OBLIGATIONS OF THE AGENT

Art. 1884. The agent is bound by his acceptance to carry out the agency, and is liable for the
damages which, through his non-performance, the principal may suffer.He must also finish the
business already begun on the death of the principal, should delay entail any danger.

Art. 1885. In case a person declines an agency, he is bound to observe the diligence of a good father
of a family in the custody and preservation of the goods forwarded to him by the owner until the latter
should appoint an agent or take charge of the goods.

Art. 1886. Should there be a stipulation that the agent shall advance the necessary funds, he shall be
bound to do so except when the principal is insolvent.

Art. 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the
principal. In default thereof, he shall do all that a good father of a family would do, as required by the
nature of the business.

Art. 1888. An agent shall not carry out an agency if its execution would manifestly result in loss or
damage to the principal. (n)

Art. 1889. The agent shall be liable for damages if, there being a conflict between his interests and
those of the principal, he should prefer his own. (n)

Art. 1890. If the agent has been empowered to borrow money, he may himself be the lender at the
current rate of interest. If he has been authorized to lend money at interest, he cannot borrow it
without the consent of the principal.

Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the
principal whatever he may have received by virtue of the agency, even though it may not be
owing to the principal.

Every stipulation exempting the agent from the obligation to render an account shall be void.

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but
he shall be responsible for the acts of the substitute:

(1) When he was not given the power to appoint one;

(2) When he was given such power, but without designating the person, and the person appointed
was notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of the principal shall be void. (1721)
Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may
furthermore bring an action against the substitute with respect to the obligations which the latter has
contracted under the substitution. (1722a)

Art. 1894. The responsibility of two or more agents, even though they have been appointed
simultaneously, is not solidary, if solidarity has not been expressly stipulated. (1723)

Art. 1895. If solidarity has been agreed upon, each of the agents is responsible for the non-fulfillment
of agency, and for the fault or negligence of his fellows agents, except in the latter case when the
fellow agents acted beyond the scope of their authority. (n)

Art. 1896. The agent owes interest on the sums he has applied to his own use from the day on which
he did so, and on those which he still owes after the extinguishment of the agency. (1724a)

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. (1725)
Art. 1898. If the agent contracts in the name of the principal, exceeding the scope of his authority, and
the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is
aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if
he undertook to secure the principal's ratification. (n)

Art. 1899. If a duly authorized agent acts in accordance with the orders of the principal, the latter
cannot set up the ignorance of the agent as to circumstances whereof he himself was, or ought to
have been, aware. (n)

Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the
scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even
if the agent has in fact exceeded the limits of his authority according to an understanding between the
principal and the agent. (n)

Art. 1901. A third person cannot set up the fact that the agent has exceeded his powers, if the
principal has ratified, or has signified his willingness to ratify the agent's acts. (n)

Art. 1902. A third person with whom the agent wishes to contract on behalf of the principal may
require the presentation of the power of attorney, or the instructions as regards the agency. Private or
secret orders and instructions of the principal do not prejudice third persons who have relied upon the
power of attorney or instructions shown them. (n)

Art. 1903. The commission agent shall be responsible for the goods received by him in the terms and
conditions and as described in the consignment, unless upon receiving them he should make a
written statement of the damage and deterioration suffered by the same. (n)

Art. 1904. The commission agent who handles goods of the same kind and mark, which belong to
different owners, shall distinguish them by countermarks, and designate the merchandise respectively
belonging to each principal. (n)

Art. 1905. The commission agent cannot, without the express or implied consent of the
principal, sell on credit. Should he do so, the principal may demand from him payment in cash,
but the commission agent shall be entitled to any interest or benefit, which may result from such sale.

Art. 1906. Should the commission agent, with authority of the principal, sell on credit, he shall so
inform the principal, with a statement of the names of the buyers. Should he fail to do so, the sale
shall be deemed to have been made for cash insofar as the principal is concerned. (n)

Art. 1907. Should the commission agent receive on a sale, in addition to the ordinary commission,
another called a guarantee commission, he shall bear the risk of collection and shall pay the principal
the proceeds of the sale on the same terms agreed upon with the purchaser. (n)

Art. 1908. The commission agent who does not collect the credits of his principal at the time
when they become due and demandable shall be liable for damages, unless he proves that he
exercised due diligence for that purpose. (n)

Art. 1909. The agent is responsible not only for fraud, but also for negligence, which shall be judged
with more or less rigor by the courts, according to whether the agency was or was not for a
compensation.

OBLIGATION OF PRINCIPAL
Art. 1910. The principal must comply with all the obligations which the agent may have contracted
within the scope of his authority. As for any obligation wherein the agent has exceeded his power, the
principal is not bound except when he ratifies it expressly or tacitly.
Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the
agent if the former allowed the latter to act as though he had full powers.
Art. 1912. The principal must advance to the agent, should the latter so request, the sums necessary
for the execution of the agency. Should the agent have advanced them, the principal must reimburse
him therefor, even if the business or undertaking was not successful, provided the agent is free from
all fault.The reimbursement shall include interest on the sums advanced, from the day on which the
advance was made.
Art. 1913. The principal must also indemnify the agent for all the damages which the execution of the
agency may have caused the latter, without fault or negligence on his part.
Art. 1914. The agent may retain in pledge the things which are the object of the agency until the
principal effects the reimbursement and pays the indemnity set forth in the two preceding articles. (
Art. 1915. If two or more persons have appointed an agent for a common transaction or undertaking,
they shall be solidarily liable to the agent for all the consequences of the agency. (
Art. 1916. When two persons contract with regard to the same thing, one of them with the agent and
the other with the principal, and the two contracts are incompatible with each other, that of prior date
shall be preferred, without prejudice to the provisions of Article 1544. (
Art. 1917. In the case referred to in the preceding article, if the agent has acted in good faith, the
principal shall be liable in damages to the third person whose contract must be rejected. If the agent
acted in bad faith, he alone shall be responsible.
Art. 1918. 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 principal's instructions, unless the latter should wish to
avail himself of the benefits derived from the contract;
(2) When the expenses were due to the fault of the agent;
(3) When the agent incurred them with knowledge that an unfavorable result would ensue, if the
principal was not aware thereof;
(4) When it was stipulated that the expenses would be borne by the agent, or that the latter would be
allowed only a certain sum.

BRITISH AIRWAYS, petitioner, vs.CA, GOP MAHTANI, and PHILIPPINE AIRLINES, respondents.

LOST LUGGAGE

1. Mahtani thru Mr. Gumar bought tickets from BA for his travel to India
2. Since BA had no direct flights from India, Mahtani had to take a flight to Hongkong via PAL,
and from HK to India via BA
3. He checked in at the PAL counter in Manila his two pieces of luggage confident that it would
be transferred to the BA flight bound for India.
4. When Mahtani arrived in India he discovered that his luggage was missing
5. Mahtani filed his complaint for damages and attorney's fees 5 against BA and Mr. Gumar
6. BA averred that Mahtani did not have a cause of action against it. BA filed a third-party
complaint 7 against PAL alleging that the reason for the non-tra nsfer of the luggage was due
to the latter's late arrival in Hongkong, PAL disclaimed any liability, arguing that there was,
adequate time to transfer the luggage. Furthermore, the transfer of the luggage to Hongkong
authorities should be considered as transfer to BA.8
7. RTC decided against BA. CA, affirmed RTC
8. SC: an airline's contract of carriage partakes of two types, a contract to deliver a cargo or
merchandise to its destination and a contract to transport passengers to their
destination.
9. In the instant case, it is apparent that the contract of carriage was between Mahtani and BA.
10. The contract of air transportation pursuant to the ticket issued by appellant to plaintiff-
appellee was exclusively between the plaintiff Mahtani and defendant-appellant BA. PAL was
merely acting as a subcontractor or agent of BA. This is shown by the fact that in the ticket
issued by appellant to plaintiff-appellee, it is specifically provided on the "Conditions of
Contract," paragraph 4 thereof that:. carriage to be performed hereunder by several
successive carriers is regarded as a single operation.
11. The rule that carriage by plane although performed by successive carriers is regarded as a
single operation and that the carrier issuing the passenger's ticket is considered the principal
party and the other carrier merely subcontractors or agent,
12. However, an agent is also responsible for any negligence in the performance of its
function.33 and is liable for damages which the principal may suffer by reason of its negligent
act.34
 13. BA and PAL are members of the International Air Transport Association (IATA), wherein
member airlines are regarded as agents of each other in the issuance of the tickets and other
matters pertaining to their relationship.35 Therefore, the contractual relationship between BA
and PAL is one of agency, the former being the principal, since it was the one which issued
the confirmed ticket,
14. Since the instant petition was based on breach of contract of carriage, Mahtani can only sue
BA alone, and not PAL, since the latter was not a party to the contract. However, this is not
to say that PAL is relieved from any liability due to any of its negligent acts.
15. Accordingly, BA may file a 3rd party complaint against PAL if it is proven that the latter's
negligence was the proximate cause of Mahtani's unfortunate experience

PNB, petitioner, vs.MANILA SURETY and FIDELITY CO., INC. and THE COURT OF APPEALS

ASPHALT

1. 2,000 tons of asphalt worth P279,000.00 were released by PNB and delivered to ATACO
under a trust receipt guaranteed by Manila Surety
2. To pay for the asphalt, ATACO constituted the Bank its assignee and attorney-in-fact to
receive and collect from the Bureau of Public Works the amount aforesaid out of funds
payable to the assignor
3. ATACO delivered to the Bureau of Public Works. The Bank regularly collected from Public
Works for 6 mos. Thereafter, for some reasons, it stopped collecting. Allowing other creditors
to collect from ATACO.
4. Thereafter, its demands on ATACO and the Surety refused, the Bank sued both
5. RTC rendered that defendants, to pay plaintiff, Philippines National Bank,
6. From said decision, only the defendant Surety Company has duly perfected its appeal.
7. However, The Court of Appeals found the Bank to have been negligent in having stopped
collecting from the Bureau of Public Works the moneys falling due in favor of the
principal debtor, ATACO, before the debt was fully collected, thereby allowing such funds
to be taken and exhausted by other creditors to the prejudice of the surety, and held that
the Bank's negligence resulted in exoneration of respondent Manila Surety & Fidelity
Company.
8. PNB contends that the power of attorney obtained from ATACO was merely in additional
security in its favor, and that it was the duty of the surety, and not that of the creditor,
owed see to it that the obligor fulfills his obligation, and that the creditor owed the surety
no duty of active diligence to collect any, sum from the principal debtor
9. This argument of appellant Bank misses the point. The Court of Appeals did not hold the
Bank answerable for negligence in failing to collect from the principal debtor but for its
neglect in collecting the sums due to the debtor from the Bureau of Public Works,
contrary to its duty as holder of an exclusive and irrevocable power of attorney to make such
collections, since an agent is required to act with the care of a good father of a family (Civ.
Code, Art. 1887) and becomes liable for the damages which the principal may suffer through
his non-performance (Civ. Code, Art. 1884). Certainly, the Bank could not expect that the
Bank would diligently perform its duty under its power of attorney, but because they could not
have collected from the Bureau even if they had attempted to do so. It must not be forgotten
that the Bank's power to collect was expressly made irrevocable, so that the Bureau of Public
Works could very well refuse to make payments to the principal debtor itself, and
a fortiori reject any demands by the surety.
10. Even if the assignment with power of attorney from the principal debtor were considered as
mere additional security still, by allowing the assigned funds to be exhausted without notifying
the surety, the Bank deprived the former of any possibility of recoursing against that security.
The Bank thereby exonerated the surety, pursuant to Article 2080 of the Civil Code:

ART. 2080. The guarantors, even though they be solidary, are released from their
obligation whenever by come act of the creditor they cannot be subrogated to the rights,
mortgages and preferences of the latter. (Emphasis supplied.)

11. The fact remains that because of the Bank's inactivity the other creditors were enabled to
collect P173,870.31, when the balance due to appellant Bank was only P158,563.18. The
 finding of negligence made by the Court of Appeals is thus not only conclusive on us but fully
supported by the evidence.
12. WHEREFORE, the appealed decision is affirmed,

CONSOLACION L. RAMOS, administratrix-appellant,

vs.BENIGNO A. CAOIBES, attorney-in-fact-appellee.

WAR DAMAGES CLAIMS

1. A year before her death, Concepcion Dipusoy executed a power of attorney which
constitute and appoint Mr. Benigno A. Caoibes, to collect any amount due from the
Philippine War Damage Commission, regarding claim filed for properties that were lost during
the last war in Balayan, to cash checks, warrants and to sign receipts, vouchers, documents
and granting full and absolute power and authority to do and perform all any every act or thing
whatsoever to be done necessary in and about the premises,
2. Annex B is an affidavit of the following tenor:That in case payment of any amount or amounts
collected from the Philippine War Damage Commission, my nephew and at the same time
attorney-in-fact, shall give my sister Teopista Vda. de Basa one-half (), of the corresponding
amount and the other half () shall be given to Benigno A. Caoibes.
3. Concepcion Ramos died leaving a will
4. Commission issued check payable to the deceased Concepcion Ramos. This check was
returned to the Commission and substituted but payable to Benigno A. Caoibes, who had
presented to said entity Annexes "A" and "B", above mentioned,
5. Annexes "A" and "B" were presented to the Commission by Caoibes after the death of
Concepcion.
6. The administratrix, Consolacion L. Ramos, filed a motion with the court asking that Caoibes
be ordered to deposit the sum with the clerk of court.
7. Caoibes contended that, by virtue of Annex "A", and Annex "B", he had the right to retain, for
himself, half of the sum of P501.62.
8. Lower Courty ordered that Atty. Caoibes deposit the said amount to be at the disposal of the
administratrix and the other parties in these intestate proceedings.
9. SC: Annex A is only a power of attorney., Caoibes, as agent, had the obligation to deliver the
amount collected by virtue of said power to his principal, Concepcion or, after her death, to
the administratrix of her estate, Consolacion. There is absolutely no cession of rights made in
favor of Caoibes in Annex "A", and under Article 1711 of the old Civil Code (which was in
force at the time of the transaction), the contract of agency is presumed to be gratuitous,
unless the agent is a professional agent. There is no proof that Caoibes was such.
Furthermore, according to Article 1732 of said Code, an agency is terminated, among other
causes, by the death of the principal or of the agent. When Caoibes made use of the power of
attorney, his principal, Concepcion was already dead.
10. Coming now to Annex "B", the alleged document of donation, of personal property and is
governed by article 632 of the old Civil Code, which reads as follows:Donations of personal
property may be made verbally or in writing. Verbal donation requires the
simultaneous delivery of the gift. In the absence of this requisite the donation shall
produce no effect, unless made in writing and accepted in the same form
11. The alleged donation was made in writing but it has not been accepted in the same form, and
consequently, has no validity. It cannot be considered a donation upon valuable
consideration, for no services nor any valuable consideration had passed from the donees to
the donor. The mere fact that Caoibes collected the claim from the War Damage Commission
is not such a service as to require compensation. Caoibes did not even prepare the claim.
12. The order appealed from is hereby reversed and Benigno A. Caoibes is ordered to deposit
with the Clerk of Court of Batangas the sum collected.

GUTIERREZ HERMANOS, plaintiff-appellant, vs.ORIA HERMANOS & CO., defendant-appellant.

RICE, PETROULEUM, SALT, TOBACCO

1. Gutierrez Hermanos and Oria Hermanos entered into a contract wherein GH bound itself to
acquire for and forward to OH certain goods such as rice, cash, petroleum, etc. Because of
this, GH and OH decided to open a mutual current account under Oria Hermanos on the
books of Gutierrez Hermanos with 8% interest. Gutierrez Hermanos informed Oria Hermanos.
that said current account would be closed within 30 days, after which, Oria Hermanos would
have to settle the balance due to Gutierrez Hermanos, if any. However, despite repeated
demands from Gutierrez Hermanos to Oria Hermanos, the latter never paid which led to the
filing of this suit.
2. Up until the closing of the account, GH had sent OH various quantities of salt, petroleum,
tobacco, groceries, and beverages and had collected a commission on the sale. The
semiannual accounts rendered by GH were never questioned. However, OH claims that GH
had set higher prices than the price actually paid, thereby defrauding OH. OH prayed
that GH render an account as well as the vouchers used to determine the purchase price of
the said goods. OH also claimed that GH had kept the discount in addition to collecting
commission on the sale of goods.
3. Issue: whether or not OH is liable to GH for its unsettled account?
4. Yes, but only upon proper accounting of the expenses for the shipment of rice and petroleum
which were claimed to be overpriced.
5. When an agent in executing the orders and commissions of his principal carries out
the instructions he has received from his principal, and does not appear to have
exceeded his authority or to have acted with negligence, deceit, or fraud, he cannot be
held responsible for the failure of his principal to accomplish the object of the agency
6. Since it was not proven that the price of the goods were overstated, thereby defrauding OH,
OH cannot escape the liability of paying GH for performing the task given to him by OH
as his principal.

FERMIN Z. CARAM, JR., petitioner, vs.CLARO L. LAURETA, respondent.

BAD FAITH DOUBLE SALE

1. On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of Davao an action for
nullity, recovery of ownership and/or reconveyance with damages and attorney's fees against
Marcos Mata, Codidi Mata, Fermin Z. Caram Jr. and the Register of Deeds of Davao City.
2. On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land n favor of Claro
Laureta,. The deed of absolute sale was not registered because it was not acknowledged
before a notary public or any other authorized officer. At the time the sale was executed, there
was no authorized officer before whom the sale could be acknowledged inasmuch as the civil
government in Tagum, Davao was not as yet organized.
3. However, the defendant Marcos Mata delivered to Laureta the peaceful and lawful
possession of the premises of the land together with the pertinent papers thereof such as the
Owner's Duplicate Original Certificate of Title, sketch plan, tax declaration, tax receipts and
other papers related thereto.
4. Since June 10, 1945, the plaintiff Laureta had been and is still in continuous, adverse and
notorious occupation of said land, without being molested, disturbed or stopped by any of the
defendants or their representatives. In fact, Laureta had been paying realty taxes due thereon
and had introduced improvements
5. However, the said property was sold to Fermin Caram, Jr. Through agents Atty Irespe and
Aportadera. The Deed of Sale was acknowledged by Atty Aportadera. The Sale was
registered at the Reg of Deeds. TCT was issued to Caram.
6. RTC ruled infavor of Laureta, stating that Caram, Jr. was not a purchaser in good faith,
and the Court of Appeals affirmed the decision of the lower court.
7. Petitioner argues that Pedro Irespe was acting merely as broker or intermediary with the
specific task and duty to pay Marcos Mata the sum of P1,000.00 for the latter's property and
to see to it that the requisite deed of sale covering the purchase was properly executed by
Marcos Mata; that the identity of the property to be bought and the price of the purchase had
already been agreed upon by the parties; and that the other alleged representative, Atty.
Aportadera, merely acted as a notary public in the execution of the deed of sale.
ISSUES: Whether petitioner have acted in bad faith through his agents action.

RULING: In the case at bar, the court found that the Attorneys Irespe and Aportadera had knowledge
of the circumstances, and knew that Mata's certificate of title together with other papers pertaining to
the land was taken by soldiers under the command of Col. Claro L. Laureta. Added to this is the fact
that at the time of the second sale Laureta was already in possession of the land. Irespe and
Aportadera should have investigated the nature of Laureta's possession. If they failed to
exercise the ordinary care expected of a buyer of real estate they must suffer the
consequences. The rule of caveat emptor requires the purchaser to be aware of the supposed title
of the vendor and one who buys without checking the vendor's title takes all the risks and losses
consequent to such failure. The principle that a person dealing with the owner of the registered land is
not bound to go behind the certificate and inquire into transactions the existence of which is not there
intimated 18 should not apply in this case. It was of common knowledge that at the time the soldiers
of Laureta took the documents from Mata, the civil government of Tagum was not yet established and
that there were no officials to ratify contracts of sale and make them registrable. Obviously,
Aportadera and Irespe knew that even if Mata previously had sold the disputed property such sale
could not have been registered. There is no doubt then that Irespe and Aportadera, acting as agents
of Caram, purchased the property of Mata in bad faith. Applying the principle of agency, Caram, as
principal, should also be deemed to have acted in bad faith.: "Art. 1544. If an immovable
property should have been sold to different vendees, the ownership shall be transferred to the
person who acquired it who in good faith first and recorded it in the Registry of Property.

" Since Caram was a registrant in bad faith, the situation is as if there was no registration at all
because a Possessor in Good Faith is one who is not aware that there exists any flaw
invalidating the title.

Laureta was first in possession, a possessor in Good faith. The Contention of the petitioner
that it was taken by force was already cured after the lapse of 4 years from the time the
intimidation ceased. Hence, Mata lost his rights to file an action for annulment or set up nullity
of contract as defense.

DBP, petitioner, vs.COURT OF APPEALS and the ESTATE OF THE LATE JUAN B. DANS,
represented by CANDIDA G. DANS, and the DBP MORTGAGE REDEMPTION INSURANCE
POOL, respondents.

MORTGAGE INSURANCE

1. Juan B. Dans, applied for a loan of P500,000.00 with the DBP Basilan. Dans, then 76 years of
age, was advised by DBP to obtain a mortgage redemption insurance (MRI) with the DBP
Mortgage Redemption Insurance Pool (DBP MRI Pool).
2. A loan, in the reduced amount of P300,000.00, was approved
3. From the proceeds of the loan, DBP deducted the amount of P1,476.00 as payment for the
MRI premium.
4. Dans accomplished and submitted the "MRI Application for Insurance" and the "Health
Statement for DBP MRI Pool."
5. MRI premium of Dans, less the DBP service fee of 10 percent, was credited by DBP to the
savings account of the DBP MRI Pool. Accordingly, the DBP MRI Pool was advised of the
credit.
6. 4 months later, Dans died of cardiac arrest. The DBP, upon notice, relayed this information to
the DBP MRI Pool. DBP MRI Pool notified DBP that Dans was not eligible for MRI coverage,
being over the acceptance age limit of 60 years at the time of application.
7. DBP offered to refund the premium of P1,476.00 which the deceased had paid, but Candida
Dans refused to accept the same, demanding payment of the face value of the MRI or an
amount equivalent to the loan.
8. She, likewise, refused to accept an ex gratia settlement of P30,000.00, which the DBP later
offered.
9. Candida Dans as administratrix, filed a complaint with RTC, , against DBP and the insurance
pool for "Collection of Sum of Money with Damages."
10. Respondent Estate alleged that Dans became insured by the DBP MRI Pool when DBP, with
full knowledge of Dans' age at the time of application, required him to apply for MRI, and later
collected the insurance premium thereon.
11. RTC rendered a decision in favor of respondent Estate and against DBP.
12. The DBP MRI Pool, however, was absolved from liability, after the trial court found no privity
of contract between it and the deceased. The trial court declared DBP in estoppel for having
led Dans into applying for MRI and actually collecting the premium and the service fee,
despite knowledge of his age ineligibility.
13. DBP appealed to the Court of Appeals,which affirmed RTC
14. Under the provisions, the MRI coverage shall take effect: (1) when the application shall be
approved by the insurance pool; and (2) when the full premium is paid during the continued
good health of the applicant. These two conditions, being joined conjunctively, must concur.
15. Undisputably, the power to approve MRI applications is lodged with the DBP MRI Pool. The
pool, however, did not approve the application of Dans. There is also no showing that it
accepted the sum of P1,476.00, which DBP credited to its account with full knowledge
that it was payment for Dan's premium. There was, as a result, no perfected contract of
insurance; hence, the DBP MRI Pool cannot be held liable on a contract that does not exist.
16. It was DBP, as a matter of policy and practice, that required Dans, the borrower, to secure
MRI coverage. Instead of allowing Dans to look for his own insurance carrier or some other
form of insurance policy, DBP compelled him to apply with the DBP MRI Pool for MRI
coverage.
17. In dealing with Dans, DBP was wearing two legal hats: the first as a lender, and the second
as an insurance agent.
18. As an insurance agent, DBP made Dans go through the motion of applying for said insurance,
thereby leading him and his family to believe that they had already fulfilled all the
requirements for the MRI and that the issuance of their policy was forthcoming.
19. Apparently, DBP had full knowledge that Dan's application was never going to be approved.
The maximum age for MRI acceptance is 60 years
20. Article 1987 of the Civil Code of the Philippines, "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."
21. DBP is not authorized to accept applications for MRI when its clients are more than 60 years
of age. Knowing all the while that Dans was ineligible for MRI coverage because of his
advanced age, DBP exceeded the scope of its authority when it accepted Dan's application
for MRI by collecting the insurance premium, and deducting its agent's commission and
service fee.
22. The liability of an agent who exceeds the scope of his authority depends upon whether
the third person is aware of the limits of the agent's powers. There is no showing that
Dans knew of the limitation on DBP's authority to solicit applications for MRI.
23. If the third person dealing with an agent is unaware of the limits of the authority
conferred by the principal on the agent and he (third person) has been deceived by the
non-disclosure thereof by the agent, then the latter is liable for damages to him The
rule that the agent is liable when he acts without authority is founded upon the supposition
that there has been some wrong or omission on his part either in misrepresenting, or in
affirming, or concealing the authority under which he assumes to act
24. Inasmuch as the non-disclosure of the limits of the agency carries with it the implication that a
deception was perpetrated on the unsuspecting client, the provisions of Articles 19, 20 and
21 of the Civil Code of the Philippines come into play.
25. The DBP's liability, however, cannot be for the entire value of the insurance policy. To
assume that were it not for DBP's concealment of the limits of its authority, Dans would have
secured an MRI from another insurance company, and therefore would have been fully
insured by the time he died, is highly speculative. Considering his advanced age, there is no
absolute certainty that Dans could obtain an insurance coverage from another company
 26. While Dans is not entitled to compensatory damages, he is entitled to moral damages. No
proof of pecuniary loss is required in the assessment of said kind of The same may be
recovered in acts referred to in Article 2219 of the Civil Code.

PHILIPPINE PRODUCTS COMPANY, plaintiff-appellant,

vs.PRIMATERIA SOCIETE ANONYME POUR LE COMMERCE EXTERIEUR: PRIMATERIA
(PHILIPPINES) INC., ALEXANDER G. BAYLIN and JOSE M. CRAME, defendants-appellees.

COPRA, not ultra vires

1. Primateria Zurich) is a foreign juridical entity engaged in "Transactions in international trade

with agricultural products, particularly in oils, fats and oil-seeds and related products."
2. Primateria Zurich, through defendant Alexander B. Baylin, entered into an agreement with
plaintiff Philippine Products Company, whereby the latter undertook to buy copra in the
Philippines for the account of Primateria Zurich,
3. Plaintiff caused the shipment of copra to foreign countries, pursuant to instructions from
defendant Primateria Zurich, thru Primateria (Phil.) acting by defendant Alexander G. Baylin
and Jose M. Crame, officers of said corporation. As a result, the total amount due to the
plaintiff was P33,009.71.
4. Alexander G. Baylin and Primateria Philippines acted as the duly authorized agents of
Primateria Zurich in the Philippines. As far as the record discloses, Baylin acted
indiscriminately in these transactions in the dual capacities of agent of the Zurich firm and
executive vice-president of Primateria Philippines, which also acted as agent of Primateria
Zurich. It is likewise undisputed that Primateria Zurich had no license in Phils.
5. Judgment was rendered by the lower court holding defendant Primateria Zurich liable to the
plaintiff and absolving defendants Primateria (Phil.), Inc., Alexander G. Baylin, and Jose M.
Crame from any and all liability. Primateria Zurich did not appeal from it.
6. However, Plaintiff appealed from that portion of the judgment dismissing its complaint as
regards the three defendants.
7. plaintiff's theory that Primateria Zurich is a foreign corporation within the meaning of Sections
68 and 69 of the Corporation Law, and since it has transacted business in the Philippines
without the necessary license, as required by said provisions, its agents here are personally
liable for contracts made in its behalf.: "
8. ISSUE: whether its agents Primateria Phils may be held personally liable
9. Appellees as agents of Primateria Zurich may be liable to it under Art. 1897 of the New Civil
Code 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.
10. But there is no proof that, as agents, they exceeded the limits of their authority. In fact, the
principal Primateria Zurich who should be the one to raise the point, never raised it,
11. . At any rate, the article does not hold that in cases of excess of authority, both the
agent and the principal are liable to the other contracting party.
12. This view of the cause dispenses with the necessity of deciding the other two issues, namely:
whether the agent of a foreign corporation doing business, but not licensed here is personally
liable for contracts made by him in the name of such corporation.1 Although, the solution
should not be difficult, since we already held that such foreign corporation may be sued
here (And obviously, liability of the agent is necessarily premised on the inability to sue the
principal or non-liability of such principal. Appealed judgment is affirmed,

DAVID (DAVE) THOMAS, plaintiff-appellant,

vs.HERMOGENES S. PINEDA, defendant-appellant.

SILVER DOLLAR CAFE TRUST

FACTS: Plaintiff owns the bar and restaurant known as Silver Dollar Caf located in Plaza Santa
Cruz, Manila. In thecourse of time, the defendant became successively cashier and manager of the
business. On the onset of the war, plaintiff made a fictitious sale of the business to defendant to
prevent the businessand its property from falling into enemy hands. Simultaneously with, or soon after
the execution of the simulated sale, the plaintiff and defendant signed aprivate or secret document
stating that the deed of sale conveying the restaurant was fictitious and upon therestoration of
peace and order, the document automatically becomes null and void and of no effect. On February
3, 1945, the building was destroyed by fire but the defendant had been able to remove some of its
furniture. According to the defendant, all of these goods were accounted for and turned over to the
plaintiff.

On May 8, 1945, a bar was opened in Bambang under the name Silver Dollar Caf. On September of
thesame year, it was transferred to its original location in Plaza Santa Cruz.

It is alleged that after liberation, plaintiff brought a certified public accountant to the caf for the
purpose of examining the books of the business. The defendant resisted, and even pointed a gun at
them. Because of thisincident, plaintiff brought the present action to compel an accounting of the
business. It also asked the courtto enjoin the defendant from using the name of that business,
Silver Dollar Caf.

The defendant avers that there was a third, verbal agreement, the import of which was that he was to
operatethe business with no liability other than to turn it over to the plaintiff as the plaintiff would find it
after the war.He insists therefore that he was relieved of any duty to make an accounting.

ISSUE: WON defendant is obliged to render an accounting to the plaintiff? YES. Prohibit using na

HELD: Defendant had been entrusted with the possession and management of the plaintiffsbusiness
and property for the owners benefit and had not made an accounting.

That the defendant was only a manager is also made evident by two sets of business cards of the
Silver DollarCaf which he himself caused to be printed. On the first set, David Thomas was held out
as the proprietor andHermogenes Pineda, as manager. On the second set, which were ordered later,
the defendant was not evenmentioned as manager, but one Bill Magner, while David Thomas name
was retained as proprietor.

There is no escaping the conclusion that the plaintiff was the sole owner of the post-war Silver Dollar
bar andrestaurant, that the defendant was only an industrial partner,

The court held that the defendant registered the business in bad faith.The plaintiffs non-use of his
trade name did not work as a forfeiture of his exclusive right to the name.As legal proposition and in
good conscience, the defendants registration of the trade name SilverDollar Caf must be deemed to
have been affected for the benefit of its owner of whom he was a mere trustee or employee.

"The relations of an agent to his principal are fiduciary and it is an elementary and very old rule that
inregard to property forming the subject matter of the agency, he is estopped from acquiring or
asserting a title adverse to that of principal. His position is analogous to that of a trustee and he
cannot consistently, with the principles of good faith, be allowed to create in himself an interest in
opposition to that of his principal or cestui que trust. A receiver, trustee, attorney, agent or any
otherperson occupying fiduciary relations respecting property or persons utterly disabled from
acquiring forhis own benefit the property committed to his custody for management. This rule is
entirelyindependent of the fact whether any fraud has intervened. No fraud in fact need be shown,
and noexcuse will be heard from any such inquiry that the rule takes so general form. The rule stands
on the moral obligation to refrain from placing one's self in position which ordinarily excite conflicts
betweenself-interest at the expense of one's integrity and duty to another, by making it possible to
profit by yielding to temptation"

JESUS MA. CUI, ET AL., plaintiffs-appellants, vs.ANTONIO MA. CUI, ET AL., defendants-appellees.

SALE OF LAND- Old Age Mental Fitness

 1. Jesus Ma. Cui and Jorge Ma. Cui brought an action in CFi Cebu against Antonio Ma. Cui and
Mercedes Cui de Ramas seeking the annulment of the sale of three parcels of land . RFC
was included because the lands were mortgaged to it to secure a loan
2. Their father Don Mariano was declared incompetent and one Victorino Reynes was appointed
as his guardian.
3. On July 13, 1949, the complaint was amended by including as party plaintiffs the guardian as
party plaintiffs Victorino Reynes and the other children and relatives of Don Mariano, namely,
Jose Ma. Cui, Serafin Ma. Cui, Rosario Cui, her husband Irineo Encarnacion, Lourdes C.
Velez, Priscilla Velez and Federico Tamayo.
4. Defendants in their answer set up the defense that the sale mentioned in the complaint is
valid because it was executed when Don Mariano Cui was still in possession of his
mental faculties and that, while the sale was at first executed in favor of the defendants and
their sister Rosario Cui, Rosario however resold her share to Don Mariano
5. CFI rendered its decision dismissing the complaint and which plaintiffs appealed
6. Petitioner contends that while Mariano was 84 years of age and under the influence of
defendants, the latter, by means of deceit, secured the transfer to themselves of the
aforementioned lots without any pecuniary consideration;
7. That defendants, fraudulently secured a loan from the Rehabilitation properties, and
contructed thereon an apartment building of strong materials consisting of 14 doors, and
another building which were leased to some Cinese commercial firms which defendants have
collected to the prejudice of the plaintiffs
8. Defendants contendendthat six days before the sale, Don Mariano had executed a general
power of attorney in favor of defendant Antonio Cui, which act could signify that Don
Mariano himself realized that he was longer capacitated to administer his properties
9. Rosario Cui testified otherwise, Don Mariano was still in good mental condition and this
was corroborated thru different correspondence written by Mariano as she was staying
with him.
10. There are other letters and documents which Don Mariano had prepared and executed in
the neighborhood of the time the deed of sale in question was executed which also depict the
mental condition that he possessed at the time,
11. Don Mariano signed and executed the deed of sale Exhibit A not only at a time when he was
still in the full enjoyment of his mental faculties, but also under conditions which indicate that
he knew what he was doing and, as a consequence, it cannot be said that he has entered into
the transaction without his consent or under a misapprehension that the document he was
signing was not the sale of the properties in question but one merely pertaining to their
administration.
12. There is however no concrete proof that may substantiate this claim of undue influence.
13. Petitioner contend As an additional arguemen to nullify the deed of sale Exhibit A, appellants
raise the question that said sale should be invalidated at least in so far as the portion of the
property sold to Antonio Cui is concerned, for the reason that when that sale was effected he
was then acting as the agent or administrator of the properties of Don Mariano Cui.
14. While under article 1459 of the old Civil Code an agent or administrator is disqualified from
purchasing property in his hands for sale or management, and, in this case, the property in
question was sold to Antonio Cui while he was already the agent or administrator of the
properties of Don Mariano Cui,
15. (3) The prohibition of the law is contained in article 1459 of the old Civil Code, but this
prohibition has already been removed. Under the provisions of article 1491, section 2, of the
new Civil Code, an agent may now buy property placed in his hands for sale or
administration, provided that the principal gives his consent thereto. While the new Code
came into effect only on August 30, 1950, however, since this is a right that is declared for
the first time, the same may be given retroactive effect if no vested or acquired right is
impaired (Article 2253, new Civil Code). During the lifetime Don Mariano, herein appellants
could not claim any vested or acquired right in these properties, for, as heirs, the most they
had was a mere expectancy. We may, therefore, invoke now this practical and liberal
provision of our new Civil Code even if the sale had taken place before its effectivity.

Having reached the conclusion that the lots in question were the exclusive property of Don Mariano
Cui and that the deed of sale Exhibit A was executed by him freely, intelligently, and with sufficient
pecuniary consideration,
THE UNITED STATES, plaintiff-appellee, vs.DOMINGO REYES, defendant-appellant..

COMMISSION (actual collected vs supposedly collected)

1. R. B. Blackman is a surveyor in the Province of Pangasinan. Domingo Reyes, the accused,

also lives in that province. Blackman employed Reyes to collect certain amounts due from
twelve individuals for Blackman's work in connection with the survey of their lands. The total
amount to be collected by Reyes was P860. He only succeeded in collecting P540. He
delivered to Blackman P368. He retained the balance, or P172. So far as good.
2. The difficult point concerns the exact terms of the contract. It was merely an oral agreement
between Blackman and Reyes.
3. Blackman claims that he agreed to pay Reyes a commission of 10 per cent. Reyes claims
that he was to receive a commission of 20 per cent.
4. The trial court, in its decision, states that " (R. B. Blackman, offered a 10 per cent
commission on all accounts collected.)
5. if we accept the statements of Blackman, Reyes was entitled to 10 per cent of P540 (or
P530), or P54, making P172 misappropriated, or, if we deduct his commission, P118. On the
other hand, if we accept the statements of Reyes, then 20 per cent of the total amount to be
collected, P860, is exactly P172, the amount claimed to have been misappropriated.
6. Conceding that Reyes was to receive 20 per cent, this, unless some contrary and express
stipulation was included, would not entitle him in advance to 20 per cent of the amount
actually collected. he right to receive a commission of either 10 or 20 per cent did not make
to hold out any sum he chose. under the oral contract Reyes was an agent who was
bound to pay to the principal all that he had received by virtue of the agency. since for
all practical purposes, the agency was terminated, the agent was under the obligation to
turn over to the principal the amount collected, minus his commission on that amount
7. under the oral contract Reyes was an agent who was bound to pay to the principal all
that he had received by virtue of the agency.
8. since for all practical purposes, the agency was terminated, the agent was under the
obligation to turn over to the principal the amount collected, minus his commission on
that amount.

ROSA VILLA MONNA, plaintiff-appellee, vs.GUILLERMO GARCIA BOSQUE, ET AL., defendants.

GUILLERMO GARCIA BOSQUE, F. H. GOULETTE, and R. G. FRANCE, appellants.

BOOKSTORE, Substitution explicit power

1. plaintiff, Rosa Villa y Monna, viuda de E. Bota, was the owner of a printing establishment and
bookstore known as La Flor de Cataluna,
2. plaintiff, a resident of Barcelona, Spain, acting through Manuel Pirretas, as attorney in fact,
sold the establishment to the defendants Guillermo Garcia Bosque and Jose Pomar Ruiz, for
the stipulated sum of P55,000, payable in installments
3. By the contract of sale the deferred installments bear interest at the rate of 7 per centum per
annum. In the same document the defendants France and Goulette obligated themselves as
solidary sureties with the principals
4. Manuel Pirretas the attorney in fact of the plaintiff, absented himself from the Philippine
Islands on a prolonged visit to Spain; he executed a document, to be a partial substitution of
agency, whereby he transferred to "the mercantile entity Figueras Hermanos, or the person,
or persons, having legal representation of the same," the powers that had been previously
conferred on Pirretas by the plaintiff "in order that," so the document runs, "they may be able
to effect the collection of such sums of money as may be due to the plaintiff
5. When the time came for the payment of the second installment and accrued interest due at
the time, the purchasers were unable to comply with their obligation, and after certain
 negotiations between said purchasers and one Alfredo Rocha, representative of Figueras
Hermanos, acting as attorney in fact for the plaintiff, an agreement was reached,
6. These new payment schemes were not paid promptly at maturity
7. A certain M. T. Figueras (of Figueras Hermanos) later enters into an agreement to discharge
Guillermo by Novating the Contract
8. Rosa is now alleging that Figueras had no authority to execute the contract containing the
release of Guillermo et al from their liability, and that she had not ratified the same. Guillermo
et al argue otherwise, using the agreement as a novation releasing him from personal liability.

ISSUE(S):
WON Rosa is bound to the agreement made by Figueras, therefore removing her cause of action
against Guillermo et al.

RATIO:
The court first looks at the partial substitution of agency made by Manuel Pirretas, conferring on
Figueras Hermanos or the person or persons exercising legal representation of FH all of the powers
that had been conferred on Pirretas by the plaintiff in the original power of attorney.

It was argued that the original power of attorney included a wide range of powers (including the
general power of Pirretas to sell the business upon conditions fixed by Pirretas, as well as the power
of substitution to collect balance due to Rosa). However, the Court has also said that the substitution
agreement between Pirretas and FH were explicit the sole purpose of the substitution was only
to collect the balance of the selling price of the Printing Establishment and Bookstore above-
mentioned, which has been sold to Messrs. Bosque and Pomar. Nothing can be construed to
authorize Figueras to discharge debtors or novate the contract. On the other hand, the
substitution agreement is very much explicit in limiting the powers of Figueras.

Furthermore, it was the mercantile entity Figueras Hermanos (or its legal representatives) who
were given the capacity to exercise the substituted power. Not MT Figueras. M. T. Figueras
intervenes as purpoted attorney in fact without anything whatever to show that he is in fact the legal
representative of Figueras Hermanos or that he is there acting in such capacity. The act of
substitution conferred no authority whatever on M. T. Figueras as an individual.

DISPOSITIVE: Appealed judgment affirmed.

NATIONAL POWER CORPORATION, Plaintiff-Appellant, v. NATIONAL MERCHANDISING

CORPORATION and DOMESTIC INSURANCE COMPANY OF THE PHILIPPINES, Defendants-
Appellants.

SULFUR Delivery No Shipping Available

1. NAMERCO, as the representative of the International Commodities Corporation New York

City, executed with NAPOCOR a contract for the purchase by the NPC from the New York
firm of four thousand long tons of crude sulfur for its Maria Cristina Fertilizer Plant in Iligan
City at a total price of

2. Performance bond was executed by the Domestic Insurance Company in favor of the NPC to
guarantee the sellers obligations
3. It was stipulated in the contract of sale that the seller would deliver the sulfur at Iligan City
within sixty days and that failure to effect delivery would subject the seller and its surety to the
payment of liquidated damages
4. The New York supplier was not able to deliver the sulfur due to its inability to secure shipping
space. During the period from January 20 to 26, 1957 there was a shutdown of the NPCs
fertilizer plant because there was no sulfur.
5. In a letter dated February 27, 1957, the general manager of the NPC advised Namerco and
the Domestic Insurance Company that under Article 9 of the contract of sale "non-availability
 of bottom or vessel" was not a fortuitous event that would excuse non-performance

6. NPC sued the New York firm, Namerco and the Domestic Insurance Company for the
recovery of the stipulated liquidated damages
7. The trial court dismissed the case as to the New York firm for lack of jurisdiction because it
was not doing business in the Philippines .
8. Defendants appeal contend that the delivery of the sulfur was conditioned on the availability
of a vessel to carry the shipment and that Namerco acted within the scope of its authority as
agent in signing the contract of sale.
9. The documentary evidence belies these contentions. The invitation to bid issued by the
NPC provides that non-availability of a steamer to transport the sulfur is not a ground
for non-payment of the liquidated damages in case of non-performance by the seller.

"4. Responsibility for availability of vessel. The availability of vessel to transport the
quantity of sulfur within the time specified in item 14 of this specification shall be the
responsibility of the bidder.
10. Namercos bid or offer is even more explicit. It provides that it was "responsible for the
availability of bottom or vessel" and that it "guarantees the availability of bottom or
vessel to ship the quantity of sulfur within the time specified in this bid"
11. In the contract of sale itself item 15 of the invitation to bid is reproduced in Article 9 which
provides that "it is clearly understood that in no event shall the seller be entitled to an
extension of time or be exempt from the payment of liquidated damages herein
specified for reason of lack of bottom or vessel"
12. It is true that the New York corporation in its cable to Namerco dated August 9, 1956 stated
that the sale was subject to availability of a steamer However, Namerco did not disclose
that cable to the NPC and, contrary to its principals instruction, it agreed that
nonavailability of a steamer was not a justification for nonpayment of the liquidated
damages.

13. The trial court rightly concluded that Namerco acted beyond the bounds of its authority
because it violated its principals cabled instructions (1) that the delivery of the sulfur should
be "C & F Manila", not "C & F Iligan City" ; (2) that the sale be subject to the availability of a
steamer and (3) that the seller should be allowed to withdraw right away the full amount of the
letter of credit and not merely eighty percent thereof (pp- 123-124, Record on Appeal).

14. NPC counter-argues that Namerco should have advised the NPC of the limitations on its
authority to negotiate the sale.
15. Namerco is liable for damages because under article 1897 of the Civil Code the agent who
exceeds the limits of his authority without giving the party with whom he contracts sufficient
notice of his powers is personally liable to such party.
16. The truth is that even before the contract of sale was signed Namerco was already aware that
its principal was having difficulties in booking shipping space. In a cable dated October 16,
1956, or one day before the contract of sale was signed, the New York supplier advised
Namerco that the latter should not sign the contract unless it (Namerco) wished to assume
sole responsibility for the shipment (Exh. T).

17. New York firm cabled Namerco that the firm did not consider itself bound by the contract of
sale and that Namerco signed the contract on its own responsibility (Exh. W).
18. However, defendants-appellants contended that every person dealing with an agent is put
upon inquiry and must discover upon his peril the authority of the agent would apply in
this case if the principal is sought to be held liable on the contract entered into by the
agent.That is not so in this case. Here, it is the agent that it sought to be held liable on a
contract of sale which was expressly repudiated by the principal because the agent took
chances, it exceeded its authority, and, in effect, it acted in its own name.
19. Also, Defendants cite article 1403 of the Civil Code which provides that a contract entered
into in the name of another person by one who has acted beyond his powers is
unenforceable. We hold that defendants contention is untenable because article 1403 refers
to the unenforceability of the contract against the principal. In the instant case, the contract
containing the stipulation for liquidated damages is not being enforced against it
principal but against the agent and its surety.
 It is being enforced against the agent because article 1807 implies that the agent who acts in
excess of his authority is personally liable to the party with whom he contracted.

And that rule is complemented by article 1898 of the Civil Code which provides that "if the
agent contracts in the name of the principal, exceeding the scope of his authority, and
the principal does not ratify the contract, it shall be void if the party with whom the
agent contracted is aware of the limits of the powers granted by the principal."

It is being enforced against the agent because article 1897 implies that the agent who acts
in excess of his authority is personally liable to the party with whom he contracted.

20. As priorly discussed, namerco, as agent, exceeded the limits of its authority in contracting
with the NPC in the name of its principal. The NPC was unaware of the limitations on the
powers granted by the New York firm to Namerco. Namerco never disclosed to the NPC the
cabled or written instructions of its principal. For that reason and because Namerco
exceeded the limits of its authority, it virtually acted in its own name and not as agent
and it is, therefore, bound by the contract of sale which, however, is not enforceable
against its principal.

MARIANO A. ALBERT, plaintiff-appellant,

vs.UNIVERSITY PUBLISHING CO., INC., defendant-appellee.

NON EXISTING PUBLISHING CORPORATION

1. Defendant, through Jose M. Aruego, its President, entered into a contract with plaintifif; that
defendant had thereby agreed to pay plaintiff P30,000.00 for the exclusive right to publish
his revised Commentaries on the Revised Penal Code and for his share in previous sales of
the book's first edition;
2. Defendant had undertaken to pay in eight quarterly installments and that defendant had failed
to pay the second installment.
3. CFI favoured ordering the defendant to pay the administrator Justo R. Albert,
4. Court ordered issuance of an execution writ against University Publishing Co., Inc.
5. Sheriff of Manila discovered that there is no such entity as University Publishing Co., Inc."
6. The fact of non-registration of University Publishing Co., Inc. in the SEC has not been
disputed.
7. Defendant would only raise the point that "University Publishing Co., Inc.," and not Jose M.
Aruego, is the party defendant; thereby assuming that "University Publishing Co., Inc." is an
existing corporation with an independent juridical personality. Precisely, however, on account
of the non-registration it cannot be considered a corporation, not even a corporation de
facto .It has therefore no personality separate from Jose M. Aruego; it cannot be sued
independently.
8. Aruego represented a non-existent entity and induced not only the plaintiff but even the court
to believe in such representation. He signed the contract as "President" of "University
Publishing Co., Inc.," stating that this was "a corporation duly organized and existing under
the laws of the Philippines," and obviously misled plaintiff (Mariano A. Albert) into believing
the same. One who has induced another to act upon his wilful misrepresentation that a
corporation was duly organized and existing under the law, cannot thereafter set up
against his victim the principle of corporation by estoppel
9. "University Publishing Co., Inc." purported to come to court, answering the complaint and
litigating upon the merits. But as stated, "University Publishing Co., Inc." has no independent
personality; it is just a name. Jose M. Aruego was, in reality, the one who answered and
litigated, through his own law firm as counsel. He was in fact, if not, in name, the defendant.
10. SC: A person acting or purporting to act on behalf of a corporation which has no valid
existence assumes such privileges and obligations and becomes personally liable for
contracts entered into or for other acts performed as such agent."
11. In this connection, it must be realized that parties to a suit are "persons who have a right to
control the proceedings, to make defense, to adduce and cross-examine witnesses, and to
 appeal from a decision" (67 C.J.S. 887) and Aruego was, in reality, the person who had
and exercised these rights. Clearly, then, Aruego had his day in court as the real defendant;
and due process of law has been substantially observed.
12. The evidence is patently clear that Jose M. Aruego, acting as representative of a non-existent
principal, was the real party to the contract sued upon; and thus assumed such privileges and
obligations and became personally liable for the contract entered into or for other acts
performed as such agent; that he was the one who reaped the benefits resulting from it, so
much so that partial payments of the consideration were made by him; that he violated its
terms, thereby precipitating the suit in question; and that in the litigation he was the real
defendant. Perforce, in line with the ends of justice, responsibility under the judgment falls on
him.

NORA S. EUGENIO and ALFREDO Y. EUGENIO, petitioners,

vs.HON. COURT OF APPEALS and PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES,

PEPSI, dispalco

FACTS: Nora Eugenio was a dealer of Pepsi. She had one store in Marikina but had a regular charge
account in Q.C. And Muntinlupa. Her husband Alfredo used to be a route manager for Pepsi in its
Q.C. Plant. Pepsi filed a complaint for a sum of money against Eugenio spouses. since
according to them the spouses (1) had an outstanding balance since it purchased and received on
credit various products from both its Q.C. and Muntinlupa plant and (2) had an unpaid obligation for
the loaned empties from Pepsi. They contend that the total outstanding account was P94,651.xx.

Eugenio's in their defense presented four Trade Provisional Receipts (TPR) allegedly issued to
and received by them from Pepsi's Route Manager (Malate Warehouse) Jovencio Estrada
showing that they paid a total sum of P80,500.xx. They also claim that the signature of Nora
Eugenio in a Sales Invoice (85366) for the amount of P5,631.xx which was included in the
computation of their debt was falsified. Therefore, without these errors, petitioner contend that (1)
they do not have any outstanding debt, and (2) it is Pepsi who owes them P3,546.02.

RTC found in favor of Pepsi. CA affirmed the decision.

ISSUE: W/N the amounts in the TPR should be credited in favor of the spouses.

HELD: CA decision is annulled and set-aside. Pepsi is ordered to pay Eugenio.

Background: Eugenio submitted the TPR's to Atty. Rosario (Pepsi's lawyer). Thereafter, Rosario
ordered Daniel Azurin (asst.personnel manager) to conduct an investigation to verify the claim of the
petitioners. According to Azurin, Estrada denied that he issued and signed the TPR's. Azurin
testified to this in Court (However, Estrada never did. He failed to appear and was never found.
Therefore, his testimony- as told by Azurin- is barred by the Hearsay Evidence Rule).

Furthermore, the investigation conducted was really more of an interview without any safeguards
and did not give Eugenio opportunity to object or cross-examine Estrada. The other points of Estrada
(and Pepsi) were all invalid since Estrada was nowhere to be found and Pepsi failed to comply with
the pertinent rules for the admission of the evidence by which it sought to prove its contentions. Pepsi
therefore was unable to rebut the aforestated presumptions in favor of valid payment by petitioners,

In relation to Agency: Assuming in this case that Pepsi never received the amounts reflected in the
TPR's, Pepsi still failed to prove that Estrada (its duly authorized agent) did not receive the amounts.
In so far as Eugenio is concerned, their obligation is extinguished when theypaid Estrada using
Pepsi's official receipt. The substantive law is that payment shall be made to the person in whose
favor the obligation has been constituted, or his successor in interest, or any person
authorized to receive it.

*TPR: Trade Provisional Receipts are bound and given in booklets to the company sales
representatives, under proper acknowledgement by them and with a record of the distribution
thereof. After every transaction, when a collection is made the customer is given by the sales
representative a copy of the TPR, that is, the triplicate copy or customer's copy, properly filled up to
reflect the completed transactions. All unused TPR's,as well as the collections made, are turned over
by the sales representative to the appropriate company officer.

GREEN VALLEY POULTRY & ALLIED PRODUCTS, INC., petitioner

vs.THE INTERMEDIATE APPELLATE COURT and E.R. SQUIBB & SONS PHILIPPINE
CORPORATION, respondents.

VETERINARY PRODUCTS, Sold on Credit by Agent

1. Squibb and Green Valley entered into a letter agreement that Squibb & Sons Philippine
Corporation is pleased to appoint Green Valley Poultry & Allied Products, Inc. as a non-exclusive
distributor for Squibb Veterinary Products. As a distributor, Green Valley Poultry & Allied
Products, Inc. will be entitled to a discount as follows: Feed Store Price (Catalogue) Less 10%
Wholesale Price Less 10% Distributor Price

Green Valley Poultry & Allied Products, Inc. will distribute only for the Central Luzon and Northern
Luzon including Cagayan Valley areas. We will not allow any transfer or stocks from Central Luzon
and Northern Luzon including Cagayan Valley to other parts of Luzon, Visayas or Mindanao

It is understood that Green Valley Poultry & Allied Products, Inc. will put up a bond of P20,000.00
from a mutually acceptable bonding company.

Payment for Purchases of Squibb Products will be due 60 days from date of invoice or the nearest
business day thereto. No payment win be accepted in the form of post-dated checks. Payment by
check must be on current dating.

For goods delivered to Green Valley but unpaid, Squibb filed suit to collect. The trial court as
aforesaid gave judgment in favor of Squibb which was affirmed by the Court of Appeals.

In both the trial court and the Court of Appeals, the parties advanced their respective theories.

Green Valley claimed that the contract with Squibb was a mere agency to sell; that it never
purchased goods from Squibb; that the goods received were on consignment only with the obligation
to turn over the proceeds, less its commission, or to return the goods ff not sold, and since it had sold
the goods but had not been able to collect from the purchasers thereof, the action was premature.

Upon the other hand, Squibb claimed that the contract was one of sale so that Green Valley was
obligated to pay for the goods received upon the expiration of the 60-day credit period.

Both courts below upheld the claim of Squibb that the agreement between the parties was a sales
contract. Whether viewed as an agency to sell or as a contract of sale, the liability of Green Valley is
indubitable. Adopting Green Valley's theory that the contract is an agency to sell, it is liable because it
sold on credit without authority from its principal. The Civil Code has a provision exactly in point.
It reads:

Art. 1905. The commission agent cannot, without the express or implied
consent of the principal, sell on credit. Should he do so, the principal may demand
from him payment in cash, but the commission agent shall be entitled to any interest
or benefit, which may result from such sale.

In an agency to sell, the agent is liable to pay the principal for goods sold by the agent without the
principal's consent. The commission agent cannot without the express or implied consent of the
principal, sell on credit. Should he do so, the principal may demand from him payment in cash
WHEREFORE, the petition is hereby dismissed;

BA Finance Corporation v. Court of Appeals, G.R. No. 94566 July 3, 1992

FORD SEDAN INSURANCE

1. Under the deed of chattel mortgage, B.A. Finance Corporation was constituted attorney-in-
fact with full power and authority to file, follow-up, prosecute, compromise or settle insurance
claims; to sign execute and deliver the corresponding papers, receipts and documents to the
Insurance Company as may be necessary to prove the claim, and to collect from the latter the
proceeds of insurance to the extent of its interests, in the event that the mortgaged car suffers
any loss or damage.

Facts: Spouses Manuel and Lilia Cuady obtained from Supercars, Inc. bought a Ford Escort 1300,
four-door sedan in installments. To secure the faithful and prompt compliance of the obligation under
the said promissory note, the Cuady spouses constituted a chattel mortgage on the aforementioned
motor vehicle. Supercars, Inc. assigned the promissory note, together with the chattel mortgage, to
B.A. Finance Corporation. The Cuadys made partial payment leaving an un paid balance.In addition
thereto, the Cuadys owe B.A. Finance .B.A. Finance Corporation, as the assignee of the mortgage
lien obtained the renewal of the insurance coverage over the aforementioned motor vehicle for the
with Zenith Insurance Corporation, when the Cuadys failed to renew said insurance coverage
themselves. Under the terms and conditions of the said insurance coverage, any loss under the policy
shall be payable to the B.A. Finance Corporation.
The motor vehicle figured in an accident and was badly damaged. The unfortunate happening was
reported to the B.A. Finance Corporation and to the insurer, Zenith Insurance Corporation. The
Cuadys asked the B.A. Finance Corporation to consider the same as a total loss, and to claim
from the insurer the face value of the car insurance policy and apply the same to the payment of
their remaining account and give them the surplus thereof, if any. But instead of heeding the
request of the Cuadys, B.A. Finance Corporation prevailed upon the former to just have the car
repaired. Not long thereafter, however, the car bogged down. The Cuadys wrote B.A. Finance
Corporation requesting the latter to pursue their prior instruction of enforcing the total loss
provision in the insurance coverage. When B.A. Finance Corporation did not respond favorably to
their request, the Cuadys stopped paying their monthly installments on the promissory note. In
view of the failure of the Cuadys to pay the remaining installments on the note, B.A. Finance
Corporation sued them.

B.A. Finance Corporation contended that even if it failed to enforce the total loss provision in the
insurance policy of the motor vehicle subject of the chattel mortgage, said failure does not operate to
extinguish the unpaid balance on the promissory note, considering that the circumstances obtaining in
the case at bar do not fall under Article 1231 of the Civil Code relative to the modes of extinguishment
of obligations.

Issue: Whether or not BA Finance can still collect on the deficiency of the Chattel Mortgage.

Held: In granting B.A. Finance Corporation the aforementioned powers and prerogatives, the Cuady
spouses created in the formers favor an agency. Thus, under Article 1884 of the Civil Code of the
Philippines, B.A. Finance Corporation is bound by its acceptance to carry out the agency, and
is liable for damages which, through its non-performance, the Cuadys, the principal in the case
at bar, may suffer; in such case, the assignee of the mortgage agreement is bound by the same
stipulation and if the assignee failed to file and prosecute the insurance claim when the car was
damaged totally, the mortgagor is relieved from his obligation to pay as he suffered a loss
because of the failure of the mortgagee to file the claim.
Under the deed of chattel mortgage, B.A. Finance Corporation was constituted attorney-in-fact with
full power and authority to file, follow-up, prosecute, compromise or settle insurance claims;
to sign execute and deliver the corresponding papers, receipts and documents to the
Insurance Company as may be necessary to prove the claim, and to collect from the latter the
proceeds of insurance to the extent of its interests, in the event that the mortgaged car suffers
any loss or damage.

BACALTOS COAL MINES and GERMAN A. BACALTOS, petitioners,

vs.HON. COURT OF APPEALS and SAN MIGUEL CORPORATION, respondents.

MINING VESSEL NOT AUTHORIZED TO USE

In an Authorization, petitioner German Bacaltos authorized Rene Savellon, to use the coal
operating contract of Bacaltos Coal Mine of which he is the proprietor, For any legitimate
purpose that it may serve and particularly: (1) to acquire purchase orders; (2) to engage in
trading; (3) to collect all receivables due or in arrears; (4) to extend to any person or company
by substitution the same extent of authority that is granted to Rene Savellon; (5) in connection
with the preceding paragraphs to execute and sign documents, contracts, and other pertinent
papers.

In 1988, a Trip Charter Party was executed between Bacaltos Coal Mines (represented by
Savellon) and San Miguel. The agreement was that For Php 650,000 to be paid within seven days
after the execution of the contract, it "lets, demises" the vessel to charterer SMC "For three round
trips to Davao." The vessel was able to make only one trip, so SMC filed an action for specific
performance.

Petitioners alleged that Savellon was not their Chief Operating Officer and that the powers
granted to him are only those clearly expressed in the Authorization which do not include the
power to enter into any contract with SMC.

ISSUE:

WON Savellon was duly authorized by the petitioners to enter into the Trip Charter Party.

RULING:

NO. The broadest scope of Savellon's authority is limited to the use of the coal operating
contract and the clause cannot contemplate any other power not included in the enumeration
or which are unrelated either to the power to use the coal operating contract or to those
already enumerated. In short, while the clause allows some room for flexibility, it can comprehend
only additional prerogatives falling within the primary power and within the same class as those
enumerated. There is no evidence at all that Bacaltos Coal Mines as a coal mining company
owns and operates vessels, and even if it owned any such vessels, that it was allowed to
charter or lease them. Also, the Authorization is not a general power of attorney. It is a special
power of attorney for it refers to a clear mandate specially authorizing the performance of a
specific power and of express acts subsumed therein.

Furthermore, had SMC exercised due diligence and prudence, it should have known in no time
that there is absolutely nothing on the Face of the Authorization that confers upon Savellon
the authority to enter into any Trip Charter Party SMC dealt with Savellon at its own peril.
VICENTE M. DOMINGO, represented by his heirs, ANTONINA RAYMUNDO VDA. DE DOMINGO,
RICARDO, CESAR, AMELIA, VICENTE JR., SALVADOR, IRENE and JOSELITO, all surnamed
DOMINGO, petitioners-appellants, vs.GREGORIO M. DOMINGO, respondent-appellee, TEOFILO P.
PURISIMA, intervenor-respondent.

SALE OF LAND, Propina not disclosed

Facts: Gregorio Domingo, Vicente Domingos broker and agent, received P1,000 from Oscar de Leon
as gift or propina. Oscar gave him said amount after Gregorio succeeded in persuading Vicente to
accept his offer to buy the lot for P1.20 instead of P2.
Held: 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. 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.

Facts:
Vicente Domingo granted to Gregorio Domingo, a real estate broker, the exclusive agency to
sell his Lot
According to the document, said lot must be sold for P2 per sq. m. 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 introduced Oscar de Leon to Gregorio as a porspective 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 Gregorio and Oscar, Oscar raised his offer to P1.20 per sq.
m. or P109,000 in total. 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.
Moreover, 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.
So, 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.
Thereafter, 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. Oscar 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
P104,000.
In his reply, Vicente stated that Gregorio is not entitled to the 5% commission because he sold
the property not to Gregorio's buyer, Oscar de Leon, but to another buyer, Amparo Diaz, wife of
Oscar de Leon.
CA: exclusive agency contract is genuine. The sale of the lot to Amparo de Leon is practically a
sale to Oscar.

Issue:
WON Gregorios act of accepting the gift or propina from Oscar constitutes a fraud which would cause
the forfeiture of his 5% commission [YES]

Ratio:
Gregorio Domingo as the broker, received a gift or propina from the prospective buyer Oscar de
Leon, without the knowledge and consent of his principal, Vicente Domingo. His acceptance of
said substantial monetary gift corrupted his duty to serve the interests only of his
principal and undermined his loyalty to his principal, 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.
Rationale: 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
hisprincipal, 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.

Article 1909 demand the utmost good faith, fidelity, honesty, candor and fairness on the part of
the agent, the real estate broker in this case, to his principal, the vendor. The law imposes
upon the agent the absolute obligation to make a full disclosure or complete account to
his principal of all his transactions and other material facts relevant to the agency, so
much so that the law as amended does not countenance any stipulation exempting the agent
from such an obligation and considers such an exemption as void. The duty of an agent is
likened to that of a trustee. This is not a technical or arbitrary rule but a rule founded on
the highest and truest principle of morality as well as of the strictest justice.

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.

Dispositive: CA decision reversed.

METROPOLITAN BANK & TRUST COMPANY, petitioner,

vs.COURT OF APPEALS, GOLDEN SAVINGS & LOAN ASSOCIATION, INC., LUCIA CASTILLO,
MAGNO CASTILLO and GLORIA CASTILLO, respondents.

TREASURY WARRANTS CLEARANCE

1. Eduardo Gomez opened an account with Golden Savings and deposited over a period of two
months 38 treasury warrants with a total value of P1,755,228.37.
2. All these warrants were subsequently indorsed by Gloria Castillo as Cashier of Golden
Savings and deposited to its Savings Account in the Metrobank branch in Calapan, Mindoro.
They were then sent for clearing by the branch office to the principal office of Metrobank,
which forwarded them to the Bureau of Treasury for special clearing.
3. More than two weeks after the deposits, Gloria Castillo went to the Calapan branch several
times to ask whether the warrants had been cleared. She was told to wait. Accordingly,
Gomez was meanwhile not allowed to withdraw from his account. Later, however,
"exasperated" over Gloria's repeated inquiries and also as an accommodation for a "valued
client," the petitioner says it finally decided to allow Golden Savings to withdraw from the
proceeds of the warrants
4. In turn, Golden Savings subsequently allowed Gomez to make withdrawals from his own
account, eventually collecting the total amount of P1,167,500.00 from the proceeds of the
apparently cleared warrants.
5. Later on, Metrobank informed Golden Savings that 32 of the warrants had been dishonored
by the Bureau of and demanded the refund by Golden Savings of the amount it had
previously withdrawn, to make up the deficit in its account.
6. The demand was rejected. Metrobank then sued Golden
7. After trial, judgment was rendered in favor of Golden Savings, which, however, filed a motion
for reconsideration even as Metrobank filed its notice of appeal.
8. SC: The petition has no merit.
9. Metrobank was indeed negligent in giving Golden Savings the impression that the treasury
warrants had been cleared and that, consequently, it was safe to allow Gomez to withdraw
the proceeds thereof from his account with it. Without such assurance, Golden Savings would
not have allowed the withdrawals; with such assurance, there was no reason not to allow the
withdrawal.
10. Metrobank exhibited extraordinary carelessness. The amount involved was not trifling
more than one and a half million pesos
11. Metrobank would invoke the conditions printed on the dorsal side of the deposit slips through
which the treasury warrants were deposited by Golden Savings with its Calapan branch. The
conditions read as follows: Kindly note that in receiving items on deposit, the bank obligates
itself only as the depositor's collecting agent, assuming no responsibility beyond care in
selecting correspondents, and until such time as actual payment shall have come into
possession of this bank, the right is reserved to charge back to the depositor's account any
amount previously credited, whether or not such item is returned. This also applies to checks
drawn on local banks and bankers and their branches as well as on this bank, which are
unpaid due to insufficiency of funds, forgery, unauthorized overdraft or any other reason.
 12. According to Metrobank, the said conditions clearly show that it was acting only as a
collecting agent for Golden Savings and give it the right to "charge back to the depositor's
account any amount previously credited, whether or not such item is returned. This also
applies to checks ". . . which are unpaid due to insufficiency of funds, forgery, unauthorized
overdraft of any other reason." It is claimed that the said conditions are in the nature of
contractual stipulations and became binding on Golden Savings when Gloria Castillo, as its
13. In stressing that it was acting only as a collecting agent for Golden Savings, Metrobank
seems to be suggesting that as a mere agent it cannot be liable to the principal. This is not
exactly true. On the contrary, Article 1909 of the Civil Code clearly provides that Art. 1909.
The agent is responsible not only for fraud, but also for negligence, which shall be
judged 'with more or less rigor by the courts, according to whether the agency was or
was not for a compensation.
14. The negligence of Metrobank has been sufficiently established. To repeat for emphasis, it
was the clearance given by it that assured Golden Savings it was already safe to allow
Gomez to withdraw the proceeds of the treasury warrants he had deposited Metrobank misled
Golden Savings. There may have been no express clearance, as Metrobank insists (although
this is refuted by Golden Savings) but in any case that clearance could be implied from its
allowing Golden Savings to withdraw from its account not only once or even twice but three
times. The total withdrawal was in excess of its original balance before the treasury warrants
were deposited, which only added to its belief that the treasury warrants had indeed been
cleared.

GONZALO TUASON, plaintiff-appellee, vs.DOLORES OROZCO, defendant-appellant.

DENIED RECEIVED MONEY FROM MORTGAGED PROPERTY

1. Juan de Vargas y Amaya, husband of Orozco, executed a power of attorney to Enrique

Grupe, authorizing him, among other things, to dispose of all his property, and particularly of a
certain house and lot known in Malate Manila, for the price at which it was actually sold. He
was also authorized to mortgage the house for the purpose of securing the payment of any
amount advanced to his wife, Dolores Orozco de Rivero, who, inasmuch as the property had
been acquired with funds belonging to the conjugal partnership, was a necessary party to its
sale or incumbrance.
2. Enrique Grupe and Dolores Orozco obtained a loan from the plaintiff Tuason secured by a
mortgage on the property referred to in the power of attorney. In the caption of the instrument
evidencing the debt it is stated that Grupe and Dolores Orozco appeared as the parties of the
first part and Gonzalo Tuason, the plaintiff, as the party of the second part; that Grupe acted
for himself and also in behalf of Juan Vargas by virtue of the power granted him by the latter,
and that Dolores Orozco appeared merely for the purpose of complying with the requirement
contained in the power of attorney. In the body of the instrument the following appears:
3. Grupe also declares that of the 3,500 pesos, he has delivered to Dolores Orozco the sum of
2,200 pesos, having retained the remaining 1,300 pesos for use in his business; that
notwithstanding this distribution of the amount borrowed, he assumes liability for the whole
sum of 3,500 pesos, which he promises to repay
4. Grupe pledges as special security for the payment of the debt 13 shares of stock in the
"Compaia de los Tranvias de Filipinas,"
5. To secure the payment of the 2,200 pesos delivered to Dolores Orozco as aforesaid he
specially mortgages the in Malate
6. Dolores Orozco states that, in accordance with the requirement contained in the power of
attorney executed by Vargas to Grupe, she appears for the purpose of confirming the
mortgage created upon the property in question.The defendant denies having received
P2,200, but her denial can not overcome the proof to the contrary contained in the
agreement. She was one of the parties to that instrument and signed it. This necessarily
implies an admission on her part that the statements in the agreement relating to her are true.
She executed another act which corroborates the delivery to her of the money in question
that is, her personal intervention in the execution of the mortgage and her statement in
the deed that the mortgage had been created with her knowledge and consent.
 7. The fact that the defendant received the money from her husband's agent and not from the
creditor does not affect the validity of the mortgage in view of the conditions contained in the
power of attorney under which the mortgage was created. Nowhere does it appear in this
power that the money was to be delivered to her by the creditor himself and not
through the agent or any other person. The important thing was that she should have
received the money.
8. Orozco claims that the instrument is evidence of a debt personally incurred by Grupe for his
own benefit, and not incurred for the benefit of Vargas. This contention cannot be sustained.
The agreement was signed by Grupe as attorney in fact for Vargas. A debt this incurred by
the agent is binding directly upon the principal, provided the former acted, as in the
present case, within the scope of his authority. (Art. 1727) The fact that the agent has
also bound himself to pay the debt does not relieve from liability the principal for whose
benefit the debt was incurred. The individual liability of the agent constitutes only a further
security in favor of the creditor. The law does not provide that the agent cannot bind
himself personally to the fulfillment of an obligation incurred by him in the name and
on behalf of his principal. (Art. 1725)
9. The mortgage being valid and duly recorded in the Registry of Property, directly subjects the
property to the fulfillment of the obligation for the security of which it was created. It is of no
importance whether or not Grupe bound himself personally to pay the debt in question. The
right in rem arising from the mortgage would have justified the creditor in bringing his action
directly against the property encumbered,

GUADALUPE GONZALEZ and LUIS GOMEZ, plaintiffs-appellants, vs.E.J. HABERER, defendant-

FAKE OWNERSHIP OF LOT,

1. The plaintiff spouses executed a deed of sale over a tract of land with the defendant.
2. It was stipulated in their contract that if the plaintiffs were found by court to not be the owners
of the land, they would return any amount that the defendant had paid.
3. It was also stipulated that Gomez gave his wife Gonzalez the marital license to execute the
deed.
4. However, after making an initial payment of Php30,000, the defendant found that the land
was in the adverse possession of many others.
5. Thus,he stopped making payments. The plaintiffs then filed an action to recover the sum of
unpaid balance.
6. The defendant claimed that when they entered into this contract, the plaintiffs made false
representations and mislead him into thinking they had full ownership of the land.
7. Issue: WON Gonzalez was free of the liabilities that her husband incurred from the
misrepresentations in the sale of the land
8. Held: NO
9. Rationale: As to the plaintiffs contention that Gonzales cannot be charged by her husbands
misrepresentation, it is sufficient to say that the latter in negotiating for the sale of the land
acted as an agent and representative of his husband; having accepted the benefit of the
representations of her as agent she cannot, of course, escape liability for them. The latter
cannot accept such benefits and at the same time deny the responsibility for them
10. that the plaintiffs have made no efforts to prosecute the proceedings for the registration of the
land. He therefore asks that the contract be rescinded; that the plaintiffs be ordered to return
to him the P30,000 already paid by him to them and to pay P25,000 as damages for breach of
the contract.

The judgment appealed from is in accordance with the law, is fully sustained by the evidence, and is
therefore affirmed, with the costs against the appellants. So ordered.
PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs.COURT OF APPEALS, WILSON
KEE, C.T. TORRES ENTERPRISES, INC. and ELDRED JARDINICO, respondents.

MIXED UP LOT 9

1. Eldred Jardinico bought the rights to Lot 9 Pleasantville Subd. That time it was vacant.
Jardinico secured from the Register of Deeds of Bacolod City TCT in his name. It was then
that he discovered that improvements had been introduced on Lot 9 by respondent Wilson
Kee, who had taken possession thereof.
2. It appears that Kee bought on installment Lot 8 of the same subdivision from C.T. Torres
Enterprises, Inc. (CTTEI
3. CTTEI through its employee, Zenaida Octaviano, accompanied Kee's wife, Donabelle Kee, to
inspect Lot 8. Unfortunately, the parcel of land pointed by Octaviano was Lot 9. Thereafter,
Kee proceeded to construct his residence, a store, an auto repair shop and other
improvements on the lot.
4. After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The parties tried
to reach an amicable settlement, but failed.
5. Jardinico filed with the MTCC a complaint for ejectment with damages against Kee.
6. The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI.
However, the MTCC found that petitioner had already rescinded its contract with Kee over Lot
8 for the latter's failure to pay the installments due, and that Kee had not contested the
rescission. MTCC concluded that Kee no longer had any right over the lot.
7. On appeal, RTC) ruled that petitioner and CTTEI were not at fault or were not negligent, there
being no preponderant evidence to show that they directly participated in the delivery of Lot 9
to Kee5 .
8. CA ruled that Kee was a builder in good faith, as he was unaware of the "mix-up" when he
began construction of the improvements on Lot 8. It further ruled that the erroneous delivery
was due to the negligence of CTTEI,
9. ISSUE: (2) What is the liability, if any, of petitioner and its agent, C.T. Torres Inc.?
10. The roots of the controversy can be traced directly to the errors committed by CTTEI, when it
pointed the wrong property to Wilson Kee and his wife. It is highly improbable that a
purchaser of a lot would knowingly and willingly build his residence on a lot owned by
another, Kee had acted in the manner of a prudent man in ascertaining the identity of his
property. Lot 8 is covered by Transfer Certificate of Title No. T-69561, while Lot 9 is identified
in Transfer Certificate of Title No. T-106367. Hence, under the Torrens system of land
registration, Kee is presumed to have knowledge of the metes and bounds of the property
with which he is dealing. . . .
11. But as Kee is a layman not versed in the technical description of his property, he had to find a
way to ascertain that what was described in TCT No. 69561 matched Lot 8. Thus, he went to
the subdivision developer's agent and applied and paid for the relocation of the lot, as well
as for the production of a lot plan by CTTEI's geodetic engineer. Having full faith and
confidence in the reputation of CTTEI, and because of the company's positive identification of
the property, Kee saw no reason to suspect that there had been a misdelivery. The steps Kee
had taken to protect his interests were reasonable.
12. At the time he built improvements on Lot 8, Kee believed that said lot was what he bought
from petitioner. He was not aware that the lot delivered to him was not Lot 8. Thus, Kee's
good faith. Petitioner failed to prove otherwise.
13. Kee also filed a third-party complaint against petitioner and CTTEI, which was dismissed by
the RTC after ruling that there was no evidence from which fault or negligence on the part of
petitioner and CTTEI can be inferred. The Court of Appeals disagreed and found CTTEI
negligent for the erroneous delivery of the lot by Octaviano, its employee.
14. Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the
erroneous delivery of Lot 9 to Kee was an act which was clearly outside the scope of its
authority, and consequently, CTTEI I alone should be liable. It asserts that "while [CTTEI]
was authorized to sell the lot belonging to the herein petitioner, it was never authorized
to deliver the wrong lot to Kee" 13 .
15. Petitioner's contention is without merit.The rule is that the principal is responsible for the
acts of the agent, done within the scope of his authority, and should bear the damage
caused to third persons 14 . On the other hand, the agent who exceeds his authority is
personally liable for the damage 15
 16. CTTEI was acting within its authority as the sole real estate representative of petitioner when
it made the delivery to Kee. In acting within its scope of authority, it was, however, negligent.
It is this negligence that is the basis of petitioner's liability, as principal of CTTEI, per
Articles 1909 and 1910 of the Civil Code.

WHEREFORE , the petition is partially GRANTED. Petitioner Pleasantville respondent C.T. Torres
Enterprises, Inc. are declared solidarily liable for damages due to negligence;

FILIPINAS LIFE ASSURANCE COMPANY (now AYALA LIFE ASSURANCE, INC.), petitioner,
vs. CLEMENTE N. PEDROSO, TERESITA O. PEDROSO and JENNIFER N. PALACIO thru her
Attorney-in-Fact PONCIANO C. MARQUEZ, respondents.

INSURANCE INVESTMENT, ultra vires ratified

1. Respondent Teresita O. Pedroso is a policy holder of a life insurance issued by petitioner

Filipinas Life). Renato Valle was her insurance and Valle collected her monthly premiums.
2. Valle told her that the Filipinas Life Escolta Office was holding a promotional investment
program for policyholders. It was offering 8% prepaid interest a month for certain amounts
deposited on a monthly basis. Enticed, she invested.
3. Subsequently, she called the Escolta office and talked to Francisco Alcantara, the
administrative assistant, who referred her to the branch manager, Angel Apetrior. Pedroso
inquired about the promotional investment and Apetrior confirmed that there was such a
promotion.
4. Relying on the representations made by the petitioners duly authorized representatives
Apetrior and Alcantara, as well as having known agent Valle for quite some time, Pedroso
waited for the maturity of her initial investment.
5. Evetually, she was able to successfully collect her investment. As a matter of fact, she made
7 to 8 more investments in varying amounts
6. Pedroso told respondent Jennifer N. Palacio, also a Filipinas Life insurance policyholder,
about the investment plan. Palacio made an investment
7. However later on, when Pedroso tried to withdraw her investment, Valle did not want to return
some P17,000 worth of it. Palacio also tried to withdraw hers, but Filipinas Life, despite
demands, refused to return her money.
8. Respondents filed an action for the recovery of a sum of money.
9. RTC, Branch 3, Manila, held Filipinas Life and its co-defendants Valle, Apetrior and Alcantara
jointly and solidarily liable to the respondents.
10. Court of Appeals denied the motion for reconsideration.
11. ISSUE: Can co-defendants be jointly and severally liable to the herein respondents?
12. Filipinas Life does not dispute that Valle was its agent, but claims that it was only a life
insurance company and was not engaged in the business of collecting investment money. It
contends that the investment scheme offered to respondents by Valle, Apetrior and Alcantara
was outside the scope of their authority as agents of Filipinas Life such that, it cannot be
held liable to the respondents
13. SC: we find that the petition lacks merit.
14. It appears indisputable that respondents Pedroso and Palacio had invested certain amounts
and were received by Valle and remitted to Filipinas Life, using Filipinas Lifes official
receipts,. Valles authority to solicit and receive investments was also established by the
parties. When respondents sought confirmation, Alcantara, holding a supervisory position,
and Apetrior, the branch manager, confirmed that Valle had authority. While it is true
that a person dealing with an agent is put upon inquiry and must discover at his own peril the
agents authority, in this case, respondents did exercise due diligence in removing all doubts
and in confirming the validity of the representations made by Valle.
15. Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle. By the
contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. 12 The
general rule is that the principal is responsible for the acts of its agent done within the
scope of its authority, and should bear the damage caused to third persons.13 When the
 agent exceeds his authority, the agent becomes personally liable for the damage. 14 But even
when the agent exceeds his authority, the principal is still solidarily liable together with the
agent if the principal allowed the agent to act as though the agent had full powers.15 In
other words, the acts of an agent beyond the scope of his authority do not bind the principal,
unless the principal ratifies them, expressly or impliedly. 16 Ratification in agency is the
adoption or confirmation by one person of an act performed on his behalf by another
without authority.17
16. Filipinas Life cannot profess ignorance of Valles acts. Even if Valles representations were
beyond his authority as a debit/insurance agent, Filipinas Life thru Alcantara and Apetrior
expressly and knowingly ratified Valles acts. It cannot even be denied that Filipinas Life
benefited from the investments deposited by Valle in the account of Filipinas Life. In our
considered view, Filipinas Life had clothed Valle with apparent authority; hence, it is now
estopped to deny said authority. Innocent third persons should not be prejudiced if the
principal failed to adopt the needed measures to prevent misrepresentation, much more so if
the principal ratified his agents acts beyond the latters authority. The act of the agent is
considered that of the principal itself. Qui per alium facit per seipsum facere videtur. "He who
does a thing by an agent is considered as doing it himself."18

WHEREFORE, the petition is DENIED for lack of merit.

WISE & CO., INC., plaintiff-appellee, vs .DIONISIO P. TANGLAO, defendant-appellant.

WRIT OF ATTACHMENT ON LOT, suretyship not presumed

Wise & Co. instituted civil case against its agent Cornelio C. David for the recovery of a certain sum of
money. Wise & Co. asked and obtained a preliminary attachment of David's property. To avoid the
execution of said attachment, David succeeded in having his Attorney Tanglao execute a power of
attorney in Davids favor, To sign for me as guarantor for himself in his indebtedness to Wise &
Company of Manila, and to mortgage my lot , to guarantee the said obligations to the Wise &
Company, Inc., of Manila.

They entered into a COMPROMISE That the pay eighty pesos (P80) per month.

II. That as security for the payment of said sum of P640, David binds in favor of, and pledges to the
plaintiff, the following real properties:

1. House of light materials in Angeles, Province of Pampanga, assessed at P320.

2. Accesoria apartments with a ground floor of 180 sq. m. with the first story of cement and galvanized
of iron roofing located on the lot belonging to Mariano Tablante Geronimo, said accesoria is described
on Angeles, Province of Pampanga, assessed at P800.

3. Parcel of land in the name of Atty Tanglao of which defendant herein holds a special power of
attorney to pledge the same in favor of Wise & Co., Inc., as a guarantee for the payment of the claim
against him in the above entitled cause.,

David paid the sum of P343.47 to Wise & Co., on account of the P640 which he bound himself to pay
under Exhibit B, leaving an unpaid balance of P296.53.

Wise & Co. now institutes this case against Tanglao for the recovery of said balance of P296.53.

David contended that he used said power of attorney only to mortgage the property and did not
enter into contract of suretyship because Nothing is stated in the Compromise to the effect that
Tanglao became David's surety for the payment of the sum in question. Neither is this inferable from
any of the clauses thereof, and even if this inference might be made, it would be insufficient to create
an obligation of suretyship which, under the law, must be express and cannot be presumed.

It appears from the foregoing that defendant, Tanglao could not have contracted any personal
responsibility for the payment of the sum of P640. The only obligation which the power of atty has
created on the part of Tanglao, is that resulting from the mortgage of a property belonging to
him to secure the payment of said P640. However, a foreclosure suit is not instituted in this case
against Tanglao, but a purely personal action for the recovery of the amount still owed by David.

At any rate, even granting that defendant Tanglao may be considered as a surety under Exhibit B, the
action does not yet lie against him on the ground that all the legal remedies against the debtor have
not previously been exhausted The plaintiff has in its favor a judgment against debtor David for the
payment of debt. It does not appear that the execution of this judgment has been asked for and
Exhibit B, on the other hand, shows that David has two pieces of property the value of which is in
excess of the balance of the debt the payment of which is sought of Tanglao in his alleged capacity as
surety.

Defendant is absolved from the complaint, with the costs to the plaintiff.

A guaranty or surety must be expressed and cannot be presumed.Art 2058 the guarantor cannot
be compelled to pay the creditor unless the latter has exhausted all the property of the debtor, and
has resorted to alllegal remedies against the debtor.

EUSEBIO M. LOPEZ, EUSEBIO LOPEZ, JR., DEOGRACIAS P. LIRIO, SOLEDAD LIRIO-DOLOR

and RENATO C. DOLOR, in his capacity as Judicial Administrator of the Intestate Estate of the late
Faustino Dolor, petitioners, vs.HON. CARMELINO G. ALVENDIA as presiding judge of branch XVI,
CFI Manila, DAVID MINSBERG, ADELAIDA S. MINSBERG, and CITY SHERIFF OF
MANILA, respondents.

CHEQUE INSUFFICIENT FUND OVERSIGHT

1. David and Adelaida Minsberg, private-parties respondents herein, bought a parcel of

residential land from the petitioners. Downpayments were made, later the Minsbergs received
from petitioners a written notice, to the effect that if fail to pay the balance in two weeks'
time, the down payment will be forfeited and they would lose all their rights over the lot.
2. Minsbergs paid the balance and, in turn, demanded the title. The petitioners, however, failed
to deliver the title, in spite of the full payment of the purchase price, but told the respondents
to wait for a few days, inasmuch as the necessary papers were in the process of preparation.
3. Minsbergs began the construction of their house on the lot, and when their estimates failed to
complete the house, they again sought the issuance of the title, in order to enable them to
mortgage the same and obtain funds.
4. Instead of giving the title, petitioners issued a mere certification, stating that they Minsbergs
have paid in full the purchase price of the lot. The certification did not merit the acceptance by
the banks of the application for loan, with the lot as security.
5. Minsbergs instituted Civil Case with the CFI of Manila,
6. CFI Orderd the defendants to deliver to plaintiffs the certificate of title with damages
7. In the same complaint, it was alleged that the reason why petitioners were not able to deliver
the title upon demand, was the fact that the title of the whole subdivision was with the GSIS
the land, part of which is the lot in question, having been mortgaged to secure a loan of a fact
not communicated to the Minsbergs.
8. Minsbergs presented a "Motion for Execution," it appearing that although the title was
delivered, one of the checks issued to cover the P3,500.00 damages was dishonored by
the drawee bank with the notation "no arrangement," Insufficient Funds
9. Petitioners contended that the non-cashing of the check by the drawee bank, was due to a
mere "oversight", on the part of the cashier of the bank
 10. This is to certify that Republic Bank Check No. 152597, drawn by Mr. Eusebio Lopez, Jr., in
favor of Mr. David Minsberg on September 21, 1962 in the sum of P3,277.38, is a good and
valid check and the dishonor of the said check is a pure case of oversight. The herein
described cheek can, therefore, be presented to us for payment anytime and/or redeposited
by the payee, Mr. David Minsberg. This certification is issued upon the request of Mr.
Lopez.(Sgd.) SIMPLICIO MANALO Cashier issued oversight certification
11. Simultaneously with the filing of the Manifestation and/or Opposition, the petitioners herein
deposited with the trial court the amount in cash, the value of the dishonored check, to show
good faith, and prayed that the motion for execution be denied.
12. However, respondent Judge issued an Order holding that the defendants failed to comply with
the requirements in the decision that they pay the plaintiffs as damages the sum . Having
failed in the said requirement, the second portion of the decision automatically comes into
effect, namely, that the amount of the damages should be
13. MR was denied
14. SC : finds the contention untenable. The bank, having accepted the alleged arrangement,
had constituted itself as the agent of the petitioners. The principal is responsible for
the acts of the agent done within the scope of his authority, and should bear the
damages caused upon third parties. If the fault (oversight) lies on the bank, petitioners
are free to sue said bank for damages occasioned thereby.

the petition should be, as it is hereby dismissed, for lack of merits.

PHILIPPINE NATIONAL BANK, plaintiff-appellee,

vs.BERNARDO BAGAMASPAD and BIENVENIDO M. FERRER, defendants-appellants.

CROP LOANS MISMANAGEMENT, collection is not ratification

1. Because WW2 there was shortage of foodstuff. President Roxas in order to foment and
encourage food production, instructed PNB to extend special facilities to farmers in the form
of crop loans in order to enable them to rehabilitate their farms. In pursuance, plaintiff Bank
passed the corresponding resolution authorizing the granting of ten-month special crop loans
to bona fide food producers, land-owners or their tenants
2. Rules and regulations were later implemented emphasizing the necessity of exercising
diligence and care in the granting of the crop loans to see to it that they are granted only
to bona fide planters, land-owners or tenants,
3. The Cotabato Agency under the management of the two defendants began granting these
special crop loans. Said Agency had granted to over 5,000 borrowers, loans in the total
amount of a little over eight and half million pesos.
4. Bagamaspad and Ferrer acting as Agent and Assistant Agent of the Cotabato Agency, in
granting new crop loans, violated the instructions of the Bank, and that furthermore, in
granting said crop loans, they acted negligently and did not exercise the care and
precaution required of them in order to prevent the release of crop loans to persons
who were neither qualified borrowers nor entitled to the assistance
5. Because of the form heavy disbursements made by the Cotabato Agency in the form of crop
loans and because of exhaustion of its funds, said agency sent a telegram, requesting
authority from the central office to secure cash from the Zamboanga Agency.
6. Without waiting for authority to secure funds from the Zamboanga Agency, Ferrer obtained
P300,000 from said Agency, and that Bagamaspad again had sent Ferrer to Zamboanga to
await instruction from the central office regarding their desire and intention to secure in
additional P1,000,000 for the Cotabato Agency.
7. As matter of fact, however, once in Zamboanga, and without waiting for instructions, Ferrer
again secured P500,000 from the Zamboanga Agency.
8. However, the central office, only authorized them to obtain only P3,0000,000 from the
Zamboanga Agency, with the statement that as soon as the said amount was exhausted, the
Cotabato Agency may again request for replenishment. This letter of the Central Office again
emphasized the necessity of strict compliance with the rules and regulations regarding the
required field inspection before releasing the second installment.
9. On November 28, 1946, Central Office telegramed expressly instructing the Cotabato Agency
to discontinue granting new crop loans. The defendants claim that this telegram, was received
by them by mail on December 7, 1946.
10. The lower court held that as Agent and Assistant Agent, respectively , did so at their own risk
and in violation of the instructions received from the Manila office; they acted with extreme
laxity, negligence and carelessness in granting said new special crops loans.
11. They did not only wait for instructions from the Central Office, but they also violated the
express instructions of the Bank to the effect that funds received from the Zamboanga
Agency should be utilized only to pay second installments on special crop loans and not
for accommodating new loans.
12. It was observed by one witness that the Cotabato Agency is like a market place full of people.
He saw crop loan papers like promissory notes, loan applications and chattel mortgages
scattered all over the Agency, some on the desks of employees, on open shelves or on top of
filing cabinets, and others on the floor. He found that transactions which had taken place five
months before were not yet posted in the books of the Agency
13. The evidence shows that the defendants released large loans aggregating P348,768.22 to
about 103 borrowers who were neither landowners or tenants but only public land sales
applicants that is to say, persons who have merely filed applications to buy public lands.
14. Appellants in their over-enthusiasm and seemingly inordinate desire to grant as many loans
as possible and in amounts disproportionate to the needs of the borrowers, admitted and
passed upon more loan applications than they could properly handle.
15. One of the provisions of the rules and regulations concerning the granting of loans is to the
effect that loans to be released by a Provincial Agency like that of the appellant's should be
approved by loan Board . The evidence, however, shows that many of the special crop loans
released by the appellants have not been approved by the Board and others have not even
been approved by anyone of them
16. Issue(s): Whether or not the two defendants Bagamaspad and Ferrer acting as Agent and
Assistant Agent of the Cotabato Agency, in granting new crop loans after November 13, 1946,
violated the instructions of the Bank, and that furthermore, in granting said crop loans, they
acted negligently and did not exercise the care and precaution required of them in order to
prevent the release of crop loans to persons who were neither qualified borrowers nor entitled
to the assistance being rendered by the Government and the Bank, all contrary to the rules
and regulations issued by the Bank.
17. Ruling : The trial court based the civil liability of the appellants herein on the provisions of
Arts. 1718 and 1719 of the Civil Code, defining and enumerating the duties and obligations of
an agent and his liability for failure to comply with such duties, and Art. 259 of the Code of
Commerce which provides that an agent must observe the provisions of law and
regulations with respect to business transactions entrusted to him otherwise he shall
be responsible for the consequences resulting from their breach or omissions; and also
Art. 1902 of the Civil Code which provides for the liability of one for his tortious act, that is to
say, any act or omission which causes damage to another by his fault or negligence.
18. It is the contention of the appellants that the act of plaintiff Bank in filling suits against the
borrowers to whom appellants were said to have granted loans without authority, which suits
resulted in the payment of part of said loans resulting in the reduction of the original claim of
the plaintiff Bank from P704,903.18 to P699,803.57, should be interpreted and considered as
a ratification of the acts of the appellants
19. As pointed out by Counsel for appellee, ordinarily, a principal who collects either judicially or
extrajudicially a loan made by an agent without authority, thereby ratifies the said act of the
agent.
20. In the present case, however, in filing suits against some of the borrowers to collect at least
part of the unauthorized loans, there was no intention on the part of the plaintiff Bank to
ratify the acts of appellants. Neither did the plaintiff receive any substantial benefit by
its act of filing these suits if we consider the fact that the collections so far made, form
a small or insignificant portion of the entire principal and interest.
21. the plaintiff Bank is not trying to enrich itself at the expense of the defendants but is
merely trying to diminish as much as possible the loss to itself and automatically
decrease the financial liability of appellants. Considering the large amount for which
appellants are found liable, it is a matter of serious doubt if they are in a position to pay it.
22. CA DECISION AFFIRMED
THE MANILA REMNANT CO., INC., Petitioner, v. THE HONORABLE COURT OF APPEALS and
OSCAR VENTANILLA, JR. and CARMEN GLORIA DIAZ, Respondents.

DOUBLE SALE SUBDIVISION/SIMULATED

1. Manila Remnant Co., Inc. is the owner of Capital Homes Subdivision

2. Manila Remnant and A.U. Valencia & Co. Inc. entered into a written agreement entitled
"Confirmation of Land Development and Sales Contract" to formalize an earlier verbal
agreement whereby for a consideration of 17 and 1/2% fee, including sales commission and
management fee, A.U. Valencia and Co., Inc. was to develop the subdivision with authority to
manage the sales thereof, execute contracts to sell to lot buyers and issue official
receipts. 1
3. At that time the President of both A.U. Valencia and Co. Inc. and Manila Remnant Co., Inc.
was Artemio U. Valencia.
4. Manila Remnant thru A.U. Valencia and Co. executed two "contracts to sell" covering Lots 1
and 2 of Block 17 in favor of Oscar C. Ventanilla and Carmen Gloria Diaz for the combined
contract price of P66,571.00 payable monthly for ten years. As thus agreed in the contracts to
sell, the Ventanillas paid the down payments on the two lots even before the formal contract
was signed
5. Ten (10) days after the signing of the contracts, Artemio U. Valencia, as President of Manila
Remnant, and without the knowledge of the Ventanilla couple, sold Lots 1 and 2 of Block 17
again, this time in favor of Carlos Crisostomo, one of his sales agents without any
consideration.
6. Artemio Valencia then transmitted the fictitious Crisostomo contracts to Manila Remnant while
he kept in his files the contracts to sell in favor of the Ventanillas. All the amounts paid by the
Ventanillas were deposited in Valencias bank account.
7. Upon orders of Artemio Valencia, the monthly payments of the Ventanillas were remitted to
Manila Remnant as payments of Crisostomo for which the former issued receipts in favor of
Crisostomo. Since Valencia kept the receipts in his files and never transmitted the same to
Crisostomo, the latter and the Ventanillas remained ignorant of Valencias scheme.
8. Manila Remnant, through its General Manager Karl Landahl, wrote Artemio Valencia
informing him that Manila Remnant was terminating its existing collection agreement with his
firm on account of the considerable amount of discrepancies and irregularities discovered in
its collections and remittances by virtue of confirmations received from lot buyers.
9. As a consequence, Artemio Valencia was removed as President by the Board of Directors of
Manila Remnant.
10. Valencia stopped transmitting Ventanillas monthly installments which at that time had already
amounted to P17,925.40 for Lot 1 and P18,141.95 for Lot 2, (which appeared in Manila
Remnants record as credited in the name of Crisostomo).
11. A.U. Valencia and Co. sued Manila Remnant CFI Manila to impugn the abrogation of their
agency agreement.
12. CFI issued an order prohibiting A.U. Valencia and Co. from collecting the monthly instalments
and ordered the Valencia firm to furnish the court with a complete list of all lot buyers who
had already made down payments to Manila Remnant . Valencia complied with the courts
order by submitting a list which excluded the name of the Ventanillas.
13. Manila Remnant caused the publication a notice cancelling the contracts to sell of some lot
buyers including that of Carlos Crisostomo in whose name the payments of the Ventanillas
had been credited.
14. the Ventanillas, after learning of the termination of the agency agreement between Manila
Remnant and A.U. Valencia & Co., decided to stop paying their amortizations to the latter.
The Ventanillas, believing that they had already remitted P37,007.00 for Lot 1 and
P36,911.00 for Lot 2 or a grand total, inclusive of interest, of P73,122.35 for the two lots,
thereby leaving a balance of P13,531.58 for Lot 1 and P13,540.22 for Lot 2, went directly to
Manila Remnant and offered to pay the entire outstanding balance of the purchase price.
15. To their shock and utter consternation, they discovered that their names did not appear in the
records of A.U. Valencia and Co. as lot buyers. Caballes showed the Ventanillas copies of the
contracts to sell in favor of Carlos Crisostomo, duly signed by Artemio U. Valencia as
President of Manila Remnant.
16. Whereupon, Manila Remnant refused the offer of the Ventanillas to pay for the remainder of
the contract price because they did not have the personality to do so. Furthermore, they were
 shown the published Notice of Cancellation rescinding the contracts of delinquent buyers
including Crisostomo.
17. the Ventanillas commenced an action for specific performance, annulment of deeds and
damages against Manila Remnant, A.U. Valencia and Co. and Carlos Crisostomo
18. The trial court rendered a decision 1) declaring the contracts to sell issued in favor of the
Ventanillas valid and subsisting and annulling the contracts to sell in Crisostomos favor; 2)
ordering Manila Remnant to execute in favor of the Ventanillas an Absolute Deed of Sale free
from all liens and encumbrances; and 3) condemning defendants A.U. Valencia and Co. Inc.,
Manila Remnant and Carlos Crisostomo jointly and severally to pay the Ventanillas moral
damages, exemplary damages
19. CA affirmed RTC
20. ISSUE is whether or not petitioner Manila Remnant should be held solidarily liable
together with A.U. Valencia and Co. and Carlos Crisostomo
21. Manila Remnant has not refuted that it cannot be made jointly and severally liable with its
agent A.U. Valencia and Co. since it was not aware of the illegal acts perpetrated nor did it
consent or ratify said acts of its agent.
22. The argument is devoid of merit. Valencia had clearly overstepped the bounds of its
authority as agent and for that matter, even the law when it undertook the double sale
of the disputed lots. Such being the case, the principal, Manila Remnant, would have been
in the clear pursuant to Article 1897 of the Civil Code which states that" (t)he agent
who acts as such is not personally liable to that 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."

However, the unique relationship existing between the principal and the agent at the time of
the dual sale must be underscored. Bear in mind that the president then of both firms was
Artemio U. Valencia, the individual directly responsible for the sale scam. Hence, despite the
fact that the double sale was beyond the power of the agent, Manila Remnant as principal
was chargeable with the knowledge or constructive notice of that fact and not having
done anything to correct such an irregularity was deemed to have ratified the same.

More in point, we find that by the principle of estoppel, Manila Remnant is deemed to have
allowed its agent to act as though it had plenary powers. "Even when the agent has
exceeded his authority, the principal is solidarily liable with the agent if the former
allowed the latter to act as though he had full powers."
23. Authority by estoppel has arisen in the instant case because by its negligence, the principal,
Manila Remnant, has permitted its agent, A.U. Valencia and Co., to exercise powers not
granted to it.
24. Manila Remnant literally gave carte blanche to its agent A.U. Valencia and Co. in the sale
and disposition of the subdivision lots. As a disclosed principal in the contracts to sell in
favor of the Ventanilla couple, there was no doubt that they were in fact contracting with
the principal.
25. Manila Remnants solidary liability is estoppel which, in turn, is rooted in the principals
neglectfulness in failing to properly supervise and control the affairs of its agent and to
adopt the needed measures to prevent further misrepresentation. As a consequence,
Manila Remnant is considered estopped from pleading the truth that it had no direct hand in
the deception employed by its agent.

AFFIRMED.

ANGELA BLONDEAU and FERNANDO DE LA CANTERA Y UZQUIANO, plaintiffs-appellants,

vs.AGUSTIN NANO and JOSE VALLEJO, defendants-appellees.

MORTGAGED LOT, FORGED SIGNATURE ACQUIESCED

1. Action was brought in CFI Manila to foreclose a mortgage alleged to have been made by the
defendants Agustin Nano and Jose Vallejo to the plaintiff Angela Blondeau, to secure the
payment of the sum of P12,000, and covering property situated on Calle Georgia, Manila.
 2. Vallejo presented an answer in which it was alleged that his signature to the mortgage was a
forgery.
3. Following the trial, judgment was rendered against Nano but not against Vallejo. From this
judgment the plaintiffs have taken an appeal that purported signature of the defendant Vallejo
to the mortgage was not a forgery.
4. In support of a series of documents, including the transfer certificate of title, showing that
Vallejo was considered the owner of the land only. the mortgage was executed in the home
of the plaintiffs, and that of those present, the principal plaintiff Angela Blondeau and her
husband Fernando de la Cantera, together with the instrumental witness Pedro Jimenez
Zoboli, identified Vallejo as the person who signed the document. As against their
testimony stands the alibi of Vallejo, partially corroborated by the testimony of the notary
public Gregorio Bilog. It is expecting a great deal to have us believe that not only the
mortgage but the power of attorney of Vallejo in favor of Nano and a series of documents
were the product of the evil machinations of Nano, and that although Nano and Vallejo,
members of same family, lived together, Vallejo was entirely unacquainted with the activities
of Nano in dealing with their joint property. It is significant that the proper cedulas of
Vallejo were presented for the accomplishment of the documents, and that if there was
fraud, not one but a number of notaries public were deceived thereby.
5. upon its face, the mortgage appears to be regular and to have been duly executed and
accepted by Vallejo
6. When the principal plaintiff, searched the registration records, he found them in due
form, including the power of attorney of Vallejo, in favor of Nano. If this had not been so
and if thereafter the proper notation of the encumbrance could not have been made, Angela
Blondeau would not have lent P12,000 to the defendant Vallejo.
7. The Torrens system is intended for the registration of title, rather than the muniments of title.
It represents a departure from the orthodox principles of property law. Under the common law,
if the pretended signature of the mortgagor is a forgery, the instrument is invalid for every
purpose and will pass on the title or rights to anyone, unless the spurious document is ratified
and accepted by the mortgagor. The Torrens Act on the contrary permits a forged transfer,
when duly entered in the registry, to become the root of a valid title in a bona fide purchaser.
The act erects a safeguard against a forged transfer being registered, by the
requirement that no transfer shall be registered unless the owner's certificate was
produced along with the instrument of transfer. An executed transfer of registered lands
placed by the registered owner thereof in the hands of another operates as a representation
to a third party that the holder of the transfer is authorized to deal with the lands.
8. This is a case of a mortgagee relying upon a Torrens title, and loaning money in all good faith
on the basis of the title standing in the name of the mortgagors only thereafter to discover one
defendant to be an alleged forger and the other defendant, if not a party to the conspiracy, at
least having by his negligence or acquiescence made it possible for the fraud to
transpire. As between two innocent persons, in this case Angela Blondeau and Jose Vallejo,
one of whom must suffer the consequence of a breach of trust, the one who made it
possible by his act of confidence must bear the loss, in this case Jose Vallejo.

PURITA PAHUD, SOLEDAD PAHUD, and IAN LEE CASTILLA (represented by Mother and Attorney-
in-Fact VIRGINIA CASTILLA), Petitioners,
vs.COURT OF APPEALS, SPOUSES ISAGANI BELARMINO and LETICIA OCAMPO, EUFEMIA
SAN AGUSTIN-MAGSINO, ZENAIDA SAN AGUSTIN-McCRAE, MILAGROS SAN AGUSTIN-
FORTMAN, MINERVA SAN AGUSTIN-ATKINSON, FERDINAND SAN AGUSTIN, RAUL SAN
AGUSTIN, ISABELITA SAN AGUSTIN-LUSTENBERGER and VIRGILIO SAN
AGUSTIN, Respondents.

SILENCE MEANS YES, DOUBLE SALE

Facts: Spouses Pedro San Agustin and Agatona Genil acquired a 246 m 2 land in Brgy. Anos, Los
Baos, Laguna. Both died intestate, survived by their eight (8) children: respondents Eufemia, Raul,
Ferdinand, Zenaida, Milagros, Minerva, Isabelita and Virgilio.

Eufemia, Ferdinand and Raul sold the property to the petitioners, the Pahuds for P525,000.00.
Eufemia also signed the deed on behalf of her four (4) other co-heirs, namely: Isabelita on the basis
of a special power of attorney 7 and also for Milagros, Minerva, and Zenaida but without their apparent
written authority.8 The deed of sale was also not notarized.9

Pahuds paid the balance of the consideration. Virgilio, however, refused to sign in the extra judicial
partition.

Virgilios co-heirs filed a complaint for judicial partition. In the course of the proceedings, a
Compromise Agreement was signed with seven (7) of the co-heirs agreeing to sell their undivided
shares to Virgilio forP700,000.00.

Eufemia acknowledged having received P700,000.00 from Virgilio. Virgilio then sold the entire
property to spouses (Belarminos). The Belarminos immediately constructed a building on the subject
property.

The Pahuds immediately confronted Eufemia who confirmed to them that Virgilio had sold the
property to the Belarminos. Aggrieved, the Pahuds filed a complaint in intervention in the pending
case for judicial partition.

After trial, the RTC upheld the validity of the sale to Pahuds. CA reversed it and ruled in favor of the
heirs.

Issue: WON the sale of the property by Eufemia to the Pahuds are valid?

Held: Yes. We find the transaction to be valid and enforceable.

Under Art. 1874, a sale of a piece of land or any interest through an agent, requires that the
authority of the latter shall be in writing; otherwise, the sale shall be void.

Also, Article 1878, a SPECIAL POWER OF ATTORNEY IS NECESSARY FOR AN AGENT TO

ENTER INTO A CONTRACT BY WHICH THE OWNERSHIP OF AN IMMOVABLE PROPERTY IS
TRANSMITTED OR ACQUIRED.

The express mandate required by law to enable an appointee of an agency in general terms to sell
must be one that expressly mentions a sale. A power of attorney must so express the powers of the
agent in clear and unmistakable language.

Absence of a written authority to sell a piece of land is, ipso jure, void, precisely to protect the interest
of an unsuspecting owner from being prejudiced by the unwarranted act of another.

In this case, the sale made by Eufemia, Isabelita and her two brothers to the Pahuds should be valid
only with respect to the 4/8 portion of the subject property.

The sale with respect to the 3/8 portion, representing the shares of Zenaida, Milagros, and Minerva,
is void because Eufemia could not dispose of the interest of her co-heirs in the said lot absent
any written authority from the latter, as explicitly required by law.

While the sale with respect to the 3/8 portion is void by express provision of law, it is still valid on the
basis of the principle of estoppel. Under Art 1431, Through estoppel an admission or
representation is rendered conclusive upon the person making it, and cannot be denied or disproved
as against the person relying thereon.

Also, the three heir concerned did not assail the validity of the sale by Eufemia to the Pahuds on the
basis of want of written authority to sell. They opted to remain silent and left the task of raising the
validity of the sale as an issue to their co-heir, Virgilio, who is not privy to the said transaction.

It is a basic rule in the law of agency that a principal is subject to liability for loss caused to
another by the latters reliance upon a deceitful representation by an agent in the course of his
employment (1) if the representation is authorized; (2) if it is within the implied authority of the agent
to make for the principal; or (3) if it is apparently authorized, regardless of whether the agent was
authorized by him or not to make the representation.37

By their continued silence, Zenaida, Milagros and Minerva have caused the Pahuds to believe that
they have indeed clothed Eufemia with the authority to transact on their behalf. Clearly, the three co-
heirs are now estopped from impugning the validity of the sale from assailing the authority of
Eufemia to enter into such transaction.

Accordingly, the subsequent sale made by the seven co-heirs to Virgilio was void because they no
longer had any interest over the subject property which they could alienate at the time of the second
transaction.38 Nemo dat quod non habet. Virgilio, however, could still alienate his 1/8 undivided share
to the Belarminos.

PRUDENTIAL BANK, petitioner, vs.THE COURT OF APPEALS, AURORA CRUZ, respondents..

BANK SCAM, FIDUCIARY

1. Aurora F.Cruz, with her sister invested P200,000.00 in Central Bank bills with the Prudential
Bank at its branch in Quezon Avenue, Quezon City,
2. The placement was for 63 days at 13.75% annual interest. For this purpose, the amount of
P196,122.88 was withdrawn from the depositors' Savings Account No. 2546 and applied to
the investment. The difference of P3,877.07 represented the pre-paid interest.
3. The transaction was evidenced by a Confirmation of Sale1 delivered to Cruz two days later,
together with a Debit Memo2 in the amount withdrawn and applied to the confirmed sale.
These documents were issued by Susan Quimbo, the employee of the bank to whom Cruz
was referred and who was apparently in charge of such transactions. 3
4. Upon maturity of the placement Cruz returned to the bank to "roll-over" or renew her
investment. Quimbo, who again attended to her, prepared a Credit Memo4 crediting the
amount of P200,000.00 in Cruz's savings account passbook. She also prepared a Debit
Memo for the amount of P196,122.88 to cover the re-investment of P200,000.00 minus the
prepaid interest of P3,877.02.5
5. This time, Cruz was asked to sign a Withdrawal Slip6 for P196,122.98, representing the
amount to be re-invested after deduction of the prepaid interest. Quimbo explained this was a
new requirement of the bank. Several days later, Cruz received another Confirmation of
Sale7 and a copy of the Debit Memo.8
6. Cruz returned to the bank and sought to withdraw her P200,000.00. After verification of her
records, however, she was informed that the investment appeared to have been already
withdrawn by her. There was no copy on file of the Confirmation of Sale and the Debit Memo
allegedly issued to her by Quimbo. Quimbo herself was not available for questioning as she
had not been reporting for the past week.
7. Cruz's filed a complaint for breach of contract against Prudential Bank in the Regional Trial
Court of Quezon City. She demanded the return of her money with interest, plus damages
and attorney's fees.
8. In its answer, the bank denied liability, insisting that Cruz had withdrawn her investment. The
bank also instituted a third-party complaint against Quimbo, who did not file an answer and
was declared in default.
9. After trial, Judge Rodolfo A. Ortiz rendered judgment in favor of the plaintiffs
10. The decision was affirmed in toto on appeal to the respondent court.
11. SC: we find substantial basis for the conclusion that the private respondents signed the
Withdrawal Slip only as part of the bank's new procedure of re-investment. She did not
actually receive the amount indicated therein, which she was made to understand was being
re-invested in her name. The bank itself so assured her in the Confirmation of Sale and the
Debit Memo later issued to her by Quimbo.
12. As far as Cruz was concerned, she had the right to withdraw her P200,000.00 placement
when it matured pursuant to the terms of her investment as acknowledged and reflected in
 the Confirmation of Sale. The failure of the bank to deliver the amount to her pursuant to the
Confirmation of Sale constituted its breach of their contract, for which it should be held liable.
13. The liability of the principal for the acts of the agent is not even debatable. Law and
jurisprudence are clearly and absolutely against the petitioner.
14. Such liability dates back to the Roman Law maxim, Qui per alium facit per seipsum facere
videtur. "He who does a thing by an agent is considered as doing it himself." This rule is
affirmed by the Civil Code thus:

Art. 1910. The principal must comply with all the obligations which the agent
may have contracted within the scope of his authority.

Art. 1911. Even when the agent has exceeded his authority, the principal is
solidarily liable with the agent if the former allowed the latter to act as though
he had full powers.

15. Conformably, we have declared in countless decisions that the principal is liable for
obligations contracted by the agent. The agent's apparent representation yields to the
principal's true representation and the contract is considered as entered into between the
principal and the third person. 18
16. A bank is liable for wrongful acts of its officers done in the interests of the bank or in the
course of dealings of the officers in their representative capacity but not for acts outside the
scope of their authority. (9 c.q.s. p. 417)
17. Accordingly, a banking corporation is liable to innocent third persons where the representation
is made in the course of its business by an agent acting within the general scope of his
authority even though, in the particular case, the agent is secretly abusing his authority and
attempting to perpetrate a fraud upon his principal or some other person, for his own ultimate
benefit (McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW 818, 40 ALR 1021.)
18. Application of these principles in especially necessary because banks have a fiduciary
relationship with the public and their stability depends on the confidence of the people in their
honesty and efficiency. Such faith will be eroded where banks do not exercise strict care in
the selection and supervision of its employees, resulting in prejudice to their depositors.

WHEREFORE, the petition is DENIED and the appealed decision is AFFIRMED,

RURAL BANK OF MILAOR (CAMARINES SUR), petitioner,

vs.FRANCISCA OCFEMIA, ROWENA BARROGO, MARIFE O. NIO, FELICISIMO OCFEMIA,
RENATO OCFEMIA JR, and WINSTON OCFEMIA, respondents.

DEED OF SALE, without Directors authority

FACTS: Several parcels of land were mortgaged by the respondents during the lifetime of the
respondents grandparents to the Rural bank of Milaor as shown by the Deed of Real Estate
Mortgage and the Promissory Note. Spouses Felicisimo Ocfemia and Juanita Ocfemia, one of the
respondents, were not able to redeem the mortgaged properties consisting of seven parcels of land
and so the mortgage was foreclosed and thereafter ownership was transferred to the petitioner bank.
Out of the seven parcels of land that were foreclosed, five of them are in the possession of the
respondents because these five parcels of land were sold by the petitioner bank to the respondents
as evidenced by a Deed of Sale. However, the five parcels of land cannot be transferred in the name
of the parents of Merife Nino, one of the respondents, because there is a need to have the document
of sale registered. The Register of deeds, however, said that the document of sale cannot be
registered without the board resolution of the petitioner bank confirming both the Deed of sale
and the authority of the bank manager, Fe S. Tena, to enter such transaction.

The petitioner bank refused her request for a board resolution and made many alibis. Respondents
initiated the present proceedings so that they could transfer to their names the subject five parcel of
land and subsequently mortgage said lots and to use the loan proceeds for the medical expenses of
their ailing mother.

ISSUE: May the Board of Directors of a rural banking corporation be compelled to confirm a deed of
absolute sale of real property owned by the corporation which deed of sale was executed by the bank
manager without prior authority of the board of directors of the rural banking corporation?

HELD: YES. The bank acknowledges, by its own acts or failure to act, the authority of Fe S. Tena to
enter into binding contracts. After the execution of the Deed of Sale, respondents occupied the
properties in dispute and paid the real estate taxes. If the bank management believed that it had title
to the property, it should have taken measured to prevent the infringement and invasion of title thereto
and possession thereof. Likewise, Tena had previously transacted business on behalf of the bank,
and the latter had acknowledged her authority. A bank is liable to innocent third persons where
representation is made in the course of its normal business by an agent like Manager Tena even
though such agent is abusing her authority. Clearly, persons dealing with her could not be blamed for
believing that she was authorized to transact business for and on behalf of the bank.

The bank is estopped from questioning the authority of the bank to enter into contract of sale.
If a corporation knowingly permits one of its officers or any other agent to act within the scope
of an apparent authority, it holds the agent out to the public as possessing the power to do those
acts; thus, the corporation will, as against anyone who has in good faith dealt with it through such
agent, be estopped from denying the agents authority.

Unquestionably, petitioner has authorized Tena to enter into the Deed of Sale. Accordingly, it has a
clear legal duty to issue the board resolution sought by respondent's. Having authorized her to sell the
property, it behooves the bank to confirm the Deed of Sale so that the buyers may enjoy its full use.

TRINIDAD J. FRANCISCO, plaintiff-appellee, vs.GSIS, defendant-appellant.

TELEGRAM ERROR MSG, Ratified

Facts: The plaintiff, Trinidad J. Francisco, in consideration of a loan mortgaged in favor of the
defendant, Government Service Insurance System a parcel of land known as Vic-Mari Compound,
located at Baesa, Quezon City. GSIS extrajudicially foreclosed the mortgage on the ground that up to
that date the plaintiff-mortgagor was in arrears on her monthly instalments. GSIS itself was the buyer
of the property in the foreclosure sale. The plaintiffs father, Atty. Vicente J. Francisco, sent a letter to
the general manager of the defendant corporation, Mr. Rodolfo P. Andal. And latter the System
approved the request of Francisco to redeem the land through a telegram. Arrangement was that
P30,000 is offered to pay but as regards the balance, Atty Francisco assigns the GSIS to take over
the administration of the mortgaged property and to collect the monthly installments, amounting to
about P5,000, due on the unpaid purchase price of more than 31 lots and houses therein and the
monthly installments collected shall be applied to the payment of Miss Francisco's arrearage until the
same is fully covered. Defendant received the payment and it did not, however, take over the
administration of the compound. The System then sent a letter to Francisco informing of his
indebtedness and the 1 year period of redemption has been expired. And the System argued that the
telegram sent to Francisco saying that the System has approved the request in redeeming the
property is incorrect due to clerical problems.

Issue: WON the System is liable for the acts of its employees regarding the telegram?

Held: Yes. There was nothing in the telegram that hinted at any anomaly, or gave ground to suspect
its veracity, and the plaintiff, therefore, can not be blamed for relying upon it. There is no denying
that the telegram was within Andals apparent authority. Hence, even if it were the board
secretary who sent the telegram, the corporation could not evade the binding effect produced by the
telegram. Knowledge of facts acquired or possessed by an officer or agent of a corporation in the
course of his employment, and in relation to matters within the scope of his authority, is notice to the
corporation, whether he communicates such knowledge or not. Yet, notwithstanding this notice,
the defendant System pocketed the amount, and kept silent about the telegram not being in
accordance with the true facts, as it now alleges. This silence, taken together with the
unconditional acceptance of three other subsequent remittances from plaintiff, constitutes in
itself a binding ratification of the original agreement.

DY PEH, AND/OR VICTORY RUBBER MANUFACTURING, Petitioner, v. COLLECTOR OF

INTERNAL REVENUE, Respondent.

TAX AGENT

1. Petitioner, was engaged in the business of manufacturing and selling rubber shoes in Cebu, under
the registered firm name Victory Rubber Manufacturing.

2. Sometime in the year 1955 the BIR unearthed anomalies committed in the office of the Treasurer of
the city of Cebu in connection with the payment of taxes by some taxpayers, amongst them petitioner
herein.
3. As a result the respondent assessed against, and demanded from petitioner the payment of the
various sums as penalty
4. This assessment was based upon short payments in connection with taxes due from petitioner
during the periods covered by the assessment. The investigation of the anomalies disclosed that the
amounts of the taxes allegedly paid by him, as appearing in the original of every official receipt he had
in his possession, were bigger than the amounts appearing in the corresponding duplicate, triplicate
and quadruplicate copy thereof kept in the office of the City Treasurer of Cebu.
5. Petitioner contended that the checks issued by him covered in full the amount due for each quarter,
and were accepted and deposited by the City Treasurer of Cebu; since the originals of the official
receipts issued by the latter show that the full amount of the taxes due from him had been paid, he
must be deemed to have paid such taxes in full, and any anomaly in the application of the amounts
paid by him consisting in the diversion of part thereof to pay the taxes of other taxpayers whether
attributable solely to employees in the office of said Treasurer or to other parties should not be held
against him.
6. Respondents contention, on the other hand, is that the amounts actually paid by petitioner were
those appearing on the duplicates, triplicates and quadruplicates of the official receipts mentioned
heretofore; that the originals thereof were falsified or altered to make them show payment in full of the
taxes due from petitioner.
7. petitioner tried to prove that the payments in question were made by him personally, while, on the
other hand, respondent claimed that said payments were made not by petitioner personally but by
Tan Chuan Liong, his authorized agent in the matter of payment of his taxes; that Bartolome Baguio,
Chief of the Internal Revenue Division of the City Treasurers Office of Cebu, had allowed the
wrongful practice of permitting Tan Chuan Liong to prepare the official receipts in connection
with tax payments made by him in behalf of his merchant clients; that it was Tan Chuan Liong
who applied a portion of the amounts given to him by petitioner to pay tax obligations of other
taxpayers, also his clients, and that therefore petitioners recourse is against him.
8. "Petitioner sought to prove that he never employed Tan Chuan Liong as a business agent in the
payment of the tax in question. The preponderance of the evidence shows otherwise. If, as alleged,
petitioner paid the tax personally, why were the official receipts prepared by Tan Chuan Liong
and not by Bartolome Baguio or any authorized employee in the office of the City Treasurer of
Cebu? It appears that Tan Chuan Liong prepared the official receipts of payments of taxpayers who
employed him as business agent. It has not been shown that Tan Chuan Liong prepared any official
receipt covering payment of taxpayers other than those who employed him business agent
9. After ruling against petitioner on this question, the Court of Tax Appeals said "Even assuming that
Tan Chuan Liong was not employed by petitioner as business agent, petitioner is not entirely
blameless. The records show that the payments were made by checks. The numbers of the official
receipts covering the payments are indicated on the back of the checks. After the checks had been
deposited and the amounts credited in favor of the Government, the cancelled checks were returned
to petitioner. Petitioner is, therefore, charged with knowledge of the fact that the amount covered by
each check was applied in payment not only of his tax but also of taxes of other taxpayers, the
numbers of the official receipts covering which are indicated on the back of the check. The fact that
he accepted the cancelled checks without protest is evidence of his acquiescence to the
manner in which the amount covered by each check was applied by the collecting officer. He
cannot now he heard to complain. He is estopped from questioning the misapplication of his
payments.
10. Tan Chuan Liong was petitioners agent, the conclusion must necessarily be that the agents acts
bind his principal; without prejudice, of course, to the latter seeking recourse against him in
an appropriate civil or criminal action.
PETITION DENIED

FRANCISCO ORTIGAS, JR., plaintiff-appellant-appellee,

vs.LUFTHANSA GERMAN AIRLINES, defendant-appellant-appellee.

FIRST CLASS DISCRIMINATION

Sharp Travel Service as General Agents of the defendant, Lufthansa German Airlines issued to the
plaintiff First Class Pan American which would take him from Manila, the place of departure, to
Hongkong, various cities in the United States, Europe, Asia, the Far East, and then back to Manila,
Ortigas' ticket for all these different legs of his journey was first class.

He left Manila as scheduled. In New York, he decided to leave out some cities, included in his original
itinerary, to be in Hongkong for several appointments he had there. He went to the Trans World
Airlines and had his Pan American ticket changed . His TWA ticket was also first class for the entire
trip from New York to several European cities, including Rome, and thence to the Far East, with
Manila also as the place of destination.

Ortigas arrived in due course in Rome. To be sure he could fly first class to Hongkong for his
appointments there the next day, Ortigas repaired to the office of the Alitalia to book passage. The
man at the counter of the Alitalia office told him it had no flight but the Lufthansa had.

Ortigas immediately asked him to get the seat and to see to it that his ticket be confirmed and
validated for the flight and a first class seat. The man thereafter asked for Ortigas' passport and other
travel papers and attached a validating sticker which corresponded to the Rome-Hongkong leg of
his TWA Ticket No. 115-460-461-878. This was reconfirmed over another call by Alitalia.

However, at the airport. the lady at the counter told him the Lufthansa had no space for him that day.
Ortigas requested her to check with her main office, which she did by calling it up. After calling, she
apologized and said the plaintiff's ticket was in order and would be confirmed and validated. On her
request, Ortigas had his luggage weighed and was given the free luggage allowance of a first class
passenger. He was furthermore asked to pay 800 liras for bus fare and 700 liras as embarkation tax.

At the airport, the plaintiff handed over his ticket to the man behind the Lufthansa counter, who told
him everything was all right. At that juncture, the plaintiff heard his name called. He inquired if he was
being called from an employee of the Lufthansa and, on receiving an affirmative answer, said he was
Ortigas. The employee asked for his passport and other papers and, after examining his passport,
where his Filipino nationality appears, said he could not board the plane that day because his seat
would be given to a Belgian. Ortigas asked the man why he was doing that to him when his
ticket was confirmed and validated first class. The Lufthansa employee replied he was sorry
but Ortigas could not leave.

Fearing he would have a recurrence of his heart ailment, Ortigas took a nitroglycerin pill which his
doctor advised him to take on occasions of stress. The plaintiff then told the Lufthansa man to bring
the Belgian over so that his papers may be examined to determine whether he had a preferred right to
Ortigas' seat but the Lufthansa employee turned down the request, raised his voice, and said if the
plaintiff desired, he could take an economy seat and he would be allowed a refund. Ortigas retorted
he was not interested in a refund and what he wanted was to travel first class in accordance
with his ticket.
After promising to, the man went inside a room and, after a while, came out and assured the plaintiff
he would travel first class from Cairo to Hongkong because he sent a communication that it should be
done. He then jotted down some letters on Ortigas' ticket

Upon arrival in Cairo, the plaintiff requested the Lufthansa agent to transfer him to first class but the
agent said he could not and that he did not receive any communication from Rome to that effect.
Ortigas also requested the man to find out if there were other airlines having planes leaving that day
but his request was likewise denied. The man, however, promised that at Dharham, Ortigas will be
transferred to first class

At Dharham, the plaintiff once more requested a transfer to first class but was also told by the
Lufthansa agent that he had not received any communication about the change and the request could
not be granted.

In Calcutta, Ortigas once again requested a transfer or that he be assisted in booking passage on
other planes but was also refused. It was only in Bangkok when the chief steward asked him if he
wanted to move over to first class but having been already embarrassed and humiliated and the trip to
Hongkong being only three hours, he said he would not as a sign of protest.

Ortigas protested against the treatment given him. He did so by means of a letter, , followed by
another letter, and not having received any definite answer, he brought this suit.

Although Ortigas' ticket for the flight from Rome to Hongkong was validated and confirmed by
the Alitalia, its act bound and obligated Lufthansa. The Alitalia and Lufthansa are members of
the International Air Transport Association (IATA). It is admitted that as such member, the
Alitalia can issue tickets for other members of the association like the Lufthansa, Pan American
World Airways, and others. Aside from being members of the IATA, the Alitalia and Lufthansa
are pool partners and conduct a joint service with interchangeable flights for the European-Far
East-and Australia sectors.. Under the pool agreement they undertake to adhere to the
appropriate IATA regulations and to take measures to provide district sales offices with every
possibility for close cooperation in the promotion of the pool services covered by the
agreement, including "reservation and booking". They furthermore, in effect confirm in the
agreement that tickets of one, other than free and reduced tickets, may be validated by the other.

The placing by the Alitalia of a sticker on the plaintiff's ticket obligated the Lufthansa to give
him a first class seat on its flight from Rome to Hongkong. The same witness, Manuel Otayza,
testified that the placing of a validating sticker on a ticket is standard airline procedure; that a sticker
changes are status of a reservation; that consequently while Ortigas' ticket was "open", that is, it had
no reservation for a particular flight between Rome and Hongkong, the moment a validating sticker
was placed thereon, stating the flight number of the airline, the day and hour of departure, with the
letters "O-K", his ticket was changed from an "open" to a "confirmed" or "validated" ticket; and that the
sticker on Ortigas' ticket meant that first class space was confirmed for him on Lufthansa flight 646
to Hongkong

There was, therefore, a valid and binding contract between Lufthansa and the plaintiff to
transport him as a first class passenger from Rome to Hongkong, and this agreement the
defendant violated by compelling the plaintiff to travel as an economy passenger. It cannot be said
the breach was the result of an honest mistake or excusable negligence. There is evidence the
defendant acted with `bad faith and in wilful disregard of the plaintiffs rights.

He was deceived into boarding the Lufthansa plane at Rome by falsely assuring him he will be
transferred to first class at Cairo, the next stop in the flight. The same false and deceptive promise
was given him at Dharham and Calcutta.

Indubitable proof of the defendant's bad faith is found in the fact that while its employee was assuring
the plaintiff he would be transferred to first class in Cairo, he was at the same time writing on his ticket
the following notation: "TRVLDY/c ROME HEG ROME ST", which means "Travelled economy class
Rome to Hongkong St", thereby barring Ortigas from asserting any right to demand first class
accommodation. The defendant's employee, therefore, knew all along the plaintiff would not
travel first class, and yet he deliberately made him believe he would be transferred to first
class from Cairo to Hongkong.

From the circumstances, it is clear that the defendant not only breached its duty to the plaintiff
but also did not want to release him as a passenger and wished to hold on to him even if it
would cause him inconvenience and embarrassment.

WHEREFORE, the judgment appealed from is modified by raising the award of moral and exemplary
damages to plaintiff Ortigas to P150,000.00 and P100,000.00, respectively. In all other respects,
including as to the payment of interests on the said amounts, the same is affirmed.

THE SHELL COMPANY OF THE PHILIPPINES, LTD., petitioner,

vs.FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY COMMERCIAL CASUALTY
INSURANCE CO., SALVADOR SISON, PORFIRIO DE LA FUENTE and THE COURT OF APPEALS
(First Division),respondents.

CAR FELL FROM LIFTER

1. A car belonging to the plaintiff Salvador Sison was brought by his son, Perlito Sison, to
the Shell gasoline and service station but operated by the defendant Porfirio de la Fuente,
for the purpose of having said car washed and greased
2. Said car was insured against loss or damage by Firemen's Insurance Company
3. The job of washing and greasing was undertaken by defendant Porfirio de la Fuente through
his two employees, To perform the job the car was carefully and centrally placed on the
platform of the lifter in the gasoline and service station aforementioned before raising up said
platform to a height of about 5 feet and then the servicing job was started. After more than
one hour of washing and greasing, the job was about to be completed except for an
ungreased portion underneath the vehicle which could not be reached by the greasemen. So,
the lifter was lowered a little and while doing so, the car for unknown reason accidentally fell
and suffered damage
4. The insurance companies after paying for the damage filed this action together Salvador
Sison for the recovery of the total amount of the damage from the defendants on the ground
of negligence
5. The defendant Porfirio de la Fuente denied negligence in the operation of the lifter in his
separate answer and contended further that the accidental fall of the car was caused by
unforseen event
6. After trial the Court dismissed the complaint. The plaintiffs appealed. The Court of Appeals
reversed the judgment and sentenced the defendant to pay.
7. As the act of the agent or his employees acting within the scope of his authority is the
act of the principal, the breach of the undertaking by the agent is one for which the principal
is answerable. Moreover, the company undertook to "answer and see to it that the
equipments are in good running order and usable condition;" and the Court of Appeals found
that the Company's mechanic failed to make a thorough check up of the hydraulic lifter and
the check up made by its mechanic was "merely routine" by raising "the lifter once or twice
and after observing that the operator was satisfactory, he (the mechanic) left the place." The
latter was negligent and the company must answer for the negligent act of its mechanic which
was the cause of the fall of the car from the hydraulic lifter.

KUE CUISON, doing business under the firm name and style"KUE CUISON PAPER
SUPPLY," petitioner, vs.THE COURT OF APPEALS, VALIANT INVESTMENT
ASSOCIATES, respondents.
PAPER DELIVERY, Bounced Cheque

SUMMARY: Kue Cuisons Binondo branch Manager Tiu Huy Tiac ordered various kinds of paper
products amounting to P297,486.30 from Valiant and had it delivered to Lilian Tan of LT Trading.
Upon delivery, Lilian Tan paid for the merchandise and Tiu Huy Tiac issued 9 postdated checks to
Valiant as payment for the paper products but the checks bounced. Upon demand by Valiant, Kue
Cuison denies having any involvement with Tiu Huy Tiacs business with Valiant.

FACTS:

Petitioner Kue Cuison is a sole proprietorship engaged in the purchase and sale of newsprint, bond
paper and scrap, under the name of "Kue Cuison Paper Supply" with places of business at Baesa,
Quezon City, and Sto. Cristo, Binondo, Manila. Private respondent Valiant Investment Associates,
on the other hand, is a partnership with business address at Kalookan City.

Valiant delivered various kinds of paper products amounting to a certain Lilian Tan of LT Trading. The
deliveries were made by Valiant pursuant to orders allegedly placed by Tiu Huy Tiac who was then
employed in the Binondo office of Kue Cuison. It was likewise pursuant to Tiac's instructions that the
merchandise was delivered to Lilian Tan. Upon delivery, Lilian Tan paid for the merchandise by
issuing several checks payable to cash at the specific request of Tiu Huy Tiac. In turn, Tiac issued 9
postdated checks to Valiant as payment for the paper products. Unfortunately, said checks were later
dishonored by the drawee bank.

Thereafter, Valiant made several demands upon Kue Cuison to pay for the merchandise in question,
claiming that Tiu Huy Tiac was duly authorized by Cuison as the manager of his Binondo office, to
enter into the questioned transactions with Valiant and Lilian Tan. Cuison denied any involvement in
the transaction entered into by Tiu Huy Tiac and refused to pay Valiant the amount of P297,487.30 for
the selling price of the subject merchandise.

RTC court dismissed the complaint against Cuison for lack of merit. On appeal, however, the decision
of the trial court was reversed by the Court of Appeals.

ISSUE:

Whether or not Tiu Huy Tiac possessed the required authority from petitioner sufficient to hold the
latter liable for the disputed transaction?

HELD:

YES. Tiu Huy Tiac possessed the authority because he is an agent of Kue Cuison. As to the merits of
the case, it is a well-established rule that one who clothes another with apparent authority as his
agent and holds him out to the public as such cannot be permitted to deny the authority of such
person to act as his agent, to the prejudice of innocent third parties dealing with such person in good
faith and in the honest belief that he is what he appears to be.

It is evident from the records that by his own acts and admission, petitioner held out Tiu Huy Tiac to
the public as the manager of his store in Sto. Cristo, Binondo, Manila. More particularly, petitioner
explicitly introduced Tiu Huy Tiac to Bernardino Villanueva, respondent's manager, as his
(petitioner's) branch manager as testified to by Bernardino Villanueva. Secondly, Lilian Tan, who has
been doing business with Cuison for quite a while, also testified that she knew Tiu Huy Tiac to be the
manager of petitioner's Sto. Cristo, Binondo branch. This general perception of Tiu Huy Tiac as the
manager of petitioner's Sto. Cristo store is even made manifest by the fact that Tiu Huy Tiac is known
in the community to be the "kinakapatid" (godbrother) of petitioner. In fact, even petitioner admitted his
close relationship with Tiu Huy Tiac when he said that they are "like brothers". There was thus no
reason for anybody especially those transacting business with petitioner to even doubt the authority of
Tiu Huy Tiac as his manager in the Sto. Cristo Binondo branch.
By his representations, petitioner is now estopped from disclaiming liability for the transaction
entered by Tiu Huy Tiac on his behalf. It matters not whether the representations are intentional or
merely negligent so long as innocent, third persons relied upon such representations in good faith and
for value.

Moreover Article 1911 of the Civil Code provides:

"Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if
the former allowed the latter to act as though he had full powers."

IGNACIO VICENTE and MOISES ANGELES, petitioners,

vs.HON. AMBROSIO M. GERALDEZ, as Judge of the Court of First Instance of Bulacan, Branch V
(Sta. Maria), and HI CEMENT CORPORATION, respondents

MINING PROPERTY CLAIM: COMPROMISE AGREEMENT Ultra Vires

Quickie: Hi-cement Corporation acquired Placer Lease Contract (which is essentially mining claims).
Vicente, et. al were claiming some parts of the mining claims as theirs. So they were suing each
other, etc. and then the Corporations lawyers finally agreed to settle with Vicente, et. al, through a
compromise agreement. However, the Corporations VP refused to sign such compromise agreement.
SC ruled that: It having been found by the trial court that "the counsel for the plaintiff entered into
the compromise agreement without the written authority of his client and the latter did not
ratify, on the contrary it repudiated and disowned the same ...", 12 We therefore declare that the
orders of the court a quo subject of these two petitions, have not been issued in excess of its
jurisdictional authority or in grave abuse of its discretion.

Rationale: 1. Special powers of attorney are necessary to compromise and to renounce the right to
appeal from a judgment. Attorneys cannot compromise their clients litigation. It is not disputed that
the lawyers of Hi Cement had not submitted to the Court any written authority from their client to enter
into a compromise. 2. Juridical persons may compromise only in the form and with the requisites
which may be necessary to alienate their property. As a general rule an officer or agent of the
corporation has no power to compromise or settle a claim by or against the corporation,
except to the extent that such power is given to him either expressly or by reasonable
implication from the circumstances. 3. To ratify the unauthorized contract of an agent and make it
binding on the corporation, it must be shown that the governing body or officer authorized to ratify had
full and complete knowledge of all the material facts connected with the transaction to which it relates.
Ratification must be by the officer or governing body having authority to make such contract, and
must be with full knowledge.

Facts: Under a deed of sale and transfer, Hi Cement had acquired the Placer Lease Contract from
the Banahaw Shale Mining Association. The deed was duly registered with the Office of the Mining
Recorder. o The said Placer Lease was for a period of twenty-five years and covered two mining
claims (Red Star VIII & IX) with a combined area of about fifty-one hectares o However, within the
boundaries of the Red Star VIII are 3 parcels of land which are veing claimed by defendants Juan
Bernabe (about two hectares), Ignacio Vicente (about two hectares) and Moises Angeles (about
onefourth hectare)

The plaintiff had requested the defendants to allow its workers to enter the area in question for
exploration and development purposes as well as for the extraction of minerals therefrom, promising
to pay the defendants reasonable amounts as damages, but the defendants refused to allow entry of
the plaintiff's representatives

o that the defendants were threatening the plaintiff's workers with bodily harm if they entered the
premises, for which reason the plaintiff had suffered irreparable damages due to its failure to work on
and develop its claims and to extract minerals therefrom, resulting in its inability to comply with its
contractual commitments
Trial Court:court suggested the relocation of the boundaries of the plaintiff's claims in relation to the
properties of the defendants, and to this end named as Commissioner, a Surveyor from the Office of
the District Engineer of Bulacan to relocate the boundaries of the plaintiff's mining claims,

The report found that Angeles and Vicentes properties were totally covered by Corporations claim.
Bernabes property was only partially covered.

The court approved the report "with the conformity of all the parties in this case.

The counsels of the parties executed and submitted to the court for its approval a Compromise
Agreement

On the same date, the foregoing Compromise Agreement was approved by the trial court, which
enjoined the parties to comply with the terms and conditions thereof.

Atty. Francisco Ventura, one of the three lawyers for plaintiff HI Cement Corporation, filed with the
trial court a manifestation stating that on September 1, 1969 he sent a copy of the Compromise
Agreement to Mr. Antonio Diokno, President of the corporation, requesting the latter to intercede with
the Board of Directors for the confirmation or approval of the commitment made by the plaintiff's
lawyers to abide by the decision of the Court based on the reports of the Commissioners

However, the corporations president answered through a letter stating that they do not
agree with the valuation set be the court.

Palintiff filed with the court a motion for new trial on the ground that the decision of the court dated
March 13, 1970 is null and void because it was based on the Compromise Agreement of January 30,
1969 which was itself null and void for want of a special authority by the plaintiff's lawyers to enter into
the said agreement.

ISSUE: Whether the compromise agreement entered into by the corporations lawyer is valid.

Held/Ratio: No. 1. Special powers of attorney are necessary, among other cases, in the following: to
compromise and to renounce the right to appeal from a judgment.Attorneys have authority to bind
their clients in any case by any agreement in relation thereto made in writing, and in taking appeals,
and in all matters of ordinary judicial procedure, but they cannot, without special authority,
compromise their clients' litigation, or receive anything in discharge of their clients' claims but
the full amount in cash.

The Compromise Agreement was signed only by the lawyers for petitioners and by the
lawyers for private respondent corporation. It is not disputed that the lawyers of respondent
corporation had not submitted to the Court any written authority from their client to enter into
a compromise.

2. The law specifically requires that "juridical persons maycompromise only in the form and with
the requisites whichmay be necessary to alienate their property."

Under the corporation law the power to compromise or settle claims in favor of or against the
corporation isordinarily and primarily committed to the Board ofDirectors. The right of the
Directors "to compromise adisputed claim against the corporation rests upon theirright to
manage the affairs of the corporation accordingto their honest and informed judgment and
discretion asto what is for the best interests of the corporation." 6 Thispower may however be
delegated either expressly orimpliedly to other corporate officials or agents. Thusit has been stated,
that as a general rule an officer oragent of the corporation has no power tocompromise or settle a
claim by or against thecorporation, except to the extent that such power isgiven to him either
expressly or by reasonableimplication from the circumstances. 7 It is thereforenecessary to ascertain
whether from the relevant facts itcould be reasonably concluded that the Board ofDirectors of the HI
Cement Corporation had authorizedits lawyers to enter into the said compromise agreement.

3. Whatever authority the officers or agents of a corporation mayhave is derived from the board of
directors, or other governingbody, unless conferred by the charter of the corporation. Acorporation
officer's power as an agent of the corporationmust therefore be sought from the statute, the charter,
theby-laws, or in a delegation of authority to such officer,from the acts of board of directors, formally
expressed orimplied from a habit or custom of doing business. In thecase at bar no provision of
thecharter and by-laws of thecorporation or any resolution or any other act of the board ofdirectors
ofHI Cement Corporation has been cited, from whichWe could reasonably infer that the administrative
managerhad been granted expressly or impliedly the power to bind thecorporation or the authority to
compromise the case. Absentsuch authority to enter into the compromise, the signature ofAtty.
Cardenas on the agreement would be legally ineffectual.

4. Equally inapposite is petitioners' invocation of the principle of estoppel. In the case at bar, except
those made by Attys.Ventura, Cardenas and Magpantay, petitioners have not demonstrated any act
or declaration of the corporationamounting to false representation or concealment of materialfacts
calculated to mislead said petitioners. The acts or conduct for which the corporation may be
liable under the doctrine of estoppel must be those of the corporation, its governing body or
authorized officers, and not those of the purported agent who is himself responsible for the
misrepresentation.