B.
FORMALITIES OF AGENCY
CONSTITUTION OF AGENCY
1. Rallos vs. Yangco|G.R. No. L-6906| September 27, 1911| Justice
Moreland|
FACTS:
Defendant Yangco sent a letter to Plaintiff Rallos on November 27, 1907
offering a consignment agreement. In such letter, Yangco made known that he
conferred upon Florentino Collantes a public power of attorney notarized by
Mr.Perfecto Salas Rodriguez dated November 16, 1907 to perform in his name and
on his behalf all acts necessary for carrying out his plans.
Accepting this invitation, the plaintiffs proceeded to do a considerable
business with the defendant through the said Collantes, as his factor, sending to him
as agent for the defendant a good deal of produce to be sold on commission. Later,
and in the month of February, 1909, the plaintiffs sent to the said Collantes, as agent
for the defendant, 218 bundles of tobacco in the leaf to be sold on commission, as
had been other produce previously. The said Collantes received said tobacco and
sold it for the sum of P1,744. The charges for such sale were P206.96. leaving in
the hands of said Collantes the sum of P1,537.08 belonging to the plaintiffs. This
sum was apparently, converted to his own use by said agent.
It appears, however, that prior to the sending of said tobacco the defendant
had severed his relations with Collantes and that the latter was no longer acting as
his factor. This fact was not known to the plaintiffs; and it is conceded in the case
that no notice of any kind was given by the defendant to the plaintiffs of the
termination of the relations between the defendant and his agent. The defendant
refused to pay the said sum upon demand of the plaintiffs, placing such refusal upon
the ground that at the time the said tobacco was received and sold by Collantes he
was acting personally and not as agent of the defendant. This action was brought to
recover said sum.
ISSUE:Whether or not the revocation of power of attorney is valid against clients
whom the agent is specified to deal with?
HOLDING and RATIO:
NO.
Having advertised the fact that Collantes was his agent and having given
them a special invitation to deal with such agent, it was the duty of the defendant on
the termination of the relationship of principal and agent to give due and timely notice
thereof to the plaintiffs. Failing to do so, he is responsible to them for whatever goods
may have been in good faith and without negligence sent to the agent without
knowledge, actual or constructive, of the termination of such relationship.
Where principal had expressly revoked the agent’s power to handle
business, but such revocation was not conveyed to a long standing client to whom
the agent had been specifically endorsed in the past by the principal, the revocation
was not deemed effective as to such client and the contracts entered into by the
agent in the name of the principal after the revocation would still be valid and binding
against his principal.
2. LIM vs. COURT OF APPEALS and PEOPLE G.R. No. 102784 February
28, 1996
Facts:
On October 8, 1987, Rosa Lim who had come from Cebu received from private
respondent Victoria Suarez the following two pieces of jewelry; one 3.35 carat
diamond ring worth P169K and one bracelet worth P170K, to be sold on commission
basis. The agreement was reflected in a receipt.
On December 15, 1987, Lim returned the bracelet to Suarez, but failed to return the
diamond ring or to turn over the proceeds thereof if sold. As a result, private
complainant, aside from making verbal demands, wrote a demand letter to petitioner
asking for the return of said ring or the proceeds of the sale thereof.
Lim’s contention: She was not an agent of Suarez. In fact, she was a prospective
buyer of the pieces of jewelry. She told Mrs. Suarez that she would consider buying
the pieces of jewelry for her own use and that she would inform the private
complainant of such decision before she goes back to Cebu. She cannot be liable
for estafa since she never received the jewelries in trust or on commission basis
from Vicky Suarez. The real agreement between her and the private respondent was
a sale on credit with Mrs. Suarez as the owner-seller and petitioner as the buyer, as
indicated by the bet that petitioner did not sign on the blank space provided for the
signature of the person receiving the jewelry but at the upper portion thereof
immediately below the description of the items taken.
Issue: WON the real transaction between Lim and Suarez was that of sale or
that of contract of agency to sell? Contract of Agency.
Held:
1

Receipt contains the following provisions:
XXX I received from Vicky Suarez the following jewelries XXX
XXX if I could not sell, I shall return all the jewelry within the period mentioned above;
if I would be able to sell, I shall immediately deliver and account the whole proceeds
of sale thereof to the owner of the jewelries at his/her residence XXX
Materiality of the location of Lim’s signature:
Rosa Lim’s signature indeed appears on the upper portion of the receipt immediately
below the description of the items taken. This does not have the effect of altering the
terms of the transaction from a contract of agency to sell on commission basis to a
contract of sale. Contracts shall be obligatory in whatever form they may have been
entered into, provided all the essential requisites for their validity are present.
There are some provisions of the law which require certain formalities for particular
contracts. It is required for for the validity of the contract; to make the contract
effective as against third parties and; for the purpose of proving the existence of the
contract. A contract of agency to sell on commission basis does not belong to any
of these three categories, hence it is valid and enforceable in whatever form it may
be entered into. FYI: There is only one type of legal instrument where the law strictly
prescribes the location of the signature – which is in notarial wills found in Article
805 NCC.
In the case before us, the parties did not execute a notarial will but a simple contract
of agency to sell on commission basis, thus making the position of petitioner’s
signature thereto immaterial.
Contention of Lim that Suarez authorized Nadera to receive the ring:
Suarez testified that Aurelia Nadera is highly indebted to her, so if she gave authority
for Nadera to get possession of it she will be exposing herself to a high risk.
3. CELESTINA T. NAGUIAT, petitioner, vs. COURT OF APPEALS and AURORA
QUEAÑO, respondents.
G.R. No. 118375 October 3, 2003
Facts: Queaño applied with Naguiat for a loan in the amount of P200,000.00, which
Naguiat granted. Naguiat indorsed to Queaño Associated Bank Check for the
amount P95,000.00, which was earlier issued to Naguiat by the Corporate
Resources Financing Corporation. She also issued her own Filmanbank Check, to
the order of Queaño, and for the amount of P95,000.00. The proceeds of these
checks were to constitute the loan granted by Naguiat to Queaño. To secure the
loan, Queaño executed a Deed of Real Estate Mortgage in favor of Naguiat, and
surrendered to the latter the owner’s duplicates of the titles covering the mortgaged
properties. Queaño issued to Naguiat a promissory note for the amount of
P200,000.00, with interest at 12% per annum. Queaño also issued a Security Bank
and Trust Company check, postdated for the amount of P200,000.00 and payable
to the order of Naguiat.
Upon presentment on its maturity date, the Security Bank check was dishonored for
insufficiency of funds. Queaño received a letter from Naguiat’s lawyer, demanding
settlement of the loan. Queaño and one Ruby Ruebenfeldt (Ruebenfeldt) met with
Naguiat. At the meeting, Queaño told Naguiat that she did not receive the proceeds
of the loan, adding that the checks were retained by Ruebenfeldt, who purportedly
was Naguiat’s agent. Naguiat applied for the extrajudicial foreclosure of the
mortgage. Before the scheduled sale, Queaño filed annulment of the mortgage
deed.
Issues: (1) Whether or not petitioner can foreclose the mortgage properties.
(2) Agency by estoppel between petitioner and Ruebenfeldt.
Rulings: (1) Absolutely no evidence was submitted by Naguiat that the checks she
issued or endorsed were actually encashed or deposited. The mere issuance of the
checks did not result in the perfection of the contract of loan. For the Civil Code
provides that the delivery of bills of exchange and mercantile documents such as
checks shall produce the effect of payment only when they have been cashed. It is
only after the checks have produced the effect of payment that the contract of loan
may be deemed perfected. A loan contract is a real contract, not consensual, and,
as such, is perfected only upon the delivery of the object of the contract. In this case,
the objects of the contract are the loan proceeds which Queaño would enjoy only
upon the encashment of the checks signed or indorsed by Naguiat. Since Naguiat
presented no such proof, it follows that the checks were not encashed or credited to
Queaño’s account. No compelling reason to disturb the finding of the courts a quo
that the lender did not remit and the borrower did not receive the proceeds of the
loan. That being the case, it follows that the mortgage which is supposed to secure
the loan is null and void.
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(2) The existence of an agency relationship between Naguiat and Ruebenfeldt is
supported by ample evidence. Naguiat instructed Ruebenfeldt to withhold from
Queaño the checks she issued or indorsed to Queaño, pending delivery by the latter
of additional collateral. It was also Ruebenfeldt who accompanied Queaño in her
meeting with Naguiat.
There is an existence of an "agency by estoppels citing Article 1873 of the Civil
Code. Apparently, it considered that at the very least, as a consequence of the
interaction between Naguiat and Ruebenfeldt, Queaño got the impression that
Ruebenfeldt was the agent of Naguiat, but Naguiat did nothing to correct Queaño’s
impression. In that situation, the rule is clear. 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.
4. YUN KWAN BYUNG vs. PHILIPPINE AMUSEMENT AND GAMING
CORPORATION
G.R. No. 163553 December 11, 2009
FACTS
PAGCOR launched its Foreign Highroller Marketing Program. The Program aims to
invite patrons from foreign countries to play at the dollar pit of designated PAGCOR-
operated casinos under specified terms and conditions and in accordance with
industry practice. Petitioner, a Korean national, alleges that he came to the
Philippines four times to play for high stakes at the Casino Filipino; that in the course
of the games, he was able to accumulate gambling chips worth US$2.1 million.
Petitioner contends that when he presented the gambling chips for encashment with
PAGCORs employees or agents, PAGCOR refused to redeem them.
PAGCOR claims that petitioner, who was brought into the Philippines by ABS
Corporation, is a junket player who played in the dollar pit exclusively leased by ABS
Corporation for its junket players. PAGCOR alleges that it provided ABS Corporation
with distinct junket chips. ABS Corporation distributed these chips to its junket
players. At the end of each playing period, the junket players would surrender the
chips to ABS Corporation. Only ABS Corporation would make an accounting of
these chips to PAGCORs casino treasury.
ISSUE
Whether the CA erred in holding that PAGCOR is not liable to petitioner,
disregarding the doctrine of implied agency, or agency by estoppels
RULING
Petitioner alleges that there is an implied agency. Alternatively, petitioner claims that
even assuming that no actual agency existed between PAGCOR and ABS
Corporation, there is still an agency by estoppel based on the acts and conduct of
PAGCOR showing apparent authority in favor of ABS Corporation. Petitioners
argument is clearly misplaced. The basis for agency is representation, that is, the
agent acts for and on behalf of the principal on matters within the scope of his
authority and said acts have the same legal effect as if they were personally
executed by the principal. On the part of the principal, there must be an actual
intention to appoint or an intention naturally inferable from his words or actions, while
on the part of the agent, there must be an intention to accept the appointment and
act on it. Absent such mutual intent, there is generally no agency.
There is no implied agency in this case because PAGCOR did not hold out to the
public as the principal of ABS Corporation. PAGCORs actions did not mislead the
public into believing that an agency can be implied from the arrangement with the
junket operators, nor did it hold out ABS Corporation with any apparent authority to
represent it in any capacity. The Junket Agreement was merely a contract of lease
of facilities and services.
5. PURITA PAHUD VS. CA, G.R. NO. 160346, AUGUST 25, 2009
FACTS:
Spouses Pedro San Agustin and Agatona Genil were able to acquire a 246-
square meter parcel of land situated in Barangay Anos, Los Baños, Laguna and
covered by Original Certificate of Title . Agatona Genil and Pedro San Agustin died
, left with children: respondents, Eufemia, Raul, Ferdinand, Zenaida, Milagros,
Minerva, Isabelita and Virgilio.
Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of
Undivided Shares conveying in favor of petitioners their respective shares . Eufemia
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also signed the deed on behalf of her four (4) other co-heirs, Only Isabelita has the
Power of attorney while the other three (3) co-heirs has no written consent
authorizing such sale. It was not notarized.
The Pahuds paid the accounts into the Los Baños Rural Bank where the
property was mortgaged. The bank issued a release of mortgage and turned over
the ownership Pahuds, the Pahuds made more payments to Eufemia and her
siblings. When Eufemia and her co-heirs drafted an extra-judicial settlement of
estate to facilitate the transfer of the title to the Pahuds, Virgilio refused to sign it.
Virgilio's co-heirs filed a complaint for judicial partition of the subject
property before the RTC of Calamba, Laguna.In the course of the proceedings for
judicial partition, a Compromise Agreement was signed with seven (7) of the co-
heirs agreeing to sell their undivided shares to Virgilio .. The compromise agreement
was, however, not approved by the trial court because Atty. Dimetrio Hilbero, lawyer
for Eufemia and her six (6) co-heirs, refused to sign the agreement because he knew
of the previous sale made to the Pahuds.
Eufemia acknowledged having received the payments from Virgilio. Virgilio
then sold the entire property to spouses Isagani Belarmino and Leticia Ocampo
(Belarminos) . The Belarminos immediately constructed a building on the subject
property. 2. FORMAL REQUIREMENTS OF AGENCY
Alarmed by the ongoing construction on the lot they purchased, the Pahuds  GENERAL POWER OF ATTORNEY
immediately confronted Eufemia who confirmed to them that Virgilio had sold the  SPECIAL POWER OF ATTORNEY
property to the Belarminos. Then the Pahuds filed a complaint in intervention in the
pending case for judicial partition. 6. Veloso vs CA│G.R. No. 102737 (260 SCRA 593) │August 21, 1996│ Justice
Torres Jr.
FACTS:
ISSUE: Whether or not the sale of the subject property by Eufemia and co-
heirs are valid? Petitioner Francisco Veloso was the owner of a parcel of land situated in the
district of Tondo, Manila, with an area of one hundred seventy seven (177) square
RULING: meters and covered by Transfer Certificate of Title No. 49138 issued by the Registry
The sale made by Eufemia, Isabelita and her two brothers to the Pahuds of Deeds of Manila. The title was registered in the name of Francisco A. Veloso,
should be valid only with respect to the authorized share of Eufemia While the sale single, on October 4, 1957. The said title was subsequently canceled and a new
with respect to the other portion of the lot representing the shares of Zenaida, one, Transfer Certificate of Title No. 180685, was issued in the name of Aglaloma
Milagros, and Minerva, is void because Eufemia could not dispose of the interest of B. Escario, married to Gregorio L. Escario, on May 24, 1988.
her co-heirs in the said lot absent any written authority from the latter, as required On August 24, 1988, petitioner Veloso filed an action for annulment of
by law. documents, reconveyance of property with damages and preliminary injunction
and/or restraining order. The complaint, docketed as Civil Case No. 8845926, was
raffled to the Regional Trial Court, Branch 45, Manila. Petitioner alleged therein that
he was the absolute owner of the subject property and he never authorized anybody,
not even his wife, to sell it. He alleged that he was in possession of the title but when
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his wife, Irma, left for abroad, he found out that his copy was missing. He then
verified with the Registry of Deeds of Manila and there he discovered that his title
was already canceled in favor of defendant Aglaloma Escario. The transfer of
property was supported by a General Power of Attorney dated November 29, 1985
and Deed of Absolute Sale, dated November 2, 1987, executed by Irma Veloso, wife
of the petitioner and appearing as his attorneyinfact, and defendant Aglaloma
Escario.
Petitioner Veloso, however, denied having executed the power of attorney
and alleged that his signature was falsified. He also denied having seen or even
known Rosemarie Reyes and Imelda Santos, the supposed witnesses in the
execution of the power of attorney. He vehemently denied having met or transacted
with the defendant. Thus, he contended that the sale of the property, and the
subsequent transfer thereof, were null and void. Petitioner Veloso, therefore, prayed
that a temporary restraining order be issued to prevent the transfer of the subject
property; that the General Power of Attorney, the Deed of Absolute Sale and the
Transfer Certificate of Title No. 180685 be annulled; and the subject property be
reconveyed to him.
Defendant Aglaloma Escario in her answer alleged that she was a buyer in
good faith and denied any knowledge of the alleged irregularity. She allegedly relied
on the general power of attorney of Irma Veloso which was sufficient in form and
substance and was duly notarized. She contended that plaintiff (herein petitioner),
had no cause of action against her. In seeking for the declaration of nullity of the
documents, the real party in interest was Irma Veloso, the wife of the plaintiff. She
should have been impleaded in the case. In fact, Plaintiffs cause of action should
have been against his wife, Irma.
7. HOME INSURANCE CO. VS. USL, GR L-25593, 15 NOVEMBER 1967
FACTS:
Sometime in 1964, SS "Pioneer Moon" arrived in Manila and discharged
unto the custody of the Bureau of Customs, as arrastre operator, two hundred (200)
cartons of carbonized adding machine rolls consigned to Burroughs, Limited. When
the cargo was delivered to the consignee, however, several cartons were damaged.
The consignee claimed the P2,605.64 worth of damage from the Bureau of
Customs, the United Lines Company owner of the vessel, and the Home Insurance
Company which had insured the cargo. The latter paid the claim and demanded
reimbursement from either arrastre operator or the carrier.
When both rejected the claim, the Home Insurance Company filed an action against
the Republic of the Philippines, the Bureau of Customs and the United States Lines,
in the alternative, for the recovery of P2,605.64, with interest plus costs.
On the date set for pre-trial, only the counsel for the plaintiff appeared, who
upon being asked for written authority to compromise, assured the court that though
he had no written authority, he had such authority verbally given by the plaintiff. On
the same day, the court dismissed the case for failure of the plaintiff to appear at the
pre-trial conference.
ISSUE: Whether or not the lower court correctly dismiss the case for failure of the
plaintiff to appear at the pre-trial conference who allegedly gave his attorney a verbal
authority to compromise?
RULING:
YES. The lower court was correct in dismissing the case. True, said counsel
asserted that he had verbal authority to compromise the case. The Rules, however,
require, for attorneys to compromise the litigation of their clients, a ―special
authority‖ (Section 23, Rule 138, Rules of Court).
And while the same does not state that the special authority be in writing,
the court has every reason to expect, that, if not in writing, the same be duly
established by evidence other than the self-serving assertion of counsel himself that
such authority was verbally given to him.
For, authority to compromise cannot lightly be presumed. And if, with good
reason, the judge is not satisfied that said authority exists, as in this case, dismissal
of the suit for non-appearance of plaintiff in pre-trial is sanctioned by the Rules. The
dismissal should therefore be sustained in toto, with respect to all the defendants.
8. ESTATE OF LIANO OLAGUER VS. ONGJOCO, GR NO. 173312 26
AUGUST 2008
FACTS:
The plaintiffs Sor Mary Edith Olaguer, Aurora O. de Guzman, Clarissa O.
Trinidad, Lina Olaguer and Ma. Linda O. Montayre are the legitimate children of the
spouses Lino Olaguer and defendant Olivia P. Olaguer. Lino Olaguer died on
October 3, 1957 so Special Proceedings No. 528 for probate of will was filed in the
then Court of First Instance of Albay. Defendant Olivia P. Olaguer was appointed as
administrator pursuant to the will. Later, defendant Eduardo Olaguer was appointed
as coadministrator. On October 15, 1959 defendant Olivia P. Olaguer got married to
defendant Jose A. Olaguer before the then Justice of the Peace of Sto. Domingo
(Libog) Albay. On January 24, 1965 they were married in church.
In the order of the probate court dated April 4, 1961, some properties of the
estate were authorized to be sold to pay obligations of the estate.
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Relying upon the order, but without prior notice or permission from the Probate
Court, defendants Olivia P. Olaguer and Eduardo Olaguer on November 1, 1965
sold to Estanislao Olaguer 10 parcels of land. The sale to was approved by the
Probate Court on November 12, 1965.
On July 7, 1966, defendant Olivia P. Olaguer executed a Special Power of
Attorney in favor of defendant Jose A. Olaguer, authorizing the latter to "sell,
mortgage, assign, transfer, endorse and deliver" of 6 properties.
On the same date, Estanislao Olaguer executed a Special Power of
Attorney in favor of Jose A. Olaguer authorizing the latter to "sell, mortgage, assign,
transfer, endorse and deliver" the 9 properties.
By virtue of this Special Power of Attorney, on March 1, 1967, Jose A.
Olaguer as Attorney-in-Fact of Estanislao Olaguer mortgaged Lots 7589, 7593 and
7396 to defendant PNB as security for a loan of 10,000 Pesos. The mortgage was
foreclosed by the PNB on June 13, 1973 and the properties mortgage were sold at
public auction to PNB. On December 10, 1990, the PNB transferred the properties
to the Republic of the Philippines pursuant to Exec. Order No. 407 dated June 14,
1990 for agrarian reform purposes.
On October 29, 1966, Estanislao Olaguer executed a General Power of
Attorney in favor of Jose A. Olaguer, authorizing the latter to exercise general control
and supervision over all of his business and properties, and among others, to sell or
mortgage any of his properties.
On December 29, 1966, Estanislao Olaguer sold to Jose A. Olaguer for 15,000 the
10 parcels of land he bought from Olivia P. Olaguer and Eduardo Olaguer.
On March 16, 1968, Estanislao Olaguer sold to Jose A. Olaguer for 1 Peso
and other valuable consideration 2 parcels of land which have a total area of 2.5
hectares.
On June 5, 1968, Estanislao Olaguer sold another 2 lots to Jose A. Olaguer
for 1 Peso and other valuable consideration.
On May 13, 1971, Jose A. Olaguer in his capacity as Attorney in-Fact of Estanislao
Olaguer sold to his son Virgilio Olaguer for 1 Peso and other valuable consideration.
On July 15, 1974, Jose A. Olaguer sold to his son Virgilio Olaguer Lot No.
4521 and Lot No. 4522 for 1,000 Pesos.
On September 16, 1978 Virgilio Olaguer executed a General Power of Attorney in
favor of Jose A. Olaguer authorizing the latter to exercise general control and
supervision over all of his business and properties and among others, to sell or
mortgage the same.
Olivia P. Olaguer and Eduardo Olaguer were removed as administrators of
the estate and on February 12, 1980, plaintiff Ma. Linda Olaguer Montayre was
appointed administrator by the Probate Court.
The decedent Lino Olaguer have had three marriages. He was first married
to Margarita Ofemaria who died April 6, 1925. His second wife was Gloria
Buenaventura who died on July 2, 1937. The third wife was the defendant Olivia P.
Olaguer.
Jose Olaguer acting upon the general power of attorney sold 8 parcels of
land to Emilio Ongjoco.
On 28 January 1980, the Estate of Lino Olaguer filed an action for the
Annulment of Sales of Real Property and/or Cancellation of Titles in the then Court
of First Instance of Albay. The plaintiffs therein alleged that the sales of the following
properties belonging to the Estate of Lino Olaguer to Estanislao Olaguer were
absolutely simulated or fictitious, the plaintiffs likewise prayed that the resulting
Transfer Certificates of Title issued to Jose Olaguer, Virgilio Olaguer, Cipriano Duran
and the PNB be annulled.
ISSUE: Whether General Power of Attorney was sufficient to effect the sale of the
subject properties?
RULING:
Yes, the general power of attorney was sufficient The Supreme Court held
that while the law requires a special power of attorney, the general power of attorney
was sufficient in this case, as Jose A. Olaguer was expressly empowered to sell any
of Virgilio's properties; and to sign, execute, acknowledge and deliver any
agreement therefor.
As regards Lots Nos. 76D, 76E, 76F and 76G, Ongjoco was able to present
a general power of attorney that was executed by Virgilio Olaguer. While the law
requires a special power of attorney, the general power of attorney was sufficient in
this case, as Jose A. Olaguer was expressly empowered to sell any of
Virgilio'sproperties; and to sign, execute, acknowledge and deliver any agreement
therefor.Even if a document is designated as a general power of attorney, the
requirement of a special power of attorney is met if there is a clear mandate from
the principal specifically authorizing the performance of the act.
The special power of attorney can be included in the general power when
the act or transaction for which the special power is required is specified therein.
On its face, the written power of attorney contained the signature of Virgilio Olaguer
and was duly notarized. As such, the same is considered a public document and it
6
has in its favor the presumption of authenticity and due execution, which can only
be contradicted by clear and convincing evidence.
According to the provisions of Article 1874of the Civil Code on Agency,
when the sale of a piece of land or any interest therein is made through an agent,
the authority of the latter shall be in writing. Absent this requirement, the sale shall
be void. Also, under Article 1878,a special power of attorney is necessary in order
for an agent to enter into a contract by which the ownership of an immovable
property is transmitted or acquired, either gratuitously or for a valuable
consideration.
9. CITY-LITE REALTY CORPORATION, vs. COURT OF APPEALS and F.P.
HOLDINGS & REALTY CORP., et al.G.R. No. 138639. February 10, 2000
FACTS:
Private Respondent F.P. Holdings and Realty Corporation (F.P. Holdings),
formerly the Sparta Holdings Inc, was the registered owner of a parcel of land
situated along E. Rodriguez Avenue, Quezon City also known as the “Violago
Property” or the “San Lorenzo Ruiz Commercial Center,” with an area of 71,754
sqm.
The property was offered for sale to the general public through the
circulation of a sales brochure containing the description of the property and the
asking price of P6,250/sqm with terms of payment negotiable. In addition, broker’s
commission was 2% of selling price, net of withholding taxes and other charges.
Contact person was Meldin Al G. Roy, Metro Drug Inc.
The front portion consisting of 9,192 sqm is the subject of this litigation
Al G. Roy sent a sales brochure, together with the location plan and copy of the TCT
to Atty. Gelacio Mamaril, a practicing lawyer and a licensed real estate broker.
Mamaril passed in turn passed on these documents to Antonio Teng, Executive Vice
President, and Atty Victor Villanueva, Legal Counsel of City-Lite
City-Lite conveyed its interest to purchase a portion or one-half (1/2) of the
front lot of the “Violago Property” Apparently, Roy subsequently informed City-Lite’s
representative that it would take time to subdivide the lot and F.P. HOLDINGS was
not receptive to the purchase of only half of the front lot
Atty. Mamaril wrote Metro Drug (Al G. Roy) expressing City-Lite’s desire to
buy the entire front lot of the subject property instead of only half thereof provided
the asking price of P6,250/sqm was reduced and that payment be in installment for
a certain period
The parties reached an agreement and Roy agreed to sell the property to
City-Lite provided only the latter submit its acceptance in writing to the terms and
conditions of the sale
For some reason or another and despite demand, F.P. HOLDINGS refused
to execute the corresponding deed of sale in favor of City-Lite of the front lot of the
property
Trial court ruled in favor of City-Lite ordering F.P. HOLDINGS to execute a
deed of sale of the property in favor of the former for the total consideration of
P55,056,250 payable as follows: P15 M as downpayment to be payable immediately
upon execution of the deed of sale and the balance within 6 months from
downpayment without interest
CA reversed TC’s decision
ISSUE: W/N there was a perfected contract of sale between City-Lite and
respondent F.P. HOLDINGS because of a lack of definite agreement on the manner
of paying the purchase price and that Metro Drug and Meldin Al G. Roy were not
authorized to sell the property to City-Lite, and that the authority of Roy was only
limited to that of mere liaison or contact person?
RULING:
No, Roy is a mere contact person.
Art. 1874 of NCC: “When the sale of a piece of land or any interest therein
is through an agent, the authority of the latter shall be in writing, otherwise, the sale
shall be void.”
The absence of authority to sell can be determined from the written
memorandum issued by respondent F.P. HOLDINGS President requesting Metro
Drug’s assistance in finding buyers for the property
The Memorandum indicates that Meldin G. Roy and/or Metro Drug was only
to assist F.P. Holdings in looking for buyers and referring to them possible prospects
whom they were supposed to endorse to F.P. Holdings.
But the final evaluation, appraisal and acceptance of the transaction could
be made only by F.P. Holdings. In other words, Roy and/or Metro Drug was only a
contact person with no authority to conclude a sale of the property
Roy and/or Metro Drug was a mere broker and Roy/s only job was to bring
parties the parties together for a possible transaction
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 The Supreme Court ruled that due to the lack of a written authority to sell
the “Violago Property” on the part of Roy and/or Metro Drug, the sale should be as
it is declared null and void
10. Pineda vs. Court of Appeals, G.R. No. 105562, 226 SCRA 754, 27 September
1993
FACTS:
Prime Marine Services, Inc. (PMSI) obtained a group insurance policy for its
sailors. During the effectivity of the policy, six covered employees of the PMSI
perished at sea when their vessel sunk somewhere in Morocco. Petitioners sought
to claim death benefits due to them and asked for assistance with the President and
General Manager of PMSI, Captain Roberto Nuval. They were made to execute,
with the exception of the spouses, Alarcon, special powers of attorney authorizing
Captain Nuval to “follow up, ask, demand, collect and receive” for their benefit
indemnities of sums money due to them.
Petitioners were able to receive their respect death benefits. Unknown to
them, however, the PMSI, in its capacity as employer and policyholder of the life
insurance of its deceased workers, filed with the Insular Life (respondent) formal
claims for and in behalf of the beneficiaries, through Captain Nuval. Insular issued
checks payable to the order of the petitioners. These checks were released to the
treasurer of PMSI, and upon instructions by Captain Nuval, it was deposited in his
personal account.
Petitioners learned that they were entitled, as beneficiaries, to life insurance
benefits under a group policy but when they sought to recover these benefits, their
claims was denied on the ground that the liability to petitioners was already
extinguished upon delivery to and receipt by PMSI.
ISSUE: Whether or not Insular Life acted with negligence?
RULING:
Yes. The practice in group insurance business, which is consistent with the
jurisprudence thereon in the State of California from whose laws our Insurance Code
has been mainly patterned, is that the employer-policyholder who takes out the
insurance for its officers and employees, is the agent of the insurer who has authority
to collect the proceeds from the insurer. In this case, the insurer, through the
negligence of its agent, allowed a purported attorney-in-fact whose instrument does
not clearly show such power to collect the proceeds, it was liable therefore under
the doctrine that the principal is bound by the misconduct of its agent.
11.COSMIC LUMBER CORPORATION vs. CA and PEREZ, G.R. No. 114311
November 29, 1996
FACTS:
Cosmic Lumber Corporation through its General Manager executed on 28
January1985 a Special Power of Attorney appointing Paz G. Villamil-Estrada as
attorney-in-fact among others to initiate, institute and file any court action for the
ejectment of third persons and/or squatters of the entire lot 9127 and 443 and
covered by TCT Nos. 37648 and 37649, for the said squatters to remove their
houses and vacate the premises in order that the corporation may take material
possession of the entire lot, and for this purpose, to appear at the pre-trial
conference and enter into any stipulation of facts and or compromise agreement so
far as it shall protect the rights and interest of the corporation in the aforementioned
lots.
On 11 March 1985, Paz G. Villamil-Estrada, by virtue of her power of
attorney, instituted an action for the ejectment of private respondent Isidro Perez
and recover the possession of a portion of Lot No. 443.
On November 25, 1985 Villamil-Estrada entered into a Compromise
Agreement with respondent Perez and on November 27, 1985 the "Compromise
Agreement" was approved by the trial court and judgment was rendered in
accordance the terms.
Although the decision became final and executor, it was not executed within the 5-
year period from date of its finality allegedly due to the failure of petitioner to produce
the owner's duplicate copy of Title No. 37649 needed to segregate from Lot No. 443
which is the portion sold by the attorney-in-fact, Paz G. Villamil-Estrada, to private
respondent under the compromise agreement. Thus on January 25, 1993
respondent filed a complaint to revive the judgment, docketed as CivilCase No. D-
10459 Petitioner asserts that it was only when the summons in Civil Case No. D-
10459 for the revival of judgment was served upon it that it came to know of the
compromise agreement entered into between Paz G. Villamil-Estrada and
respondent Isidro Perez upon which the trial court based its decision of 26 July 1993
in Civil Case No. D-7750. Forthwith, upon learning of the fraudulent transaction,
petitioner sought annulment of the decision of the trial court before respondent Court
of Appeals on the ground that the compromise agreement was void.
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ISSUE:Whether Villamil-Estrada exceeded her authority as specified in the
SPA?
RULING:
The authority granted Villamil-Estrada under the special power of attorney
was explicit and exclusionary. The alienation by sale of an immovable certainly
cannot be deemed protective of the right of petitioner more so when the land was
being sold for a price of P80.00per square meter, much less than its assessed value
of P250.00 per square meter, which was not even received by the corporation.
When the sale of a piece of land or any interest thereon is through an agent,
the authority of the latter shall be in writing; otherwise, the sale shall be void. Thus
the authority of an agent to execute a contract for the sale of real estate must be
conferred in writing and must give him specific authority. A special power of attorney
is necessary to enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration. The
express mandate required by law to enable an appointee of an agency (couched) in
general terms to sell must be one that expressly mentions a sale or that includes a
sale as a necessary ingredient of the act mentioned. For the principal to confer the
right upon an agent to sell real estate, a power of attorney must so express the
powers of the agent in clear and unmistakable language. When there is any
reasonable doubt that the language so used conveys such power, no such
construction shall be given the document. It is therefore clear that by selling to
respondent Perez a portion of petitioner's land through a compromise
agreement,Villamil-Estrada acted without or in obvious authority. The saleIp so
jureis consequently void. So is the compromise agreement. This being the case, the
judgment based thereon is necessarily void. Antipodal to the opinion expressed by
respondent court in resolving petitioner's motion for reconsideration, the nullity of
the settlement between Villamil-Estrada and Perez impaired the jurisdiction of the
trial court to render its decision based on the compromise agreement.
InAlviar v Court of First Instance of La Union,the Court held --“As the
judgment inquestion is null and voidab initio, it is evident that the court acquired no
jurisdiction to render it, much less to order the execution thereof . . .”

Verily, when an agent is engaged in the perpetration of a fraud upon his

principal for his ownexclusive benefit, he is not really acting for the principal but is
really acting for himself, entirely outside the scope of his agency. Indeed, the basic
tenets of agency rest on the highest considerations of justice, equity and fair play,
and an agent will not be permitted to pervert his authority to his own personal
advantage, and his act in secret hostility to the interests of his principal transcends
the power afforded him. WHEREFORE, the petition is GRANTED.
9