BORDADOR vs.

LUZ
FACTS: Petitioners Bordador spouses were engaged in the business of purchase and sale
of jewelry, while respondent Brigida Luz was their regular customer. Respondent
Narciso Deganos, Luz's brother, received several pieces of jewelry from the Bordadors
amounting to P382,816.00, which items were indicated in 17 receipts covering the
same--11 of the receipts stated that they were received by Deganos for a certain Evelyn
Aquino, while the remaining 6 indicated that they were received by Deganos for Luz.
Deganos was supposed to sell the items at a profit and remit the proceeds and return
the unsold items to the Bordadors. Deganos remitted only P53,207.00. He neither paid
the balance of the sales proceeds, nor did he return any unsold item to the Bordadors,
which led them to file an action for recovery of a sum of money and damages against
Deganos and Luz with the RTC.

ISSUE: Whether Luz is liable to the Bordadors for the latter's claim for money and
damages despite the fact that Luz did not sign any of the subject receipts or authorized
Deganos to receive the items of jewelry on her behalf

HELD: No, Luz is not liable to the Bordadors.

RATIO: THE BASIS FOR AGENCY IS REPRESENTATION. The basis for agency is
representation. Here, there is no showing that Luz consented to the acts of Deganos or
authorized him to act on her behalf, much less with respect to the particular
transactions involved. The Bordadors' attempt to foist liability on Luz through the
supposed agency relation with Deganos is groundless and ill-advised. A PERSON
DEALING WITH AN AGENT IS PUT UPON INQUIRY AND MUST DISCOVER UPON HIS PERIL
THE AUTHORITY OF THE AGENT. Besides, it was grossly and inexcusably negligent of the
Bordadors to entrust to Deganos, not once or twice but on at least 6 occasions as
evidenced by 6 receipts, several pieces of jewelry of substantial value without requiring
a written authorization from his alleged principal. A person dealing with an agent is put

Spouses Fernando and Lourdes Viloria vs. Continental Airlines, Inc.

G.R. No. 188288 January 16, 2012

FACTS: In 1997, while the spouses Viloria were in the United States, they approached
Holiday Travel, a travel agency working for Continental Airlines, to purchase tickets from
Newark to San Diego. The travel agent, Margaret Mager, advised the couple that they
cannot travel by train because it is fully booked; that they must purchase plane tickets
for Continental Airlines; that if they wont purchase plane tickets; theyll never reach
their destination in time. The couple believed Magers representations and so they
purchased two plane tickets worth $800.00. Later however, the spouses found out that
the train trip isnt fully booked and so they purchased train tickets and went to their
destination by train instead. Then they called up Mager to request for a refund for the
plane tickets. Mager referred the couple to Continental Airlines. Continental Airlines
refused to refund the amount of the ticket and so the spouses sued the airline company.
In its defense, Continental Airlines claimed that the ticket sold to them by Mager is non-
refundable; that, if any, they are not bound by the misrepresentations of Mager
because theres no agency existing between Continental Airlines and Mager.

ISSUE: Whether or not a contract of agency exists between Continental Airlines and
Mager.

HELD: Yes. All the elements of agency are present, to wit: there is consent, express or
implied of the parties to establish the relationship; the object is the execution of a
juridical act in relation to a third person; the agent acts as a representative and not for
himself, and the agent acts within the scope of his authority. The first and second
elements are present as Continental Airlines does not deny that it concluded an
agreement with Holiday Travel to which Mager is part of, whereby Holiday Travel would
enter into contracts of carriage with third persons on the airlines behalf. The third
element is also present as it is undisputed that Holiday Travel merely acted in a
representative capacity and it is Continental Airlines and not Holiday Travel who is
bound by the contracts of carriage entered into by Holiday Travel on its behalf. The
fourth element is also present considering that Continental Airlines has not made any
allegation that Holiday Travel exceeded the authority that was granted to it. Continental
Airlines also never questioned the validity of the transaction between Mager and the
spouses. Continental Airlines is therefore in estoppels.

Philex Mining Corporation vs. CIR [G.R. No. 148187 (April 16, 2008)]

Facts: Petitioner Philex entered into an agreement with Baguio Gold Mining Corporation
for the former to manage the latters mining claim know as the Sto. Mine. The parties
agreement was denominated as Power of Attorney. The mine suffered continuing
losses over the years, which resulted in petitioners withdrawal as manager of the mine.
The parties executed a Compromise Dation in Payment, wherein the debt of Baguio
amounted to Php. 112,136,000.00. Petitioner deducted said amount from its gross
income in its annual tax income return as loss on the settlement of receivables from
Baguio Gold against reserves and allowances. BIR disallowed the amount as deduction
for bad debt. Petitioner claims that it entered a contract of agency evidenced by the
power of attorney executed by them and the advances made by petitioners is in the
nature of a loan and thus can be deducted from its gross income. Court of Tax Appeals
(CTA) rejected the claim and held that it is a partnership rather than an agency. CA
affirmed CTA

Issue: Whether or not it is an agency.

Held: No. The lower courts correctly held that the Power of Attorney (PA) is the
instrument material that is material in determining the true nature of the business
relationship between petitioner and Baguio. An examination of the said PA reveals that
a partnership or joint venture was indeed intended by the parties. While a corporation
like the petitioner cannot generally enter into a contract of partnership unless
authorized by law or its charter, it has been held that it may enter into a joint venture,
which is akin to a particular partnership. The PA indicates that the parties had intended
to create a PAT and establish a common fund for the purpose. They also had a joint
interest in the profits of the business as shown by the 50-50 sharing of income of the
mine.

Moreover, in an agency coupled with interest, it is the agency that cannot be revoked or
withdrawn by the principal due to an interest of a third party that depends upon it or
the mutual interest of both principal and agent. In this case the non-revocation or non-
withdrawal under the PA applies to the advances made by the petitioner who is the
agent and not the principal under the contract. Thus, it cannot be inferred from the
stipulation that it is an agency.