Virata v.

Wee
Nature of the case:
Consolidated petitions to assail the decision of the Court of Appeals affirming the decision of
the RTC declaring the petitioners solidarity liable to Alejandro Ng Wee.

Petitioner: Luis Juan L. Virata and Uemmara Philippines Corporation

Respondent: Alejandro Ng Wee

FACTS:

Ng Wee was a valued client of Westmont Bank. He was enticed by the bank manager to make
money placements with Westmont Investment Corporation (Wincorp), a domestic corporation
organized and licensed to operate as an investment house, and one of the bank's affiliates

Lured by representations that the "sans recourse" transactions are safe, stable, high-yielding,

and involve little to no risk Ng Wee, sometime in 1998, placed investments thereon (  A corporate
borrower who needs financial assistance or funding to run its business or to serve as working capital
is screened by Wincorp. Once it qualifies as an accredited borrower, Wincorp enters into a Credit
Line Agreement for a specific amount with the corporation which the latter can draw upon in a series
of availments over a period of time. )

In exchange, Wincorp issued Ng Wee and his trustees Confirmation Advices informing them
of the identity of the borrower with whom they were matched, and the terms under which the said
borrower would repay them. Special Power of Attorneys (SPAs) are also prepared for the signature of
the lender investor.

Wincorp extended a credit line to Power Merge and allowed the latter to make drawdowns
despite signs that would show Power Merge’s inability to pay. To secure the Credit Line Agreement
and the Amendment to Credit Line Agreement, Power Merge executed promissory notes obliging
itself to pay Wincorp, for itself or as agent for and on behalf of certain investors the amount of the
drawdowns with interest on the maturity of the promissory note. However, unknown to Ng Wee, the
promissory notes were rendered useless by the Side Agreements, simultaneously executed by Ong and
Reyes with the Credit Line Agreement and the Amendment to Credit Line Agreement, which virtually
exonerated Power Merge of its liability on the promissory notes.

RTC: RTC rendered a Decision in favor of Ng Wee. The trial court explained that there was no
dispute on the factual circumstances of the case and that, based on these facts, Wincorp and Power
Merge colluded, if not connived, to defraud Ng Wee of his investments. 

CA: The CA upheld the finding of the RTC. The CA likewise found that Wincorp and Power Merge
perpetrated an elaborate scheme of fraud to persuade Ng Wee into investing funds. Ng Wee would not
have placed his investments in the "sans recourse" transactions had he not been deceived into
believing that Power Merge is financially capable of paying the returns on his investments.

Issue: WON Ng Wee is entitled to recover the investments he infused in Win corp

Ruling: YES.
Wincorp attempts to evade liability by hiding behind the "sans recourse" nature of the transactions
with Ng Wee. It argues that as a mere agent or broker that matches an investor with a borrower, it
cannot be held liable for the invested amount in case of an unsuccessful or failed match. As evidenced
by the Confirmation Advices and SP As signed by the investors, Wincorp is merely tasked to deliver
the amount to be loaned to the borrower, and does not guarantee its borrowers' financial capacity.

 Even as an agent, Wincorp can still be held liable

The argument that Wincorp is a mere agent that could not be held liable for Power Merge's unpaid
loan is equally unavailing. For even if the Court were to accede to the argument and undercut the
significance of Wincorp's participation from vendor of securities to purely attorney-in-fact, the
investment house would still not be immune. Agency, in Wincorp's case, is not a veritable defense.

Through the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. 119 As the basis of
agency is representation, there must be, on the part of the principal, an actual intention to appoint, an
intention naturally inferable from the principal's words or actions. In the same manner, there must be
an intention on the part of the agent to accept the appointment and act upon it. Absent such mutual
intent, there is generally no agency.120

There is no dearth of statutory provisions in the New Civil Code that aim to preserve the fiduciary
character of the relationship between principal and agent. Of the established rules under the code, one
cannot be more basic than the obligation of the agent to carry out the purpose of the agency within the
bounds of his authority.121 Though he may perform acts in a manner more advantageous to the
principal than that specified by him, 122 in no case shall the agent carry out the agency if its execution
would manifestly result or damage to the principal.123

NEW CIVIL CODE, Article 1881: The agent must act within the scope of his authority. He may do
such acts as may be conducive to the accomplishment of the purpose of the agency.

122
 NEW CIVIL CODE, Article 1882: The limits of the 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.

123
 NEW CIVIL CODE, Article 1888: An agent shall not carry out an agency if its execution would
manifestly result in loss or damage to the principal cases:

In the instant case, the SPAs executed by Ng Wee constituted Wincorp as agent relative to the
borrowings of Power Merge, allegedly without risk of liability on the part of Wincorp. However, the
SPAs, as couched, do not specifically include a provision empowering Wincorp to excuse Power
Merge from repaying the amounts it had drawn from its credit line via the Side Agreements. They
merely authorize Wincorp "to agree, deliver, sign, execute loan documents" relative to the borrowing
of a corporate borrower. Otherwise stated, Wincorp had no authority to absolve Power Merge from
the latter's indebtedness to its lenders. Doing so therefore violated the express terms of the SPAs that
limited Wincorp's authority to contracting the loan.

In no way can the execution of the Side Agreements be considered as part and parcel of Wincorp's
authority since it was not mentioned with specificity in the SP As. As far as the investors are
concerned, the Side Agreements amounted to a gratuitous waiver of Power Merge's obligation, which
authority is required under the law to be contained in an SP A for its accomplishment. 124
Finally, the benefit from the Side Agreements, if any, redounded instead to the agent itself, Wincorp,
which was able to hold Power Merge papers that are more valuable than the outstanding Hottick
obligations that it exchanged. In discharging its duties as an alleged agent, Wincorp then elected to
put primacy over its own interest than that of its principal, in clear contravention of the law. 125 And
when Wincorp thereafter concealed from the investors the existence of the Side Agreements, the
company became liable for fraud even as an agent. 126

Int. Exchange Bank (Now Union Bank) v. Spouses Jerome and Quinnie Briones and
John Doe
Nature of the case:
Petition for Review on Certiorari which assails the decision of the Court of
Appeals which upheld the decision of the Regional Trial Court of Makati
Petitioner: Spouses May and Johhny Villaluz
Respondent: Land Bank of the Philippines and the Register of Deeds for Davao City

Facts:

Spouses Jerome and Quinnie Briones (Spouses Briones) took out a loan from iBank to
purchase a car. The Spouses Briones executed a promissory note with chattel mortgage that
required them to take out an insurance policy on the vehicle. 8 The promissory note also gave
iBank, as the Spouses Briones' attomey-infact, irrevocable authority to file an insurance claim
in case of loss or damage to the vehicle. 9 The insurance proceeds were to be made payable to
iBank
 However, the mortgage car was carnapped, thus the Spouses Briones declared the loss
to iBank, which instructed them to continue paying the next three (3) monthly instalment. But
iBank sent them a letter demanding full payment of the lost vehicle. The Spouses Briones
submitted a notice of claim with their insurance company, which denied the due to the
delayed reporting of the lost vehicle.
iBank filed a complaint for replevin and/or sum of money against the Spouses Briones
and a person named John Doe. The Complaint alleged that the Spouses Briones defaulted in
paying the monthly amortizations of the mortgaged vehicle.
Respondents insist that when the mortgaged vehicle was carnapped, petitioner, as the
agent, should have asserted its right "to collect, demand and proceed against the [insurance
company.]"
Petitioner asserts that the Spouses Briones effectively revoked the agency granted
under the promissory note when they filed a claim with the insurance company
The RTC dismissed iBank's complaint. It ruled that as the duly constituted attorney-
in- fact of the Spouses Briones, iBank had the obligation to facilitate the filing of the notice
of claim and then to pursue the release of the insurance proceeds. It also pointed out that as
the Spouses Briones' agent, iBank prioritized its interest over that of its principal when it
failed to file the notice of claim with the insurance company and demanded full payment
from the spouses.

Issues:

1. Whether an agency relationship existed between the parties;

2. Whether the agency relationship was revoked or terminated

3. Whether petitioner is entitled to the return of the mortgaged vehicle or, in the
alternative, payment of the outstanding balance of the loan taken out for the
mortgaged vehicle.

Held:
Issue No. 1: Existence of an agency
In a contract of agency, "a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the
latter."44 Furthermore, Article 1884 of the Civil Code provides that "the agent is bound by his
acceptance to carry out the agency, and is liable for the damages which, through his non-
performance, the principal may suffer.
 All the elements of agency exist in this case. Under the promissory note with chattel
mortgage, Spouses Briones appointed iBank as their attorney-in-fact, authorizing it to file a
claim with the insurance company if the mortgaged vehicle was lost or damaged. 48 Petitioner
was also authorized to collect the insurance proceeds as the beneficiary of the insurance
policy

Issue No. 2: Whether agency is revoked

Revocation as a form of extinguishing an agency under Article 192453 of the Civil
Code only applies in cases of incompatibility, such as when the principal disregards or
bypasses the agent in order to deal with a third person in a way that excludes the agent

The Spouses Briones' claim for loss cannot be seen as an implied revocation of the
agency or their way of excluding petitioner. They did not disregard or bypass petitioner when
they made an insurance claim; rather, they had no choice but to personally do it because of
their agent's negligence. This is not the implied termination or revocation of an agency
provided for under Article 1924 of the Civil Code.

Issue No. 3: Whether or not entitled for such claim

As the agent, petitioner was mandated to look after the interests of the Spouses
Briones. However, instead of going after the insurance proceeds, as expected of it as the
agent, petitioner opted to claim the full amount from the Spouses Briones, disregard the
established principal-agency relationship, and put its own interests before those of its
principal.

The facts show that the insurance policy was valid when the vehicle was lost, and that
the insurance claim was only denied because of the belated filing.1âwphi1

Having been negligent in its duties as the duly constituted agent, petitioner must be
held liable for the damages suffered by the Spouses Briones because of non-performance65 of
its obligation as the agent, and because it prioritized its interests over that of its principal.
Spouses Villaluz v. Landbank of the Philippines
Nature of the case:
Petition for Review on Certiorari which assails the decision of the Court of
Appeals
Petitioner: Spouses May and Johhny Villaluz
Respondent: Land Bank of the Philippines and the Register of Deeds for Davao City

Facts:
Paula Agbisit, mother of petitioner May Villaluz, requested the latter to provide her
with collateral for a loan. Petitioner with the concurrence of her husband, executed a special
power of attorney, allowing her mother to sell or mortgage their land. Agbisit, who was the
chairperson of Milflores Cooperative, on the other hand, executed her own Special Power of
Attorney, appointing Milflores Cooperative as attorney-in-fact in obtaining a loan and
executing a real mortgage in favour of Land Bank of the Philippines.
 Upon failure of Milflores Cooperative to pay such loan, Landbank had moved to
foreclose the subject property and had later won the auction sale.

The Spouses Villaluz filed a complaint with the Regional Trial Court (RTC) of Davao
City seeking the annulment of the foreclosure sale contending that Agbisit could not have
validly delegated her authority as attorney-in-fact to Milflores Cooperative.

The RTC ruled that the delegation was valid since the Special Power of Attorney
executed by the Spouses Villaluz had no specific prohibition against Agbisit appointing a
substitute. Accordingly, the RTC dismissed the complaint.

The decision was then affirmed by the Court of Appeals

Issue:
Whether Agbisit could have validly delegated her authority as attorney-in-fact to
Milflores Cooperative.

Held:
The law, under Article 1892 and 1893 creates a presumption that an agent has the
power to appoint a substitute. The consequence of the presumption is that, upon valid
appointment of a substitute by the agent, there ipso jure arises an agency relationship
between the principal and the substitute. As a result, the principal is bound by the acts of the
substitute as if these acts had been performed by the principal's appointed agent.
Concomitantly, the substitute assumes an agent's ob1igations to act within the scope of
authority.

In the present case, the Special Power of Attorney executed by the Spouses Villaluz
contains no restrictive language indicative of an intention to prohibit Agbisit from appointing
a substitute or sub-agent. They were not coerced to grant a special power of attorney in favor
of Agbisit. Nor were they prohibited from prescribing conditions on how such power may be
exercised. Absent such express limitations, the law recognizes Land Bank's right to rely on
the terms of the power of attorney as written.
Calubad v. Ricarcen Development Corporation
Nature of the case:
Petition for Review on Certiotari which assails the decision of the
Court of Appeals which then upheld the decision of the Regional Trial Court
Petitioner: Arturo C. Calubad
Respondent: Ricarcen Development Corporation who was engaged in renting out real
estates
Facts:
Marilyn, acting on Ricarcen’s behalf as its president obtained a loan from Calubad
which was secured with a real estate mortgage over the Ricarcen’s property. The loan was
then amended and increased for several times with Marilyn acting on behalf of Ricarcen. To
prove her authority to execute loans and mortagages, she presented Calubad with a Board
Resolution empowering her to borrow money and use the corporation’s property.
Upon failure of Ricarcen’s property, Calupad initiated a foreclosure proceeding on the
real property and had obtained the property as the highest bidder.
However, Ricarcen;s board of directors, upon knowing that their property was
foreclosed and sold to Calubad, filed a complaint to annul such foreclosure and sale of their
property contending that Marilyn Calubad was not authorized to obtain loans and use the
subject property as collateral. It also highlighted that Marilyn Calubad was not vested with
special powers of attorney to perform such acts.
Petitioner on the other hand raised the defences that Ricarcen is barred by estoppel
from denying Marilyn’s authority to enter into a contract of loan and mortgage for he
corporation also benefited to such loans and that there were documents presented by Marilyn
which showed that she is vested with the authority.
The Regional Trial Court denied the case against the petitioner. This was also
affirmed by the Court of Appeals.

Issue:
Whether or not Ricarcen Dev. Corporation is estopped from denying or disowning the
authority of Marilyn, its former President, from entering into a contract of loan and mortgage
with Calubad.

Held:
The court merited the petition of Calubad.
The court emphasized that the doctrine of apparent authority provides that even if no
actual authority has been conferred on an agent, his or her acts, as long as they are within his
or her apparent scope of authority, bind the principal. However, the principal's liability is
limited to third persons who are reasonably led to believe that the agent was authorized to act
for the principal due to the principal's conduct.
 Apparent authority is determined by the acts of the principal and not by the acts of
the agent.84 Thus, it is incumbent upon Calubad to prove how Ricarcen's acts led him to
believe that Marilyn was duly authorized to represent it.

As the former president of Ricarcen, it was within Marilyn's scope of authority to act
for and enter into contracts in Ricarcen's behalf. Her broad authority from Ricarcen can be
seen with how the corporate secretary entrusted her with blank yet signed sheets of paper to
be used at her discretion.

When a corporation intentionally or negligently clothes its agent with apparent

authority to act in its behalf, it is estopped from denying its agent's apparent authority as to
innocent third parties who dealt with this agent in good faith.