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AGENCY- CASE DIGEST
Raisa G. Marasigan
MANILA MEMORIAL PARK CEMETERY, INC.vs.
PEDRO L. LINSANGAN
FACTS:
Florencia Baluyot offered Atty. Pedro L. Linsangan a
lot called Garden State at the Holy Cross Memorial
Park owned by petitioner (MMPCI). According to
Baluyot, a former owner of a memorial lot under
Contract No. 25012 was no longer interested in
acquiring the lot and had opted to sell his rights
subject to reimbursement of the amounts he already
paid. The contract was for P95,000.00. Baluyot
reassured Atty. Linsangan that once reimbursement
is made to the former buyer, the contract would be
transferred to him.
Atty. Linsangan agreed and gave Baluyot P35,295.00
representing the amount to be reimbursed to the
original buyer and to complete the down payment to
MMPCI. Baluyot issued handwritten and typewritten
receipts for these payments. Contract No. 28660 has
a listed price of P132,250.00. Atty. Linsangan
objected to the new contract price, as the same was
not the amount previously agreed upon. To convince
Atty. Linsangan, Baluyot executed a document
confirming that while the contract price is
P132,250.00, Atty. Linsangan would pay only the
original price of P95,000.00.
Later on, Baluyot verbally advised Atty. Linsangan
that Contract No. 28660 was cancelled for reasons
the latter could not explain. For the alleged failure of
MMPCI and Baluyot to conform to their agreement,
Atty. Linsangan filed a Complaint for Breach of
Contract and Damages against the former.
MMPCI alleged that Contract No. 28660 was
cancelled conformably with the terms of the contract
because of non-payment of arrearages. MMPCI
stated that Baluyot was not an agent but an
independent contractor, and as such was notauthorized to represent MMPCI or to use its name
except as to the extent expressly stated in the
Agency Manager Agreement. Moreover, MMPCI was
not aware of the arrangements entered into by Atty.
Linsangan and Baluyot, as it in fact received a down
payment and monthly installments as indicated in
the contract.
The trial court held MMPCI and Baluyot jointly and
severally liable. The Court of Appeals affirmed the
decision of the trial court.
ISSUES:
1. Whether or not there was a contract of agency
between Baluyot and MMPCI?
2. Whether or not MMPCI should be liable for
Baluyots act?
HELD:
Yes. By the contract of agency, a person binds
himself to render some service or to do something in
representation or on behalf of another, with the
consent or authority of the latter. As properly found
both by the trial court and the Court of Appeals,
Baluyot was authorized to solicit and remit to
MMPCI offers to purchase interment spaces
obtained on forms provided by MMPCI. The terms of
the offer to purchase, therefore, are contained in
such forms and, when signed by the buyer and an
authorized officer of MMPCI, becomes binding on
both parties.
No. While there is no more question as to the agency
relationship between Baluyot and MMPCI, there is
no indication that MMPCI let the public, or
specifically, Atty. Linsangan to believe that Baluyot
had the authority to alter the standard contracts of
the company. Neither is there any showing that prior
to signing Contract No. 28660, MMPCI had anyknowledge of Baluyot's commitment to Atty.
Linsangan. Even assuming that Atty. Linsangan was
misled by MMPCI's actuations, he still cannot invoke
the principle of estoppel, as he was clearly negligent
in his dealings with Baluyot, and could have easily
determined, had he only been cautious and prudent,
whether said agent was clothed with the authority to
change the terms of the principal's written contract.
To repeat, the acts of the agent beyond the scope of
his authority do not bind the principal unless the
latter ratifies the same. It also bears emphasis that
when the third person knows that the agent was
acting beyond his power or authority, the principalcannot be held liable for the acts of the agent. If the
said third person was aware of such limits of
authority, he is to blame and is not entitled to
recover damages from the agent, unless the latter
undertook to secure the principal's ratification.
IR FRANCE vs. COURT OF APPEALS
G.R. No. 76093/ March 21, 1989
FACTS:
Atty. Narciso Morales, a lawyer, thru his
representative purchased an airline ticket from
Aspac Management Corporation, petitioner's General
Sales Agent in Makati. The itinerary covered by the
ticket included several cities, with certain segments
thereof restricted by markings of "non endorsable'
and 'valid on Air France only. While in New York,
U.S.A., Atty. Morales suffered an ear infection which
necessitated medical treatment. He obtained three
medical certificate. From New York, he flew to Paris,
Stockholm and then Copenhagen where he made
representations with petitioner's office to shorten his
trip by deleting some of the cities in the itinerary.
Atty. Morales was informed that, as a matter of
procedure, confirmation of petitioner's office inManila (as ticketing office) must be secured before
shortening of the route(already paid for). The Air
France Manila replied in negative with the request of
Atty. Morales to shorten his trip. After reiterating his
need to flying home on a shorter route due to his ear
infection, and presentation of supporting medical
certificates, again, the airline office made the
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necessary request to Manila a Hamburg, Paris,
Geneva, Rome, Paris, Hongkong and Manila route.
Still, the request was denied. Atty. Morales,
therefore, had to buy an entirely new set of tickets,
paying 1,914 German marks for the homeward
route. Upon arrival in Manila, Atty. Morales filed a
complaint for breach of contract of carriage and
damages. The CFI found Air France was in evident
bad faith for violation of the contract of carriage,
aggravated by the threatening attitude of its
employees in Hamburg. On appeal the Court of
Appeals affirmed the CFI's decision with
modifications on the award of damages. Questioning
the factual findings of the CA Air France filed a
petition for review..
ISSUE:
Whether or not Air France is guilty of Breach of
Contract of Carriage.
HELD:No, Air France is not guilty of Breach of Contract of
Carriage. The respondent court's ruling that there
was breach of contract of carriage is premised on
petitioner's refusal to re-route Atty. Morales and, in
effect, requiring him to purchase a new set of tickets.
International Air Transportation Association (IATA)
Resolution No. 275 e, 2., special note reads:
"Where a fare is restricted and such restrictions are
not clearly evident from the required entries on the
ticket, such restrictions may be written, stamped or
reprinted in plain language in the
Endorsement/Restrictions" box of the applicable
flight coupon(s); or attached thereto by use of anappropriate notice." Voluntary changes to
tickets,while allowable, are also covered by (IATA)
Resolution No. 1013, Art. II, which provides: "1.
changes to the ticket requested by the passenger will
be subject to carriers regulations. Considering the
original restrictions on the ticket, it was not
unreasonable for Air France to deny the request. It is
essential before an award of damages that the
claimant must satisfactorily prove during the trial
the existence of the factual basis of the damages and
its causal connection to defendant's acts. Atty.
Morales failed to substantiate his claim due tofailure to present a medical certificate that he indeed
had undergone medical examination upon arrival in
Manila. Furthermore, Air France employees in
Hamburg informed Atty. Morales that his tickets
were partly stamped "non-endorsable" and "valid on
Air France only." The mere refusal to accede to the
passenger's wishes does not necessarily translate
into damages in the absence of bad faith. Atty.
Morales has failed to show wanton, malevolent or
reckless misconduct imputable to petitioner in its
refusal to re-route. Omissions by ordinary
passengers may be condoned but more is expected of
members of the bar who cannot feign ignorance ofsuch limitations and restrictions. An award of moral
and exemplary damages cannot bes ustained under
the circumstances, but petitioner has to refund the
unused coupons in the Air France ticket to the
private respondent.
RALLOS v FELIX GO CHAN & REALTY COPR.,
Munoz-Palma
Plaintiff: Ramon Rallos
Defendant: Felix Go Chan & Sons Realty Corporation
Facts: Concepcion and Gerundia Rallos were
sisters and registered co-owners of the parcel of land
in issue. They executed a special power of attorney
in favor of their brother, Simeon Rallos, authorizing
him to sell such land for and in their behalf. After
Concepcion died, Simeon Rallos sold the undivided
shares of his sisters Concepcion and Gerundia to
Felix Go Chan & Sons Realty Corporation for the
sum of P10,686.90. New TCTs were issued to the
latter.Petitioner Ramon Rallos, administrator of the
Intestate Estate of Concepcion filed a complaint
praying (1) that the sale of the undivided share of
the deceased Concepcion Rallos in lot 5983 beunenforceable, and said share be reconveyed to her
estate; (2) that the Certificate of 'title issued in the
name of Felix Go Chan & Sons Realty Corporation be
cancelled and another title be issued in the names of
the corporation and the "Intestate estate of
Concepcion Rallos" in equal undivided and (3) that
plaintiff be indemnified by way of attorney's fees and
payment of costs of suit.
Issues:
Whether or not the sale fell within the exception to
the general rule that death extinguishes the
authority of the agent
Held/Ratio:
Yes the sale is void. The court held that no one may
contract in the name of another without being
authorized by the latter, or unless he has by law a
right to represent him (Art. 1317 of the Civil
Code). Simons authority as agent was extinguished
upon Concolacions death. The sale did not fall
under the exceptions to the general rule that death
ipso jure extinguishes the authority of the agent.
Art.1930 inapplicable since SPA in favor of Simon
Rallos was not coupled with interest and Art. 1931inapplicable because Rallos knew of principal
Concepcions death. For Art 1931 to apply, both
requirements must be present Laws on agency, the
terms of which are clear and unmistakable leaving
no room for an interpretation contrary to its tenor,
should apply, the law provides that death of the
principal ipso jure extinguishes the authority of the
agent to sell rendering the sale to a third person in
good faith unenforceable unless at the agent had no
knowledge of the principals death at that time
(exception under Art. 1931)
Dispositive: CA Decision reversed, CFI decision
affirmed. Sale was null and void.
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ORIENT AIR SERVICES & HOTEL
REPRESENTATIVES v. COURT OF APPEALS and
AMERICAN AIR-LINES INCORPORATED
G.R. No. 76933 May 29, 1991
PADILLA, J.:
Facts:
American Airlines, Inc. (American Air), an air carrier
offering passenger and air cargo transportation in
the Philippines, and Orient Air Services and Hotel
Representatives (Orient Air),entered into a General
Sales Agency Agreement (Agreement), whereby the
former authorized the latter to act as its exclusive
general sales agent within the Philippines for the
sale of air passenger transportation. In the
agreement, Orient Air shall remit in United States
dollars to American the ticket stock or exchange
orders, less commissions to which Orient Air
Services is entitled, not less frequently than semi-monthly. On the other hand, American will pay
Orient Air Services commission on transportation
sold by Orient Air Services or its sub-agents.
Thereafter, American alleged that Orient Air had
reneged on its obligations under the Agreement by
failing to promptly remit the net proceeds of sales for
the months of January 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 and terminated
forthwith the Agreement in accordance with
paragraph 13 which authorize the termination of the
thereof in case Orient Air is unable to transfer to the
United States the funds payable by Orient Air
Services to American. American Air instituted suit
against Orient Air with the Court of First Instance of
Manila for Accounting with Preliminary Attachment
or Garnishment, Mandatory Injunction and
Restraining Order averring the aforesaid basis for
the termination of the Agreement as well as therein
defendant's previous record of failures "to promptly
settle past outstanding refunds of which there were
available funds in the possession of the
defendant, . . . to the damage and prejudice of
plaintiff. Orient Air denied the material allegationsof the complaint with respect to plaintiffs
entitlement to alleged unremitted amounts,
contending that after application thereof to the
commissions due it under the Agreement, plaintiff in
fact still owed Orient Air a balance in unpaid
overriding commissions. Further, the defendant
contended that the actions taken by American Air in
the course of terminating the Agreement as well as
the termination itself were untenable. The trial court
ruled in its favor which decision was affirmed with
modification byCourt of Appeals. It held the
termination made by the latter as affecting the GSA
agreementillegal and improper and ordered theplaintiff to reinstate defendant as its general sales
agent for passenger transportation in the Philippines
in accordance with said GSA agreement.
ISSUE:
The principal issue for resolution by the Court is the
extent of Orient Air's right to the 3% overriding
commission.
HELD:
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 Air was remiss or in default of its obligations
under the Agreement was, in fact, a situation where
the latter acted in accordance with the Agreement
that of retaining from the sales proceeds its accrued
commissions before remitting the balance to
American Air. Since the latter was still obligated to
Orient Air by way of such commissions. Orient Air
was clearly justified in retaining and refusing to
remit the sums claimed by American Air. The latter's
termination of the Agreement was, therefore, without
cause and basis, for which it should be held liable toOrient Air.
On the matter of damages, the respondent appellate
court modified by reduction the trial court's award of
exemplary damages and attorney's fees. This Court
sees no error in such modification and, thus, affirms
the same.
It is believed, however, that respondent appellate
court erred in affirming the rest of the decision of
the trial court.1wphi1 We refer particularly to the
lower court's decision ordering American Air to
"reinstate defendant as its general sales agent forpassenger transportation in the Philippines in
accordance with said GSA Agreement."
By affirming this ruling of the trial court,
respondent appellate court, in effect, compels
American Air to extend its personality to Orient Air.
Such would be violative of the principles and
essence of agency, defined by law as a contract
whereby "a person binds himself to render some
service or to do something in representation or on
behalf of another, WITH THE CONSENT OR
AUTHORITY OF THE LATTER . 17 (emphasis
supplied) In an agent-principal relationship, the
personality of the principal is 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 him do. Such a
relationship can only be effected with the consent of
the principal, which must not, in any way, be
compelled by law or by any court. The Agreement
itself between the parties states that "either party
may terminate the Agreement without cause by
giving the other 30 days' notice by letter, telegram or
cable." (emphasis supplied) 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 and resolution of the
respondent Court of Appeals, dated 27 January
1986 and 17 December 1986, respectively. Costs
against petitioner American Air.
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Sevilla vs CA
G..R. No. L-41182-3 April 16, 1988
Facts:
The petitioners invoke the provisions on human
relations of the Civil Code in this appeal by
certiorari.
Mrs. Segundina Noguera, party of the first part; the
Tourist World Service, Inc., represented by Mr. Eliseo
Canilao as party of the second part, and hereinafter
referred to as appellants, the Tourist World Service,
Inc. leased the premises belonging to the party of the
first part at Mabini St., Manila for the former-s use
as a branch office. In the said contract the party of
the third part held herself solidarily liable with the
party of the part for the prompt payment of themonthly rental agreed on. When the branch office
was opened, the same was run by the herein
appellant Una 0. Sevilla payable to Tourist World
Service Inc. by any airline for any fare brought in on
the efforts of Mrs. Lina Sevilla, 4% was to go to Lina
Sevilla and 3% was to be withheld by the Tourist
World Service, Inc.
On November 24, 1961 the Tourist World Service,
Inc. appears to have been informed that Lina Sevilla
was connected with a rival firm, the Philippine Travel
Bureau, and, since the branch office was anyhow
losing, the Tourist World Service considered closingdown its office.
On June 17,1963, appellant Lina Sevilla refiled her
case against the herein appellees and after the
issues were joined, the reinstated counterclaim of
Segundina Noguera and the new complaint of
appellant Lina Sevilla were jointly heard following
which the court ordered both cases dismiss for lack
of merit.
In her appeal, Lina Sevilla claims that a joint
bussiness venture was entered into by and between
her and appellee TWS with offices at the Ermita
branch office and that she was not an employee of
the TWS to the end that her relationship with TWS
was one of a joint business venture appellant made
declarations.
Issue:
Whether or not the padlocking of the premises by
the Tourist World Service, Inc. without the
knowledge and consent of the appellant Lina Sevilla
entitled the latter to the relief of damages prayed for
and whether or not the evidence for the saidappellant supports the contention that the appellee
Tourist World Service, Inc. unilaterally and without
the consent of the appellant disconnected the
telephone lines of the Ermita branch office of the
appellee Tourist World Service, Inc.?
Held:
The trial court held for the private respondent on the
premise that the private respondent, Tourist World
Service, Inc., being the true lessee, it was within its
prerogative to terminate the lease and padlock the
premises. It likewise found the petitioner, Lina
Sevilla, to be a mere employee of said Tourist World
Service, Inc. and as such, she was bound by the acts
of her employer. The respondent Court of Appeal
rendered an affirmance.
In this jurisdiction, there has been no uniform test
to determine the evidence of an employer-employee
relation. In general, we have relied on the so-called
right of control test, "where the person for whom the
services are performed reserves a right to control not
only the end to be achieved but also the means to be
used in reaching such end." Subsequently, however,
we have considered, in addition to the standard of
right-of control, the existing economic conditions
prevailing between the parties, like the inclusion ofthe employee in the payrolls, in determining the
existence of an employer-employee relationship.
the Decision promulgated on January 23, 1975 as
well as the Resolution issued on July 31, 1975, by
the respondent Court of Appeals is hereby
REVERSED and SET ASIDE. The private
respondent, Tourist World Service, Inc., and Eliseo
Canilao, are ORDERED jointly and severally to
indemnify the petitioner, Lina Sevilla, the sum of
25,00.00 as and for moral damages, the sum of
P10,000.00, as and for exemplary damages, and the
sum of P5,000.00, as and for nominal and/ortemperate damages.
GREEN VALLEY POULTRY & ALLIED PRODUCTS,
INC., vs. THE INTERMEDIATE APPELLATE
COURT and E.R. SQUIBB & SONS PHILIPPINE
CORPORATION.
FACTS:
On November 3, 1969, Squibb and Green Valley
entered into a letter agreement the text of which
reads: E.R. Squibb & Sons Philippine Corporation is
pleased to appoint Green Valley Poultry & AlliedProducts, Inc. as a non-exclusive distributor for
Squibb Veterinary Products, as recommended by Dr.
Leoncio D. Rebong, Jr. and Dr. J.G. Cruz, Animal
Health Division Sales Supervisor. A stipulation in
the agreement specifies that:
Payment for Purchases of Squibb Products will be
due 60 days from date of invoice or the nearest
business day thereto. No payment win be accepted in
the form of post-dated checks. Payment by check
must be on current dating. It is mutually agreed that
this non-exclusive distribution agreement can be
terminated by either Green Valley Poultry & AlliedProducts, Inc. or Squibb Philippines on 30 days
notice. For goods delivered to Green Valley but
unpaid, Squibb filed suit to collect. Green Valley
claimed that the contract with Squibb was a mere
agency to sell; that it never purchased goods from
Squibb; that the goods received were on
consignment only with the obligation to turn over
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the proceeds, less its commission, or to return the
goods if not sold, and since it had sold the goods but
had not been able to collect from the purchasers
thereof, the action was premature. Upon the other
hand, Squibb claimed that the contract was one of
sale so that Green Valley was obligated to pay for the
goods received upon the expiration of the 60-day
credit period. TC and CA upheld the claim of Squibb
that the agreement between the parties was a sales
contract.
ISSUE:
WON the contract is an agency to sell or a contract
of sale.
HELD:
CONTRACT OF SALE. Green Valley is liable because
it sold on credit without authority from its principal.
The Civil Code has a provision...
Ker and Co., LTD vs LingadGR No. L-20871 April 30, 1971
Facts:
CIR assessed the sum of P20,272.33 as the
commercial brokers percentage tax, surcharge, and
compromise penalty against Ker & Co. Ker and Co.
requested for the cancellation of the assessment and
filed a petition for review with the Court of Tax
Appeals. The CTA ruled that Ker and Co is liable as
a commercial broker. Ker has a contract with US
rubber. Ker is the distributor of the said company.
Ker was precluded from disposing the products
elsewhere unless there has been a written consent
from the company. The prices, discounts, terms of
payment, terms of delivery and other conditions of
sale were subject to change in the discretion of the
Company.
Issue:
Whether the relationship of Ker and Co and US
rubber was that of a vendor- vendee or principal-
broker
Ruling:
The relationship of Ker and Co and US rubber wasthat of a principal-broker/ agency. Ker and Co is
only an agent of the US rubber because it can
dispose of the products of the Company only to
certain persons or entities and within stipulated
limits, unless excepted by the contract or by the
Rubber Company, it merely receives, accepts and/or
holds upon consignment the products, which remain
properties of the latter company, every effort shall be
made by petitioner to promote in every way the sale
of the products and that sales made by petitioner are
subject to approval by the company. Since the
company retained ownership of the goods, even as it
delivered possession unto the dealer for resale tocustomers, the price and terms of which were
subject to the companys control, the relationship
between the company and the dealer is one of
agency.
LIM vs. PEOPLE
G.R. No. L-34338 November 21, 1984
RELOVA,J
FACTS:
Lourdes Lim went to the house of Maria de Guzman
and proposed to sell the latters tobacco.
Maria agreed with the proposal. Hence the execution
of a receipt manifesting that Lourdes received 615
kilos of tobacco to be sold at P1.30 per kilo, the
overprice for which would be received by Lourdes.
The receipt also states that the proceeds will be
given to Mariaas soon as it was sold. However,
Lourdes paid only P240, despite repeated demands.
5. Thus, Maria filed a complaint, and Lourdes was
found guilty of estafa. (Estafa is present where
contract to sell constituted another as mere agent)
Lourdes argued that the receipt was a contract of
sale and not a contract of agency to sell.
ISSUE:Is Lourdes argument tenable?
RULING:
NO. The contract was not a contract of sale because
there was no transfer of ownership of the goods to
Lourdes. Instead, the agreement was a contract of
agency to sell for it constituted Lourdes as agent
with the obligation to give the proceeds of the sale to
Maria as soon as the same was sold. The obligation
was immediately demandable as soon as the tobacco
was disposed of. Consequently, there is no need for
the court to fix the duration of the obligation, as
contended by Lourdes.
NARIC vs. CA
G.R. No. L-32320, July 16, 1979
FACTS:
The National Rice and Corn Corporation (Naric) had
on stock 8000 metric tons of corn which it could not
dispose of due to its poor quality. Naric called for
bids for the purchase of the corn and rice. But
precisely because of the poor quality of the corn, a
direct purchase of said corn even with the privilege
of importing commodities did not attract good offers.Davao Merchandising Corporation (Damerco) came
in with its offer to act as agent in the exportation of
the corn, with the agent answering for the price
thereof and shouldering all expenses incidental
thereto, provided it can import commodities, paying
the NARIC therefor from the price it offered for the
corn. Damerco was to open a domestic letter of
credit, which shall be available to the NARIC drawing
therefrom through sight draft without recourse. The
availability of said letter or letters of credit to the
NARIC was dependent upon the issuance of the
export permit. The payment therefor depended on
the importation of the collateral goods, that is afterits arrival.
The first half of the collateral goods were
successfully imported. Due to the inferior quality of
the corn, it had to be replaced with more acceptable
stock. This caused such delay that the letters of
credit expired without the NARIC being able to draw
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the full amount therefrom. Checks and PN were
issued by DAMERCO for the purpose of securing the
unpaid part of the price of the corn and as guaranty
that DAMERCO will purchase the corresponding
collateral goods.
But because of the change of administration in the
government, barter transactions were suspended.
Hence, DAMERCO was not able to import the
remaining collateral goods. NARIC instituted in the
CFI of Manila against DAMERCO and Fieldmens
Insurance Co. Inc. an action for recovery of a sum of
money representing the balance of the value of corn
and rice exported by DAMERCO. The trial court
rendered in favor of NARIC ordering DAMERCO and
Fieldmens Insurance Co. Inc., to pay, jointly and
severally. CA reversed the trial courts decision and
rendered a new judgement dismissing the complaint
as premature and for lack of cause of action. Hence
this petition for certiorari.
ISSUE:
Whether DAMERCO only acted as an agent of NARIC
or is a buyer
HELD:
The petition for review is denied and the resolution
of the CA appealed from is hereby affirmed
AGENT
Clearly from the contract between NARIC and
DAMERCO: bids were previously called for by theNARIC for the purchase of corn and rice to be
exported as well as of the imported commodities that
will be brought in, but said biddings did not succeed
in attracting good offers. Subsequently, Damerco
made an offer. Now, to be sure, the contract
designates the Naric as the seller and the Damerco
as the buyer. These designations, however, are
merely nominal, since the contract thereafter sets
forth the role of the buyer (Damerco) as agent of
the seller in exporting the quantity and kind of corn
and rice as well as in importing the collateral goods
thru barter and to pay the aforementioned collateral
goods.
The contract between the NARIC and the DAMERCO
is bilateral and gives rise to a reciprocal obligation.
The said contract consists of two parts: (1) the
exportation by the DAMERCO as agent for the
NARIC of the rice and corn; and (2) the importation
of collateral goods by barter on a back to back letter
of credit or no-dollar remittance basis. It is evident
that the DAMERCO would not have entered into the
agreement were it not for the stipulation as to the
importation of the collateral goods which it could
purchase.
It appears that we were also misled to believe that
the Damerco was buying the corn. A closer look at
the pertinent provisions of the contract, however,
reveals that the price as stated in the contract was
given tentatively for the purpose of fixing the price in
barter. It should likewise be stressed that the
aforesaid exportation and importation was on a no-
dollar remittance basis. In other words, the agent,
herein defendant Damerco, was not to be paid by its
foreign buyer in dollars but in commodities.
Damerco could not get paid unless the commodities
were imported, and Damerco was not exporting and
importing on its own but as agent of the plaintiff,
because it is the latter alone which could export and
import on barter basis according to its charter.
Thus, unless Damerco was made an agent of the
plaintiff, the former could not export the corn and
rice nor import at the same time the collateral
goods. This was precisely the intention of the
parties.
He is not to be considered a buyer, who should be
liable for the sum sought by NARIC because the
contract itself clearly provides the Damerco was to
export the rice and corn, AND TO BUY THE
collateral goods. There is nothing in the contract
providing unconditionally that Damerco was buyingthe rice and corn. To be more specific, if the
agreement was just a sale of corn to Damerco, the
contract need not specify that Damerco was to buy
the collateral goods.
SSS vs. CA(120 SCRA 707)
FACTS:
Spouses David and Socorro Cruz, applied and
granted a real estate loan by the SSS with residential
lot located at Pateros, Rizal as collateral. The
spouses Cruz complied with their monthlypayments. When delayed were incurred in their
monthly payments SSS filed a petition for foreclosure
of their real estate mortgage executed by the spouses
Cruz on the ground that the spouses Cruz defaulted
in payment, Pursuant for these application for
foreclosure notices were published on the second
notice the counsel for spouses Cruz sent a letter to
SSS informing the latter that his clients are up to
date in their payment of the monthly amortization
and the SSS should discontinued the publication of
the notices of foreclosure. This request remain
unheeded, this spouses Cruz filed an action fordamages against SSS before RTC in Rizal. SSS
invoking its immunity from suit being an agency of
the government performing government function.
The trial court and court of appeal nevertheless
awarded damages in favor of spouses Cruz which
was affirmed by court of appeal, Hence this petition.
ISSUE:
Whether or not SSS is immune from suit?
HELD:
Negative.The SSS has a distinct legal personality and
it can be sued for damages. The SSS does not enjoyimmunity from suit by express statutory consent. It
has corporated power separate and distinct from the
government. SSS own organic act specifically
provides that it can sue and be sued in court. These
words sue and be sued embrace all civil process
incident to a legal action. So that even assuming
that the SSS, as it claims, enjoys immunity from suit
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as an entity performing governmental function, by
virtue of the explicit provision of the afore cited
enabling law, the government must be deemed to
have waived immunity in respect of the SSS,
although it does not thereby concede its liability that
statutory law has given to the private citizen a
remedy for the enforcement and protection of his
rights. The SSS thereby has been required to submit
to the jurisdiction of the court; subject to its right to
interpose any lawful defense.
Jai-Alai Corp. of the Phil. vs. Bank of the Phil.
Islands
G.R. No. L-29432 August 6, 1975 66 SCRA 29
FACTS:
Petitioner deposited 10 checks in its current account
with BPI. The checks which were acquired by
petitioner from Ramirez, a sales agent of the Inter-
Island Gas were all payable to Inter-Island Gas
Service, Inc. or order. After the checks had beensubmitted to Inter-bank clearing, Inter-Island Gas
discovered that all the indorsements made on the
checks purportedly by its cashiers were forgeries.
BPI thus debited the value of the checks against
petitioner's current account and forwarded to the
latter the checks containing the forged indorsements
which petitioner refused to accept.
ISSUE:
Whether BPI had the right to debit from petitioner's
current account the value of the checks with the
forged indorsements.
RULING:
BPI acted within legal bounds when it debited the
petitioner's account. Having indorsed the checks to
respondent bank, petitioner is deemed to have given
the warranty prescribed in Section 66 of the NIL that
every single one of those checks "is genuine and in
all respects what it purports to be." Respondent
which relied upon the petitioner's warranty should
not be held liable for the resulting loss.
**The depositor of a check as indorser warrants that
it is genuine and in all respects what it purports tobe. Having indorsed the checks to respondent bank,
petitioner is deemed to have given the warranty
prescribed in Section 66 of the NIL that every single
one of those checks " is genuine and in all respects
what it purports to be."
Conde V. CA
RATIO DECIDENDI
| Melencio-Herrera, J. (1982)
The purpose of the rule is to give stability to written
agreements, and to remove the temptation and
possibility of perjury, which would be afforded if
parol evidence was admissible.
FACTS
Margarita Conde, Bernardo Conde and
Dominga Conde sold with a right of repurchase,
within 10 years from, a parcel of agricultural land to
the Altera Spouses.
o The contract provided that: If at the end of
10 years the said land is not repurchased, a new
agreement shall be made between the parties and in
no case title and ownership shall be vested in the
hand of the party of the Second Part (Alteras).
The Cadastral Court of Leyte then
adjudicated the lot to the Alteras subject to the right
of redemption counting from 7 April 1938 after
returning the amount of PHP 165.00
On 28 November 1945, Paciente Cordero,
son-in-law of the Alteras signed a document allowing
Eusebio Amarille, the representative of the Condes,
to repurchase the land.
On 30 June 1965, Pio Altera sold the
disputed lot to the spouses Ramon Conde and
Catalina Conde. (Relationship to the other Condes
were not shown)
Dominga then filed a Complaint for quieting
of title to property.
ISSUE/HELD
WoN Dominga Conde validly repurchased the said lot
- YES
RATIO
An implied agency was created from the
silence or lack of action, or their failure to repudiate
the agreement.
The Alteras did not repudiate the agreement
that their son-in-law signed.
From the execution of the repurchase
document in 1945, possession, which heretofore hadbeen with the Alteras, has been in the hands of
Dominga Conde as stipulated therein.
Land taxes has already been paid for by
Dominga Conde.
Ramon and Catalina Conde are not
purchasers in good faith.
o The OCT in the name of the Alteras
specifically contained the condition that it was
subject to the right of repurchase within 10 years
from 1938.
o Although the 10 year period had lapsed in
1965, and there was no annotation of any
repurchase by Dominga Conde, neither had the title
been cleared of the encumbrance.
They were put on notice that some other
person could have a right to or interest in said
property.
The Conde spouses conends that Paciente
Cordero signed the document of repurchase merely
to show that he had no objection to the repurchase.
They introduced evidence for this purpose.
o There is nothing in the document of
repurchase to show that Paciente Cordero had
signed the same merely to indicate that he had no
objection to Dominga Condes right of repurchase.o At the same time, he had no personality to
object.
o To uphold his oral testimony on that point,
would be a departure from the parol evidence rule
and would defeat the purpose for which the doctrine
is intended.
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The purpose of the rule is to give stability to
written agreements, and to remove the temptation
and possibility of perjury, which would be afforded if
parol evidence was admissible.
Naguiat vs CA and Queao
GR No. 118375, 03 October 2003
412 SCRA 591
FACTS
Queao applied with Naguiat a loan for P200,000,
which the latter granted. Naguiat indorsed to
Queao Associated bank Check No. 090990 for the
amount of P95,000 and issued also her own
Filmanbank Check to the order of Queao for the
amount of P95,000. The proceeds of these checks
were to constitute the loan granted by Naguiat to
Queao. To secure the loan, Queao executed a
Deed of Real Estate Mortgage in favor of Naguiat,
and surrendered the owners duplicates of titles of
the mortgaged properties. The deed was notarizedand Queao issued to Naguiat a promissory note for
the amount of P200,000. Queao also issued a post-
dated check amounting to P200,000 payable to the
order of Naguait. The check was dishonoured for
insufficiency of funds. Demand was sent to Queao.
Shortly, Queao, and one Ruby Reubenfeldt met
with Naguiat. Queao told Naguiat that she did not
receive the loan proceeds, adding that the checks
were retained by Reubenfeldt, who purportedly was
Naguiats agent.
Naguiat applied for extrajudicial foreclosure of the
mortgage. RTC declared the Deed as null and voidand ordered Naguiat to return to Queao the owners
duplicates of titles of the mortgaged lots.
ISSUE
Whether or not the issuance of check resulted in the
perfection of the loan contract.
HELD
The Court held in the negative. No evidence was
submitted by Naguiat that the checks she issued or
endorsed were actually encashed or deposited. The
mere issuance of the checks did not result in theperfection of the contract of loan. The Civil Code
provides that the delivery of bills of exchange and
mercantile documents such as checks shall produce
the effect of payment only when they have been
cashed. It is only after the checks have been
produced the effect of payment that the contract of
loan may have been perfected.
Article 1934 of the Civil Code provides: An accepted
promise to deliver something by way of commodatum
or simple loan is binding upon the parties, but the
commodatum or simple loan itsel shall not be
perfected until the delivery of the object of thecontract. A loan contract is a real contract, not
consensual, and as such, is perfected only upon the
delivery of the objects of the contract.
Prats v. Court of Appeals G.R. No. L-39822,
January 31, 1978,
Fernandez, J.
Facts:
In 1968, Antonio Prats, under the name of
Philippine Real Estate Exchange instituted against
Alfonso Doronilla and PNB a case to recover a sum of
money and damages. Doronilla had for sometime
tried to sell his 300 ha land and he had designated
several agents for that purpose at one time. He
offered the property to the Social Security System
but was unable to consummate the sale.
Subsequently he gave a written authority in writing
to Prats to negotiate the sale of the property. Such
authorization was published by Prats in the Manila
Times. The parties agreed that Prats will be entitled
to 10% commission and if he will be able to sell it
over its price, the excess shall be credited to the
latter plus his commission. Thereafter, Prats
negotiated the land to the SSS. SSS invited Doronilla
for a conference but the latter declined and insteadinstructed that the former should deal with Prats
directly. Doronilla had received the full payment
from SSS. When Prats demanded from him his
professional fees as real estate broker, Doronilla
refused to pay. Doronilla alleged that Prats had no
right to demand the payment not rendered according
to their agreement and that the authority extended
to Prats had expired prior to the closing of the sale..
Issue:
Whether petitioner was the efficient procuring cause
in bringing about the sale of respondents land to
the SSS.
Ruling:
The Supreme Court ruled that Prats was not the
efficient procuring cause of the sale. It was not
categorical that it was through Prats efforts that
meeting with the SSS official to close the sale took
place. The court concluded that the meeting took
place independently because the SSS had
manifested disinterest in Prats intervention.
However, in equity, the court noted that Prats had
diligently taken steps to bring back togetherDoronilla and SSS. Prats efforts somehow were
instrumental in bringing them together again and
finally consummating the sale although such
finalization was after the expiration of Prats
extended exclusive authority. Doronilla was ordered
to pay Prats for his efforts and assistance in the
transaction.
AF Realty & Development, Inc. vs Dieselman
Freight Services, Co
Facts:
In 1988, Manuel Cruz, Jr., a board member of
Dieselman Freight Services, Co. (DFS) authorized
Cristeta Polintan to sell a 2,094 sq. m. parcel of land
owned by DFS. Polintan in turn authorized
Felicisima Noble to sell the same lot. Noble then
offered AF Realty & Development, Co., represented
by Zenaida Ranullo, the land at the rate of
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P2,500.00 per sq. m. AF Realty accepted the offer
and issued a P300,000 check as downpayment.
However, it appeared that DFS did not authorize
Cruz, Jr. to sell the said land. Nevertheless, Manuel
Cruz, Sr. (father) and president of DFS, accepted the
check but modified the offer. He increased the selling
price to P4,000.00 per sq. m. AF Realty, in its
response, did not exactly agree nor disagree with the
counter-offer but only said it is willing to pay the
balance (but was not clear at what rate). Eventually,
DFS sold the property to someone else.
Now AF Realty is suing DFS for specific performance.
It claims that DFS ratified the contract when it
accepted the check and made a counter-offer.
ISSUE:
Whether or not the sale made through an agent was
ratified.
HELD:
No. There was no valid agency created. The Board of
Directors of DFS never authorized Cruz, Jr. to sell
the land. Hence, the agreement between Cruz, Jr.
and Polintan, as well as the subsequent agreement
between Polintan and Noble, never bound the
corporation. Therefore the sale transacted by Noble
purportedly on behalf of Polintan and ultimately
purportedly on behalf of DFS is void.
Being a void sale, it cannot be ratified even if Cruz,
Sr. accepted the check and made a counter-offer.
(Cruz, Sr. returned the check anyway). Under Article1409 of the Civil Code, void transactions can never
be ratified because they were void from the very
beginning.
Manotoc vs. CA | May 30, 1986
FACTS:
Ricardo Manotoc Jr. was one of the two principal
stockholders of Trans-Insular Management Inc. and
the Manotoc Securities Inc. (stock brokerage house).
He was in US for a certain time, went home to file apetition with SEC for appointment of a management
committee for both businesses. Such was granted.
However, pending disposition of a case filed with
SEC, the latter requested the Commissioner of
Immigration not to clear him for departure.
Consequently, a memorandum to this effect was
issued.
There was a torrens title submitted to and accepted
by Manotoc Securities Inc which was suspected to be
fake. 6 of its clients filed separate criminal
complaints against the petitioner and Leveriza,
President and VP respectively. He was charged withestafa and was allowed by the Court to post bail.
Petitioner filed before each trial court motion for
permission to leave the country stating his desire to
go to US relative to his business transactions and
opportunities. Such was opposed by the
prosecution and was also denied by the judges. He
filed petition for certiorari with CA seeking to annul
the prior orders and the SEC communication
request denying his leave to travel abroad.
According to the petitioner, having been admitted to
bail as a matter of right, neither the courts that
granted him bail nor SEC, which has no jurisdiction
over his liberty, could prevent him from exercising
his constitutional right to travel.
ISSUE:
WON petitioners constitutional right to travel was
violated.
HELD:
NO. The court has power to prohibit person admitted
to bail from leaving the country because this is a
necessary consequence of the nature and function ofa bail bond. The condition imposed upon petitioner
to make himself available at all times whenever the
court requires his presence operates as a valid
restriction on his constitutional right to travel. In
case he will be allowed to leave the country without
sufficient reason, he may be placed beyond the
reach of courts.
Furthermore, petitioner failed to satisfy trial court
and CA of the urgency of his travel, duration thereof,
as well as consent of his surety to the proposed
travel. He was not able to show the necessity of his
travel abroad. He never indicated that no other
person in his behalf could undertake such business
transaction.
Article 3 Sec6: The liberty of abode and of changing
the same shall not be impaired except upon lawful
order of the court. According to SC, the order of
trial court in releasing petitioner on bail constitutes
such lawful order as contemplated by the provision
on right to travel.
SIASAT vs. INTERMEDIATE APPELLATE COURT
G.R. No. L-67889, October 10, 1985
GUTIERREZ, JR.,
J.
FACTS:
Teresita Nacianceno succeeded in convincing
officials of the Department of Education and Culture
to purchase without public bidding, one million
pesos worth of national flags for the use of public
schools throughout the country. Nancianceno was
able to expedite the approval of the purchase. All the
legal requirements had been complied with, except
the release of the purchase orders. She was
informed by the Chief of the Budget Division of the
Department that the purchase orders could not be
released unless a formal offer to deliver the flags was
first submitted for approval. She contacted the
owners of the United Flag Industry. Mr. Primitivo
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Siasat, owner and general manager of United Flag
Industry came up with a document which read:
Mrs. Tessie Nacianceno,
This is to formalize 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 (30%) percent.
Signed Mr. Primitive Siasat Owner and Gen.
Manager
The first delivery of 7,933 flags was made by the
United Flag Industry.
Then, Nanciancenos authority to represent the
United Flag Industry was revoked by Primitivo Siasat
on theground that she was not authorized to sell 16,
666 Philippine flags to the Department.Nanciancenosaid that for the first delivery, United Flag Industry
tendered the amount of P23,900.00 or five percent
(5%) of the amount received as payment of her
commission. She refused to accept the said amount
insisting on the 30% commission agreed upon. She
later learned that petitioner Siasat had already
received payment for the second delivery of 7,833
flags. When she confronted the petitioners, they
vehemently denied receipt of the payment, at the
same time claimed that the respondent had no
participation whatsoever with regard to the second
delivery of flags and that the agency had already
been revoked. Nancianceno filed an action in theCourt of First Instance 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 favor of the respondent.
The decision was affirmed in toto by the
Intermediate Appellate Court.
ISSUE:
1. Did Nancianceno have the capacity to represent
United Flag in the transaction with the Department?
2. Did the revocation of agency foreclose the
respondent's claim of 30% commission on the
second transaction?
RULING:
YES, she had the capacity to represent United Flag
In fact, she was a general agent. There are several
kinds of agents. An agent may be (1) universal: (2)
general, or (3) special. A universal; agent is one
authorized to do all acts for his principal which can
lawfully be 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 oneauthorized to do all acts pertaining to a business of
a certain kind 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.
An agent, therefore, who is empowered to transact all
the business of his principal of a particular kind or
in a particular place, would, for this reason, be
ordinarily deemed a general agent A special agent is
one authorized to do some particular act or to act
upon some particular occasion. lie acts usually in
accordance with specific instructions or under
limitations necessarily implied from the nature of
the act to be done.
By the way general words were employed in the
agreement, 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 the execution
of, a contract of sale of petitioners' merchandise with
any entity or organization. There was nothing to
prevent the petitioners from stating in the contract
of agency that the respondent could represent themonly in the Visayas or to state that the Department
of Education and Culture and the Department of
National Defense, which alone would need a million
pesos worth of flags, are outside the scope of the
agency. 2.
NO, the revocation did not foreclose the respondents
claimed of 30% commission on the second
transaction. The revocation of agency could not
prevent the Nancianceno from earning her
commission because the contract of sale had been
already perfected and partly executed. The principal
cannot deprive his agent of the commission agreedupon by cancelling the agency and, thereafter,
dealing directly with the buyer.
Shoppers Paradise Realty & Development
Corporation vs. Felipe Roque
(G.R. No. 148775, January 13, 2004, 419 SCRA 93)
FACTS:
On 23 December 1993, petitioner Shoppers Paradise
Realty & Development Corporation, represented by
its president, Veredigno Atienza, entered into a
twenty-five year lease with Dr. Felipe C. Roque, nowdeceased, over a parcel of land. Simultaneously,
petitioner and Dr. Roque likewise entered into a
memorandum of agreement for the construction,
development and operation of a commercial building
complex on the property. Conformably with the
agreement, petitioner issued a check for another
P250,000.00 "downpayment" to Dr. Roque.
The contract of lease and the memorandum of
agreement, both notarized, were to be annotated on
TCT No. 30591 within sixty (60) days from 23
December 1993 or until 23 February 1994. The
annotations, however, were never made because ofthe untimely demise of Dr. Felipe C. Roque. The
death of Dr. Roque on 10 February 1994 constrained
petitioner to deal with respondent Efren P. Roque,
one of the surviving children of the late Dr. Roque,
but the negotiations broke down due to some
disagreements. Respondent then filed a case for
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annulment of the contract of lease and the
memorandum of agreement, with a prayer for the
issuance of a preliminary injunction.
Efren P. Roque alleged that he had long been the
absolute owner of the subject property by virtue of a
deed of donation inter vivos executed in his favor by
his parents, Dr. Felipe Roque and Elisa Roque, on 26
December 1978, and that the late Dr. Felipe Roque
had no authority to enter into the assailed
agreements with petitioner. The donation was made
in a public instrument duly acknowledged by the
donor-spouses before a notary public and duly
accepted on the same day by respondent before the
notary public in the same instrument of donation.
The title to the property, however, remained in the
name of Dr. Felipe C. Roque, and it was only
transferred to and in the name of respondent sixteen
years later, or on 11 May 1994.
The trial court dismissed the complaint of therespondent, explaining that "(o)rdinarily, a deed of
donation need not be registered in order to be valid
between the parties. Registration, however, is
important in binding third persons. Thus, when
Felipe Roque entered into a leased contract with
defendant corporation, plaintiff Efren Roque (could)
no longer assert the unregistered deed of donation
and say that his father, Felipe, was no longer the
owner of the subject property at the time the lease
on the subject property was agreed upon."
On appeal, the Court of Appeals reversed the
decision of the trial court, explaining that petitionerwas not a lessee in good faith having had prior
knowledge of the donation in favor of respondent,
and that such actual knowledge had the effect of
registration insofar as petitioner was concerned.
HELD:
The existence, albeit unregistered, of the donation in
favor of respondent is undisputed. The trial court
and the appellate court have not erred in holding
that the non-registration of a deed of donation does
not affect its validity. As being itself a mode of
acquiring ownership, donation results in an effective
transfer of title over the property from the donor to
the donee. In donations of immovable property, the
law requires for its validity that it should be
contained in a public document, specifying therein
the property donated and the value of the charges
which the donee must satisfy. The Civil Code
provides, however, that "titles of ownership, or other
rights over immovable property, which are not duly
inscribed or annotated in the Registry of Property
(now Registry of Land Titles and Deeds) shall not
prejudice third persons." It is enough, between the
parties to a donation of an immovable property, that
the donation be made in a public document but, inorder to bind third persons, the donation must be
registered in the registry of Property (Registry of
Land Titles and Deeds). Consistently, Section 50 of
Act No. 496 (Land Registration Act), as so amended
by Section 51 of P.D. No. 1529 (Property Registration
Decree), states:
"SECTION 51. Conveyance and other dealings by
registered owner.- An owner of registered land may
convey, mortgage, lease, charge or otherwise deal
with the same in accordance with existing laws. He
may use such forms of deeds, mortgages, leases or
other voluntary instruments as are sufficient in law.
But no deed, mortgage, lease, or other voluntary
instrument, except a will purporting to convey or
affect registered land shall take effect as a
conveyance or bind the land, but shall operate only
as a contract between the parties and as evidence of
authority to the Register of Deeds to make
registration.
"The act of registration shall be the operative act to
convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the
registration shall be made in the office of the
Register of Deeds for the province or city where theland lies."
Petition denied.
BA Finance Corp vs. CA
GR 61464, May 28 1988
FACTS:
Augusto Yulo secured a loan from the petitioner in
the amount of P591,003.59 as evidenced by a
promissory note he signed in his own behalf and as
a representative of A&L Industries. Augustopresented an alleged special power of attorney
executed by his wife, Lily Yulo, who managed the
business and under whose name the said business
was registered, purportedly authorized the husband
to procure the loan and sign the promissory note.
2months prior the procurement of the loan, Augusto
left Lily and their children which in turn abandoned
their conjugal home. When the obligation became
due and demandable, Augusto failed to pay the
same.
The petitioner prayed for the issuance of a writ of
attachment alleging that said spouses were guilty of
fraud consisting of the execution of Deed of
Assignment assigning the rights, titles and interests
over a construction contract executed by and
between the spouses and A. Soriano Corporation.
The writ hereby prayed for was issued by the trial
court and not contented with the order, petitioner
filed a motion for the examination of attachment
debtor alleging that the properties attached by the
sheriff were not sufficient to secure the satisfaction
of any judgment which was likewise granted by the
court.
ISSUE:
WON A&L Industries can be held liable for the
obligations contracted by the husband.
HELD:
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A&L Industries is a single proprietorship, whose
registered owner is Lily Yulo. The said
proprietorship was established during the marriage
and assets were also acquired during the same.
Hence, it is presumed that the property forms part
of the conjugal partnership of the spouses and be
held liable for the obligations contracted by the
husband. However, for the property to be liable, the
obligation contracted by the husband must have
redounded to the benefit of the conjugal partnership.
The obligation was contracted by Augusto for his
own benefit because at the time he incurred such
obligation, he had already abandoned his family and
left their conjugal home. He likewise made it appear
that he was duly authorized by his wife in behalf of
the company to procure such loan from the
petitioner. Clearly, there must be the requisite
showing that some advantage accrued to the welfare
of the spouses.
Thus, the Court ruled that petitioner cannot enforcethe obligation contracted by Augusto against his
conjugal properties with Lily. Furthermore, the writ
of attachment cannot be issued against the said
properties and that the petitioner is ordered to pay
Lily actual damages amouting to P660,000.00.
Bicol Savings and Loan Association vs. CA
Facts:
Juan de Jesus was the owner of a parcel of land in
Naga City. He executed a Special Power of
Attorney in favor of Jose de Jesus, his son, whereinthe latter could negotiate and mortgage the formers
property in any bank preferably in the Bicol Savings
and Loan Association. By virtue of such document,.
Jose was able to obtain P20,000 from Bicol Savings.
To secure payment, he executed a deed of mortgage
wherein it was stipulated that upon the mortgagors
failure or refusal to pay the obligation, the mortgagee
may immediately foreclose the property. Juan de
Jesus died and the loan obligation was not paid. As
a result, Bicol Savings extrajudicially foreclosed the
mortgaged property. The bank won as the highest
bidder during the auction sale. Jose and the otherheirs failed to redeem the property. Thereafter,
theytried to negotiate with Bicol Savings but the
parties did not come up to an agreement. Bicol
Savings sold the property to another person. Hence,
Jose filed for annulment of the foreclosure sale. The
lower court dismissed the case. On appeal, the CA
reversed RTCs decision. Hence, this appeal.
Issue:
Whether or not the extrajudicial foreclosure sale of
the property was valid.
Ruling.
Yes. Art 1879 of the CC which states that special
power to sell excludes the power to mortgageand vice
versa is inapplicable in the case. What it proscribes
is a voluntary and independent contract of sale and
not an auction sale resulting from extrajudicial
foreclosure caused by the default of themortgagor.
The power to foreclose is not an ordinary agency but
is primarily conferred upon themortgagee for its
protection. The right of the bank to foreclose is
independent of the mortgage contract asit is
recognized by the Rules of Court.
Rural Bank of Bombon v CA
G.R. No. 95703 | August 3, 1992
Ederlinda Gallardo transacted with Rufino Aquino,
contracting him to be her agent and providing him
with a Special Power of Attorney authorizing him to
mortgage her property in her behalf for the purpose
of securing loans from banks. She provided him with
the TCT to the property as well. Rufino Aquino
secured a loan from Rural Bank of Bombon forthe
amount of PhP350,000.00 as principal and
chargeable with a 14% interest per annum. In the
contract of mortgage, he represented himself to be
the attorney-in-fact of Gallardo, but proceeded tosign his name as mortgagor. He even got his wife to
sign the documents as wife of mortgagor. Gallardo,
upon knowing of the transaction, went to court to
secure the annulment of such contract since she
was allegedly surprised to find out that her property
was already mortgaged and correspondence
regarding the contract of mortgage were not being
sent to her, and instead sent to the address of
Aquino, who has since disappeared from Bulacan
and now resides in Camarines Sur. Further, the
mortgage was secured to pay off personal loans of
Aquino and to establish his personal fishpond
business. RTC issued a TRO restraining Rural Bankof Bombon to foreclose the mortgage. In his Answer,
Aquino alleged that Gallardo owed him money and it
was already the responsibility of Aquino to take care
of payments due. RTC ruled in favor of Aquino and
Bank of Bombon.CA reversed the ruling of the RTC
and held that the Deal of Real Estate Mortgage was
not valid. It not binding on the principal Gallardo
since it was executed not in her name as principal
but in the personal capacity of the Aquino spouses.
Issue:
WON the Deed of Real Estate Mortgage executed by
Rufino S.Aquino as attorney-in-fact of Ederlinda
Gallardo in favor of the Rural Bank of Bombon is
valid.
Held:
No. Aquino signed the Deed of Real Estate Mortgage
in his name alone as mortgagor, without any
indication that he was signing for and in behalf of
the property owner, Ederlinda Gallardo. He bound
himself alone in his personal capacity as a debtor of
the petitioner Bank and not as the agent or attorney-
in-fact of Gallardo:
It is a general rule in the law of agency that, in order
to bind the principal by a mortgage on real property
executed by an agent, it must upon its face purport
to be made, signed and sealed in the name of the
principal, otherwise, it will bind the agent only. It is
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not enough merely that the agent was in fact
authorized to make the mortgage, if he has not acted
in the name of the principal. Neither is it ordinarily
sufficient that in the mortgage the agent describes
himself as acting by virtue of a power of attorney, if
in fact the agent has acted in his own name and has
set his own hand and seal to the mortgage. This is
especially true where the agent himself is a party to
the instrument. However clearly the body of the
mortgage may show and intend that it shall be the
act of the principal, yet, unless in fact it is executed
by the agent for and on behalf of his principal and as
the act and deed of the principal, it is not valid as to
the principal. (Philippine Sugar Estates Development
Co. vs. Poizat)Bank cannot rely on Article 1883 to
bind the principal Gallardo. It is not applicable to
the case at bar. Article 1883statesin such case the
agent is the one directly bound in favor of the person
with whom he has transacted, as if the transaction
was his own, except when the contract involves
things belonging to the principal.There is no principle of law by which a person can
become liable on a real mortgage which she never
executed either in person or by attorney in fact.
Here, Aquino acted purportedly as an agent of
Gallardo, but actually acted in his personal capacity.
Involved herein are properties titled in the name of
respondent Gallardo against which the Bank
proposes to foreclose the mortgage constituted by an
agent (Aquino)acting in his personal capacity.
G.R. No. L-32116 April 2l, 1981 RURAL BANK OF
CALOOCAN, INC. and JOSE O. DESIDERIO, JR.,
petitioners, vs. THE COURT OF APPEALS and
MAXIMA CASTRO, respondents.
FACTS:
Maxima Castro, accompanied by Severino Valencia,
went to the Rural Bank of Caloocan to apply for a
loan. Valencia arranged everything about the loan
with the bank. He supplied to the latter the personal
data required for Castro's loan application. After the
bank approved the loan for the amount of
P3,000.00, Castro, accompanied by the Valencia
spouses, signed a promissory note corresponding to
her loan in favor of the bank. On the same day, theValencia spouses obtained from the bank an equal
amount of loan for P3,000.00. They signed another
promissory note (Exhibit "2") corresponding to their
loan in favor of the bank and had Castro affixed
thereon her signature as co-maker. Both loans were
secured by a real-estate mortgage on Castro's house
and lot. Later, the sheriff of Manila sent a notice to
Castro, saying that her property would be sold at
public auction to satisfy the obligation covering the
two promissory notes plus interest and attorney's
fees. Upon request by Castro and the Valencias and
with conformity of the bank, the auction sale was
postponed, but was nevertheless auctioned at a laterdate. Castro claimed that she is a 70-year old widow
who cannot read and write in English. According to
her, she has only finished second grade. She needed
money in the amount of P3,000.00 to invest in the
business of the defendant spouses Valencia, who
accompanied her to the bank to secure a loan of
P3,000.00. While at the bank, an employee handed
to her several forms already prepared which she was
asked to sign, with no one explaining to her the
nature and contents of the documents. She also
alleged that it was only when she received the letter
from the sheriff that she learned that the mortgage
contract which was an encumbrance on her property
was for P6.000.00 and not for P3,000.00 and that
she was made to sign as co-maker of the promissory
note without her being informed. Castro filed a suit
against petitioners contending that thru mistake on
her part or fraud on the part of Valencias she was
induced to sign as co-maker of a promissory note
and to constitute a mortgage on her house and lot to
secure the questioned note. At the time of filing her
complaint, respondent Castro deposited the amount
of P3,383.00 with the court a quo in full payment of
her personal loan plus interest. Castro prayed for: (1)
the annulment as far as she is concerned of the
promissory note (Exhibit "2") and mortgage (Exhibit
"6") insofar as it exceeds P3,000.00; and that shewas made to sign as co-maker of the promissory
note without her being informed. Castro filed a suit
against petitioners contending that thru mistake on
her part or fraud on the part of Valencias she was
induced to sign as co-maker of a promissory note
and to constitute a mortgage on her house and lot to
secure the questioned note. At the time of filing her
complaint, respondent Castro deposited the amount
of P3,383.00 with the court a quo in full payment of
her personal loan plus interest. Castro prayed for:(1)
the annulment as far as she is concerned of the
promissory note (Exhibit "2") and mortgage (Exhibit
"6") insofar as it exceeds P3,000.00; and(2) for thedischarge of her personal obligation with the bank
by reason of a deposit of P3,383.00 with the court a
quo upon the filing of her complaint.
ISSUE:
Whether or not respondent court correctly affirmed
the lower court in declaring the promissory note
(Exhibit 2) invalid insofar as they affect respondent
Castro vis-a-vis petitioner bank, and the mortgage
contract (Exhibit 6) valid up to the amount of
P3,000.00 only.
HELD:
Yes While the Valencias defrauded Castro by making
her sign the promissory note and the mortgage
contract, they also misrepresented to the bank
Castro's personal qualifications in order to secure its
consent to the loan. Thus, as a result of the fraud
upon Castro and the misrepresentation to the bank
inflicted by the Valencias both Castro and the bank
committed mistake in giving their consents to the
contracts.In other words, substantial mistake
vitiated their consents given. For if Castro had beenaware of what shesigned and the bank of the true
qualifications of the loan applicants, it is evident
that they would not have given their consents to the
contracts. Article 1342 of the Civil Code which
provides: Art. 1342. Misrepresentation by a third
person does not vitiate consent, unless such
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misrepresentation has created substantial mistake
and the same is mutual. We cannot declare the
promissory note valid between the bank and Castro
and the mortgage contract binding on Castro beyond
the amount of P3,000.00, for while the contracts
may not be invalidated insofar as they affect the
bank and Castro on the ground of fraud because the
bank wasnot a participant thereto, such may
however be invalidated on the ground of substantial
mistake mutually committed by them as a
consequence of the fraud and misrepresentation
inflicted by the Valencias. Thus, in the case of Hill
vs. Veloso, this Court declared that a contract may
be annulled on the ground of vitiated consent if
deceit by a third person, even without connivance or
complicity with one of the contracting parties,
resulted in mutual error on the part of the parties to
the contract. The fraud particularly averred in the
complaint, having been proven, is deemed sufficient
basis for the declaration of the promissory note
invalid insofar as it affects Castro vis-a-vis the bank,and the mortgage contract valid only up to the
amount of P3,000.00
Ignacio Vicente vs Ambrosio Geraldez
FACTS:
In 1967, HI Cement Corporation was granted
authority to operate mining facilities in Bulacan.
However, the areas allowed for it to explore cover
areas which were also being explored by Ignacio
Vicente, Juan Bernabe, and Moises Angeles. And so
a dispute arose between the three and HI Cement as
neither side wanted to give up their mining claimsover the disputed areas. Eventually, HI Cement filed
a civil case against the three. During pre-trial, the
possibility of an amicable settlement was explored
where HI Cement offered to purchase the areas of
claims of Vicente et al at the rate of P0.90 per square
meter. Vicente et al however wanted P10.00 per
square meter.
In 1969, the lawyers of HI Cement agreed to enter
into a compromise agreement with the three
whereby commissioners shall be assigned by the
court for the purpose of assessing the value of the
disputed areas of claim. An assessment was
subsequently made pursuant to the compromise
agreement and the commissioners recommended a
price rate of P15.00 per square meter.
One of the lawyers of HI Cement, Atty. Francisco
Ventura, then notified the Board of Directors of HI
Cement for the approval of the compromise
agreement. But the Board disapproved the
compromise agreement hence Atty. Ventura filed a
motion with the court to disregard the compromise
agreement. Vicente et al naturally assailed the
motion. Vicente et al insisted that the compromiseagreement is binding because prior to entering into
the compromise agreement, the three lawyers of HI
Cement declared in open court that they are
authorized to enter into a compromise agreement for
HI Cement; that one of the lawyers of HI Cement,
Atty. Florentino Cardenas, is an executive official of
HI Cement; that Cardenas even nominated one of
the commissioners; that such act ratified the
compromise agreement even if it was not approved
by the Board. HI Cement, in its defense, averred that
the lawyers were not authorized and that in fact
there was no special power of attorney executed in
their favor for the purpose of entering into a
compromise agreement. Judge Ambrosio Geraldez
ruled in favor of HI Cement.
ISSUE:
Whether or not a compromise agreement entered
into by a lawyer purportedly in behalf of the
corporation is valid without a written authority.
HELD:
No. Corporations may compromise only in the form
and with the requisites which may be necessary to
alienate their property. Under the corporation law
the power to compromise or settle claims in favor of
or against the corporation is ordinarily and primarilycommitted to the Board of Directors but such power
may be delegated. The delegation must be clearly
shown for as a general rule an officer or agent of the
corporation has no power to compromise or settle a
claim by or against the corporation, except to the
extent that such power is given to him either
expressly or by reasonable implication from the
circumstances. In the case at bar, there was no
special power of attorney authorizing the three
lawyers to enter into a compromise agreement. This
is even if the lawyers declared in open court that
they are authorized to do so by the corporation (in
this case, the transcript of stenographic notes doesnot show that the lawyers indeed declare such in
open court). The fact that Cardenas, an officer of HI
Cement, acted in effecting the compromise
agreement, i.e. nominating a commissioner, does not
ratify the compromise agreement. There is no
showing that Cardenas act binds HI Cement; no
proof that he is authorized by the Board; no proof
that there is a provision in the articles of
incorporation of HI Cement that he can bind the
corporation.
Vda de Chua vs. CAGR No. 70909, January 5, 1994
FACTS:
Roberto Lim Chua, during his lifetime, lived out of
wedlock with private respondent Florita A. Vallejo
from 1970-1981. The couple had two illegitimate
children, Roberto Rafson Alonzo and Rudyard Pride
Alonzo, all surnamed Chua. Roberto died intestate
in Davao City on May 28, 1992. Vallejo filed on July
2, 1992 with RTC-Cotabato a petition for declaration
of guardianship of the two child and their properties
worth P5,000,000.00.
Antonietta Garcia Vda De Chua, the petitioner, filed
a motion alleging that she was the true wife of
Roberto. However, according to Vallejo, she is not
the surviving spouse of the latter but a pretender to
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the estate since the deceased never contracted
marriage with any woman and died a bachelor.
ISSUE:
Whether petitioner is indeed the true wife of Roberto
Chua.
HELD:
The court ruled that petitioner was not able to prove
her status as wife of the decedent. She could not
produce the original copy or authenticated copy of
their marriage certificate. Furthermore, a
certification from the Local Civil Registrar was
presented that no such marriage contract between
petitioner and Roberto Chua was ever registered with
them, attested by Judge Augusto Banzali, the alleged
person to have solemnized the alleged marriage, that
he has not solemnized such alleged marriage.
Hence, it is clear that petitioner failed to establish
the truth of her allegation that she was the lawful
wife of the decedent. The best evidence is a valid
marriage contract which she failed to produce.
NAPOCOR v. NATIONAL MERCHANDISING Corp.
G.R. Nos. L-33819 and L-33897; October 23, 1982
Ponente: J. Aquino
FACTS:
Plaintiff-appellant National Power Corporation (NPC)
and defendant- appellant National Merchandising
Corporation (NAMERCO), the Philippine
representative of New York-based International
Commodities Corporation, executed a contract of
sale of sulfur with a stipulation for liquidated
damages in case of breach.
Defendant-appellant Domestic Insurance Company
executed a performance bond in favor of NPC to
guarantee the seller's obligation. In entering into the
contract, Namerco, however, did not disclose to NPC
that Namerco's principal, in a cabled instruction,
stated that the sale was subject to availability of asteamer, and contrary to its principal's instruction,
Namerco agreed that non-availability of a steamer
was not a justification for non-payment of liquidated
damages.
The New York supplier was not able to deliver the
sulfur due to its inability to secure shipping space.
Consequently, the Government Corporate Counsel
rescinded the contract of sale due to the supplier's
non-performance of its obligations, and demanded
payment of liquidated damages from both Namerco
and the surety. Thereafter, NPC sued for recovery of
the stipulated liquidated damages. After trial, theCourt of First Instance rendered judgment ordering
defendants-appellants to pay solidarity to the NPC
reduced liquidated damages with interest.
ISSUE:
Whether NaMerCo exceeded their authority
HELD:
Yes, NaMerCo exceeded their authority. The Supreme
Court held that before the contract of sale was
signed Namerco was already aware that its principal
was having difficulties in booking shipping space.
It is being enforced against the agent because article1897 implies that the agent who acts in excess of his
authority is personally liable to the party with whom
he contracted. Moreover, the rule is complemented
by article 1898 of the Civil Code which provides that
"if the agent contracts in the name of the principal,
exceeding the scope of his authority, and the
principal does not ratify the contract, it shall be void
if the party with whom the agent contracted is aware
of the limits of the powers granted by the principal".
Namerco never disclosed to the Napocor the cabled
or written instructions of its principal. For that
reason and because Namerco exceeded the limits of
its authority, it virtually acted in its own name andnot as agent and it is, therefore, bound by the
contract of sale which, however, is not enforceable
against its principal.
Veloso vs La Urbana
Facts:
Veloso was the owner of some portions of certain
parcels of lands. Her brother in law, Jose Maria del
Mar forged two powers of attorney supposedly made
by Veloso and her husband which gave him the
authority to mortgage their interests/participation in
the said properties. These powers of attorney were
registered in the registry of deeds.
Using the powers of attorney, he mortgaged the
participations to La Previsoa Filipina but he
subsequently transferred the mortgage to La Urbana
with whom he executed another deed of mortgage for
an additional loan. When he violated the conditions
of mortgage, La Urbana foreclosed the mortgage and
sold it at a public auction. It was only then that
Velasco found out about the fraudulent transactions.
Issue:W/N mortgage is valid
Held:
No, mortgage is null and void. Even though Del Mar
had powers of attorney, La Urbana should have
exerted effort to ascertain the genuineness of the
instruments. Every person dealing with an agent has
the responsibility to ascertain the authority of an
agent.
NATIONAL FOOD AUTHORITY vs. INTERMEDIATE
APPELLATE COURT
GR NO. 75640, April 5, 1990
FACTS:
Paras
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