AGENCY 

#74 Borador vs. Luz

(Bea)
Facts:

Spouses Borador were engaged in the business of purchase and sale of jewelry and Luz was their
regular customer. On several occasions, Deganos, the brother of Luz received several pieces of gold
and jewelry from Borador. These items were indicated in 17 receipts, while 11 of the receipts stated that
they were received for a certain niece of Deganos, and the remaining 6 indicated that they were received
for Luz.

Deganos was supposed to sell the items at a profit and remit the proceeds and return the unsold items to
Borador. Deganos remitted only P53,207 and did not pay the balance of the sales proceeds nor did he
return any unsold items to Borador.

Borador field a complaint in the barangay court against Deganos to recover the amount. In the barangay
proceedings, the parties entered into a compromise agreement. Deganos obligated himself to pay
Borador the balance of his account plus interest. However, he failed to pay.

Borador filed in the RTC for recovery of a sum of money and damages, with an application for preliminary
attachment against Deganos and Luz. Four years later, Deganos and Luz were charged with estafa.

Deganos asserted that it was he alone who was involved in the transaction with Borador, he neither acted
as an agent for he was not authorized by Luz. Luz denied that she had anything to do with the
transactions between Borador and Deganos. She claimed that she never authorized Deganos to receive
any item of jewelry in behalf.

Trial Court & CAÎ It found that only Deganos was liable to the Spouses Borador for the amount and
damages claimed. It was persuaded that Luz was behind Deganos, but because there was no
memorandum to this effect, the agreement between eh parties was unenforceable under the Statute of
Frauds. Absent the required memorandum or any written document connecting Luz or authorizing
Deganos to act on their behalf, the alleged agreement between Borador and Luz was unenforceable.

Issue: Whether Luz are liable to Borador for their claim for money and damages, despite the fact that the
evidence does not show that they signed any of the subject receipts or authorized Deganos to receive the
items of jewelry on their behalf.

Held:

Luz is not liable. The evidence does not support the theory of Borador that Deganos was an agent of Luz
and that the latter should consequently be held solidarily liable with Deganos in his obligation Borador.

Even assuming arguendo that Deganos acted as an agent of Brigida, the latter never authorized him to
act on her behalf with regard to the transactions subject of this case. The records show that neither an
express nor an implied agency was proven to have existed between Deganos and Luz. Borador, who
were negligent in their transactions with Deganos, cannot seek relief from the effects of their negligence
by conjuring a supposed agency relation between the Deganos and Luz where no evidence supports
such claim.

The basis of agency is representation. There is no showing that Luz consented to the acts of
Deganos or authorized to act on her behalf.

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#75 Cosmic Lumber Corporation v. CA (1996)

(Benjie)

Power of Agent to Sell Land

Facts:

Petitioner executed a Special Power of Attorney (SPA) appointing Paz G. Villamil-Estrada (Paz) as
attorney-in-fact to initiate, institute and file any court action for the ejectment of third persons and/or
squatters. Paz, by virtue of her power of attorney, instituted an action for the ejectment of private
respondent Isidro Perez and recover the possession of a portion of Lot No. 443 before the RTC. A
Compromise Agreement was reached by wherein the agent sold the land to Perez for a price of P80 per
square meter. It was approved by the RTC and judgment was rendered in accordance therewith.
Petitioner did not receive the proceeds of the sale.

Although the decision became final and executory it was not executed within the 5-year period from date
of its finality. Petitioner asserts that it was only when the summons for the revival of judgment was served
upon it that it came to know of the compromise agreement. Petitioner sought annulment of the decision of
the RTC before the CA on the ground, among others, that the compromise agreement was void because
while the SPA made mention of an authority to enter into a compromise agreement, such authority was in
connection with, and limited to, the eviction of third persons/squatters thereat, in order that the
corporation may take material possession of the entire lot.

The CA dismissed the complaint on the basis of its finding that not one of the grounds for annulment,
namely, lack of jurisdiction, fraud or illegality was shown to exist. Petitioner challenges this verdict.

Issue: Whether the agent had authority to sell the land.

Held:
None. “The authority granted Paz under the SPA was explicit and exclusionary: for her to institute any
action in court to eject all persons found on Lots Nos. 9127 and 443 so that petitioner could take material
possession thereof, and for this purpose, to appear at the pre-trial and enter into any stipulation of facts
and/or compromise agreement but only insofar as this was protective of the rights and interests of
petitioner in the property. Nowhere in this authorization was Paz granted, expressly or impliedly, any
power to sell the subject property nor a portion thereof. Neither can a conferment of the power to sell be
validly inferred from the specific authority "to enter into a compromise agreement" because of the explicit
limitation fixed by the grantor that the compromise entered into shall only be so far as it shall protect the
rights and interest of the corporation in the aforementioned lots.

“When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter
shall be in writing; otherwise, the sale shall be void. XXX. It is, therefore, clear that by selling to
respondent Perez a portion of petitioner's land through a compromise agreement, Paz acted without or in
obvious authority. The sale ipso jure is consequently void. So is the compromise agreement. This being
the case, the judgment based thereon is necessarily void.”

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#76 Genevieve Lim, Petitioner, Vs. Florencio Saban, Respondents.

G.R. No. 163720 December 16, 2004
(Farrah)

FACTS:

The late Eduardo Ybañez (Ybañez), owner of a 1,000-square meter lot in Cebu City (the "lot"), entered
into an Agreement and Authority to Negotiate and Sell (Agency Agreement) with respondent
Florencio Saban. Under the Agency Agreement, Ybañez authorized Saban to look for a buyer of the lot
for Two Hundred Thousand Pesos (P200,000.00) and to mark up the selling price to include the amounts
needed for payment of taxes, transfer of title and other expenses incident to the sale, as well as Saban’s
commission for the sale.

Through Saban’s efforts, Ybañez and his wife were able to sell the lot to the petitioner Genevieve Lim
(Lim) and the spouses Benjamin and Lourdes Lim (the Spouses Lim) on March 10, 1994. The price of the
lot as indicated in the Deed of Absolute Sale is Two Hundred Thousand Pesos (P200,000.00).

It appears, however, that the vendees agreed to purchase the lot at the price of Six Hundred Thousand
Pesos (P600,000.00), inclusive of taxes and other incidental expenses of the sale. After the sale, Lim
remitted to Saban the amounts of One Hundred Thirteen Thousand Two Hundred Fifty Seven Pesos
(P113,257.00) for payment of taxes due on the transaction as well as Fifty Thousand Pesos (P50,000.00)
as broker’s commission. Lim also issued in the name of Saban four postdated checks in the aggregate
amount of Two Hundred Thirty Six Thousand Seven Hundred Forty Three Pesos (P236,743.00).

Subsequently, Ybañez sent a letter addressed to Lim asking her to cancel all the checks issued by her in
Saban’s favor and to "extend another partial payment" for the lot in his favor.

After the four checks in his favor were dishonored upon presentment, Saban filed a Complaint for
collection of sum of money and damages against Ybañez and Lim with the Regional Trial Court (RTC) of
Cebu City.

Ybañez in his answer, claimed that Saban was not entitled to any commission because he concealed the
actual selling price from him and because he was not a licensed real estate broker. Lim, for her part,
argued that she was not privy to the agreement between Ybañez and Saban, and that she issued stop
payment orders for the three checks because Ybañez requested her to pay the purchase price directly to
him, instead of coursing it through Saban. She also alleged that she agreed with Ybañez that the
purchase price of the lot was only P200,000.00.

Ybañez died during the pendency of the case before the RTC. Upon motion of his counsel, the trial court
dismissed the case only against him without any objection from the other parties.

RTC Ruling: dismissed Saban’s complaint, declaring the four (4) checks issued by Lim as stale and non-
negotiable, and absolving Lim from any liability towards Saban.

CA Ruling: Reversed the trial court’s ruling. It held that Saban was entitled to his commission amounting
to P236,743.00. It held that Ybañez’s revocation of his contract of agency with Saban was invalid
because the agency was coupled with an interest and Ybañez effected the revocation in bad faith in order
to deprive Saban of his commission and to keep the profits for himself. It also held that Ybañez and Lim
connived to deprive Saban of his commission. It declared that Lim is liable to pay Saban the amount of
the purchase price of the lot corresponding to his commission because she issued the four checks
knowing that the total amount thereof corresponded to Saban’s commission for the sale, as the agent of
Ybañez. Further, it ruled that in issuing the checks in payment of Saban’s commission, Lim acted as an
accommodation party. She signed the checks as drawer, without receiving value therefor, for the purpose

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AGENCY 

of lending her name to a third person. As such, she is liable to pay Saban as the holder for value of the
checks.

MR filed by Lim was denied. Hence, this present petition.

ISSUES:

(1) Whether or not Saban is entitled to receive his commission from the sale

(2) Whether or not Lim is liable to pay Saban his sales commission.

HELD:

(1) Yes. To deprive Saban of his commission subsequent to the sale which was consummated through
his efforts would be a breach of his contract of agency with Ybañez which expressly states that Saban
would be entitled to any excess in the purchase price after deducting the P200,000.00 due to Ybañez and
the transfer taxes and other incidental expenses of the sale.

The contract of agency was not revoked when Ybañez requested Lim make stop payment orders for the
checks payable to Saban after the consummation of the sale on March 10, 1994. At that time, Saban had
already performed his obligation as Ybañez’s agent when, through Saban’s efforts, Ybañez executed the
Deed of Absolute Sale of the lot with Lim and the Spouses Lim.

However, the Court does not agree with the appellate court’s pronouncement that Saban’s agency was
one coupled with an interest. Under Article 1927 of the Civil Code, 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. Stated differently, an agency is deemed as one coupled with an interest
where it is established for the mutual benefit of the principal and of the agent, or for the interest of the
principal and of third persons, and it cannot be revoked by the principal so long as the interest of the
agent or of a third person subsists.

In an agency coupled with an interest, the agents interest must be in the subject matter of the power
conferred and not merely an interest in the exercise of the power because it entitles him to compensation.
When an agent’s interest is confined to earning his agreed compensation, the agency is not one coupled
with an interest, since an agent’s interest in obtaining his compensation as such agent is an ordinary
incident of the agency relationship.

(2) Yes. Saban’s right to receive compensation for negotiating as broker for Ybañez arises from the
Agency Agreement between them. Lim is not a party to the contract. However, the record reveals that she
had knowledge of the fact that Ybañez set the price of the lot at P200,000.00 and that the P600,000.00
price agreed upon by her and Saban was more than the amount set by Ybañez because it included the
amount for payment of taxes and for Saban’s commission as broker for Ybañez.

Lim’s act of issuing the four checks amounting to P236,743.00 in Saban’s favor belies her claim that she
and her co-vendees did not agree to purchase the lot at P600,000.00. If she did not agree thereto, there
would be no reason for her to issue those checks which is the balance of P600,000.00 less the amounts
of P200,000.00 (due to Ybañez), P50,000.00 (commission), and the P113,257.00 (taxes). The only logical
conclusion is that Lim changed her mind about agreeing to purchase the lot at P600,000.00 after talking
to Ybañez and ultimately realizing that Saban’s commission is even more than what Ybañez received as
his share of the purchase price as vendor. Obviously, this change of mind resulted to the prejudice of
Saban whose efforts led to the completion of the sale between the latter, and Lim and her co-vendees.
This the Court cannot countenance.

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AGENCY 

Considering the circumstances surrounding the case, and the undisputed fact that Lim had not yet
paid the balance of P200,000.00 of the purchase price of P600,000.00, it is just and proper for her
to pay Saban the balance of P200,000.00. Furthermore, since Ybañez received a total of P230,000.00
from Lim, or an excess of P30,000.00 from his asking price of P200,000.00, Saban may claim such
excess from Ybañez’s estate, if that remedy is still available, in view of the trial court’s dismissal of
Saban’s complaint as against Ybañez, with Saban’s express consent, due to the latter’s demise on
November 11, 1994.

The appellate court however erred in ruling that Lim is liable on the checks because she issued
them as an accommodation party. Under Section 29 of the Negotiable Instruments Law, the
accommodation party is one who meets all these three requisites, viz: (1) he signed the instrument as
maker, drawer, acceptor, or indorser; (2) he did not receive value for the signature; and (3) he signed for
the purpose of lending his name to some other person. In the case at bar, while Lim signed as drawer of
the checks she did not satisfy the two other remaining requisites.

The absence of the second requisite becomes pellucid when it is noted at the outset that Lim issued the
checks in question on account of her transaction, along with the other purchasers, with Ybañez which
was a sale and, therefore, a reciprocal contract. Specifically, she drew the checks in payment of the
balance of the purchase price of the lot subject of the transaction. And she had to pay the agreed
purchase price in consideration for the sale of the lot to her and her co-vendees. In other words, the
amounts covered by the checks form part of the cause or consideration from Ybañez’s end, as vendor,
while the lot represented the cause or consideration on the side of Lim, as vendee. Ergo, Lim received
value for her signature on the checks.Neither is there any indication that Lim issued the checks for the
purpose of enabling Ybañez, or any other person for that matter, to obtain credit or to raise money,
thereby totally debunking the presence of the third requisite of an accommodation party.

WHEREFORE, in view of the foregoing, the petition is DISMISSED.

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AGENCY 

#77 PNB vs. CA

(Inah)

Facts:

Private respondent Loreto Tan’s parcel of land in Bacolod City was expropriated. He filed a motion
requesting issuance of an order for the release to him of the expropriation price of P32,480. Petitioner
PNB was required by the trial court to release to Tan the amount deposited with it by the government.
However, PNB released it to one Sonia Gonzaga without Tan’s knowledge, consent or authority, by virtue
of an alleged SPA executed by Tan in favor of Gonzaga. The SPA, however, could not be reproduced in
court. Tan Filed a motion to require PNB to pay it to him, but the court decided that there was need for the
matter to be ventilated in a separate civil action, so another complaint was filed with the RTC. Petitioner
PNB claims Tan duly authorized Gonzaga to act as his agent, but could not present the SPA, claiming
that Gonzaga borrowed it later with the promise to return it, claiming that she needed it to encash the
check. Judgment rendered in favor of Tan. Hence, this appeal.

Issue: Whether payment to Gonzaga can be credited to Tan

Held: Decision affirmed. There is no question that no payment had ever been made to private
respondent as the check was never delivered to him. When the court ordered petition to pay private
respondent the amount, it had the obligation to deliver the same to him. Under the Civil Code, a debt
shall not be understood to have been paid unless the thing or service in which the obligation consists has
been completely delivered or rendered, as the case may be. The burden of proof of such payment lies
with the debtor. In the instant case, neither the SPA nor the check issued by petitioner was ever
presented in court. The testimonies of petitioner’s own witnesses regarding the check were conflicting.
Furthermore contrary to petitioner’s contention that all that is needed to be proved is the existence of the
SPA, it is also necessary for evidence to be presented regarding the nature and extent of the alleged
powers and authority granted to Sonia Gonzaga; more specifically, to determine whether the document
indeed authorized her to receive payment intended for private respondent. Considering that the contents
of the SPA are also in issue here, the best evidence rule applies. Hence, only the original document
(which has not been presented at all) is the best evidence of the fact as to whether or not private
respondent indeed authorized Sonia Gonzaga to receive the check from petitioner. In the absence of
such document, petitioner’s arguments regarding due payment must fail.

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AGENCY 

#78 MARIA TUAZON, ALEJANDRO P. TUAZON, MELECIO P. TUAZON, Spouses ANASTACIO and
MARY T. BUENAVENTURA vs. HEIRS OF BARTOLOME RAMOS
(Karl)

Facts:

Respondents alleged that Spouses Leonilo and Maria Tuazon (Spouses Tuazon) purchased a total of
8,326 cavans of rice from the deceased Bartolome Ramos (Ramos), the predecessor-in-interest of
respondents. Of this quantity, only 4,437 cavans have been paid for so far, leaving some 3,889 cavans
unpaid and valued at P1.2M. As payment, Spouses Tuazon issued several Traders Royal Bank checks.
But when they were presented, they were dishonored due to insufficiency of funds. Respondents
advanced that before issuing said checks, Spouses Tuazon already knew that they had no available fund
to support the checks, and they failed to provide for the payment of these despite repeated demands
made on them. Respondents averred that because Spouses Tuazon anticipated that they would be sued,
they conspired with the other petitioners to defraud them as creditors by executing fictitious sales of their
properties. They executed simulated sales of 3 lots in favor of the petitioner Spouses Buenaventura as
well as their residential lot and the house thereon, all located at Nueva Ecija. Another simulated deed of
sale was executed pertaining to a Stake Toyota, which was registered with the LTO-Cabanatuan.

Petitioner Melecio Tuazon, a son of Spouses Tuazon, registered a fictitious Deed of Sale over a
residential lot located at Nueva Ecija. Another simulated sale of a Toyota Willys was executed in favor of
their other son, petitioner Alejandro Tuazon. As a result of the said sales, the titles of these properties
issued in the names of Spouses Tuazon were cancelled and new ones were issued in favor of the
Spouses Buenaventura, Alejandro Tuazon and Melecio Tuazon. As a result, there was no more property
left registered in the names of Spouses Tuazon which can be made answerable to creditors.

Petitioners denied having purchased rice from Ramos. They alleged that it was Magdalena Ramos, wife
of said deceased, who owned and traded the merchandise and Maria Tuazon was merely her agent.
They argued that it was Evangeline Santos (Santos) who was the buyer of the rice and issued the checks
to Maria Tuazon as payments therefor. In good faith, the checks were received from Santos and were
turned over to Ramos without knowing that they were not funded. And it is for this reason that petitioners
have been insisting on the inclusion of Santos as an indispensable party, and her non-inclusion was a
fatal error. Refuting that the sale of several properties were fictitious or simulated, Spouses Tuazon
contended that these were sold because they were then meeting financial difficulties but the disposals
were made for value and in good faith and done before the filing of the instant suit. To dispute the
contention of respondents that they were the buyers of the rice, they argued that there was no sales
invoice, official receipts or like evidence to prove this. They assert that they were merely agents and
should not be held answerable.

Civil and criminal cases were filed by respondents against Spouses Tuazon. These cases were later
consolidated and amended to include Spouses Buenaventura and the other Tuazons. Having passed
away before the pre-trial, Ramos was substituted by his heirs. Contending that Santos was an
indispensable party in the case, petitioners moved to file a third-party complaint against her. Allegedly,
she was primarily liable to respondents, as evidenced by the fact that the checks had been drawn in her
name. The RTC, however, denied petitioners' Motion. The trial court acquitted petitioners in all 3 of the
consolidated criminal cases; they appealed only its decision finding them civilly liable to respondents. The
CA affirmed the RTC, holding that the petitioners had failed to prove the existence of an agency between
respondents and Spouses Tuazon. The CA disbelieved the contention that Santos should have been
impleaded as an indispensable party. Inasmuch as all the checks had been indorsed by Maria Tuazon,
who thereby became liable to subsequent holders for the amounts stated in those checks, there was no
need to implead Santos. Petitioners went to the SC.

Issue: WON the petitioners are agents of the respondents.

Held:

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AGENCY 

No, they are not. In a contract of agency, one binds oneself to render some service or to do
something in representation or on behalf of another, with the latter's consent or authority. The
following are the elements of agency: (1) the parties' consent, express or implied, to establish the
relationship; (2) the object, which is the execution of a juridical act in relation to a third person; (3)
the representation, by which the one who acts as an agent does so, not for oneself, but as a
representative; (4) the limitation that the agent acts within the scope of his or her authority.

As the basis of agency is representation, there must be, on the part of the principal, an actual
intention to appoint, an intention naturally inferable from the principal's words or actions. There
must also be an intention on the part of the agent to accept the appointment and act upon it.
Absent such mutual intent, there is generally no agency. Here, the finding that the petitioners were
the rice buyers themselves is correct. They were not mere agents of respondents in their rice
dealership. The question of whether a contract is one of sale or of agency depends on the
intention of the parties. The declarations of agents alone are generally insufficient to establish the fact
or extent of their authority. The law makes no presumption of agency; proving its existence, nature and
extent is incumbent upon the person alleging it. Here, petitioners raise the fact of agency as an affirmative
defense, yet failed to prove its existence.

It is to be noted that petitioners, on their own behalf, sued Santos for collection of the amounts
represented by the bounced checks in a separate civil case that they sought to be consolidated with the
current one. If, as they claim, they were mere agents of respondents, petitioners should have brought the
suit against Santos for and on behalf of their alleged principal, in accordance with Section 2 of Rule 3 of
the Rules on Civil Procedure. Their filing a suit against her in their own names negates their claim that
they acted as mere agents in selling the rice obtained from Ramos.

Spill: As indorser, Maria Tuazon warranted that upon due presentment, the checks were to be accepted
or paid, or both, according to their tenor; and that in case they were dishonored, she would pay the
corresponding amount. After an instrument is dishonored by nonpayment, indorsers cease to be merely
secondarily liable; they become principal debtors whose liability becomes identical to that of the original
obligor. The holder of a negotiable instrument need not even proceed against the maker before suing the
indorser. Thus, Santos -- as the drawer of the checks -- is not an indispensable party.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners.
SO ORDERED.

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# 79 Manila Memorial Park vs Linsangan (2004)

(Eli)

Facts: Florencia Baluyot, Agency Manager of Manila Memorial, and Atty. Linsangan were friends. In
1984, Baluyot told Linsangan that a lot owner, under Contract 25012, was no longer interested in
acquiring the said lot and had opted to sell his rights subject to reimbursement of the amounts he already
paid. Contract 25012 had a purchase price of Php 95K. Baluyot told Linsangan that once reimbursement
was made to the lot owner, Contract 25012 would be transferred to Linsangan. Convinced, Linsangan
gave to Baluyot Php 35K representing the amount to be reimbursed to the lot owner and the
downpayment to Manila Memorial. The corresponding receipt was issued by Baluyot.

A few months later, Baluyot informed Linsangan that Contract 25012 could not be transferred to
him and that another contract would be issued to him covering the same memorial lot. Under the new
contract, the purchase price was Php 132K. Linsangan protested. To convince him, Baluyot executed a
document stating that although the contract stated that the purchase price was Php 132K, he would only
pay Php 95K. Also, the downpayment of Php 20 K would be credited leaving a balance of Php 75K
payable in 5 years with a monthly installment of Php 1,800. With this, Linsangan signed the new contract
and issued 12 post dated checks to cover the first year of installments.

For the succeeding year, Linsangan issued another 12 post dated checks. All of the checks were
encashed by Manila Memorial. In 1987, Baluyot informed Linsangan that the new contract was cancelled
for reasons the former could not explain. Baluyot also presented to Linsangan another proposal for the
purchase of an equivalent property. Linsangan protested and demanded that Baluyot and Manila
Memorial should honor their previous agreement. For failure of Baluyot and Manila Memorial to conform
to their agreement, Linsangan filed an action for Breach of Contract and Damages against Manila
Memorial and Baluyot.

Baluyot did not present any evidence. Manila Memorial answered that Baluyot was not its agent
but an independent contractor as stated in the Agency Manager Agreement. Also, the company alleged
that it was not aware of the agreement between Baluyot and Linsangan.

The RTC found Baluyot and Manila Memorial jointly and severally liable. It found that Baluyot was
an agent of Manila Memorial and the latter was estopped from denying this agency since it encashed the
checks.

The CA affirmed the trial court’s decision. It further declared that although Baluyot had exceeded
her authority, the agreement between Linsangan and Baluyot bound Manila Memorial since such
agreement was made in conformance with the accepted practice in the company for a long period of time.

Issue: WON Baluyot is an agent of Manila Memorial and WON Manila Memorial is bound by the
agreement entered by Baluyot with Linsangan

Held: Yes, Baluyot is an agent of Manila Memorial. Despite that the Agency Manager Agreement
states that Baluyot is not an agent but an independent contractor, she is authorized to solicit and remit to
Manila Memorial offers to purchase interment spaces belonging to and sold by her. Furthermore, that she
was authorized to solicit solely for and in behalf of Manila Memorial. As properly found both by the

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RTC and the CA, Baluyot was an agent of Manila Memorial, having represented the interest of the latter,
and having been allowed by Manila Memorial to represent it in her dealings with its clients/prospective
buyers.

No, Manila Memorial cannot be be bound by the contract procured by Linsangan and
solicited by Baluyot. Linsangan and Baluyot had an agreement different from that contained in the Offer
to Purchase is of no moment, and should not affect Manila Memorial, as it was obviously made outside
Baluyot’s authority. To repeat, Baluyot’s authority was limited only to soliciting purchasers. She had no
authority to alter the terms of the written contract provided by MMPCI. The document/letter
“confirming” the agreement that Linsangan would have to pay the old price was executed by
Baluyot alone. Nowhere is there any indication that the same came from Manila Memorial or any of its
officers.

It is a settled rule that persons dealing with an agent are bound at their peril, if they would
hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of
authority, and in case either is controverted, the burden of proof is upon them to establish it. The
basis for agency is representation and a person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent. If he does not make such an inquiry, he is chargeable
with knowledge of the agent’s authority and his ignorance of that authority will not be any excuse.

The ignorance of a person dealing with an agent as to the scope of the latter’s authority is
no excuse to such person and the fault cannot be thrown upon the principal. A person dealing with
an agent assumes the risk of lack of authority in the agent. He cannot charge the principal by relying
upon the agent’s assumption of authority that proves to be unfounded. The principal, on the other hand,
may act on the presumption that third persons dealing with his agent will not be negligent in failing to
ascertain the extent of his authority as well as the existence of his agency.

Also, there is neither ratification nor estoppel in the case at bar. The acts of an agent
beyond the scope of his authority do not bind the principal, unless he ratifies them, expressly or
impliedly. Only the principal can ratify; the agent cannot ratify his own unauthorized acts.
Moreover, the principal must have knowledge of the acts he is to ratify.

Ratification in agency is the adoption or confirmation by one person of an act performed

on his behalf by another without authority. The substance of the doctrine is confirmation after
conduct, amounting to a substitute for a prior authority. Ordinarily, the principal must have full
knowledge at the time of ratification of all the material facts and circumstances relating to the
unauthorized act of the person who assumed to act as agent. Thus, if material facts were suppressed
or unknown, there can be no valid ratification and this regardless of the purpose or lack thereof in
concealing such facts and regardless of the parties between whom the question of ratification
may arise. Nevertheless, this principle does not apply if the principal’s ignorance of the material facts and
circumstances was willful, or that the principal chooses to act in ignorance of the facts. However, in the
absence of circumstances putting a reasonably prudent man on inquiry, ratification cannot be implied as
against the principal who is ignorant of the facts.

Atty. Linsangan failed to show that MMPCI had knowledge of the arrangement. As far as MMPCI
is concerned, the contract price was P132,250.00, as stated in the Offer to Purchase signed by Atty.
Linsangan and MMPCI’s authorized officer. The down payment of P19,838.00 given by Atty. Linsangan
was in accordance with the contract as well. Payments of P3,235.00 for at least two installments were
likewise in accord with the contract, albeit made through a check and partly in cash.

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AGENCY 

Neither is there estoppel in the instant case. The essential elements of estoppel are (i)
conduct of a party amounting to false representation or concealment of material facts or at least
calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which
the party subsequently attempts to assert; (ii) intent, or at least expectation, that this conduct shall be
acted upon by, or at least influence, the other party; and (iii) knowledge, actual or constructive, of the real
facts

There is no indication that Manila Memorial let the public, or specifically, Linsangan to believe that
Baluyot had the authority to alter the standard contracts of the company. Neither is there any showing
that prior to signing of the new contract, Manila Memorial had any knowledge of Baluyot’s commitment to
Linsangan.

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AGENCY 

#80 Chua v. Soriano

(Eyet)

Facts:

Msgr. Soriano (respondent) owned a parcel of land. He lent the TCT to his first cousin Celestino as a
security for a business loan and executed an SPA authorizing the latter to mortgage it. Fire gutted the QC
Hall and destroyed the original copy of the TCT in the registry of deeds. Soriano authorized Celestino to
initiate administrative reconstitution proceedings on the said TCT. Later, Soriano confronted Celestino
about the rumors that the land was already sold, which was denied by the latter. When he made inquiries
with the Registry of Deeds, Soriano discovered that the TCT had been cancelled by a new one in the
name of the Sps Chua (petitioner). The said land was sold by Celestino by virtue of an SPA for
P500,000.00.

Claiming that the signature on the SPA is a forgery, Soriano filed a complaint against Celestino and the
Sps Chua for annulment of the deed of sale, SPA, cancellation of title and reconveyance with damages.
Soriano died during the pendency of the trial and was replaced by Sis. Soriano. The RTC ruled in favor of
Soriano based on the opinion of expert witnesses from the NBI that the real signature of Soriano and that
appearing on the SPA are executed by two different persons. It also held that the Sps Chua were not
purchasers in good faith as they did not personally verify the title of the land. The CA affirmed the
decision of the RTC stating that there was no contrary evidence to rebut the reliance on the testimony of
expert witnesses. Chua died during the pendency of the petition.

Issue: Whether the Chuas are purchasers in good faith for merely relying on the TCT.

Held:

Yes. Every person dealing with registered land may safely rely on the correctness of the
certificate of title issued therefore and the law will in no way oblige him to go beyond the certificate
to determine the condition of the property. Although the law requires a higher degree of prudence
from one who buys from a person who is not the registered owner, it will directly contravene the Torrens
system of registration. It will impair public confidence in the certificate of title.

The subsequent declaration of the RTC that the signature appearing in the SPA is a falsity is of no
moment. The assailed SPA contains a notarial seal which evidentiary weight with respect to their due
execution and regularity, therefore is sufficient evidence of good faith. Moreover, it was accepted by the
Register of Deeds which registered, inscribed and annotated it in the owner’s duplicate title.

Sps Chua already acquired valid title to the property and holds an indefeasible title to it, thus entitled to
the protection of the law. To uphold the effects of a false SPA may be disconcerting but the sympathies
for the deceived party must be balanced in deference to purchasers in good faith.

Petition granted. Celestino is ordered to pay Soriano P500,000.00 with 6% interest until full payment.

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