the purchaser would assume the
mortgage existing thereon in the favor of the Rehabilitation Finance Corporation. Infante agreed to pay them a commission of 5% on
the purchase price plus whatever overprice they may obtain for the property. Cunanan & Mijares found one Pio S. Noche who was
willing to buy the property under the terms agreed upon with Infante but when they introduced him to Infante the latter informed
them that she was no longer interested in selling the property and succeeded in making them sign a document stating therein that
the written authority she had given them was already can-celled. However, Infantedealt directly with Pio S. Noche selling to him the
property for P31,000. Upon learning this transaction, Cunanan & Mijares demanded from Infante the payment of their commission,
but she refused and so they brought the present action.

ISSUE: Were Cunanan and Mijares as brokers entitled to payment of their commission?

RULING: YES 1. After infante had given the written authority to respondents to sell her land for the sum of P30,000, respondents
found a buyer in the person of one Pio S. Noche who was willing to buy the property under the terms agreed upon, and this matter
was immediately brought to the knowledge of Infante. Infante, perhaps by way of strategem, advised respondents that she was no
longer interested in the deal and was able to prevail upon them to sign a document agreeing to the cancellation of the written
authority. Infante had changed her mind even if respondents had found a buyer who was willing to close the deal, is a matter that
would not give rise to a legal consequence if respondents agree to call off the transaction in deference to the request of the
petitioner. But the situation varies if one of the parties takes advantage of the benevolence of the other and acts in a manner that
would promote his own selfish interest. This act is unfair as would amount to bad faith. This act cannot be sanctioned without
according to the party prejudiced the reward which is due him. This is the situation in which respondents were placed by petitioner.
Infante took advantage of the services rendered by respondents, but believing that she could evade payment of their commission,
she made use of a ruse by inducing them to sign the deed of cancellation Exhibit 1. This act of subversion cannot be sanctioned and
cannot serve as basis for petitioner to escape payment of the commission agreed upon.

25) MANOTOK BROTHERS, INC. VS. COURT OF APPEALS


CASE NUMBER: G.R. No. 94753 DATE: April 7, 1993. PONENTE: Campos Jr., J.

FACTS: The petitioner in this case is the owner of a parcel of land and building which was leased to the City of Manila and was used
by Claro M. Recto High school. Respondent here, Salvador Saligumba was the agent of the petitioner who negotiated with the city
for the sale of the said property.
Accordingly as such, he was given letters of authority that allowed him to negotiate the property at a price not less than 425k He
was to get a 5% commission from the said sale His authority was extended several times, the last one lasting for 180 days from
November 16, 1987, also it was at this time that petitioner allowed the sale to be consummated for the amount of 410k. However, it
was only on April 26, 1968, passed Ordinance No. 6603, appropriating the sum of P410,816.00 for the purchase of the property
which private respondent was authorized to sell. Said ordinance however, was signed by the City Mayor only on May 17, 1968, one
hundred eighty three (183) days after the last letter of authorization. On January 14, 1969, the parties signed the deed of sale of the
subject property.
The initial payment of P200,000.00 having been made, the purchase price was fully satisfied with a second payment on April 8, 1969
by a check in the amount of P210,816.00. Respondent now asks that the 5% commission be paid to him in the amount of
P20,554.50. But petitioners refused to pay up, arguing that:
(1) Private respondent would be entitled to a commission only if the sale was consummated and the price paid within the period
given in the respective letters of authority;
(2) Private respondent was not the person responsible for the negotiation and consummation of the sale; instead it was Filomeno E.
Huelgas, the PTA president for 1967-1968 of the Claro M. Recto High School. Petitioner presented as its witnesses Filomeno Huelgas
and the petitioner's President, Rufino Manotok. Huelgas testified to the effect that after being inducted as PTA president in
August, 1967 he followed up the sale from the start with Councilor Magsalin until after it was approved by the Mayor on May 17,
1968 He also said that he came to know Rufino Manotok only in August, 1968, at which meeting the latter told him that he would
be given a "gratification" in the amount of P20,000.00 if the sale was expedited. Petitioners contention that as a broker, private
respondent's job is to bring together the parties to a transaction. Accordingly, if the broker does not succeed in bringing the minds
of the purchaser and the vendor to an agreement with respect to the sale, he is not entitled to a commission. The Court ruled in
favor of the respondent, with the CA affirming the RTC decision. Hence the appeal

ISSUE: is the private respondent entitled to the 5% commission? -> Yes

RULING: Court says: it is to be noted that the ordinance was approved on April 26, 1968 when private respondent's authorization
was still in force. Moreover, the approval by the City Mayor came only three days after the expiration of private respondent's
authority. It is also worth emphasizing that from the records, the only party given a written authority by petitioner to negotiate the
sale from July 5, 1966 to May 14, 1968 was private respondent. When there is a close, proximate and causal connection between
the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission. Private respondent is
the efficient procuring cause for without his efforts, the municipality would not have anything to pass and the Mayor would not have
anything to approve. The SC agrees with respondent Court that the City of Manila ultimately became the purchaser of petitioner's
property mainly through the efforts of private respondent. Disposition: Decision of the RTC is affirmed.

26) DOMINGO VS. DOMINGO


CASE NUMBER: GR No. L-30573 DATE: Oct. 29, 1971 PONENTE: Makasiar, J.

FACTS: Vicente Domingo granted to Gregorio Domingo, a real estate broker, the exclusive agency to sell his Lot No. 883, Piedad
Estate in a document.
The lot has an area of 88,477 sq. m. According to the document, said lot must be sold for P2 per sq. m. Accordingly, Gregorio is
entitled to 5% commission on the total price if the property is sold by Vicente or by anyone else during the 30-day duration of the
agency or by Vicente within 3 months from the termination of the agency to a purchaser to whom it was submitted by Gregorio
during the effectivity of the agency with notice to Vicente. This contract is in triplicate with the original and another copy being
retained by Gregorio. The last copy was given to Vicente.
Subsequently, Gregorio authorized Teofilo Purisima to look for a buyer without notifying Vicente. Gregorio promised Teofilo of
the 5% commission. Teofilo then introduced Oscar de Leon to Gregorio as a prospective buyer. Oscar submitted a written offer
which was very much lower than the P2 per sq. m. price. Vicente directed Gregorio to tell Oscar to raise his offer. After several
conferences between the parties, Oscar raised his offer to P1.20 per sq. m. or P109k in total to which Vicente agreed to said offer.
Upon Vicentes demand, Oscar issued a P1,000 check to him as earnest money. Vicente, then, advanced P300 to Gregorio.
Subsequently, Vicente asked for an additional P1,000 as earnest money, which Oscar promised to deliver to Vicente.
The written agreement, Exhibit C, between the parties was amended. Oscar will vacate on or about September 15, 1956 his house
and lot at Denver St., QC, which is part of the purchase price later on, it was again amended to state that Oscar will vacate his house
and lot on Dec.1, 1956 because his wife was pregnant at that time. Oscar gave Gregorio P1,000 as a gift or propina for succeeding
in persuading Vicente to sell his lot at P1.20 per sq. m. Gregorio did not disclose said gift or propina to Vicente. Oscar did not pay
Vicente the additional P1,000 Vicente asked from him as earnest money.
The deed of sale was not executed since Oscar gave up on the negotiation when he did not receive his money from his brother in
the US, which he communicated to Gregorio. Gregorio did not see Oscar for several weeks thus sensing that something fishy might
be going on. He went to Vicentes house where he read a portion of the agreement to the effect that Vicente was still willing to
pay him 5% commission, P5,450. Gregorio went to the Register of Deeds of QC, where he discovered that a Deed of sale was
executed by Amparo de Leon, Oscars wife, over their house and lot in favor of Vicente.
After discovering that Vicente sold his lot to Oscars wife, Gregorio demanded in writing the payment of his commission. Gregorio
also conferred with Oscar who told him that: Vicente went to him and asked him to eliminate Gregorio in the transaction and that
he would sell his property to him for P104k. In his reply, Vicente stated that Gregorio is not entitled to the 5% commission: Since
he sold the property not to Gregorios buyer (Oscar de Leon) but to another buyer (Amparo Diaz) who is the wife of Oscar de Leon.
CA said: the exclusive agency contract is genuine. The sale of the lot to Amparo de Leon is practically a sale to Oscar.

ISSUE: Does Gregorios act of accepting the gift or propina from Oscar constitute fraud which would cause the forfeiture of his
5%commission? -> Yes

RULING: Gregorio Domingo as the broker received a gift or propina from the prospective buyer Oscar de Leon, without the
knowledge and consent of the principal, Vicente. His acceptance of said substantial monetary gift corrupted his duty to serve the
interests only of his principal and undermined his loyalty to his principal, who gave him partial advance of P3000 on his commission.
As a consequence, instead of exerting his best to persuade his prospective buyer to purchase the property on the most
advantageous terms desired by his principal, Gregorio Domingo, succeeded in persuading his principal to accept the counter-offer of
the prospective buyer to purchase the property at P1.20 per sq. m. The duties and liabilities of a broker to his employer are
essentially those which an agent owes to his principal.
An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the
same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission
from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better
results or that the agency is a gratuitous one, or that usage or custom allows it.
This is to prevent the possibility of any wrong not to remedy or repair an actual damage agent thereby assumes a position wholly
inconsistent with that of being an agent for his principal, who has a right to treat him, insofar as his commission is concerned, as if
no agency had existed The fact that the principal may have been benefited by the valuable services of the said agent does not
exculpate the agent who has only himself to blame for such a result by reason of his treachery or perfidy.
As a necessary consequence of such breach of trust, Gregorio Domingo must forfeit his right to the commission and must return
the part of the commission he received from his principal. Decisive Provisions Article 1891 and 1909 CC Article 1891 consists in
changing the phrase "to pay" to "to deliver", which latter term is more comprehensive than the former. Paragraph 2 of Article
1891 is a new addition designed to stress the highest loyalty that is required to an agent condemning as void any stipulation
exempting the agent from the duty and liability imposed on him in paragraph one thereof. Article 1909 demands the utmost good
faith, fidelity, honesty, candor and fairness on the part of the agent, the real estate broker in this case, to his principal, the vendor.
The law imposes upon the agent the absolute obligation to make a full disclosure or complete account to his principal of all his
transactions and other material facts relevant to the agency, so much so that the law as amended does not countenance any
stipulation exempting the agent from such an obligation and considers such an exemption as void.
Situations where the duty mandated by Art 1891 does not apply: Agent or broker acted only as a middleman with the task of
merely bringing together the vendor and vendee, who themselves thereafter will negotiate on the terms and conditions of the
transaction. Agent or broker had informed the principal of the gift or bonus or profit he received from the purchaser and his
principal did not object Teofilo Purisimas entitlement to his share in the 5% commission Teofilo can only recover from Gregorio his
share of whatever amounts Gregorio Domingo received by virtue of the transaction as his sub-agency contract was with Gregorio
Domingo alone and not with Vicente Domingo, who was not even aware of such sub-agency. Since Gregorio already received a
total of P1,300 from Oscar and Vicente, P650 of which should be paid by Gregorio to Teofilo. Disposition: CA decision reversed.

27) SIASAT vs. INTERMEDIATE APPELLATE COURT


CASE NUMBER: G.R. No. L-67889 DATE: October 10, 1985 PONENTE: GUTIERREZ, JR., J.

FACTS: Teresita Nacianceno succeeded in convincing officials of the Department of Education and Culture to purchase
without public bidding, one million pesos worth of national flags for the use of public schools throughout the country. Nancianceno
was able to expedite the approval of the purchase.
All the legal requirements had been complied with, except the release of the purchase orders. She was informed by the Chief of the
Budget Division of the Department that the purchase orders could not be released unless a formal offer to deliver the flags was first
submitted for approval She contacted the owners of the United Flag Industry. Mr. Primitivo Siasat, owner and general manager of
United Flag Industry came up with a document which read: Mrs. Tessie Nacianceno, This is to formalize our agreement for you to
represent United Flag Industry to deal with any entity or organization, private or government in connection with the marketing of
our products-flags and all its accessories. For your service, you will be entitled to a commission of thirty (30%) percent. Signed Mr.
Primitive Siasat Owner and Gen. Manager
The first delivery of 7,933 flags was made by the United Flag Industry.
Then, Nanciancenos authority to represent the United Flag Industry was revoked by Primitivo Siasat on the ground that she was not
authorized to sell 16, 666 Philippine flags to the Department. Nancianceno said that for the first delivery, United Flag Industry
tendered the amount of P23,900.00 or five percent (5%) of the amount received as payment of her commission. She refused to
accept the said amount insisting on the 30% commission agreed upon. She later learned that petitioner Siasat had already received
payment for the second delivery of 7,833 flags.
When she confronted the petitioners, they vehemently denied receipt of the payment, at the same time claimed that the
respondent had no participation whatsoever with regard to the second delivery of flags and that the agency had already been
revoked. Nancianceno filed an action in the Court of First Instance of Manila to recover the following commissions: 25%, as balance
on the first delivery and 30%, on the second delivery. The trial court decided in favor of the respondent. The decision was affirmed in
toto by the Intermediate Appellate Court.

ISSUE: 1. Did Nancianceno have the capacity to represent United Flag in the transaction with the Department?
2. Did the revocation of agency foreclose the respondent's claim of 30% commission on the second transaction? 3. Was the award
for attorneys fees and moral damages proper?

RULING: 1. YES, she had the capacity to represent United Flag In fact, she was a general agent. There are several kinds of agents. An
agent may be (1) universal: (2) general, or (3) special. A universal; agent is one authorized to do all acts for his principal which can
lawfully be delegated to an agent. So far as such a condition is possible, such an agent may be said to have universal authority.

A general agent is one authorized to do all acts pertaining to a business of a certain kind or at a particular place, or all acts pertaining
to a business of a particular class or series. He has usually authority either expressly conferred in general terms or in effect made
general by the usages, customs or nature of the business which he is authorized to transact. An agent, therefore, who is empowered
to transact all the business of his principal of a particular kind or in a particular place, would, for this reason, be ordinarily deemed a
general agent. A special agent is one authorized to do some particular act or to act upon some particular occasion. lie acts
usually in accordance with specific instructions or under limitations necessarily implied from the nature of the act to be done. By the
way general words were employed in the agreement, no restrictions were intended as to the manner the agency was to be carried
out or in the place where it was to be executed.
The power granted to the respondent was so broad that it practically covers the negotiations leading to, and the execution of, a
contract of sale of petitioners' merchandise with any entity or organization. There was nothing to prevent the petitioners from
stating in the contract of agency that the respondent could represent them only in the Visayas or to state that the Department of
Education and Culture and the Department of National Defense, which alone would need a million pesos worth of flags, are outside
the scope of the agency.

2.NO, the revocation did not foreclose the respondents claime of 30% commission on the second transaction. - The revocation of
agency could not prevent the Nancianceno from earning her commission because the contract of sale had been already perfected
and partly executed. - The principal cannot deprive his agent of the commission agreed upon by cancelling the agency and,
thereafter, dealing directly with the buyer.
NO, the award was not proper. - Moral damages: To support a judgment for damages, facts which justify the inference of a lack or
absence of good faith must be alleged and proven. There is no evidence on record from which to conclude that the revocation of the
agency was deliberately effected by the petitioners to avoid payment of the respondent's commission. - Attorneys fees: For one
thing, the respondent did not come to court with completely clean hands. For another, the petitioners apparently believed they
could legally revoke the agency in the manner they did and deal directly with education officials handling the purchase of Philippine
flags. They had reason to sincerely believe they did not have to pay a commission for the second delivery of flags.

3.The decision of the respondent court was MODIFIED. The petitioners were ordered to pay the respondent the amount of ONE
HUNDRED FOURTY THOUSAND NINE HUNDRED AND NINETY FOUR PESOS (P140,994.00) as her commission on the second delivery
of flags with legal interest from the date of the trial court's decision.
*The decision was modified to exclude the respondents right to collect 25% from the first delivery. The demand letter of the
respondent's lawyer dated November 13, 1984 asked petitioner Siasat only for the 30% commission due from the second delivery.
The fact that the respondent demanded only the commission on the second delivery without reference to the alleged unpaid
balance which was only slightly less than the amount claimed can only mean that the commission on the first delivery was already
fully paid.

28) GERMAN & CO. vs. DONALDSON, SIM, & CO.


CASE NUMBER: G.R. No. L-439 DATE: November 11, 1901 PONENTE: LADD, J

FACTS: A general power for suits was executed in Manila in favor of Fernando Kammerzell, a German national. It was purported to
be a substitution in favor of several attorneys of powers conferred upon Kammerzell in an instrument executed in Berlin, Germany
by Max Leonard Tornow, the sole owner of the business carried on in Berlin and Manila under the name of Germann & Co.
Kammerzell, by virtue of the general power for suits, filed an action against Donaldson, Sim & Co. to recover a sum claimed to be
due for freight under a charter party. The Court of First Instance of Manila ruled in favor of Germann & Co.

ISSUE: 1. Is the original power invalid under article 1280, No. 5, of the Civil Code, which provides that powers for suits must be
contained in a public instrument?

2. RULING: 1. No, because no claim is made that the document was not executed with the formalities required by the German law in
the case of such an instrument. The Court saw no reason why the general principle that the formal validity of contracts is to be
tested by the laws of the country where they are executed should not apply. Yes, because the instrument contains an explicit grant
of a power broad enough to authorize the bringing of the present action, even assuming the applicability of the domestic law as
claimed by the defendants. - By this instrument Tornow constitutes Kammerzell his "true and lawful attorney with full power to
enter the firm name of Germann & Co. in the Commercial Registry of the city of Manila as a branch of the house of Germann & Co.
in Berlin, it being the purpose of this power to invest said attorney will full legal powers and authorization to direct and administer in
the city of Manila for us and in our name a branch of our general commercial business of important and exportation, for which
purpose he may make contracts of lease and employ suitable assistants, as well as sign every kind of documents, accounts, and
obligations connected with the business which may be necessary, take charge in general of the receipt and delivery of merchandise
connected with the business, sign all receipts for sums of money and collect them and exact their payment by legal means, and in
general execute all the acts and things necessary for the perfect carrying on of the business committed to his charge in the same
manner as we could do ourselves if we were present in the same p lace. - The Court did not consider the institution of the suit to
collect a claim accruing in the ordinary course of the plaintiff's business, as properly belonging to the class of acts described in article
1713 of the Civil Code as acts "of strict ownership. - It is necessarily a part of the mere administration of such a business as that
described in the instrument in question and only incidentally, if at all, involving a power to dispose of the title to property. Can the
original power be construed as conferring upon Kammerzell authority to institute or defend suits?

2.The judgment was affirmed.

29)MUNICIPAL COUNCIL OF ILOILO vs. EVANGELISTA


(55 Phil 290); November 17, 1930

FACTS: The Court of First Instance of Iloilo rendered judgment wherein the appellant herein Tan Ong Sze Vda. De Tan Toco sought to
recover the value of a strip of land belonging to said appellant taken by the petitioner herein to widen a public street. After the case
was remanded to the court of origin and the judgment rendered therein had become final and executor, Atty. Evangelista in his own
behalf and counsel for the administratrix of Jose Ma. Arroyos interest estate filed a claim in the same case for professional services
rendered by him. At the hearing on the said claim various claimants appeared claiming the amount judgment.
After the hearing all the adverse claims on the amount of the judgment were recorded in favor of Atty. Evangelista, in his
own behalf and as counsel for the administratrix of the deceased Arroyo and directed the Municipality of Iloilo to file an action of
interpleading against the adverse claimants, the PNB, Antero Soriano, Mauricio Cruz & Co., Jose Evangelista and Jose Arroyo.
Thereafter, the municipal treasurer of Iloilo paid the late Antero Soriano the amount of 6,000 in part payment of the judgment
assigned to him by Tan Boon Tiong, acting as attorney-in-fact of Tan Ong Sze Vda. De Tan Toco. The amount of 6,000 in part as
payment of the judgment was also delivered to Atty. Evangelista as counsel for the late Jose Ma. Arroyo. With these two payments
of 6,000 each, the judgment for 42,966.44 against municipality of Iloilo was reduced to 30,966.40, which was adjudicated by said
court to Mauricio Cruz & Co.

ISSUE: WON the assignment of credits, rights and interest belonging to Tan Ong Sze made by Tan Boon Tiong, as attorney-in-fact of
Tan Ong Sze Vda. De Tan Toco to Atty. Antero Soriano by virtue of the judgment rendered in civil case in consideration of
professional service rendred is in contravention of the prohibition contained in Article 1459, paragrapg 5 of the Civil Code.

RULING: No! The appellants contention that the amounts of P200 and P500 should be considred as payments made to Atty. Antero
Soriano for professional services rendered by him personally to the interest of the widow of Tan Toco is untenable. In view of the
fact that the amounts involved in the cases prosecuted by Atty. Soriano as counsel for Tan Tocos widow, some of which cases have
been appealed to this court, run into hundreds of thousands of peos, and considering that said attorney had won several of those
cases for his clients, the sum of P10,000 to date paid to him for professional services is wholly inadequate, and even if indirectly, that
the assignment of appellants rights and interests made to the late Atty. Soriano was made in consideration of the professional
services rendered by the latter to the widow and her co-heirs.
Article 1459: The following persons cannot take by purchase, even at a public or judicial action, either in person or through
the mediation of another:
Xxxxxxxxxxxxxxxxxx 5. Justices, judges, members of the department of public prosecution, clerks of superior and inferior courts, and
other officers of such courts, the property and rights in litigation before the court within whose jurisdiction or territory they perform
their respective duties. This prohibition shall include the acquisition of such property by assignment.
The prohibition contained in this paragraph shall include lawyers and solicitors with respect to any property or rights
involved in any litigation in which they may take part by virtue of their profession and office.
In this case, it does not appear that Atty. Soriano was counsel for the appellant in civil case, which the appellant instituted
against the Municipality of Iloilo for the recovery of the value of a strip of land expropriated by said municipality for the widening of
a certain public street. The only lawyers who appear to have represented her in the case were Atty. Arroyo and Atty. Evangelista,
who filed claim for their professional fees. There was no relation of attorney and client, then, between Antero Soriano and the
appellant, in this case where the judgment was rendered, and therefore the assignment of her credit, right and interest to Atty.
Soriano did not violate prohibition cited above.

30) CABALLERO VS. DEIPARINE


CASE NUMBER: L-39059 DATE: September 30, 1974 PONENTE: Esguerra, J.

FACTS:
1. This involves a dispute over a parcel of land and the acts committed by the plaintiff lawyer which were not intended by his client,
the plaintiff.
2. That during the lifetime of Bucao she with her second husband acquired by joint purchase a parcel of land from the Talisay-
Minglanilla Estate
3. That in 1932 Bucao and Tomas executed jointly a notarial instrument identified as Annex "B" wherein they acknowledged that
Antonio Caballero had contributed the amount therein stated for the purchase of the property and they sold 1/4 of the lot to him;
when the title to said lot was issued, VicentaBucao and Tomas Raga held it in trust for their co-owner.
4. That the portion mentioned as sold to plaintiff Antonio Caballero remained unsegregated from Lot 2072 and the deed of sale,
Annex "B" of the Complaint; nor had it been registered in the Register of Deeds; but he, had been in occupation of a portion of this
lot peacefully until the present.
5. Bucaosold her undivided 1/2 of the above parcel to her co-owner, Tomas Raga.
6. Defendants Olimpio Raga, Adriano Raga, Magdalena Raga and Tomas Raga executed an instrument known as "Declaration and
confirmation of sale" without the participation of plaintiffs Antonio Caballero and Concordia Caballero, wherein they stated that
they are the heirs of VicentaBucao of the 1/2 of the property to Tomas Raga, a certified true copy of which document is identified as
Annex "E" in the Complaint.
7. Alma Deiparine acquired in good faith, with a just title and for a valuable consideration, the whole of Lot 2072 from Tomas Raga
as per deed of absolute sale identified as Annex "C" in the complaint which cancelled Transfer Certificate of Title No. RT-2482 (T-
17232) and the issuance in her name of Transfer Certificate of Title No. 9934 on April 1, 1963, a certified true copy of which is
identified as Annex "D" in the complaint;
8. That defendant Alma Deiparine came to know only of Annex "B" when it was presented by plaintiff Antonio Caballero at the trial
of an ejectment case filed by the former in the Municipal Court of Talisay.
9. This case was decided in favor of Antonio Caballero but the decision was appealed by Alma Deiparine to the Court of First
Instance of Cebu which affirmed the decision for Caballero. The case is now in the Court of Appeals on appeal by Alma Deiparine.
10. Caballero and the defendant parties entered into a compromise agreement. And the lawyer of Caballero admitted to certain
facts without the authority of his client, Caballero.

ISSUE: Is the compromise valid, considering that the lawyer admitted to facts which were not authorized by his client to make? No

RULING: 1. A reading of the stipulation of facts convinced the court that it is a compromise agreement of the parties. The stipulation
concludes with this prayer: "WHEREFORE, it is most respectfully prayed that the foregoing Stipulation of Facts be approved and that
a decision be handed down on the legal issues submitted on the basis of said Stipulation of Facts." Apparently it is intended to
terminate the case.
2. Attorneys have authority to bind their clients in any case by any agreement in relation thereto made in writing, and in taking
appeals, and in all matters of ordinary judicial procedure. But they cannot, without special authority, compromise their client's
litigation, or receive anything in discharge of a client's claim but the full amount in cash
3. It may be true that during the pre-trial hearing held on February 3, 1968, the parties concerned agreed to execute a stipulation of
facts but it does not mean that the respective counsels of the contending parties can prepare a stipulation of facts the contents of
which is prejudicial to the interest of their clients and sign it themselves without the intervention of their clients.
4. Counsel for plaintiffs-appellants, Atty. Melecio C. Guba, agreed that defendant-appellee Alma Deiparine bought the land in
question in good faith and for a valuable consideration; that during the lifetime of their mother VicentaBucao, she, with the
conformity of her husband, sold her undivided of the land in question to her co-owner and son, Tomas Raga.
5. All these adverse facts were made the basis of the appealed decision against the plaintiffs. No further evidence was presented as
there was no hearing. 6. The attorney for the plaintiffs in making such admission went beyond the scope of his authority as counsel
and practically gave away the plaintiffs' case. The admission does not refer to a matter of judicial procedure related to the
enforcement of the remedy. It related to the very subject matter of the cause of action, or to a matter on which the client alone can
make the admission binding on him. The broad implied or apparent powers of an attorney with respect to the conduct or control of
litigation are, however, limited to matters which relate only to the procedure or remedy. The employment of itself confers upon the
attorney no implied or power or authority over the subject matter of the cause of action or defense; and, unless the attorney has
expressly been granted authority with respect thereto, the power to deal with or surrender these matters is regarded as remaining
exclusively in the client.

31) PHILIPPINE NATIONAL BANK vs. STA. MARIA


CASE NUMBER: G.R. No. L-24765 DATE: August 29, 1969
PONENTE: TEEHANKEE, J.

FACTS: In this appeal certified to this Court by the Court of Appeals as involving purely legal issues, we hold that a special power of
attorney to mortgage real estate is limited to such authority to mortgage and does not bind the grantor personally to other
obligations contracted by the grantee, in the absence of any ratification or other similar act that would estop the grantor from
questioning or disowning such other obligations contracted by the grantee. Plaintiff bank filed this action on February 10, 1961
against defendant Maximo Sta. Maria and his six brothers and sisters, defendants-appellants, Valeriana, Emeteria, Teofilo, Quintin,
Rosario and Leonila, all surnamed Sta. Maria, and the Associated Insurance & Surety Co., Inc. as surety, for the collection of certain
amounts representing unpaid balances on two agricultural sugar crop loans due allegedly from defendants. 1
The said sugar crop loans were obtained by defendant Maximo Sta. Maria from plaintiff bank under a special power of attorney,
executed in his favor by his six brothers and sisters, defendants-appellants herein, to mortgage a 16-odd hectare parcel of land,
jointly owned by all of them. In addition, Valeriana Sta. Maria alone also executed in favor of her brother, Maximo, a special power
of attorney to borrow money and mortgage any real estate owned by her. By virtue of the two above powers, Maximo Sta. Maria
applied for two separate crop loans, for the 1952-1953 and 1953-1954 crop years, with plaintiff bank, one in the amount of
P15,000.00, of which only the sum of P13,216.11 was actually extended by plaintiff, and the other in the amount of P23,000.00, of
which only the sum of P12,427.57 was actually extended by plaintiff.
As security for the two loans, Maximo Sta. Maria executed in his own name in favor of plaintiff bank two chattel mortgages on the
standing crops, guaranteed by surety bonds for the full authorized amounts of the loans executed by the Associated Insurance &
Surety Co., Inc. as surety with Maximo Sta. Maria as principal. The records of the crop loan application further disclose that among
the securities given by Maximo for the loans were a "2nd mortgage on 25.3023 Has. of sugarland, including sugar quota rights
therein" including, the parcel of land jointly owned by Maximo and his six brothers and sisters herein for the 1952-1953 crop loan,
with the notation that the bank already held a first mortgage on the same properties for the 1951-1952 crop loan of Maximo, and a
3rd mortgage on the same properties for the 1953-1954 crop loan. The trial court rendered judgment in favor of plaintiff and
against defendants: condemning the defendant Maximo R. Sta. Maria and his co-defendants Valeriana, Quintin, Rosario, Emeteria,
Teofilo, and Leonila all surnamed Sta. Maria and the Associated Insurance and Surety Company, Inc., jointly and severally, to pay the
plaintiff, the Philippine National Bank, Del Carmen Branch the sum of P8,500.72 and P14,299.79 .
Defendant Maximo Sta. Maria and his surety, defendant Associated Insurance & Surety Co., Inc. who did not resist the action, did
not appeal the judgment. This appeals been taken by his six brothers and sisters, defendantsappellants who reiterate in their brief
their main contention in their answer to the complaint that under this special power of attorney, they had not given their brother,
Maximo, the authority to borrow money but only to mortgage the real estate jointly owned by them; and that if they are liable at all,
their liability should not go beyond the value of the property which they had authorized to be given as security for the loans
obtained by Maximo. In their answer, defendants-appellants had further contended that they did not benefit whatsoever from the
loans, and that the plaintiff bank's only recourse against them is to foreclose on the property which they had authorized Maximo to
mortgage.

ISSUE: Whether the 6 brothers and sisters are liable for the loan obtained by Maximo.

RULING: The authority granted by defendants-appellants (except Valeriana) unto their brother, Maximo, was merely to mortgage
the property jointly owned by them. They did not grant Maximo any authority to contract for any loans in their names and behalf.
Maximo alone, with Valeriana who authorized him to borrow money, must answer for said loans and the other defendants-
appellants' only liability is that the real estate authorized by them to be mortgaged would be subject to foreclosure and sale to
respond for the obligations contracted by Maximo. But they cannot be held personally liable for the payment of such obligations, as
erroneously held by the trial court. It is not unusual in family and business circles that one would allow his property or an
undivided share in real estate to be mortgaged by another as security, either as an accommodation or for valuable consideration,
but the grant of such authority does not extend to assuming personal liability, much less solidary liability, for any loan secured by the
grantee in the absence of express authority so given by the grantor. The outcome might be different if there had been an express
ratification of the loans by defendants-appellants or if it had been shown that they had been benefited by the crop loans so as to put
them in estoppel. Quintin Sta. Maria testified that he and his co-defendants executed the authority to mortgage "to accommodate
(my) brother Dr. Maximo Sta. Maria ... and because he is my brother, I signed it to accommodate him as security for whatever he
may apply as loan. Only for that land, we gave him as, security" and that "we brothers did not receive any centavo as benefit."
The record further shows plaintiff bank itself admitted during the trial that defendants-appellants "did not profit from the loan" and
that they "did not receive any money (the loan proceeds) from (Maximo)." No estoppel, therefore, can be claimed by plaintiff as
against defendants-appellants. Valeriana Sta. Maria's liability to plaintiff. Valeriana stands liable not merely on the mortgage of her
share in the property, but also for the loans which Maximo had obtained from plaintiff bank, since she had expressly granted
Maximo the authority to incur such loans. The Court hold that Valeriana's liability for the loans secured by Maximo is not joint and
several or solidary as adjudged by the trial court, but only joint, pursuant to the provisions of Article 1207 of the Civil Code that "the
concurrence ... of two or more debtors in one and the same obligation does not imply that ... each one of the (debtors) is bound to
render entire compliance with the prestation.
There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires
solidarity." It should be noted that in the additional special power of attorney, executed by Valeriana, she did not grant Maximo the
authority to bind her solidarity with him on any loans he might secure thereunder. WHEREFORE, the judgment of the trial court
against defendants-appellants Emeteria, Teofilo, Quintin, Rosario and Leonila, all surnamed Sta. Maria is hereby reversed and set
aside, with costs in both instances against plaintiff.
The judgment against defendant-appellant Valeriana Sta. Maria is modified in that her liability is held to be joint and not solidary.

32) BA FINANCE CORPORATION vs. COURT OF APPEALS


CASE NUMBER: G.R. No. 94566 DATE: July 3, 1992 PONENTE: MEDIALDEA, J.

FACTS: On December 17, 1980, Renato Gaytano, doing business under the name Gebbs International, applied for and was granted
a loan with respondent Traders Royal Bank in the amount of P60,000.00. As security for the payment of said loan, the Gaytano
spouses executed a deed of suretyship whereby they agreed to pay jointly and severally to respondent bank the amount of the loan
including interests, penalty and other bank charges. In a letter dated December 5, 1980 addressed to respondent bank, Philip
Wong as credit administrator of BA Finance Corporation for and in behalf of the latter, undertook to guarantee the loan of the
Gaytano spouses. Partial payments were made on the loan leaving an unpaid balance in the amount of P85,807.25.
Since the Gaytano spouses refused to pay their obligation, respondent bank filed with the trial court complaint for sum of money
against the Gaytano spouses and petitioner corporation as alternative defendant. The Gaytano spouses did not present evidence
for their defense. Petitioner corporation, on the other hand, raised the defense of lack of authority of its credit administrator to bind
the corporation. On December 12, 1988, the trial court: judgment in favor of plaintiff and against defendants/Gaytano spouses,
ordering the latter to jointly and severally pay the plaintiff the following among others P85,807.25 Not satisfied with the decision,
respondent bank appealed with the Court of Appeals. On March 13, 1990, respondent appellate court rendered judgment modifying
the decision of the trial court ordering the defendants Gaytano spouses and alternative defendant BA Finance Corporation, jointly
and severally, to pay the plaintiff the amount of P85,807.25
Hence this petition was filed with the petitioner assigning the following errors committed by respondent appellate court:

ISSUE: Whether the plaintiff was guilty of estoppels despite the fact that it never knew of such alledged letter-guaranty.

RULING: Persons dealing with an assumed agent, whether the assumed agency be a general or special one are bound at their peril,
if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in
case either is controverted, the burden of proof is upon them to establish it (Harry Keeler v. Rodriguez, 4 Phil. 19). that a power of
attorney or authority of an agent should not be inferred from the use of vague or general words. Guaranty is not presumed, it must
be expressed and cannot be extended beyond its specified limits (Director v. Sing Juco, 53 Phil. 205). We find that the said
conclusion has no basis in fact. Respondent bank had not shown any evidence aside from the testimony of the credit administrator
that the disputed transaction of guaranty was in fact entered into the official records or files of petitioner corporation, which will
show notice or knowledge on the latter's part and its consequent ratification of the said transaction. In the absence of clear proof, it
would be unfair to hold petitioner corporation guilty of estoppel in allowing its credit administrator to act as though the latter had
power to guarantee. ACCORDINGLY, the petition is GRANTED and the assailed decision of the respondent appellate court dated
March 13, 1990 is hereby REVERSED and SET ASIDE and another one is rendered dismissing the complaint for sum of money against
BA Finance Corporation.

33) DIRECTOR OF PUBLIC WORKS VS. SING JUCO, et al.


CASE NUMBER: 30181 DATE: July 12, 1929 PONENTE: Street, J.

FACTS:
1. Involves a land located on Point Llorente at the mouth of Iloilo River, near Iloilo City. Mariano de la Rama, Gonzalo Mariano
Tanboontien, Sing Juco, and Sing Bengco owned this land, in undivided shares.
2. In 1920, the owners of the property conveyed it by way of mortgage to the PNB for the purpose of securing a credit in current
account of not exceeding P170,000.00.
3. The subject land was subject to frequent flooding due to its low level. In 1921, the Government of the Philippine Islands was
planning extensive harbor improvements in this vicinity, requiring extensive dredging by the Bureau of Public Works in the mouth of
said river.
4. This dredging operation requires the Director of Public Works to find a place of deposit for the dirt and mud taken from the places
dredged.
5. A contract was made between the DPW, representing the Government of the Philippine Islands, and the four owners. DPW also
required a bond to be supplied by the owners in the amount of P150,000.00. This bond was made together with the main contract;
one of the signatures of the owner was under the name of Casa Viuda de Tan Toco, purporting to be signed by M. de la Rama.
6. The dredging operation was conducted in substantial compliance with the agreement; and the amount due from the owners was
determined and demanded. No payment was made thus an action was instituted by the DPW to recover the amount due to the
Government under the said contract. a. Defense: government has not complied with the contract; the material deposited on the
land was not enough to raise the level of the land above water. Defendants asserted that they are not obliged to pay and
subsequently sought to recover further damages. i. On part of Viuda de Tan Toco: the name Casa Viuda de Tan Toco signed under
the contract of suretyship by M. de la Rama was signed without authority. b. Decision: Owners are obliged to pay and that Tan
OngSze (widow of Tan Toco) and Viuda de Tan Toco is personally liable upon the contract of suretyship in case the principal debtors
should not satisfy their indebtedness.

ISSUE: Whether or not TanOngSze, Viuda de Tan Toco is liable upon the contract of suretyship?

RULING: No. Judgment in relation to Tan OngSze, Viuda de Tan Toco was reversed. The said contract purports to have been signed
by Mariano de la Rama, acting for this defendant under the power of attorney. But the Government did not exhibitevidence that
would prove that the defendant was authorized in creating an obligation in the nature of suretyship binding upon the principal. The
clauses noted in the documents exhibiting powers of attorney, relate more specifically to the execution of contracts relating to
property. Neither of these powers officially confers upon Mariano de la Rama the power to bind a principal by a contract of
suretyship.
Following the principle of ejusdem generis. Power to execute a contract such as a contract of suretyship or guaranty cannot be
inferred from the general words contained in these powers. Article 1827 of the Civil Code declared that guaranty should not be
presumed; it must be expressed and cannot be extended beyond its limit. By effect, a power of attorney to execute a contract of
guaranty should not be inferred from vague or general words, especially when such words have their origin and explanation in
particular powers of a wholly different nature.

34) PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., vs. POIZAT


CASE NUMBER: G.R. No. L-23352 DATE: December 31, 1925

FACTS:
1. Appellant, Doa Gabriela Andrea de Coster, executed to and in favor of her husband, Juan M.Poizat, a general power of attorney.
It authorized him to do "in her name, place and stead, and making use of her rights and actions"; to loan or borrow any amount of
cash under the conditions he may deemed convenient, executing and signing private and public document and making these
transactions with or without mortgage.
2. Poizat obtained from the plaintiff a credit for the sum of 10,000 Pounds Sterling to be drawn on the "Banco Espaol del Rio de la
Plata.
3. To secure payment he executed a mortgage upon the real property of his wife.
4. Plaintiff then brought an action against the defendant for failure to pay, to for lose the mortgage. The trial court's decision issued
an order directing the sale of the mortgaged property to satisfy the judgment. Consequently, the property was sold to the plaintiff
for P100,000.00
5. Appellant personally appeared and objected to the confirmation of the sale. She alleged that the mortgage in question was
illegally executed thus null and void, because the agent of the defendant was not authorized to execute it. That the plaintiff was
aware of such fact and that the mortgage was executed to secure a loan, which was not made to this defendant or for her benefit
but was made to him personally. Such objections were overruled, which prompted the appellant to appeal.

ISSUE: Whether the act of defendant Poizant, in his capacity as attorney in fact, binds her wife?

HELD: No. The mortgage is declared null and void ab initio. The sale is set aside RULING: Juan Poizat may have had the authority to
borrow money and mortgage the real property of his wife, but the law specifically provided how and in what manner it must be
done. The law requires that a power of attorney to mortgage or sell real property should be executed with all the formalities
required in a deed. In this case it was not excersiced. His personal signature, standing alone, does not bind his principal. The deed in
its face does not purport to be the deed of the principal, made and signed by him in his name and as his deed. The mortgage in
question was held to be executed by him and him only thus it is not binding to his wife. PONENTE: Johns, J.
35) RURAL BANK OF BOMBON INC. vs. COURT OF APPEALS
CASE NUMBER: G.R. No. 95703 DATE: August 3, 1992 PONENTE: GRINO-AQUINO, J,

FACTS:
1. On January 12, 1981, Ederlinda M. Gallardo, married to Daniel Manzo, executed a special power of attorney in favor of Rufina S.
Aquino authorizing him: - To secure a loan from any institution for any amount or mortgage the property at Las Pinas, Rizal
2. On August 26, 1981, a Deed of Real Estate Mortgage was executed by Rufino S. Aquino in favor of the Rural Bank of
Bombon(Camarines Sur), Inc. The property was secured for a loan in the total sum of Three Hundred Fifty Thousand Pesos only
(P350,000.00), plus interest at the rate of fourteen (14%) per annum.
3. Spouses Gallardo filed an action against Rufino Aquino and Rural Bank. They alleged that Aquino mortgaged the property to pay
for his personal loans, from the same Bank. - The trial court temporarily restrained the Rural Bank "from enforcing the real estate
mortgage and from foreclosing it either judicially or extrajudicially until further orders from the court.
4. Aquino, in his answer, alleged that the spouses allowed him to mortgage the property and use the use the proceeds thereof to
compensate for the pre-existing obligation of P350,000 that the spouse owed him.
5. The trial court lifted the TRO against the bank and ordered the foreclosure proceeding against the mortgaged property. The
Spouses Gallardo appealed to the Court of Appeals (CA). The CA reversed the trial court and held that Rufino Aquino had no
authority to mortgage the land. Thus, this appeal against the decision.

ISSUE: Whether or not the Deed of Real Estate Mortgageexecuted by Rufino S. Aquinoin favor of the Rural Bank of Bombon (Cam.
Sur), Inc. is with authority, thus valid? NO, it was without authority.

RULING: Agent who signs a Deed of Mortgage in his name alone does not validly bind the owner of the real estate
mortgaged.Aquino's act of signing the Deed of Real Estate Mortgage in his name alone as mortgagor, without any indication that he
was signing for and in behalf of the property owner, Ederlinda Gallardo, bound himself alone in his personal capacity as a debtor of
the petitioner Bank and not as the agent or attorney-in-fact of Gallardo. The petitioner misapplied Art. 1883. The above provision of
the Civil Code relied upon by the petitioner Bank, is not applicable to the case at bar. Herein respondent Aquino acted purportedly
as an agent of Gallardo, but actually acted in his personal capacity. Involved herein are properties titled in the name of respondent
Gallardo against which the Bank proposes to foreclose the mortgage constituted by an agent (Aquino) acting in his personal
capacity. Under these circumstances, we hold, that Gallardo's property is not liable on the real estate mortgage.

36.) COMMERCIAL BANK & TRUST CO. OF THE PHILS Vs. REP. ARMORED CAR SERVICE CORP.
CASE NUMBER: G.R. Nos. L-18223-24 DATE: September 30, 1963 PONENTE: LABRADOR, J.

FACTS: 1. Defendant-appellant Damaso Perez has presented a motion for new trial on the ground of newly discovered evidence. 2.
Damaso Perez claims that he was not aware of the nature of the power of attorney that Ramon Racelis used, purportedly signed by
him, to secure the loans for the Republic Armored Car Service Corporation and the Republic Credit Corporation. 3. He claims that
Ramon Racelis only used a photastic copy as proof of the Power of Attorney. He further presents the original purporting the alleged
true authority granted by the movant. - It is not expressly mentioned that this is the precise power of attorney that Ramon Racelis
Utilized to secure the loans the collection of which is sought in these cases.

ISSUE: Whether or not the claim of the movant is tenable as to invalidate the security loans secured under the name of movant?
NO, it is not.

RULING: Assuming, for the sake of argument, that the said power of attorney incorporated in the motion for reconsideration was the
one used to obtain the loans. We find that the movant's contention has no merit. In accordance with the document, Racelis was
authorized to negotiate for a loan or various loans .. with other being institution, financing corporation, insurance companies or
investment corporations, in such sum or sums, aforesaid Attorney-in-fact Mr. Ramon Racelis, may deem proper and convenient to
my interests, ... and to execute any and all documents he deems requisite and necessary in order to obtain such loans, always having
in mind best interest; ... We hold that this general power attorney to secure loans from any banking institute was sufficient authority
for Ramon Racelis to obtain the credits subject of the present suits.

37) LIM TIU vs. RUIZ y REMENTERIA


CASE NUMBER: GR No. 5676 DATE: March 2, 1910 PONENTE: Johnson, J.

FACTS: On May 26, June 5 and June 12, 1908, Lim Tiu sold to Ruiz y Rementeria certain merchandise totaling P1,043.57 Said
amount was due and unpaid therefore, an action was filed by Lim Tiu against Ruiz y Rementeria Lower Court ruling - Ruiz y
Rementeria purchased and paid the merchandise to Domingo Tim Bun Lui - Since they have already paid the merchandise, Ruiz y
Rementeria is no longer liable Lim Tiu filed an appeal, arguing that the following errors, among others, were committed by the
lower court - Ruiz y Rementeria never had a notice that their business transactions with Domingo were by him as agent or employee
of Lim Tiu - They never notified Ruiz y Rementeria that Domingo could sell their merchandise - No payments were accepted by them
thru Domingo
ISSUE/RULING: a. W/N Ruiz y Rementeria purchased directly from Lim Tiu? NO. They have no knowledge or information
that the merchandise they were receiving from Domingo was the merchandise of Lim Tiu Ruiz y Rementeria had been buying
merchandise from Domingo for several months and paying for said merchandise by selling to Domingo certain goods in exchange.
Payments were likewise made to him Further, Ruiz y Rementerias books of account were kept by Domingo during the entire period
they were doing business Domingo even presented a bill in Ruiz y Rementerias favor for every merchandise sold Since Ruiz y
Rementeria already paid to Domingo the merchandise purchased, they are no longer liable to Lim Tiu

b. W/N Domingo Tim Bun Liu acted in his own name in dealing with Ruiz y Rementeria? YES. No notice was given by
Domingo to Ruiz y Rementeria that he was acting as Lim Tius agent in selling the merchandise What Domingo did was to purchase
the all or nearly all the merchandise from Lim Tiu then sell it to Ruiz y Rementeria Ruiz y Rementeria also believed that they were
dealing with Domingo without any knowledge that he is indeed an agent of Lim Tiu Art. 1717 of the Civil Code: When an agent acts
in his own name, the principal shall have no action against the persons with whom the agent has contracted, nor the said persons
against the principal Art. 246 of the Code of Commerce: When an agent transacts business in his own name, it shall not be necessary
for him to state who is the principal, and he shall be directly liable, as if the business were for his own account, to the persons with
whom he transacts the same, said persons not having any right of action against the principal, nor the latter against the former, the
liabilities of the principal and the agent to each other always reserved

The judgment of the lower court is hereby affirmed.

38.) PHIL. NATIONAL BANK vs. AGUDELO y GONZAGA


CASE NUMBER: GR No. L-39037 DATE: Oct. 30, 1933

FACTS: On Nov. 9, 1920, Paz Agudelo executed a special power of attorney (Exhibit K) in favor of her nephew, Mauro Garrucho In
the said SPA, Garrucho is able to sell alienate and mortgage in whatever manner or form he might deem convenient, all Agudelos
properties in Murcia and Bacolod, Negros Occidental On Dec. 22, 1920, Amparo Garrucho executed a special power of attorney
(Exhibit H) wherein she enabled her brother, Mauro, to sell, alienate, mortgage or otherwise encumber all her properties in Murcia
and Bago, Negros Occidental
However, nothing in the said SPAs expressly authorized Mauro A. Garrucho to contract any loan nor to constitute a mortgage on the
properties belonging to the respective principals, to secure his obligations On Dec. 23, 1920, a document (Exhibit G) was executed
by Mauro in favor of Philippine National Bank (PNB) whereby he constituted a mortgage on Lot No. 878 under Amparo A. Garrucho,
to secure the payment of credits, loans, commercial overdrafts, etc., not exceeding P6,000, together with interest thereon, which he
might obtain from PNB, issuing the corresponding promissory note to that effect For the years 1921 and 1922, Mauro maintained
a personal credit account with PNB
On Aug. 24, 1921, Mauro executed another document (Exhibit J) in PNBs favor whereby he constituted a mortgage on Agudelos 2
lots, including the buildings and improvements to secure the payment of credits, loans and commercial overdrafts which the said
bank might furnish him to the amount of P16,000, payable on August 24, 1922, executing the corresponding promissory note to that
effect. Said mortgage contracts and promissory notes were executed by Mauro in his own name and signed by him in his personal
capacity, authorizing PNB to take possession of the mortgaged properties, by means of force if necessary, in case he failed to comply
with any of the conditions stipulated therein
Thereafter, PNB notified Mauro of his promissory note within which to make a payment Eventually, Mauros commercial credit
was closed starting May 22, 1922 PNB manager requested Mauro to liquidate his account amounting to P15,148.15, at the same
time notifying him that his promissory note for P16,000 giving as security for the commercial overdraft in question, had fallen due
As a result, another mortgage contract (Exhibit C) was executed by Mauro in PNBs favor over Agudelos lot in Bacolod and Murcia
Mauro incurred credits and loans for a total of P21,000. A new promissory note was executed for P21,000, thereby novating the first
2 notes Sometime 1925, Amparo sold Lot 878 (which was under exhibit G) to Paz Agudelo (Exhibit M). An affidavit (Exhibit N) was
likewise signed by Paz Agudelo which states: xxx do hereby agree and consent to the transfer in my favor of lot No. 878 of the
Cadastre of Murcia, Occidental Negros, P. I., by Miss Amparo A. Garrucho, as evidenced by the public instrument dated November
25, 1925, executed before the notary public Mr. Genaro B. Benedicto, and do hereby further agree to the amount of the lien thereon
stated in the mortgage deed executed by Miss Amparo A. Garrucho in favor of the Philippine National Bank. Pursuant to the said
sale, the property and title was transferred i n Pazs name CFI Ruling: - Absolved Mauro from the complaint - Paz Agudelo is
ordered to pay PNB

ISSUE: W/N the powers of attorney issued in Mauro Garruchos favor to mortgage their respective real estate, authorized him to
obtain loans secured by mortgage in the properties in question?

RULING: NO Art. 1709 of the Civil Code states that by the contract of agency, one person binds himself to render some service, or
to do something for the account or at the request of another On the other hand, Art. 1717 states that when an agent acts in his own
name, the principal shall have no right of action against the persons with whom the agent has contracted, or such persons against
the principal. In such case, the agent is directly liable to the person with whom he has contracted, as if the transaction were his own.
Cases involving things belonging to the principal are excepted xxx There is nothing in the mortgage deeds to show that Mauro A.
Garrucho is attorney in fact of Amparo and Paz, and that he obtained the loans mentioned in the aforesaid mortgage deeds and
constituted said mortgages as security for the payment of said loans, for the account and at the request of said Amparo A. Garrucho
and Paz Agudelo Mauros transactions with PNB appears to have been acted in his personal capacity In the mortgage deeds, Mauro
appears to have acted in his personal capacity. In his capacity as mortgage debtor, he appointed the mortgage creditor PNB as his
attorney in fact so that it might take actual and full possession of the mortgaged properties by means of force in case of violation of
any of the conditions stipulated in the respective mortgage contracts As held in National Bank vs. Palma Gil, a mortgage on real
property of the principal not made and signed in the name of the principal is not valid as to the principal. If Mauro A. Garrucho acted
in his capacity as mere attorney in fact of Amparo A. Garrucho and of Paz Agudelo, he could not delegate his power, in view of the
legal principle of "delegata potestas delegare non potest" (a delegated power cannot be delegated), inasmuch as there is nothing in
the records to show that he has been expressly authorized to do so Also, he executed the promissory notes evidencing the aforesaid
loans, under his own signature, without authority from his principal and, therefore, were not binding upon the latter. There was no
showing that the loan obtained was for his principal What really happened was Mauro obtained such credit for himself in his
personal capacity and secured the payment thereof by mortgage constituted by him in his personal capacity, although on properties
belonging to his principal Thus, Mauro exceeded his scope of his authority and the principal is not liable for his acts In conclusion,
when an agent negotiates a loan in his personal capacity and executes a promissory note under his own signature, without express
authority from his principal, giving as security therefor real estate belonging to the letter, also in his own name and not in the name
and representation of the said principal, the obligation do constructed by him is personal and does not bind his aforesaid principal.

39) SYJUCO & VIARDO vs. SY-JUCO


CASE NUMBER: 13471 DATE: 12 Jan 1920 PONENTE: Avancea, J.

FACTS:
1. Santiago was appointed by the plaintiffs (Syjucos for brevity; Santiagos parents) as administrator of their property and acted as
such from 1902-1916.
2. The Syjucos allege that during his administration, Santiago acquired the launch Malabon in his capacity as administrator with their
(Syjucos) money and for their benefit.
3. The RTC ruled in favor of the Syjucos and ordered Santiago to return basically everything that the Syjucos asked for in the
complaint.
4. The SC affirmed the RTC with the exception of casco No. 2545 which was lawfully sold to Santiago.

ISSUE: Do the properties bought by Santiago in his own name, as an administrator, belong to him? (No; except the casco 2545)

RULING: 1. Regarding the launch Malabon: though Santiago bought it in his own name, such fact does not show that bought it for
himself and with his own money, as he claims. - This transaction was within the agency which he had received from the Syjucos (the
principal). - The fact that he has acted in his own name may be only a violation of the agency on his part. - The question is not in
whose favor the document of sale of the launch is executed nor in whose name same was registered, but with whose money was
said launch bought. Moreover, from the rule established in Article 1717 of the Civil Code (when an agent acts in his own name, the
principal shall have no right of action against the person with whom the agent has contracted, cases involving things belonging to
the principal are excepted): According to this exception: the agent is bound to the principal although he does not assume the
character of such agent and appears acting on his own name Thus, in effect, the contract must be considered as entered into
between the principal and the third person; and, consequently, if the obligations belong to the former, to him alone must also
belong the rights arising from the contract. - The money with which the launch was bought having come from the Syjucos, the
exception established in Article 1717 is applicable to this case. Concerning the casco No. 2584, Santiago himself admits it was
constructed by the Syjucos in the latter's ship-yard. As to the automobile, there is sufficient evidence to show that its price was paid
with the Syjucos money. Concerning the casco No. 2545: (the RTC refrained from making any declaration about its ownership in
view of the fact that this casco had been leased and was sunk while in the lessee's hands before the complaint in this case was filed)
The RTC should have made a pronouncement upon this casco. - As it belonged to the Syjucos, and that the latter sold it afterwards
to Santiago- Santiagos ownership over it absolves him from liability on it. Concerning the rendition of accounts which the Syjucos
require of Santiago, Santiago is also absolved from this for it appears that Santiago used to render accounts of his agency after each
transaction, to the Syjucos satisfaction.

40.) NATIONAL FOOD AUTHORITY vs. INTERMEDIATE APPELLATE COURT CASE NUMBER:
GR NO. 75640 DATE: April 5, 1990 PONENTE: Paras

FACTS: Medalla, as commission agent of Superior Shipping Corporation (SSC), entered into a contract for hire of ship with the
National Grains Authority (NGA), where sacks of rice belonging to the latter would be transported from Occidental Mindoro to
Manila. SSC then asked payments from NGA and it requested that the payment be made to it and not to Medalla. NGA replied that it
could not grant its request because the contract was entered into by NGA and Medalla who did not disclose that he was acting as a
mere agent of SSC. NGA paid Medalla. The SSC asked Medalla for the payment but the latter ignored the request.

ISSUE: : Is NGA liable to SSC?


RULING:
NGA is liable under Art 1883 of the Civil Code. Relevant portion of the provision states, In such case the agent is the one directly
bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves
things belonging to the principal. Consequently, when things belonging to the principal (in this case, SSC) are dealt with, the agent is
bound to the principal although he does not assume the character of such agent and appears acting in his own name. Thus, in effect,
the contract must be considered as entered into between the principal and the third person.

41) AWAD vs. FILMA MAECANTILE CO.


CASE NUMBER: No. L-25950 DATE: December 24, 1926

FACTS: Plaintiff, doing business in the Philippine Islands under the name of E. Awad & Co., delivered certain merchandise with an
invoice value of 11,140 to Chua Lioc, a merchant operating under the name of Hang Chua Co. in Manila, and sell it on commission
basis. Chua Lioc, representing himself as the owner of the merchandise, sold it to Filma Mercantile (defendant) for 12,155.60.
He owed the Philippine Manufacturing Co. 3,480, which the defendant agreed to pay, and was also indebted to the defendant itself
of the amount of 2,017.98. The total amount of the two debts, 5,497.98, was deducted from the purchase price, leaving a balance
of 6,657.52 which the defendant promised to pay to Chua Lioc on or before October 9, 1924. The merchandise purchased was
delivered to the defendant, who immediately offered it for sale. Three days later D. J. Awad, plaintiffs representative in the
Philippine Islands, having ascertained that the goods entrusted to Chua Lioc was being offered for sale by the defendant, obtained
authorization from Chua Lioc to collect 11,707 from the defendant and informed the latter's treasurer of the said transaction. On
September 15, D. J. Awad, in behalf of E. Awad & Co., wrote a letter to the defendant corporation telling them that inasmuch the
merchandise belonged to E. Awad & Co., the purchase price should be paid to them, but the defendant refused to comply in its reply
letter.
On September 18, 1924, the Philippine Trust Company brought an action against Chua Lioc for the recovery of the sum of 1,036.36
and under a writ of attachment garnished the balance due Chua Lioc from the defendant. On October 7, E. Awad also brought an
action, against Chua Lioc for the recovery of the sum of 11,140 (invoice value of the merchandise) and also obtained a writ of
attachment under which notice of garnishment of the said aforesaid balance we served upon the herein defendant.
The present action was filed on November 26, 1924 with the plaintiff demanding payment of the same sum of 11,140 for which
action had already been brought against Chua Lioc. The defendant averred, among others, that it brought the merchandise in good
faith and without any knowledge whether of the person from whom or the condition under which the said merchandise had been
acquired by Chua Lioc or Hang Chua Co. The trial court dismissed the case on the ground that the plaintiff was only entitled to
payment of the sum of 6,657.52, but which sum the defendant had the right to retain subject to the orders of the court in the two
other cases. Hence, this appeal.

ISSUE: Whether the defendant brought the merchandise in good faith.

RULING: Yes. Article 246 of the Code of Commerce states that: When the agent transacts business in his own name, it shall not be
necessary for him to state who is the principal and he shall be directly liable, as if the business were for his own account, to the
persons with whom he transacts the same, said persons not having any right of action against the principal, nor the latter against the
former, the liabilities of the principal and of the agent to each other always being reserved. PONENTE: Ostrand, J.

The plaintiff-appellant pointed out several circumstances which he believes indicate that the defendant-appellee was aware of the
condition under which the merchandise was entrusted to the agent Chua Lioc and therefore did not purchase the goods in good
faith. But the court did not see anything conclusive about the circumstances referred to and they are not sufficient to overcome the
presumption of good faith.

42. Bordador vs Luz


1. 2. Petitioners were engaged in the business of purchase and sale of jewelry and respondent Brigida D. Luz, also known as Aida D.
Luz, was their regular customer. On several occasions during the period from April 27, 1987 to September 4, 1987, respondent
Narciso Deganos, the brother to Brigida D. Luz, received several pieces of gold and jewelry from petitioner 1 amounting to
P382,816.00.
These items and their prices were indicated in seventeen receipts covering the same. Eleven of the receipts stated that they were
received for a certain Evelyn Aquino, a niece of Deganos, and the remaining six indicated that they were received for Brigida D. Luz.
Deganos was supposed to sell the items at a profit and thereafter remit the proceeds and return the unsold items to petitioners.
Deganos remitted only the sum of P53,207.00. He neither paid the balance of the sales proceeds, nor did he return any unsold item
to petitioners. By January 1990, the total of his unpaid account to petitioners, including interest, reached the sum of P725,463.98.
Petitioners eventually filed a complaint in the barangay court against Deganos to recover said amount. In the barangay proceedings,
Brigida D. Luz, who was not impleaded in the case, appeared as a witness for Deganos and ultimately, she and her husband, together
with Deganos, signed a compromise agreement with petitioners. In that compromise agreement, Deganos obligated himself to pay
petitioners, on installment basis, the balance of his account plus interest thereon.
However, he failed to comply with his aforestated undertakings. On June 25, 1990, petitioners instituted Civil Case No. 412-M-90 in
the Regional Trial Court of Malolos, Bulacan against Deganos and Brigida, D. Luz for recovery of a sum of money and damages, with
an 4 application for preliminary attachment. Ernesto Luz was impleaded therein as the spouse of Brigida. Petitioners claimed that
Deganos acted as the agent of Brigida D. Luz when he received the subject items of jewelry and, because he failed to pay for the
same, Brigida, as principal, and her spouse are solidarily liable with him therefor.
Private Respondent: Deganos admitted that he had an unpaid obligation to petitioners, he claimed that the same was only in the
sum of P382,816.00 and not P725,463.98. He further asserted that it was he alone who was involved in the transaction with the
petitioners; that he neither acted as agent for nor was he authorized to act as an agent by Brigida D. Luz, notwithstanding the fact
that six of the receipts indicated that the items were received by him for the latter. He further claimed that he never delivered any
of the items he received from petitioners to Brigida. Trial court below found that only Deganos was liable to petitioners for the
amount and damages claimed. It held that while Brigida D. Luz did have transactions with petitioners in the past, the items involved
were already paid for and all that Brigida owed petitioners was the sum of P21,483.00 representing interest on the principal account
which she had previously paid for. CA AFFIRMED 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

ISSUE: whether or not herein respondent spouses are liable to petitioners for the latter's claim for money and damages in the sum of
P725,463.98, plus interests and attorney's fees, despite the fact that the evidence does not show that they signed any of the subject
receipts or authorized Deganos to received the items of jewelry on their behalf.

HELD. NO. RATIO: - The evidence does not support the theory of petitioners that Deganos was an agent of Brigida D. Luz and that
the latter should consequently be held solidarily liable with Deganos in his obligation to petitioners. While the quoted statement in
the findings of fact of the assailed appellate decision mentioned that Deganos ostensibly acted as an agent of Brigida, the actual
conclusion and ruling of the Court of Appeals categorically stated that, "(Brigida Luz) never authorized her brother (Deganos) to act
for and in her behalf in any transaction with Petitioners . . . . - It is clear, therefore, that even assuming arguendo that Deganos acted
as an agent of Brigida, the latter never authorized him to act on her behalf with regard to the transaction subject of this case. - The
basis for agency is representation. Here, there is no showing that Brigida consented to the acts of Deganos or authorized him to act
on her behalf, much less with respect to the particular transactions involved. Petitioners' attempt to foist liability on respondent
spouses through the supposed agency relation with Deganos is groundless and ill-advised. - Besides, it was grossly and inexcusably
negligent of petitioners to entrust to Deganos, not once or twice but on at 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 dealing with an
agent is put upon inquiry and must discover upon his peril the authority of the agent. - The records show that neither an express nor
an implied agency was proven to have existed between Deganos and Brigida D. Luz. Evidently, petitioners, who were negligent in
their transactions with Deganos, cannot seek relief from the effects of their negligence by conjuring a supposed agency relation
between the two respondents where no evidence supports such claim.

43. ALFRED HAHN, petitioner, vs. COURT OF APPEALS and BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT (BMW),
respondents.

January 22, 1997

Mendoza, J.

Facts:
1. Alfred Hahn is a Filipino citizen doing business under the name and style "Hahn-Manila."
2. Bayerische Motoren Werke Aktiengesellschaft (BMW) is a nonresident foreign corporation existing under the laws of the
former Federal Republic of Germany, with principal office at Munich, Germany.
3. In 1963, Hahn executed in favor of BMW a Deed of Assignment with Special Power of Attorney which essentially, makes
Hahn as the exclusive dealer of BMW in the Philippines. Moreover, it stated there that Hahn and BMW shall continue
business relations as has been usual in the past without a formal contract."
4. In 1993, BMW and Columbia Motors Corp (CMC) had a meeting which would grant CMC exclusive dealership of BMW cars.
5. Hahn was informed later that BMW was dissatisfied with how it carrying its business. However, BMW expressed willingness
to continue business relations with the petitioner on the basis of a "standard BMW importer" contract, otherwise, it said, if
this was not acceptable to petitioner, BMW would have no alternative but to terminate petitioner's exclusive dealership
effective June 30, 1993.
6. Hahn protested alleging that such termination is a breach of the Deed of Assignment. Hahn insisted that as long as the
assignment of its trademark and device subsisted, he remained BMW's exclusive dealer in the Philippines because the
assignment was made in consideration of the exclusive dealership.
7. BMW, however, went on to terminate its dealership with Hahn.
8. Hahn filed a complaint for specific performance and damages in the RTC. RTC issued a writ preliminary injunction.
9. BMW appealed to the CA. CA reversed on the ground that Hahn is not an agent of BMW and that BMW is not doing
business in the Phils. By virtue of the latter, the writ of preliminary injunction should not have been issued since RTC did
not have jurisdiction over it.

Issues
1. W/N Hahn is agent or a distributor (or broker) in the Philippines of BMW.
He is an agent.
2. W/N BMW is doing business here in the Philippines.
YES

Held/Ratio:
1. There is nothing to support the appellate court's finding that Hahn solicited orders alone and for his own account and
without "interference from, let alone direction of, BMW. To the contrary, Hahn claimed he took orders for BMW 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.

BMW periodically inspected the service centers to see to it that BMW standards were maintained. Indeed, it would seem
from BMW's letter to Hahn that it was for Hahn's alleged failure to maintain BMW standards that BMW was terminating
Hahn's dealership.

The fact that Hahn invested his own money to put up these service centers and showrooms does not necessarily prove that
he is not an agent of BMW. For as already noted, there are facts in the record which suggest that BMW exercised control
over Hahn's activities as a dealer and made regular inspections of Hahn's premises to enforce compliance with BMW
standards and specifications. This was proven by a letter.
These allegations were admitted by BMW.
This arrangement shows an agency.

2. Hahn and BMW had a Representative Agreement or a Licensing Agreement. This arrangement is whereby a domestic
corporation, by virtue of which the latter was appointed "exclusive representative" in the Philippines for a stipulated
commission. Pursuant to these contracts, the domestic corporation sold products exported by the foreign corporation and
put up a service center for the products sold locally. This Court held that these acts constituted doing business in the
Philippines. The arrangement showed that the foreign corporation's purpose was to penetrate the Philippine market and
establish its presence in the Philippines.

In addition, BMW held out private respondent Hahn as its exclusive distributor in the Philippines, even as it announced in
the Asian region that Hahn was the "official BMW agent" in the Philippines.

44. MANUEL B. TAN, GREGG M. TECSON and ALEXANDER SALDAA, petitioners, vs. EDUARDO R. GULLAS and NORMA S. GULLAS,
respondents.
G.R. No. 143978 December 3, 2002

Facts: Respondents, were the registered owners of a parcel of land, they executed a special power of attorney authorizing
petitioners Tan, a licensed real estate broker, and his associates Tecson and Saldaa, to negotiate for the sale of the land, at a
commission of 3% of the gross price. Tan contacted the Sisters of Mary of Banneaux, Inc. (hereafter, Sisters of Mary), a religious
organization interested in acquiring a property. The Sisters, who had already seen and inspected the land, found the same suitable
for their purpose and expressed their desire to buy it. However, they requested that the selling price be reduced. Respondents
agreed to sell the property to the Sisters of Mary. Petitioners went to see respondents who refused to pay the brokers fee and
alleged that another group of agents was responsible for the sale of land to the Sisters of Mary. Petitioners filed a complaint against
the defendants for recovery of their brokers fee. They alleged that they were the efficient procuring cause in bringing about the sale
of the, but that their efforts in consummating the sale were frustrated by the respondents who, in evident bad faith, malice and in
order to evade payment of brokers fee, dealt directly with the buyer whom petitioners introduced to them.

Issues: (1) Whether or not the petitioners are entitled to the brokerage commission.
(2) An agent distinguished from a broker.

Rulings: (1) The records show that petitioner Tan is a licensed real estate broker, and other petitioners his associates.
"Broker" as "one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which
he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed
him. x x x a broker is one whose occupation is to bring the parties together, in matters of trade, commerce or navigation." The
petitioners were responsible for the introduction of the representatives of the Sisters of Mary to respondent.

(2) There was no dispute as to the role that petitioners played in the transaction. "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." Clearly, therefore, petitioners, as brokers, should be entitled to the commission whether or not the
sale of the property subject matter of the contract was concluded through their efforts.

45.
ANDRES QUIROGA, plaintiff and appellant, vs.PARSONS AUTHOR: PABLO
HARDWARE Co., defendant and appellee NOTES: (5pages lang fulltext so maikli talaga siya )
[G.R. No. 11491. August 23, 1918.]
TOPIC: Sale distinguished from other contracts
(Agency to buy and sell)
PONENTE: AVANCEA, J.:
FACTS:
Quiroga and Parsons Hardware, both merchants, entered into a contract where the former granted the latter the exclusive
right to sell Quiroga Beds in the Visayan Islands. It provided for a discount of 25% as commission for the sales, among other
conditions.
Quiroga alleged that Parsons breached its contractual obligations by selling the beds at a higher price, not having an open
establishment in Iloilo, not maintaining a public exhibition, and for not ordering beds by the dozen.
Only the last imputation was provided for by the contract, the others were never stipulated.
Quiroga argued that since there was a contract of agency between them, such obligations were necessarily implied.
ISSUE(S):
Whether or not the contract between them was one of agency, not sale
HELD:
No.
RATIO:
The agreement between Quiroga and Parsons was that of a simple purchase and salenot an agency. Quiroga supplied
beds, while Parsons had the obligation to pay their purchase price. These are characteristics of a purchase and sale. In a
contract of agency (or order to sell), the agent does not pay its price yet, and sells the products, remitting to the principal its
proceeds. Unsold products must also be returned to the principal. The provisions on commission and the use of the word
agency in the contract as well as the testimonies in court do not affect its nature. Contracts are what the law defines it to
be, not what the parties call it.
CASE LAW/ DOCTRINE: (E-SCRA)
SALES; INTERPRETATION OF CONTRACT.For the classification of contracts, due regard must be paid to their essential clauses.
In the contract in the instant case, what was essential, constituting its cause and subject matter, was that the plaintiff was
to furnish the defendant with the beds which the latter might order, at the stipulated price, and that the d efendant was to
pay this price in the manner agreed upon. These are precisely the essential features of a contract of purchase and sale.
There was the obligation on the part of the plaintiff to supply the beds, and, on that of the defendant, to pay their price. These
features exclude the legal conception of an agency or order to sell whereby the mandatary or agent receives the thing to sell
it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person,
and if he does not succeed in selling it, he returns it. Held: That this contract is one of purchase and sale, and not of
commercial agency.
DISSENTING/CONCURRING OPINION(S):

48. RURAL BANK OF BOMBON v. CA 212 SCRA 25

FACTS: Ederlinda M. Gallardo, married to Daniel Manzo, executed a special power of attorney in favor of Rufina S. Aquino
authorizing him to secure a loan from any bank or lending institution for any amount or otherwise mortgage the property and in that
connection, to sign, or execute any deed of mortgage and sign other document requisite and necessary in securing said loan and to
receive the proceeds thereof in cash or in check and to sign the receipt therefor and thereafter endorse the check representing the
proceeds of loan

Deed of Real Estate Mortgage was executed by Rufino S. Aquino in favor of the Rural Bank of Bombon (Camarines Sur), Inc.
(hereafter, defendant Rural Bank) over the three parcels of land Allegations of plaintiffs: o they were surprised to discover that the
property was mortgaged to pay personal loans obtained by Aquino from the Bank solely for personal use and benefit of Aquino; o
the mortgagor in the deed was defendant Aquino instead of plaintiff Gallardo o correspondence relative to the mortgage was sent
to Aquino's address at "Sta. Isabel, Calabanga, Camarines Sur" instead of Gallardo's postal address at Las Pias, Metro Manila; o
defendant Aquino, in the real estate mortgage, appointed defendant Rural Bank as attorney in fact, and in case of judicial
foreclosure as receiver with corresponding power to sell and that although without any express authority from Gallardo, defendant
Aquino waived Gallardo's rights under Section 12, Rule 39, of the Rules of Court and the proper venue of the foreclosure suit.
Argument of Aquino: the plaintiff authorized him to mortgage her property to a bank so that he could use the proceeds to liquidate
her obligation of P350,000 to him.

The obligation to pay the Rural Bank devolved on Gallardo. Argument of the Bank: the real estate mortgage executed by respondent
Aquino is valid because he was expressly authorized by Gallardo to mortgage her property under the special power of attorney she
made in his favor which was duly registered and annotated on Gallardo's title. Since the Special Power of Attorney did not specify or
indicate that the loan would be for Gallardo's benefit, then it could be for the use and benefit of the attorney-infact, Aquino.

ISSUE: validity of the Deed of Real Estate Mortgage dated August 26, 1981, executed by Rufino S. Aquino, as attorney-in-fact of
Ederlinda Gallardo, in favor of the Rural Bank of Bombon (Cam. Sur), Inc.

HELD: Aquino's act of signing the Deed of Real Estate Mortgage in his name alone as mortgagor, without any indication that he was
signing for and in behalf of the property owner, Ederlinda Gallardo, bound himself alone in his personal capacity as a debtor of the
petitioner Bank and not as the agent or attorney-in-fact of Gallardo. RATIO: defendant Aquino in executing the deed of Real Estate
Mortgage in favor of the rural bank over the three parcels of land covered by Gallardo's title named himself as the mortgagor
without stating that his signature on the deed was for and in behalf of Ederlinda Gallardo in his capacity as her attorney-in-fact.
The three (3) promissory notes respectively dated August 31, 1981, September 23, 1981 and October 26, 1981, were each signed by
Rufino Aquino on top of a line beneath which is written "signature of mortgagor" and by Bibiana P. Aquino on top of a line under
which is written "signature of spouse," without any mention that execution thereof was for and in behalf of the plaintiff as
mortgagor. It results, borne out from what were written on the deed, that the amounts were the personal loans of defendant
Aquino. As pointed out by the appellant, Aquino's wife has not been appointed co-agent of defendant Aquino and her signature on
the deed and on the promissory notes can only mean that the obligation was personally incurred by them and for their own personal
account. in order to bind the principal by a mortgage on real property executed by an agent, it must upon its face purport to be
made, signed and sealed in the name of the principal, otherwise, it will bind the agent only.
Agents act of signing mortgage deed in his own name bound himself in his personal capacity as debtor Argument of Petitioner: the
Deed of Real Estate Mortgage is enforceable against Gallardo since it was executed in accordance with Article 1883 which provides
(Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has
contracted; neither have such persons against the principal. In such case the agent is the one directly bound in favor of the person
with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the
principal.) SC: Exception in Art. 1883 not applicable to the case at bar. Herein respondent Aquino acted purportedly as an agent of
Gallardo, but actually acted in his personal capacity.
Involved herein are properties titled in the name of respondent Gallardo against which the Bank proposes to foreclose the mortgage
constituted by an agent (Aquino) acting in his personal capacity. Under these circumstances, Gallardo's property is not liable on the
real estate mortgage: There is no principle of law by which one can become liable on a real estate mortgage which he never
executed either in person or by attorney in fact

49. DOMINION INSURANCE CORPORATION, petitioner, vs. COURT OF


APPEALS, RODOLFO S. GUEVARRA, and FERNANDO
AUSTRIA, respondents.
G. R. No. 129919. February 6, 2002

PARDO, J .:

FACTS:
Rodolfo S. Guevarra instituted Civil Case No. 8855 for sum of money, seeking to recover the sum of P156,473.90 against
Dominion Insurance Corporation. Guevarra claimed to have advanced in his capacity as manager of DIC to satisfy certain claims
filed by DICs clients. DIC denied any liability to Guevarra and asserted a counterclaim for P249,672.53. 1991, DIC filed a third-
party complaint against Fernando Austria, who, at the time relevant to the case, was its Regional Manager for Central Luzon area.
After repeated postponements filed by both parties, DIC was declared in default by the RTC.
RTC issued a decision; the dispositive portion is read as:
o WHEREFORE, premises considered, judgment is hereby
rendered ordering:
1. Dominion Insurance Corporation to pay [Guevarra] the sum of P156,473.90 representing the total amount advanced by [DIC] in
the payment of the claims of [Guevarra]s clients;
2. [DIC] to pay [Guevarra] P10,000.00 as and by way of attorneys fees;
3. The dismissal of the counter-claim of the [DIC] and the third-party [Austria] complaint;
4. [DIC] to pay the costs of suit. DIC brought the case up to the CA; CA affirmed the decision of the RTC.
Hence this case.

ISSUE/S:
Whether or not Guevarra acted within his authority as agent for DIC;
Whether or not Guevarra is entitled to reimbursement of amounts he paid out of his personal money in settling the claims of
several insured.

HELD:
NO, because his authority as agent does not grant such powers (a special power of attorney is required);
YES, because this case falls squarely under the general law on obligations and contracts.

RATIO: A perusal of the Special Power of Attorney would show that DIC (represented by third-party defendant Austria) and
Guevarra intended to enter into a principal-agent relationship. Despite the word special in the title of the document, the contents
reveal that what was constituted was actually a general agency. [Refer to the original case for the said contract stipulations]

The instruction of DIC as the principal could not be any clearer. Guevarra was authorized to pay the claim of the insured, but the
payment shall come from the revolving fund or collection in his possession.

Having deviated from the instructions of the principal, the expenses that Guevarra incurred in the settlement of the claims
of the insured may not be reimbursed from DIC.

Article 1918, Civil Code: The principal is not liable for the expenses incurred by
the agent in the following cases:
(1) If the agent acted in contravention of the principals instructions, unless the
latter should wish to avail himself of the benefits derived from the contract;
xxx xxx xxx

HOWEVER, while the law on agency prohibits respondent Guevarra from obtaining reimbursement, his right to recover may
still be justified under the general law on obligations and contracts.

Article 1236, second paragraph, Civil Code, provides: Whoever pays for another may demand from the debtor what he has
paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the
payment has been beneficial to the debtor.

50. VICTORIAS MILLING CO., INC. v. COURT OF APPEALS and CONSOLIDATED SUGAR CORPORATION (2000,
Quisumbing)1

PARTIES: Petitioner Victorias Milling Co., Inc. | Respondents CA & Consolidated Sugar Corporation

FACTS:
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co., Inc., (VMC). In the course of their
dealings, VMC issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases.
Among these was SLDR No. 1214M which covers 25,000 bags of sugar. STM sold to private respondent Consolidated
Sugar Corporation (CSC) its rights in SLDR No. 1214M.
CSC issued one check dated October 25, 1989 and three checks postdated November 13, 1989 in payment. That
same day, CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by SLDR No.
1214M. Enclosed in the letter were a copy of SLDR No. 1214M and a letter of authority from STM authorizing CSC
"to withdraw for and in our behalf the refined sugar covered by SLDR No. 1214M. SLDR was sold and indorsed to
CSC.
CSC was only able to withdraw 2,000 of the 25,000 bags of sugar covered by SLDR No. 1214M.
VMC replied that it could not allow any further withdrawals of sugar against SLDR No. 1214M because STM had
already withdrawn all the sugar covered by the cleared checks.
CSC demanded the release of the 23,000 bags. Victorias Milling reiterated that all bags had been fully withdrawn.

Pre-trial
CSC filed a complaint for specific performance. Defendants were Teresita Ng Sy (doing business under the name of
St. Therese Merchandising) and Victorias Milling. CSC did not pursue case against Sy and instead used her as a
witness.
CSC: Fully paid so no reason to refuse delivery
VMC:
23,000 bags were withdrawn by STM corresponding to the cleared checks
SLDRs, which it had issued, were not documents of title, but mere delivery receipts issued pursuant to a series of
transactions entered into between it and STM.
The SLDRs prescribed delivery of the sugar to the party specified therein and did not authorize the transfer of
said party's rights and interests.

Trial Court
TC rendered judgment in favor of CSC. VMC was ordered to deliver 23,000 bags of sugar.
CSC:
The testimony of plaintiff's witness Teresita Ng Go, that she had fully paid the purchase price of P15,950,000.00
of the 25,000 bags of sugar bought by her covered by SLDR No. 1214 as well as the purchase price of
P15,950,000.00 for the 25,000 bags of sugar bought by her covered by SLDR No. 1213 on the same date,
October 16, 1989 (date of the two SLDRs) is duly supported by documentary evidence, inclusive of which are
post-dated checks dated October 27, 1989 issued by St. Therese Merchandising in favor of VMC at the time it
purchased the 50,000 bags of sugar covered by SLDR No. 1213 and 1214. Said checks appear to have been
honored and duly credited to the account of VMC as evidenced by an official receipt issued by VMC in favor of
STM.
The testimony of Teresita Ng Go is further supported by a computer printout of VMC, showing the quantity and
value of the purchases made by STM, the SLDR no. issued to cover the purchase, the official receipt no., and the
status of payment. It is clearly indicated in that document that with respect to the sugar covered by SLDR No.
1214, the same has been fully paid as indicated by the word 'cleared' appearing under the column of 'status of
payment.'
VMC:

1
I just revised Mr. Batocabes earlier digest. Thank you.
That the purchase price of the 25,000 bags of sugar purchased by STM covered by SLDR No. 1214 has not been
fully paid is supported only by the testimony of Arnulfo Caintic.
TC: The testimony of Arnulfo Caintic is merely a sweeping barren assertion that the purchase price has not been fully
paid and is not corroborated by any positive evidence.

Court of Appeals
VMC appealed.
VMC: Dealings between it and STM were part of a series of transactions involving only one account or one general
contract of sale. Pursuant to this contract, STM or any of its authorized agents could withdraw bags of sugar only
against cleared checks of STM.
CSC: SLDR No. 1214M is a separate transaction.
CA first MODIFIED RTC, VMC to deliver 12,586 bags but on MR modified its own judgment, VMC to deliver 23,000
bags.
STMs and CSCs specially informing VMC that CSC was authorized by buyer STM to withdraw sugar against SLDR No.
1214M "for and in our (STM) behalf," CSCs withdrawing of 2,000 bags of sugar for STM, and STM's empowering
other persons as its agents to withdraw sugar against the same SLDR No. 1214M, rendered CSC like the other
persons, an agent of STM as held in Rallos v. Felix Go Chan & Realty Corp., and precluded it from subsequently
claiming and proving being an assignee of SLDR No. 1214M and from suing by itself for its enforcement because it
was conclusively presumed to be an agent (Sec. 2, Rule 131, Rules of Court) and estopped from doing so.

RELEVANT ISSUES:
1. W/N CA erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon SLDR No. 1214M as an
assignee.
(Note: Issue 1st raised on appeal; so an issue which was not raised during the trial in the court below could not be
raised for the first time on appeal as to do so would be offensive to the basic rules of fair play, justice, and due
process. BUT since CA ruled upon it SC must address it)

2. W/N CA erred in applying the law on compensation to the transaction under SLDR No. 1214M so as to preclude VMC
from offsetting its credits on the other SLDRs.

3. W/N CA erred in not ruling that the sale of sugar under SLDR No. 1214M was a conditional sale or a contract to sell
and hence freed VMC from further obligations.
HELD/RATIO:
1. NO. CA did not err when it held that CSC was not STMs agent. CSC could independently sue VMC.
VMC: Relies upon STM's letter of authority allowing CSC to withdraw sugar against SLDR No. 1214M to show that the
latter was STM's agent:
This is to authorize Consolidated Sugar Corporation or its representative to withdraw for and in our
behalf (stress supplied) the refined sugar covered by Shipping List/Delivery Receipt = Refined Sugar (SLDR) No.
1214 dated October 16, 1989 in the total quantity of 25, 000 bags."
The Civil Code defines a contract of agency as follows:
"Art. 1868. By the contract of agency a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter."
From Article 1868 it is clear that the basis of agency is representation.
On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from
his words or actions; and on the part of the agent, there must be an intention to accept the appointment and act
on it, and in the absence of such intent, there is generally no agency.
One factor which most clearly distinguishes agency from other legal concepts is control; one person - the agent -
agrees to act under the control or direction of another - the principal. Indeed, the very word "agency" has come to
connote control by the principal. The control factor, more than any other, has caused the courts to put contracts
between principal and agent in a separate category.
Where the relation of agency is dependent upon the acts of the parties, the law makes no presumption of agency,
and it is always a fact to be proved, with the burden of proof resting upon the persons alleging the agency, to show
not only the fact of its existence, but also its nature and extent.
CSC was a buyer of the SLDFR form, and not an agent of STM.
CSC was not subject to STM's control. The question of whether a contract is one of sale or agency depends on the
intention of the parties as gathered from the whole scope and effect of the language employed. That the
authorization given to CSC contained the phrase "for and in our (STM's) behalf" did not establish an agency.
Ultimately, what is decisive is the intention of the parties. That no agency was meant to be established by the CSC
and STM is clearly shown by CSC's communication to petitioner that SLDR No. 1214M had been "sold and endorsed"
to it. The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale, and not an
agency.
2. NO. CA did not err when it refused to apply Article 1279 of NCC.
VMC: Insists that its debt has been offset by its claim for STM's unpaid purchases, pursuant to Article 1279 NCC.
However, TC and CA found that the purchase of sugar covered by SLDR No. 1214M was a separate and independent
transaction; it was not a serial part of a single transaction or of one account contrary to petitioner's insistence.
Evidence shows that VMC had been paid for the sugar purchased under SLDR No. 1214M.
VMC clearly had the obligation to deliver said commodity to STM or its assignee. Since said sugar had been fully paid
for, VMC and CSC, as assignee of STM, were not mutually creditors and debtors of each other.

3. YES. CA erred in ruling that the transaction was a contract to sell. It is a contract of sale.
VMC: The sale of sugar under SLDR No. 1214M is a conditional sale or a contract to sell, with title to the sugar still
remaining with the vendor. SLDR No. 1214M contains the following terms and conditions:
"It is understood and agreed that by payment by buyer/trader of refined sugar and/or receipt of this document by
the buyer/trader personally or through a representative, title to refined sugar is transferred to buyer/trader and
delivery to him/it is deemed effected and completed and buyer/trader assumes full responsibility therefore
The terms and conditions clearly show that VMC transferred title to the sugar to the buyer or his assignee upon
payment of the purchase price. Said terms clearly establish a contract of sale, not a contract to sell. VMC is now
estopped from alleging the contrary.
Having transferred title to the sugar in question, VMC is now obliged to deliver it to the purchaser or its assignee.
The contract is the law between the contracting parties. Where the terms and conditions so stipulated are not
contrary to law, morals, good customs, public policy or public order, the contract is valid and must be upheld.

DISPOSITIVE: The instant petition is DENIED for lack of merit. Costs against petitioner.
51. Eurotech Industrial Technologies, Inc. v. Edwin Cuizon and Erwin Cuizon
G.R. No. 167552 April 23, 2007
Chico-Nazario, J.

FACTS:
Eurotech is engaged in the business of importation and distribution of various European industrial equipment. It has as
one of its customers Impact Systems Sales which is a sole proprietorship owned by Erwin Cuizon.
Eurotech sold to Impact Systems various products allegedly amounting to P91,338.00. Cuizons sought to buy from
Eurotech 1 unit of sludge pump valued at P250,000.00 with Cuizons making a down payment of P50,000.00. When the
sludge pump arrived from the United Kingdom, Eurotech refused to deliver the same to Cuizons without their having
fully settled their indebtedness to Eurotech. Thus, Edwin Cuizon and Alberto de Jesus, general manager of Eurotech,
executed a Deed of Assignment of receivables in favor of Eurotech.
Cuizons, despite the existence of the Deed of Assignment, proceeded to collect from Toledo Power Company the
amount of P365,135.29. Eurotech made several demands upon Cuizons to pay their obligations. As a result, Cuizons
were able to make partial payments to Eurotech. Cuizons total obligations stood at P295,000.00 excluding interests
and attorneys fees.
Edwin Cuizon alleged that he is not a real party in interest in this case. According to him, he was acting as mere agent
of his principal, which was the Impact Systems, in his transaction with Eurotech and the latter was very much aware of
this fact.

ISSUE: WON Edwin exceeded his authority when he signed the Deed of Assignment thereby binding himself personally
to pay the obligations to Eurotech

HELD: No.
Edwin insists that he was a mere agent of Impact Systems which is owned by Erwin and that his status as such is
known even to Eurotech as it is alleged in the Complaint that he is being sued in his capacity as the sales manager of
the said business venture. Likewise, Edwin points to the Deed of Assignment which clearly states that he was acting as
a representative of Impact Systems in said transaction.
Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly
binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers.
In a contract of agency, a person binds himself to render some service or to do something in representation or on
behalf of another with the latters consent. Its purpose is to extend the personality of the principal or the party for
whom another acts and from whom he or she derives the authority to act. The basis of agency is representation, that
is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the
same legal effect as if they were personally executed by the principal.
elements of the contract of agency: (1) consent, express or implied, of the parties to establish the relationship; (2) the
object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for
himself; (4) the agent acts within the scope of his authority
An agent, who acts as such, is not personally liable to the party with whom he contracts. There are 2 instances when
an agent becomes personally liable to a third person. The first is when he expressly binds himself to the obligation and
the second is when he exceeds his authority. In the last instance, the agent can be held liable if he does not give the
third party sufficient notice of his powers. Edwin does not fall within any of the exceptions contained in Art. 1897.
In the absence of an agreement to the contrary, a managing agent may enter into any contracts that he deems
reasonably necessary or requisite for the protection of the interests of his principal entrusted to his management.
Edwin Cuizon acted well-within his authority when he signed the Deed of Assignment. Eurotech refused to deliver the
1 unit of sludge pump unless it received, in full, the payment for Impact Systems indebtedness. Impact Systems
desperately needed the sludge pump for its business since after it paid the amount of P50,000.00 as downpayment it
still persisted in negotiating with Eurotech which culminated in the execution of the Deed of Assignment of its
receivables from Toledo Power Company. The significant amount of time spent on the negotiation for the sale of the
sludge pump underscores Impact Systems perseverance to get hold of the said equipment. Edwins participation in
the Deed of Assignment was reasonably necessary or was required in order for him to protect the business of his
principal.

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