agency syllabus midterms reviewer

8/12/2019 Agency Syllabus Midterms Reviewer

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Sieramon A. Lacambra

AMAT VICTORIA CURAM

I. Concept of agency

A. Purpose and definition

To accomplish results by using the services of others

By the contract of agency a person binds himself to render some

service or to do something in representation or on behalf ofanother, with the consent or authority of the latter.

Eurotech v. Cuison

Doctrine: The purpose of agency is to extend the personality of the

principal. The basis of agency is representation that is, the A acts for andin behalf of the P on matterw within the scope of his authority and said

acts have the same legak effects as if they were personally executed bythe principal.

Held: Deed of assignment clearly stated that respondent Edwin Cuisonsigned thereon as the sale manager of Impact Systems, the company he

works for.

2. Definition

Art. 1868. By the contract of agency a person binds himself to render

some service or to do something in representation or on behalf ofanother, with the consent or authority of the latter.

Agency: A relationship which implies a power in an agent to contract with

a 3rd

person on behalf of a principal.

Kind of Contract: It is a preparatory contract. It is a contract entered notfor its own end but to be able to enter into other contracts.

Characteristics:1.) Consensual: perfected by mere consent;

2.) Nominate: it has its own name;

3.) Principal: does not depend on another contract for its existenceand validity;

4.) Preparatory: entered into as a means to an end;

5.) Unilateral/Bilateral:

a.) Unilateral: if contract is gratuitous, it creates obligations foronly one of the parties, i.e. agent.

b.) Bilateral: if for compensation, it gives rise to reciprocalrights and obligs.

Basis: Representation.

The acts of the agent on behalf of the principal within the scope of his

authority produce the same legal and binding effects as if the principal

personally did them.

Distinguishing Features:

1.) Representative character; and

2.) Derivative authority.

Purpose: To extend the personality of the principal through the facility ofthe agent.

Parties:

1.) Principal; and

2.)Agent.

Who can be principal?

The principal may be a natural person or a juridical person. He must becapacitated. The rule is if a person is capacitated to act for himself or in

his own right, he can act through an agent.

Must the agent have capacity?


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Insofar as 3rd

persons are concerned, it is enough that the principal is

capacitated; but insofar as his obligations to his principal are concerned,the agent must be able to bind himself.

Art. 1869. Agency must be expressed ot implied from the acts of the, from

his silence or lack of action, or his failure to repudiate the agency,knowing that another person is acting on his behalf without authority.

Agency may be oral, unless the law requires a specific form.

Classifications of Agency: as to

1.) Manner of Creation:

a.) Express: actually authorized, either orally or in writing.

b.) Implied: implied from acts of principal, from his silence or

lack of action or his failure to repudiate the agency knowingthat another person is acting on his behalf w/o authority.

2.) Character:

a.) Gratuitous: agent receives no compensation for his services.

b.) Onerous: agent does receive compensation.3.) Extent of business covered:

a.) General: comprises all the business of the principal.

b.) Special: comprises one or more specific transactions.

4.) Authority conferred:

a.) Couched in general terms: deemed to comprise only acts ofadministration.

b.) Couched in specific terms: authorizes only the performanceof a specific act/s.

5.) Nature and effects:

a.) Representative: agent acts in name and representation ofprincipal.

b.) Simple/Commission: agent acts in his own name but for theaccount of the principal.

Can agency be presumed?

Generally NO, because the relationship between the principal and agent

must exist as a fact. The only exceptions to this rule are when agencyarises by operation of law or agency is presumed to prevent unjust

enrichment.

Form: Generally, NO formal requirements. Agents authority may be oral

or written, it may be in public or private writings. The only exception iswhen the law requires a specific form (e.g. sale of real property or anyinterest therein by an agent.)

Art. 1870. Acceptance by the agent may also be express, or implied

from his acts which carry out the agency, or from his silence orinaction according to the circumstances.

Form of Acceptance by Agent:

Acceptance may be express or implied; express when it is oral or written;implied when it can be inferred from the acts of the agent which carry out

the agency, or from his silence or inaction accdg to the circumstances

a. Legal relationship

Sps. Mamaril v. Boyscout of the Philippines

Doctrine:

Ramon Rallos v. FELIX Go Chan


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AMAT VICTORIA CURAM

Doctrine: The juridical basis of agency is representation. There being an

integration of the personality of the P into that of the A it is not possiblefir the representation to continue to exist once the death of either is

established. Such that the death of the P affects instantaneous and

absolute revocation of the authority of the A unless the power be coupledwith interest.

b. Contract

Art. 1868. By the contract of agency a person binds himself torender some service or to do something in representation or on

behalf of another, with the consent or authority of the latter.

Art. 1305. A contract is a meeting of the minds between two persons

whereby one binds himself wrt the other to give something or torender some service.

Art.1318. There is no contract unless the following requisites

concur:

1. Consent of the contracting parties

2. Object certain which is the subject matter of the contract

3. Cause of the obligation which is established

B. Elements of Agency

1. Consent of the parties

2. Object is to establish juridical relations wrt third persons

3. Agent acts as a representative

4. A acts within the scope of his authority

Tuazon v. Heirs of Ramos

Doctrine: the basis being representation, there must be an intention on

the part of the orincipal, an ACTUAL INTENTION TO APPOINT, inferrablefrom the P's WORDS OR ACTIONS. And in the same manner, there must

be an intention on the part of the A to accept the appointment and act

upon it. Absent such intent there is no mutual agency.

Victorias Milling v. CA and Consolidated Sugar

Doctrine: same as above. the authorization givento CSC cobtained thephrase "for and in our(STM's) BEHALF" DID NOT ESTABLISH an agency

as can be clearly shown in the letter "sold and endorsed." such words

means that STM and CSC intended a cobtract of sale and not an agency.CSC is not STM's A.

C. Effect of Agency: Integration and Extension

1. Authority to act

Authority: the power of the agent to affect the legal.relations of the P byacts done in accordance with the P's manifestation of consent to him.

Art. 1881. The A must act within the scope of his authority. He may

do such acts as may he conducive to the accomplishment od thepurpose of the agency.

Kinds of authority

1. Actual-when it is actually granted; what P has indicated to the agent

2. Express- directly conferred by words

3. Implied- when incidental to the transaction

4. Apparent or ostensible- by conduct or silence of the P which causesthird persons to believe that a paritcular person who may or may not be

P's A has actual authority to qct for the P.


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AMAT VICTORIA CURAM

5. General- refers to all the business of the P

6. Special- limited only to one or more specific transactions

7. By necessity of by operation of law- by virtue of an emergency

Requisites for Principal to be Bound by Act of Agent:

1.) The agent must act in behalf of the principal;2.) The agent must act within the scope of his authority.

When is a principal not bound by the act of his agent?

When the agent acts without or beyond the scope of his authority; orwhen the agent acts within the scope of his authority but in his own name

except when the transaction involves things belonging to the principal.

With authority Principals Valid

With authority Own Depends.[1883]

Without Principals Unenforceable

Without Own Valid

Who to sue?

In case the agent acts in the name of the principal and within his scope ofauthority, you must name theprincipal as the defendant.

Note: The authority to look for buyers does not carry with it the authority tosell.

Pacific Rehouse v. EIB Secuities

Doctrines:

Art. 1403. The following contracts are unenforceable, unless they are

ratified: (1) Those entered into in the name of another person by one whohas been given no authority or legal representation, or who has acted

beyond his powers;

Art. 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. (1714a) Article 1887 of the Civil Code provides succinctly thetwin measures of how an agent should act In the execution of the

agency, to be as follows: (a) Agent must act in accordance with the

instructions of the principal; (b) In default of guiding instructions, theagent shall do all that a good father of a family do, as required by the

nature of the business. would

Art. 1888. An agent shall not carry out an agency if its execution would

manifestly result in loss or damage to the principal (n) Contract is VOID

if: o o o o the agent contracts in the name of the principal agent exceeds

the scope of his authority the principal does not ratify the contract, the

3rd party is aware of the limits of the powers granted by the principal

Facts:

Background of the case: Petition for Review on Certiorari, seeking to

reverse CA decision, which revoked RTC ruling On various dates fromJune 2003 - March 2004,

Pacific Rehouse (petitioner, P) bought 60,790,000 Kuok Properties Inc.(KPP) shares of stock through their broker EIB Securities (respondent, R)

at P 0.22 per share On various dates from July to August 2003, P acquired32,180,000 DMCI shares at P 0.38 per share, 16,180,000 of which was

thru R. On 01 April 2004 P and R agreed to sell all KPP shares to any

buyer at the price of P 0.14 apiece, with an option for P to buy back saidshares within 30 days of the transaction at P 0.18 per share 30 days after

the sale, P opted not to exercise their option On various dates in June2004, R sold P's 32,180,000 DMCI shares at P 0.24/share without P's


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AMAT VICTORIA CURAM

knowledge and consent, despite having the knowledge that such sale will

result to a total loss of around P 4.5 million for P. This is in violation ofArt. 1888 of the CivCode Proceeds of the sale was used by R to buy back

the KPP shares R made an unauthorized promise and commitment to the

buyer/s of the KPP shares in April 2004 that P would buy back the KPP

shares. P learned of the unauthorized sales in #5 and 6 much later. P also

learned that all throughout their business dealings, R had surreptitiouslycharged and collected from plaintiffs exorbitant interest amounting to

thirty percent (30%) of all amounts owing from the plaintiffs. On 05

January 2005, plaintiffs wrote to R to demand that their 32,180,000 DMCI

shares be transferred to Westlink Global Equities Inc., but because of thesale in #5, R could not comply with the demand.

R later on admitted to P that they sold the 32,180,000 DMCI shares of

stock of plaintiffs without the latters prior knowledge and consent,

however, it claims that since P made no exceptions to the statements ofaccount when R sent them in June 2004, the sale of P's DMCI shares in

June 2004 was supposedly "validly executed". R claims that since P owes

them P 70 million they have the power to sell the stocks of P, pursuant to

the provisions of the Securities Dealing Accounts Agreements that was

signed by the plaintiffs in favor of the defendant, a copy of which is heretoattached and made an integral part hereof as Annex "1". Section 7 of the

aforesaid Securities Dealing Accounts Agreements , which states: Theclient agrees that all monies and/or securities and/or all other property

of the Client (plaintiffs) in the Company's (defendant) custody or control

held from time to time shall be subject to a general lien in favor of

Company for the discharge of all or any indebtedness of the Client to theCompany. The company shall be entitled at any time and without notice

to the Client to retain, apply, sell or dispose of all or any of the [clients]

property if any such obligation or liability is not discharged in full by the

client when due or on demand in or towards the payment and dischargeof such obligation or liability and the Company shall be under no duty tothe client as to the price obtained or any losses or liabilities incurred or

arising in respect of any such sale or disposal. RTC ruled in favor of P,finding its claims meritorious. CA reversed.

Issues:

1. W/N the sale conducted by EIB as agent involving the DMCI stocks ofPacific Rehouse, its principal, was valid.

Held/Ratio: 1. No. The sale of the DMCI shares made by EIB is null andvoid for lack of authority to do so, for petitioners never gave their consent

or permission to the sale. The Court ruled that: xxx. Article 1881 of the

Civil Code provides that "the agent must act within the scope of his

authority." Pursuant to the authority given by the principal, the agent is

granted the right "to affect the legal relations of his principal by theperformance of acts effectuated in accordance with the principals

manifestation of consent. In the case at bar, the scope of authority of EIBas agent of petitioners is "to retain, apply, sell or dispose of all or any of

the clients [petitioners] property," if all or any indebtedness or other

obligations of petitioners to EIB are not discharged in full by petitioners"when due or on demand in or towards the payment and discharge ofsuch obligation or liability." The right to sell or dispose of the properties

of petitioners by EIB is unequivocally confined to payment of the

obligations and liabilities of petitioners to EIB and none other. Thus,

when EIB sold the DMCI shares to buy back the KKP shares, it paid the

proceeds to the vendees of said shares, the act of which is clearly anobligation to a third party and, hence, is beyond the ambit of its authority

as agent. Such act is surely illegal and does not bind petitioners asprincipals of EIB.

2. Agent not a real party-in-interest

Angeles v. PNR


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AMAT VICTORIA CURAM

Doctrine: When agency exists, the third party's liability on a contract is to

the P and not to the A and the relationship of the third party to the P is

the same as that in a contract in which there is no A. Normally the agent

has no rights nor liabilities wrt the third person. HE(A) CANNOT SUE OR

BESUED ON THE CONTRACT. The Court noted that it could have been

different if the A was constituted as an ASSIGNEE. In such case, the A mayin his own behalf, sue on the contract made for his principal, as assignee

of the contract.

Facts:

The Philippine National Railways (PNR, hereinafter) accepted

Romualdezs offer to buy, on an AS IS, WHERE IS basis, PNRs scrap /

unserviceable rails. After paying purchase price of P96,600.00,Romualdez addressed the ff. letter to Atty. Dizon (PNRs Acting

Purchasing Agent): This is to inform you as President of San Juanico

Enterprises, that I have authorized the bearer, LIZETTE R. WIJANCO x x x

to be my lawful representative in the withdrawal of thescrap/unserviceable rails awarded to me. For this reason, I have given

her the ORIGINAL COPY of the AWARD, x x x x and O.R. x x x which willindicate my waiver of rights, interests and participation in favor of

LIZETTE R. WIJANCO. **Lizette Wijanco is Lizetter Wijanco -Angeles,

petitioners deceased wife. PNR allowed Lizette to withdraw

scrap/unserviceable rails in Tarlac. However, PNR subsequently

suspended the withdrawal due to documentary discrepancies and

reported pilferages of PNR scrap properties in said area. Spouses Angelesdemanded the refund of P96,000 (Note: This is not a typo. I noticed in the

original case it really says P96,000 was prayed for and the purchase pricewas P96,600. I dont think its relevant though.). PNR, however, refused to

pay, alleging that unserviceable rails already been withdrawn, whichamount already exceeds the claim for refund (about P114,000). SpousesAngeles filed suit against the PNR for specific performance and damages

before the RTC. Meanwhile, Lizette W. Angeles passed away and was

substituted by petitioner Laureno T. Angeles (husband). The trial courtdismissing their complaint for lack of cause of action. The TC held that

Lizette was merely a representative (agent) of Romualdez in the

withdrawal of scrap or unserviceable rails awarded to him and not an

assignee to the latter's rights. Thus, the spouses Angeles are not the real

parties-in-interest. The CA affirmed the trial courts decision. Petitionerclaims Lizette was an assignee and thus, is a real party-in-interest withcapacity to sue.

Issues:

1. W/N petitioner/s (Angeles) is a real party-in-interest.

Held/Ratio:

1. NO. Lizette Angeles is not a real party-in-interest; thus, it follows

neither is her husband. Where agency exists, the third party's (in this

case, PNR) liability on a contract is to the principal and not to the agent.

The agent neither has rights nor liabilities as against the third party. Hecannot sue nor be sued on the contract. However, where an agent is

constituted as an assignee, the agent may, in his own behalf, sue on a

contract made for his principal. Upon scrutiny, the letter of Romualdez to

Atty. Dizon of the PNR designated Lizette W. Angeles as a mere agent, andnot as an assignee. Being merely an agent whose authority was limited to

the withdrawal of the scrap rails, hence, Angeles is without personality to

sue. Even if the terms agent or attorney-in-fact were not used in the

letter, the agent may also be called an A person acting as a mererepresentative of another acquires no rights whatsoever, nor does he

incur any liabilities arising from the said contract between his principal

and another attorney, proxy, delegate or, as here, representative. In

addition, Romualdez used the word authorized, instead of assigned,indicating an intent on his part to limit Lizettes role to being the

representative of his interest. Petitioners contention that the second


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paragraph of the letter, stating - I have given [Lizette] the original copy

of the award x x x which will indicate my waiver of rights, interests andparticipation in favor of Lizette R. Wijanco - shows that Lizette was

intended to be an assignee, is misplaced. The Court said that petitioner

conveniently omitted the phrase at the beginning of the sentence, Forthis reason. The antecedent thereof is Romualdezs having appointed

Lizette as his representative in the matter of withdrawal. The key phraseclearly conveys the idea that Lizette was given the original copy of thecontract award to enable her to withdraw the rails as an authorized

representative. Moreover, the fact of agency was confirmed by

subsequent acts of the parties; that is, subsequent letters from the

Angeles spouses in which they refer to Lizette as authorizedrepresentative and the withdrawal receipt, which Lizette had signed,

indicated that she was doing so in a representative capacity.

3. Notice to the agent is notice to the principal(Theory of ImputedKnowledge)

Sunace International v. NLRC

Doctrine: The theory of imputed knowledge ascribes the knowledge of

the agent (Sunace) to the principal(Xing) NOT THE OTHER WAYAROUND. The knowledge of the foreign principal cannot be imputed to itsagent Sunace.

Facts:

Sunace, deployed Divina A. Montehermozo to Taiwan as domestic helper

under 12-month contract. This is with assistance of Taiwanese broker,

Edmund Wang. After the 12-month contract expired, Divina continued towork for 2 more years. Shortly after her return or on February 14, 2000,

Divina filed a complaint2 before the (NLRC) against Sunace, one Adelaide

Perez, the Taiwanesebroker, and the employer-foreign principal alleging

that she was jailed for three months andthat she was underpaid. Divinawas claiming the refund of the deduction for income tax and savings

under the one-year and 2-year extended contract.

Year Deduction for Income Tax Deduction for Savings1997 ,1998 ,1999.

Sunace says she was not entitled to refund for 24 months savings because

employer did notdeduct any from her salary from there. There is also nobasis for her claim of tax refund because as the she finished her one yearcontractand hence, was not illegally dismissed by her employer. (not

entitled to compensation because no injury suffered) Reacting to Divinas

Position Paper, Sunace filed on April 25, 2000 an ". . . answer to

complainants position paper "7alleging that Divinas 2-year extension of

her contract was without its knowledge and consent, hence, it had noliability attaching to any claim arising therefrom, and Divina in fact

executed a Waiver/Quitclaim and Release of Responsibility andan

Affidavit of Desistance, copy of each document was annexed to said ". . .

answer tocomplainants position paper." Labor Arbiter, rejectedSunacesclaim that the extension of Divinas contract for two moreyears

was without its knowledge (communication between Sunace andEdmund Wang).Labor Arbiter also says that any agreement for

settlement (quitclaim) should be reduced to writing and signed by parties

and counsel before Labor Arbiter. Held for Divina, Sunaceand Adelaida Perge (owner) jointly and severally for the amounts. NLRC

affirmed LA. CA dismissed petition for certiorari. Principal-agent

relationship.

Issue:

WON Sunace can be held liable for the money claims of Divina

Held:No. Sunace not privy to extended contract.Petition granted.

Ratio:


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AMAT VICTORIA CURAM

The February 21, 2000 telefax message from the Taiwanese broker toSunace, theonlybasis of a finding of continuous communication.

x x x xRegarding to Divina, she did not say anything about her saving in

police station. As we contactwith her employer, she took back her saving

already last years. And they did not deduct anymoney from her salary. Or

she will call back her employer to check it again. If her employer said yes!

we will get it back for her.Thank you and best regards.(Sgd.)EdmundWangPresident19 The message does not provide evidence that Sunace

was privy to the new contract executed after the expiration on February

1, 1998 of the original contract. That Sunace and theTaiwanese

broker communicated regarding Divinas allegedly withheld savings

doesnot necessarilymean that Sunace ratified the extension of the

contract. As Sunace points out in its Reply20 filedbefore the Court of

Appeals, As can be seen from that letter communication, it was just an

information given to the petitioner thatthe private respondent hadt[aken] already her savings from her foreign employer and that

nodeduction was made on her salary. It contains nothing about the

extension or the petitionersconsent thereto.21Parenthetically, since the

telefax message is dated February 21, 2000, it is safe to assume that itwassent to enlighten Sunace who had been directed, by Summons issued onFebruary 15, 2000, toappear on February 28, 2000 for a mandatory

conference following Divinas filing of the complaint onFebruary 14,

2000.There being no substantial proof that Sunace knew of and

consented to be bound under the 2-year employment contract extension,

it cannot be said to be privy thereto. As such, it and its "owner"cannot be

held solidarily liable for any of Divinas claims arising from the 2-yearemploymentextension. As the New Civil Code provides,Contracts take

effect only between the parties, their assigns, and heirs, except in case

where therights and obligations arising from the contract are not

transmissible by their nature, or by stipulationor by provision oflaw.24 Furthermore, as Sunace correctly points out, there was an impliedrevocation of its agencyrelationship with its foreign principal when, after

the termination of the original employment contract,the foreign principal

directly negotiated with Divina and entered into a new and separate

employmentcontract in Taiwan. Article 1924 of the New Civil CodereadingThe agency is revoked if the principal directly manages the

business entrusted to the agent, dealingdirectly with third persons. No

substanial proof that Sunace knew of wnd consented to be bound under

the 2-year extension it cannot be said to be privy thereto. Hence, no

subsidiary liability od A with principal for any of Divina's claims arisingfrom the 2-year employment extension.

4. Bad faithof the Agent is bad faith of the principal

Caram v. Laureta

Doctrine: Knowledge of the previous sale of the land though nit

registered is equivalent to registration. Hence, when Atty. Aportadera and

an Arcilla as agents of Caram had knowledge of such sale but nonetheless

became instrumental in the subsequent sale to their principal Caram, tge

effect is that the bad faith if the agent is also the bad faith of theirprincipal. Both knew that even if Mata previously sold the land, such salecould not be registered as there was yet no civil government at that time.

FACTS:

On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land

covered by OCT No. 3019 in favor of Claro Laureta, plaintiff, the

respondent herein. The deed of absolute sale in favor of the plaintiff was

not registered because it was not acknowledged before a notary public orany other authorized officer. Since June 10, 1945, the plaintiff Laureta had

been and is in continuous, adverse and notorious occupation of said land,

without being molested, disturbed or stopped by any of the defendants ortheir representatives. In fact, Laureta had been paying realty taxes due

thereon and had introduced improvements worth not less than


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AMAT VICTORIA CURAM

P20,000.00 at the time of the filing of the complaint. On May 5, 1947, the

same land covered by OCT No. 3019 was sold by Marcos Mata todefendant Fermin Z. Caram, Jr., petitioner herein. The deed of sale in favor

of Caram was acknowledged before Atty. Abelardo Aportadera. On

December 9, 1947, the second sale between Marcos Mata and Fermin

Caram, Jr. was registered with the Register of Deeds. On the same date,

Transfer Certificate of Title No. 140 was issued in favor of Fermin CaramJr.The defendant Fermin Caram Jr. claimed that he has no knowledge orinformation about the previous encumbrances, transactions, andalienations in favor of plaintiff until the filing of the complaints.

ISSUE:

Whether or not the knowledge petitioner of a prior unregistered sale of a

titled property attributable to petitioner and equivalent in law ofregistration of sale.

HELD:

Yes. There is no doubt then that Irespe and Aportadera, acting as agentsof Caram, purchased the property of Mata in bad faith. Applying the

principle of agency, Caram as principal, should also be deemed to have

acted in bad faith.Since Caram was a registrant in bad faith, the situation

is as if there was no registration at all. A possessor in good faith is onewho is not aware that there exists in his title or mode of acquisition any

flaw which invalidates it. Laureta was first in possession of the property.

He is also a possessor in good faith. It is true that Mata had alleged that

the deed of sale in favor of Laureta was procured by force. Such defect,however, was cured when, after the lapse of four years from the time the

intimidation ceased, Marcos Mata lost both his rights to file an action for

annulment or to set up nullity of the contract as a defense in an action to

enforce the same.

5. Extinguished by death

Rallos v. Felix Go Chan(SUPRA)

D. NATURE OF AGENCY: GENERAL AND SPECIAL

1.Distinguishing General Agency and Agency Couched in General Terms

a. As to scope: General Agency

Art. 1876. An agency is either general or special. The former comprises

all.the business of the principal. The latter, one or more soecifictransactions.

Dominion Insurance v. CA, Guevarra and Austria

Doctrine: Despite the word "special" in the title of the SPA, the contentsreveal that what was constituted was actually a GENERAL AGENCY.

PAYMENT OF CLAIMS is not an act of administration. The settlement of

claims is not included among the acts enumerated in the SPA neither is it

of a character similar to the acts enumerated therein. However, the Court

stated that the A may still recover expenses on the basis of UnjustEnrichment under Obligations and Contracts.

Facts:

Acting as agent for petitioner Dominion, Guevarra paid P156,473.90 insettling the claims of several insured clients of petitioner out of his

personal money. Guevarra thereafter filed a civil case for sum of money to

recover said amount. The RTC and the CA rendered judgment in favor of

Guevarra. On appeal, Dominion claimed Guevarra is not entitled to

reimbursement because he did not act within his authority as agent forDominion.

Issues:

1. W/N Guevarra acted within his authority as an agent for DominionInsurance.


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AMAT VICTORIA CURAM

2. W/N Guevarra is entitled to reimbursement of amounts he paid out ofhis personal money in settling the claims of several insured.

Held/ Ratio:

1. No, because to make such payments as are not usually considered as

acts of administration, and such act, thus, would require a Special Power

of Attorney.3 A perusal of the Special Power of Attorney executedbetween Guevarra and Dominion Insurance would show that petitionerand respondent intended to enter into a principal-agent relationship.

Despite the word "special" in the title of the document, the contents

reveal that what was constituted was actually a general agency4. The

agency comprises all the business of the principal but, couched in generalterms, it is limited only to acts of administration. A general power permits

the agent to do all acts for which the law does not require a special

power. Thus, the acts enumerated in or similar to those enumerated in

the Special Power of Attorney agreement do not require a special power

of attorney. The payment of claims is not an act of administration. Thesettlement of claims is not included among the acts enumerated in the

Special Power of Attorney, neither is it of a character similar to the acts

enumerated therein. A special power of attorney is required before

respondent Guevarra could settle the insurance claims of the insured.

Also, the instruction of petitioner as the principal could not be anyclearer. Respondent Guevarra was authorized to pay the claim of the

insured, but the payment shall come from the revolving fund or collection

in his possession. Having deviated from the instructions of the principal,

the expenses that respondent Guevarra incurred in the settlement of the

claims of the insured may not be reimbursed from petitioner Dominion.This conclusion is in accord with Article 19185, Civil Code.

2. No, if under the laws on agency. His right to recover is under the

general law of obligations and contracts, most specifically, Article 1236,second paragraph.6 To rule otherwise would be unjust enrichment ofDominion Insurance.

b. As to authority: Agency couched in general terms

Art. 1877. AN AGENCY COUCHED IN GENERAL TERMS comprises only

acts of administration, even if the P should state that he withholds

no power or that the agent may execute such acts as he may considerappropriate, or even though the agency should authorize a generaland unlimited management.

2. Distinguishing Special Agency and Agency Couched in Specific

Terms(one authorized inly the performance of specific acts)

Examples of acts of mere administration:

1.) To sue for collection of debts;

2.) To employ workers or servants and employees needed for the conductof business;

3.) To engage counsel to preserve the ownership and possession of theprincipals property;

4.) To lease real property to another person for 1 year or less, provided

the lease is not registered;

5.) To make customary gifts for charity or to employees in the businessmanaged by the agent

6.) To borrow money if it be urgent and indispensable for thepreservation of the things under administration.

How are contracts of agency construed?Contracts of agency as well as general powers of attorney must be

interpreted in accordance with the language used by the parties. The real


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intention of the parties is primarily determined from the language used

and gathered from the whole instrument. In case of doubt, resort must behad to the situation, surroundings and relations of the parties. The

intention of the parties must be sustained rather than defeated. So if the

contract be open to 2 constructions, one of which would uphold theintention while the other would overthrow it, the former is to be chosen.

a. As to scope: Special Agency(to do only one or more specific acts inpursuwnce of particular instructions or with restrictions necessarily

implied from the act to be done)

Art. 1876.

b. As to authority: Special Power of Attorney

To qppear for and. In behalf of the client at any stage of the proceeding.The act done must be legally identical with that authorized to be done.

i. Transactions covered

Art. 1878. An agency is either general or special. The formercomprises all the business of the principal. The latter, one or morespecific transactions.

Classification of Agents:

1.) Universal agent: One employed to do all acts that the principal maypersonally do, and which

the principal can lawfully delegate to another the power of doing.

2.) General agent: One employed to transact all the business of hisprincipal, or all business of a particular kind or in a particular place, or in

other words, to do all acts connected with a particular trade, business, oremployment.

3.) Special/Particular agent: One authorized to act in one or more specific

transactions, or to do one or more specific acts, or to act upon a particularoccasion. e.g.:

a.) Attorney at law: One whose business is to represent clients in legalproceedings.

b.) Auctioneer: One whose business is to sell property for others to the

highest bidder at a public sale.c.) Broker: One whose business is to act as intermediary between 2 otherparties.

d.) Factor: One whose business is to receive and sell goods for acommission, being entrusted with the possession of the goods involved in

the transaction.

Attorney-in-fact: One who is given authority by his principal to do a

particular act not of a legal character. In strict legal sense: An agenthaving a special authority created by deed.

Veloso v. CA

Doctrine: Where the power, for example to sell or mortgage, is specified,

there can be no doubt that the agent may execute the act although the

instrument is denominated as a general power of attorney. there is noneed to execute a separate and special power of attorney.

Facts:

Francisco Veloso is the owner of a parcel of land (177 square meters)

located in Tondo, Manila. The land was covered by a TCT and registeredunder his name. However, the TCT was cancelled a new one was issued in

the name of Aglaloma Escaro. Veloso claimed that he was the sole owner

of the property and he never authorized anyone to sell the land. He


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further alleged that he was in possession of the title but when his wife,

Irma, left for abroad, he found out his copy was missing. He went to theRegister of Deeds to verify and he found out that his TCT was cancelled

and is now under the name of Escario. A general power of attorney and a

deed of absolute sale executed by his wife, Irma as his attorney-in-fact

supported the TCT. However, Veloso denied executing the power of

attorney. He prayed that a temporary restraining order be issued over theland.

Issues:

1. W/N there was a valid sale of the subject property.

Held/Ratio:

1. YES. The assailed power of attorney was valid and regular on its face. It

was notarized and therefore has evidentiary weight with regard to its due

execution. Furthermore, if the General Power of Attorney expressly

granted the power to sell the property to the agent/ attorney in fact, there

is no need to execute a separate and special power of attorney. To buy orsell ---- lands, tenements and hereditaments or other forms of real

property, more specifically TCT No. 49138, upon such terms and

conditions and under such covenants as my said attorney shall deem fit

and proper. Even assuming that the General Power of Attorney and Deed

of Sale is void, Aglaloma Escaro is still the lawful owner of the property.

She is deemed an innocent purchaser for value because she relied on the

General Power of Documents acknowledged before a notary have the

evidentiary weight with respect to their due execution. There was noneed to execute a separate and special power of attorney since the

general power of attorney had expressly authorized the agent of attorney

in fact the power to sell the subject property. The separate power of

attorney can be included in the general power of attorney when the act oftransaction for which the special power is required is specified therein.

Article 1918 (1) Civil Code of the Philippines article 1236, second

paragraph. This article provides: "Whoever pays for another may demandfrom the debtor what he has paid, except that if he paid without the

knowledge or against the will of the debtor, he can recover only insofar as

the payment has been beneficial to the debtor.

Lim Pin v. Liao Tan

Doctrine: ma'am said there is a mistake in the decision wrt the

application of ratification and the compromise agreemenrmt being oral.the authority to enter into a compromise agreement has to be in writing.

ii. Effect of abscence of specific authorization

Cosmic Lumberv. CA

Doctrine: A SPA forban A to institute any action in court to eject all

persons in the P's lots so that the P coukd take material possession

thereof, and for this purpose, to appear at the pre-trial and to enter into

any stipulation of facts and/or compromise agreement but only insofar asthis is protective of the rights and interest of the P in the pty, DOES NOTINCLUDE POWER TO SELL.

COSMIC LUMBER CORPORATION V CA

FACTS

* Cosmic Corporation, through its General Manager executed a

Special Power of Attorney appointing Paz G. Villamil-Estrada as attorney-

in-fact to initiate, institute and file any court action for the ejectment of

third persons and/or squatters of the entire lot 9127 and 443 for the said

squatters to remove their houses and vacate the premises in order thatthe corporation may take material possession of the entire lot


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* Paz G. Villamil Estrada, by virtue of her power of attorney,

instituted an action for the ejectment of private respondent Isidro Perezand recover the possession of a portion of lot 443 before the RTC

* Estrada entered into a Compromise Agreement with Perez, theterms and conditions such as:

Inorder for Perez to buy the said lot he is presently occupying, he has

to pay to plaintiff through Estada the sum of P26,640 computed atP80/square meter and that Cosmic Lumber recognizes ownership andpossession of Perez by virtue of this compromise agreement over said

portion of 333 sqm of lot 443 and whatever expenses of subdivision,

registration and other incidental expenses shall be shouldered by Perez

* although the agreement was approved by the trial court and thedecision became final and executory it was not executed within the 5 year

period from date of its finality allegedly due to the failure of Cosmic

Lumber to produce the owners duplicate copy of title needed to

segregate from lot 443 the portion sold by the attorney-in-fact, PazEstrada to Perez under the compromise agreement

ISSUE: W/N there is a contract of agency between Cosmic Lumber,

principal and Paz Estrada, agent thus binding the principal over the

compromise agreement made by the agent to a third person, Perez inselling the portion of the said property

RULING: No

The authority granted Villamil-Estrada under the special power ofattorney was explicit and exclusionary: for her to institute any action in

court to eject all persons found on lots number 9127 and 443 so that

Cosmic Lumber could take material possession thereof and for thispurpose, to appear at the pre-trial and enter into any stipulation of facts

and/or compromise agreement but only insofar as this was protective ofthe rights and interests of Cosmic Lumber in the property

Nowhere in this authorization was Villamil-Estrada granted

expressly or impliedly any power to sell the subject property nor aportion thereof

Neither can a conferment of the power to sell be validly inferred

from the specific authority to enter into a compromise agreementbecause of the explicit limitation fixed by the grantor that thecompromise entered into shall only be so far as it shall protect the rightsand interest of the corporation in the aforementioned lots.

In the context of special investiture of powers to Villamil-Estrada,

alienation by sale of an immovable certainly cannot be deemed protectiveof the right of Cosmic Lumber to physically possess the same, more so

when the land was being sold for a price of P80/sqm , very much less

than its assessed value of P250/sqm and considering further that plaintiff

never received the proceeds of the sale

When the sale of a piece of land or any interest thereon is through

an agent, the authority of the latter shall be in writing; otherwise, the sale

should be void. Thus, the authority of an agent to execute a contract for

the sale of real estate must be conferred in writing and must give himspecific authority, either to conduct the general business of the principal

or to execute a binding contract containing terms and conditions which

are in the contract he did execute

For the principal to confer the right upon an agent to sell realestate, a power of attorney must so express the powers of the agent inclear and unmistakable language

It is therefore clear that by selling to Perez a portion of Cosmic

Lumbers land through a compromise agreement, Villamil-Estrada acted

without or in obvious authority. The sale ipso jure is consequently void

and so is the compromise agreement. This being the case, the judgmentbased thereon is necessarily void


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When an agent is engaged in the perpetration of a fraud upon his

principal for his own exclusive benefit, he is not really acting for theprincipal but is really acting for himself, entirely outside the scope of his

agency

Mercado v. Allied Banking Corp. 200

LILLIAN N. MERCADO, CYNTHIA M. FEKARIS, and JULIAN MERCADO,

JR.,represented by their Attorney-In-Fact, ALFREDO M.

PEREZ,Petitioners, vs.ALLIEDBANKINGCORPORATION,Respondent. G.R. No. 171460 July 24, 2007

Facts:

Perla executed a Special Power of Attorney (SPA) in favor of her husband,

JulianD. Mercado (Julian) over several pieces of real property registeredunder her name, authorizingthe latter to perform the following acts: 1. To

act in my behalf, to sell, alienate, mortgage, leaseand deal otherwise over

the different parcels of land described hereinafter x x x 2. To sign for andin my behalf any act of strict dominion or ownership any sale, disposition,mortgage, leaseor any other transactions including quit-claims, waiver

and relinquishment of rights x x x 3. Toexercise any or all acts of strict

dominion or ownership over the above-mentioned properties,rights and

interest therein.On the strength of the aforesaid SPA, Julian obtained a

loan from the respondent. Stillusing the subject property as security,Julian obtained an additional loan from the respondent.It appears,

however, that there was no property identified in the SPA and registeredwith theRegistry of Deeds. What was identified in the SPA instead was the

property different from theone used as security for loan.Julian defaulted

on the payment of his loan obligations. Thus, respondent initiated extra-

judicial foreclosure proceedings over the subject property whichwas subsequently sold at publicauction wherein the respondent wasdeclared as the highest bidder. Petitioners initiated an actionfor the

annulment of REM constituted over the subject property on the ground

that the same wasnot covered by the SPA and that the said SPA, at thetime the loan obligations were contracted,no longer had force and effect

since it was previously revoked by Perla. In the absence of authority to do

so, the REM constituted by Julian over the subject property was null and

void;thus, petitioners likewise prayed that the subsequent extra-judicial

foreclosure proceedings andthe auction sale of the subject property bealso nullified.

Issues:

(1) Whether or not there was a valid mortgage constituted over subject

property.

(2) Whether or not there was a valid revovation of SPA.

(3) Construction of powers of attorney.

Rulings:

(1) In the case at bar, it was Julian who obtained the loan obligations

fromrespondent which he secured with the mortgage of the subject

property. The property mortgagedwas owned by his wife, Perla,considered a third party to the loan obligations between Julianandrespondent. It was, thus, a situation recognized by the last paragraph

of Article 2085 of the CivilCode that third persons who are not parties to

the principal obligation may secure the latter by pledging or

mortgaging their own property. There is no question therefore that

Julian was vestedwith the power to mortgage the pieces of propertyidentified in the SPA, however, the

subject property was not among those enumerated therein. Julian was not conferred by Perla with theauthority to mortgage the subject property

under the terms of the SPA, the real estate mortgagesJulian executed overthe said property are therefore unenforceable.


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AMAT VICTORIA CURAM

(2) The said SPA was revoked by virtue of a public instrument executedby Perla. Toaddress respondents assertion that the said revocation was

unenforceable against it as a

third party to the SPA and as one who relied on the same in good faith, th

e rule is that an agency isextinguished, among others, by its revocation

( Article 1999, New Civil Code of the Philippines).The principal may

revoke the agency at will, and compel the agent to return thedocumentevidencing the agency. Such revocation may be express orimplied ( Article 1920, supra).

(3) Rule of strict construction- where the terms of the contract are clear

as to leave noroom for interpretation, resort to circumstantial evidence toascertain the true intent of

the parties, is not countenanced. The law is that if the terms of a contract

are clear and leave nodoubt upon the intention of the contracting parties,

the literal meaning of its stipulation shallcontrol. The clear terms of thecontract should never be the subject matter of interpretation.Equally

relevant is the rule that a power of attorney must be strictly construed

and pursued. Theinstrument will be held to grant only those powers

which are specified therein, and the agent mayneither go beyond nordeviate from the power of attorney. Where powers and duties arespecifiedand defined in an instrument, all such powers and duties are

limited and are confined to thosewhich are specified and defined, and allother powers and duties are excluded.Qualification of the rule- this is but

in accord with the disinclination of courts to enlargethe authority granted

beyond the powers expressly given and those which incidentally flow

or derive therefrom as being usual and reasonably necessary and properfor the performance of such express powers.

iii. Effect of SPECIFIC AUTHORIZATION

Veloso SUPRA

Bravo-Guerrero v. Bravo

Facts:

Spouses Bravo (Mauricio and Simona) owned two parcels of land Makati

City. The Properties are registered under TCT Nos. 58999 and 59000issued by the Register of Deeds of Rizal on 23 May 1958. The Propertiescontain a large residential dwelling, a smaller house and otherimprovements.

Sps. Bravo had three children - Roland, Cesar and Lily, all surnamed

Bravo. Cesar died without issue. Lily Bravo married David Diaz, and hada son, David B. Diaz, Jr. Roland had six children, namely, (Elizabeth),

(Edward), (Roland Jr.), Senia Bravo, Benjamin Mauricio Bravo, andtheir half-sister, (Ofelia).

Simona executed a General Power of Attorney on 17 June 1966

appointing Mauricio as her attorney-in-fact. In the GPA, Simona

authorized Mauricio to mortgage or otherwise hypothecate, sell, assignand dispose of any and all of my property, real, personal or mixed, of anykind whatsoever and wheresoever situated, or any interest therein.

Mauricio subsequently mortgaged the Properties to the Philippine

National Bank (PNB) and Development Bank of the Philippines (DBP) for

P10,000 and P5,000, respectively.

On 25 October 1970, Mauricio executed a Deed of Sale with Assumptionof Real Estate Mortgage conveying the Properties to Roland A. Bravo,

Ofelia A. Bravo and Elizabeth Bravo(vendees). The sale was

conditioned on the payment of P1,000 and on the assumption by thevendees of the PNB and DBP mortgages over the Properties.

As certified by the Clerk of Court of the Regional Trial Court of Manila, the

Deed of Sale was notarized by Atty. Victorio Q. Guzman on 28 October

1970 and entered in his Notarial Register.However, the Deed of Sale was


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AMAT VICTORIA CURAM

not annotated on TCT Nos. 58999 and 59000. Neither was it presented to

PNB and DBP. The mortage loans and the receipts for loan paymentsissued by PNB and DBP continued to be in Mauricios name even after his

death on 20 November 1973. Simona died in 1977.

On 23 June 1997, Edward, represented by his wife, Fatima Bravo, filed an

action for the judicial partition of the Properties. Edward claimed that he

and the other grandchildren of Mauricio and Simona are co-owners of theProperties by succession. Despite this, petitioners refused to share with

him the possession and rental income of the Properties. Edward later

amended his complaint to include a prayer to annul the Deed of Sale,which he claimed was merely simulated to prejudice the other heirs.

In 1999, David Jr., whose parents died in 1944 and who was subsequently

raised by Simona, moved to intervene in the case. David Jr. filed acomplaint-in-intervention impugning the validity of the Deed of Sale and

praying for the partition of the Properties among the surviving heirs ofMauricio and Simona. The trial court allowed the intervention in itsOrder dated 5 May 1999.

The trial court upheld Mauricios sale of the Properties to the vendees.

The trial court ruled that the sale did not prejudice the compulsory heirs,as the Properties were conveyed for valuable consideration. The trial

court also noted that the Deed of Sale was duly notarized and was in

existence for many years without question about its validity.

Edward and David Jr. Filed an appeal to the CA which ruled Reverssing

the RTC decision. Citing Article 166 of the Civil Code, CA declared theDeed of Sale void for lack of Simonas consent. The appellate court held

that the GPA executed by Simona in 1966 was not sufficient to authorize

Mauricio to sell the Properties because Article 1878 of the CC requires a

special power of attorney SPA for such transactions. The appellate courtreasoned that the GPA was executed merely to enable Mauricio tomortgage the Properties, not to sell them.

Issue:

W/N the GPA executed by Simona in 1966 was not sufficient to authorize

Mauricio to sell the Properties because Article 1878 of the Civil Coderequires a SPA for such transactions.

Held:

Under the Civil Code, only the wife can ask to annul a contract that

disposes of conjugal real property without her consent. Further,

respondents, who are Simonas heirs, are not the parties who can invoke

Article 166. Article 173 reserves that remedy to the wife alone. OnlySimona had the right to have the sale of the Properties annulled on theground that Mauricio sold the Properties without her consent.

Resloving the issue, the SC agreed with the TC that Simona authorized

Mauricio to dispose of the Properties when she executed the GPA. True,

Article 1878 requires a special power of attorney for an agent to executea contract that transfers the ownership of an immovable. However, theCourt has clarified that Article 1878 refers to the nature of the

authorization, not to its form. Even if a document is titled as a general

power of attorney, the requirement of a special power of attorney is met

if there is a clear mandate from the principal specifically authorizing theperformance of the act.

In Veloso v. Court of Appeals, the Court explained that a general power of

attorney could contain a special power to sell that satisfies therequirement of Article 1878, thus:

An examination of the records showed that the assailed power of

attorney was valid and regular on its face. It was notarized and as such, itcarries the evidentiary weight conferred upon it with respect to its dueexecution. While it is true that it was denominated as a general power of


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AMAT VICTORIA CURAM

attorney, a perusal thereof revealed that it stated an authority to sell, towit:

2. To buy or sell, hire or lease, mortgage or otherwise hypothecate

lands, tenements and hereditaments or other forms of real property,

more specifically TCT No. 49138, upon such terms and conditions and

under such covenants as my said attorney shall deem fit and proper.

Thus, there was no need to execute a separate and special power of

attorney since the general power of attorney had expresslyauthorized the agent or attorney in fact the power to sell the subject

property. The special power of attorney can be included in the

general power when it is specified therein the act or transaction forwhich the special power is required. (Emphasis supplied)

In this case, Simona expressly authorized Mauricio in the GPA to sell,

assign and dispose of any and all of my property, real, personal or mixed,

of any kind whatsoever and wheresoever situated, or any interest thereinxxxas well as to act as my general representative and agent, with fullauthority to buy, sell, negotiate and contract for me and in my behalf.

Taken together, these provisions constitute a clear and specific mandate

to Mauricio to sell the Properties. Even if it is called a general power of

attorney, the specific provisions in the GPA are sufficient for the

purposes of Article 1878. These provisions in the GPA likewise indicate

that Simona consented to the sale of the Properties.

6. Clarifying the terms

Siasat v. IAC

Siasat v. Intermediate Appellate Court (1985) (30% commission,Philippine flags)

Doctrines: An agent may be (1) universal, (2) general, or (3) specific. A

universal agent is one authorized to do all acts, which can be lawfully

delegated to an agent. So far as such a condition is possible, such an agent

may be said to have universal authority. A general agent is one authorized

to do all acts pertaining to a business of a certain kind or at a particularplace, or all acts pertaining to a business of a particular class or series. He

usually has authority either expressly conferred in general terms or in

effect made general by the usages, customs or nature of the business,

which he is authorized to transact. A special agent is one authorized to dosome particular act or act upon some particular occasion. He acts in

accordance with specific instructions or limitations necessarily impliedfrom the nature of the act to be done.

Facts:

In 1974, a certain Teresita Nacianceno convinced the Department of

Education and Culture (Department for brevity) to purchase, without

public bidding, P1M worth of Philippine flags for use in public schools. By

early September 1974, all the legal requirements had been complied with,except the release of the purchase orders, which could not be released

unless a formal offer to deliver the flags in accordance with the required

specifications was first submitted for approval. When Nacianceno was

informed of this, she contacted the owners of the United Flag Industry on

17 September 1974. The next day, after the transaction was discussed,

the following document was drawn up: Mrs. Tessie Nacianceno This is toformalize our agreement for you to represent United Flag Industry to deal

with any entity or organization, private or government in connection with

the marketing of our products-flags and all its accessories. For your

service, you will be entitled to a commission of thirty percent. Signed Mr.Primitivo Siasat Owner and Gen. Manager On 16 October, the firstdelivery (7933 flags) was made by the United Flag Industry. The next day,


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AMAT VICTORIA CURAM

on 17 October, the Naciancenos authority to represent the United Flag

Industry was revoked by petitioner Primitivo Siasat. On 23 October, afterreceiving the payment of P469,980 for the first delivery, Siasat, according

to Nacianceno, tendered the amount of P23,900 or 5% of the amount

received to the latter as payment of her commission. She naturally

protested, insisting on the 30% commission agreed upon. However, she

eventually accepted, relying upon an assurance by Siasat that they would

pay the commission in full after delivery of the second half of the order.However, Nacianceno later on found out that Siasat had already received

payment for the second delivery. When she confronted Siasat, he

vehemently denied receipt of the payment, at the same time claiming that

she had no participation whatsoever with regard to the second delivery

of flags and that the agency had already been revoked. Fuming, she filedan action in the CFI of Manila to recover the following commissions: 25%,

as balance on the first delivery and 30%, on the second delivery. The trial

court decided in her favor, and the Intermediate Appellate Court affirmedin toto. Hence, this petition was filed.

Issues: 1. W/N Nacianceno was incapacitated to transact with theDepartment because the authorization simply states that she could deal

with any entity in connection with the marketing of their products for a

commission of 30%. There was no specific authorization for the sale of

Philippine flags to the Department.

2. W/N Nacianceno is entitled to commission on the second delivery evenif the agency has been revoked after the first.

Held/Ratio:

1. NO, Nacianceno was capacitated because she was a general agent. An

agent may be (1) universal, (2) general, or (3) special. x x x A generalagent is one authorized to do all acts pertaining to a business of a certainkind or at a particular place, or all acts pertaining to a business of a

particular class or series. He has usually authority either expressly

conferred in general terms or in effect made general by the usages,customs or nature of the business, which he is authorized to transact.

Nacianceno was instituted as a general agent. It can easily be seen by the

way general words were employed in the agreement that no restrictions

were intended as to the manner the agency was to be carried out or in the

place where it was to be executed. The power granted to the respondent

was so broad that it practically covers the negotiations leading to, and theexecution of, a contract of sale of petitioners' merchandise with any entity

or organization. 2. YES, Nacianceno is still entitled to commission on the

second delivery, notwithstanding the revocation of the agency after the

first, because the two deliveries are part of a single, perfected transaction.

The revocation of agency could not prevent the respondent from earningher commission because it came too late, the contract of sale having been

already perfected and partly executed. The principal, once the contract

between his then duly authorized agent and a third person has been

perfected, cannot deprive his agent of the commission agreed upon by

cancelling the agency and, thereafter, dealing directly with the buyer.

Note: Nacianceno alleged that she was entitled to the balance (25%) onthe first delivery. However, the totality of evidence shows that

Nacianceno had already received full payment of her commission for the

first delivery. By virtue of this, and the apparent yet unproven conspiracywith Department officials to plunder public money, the Court posited that

she did not come to Court with clean hands (masyadong swapang eh

magnanakaw rin naman, lol) and, therefore, is not entitled to moral

damages and attorneys fees. The Court also took notice of the

unscrupulous procurement policies of the Department of Education andCulture in its purchase of Philippine flags, to wit: There is no reason why

a shocking 30% of the taxpayers' money should go to an agent orfacilitator who had no flags to sell and whose only work was to secure

and hand carry the indorsements of education and budget officials. x x xConsidering the sad plight of underpaid and overworked classroom

teachers whose pitiful salaries and allowances cannot sometimes be paid


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AMAT VICTORIA CURAM

on time, a P300,000 fee for a P1,000,000 purchase of flags is not onlyclearly unnecessary but a scandalous waste of public funds as well.

II. Establishing Agency

A. Oral or Written

Art. 1869. Agency must be express, or implied from the acts of theprincipal, from his silence or lack of action, or his failure to

repudiate the agency, knowing that another person is acting on hisbehalf without authority.

Agency may be oral, unless the law requires a specific form.

Classifications of Agency: as to

1.) Manner of Creation:

a.) Express: actually authorized, either orally or in writing.

b.) Implied: implied from acts of principal, from his silence or lack ofaction or his failure to repudiate the agency knowing that another personis acting on his behalf w/o authority.

2.) Character:

a.) Gratuitous: agent receives no compensation for his services.

b.) Onerous: agent does receive compensation.

3.) Extent of business covered:

a.) General: comprises all the business of the principal.

b.) Special: comprises one or more specific transactions.

4.) Authority conferred:

a.) Couched in general terms: deemed to comprise only acts of

administration.b.) Couched in specific terms: authorizes only the performance of aspecific act/s.

5.) Nature and effects:

a.) Representative: agent acts in name and representation of principal.

b.) Simple/Commission: agent acts in his own name but for the account ofthe principal.

Can agency be presumed?

Generally NO because the relationship between the principal and agentmust exist as a fact. The only exceptions to this rule are when agencyarises by operation of law or agency is presumed to prevent unjustenrichment.

Form: Generally, NO formal requirements. Agents authority may be oral

or written, it may be in public or private writings. The only exception iswhen the law requires a specific form (e.g. sale of real property or anyinterest therein by an agent.)

1. Oral

Air France v. CA 1983

Air France v. Court of Appeals (1983) (Japan Trip, Ganas, expired ticket,

knowledge )

Doctrines: From Agency Outline: Under the principle that knowledge of

the agent is considered knowledge by the principle, the Court ruled that

the spouses cannot defend by contending lack of knowledge of the rulesupon which they received their tickets from the airline company since the

evidence bore out that their travel agent who handled their travel

arrangements, was duly informed by proper representatives of the airlinecompany.

Facts:


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AMAT VICTORIA CURAM

Sometime in February, 1970, the late Jose G. Gana and his family (Ganas)

purchased from Air France through Imperial Travels 9 (nine) open-datedtickets for the Manila/Osaka/Tokyo/Manila route. Ganas were booked for

Manila/Osaka May 8, 1970 and Tokyo/Manila May 22, 1970. The expiry

date was May 8. 1971. The Ganas, however, did not depart on May 8,

1970. Sometime in January 1971, Jose Gana asked the assistance of

Teresita Manucdoc (Secretary of Sta Clara Lumber - where Jose Gana is

working as Director and Treasurer) for the extension of the validity oftheir tickets (which again due to expire on May 8, 1971). Teresita asked

for help from Lee Ella, Manager of the Philippine Travel Bureau. She used

to handle travels of Sta. Clara Lumber. She then sent the tickets to Cesar

Rillo who is the Office Manager of Air France. Tickets were returned to

Ella. Ella was informed that extension was NOT possible, unless thefollowing are paid first (1) fare differentials resulting from the increase in

fares triggered by an increase of the exchange rate of the USD to P and (2)

the increased travel tax. Ella returned the tickets to Manucdoc and

informed the impossibility of extension. Meanwhile, Ganas scheduled

their departure on May 7, 1971 (ONE DAY BEFORE expiry). Manucdoc

requested Ella to arrange the tickets but Ella warned her that the ticketscan be used May 7, but they would NO longer be valid for the rest of the

trip because it will expire next day. Manucdoc said that Ganas will make

the arrangements (This was verified through the Q&A. It was even askedif Tagalog or in English. It was in English). Assured, Ella ON HIS OWN,

attached to the tickets revalidating stickers (Japan Airlines and

Scandinavian Airways System (SAS) sticker). The SAS indicates that it was

Reevaluated by: the Philippine Travel Bureau, Branch No.2 (as shown

by a circular rubber stamp) and signed "Ador", and the date ishandwritten in the center of the circle. Then appear under printed

headings the notations: JL. 108 (Flight), 16 May (Date), 1040 (Time), OK(status). Ella made no more attempt to contact Air France as there was no

more time. Come Osaka/Tokyo Flight on May 17, 1971 - Japan Airlinesrefused to honor the tickets and the Ganas had to purchase new tickets.

Same difficulty happened in their return trip to Manila - Air France also

refused the tickets. They were only able to return only after pre-payment

in Manila, through their relatives , of the adjusted rates. The family flewseparate flights.

Issues:

1. W/N notice to Manucdoc is notice to the Ganas 2. W/N Ella acted

beyond his powers as travel agent Held/Ratio: 1. YES. To all legal intentsand purposes, Manucdoc was the agent of the Ganas and notice to her ofthe rejection of the request for extension of the validity of the tickets was

notice to the Ganas, her principal. There are IAT (Intl Air Transportation

Association) Rules about ticket expiry and fare differentials (adjustment

for increase and decrease). The GANAS cannot defend by contending lackof knowledge of those rules since the evidence bears out that Manucdoc

was duly informed by Ella of the advice of Reno, the Office Manager of Air

France, that the tickets in question could not be extended beyond the

period of their validity without paying the fare differentials and

additional travel taxes brought about by the increased fare rate and traveltaxes.

2. YES. The circumstances that AIR FRANCE personnel at the ticket

counter in the airport allowed the Ganas to leave is not tantamount to animplied ratification of travel agent Ella's irregular actuations. It should be

recalled that the Ganas left in Manila the day before the expiry date of

their tickets and that "other arrangements" were to be made with respect

to the remaining segments. Besides, the validating stickers that Ella

affixed on his own merely reflect the status of reservations on the

specified flight and could not legally serve to extend the validity of aticket or revive an expired one. It should be recalled that AIR FRANCE

was even unaware of the validating SAS and JAL. stickers that Ella had

affixed spuriously. Consequently, Japan Air Lines and AIR FRANCE merely

acted within their contractual rights when they dishonored the tickets onthe remaining segments of the trip and when AIR FRANCE demandedpayment of the adjusted fare rates and travel taxes for the Tokyo/Manila


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flight. Emergency Facts: Tickets cost USD 2,528.58, exchange rate wasP3.90/USD1, travel tax is P100 for each passenger.

2. Written

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

A letter is sufficient [Jimenez v. Rabot]. a. Application

Cosmic Lumber SUPRA

Oesmer v. Paraiso Development 2007

Facts:

Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, andEnriqueta, all surnamed Oesmer, together with Adolfo Oesmer and Jesus

Oesmer, are brothers and sisters, and the co-owners of undivided sharesof two parcels of agricultural and tenanted land situated in Cavite,

identified as Lot 720 and Lot 834. Both lots are unregistered and

originally owned by their parents, Bibiano Oesmer and Encarnacion

Durumpili, who declared the lots for taxation purposes. When the

spouses Oesmer died, petitioners, together with Adolfo and Jesus,acquired the lots as heirs of the former by right of succession.

Respondent Paraiso Development Corporation is known to beengaged in the real estate business.

Sometime in March 1989, Rogelio Paular, a resident and former

Municipal Secretary of Carmona, Cavite, brought along petitioner Ernesto

to meet with a certain Sotero Lee, President of respondent Paraiso

Development Corporation, at Otani Hotel in Manila. The said meeting was

for the purpose of brokering the sale of petitioners properties to

respondent corporation.

Pursuant to the said meeting, a Contract to Sell was drafted by the

Executive Assistant of Sotero Lee, Inocencia Almo. On 1 April 1989,

petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell. A

check in the amount of P100,000.00, payable to Ernesto, was given asoption money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr., and

Librado also signed the said Contract to Sell. However, two of thebrothers, Adolfo and Jesus, did not sign the document.

On 5 April 1989, a duplicate copy of the instrument was returned to

respondent corporation. On 21 April 1989, respondent brought the sameto a notary public for notarization.

In a letter dated 1 November 1989, addressed to respondent

corporation, petitioners informed the former of their intention to rescind

the Contract to Sell and to return the amount of P100,000.00 given byrespondent as option money.

Respondent did not respond to the aforesaid letter. On 30 May1991, herein petitioners, together with Adolfo and Jesus, filed a

Complaint for Declaration of Nullity or for Annulment of Option

Agreement or Contract to Sell with Damages before the (RTC) of Bacoor,

Cavite.


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During trial, petitioner Rizalino died. Upon motion of petitioners,

the trial court issued an Order dated 16 September 1992, to the effectthat the deceased petitioner be substituted by his surviving spouse,

Josefina O. Oesmer, and his children, Rolando O. Oesmer and Fernando O.

Oesmer. However, the name of Rizalino was retained in the title of thecase both in the RTC and the Court of Appeals.

After trial on the merits, the lower court rendered a Decision infavor of herein Paraiso. The assailed Contract to Sell is valid and binding

only to the undivided proportionate share of the signatory of this

document and recipient of the check, co-owner Ernesto DurumpiliOesmer.

CA rendered Decision Modifying RTCDecision, still in favor ofParaiso.

Issue(s):

W/N

b. effect

AF Realty v. Dieselman 2002

Doctrine:

Litonjua v. Eternity 2006

Doctrine:

B. express/implied Agency by Estoppel

Art. 1869.

1. Express Agency

2. Implied agency

a. Implied from the acts of the Principal

Art. 1869.

Uniland Resources v. DBP 1991

Doctrine:

b. Implied from the acts of the Agent

Art. 1870. Acceptance by the agent may also be express, or implied

from his acts which carry out the agency, or from his silence orinaction according to the circumstances.

Form of Acceptance by Agent:

Acceptance may be express or implied; express when it is oral or written;implied when it can be inferred from the acts of the agent which carry out

the agency, or from his silence or inaction accdg to the circumstances.

Art. 1871. Between persons who are present, the acceptance of the

agency may also be implied if the principal delivers his power ofattorney to the agent and the latter receives it without any objection.

Between 2 persons who are present, when it acceptance deemed implied?

When the agent receives a power of atty from the principal himselfpersonally without objection.

Is this presumption conclusive?

NO, it can be rebutted by contrary proof.Power of attorney: An instrument in writing by which one person, as

principal, appoints another as his agent and confers upon him the


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authority to perform certain specified acts or kinds of acts on behalf of

the principal. Its primary purpose is to evidence the authority of the agent

to 3rd

parties w/ whom the agent deals.

Construction

A power of atty is strictly construed and strictly pursued. The instrument

will be held to grant only those powers which are specified, and the agent

may neither go beyond nor deviate from the power of atty. The onlyexception is when strict construction will destroy the very purpose of thepower.

Meaning of present

Not limited to face-to-face encounters. 2 persons conversing on the phoneare also considered as both present.

Art. 1872. Between persons who are absent, the acceptance of theagency cannot be implied from the silence of the agent, except:

1.) When the principal transmits his power of attorney to the

agent, who receives it without any objection;

2.) When the principal entrusts to him by letter or telegram a

power of attorney with respect to the business in which heis habitually engaged as an agent, and he did not reply tothe letter or telegram.

2 Ways of Giving Notice of Agency

1.) By special information; or

2.) By public advertisement.

Effects:

1.) Special information: the person appointed as agent is consideredsuch with respect to the person to whom it was given.

2.) Public advertisement: Agent is considered such with regard to anyperson.

Revocation An agency is revoked in the same manner as it was given.

General rule: Special information needs special information of revocation.

Except: if you can prove that the 3rd

person read the notice in thenewspaper.

3. Agency by estoppel; based on statute

Art. 1873. If a person specially informs another or states by public

advertisement that he has given a power of attorney to a thirdperson, the latter thereby becomes a duly authorized agent, in the

former case with respect to the person who received the specialinformation, and in the latter case with regard to any person.

The power shall continue to be in full force until the notice is

rescinded in the same manner in which it was given.

Agency by Estoppel: There is really no agency at all, but the alleged agent

seemed to have apparent or ostensible, although no real authority torepresent another.

1.) Estoppel of Agent One professing to act as agent for another may be

estopped to deny his agency both as against his asserted principal and the3rd persons interested in the transaction in which he is engaged.

2.) Estoppel of Principal

a.) As to Agent One who knows that another is acting as his agent andfails to repudiate his acts, or accept the benefits of them, will be estoppedto deny the agency as against such other.

b.)As to sub-agent To estop the principal from denying his liability to a

3rd person, he must have known or be charged with knowledge of the fact


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of the transmission and the terms of the agreement between the agentand sub-agent.

c.)As to 3rdpersons One who knows that another is acting as his agent or

permitted another to appear as his agent, to the injury of 3rd persons who

have dealt with the apparent agent as such in good faith and in theexercise of reasonable prudence, is estopped to deny the agency.

3.) Estoppel of 3rd

Persons A 3rd

person, having dealt with one as an agentmay be estopped to deny the agency as against the principal, agent or 3rd

persons in interest.

4.) Estoppel of the govt The govt is neither estopped by the mistake orerror on the part of

its agents. But it may be estopped through affirmative acts of its

officers acting within the scope of their authority.

4. Based on jurisprudence

Country bankers v. Keppel Cebu shipyard

Doctrine:

Pahud v. CA 2009

Doctrine:

Nogales v. Capitol Medical 2006

Doctrine:

5. Distinguishing Implied Agency and Agency by Estoppel

Woodchild v. Roxas 2004

Doctrine:

Yun Kwan Byung v. PAGCOR 2009

Doctrine:

Professional Service v. Agana 2007

Doctrine:

III. THE AGENTA. The Rights of Agents

1. Compensation

Art. 1875. Agency is presumed to be for a compensation, unless thereis proof to the contrary.

Broker: One who in behalf of others, and for compensation or fee,negotiate contracts relative to property. He is the negotiator between the

parties, never acting in his own name, but in the name of those who

employ him. He is strictly a middleman and for some purposes, the agentof both parties.


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When is a broker entitled to compensation?

A broker is entitled to commission whenever he brings to his principal a

party who is able and willing to take the property, and enter into a validcontract upon the terms named by the principal, although the particulars

may be arranged and the matter negotiated and completed between the

principal and the purchaser directly. A broker is never entitled tocommission for unsuccessful efforts.

Does the law allow double agency?

Such agency is disapproved by law for being against public policy and

sound morality. The exception is where the agent acted with fullknowledge and free consent of the principals.

\In case the agent assumes a double agency, what is his right tocompensation?

1.) If with knowledge of both principals recovery can be had from both.

2.) If without knowledge of both agent can recover from neither.3.) If with knowledge of only one as to the principal who knew of thatfact and as to the agent, they are in pari delicto and the courts shall leave

them as they were, the contract between them being void as against

public polisy and good morals.

Art. 1909. The agent is responsible not only for fraud, but also for

negligence, which shall be judged with more or less rigor by the

courts, according to whether the agency was or was not for acompensation.

Is the agent liable for fraud?Yes, in all cases.

For negligence?

Yes, but this shall be adjudged with rigor by the courts.

Why does the court have to take into consideration whether the agencywas gratuitous or for compensation?

In order to fix the liability of the agent for negligence only (not fraud)

a. Procuring Cause

It refers to a cause originating a series of events which without

break in the continuity, result in the accomplishment of the primeobligation of the employment of the BROKER.

PHILIPPINE HEALTHCARE V. ESTRADA

DOCTRINE:

SANCHEZ V. MEDICARD

DOCTRINE:

LIM V. SABAN 2004

DOCTRINE:

b. Doctrine and Manotok test

PRATS V. CA 1978


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DOCTRINE:

MANOTOK BROTHERS V. CA 1993

DOCTRINE:

UNILAND, SUPRA

c. Forfeiture of Right to collect commission

DOMINGO V. DOMINGO 1971

DOCTRINE:

2. Lend to/borrow money from the agency

Art. 1890. If the agent has been empowered to borrow money, he

may himself be the lender at the current rate of interest. If he has

been authorized to lend money at interest, he cannot borrow itwithout the consent of the principal.

Rationale: The agent can lend money to the principal using the agents

own funds at the current rate of interest and NOT at a higher interest ratebecause the agent is supposed to act for the principals benefit.

Instance EffectNo prohibition Agent

responsible

for all the

acts of sub-agent.

Prohibition Sub-agents

acts are

VOID as to

theprincipal.

Authority to appoint butnot designated byprincipal

Agent liablefor acts of

sub-agent if

the sub-

agent is

notoriouslyincompeten

t or

insolvent.

Authority to appoint anddesignated by principal

Agent isreleasedfrom any

liability

from the

acts of thesub-agent

If the agent is authorized to lend the principals money, with interest, to

3rd

persons, the agent cant be the borrower without the consent of the

principal because the agent may not be a good borrower or he may beinsolvent or he may not be a good risk. There is a danger here that the

interest of the principal would be jeopardized.This would also seem to be the case if the agent is authorized to lendmoney w/o interest because of the same reason.


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The reimbursement shall include interest on the sums advanced,from the day on which the advance was made.

Should the principal reimburse the agent for advances made by the lattereven if the agency was unsuccessful?

It depends. Yes, if the agent is free from fault. No, if the agent was with

fault.

Is a broker always entitled to a commission?A broker is entitled to a commission if the sale is effected, but not if there

is no perfected transaction.

Art. 1913. The principal must also indemnify the agent for all the

damages which the executive of the agency may have caused thelatter, without fault or negligence on his part.

Basis for the above rule: Equity. Since the principal receives the benefits

of the agency, and has a right to demand damages from the agent should

the latter not perform the agency, he should answer for the damages

resulting from the execution thereof with