G.R. No.

188288               January 16, 2012

SPOUSES FERNANDO and LOURDES VILORIA, Petitioners,  vs. CONTINENTAL AIRLINES, INC.,

While in the United States, Fernando purchased for himself and his wife, Lourdes, two (2) round trip airline tickets from California to New
Jersey on board Continental Airlines. Fernando purchased the tickets at US$400.00 each from a travel agency called "Holiday Travel" and
was attended to by a certain Margaret Mager (Mager). Fernando agreed to buy the said tickets after Mager informed them that there were no
available seats at Amtrak. Subsequently, Fernando requested Mager to reschedule their flight to Newark to an earlier date. Mager informed
him that flights to Newark via Continental Airlines were already fully booked and offered the alternative of a round trip flight via Frontier
Air. Fernando opted to request for a refund. Mager, however, denied his request as the subject tickets are non-refundable and the only
option that Continental Airlines can offer is the re-issuance of new tickets within one (1) year from the date the subject tickets were issued.
Fernando decided to reserve two (2) seats with Frontier Air. As he was having second thoughts on traveling via Frontier Air, Fernando went
to the Greyhound Station where he saw an Amtrak station nearby. Fernando made inquiries and was told that there are seats available and
he can travel on Amtrak anytime and any day he pleased. Fernando went to Holiday Travel and confronted Mager with the Amtrak tickets,
telling her that she had misled them into buying the Continental. Fernando reiterated his demand for a refund but Mager was firm in her
position that the subject tickets are non-refundable. Upon returning to the Philippines, Fernando sent a letter to CAI on February 11, 1998,
demanding a refund and alleging that Mager had deluded them into purchasing the subject tickets. In a letter dated February 24, 1998,
Continental Micronesia informed Fernando that his complaint had been referred to the Customer Refund Services of Continental Airlines at
Houston, Texas. Continental Micronesia denied Fernando’s request for a refund and advised him that he may take the subject tickets to any
Continental ticketing location for the re-issuance of new tickets within two (2) years from the date they were issued. Continental Micronesia
informed Fernando that the subject tickets may be used as a form of payment for the purchase of another Continental ticket, albeit with a re-
issuance fee. Fernando went to Continental’s ticketing office at Ayala Avenue, Makati City to have the subject tickets replaced by a single
round trip ticket to Los Angeles, California under his name. However, Lourdes’ ticket was non-transferable, thus, cannot be used for the
purchase of a ticket in his favor. He was also informed that a round trip ticket to Los Angeles was US$1,867.40 so he would have to pay what
will not be covered by the value of his San Diego to Newark round trip ticket. Thus, Fernando demanded for the refund of the subject tickets
as he no longer wished to have them replaced. Fernando claimed that CAI’s act of charging him for a round trip ticket to Los Angeles, and
refusal to allow him to use Lourdes’ ticket, breached its undertaking under its letter. On September 8, 2000, Spouses Viloria filed a
complaint against CAI. Following a full-blown trial, the RTC rendered its April 3, 2006 Decision, holding that Spouses Viloria are entitled to a
refund in view of Mager’s misrepresentation in obtaining their consent in the purchase of the subject tickets. On appeal, the CA reversed the
RTC’s April 3, 2006 Decision, holding that CAI cannot be held liable for Mager’s act in the absence of any proof that a principal-agent
relationship existed between CAI and Holiday Travel.

Issue: does a principal- agent relationship exist between CAI and holiday travel?

Held: YES.A principal-agent relationship exists between CAI and Holiday Travel.

In Rallos v. Felix Go Chan & Sons Realty Corporation, 18 this Court explained the nature of an agency and spelled out the essential elements
thereof: One party, called the principal (mandante), authorizes another, called the agent (mandatario), to act for and in his behalf in
transactions with third persons. The essential elements of agency are: (1) there is consent, express or implied of the parties to establish the
relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for
himself, and (4) the agent acts within the scope of his authority. Agency is basically personal, representative, and derivative in nature. The
authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the
scope of the authority. Qui facit per alium facit se. "He who acts through another acts himself."

All the elements of an agency exist in this case. The first and second elements are present as CAI does not deny that it concluded an
agreement with Holiday Travel, whereby Holiday Travel would enter into contracts of carriage with third persons on CAI’s behalf. The third
element is also present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is CAI and not Holiday Travel
who is bound by the contracts of carriage entered into by Holiday Travel on its behalf. The fourth element is also present considering that
CAI has not made any allegation that Holiday Travel exceeded the authority that was granted to it. In fact, CAI consistently maintains the
validity of the contracts of carriage that Holiday Travel executed with Spouses Viloria and that Mager was not guilty of any fraudulent
misrepresentation. That CAI admits the authority of Holiday Travel to enter into contracts of carriage on its behalf is easily discernible from
its February 24, 1998 and March 24, 1998 letters, where it impliedly recognized the validity of the contracts entered into by Holiday Travel
with Spouses Viloria. When Fernando informed CAI that it was Holiday Travel who issued to them the subject tickets, CAI did not deny that
Holiday Travel is its authorized agent.

G.R. No. 144805 June 8, 2006

EDUARDO V. LINTONJUA, JR. and ANTONIO K. LITONJUA, Petitioners,  vs. ETERNIT CORPORATION (now ETERTON MULTI-
RESOURCES CORPORATION), ETEROUTREMER, S.A. and FAR EAST BANK & TRUST COMPANY, Respondents.

The Eternit Corporation (EC) is a corporation duly organized and registered under Philippine laws. It had been engaged in the manufacture
of roofing materials and pipe products. Its manufacturing operations were conducted on eight parcels of land under the name of Far East
Bank & Trust Company, as trustee. Ninety (90%) percent of the shares of stocks of EC were owned by Eteroutremer S.A. Corporation
(ESAC), a corporation organized and registered under the laws of Belgium.3 Jack Glanville, an Australian citizen, was the General Manager
and President of EC, while Claude Frederick Delsaux was the Regional Director for Asia of ESAC. Both had their offices in Belgium. In 1986,
the management of ESAC grew concerned about the political situation in the Philippines and wanted to stop its operations in the country.
The Committee for Asia of ESAC instructed Michael Adams, a member of EC’s Board of Directors, to dispose of the eight parcels of land.
Adams engaged the services of realtor/broker Lauro G. Marquez so that the properties could be offered for sale to prospective buyers.
Glanville later showed the properties to Marquez. Marquez thereafter offered the parcels of land and the improvements thereon to Eduardo
B. Litonjua, Jr. of the Litonjua & Company, Inc. Marquez declared that he was authorized to sell the properties for P27,000,000.00 and that
the terms of the sale were subject to negotiation. The Litonjua siblings offered to buy the property for P20,000,000.00 cash. Marquez
apprised Glanville of the Litonjua siblings’ offer and relayed the same to Delsaux in Belgium, but the latter did not respond. Later there was a
Counterproposal to the offer of the Litonjua siblings. Delsaux sent a telex to Glanville stating that, based on the "Belgian/Swiss decision," the
final offer was "US$1,000,000.00 and P2,500,000.00 to cover all existing obligations prior to final liquidation." 5 The Litonjua siblings had
accepted the counter-proposal of Delsaux. The Litonjua brothers deposited the amount of US$1,000,000.00 with the Security Bank & Trust
Company. Sometime later, Marquez and the Litonjua brothers inquired from Glanville when the sale would be implemented Meanwhile, with
the assumption of Corazon C. Aquino as President of the Republic of the Philippines, the political situation in the Philippines had improved.
Marquez received a telephone call from Glanville, advising that the sale would no longer proceed. When apprised of this development, the
Litonjuas, through counsel, wrote EC, demanding payment for damages they had suffered on account of the aborted sale. EC, however,
rejected their demand.

The Litonjuas then filed a complaint for specific performance and damages against EC (now the Eterton Multi-Resources Corporation) and
the Far East Bank & Trust Company, The trial court rendered judgment in favor of defendants and dismissed the amended complaint. The
CA rendered judgment affirming the decision of the RTC. 16 The Litonjuas filed a motion for reconsideration, which was also denied by the
appellate court. The CA ruled that Marquez, who was a real estate broker, was a special agent within the purview of Article 1874 of the New
Civil Code. Under Section 23 of the Corporation Code, he needed a special authority from EC’s board of directors to bind such corporation to
the sale of its properties. Delsaux, who was merely the representative of ESAC (the majority stockholder of EC) had no authority to bind the
latter. The CA pointed out that Delsaux was not even a member of the board of directors of EC. Moreover, the Litonjuas failed to prove that
an agency by estoppel had been created between the parties.

ISSUE: Whether or not Marquez, Glanville, and Delsaux were authorized by respondent EC to act as its agents relative to the sale of the
properties of respondent EC, and if so, the boundaries of their authority as agents

HELD: A corporation is a juridical person separate and distinct from its members or stockholders and is not affected by the personal
rights,obligations and transactions of the latter.25 It may act only through its board of directors or, when authorized either by its by-laws or
by its board resolution, through its officers or agents in the normal course of business. The general principles of agency govern the relation
between the corporation and its officers or agents, subject to the articles of incorporation, by-laws, or relevant provisions of law. An
unauthorized act of an officer of the corporation is not binding on it unless the latter ratifies the same expressly or impliedly by its board of
directors. Any sale of real property of a corporation by a person purporting to be an agent thereof but without written authority from the
corporation is null and void. The declarations of the agent alone are generally insufficient to establish the fact or extent of his/her authority.
Agency may be oral unless the law requires a specific form. 35 However, to create or convey real rights over immovable property, a special
power of attorney is necessary.36 Thus, when a sale of a piece of land or any portion thereof is through an agent, the authority of the latter
shall be in writing, otherwise, the sale shall be void. In this case, the petitioners as plaintiffs below, failed to adduce in evidence any
resolution of the Board of Directors of respondent EC empowering Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for sale,
for and in its behalf, the eight parcels of land owned by respondent

[ GR No. 118375, Oct 03, 2003 ]

CELESTINA T. NAGUIAT v. CA 459 Phil. 237

Queañ o applied with Naguiat for a which the latter granted. Naguiat indorsed to Queañ o 2 checks. The proceeds of these checks were to
constitute the loan granted by Naguiat to Queañ o. To secure the loan, Queañ o executed a Deed of Real Estate Mortgage in favor of Naguiat,
and surrendered to the latter the owner's duplicates of the titles covering the mortgaged properties. Upon presentment on its maturity date,
the Security Bank check was dishonored for insufficiency of funds. Queañ o received a letter from Naguiat's lawyer, demanding settlement of
the loan. Shortly thereafter, Queañ o and one Ruby Ruebenfeldt (Ruebenfeldt) met with Naguiat. At the meeting, Queañ o told Naguiat that she
did not receive the proceeds of the loan, adding that the checks were retained by Ruebenfeldt, who purportedly was Naguiat's agent. Naguiat
applied for the extrajudicial foreclosure of the who then scheduled the foreclosure sale.Three days before the scheduled sale, Queañ o filed
the case before the RTC seeking the annulment of the mortgage deed. The trial court eventually stopped the auction sale. On 8 March 1991,
the RTC rendered judgment, declaring the Deed of Real Estate Mortgage null and void, and ordering Naguiat to return to Queañ o the owner's
duplicates of her titles to the mortgaged lots. Naguiat appealed the decision before the Court of Appeals, making no less than eleven
assignments of error. The Court of Appeals promulgated the decision now assailed before us that affirmed in toto the RTC decision and
recognized the existence of an "agency by estoppel. Hence, the present petition.

ISSUE: WON there exist agency by estoppel in this case.

HELD: YES. The Court of Appeals is correct in invoking the said rule on . agency by estoppel. The existence of an agency relationship
between Naguiat and Ruebenfeldt is supported by ample evidence that the latter is not a stranger or an unauthorized person. The Court of
Appeals recognized the existence of an "agency by estoppel citing Article 1873 of the Civil Code. Apparently, it considered that at the very
least, as a consequence of the interaction between Naguiat and Ruebenfeldt, Queañ o got the impression that Ruebenfeldt was the agent of
Naguiat, but Naguiat did nothing to correct Queañ o's impression. In that situation, the rule is clear. One who clothes another with apparent
authority as his agent, and holds him out to the public as such, cannot be permitted to deny the authority of such person to act as his agent,
to the prejudice of innocent third parties dealing with such person in good faith, and in the honest belief that he is what he appears to be.
G.R. No. 165133 April 19, 2010
SPOUSES JOSELINA ALCANTARA AND ANTONIO ALCANTARA, and SPOUSES JOSEFINO RUBI AND ANNIE DISTOR- RUBI, Petitioners,
vs. BRIGIDA L. NIDO, as attorney-in-fact of REVELEN N. SRIVASTAVA, Respondent.

FACTS:
1. Revelen was the owner of an unregistered land with an area of 1939m2 in Cardona, Rizal.
2. In March 1989, respondent accepted the petitioners’ offer to purchase 200 sq. m. portion of the lot at P200/sq.m. . P3000 was paid
as down payment and the balance was payable in installment.
3. Later on, petitioners were able to construct their house therein and occupied additional 150 sq. m. of the lot with the respondent’s
consent. Nonetheless, petitioners failed/ defaulted in their payment.
4. Because of this, respondent, as the administrator and the attorney in fact of Revelen, filed a complaint for recovery of possession
with damages.
5. The trial court ruled that the sale was void, there being no written authority in favor of the respondent administrator. The appellate
court reversed such decision, that the case is an unlawful detainer case which should be under the MTC, and that respondent did not have
written authority to enter into such contract of sale.

ISSUES: 1. WON the contract of sale entered into by the parties is VOID.
2. WON the RTC has jurisdiction over the case.

RULING:
1. YES. Under Art. 1874 and 1878 of the Civil Code:

Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void.

Art. 1878. Special powers of attorney are necessary in the following cases:
xxx
(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable
consideration;
xxx

In this case, there is absolutely no proof of respondent’s written authority to sell the lot to the petitioners. Fror the principal to confer the
right upon an agent to sell real estate, a power of attorney must so express the powers of the agent in clear and unmistakable language. The
sale of lot by respondent which did not have written authority from Revelen is a VOID CONTRACT and produces no effect, neither against or
in favor of anyone and cannot be ratified.

2. NO. With the modifications introduced by R.A. No. 7691 in 1994, the jurisdiction of the first level courts has been expanded to
include jurisdiction over other real actions where the assessed value does not exceed ₱20,000, ₱50,000 where the action is filed in Metro
Manila. The first level courts thus have exclusive original jurisdiction over accion publiciana and accion reivindicatoria where the assessed
value of the real property does not exceed the aforestated amounts. Accordingly, the jurisdictional element is the assessed value of the
property.
 
[ GR No. L-18170, Aug 31, 1963 ]
NATIONAL BREWERY v. SAN MIGUEL BREWERY

FACTS:
1. National Brewery and Allied Industries Labor Union of the Philippines is the bargaining representative of all regular workers and
route helpers of SM Brewery.
2. On October 2, 1959, it signed a CBA with the company which provided among other things:
"The COMPANY will deduct the UNION agency fee from the wages of workers who are not members of the UNION, provided the aforesaid
workers authorizes the Company to make such deductions in writing or if no such authorization is given, if a competent court direct the
COMPANY to make such deduction." (Art. II, Sec. 4).
3. Later on, the union filed a suit for the collection of union of agency fees from the independent SMB Worker’s Association. The trial
court dismissed the same, there being no agreement or authorization between the union and non-union members as to the payment of the
fee.

ISSUE: WON such agreement is permissible form of union security and justified on principle of Agency

HELD: NO.
1. A clause in the collective bargaining agreement providing that the company will deduct union agency fee is not permissible form of
union security. This is because the company is not free to require of employees membership in a union as a condition of employment,
neither can they require a lesser form of union security.
2. It is true that whatever benefits the majority union obtains from the employer, accrue to its members as well as to non-members.
However, this alone does not justify the collection of agency fees from non-members; for the benefits of CBA are extended to all employees
regardless of their membership in the union because to withhold the same would be to discriminate them.
3. Lastly, collection of agency free may not be justified on the principle of agency because when a union acts as the bargaining agent,
when a union acts as the bargaining agent, it assumes the responsibility imposed upon it by law to represent not only its members but all
employees in the appropriate bargaining unit of which it is the agent. The Civil Code states that agency is presumed to be for compensation
unless there is proof to the contrary. (Art. 1875). There can be no better proof that the agency created by law between the bargaining
representative and the employees in the unit is without compensation than the fact that these employees in the minority voted against the
appellant union.

G.R. No. L-39822 January 31, 1978

ANTONIO E. PRATS, doing business under the name of Philippine Real Estate Exchange, petitioner, vs. HON. COURT OF APPEALS,
ALFONSO DORONILA and PHILIPPINE NATIONAL BANK, respondents.

FACTS:
1. Alfonso Doronila was the registered owner of a 300-hectare land in Montalban, Rizal which he had tried to sell and designated
several agents. He also offered to sell such land to the SSS which in turn made a counter-offer of Php 3.25/sq. m.
2. Having failed to consummate the previous sale, Doronila then gave an exclusive option and authority in writing to negotiate the
sale of property, and provided terms. A portion of is provides that:
a. The price of the property is THREE (P3.00) PESOS per square meter.

b. A commission of TEN (10%) PERCENT will be paid to us based on P2.10 per square meter, or at any price that you DORONILA
finally agree upon, and all expenses shall be for our account, including preparation of the corresponding deed of conveyance, documentary
stamps and registration fee, whether the sale is causes directly or indirectly by us within the time of this option. If the property is sold over
and above P3.00 per square meter, the excess amount shall be credited and paid to the herein workers. In addition to the 10% commission
based on P2.10 per square meter, provided the brokers shall pay the corresponding taxes to the owner of the excess amount over P3.00 per
square meter, unless paid by check which would then be deductible as additional expenses.

c. This exclusive option and authority is good for a period of sixty (60) days from the date of your conformity; provided, however,
that should negotiations have been started with a buyer, said period is automatically extended until said negotiations is terminated, but not
more than fifteen (15) days;

d. The written offers must be made by the prospective buyers, unless they prefer to have us take the offer for and in their behalf some
buyers do not want to be known in the early stages of the negotiations:

e. If no written offer is made to you until the last day of this authorization, this option and authority shall expire and become null and
void;
XXX

3. Because of this, Doronila withdrew his previous offer to sell with SSS and asked for the return of all the papers involved, and that
papers were then given to Prats, who is the authorized real estate broker.
4. Doronila was invited by SSS but declined the same, telling that SSS should directly communicate with Prats. In addition, Doronila
extended Prats exclusive option and authority up to May 18.
5. Later on, Prats informed Doronila that SSS agreed to purchase the land, through no formal offer was made by the latter. However,
Doronila never received any written offer from the SSS during the 60-day exclusive option and authority of Prats, nor during the extension
which expired on May 18 – Thus, as per agreement, the option expired and become null and void.
6. Because of these, Prats files a complaint and presented his statement of account, for the payment of his professional services as real
estate broker in the amount of P1,380,000.00, as computed on the basis of the letter-agreement, which defendant failed to pay. Manila, for
Quezon City, January 18,1968.

ISSUE: WON CA erred in concluding that Prats was not the efficient procuring cause in bringing the sale of Doronila’s land to SSS and should
not be entitled to his commission.

HELD: NO.
1. From the facts, the offer of Doronila to sell the land to SSS was formally accepted by SSS only on June 20, 1968, after the exclusive
option had expired. Prats was not the efficient procuring cause in bringing about the sale proceeding from the fact of expiration of his
exclusive option. This is manifested by the fact that the SSS officials specifically requested Prats not to be present in the meeting with
Doronila since they never wanted his intervention.

2. The Court has noted on the other hand that Doronila finally sold the property to the Social Security System at P3.25 per square
meter which was the very same price counter-offered by the Social Security System and accepted by him in July, 1967 when he alone was
dealing exclusively with the said buyer long before Prats came into the picture but that on the other hand Prats' efforts somehow were
instrumental in bringing them together again and finally consummating the transaction at the same price of P3.25 square meter, although
such finalization was after the expiration of Prats' extended exclusive authority. Still such price was higher than that stipulated in the
exclusive authority granted by Doronila to Prats.

3. Under the circumstances, the Court grants in equity the sum of One Hundred Thousand Pesos (P100,000.00) by way of
compensation for his efforts and assistance in the transaction, which however was finalized and consummated after the expiration of his
exclusive authority and sets aside the P10,000.00 — attorneys' fees award adjudged against him by respondent court.
4. Finally, the principal has the obligation to pay his agent, subject to the limitations of the stipulation in the agency. Based on equity,
as in this compensation to the efforts of the agent which helped further the principal’s interests.

G.R. No. 76931 May 29, 1991

ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, petitioner, vs. COURT OF APPEALS and AMERICAN AIR-LINES INCORPORATED,
respondents.

FACTS:
1. American Airlines is an air carrier offering passenger and air cargo transportation and Orient Air Services representatives entered
into a General Sales Agency Agreement wherein American Airlines authorized the Orient Air Services as its exclusive general sales agent
within the Philippines for the sale of air-passenger transportation.
2. The terms and conditions of such mutual covenant where agreed by parties including the mode of termination of the same which
provided: “American may terminate the Agreement on two days' notice in the event Orient Air Services is unable to transfer to the United
States the funds payable by Orient Air Services to American under this Agreement. Either party may terminate the Agreement without cause
by giving the other 30 days' notice by letter, telegram or cable.”
3. Subsequently, on May 11, 1981, alleged by American Airlines that Orient had failed in its obligation to promptly remit net proceeds,
American Air by itself undertook the collection of proceeds and terminated the agreement in accordance with Paragraph 13 on termination.
American then filed a suit against Orient.
4. Later on, Orient denied the allegations therein, contending that after application to the commissions, due to it under the agreement,
American in fact still owed Orient a balance in unpaid overriding commissions.
5. The trial court ruled in Orient’s favor, alleging that the termination was improper and illegal and ordered the plaintiff to reinstate
defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA agreement, which was
affirmed by the appellate court.

ISSUE: WON CA erred in reinstating the defendant as its general sales agent for passenger transportation in the Philippines in accordance
with GSA agreement.

HELD: YES.

1. By affirming the ruling of the trial court, the appellate court in effect, compels American Air to extend its personality to Orient Air.

2. Such would be violation of the principles and essence of agency, defined by law as a contract whereby, “a person binds himself to
render some service or to do something in representation/on behalf of another, WITH THE CONSENT OR AUTHORITY OF THE LATER.

3. In an agent – principal relationship, the personality of the principal is extended through the facility of the agent. In doing so, the
agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter world have him do. Such relationship can only
be effected with the consent of the principal which was not be compelled by law/ any court.

PATRIMONIO V GUTIERREZ

FACTS: Alvin Patrimonio and the Napoleon Gutierrez entered into a business venture under the name of Slam Dunk Corporation (Slum
Dunk), a production outfit that produced mini-concerts and shows related to basketball. In the course of their business, the petitioner pre-
signed several checks to answer for the expenses of Slam Dunk; however, these checks were blank. The blank checks were entrusted to
Gutierrez with the specific instruction not to fill them out without previous notification to and approval by the petitioner. Without the
petitioner’s knowledge and consent, Gutierrez went to Marasigan to secure a loan in the amount of ₱200,000.00 and Gutierrez
simultaneously delivered to Marasigan one of the blank checks the petitioner pre-signed with Pilipinas Bank in the amount of "₱200,000.00.
When Marasigan deposited the check, it was dishonored for the reason "ACCOUNT CLOSED" and so Marasigan sought recovery from
Gutierrez and petitioner asking for the payment of ₱200,000.00.

ISSUE: Whether or not the loan obtained by Gutierrez is valid

HELD: not valid. The petitioner seeks to nullify the contract of loan on the ground that he never authorized the borrowing of money. He
points to Article 1878, paragraph 7 of the Civil Code, which explicitly requires a written authority when the loan is contracted through an
agent. The petitioner contends that absent such authority in writing, he should not be held liable for the face value of the check because he
was not a party or privy to the agreement. Article 1878 paragraph 7 of the Civil Code expressly requires a special power of authority before
an agent can loan or borrow money in behalf of the principal, to wit:
Art. 1878. Special powers of attorney are necessary in the following cases:
xxxx
(7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under
administration.

Article 1878 does not state that the authority be in writing. As long as the mandate is express, such authority may be either oral or written.
The requirements of a special power of attorney in Article 1878 of the Civil Code and of a special authority in Rule 138 of the Rules of Court
refer to the nature of the authorization and not its form. The requirements are met if there is a clear mandate from the principal specifically
authorizing the performance of the act.
The records reveal that Gutierrez did not have any authority to borrow money in behalf of the petitioner. Records do not show that the
petitioner executed any special power of attorney (SPA) in favor of Gutierrez. In fact, the petitioner’s testimony confirmed that he never
authorized Gutierrez (or anyone for that matter), whether verbally or in writing, to borrow money in his behalf, nor was he aware of any
such transaction. In the absence of any authorization, Gutierrez could not enter into a contract of loan in behalf of the petitioner.

In the absence of any showing of any agency relations or special authority to act for and in behalf of the petitioner, the loan agreement
Gutierrez entered into with Marasigan is null and void. Thus, the petitioner is not bound by the parties’ loan agreement. Furthermore, that
the petitioner entrusted the blank pre-signed checks to Gutierrez is not legally sufficient because the authority to enter into a loan can never
be presumed. The contract of agency and the special fiduciary relationship inherent in this contract must exist as a matter of fact. The person
alleging it has the burden of proof to show, not only the fact of agency, but also its nature and extent.

BICOL SAVINGS V CA

FACTS: Juan de Jesus was the owner of a parcel of land situated in Naga City. He executed a Special Power of Attorney in favor of his son, Jose
de Jesus, to negotiate, mortgage his real property in any bank either private or public entity preferably in the Bicol Savings Bank, Naga City,
in any amount that may be agreed upon between the bank and the attorney-in-fact. By virtue thereof, Jose de Jesus obtained a loan of
P20,000 from petitioner bank and executed a deed of mortgage on the real property. Juan de Jesus died at an unknown date. By reason of his
failure to pay the loan obligation even during his lifetime, petitioner bank caused the mortgage to be extrajudicially foreclosed. In the
subsequent public auction, the mortgaged property was sold to the bank as the highest bidder. Private respondents herein, including Jose de
Jesus, who are all the heirs of the late Juan de Jesus, failed to redeem the property within one year from the date of the registration of the
Provisional Certificate of Sale. Nonetheless, the private respondents still negotiated for the repurchase of the property but were unsuccessful
despite offers and counter-offers. Private respondents filed a complaint with the trial court, praying for the annulment of the deed of sale but
the complaint was dismissed b the trial court ruling that the deed became absolute. Upon appeal, the CA reversed the ruling o the trial court,
ruling that Article 1879 of the Civil Code and stated that since the special power to mortgage granted to Jose de Jesus did not include the
power to sell, it was error for the lower Court not to have declared the foreclosure proceedings, and the auction sale held in null and void
because the Special Power of Attorney given by Juan de Jesus to Jose de Jesus was merely to mortgage his property, and not to extrajudicially
foreclose the mortgage and sell the mortgaged property in the said extrajudicial foreclosure.

ISSUE: Whether or not the agent-son exceeded the scope of his authority in agreeing to a stipulation in the mortgage deed that petitioner
bank could extrajudicially foreclose the mortgaged property.

HELD: Did not exceed scope of authority

The sale proscribed by a special power to mortgage under Article 1879:

Art. 1879. A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell.

is a voluntary and independent contract, and not an auction sale resulting from extrajudicial foreclosure, which is precipitated by the default
of a mortgagor. The stipulation granting an authority to extrajudicially foreclose a mortgage is an ancillary stipulation supported by the same
cause or consideration for the mortgage and forms an essential or inseparable part of that bilateral agreement. It matters not that the
authority to extrajudicially foreclose was granted by an attorney-in-fact and not by the mortgagor personally. The stipulation in that regard,
although ancillary, forms an essential part of the mortgage contract and is inseparable therefrom. No creditor will agree to enter into a
mortgage contract without that stipulation intended for its protection. Petitioner bank, in effecting the extrajudicial foreclosure of the
mortgaged property, merely availed of a right conferred by law. The auction sale that followed in the wake of that foreclosure was but a
consequence thereof.

OLAGUER V PURUGGANAN

FACTS: Olaguer was the owner of shares of stocks of Businessday Corporation. He was active in the political opposition against Marcos
dictatorship. Anticipating the possibility of his arrest and detention, he executed a SPA appointing his attorneys-in-fact Locsin, Joaquin and
Holifena for the purpose of selling and transferring his shares of stock with Businessday in order to cancel his shares of stocks even before
they are sold for the purpose of concealing that he was a stockholder. The parties acknowledge the SPA before Purugganan, the notary
public. After Olaguer was arrested, Locsin ordered Purugganan to cancel the shares in the books of the Corp. and transfer them under his
name. When he was released from detention, he discovered that he was no longer registered as stockholder. He demanded that respondents
restore him full ownership, but they refused to do so. He filed a complaint before the RTC against Purugganan and Locsin to declare the sale
of the shares of stock as illegal. He alleged that respondent exceeded his authority under the SPA and that the SPA could only be applied in
cases of absence and incapacity. RTC dismissed the case and found the sale of the shares to be valid.

ISSUE: Whether or not the sale was valid

HELD: Yes, valid sale. It is a general rule that a power of attorney must be strictly construed; the instrument will be held to grant only those
powers that are specified, and the agent may neither go beyond nor deviate from the power of attorney. However, the rule is not absolute
and should not be applied to the extent of destroying the very purpose of the power. If the language will permit, the construction that should
be adopted is that which will carry out instead of defeat the purpose of the appointment. Clauses in a power of attorney that are repugnant
to each other should be reconciled so as to give effect to the instrument in accordance with its general intent or predominant purpose.
Furthermore, the instrument should always be deemed to give such powers as essential or usual in effectuating the express powers. Article
1882 of the Civil Code provides that the limits of an agent's authority shall not be considered exceeded should it have been performed in a
manner more advantageous to the principal than that specified by him.
In the present case, limiting the definitions of "absence" to that provided under Article 381 of the Civil Code and of "incapacity" under Article
38 of the same Code negates the effect of the power of attorney by creating absurd, if not impossible, legal situations. Petitioner himself had
already authorized agents to do specific acts of administration and thus, no longer necessitated the appointment of one by the court.

CALIMLIM V EVANGELISTA

FACTS: The then head of the Intelligence Service of the Armed Forces of the Philippines and the Presidential Security Group Calimlim,
entered into a Memorandum of Agreement with Reyes. The MOA granted Reyes a permit to hunt for treasure in a land in Bulacan owned by
Legaspi. Reyes accompanied by Calimlim started, digging, tunneling and blasting works on the said land of Legaspi. The complaint also
alleged that Calimlim assigned about 80 military personnel to guard the area and encamp thereon to intimidate Legaspi and other occupants
of the area from going near the subject land. Legaspi executed a special power of attorney (SPA) appointing his nephew Gutierrez, as his
attorney-in-fact. Gutierrez was given the power to deal with the treasure hunting activities on Legaspi’s land and to file charges against those
who may enter it without the latter’s authority. Legaspi agreed to give Gutierrez 40% of the treasure that may be found in the land.
Gutierrez filed a case for damages and injunction against Calimlim for illegally entering Legaspi’s land. He hired the legal services of Atty.
Adaza. Their contract provided that as legal fees, Atty. Adaza shall be entitled to 30% of Legaspi’s share in whatever treasure may be found
in the land. Petitioners filed a Motion to dismiss contending that there is no real party-in-interest as the SPA of Gutierrez to bring the suit
was already revoked by Legaspi, as evidenced by a Deed of Revocation. The trial court ruled that the SPA granted to Gutierrez continues to
be valid

ISSUE: Whether or not the contract of agency between Legaspi and Gutierrez has been effectively revoked by Legaspi

HELD: Not effectively revoked. Unilateral revocation is invalid when agency is coupled with interest.

A contract of agency is generally revocable as it is a personal contract of representation based on trust and confidence reposed by the
principal on his agent. As the power of the agent to act depends on the will and license of the principal he represents, the power of the agent
ceases when the will or permission is withdrawn by the principal. Thus, generally, the agency may be revoked by the principal at will.
However, 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.The reason for its irrevocability is because the agency becomes part of another obligation or agreement. 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.

In the case at bar, we agree with the finding of the trial and appellate courts that the agency granted by Legaspi to Gutierrez is coupled with
interest as a bilateral contract depends on it. It was agreed upon that Gutierrez shall be entitled to 40% of whatever treasure may be found
in the land. Pursuant to this authority and to protect Legaspi’s land from the alleged illegal entry of petitioners, agent Gutierrez hired the
services of Atty. Adaza to prosecute the case and as payment for the legal services, Gutierrez agreed to assign to Atty. Adaza 30% of Legaspi’s
share in whatever treasure may be recovered in the subject land.

It is clear that the treasure that may be found in the land is the subject matter of the agency; that under the SPA, Gutierrez can enter into
contract for the legal services of Atty. Adaza; and, thus Gutierrez and Atty. Adaza have an interest in the subject matter of the agency, i.e., in
the treasures that may be found in the land. This bilateral contract depends on the agency and thus renders it as one coupled with interest,
irrevocable at the sole will of the principal Legaspi.When an agency is constituted as a clause in a bilateral contract, that is, when the agency
is inserted in another agreement, the agency ceases to be revocable at the pleasure of the principal as the agency shall now follow the
condition of the bilateral agreement.Consequently, the Deed of Revocation executed by Legaspi has no effect. The authority of Gutierrez to
file and continue with the prosecution of the case at bar is unaffected.

NATIONAL FOOD AUTHORITY vs. IAC, SUPERIOR (SG) SHIPPING CORPORATION

G.R. No. 75640
April 5, 1990

FACTS: Gil Medalla, is a commission agent of the Superior Shipping Corporation (SSC). On September 6, 1979, he entered into a contract for
hire of ship with defendant NFA, formerly National Grains Authority. In the contract, Medalla transported on 8,550 sacks of rice belonging to
defendant NFA from Occidental Mindoro to Metro Manila through SSC’s vessel. When the sacks of rice were delivered to Manila, SSC
requested NFA that he be allowed to collect freightage and other surcharges (demurrage & stevedoring fees) amounting to P93, 538.70.
For the second time, SSC again wrote NFA requesting for the payment of freightage and other surcharges to it and not to Madella as SSC is
the owner of the vessel used to transport the sacks of rice. However, NFA refused to grant the request due to the fact that Medalla did not
disclose that he was only acting as a mere agent of SSC. Hence, NFA paid Php25,974.90 Medalla for freight services in connection with the
shipment of the sacks of rice. SSC demanded Medalla to return to it the amount paid by NFA, but Medalla ignored the demand. Hence this
complaint. The lower courts ruled in favor of SSC and ordered Medalla and NFA to pay jointly and severally SSC the Php25, 974 with interest.

ISSUE: Shall NFA be jointly and severally liable with the agent, Medalla to pay the principal, SSC because NFA had no knowledge of the fact
that Medalla was merely an agent of SSC? OR Is NFA jointly and severally liable with the agent, Medalla to pay the principal, SSC because
NFA had no knowledge of the fact of agency between them?

RULING: Yes. This case falls under the exceptions of Art. 1883 of the Civil Code. This provision provides:
Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has
contracted; neither have such persons against the principal.
In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own,
except when the contract involves things belonging to the principal. The provision of this article shall be understood to be without prejudice
to the actions between the principal and agent. An exception to this rule is when the thing involved belongs to the principal. When things
belonging to the principal are dealt with, the agent is bound to the principal although he does not assume the character of such agent and
appears acting in his own name. In other words, the agent's apparent representation yields to the principal's true representation and that, in
reality and in effect, the contract must be considered as entered into between the principal and the third person (Sy Juco and Viardo v. Sy
Juco, 40 Phil. 634). Corollarily, if the principal can be obliged to perform his duties under the contract, then it can also demand the
enforcement of its rights arising from the contract. It is undisputed that Gil Medalla was a commission agent of Superior Shipping
Corporation which owned the vessel "MV Sea Runner" that transported the sacks of rice belonging to NFA. Being the principal and owner of
the vessel, SSC may demand enforcement of its rights and agent Medalla is bound to the principal. Even though SSC is undisclosed to NFA as
the principal, in reality and in effect, the contract it entered into with NFA must be considered as entered into between SSC and NFA.

BRITISH AIRWAYS vs. CA, GOP MAHTANI, and PHILIPPINE AIRLINES

G.R. No. 121824
January 29, 1998

FACTS:
Mahtani decided to visit his relatives in Bombay, India and obtained the services of Mr. Gumar to prepare his travel plans. In turn, Gumar
purchased a ticket from British Airways (BA) where the following itinerary was indicated:
CARRIERFLIGHT DATE TIME
MANILA MNL PR 310 Y 16 APR. 1730 OK
HONGKONG HKG BA 20 M 16 APR. 2100 OK
BOMBAY BOM BA 19 M 23 APR. 0840 OK
Since BA had no direct flights from MNL to Bombay, Mahtani had to take a flight to HK via PAL, and upon arrival in HK, he had to take a
connecting flight to Bombay on board BA. Prior to his departure, Mahtani checked in at the PAL counter in Manila his two pieces of luggage
containing his clothings and personal effects, confident that upon reaching HK, the same would be transferred to the BA flight bound for
Bombay. Unfortunately, when Mahtani arrived in Bombay he discovered that his luggage was missing and when he inquired from BA, he was
told that the same might have been diverted to London. After patiently waiting for his luggage for one week, BA finally advised him to file a
claim by accomplishing the "Property Irregularity Report." When he was back in the PH, Mahtani filed his complaint for damages and
attorney's fees against BA and Mr. Gumar. BA contended that Mahtani did not have a cause of action against it. Likewise, it filed a third-party
complaint against PAL alleging that the reason for the non-transfer of the luggage was due to PAL’s late arrival in HK, thus leaving hardly any
time for the proper transfer of Mahtani's luggage to the BA aircraft bound for Bombay. PAL disclaimed any liability, arguing that there was,
in fact, adequate time to transfer the luggage to BA facilities in HK. The transfer of the luggage to HK authorities should be considered as
transfer to BA. The lower court ruled in favor of Mahtani and dismissed the complaint against PAL for lack of cause of action, which was later
on affirmed by CA. CA held that the contract of air transportation in this case pursuant to the ticket issued by BA to Mahtani was exclusively
between the Mahtani and BA. When Mahtani boarded the PAL plane from MNL to HK, PAL was merely acting as a subcontractor or agent of
BA. This is shown by the fact that in the ticket issued by BA to Mahtani, it is specifically provided on the ract," paragraph 4 thereof that:

4. . . . carriage to be performed hereunder by several successive carriers is regarded as a single operation.

The rule that carriage by plane although performed by successive carriers is regarded as a single operation and that the carrier issuing the
passenger's ticket is considered the principal party and the other carrier merely subcontractors or agent, is a settled issue.

ISSUE: Is PAL liable to BA for the missing luggage?

RULING: Yes, because PAL, in transporting Mahtani from Manila to Hongkong acted as the agent of BA.
Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view of their contract of carriage. Yet, BA adamantly
disclaimed its liability and instead imputed it to PAL which the latter naturally denies. In other words, BA and PAL are blaming each other
for the incident. The contract of air transportation was exclusively between Mahtani and BA, with BA merely endorsing the MNL to HK leg of
the Mahtani’s journey to PAL, as its subcontractor or agent. In fact, the fourth paragraph of the "Conditions of Contracts" of the ticket issued
by BA to Mahtani confirms that the contract was one of continuous air transportation from Manila to Bombay. It is well-settled rule that an
agent is also responsible for any negligence in the performance of its function and is liable for damages which the principal may suffer by
reason of its negligent act. Hence, CA erred when it opined that BA, being the principal, had no cause of action against PAL, its agent or sub-
contractor. Since the instant petition was based on breach of contract of carriage, Mahtani can only sue BA alone, and not PAL, since the
latter was not a party to the contract. However, this is not to say that PAL is relieved from any liability due to any of its negligent acts. In
China Air Lines, Ltd. v. Court of Appeals, while not exactly in point, the case, however, illustrates the principle which governs this particular
situation. In that case, we recognized that a carrier (PAL), acting as an agent of another carrier, is also liable for its own negligent acts or
omission in the performance of its duties.
MODIFIED, reinstating the third-party complaint filed by British Airways.

ELISEA G. ROXAS vs. COURT OF APPEALS, and CLARENCE PIMENTEL

G.R. No. L-56960
January 28, 1988

FACTS: A general power of attorney was made by Elisea G. Roxas authorizing Edgardo Jose, among other things, “to buy or sell, hire or lease,
mortgage or otherwise hypothecate lands, tenements, and hereditaments and other forms of real property, upon such terms and conditions
and under covenant as said attorney shall deem fit and proper”. With his general power, Edgardo sold to Clarence Pimentel Elisea’s house
and lot at Paranaque, Manila for P380K plus Pimentel's assumption of the mortgage constituted on the property in favor of Banco Filipino
(P83K). It was payable partly in cash (P180K) and partly in property - Pimentel's own house and lot, (P200K), which was transferred to
Elisea, Edgardo’s principal, together with the mortgage obligation (P50K). Pimentel obtained title to the property in his name, took
possession thereof, and introduced improvements thereon. The transaction took place while Elisea was in the US. Shortly upon her return to
the PH, she revoked Edgardo’s general power of attorney and then, on November 28, 1975 by her attorney's letter, demanded from Edgardo
the delivery of the cash proceeds of the sale, as well as the chattels and effects she had left in her house. But Edgardo evidently failed to
comply with Elisea’s demand. Elisea then filed a case to annul the sale, on the ground that Edgardo lacked authority to sell. In her complaint,
she impleaded Banco Filipino and ROD as additional defendants: Banco Filipino for releasing the owner's duplicate certificate of title to
Pimentel; and the ROD, for having allowed registration of the deed of sale and the issuance of title to Pimentel. Banco Filipino and ROD
asserted, and Pimentel testified at the trial that prior to the execution of the DOS, Elisea had been informed while she was in the US of the
terms and had approved them; that on her return to this country she had confirmed the sale through two documents: "Acknowledgement
and/or Confirmation" and "Receipt Confirmation and/or Acknowledgment"; and that her ratification had been made indubitable by her
counsel's November 28, 1975 letter demanding from Edgardo delivery or accounting of the proceeds of the sale. The lower court ordered
for the cancellation of Pimentel's title and the issuance of a new one in Elisea’s favor, ordered Pimentel to vacate the property and pay
damages, and directed Banco Filipino to grant Elisea 6 months from finality of the decision to update her accounts. Rationale of trial court:
(1) the transaction was not a sale but a barter, not covered by Edgardo’s general power; (2) there was so great a disparity in the values of the
properties exchanged that the barter was unconscionable in contemplation of Articles 1887 11 and 1888 12 of the Civil Code; and (3) there
had actually been no confirmation or ratification of the sale by Elisea. Pimentel appealed to CA which was later on denied and partial
execution pending appeal filed by Elisea was granted as she had no house to live at the present time. Then Pimentel promptly filed in CA a
petition for certiorari with application for preliminary injunction, seeking nullification of said order and writ of execution, and their
provisional inhibition pending judgment, which was later on granted by CA finding that Pimentel is the present registered owner and
possessor of the property, and had introduced substantial improvements therein.

ISSUE: Is CA correct in granting Pimentel’s motion of preliminary injunction of the writ of execution of the lower court’s decision ordering
Pimentel to vacate the subject property?

RULING: Yes, CA is correct. While it is true that It is quite true that Pimentel admitted surrendering his house and lot to Elisea as part of the
consideration of P380K for the sale, it is also true that evidence had been presented by the defendants tending to establish that Elisea had
ratified the transaction. This has apparently escaped the Trial Court's attention completely. No admissions are taken on this issue of
ratification; it is an issue legitimately arising from the pleadings and the evidence; it is, obviously, an issue that may properly be raised and
ventilated on appeal, involving the examination and evaluation of the testimonial and documentary proofs relevant thereto; and it is one that
Pimentel evidently intends to so set up on appeal. That the Trial Court has rejected the Banco Filipino and ROD asserted theory of
ratification — choosing to accord superior credit to Elisea’s oral disclaimer as against Pimentel's documentary evidence and this does not
import that the issue has been irreversibly resolved. That resolution is not at all conclusive, and is reviewable upon timely appeal which, it
should be stressed, may be taken by the aggrieved party as a matter of right. It is therefore incorrect to brand Pimentel's appeal as dilatory
or "pro-forma." In doing so, the Trial Court ignored quite without cause and in derogation of Pimentel's right of appeal, the existence of a
substantial issue litigable in appellate proceedings, and hence acted with grave abuse of discretion.

G.R. No. L-28673 October 23, 1984

SAMAR MINING COMPANY, INC., plaintiff-appellee, vs. NORDEUTSCHER LLOYD and C.F. SHARP & COMPANY, INC., defendants-
appellants.

FACTS: Samar Mining imported 1 crate optima welded wire (amounting to around USD 424 or PhP 1,700) from Germany, which was
shipped on a vessel owned by Nordeutscher Lloyd (M/S Schwabenstein). The shipment was unloaded in Manila into a barge for
transshipment to Davao under Bill of Lading No. 18.

Section 1, paragraph 3 of Bill of Lading No. 18. “The carrier shall not be liable in any capacity whatsoever for any delay, loss or damage
occurring before the goods enter ship’s tackle to be loaded or after the goods leave ship’s tackle to be discharged, transshipped or
forwarded.”

Section 11:
Whenever the carrier or master may deem it advisable or in any case where the goods are placed at carrier’s disposal at or consigned to a
point where the ship does not expect to load or discharge, the carrier or master may, without notice, forward the whole or any part of the
goods before or after loading at the original port of shipment, … This carrier, in making arrangements for any transshipping or forwarding
vessels or means of transportation not operated by this carrier shall be considered solely the forwarding agent of the shipper and without
any other responsibility whatsoever even though the freight for the whole transport has been collected by him. … Pending or during
forwarding or transshipping the carrier may store the goods ashore or afloat solely as agent of the shipper and at risk and expense of the
goods and the carrier shall not be liable for detention nor responsible for the acts, neglect, delay or failure to act of anyone to whom the
goods are entrusted or delivered for storage, handling or any service incidental thereto.
When the goods arrived in the port of Davao, it was delivered in good order and condition to the bonded warehouse of AMCYL but it was not
delivered and received by Samar Mining Company, Inc.

ISSUE: Whether Nordeustscher Lloyd is liable for the loss of the goods as common carrier?

HELD: No. At the time of the loss of the goods, the character of possession of Nordeutscher Lloyd shifted from common carrier to agent of
Samar Mining Co. The Bill of Lading is serves both as a receipt of goods and is likewise the contract to transport and deliver the same as
stipulated. It is a contract and is therefore the law between the parties. The Bill of Lading in question stipulated that Nordeutscher Lloyd only
undertook to transport the goods in its vessel only up to the port of discharge from ship, which is Manila. The Bill of Lading further
stipulated that the goods were to be transshipped by the carrier from Manila to the port of destination – Davao. By unloading the shipment
in Manila and delivering the goods to the warehouse of AMCYL, the appellant was acting within the contractual stipulations contained in the
Bill of Lading.

Article 1736 of the Civil Code relives the carrier of responsibility over the shipment as soon as the carrier makes actual or constructive
delivery of the goods to the consignee or to the person who has a right to receive them.
Lastly, two undertakings are embodied in the bill of lading: the transport of goods from Germany to Manila, and the transshipment of the
same goods from Manila to Davao, with Samar Mining acting as the agent of the consignee. The moment the subject goods are discharged in
Manila, Samar Mining’s personality changes from that of carrier to that of agent of the consignee. Such being the case, there was, in effect,
actual delivery of the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the appellant, as
erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from that point onwards. This is the full import
of Article 1736.

But even as agent of the consignee, the appellant cannot be made answerable for the value of the missing goods. It is true that the
transshipment of the goods, which was the object of the agency, was not fully performed. However, appellant had commenced said
performance, the completion of which was aborted by circumstances beyond its control. An agent who carries out the orders and
instructions of the principal without being guilty of negligence, deceit or fraud, cannot be held responsible for the failure of the principal to
accomplish the object of the agency.

G.R. No. L-30573 October 29, 1971

VICENTE M. DOMINGO, represented by his heirs, ANTONINA RAYMUNDO VDA. DE DOMINGO, RICARDO, CESAR, AMELIA, VICENTE
JR., SALVADOR, IRENE and JOSELITO, all surnamed DOMINGO, petitioners-appellants,
vs. GREGORIO M. DOMINGO, respondent-appellee, TEOFILO P. PURISIMA, intervenor-respondent.

FACTS: On June 2, 1956, Vicente M. Domingo granted Gregorio Domingo, a real estate broker, the exclusive agency to sell his lot No. 883 of
Piedad Estate with an area of about 88,477 square meters at the rate of P2.00 per square meter (or for P176,954.00) with a commission of
5% on the total price. On June 3, 1956, Gregorio authorized the intervenor Teofilo P. Purisima to look for a buyer, promising him one-half of
the 5% commission. Thereafter, Teofilo Purisima introduced Oscar de Leon to Gregorio as a prospective buyer.
Oscar de Leon submitted a written offer which was very much lower than the price of P2.00 per square meter. Vicente directed Gregorio to
tell Oscar de Leon to raise his offer. After several conferences between Gregorio and Oscar de Leon, the latter raised his offer to P109,000.00
on June 20, 1956. Upon demand of Vicente, Oscar de Leon issued to him a check in the amount of P1,000.00 as earnest money. Vicente asked
for an additional amount of P1,000.00 as earnest money, which Oscar de Leon promised to deliver to him. Oscar gave Gregorio as a gift or
propina the sum of One Thousand Pesos (P1,000.00) for succeeding in persuading Vicente to sell his lot at P1.20 per square meter or a total
in round figure of One Hundred Nine Thousand Pesos (P109,000.00). This gift of One Thousand Pesos (P1,000.00) was not disclosed by
Gregorio to Vicente.
ISSUE: Whether Gregorio’s act of accepting the gift or propina from Oscar constitutes a fraud which would cause the forfeiture of his 5%
commission.

HELD: Yes.
Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by
virtue of the agency, even though it may not be owing to the principal.
Every stipulation exempting the agent from the obligation to render an account shall be void.
xxx xxx xxx
Art. 1909. The agent is responsible not only for fraud but also for negligence, which shall be judged with more less rigor by the courts,
according to whether the agency was or was not for a compensation.

Gregorio Domingo as the broker, received a gift or propina from the prospective buyer Oscar de Leon, without the knowledge and
consent of his principal, Vicente Domingo. His acceptance of said substantial monetary gift corrupted his duty to serve the interests
only of his principal and undermined his loyalty to his principal, who gave him partial advance of P300 on his commission. As a consequence,
instead of exerting his best to persuade his prospective buyer to purchase the property on the most advantageous terms desired by his
principal, Gregorio Domingo, succeeded in persuading his principal to accept the counter-offer of the prospective buyer to purchase the
property atP1.20 per sq. m. An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without
revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect
the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained
better results or that the agency is a gratuitous one, or that usage or custom allows it. As a necessary consequence of such breach of trust,
Gregorio Domingo must forfeit his right to the commission and must return the part of the commission he received from his
principal.

G.R. No. 136433 December 6, 2006

ANTONIO B. BALTAZAR, petitioner, vs. HONORABLE OMBUDSMAN, EULOGIO M. MARIANO, JOSE D. JIMENEZ, JR., TORIBIO E. ILAO,
JR. and ERNESTO R. SALENGA, respondents.

FACTS: Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan, Pampanga. Her Attorney-in-Fact Faustino R. Mercado
leased the fishpond for PhP 230,000.00 to Eduardo Lapid for a three (3)-year period. Lessee Eduardo Lapid in turn sub-leased the fishpond
to Rafael Lopez for PhP 50,000.00 during the last seven (7) months of the original lease. Respondent Ernesto Salenga was hired by Eduardo
Lapid as fishpond watchman (bante-encargado). In the sub-lease, Rafael Lopez rehired respondent Salenga. Meanwhile, on March 11, 1993,
respondent Salenga, through a certain Francis Lagman, sent his January 28, 1993 demand letter to Rafael Lopez and Lourdes Lapid for
unpaid salaries and non-payment of the 10% share in the harvest. On June 5, 1993, sub-lessee Rafael Lopez wrote a letter to respondent
Salenga informing the latter that for the last two (2) months of the sub-lease, he had given the rights over the fishpond to Mario Palad and
Ambit Perez for PhP 20,000.00. This prompted respondent Salenga to file a Complaint before the Provincial Agrarian Reform Adjudication
Board (PARAB). On November 24, 1994, pending resolution of the agrarian case, the instant case was instituted by petitioner Antonio
Baltazar, an alleged nephew of Faustino Mercado, through a Complaint-Affidavit against private respondents before the Office of the
Ombudsman. Petitioner charged private respondents of conspiracy through the issuance of the TRO in allowing respondent Salenga to retain
possession of the fishpond, operate it, harvest the produce, and keep the sales under the safekeeping of other private respondents. Petitioner
asserts that he is duly authorized by Faustino Mercado to institute the suit and presented a Special Power of Attorney (SPA) from Faustino
Mercado.

ISSUE: Whether Faustino Mercado can delegate his agency to his nephew Antonio Baltazar

HELD: No, Faustino Mercado cannot delegate his agency to his nephew Antonio Baltazar. The Supreme Court held that petitioner's principal,
Faustino Mercado, is an agent himself and as such cannot further delegate his agency to another. Otherwise put, an agent cannot delegate to
another the same agency. The legal maxim potestas delegata non delegare potest; a power once delegated cannot be re-delegated, while
applied primarily in political law to the exercise of legislative power, is a principle of agency. For another, a re-delegation of the agency
would be detrimental to the principal as the second agent has no privity of contract with the former. In the instant case, petitioner has no
privity of contract with Paciencia Regala, owner of the fishpond and principal of Faustino Mercado.

JOSE CANGCO, plaintiff-appellant, vs. MANILA RAILROAD CO., defendant-appellee

G.R. No. L-12191
October 14, 1918

FACTS: Jose Cangco was an employee of Manila Railroad Company. He lived in the pueblo of San Mateo, in the province of Rizal, which is
located upon the line of the defendant railroad company; and in coming daily by train to the company’s office in the city of Manila where he
worked, he used a pass, supplied by the company, which entitled him to ride upon the company’s trains free of charge.
During his ride in the train he arose from his seat and makes his way to the exit while the train is still moving. Jose Cangco step down into the
cement platform but unfortunately step in to a sack of watermelon, fell down and rolled under the platform and was drawn under the
moving car which resulting to his arm to be crashed and lacerated. He was rushed to the hospital and sued the company and the employee
who put the sack of watermelon in the platform. The plaintiff contends that there is negligence on the part of the defendant for letting the
sacks of watermelon be placed at the edge of platform that may cause serious accident. His action was based upon the negligence of the
servants and employees of the defendant in placing the sacks of melons upon the platform and leaving them so placed as to be a menace to
the security of passenger alighting from the company's trains. The defendant answered that the plaintiff failed to use due caution in
alighting from the train and did not wait for the train to come into a full stop before leaving the same. Moreover, the plaintiff must prove the
negligence of the defendant’s employees or agents to bind the defendant. The trial court ruled in favor of the defendant railroad company. It
ruled that the plaintiff failed to use due caution in alighting from train and therefore precluded from recovering.
The plaintiff appealed.

ISSUE: Whether or not the negligence of the defendant’s employees or agents arising from culpa contractual binds the defendant?

RULING: It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the obligation to
respond for the damage which plaintiff has suffered arises, if at all, from the breach of that contract by reason of the failure of defendant to
exercise due care in its performance. That is to say, its liability is direct and immediate, differing essentially, in legal viewpoint from that
presumptive responsibility for the negligence of its servants, imposed by article 1903 of the Civil Code, which can be rebutted by proof of the
exercise of due care in their selection and supervision. Article 1903 of the Civil Code is not applicable to obligations arising ex contractu, but
only to extra-contractual obligations — or to use the technical form of expression, that article relates only to culpa aquiliana and not to culpa
contractual. The Court reversed the judgment of the trial court and declared that in culpa contractual, the negligence of the defendant’s
employees or agents will definitely bind the defendant.

GREEN VALLEY POULTRY & ALLIED PRODUCTS, INC., petitioner vs. THE INTERMEDIATE APPELLATE COURT and E.R. SQUIBB &
SONS PHILIPPINE CORPORATION, respondents.
G.R. No. L-49395
December 26, 1984

FACTS: Squibb and Green Valley entered into a letter agreement which provides that E.R. Squibb & Sons Philippine Corporation is pleased to
appoint Green Valley Poultry & Allied Products, Inc. as a non-exclusive distributor for Squibb Veterinary Products with the following
stipulations.
xxx
Payment for Purchases of Squibb Products will be due 60 days from date of invoice or the nearest business day thereto. No payment win be
accepted in the form of post-dated checks. Payment by check must be on current dating.
xxx
For goods delivered to Green Valley but unpaid, Squibb filed suit to collect. The trial court as aforesaid gave judgment in favor of Squibb
which was affirmed by the Court of Appeals.
Green Valley claimed that the contract with Squibb was a mere agency to sell; that it never purchased goods from Squibb; that the goods
received were on consignment only with the obligation to turn over the proceeds, less its commission, or to return the goods if not sold, and
since it had sold the goods but had not been able to collect from the purchasers thereof, the action was premature.
Upon the other hand, Squibb claimed that the contract was one of sale so that Green Valley was obligated to pay for the goods received upon
the expiration of the 60-day credit period.

ISSUE: Whether or not Green Valley as an agent of Squibb is liable for nonpayment of the latter’s products?
RULING: Whether viewed as an agency to sell or as a contract of sale, the liability of Green Valley is indubitable. Adopting Green Valley's
theory that the contract is an agency to sell, it is liable because it sold on credit without authority from its principal.

Art. 1905 of the Civil Code provides that the commission agent cannot, without the express or implied consent of the principal, sell on credit.
Should he do so, the principal may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit,
which may result from such sale.

WOODCHILD HOLDINGS, INC., Petitioner, vs. ROXAS ELECTRIC AND CONSTRUCTION COMPANY, INC., Respondent.
G.R. NO. 140667
August 12, 2004

FACTS: The respondent was the owner of two parcel of land. The respondent’s Board of Directors approved a resolution authorizing the
corporation, through its president, Roberto B. Roxas, to sell one parcel of land only. The petitioner, on the other hand, wanted to buy the lot
on which it planned to construct its warehouse building, and a portion of the adjoining lot, so that its 45-foot container van would be able to
readily enter or leave the property. Roxas indicated his acceptance of the offer on page 2 of the deed. The deed has the following
stipulations: The Vendor agree, as it hereby agrees and binds itself to give Vendee the beneficial use of and a right of way from Sumulong
Highway to the property herein conveyed consists of 25 square meters wide to be used as the latter's egress from and ingress to and an
additional 25 square meters in the corner of Lot No. 491-A-3-B-1 (the other parcel of land), as turning and/or maneuvering area for
Vendee's vehicles. Roxas died years thereafter, the WHI demanded that the RECCI sell a portion of Lot No. 491-A-3-B-1 covered by TCT No.
78085 for its beneficial use pursuant to the absolute Deed of Sale, within 72 hours from notice thereof, otherwise the appropriate action
would be filed against it. RECCI rejected the demand of WHI. The respondent claimed that the previous President was not authorized by the
corporation for the right of way and the sale of a portion of the other parcel of land. On the other hand, the petitioner contends that by the
act of the respondent in retaining the payment of the land, it already ratified the act of the President Roxas.

ISSUE: Whether or not the previous President of the respondent corporation has no authority to enter into stipulations for the right of way
and sale of a portion of the other land with the petitioner?

RULING: The Supreme Court ruled for the respondent. A corporation is a juridical person separate and distinct from its stockholders or
members. Accordingly, the property of the corporation is not the property of its stockholders or members and may not be sold by the
stockholders or members without express authorization from the corporation's board of directors.
Generally, the acts of the corporate officers within the scope of their authority are binding on the corporation. However, under Article 1910
of the New Civil Code, acts done by such officers beyond the scope of their authority cannot bind the corporation unless it has ratified such
acts expressly or tacitly, or is estopped from denying them:

Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.
As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.

Thus, contracts entered into by corporate officers beyond the scope of authority are unenforceable against the corporation unless ratified by
the corporation Evidently, Roxas was not specifically authorized under the said resolution to grant a right of way in favor of the petitioner on
a portion of Lot No. 491-A-3-B-1 or to agree to sell to the petitioner a portion thereof.

SYLVIA H. BEDIA and HONTIVEROS & ASSOCIATED PRODUCERS PHILS. YIELDS, INC., petitioners, vs. EMILY A. WHITE and HOLMAN
T. WHITE, respondents.
G.R. No. 94050
CRUZ, J.:

FACTS: In 1980, Sylvia Bedia approached Emily White and persuaded her to participate in the State of Texas Fair. Bedia offered White the
use of booths in such fair in representation of Hontiveros & Associated Producers Phils. Yield Inc. (Hontiveros). Bedia and White entered into
and signed a Participation Contract wherein the latter shall pay $2,250.00 for the use of the booth. White made a downpayment of $500.00
for the agreed display space. On the day when she went to display her merchandise, it was made known to her that neither Bedia nor
Hontiveros paid or registered any display space in her name nor where they authorized by the state fair director to recruit participants.
White then filed a complaint in the Regional Trial Court of Pasay in 1986 alleging that Bedia and Hontiveros deceived her and should be held
solidarily liable. Bedia and Hontiveros filed a joint answer. Hontiveros claimed that there was no display space under the name of White
because she was only supposed to share the space leased by Hontiveros. Additionally, she was not allowed to display her goods because she
was not able to pay the balance of $1,750.00. Bedia avered in the joint answer that she did not sign the participation contract in her own
behalf but as an agent of Hontiveros. During the trial proceedings, the complaint against Hontiveros was dismissed upon the motion of
White. The trial court held Bedia liable since she acted in her own name. Such decision was upheld by the Court of Appeals. Hence, this
petition.

ISSUE: Whether or not Bedia should be held liable.

HELD: No. Bedia should not be held liable since she is merely an agent of Hontiveros. Significantly, Hontiveros has not repudiated Bedia’s
agency as it should have. In the it filed with Bedia, it did not deny the latter’s allegation that she was only acting as an agent. The fact that
Hontiveros filed an answer jointly with Bedia throught their common counsel, it affirmed such allegation. Since it has not been found that
Bedia was acting beyond the scope of authority, it is Hontiveros that should be held answerable for any obligation arising from their agency
agreement. However, by moving to dismiss the complaint against Hontiveros, White virtually disarmed herself and forfeited whatever claims
they may have. Having waived the claims against the principal, White cannot now assert such claims against the agent.

FILIPINAS LIFE ASSURANCE COMPANY (now AYALA LIFE ASSURANCE, INC.), Petitioner, v. CLEMENTE N. PEDROSO, TERESITA O.
PEDROSO and JENNIFER N. PALACIO thru her Attorney-in-Fact PONCIANO C. MARQUEZ, Respondents.
G.R. No. 159489

FACTS: Teresita Pedroso is a policy holder of a 20-year life insurance issued by Filipinas Life Assurance Company (Filipinas). Renato Valle
was her insurance agent since 1972 and it was Valle who collects her monthly premiums. In 1977, Valle informed Pedroso that Filipinas
Escolta Office was holding a promotional investment program for policy holders. Enticed, Pedroso issued a post-dated check for P10,000.00.
Valle thereafter issued a personal check for P800.00 as interest and a Filipinas “Agent’s Receipt” in favor of Pedroso. Pedroso subsequently
called Filipinas Escolta Office. She was able to confirm with Francisco Alcantara, administrative assistant, and Angel Apetrior, branch
manager, that such promotion exists. Since Pedroso was able to withdraw her initial investment upon maturity, she told Jennifer Palacio,
also a policy holder, about the promotion. Pedroso invested another P37,000.00 while Palacio invested P49,550.00. Upon demand, the return
of their investments was denied by Filipinas. Pedroso and Palacio then filed a complaint in the Regional Trial Court of Manila. The trial court
held Filipinas and Valle solidarily liable. The Court of Appeals affirmed such decision. Hence this petition.

ISSUE: Whether or not Filipinas and Valle should be held jointly and severally liable.

HELD: Yes. Filipinas and Valle should be held jointly and severally liable to Pedroso and Palacio.
By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with
consent or authority of the latter. Filipinas does not dispute that Valle is its agent. However, it claims that in offering the investment scheme,
Valle acted outside the scope of his authority. The Court gives such defense no merit. The general rule in the Civil Code is that the principal is
responsible for the acts of its agents but when an agent exceeds its authority, he becomes personally liable. However, the principal is still
solidarily liable with the agent if the principal allowed the agent to act as though it had full powers. In this case, even if Valle’s representation
was beyond his authority, Filipinas, through the act of Alcantara and Apetrior, expressly ratified the acts of Valle.

PRUDENTIAL BANK, petitioner, vs. THE COURT OF APPEALS, AURORA CRUZ, respondents.
G.R. No. 108957
CRUZ, J.:

FACTS: Aurora Cruz invested P200,000.00 with Prudential Bank. Upon maturity, Cruz returned to the bank to renew her investment. Susan
Quimbo, the bank employee in charge of such transactions, attended to her. Cruz was given a Confirmation of Sale and a Debit Memo. Upon
maturity of the investment, Cruz returned to the bank to renew the same. Quimbo attended to her again and she was asked to sign a
withdrawal slip P196,122.90 representing the amount to be reinvested after deduction of prepaid interest. Quimbo explained that this was a
new requirement of the bank. Subsequently, Cruz was given another Confirmation of Sale and Debit Memo. Upon maturity of her second
investment, Cruz tried to withdraw her investment. However, she was denied by the bank of the P200,000.00 alleging that she had already
withdrawn the amount. The bank had no copy of the second Confirmation of Sale and Debit Memo. Cruz filed an action for breach of contract.
The bank denied liability and instituted a third-party suit against Quimbo.

ISSUE: Whether or not Prudential shall be liable for the actions of Quimbo.

HELD: Yes. Prudential shall be held liable. The Court finds substantial basis that Cruz signed the withdrawal slip only as a part of the bank’s
new procedure. She was made to understand that such amount was being reinvested in her name. The bank further assured her in the
Confirmation of Sale and Debit Memo issued to her. The bank also has not explained the remarkable coincidence that the amount in the
withdrawal slip that it relied on is an irregular figure which corresponded to the very same amount Cruz was reinvesting after deduction of
prepaid interest. If the intention of Cruz was withdrawal, she would have done so in round figures. The bank failed to impugn the
authenticity of the documents presented by Cruz. And even if such documents were not signed by authorized officials, Cruz had no obligation
to verify the authority of Quimbo. She had the right to presume the authenticity of the documents and she had no reason not to accept
Quimbo’s authority to act in behalf of Prudential. The Court had also previously held that banks are to be liable to innocent third persons
where the representation is made in the course of its business by an agent acting within the general scope of his authority, notwithstanding
the fact that the latter may be abusing his authority to commit fraud. The bank’s relationship with the public is fiduciary and it should have
immediately repaired the injury caused to Cruz. The misdeeds of its employees must be readily acknowledged and rectified by the bank.

Castro vs. CA & Artigo

G.R. No. 115838, July 18, 2002

FACTS: Petitioners Constante and Corazon authorized respondent Artigo to act as real estate broker in the sale of four (4) lots, co-owned by
the petitioners for the amount of P23,000,000.00, five percent (5%) of which will be given to the agent as commission. It was the
respondent who first found Times Transit Corporation as prospective buyer on the two (2) lots. Later, the sale over the said lots were
consummated and the respondent was given a commission. However, the respondent felt short of the commission given to him. Hence, he
sued the petitioners to collect the unpaid balance of his broker's commission from the De Castros The petitioners claimed that the complaint
must be dismissed for failure to implead all the co-owners of the two lots. Such failure to implead is fatal to the complaint since Artigos, as an
agent, would be paid with funds co-owned by the four co-owners. The RTC rendered Decision finding the petitioners jointly and solidarily
liable to the respondent and the same was affirmed by the CA. Hence, this petition.

ISSUE: Whether or not the petitioners are solidarily liable?

RULING: The Court said that the petitioners are solidarily liable.

Article 1915 of the Civil Code expressly provides that:

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.

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.

Rallos vs Chan
G.R. No. L-24332 January 31, 1978

FACTS: Concepcion Rallos and Gerundia Rallos were sisters and registered co-owners of a certain parcel of land. On April 21, 1954, the
sisters executed a special power of attorney in favor of their brother, Simeon Rallos authorizing him to sell for and in their behalf the said
land. After Concepcion died, Simeon sold the undivided shares of his sisters to Felix Go Chan & Sons Realty Corporation and subsequently
registered in the registry of deeds. Later on, Ramon Rallos, administrator of Concepcion Rallos filed a complaint against Felix Go Chan & Sons
Realty Corporation, Simeon Rallos, Simeon Rallos, and Register of Deeds, alleging that the sale of the undivided share was unenforceable
because he was already dead when the sale was consummated. The RTC granted the relief prayed for, which later on affirmed by the CA.
Hence, this petition.

ISSUE: Whether or not the sale of the undivided share of the deceased was unenforceable?

RULING: The Court held that the sale of the undivided share of the deceased was unenforceable because the agent executed the sale
notwithstanding notice of the death of his principal. As a general rule, death of the principal or of the agent extinguishes the agency
pursuant pursuant to Article 1919 of the Civil Code. However, there are exceptions provided for under Articles 1930 and 1931 of the same
code, which states that:

ART. 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common
interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor.

ART. 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency,
is valid and shall be fully effective with respect to third persons who may have contracted with him in good faith.

However, Article 1930 is not applicable because the special power of attorney executed in favor of Simeon Rallos was not coupled with
interest. Article 1931 is not also applicable because Under this provision, an act done by the agent after the death of his principal is valid and
effective only under two conditions, to wit:

(1) that the agent acted without knowledge of the death of the principal and

(2) that the third person who contracted with the agent himself acted in good faith.

Good faith here means that the third person was not aware of the death of the principal at the time he contracted with said agent. These two
requisites must concur the absence of one will render the act of the agent invalid and unenforceable. In the case at bar, the agent was
notified of the death of the principal and despite notice, he executed the sale. Hence, Article 1931 is not applicable. Wherefore, premises duly
considered, the sale of the undivided share of the deceased was unenforceable.

PACSPORTS PHILS, INC vs. NICCOLO SPORTS, INC

G.R. No. 141602, November 22, 2001

FACTS: On April 28, 1998, Petitioner Pacsports Phils., Inc. (PPI), a distributor of sports products manufactured by Bridgestone Sports
Company of Japan and Cross Creek International of the United States, entered into two (2) separate Exclusive Retail Agreements with
respondent Niccolo Sports, Inc. (NSI) whereby the petitioner will supply the respondent assorted Bridgestone and Cross Creek golf products
on consignment basis to be sold by the latter. After months of operation, respondent failed to pay its obligation prompting the petitioner to
file a case for damges with application for writ of replevin against the respondent before the Court of Makati City on Jan. 28, 1999. The
Makati City RTC granted petitioner’s application for a writ of replevin. However, the petitioner was not able to pursue the implementation of
the writ because the respondent concealed the gold equipment to be seized. For this reason, petitioner applied for the issuance of a writ of
preliminary injunction to compel respondent to turn over to petitioner the golf equipment and sales proceeds. On the other hand,
respondent filed Quezon City RTC with a case for "Breach and Confirmation of Termination of Contracts and Damages"against the petitioner
on February 16, 1999 stating that the respondent is authorized to retain in pledge and withhold the remittance of the sales proceeds and the
return of the remaining inventory of the said products pursuant to Article Articles 1912, 1913 and 1914 of the Civil Code. Both parties filed a
motion to dismiss with the the Makati RTC and Quezon City RTC on the ground of the pendency of the Quezon City Case and Makati City
Case, respectively. Makati City RTC denied respondent’s motion to dismiss and granted petitioner’s application for a writ of preliminary
injuction. Respondent filed MR bu t the same was denied prompting the respondent to elevate the matter to the CA, which rendered a
Decision in favor of the respondent dismissing the civil case filed by the petitioner. The Petitioner filed MR but the same was denied. Hence,
this petition.

ISSUES:

1) Which of the two cases should be dismissed by reason of litis pendentia - the Makati City case which was filed earlier or the Quezon
City case which was filed later; and

2) Whether the order of the Makati RTC dated April 20, 1999 granting petitioner’s application for a writ of preliminary mandatory
injunction was issued with grave abuse of discretion.

RULING: As to the first issue, the court dismissed the Quezon City Cases because the Makati City case was filed earlier under the principle on
litis pendentia. In order that one of two actions be dismissed on the ground of litis pendentia, the following requisites must concur: (a)
identity of parties, or at least such as representing the same interest in both actions; (b) identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and (c) the identity in the two (2) cases should be such that judgment in one would amount to res
judicata in the other. Undisputably, the parties in the Makati case and the Quezon City case are the same. Petitioner is the plaintiff in the
Makati case and the defendant in the Quezon City case; and respondent is the defendant in the Makati case and the plaintiff in the Quezon
City case. The rights asserted and the reliefs prayed for by petitioner in the Makati City case and the rights asserted and the reliefs prayed for
by respondent in the Quezon City case are all based on the validity of the pre-termination of the Exclusive Retail Agreements.In view of those
similarities in the two actions, a final judgment on the merits in one would be a bar against the other on the ground of res judicata.

As to the second issue, the Court ruled that the granting of petitioner’s application for a writ of preliminary mandatory injunction is
in order because the following requisites for it issuance are present, to wit: (1) that the complainant has a clear legal right; (2) that his right
has been violated and the invasion is material and substantial; and (3) there is an urgent and permanent necessity for the writ to prevent
serious damage. Equally settled5 is that, as a rule, injunction will not be granted to take property out of the possession or control of one
party and place it into that of another whose title has not clearly been established by law. Further, it is worthy to note that Makati RTC
required petitioner to post a bond for the issuance of the writ of preliminary mandatory injunction to answer for any damage that
respondent may suffer by virtue of the writ should the court finally adjudge that petitioner is not entitled thereto.

Hence, there is no question that petitioner, as owner of the items being withheld by respondent, is entitled to possession thereof
Respondent's refusal to deliver them to petitioner is a breach of that right. Its claim for reimbursement and retention of the items in pledge
under Articles 1912, 1913 and 1914 of the Civil Code6 are being disputed by petitioner. Actually, respondent's claims are not clearly
established but yet to be resolved. Secondly, in light of the bond posted by petitioner which would guaranty payment of respondent's claims
if found meritorious, respondent has lost its basis for withholding the disputed items and money as security. Finally, by their nature, the golf
equipment, accessories and apparel may not be kept in storage indefinitely or until the dispute between the parties is finally resolved
without impairing their market value which would prejudice the petitioner as owner.

NOTE:

Consignment basis – is an arrangement whereby the goods areleft in the possession of an authorized theird party to sell. The consignor
receives a percentage of the revenue from the sale in the form of a commission.

LITIS PENDENTIA – ground for dismissal of a civil action. It refers to a situation whereby two actions are pending between the same parties
for the same cause of action so that one of them becomes unnecessary and vexatious.

G.R. No. L-11415 May 25, 1959

MANUEL BUASON and LOLITA M. REYES, plaintiffs-appellants, vs. MARIANO PANUYAS, defendant-appellee.

FACTS: In their lifetime the spouses Buenaventura Dayao and Eugenia Vega acquired by homestead patent a parcel of land containing an
area of 14.8413 hectares they executed a power of attorney authorizing Eustaquio Bayuga to engage the services of an attorney to prosecute
their case against Leonardo Gambito for annulment of a contract of sale of the parcel of and after the termination of the case in their favor to
sell it, and from the proceeds of the sale to deduct whatever expenses he had incurred in the litigation. Buenaventura Dayao died leaving his
wife Eugenia Vega and children, his four children executed a deed of sale conveying 12.8413 hectares of the parcel of land to the appellants,
the spouses Manuel Buason and Lolita M. Reyes. Their mother Eugenia Vega affixed her thumbmark to the deed of sale as witness. On 18 July
1944 Eustaquio Bayuga sold 8 hectares of the same parcel of land to the spouses Mariano Panuyas and Sotera B. Cruz. It appears that the
appellants did not register the sale of 12.8413 hectares of the parcel of land in question executed in their favor by the Dayao children. On the
other hand, the power of attorney executed by Buenaventura Dayao on 29 October 1930 authorizing Eustaquio Bayuga to sell the parcel of
land was annotated or inscribed on the back of the original certificate of title No. 1187.

ISSUE: whether or not the second sale was valid

Held: yes, Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency,
is valid and shall be fully effective with respect to third persons who may have contracted with him in good faith is the law applicable to the
point raised by the appellants.
G.R. No. L-41420 July 10, 1992
CMS LOGGING, INC., petitioner, vs. THE COURT OF APPEALS and D.R. AGUINALDO CORPORATION, respondents.

FACTS: By virtue of the aforesaid agreement, CMS was able to sell through DRACOR a total of 77,264,672 board feet of logs in Japan, from
September 20, 1957 to April 4, 1962. About six months prior to the expiration of the agreement, while on a trip to Tokyo, Japan, CMS's
president, Atty. Carlos Moran Sison, and general manager and legal counsel, Atty. Teodoro R. Dominguez, discovered that DRACOR had used
Shinko Trading Co., Ltd. (Shinko for brevity) as agent, representative or liaison officer in selling CMS's logs in Japan for which Shinko earned
a commission of U.S. $1.00 per 1,000 board feet from the buyer of the logs. Under this arrangement, Shinko was able to collect a total of U.S.
$77,264.67. 3. After this discovery, CMS sold and shipped logs valued at U.S. $739,321.13 or P2,883,351.90, 4 directly to several firms in
Japan without the aid or intervention of DRACOR.

ISSUE: whether or not the agency was terminated.

HELD: Yes, The principal may revoke a contract of agency at will, and such revocation may be express, or implied, 20 and may be availed of
even if the period fixed in the contract of agency as not yet expired. 21 As the principal has this absolute right to revoke the agency, the agent
can not object thereto; neither may he claim damages arising from such revocation, 22 unless it is shown that such was done in order to
evade the payment of agent's commission. In the case at bar, CMS appointed DRACOR as its agent for the sale of its logs to Japanese firms.
Yet, during the existence of the contract of agency, DRACOR admitted that CMS sold its logs directly to several Japanese firms. This act
constituted an implied revocation of the contract of agency under Article 1924 of the Civil Code, which provides: Since the contract of agency
was revoked by CMS when it sold its logs to Japanese firms without the intervention of DRACOR, the latter is no longer entitled to its
commission from the proceeds of such sale and is not entitled to retain whatever moneys it may have received as its commission for said
transactions. Neither would DRACOR be entitled to collect damages from CMS, since damages are generally not awarded to the agent for the
revocation of the agency, and the case at bar is not one falling under the exception mentioned, which is to evade the payment of the agent's
commission

G.R. No. 111924 January 27, 1997

ADORACION LUSTAN, petitioner, vs.
COURT OF APPEALS, NICOLAS PARANGAN and SOLEDAD PARANGAN, PHILIPPINE NATIONAL BANK, respondents.

FACTS: Petitioner Adoracion Lustan is the registered owner of a parcel of land containing an area of 10.0057 hectares, petitioner leased the
above described property to private respondent Nicolas Parangan for a term of ten (10) years and an annual rent of One Thousand
(P1,000.00) Pesos. During the period of lease, Parangan was regularly extending loans in small amounts to petitioner to defray her daily
expenses and to finance her daughter's education. Petitioner 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. On February 18, 1972, a
second Special Power of Attorney was executed by petitioner, by virtue of which, Parangan was able to secure four (4) additional loans, to
wit: the sums of P24,000.00, P38,000.00, P38,600.00 and P25,000.00 on December 15, 1975, September 6, 1976, July 2, 1979 and June 2,
1980, respectively. The last three loans were without the knowledge of herein petitioner and all the proceeds therefrom were used by
Parangan for his own benefit. 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.

ISSUE: whether or not petitioner's property is liable to PNB for the loans contracted by Parangan by virtue of the special power of attorney.

HELD: yes, 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, the same continues to have force and effect as against third persons who had no knowledge of such lack of
authority. Article 1921 of the Civil Code provides:

Art. 1921. 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.

The Special Power of Attorney executed by petitioner in favor of Parangan duly authorized the latter to represent and act on behalf of the
former. Having done so, petitioner 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. 22 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. 23 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.