Dominion Insurance Corp v CA - Belen
FIRST ISSUE
Petitioners: Dominion Insurance Corporation
Respondents: CA, Rodolfo Guevarra and Fernando Austria
DOCTRINE:
While the law on agency prohibits an agent from obtaining reimbursement
his right to recovery may still be justified under the general law on
Obligations and Contracts, particularly, Art. 1236, which provides:
"Whoever pays for another may demand from the debtor what he
has paid, except that if he paid without the knowledge or against
the will of the debtor, he can recover only insofar as the payment
has been beneficial to the debtor."
Thus, to the extent that the obligation of the principal has been
extinguished, an agent may demand for reimbursement from his principal.
To rule otherwise would result in unjust enrichment of petitioner.
FACTS:
● Rodolfo Guevarra instituted a civil case for the recovery of a sum of money
against Dominion Insurance Corporation. He sought to recover
P156,473.90, which he claimed to have advanced in his capacity as
manager of Dominion to satisfy claims filed by Dominion’s clients.
● Dominion denied any liability to Guevarra and asserted a counterclaim for
premiums allegedly unremitted by the latter. Dominion also filed third-party
complaint against Fernando Austria, Regional Manager for Central Luzon
Area.
● The pre-trial conference never pushed through despite being scheduled
and was postponed nine times over the course of six months, 6 were
cancelled upon joint request of the parties.
● Finally, the case was called again for pre-trial and Dominion and counsel
failed to show up. The trial court declared Dominion in default and denied
any reconsideration.
● On the merits of the case, the RTC ruled that Dominion was to pay
Guevarra the P156,473.90 claimed as the total amount advanced by the
latter in the payment of the claims of Dominion’s clients.
● The CA affirmed.
ISSUE/S:
1. W/N Guevarra acted within his authority as agent for Dominion - NO
2. W/N Guevarra is entitled to reimbursement - YES
RATIO:
A perusal of the Special Power of Attorney would show that petitioner
(represented by third-party defendant Austria) and respondent Guevarra
intended to enter into a principal-agent relationship. Despite the word
"special" in the title of the document, the contents reveal that what was
constituted was actually a general agency. “When the agency comprises all
the business of the principal but couched in general terms, it is limited only to
acts of administration (Art 1877). A general power permits the agent to do all
acts for which the law does not require a special power.
Art. 1878 enumerates the instances when a special power of attorney is
required, including (1) to make such payments as are not usually considered
as acts of administration; (15) any other act of strict dominion.
The payment of claims is not an act of administration. The settlement of
claims is not included among the acts enumerated in the Special Power of
Attorney, neither is it of a character similar to the acts enumerated therein. A
special power of attorney is required before respondent Guevarra could
settle the insurance claims of the insured.
Guevarra’s authority to settle claims is embodied in the Memorandum of
Management Agreement which enumerated the scope of Guevarra’s duties
and responsibilities. However, the Memorandum showed the instruction of
Dominion that payment of claims shall come from a revolving fund. Having
deviated from the instructions of the principal, the expenses that Guevarra
incurred in the settlement of the claims of the insured may not be reimbursed
from Dominion.
SECOND ISSUE
While the law on agency prohibits Guevarra from obtaining reimbursement,
his right to recovery may still be justified under the general law on
Obligations and Contracts, particularly, Art. 1236, which provides:
"Whoever pays for another may demand from the debtor what he has paid,
except that if he paid without the knowledge or against the will of the debtor,
he can recover only insofar as the payment has been beneficial to the
debtor."
Thus, to the extent that the obligation of the petitioner has been extinguished,
respondent Guevarra may demand for reimbursement from his principal. To
rule otherwise would result in unjust enrichment of petitioner.
DISPOSITION:
IN VIEW WHEREOF, we DENY the Petition. However, we MODIFY the decision of
the Court of Appeals and that of the Regional Trial Court, Branch 44, San Fernando,
Pampanga, in that petitioner is ordered to pay respondent Guevarra the amount of
P112,672.11 representing the total amount advanced by the latter in the payment of
the claims of petitioner’s clients. No costs in
CMS LOGGING VS. CA. ---- BELENO
 is no longer entitled to the additional commission paid to Shinko as this is
Petitioner: CMS Logging Inc - Forest concessionaire engaged in the tantamount to DRACOR receiving double compensation for the services it
logging business rendered.
Private Respondent: DRACOR (D.R. Aguinaldo Corp.): Engaged in the
business of exporting and selling logs and lumber. CFI: Dismissed complaint and counterclaim. No evidence was presented to
show that Shinko received the commission of U.S.
DOCTRINE: The principal may revoke a contract of agency at will, and
such revocation may be express, or implied, and may be Only CMS appealed to CA
availed of even if the period fixed in the contract of agency has not yet CA: Affirmed dismissal.
expired. As the principal has this absolute right to revoke the CMS failed to prove by competent evidence its claims as to the coNew
agency, the agent can not object thereto; neither may he claim Manila Lumber Company vs. RP: The act of a contractor, who, after
damages arising from such revocation, unless it is shown that such executing powers of attorney in favor of another
was empowering the latter to collect whatever amounts may be due to him from
done in order to evade the payment of agent's commission. NCC 1924 the Government, and thereafter demanded and
is an implied revocation of the contract of agency in which “the collected from the government the money the collection of which he
agency is revoked if the principal directly manages the business entrusted to his attorney-in-fact, constituted
entrusted to the agent, dealing directly with third persons”. revocation of the agency in favor of the attorney-in-fact.

FACTS: Aug. 28, ’57: CMS (principal) and DRACOR (agent) entered into a Since the contract of agency was revoked by CMS when it sold its logs to
contract of agency whereby DRACOR is appointed as CMS’ exclusive export Japanese firms without the intervention of
and sales agent for all logs that CMS may produce, for a period of 5 years. DRACOR, the latter is no longer entitled to its commission from the proceeds
It is expressly agreed that DRACOR shall handle exclusively all negotiations of such sale and is not entitled to retain whatever
of all export sales of SISON (CMS) with the buyers and arrange the moneys it may have received as its commission for said transactions.
procurement and schedules of the vessel or vessels for the shipment of
SISON's logs in
accordance with SISON's written requests, but DRACOR shall not in any WHEREFORE, the decision appealed from is hereby MODIFIED as stated in
way be liable or responsible for any delay, default or failure of the vessel or the preceding paragraph. Costs de officio.mmissions received by Shinko
vessels to comply with the schedules agreed upon. It was also agreed by the
parties that DRACOR shall receive 5% commission of the gross sales of logs ISSUES:
of SISON based on F.O.B. invoice value which commission shall be 1) Whether CMS is entitled to recover the commissions paid to Shinko? (NO)
deducted from the proceeds of any and/or all moneysreceived by DRACOR 2) Whether DRACOR is entitled to commission from the direct sales made by
for and in behalf and for the account of SISON; CMS to Japanese buyers? (NO)
CMS was able to sell through DRACOR a total of 77,264,672 board feet of
logs in Japan, from Sept. 20, ‘57 to Apr. 4, ‘62. While on a trip to Tokyo, RULING:
CMS's president, Atty. Sison, and Gen. Mgr. & legal counsel, Atty. I. CMS was not able to prove payment of commission to Shinko
Dominguez, discovered that DRACOR had used Shinko Trading Co. as • CMS: Shinko received the commission in question; recovery is proper.
agent, representative or liaison officer, in selling CMS's logs in Japan for • SC: Unmeritorious. These arguments question the findings of fact made by
which Shinko earned a commission of U.S. $1.00 per 1,000 board feet from CA which are final and conclusive and cannot be
the buyer of the logs. After this discovery, CMS sold and shipped logs reviewed on appeal to SC (Amigo vs. Teves). Evidence adduced establishes
directly to several firms in Japan without the aid or intervention of DRACOR. the fact that Shinko is DRACOR's agent or liaison in Japan; HOWEVER,
CMS sued DRACOR for the commission received by Shinko and for moral there is no evidence
and exemplary damages: which established the fact that Shinko did receive commissions arising from
Commission paid to Shinko was in violation of the agreement and CMS is the sale of CMS's logs to various Japanese firms.
entitled to this amount as part of the proceeds of the sale of the logs. • Testimony of Atty. Dominguez: Shinko's president and director told him that
Since DRACOR had been paid the 5% commission under the agreement, it Shinko received a commission of U.S. $1.00 for every
1,000 board feet of logs sold, • Even if it was shown that Shinko did in fact receive the commissions in
o SC: This is hearsay. question, CMS is not entitled thereto since these were apparently paid by the
• Letter of Mr. K. Shibata of Toyo Menka Kaisha buyers to Shinko for arranging the sale. This is therefore not part of the gross
o SC: Also hearsay since Mr. Shibata was not presented to testify on his sales of CMS's
letter. logs.
• Statements in memorandum of Atty. Ciocon to DRACOR (May 31, 1965):
“xxx our shipment of logs to Toyo Menka Kaisha, Ltd., is II. DRACOR is not entitled to commission for direct sales made by CMS
only for a net volume of 67,747,732 board feet which should enable Shinko • CMS: CA erred in holding that DRACOR was entitled to its commission
to collect a commission of US $67,747.73 only from the sales made by CMS to Japanese firms.
o SC: This cannot be categorized as admissions that Shinko did receive the • SC: There is merit to this contention.
commissions in question since the statement • The principal may revoke a contract of agency at will , and such revocation
was made in the context of questioning CMS's tally of logs delivered to may be express, or implied, ( Art.1920 ) and may be
various Japanese firms. availed of even if the period fixed in the contract of agency has not yet
• Statement of Daniel R. Aguinaldo, president of DRACOR: xxx it is obvious expired (Barretto vs. Santa Marina).
that Toyo paid Shinko for certain services which Shinko • As the principal has this absolute right to revoke the agency , the agent can
must have satisfactorily performed for them in Japan otherwise they would not object thereto; neither may he claim damages arising from such
not have paid Shinko revocation (Padilla, Civil Law), unless it is shown that such was done in order
• And reply-letter by DRACOR's counsel Atty. Del Rosario to CMS's demand to evade the payment of agent's
letter: It does not seem proper, for CMS Logging, Inc., commission (Infante vs. Cunanan).
as principal, to concern itself with, much less question, the right of Shinko, CMS appointed DRACOR as its agent for the sale of its logs to Japanese
with which our client debt directly, to whatever benefits it firms. Yet, during the existence of the contract of agency, DRACOR admitted
might have derived from the ultimate consumer/buyer of these logs, Toyo that CMS sold its logs directly to several Japanese firms. This act constituted
Menka Kaisha, Ltd. There appears to be no justification an implied revocation of the contract of agency under NCC 1924.
for your client's contention that these benefits, whether they can be Art. 1924 The agency is revoked if the principal directly manages the
considered as commissions paid by Toyo to Shinko, are to be business entrusted to the agent, dealing
regarded part of the gross sales. directly with third persons.
o SC: This cannot be categorized as admissions that Shinko did receive the
commissions in question since neither New Manila Lumber Company vs. RP: The act of a contractor, who, after
statements declared categorically that Shinko did in fact receive the executing powers of attorney in favor of another
commissions and that these arose from the sale of empowering the latter to collect whatever amounts may be due to him from
CMS's logs. the Government, and thereafter demanded and
• It is a rule that "a statement is not competent as an admission where it does collected from the government the money the collection of which he
not, under a reasonable construction, appear to admit or acknowledge the entrusted to his attorney-in-fact, constituted
fact which is sought to be proved by it". An admission or declaration to be revocation of the agency in favor of the attorney-in-fact.
competent must have been expressed in definite, certain and unequivocal
language (BPI vs. Fidelity). Since the contract of agency was revoked by CMS when it sold its logs to
• CMS: DRACOR had admitted by its silence the allegation that Shinko Japanese firms without the intervention of
received the commissions in question when it failed to DRACOR, the latter is no longer entitled to its commission from the proceeds
respond to Atty. Sison's letter of such sale and is not entitled to retain whatever
• SC: DRACOR did reply to the letter of Atty. Sison, through a letter of a moneys it may have received as its commission for said transactions.
certain F.A. Novenario which stated: We have no record or knowledge of any
such payment of commission made by Toyo Menka to Shinko.
o THe finding that "Shinko was able to collect $77,264.67 US Dollars," WHEREFORE, the decision appealed from is hereby MODIFIED as
cannot be given weight since this was based on the summary prepared by stated in the preceding paragraph. Costs de officio.
CMS itself.
 RATIO:
• Appellants claim that this defect (mentioned above) is cured by Exhibit 1,
which purports to be a PRIOR general power of attorney given to the
same agent.
Dy Buncio & Co. v. Ong Guan Can - BULATAO • Article 1732 of the Civil Code is silent over the partial termination of an
agency.
Petitioners: Dy Buncio & Company, Inc.
• The making and accepting of a new power of attorney, whether it
Respondents: Ong Guan Can, et al.
enlarges or decreases the power of the agent under a prior power of
attorney, must be held to supplant and revoke the prior PA when the two
DOCTRINE:
are inconsistent. If the new appointment with limited powers does not
The making and accepting of a new power of attorney, whether it enlarges
revoke the general power of attorney, the execution of the second
or decreases the power of the agent under a prior power of attorney, must
power of attorney would be a mere futile gesture.
be held to supplant and revoke the latter when the two are inconsistent. If
• The title of Ong Guan cannot having been divested by the so-called deed,
the new appointment with limited powers does not revoke the general
his properties are subject to attachment and execution.
power of attorney, the execution of the second power of attorney would be
a mere futile gesture.
DISPOSITION:
The judgment appealed from is therefore affirmed. Costs against appellants.
FACTS: So ordered.
• This case is a suit over a rice mill and camarin situated at Dao, Capiz.
• Plaintiff claims that the property belongs to its judgment debtor, Ong Guan
Can, while defendants Juan Tong and Pua Giok Eng claim as owner and
lessee of the owner by virtue of a deed by Ong Guan Can, Jr.
• CFI Capiz: The deed was invalid and that the property was subject to the
execution which has been levied on said properties by the judgment creditor
of the owner.
• Defendants Juan Tong and Pua Giok bring this appeal and insist that the
deed is valid.
• The first recital of the deed is that Ong Guan Can, Jr., as agent of Ong
Guan Can, sells the rice-mill and camarin for P13,000 and gives, as his
authority, the power of attorney a copy of this public instrument being
attached to the deed and recorded with the deed in the office of the register
of deeds of Capiz.
• The receipt of the money acknowledged in the deed was to the agent,
and the deed was signed by the agent in his own name and without any
words indicating that he was signing it for the principal.
• Leaving aside the irregularities of the deed and examining the power of
attorney referred to in the deed and registered therewith: it is NOT a general
power of attorney BUT a limited one and does not give the express
power to alienate the properties in question. (Article 1713 of the Civil
Code.)

ISSUE/S:
1. W/N the deed executed by Ong Guan Can, Jr. is valid. - NO

Republic v. Evangelista - Capacite
Petitioners: Republic of the Phils, represented by Lt. Gen. Jose Calimlim
and Maj. David Diciano
Respondents: Hon. Victorino Evangelista and Dante Legaspi,
represented by Paul Gutierrez
DOCTRINE: An exception to the revocability of a contract of agency is
when it is coupled with interest, i.e., if a bilateral contract depends upon
the agency. In such case, the agency cannot be revoked at the sole will of
the principal.
Facts:
● Legaspi allegedly owned a land in Bulacan.
● Calimlim, as head of the Intelligence Service of the AFP and the
Presidential Security Group - MOA with Ciriaco Reyes
○ MOA granted Reyes a permit to hunt for treasure.
○ They allegedly started digging, tunneling, and blasting works
on Legaspi’s land.
○ Calimlim assigned about 80 military personnel to guard and
encamp so as to intimidate Legaspi and the other occupants
from going near.
● Legaspi - SPA appointing his nephew, Gutierrez
○ Power to deal with the treasure hunting activities on
Legaspi’s land and to file charges against those who may
enter it without Legaspi’s authority
○ Gutierrez gets 40% of the treasure that may be found.
● Gutierrez filed for damages and injunction against petitioners for
illegally entering Legaspi’s land.
○ Gutierrez - hired Atty. Adaza (gets 30% of Legaspi’s share)
● RTC: issued a 72-hour TRO against petitioners
○ Raffled to RTC of Quezon City and another 72-hour TRO
was issued
● Petitioners - no real party-in-interest as the SPA of Gutierrez was
already revoked by Legaspi (Deed of Revocation)
● RTC: granted application for a writ of preliminary injunction
○ Urgent need to maintain the status quo to prevent serious
damage to Legaspi’s land
○ SPA granted to Gutierrez continues to be valid.
Issue: WON Legaspi revoked the SPA of Gutierrez - NO
Ruling:
● Contract of agency - generally revocable as it is a personal contract
of representation based on trust and confidence.
○ Power of the agent to act depends on the will and license of
the principal
○ Ceases when the will or permission is withdrawn by the
principal
○ May be revoked by the principal at will
● Exception to the revocability - coupled with interest i.e. if a
bilateral contract depends upon the agency
○ Reason: The agency becomes part of another obligation. It
is not solely the rights of the principal but also that of the
agent and third persons which are affected. Hence, the law
provides that in such cases, the agency cannot be revoked
at the sole will of the principal.
● Here, it was agreed upon that Gutierrez shall be entitled to 40% of
whatever treasure may be found in the land; Atty. Adaza also had
30% of Legaspi’s share in the treasure as legal fees.
○ Thus, Gutierrez and Atty. Adaza have an interest in the
subject matter of the agency (treasures that may be found).
○ The bilateral contract between Gutierrez and Atty. Adaza (for
legal services) depends on the agency and thus renders it as
one coupled with interest, irrevocable at the sole will of
Legaspi.
○ Deed of Revocation - no effect
Dispositive:
IN VIEW WHEREOF, the impugned Orders of the trial court in Civil Case No.
Q-00-40115, dated March 23 and April 4, 2000, are AFFIRMED. The
presiding judge of the Regional Trial Court of Quezon City to whom Civil
Case No. Q-00-40115 was assigned is directed to proceed with dispatch in
hearing the main case for damages. No pronouncement as to costs.

Int’l Exchange Bank v. Briones — Chang
Petitioners: Int’l Exchange Bank (aka iBank) (now UnionBank)
Respondents: Sps. Jerome and Quinnie Briones and John Doe
DOCTRINE: An agency cannot be revoked if a bilateral contract
depends upon it.
When the bank has been constituted with an irrevocable power of attorney
to file a claim in case of loss or damage to the mortgaged vehicle, and fails
to make such claim and instead compels the spouses-borrowers to
continue paying the installments, the resort of the spouses to directly file a
claim with the insurance company does not of itself amount to a revocation
of the agency arrangement as to relieve the bank of its duty of diligence.
Besides the agency was irrevocable towards allowing the bank to seek
proceeds for the full payment of the loan; failing in such duty, the bank can
no longer collect on the unpaid balance of the loan.
Facts:
● July 2003: Spouses Briones took out a loan of P3,789,216.00 from
iBank to purchase a BMW Z4 Roadster.
● The monthly amortization for 2 years was P78,942.00.
● Sps. Briones executed a promissory note (PN) with chattel mortgage
that required them to take out an insurance policy on the vehicle.
● The PN also gave iBank (the Sps Briones' attorney-in-fact),
irrevocable authority to file an insurance claim in case of loss or
damage to the vehicle. Insurance proceeds were made payable to
iBank.
● Nov. 2003: The roadster was carnapped at 10 pm by 3 armed men in
front of Metrobank, Tandang Sora.
● Sps. Briones declared the loss to iBank, which instructed them to
continue paying the next 3 monthly installments "as a sign of good
faith," which they complied with.
● March 2004: after the Sps. finished paying the installments, iBank
sent them a letter demanding full payment of the lost vehicle.
● April 2004: Sps Briones submitted a notice of claim, which was
denied by their insurance in June 2004 due to the delayed reporting
of the loss of the vehicle.
● May 2004: iBank filed complaint for sum of money against the Sps.
and a John Doe.
● RTC: Dismissed the complaint of iBank because as the duly
constituted agent of the Sps Briones, iBank had the obligation to
facilitate the filing of the notice of claim and then to pursue the
release of the insurance proceeds.
○ pointed out that as the Sps Briones' agent, iBank prioritized
its interest over that of its principal when it failed to file the
notice of claim with the insurance company and demanded
full payment from the spouses.
● CA: Affirmed the RTC ruling. Saying that "the denial of the insurance
claim for delayed filing was a direct consequence of the bank's
inaction in not filing the insurance claim."
● iBank’s contention: it is entitled to recover the mortgaged vehicle
or, in the alternative, to collect a sum of money from respondents
because of the clear wording of the promissory note with chattel
mortgage executed by respondents.
○ It maintains that the insurance coverage taken on the vehicle
is "only an aleatory alternative that the Sps. are entitled to" if
their claim is granted by the insurance company.
○ That Jerome's direct dealing with the insurance
company was a revocation of the agency relationship
between petitioner and respondents.
● Sps. Briones’ contention: iBank failed to exercise the "degree of
diligence required of it considering the fiduciary nature of its
relationship with its clients."
○ That after reporting the loss to iBank, they complied with the
request to pay 3 monthly installments and despite their good
faith and the insurance policy taken out on the carnapped
vehicle, petitioner still demanded full payment from them.
Issue/s:
1. WON an agency relationship exists between iBank and the Sps.
Briones? YES!! (not so important)
2. (Main Issue) WON the agency was revoked or terminated? NO!
Ratio:
1. The agency was established by the PN.
● All the elements of agency exist in this case. Under the PN with
chattel mortgage, Sps Briones appointed iBank as their attorney-in-
fact, authorizing it to file a claim with the insurance company if the
mortgaged vehicle was lost or damaged.
● iBank was also authorized to collect the insurance proceeds as the
beneficiary of the insurance policy.
● Sec 6 of the PN: Mortgagor hereby further constitutes the Mortgagee
to be its/his/her Attorney-in-Fact for the purpose of ling claims with
insurance company including but not limited to apply, sign, follow-up
 and secure any documents, deeds . . . that may be required by the
insurance company to process the insurance claim ...
● Sec 22 of the PN: In case of loss or damage, the MORTGAGOR
hereby irrevocably appoints the MORTGAGEE or its assigns as his
attorney-in-fact with full power and authority to le, follow-up,
prosecute, compromise or settle insurance claims...

2. The agency was NOT revoked/ terminated. *MAIN ISSUE*

● iBank is wrong when it asserts that the Sps Briones effectively
revoked the agency granted under the promissory note when they
led a claim with the insurance company.
● Revocation as a form of extinguishing an agency under Art 1924
NCC only applies in cases of incompatibility, such as when the
principal disregards or bypasses the agent in order to deal with a
third person in a way that excludes the agent.
● The Sps did not disregard or bypass iBank when they made an
insurance claim; rather, they had no choice but to personally do it
because of their agent's negligence.
● While a contract of agency is generally revocable at will as it is
primarily based on trust and confidence, Article 1927 of the Civil
Code provides the instances when an agency becomes
irrevocable:
Article 1927. An agency cannot be revoked if a bilateral
contract depends upon it, or if it is the means of fulfilling
an obligation already contracted, or if a partner is appointed
manager of a partnership in the contract of partnership and
his removal from the management is unjustifiable.
● Lim v. Saban: Emphasizes that when an agency is established for
both the principal and the agent, an agency coupled with an interest
is created and the principal cannot revoke the agency at will.
● In the PN, the Sps Briones authorized iBank to claim, collect, and
apply the insurance proceeds towards the full satisfaction of their
loan if the mortgaged vehicle were lost or damaged. Clearly, a
bilateral contract existed between the parties, making the
agency irrevocable.
● iBank was also aware of the bilateral contract; thus, it included the
designation of an irrevocable agency in the promissory note with
chattel mortgage that it prepared for the Spouses Briones to sign.

Dispositive: WHEREFORE, premises considered, the Petition is DENIED.

The Court of Appeals Decision and Resolution dated September 27, 2012
and February 6, 2013, respectively, in CA-G.R. CV No. 97453 are
AFFIRMED.

Sevilla vs Court of Appeals - Combate
Petitioners: Dr. Carlos L. Sevilla and Lino O. Sevilla
Respondents: THE COURT OF APPEALS, TOURIST WORLD
SERVICE, INC., ELISEO S.CANILAO, and SEGUNDINA NOGUERA
DOCTRINE: Unlike simple SPAs, an agency coupled with interests
cannot be revoked at will, since it had been created for the mutual
interest of the agent and the principal.
Facts:
● Tourist World Service Inc. (TWS) leased the premises of Mrs.
Noguera for use as a branch office. Sevilla bound herself solidarily
liable with TWS for the payment of the monthly rental. When the
branch office was opened, it was run by appellant Sevilla payable to
TWS by any airline for any fare brought in on the efforts of Mrs.
Sevilla, 4% was to go to Sevilla and 3% was to be withheld by TWS.
● Later, TWS was informed that Sevilla was connected with
Philippine Travel Bureau, a rival firm, and since the branch office
was losing, TWS considered closing down its office. Two resolutions
were passed to abolish the office of the manager and vice president
of the branch office and authorizing Canilao, the branch manager, to
receive the properties of TWS in the branch office.
● In 1962, the contract for the use of the branch office premises was
terminated. Because of this, Canilao, the secretary of TWS, went
over to the branch office, and finding the premises locked, he
padlocked the premises.
● When neither appellant Sevilla nor his employees could enter, a
complaint was filed by the Sevilla against TWS. TWS insisted that
Sevilla was a mere employee, being the “branch manager” of its
branch office and that she had no say on the lease executed with the
private respondent, Noguera.
Issue:
● WoN Sevilla is a mere employee of TWS. NO
Ruling:
● Sevilla is not an employee but an agent of TWS
-Sevilla is not subject to control by TWS as to the means used.
-Sevilla is not under the payroll of TWS and does not receive a fixed
salary, she earns commission based on the success of her airline
bookings.
● It is the Court's considered opinion, that when the petitioner, Lina
Sevilla, agreed to (wo)man the private respondent, Tourist World
Service, Inc.'s Ermita office, she must have done so pursuant to a
contract of agency. It is the essence of this contract that the agent
renders services "in representation or on behalf of another. In the
case at bar, Sevilla solicited airline fares, but she did so for and on
behalf of her principal, Tourist World Service, Inc. As compensation,
she received 4% of the proceeds in the concept of commissions. And
as we said, Sevilla herself based on her letter of November 28, 1961,
pre-assumed her principal's authority as owner of the business
undertaking. We are convinced, considering the circumstances and
from the respondent Court's recital of facts, that the ties had
contemplated a principal agent relationship, rather than a joint
managament or a partnership.
● But unlike simple grants of a power of attorney, the agency that we
hereby declare to be compatible with the intent of the parties, cannot
be revoked at will. The reason is that it is one coupled with an
interest, the agency having been created for mutual interest, of the
agent and the principal. It appears that Lina Sevilla is a bona fide
travel agent herself, and as such, she had acquired an interest in the
business entrusted to her. Moreover, she had assumed a personal
obligation for the operation thereof, holding herself solidarily liable for
the payment of rentals. She continued the business, using her own
name, after Tourist World had stopped further operations. Her
interest, obviously, is not to the commissions she earned as a result
of her business transactions, but one that extends to the very subject
matter of the power of management delegated to her. It is an agency
that, as we said, cannot be revoked at the pleasure of the principal.
Accordingly, the revocation complained of should entitle the
petitioner, Lina Sevilla, to damages.
Dispositive:
WHEREFORE, the Decision promulgated on January 23, 1975 as well as the
Resolution issued on July 31, 1975, by the respondent Court of Appeals is
hereby REVERSED and SET ASIDE. The private respondent, Tourist World
Service, Inc., and Eliseo Canilao, are ORDERED jointly and severally to
indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as and for moral
damages, the sum of P10,000.00, as and for exemplary damages, and the
sum of P5,000.00, as and for nominal and/or temperate damages.
Costs against said private respondents.
Valezuela v. CA - CORPUS
Petitioners: Arturo P. Valenzuela and Hospitalita N. Valenzuela
Respondents: The Honorable Court Of Appeals, Bienvenido M.
Aragon, Robert E. Parnell, Carlos K. Catolico and The Philippine
American General Insurance Company, Inc.
DOCTRINE: When the agency has been given not only for the interest of
the principal but for the interest of third persons or for the mutual interest of
the principal and the agent, the agency ceases to be freely revocable by
the sole will of the principal.
Facts:
● Valenzuela is a General Agent of Philamgen for short since 1965
○ He was authorized to solicit and sell in behalf of Philamgen
all kinds of non-life insurance
○ entitled to receive the full agent's commission of 32.5% from
Philamgen
● From 1973 to 1975, Valenzuela solicited marine insurance from one
of his clients, the Delta Motors, Inc. in the amount of P4.4 Million
○ He was entitled to a commission of P1.6M, bu he did not
receive his full commission
● From 1976 to 1978, premium payments amounting to P1,946,886.00
were paid directly to Philamgen
○ Valenzuela is entitled to commission of P632,737.00.
● Philamgen started to become interested in and expressed its intent
to share in the commission due Valenzuela on a fifty-fifty basis, but
Valenzuela refused.
● Philamgen and its President, Aragon insisted on the sharing of the
commission with Valenzuela This was followed by another sharing
proposal, but Valenzuela firmly reiterated his objection to the
proposals.
● Because of the refusal of Valenzuela, Philamgen and its officers,
namely: Aragon, Catolico and Parnell took drastic action against
Valenzuela.
○ reversed the commission due him by not crediting in his
account the commission earned from the Delta Motors, Inc.
insurance
○ placed agency transactions on a cash and carry basis
○ threatened the cancellation of policies issued by his agency
○ started to leak out news that Valenzuela has a substantial
account with Philamgen.
● All of these acts resulted in the decline of Valenzuela’s business as
insurance agent
● Philamgen then terminated the General Agency Agreement of
Valenzuela.
● Valenzuela filed a complaint against respondents. Trial court ruled in
favour of Valenzuela.
○ TC found that the reason for termination is because
Valenzuela did not want to share the commissions. Since
defendants are not justified in the termination of Arturo P.
Valenzuela as one of their General Agents, defendants shall
be liable for the resulting damage and loss of business of
plaintiff Arturo P. Valenzuela. (Arts. 2199/2200, Civil Code of
the Philippines).
● CA reversed the decision.
○ In any event the principal's power to revoke an agency at will
is so pervasive, SChas consistently held that termination
may be effected even if the principal acts in bad faith,
subject only to the principal's liability for damages (Danon v.
Antonio A. Brimo & Co., 42 Phil. 133; Reyes v. Mosqueda,
53 O.G. 2158 and Infante V. Cunanan, 93 Phil. 691, cited in
Paras, Vol. V, Civil Code of the Philippines Annotated [1986]
696).
○ CA also ordered Valenzuela to pay Philamgen the sum of
P1,902,532.17 for insurance premiums due.
Issue:
1. Whether or not the agency may be unilaterally revoked by
Philamgen? – No.
Ratio:
1. The Court agrees with the court a quo that the principal cause of the
termination of Valenzuela as General Agent of Philamgen arose from
his refusal to share his Delta commission. The records sustain the
conclusions of the trial court on the apparent bad faith of the private
respondents in terminating the General Agency Agreement of
petitioners.
As early as September 30,1977, Philamgen told the petitioners of its desire
to share the Delta Commission with them. The petitioners consistently
opposed the pressures to hand over the agency or half of their commissions
and for a treatment of the Delta account distinct from other accounts. The
pressures and demands, however, continued until the agency agreement
itself was finally terminated.
It is also evident from the records that the agency involving petitioner
and private respondent is one "coupled with an interest," and,
therefore, should not be freely revocable at the unilateral will of the
latter.
In the insurance business in the Philippines, the most difficult and frustrating
period is the solicitation and persuasion of the prospective clients to buy
insurance policies. In the case of Valenzuela, he was able to build up an
Agency from scratch in 1965 to a highly productive enterprise with gross
billings of about P2,500,000.00 premiums per annum. The records sustain
the finding that the private respondent started to covet a share of the
insurance business that Valenzuela had built and when Valenzuela refused
to share his commission in the Delta account, the boom suddenly fell on him.
It is clear that Valenzuela had an interest in the continuation of the
agency when it was unceremoniously terminated not only because of
the commissions he should continue to receive from the insurance
business he has solicited and procured but also for the fact that by the
very acts of the respondents, he was made liable to Philamgen in the
event the insured fail to pay the premiums due.
When the agency has been given not only for the interest of the
principal but for the interest of third persons or for the mutual interest
of the principal and the agent, the agency ceases to be freely revocable
by the sole will of the principal.

DISPOSITIVE: ACCORDINGLY, the petition is GRANTED. The impugned

decision of January 29, 1988 and resolution of April 27, 1988 of
respondent court are hereby SET ASIDE. The decision of the trial court
dated January 23, 1986 in Civil Case No. 121126 is REINSTATED with
the MODIFICATIONS that the amount of FIVE HUNDRED TWENTY ONE
THOUSAND NINE HUNDRED SIXTY-FOUR AND 16/100 PESOS
(P521,964.16) representing the petitioners Delta commission shall earn
only legal interests without any adjustments under Article 1250 of the
Civil Code and that the contractual relationship between Arturo P.
Valenzuela and Philippine American General Insurance Company shall
be deemed terminated upon the satisfaction of the judgment as
modified.

National Sugar Trading v. PNB - DELA CRUZ
Petitioners: NATIONAL SUGAR TRADING and/or the SUGAR
REGULATORY ADMINISTRATION
Respondents: PHILIPPINE NATIONAL BANK
DOCTRINE: Agency coupled with interest cannot be revoked at will
by any of the parties.
Facts:
· Philippine Sugar Commission (PHILSUCOM), the sole buying and
selling agent of sugar on the quedan permit level
· Philippine Exchange Company, Inc. (PHILEXCHANGE), a wholly
owned subsidiary of Philippine National Bank (PNB) to serve as the
marketing agent of PHILSUCOM
· PHILEXCHANGEs purchases of sugar shall be financed by PNB and
the proceeds of sugar trading operations of PHILEXCHANGE shall be used
to pay its liabilities with PNB
· PHILEXCHANGE and/or PNB as the exclusive sugar trading agencies of
the government for buying sugar from planters or millers and selling or
exporting them.
· PNB then extended loans to PHILEXCHANGE for the latters sugar
trading operations.
· At first, PHILEXCHANGE religiously paid its obligations to PNB by
depositing the proceeds of the sale of sugar with the bank.
Subsequently, however, with the fall of sugar prices in the world market,
PHILEXCHANGE defaulted in the payments of its loans
· National Sugar Trading Corporation (NASUTRA) replaced
PHILEXCHANGE as the marketing agent of PHILSUCOM. Accordingly,
PHILEXCHANGE sold and turned over all sugar quedans to NASUTRA.
· NASUTRA and PHILSUCOM still failed to pay the sugar stocks
covered by quedans to PHILEXCHANGE which amounted to
P498,828,845.03. As a consequence, PHILEXCHANGE was not able to
pay its obligations to PNB.
· To finance its sugar trading operations, NASUTRA applied for and
was granted a P408 Million Revolving Credit Line by PNB in 1981. Every
time NASUTRA availed of the credit line, its Executive Vice-President,
Jose Unson, executed a promissory note in favor of PNB.
· In order to stabilize sugar liquidation prices at a minimum of
P300.00 per picul, PHILSUCOM issued Circular Letter No. EC-4-85,
considering all sugar produced during crop year 1984-1985 as domestic
sugar and liquidation scheme of the sugar quedans assigned to PNB by
the sugar planters.
· Despite such liquidation scheme, NASUTRA/PHILSUCOM still
failed to remit the interest payments to PNB
· Executive Order (EO) No. 18 created the Sugar Regulatory
Administration (SRA) and abolished PHILSUCOM. All the assets and
records of PHILSUCOM including its beneficial interests over the assets
of NASUTRA were transferred to SRA
· PNB received remittances from foreign banks totaling
US$36,564,558.90 or the equivalent of P696,281,405.09 representing
the proceeds of NASUTRAs sugar exports. Said remittances were then
applied by PNB to the unpaid accounts of NASUTRA/ PHILSUCOM with
PNB and PHILEXCHANGE.
· Subsequently, PNB applied the P19,688,763.29 to PHILSUCOMs
account with PHILEXCHANGE which in turn was applied to
PHILEXCHANGEs account with PNB.
· Accordingly, NASUTRA requested PNB to furnish it with the
necessary documents and/or explanation concerning the disposition/
application, accounting and restitution of the remittances in question.
Dissatisfied, and believing that PNB failed to provide them with said
documents, NASUTRA and SRA filed a case against PNB.
Issue/s:
1. WON OFFSETTING OR COMPENSATION OF THE SUBJECT
REMITTANCES TO ALLEGED ACCOUNTS OF NASUTRA WITH PNB
AND PHILEX DESPITE THE FACT THAT NO CREDITOR-DEBTOR
RELATIONSHIP EXISTED BETWEEN PNB AND NASUTRA WITH
RESPECT TO THE SAID REMITTANCES IS PROPER – YES
Ratio: (numbered, according to issue/s)
1. In the instant case, NASUTRA applied for a P408 million credit line with
PNB in order to finance its trading operations. PNB, on the other hand,
approved said credit line. Thereafter, NASUTRA availed of the credit and
in fact drew P389,246,324.60, in principal and accrued interest, from the
approved credit line. Evidence shows that every time NASUTRA availed
of the credit, its Executive Vice President, Jose Unson, executed a
promissory note in favor of PNB with the following proviso:
 PNB must be respected and have the force of law between them.
“In the event that this note is not paid at maturity or when the same
becomes due under any of the provisions hereof, I/We hereby
authorize the Bank, at its option and without notice, to apply to the Dispositive: WHEREFORE, in view of the foregoing, the instant petition
payment of this note, any and all moneys, securities and things of for review is DENIED. The decision of the Court of Appeals dated
values which may be in the hands on deposit or otherwise belonging August 10, 2001 is AFFIRMED.
to me/us and for this purpose, I/We hereby, jointly and severally, SO ORDERED.
irrevocably constitute and appoint the Bank to be my/our true
Attorney-in-Fact with full power and authority for me/us and in my/our
name and behalf and without prior notice to negotiate, sell and
transfer any moneys, securities and things of value which it may
hold, by public or private sale and apply the proceeds thereof to the
payment of this note.”

While we agree with petitioners that the application of subject

remittances cannot be justified under Article 1278 in relation to
Article 1279 of the Civil Code, considering that some elements of
legal compensation were lacking, application of the subject
remittances to NASUTRAs account with PNB and the claims of
various PNB branches for interest on the unpaid CY 1984-1985
sugar proceeds is authorized under the above-quoted stipulation.
PNB correctly treated the subject remittances for the account of
NASUTRA as moneys in its hands which may be applied for the
payment of the note.

Also, the relationship between NASUTRA/SRA and PNB when the

former constituted the latter as its attorney-in-fact is not a simple
agency. NASUTRA/SRA has assigned and practically surrendered
its rights in favor of PNB for a substantial consideration. To reiterate,
NASUTRA/SRA executed promissory notes in favor of PNB every
time it availed of the credit line. The agency established between the
parties is one coupled with interest which cannot be revoked or
cancelled at will by any of the parties.
Notwithstanding its availment of the approved credit, NASUTRA, for
reasons only known to itself, insisted in claiming for refund of the
remittances. NASUTRAs posture is untenable. NASUTRAs actuation
runs counter to the good faith covenant in contractual relations,
required under Article 1159 of the Civil Code, to wit:

Obligations arising from contract have the force of law between the
contracting parties and should be complied with in good faith.

Verily, parties may freely stipulate their duties and obligations which
perforce would be binding on them. Not being repugnant to any legal
proscription, the agreement entered into by NASUTRA/SRA and

9. Rallos vs Yangco — DE VERA
Petitioners: Florentino Rallos, et. al. (appellee)
Respondents: Teodoro Yangco, et. al. (appellant)
DOCTRINE: It was the duty of the principal on the termination of the
relationship of agency to give due and timely notice thereof to the third
persons concerned. 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.
Facts:
● Yangco sent a letter to Rallos and other potential consignors,
informing him that:
○ He opened a shipping and commission department for
buying and selling leaf tobacco and other native products in
his steamship office.
○ The letter was an invitation to Rallos and other persons
(possibly all of them were tobacco dealers) to become a
consignor.
○ Yangco introduced Collantes in the letter. He said that he
conferred a public power of attorney over Collantes, who
was therefore authorized to perform all acts necessary to
carrying out Yangco’s plans.
■ Agency was constituted because of Collantes’
knowledge and long experience in the business and
Yangco’s commercial connections with merchants in
the city and provinces
■ BASICALLY, Collantes would be selling Rallos’ and
other consignors’ goods, as Yangco’s agent
○ (Other terms and conditions were set forth in the letter)
● Rallos and the other consignors accepted the invitation. He
proceeded to do business with Yangco through Collantes, as the
latter’s factor/agent. He sent Collantes a good deal of produce to be
sold on commission.
● In February 1909, Rallos sent 218 bundles of tobacco to Collantes.
○ Collantes received it and sold it for P1,744.
○ The charges for such sale was P206.96, leaving in the
hands of Collantes the sum of P1,537 belonging to Rallos.
○ This amount of P1,537 was apparently converted by the
agent to his own use.
● However, prior to sending the 218 bundles, Yangco severed his
relations with Collantes and was no longer acting as his agent.
○ No notice was ever given by Yangco to Rallos and the other
consignors about the termination of the agency.
● Yangco refused to pay the sum of money upon demand by Rallos,
on the ground that:
○ At the time the tobacco was received and sold by Collatnes,
he was acting personally and not as Yangco’s agent.
● This action was instituted to recover the sum of money.
○ CFI ruled in favor of Rallos and other consignors.
Issue/s:
1. WON Rallos, acting in good faith and without knowledge, can recover
from Yangco the sum of money - YES
Ratio:
1. Yangco is liable.
a. Having advertised the fact that Collantes was his agent and
having given Rallos a special invitation to deal with such
agent,
i. It was the duty of Yangco on the termination of the
relationship of principal and agent to give due and
timely notice thereof to Rallos.
ii. 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.
Dispositive: For these reasons the judgment appealed from is confirmed,
without special finding as to costs.

10. Perez v. PNB - Faderguya
Petitioners: Amparo Perez, et al.
Respondents: Philippine National Bank, et al.
DOCTRINE:
The power to foreclose is not an ordinary agency that contemplates
exclusively the representation of the principal by the agent but is primarily
an authority conferred upon the mortgagee for the latter’s own protection.
The power to foreclose extrajudicially survived the death of the principal-
mortgagor.
Facts:
● In 1939, Vicente Perez mortgaged Lot No. 286-E of the Kabankalan
Cadastre located in Bacolod to PNB as a security for a loan of
P2,500 extended to Vicente by the bank.
● In 1942, Vicente died intestate and was survived by his widow and
children. At the time of his death, there was an outstanding balance
of P1,917 on the mortgage indebtedness.
● In 1956, the widow of Perez instituted a special proceeding for the
settlement of estate. Notably, the bank did not file a claim, thus, the
partition was approved and the properties were distributed.
● In 1963, the bank, pursuant to the authority granted in the mortgage
deed, extra-judicially foreclosed the property.
● The widow and heirs of Perez instituted a case seeking to annul the
foreclosure and the transfer of the certificate of title.
● RTC, following the doctrine in Pasno v. Ravina, ordered the
annulment of the sale.
○ Bank should have foreclosed its mortgage in court.
○Power to sell contained in the deed of mortgage had
terminated upon death of the mortgagor.
● PNB contends that foreclosure can also be executed extrajudicially.
○ Moreover, they contend that the power of sale survived the
death of Perez, who was by analogy, a principal of PNB.
Issue:
1. WON power to foreclose is barred upon death of the debtor - NO
Ruling:
● The argument that foreclosure by the bank under its power of sale is
barred upon death of the debtor, because agency is extinguished by
death of the principal is untenable.
● Such argument neglects to take into account that the power to
foreclose is not an ordinary agency that contemplates exclusively the
representation of the principal by the agent.
● The power to foreclose is primarily an authority conferred upon
the mortgagee for the latter’s own protection.
● It is an ancillary stipulation supported by the same consideration for
the mortgage and forms an essential and inseparable part of the
bilateral agreement.
● The death of the principal-debtor did not extinguished the power of
the Bank to sell the property at a public sale.
● Power to foreclose extrajudicially survived the death of the
mortgagor.
● Court noted that the bank knew of the death since 1947, but it was
only in 1963 when it foreclosed the property.
○ Such failure prevented them from blocking the foreclosure
through seasonable payment.
○ Justice and equity will be served by permitting the heirs of
perez to redeem the property.
● Not main issue (you can skip, but just in case sir asks)
○ Pasno doctrine states that Foreclosure of mortgage can only
be done through the courts.
○ Court, in this case, reversed its ruling in Pasno. It agreed
with the dissenting opinion on the case that the Pasno
doctrine effectively erased the third alternative [...3.) Rely on
mortgage exclusively, foreclosing the same…] under Rules
of CivPro.
Dispositive:
Wherefore, the judgment appealed from is hereby modified, as follows:
(1) Declaring valid and effective the extra-judicial foreclosure of the mortgage
over Lot 286-E of the Kabankalan Cadastre;
(2) Upholding and confirming the cancellation of Transfer Certificate of Title No.
29350 of the Registry of Deeds of Occidental Negros in the name of the late Vicente
Perez, as well as its replacement by Certificate of Title T-32066 of the same Registry
in the name of appellant Philippine National Bank;
(3) Declaring the appellees herein, widow and other heirs of Vicente Perez
entitled to redeem the property in question by paying or tendering to the Bank
the capital of the debt of Vicente Perez, with the stipulated interest to the date of
foreclosure, plus interest thereafter at 12% per annum; and reimbursing the Bank the
value of any useful expenditures on the said property but deducting from the amounts
thus payable the value of any rents and profits derived by the appellee National Bank
from the property in question. Such payment to be made within sixty (60) days after
the balance is determined by the court of origin.
16. Petron Corp. v. Sps. Cesar Jovera and Erma Cudilla — GARCIA
Petitioners: Petron Corporation
Respondents: Spouses CESAR JOVERO and ERMA F. CUDILLA,
Spouses LONITO TAN and LUZVILLA SAMSON, and Spouses ROGELIO
LIMPOCO and LUCIA JOSUE, being represented by PIO JOSUE
DOCTRINE: When it can be seen in the terms of the dealership contract
that the principal was still under control, (i.e. imposing a penalty clause in
instances when there was a violation of the hauling contract) wherein it
may impose a penalty ranging from a written warning to the termination of
the contract, the principal cannot disclaim that there is a contract of
agency.
Facts:
● Petron and Rubin Uy then entered into a Retail Dealer Contract
where the petitioner shall sell to the dealer its products
○ There was also an agreement that petitioner Petron will
deliver the products to places designated
● In this Contract, Uy (dealer) agreed to hold petitioner harmless
against all losses and claims including those of the parties, their
agents, and employees- which includes death, personal injury or
property damage arising out of the operation of the dealer
● For the delivery of the products, petitioner contracted the hauling
services of Jose Villaruz (doing business under Gale Freight
Services)
○ There were specifically 3 units of tank truck for the hauling
requirements of petitioner which would include the
transportation and PROPER loading and unloading and
delivery
○ There was also an agreement to hold Villaruz liable to
petitioner for damage to its plant, equipment and facilities
including those of its employees, dealers, customers,
resulting from his/her lack of diligence
● Uy then executed an SPA in favor of Chiong Uy and Dortina Uy for
the management and operation of the gasoline station
● On January 3, 1991, Ronnie Allanraiz, employee of the gasoline
station ordered petroleum products
○ These were transported by Villaruz using a truck other than
those specifically stated in the agreement (but petron still
acceded)
○ The vehicle was driven by Pepito Igdanis
● During the unloading of the petroleum products from the tank, a fire
started in the fill pipe and spread to the rubber hose connected to the
truck but Igdanis was nowhere to be found
● When he returned, seeing the fire, without detaching the rubber hose
from the fill pipe drove in reverse resulting to the damage of the
properties of the respondents in this case prompting the latter to file
a case for damages
● Petron denies liability by stating that the products were already sold
to Rubin Uy and that VIllaruz was responsible for the delivery of the
products due to their contract
○ And that neither Igdanis nor Villaruz were their employees
● During trial, Villaruz, in his defense, that his exercise of diligence in
the selection and supervision of employees should not make him
liable; further imputing liability to Igdanis as the proximate cause of
the fire
● Respondents contend that Petron was negligent in selling and
storing products without an existing dealer’s contract at the time of
the incident
○ And that petitioner had the responsibility to ensure that the
gasoline station was properly maintained and should have
ensured the safe delivery and storage of its goods
● RTC decided in favor of the respondents which was affirmed by the
CA
Issue/s:
● WON Petitioner can be held liable for the acts of Villaruz and his
employees?
Ratio:
● Yes. As far as the public is concerned, it is enough that the
establishment carries exclusively the name and products of petitioner
to assume that the latter is liable for acts done within the premises.
● With the use of its trade name and trademark, petitioner and the
dealer inform and guarantee to the public that the products and
services are of a particular standard or quality.
 ○ More importantly, the public, which is not privy to the
dealership contract, assumes that the gasoline station is
owned or operated by petitioner.
● Petitioner owns the equipment used during the incident making it
responsible for the delivery of the petroleum to the dealer.
○ Aside from failing to show the actual cause of the fire, it also
failed to rebut the presumption that it was negligent in the
maintenance of its properties and in the conduct of its
business.
● During the incident, petitioner, through Gale Freight Services, was
still in the process of fulfilling its obligation to the dealer. There being
no complete delivery yet, Villaruz was acting as the agent of
petitioner Petron.
● Therefore, as far as the dealer was concerned with regard to the
terms of the dealership contract, acts of Villaruz and his employees
are also acts of petitioner.
● Thus, with regard to the delivery of the petroleum, Villaruz was acting
as the agent of petitioner Petron.
○ For a fee, he delivered the petroleum products on its behalf.
Notably, petitioner even imposed a penalty clause in
instances when there was a violation of the hauling contract,
wherein it may impose a penalty ranging from a written
warning to the termination of the contract.
○ Therefore, as far as the dealer was concerned with regard to
the terms of the dealership contract, acts of Villaruz and his
employees are also acts of petitioner.
● Petitioner, the dealer Rubin Uy were held in solidary liability due to
the shared responsibility of maintaining the equipment and ensuring
the safe use of the same
● Petitioner was likewise negligent in allowing a tank truck different
from that specifically provided under its hauling contract with Villaruz.
● Villaruz is also liable to petitioner based on the hauling contract

Dispositive:·
WHEREFORE, in view of the foregoing, we AFFIRM the Decision of the
Court of Appeals in Civil Case No. 60845 insofar as herein petitioner has
been held solidarily liable to pay damages to respondents. The CA Decision
is, however, MODIFIED and the actual damages awarded to respondents
shall be subject to the rate of legal interest of 6% per annum from the time of
filing of Civil Case Nos. 19633, 19684 and 20122 with the Regional Trial
Court of Iloilo City up to the time this judgment becomes final and executory.
Henceforth, the rate of legal interest shall be 12% until the satisfaction of
judgment.
16. Spouses Fernando Viloria and Lourdes Viloria vs Continental agency called “Holiday Travel” and was attended by Margaret Mager
Airlines, Inc.— GAMAD (Mager). According to Spouses Viloria, Fernando agreed to buy the
said plane tickets after Mager informed them that there were no
Petitioners: SPOUSES FERNANDO and LOURDES VILORIA
available seats at Amtrak (travel via train).
Respondents: CONTINENTAL AIRLINES, INC.
2. Subsequently, Fernando requested to reschedule their flight to an
DOCTRINE:
earlier date but Mager informed him that flights to Newark was fully
In Rallos v. Felix Go Chan & Sons Realty Corporation, 81 SCRA 251
booked and offered flight via Frontier Air but it was a higher fare so
(1978), this Court explained the nature of an agency and spelled out the
Fernando opted to request a refund. Mager denied his request as the
essential elements thereof: Out of the above given principles, sprung the
subject tickets are non-refundable and the only option that
creation and acceptance of the relationship of agency whereby one party,
Continental Airlines can offer is the re-issuance of new tickets within
called the principal (mandante), authorizes another, called the agent
one (1) year from the date the subject tickets were issued and
(mandatario), to act for and in his behalf in transactions with third persons.
consequently reserved two seats with Frontier Air.
The essential elements of agency are: (1) there is consent, express or
3. Later however, the spouses found out that the train trip wasn’t really
implied of the parties to establish the relationship; (2) the object is the
fully booked. As he was having second thoughts on traveling via
execution of a juridical act in relation to a third person; (3) the agent acts
Frontier Air, Fernando went to the Greyhound Station where he saw
as a representative and not for himself, and (4) the agent acts within the
an Amtrak station nearby and made inquiries. Amtrak told Fernando
scope of his authority. Agency is basically personal, representative, and
that there are seats available and he can travel on Amtrak anytime
derivative in nature. The authority of the agent to act emanates from the
and any day he pleased so he purchased two tickets for Washington
powers granted to him by his principal; his act is the act of the principal if
and so they purchased train tickets and went to their destination by
done within the scope of the authority. Qui facit per alium facit se. “He who
train instead. Then they called up Mager to request for a refund for
acts through another acts himself.”
the plane tickets. Mager referred the couple to Continental Airlines.
As the couple were now in the Philippines, they filed their request
An airline company is not completely exonerated from any liability for the
with Continental Airline’s office in Ayala. The spouses Viloria alleged
tort committed by its agent’s employees. A prior determination of the
that Mager misled them into believing that the only way to travel was
nature of the passenger’s cause of action is necessary. If the passenger’s
by plane and so they were fooled into buying expensive plane
cause of action against the airline company is premised on culpa aquiliana
tickets.
or quasi-delict for a tort committed by the employee of the airline
4. Upon returning to Philippines, Fernando sent a letter to CAI
company’s agent, there must be an independent showing that the airline
demanding a refund but was denied and was advised for re-issuance
company was at fault or negligent or has contributed to the negligence or
of ticket within two years from the date they were issued. Fernando
tortuous conduct committed by the employee of its agent. The mere fact
availed of re-issuance of Lourdes’ ticket but was informed that it was
that the employee of the airline company’s agent has committed a tort is
non-transferable.
not sufficient to hold the airline company liable. There is no vinculum juris
5. Continental Airlines refused to refund the amount of the tickets and
between the airline company and its agent’s employees and the
so the spouses sued the airline company. In its defense, Continental
contractual relationship between the airline company and its agent does
Airlines claimed that the tickets sold to them by Mager were non-
not operate to create a juridical tie between the airline company and its
refundable; that, if any, they were not bound by the
agent’s employees. Article 2180 of the Civil Code does not make the
misrepresentations of Mager because there’s no contract of agency
principal vicariously liable for the tort committed by its agent’s employees
existing between Continental Airlines and Mager.
and the principal-agency relationship per se does not make the principal a
6. Spouses Viloria filed a complaint against CAI praying for their refund,
party to such tort; hence, the need to prove the principal’s own fault or
moral and exemplary damages. They claim that the
negligence.
misrepresentation of Mager, agent of CAI, lead him to avail the
Facts: ticket and that CAI is liable for her misrepresentation.
1. On or about July 21, 1997 and while in the United States, Fernando 7. Trial Court rendered an order in favor of the Spouses declaring that
purchased for himself and his wife, Lourdes, two (2) round trip airline Mager of Holiday Ticket is an agent of CAI and was in bad faith when
tickets from San Diego, California to Newark, New Jersey on board she was less candid and diligent in presenting to plaintiffs spouses
Continental Airlines. Fernando purchased the tickets from a travel their booking option. On appeal CA reversed RTC’s decision,
 holding that CIA cannot be liable to be held liable for Mager’s act in create a juridical tie between the airline company and its agent’s employees.
the absence of any proof that a principal-agent relationship existed Article 2180 of the Civil Code does not make the principal vicariously liable
between them. Hence this petition for review. for the tort committed by its agent’s employees and the principal-agency
relationship per se does not make the principal a party to such tort; hence,
Issue/s: Whether or not a contract of agency exists between the need to prove the principal’s own fault or negligence.
Continental Airlines and Mager. - YES.
Spouses Viloria’s cause of action on the basis of Mager’s alleged
fraudulent misrepresentation is clearly one of tort or quasi-delict, there being
Ratio: Yes. All the elements of agency are present, to wit:
no pre-existing contractual relationship between them. Therefore, it was
1. there is consent, express or implied of the parties to incumbent upon Spouses Viloria to prove that CAI was equally at fault. The
establish the relationship; records are devoid of any evidence by which CAI’s alleged liability can be
2. the object is the execution of a juridical act in relation to a substantiated. A person’s vicarious liability is anchored on his possession of
third person; control, whether absolute or limited, on the tortfeasor. Without such control,
3. the agent acts as a representative and not for himself, and there is nothing which could justify extending the liability to a person other
4. the agent acts within the scope of his authority. than the one who committed the tort. It is incumbent upon Spouses Viloria to
The first and second elements are present as Continental Airlines does not prove that CAI exercised control or supervision over Mager by preponderant
deny that it concluded an agreement with Holiday Travel to which Mager is evidence. The existence of control or supervision cannot be presumed and
part of, whereby Holiday Travel would enter into contracts of carriage with CAI is under no obligation to prove its denial or nugatory assertion.
third persons on the airlines’ behalf. The third element is also present as it is Therefore, without a modicum of evidence that CAI exercised control over
undisputed that Holiday Travel merely acted in a representative capacity and Holiday Travel’s employees or that CAI was equally at fault, no liability can
it is Continental Airlines and not Holiday Travel who is bound by the contracts be imposed on CAI for Mager’s supposed misrepresentation.
of carriage entered into by Holiday Travel on its behalf. The fourth element is
Dispositive: WHEREFORE, premises considered, the instant Petition is
also present considering that Continental Airlines has not made any
DENIED.
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
estoppel. Continental Airlines cannot be allowed to take an altogether
different position and deny that Holiday Travel is its agent without condoning
or giving imprimatur to whatever damage or prejudice that may result from
such denial or retraction to Spouses Viloria, who relied on good faith on
Continental Airlines’ acts in recognition of Holiday Travel’s authority.
Estoppel is primarily based on the doctrine of good faith and the avoidance of
harm that will befall an innocent party due to its injurious reliance, the failure
to apply it in this case would result in gross travesty of justice.
2. Considering that Holiday Travel is CAI’s agent, does it necessarily follow
that CAI is liable for the fault or negligence of Holiday Travel’s employees? If
the passenger’s cause of action against the airline company is premised on
culpa aquiliana or quasi-delict for a tort committed by the employee of the
airline company’s agent, there must be an independent showing that the
airline company was at fault or negligent or has contributed to the negligence
or tortuous conduct committed by the employee of its agent. The mere fact
that the employee of the airline company’s agent has committed a tort is not
sufficient to hold the airline company liable. There is no vinculum juris
between the airline company and its agent’s employees and the contractual
relationship between the airline company and its agent does not operate to
16. Albaladejo y Cia v. PRC - GUEVARRA
Petitioners: ALBALADEJO Y CIA
Respondents: The PHILIPPINE REFINING CO., as successor to The
Visayan Refining Co.
DOCTRINE:
But the use of the term “agent” in one clause of the contract cannot
dominate the real nature of the agreement as revealed in other clauses, no
less than in the caption of the agreement itself.
When copra purchased by a company from another company is by way of
sale rather than an agency to purchase, the former is not liable to
reimburse the latter for expenses incurred by the latter in maintaining it
purchasing organization intact over a period during which the actual buying
of copra was suspended.
Facts:
● Albaladejo y Cia is a limited partnership engaged in the purchase of
copra in the Province of Albay; and Whereas, Visayan Refining Co.
(predecessor of RMC) is engaged in the business of the manufacture
of coconut oil, or which purpose it must continually purchase large
quantities of copra.
● Cia made a contract with VRC: Memorandum of Agreement Re
Purchase of Copra.
a)VRC bound itself to but from Cia all copra purchased by Cia in the
province of Albay for a period of 1 year from the date of MOA
b)VRC bound itself to pay Cia the Cebu market price of copra
deducting, however ,price of the cost of transportation by sea to VRC
factory
c)VRC will not appoint any other agent for the purchase of copra in
Legaspi nor buy copra from any vendor in Legaspi
d)VRC will keep CIA advised of the prevailing prices paid for said
copra in Cebu market
e)VRC to provide transportation by sea to Opon, Cebu for the
delivery of copra by Cia
● Due to satisfaction on both parties from the arrangement, the
agreement continued even after the 1 year period by tacit consent of
both parties.
● During this time, Cia expanded its business due to the large
requirements/demand of copra from VRC *before 1 only now
established some twenty agencies, or sub agencies, in various ports
and places of the Province of Albay and neighboring provinces.
● After the VRC. had ceased to buy copra, of which fact Cia was duly
notified, the supplies of copra already purchased by Cia were
gradually shipped out and accepted by the VRC., and in the course
of the next eight or ten months the accounts between the two parties
were liquidated.
● The last account rendered by the VRC. to the CIA showed a balance
of P288 in favor of the defendant.
● VRC then became the now PRC
● Cia filed a complaint against PRC for recovery of money alleging that
due to VRC’s negligence in sending boats for transportation to
Opon of the copra products,the stocks of copra prepared for
shipment by the CIA had to remain an unnecessary length of
time in warehouses and could not be delivered thus, said copra
suffered a diminishment of weight through shrinkage and
excessive drying and consequently, copra diminished its value.
Cia claims 201k for damages.
● Cia contends that the contract between the CIA and the VRC
created the relation of principal and agent between the parties,
according to article 1729 of the Civil Code which requires the
principal to indemnify the agent for damages incurred in carrying out
the agency.
ISSUE: WON VRC is principal which is liable to the expenses incurred by
the “agent” Cia in carrying out the agency - NO
RULING:
● The relation between the parties was not that of principal and agent
in so far as relates to the purchase of copra by the CIA. It is true that
the VRC made the CIA one of its instruments for the collection of
copra; but it is clear that in making its purchases from the producers
the CIA was buying upon its own account and that when it turned
over the copra to the VRC., pursuant to that agreement, a second
sale was effected.
● In paragraph three of the contract it is declared that “during the
continuance of this contract the VRC would not appoint any other
agent for the purchase of copra in Legaspi”; and this gives rise
indirectly to the inference that the CIA was considered its
buying agent.
● But the use of this term in one clause of the contract cannot
dominate the real nature of the agreement as revealed in other
clauses, no less than in the caption of the agreement itself. In
some of the trade letters also the various instrumentalities used by
the VRC for the collection of copra are spoken of as agents. But this
designation was evidently used for convenience; and it is very
clear that in its activities as a buyer CIA was acting upon its
own account and not as agents, in the legal sense, of the VRC.
The title to all of the copra purchased by CIA undoubtedly remained
in it until it was delivered by way of subsequent sale to said
company.
Dispositive:
The appealed judgment will therefore be affirmed in so far as it
absolves the defendant from the first cause of action and will be
reversed in so far as it gives judgment against the defendant upon the
second cause of action; and the defendant will be completely absolved
from the complaint. So ordered, without express findings as to costs of
either instance

NOTE:
SC held that:
Copra is a product which necessarily undergoes considerable shrinkage in
the process of drying, and intelligent witnesses who are conversant with the
matter testified at the trial that shrinkage of cobra varies from twenty to thirty
per centum of the original gross weight. It is agreed that the shrinkage shown
in all of the copra which the Cia delivered to the VRC. amounted to only
8.187 per centum of the whole, an amount which is notably below the
normal.
Thus VRC was not negligent.

According to the letters sent by respondent corporation (re: suspension of its

purchase of Copra):
● The copra market is still very weak.
● No business can be done because the banks will not lend the mills
any money to buy copra with at this time.
● Reports from the United States show that the oil market is in a very
serious and depressed condition and that large quantities of oil
cannot be disposed of at any price.
De Castro vs CA - Infante
Petitioners: Constante and Corazon Amor De Castro
Respondents: CA and Franciso Artigo
Doctrine:When the law expressly provides for solidarity of the
obligation, as in the liability of co-principals in a contract of
agency, each obligor may be compelled to pay the entire
obligation. The agent may recover the whole compensation from
any one of the co-principals
FACTS:
o Private respondent Artigo sued petitioners Constante and Amor De
Castro to collect the unpaid balance of his broker’s commission from
the De Castros.
o Private respondent Artigo sued petitioners Constante and Amor De
Castro to collect the unpaid balance of his broker’s commission from
the De Castros.
o The appellants, De Castros, were co-owners of 4 lots in Cubao,
Quezon City. The appellee, Artigo, was authorized by appellants to
act as real estate broker in the sale of these properties for the
amount of P23,000,000.00, 5% of which will be given to the agent as
commission.
o Appellee first found the Times Transit Corporation and 2 lots were
sold. In return, he received P48,893.76 as commission.
o Appellee apparently felt short changed because according to him, his
total commission should be P352,500.00 which is 5% of the agreed
price of P7,050,000.00 paid by Times Transit Corporation to
appellants for the 2 lots and that it was he who introduced the buyer
to appellants and unceasingly facilitated the negotiation which
ultimately led to the consummation of the sale.
o Hence, he sued to collect the balance of P303,606.24 after having
received P48,893.76 in advance.
o Appellants argued that appellee is selfishly asking for more than what
he truly deserved as commission to the prejudice of
other agents who were more instrumental to the
consummation of the sale and that there were more or
less 18 others who took active efforts.
o The De Castros argued that Artigo’s complaint should
have been dismissed for failure to implead all the co
owners of the 2 lots.
o The De Castros contend that failure to implead such
indispensable parties is fatal to the complaint since
Artigo, as agent of all the four co-owners, would be paid
with funds co-owned by the four co-owners.
· It was shown also that Constante Amor De Castro signed
the authorization of Artigo as owner and representative
of the co-owners.
ISSUE: Whether or not the complaint should be dismissed because if
the failure to implead the other co-owners as indispensable parties-
NO
RATIO:
· The De Castros argue that Artigo’s complaint should have
been dismissed for failure to implead all the co-owners
of the two lots. The De Castros claim that Artigo always
knew that the two lots were co-owned by Constante and
Corazon with their other siblings Jose and Carmela
whom Constante merely represented. The De Castros
contend that failure to implead such indispensable
parties is fatal to the complaint since Artigo, as agent of
all the four co-owners, would be paid with funds co-
owned by the four co-owners.
· The De Castros contentions are devoid of legal basis.
· An indispensable party is one whose interest will be
affected by the court’s action in the litigation, and without
whom no final determination of the case can be had. The
joinder of indispensable parties is mandatory and courts
cannot proceed without their presence. Whenever it
appears to the court in the course of a proceeding that
an indispensable party has not been joined, it is the duty
of the court to stop the trial and order the inclusion of
such party.
· However, the rule on mandatory joinder of indispensable
parties is not applicable to the instant case.
· There is no dispute that Constante appointed Artigo in a
handwritten note dated January 24, 1984 to sell the
properties of the De Castros for P23 million at a 5
percent commission.
· Constante signed the note as owner and as representative
of the other co-owners. Under this note, a contract of
agency was clearly constituted between Constante and
Artigo. Whether Constante appointed Artigo as agent, in
Constante’s individual or representative capacity, or
both, the De Castros cannot seek the dismissal of the
case for failure to implead the other co-owners as
indispensable parties. The De Castros admit that the
other co-owners are solidarily liable under the contract of
agency, citing Article 1915 of the Civil Code, which
reads: 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.
· The solidary liability of the four co-owners, however,
militates against the De Castros’ theory that the other
co-owners should be impleaded as indispensable
parties. A noted commentator explained Article 1915
thus–
power granted includes various transactions some of
which are common and others are not, only those
interested in each transaction shall be liable for it.”
· When the law expressly provides for solidarity of the
obligation, as in the liability of co-principals in a contract
of agency, each obligor may be compelled to pay the
entire obligation. The agent may recover the whole
compensation from any one of the co-principals, as in
this case.
· Indeed, Article 1216 of the Civil Code provides that a
creditor may sue any of the solidary debtors.
· Art. 1216. The creditor may proceed against any one of
the solidary debtors or some or all of them
simultaneously. The demand made against one of them
shall not be an obstacle to those which may
subsequently be directed against the others, so long as
the debt has not been fully collected.
Disposition:
WHEREFORE, the petition is denied for lack of merit. The Decision of the
Court of Appeals dated May 4, 1994 in CA-G.R. CV No. 37996 is AFFIRMED
in toto.

· The rule in this article applies even when the appointments

were made by the principals in separate acts, provided
that they are for the same transaction. The solidarity
arises from the common interest of the principals, and
not from the act of constituting the agency. By virtue of
this solidarity, the agent can recover from any principal
the whole compensation and indemnity owing to him by
the others. The parties, however, may, by express
agreement, negate this solidary responsibility. The
solidarity does not disappear by the mere partition
effected by the principals after the accomplishment of
the agency.

· If the undertaking is one in which several are interested,

but only some create the agency, only the latter are
solidarily liable, without prejudice to the effects of
negotiorum gestio with respect to the others. And if the

15. Garcia v. Manzano — JOSEF
Petitioners: JUAN GARCIA
Respondents: JOSEFA DE MANZANO, as administratrix of the
estate of her husband Narciso Lopez Manzano
Doctrine: It is necessary for the previously appointed agent
to be notified of the appointment of a new or second agent
for the previous agency to be revoked. Without such
notification, the previously appointed agent acts under a
valid power-of-attorney.
FACTS:
● Narciso L. Manzano was a merchant in Atimonan, Tayabas.
● He was the owner of a half interest in a small steamer,the San
Nicolas, the other half being owned by Ocejo, Perez & Co., with
whom there was a partnership agreement to run the steamer for a
few years.
● On February 1910, he gave a general power-of-attorney to his
son, Angel L. Manzano. Then on March, he gave a second
general power-of-attorney to his wife Josefa.
● He left and went to Spain in May 1910.
● When the partnership agreement period expired, Ocejo, Perez &
Co., refused to continue the contact and demanded that Manzano
buy or sell.
● On October 1910, Juan Garcia bought the half interest held by
Ocejo, Perez & Co.
● In 1911, Angel L. Manzano, acting under his power-of-attorney,
sold in the other half of the boat to the Juan Garcia, but as he is
a Spaniard and could not register the boat in his name at the Custom
House, the boat was registered in the name of his son, Agustin
Garcia.
● Agustin Garcia shortly thereafter died, leaving his parents as his
heirs at law, and as such heirs Juan Gacia's wife was made a party.
● On July 1912, Angel L. Manzano, by virtue of the power-of-attorney
from his father Narciso, executed a contract, by which Juan Garcia
extended a credit to Narciso L. Manzano in the sum of P12,000, and
this credit was used by the house of Manzano. To secure it a
mortgage was given in the same document on three parcels of land
in Atimonan.
○ (in the ruling the sc said: The sale of the half interest in the
small vessel was necessary in order to get money or a
credit without which it would be impossible to continue the
business which was being conducted in the name of Narciso
L. Manzano and for his benefit.)
● Narciso Manzano died in Spain in 1913.
● In 1914, The court named the wife, Josefa de Manzano,
administrator of the property of Narciso L. Manzano. There were no
claims against the estate, which was reported to the court on
December 1914.
● On July 1915, the Court ordered the partition of the property
amongst the heirs of Narciso L. Manzano.
● On May, 1915, Garcia filed an action to foreclose the so-called
mortgage.
● Josefa de Manzano filed a pleading stating that the estate had
already been divided; that the property of Narciso Manzano had
been assigned.
● Josefa Manzano also filed a counter-claim against Juan Garcia,
arguing:
o That Angel L. Manzano had no authority to sell the interest
in the steamer, but that since the date of said sale, July,
1911, Garcia had illegally appropriated all rents and
profits of the boat to his own use.
o That the power-of-attorney to the wife (Josefa Manzano)
revoked the one to the son (Angel Manzano) in
accordance with article 1735 of the Civil code.
o That the power-of-attorney under which Angel L. Manzano
acted, even if a valid power, did not authorize the sale of
the boat, and they want it back it with one-half of the
profits derived from its use by Garcia.
ISSUE/S:
1. WoN power-of-attorney to the wife (Josefa Manzano) revoked the
one to the son (Angel Manzano) in accordance with article 1735 of the
Civil code –NO
2. WoN the power-of-attorney authorized the sale of the boat –YES
RATIO:
1. Article 1735 of the Civil code is as follows:
The appointment of a new agent for the same business produces a
revocation of the previous agency from the day on which notice was
given to the former agent, excepting the provisions of the next
preceding article.
There is no proof in the record that the first agent, the son, knew of the
power-of-attorney to his mother.
It was necessary under the law for the defendants to prove that the son had
notice of the second power-of-attorney. They have not done so, and it must
be considered that Angel L. Manzano was acting under a valid power-of-
attorney from his father which had not been legally revoked on the date of
the sale of the half interest in the steamer to the plaintiff's son, which half
interest was legally inherited by the plaintiffs.
2. The power-of-attorney executed by Narciso Manzano in favor of his
son reads:
To enable him to buy or sell, absolutely or under pacto de retro, any
of the rural or urban estates that now own and may acquire in the
future, at such price as he may deem most advantageous, which he
shall collect in cash or by installments and under such conditions as
he may consider proper, and he shall set forth the encumbrances on
the properties and their origin. I bind myself to warrant and defend, in
accordance with law, the titles to such properties; and if the
properties alienated by this agreement should be redeemed, he is
empowered to redeem them by paying the price that may have been
fixed, and, for this purpose, shall execute the proper instrument.

The power-of-attorney authorizes the sale of real property, the buying of real
property and mortgaging the same the borrowing of money and in fact is
general and complete.

The power does not expressly state that the agent may sell the boat, but a
power so full and complete authoring the sale of real property, must
necessarily carry with it the right to sell a half interest in a small boat. The
record further shows the sale was necessary in order to get money or a
credit without which it would be impossible to continue the business which
was being conducted in the name of Narciso L. Manzano and for his benefit.

The authorization is so complete that it carries with it full authority to sell the
one-half interest in the boat which was then owned by Narciso L. Manzano.

RULING: That part of the judgement ordering the defendant Josefa

Samson de Manzano to pay the plaintiff P12,752.85 is revoked, and the
judgment in so far as it dismisses the counterclaim of the defendants is
affirmed, without any declaration of costs. So ordered.

16. Ching v. Bantolo — KEE
Petitioners: Albert M. Ching and Romeo Bautista
Respondents: Felix M. Bantolo, Antonio O. Adriano and Eulogio Sta.
Cruz, Jr. substituted by his children, represented by Raul Sta. Cruz Jr.
DOCTRINE:
Facts:
● Respondents Bantolo, et al are owners of several parcels of land in
Tagaytay City
● They executed in favor of petitioner Ching and Bautista a SPA
authorizing the latter to obtain a loan using respondents’ properties
as collateral.
● Without notice to petitioners, respondents executed a Revocation of
Power of Attorney effective at the end of business hours of July 17,
2000.
● On July 18, 2000, the Philippine Veterans Bank (PVB) approved the
loan application of petitioner Ching in the amount of P25 million (“mil”
for brevity) for five years.
● On July 31, 2000, the petitioner thru a letter informed respondents of
the approval of the loan.
● In the first week of August 2000, petitioners learned about the
revocation of the SPA. Petitioners demanded to respondents the
compliance of their agreement by annulling the revocation of the
SPA.
● Petitioners filed before RTC of Quezon City a complaint for
Annulment of Revocation of SPA.
● Petitioner’s contention: SPA is irrevocable because it is a contract of
agency coupled with interest. They agreed to defray the costs
involved in the processing of the loan because respondents
promised that they would have an equal share in the proceeds of the
loan.
● Respondent’s contention: They executed the SPA in favor of
petitioners because of their assurance that they would be able to get
a loan in the amount of P50 mil and that the P30 mil would be given
to respondents within a month’s time.
○ When the 1 month period expired, respondents complained
to petitioner and asked him to advance the amount of
P500,000.
○ Petitioner Ching agreed to their request on the condition that
they hand over to him the original titles for safekeeping.
○ Respondents, in turn, asked petitioner Ching to give them P1
mil in exchange for the titles.
○ Petitioner Ching agreed and gave him the titles. However he
never gave them the money. They asked him to return the
titles but they refused.
○ Later, they were informed that the loan was approved in the
amount of 25 mil and that their share would be 6 mil. Since it
was not the amount agreed upon, respondents revoked the
SPA and demanded the return of the titles.
● RTC: In favor of petitioners. Valid SPA. But although the SPA was
valid, can no longer be enforced because the circumstances present
at the time of its execution have changed. Respondents were liable
for damages. Petitioner entitled to one-half of the subject properties.
● CA: Modified the decision of RTC. Petitioners not entitled to one-half
of the subject properties.
Issue/s:
1. WON petitioners are entitled to actual damages? YES
2. WON petitioners are entitled to one-half of the subject properties?
NO
3. WON petitioners are entitled to reimbursement of all the expenses
incurred in obtaining a loan? NO
4. WON petitioners are entitled to exemplary damages? NO
Ratio:
There is no question that the SPA executed by respondents in favor of
petitioners is a contract of agency coupled with interest. It cannot be revoked
at the sole will of the principal. The only issues to resolve are the following:
1. Petitioner Ching is entitled to actual damages for P500,000 without
any condition. In exchange for his possession of the titles, petitioner
advanced the amount of P500,000 to respondents. Since the loan application
with PVB did not push through, respondents are liable to return the said
amount to petitioner (It was not clearly stated in the facts of the case how
much was advanced by petitioners but it can be inferred in the ratio that it
only advanced P500,000, not P1 mil which was demanded by respondents
for the exchange of title.)
● The return of the amount of P500,000 should not depend upon the
happening of a future event. WON the loan is obtained by the
petitioners, respondents are liable to pay the amount as actual
damages.
2. Petitioners are not entitled to one-half of the subject properties. It is
far from human experience that a person will give his half of his property to
another person whom he barely knows. It is clear that respondents do not
know petitioner Ching. It was petitioner Bautista who introduced him to WHEREFORE, the petition is hereby partially GRANTED. The assailed
respondent Bantolo. The respondents agreed to give a SPA to Ching Decision dated July 31, 2006 and the Resolution dated March 12, 2007 of
because they were informed that the latter could help them secure a loan the Court of Appeals in CA-G.R. CV. No. 79886 are hereby AFFIRMED with
with their pieces of property as collateral. MODIFICATION that respondents are ordered to pay petitioner Ching actual
3. Petitioners are not entitled to reimbursement of all the expenses damages in the amount of P500,000.00.
incurred in obtaining a loan. Petitioner Ching testified in court that he
agreed to shoulder all the expenses. Petitioners failed to show that the
receipts submitted as evidence were incurred in relation to the loan
application. CA’s findings reveal that the majority of the receipts were
incurred abroad and in connection with petitioner Ching’s business dealings.
● Atty Figueroa: Mr. Witness, can you please tell us who will shoulder
the expenses that will be incurred in the processing of this loan
application?
● A - I will shoulder everything.
● Q - But you have an agreement with [respondent] Bantolo, and
pursuant to this agreement, Mr. Witness, once the application for
loan was approved, what will happen?
● A - According to him, we will share 50-50 [in] the amount that we will
pay and I have the option to choose between the money, if the same
is small [or] to take the 50% of the property.
● What happens, now, Mr. witness, if the loan is not approved by
the bank[?] What happens specifically to the expenses that you
have incurred in the processing of the loan application[?]
● A - I asked them about that but they told me that they don’t have
money to pay me, so I shouldered all the expenses. I took the
risk of shouldering all the expenses.
● Atty. Figueroa: You said you took the risk. Will you be more specific
what do you mean by this risk that you took, as far as the expenses
are concerned?
● A - What I mean, sir, is that I will not be able to recover all my
expenses if the loan is not granted by the Philippine Veterans
Bank.
4. Petitioners are not entitled to exemplary damages. Article 2229 of the
Civil Code provides that exemplary damages may be imposed "by way of
example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages." They are awarded only if
the guilty party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.
● Respondents did not act in a wanton, fraudulent, reckless,
oppressive or malevolent manner. They revoked the SPA because
they were not satisfied with the amount of the loan approved. Thus,
petitioners are not entitled to exemplary damages.

Ruling:

Bacaling v. Muya - KIT
Petitioners: NELITA M. BACALING, represented by her attorney-in-fact
JOSE JUAN TONG, and JOSE JUAN TONG
Respondents: ELOMINO MUYA, CRISPIN AMOR, WILFREDO JEREZA,
RODOLFO LAZARTE and NEMESIO TONOCANTE
DOCTRINE: The agency having been created for the mutual interest of the
agent and the principal’s interest, obviously, is not limited to commissions
earned as a result of business transactions, but one that extends to the
subject matter of power of management delegated. It is an agency that
cannot be revoked at the pleasure of the principal.
Facts:
● Petitioner Nelita Bacaling owned 3 parcels of land, around 9.9 hectares
in Brgy. Cubay, Jaro, Iloilo City
● 1955, the landholding was subdivided into 110 sub-lots covered by
TCTs, inclusive of the Registry of Deeds of the City of Iloilo.
○ Processed and approved as "residential/subdivision" by the
National Urban Planning Commission (NUPC)
○ Bureau of Lands approved the subdivision plan for
developing it into a residential community
● 1957, a real estate loan of P600K was granted to Sps. Bacaling by
GSIS for the development of the subdivision
○ Executed a real estate mortgage over their land including
110 sub-lots, but only P240K released to them
○ Bacalings failed to pay amortizations on the loan and
mortgage constituted on 110 sub-lots foreclosed by the
GSIS
● Respondents Muya, et. al: 1964, they were legally instituted by
Bacalings’ administrator/overseer as tenant-tillers of the subject land
on sharing basis with 2.5 hectares each for Muya, Amor, Tonocante
and Lazarte, and 1.5 hectares for Jereza
○ 1974, their relationship with the landowner was changed to
one of leasehold.
○ They delivered their rental payments to Bacaling as
agricultural lessor and eventually secured certificates of land
transfer in their names for 110 sub-lots and made various
payments to the Land Bank of the Philippines
● City Council of Iloilo enacted Zoning Ordinance No. 212 declaring
the one hundred ten (110) sub-lots as "residential" and "non-
agricultural,"
● 1978, Nelita Bacaling was able to register the subject property as the
Bacaling-Moreno Subdivision with the NHA and to obtain a license to
sell the 110 sub-lots
● Nelita Bacaling (by then a widow) in 1989, was eventually able to
restore to herself ownership of the 110 sub-lots
● 1990, petitioner Juan Tong, bought from Nelita Bacaling the 110 sub-
lots for P1.7M.
○ To secure performance and facilitate the transfer of title,
Bacaling appointed him as her attorney-in-fact, under an
irrevocable SPA
● 10 years after the perfection and execution of the sale, or on
April 2000, Bacaling filed a complaint to nullify the contract of
sale
● Tong (together with Bacaling) filed a petition for cancellation of the
certificates of land transfer against respondents and Department of
Agrarian Reform (DAR)
○ DAR dismissed on the ground that there had been no
legitimate conversion of the classification of the 110 sub-lots
from agricultural to residential prior to Operation Land
Transfer, P.D. No. 72 (Oct. 1972)
● Tong and Bacaling appealed to the Office of the Pres. (OP)
● Office of Pres.: Parcels of land had been converted from agricultural
to residential by declarations of the NUPC and Bureau of Lands and
factual circumstances
○ Respondents Muya, et. al. elevated the OP Decision to the
CA
● Before petition was resolved, Bacaling manifested to CA revocation
of irrevocable power of attorney in favor of Tong and was admitting
the status of respondents as her tenants of the 110 sub-lots which
allegedly were agricultural in character
● Court of Appeals: Reversed the OP Decision and validated
certificates of land transfers in favor of respondents
○ Refused to recognize the NUPC and Bureau of Lands
classification of the subject lots as residential subdivision.
● Tong moved for reconsideration of the CA Decision which Bacaling
did not oppose despite her manifestation
 ○ CA denied
● Bacaling resurrected her manifestation with CA and moved to
dismiss Tong’s petition on the ground that:
○ Irrevocable power of attorney in favor of Tong had been
nullified and that Tong consequently lacked the authority to
appear before the Court
○ Respondents were bona fide tenants of the 110 sub-lots
which were allegedly agricultural and not residential
Issue/s:
1. WON petitioner Tong has the requisite interest to litigate this
petition for review on certiorari -- YES
2. WON respondents agricultural lessees -- NO
Ratio: (numbered, according to issue/s)
● There should be no doubt that as transferee of the 110 sub-lots
through a contract of sale and as the attorney-in-fact of Bacaling,
under an irrevocable special power of attorney, petitioner Tong
stands to be benefited or injured by the judgment in the instant
case.
○ Interest = material interest in issue and to be affected by the
judgment, while a real party in interest = party who would be
benefitted/injured by the judgment/the party entitled to the
avail of the suit
● Bacaling cannot revoke at her whim and pleasure the irrevocable
special power of attorney which she had duly executed in favor of
Tong and duly acknowledged before a notary public.
● The agency is one coupled with interest which is explicitly
irrevocable since the deed of agency was prepared and signed
and/or accepted by Tong and Bacaling with a view to completing
the performance of the contract of sale of 110 sub-lots.
● It is for this reason that the mandate of the agency constituted Tong as
the real party in interest to remove all clouds on the title of Bacaling and
that, after all these cases are resolved, to use the irrevocable special
power of attorney to ultimately cause and effect the transfer of the
aforesaid lots in the name of the vendees and execute and deliver
document/s or instrument of whatever nature necessary to accomplish
the foregoing acts and deeds.
● The fiduciary relationship inherent in ordinary contracts of agency
is replaced by material consideration which in the type of agency
herein established bars the removal or dismissal of Tong as
Bacalings attorney-in-fact on the ground of alleged loss of trust and
confidence.
○ Stated otherwise, Bacaling cannot vest in herself just like in
ordinary contracts the unilateral authority of determining the
existence and gravity of grounds to justify the rescission of
the irrevocable special power of attorney.
● The requisites in order to have a valid agricultural leasehold relationship
are:
(1) The parties are the landowner and the tenant or agricultural lessee;
(2) The subject matter of the relationship is agricultural land;
(3) There is consent between the parties to the relationship;
(4) the purpose of the relationship is to bring about agricultural
production;
(5) There is personal cultivation on the part of the tenant or agricultural
lessee; and
(6) The harvest is shared between the landowner and the tenant or
agricultural lessee.
○ The first, third and sixth requisites are lacking in the case
● Respondents cannot validly claim that they are legitimate and
recognized tenants of the subject parcels of land for the reason that
their agreement to till the land was not with GSIS, the real
landowner.
○ There is no showing that GSIS consented to such tenancy
relationship nor is there proof that GSIS received a share in
the harvest of the tenants.
Dispositive: WHEREFORE, the Petition for Review is GRANTED. It is
further ordered and adjudged that:
1. The certificates of land transfer over the one hundred ten (110) sub-lots
are hereby DECLARED VOID AB INITIO. The said 110 sub-lots are declared
outside the coverage and operation of P.D. No. 27 and other land reform
laws.
2. The Decision of the Court of Appeals and its Resolution are REVERSED
AND SET ASIDE.
3. The Decisionand the Resolution of the Office of the President in OP Case
No. 98-K-8180 are REINSTATED with the modification in that the
respondents are not entitled to disturbance compensation; and
4. Respondents Felomino Muya, Crispin Amor, Wilfredo Jereza, Rodolfo
Lazarte and Nemesio Tonocante together with their assigns and successors
in interest are ordered to vacate and surrender peacefully the possession of
the 110 sub-lots to petitioner Jose Juan Tong within thirty (30) days from
notice of this Decision.

Coleongco vs Claparol- Lim
Petitioners: Vicente Coleongco
Respondents: Eduardo Claparols
DOCTRINE: A power of attorney coupled with interest in a
partnership can be revoked for a just cause, such as when the
attorney-in-fact betrays the interest of the principal. The
irrevocability of the power of attorney may not be used to shield the
perpetration of acts in bad faith, breach of confidence, or betrayal of
trust, by the agent for that would be authorizing the agent to commit
frauds against the principal.
FACTS:
● Eduardo Claparols operated a factory for the manufacturing of nails
in Talisay, Negros Occidental under the name “Claparols Steel and
Nail Plant.” The raw material, the nail wire, was imported from
foreign sources, specially from Belgium. The marketing of the nails
was handled by the "ABCD Commercial" of Bacolod, which was
owned by a Chinaman named Kho To.
● Losses compelled Claparols to look for someone to finance his
import of nail wires. Kho To then referred him to Vicente Coleongco
who offered to finance him.
● Claparols and Coleongco entered into a financing agreement
wherein Coleongco will finance the importation of the nail wire which
Claparol bound himself to convert into nail wire. It was agreed upon
that Coleongco would have the exclusive distribution of the product
and marketing of these nails and the promotion of sales all over the
Philippines except the Davao. He would also "share the control of all
the cash" from sales or deposited in banks; that he would have a
representative in the management; that all contracts and
transactions should be jointly approved by both parties; that proper
books would be kept and annual accounts rendered; and that profits
and losses would be shared "on a 50-50 basis".
● 2 days after the execution of the financing agreement, Claparols
executed an SPA as per the request of Coleongco to open and
negotiate letters of credit, to sign contracts, bills of lading, invoices,
and papers covering transactions; to represent appellee and the nail
factory; and to accept payments and cash advances from dealers
and distributors. Thereafter, Coleongco also became the assistant
manager of the factory, and took over its business transactions,
while Claparols devoted most of his time to the nail manufacture
processes.
● 3 years after, Claparols was surprised to receive a writ of execution
to enforce a judgment against him by PNB despite the fact that he
sent them an amortization plan to settle his account. Upon meeting
with PNB, he found out that Coleongco was spreading derogatory
information about him claiming that to avoid his liability to PNB, he
took the machines that were mortgaged to the said bank.
● Claparols managed to arrange matters with the bank and to have the
execution levy lifted. Incensed at what he regarded as disloyalty of
his attorney-in-fact, he revoked the power of attorney and informed
Coleongco by registered mail. At the same time, he demanded a full
accounting of the business.
● After the examination by the auditors it was found that Coleongco
owed the Claparols Nail Factory the amount of P87,387.37. Also,
Claparols found a correspondence between Coleongco and Kho To
which contained a plan to cut his monthly advances from 2,000 to
1,000 so that he would have more difficulty in running his company
so that he would cede the company to them.
● Coleongco claims that Claparol cannot revoke the agency
relationship because it was constituted to protect his interest under
 the financing agreement and was one coupled with an interest that
the appellee Claparols had no legal power to revoke.
ISSUE/S:
1. WON the revocation of the power of attorney is valid?
2. WON there was a just and lawful cause?
RATIO:
1. Yes. The financing agreement itself already contained clauses for the
protection of appellant's interest, and did not call for the execution of any
power of attorney in favor of Coleongco. It must not be forgotten that a power
of attorney can be made irrevocable by contract only in the sense that the
principal may not recall it at his pleasure; but coupled with interest or not, the
authority certainly can be revoked for a just cause, such as when the
attorney-in-fact betrays the interest of the principal, as happened in this
case. It is not open to serious doubt that the irrevocability of the power of
attorney may not be used to shield the perpetration of acts in bad faith,
breach of confidence, or betrayal of trust, by the agent for that would amount
to holding that a power coupled with an interest authorizes the agent to
commit frauds against the principal.
Based on records, it was also shown that contrary to the financing
agreement, Claparols was made to shoulder ¾ of the payment of the
imports. Coleongco never paid Claparols his full share on the profits. For
1957 to 1958 Claparols financed the imports of nail wire without the help of
appellant, and in view of the latter's infringement of his obligations, his acts of
disloyalty previously discussed, and his diversions of factory funds (he even
bought two motor vehicles with them), we find no justification for his
insistence in sharing in the factory's profit for those years, nor for the
restoration of the revoked power of attorney. The basic rule of contracts
requires parties to act loyally toward each other in the pursuit of the common
end, and appellant clearly violated the rule of good faith prescribed by Art.
1315 of the new Civil Code.
DISPOSITION:
IN VIEW OF THE FOREGOING, the decision appealed from is affirmed.
Costs against appellant Vicente Coleongco.

Under Art. 1800 of the Civil Code: the powers of a partner, appointed as
manager, in the articles of co-partnership are irrevocable without just or
lawful cause; and an agent with power coupled with an interest can not stand
on better ground than such a partner in so far as irrevocability of the power is
concerned.

2. Yes. The appellee Coleongco acted in bad faith towards his principal
Claparols. This is evidenced by his letters to the Philippine National Bank
attempting to undermine the credit of the principal and to acquire the factory
of the latter, without the principal's knowledge; Coleongco's letter to his
cousin, Kho To instructing the latter to reduce to one-half the usual monthly
advances to Claparols on account of nail sales in order to squeeze said
appellee and compel him to extend the contract entitling Coleongco to share
in the profits of the nail factory on better terms, and ultimately "own his
factory", a plan carried out by Kho's letter, reducing the advances to
Claparols; Coleongco's attempt to, have Romulo Agsam pour acid on the
machinery; his illegal diversion of the profits of the factory to his own benefit;
and the surreptitious disposition of the Yates band resaw machine in favor of
his cousin's Hong Shing Lumber Yard, made while Claparols was in Baguio
in July and August of 1956, are plain acts of deliberate sabotage by the
agent that fully justified the revocation of the power of attorney by
Claparols and his demand for an accounting from his agent Coleongco.

Lustan v. Court of Appeals - Lumbre
Petitioners: Adoracion Lustan
Respondents: Court of Appeals, Philippine National Bank, Nicolas
and Soledad Parangan
DOCTRINE: If the agency has been entrusted for the purpose of
contracting with specified persons, its revocation shall not prejudice
the latter if they were not given notice thereof.
FACTS:
● Adoracion Lustan is the registered owner of a parcel of land
otherwise known as Lot 8069 of the Cadastral Survey of Calinog, llo-
ilo containing an area of 10 hectares and covered by TCT No. T-561.
● Lustan leased the lot to private respondent Nicolas Parangan for a
term of 10 years and an annual rent of 1,000php
● In 1970, Lustan executed a Special Power of Attorney in favor of
Parangan to secure an agricultural loan from private respondent
Philippine National Bank (PNB) with the aforesaid lot as collateral.
● In 1972, a second Special Power of Attorney was executed by
Lustan, by virtue of which, Parangan was able to secure 4 additional
loans (Php24k,38k,38.6k, and 25k respectively)
● The SPA stipulated that the same is good not only for the principal
loan but also for subsequent commercial, industrial, agricultural loan
or credit accommodation that the attorney-in-fact may obtain and
until the power of attorney is revoked in a public instrument and a
copy of which is furnished to PNB
● The last three loans were without the knowledge of Lustan and all
the proceeds therefrom were used by Parangan for his own benefit.
These encumbrances were duly annotated on the certificate of title.
● In 1973, Lustan signed a Deed of Pacto de Retro Sale in favor of
Parangan which was superseded by the Deed of Definite Sale dated
May 4, 1979 which petitioner signed upon Parangan’s representation
that the same merely evidences the loans extended by him unto the
former.
● For fear that her property might be prejudiced by the continued
borrowing of Parangan, petitioner demanded the return of her
certificate of title.
● Instead of complying with the request, Parangan asserted his rights
over the property which allegedly had become his by virtue of the
aforementioned Deed of Definite Sale.
● Under said document, petitioner conveyed the subject property and
all the improvements thereon unto Parangan absolutely for and in
consideration of the sum of Php75,000.00
● Aggrieved, petitioner now files an action for cancellation of liens,
quieting of title, recovery of possession and damages against
Parangan and PNB in the Regional Trial Court of Iloilo City.
● RTC ruled:
● cancelling the unauthorized loans,
● declaring the Deed of Definite Sale void,
● ordering Nicolas Parangan to return possession of the land
in question,
● ordered PNB to return the TCT
● CA reversed the decision.
● Hence this appeal where Lustan claimed:
○ that the CA erred in finding that the SPA authorizing for
“Unlimited Mortgage” is relevant;
 ○ that the last three mortgages are void for want of
authority
ISSUE: WoN the outstanding mortgages entered into by Parangan
under the SPA can be enforced against Lustan
HELD: YES
RATIO:
- Third persons (Lustan, as owner of the lot) who are not parties to a loan
(Parangan and PNB) may furnish security for the loan by pledging or
mortgaging their own property. So long as valid consent was given, the fact
that the loans were solely for the benefit of Parangan would not invalidate the
mortgage with respect to petitioner's property.
- In consenting thereto, even granting that petitioner may not be assuming
personal liability for the debt, her property shall nevertheless secure and
respond for the performance of the principal obligation. It is admitted that
petitioner is the owner of the parcel of land mortgaged to PNB on five (5)
occasions by virtue of the Special Powers of Attorney executed by petitioner
in favor of Parangan.
- Petitioner argues that the last three mortgages were void for lack of
authority. She totally failed to consider that said Special Powers of Attorney
are a continuing one and absent a valid revocation duly furnished to the
mortgagee (PNB), the same continues to have force and effect as against
third persons who had no knowledge of such lack of authority.
- Article 1921 provides that if the agency has been entrusted for the
purpose of contracting with specified persons, its revocation shall not
prejudice the latter if they were not given notice thereof.
- Lustan, by executing the SPA, clothed Parangan with authority to deal with
PNB on her behalf and in the absence of any proof that the bank had
knowledge that the last three loans were without the express authority
of petitioner, it cannot be prejudiced thereby.
- As far as third persons are concerned, an act is deemed to have been
performed within the scope of the agent's authority if such 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 the understanding between the principal
and the agent.
- The Special Power of Attorney particularly provides that the same is good
not only for the principal loan but also for subsequent commercial, industrial,
agricultural loan or credit accommodation that the attorney-in-fact may obtain
and until the power of attorney is revoked in a public instrument and a copy
of which is furnished to PNB.
- 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 (Article 1911, Civil Code).
NOTE:
- Lustan was illiterate.
- The deed of sale was deemed to be an equitable mortgage.
Evidence proved that the contract of definite sale did not embody the
true intent of the parties.
- Lustan has an unquestionable right to demand proportional
indemnification from Parangan with respect to the sum paid to PNB
from the proceeds of the sale of her property in case the same is sold
to satisfy the unpaid debts.
DISPOSITION:
WHEREFORE, premises considered, the judgment of the lower court is
hereby REINSTATED with the following MODIFICATIONS:
1. DECLARING THE DEED OF DEFINITE SALE AS AN EQUITABLE
MORTGAGE;
2. ORDERING PRIVATE RESPONDENT NICOLAS PARANGAN TO
RETURN THE POSSESSION OF THE SUBJECT LAND UNTO
PETITIONER UPON THE LATTER'S PAYMENT OF THE SUM OF
P75,000.00 WITHIN NINETY (90) DAYS FROM RECEIPT OF THIS
DECISION;
3. DECLARING THE MORTGAGES IN FAVOR OF PNB AS VALID AND
SUBSISTING AND MAY THEREFORE BE SUBJECTED TO EXECUTION
SALE.
4. ORDERING PRIVATE RESPONDENT PARANGAN TO PAY
PETITIONER THE AMOUNT OF P15,000.00 BY WAY OF ATTORNEY'S
FEES AND TO PAY THE COSTS OF THE SUIT.
SO ORDERED.