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    G.R. No. 76931 May 29, 1991ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, petitioner, vs.COURT OFAPPEALS and AMERICAN AIR-LINES INCORPORATED, respondents.G.R. No. 76933 May 29, 1991AMERICAN AIRLINES, INCORPORATED, petitioner, vs.COURT OF APPEALS andORIENT AIR SERVICES & HOTEL REPRESENTATIVES, INCORPORATED,respondents.

    PADILLA, J.:p

    This case is a consolidation of two (2) petitions for review on certiorariof a decision

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    of the Court of Appeals in CA-G.R. No. CV-04294, entitled "American Airlines, Inc. vs.Orient Air Services and Hotel Representatives, Inc." which affirmed, with modification,the decision 2 of the Regional Trial Court of Manila, Branch IV, which dismissed thecomplaint and granted therein defendant's counterclaim for agent's overridingcommission and damages.The antecedent facts are as follows:On 15 January 1977, American Airlines, Inc. (hereinafter referred to as American Air),an air carrier offering passenger and air cargo transportation in the Philippines, andOrient Air Services and Hotel Representatives (hereinafter referred to as Orient Air),entered into a General Sales Agency Agreement (hereinafter referred to as theAgreement), whereby the former authorized the latter to act as its exclusive generalsales agent within the Philippines for the sale of air passenger transportation.Pertinent provisions of the agreement are reproduced, to wit:

    WITNESSETHIn consideration of the mutual convenants herein contained, the parties hereto agreeas follows:1. Representation of American by Orient Air Services

    Orient Air Services will act on American's behalf as its exclusive General Sales Agentwithin the Philippines, including any United States military installation therein whichare not serviced by an Air Carrier Representation Office (ACRO), for the sale of airpassenger transportation. The services to be performed by Orient Air Services shallinclude:(a) soliciting and promoting passenger traffic for the services of American and, ifnecessary, employing staff competent and sufficient to do so;(b) providing and maintaining a suitable area in its place of business to be used

    exclusively for the transaction of the business of American;(c) arranging for distribution of American's timetables, tariffs and promotional materialto sales agents and the general public in the assigned territory;(d) servicing and supervising of sales agents (including such sub-agents as may beappointed by Orient Air Services with the prior written consent of American) in theassigned territory including if required by American the control of remittances andcommissions retained; and(e) holding out a passenger reservation facility to sales agents and the general publicin the assigned territory.

    In connection with scheduled or non-scheduled air passenger transportation withinthe United States, neither Orient Air Services nor its sub-agents will perform servicesfor any other air carrier similar to those to be performed hereunder for Americanwithout the prior written consent of American. Subject to periodic instructions and

    continued consent from American, Orient Air Services may sell air passengertransportation to be performed within the United States by other scheduled air carriers

    provided American does not provide substantially equivalent schedules between thepoints involved.xxx xxx xxx4. RemittancesOrient Air Services shall remit in United States dollars to American the ticket stock orexchange orders, less commissions to which Orient Air Services is entitled hereunder,not less frequently than semi-monthly, on the 15th and last days of each month forsales made during the preceding half month.All monies collected by Orient Air Services for transportation sold hereunder on

    American's ticket stock or on exchange orders, less applicable commissions to whichOrient Air Services is entitled hereunder, are the property of American and shall beheld in trust by Orient Air Services until satisfactorily accounted for to American.

    5. CommissionsAmerican will pay Orient Air Services commission on transportation sold hereunder byOrient Air Services or its sub-agents as follows:

    (a) Sales agency commissionAmerican will pay Orient Air Services a sales agency commission for all sales oftransportation by Orient Air Services or its sub-agents over American's services andany connecting through air transportation, when made on American's ticket stock,equal to the following percentages of the tariff fares and charges:(i) For transportation solely between points within the United States and between

    such points and Canada: 7% or such other rate(s) as may be prescribed by the AirTraffic Conference of America.(ii) For transportation included in a through ticket covering transportation betweenpoints other than those described above: 8% or such other rate(s) as may beprescribed by the International Air Transport Association.

    (b) Overriding commissionIn addition to the above commission American will pay Orient Air Services anoverriding commission of 3% of the tariff fares and charges for all sales oftransportation over American's service by Orient Air Service or its sub-agents.xxx xxx xxx

    10. Default

    If Orient Air Services shall at any time default in observing or performing any of theprovisions of this Agreement or shall become bankrupt or make any assignment forthe benefit of or enter into any agreement or promise with its creditors or go intoliquidation, or suffer any of its goods to be taken in execution, or if it ceases to be inbusiness, this Agreement may, at the option of American, be terminated forthwith andAmerican may, without prejudice to any of its rights under this Agreement, takepossession of any ticket forms, exchange orders, traffic material or other property orfunds belonging to American.11. IATA and ATC RulesThe provisions of this Agreement are subject to any applicable rules or resolutions ofthe International Air Transport Association and the Air Traffic Conference of America,and such rules or resolutions shall control in the event of any conflict with theprovisions hereof.xxx xxx xxx

    13. TerminationAmerican may terminate the Agreement on two days' notice in the event Orient Air

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    Services is unable to transfer to the United States the funds payable by Orient AirServices to American under this Agreement. Either party may terminate theAgreement without cause by giving the other 30 days' notice by letter, telegram orcable.xxx xxx xxx 3

    On 11 May 1981, alleging that Orient Air had reneged on its obligations under theAgreement by failing to promptly remit the net proceeds of sales for the months ofJanuary to March 1981 in the amount of US $254,400.40, American Air by itself

    undertook the collection of the proceeds of tickets sold originally by Orient Air andterminated forthwith the Agreement in accordance with Paragraph 13 thereof(Termination). Four (4) days later, or on 15 May 1981, American Air instituted suitagainst Orient Air with the Court of First Instance of Manila, Branch 24, for Accountingwith Preliminary Attachment or Garnishment, Mandatory Injunction and RestrainingOrder4 averring the aforesaid basis for the termination of the Agreement as well astherein defendant's previous record of failures "to promptly settle past outstandingrefunds of which there were available funds in the possession of the defendant, . . . tothe damage and prejudice of plaintiff." 5

    In its Answer 6 with counterclaim dated 9 July 1981, defendant Orient Air denied thematerial allegations of the complaint with respect to plaintiff's entitlement to allegedunremitted amounts, contending that after application thereof to the commissions dueit under the Agreement, plaintiff in fact still owed Orient Air a balance in unpaid

    overriding commissions. Further, the defendant contended that the actions taken byAmerican Air in the course of terminating the Agreement as well as the terminationitself were untenable, Orient Air claiming that American Air's precipitous conduct hadoccasioned prejudice to its business interests.

    Finding that the record and the evidence substantiated the allegations of thedefendant, the trial court ruled in its favor, rendering a decision dated 16 July 1984,the dispositive portion of which reads:

    WHEREFORE, all the foregoing premises considered, judgment is hereby renderedin favor of defendant and against plaintiff dismissing the complaint and holding thetermination made by the latter as affecting the GSA agreement illegal and improperand order the plaintiff to reinstate defendant as its general sales agent for passenger

    tranportation in the Philippines in accordance with said GSA agreement; plaintiff isordered to pay defendant the balance of the overriding commission on total flownrevenue covering the period from March 16, 1977 to December 31, 1980 in theamount of US$84,821.31 plus the additional amount of US$8,000.00 by way of proper3% overriding commission per month commencing from January 1, 1981 until suchreinstatement or said amounts in its Philippine peso equivalent legally prevailing atthe time of payment plus legal interest to commence from the filing of thecounterclaim up to the time of payment. Further, plaintiff is directed to pay defendantthe amount of One Million Five Hundred Thousand (Pl,500,000.00) pesos as and forexemplary damages; and the amount of Three Hundred Thousand (P300,000.00)pesos as and by way of attorney's fees.

    Costs against plaintiff. 7

    On appeal, the Intermediate Appellate Court (now Court of Appeals) in a decisionpromulgated on 27 January 1986, affirmed the findings of the court a quo on their

    material points but with some modifications with respect to the monetary awardsgranted.

    The dispositive portion of the appellate court's decision is as follows:WHEREFORE, with the following modifications 1) American is ordered to pay Orient the sum of US$53,491.11 representing thebalance of the latter's overriding commission covering the period March 16, 1977 toDecember 31, 1980, or its Philippine peso equivalent in accordance with the officialrate of exchange legally prevailing on July 10, 1981, the date the counterclaim was

    filed;2) American is ordered to pay Orient the sum of US$7,440.00 as the latter'soverriding commission per month starting January 1, 1981 until date of termination,May 9, 1981 or its Philippine peso equivalent in accordance with the official rate ofexchange legally prevailing on July 10, 1981, the date the counterclaim was filed3) American is ordered to pay interest of 12% on said amounts from July 10, 1981 thedate the answer with counterclaim was filed, until full payment;4) American is ordered to pay Orient exemplary damagesof P200,000.00;5) American is ordered to pay Orient the sum of P25,000.00 as attorney's fees.the rest of the appealed decision is affirmed.Costs against American. 8

    American Air moved for reconsideration of the aforementioned decision, assailing thesubstance thereof and arguing for its reversal. The appellate court's decision was also

    the subject of a Motion for Partial Reconsideration by Orient Air which prayed for therestoration of the trial court's ruling with respect to the monetary awards. The Court ofAppeals, by resolution promulgated on 17 December 1986, denied American Air'smotion and with respect to that of Orient Air, ruled thus:Orient's motion for partial reconsideration is denied insofar as it prays for affirmanceof the trial court's award of exemplary damages and attorney's fees, but grantedinsofar as the rate of exchange is concerned. The decision of January 27, 1986 ismodified in paragraphs (1) and (2) of the dispositive part so that the payment of thesums mentioned therein shall be at their Philippine peso equivalent in accordancewith the official rate of exchange legally prevailing on the date of actual payment. 9

    Both parties appealed the aforesaid resolution and decision of the respondent court,Orient Air as petitioner in G.R. No. 76931 and American Air as petitioner in G.R. No.76933. By resolution 10 of this Court dated 25 March 1987 both petitions were

    consolidated, hence, the case at bar.

    The principal issue for resolution by the Court is the extent of Orient Air's right to the3% overriding commission. It is the stand of American Air that such commission isbased only on sales of its services actually negotiated or transacted by Orient Air,otherwise referred to as "ticketed sales." As basis thereof, primary reliance is placedupon paragraph 5(b) of the Agreement which, in reiteration, is quoted as follows:5. Commissionsa) . . .b) Overriding Commission

    In addition to the above commission, American will pay Orient Air Services anoverriding commission of 3% of the tariff fees and charges for all sales oftransportation over American's services by Orient Air Services or its sub-agents.

    (Emphasis supplied)Since Orient Air was allowed to carry only the ticket stocks of American Air, and the

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    former not having opted to appoint any sub-agents, it is American Air's contention thatOrient Air can claim entitlement to the disputed overriding commission based only onticketed sales. This is supposed to be the clear meaning of the underscored portion ofthe above provision. Thus, to be entitled to the 3% overriding commission, the salemust be made by Orient Air and the sale must be done with the use of American Air'sticket stocks.

    On the other hand, Orient Air contends that the contractual stipulation of a 3%overriding commission covers the total revenue of American Air and not merely that

    derived from ticketed sales undertaken by Orient Air. The latter, in justification of itssubmission, invokes its designation as the exclusive General Sales Agent ofAmerican Air, with the corresponding obligations arising from such agency, such as,the promotion and solicitation for the services of its principal. In effect, by virtue ofsuch exclusivity, "all sales of transportation over American Air's services arenecessarily by Orient Air." 11

    It is a well settled legal principle that in the interpretation of a contract, the entiretythereof must be taken into consideration to ascertain the meaning of its provisions. 12

    The various stipulations in the contract must be read together to give effect to all. 13

    After a careful examination of the records, the Court finds merit in the contention ofOrient Air that the Agreement, when interpreted in accordance with the foregoingprinciples, entitles it to the 3% overriding commission based on total revenue, or asreferred to by the parties, "total flown revenue."

    As the designated exclusive General Sales Agent of American Air, Orient Air wasresponsible for the promotion and marketing of American Air's services for airpassenger transportation, and the solicitation of sales therefor. In return for suchefforts and services, Orient Air was to be paid commissions of two (2) kinds: first, asales agency commission, ranging from 7-8% of tariff fares and charges from salesby Orient Air when made on American Air ticket stock; and second, an overridingcommission of 3% of tariff fares and charges forallsales of passenger transportationover American Air services. It is immediately observed that the precondition attachedto the first type of commission does not obtain for the second type of commissions.The latter type of commissions would accrue for sales of American Air services madenot on its ticket stock but on the ticket stock of other air carriers sold by such carriersor other authorized ticketing facilities or travel agents. To rule otherwise, i.e., to limit

    the basis of such overriding commissions to sales from American Air ticket stockwould erase any distinction between the two (2) types of commissions and would leadto the absurd conclusion that the parties had entered into a contract with meaninglessprovisions. Such an interpretation must at all times be avoided with every effortexerted to harmonize the entire Agreement.An additional point before finally disposing of this issue. It is clear from the recordsthat American Air was the party responsible for the preparation of the Agreement.Consequently, any ambiguity in this "contract of adhesion" is to be taken " contraproferentem", i.e., construed against the party who caused the ambiguity and couldhave avoided it by the exercise of a little more care. Thus, Article 1377 of the CivilCode provides that the interpretation of obscure words or stipulations in a contractshall not favor the party who caused theobscurity. 14 To put it differently, when severalinterpretations of a provision are otherwise equally proper, that interpretation orconstruction is to be adopted which is most favorable to the party in whose favor the

    provision was made and who did not cause the ambiguity. 15 We therefore agree withthe respondent appellate court's declaration that:

    Any ambiguity in a contract, whose terms are susceptible of different interpretations,must be read against the party who drafted it. 16

    We now turn to the propriety of American Air's termination of the Agreement. Therespondent appellate court, on this issue, ruled thus:

    It is not denied that Orient withheld remittances but such action finds justification fromparagraph 4 of the Agreement, Exh. F, which provides for remittances to American

    less commissions to which Orient is entitled, and from paragraph 5(d) whichspecifically allows Orient to retain the full amount of its commissions. Since, as statedante, Orient is entitled to the 3% override. American's premise, therefore, for thecancellation of the Agreement did not exist. . . ."

    We agree with the findings of the respondent appellate court. As earlier established,Orient Air was entitled to an overriding commission based on total flown revenue.American Air's perception that Orient Ai r was remiss or in default of its obligationsunder the Agreement was, in fact, a situation where the latter acted in accordancewith the Agreementthat of retaining from the sales proceeds its accruedcommissions before remitting the balance to American Air. Since the latter was stillobligated to Orient Air by way of such commissions. Orient Air was clearly justified inretaining and refusing to remit the sums claimed by American Air. The latter'stermination of the Agreement was, therefore, without cause and basis, for which it

    should be held liable to Orient Air.On the matter of damages, the respondent appellate court modified by reduction thetrial court's award of exemplary damages and attorney's fees. This Court sees noerror in such modification and, thus, affirms the same.

    It is believed, however, that respondent appellate court erred in affirming the rest ofthe decision of the trial court. We refer particularly to the lower court's decisionordering American Air to "reinstate defendant as its general sales agent for passengertransportation in the Philippines in accordance with said GSA Agreement."

    By affirming this ruling of the trial court, respondent appellate court, in effect, compelsAmerican Air to extend its personality to Orient Air. Such would be violative of theprinciples and essence of agency, defined by law as a contract whereby "a person

    binds himself to render some service or to do something in representation or onbehalf of another, WITH THE CONSENT OR AUTHORITY OF THE LATTER . 17

    (emphasis supplied) In an agent-principal relationship, the personality of the principalis extended through the facility of the agent. In so doing, the agent, by legal fiction,becomes the principal, authorized to perform all acts which the latter would have himdo. Such a relationship can only be effected with the consent of the principal, whichmust not, in any way, be compelled by law or by any court. The Agreement itselfbetween the parties states that "either party may terminate the Agreement withoutcause by giving the other 30 days' notice by letter, telegram or cable." (emphasissupplied) We, therefore, set aside the portion of the ruling of the respondent appellatecourt reinstating Orient Air as general sales agent of American Air.

    WHEREFORE, with the foregoing modification, the Court AFFIRMS the decision andresolution of the respondent Court of Appeals, dated 27 January 1986 and 17

    December 1986, respectively. Costs against petitioner American Air.SO ORDERED.

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    [G.R. No. 130148. December 15, 1997]JOSE BORDADOR and LYDIA BORDADOR, petitioners, vs. BRIGIDA D. LUZ,ERNESTO M. LUZ and NARCISO DEGANOS, respondents.

    D E C I S I O NREGALADO, J.:

    In this appeal by certiorari, petitioners assail the judgment of the Court of Appeals inCA-G.R. CV No. 49175 affirming the adjudication of the Regional Trial Court of

    Malolos, Bulacan which found private respondent Narciso Deganos liable topetitioners for actual damages, but absolved respondent spouses Brigida D. Luz andErnesto M. Luz of liability. Petitioners likewise belabor the subsequent resolution ofthe Court of Appeals which denied their motion for reconsideration of its challengeddecision.

    Petitioners were engaged in the business of purchase and sale of jewelry andrespondent Brigida D. Luz, also known as Aida D. Luz, was their regular customer.On several occasions during the period from April 27, 1987 to September 4, 1987,respondent Narciso Deganos, the brother of Brigida D. Luz, received several piecesof gold and jewelry from petitioners amounting to P382,816.00. [1] These items andtheir prices were indicated in seventeen receipts covering the same. Eleven of thereceipts stated that they were received for a certain Evelyn Aquino, a niece ofDeganos, and the remaining six indicated that they were received for Brigida D. Luz.

    [2]

    Deganos was supposed to sell the items at a profit and thereafter remit the proceedsand return the unsold items to petitioners. Deganos remitted only the sum ofP

    53,207.00. He neither paid the balance of the sales proceeds, nor did he return anyunsold item to petitioners. By January 1990, the total of his unpaid account topetitioners, including interest, reached the sum of P725,463.98. [3] Petitionerseventually filed a complaint in the barangaycourt against Deganos to recover saidamount.

    In the barangayproceedings, Brigida D. Luz, who was not impleaded in the case,appeared as a witness for Deganos and ultimately, she and her husband, togetherwith Deganos, signed a compromise agreement with petitioners. In that compromise

    agreement, Deganos obligated himself to pay petitioners, on installment basis, thebalance of his account plus interest thereon. However, he failed to comply with hisaforestated undertakings.

    On June 25, 1990, petitioners instituted Civil Case No. 412-M-90 in the Regional TrialCourt of Malolos, Bulacan against Deganos and Brigida D. Luz for recovery of a sumof money and damages, with an application for preliminary attachment.[4] ErnestoLuz was impleaded therein as the spouse of Brigida.

    Four years later, or on March 29, 1994, Deganos and Brigida D. Luz were chargedwith estafa[5] in the Regional Trial Court of Malolos, Bulacan, which was docketed asCriminal Case No. 785-M-94. That criminal case appears to be still pending in saidtrial court.

    During the trial of the civil case, petitioners claimed that Deganos acted as the agentof Brigida D. Luz when he received the subject items of jewelry and, because he

    failed to pay for the same, Brigida, as principal, and her spouse are solidarily liablewith him therefor.

    On the other hand, while Deganos admitted that he had an unpaid obligation topetitioners, he claimed that the same was only in the sum of P382,816.00 and notP725,463.98. He further asserted that it was he alone who was involved in thetransaction with the petitioners; that he neither acted as agent for nor was heauthorized to act as an agent by Brigida D. Luz, notwithstanding the fact that six ofthe receipts indicated that the items were received by him for the latter. He further

    claimed that he never delivered any of the items he received from petitioners toBrigida.

    Brigida, on her part, denied that she had anything to do with the transactions betweenpetitioners and Deganos. She claimed that she never authorized Deganos to receiveany item of jewelry in her behalf and, for that matter, neither did she actually receiveany of the articles in question.

    After trial, the court below found that only Deganos was liable to petitioners for theamount and damages claimed. It held that while Brigida D. Luz did have transactionswith petitioners in the past, the items involved were already paid for and all thatBrigida owed petitioners was the sum of P21,483.00 representing interest on theprincipal account which she had previously paid for.[6]

    The trial court also found that it was petitioner Lydia Bordador who indicated in thereceipts that the items were received by Deganos for Evelyn Aquino and Brigida D.Luz. [7] Said court was persuaded that Brigida D. Luz was behind Deganos, butbecause there was no memorandum to this effect, the agreement between the partieswas unenforceable under the Statute of Frauds. [8] Absent the required memorandumor any written document connecting the respondent Luz spouses with the subjectreceipts, or authorizing Deganos to act on their behalf, the alleged agreementbetween petitioners and Brigida D. Luz was unenforceable.

    Deganos was ordered to pay petitioners the amount of P725,463.98, plus legalinterest thereon from June 25, 1990, and attorneys fees. Brigida D. Luz was orderedto pay P21,483.00 representing the interest on her own personal loan. She and herco-defendant spouse were absolved from any other or further liability. [9]

    As stated at the outset, petitioners appealed the judgment of the court a quo to theCourt of Appeals which affirmed said judgment. [10] The motion for reconsiderationfiled by petitioners was subsequently dismissed, [11] hence the present recourse tothis Court.

    The primary issue in the instant petition is whether or not herein respondent spousesare liable to petitioners for the latters claim for money and damages in the sum ofP725,463.98, plus interests and attorneys fees, despite the fact that the evidencedoes not show that they signed any of the subject receipts or authorized Deganos toreceive the items of jewelry on their behalf.

    Petitioners argue that the Court of Appeals erred in adopting the findings of the courta quo that respondent spouses are not liable to them, as said conclusion of the trial

    court is contradicted by the finding of fact of the appellate court that (Deganos) actedas agent of his sister (Brigida Luz). [12] In support of this contention, petitioners

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    quoted several letters sent to them by Brigida D. Luz wherein the latter acknowledgedher obligation to petitioners and requested for more time to fulfill the same. Theylikewise aver that Brigida testified in the trial court that Deganos took some goldarticles from petitioners and delivered the same to her.

    Both the Court of Appeals and the trial court, however, found as a fact that theaforementioned letters concerned the previous obligations of Brigida to petitioners,and had nothing to do with the money sought to be recovered in the instant case.Such concurrent factual findings are entitled to great weight, hence, petitionerscannot plausibly claim in this appellate review that the letters were in the nature ofacknowledgments by Brigida that she was the principal of Deganos in the subjecttransactions.

    On the other hand, with regard to the testimony of Brigida admitting delivery of thegold to her, there is no showing whatsoever that her statement referred to the itemswhich are the subject matter of this case. It cannot, therefore, be validly said that sheadmitted her liability regarding the same.

    Petitioners insist that Deganos was the agent of Brigida D. Luz as the latter clothedhim with apparent authority as her agent and held him out to the public as such,hence Brigida can not be permitted to deny said authority to innocent third partieswho dealt with Deganos under such belief. [13] Petitioners further represent that theCourt of Appeals recognized in its decision that Deganos was an agent of Brigida.[14]

    The evidence does not support the theory of petitioners that Deganos was an agentof Brigida D. Luz and that the latter should consequently be held solidarily liable withDeganos in his obligation to petitioners. While the quoted statement in the findings offact of the assailed appellate decision mentioned that Deganos ostensibly acted as anagent of Brigida, the actual conclusion and ruling of the Court of Appeals categoricallystated that, (Brigida Luz) never authorized her brother (Deganos) to act for and in herbehalf in any transaction with Petitioners x x x. [15] It is clear, therefore, that evenassuming arguendo that Deganos acted as an agent of Brigida, the latter neverauthorized him to act on her behalf with regard to the transactions subject of thiscase.

    The Civil Code provides:

    Art. 1868. By the contract of agency a person binds himself to render some service orto do something in representation or on behalf of another, with the consent orauthority of the latter.

    The basis for agency is representation. Here, there is no showing that Brigidaconsented to the acts of Deganos or authorized him to act on her behalf, much lesswith respect to the particular transactions involved. Petitioners attempt to foist liabilityon respondent spouses through the supposed agency relation with Deganos isgroundless and ill-advised.

    Besides, it was grossly and inexcusably negligent of petitioners to entrust toDeganos, not once or twice but on at least six occasions as evidenced by six receipts,several pieces of jewelry of substantial value without requiring a written authorizationfrom his alleged principal. A person dealing with an agent is put upon inquiry and

    must discover upon his peril the authority of the agent. [16]

    The records show that neither an express nor an implied agency was proven to haveexisted between Deganos and Brigida D. Luz. Evidently, petitioners, who werenegligent in their transactions with Deganos, cannot seek relief from the effects oftheir negligence by conjuring a supposed agency relation between the tworespondents where no evidence supports such claim.

    Petitioners next allege that the Court of Appeals erred in ignoring the fact that thedecision of the court below, which it affirmed, is null and void as it contradicted itsruling in CA-G.R. SP No. 39445 holding that there is sufficient evidence/proofagainst Brigida D. Luz and Deganos for estafa in the pending criminal case. Theyfurther aver that said appellate court erred in ruling against them in this civil actionsince the same would result in an inevitable conflict of decisions should the trial courtconvict the accused in the criminal case.

    By way of backdrop for this argument of petitioners, herein respondents Brigida D.Luz and Deganos had filed a demurrer to evidence and a motion for reconsiderationin the aforestated criminal case, both of which were denied by the trial court. Theythen filed a petition forcertiorariin the Court of Appeals to set aside the denial of theirdemurrer and motion for reconsideration but, as just stated, their petition therefor wasdismissed.[17]

    Petitioners now claim that the aforesaid dismissal by the Court of Appeals of thepetition in CA-G.R. SP No. 39445 with respect to the criminal case is equivalent to a

    finding that there is sufficient evidence in the estafa case against Brigida D. Luz andDeganos. Hence, as already stated, petitioners theorize that the decision andresolution of the Court of Appeals now being impugned in the case at bar would resultin a possible conflict with the prospective decision in the criminal case. Instead ofpromulgating the present decision and resolution under review, so they suggest, theCourt of Appeals should have awaited the decision in the criminal case, so as not torender academic or preempt the same or, worse, create two conflicting rulings. [18]

    Petitioners have apparently lost sight of Article 33 of the Civil Code which providesthat in cases involving alleged fraudulent acts, a civil action for damages, entirelyseparate and distinct from the criminal action, may be brought by the injured party.Such civil action shall proceed independently of the criminal prosecution and shallrequire only a preponderance of evidence.

    It is worth noting that this civil case was instituted four years before the criminal casefor estafa was filed, and that although there was a move to consolidate both cases,the same was denied by the trial court. Consequently, it was the duty of the twobranches of the Regional Trial Court concerned to independently proceed with thecivil and criminal cases. It will also be observed that a final judgment rendered in acivil action absolving the defendant from civil liability is no bar to a criminal action. [19]

    It is clear, therefore, that this civil case may proceed independently of the criminalcase [20] especially because while both cases are based on the same facts, thequantum of proof required for holding the parties liable therein differ. Thus, it isimprovident of petitioners to claim that the decision and resolution of the Court ofAppeals in the present case would be preemptive of the outcome of the criminalcase. Their fancied fear of possible conflict between the disposition of this civil case

    and the outcome of the pending criminal case is illusory.

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    Petitioners surprisingly postulate that the Court of Appeals had lost its jurisdiction toissue the denial resolution dated August 18, 1997, as the same was tainted withirregularities and badges of fraud perpetrated by its court officers. [21] They chargethat said appellate court, through conspiracy and fraud on the part of its officers,gravely abused its discretion in issuing that resolution denying their motion forreconsideration. They claim that said resolution was drafted by the ponente, thensigned and issued by the members of the Eleventh Division of said court within oneand a half days from the elevation thereof by the division clerk of court to the office oftheponente.

    It is the thesis of petitioners that there was undue haste in issuing the resolution asthe same was made without waiting for the lapse of the ten-day period forrespondents to file their comment and for petitioners to file their reply. It wasallegedly impossible for the Court of Appeals to resolve the issue in just one and ahalf days, especially because its ponente, the late Justice Maximiano C. Asuncion,was then recuperating from surgery and, that, additionally, hundreds of moreimportant cases were pending. [22]

    These lamentable allegation of irregularities in the Court of Appeals and in theconduct of its officers strikes us as a desperate attempt of petitioners to induce thisCourt to give credence to their arguments which, as already found by both the trialand intermediate appellate courts, are devoid of factual and legal substance. Theregrettably irresponsible attempt to tarnish the image of the intermediate appellate

    tribunal and its judicial officers through ad hominem imputations could well becontumacious, but we are inclined to let that pass with a strict admonition thatpetitioners refrain from indulging in such conduct in litigations.

    On July 9, 1997, the Court of Appeals rendered judgment in this case affirming thetrial courts decision. [23] Petitioners moved for reconsideration and the Court ofAppeals ordered respondents to file a comment. Respondents filed the same onAugust 5, 1997 [24] and petitioners filed their reply to said comment on August 15,1997. [25] The Eleventh Division of said court issued the questioned resolutiondenying petitioners motion for reconsideration on August 18, 1997.[26]

    It is ironic that while some litigants malign the judiciary for being supposedly slothful indisposing of cases, petitioners are making a show of calling out for justice because

    the Court of Appeals issued a resolution disposing of a case sooner than expected ofit. They would even deny the exercise of discretion by the appellate court to prioritizeits action on cases in line with the procedure it has adopted in disposing thereof andin declogging its dockets. It is definitely not for the parties to determine and dictatewhen and how a tribunal should act upon those cases since they are not even awareof the status of the dockets and the internal rules and policies for acting thereon.

    The fact that a resolution was issued by said court within a relatively short period oftime after the records of the case were elevated to the office of the ponente cannot,by itself, be deemed irregular. There is no showing whatsoever that the resolutionwas issued without considering the reply filed by petitioners. In fact, that briefpleading filed by petitioners does not exhibit any esoteric or ponderous argumentwhich could not be analyzed within an hour. It is a legal presumption, born of wisdomand experience, that official duty has been regularly performed; [27] that the

    proceedings of a judicial tribunal are regular and valid, and that judicial acts andduties have been and will be duly and properly performed. [28] The burden of proving

    irregularity in official conduct is on the part of petitioners and they have utterly failedto do so. It is thus reprehensible for them to cast aspersions on a court of law on thebases of conjectures or surmises, especially since one of the petitioners appears tobe a member of the Philippine Bar.

    Lastly, petitioners fault the trial courts holding that whatever contract of agency wasestablished between Brigida D. Luz and Narciso Deganos is unenforceable under theStatute of Frauds as that aspect of this case allegedly is not covered thereby. [29]They proceed on the premise that the Statute of Frauds applies only to executorycontracts and not to executed or to partially executed ones. From there, they moveon to claim that the contract involved in this case was an executed contract as theitems had already been delivered by petitioners to Brigida D. Luz, hence, suchdelivery resulted in the execution of the contract and removed the same from thecoverage of the Statute of Frauds.

    Petitioners claim is speciously unmeritorious. It should be emphasized that neitherthe trial court nor the appellate court categorically stated that there was such acontractual relation between these two respondents. The trial court merely said that ifthere was such an agency existing between them, the same is unenforceable as thecontract would fall under the Statute of Frauds which requires the presentation of anote or memorandum thereof in order to be enforceable in court. That was merely apreparatory statement of a principle of law. What was finally proven as a matter offact is that there was no such contract between Brigida D. Luz and Narciso Deganos,

    executed or partially executed, and no delivery of any of the items subject of this casewas ever made to the former.

    WHEREFORE, no error having been committed by the Court of Appeals in affirmingthe judgment of the court a quo, its challenged decision and resolution are herebyAFFIRMED and the instant petition is DENIED,with double costs against petitionersSO ORDERED.Puno, Mendoza, and Martinez, JJ., concur.

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    G.R. No. 156262MARIA TUAZON, ALEJANDRO P. TUAZON, MELECIO P.TUAZON, Spouses ANASTACIO and MARY T. BUENAVENTURA, Petitioners,versus HEIRS OF BARTOLOME RAMOS,Respondents. July 14, 2005DECISIONPANGANIBAN, J.:Stripped of nonessentials, the present case involves the collection of a sum ofmoney. Specifically, this case arose from the failure of petitioners to pay respondentspredecessor-in-interest. This fact was shown by the non-encashment of checksissued by a third person, but indorsed by herein Petitioner Maria Tuazon in favor ofthe said predecessor. Under these circumstances, to enable respondents to collecton the indebtedness, the check drawer need not be impleaded in the Complaint.Thus, the suit is directed, not against the drawer, but against the debtor who indorsedthe checks in payment of the obligation.The CaseBefore us is a Petition for Review[1] under Rule 45 of the Rules of Court, challengingthe July 31, 2002 Decision[2] of the Court of Appeals (CA) in CA-GR CV No. 46535.The decretal portion of the assailed Decision reads:

    WHEREFORE, the appeal is DISMISSED and the appealed decision is AFFIRMED.

    On the other hand, the affirmed Decision[3] of Branch 34 of the Regional Trial Court(RTC) of Gapan, Nueva Ecija, disposed as follows:WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against thedefendants, ordering the defendants spouses Leonilo Tuazon and Maria Tuazon topay the plaintiffs, as follows:1. The sum of P1,750,050.00, with interests from the filing of the second amendedcomplaint;2. The sum of P50,000.00, as attorneys fees;3. The sum of P20,000.00, as moral damages4. And to pay the costs of suit.The FactsThe facts are narrated by the CA as follows:

    [Respondents] alleged that between the period of May 2, 1988 and June 5, 1988,spouses Leonilo and Maria Tuazon purchased a total of 8,326 cavans of rice from[the deceased Bartolome] Ramos [predecessor-in-interest of respondents]. That ofthis [quantity,] x x x only 4,437 cavans [have been paid for so far], leaving unpaid3,889 cavans valued at P1,211,919.00. In payment therefor, the spouses Tuazonissued x x x [several] Traders Royal Bank checks.

    [B]ut when these [checks] were encashed, all of the checks bounced due toinsufficiency of funds. [Respondents] advanced that before issuing said checks[,]spouses Tuazon already knew that they had no available fund to support the checks,and they failed to provide for the payment of these despite repeated demands madeon them.[Respondents] averred that because spouses Tuazon anticipated that they would be

    sued, they conspired with the other [defendants] to defraud them as creditors byexecuting x x x fictitious sales of their properties. They executed x x x simulated

    sale[s] [of three lots] in favor of the x x x spouses Buenaventura x x x[,] as well astheir residential lot and the house thereon[,] all located at Nueva Ecija, and anothersimulated deed of sale dated July 12, 1988 of a Stake Toyota registered with the LandTransportation Office of Cabanatuan City on September 7, 1988. [Co-petitioner]Melecio Tuazon, a son of spouses Tuazon, registered a fictitious Deed of Sale on July19, 1988 x x x over a residential lot located at Nueva Ecija. Another simulated sale ofa Toyota Willys was executed on January 25, 1988 in favor of their other son, [co-petitioner] Alejandro Tuazon x x x. As a result of the said sales, the titles of theseproperties issued in the names of spouses Tuazon were cancelled and new oneswere issued in favor of the [co-]defendants spouses Buenaventura, Alejandro Tuazonand Melecio Tuazon. Resultantly, by the said ante-dated and simulated sales and thecorresponding transfers there was no more property left registered in the names ofspouses Tuazon answerable to creditors, to the damage and prejudice of[respondents].For their part, defendants denied having purchased x x x r ice from[Bartolome] Ramos. They alleged that it was Magdalena Ramos, wife of saiddeceased, who owned and traded the merchandise and Maria Tuazon was merelyher agent. They argued that it was Evangeline Santos who was the buyer of the riceand issued the checks to Maria Tuazon as payments therefor. In good faith[,] thechecks were received [by petitioner] from Evangeline Santos and turned over toRamos without knowing that these were not funded. And it is for this reason that[petitioners] have been insisting on the inclusion of Evangeline Santos as an

    indispensable party, and her non-inclusion was a fatal error. Refuting that the sale ofseveral properties were fictitious or simulated, spouses Tuazon contended that thesewere sold because they were then meeting financial difficulties but the disposals weremade for value and in good faith and done before the filing of the instant suit. Todispute the contention of plaintiffs that they were the buyers of the rice, they arguedthat there was no sales invoice, official receipts or like evidence to prove this. Theyassert that they were merely agents and should not be held answerable.[5]

    The corresponding civil and criminal cases were filed by respondents againstSpouses Tuazon. Those cases were later consolidated and amended to includeSpouses Anastacio and Mary Buenaventura, with Alejandro Tuazon and MelecioTuazon as additional defendants. Having passed away before the pretrial, BartolomeRamos was substituted by his heirs, herein respondents.

    Contending that Evangeline Santos was an indispensable party in the case,petitioners moved to file a third-party complaint against her. Allegedly, she wasprimarily liable to respondents, because she was the one who had purchased themerchandise from their predecessor, as evidenced by the fact that the checks hadbeen drawn in her name. The RTC, however, denied petitioners Motion.Since the trial court acquitted petitioners in all three of the consolidated criminalcases, they appealed only its decision finding them civilly liable to respondents.Ruling of the Court of AppealsSustaining the RTC, the CA held that petitioners had failed to prove the existence ofan agency between respondents and Spouses Tuazon. The appellate courtdisbelieved petitioners contention that Evangeline Santos should have been

    impleaded as an indispensable party. Inasmuch as all the checks had been indorsedby Maria Tuazon, who thereby became liable to subsequent holders for the amounts

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    stated in those checks, there was no need to implead Santos.Hence, this Petition.[6]

    IssuesPetitioners raise the following issues for our consideration:1. Whether or not the Honorable Court of Appeals erred in ruling that petitioners arenot agents of the respondents.2. Whether or not the Honorable Court of Appeals erred in rendering

    judgm ent aga inst the pet it ion ers des pi te x x x the failure of the respondents toinclude in their action Evangeline Santos, an indispensable party to the suit.[7]The Courts RulingThe Petition is unmeritorious.

    First Issue:AgencyWell-entrenched is the rule that the Supreme Courts role in a petition under Rule 45is limited to reviewing errors of law allegedly committed by the Court of Appeals.Factual findings of the trial court, especially when affirmed by the CA, are conclusiveon the parties and this Court.[8] Petitioners have not given us sufficient reasons todeviate from this rule.

    In a contract of agency, one binds oneself to render some service or to do somethingin representation or on behalf of another, with the latters consent or authority.[9] Thefollowing are the elements of agency: (1) the parties consent, express or implied, toestablish the relationship; (2) the object, which is the execution of a juridical act inrelation to a third person; (3) the representation, by which the one who acts as anagent does so, not for oneself, but as a representative; (4) the limitation that the agentacts within the scope of his or her authority.[10] As the basis of agency isrepresentation, there must be, on the part of the principal, an actual intention toappoint, an intention naturally inferable from the principals words or actions. In thesame manner, there must be an intention on the part of the agent to accept theappointment and act upon it. Absent such mutual intent, there is generally no agency.[11]

    This Court finds no reversible error in the findings of the courts a quo that petitionerswere the rice buyers themselves; they were not mere agents of respondents in theirrice dealership. The question of whether a contract is one of sale or of agencydepends on the intention of the parties.[12]

    The declarations of agents alone are generally insufficient to establish the fact orextent of their authority.[13] The law makes no presumption of agency; proving itsexistence, nature and extent is incumbent upon the person alleging it.[14] In thepresent case, petitioners raise the fact of agency as an affirmative defense, yet fail toprove its existence.

    The Court notes that petitioners, on their own behalf, sued Evangeline Santos forcollection of the amounts represented by the bounced checks, in a separate civil casethat they sought to be consolidated with the current one. If, as they claim, they were

    mere agents of respondents, petitioners should have brought the suit against Santosfor and on behalf of their alleged principal, in accordance with Section 2 of Rule 3 of

    the Rules on Civil Procedure.[15] Their filing a suit against her in their own namesnegates their claim that they acted as mere agents in selling the rice obtained fromBartolome Ramos.

    Second Issue:Indispensable Party

    Petitioners argue that the lower courts erred in not allowing Evangeline Santos to beimpleaded as an indispensable party. They insist that respondents Complaint againstthem is based on the bouncing checks she issued; hence, they point to her as theperson primarily liable for the obligation.

    We hold that respondents cause of action is clearly founded on petitioners failure topay the purchase price of the rice. The trial court held that Petitioner Maria Tuazonhad indorsed the questioned checks in favor of respondents, in accordance withSections 31 and 63 of the Negotiable Instruments Law.[16] That Santos was thedrawer of the checks is thus immaterial to the respondents cause of action.As indorser, Petitioner Maria Tuazon warranted that upon due presentment, thechecks were to be accepted or paid, or both, according to their tenor; andthat in casethey were dishonored, she would pay the corresponding amount.[17] After aninstrument is dishonored by nonpayment, indorsers cease to be merely secondarilyliable; they become principal debtors whose liability becomes identical to that of the

    original obligor. The holder of a negotiable instrument need not even proceed againstthe maker before suing the indorser.[18] Clearly, Evangeline Santos -- as the drawerof the checks -- is not an indispensable party in an action against Maria Tuazon, theindorser of the checks.Indispensable parties are defined as parties in interest without whom no finaldetermination can be had.[19] The instant case was originally one for the collectionof the purchase price of the rice bought by Maria Tuazon from respondentspredecessor. In this case, it is clear that there is no privity of contract betweenrespondents and Santos. Hence, a final determination of the rights and interest of theparties may be made without any need to implead her.WHEREFORE, the Petition isDENIED and the assailed Decision AFFIRMED. Costs

    against petitioners.SO ORDERED.

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    Amon Trading Corp. v. Court of Appeals,D E C I S I O NCHICO-NAZARIO, J.:

    This is an appeal by certiorarifrom the Decision[1] dated 28 November 2002 of the Courtof Appeals in CA-G.R. CV No. 60031, reversing the Decision of the Regional Trial Court ofQuezon City, Branch 104, and holding petitioners Amon Trading Corporation and JulianaMarketing to be solidarily liable with Lines & Spaces Interiors Center (Lines & Spaces) inrefunding private respondent Tri-Realty Development and Construction Corporation (Tri-Realty) the amount corresponding to the value of undelivered bags of cement.

    The undisputed facts:Private respondent Tri-Realty is a developer and contractor with projects in Bulacan andQuezon City. Sometime in February 1992, private respondent had difficulty in purchasingcement needed for its projects. Lines & Spaces, represented by Eleanor Bahia Sanchez,informed private respondent that it could obtain cement to its satisfaction from petitioners,

    Amon Trading Corporation and its sister company, Juliana Marketing. On the strength ofsuch representation, private respondent proceeded to order from Sanchez Six ThousandFifty (6,050) bags of cement from petitioner Amon Trading Corporation, and from JulianaMarketing, Six Thousand (6,000) bags at P98.00/bag.

    Private respondent, through Mrs. Sanchez of Lines & Spaces, paid in advance the amountof P592,900.00 through Solidbank Managers Check No. 0011565 payable to AmonTrading Corporation, and the amount of P588,000.00 payable to Juliana Marketing,

    through Solidbank Managers Check No. 0011566. A certain Weng Chua signed thecheck vouchers for Lines & Spaces while Mrs. Sanchez issued receipts for the twomanagers checks. Private respondent likewise paid to Lines & Spaces an advance fee forthe 12,050 cement bags at the rate of P7.00/bag, or a total of P84,350.00, in considerationof the facilitation of the orders and certainty of delivery of the same to the privaterespondent. Solidbank Managers Check Nos. 0011565 and 0011566 were paid bySanchez to petitioners.

    There were deliveries to private respondent from Amon Trading Corporation and JulianaMarketing of 3,850 bags and 3,000 bags, respectively, during the period from April to June1992. However, the balance of 2,200 bags from Amon Trading Corporation and 3,000 bagsfrom Juliana Marketing, or a total of 5,200 bags, was not delivered. Private respondent,thus, sent petitioners written demands but in reply, petitioners stated that they have alreadyrefunded the amount of undelivered bags of cement to Lines and Spaces per writteninstructions of Eleanor Sanchez.Left high and dry, with news reaching it that Eleanor Sanchez had already fled abroad,private respondent filed this case for sum of money against petitioners and Lines &Spaces.Petitioners plead in defense lack of right or cause of action, alleging that privaterespondent had no privity of contract with them as it was Lines & Spaces/Tri-Realty,through Mrs. Sanchez, that ordered or purchased several bags of cement and paid theprice thereof without informing them of any special arrangement nor disclosing to them thatLines & Spaces and respondent corporation are distinct and separate entities. They addedthat there were purchases or orders made by Lines & Spaces/Tri-Realty which they wereabout to deliver, but were cancelled by Mrs. Sanchez and the consideration of thecancelled purchases or orders was later reimbursed to Lines & Spaces. The refund was inthe form of a check payable to Lines & Spaces.

    Lines & Spaces denied in its Answer that it is represented by Eleanor B. Sanchez and

    pleads in defense lack of cause of action and in the alternative, it raised the defense that itwas only an intermediary between the private respondent and petitioners.[2] Soon after,though, counsel for Lines & Spaces moved to withdraw from the case for the reason thatits client was beyond contact.

    On 29 January 1998, the Regional Trial Court of Quezon City, Branch 104, found Lines &Spaces solely liable to private respondent and absolved petitioners of any liability. Thedispositive portion of the trial courts Decision reads:

    Wherefore, judgment is hereby rendered ordering defendant Lines and Spaces Interiors

    Center as follows: to pay plaintiff on the complaint the amount of P47,950.00 as refund ofthe fee for the undelivered 5,200 bags of cement at the rate of P7.00 per bag; the amountof P509,600.00 for the refund of the price of the 5,200 undelivered bags of cement atP98.00 per bag; the amount of P2,000,000.00 for compensatory damages; as well as theamount of P639,387.50 as attorneys fees; and to pay Amon Trading and JulianaMarketing, Inc. on the crossclaim the sum of P200,000.00 as attorneys fees.[3]

    Private Respondent Tri-Realty partially appealed from the trial courts decision absolving

    Amon Trading Corporation and Juliana Marketing of any liability to Tri-Realty. In thepresently assailed Decision, the Court of Appeals reversed the decision of the trial courtand held petitioners Amon Trading Corporation and Juliana Marketing to be jointly andseverally liable with Lines & Spaces for the undelivered bags of cement. The Court of

    Appeals disposed-

    WHEREFORE, premises considered, the decision of the court a quo is herebyREVERSED AND SET ASIDE, and another one is entered ordering the following:Defendant-appellee Amon Trading Corporation is held liable jointly and severally withdefendant-appellee Lines and Spaces Interiors Center in the amount of P215,600.00 forthe refund of the price of 2,200 undelivered bags of cement.Defendant-appellee Juliana Marketing is held liable jointly and severally with defendant-appellee Lines and Spaces Interiors Center in the amount of P294,000.00 for the refund ofthe price of 3,000 undelivered bags of cement.The defendant-appellee Lines and Spaces Interiors Center is held solely in the amount ofP47,950.00 as refund of the fee for the 5,200 undelivered bags of cement to the plaintiff-appellant Tri-Realty Development and Construction Corporation.The awards of compensatory damages and attorneys fees are DELETED.The cross claim of defendants-appellees Amon Trading Corporation and Juliana Marketingis DISMISSED for lack of merit.No pronouncement as to costs.[4]Pained by the ruling, petitioners elevated the case to this Court via the present petition forreview to challenge the Decision and Resolution of the Court of Appeals on the followingissues:

    WHETHER OR NOT THERE WAS A CONTRACT OF AGENCY BETWEEN LINES AND

    SPACES INTERIOR CENTER AND RESPONDENT;

    WHETHER OR NOT PETITIONERS AND RESPONDENT HAS PRIVITY OF CONTRACT.[5]

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    At the focus of scrutiny is the issue of whether or not the Court of Appeals committedreversible error in ruling that petitioners are solidarily liable with Lines & Spaces. The keyto unlocking this issue is to determine whether or not Lines & Spaces is the privaterespondents agent and whether or not there is privity of contract between petitioners andprivate respondent.

    We shall consider these issues concurrently as they are interrelated.

    Petitioners, in their brief, zealously make a case that there was no contract of agencybetween Lines & Spaces and private respondent.[6] Petitioners strongly assert that they

    did not have a hint that Lines & Spaces and Tri-Realty are two different and distinct entitiesinasmuch as Eleanor Sanchez whom they have dealt with just represented herself to befrom Lines & Spaces/Tri-Realty when she placed her order for the delivery of the bags ofcement. Hence, no privity of contract can be said to exist between petitioners and privaterespondent.[7]

    Private respondent, on the other hand, goes over the top in arguing that contrary to theirclaim of innocence, petitioners had knowledge that Lines & Spaces, as represented byEleanor Sanchez, was a separate and distinct entity from Tri-Realty.[8] Then, too, privaterespondent stirs up support for its contention that contrary to petitioners' claim, there wasprivity of contract between private respondent and petitioners.[9]

    Primarily, there was no written contract entered into between petitioners and privaterespondent for the delivery of the bags of cement. As gleaned from the records, and as

    private respondent itself admitted in its Complaint, private respondent agreed with EleanorSanchez of Lines & Spaces for the latter to source the cement needs of the former inconsideration of P7.00 per bag of cement. It is worthy to note that the payment inmanagers checks was made to Eleanor Sanchez of Lines & Spaces and was not directlypaid to petitioners. While the managers check issued by respondent company waseventually paid to petitioners for the delivery of the bags of cement, there is obviouslynothing from the face of said manager s check to hint that private respondent was the onemaking the payments. There was likewise no intimation from Sanchez that the purchaseorder placed by her was for private respondents benefit. The meeting of minds, therefore,was between private respondent and Eleanor Sanchez of Lines & Spaces. This contract isdistinct and separate from the contract of sale between petitioners and Eleanor Sanchezwho represented herself to be from Lines & Spaces/Tri-Realty, which, per herrepresentation, was a single account or entity.

    The records bear out, too, Annex A showing a check voucher payable to Amon TradingCorporation for the 6,050 bags of cement received by a certain Weng Chua for Mrs.Eleanor Sanchez of Lines & Spaces, and Annex B which is a check voucher bearing thename of Juliana Marketing as payee, but was received again by said Weng Chua.Nowhere from the face of the check vouchers is it shown that petitioners or any of theirauthorized representatives received the payments from respondent company.

    Also on record are the receipts issued by Lines & Spaces, signed by Eleanor BahiaSanchez, covering the said managers checks. As Engr. Guido Ganhinhin of respondentTri-Realty testified, it was Lines & Spaces, not petitioners, which issued to them a receiptfor the two (2) managers checks. Thus-

    Q: And what is your proof that Amon and Juliana were paid of the purchases throughmanagers checks?

    A: Lines & Spaces who represented Amon Trading and Juliana Marketing issued usreceipts for the two (2) managers checks we paid to Amon Trading and Juliana MarketingCorporation.

    Q: I am showing to you check no. 074 issued by Lines & Spaces Interiors Center, whatrelation has this check to that check you mentioned earlier?

    A: Official Receipt No. 074 issued by Lines & Spaces Interiors Center was for theP592,900.00 we paid to Amon Trading Corporation for 6,050 bags of cement.Q: Now there appears a signature in that receipt above the printed words authorizedsignature, whose signature is that?

    A: The signature of Mrs. Eleanor Bahia Sanchez, the representative of Lines andSpaces.Q: Why do you know that that is her signature?

    A: She is quite familiar with me and I saw her affix her signature upon issuance of the

    receipt.[10] (Emphasis supplied.)Without doubt, no vinculum could be said to exist between petitioners and privaterespondent.

    There is likewise nothing meaty about the assertion of private respondent that inasmuch asthe delivery receipts as well as the purchase order were for the account of Lines &Spaces/Tri-Realty, then petitioners should have been placed on guard that it was privaterespondent which is the principal of Sanchez. In China Banking Corp. v. Members of theBoard of Trustees, Home Development Mutual Fund[11] and the later case of Romulo,Mabanta, Buenaventura, Sayoc andDe los Angeles v. Home Development Mutual Fund,[12] the term and/or was held to mean that effect shall be given to both the conjunctiveand and the disjunctive or; or that one word or the other may be taken accordingly asone or the other will best effectuate the intended purpose. It was accordingly ordinarilyheld that in using the term "and/or" the word "and" and the word "or" are to be used

    interchangeably.

    By analogy, the words Lines & Spaces/Tri-Realty mean that effect shall be given to bothLines & Spaces and Tri-Realty or that Lines & Spaces and Tri-Realty may be usedinterchangeably. Hence, petitioners were not remiss when they believed EleanorSanchezs representation that Lines & Spaces/Tri-Realty refers to just one entity. Therewas, therefore, no error attributable to petitioners when they refunded the value of theundelivered bags of cement to Lines & Spaces only.

    There is likewise a dearth of evidence to show that the case at bar is an open-and-shutcase of agency between private respondent and Lines & Spaces. Neither Eleanor Sancheznor Lines & Spaces was an agent for private respondent, but rather a supplier for thelatters cement needs. The Civil Code defines a contract of agency as follows:

    Art. 1868. By the contract of agency a person binds himself to render some service or todo something in representation or on behalf of another, with the consent or authority of thelatter.

    In a bevy of cases such as the avuncular case of Victorias Milling Co., Inc. v. Court of

    Appeals,[13] the Court decreed from Article 1868 that the basis of agency isrepresentation.. . . On the part of the principal, there must be an actual intention to appoint or an intentionnaturally inferable from his words or actions and on the part of the agent, there must be anintention to accept the appointment and act on it, and in the absence of such intent, thereis generally no agency. One factor which most clearly distinguishes agency from otherlegal concepts is control; one person - the agent - agrees to act under the control ordirection of another - the principal. Indeed, the very word "agency" has come to connotecontrol by the principal. The control factor, more than any other, has caused the courts toput contracts between principal and agent in a separate category.

    Here, the intention of private respondent, as the Executive Officer of respondent

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    corporation testified on, was merely for Lines & Spaces, through Eleanor Sanchez, tosupply them with the needed bags of cement.

    Q: Do you know the defendant Lines & Spaces in this case?

    A: Yes, sir.Q: How come you know this defendant?

    A: Lines & Spaces represented by Eleanor Bahia Sanchez offered to supply uscement when there was scarcity of cement experienced in our projects .[14] (Emphasissupplied)

    We cannot go along the Court of Appeals disquisition that Amon Trading Corporation andJuliana Marketing should have required a special power of attorney form when theyrefunded Eleanor B. Sanchez the cost of the undelivered bags of cement. All the quibblingabout whether Lines & Spaces acted as agent of private respondent is inane because asillustrated earlier, petitioners took orders from Eleanor Sanchez who, after all, was the onewho paid them the managers checks for the purchase of cement. Sanchez representedherself to be from Lines & Spaces/Tri-Realty, purportedly a single entity. Inasmuch as theyhave never directly dealt with private respondent and there is no paper trail on record toguide them that the private respondent, in fact, is the beneficiary, petitioners had no reasonto doubt the request of Eleanor Sanchez later on to refund the value of the undeliveredbags of cement to Lines & Spaces. Moreover, the check refund was payable to Lines &Spaces, not to Sanchez, so there was indeed no cause to suspect the scheme.

    The fact that the deliveries were made at the construction sites of private respondent does

    not by itself raise suspicion that petitioners were delivering for private respondent. Therewas no sufficient showing that petitioners knew that the delivery sites were that of privaterespondent and for another thing, the deliveries were made by petitioners men who haveno business nosing around their clients affairs.

    Parenthetically, Eleanor Sanchez has absconded to the United States of America and thestory of what happened to the check refund may be forever locked with her. Lines &Spaces, in its Answer to the Complaint, washed its hands of the apparent ruse perpetuatedby Sanchez, but argues that if at all, it was merely an intermediary between petitioners andprivate respondent. With no other way out, Lines & Spaces was a no-show at the trialproceedings so that eventually, its counsel had to withdraw his appearance because of hisclients vanishing act. Left with an empty bag, so to speak, private respondent now putsthe blame on petitioners. But this Court finds plausible the stance of petitioners that theyhad no inkling of the deception that was forthcoming. Indeed, without any contract or anyhard evidence to show any privity of contract between it and petitioners, privaterespondents claim against petitioners lacks legal foothold.

    Considering the vagaries of the case, private respondent brought the wrong upon itself. Asadeptly surmised by the trial court, between petitioners and private respondent, it is thelatter who had made possible the wrong that was perpetuated by Eleanor Sanchez againstit so it must bear its own loss. It is in this sense that we must apply the equitable maximthat as between two innocent parties, the one who made it possible for the wrong to bedone should be the one to bear the resulting loss.[15] First, private respondent was theone who had reposed too much trust on Eleanor Sanchez for the latter to source itscement needs. Second, it failed to employ safety nets to steer clear of the rip-off. Forsuch huge sums of money involved in this case, it is surprising that a corporation such asprivate respondent would pay its construction materials in advance instead of in creditthus opening a window of opportunity for Eleanor Sanchez or Lines & Spaces to pocket theremaining balance of the amount paid corresponding to the undelivered materials. Private

    respondent likewise paid in advance the commission of Eleanor Sanchez for the materialsthat have yet to be delivered so it really had no means of control over her. Finally, there is

    no paper trail linking private respondent to petitioners thereby leaving the latter cluelessthat private respondent was their true client. Private respondent should have, at the veryleast, required petitioners to sign the check vouchers or to issue receipts for the advancepayments so that it could have a hold on petitioners. In this case, it was the representativeof Lines & Spaces who signed the check vouchers. For its failure to establish any of thesedeterrent measures, private respondent incurred the risk of not being able to recoup thevalue of the materials it had paid good money for.

    WHEREFORE, the present petition is hereby GRANTED. Accordingly, the Decision andthe Resolution dated 28 November 2002 and 10 June 2003, of the Court of Appeals in CA-

    G.R CV No. 60031, are hereby REVERSED and SET ASIDE. The Decision dated 29January 1998 of the Regional Trial Court of Quezon City, Branch 104, in Civil Case Q-92-14235 is hereby REINSTATED. No costs.

    SO ORDERED.

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    G.R. No. 149353 June 26, 2006JOCELYN B. DOLES, Petitioner,vs.MA. AURA TINA ANGELES, Respondent.D E C I S I O NAUSTRIA-MARTINEZ, J.:

    This refers to the Petition for Review on Certiorari under Rule 45 of the Rules of Courtquestioning the Decision1 dated April 30, 2001 of the Court of Appeals (CA) in C.A.-G.R.CV No. 66985, which reversed the Decision dated July 29, 1998 of the Regional Trial Court(RTC), Branch 21, City of Manila; and the CA Resolution2 dated August 6, 2001 whichdenied petitioners Motion for Reconsideration.

    The antecedents of the case follow:On April 1, 1997, Ma. Aura Tina Angeles (respondent) filed with the RTC a complaint forSpecific Performance with Damages against Jocelyn B. Doles (petitioner), docketed asCivil Case No. 97-82716. Respondent alleged that petitioner was indebted to the former inthe concept of a personal loan amounting to P405,430.00 representing the principalamount and interest; that on October 5, 1996, by virtue of a "Deed of Absolute Sale", 3

    petitioner, as seller, ceded to respondent, as buyer, a parcel of land, as well as theimprovements thereon, with an area of 42 square meters, covered by Transfer Certificateof Title No. 382532,4 and located at a subdivision project known as Camella TownhomesSorrente in Bacoor, Cavite, in order to satisfy her personal loan with respondent; that thisproperty was mortgaged to National Home Mortgage Finance Corporation (NHMFC) tosecure petitioners loan in the sum of P337,050.00 with that entity; that as a condition forthe foregoing sale, respondent shall assume the undue balance of the mortgage and pay

    the monthly amortization of P4,748.11 for the remainder of the 25 years which began onSeptember 3, 1994; that the property was at that time being occupied by a tenant paying amonthly rent of P3,000.00; that upon verification with the NHMFC, respondent learned thatpetitioner had incurred arrearages amounting to P26,744.09, inclusive of penalties andinterest; that upon informing the petitioner of her arrears, petitioner denied that sheincurred them and refused to pay the same; that despite repeated demand, petitionerrefused to cooperate with respondent to execute the necessary documents and otherformalities required by the NHMFC to effect the transfer of the title over the property; thatpetitioner collected rent over the property for the month of January 1997 and refused toremit the proceeds to respondent; and that respondent suffered damages as a result andwas forced to litigate.

    Petitioner, then defendant, while admitting some allegations in the Complaint, denied thatshe borrowed money from respondent, and averred that from June to September 1995,she referred her friends to respondent whom she knew to be engaged in the business oflending money in exchange for personal checks through her capitalist Arsenio Pua. Shealleged that her friends, namely, Zenaida Romulo, Theresa Moratin, Julia Inocencio,Virginia Jacob, and Elizabeth Tomelden, borrowed money from respondent and issuedpersonal checks in payment of the loan; that the checks bounced for insufficiency of funds;that despite her efforts to assist respondent to collect from the borrowers, she could nolonger locate them; that, because of this, respondent became furious and threatenedpetitioner that if the accounts were not settled, a criminal case will be filed against her; thatshe was forced to issue eight checks amounting to P350,000 to answer for the bouncedchecks of the borrowers she referred; that prior to the issuance of the checks she informedrespondent that they were not sufficiently funded but the latter nonetheless deposited thechecks and for which reason they were subsequently dishonored; that respondent thenthreatened to initiate a criminal case against her for violation ofBatas Pambansa Blg. 22;that she was forced by respondent to execute an "Absolute Deed of Sale" over herproperty in Bacoor, Cavite, to avoid criminal prosecution; that the said deed had no valid

    consideration; that she did not appear before a notary public; that the Community TaxCertificate number on the deed was not hers and for which respondent may be prosecuted

    for falsification and perjury; and that she suffered damages and lost rental as a result.

    The RTC identified the issues as follows: first, whether the Deed of Absolute Sale is valid;second; if valid, whether petitioner is obliged to sign and execute the necessary documentsto effect the transfer of her rights over the property to the respondent; and third, whetherpetitioner is liable for damages.

    On July 29, 1998, the RTC rendered a decision the dispositive portion of which states:WHEREFORE, premises considered, the Court hereby orders the dismissal of thecomplaint for insufficiency of evidence. With costs against plaintiff.

    SO ORDERED.

    The RTC held that the sale was void for lack of cause or consideration:5

    Plaintiff Angeles admission that the borrowers are the friends of defendant Doles andfurther admission that the checks issued by these borrowers in payment of the loanobligation negates [sic] the cause or consideration of the contract of sale executed by andbetween plaintiff and defendant. Moreover, the property is not solely owned by defendantas appearing in Entry No. 9055 of Transfer Certificate of Title No. 382532 (Annex A,Complaint), thus:

    "Entry No. 9055. Special Power of Attorney in favor of Jocelyn Doles covering the share ofTeodorico Doles on the parcel of land described in this certificate of title by virtue of thespecial power of attorney to mortgage, executed before the notary public, etc."

    The rule under the Civil Code is that contracts without a cause or consideration produce noeffect whatsoever. (Art. 1352, Civil Code).Respondent appealed to the CA. In her appeal brief, respondent interposed her soleassignment of error:

    THE TRIAL COURT ERRED IN DISMISSING THE CASE AT BAR ON THE GROUND OF[sic] THE DEED OF SALE BETWEEN THE PARTIES HAS NO CONSIDERATION ORINSUFFICIENCY OF EVIDENCE.6

    On April 30, 2001, the CA promulgated its Decision, the dispositive portion of which reads:WHEREFORE, IN VIEW OF THE FOREGOING, this appeal is hereby GRANTED. TheDecision of the lower court dated July 29, 1998 is REVERSED and SET ASIDE. A new oneis entered ordering defendant-appellee to execute all necessary documents to effecttransfer of subject property to plaintiff-appellant with the arrearages of the formers loanwith the NHMFC, at the latters expense. No costs.SO ORDERED.

    The CA concluded that petitioner was the borrower and, in turn, would "re-lend" theamount borrowed from the respondent to her friends. Hence, the Deed of Absolute Salewas supported by a valid consideration, which is the sum of money petitioner owedrespondent amounting to P405,430.00, representing both principal and interest.

    The CA took into account the following circumstances in their entirety: the supposedfriends of petitioner never presented themselves to respondent and that all transactionswere made by and between petitioner and respondent;7 that the money borrowed wasdeposited with the bank account of the petitioner, while payments made for the loan weredeposited by the latter to respondents bank account;8 that petitioner herself admitted inopen court that she was "re-lending" the money loaned from respondent to otherindividuals for profit;9 and that the documentary evidence shows that the actual borrowers,

    the friends of petitioner, consider her as their creditor and not the respondent.10

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    Furthermore, the CA held that the alleged threat or intimidation by respondent did notvitiate consent, since the same is considered just or legal if made to enforce ones claimthrough competent authority under Article 1335 11 of the Civil Code;12 that with respect tothe arrearages of petitioner on her monthly amortization with the NHMFC in the sum ofP26,744.09, the same shall be deemed part of the balance of petitioners loan with theNHMFC which respondent agreed to assume; and that the amount of P3,000.00representing the rental for January 1997 supposedly collected by petitioner, as well as theclaim for damages and attorneys fees, is denied for insufficiency of evidence.13

    On May 29, 2001, petitioner filed her Motion for Reconsideration with the CA, arguing that

    respondent categorically admitted in open court that she acted only as agent orrepresentative of Arsenio Pua, the principal financier and, hence, she had no legal capacityto sue petitioner; and that the CA failed to consider the fact that petitioners father, who co-owned the subject property, was not impleaded as a defendant nor was he indebted to therespondent and, hence, she cannot be made to sign the documents to effect the transfer ofownership over the entire property.On August 6, 2001, the CA issued its Resolution denying the motion on the ground that theforegoing matters had already been passed upon.

    On August 13, 2001, petitioner received a copy of the CA Resolution. On August 28, 2001,petitioner filed the present Petition and raised the following issues:

    I. WHETHER OR NOT THE PETITIONER CAN BE CONSIDERED AS A DEBTOR OFTHE RESPONDENT.

    II. WHETHER OR NOT AN AGENT WHO WAS NOT AUTHORIZED BY THE PRINCIPALTO COLLECT DEBT IN HIS BEHALF COULD DIRECTLY COLLECT PAYMENT FROMTHE DEBTOR.III. WHETHER OR NOT THE CONTRACT OF SALE WAS EXECUTED FOR A CAUSE. 14

    Although, as a rule, it is not the business of this Court to review the findings of fact madeby the lower courts, jurisprudence has recognized several exceptions, at least three ofwhich are present in the instant case, namely: when the judgment is based on amisapprehension of facts; when the findings of facts of the courts a quo are conflicting; andwhen the CA manifestly overlooked certain relevant facts not disputed by the parties,which, if properly considered, could justify a different conclusion.15 To arrive at a proper

    judgment, therefore, the Court finds it necessary to re-examine the evidence presented bythe contending parties during the trial of the case.

    The Petition is meritorious.The principal issue is whether the Deed of Absolute Sale is supported by a validconsideration.1. Petitioner argues that since she is merely the agent or representative of the allegeddebtors, then she is not a party to the loan; and that the Deed of Sale executed betweenher and the respondent in their own names, which was predicated on that pre-existingdebt, is void for lack of consideration.

    Indeed, the Deed of Absolute Sale purports to be supported by a consideration in the formof a price certain in money16 and that this sum indisputably pertains to the debt in issue.This Court has consistently held that a contract of sale is null and void and produces noeffect whatsoever where the same is without cause or consideration. 17 The question thathas to be resolved for the moment is whether this debt can be considered as a valid causeor consideration for the sale.

    To restate, the CA cited four instances in the record to support its holding that petitioner"re-lends" the amount borrowed from respondent to her friends: first, the friends of

    petitioner never presented themselves to respondent and that all transactions were madeby and between petitioner and respondent;18 second; the money passed through the bankaccounts of petitioner and respondent;19 third, petitioner herself admitted that she was "re-lending" the money loaned to other individuals for profit; 20 and fourth, the documentaryevidence shows that the actual borrowers, the friends of petitioner, consider her as theircreditor and not the respondent.21

    On the first, third, and fourth points, the CA cites the testimony of the petitioner, thendefendant, during her cross-examination:22

    Atty. Diza:

    q. You also mentioned that you were not the one indebted to the plaintiff?witness:a. Yes, sir.

    Atty. Diza:q. And you mentioned the persons[,] namely, Elizabeth Tomelden, Teresa Moraquin, MariaLuisa Inocencio, Zenaida Romulo, they are your friends?witness:a. Inocencio and Moraquin are my friends while [as to] Jacob and Tomelden[,] they were

    just referred.Atty. Diza:q. And you have transact[ed] with the plaintiff?witness:a. Yes, sir.

    Atty. Diza:

    q. What is that transaction?witness:a. To refer those persons to Aura and to refer again to Arsenio Pua, sir.

    Atty. Diza:q. Did the plaintiff personally see the transactions with your friends?witness:a. No, sir.

    Atty. Diza:q. Your friends and the plaintiff did not meet personally?witness:a. Yes, sir.

    Atty. Diza:q. You are intermediaries?witness:a. We are both intermediaries. As evidenced by the checks of the debtors they weredeposited to the name of Arsenio Pua because the money came from Arsenio Pua.x x x x

    Atty. Diza:q. Did the plaintiff knew [sic] that you will lend the money to your friends specifically theone you mentioned [a] while ago?witness:a. Yes, she knows the money will go to those persons.

    Atty. Diza:q. You are re-lending the money?witness:a. Yes, sir.

    Atty. Diza:q. What profit do you have, do you have commission?witness:

    a. Yes, sir.Atty. Diza:

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    q. How much?witness:a. Two percent to Tomelden, one percent to Jacob and then Inocencio and my friendsnone, sir.Based on the foregoing, the CA concluded that petitioner is the real borrower, while therespondent, the real lender.But as correctly noted by the RTC, respondent, then plaintiff, made the following admissionduring her cross examination:23

    Atty. Villacorta:q. Who is this Arsenio Pua?

    witness:a. Principal financier, sir.Atty. Villacorta:q. So the money came from Arsenio Pua?witness:a. Yes, because I am only representing him, sir.Other portions of the testimony of respondent must likewise be considered:24

    Atty. Villacorta:q. So it is not actually your money but the money of Arsenio Pua?witness:a. Yes, sir.Court:q. It is not your money?witness:

    a. Yes, Your Honor.Atty. Villacorta:q. Is it not a fact Ms. Witness that the defendant borrowed from you to accommodatesomebody, are you aware of that?witness:a. I am aware of that.

    Atty. Villacorta:q. More or less she [accommodated] several friends of the defendant?witness:a. Yes, sir, I am aware of that.x x x x

    Atty. Villacorta:q. And these friends of the defendant borrowed money from you with the assurance of thedefendant?witness:a. They go direct to Jocelyn because I dont know them.x x x x

    Atty. Villacorta:q. And is it not also a fact Madam witness that everytime that the defendant borrowedmoney from you her friends who [are] in need of money issued check[s] to you? Therewere checks issued to you?witness:a. Yes, there were checks issued.

    Atty. Villacorta:q. By the friends of the defendant, am I correct?witness:a. Yes, sir.

    Atty. Villacorta:q. And because of your assistance, the friends of the defendant who are in need of money

    were able to obtain loan to [sic] Arsenio Pua through your assistance?witness:

    a. Yes, sir.Atty. Villacorta:q. So that occasion lasted for more than a year?witness:a. Yes, sir.

    Atty. Villacorta:q. And some of the checks that were issued by the friends of the defendant bounced, am Icorrect?witness:a. Yes, sir.

    Atty. Villacorta:q. And because of that Arsenio Pua got mad with you?witness:a. Yes, sir.

    Respondent is estopped to deny that she herself acted as agent of a certain Arsenio Pua,her disclosed principal. She is also estopped to deny that petitioner acted as agent for thealleged debtors, the friends whom she (petitioner) referred.

    This Court has affirmed that, under Article 1868 of the Civil Code, the basis of agency isrepresentation.25 The question of whether an agency has been created is ordinarily aquestion which may be established in the same way as any other fact, either by direct orcircumstantial evidence. The question is ultimately one of intention.26 Agency may even beimplied from the words and conduct of the parties and the circumstances of the particular

    case.

    27

    Though the fact or extent of authority of the agents may not, as a general rule, beestablished from the declarations of the agents alone, if one professes to act as agent foranother, she may be estopped to deny her agency both as against the asserted principaland the third persons interested in the transaction in which he or she is engaged.28

    In this case, petitioner knew that the financier of respondent is Pua; and respondent knewthat the borrowers are friends of petitioner.

    The CA is incorrect when it considered the fact that the "supposed friends of [petitioner],the actual borrowers, did not present themselves to [respondent]" as evidence thatnegates the agency relationshipit is sufficient that petitioner disclosed to respondent thatthe former was acting in behalf of her principals, her friends whom she referred torespondent. For an agency to arise, it is not necessary that the principal personallyencounter the third person with whom the agent interacts. The law in fact contemplates,and to a great degree, impersonal dealings where the principal need not personally knowor meet the third person with whom her agent transacts: precisely, the purpose of agencyis to extend the personality of the principal through the facility of the agent.29

    In the case at bar, both petitioner and respondent have undeniably disclosed to each otherthat they are representing someone else, and so both of them are estopped to deny thesame. It is evident from the record that petitioner merely refers actual borrowers and thencollects and disburses the amounts of the loan upon which she received a commission;and that respondent transacts on behalf of her "principal financier", a certain Arsenio Pua.If their respective principals do not actually and personally know each other, suchignorance does not affect their juridical standing as agents, especially since the verypurpose of agency is to extend the personality of the principal through the facility of theagent.

    With respect to the admission of petitioner that she is "re-lending" the money loaned from

    respondent to other individuals for profit, it must be stressed that the manner in which theparties designate the relationship is not controlling. If an act done by one person in behalf

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    of another is