1.
DY PEH, AND/OR VICTORY RUBBER
MANUFACTURING, Petitioner, v. COLLECTOR OF
INTERNAL REVENUE, Respondent.
[G.R. No. L-19375. May 21, 1969.]
Facts:
Petitioner was engaged in the business of manufacturing and
selling rubber shoes and allied products in Cebu City under the
registered firm name Victory Rubber Manufacturing.
Sometime in 1955 the BIR unearthed anomalies committed in
the treasurer’s office of Cebu in connection with the payment
of taxes by some taxpayers, amongst them petitioner herein.
The investigation of the anomalies disclosed that the amounts
of the taxes allegedly paid by petitioner, as appearing in the
original of every official receipt he had in his possession, were
bigger than the amounts appearing in the corresponding
duplicate, triplicate and quadruplicate copy thereof kept in the
office of the City Treasurer of Cebu.
Petitioner’s contention is since the checks he issued covered in
full the amount and were accepted and deposited by the City
Treasurer of Cebu and since the originals of the OR issued by
the latter show that the full amount of the taxes due from him
had been paid, he must be deemed to have paid such taxes in
full, and any anomaly in the application of the amounts paid by
him should not be held against him.
Respondent’s contention is that the originals thereof were
falsified or altered to make them show payment in full of the
taxes due from petitioner.
In connection with the issues thus joined petitioner tried to
prove that the payments in question were made by him
personally, while, on the other hand, respondent claimed that
said payments were made not by petitioner personally but by
Tan Chuan Liong, his authorized agent in the matter of
payment of his taxes; that it was Tan Chuan Liong who applied
a portion of the amounts given to him by petitioner to pay tax
obligations of other taxpayers, also his clients, and that
therefore petitioner’s recourse is against him.
Issue:
WON Tan Chuan Liong was petitioner’s agent, therefore his
acts bind his principal.
Held:
It appears that Tan Chuan Liong prepared the official receipts
of payments of taxpayers who employed him as business
agent. It has not been shown that Tan Chuan Liong prepared
any official receipt covering payment of taxpayers other than
those who employed him business agent
We believe it established as a fact that petitioner had
employed Tan Chuan Liong as a business agent in the matter
of payment of his taxes. The testimonies of Bartolome Baguio,
Isidro Badana and Lauro Abalos on this matter were
corroborated by the statement and report of NBI handwriting
expert Felipe Logan. That Tan Chuan Liong, as such
petitioner’s agent, actually paid to the government less than
the amounts of the taxes due from petitioner is also fully
proven by their testimonies and the duplicate, triplicate and
quadruplicate copies of the official receipts which appear upon
their face to be genuine or authentic. The same thing cannot
be claimed for the official receipts in question, because the
lower court found that, as in the case Tiu Bon Sin v. Collector
etc., C.T.A. No. 286, and Yap Pe Giok v. Aranas, C.T.A. No.
533, appellant employed the same business agent who
misappropriated a portion of the amounts entrusted to him
and paid less than what was due from his principals. In plain
words, the lower court expressed the view that the official
receipts in petitioner’s hands did not reflect the truth.
AGENCY; AGENT’S ACTS BIND HIS PRINCIPAL; CASE AT BAR.
— Where Tan Chuan Liong, petitioner’s agent who made the
payment of the latter’s taxes, falsified the official receipts,
applying a portion of the amounts given by petitioner to him to
pay the tax obligation of other taxpayers such as that the
official receipts in petitioner’s hands did not reflect the truth
thereby making him liable to pay deficiency percentage taxes
in the total amount of P15,939.27, the conclusion must
necessarily be that the agent’s acts bind his principal, without
prejudice, of course, to the latter seeking recourse against him
in an appropriate civil or criminal action
2. G.R. No. 88539 October 26, 1993
KUE CUISON vs. THE COURT OF APPEALS and VALIANT
INVESTMENT ASSOCIATES
Facts:
Petitioner (Kue Cuison) is a sole proprietorship engaged in the
purchase and sale of newsprint, bond paper and scrap. On the
other hand, the private respondent (Valiant Investment
Associates) is a partnership.
It was alleged that the private respondent delivered various
kinds of paper products amounting to P297,487.30 to Lilian Tan
of LT Trading pursuant to orders of petitioner's manager, Tiu
Huy Tiac. Lilian Tan paid for the merchandise by issuing several
checks payable to cash at the specific request of Tiu Huy Tiac.
In turn, Tiac issued nine (9) postdated checks to private
respondent as payment for the paper products.
After the said checks were later dishonored by the drawee bank,
the private respondent made several demands upon petitioner
to pay for the merchandise in question, claiming that Tiu Huy
Tiac was duly authorized as the manager of his Binondo office.
However, petitioner denied any involvement in the transaction
and refused to pay private respondent.
Private respondent filed an action against petitioner for the
collection of P297,487.30. After due hearing, the trial court
dismissed the complaint against petitioner for lack of merit. On
appeal, however, the decision of the trial court was reversed by
the Court of Appeals (CA) ordering petitioner to pay private
respondent, among others, the sum of P297,482.30 with
interest.
The petitioner filed to the Supreme Court a petition for review
which assails the decision of the respondent CA contending that
the CA erred: (a) in finding Tiu Huy Tiac as petitioner’s agent;
(b) in finding petitioner liable for an obligation undisputedly
belonging to Tiu Huy Tiac, and (c) in reversing the well-founded
decision of the trial court.
Issue: Whether or not Tiu Huy Tiac possessed the required
authority from petitioner sufficient to hold the latter liable for
the disputed transaction.
Ruling: Yes. The Court denied the petition for lack of merit.
It is evident from the records that by his own acts and
admission, the petitioner held out Tiu Huy Tiac to the public as
the manager of his store. Therefore, by petitioner's own
representations and manifestations, Tiu Huy Tiac became an
agent of petitioner by estoppel, an admission or representation
is rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying thereon
(Article 1431, Civil Code of the Philippines). A party cannot be
allowed to go back on his own acts and representations to the
prejudice of the other party who, in good faith, relied upon them
1
(Philippine National Bank v. Intermediate Appellate Court, et al.,
189 SCRA 680 [1990]).
Taken in this light, petitioner is liable for the transaction entered
into by Tiu Huy Tiac on his behalf. Thus, 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), as in the case at bar.
Finally, although it may appear that Tiu Huy Tiac defrauded his
principal (petitioner) in not turning over the proceeds of the
transaction to the latter, such fact cannot in any way relieve nor
exonerate petitioner of his liability to private respondent. For it
is an equitable maxim that as between two innocent parties, the
one who made it possible for the wrong to be done should be
the one to bear the resulting loss (Francisco vs. Government
Service Insurance System, 7 SCRA 577 [1963]).
3. G.R. No. 94050 November 21, 1991
SYLVIA H. BEDIA and HONTIVEROS & ASSOCIATED
PRODUCERS PHILS. YIELDS, INC., petitioners,
vs.
EMILY A. WHITE and HOLMAN T. WHITE, respondents.
Facts:
Bedia and White entered into a Participation Contract. They
agreed to participate Dallas State Fair to be held in Dallas and
request for a 15 sqm. booth space worth $2,250.00 U.S.
Dollars.
They further agreed that the participation contract shall be
deemed non-cancellable after payment of the said down
payment, and that any intention on our part to cancel the
same shall render whatever amount we have paid forfeited in
favor of HONTIVEROS & ASSOCIATED PRODUCERS
PHILIPPINE YIELDS, INC.
White and her husband filed a complaint with RTC, Pasay for
Bedia and Hontiveros & Associated Producers Phil. Yields, Inc.
for damages caused by their fraudulent violation of their
agreement. She averred that Bedia had approached her and
persuaded her to participate in the State of Texas Fair, and
that she made a down payment of $500.00 to Bedia on the
agreed display space but was dismayed to learn later that the
defendants had not paid for or registered any display space in
her name, nor were they authorized by the state fair director
to recruit participants. She said she incurred losses as a result
for which the defendants should be held solidarily liable.
Defendants denied the plaintiff's allegation that they had
deceived her and explained that no display space was
registered in her name as she was only supposed to share the
space leased by Hontiveros in its name. She was not allowed
to display her goods in that space because she had not paid
her balance of $1,750.00, in violation of their contract. Bedia
also made the particular averment that she did not sign the
Participation Contract on her own behalf but as an agent of
Hontiveros and that she had later returned the advance
payment of $500.00 to the plaintiff. The defendants filed their
own counterclaim and complained of malice on the part of the
plaintiffs. 3
Issue: WON Bedia is liable for the damages lost by White
Held:
2
The Court held that since it has not been found that Bedia was
acting beyond the scope of her authority when she entered
into the Participation Contract on behalf of Hontiveros, it is the
latter that should be held answerable for any obligation arising
from that agreement. By moving to dismiss the complaint
against Hontiveros, the plaintiffs virtually disarmed themselves
and forfeited whatever claims they might have proved against
the latter under the contract signed for it by Bedia. It should
be obvious that having waived these claims against the
principal, they cannot now assert them against the agent.
4. Rural Bank of Milaor vs. Francisca Ocfemia et. Al
G.R. No 137686 ; February 8, 2000
FACTS: Several parcels of land were mortgaged by the
respondents during the lifetime of the respondent’s
grandparents to the Rural bank of Milaor as shown by the
Deed of Real Estate Mortgage and the Promissory Note.
Spouses Felicisimo Ocfemia and Juanita Ocfemia, one of the
respondents, were not able to redeem the mortgaged
properties consisting of seven parcels of land and so the
mortgage was foreclosed and thereafter ownership was
transferred to the petitioner bank. Out of the seven parcels of
land that were foreclosed, five of them are in the possession of
the respondents because these five parcels of land were sold
by the petitioner bank to the respondents as evidenced by a
Deed of Sale. However, the five parcels of land cannot be
transferred in the name of the parents of Merife Nino, one of
the respondents, because there is a need to have the
document of sale registered. The Register of deeds, however,
said that the document of sale cannot be registered without
the board resolution of the petitioner bank confirming both the
Deed of sale and the authority of the bank manager, Fe S.
Tena, to enter such transaction.
The petitioner bank refused her request for a board resolution
and made many alibis. Respondents initiated the present
proceedings so that they could transfer to their names the
subject five parcel of land and subsequently mortgage said lots
and to use the loan proceeds for the medical expenses of their
ailing mother.
ISSUE: May the Board of Directors of a rural banking
corporation be compelled to confirm a deed of absolute sale of
real property owned by the corporation which deed of sale was
executed by the bank manager without prior authority of the
board of directors of the rural banking corporation?
HELD: YES. The bank acknowledges, by its own acts or failure
to act, the authority of Fe S. Tena to enter into binding
contracts. After the execution of the Deed of Sale, respondents
occupied the properties in dispute and paid the real estate
taxes. If the bank management believed that it had title to the
property, it should have taken measured to prevent the
infringement and invasion of title thereto and possession
thereof. Likewise, Tena had previously transacted business on
behalf of the bank, and the latter had acknowledged her
authority. A bank is liable to innocent third persons where
representation is made in the course of its normal business by
an agent like Manager Tena even though such agent is
abusing her authority. Clearly, persons dealing with her could
not be blamed for believing that she was authorized to
transact business for and on behalf of the bank.
The bank is estopped from questioning the authority of the
bank to enter into contract of sale. If a corporation knowingly
permits one of its officers or any other agent to act within the
scope of an apparent authority, it holds the agent out to the
public as possessing the power to do those acts; thus, the
corporation will, as against anyone who has in good faith dealt
with it through such agent, be estopped from denying the
agent’s authority.
6. Pahud vs CA
Facts:
Spouses Pedro San Agustin and Agatona Genil acquired a 246
m2 land in Brgy. Anos, Los Baños, Laguna. Both died intestate,
survived by their eight (8) children: respondents Eufemia,
Raul, Ferdinand, Zenaida, Milagros, Minerva, Isabelita and
Virgilio.
Eufemia, Ferdinand and Raul sold the property to the
petitioners, the Pahuds for P525,000.00. Eufemia also signed
the deed on behalf of her four (4) other co-heirs, namely:
Isabelita on the basis of a special power of attorney executed
on September 28, 1991,7 and also for Milagros, Minerva, and
Zenaida but without their apparent written authority.8 The
deed of sale was also not notarized.9
Pahuds paid the balance of the consideration. Virgilio,
however, refused to sign in the extra judicial partition.
Virgilio’s co-heirs filed a complaint for judicial partition. In the
course of the proceedings, a Compromise Agreement was
signed with seven (7) of the co-heirs agreeing to sell their
undivided shares to Virgilio forP700,000.00.
Eufemia acknowledged having received P700,000.00 from
Virgilio. Virgilio then sold the entire property to spouses
(Belarminos) sometime in 1994. The Belarminos immediately
constructed a building on the subject property.
The Pahuds immediately confronted Eufemia who confirmed to
them that Virgilio had sold the property to the Belarminos.
Aggrieved, the Pahuds filed a complaint in intervention in the
pending case for judicial partition.
After trial, the RTC upheld the validity of the sale to Pahuds.
CA reversed it and ruled in favor of the heirs.
Issue: WON the sale of the property by Eufemia to the
Pahuds are valid?
Held: Yes. We find the transaction to be valid and
enforceable.
Under Art. 1874, a sale of a piece of land or any interest
through an agent, requires that the authority of the latter shall
be in writing; otherwise, the sale shall be void.
Also, Article 1878, a special power of attorney is necessary for
an agent to enter into a contract by which the ownership of an
immovable property is transmitted or acquired.
The express mandate required by law to enable an appointee
of an agency in general terms to sell must be one that
expressly mentions a sale. A power of attorney must so
express the powers of the agent in clear and unmistakable
language.
Absence of a written authority to sell a piece of land is, ipso
jure, void, precisely to protect the interest of an unsuspecting
owner from being prejudiced by the unwarranted act of
another.
In this case, the sale made by Eufemia, Isabelita and her two
brothers to the Pahuds sometime in 1992 should be valid only
with respect to the 4/8 portion of the subject property.
3
The sale with respect to the 3/8 portion, representing the
shares of Zenaida, Milagros, and Minerva, is void because
Eufemia could not dispose of the interest of her co-heirs in the
said lot absent any written authority from the latter, as
explicitly required by law.
While the sale with respect to the 3/8 portion is void by
express provision of law, it is still valid on the basis of the
principle of estoppel. Under Art 1431, Through estoppel an
admission or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as
against the person relying thereon.
Eufemia was not armed with the requisite special power of
attorney to dispose of the 3/8 portion of the property. Initially,
in their answer to the complaint in intervention, Eufemia and
her other co-heirs denied having sold their shares to the
Pahuds. Later, however, they admitted that they had indeed
sold 7/8 of the property to the Pahuds sometime in
1992.33 Thus, the previous denial was superseded, if not
accordingly amended, by their subsequent admission.
Also, the three heir concerned did not assail the validity of the
sale by Eufemia to the Pahuds on the basis of want of written
authority to sell. They opted to remain silent and left the task
of raising the validity of the sale as an issue to their co-heir,
Virgilio, who is not privy to the said transaction.
It is a basic rule in the law of agency that a principal is subject
to liability for loss caused to another by the latter’s reliance
upon a deceitful representation by an agent in the course of
his employment (1) if the representation is authorized; (2) if it
is within the implied authority of the agent to make for the
principal; or (3) if it is apparently authorized, regardless of
whether the agent was authorized by him or not to make the
representation.37
By their continued silence, Zenaida, Milagros and Minerva have
caused the Pahuds to believe that they have indeed clothed
Eufemia with the authority to transact on their behalf. Clearly,
the three co-heirs are now estopped from impugning the
validity of the sale from assailing the authority of Eufemia to
enter into such transaction.
Accordingly, the subsequent sale made by the seven co-heirs
to Virgilio was void because they no longer had any interest
over the subject property which they could alienate at the time
of the second transaction.38 Nemo dat quod non habet.
Virgilio, however, could still alienate his 1/8 undivided share to
the Belarminos
8. VALENZUELA v. COURT OF APPEALS, ARAGON et al.
Topic: Effects of Nonpayment/Partial Payment
Facts:
Arturo Valenzuela is a General Agent of Philippine American
General Insurance (Philamgen) since 1965. He was authorized
to solicit and sell in behalf of Philamgen all kinds of non-life
insurance, and in consideration of services rendered was
entitled to receive the full agent's commission of 32.5% from
Philamgen under the scheduled commission rates. From 1973 to
1975, Valenzuela solicited marine insurance from one of his
clients, the Delta Motors in the amount of P4.4 Million from
which he was entitled to a commission of 32%. However,
Valenzuela did not receive his full commission which amounted
to P1.6 Million from the P4.4 Million insurance coverage of the
Delta Motors. In 1977, Philamgen started to become interested
in and expressed its intent to share in the commission due
Valenzuela on a fifty-fifty basis. Because of the refusal of
Valenzuela, Philamgen terminated the General Agency
Agreement of Valenzuela.
Issue:
whether or not Philamgen could continue to hold Valenzuela
jointly and severally liable with the insured for unpaid premiums
Held: NO.
The principal cause of the termination of Valenzuela as General
Agent of Philamgen arose from his refusal to share his Delta
commission. The apparent bad faith of the private respondents
in terminating the General Agency Agreement of petitioners.
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. With the termination
of the General Agency Agreement, Valenzuela would no longer
be entitled to commission on the renewal of insurance policies
of clients sourced from his agency.
Despite the termination of the agency, Philamgen continued to
hold Valenzuela jointly and severally liable with the insured for
unpaid premiums. 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. They are estopped by their own positive
averments and claims for damages. Therefore, the respondents
cannot state that the agency relationship between Valenzuela
and Philamgen is not coupled with interest. There is an
exception to the principle that an agency is revocable at will and
that is 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. In these cases, it
is evident that the agency ceases to be freely revocable by the
sole will of the principal.
The factor rendering Philamgen and the private respondents
liable in damages is that the termination by them of the General
Agency Agreement was tainted with bad faith. If a principal acts
in bad faith and with abuse of right in terminating the agency,
then he is liable in damages.
Valenzuela is not liable to Philamgen for the unpaid and
uncollected premiums. Under Section 77 of the Insurance Code,
the remedy for the non-payment of premiums is to put an end
to and render the insurance policy not binding —
Sec. 77 ... [N]otwithstanding any agreement
to the contrary, no policy or contract of
insurance is valid and binding unless and until
the premiums thereof have been paid except
in the case of a life or industrial life policy
whenever the grace period provision applies…
In Philippine Phoenix Surety v. Woodworks, we held that the
non-payment of premium does not merely suspend but puts an
end to an insurance contract since the time of the payment is
peculiarly of the essence of the contract. And in Arce v. The
Capital Insurance and Surety Co. Inc. (117 SCRA 63, [1982]),
we reiterated the rule that unless premium is paid, an insurance
contract does not take effect. Thus:
It is to be noted that Delgado (Capital
Insurance & Surety Co., Inc. v. Delgado, 9
SCRA 177 [1963] was decided in the light of
the Insurance Act before Sec. 72 was
amended by the underscored portion. Supra.
Prior to the Amendment, an insurance
contract was effective even if the premium
had not been paid so that an insurer was
obligated to pay indemnity in case of loss and
correlatively he had also the right to sue for
payment of the premium. But the amendment
to Sec. 72 has radically changed the legal
regime in that unless the premium is paid
there is no insurance.”
In Philippine Phoenix Surety case, we held:
4
Moreover, an insurer cannot treat a contract
as valid for the purpose of collecting
premiums and invalid for the purpose of
indemnity.
No contract of Insurance by an insurance
company is valid and binding unless and until
the premium thereof has been paid,
notwithstanding any agreement to the
contrary
Since admittedly the premiums have not been paid, the policies
issued have lapsed. The insurance coverage did not go into
effect or did not continue and the obligation of Philamgen as
insurer ceased. Hence, for Philamgen which had no more liability
under the lapsed and inexistent policies to demand, much less
sue Valenzuela for the unpaid premiums would be the height of
injustice and unfair dealing. In this instance, with the lapsing of
the policies through the nonpayment of premiums by the
insured there were no more insurance contracts to speak of. As
this Court held in the Philippine Phoenix Surety case, supra "the
non-payment of premiums does not merely suspend but puts an
end to an insurance contract since the time of the payment is
peculiarly of the essence of the contract."
The circumstances of the case, however, require that the
contractual relationship between the parties shall be terminated
upon the satisfaction of the judgment. No more claims arising
from or as a result of the agency shall be entertained by the
courts after that date.
ACCORDINGLY, the petition is GRANTED.
9. CONSTANTE AMOR DE CASTRO VS CA
GR NO. 115838
JULY 18, 2002
FACTS:
Private respondent Artigo sued petitioners Constante
and Amor De Castro to collect the unpaid balance of his broker’s
commission from the De Castros.
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. Appellee first found the
Times Transit Corporation and 2 lots were sold. In return, he
received P48,893.76 as commission.
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. Hence, he sued to collect the balance
of P303,606.24 after having received P48,893.76 in advance.
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.
The De Castros argued that Artigo’s complaint should
have been dismissed for failure to implead all the co owners of
the 2 lots. . 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 merits dismissal for
failure to implead other co-owners as indispensable parties
HELD:
 No. The De Castros’ contentions are devoid of legal
basis. The CA explained that it is not necessary to implead the
co-owners since the action is exclusively based on a contract of
agency between Artigo and Constante. The rule on mandatory
joinder of indispensable parties is not applicable to the instant
case.
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.
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. This article reads:
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.