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Puyat & Sons v.

Arco Amusement (GR 47538, 20 June


1941)
72 Phil 402

Facts: Gonzalo Puyat & Sons is the exclusive agent of Starr
Piano Company of Richmond, Indiana USA, in the
Philippines. Teatro Arco, or Arco Amusement Company,
desiring to equip its cinematograph with sound reproducing
devices, approached Puyat. It was agreed by the parties that
Puyat would in behalf of Arco order equipment from Starr
Piano and that Arco would pay Puyat in addition to price of
the equipment, 10% commission plus all expenses such as
freight, insurance, banking charges, cables, etc. Puyat
informed Arco that the price of the equipment was $1,700, to
which Arco agreed. Later, a similar arrangement was made
by Arco for the purchase of similar equipment for $1,600 with
10% commission, with Puyat charging an additional flat
charge of $160 for all expenses and charges. 3 years later,
Arco learned that the price quoted by Puyat on the 2 orders
were not the net price but the list price for the equipment.
Arco filed a complaint with the trial court (CFI) demanding
reimbursement from said overpriced sales. The trial court
ruled in favor of Puyat, but the Court of Appeals reversed
such decision and declared Puyat an agent of Arco
Amusement in the purchase of said equipment.

Issue: Whether the agreement made between Puyat and
Arco Amusement is that of purchase and sale or that of
agency.

Held: Gonzalo Puyat & Sons cannot be the agent of Arco
Amusement in the purchase of equipment from Starr Piano
Company as Puyat & Sons is already the exclusive agent of
Starr Piano in the Philippines. Puyat cannot be the agent of
both vendor and purchaser. The fact that a commission was
offered to the other does not necessarily mean that the latter
has become the agent of the former, as this was only an
additional price which Arco bound itself to pay and which is
not incompatible with the contract of purchase and sale.
Puyat is not bound to reimburse the profit acquired in the
transaction, as this is the very essence of commerce
involving middlemen and merchants. The contract is the law
between the parties. What does not appear on the face of
the contract should be regarded as dealers or traders talk
which cannot bind either party. Not every concealment is
fraud, short of fraud, and such as that in this case, is
considered as business acumen.

FAR EASTERN EXPORT & IMPORT CO, vs. LIM TECK
SUAN
CASE NUMBER: L-7144 DATE: May 31, 1955

FACTS:
Import Company, went to the store of Lim Teck Suan in
Manila and offered to sell textile.
General Manager of Lim Teck Suan, Delizalde returned with
a buyers order.
our of Frenkel
International Corporation through HSBC.
complained to Far Eastern of the inferior quality of the textile.
goods in a warehouse and withdrew the same and was
offered for sale. The net direct loss is now being claimed
against Far Eastern.
broker in this transaction.

asing its decision of reversal
on the case of Jose Velasco v. Universal Trading where the
transaction therein involved was found by the court to be one
of purchase and sale and not of brokerage or agency.

ISSUE:
Was the transaction one of agency that will exonerate Far
Eastern from liability, or one of purchase and sale?

RULING: One of purchase and sale
similar to those in the Velasco case.
* In the Velasco case, Universal Trading contends
that it merely acted as agent for Velasco and
could not be held responsible for the
substitution of Blended Whisky for Bourbon
Whisky.
* The Court held that the transaction was
purchase and sale and ordered the defendant to
refund his deposit with legal interest.
goods and merchandise, that same agent could not very well
act as agent for local buyers, because the interests of his
foreign principal and those of the buyer would be in direct
conflict.
* He could not serve two masters at the same
time.
* Far Eastern, being an agent of Frenkel, could not
have acted as an agent or broker for Suan.
one of purchase and sale.
*Far Eastern acted as agent for Frenkel
International Corporation, presumably the
supplier of the textile sold.
*Suan according to the first part of the agreement
is said merely to be commissioning Far Eastern
to procure for him the merchandise in question.
*The price of the merchandise bought was paid for
by Suan by means of an irrevocable letter
of credit opened in favour of the supplier, Frenkel
International Corporation.
*The agreement speaks of the items involved as
sold, and the sale was even confirmed by Far
Eastern.
*Far Eastern dealt directly with Suan without
expressly indicating or revealing the principal.
*There was no privity of contract between the
buyer and supplier.
*No commission or monetary consideration was
paid or agreed to be paid by the buyer to
export company proof that there was no
agency or brokerage, and that the profit of the
latter was undoubtedly the difference between
the price listed to the buyer and the net or special
price quoted to the seller by the supplier.

National Rice and Corn Corporation (NARIC) vs. CA et al
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 after its 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 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 the NARIC 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 buying
the 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.

ALFRED HAHN, petitioner, vs. COURT OF APPEALS and
BAYERISCHE MOTOREN
WERKEAKTIENGESELLSCHAFT (BMW), respondents.
January 22, 1997

Facts:
1 .Alfred Hahn is a Filipino citizen doing business under the
name and style "Hahn-Manila."
2. Bayerische Motoren Werke Aktiengesellschaft (BMW) is a
nonresident foreign corporation existing under the laws of
the former Federal Republic of Germany, with principal office
at Munich, Germany.
3. In 1963, Hahn executed in favor of BMW a Deed of
Assignment with Special Power of Attorney which
essentially, makes Hahn as the exclusive dealer of BMW in
the Philippines. Moreover, it stated there that Hahn and
BMW shall continue business relations as has been usual in
the past without a formal contract."
4. In 1993, BMW and Columbia Motors Corp (CMC) had a
meeting which would grant CMC exclusive dealership of
BMW cars.
5. Hahn was informed later that BMW was dissatisfied with
how it carrying its business. However, BMW expressed
willingness to continue business relations with the petitioner
on the basis of a "standard BMW importer" contract,
otherwise, it said, if this was not acceptable to petitioner,
BMW would have no alternative but to terminate petitioners
exclusive dealership effective June 30, 1993.
6. Hahn protested alleging that such termination is a breach
of the Deed of Assignment. Hahn insisted that as long as the
assignment of its trademark and device subsisted, he
remained BMW's exclusive dealer in the Philippines because
the assignment was made inconsideration of the exclusive
dealership.
7. BMW, however, went on to terminate its dealership with
Hahn.
8. Hahn filed a complaint for specific performance and
damages in the RTC. RTC issued a writ preliminary
injunction.
9. BMW appealed to the CA. CA reversed on the ground that
Hahn is not an agent of BMW and that BMW is not doing
business in the Phils. By virtue of the latter, the writ of
preliminary injunction should not have been issued since
RTC did not have jurisdiction over it.

Issues
1. W/N Hahn is agent or a distributor (or broker) in the
Philippines of BMW.
He is an agent.
2. W/N BMW is doing business here in the Philippines.
YES
Held/Ratio:
1. There is nothing to support the appellate court's
finding that Hahn solicited orders alone and for his own
account and without "interference from, let alone direction of,
BMW. To the contrary, Hahn claimed he took orders for
BMW cars and transmitted them to BMW. Upon receipt of
the orders, BMW fixed the down payment and pricing
charges, notified Hahn of the scheduled production month
for the orders, and reconfirmed the orders by signing and
returning to Hahn the acceptance sheets. Payment was
made by the buyer directly to BMW. Title to cars purchased
passed directly to the buyer and Hahn never paid for the
purchase price of BMW cars sold in the Philippines. Hahn
was credited with a commission equal to 14% of the
purchase price upon the invoicing of a vehicle order by
BMW. Upon confirmation in writing that the vehicles had
been registered in the Philippines and serviced by him, Hahn
received an additional 3% of the full purchase price. Hahn
performed after-sale services, including, warranty services,
for which he received reimbursement from BMW. All orders
were on invoices and forms of BMW.
BMW periodically inspected the service centers to
see to it that BMW standards were maintained. Indeed, it
would seem from BMW's letter to Hahn that it was for Hahn's
alleged failure to maintain BMW standards that BMW was
terminating Hahn's dealership. The fact that Hahn invested
his own money to put up these service centers and
showrooms does not necessarily prove that he is not an
agent of BMW. For as already noted, there are facts in the
record which suggest that BMW exercised control over
Hahn's activities as a dealer and made regular inspections of
Hahn's premises to enforce compliance with BMW standards
and specifications. This was proven by a letter.
These allegations were admitted by BMW.
This arrangement shows an agency.
2. Hahn and BMW had a Representative Agreement
or a Licensing Agreement. This arrangement is whereby a
domestic corporation, by virtue of which the latter was
appointed exclusive representative" in the Philippines for a
stipulated commission. Pursuant to these contracts, the
domestic corporation sold products exported by the foreign
corporation and put up a service center for the products sold
locally. This Court held that these acts constituted doing
business in the Philippines. The arrangement showed that
the foreign corporations purpose was to penetrate the
Philippine market and establish its presence in the
Philippines.
In addition, BMW held out private respondent
Hahn as its exclusive distributor in the Philippines, even as it
announced in the Asian region that Hahn was the "official
BMW agent in the Philippines.

LIM vs. COURT OF APPEALS and PEOPLE
G.R. No. 102784 February 28, 1996

Facts:
On October 8, 1987, Rosa Lim who had come
from Cebu received from private respondent Victoria Suarez
the following two pieces of jewelry; one 3.35 carat diamond
ring worth P169K and one bracelet worth P170K, to be sold
on commission basis. The agreement was reflected in a
receipt.
On December 15, 1987, Lim returned the bracelet
to Suarez, but failed to return the diamond ring or to turn
over the proceeds thereof if sold. As a result, private
complainant, aside from making verbal demands, wrote a
demand letter to petitioner asking for the return of said ring
or the proceeds of the sale thereof.
Lims contention: She was not an agent of Suarez.
In fact, she was a prospective buyer of the pieces of jewelry.
She told Mrs. Suarez that she would consider buying the
pieces of jewelry for her own use and that she would inform
the private complainant of such decision before she goes
back to Cebu. She cannot be liable for estafa since she
never received the jewelries in trust or on commission basis
from Vicky Suarez. The real agreement between her and the
private respondent was a sale on credit with Mrs. Suarez as
the owner-seller and petitioner as the buyer, as indicated by
the bet that petitioner did not sign on the blank space
provided for the signature of the person receiving the jewelry
but at the upper portion thereof immediately below the
description of the items taken.

Issue:

WON the real transaction between Lim and Suarez was that
of sale or that of contract of agency to sell? Contract of
Agency.

Held:

Receipt contains the following provisions:
XXX I received from Vicky Suarez the following jewelries
XXX
XXX if I could not sell, I shall return all the jewelry within the
period mentioned above; if I would be able to sell, I shall
immediately deliver and account the whole proceeds of sale
thereof to the owner of the jewelries at his/her residence
XXX

Materiality of the location of Lims signature:

Rosa Lims signature indeed appears on the upper
portion of the receipt immediately below the description of
the items taken. This does not have the effect of altering the
terms of the transaction from a contract of agency to sell on
commission basis to a contract of sale. Contracts shall be
obligatory in whatever form they may have been entered
into, provided all the essential requisites for their validity are
present.
There are some provisions of the law which
require certain formalities for particular contracts. It is
required for the validity of the contract; to make the contract
effective as against third parties and; for the purpose of
proving the existence of the contract. A contract of agency to
sell on commission basis does not belong to any of these
three categories, hence it is valid and enforceable in
whatever form it may be entered into. FYI: There is
only one type of legal instrument where the law strictly
prescribes the location of the signature which is in notarial
wills found in Article 805 NCC.
In the case before us, the parties did not execute a
notarial will but a simple contract of agency to sell on
commission basis, thus making the position of petitioners
signature thereto immaterial.

Contention of Lim that Suarez authorized Nadera to receive
the ring:

Suarez testified that Aurelia Nadera is highly
indebted to her, so if she gave authority for Nadera to get
possession of it she will be exposing herself to a high risk.

DE LA PENA V. HIDALGO

FACTS:
1887-1893 (1
st
period) 1893-1902 (2
nd
period)
FEDERICO ANTONIO
1902-1904 (3
rd
period)
FRANCISCO
Before DE LA PENA went to Spain, he executed a
power of attorney in favor of FEDERICO and 3 other people.
Their task is to represent him and administer various
properties he owned in Manila. FEDERICO took charge in
Nov. 1887.After a few years, FEDERICO wrote a letter to DE
LA PENA. It contains a request that DE LA PENA assign a
person who might substitute FEDERICO in the event that he
leaves the Philippines because one of the agents died and
the other 2 are unwilling to take charge. DE LA PENA did not
answer the letter there was neither approval nor objection
on the accounts and no appointment of another person who
might substitute FEDERICO. Because of health reasons,
FEDERICO went to Spain. Before he departed, he sent
another letter to DE LAPENA a summary of accounts and
informing that he will be leaving the Philippines and that he
turned over the administration to ANTONIO (though
FEDERICO stated that if DE LA PENA is not happy with this,
DE LA PENA must send ANTONIO a new power of
attorney).
DE LA PENA files in court for the collection of
revenue from his accounts which was handled by
FEDERICO. DE LA PENA alleges that FEDERICO has only
remitted 1.2k and still owes him roughly 72k. Furthermore,
DE LA PENA seeks to hold FEDERICO liable for the
administration from the period of 1887 until 1904.FEDERICO
asserts that he cannot be liable for the period after he
renounced his agency. Furthermore FEDERICO argues that
his renunciation and appointment of a substitute was legal
for there was no objection on the part of DE LA PENA.

ISSUE:
Whether there was a valid agency in the case of ANTONIO
(2
nd
period)

HELD:
There was an implied agency in the case of
ANTONIO. DE LA PENA created an implied agency in favor
of ANTONIO because of his silence on the matter for a
number of years.
There was a valid renunciation in the case of
FEDERICO. His reason for leaving the country is legitimate.
Furthermore, he gave notice to DE LA PENA about his
situation in which the latter failed to give his objection.
Being a valid agency on the part of ANTONIO and
a valid renunciation on the party of FEDERICO, it must
follow that the liability of FEDERICO only extends up to the
point before his renunciation of the agency (1
st
period).

DOCTRINE:
The implied agency is founded on the lack of
contradiction or opposition, which constitutes simultaneous
agreement on the part of the presumed principal to the
execution of the contract.
The agent and administrator who was obliged to
leave his charge for a legitimate cause and who duly
informed his principal, is thenceforward released and freed
from the results and consequences of the management of
the person who substituted him with the consent, even tacit
though it be, ofhis principal.

SIDE NOTE ON POWER OF ATTORNEY:
It was also argued by DE LA PENA that there was no
authority on the part of FEDERICO to appoint a substitute.
The COURT ruled that the power of attorney given by DE LA
PENA to FEDERICO did not include a power to appoint a
substitute. Nevertheless, it was pointed out that the
appointment made by FEDERICO was not based on the
power of attorney of DE LA PENA. The appointment was
grounded on a new power of attorney FEDERICO himself
executed in favor of ANTONIO. Thus, there was no violation
incurred by FEDERICO. And as stated in the case, DE LA
PENA was duly informed of this but nevertheless kept his
silence on the matter.

CONDE vs. CA
G.R. No. L-40242 December 15, 1982

FACTS:
1. Margarita Conde, Bernardo Conde and the petitioner
Dominga Conde, as heirs of Santiago Conde, sold with right
of repurchase, within ten (10) years, a parcel of agricultural
land with to Casimira Pasagui, married to Pio Altera), for
P165.00.
2. On 17 April 1941, the Cadastral Court of Leyte
adjudicated Lot No. 840 to the Alteras" subject to the right of
redemption by Dominga Conde.
3. Original Certificate of Title No. N-534 in the name of the
spouses Pio Altera and Casimira Pasagui was then
transcribed in the "Registration Book" of the Registry of
Deeds of Leyte.
4. On 28 November 1945,
private respondent Paciente Cordero, son-in-law of
theAlteras, signed a document in the Visayan dialect.
Neither of the vendees-a-retro, Pio Altera nor Casimira
Pasagui, was a signatory to the deed.
5. Petitioner maintains that because Pio Altera was very ill
at the time, Paciente Cordero executed the deed of resale
for and on behalf of his father-in-law. Petitioner further states
that she redeemed the property with her own money as her
co-heirs were bereft of funds for the purpose
6. After which, Pio Altera sold the disputed lot to the spouses
Ramon Conde and CatalinaT. Conde (not related to
petitioner).
7. Contending that she had validly repurchased the lot in
question in 1945, Dominga Conde filed, a Complaint against
the respondents for quieting of title to real property and
declaration of ownership.

ISSUE:
WON there was an implied agency when Cordero signed the
repurchase document

HELD:
YES.
If petitioner had done nothing to formalize her
repurchase, by the same token, neither have the vendees-a-
retro done anything to clear their title of the encumbrance
therein regarding petitioners right to repurchase. No new
agreement was entered into by the parties as stipulated in
the deed of pacto de retro, if the vendors a retro failed to
exercise their right of redemption after ten years. If,
petitioner exerted no effort to procure the signature of Pio
Altera after he had recovered from his illness, neither did the
Alteras repudiate the deed that their son-in-law had signed.
Thus, an implied agency must be held to have been created
from their silence or lack of action, or their failure to
repudiate the agency.
Possession of the lot in dispute having been
adversely and uninterruptedly with petitioner from1945 when
the document of repurchase was executed, to 1969, when
she instituted this action, or for 24 years, the Alteras must be
deemed to have incurred in laches.

Lopez vs. Tan Tioco
Ibenta mo ang asukal pag sinabi kongibenta mo.
FACTS:
Lopez and Tan Tioco entered into a verbal contract that
shell deliver certain sugar to Tan Tioco which he obligated
himself to store until he receives instructions from her to sell
them. She delivered the piculs of sugar and instructed to sell
in on Sept 1904 but def did not do so. Pet filed action. Def
denies allegations.

Issue:
WON the defendant was in default.
Held:
Yes. He was in default from the time the Pet demanded to
deliver or do something, or the fulfillment of the obligation.
Neither the contract nor the law demands to make judicial
demand than extrajudicial. The price of the sugar should be
from the time she instructed the def to sell them. Delay in
Performance: Delay in selling the sugar upon instructions.

HARRY E. KELLER ELEC. CO. vs. RODRIGUEZ

FACTS:
sold a Mathews electric plant to Rodriguez.
s for
the Mathews electric plant.

then installed by Cenar.
fact presented a bill to Rodriguez.
payment would just be made in Manila.
Montelibano.
Rodriguez, Rodriguez said that he already paid Montelibano.
Rodriguez.


1.) That the bill was given to Montelibano for collection.
2.) That Harry represented Montelibano as an agent
authorized to collect.

ISSUE:
Was the lower court correct in ruling that Montelibano was
an agent of Harry Keeler authorized to make collection?

RULING:
NO, the lower court ruling is hereby reversed.
odriguez (which was the
receipt given by Montelibano) there was no showing that
montelibano was an agent
did not contain that Montelibano had authority to
receive money
Rodriguez to Montelibano was at his
own risk.
Rodriguez failed to exercise ordinary prudence and
reasonable diligence in making sure that Montelibano was in
fact authorized to receive payment.
authority:
1.) The law does not presume that an agency exists. it has
to be proven through facts
2.) The agent cannot establish his authority
3.) Authority cannot be established through mere rumor or
general reputation
4.) General authority is not equal to unlimited authority
5.) That every authority must find its ultimate source in some
act or omission by the principal
cautious
without the concurrence of the principal

Important provisions:
Art 1162: Payment must be made to the person in whose
favor the obligation is constituted, or to another authorized to
receive it in his name.
Art 1727: The principal shall be liable as to matters with
respect to which the agent has exceeded his authority only
when he ratifies the same expressly or by implication.

COMPANIA MARITIME V LIMSON (PATAJO, J., 1986)

Facts:
Compania filed a complaint against Limson for collection of
the sum of P44,701.54,which is the unpaid accounts for
passage and freight on shipment of hogs, cattle and
carabaos abroad Companias vessel.
Limson denied liability claiming that he was not the shipper
nor had he authorized said shipments. He further set up a
counterclaim for the refund of the rebate he was entitled to
pursuant to their agreement.
The Court appointed a commissioner to examine the
accounts involved before proceeding with the hearing.
The Report indicated that Limsons claim amounted to
P676, 416.05, and Companias claim to P545,394.24.
Companias claim was based among others on several bills
signed by one Perry with Limson as the shipper and
consignee, and some for others as shippers and consignee.
CFI: Ruled that Perry was not Limsons authorized
representative. Thus, he was not liable for the bills of lading
not signed by him or his authorized representatives.

Issue:
WON the bills of lading signed by Perry should be accepted.

Held/Ratio:
YES.
A shipper may be held liable for freightage on bills of lading
signed by another person where the shipper appears as
shipper or consignee, bills of lading where persons other
than Limson appear as shipper, and bills of lading not signed
by the shipper where the testimonial evidence shows that
the goods shipped actually belong to him as the shipper.
As regards the controverted bills of lading signed by "Perry"
with Limson as shipper or consignee, a witness testified that
the signatures therein are those of Cipriano Magtibay alias
"Perry" who took delivery of the cargoes stated therein after
signing the delivery receipts. He was known to be the regular
representative of Limson.
With respect to the unsigned bills of lading, delivery receipts
were issued upon delivery of the shipments. Witnesses
testified that the ordinary procedure at Compania's terminal
office was to require the surrender of the original bill of
lading, but when the bill of lading cannot be surrendered
because it had not arrived or received by the consignee or
assignee, the delivery of the cargo was authorized just the
same, and the delivery receipt was prepared based on the
ship's cargo manifests or ship's copy of the bill of lading.
This accommodation was especially given Limson, because
defendant was a regular shipper and ship chandler of
plaintiff, and was a compadre of Cabling.
Regarding the controverted bills of lading in the name of
other persons as shippers or consignees and signed by
Perry, it was established that said bills of lading were for
cattle and hogs-purchased by the defendant from his
"viajeros" in Manila which were delivered to and received by
Limson.




AIR PHILIPPINES CORPORATION, petitioner, vs.
INTERNATIONAL BUSINESSAVIATION SERVICES
PHILS., INC., respondent

FACTS:
The Air Philippines, Inc., API, was in need of the
services of a business establishment to ferry its B-737
airplane from the United States of America to the
Philippines, via Subic Bay International Airport, at Olongapo
City. API, through Captain Alex Villacampa, its Vice-
President for Operations, engaged the services of
International Business Aviation Services Phils., Inc., IBASPI,
as its agent to look for and engage, for API, a business
enterprise to ferry the airplane. IBASPI did engage the
services of Universal Weather & Aviation, Inc., UWAI, to
ferry the airplane to the Philippines, where API took delivery
of the plane.
During the pre-trial, on December 7, 1998, Atty.
Manolito Manalo, counsel of the petitioner, appeared but
without any Special Power of Attorney from the petitioner.
The petitioner failed to file its Pre-Trial Brief . Among the
documentary evidence adduced by the respondent were the
xerox copy of the Certification of Captain Alex Villacampa,
and the Memorandum of Rodolfo Estrellado.
The petitioner filed a
Motion for New Trial on the grounds that:
(a) It was deprived of itsday in court due to the gross
negligence of its former counsel, Atty. Manolito A. Manalo;
(b) The Receipt/Agreement executed by Atty. Manolito A.
Manalo, in behalf of the petitioner, was unauthorized as
there was no Resolution of the Board of Directors
authorizing him to execute said Receipt/Agreement and,
hence, said counsel acted beyond the scope of his authority;
(c) The claim of IBASPI was excessive and unjustified; and
(d) the petitioner never agreed to pay the [respondent] a
commission of 10% of the billings of UWAI.

ISSUE: Whether the Motion for New Trial should be denied

HELD:
The act performed by the counsel within the scope
of
a general or implied authority is regarded as an act of the
client, even the mistake of the counsel will result to an
unfavorable judgment against the client. Petitioners counsel
is guilty of simple, not gross, negligence. We cannot
consider as gross negligence his resort to dilatory schemes,
presentation and assessment of the issues and their just
resolution.

Counsels patent carelessness in citing conflicting
reasons in his Motions for Reconsideration verily displays his
lack of competence, diligence and candor, but not his
recklessness or total want of care.
Indeed, the lawyers failure to live up to the
dictates of the canons of the legal profession makes him
answerable to both his profession and his employer. The
new trial is unwarranted due to the mere negligence of the
counsel.

TIRSO UYTENGSU III vs. ATTY. JOSEPH M. BADUEL
FACTS:
Complainant is one of the heirs of Tirso Uytengsu,
Jr. He and his co-heirs had a pending patent application. He
alleges that sometime in December 1998 respondent
requested him to sign a special power of attorney (SPA)
authorizing Luis Wee (Wee) and/or Thomas Jacobo
(Jacobo) to claim, demand, acknowledge and receive on his
behalf the certificates of title from the Register of Deeds,
General Santos City, Department of Environment and
Natural Resources and from any government office or
agency due to complainant and his co-heirs by reason of
their application for Homestead Patent. Complainant refused
to sign the SPA as he wanted to obtain the documents
personally.
The respondent argues that the allegations of
complainant are purely hearsay. He stresses that complaint
was instituted to harass him because he was the counsel of
an opposing litigant against complainants corporation in an
ejectment case entitled General Milling Corporation v. Cebu
Automatic Motors, Inc. and Tirso Uytengsu III. Complainant
charges that respondent committed an act meriting
disbarment when the latter caused to have a special power
of attorney, which the former refused to sign earlier,
executed by Mrs. Connie Kokseng, former guardian of
complainant and his co-heirs, authorizing certain individuals
to secure the release from the Register of Deeds and other
government offices in General Santos City, titles and other
documents pertaining to complainants and his co- heirs
homestead application.

ISSUE:
Whether or not the respondent has the authority to represent
the complainant in their homestead patent application.

HELD:
The relation of attorney and client is in many
respects one of agency and the general rules of ordinary
agency apply to such relation. The extent of authority of a
lawyer, when acting on behalf of his client outside of court, is
measured by the same test as that which is applied to an
ordinary agent.
Such being the case, even respondent himself can
acquire the certificates of title and other documents without
need of an SPA from complainant and his co-heirs.
In addition, the Court agrees with the investigating
commissioner that the allegations of complainant constitutes
mere hearsay evidence and may not be admissible in any
proceeding. It was proven that the case at bar is without
merit and that evidences are weak and proved to be just
hearsay.

J-PHIL MARINE, INC. and/or JESUS CANDAVA and
NORMAN SHIPPING SERVICES VS NATIONAL LABOR
COMMISSION and WARLITO E. DUMALAOG
561 SCRA 675 (2008)

FACTS:
A compromise agreement is valid as long as the
consideration is reasonable and the employee signed the
waiver voluntarily, with a full understanding of what he was
entering into.

Worked as a cook on aboard vessels plying overseas,
Warlito E. Dumalaog was employed as a cook on board
vessels plying overseas. He filed a pro-forma complaint on
March 4,2002 before the National Labor Relations
Commission (NLRC) against J-Phil Marine, Inc., its then
president Jesus Candava, and its foreign principal Norman
Shipping Services.

The Labor Arbiter dismissed the complaint for lack of merit.
On appeal, the NLRC reversed the decision of the Labor
Arbiter. The Court of Appeals affirmed the dismissal for
failure to attach to the petition all material documents and for
defective verification and certification. Consequently, a
petition was filed before the Court of Appeals.
While the case was pending in the Supreme Court, the
respondent entered into a compromise agreement and
signed Quitclaims and Release. The same has been
subscribed and sworn to before the Labor Arbiter.
Accordingly, the case was dismissed.

ISSUES:
Whether or not the compromise agreement entered into by
the respondent, without his counsel, is valid

HELD:
A compromise agreement is valid as long as the
consideration is reasonable and the employee signed the
waiver voluntarily, with a full understanding of what he was
entering into. All that is required for the compromise to be
deemed voluntarily entered into is personal and specific
individual consent. Thus, contrary to Dumalaoags
contention, the employees counsel need not be present at
the time of the signing of the compromise agreement.

The relation of attorney and client is in many respects one of
agency and the general rules of agency apply to such
relation. The acts of an agent are deemed the acts of the
principal only if the agent acts within the scope of his
authority. The circumstances of this case indicate that
Dumalaoags counsel is acting beyond the scope of his
authority in questioning the compromise agreement.

COSMIC LUMBER CORPORATION V CA

FACTS
* Cosmic Corporation, through its General
Manager executed a Special Power of Attorney appointing
Paz G. Villamil-Estrada as attorney-in-fact to initiate, institute
and file any court action for the ejectment of third persons
and/or squatters of the entire lot 9127 and 443 for the said
squatters to remove their houses and vacate the premises in
order that the corporation may take material possession of
the entire lot
* Paz G. Villamil Estrada, by virtue of her power of
attorney, instituted an action for the ejectment of private
respondent Isidro Perez and recover the possession of a
portion of lot 443 before the RTC
* Estrada entered into a Compromise Agreement
with Perez, the terms and conditions such as:
In order for Perez to buy the said lot he is presently
occupying, he has to pay to plaintiff through Estada the sum
of P26,640 computed at P80/square meter and that Cosmic
Lumber recognizes ownership and possession of Perez by
virtue of this compromise agreement over said portion of 333
sqm of lot 443 and whatever expenses of subdivision,
registration and other incidental expenses shall be
shouldered by Perez
* although the agreement was approved by the trial court
and the decision became final and executory it was not
executed within the 5 year period from date of its finality
allegedly due to the failure of Cosmic Lumber to produce the
owners duplicate copy of title needed to segregate from lot
443 the portion sold by the attorney-in-fact, Paz Estrada to
Perez under the compromise agreement

ISSUE: W/N there is a contract of agency between Cosmic
Lumber, principal and Paz Estrada, agent thus binding the
principal over the compromise agreement made by the agent
to a third person, Perez in selling the portion of the said
property

RULING: No
The authority granted Villamil-Estrada under the
special power of attorney was explicit and exclusionary: for
her to institute any action in court to eject all persons found
on lots number 9127 and 443 so that Cosmic Lumber could
take material possession thereof and for this purpose, to
appear at the pre-trial and enter into any stipulation of facts
and/or compromise agreement but only insofar as this was
protective of the rights and interests of Cosmic Lumber in the
property
Nowhere in this authorization was Villamil-Estrada
granted expressly or impliedly any power to sell the subject
property nor a portion thereof
Neither can a conferment of the power to sell be
validly inferred from the specific authority to enter into a
compromise agreement because of the explicit limitation
fixed by the grantor that the compromise entered into shall
only be so far as it shall protect the rights and interest of the
corporation in the aforementioned lots.
In the context of special investiture of powers to
Villamil-Estrada, alienation by sale of an immovable certainly
cannot be deemed protective of the right of Cosmic Lumber
to physically possess the same, more so when the land was
being sold for a price of P80/sqm , very much less than its
assessed value of P250/sqm and considering further that
plaintiff never received the proceeds of the sale
When the sale of a piece of land or any interest
thereon is through an agent, the authority of the latter shall
be in writing; otherwise, the sale should be void. Thus, the
authority of an agent to execute a contract for the sale of real
estate must be conferred in writing and must give him
specific authority, either to conduct the general business of
the principal or to execute a binding contract containing
terms and conditions which are in the contract he did
execute
For the principal to confer the right upon an agent
to sell real estate, a power of attorney must so express the
powers of the agent in clear and unmistakable language
It is therefore clear that by selling to Perez a
portion of Cosmic Lumbers land through a compromise
agreement, Villamil-Estrada acted without or in obvious
authority. The sale ipso jure is consequently void and so is
the compromise agreement. This being the case, the
judgment based thereon is necessarily void
When an agent is engaged in the perpetration of a
fraud upon his principal for his own exclusive benefit, he is
not really acting for the principal but is really acting for
himself, entirely outside the scope of his agency.

Linan v.s. Puno 31 Phil. 357 (1915)

FACTS:

Diego Linan, a resident of Daet, Ambas, Camarines
temporarily lived but owned a parcel of land in Tarlac. He
executed a document conferring sufficiently to Marcos P.
Puno on May 16, 1908, the power to represent him to
purchase, sell, collect and pay as well as sue and be sued
before any authority, appear before the cours of justice and
administrative officers in any proceeding or business
concerning the good administration and advancement of of
my said interests and may in necessary cases, appoint
attorneys at law or in fact to represent him. On June 1911,
Puno sold and delivered the said land to the other
defendants namely: Enrique, Vicente, Aquilina and
Remedios all surnamed Maglanok for a sum of Php 800.00.
The plaintiff alleged that the document did not confer upon
Puno the power to sell the property and prayed that the sale
be set aside; the land be returned to him with damages.
Puno contended that the sale was valid and prayed to be
prayed from liability.

ISSUE:
Whether or not the sale was valid as performed by Puno as
an agent of Linan?

HELD:

YES. The Supreme Court ruled in favor of Puno. The Court
examined the power conferred upon. The words administer,
purchase, sell etc. has equal force with each other. There
seemed to be no good reason for saying that Puno had
authority to administer and not to sell when to sell was
advantageous to the plaintiff in the administration of his
affairs. In reaching this conclusion, the Court took into
account the fact that the plaintiff delayed his action to annul
said sale from June 1911 until February 15, 1913.

Strong vs. Repide

FACTS:
Among the lands comprising the friar lands are the
Dominican lands, the only valuable asset owned by the
corporation Philippine Sugar Estates Development Company
Limited (Philippine Sugar Estates). Francisco Gutierrez
Repide (Repide), defendant, was the majority stockholder
and one of the five directors of Philippine Sugar Estates. He
was likewise elected by the board as the agent and
administrator general of such company.
The factual backdrop being during US occupation,
the US Government wanted to secure title over the friar
lands. To accomplish this objective, Governor for the
Philippines entered into negotiations for the purchase of the
Dominican lands, during which Repide represented
Philippine Sugar Estates. The first offer of the Governor was
to purchase the subject lands in the amount of
$6,043,219.47. As the majority stockholder of Philippine
Sugar Estates and without prior consultation with the other
stockholders, Repide rejected the offer. For the second offer,
the purchase price was increased to $7,535,000.
While negotiations for the second offer were
ongoing and while still holding out for a higher price of the
Dominican lands, Repide took steps to purchase the 800
shares of stock of Philippine Sugar Estates. These shares
were owned by Mrs. Eleanor Strong (Strong) which were
then in the possession of her agent, F. Stuart Jones (Jones).
Repide, instead of seeing Jones, employed Kauffman who
later on employed Sloan, a broker, to purchase the shares of
Strong. Jones sold the 800 shares of Strong for 16,000
Mexican currency. For this sale transaction a check of one
Rueda Ramos was issued.
Later on, the negotiations for the purchase of the
Dominican lands were concluded and a contract of sale was
subsequently executed. This sale transaction increased the
value of the shares of stocks originally owned by Strong from
16,000 Mexican currency to 76,256 US currency. During the
negotiations regarding the purchase of the shares of stock of
Strong, not one word of the facts affecting the value of this
stock was made known to her nor her agent, Jones. After the
sale of Dominican lands and after the purchase of the 800
shares of Strong, Repide became the owner of 30,400 out of
the 42,030 shares of Philippine Sugar Estates.
Strong filed a complaint for the recovery of her 800
shares. She argued that her agent Jones had no authority to
sell her shares and that Repide fraudulently concealed the
facts affecting their value.

ISSUE:
Was there fraud in effecting the purchase of Strongs
shares?

RULING:
Yes. With the factual circumstances of this case, it became
the duty of Repide, acting in good faith, to state the facts
before making the purchase of Strongs shares. That Repide
was one of the directors of Philippine Sugar Estates was but
one of the facts upon which liability is asserted. He was not
only a director, but he owned three-fourths of the shares of
its stock, and was, at the time of the purchase of the stock,
administrator general of the company with large powers and
engaged in the negotiations which finally led to the sale of
the companys lands at a price which greatly enhanced the
value of the stock. He was the negotiator for the sale of the
Dominican lands and was acting substantially as the agent
of the shareholders of Philippine Sugar Estates by reason of
his ownership of the shares in the company. Because of
such ownership and agency, no one knew as well as he
does about the exact condition of the negotiations. He was
the only one who knew of the probability of the sale of the
Dominican lands to the government and of the probable
purchase price. Under these circumstances, Repide
employed an agent to purchase the stock of Strong,
concealed his own identity and his knowledge of the state of
negotiations and their probable result. The concealment of
his identity while procuring the purchase of the stock, by his
agent, was in itself strong evidence of fraud on the part of
Repide. By such means, the more easily was he able to
avoid questions relative to the negotiations for the sale of
Dominican lands and actual misrepresentations regarding
that subject. He kept up the concealment as long as he
could by giving the check of a third person Rueda Ramos,
for the purchase money.
This move of Repide was a studied and intentional
omission to be characterized as part of the deceitful
machinations to obtain the purchase without giving any
information whatever as to the state and probable result of
the negotiations and to obtain a lower price for the shares of
Strong. After the purchase of stock, he continued
negotiations for the sale of the Dominican lands as the
administrator general and eventually entered into a contract
of sale. The whole transaction gives conclusive evidence of
the overwhelming influence Repide had in the negotiations
and it is clear that the final consummation was in his hands
at all times.

KATIGBAK vs. TAI HING CO.

FACTS:
1) Gabino Barreto Po Ejap, as attorney-in-fact of Po Tecsi,
sold in favor of Jose M. Katigbak the subject land; after said
sale, Po Tecsi leased the property sold, from Gabino Barreto
Po Ejap, who administered it in the name of Jose M.
Katigbak, at a rental of P1,500 per month, payable in
advance, leaving unpaid the rents accrued from that date
until his death which occurred on November 26, 1926,
having paid the accrued rents up to October 22, 1925;

2) From November 26, 1926, the defendants Po Sun Suy
and Po Ching leased said land for the sum of P1,500 per
month; on February 11, 1927, Po Sun Suy was appointed
administrator of the estate of his father Po Tecsi, and filed
with the court an inventory of said estate including the land
in question; and on May 23, 1927, Jose M. Katigbak sold the
same property to Po Sun Boo.

3) Take note that all these transfers happened even though
the power of attorney was not registered in the Registry of
deeds.

ISSUE:
Can the Principal be bound by the acts of the agent even
though the power of attorney is not registered the Registry of
deeds?

RULING:
YES
1) Inasmuch as in accordance with section 39 of said Act
No. 496, Every applicant receiving a certificate of title in
pursuance of a decree of registration, and every subsequent
purchaser of registered land who takes a certificate of title
for value in good faith, shall hold the same free of all
encumbrance except noted on said certificate, every
document which in any manner affects the registered land is
ineffective unless it is recorded in the registry of deeds. But
such inefficacy only refers to third persons who, in good
faith, may have acquired some right to the registered land.

2) While it is true that a power of attorney not recorded in the
registry of deeds is ineffective in order than an agent or
attorney-in-fact may validly perform acts in the name of his
principal, and that any act performed by the agent by virtue
of said with respect to the land is ineffective against a third
person who, in good faith, may have acquired a right thereto,
it does, however, bind the principal to acknowledge the acts
performed by his attorney-in-fact regarding said property
(sec. 50, Act No. 496).

3) In the present case, while it is true that the non-
registration of the power of attorney executed by Po Tecsi in
favor of his brother Gabino Barreto Po Ejap prevents the
sale made by the latter of the litigated land in favor of Jose
M. Katigbak from being recorded in the registry of deeds, it is
not ineffective to compel Tecsi to acknowledge said sale.

4) From the fact that said power and sale were not recorded
in the registry of deeds, and from the omission of any
mention in the deed of sale of the mortgage lien in favor of
Antonio M. H. Limjenco, and the lease of a part of said land
in favor of Uy Chia, the appellants deduce that said sale is
fraudulent.

5) The record contains many indications that Po Tecsi was
not unaware of said sale. His several letters complaining of
the pressing demands of his brother Gabino Barreto Po Ejap
to send him the rents of the land, his promises to send them
to him, and the remittance of the same were a tacit
acknowledgment that he occupied the land in question no
longer as an owner but only as lessee.

Amigo v.s. Teves 96 Phil. 252 (1954)

FACTS:

On August 11, 1937, Macario Amigo and Anacleto Cagalitan
executed a power of attorney for their son Marcelino Amigo
granting the power to lease, let, bargain, transfer, convey
and sell, remise, release, mortgage and hypothecate, part of
any of the properties upon such terms and conditions and
under such covenants as he shall think fit. On October 30,
1938, Marcelino executed a deed of sale of a land at Php
3,000.00 in favor of Serapin Teves with a repurchase
stipulation of 18 months from the date of sale. On July 20,
1939 the spouses donated to their sons Justino and Pastor
several lands including their right to repurchase the said land
(sold to Teves). The deed of donation was registered in the
Register of Deeds. On March 9, 1940 Justino and Pastor
offered to repurchase the land from Teves but the latter
refused because ownership had already been consolidated
in him as purchaser a retro. Petitioners contended that
Marcelino Amigo acted in excess of his powers because the
covenant of lease contained in the said deed is not
germane to the said power.

ISSUE:

Whether or not Marcelino Amigo acted in excess of his
power?

HELD:

NO. The Court find no plausible reason xxx a cursory
reading thereof would at once reveal that the power granted
to the agent is so broad that if practically covers the
celebration of any contract and the conclusion of any
covenant or stipulation. When the power of attorney says
that the agent can enter into any contract concerning the
land or can sell the land under any term or condition and
covenant he may think fit, it undoubtedly means that he can
act in the same manner and with the same breadth and
latitude as the principal could concern the property.

RIZALINO, substituted by his heirs, JOSEFINA,
ROLANDO and FERNANDO, ERNESTO,
LEONORA,BIBIANO, JR., LIBRADO and ENRIQUETA, all
surnamed OESMER, Petitioners, vs.
PARAISODEVELOPMENT CORPORATION, Respondent.

FACTS:
Petitioners together with Adolfo Oesmer and
Jesus Oesmer, are brothers and sisters, and the co-owners
of undivided shares of two parcels of agricultural and
tenanted land which were acquired byright of succession.
Respondent Paraiso Development Corporation is
known to be engaged in the real estate business.
This case originated when Ernesto Oesmer, one
of the co-owners of the subject land, met with the President
of respondent corporation for the purpose of brokering the
sale of petitioners properties to respondent corporation.
Pursuant to the said meeting, a Contract to Sell was drafted
whereby petitioners Ernesto and Enriqueta subsequently
signed the aforesaid Contract to Sell. A check in the amount
of P100, 000.00, payable to Ernesto, was given as option
money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr.,
and Librado also signed the said Contract to Sell. However,
two of the brothers, Adolfo and Jesus, did not sign the
document.
Later on, petitioners informed the respondent,
through a letter, of their intention to rescind the Contract to
Sell and to return the amount of P100, 000.00 given by
respondent as option money. Respondent did not respond to
the aforesaid letter. Afterwards, herein petitioners, together
with Adolfo and Jesus, filed a Complaint for Declaration of
Nullity or for Annulment of Option Agreement or Contract to
Sell with Damages before the RTC.
The trial court held that the assailed Contract to
Sell is valid and binding only to the undivided proportionate
share of Ernesto who signed the document and received the
check. Ernesto was ordered to execute the Contract of
Absolute Sale concerning his 1/8 share over the subject two
parcels of land in favor of respondent.
On appeal, the Court of Appeals modified the
decision of RTC whereby it declared that the Contract to Sell
is valid and binding with respect to the undivided
proportionate share of the six signatories of the document.

ISSUE:
Whether or not the contract to sell binds the co-owners of
Ernesto.

HELD:
Yes. The contract to sell was valid and binding. In
contrast to the contention of the five co-owners who affixed
their signatures in the contract to sell that their signatures do
not confer authority to Ernesto as an agent to sell their
shares, the Court held that they were selling the same
directly and intheir own right. Hence, written authority is no
longer necessary since they were selling their shares in their
own capacity as owners.
In addition, the petitioners, being owners of their
respective undivided shares in the subject properties, can
dispose of their shares even without the consent of all the
co-heirs. Article 493 of the Civil Code provides that, Each
co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto and he may therefore
alienate, assign or mortgage it, and even substitute another
person in its enjoyment, except when personal rights are
involved. But the effect of the alienation or the mortgage,
with respect to the co-owners, shall be limited to the portion
which may be allotted to him in the division upon the
termination of the co-ownership. Consequently, even
without the consent of the two co-heirs, Adolfo and Jesus,
the Contract to Sell was valid and binding with respect to the
6/8 proportionate shares of the petitioners.

gratuity or personal benefit from the vendee, without
revealing the same to his principal, the vendor, is guilty of a
breach of his loyalty to the principal and forfeits his right to
collect the commission from his principal, even if the
principal does not suffer any injury by reason of such breach
of fidelity, or that he obtained better results or that the
agency is a gratuitous one, or that usage or custom allows it.
remedy or repair an actual damage agent thereby assumes
a position wholly inconsistent with that of being an agent for
his principal, who has a right to treat him, insofar as his
commission is concerned, as if no agency had existed
valuable services of the said agent does not exculpate the
agent who has only himself to blame for such a result by
reason of his treachery or perfidy.
Gregorio Domingo must forfeit his right to the commission
and must return the part of the commission he received from
his principal. Decisive Provisions Article 1891 and 1909 CC
deliver", which latter term is more comprehensive than the
former.
stress the highest loyalty that is required to an agent
condemning as void any stipulation exempting the agent
from the duty and liability imposed on him in paragraph one
thereof.
honesty, candor and fairness on the part of the agent, the
real estate broker in this case, to his principal, the vendor.
make a full disclosure or complete account to his principal of
all his transactions and other material facts relevant to the
agency, so much so that the law as amended does not
countenance any stipulation exempting the agent from such
an obligation and considers such an exemption as void.

apply:
h the task of
merely bringing together the vendor and vendee, who
themselves thereafter will negotiate on the terms and
conditions of the transaction.
bonus or profit he received from the purchaser and his
principal did not object
Teofilo Purisimas entitlement to his share in
the 5% commission
whatever amounts Gregorio Domingo received by virtue of
the transaction as his sub-agency contract was with
Gregorio Domingo alone and not with Vicente Domingo, who
was not even aware of such sub-agency.

, 300 from
Oscar and Vicente, P650 of which should be paid by
Gregorio to Teofilo.

SIASAT vs. INTERMEDIATE APPELLATE COURT

FACTS:
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.
purchase.
the release of the purchase orders.
the Department that the purchase orders could not be
released unless a formal offer to deliver the flags was first
submitted for approval.

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.
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.
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.
Manila to recover the following commissions: 25%, as
balance on the first delivery and 30%, on the second
delivery.
t.
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?
3. Was the award for attorneys fees and moral damages
proper?

RULING:
1. 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 one authorized 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
them only 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
claim 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
agreed upon by cancelling the agency and, thereafter,
dealing directly with the buyer.

3. NO, the award was not proper.
- Moral damages: To support a judgment for damages, facts
which justify the inference of a lack or absence of good faith
must be alleged and proven. There is no evidence on record
from which to conclude that the revocation of the agency
was deliberately effected by the petitioners to avoid payment
of the respondent's commission.
- Attorneys fees: Fo r one thing, the respondent did not
come to court with completely clean hands. For another, the
petitioners apparently believed they could legally revoke the
agency in the manner they did and deal directly with
education officials handling the purchase of Philippine flags.
They had reason to sincerely believe they did not have to
pay a commission for the second delivery of flags.
The decision of the respondent court was MODIFIED. The
petitioners were ordered to pay the respondent the amount
of ONE HUNDRED FOURTY THOUSAND NINE HUNDRED
AND NINETY FOUR PESOS (P140, 994.00) as her
commission on the second delivery of flags with legal
interest from the date of the trial court's decision.

FRANCISCO A. VELOSO, Petitioner, v. CA, AGLALOMA
B. ESCARIO, assisted by her husband GREGORIO L.
ESCARIO, the REGISTER OF DEEDS -MANILA,
Respondent.

DOCTRINE:
The special power of attorney can be included in
the general power when it is specified therein the act or
transaction for which the special power is required.
Whether the instrument be denominated as
"general power of attorney" or "special power of attorney,"
what matters is the extent of the power or powers
contemplated upon the agent or attorney in fact. If the power
is couched in general terms, then such power cannot go
beyond acts of administration. However, where the power to
sell is specific, it not being merely implied, much less
couched in general terms, there cannot be any doubt that
the attorney in fact may execute a valid sale. An instrument
may be captioned as "special power of attorney" but if the
powers granted are couched in general terms without
mentioning any specific power to sell or mortgage or to do
other specific acts of strict dominion, then in that case only
acts of administration may be deemed conferred."

FACTS:
Petitioner Francisco Veloso owns a parcel of land in Tondo,
Manila covered by a TCT issued by the Registry of Deeds-
Manila. He acquired the subject property before he got
married from Philippine Building Corporation. Hence, the
property did not belong to the conjugal partnership.
The said title was subsequently canceled and a new one
was issued in the name of Aglaloma B. Escario.
Subsequently, petitioner filed an action for annulment of
documents, reconveyance of property with damages and
preliminary injunction alleging that he was the absolute
owner of the subject property and he never authorized
anybody to sell it. He alleged that when his wife left for
abroad, he found out that his copy was missing.
The transfer of property was supported by a General Power
of Attorney and Deed of Absolute Sale, executed by Irma
Veloso, wife of the petitioner.
Petitioner denied executing the power of attorney and
alleged that his signature was falsified. He also denied
having known the supposed witnesses in the execution of
the power of attorney. Thus, he contended that the sale of
the property, and the subsequent transfer were null and void.
Defendant Aglaloma Escario alleged that she was a buyer
in good faith and denied any knowledge of the alleged
irregularity. She allegedly relied on the general power of
attorney which was sufficient in form and substance and was
duly notarized.
Witness for the plaintiff Atty. Julian G. Tubig denied any
participation in the execution of the general power of
attorney, and attested that he did not sign.
RTC ruled in favor of Escaro as the lawful owner of the
property as she was deemed an innocent purchaser for
value. The trial court ruled that there was no need for a
special power of attorney when the special power was
already mentioned in the general one.
CA affirmed in toto the findings of the trial court.

ISSUE:
Was the General Power of Attorney valid?
HELD:
The assailed power of attorney was valid and
regular on its face. It was notarized and as such, it carries
the evidentiary weight conferred upon it with respect to its
due execution. While it is true that it was denominated as a
general power of attorney, a perusal thereof revealed that it
stated an authority to sell.
"2. To buy or sell, hire or lease, mortgage or otherwise
hypothecate lands, tenements and hereditaments ."
Thus, there was no need to execute a separate
and special power of attorney since the general power of
attorney had expressly authorized the agent or attorney in
fact the power to sell the subject property. The general
power of attorney was accepted by the Register of Deeds
when the title to the subject property was canceled and
transferred in the name of Private Respondent.
RE FALSIFIED SIGNATURE:
SC found that the basis presented by the
petitioner was inadequate to sustain his allegation of forgery.
Mere variance of the signatures cannot be considered as
conclusive proof that the same were forged. Forgery cannot
be presumed.
RE INNOCENT PURCHASER FOR VALUE:
SC agrees with the conclusion of the lower court
that private respondent was an innocent purchaser for value.
Respondent Aglaloma relied on the power of attorney
presented by petitioners wife, Irma. Being the wife of the
owner and having with her the title of the property, there was
no reason for the private respondent not to believe in her
authority. Moreover, the power of attorney was notarized and
as such, carried with it the presumption of its due execution.
A purchaser in good faith is one who buys
property of another, without notice that some other person
has a right to, or interest in such property and pays a full and
fair price for the same, at the time of such purchase, or
before he has notice of the claim or interest of some other
person in the property. The questioned power of attorney
and deed of sale were notarized and therefore, presumed to
be valid and duly executed.
Atty. Tubig denied having notarized the said
documents and alleged that his signature had also been
falsified. Just like the petitioner, witness Atty. Tubig merely
pointed out that his signature was different from that in the
power of attorney and deed of sale.
Even granting for the sake of argument, that the
petitioners signature was falsified and consequently, the
power of attorney and the deed of sale were null and void,
such fact would not revoke the title subsequently issued
in favor of private respondent.
The right of an innocent purchaser for value
must be respected and protected, even if the seller
obtained his title through fraud. The REMEDY of the
person prejudiced is to bring an action for damages against
those who caused or employed the fraud, and if the latter are
insolvent, an action against the Treasurer of the Philippines
may be filed for recovery of damages against the Assurance
Fund.
RE ESTOPPEL:
The trial court did not err in applying equitable
estoppel in this case. The principle of equitable estoppel
states that where one or two innocent persons must suffer a
loss, he who by his conduct made the loss possible must
bear it. From the evidence adduced, it should be the
petitioner who should bear the loss.
The fact remains that the Certificate of Title, as
well as other documents necessary for the transfer of title
were in the possession of Irma, consequently leaving no
doubt or any suspicion on the part of the defendant as to
her authority. Under Section 55 of Act 496, Irmas
possession and production of the TCT to defendant operated
as conclusive authority from the plaintiff to the Register
of Deeds to enter a new certificate.
ACCORDINGLY, the petition for review is hereby
DENIED for lack of merit.

B. H. MACKE ET AL V JOSE CAMPS

FACTS:
* B. H. Macke and W.H. Chandler, partners doing
business under the firm name of Macke, Chandler And
Company, allege that during the months of February and
March 1905, they sold to Jose Camps and delivered at his
place of business, known as the :Washington Caf, various
bills of goods amounting to P351.50; that Camps has only
paid on account of said goods the sum of P174; that there is
still due them on account of said goods the sum of P177.50
* Plaintiffs made demand for the payment from
defendant and that the latter failed and refused to pay the
said balance or any part of it
* Macke, one of the plaintiffs, testified that on the
order of one Ricardo Flores, who represented himself to be
the agent of Jose Camps, he shipped the said goods to the
defendant at the Washington Caf; that Flores (agent) later
acknowledged the receipt of the said goods and made
various payments thereon amounting in all to P174; that
believes that Flores is still the agent of Camps; and that
when he went to the Washington Caf for the purpose of
collecting his bill he found Flores, in the absence of Camps,
apparently in charge of the business and claiming to be the
business manager of Camps, said business being that of a
hotel with a bar and restaurant annexed.
* A written contract was introduced as evidence,
from which it appears that one Galmes, the former of
Washington Caf subrented the building wherein the
business was conducted, to Camps for 1 year for the
purpose of carrying on that business, Camps obligating
himself not to sublet or subrent the building or the business
without the consent of the said Galmes. *This contract was
signed by Camps and the name of Ricardo Flores as a
witness and attached thereon is an inventory of the furniture
and fittings which also is signed by Camps with the word
sublessee below the name, and at the foot of this inventory
the word received followed by the name Ricardo Flores
with the words managing agent immediately following his
name.

ISSUE:
W/N Ricardol Flores was the agent of Camps

Ruling:
Yes.
Evidence is sufficient to sustain a finding that
Flores is the agent of Camps in the management of the bar
of the Washington Caf with authority to bind Camps, his
principal, for the payment of the goods
The contract sufficiently establishes the fact that
Camps was the owner of the business and of the bar, and
the title of managing agent attached to the signature of
Flores which appears on that contract, together with the fact
that at the time the purchases were made, Flores was
apparently in charge of the business performing the duties
usually intrusted to a managing agent leave little room for
doubt that he was there as the authorized agent of Camps.
Agency by Estoppel --- One who clothes another
with apparent authority as his agent, and holds him out to
the public as such, cannot be permitted to deny the authority
of such person to act as his agent, to the prejudice of
innocent third persons dealing with such person in good faith
and in the honest belief that he is what he appears to be.
Estoppel--- Whenever a party has, by his own
declaration, act or omission, intentionally and deliberately led
another to believe a particular thing true, and to act upon
such belief, he cannot, in any litigation arising out of such
declaration, act, or omission be permitted to falsify; and
unless the contrary appears, the authority of the agent must
be presumed to include all the necessary and usual means
of carrying his agency into effect.

Germann & Co. v.s. Donaldson, Sim & Co. 1 Phil. 63
(1901)

FACTS:

Max Leonard Tornow, a German national was the owner of
Germann & Co. which operated in Berlin and Manila. On
February 5, 1900 he executed in Berlin an instrument
constituting Fernando Kammerzell as his true and lawful
attorney with power to enter the firm name of Germann &
Co. in the Commercial Registry of Manila as a branch of the
house of the company in Berlin, it being the purpose of this
power to invest said attorney with full legal powers and
authorization to direct and administer in the City of Manila for
us and in our name a branch of our general commercial
business of import and export for which purpose he may
make contracts of lease and employ suitable assistants, as
well as sign every kind of documents, accounts, and
obligations connected with the business which may be
necessary, take charge in general of the receipt and delivery
of merchandise connected with the business sign all receipts
for sums of money and collect them and exact their payment
by legal means On October 27, 1900 Kammerzell
executed a general power for suits in Manila and purporting
to be a substitution in favor of several attorneys of powers
conferred upon Kammerzell in an instrument executed by
Tornow. Kammerzells instrument was authenticated will
formalities of domestic laws while Tornows was not.

ISSUE:
Whether or not Kammerzell has the authority to institute
suits for the recovery of sums of money?

HELD:

YES. The Court ruled that the clause conferring the power to
exact the payment of sums of money by legal means,
provides that the power to exact the payment of debts due
the concern by means of the institution of suits for the
recovery. The main object of the instrument is clearly to
make him the manager of the Manila branch with the same
general authority. In absence of a clear language, it was the
intention of the principal to withhold from his agent a power
essential to the efficient management of the business.

Municipal Council of Iloilo v.s. Evangelista 55 Phil. 290
(1930)

FACTS:

On March 20, 1924, the Court of First Instance of
Iloilo rendered judgment in Civil Case No. 3514 thereof,
wherein the appellant, herein Tan Ong Sze Vda. de Tan
Toco was the plaintiff and the Municipality of Iloilo the
defendant and the former sought to recover of the plaintiff
value of a strip of land belonging to said plaintiff taken by the
defendant to widen a public street; the judgment entitled the
plaintiff to recover Php 42,966.40 representing the value of
said strip of land from the defendant. On appeal to the
judgment was affirmed on November 28, 1924. After the
case was remanded to the court of origin and the judgment
rendered therein had become final and executory. Attorney
Jose Evangelista in his own behalf and as counsel for the
administratix of Jose Ma. Arroyos intestate estate filed a
claim in the said case for professional services rendered by
him, which the court acting with the consent of the appellant
widow, fixed at 15% of the amount of the judgment.

At the hearing on said claim, the claimants
appearead as did also for the Philippine National Bank which
prayed that the amount of the judgment be turned over to it
because the land taken over had been mortgaged to it.
Antero Soriano also appeared claiming the amount of the
judgment as it had been assigned to him and by him in turn,
assigned to Mauricio Cruz & Co., Inc. After hearing, all the
adverse claims on the amount of the judgment, the court
ordered that the attorneys lien in the amount of 15% of the
judgment be recorded in favor of Attorney Evangelista in his
own behalf and counsel for the administratix of the deceased
Jose Ma. Arroyo and directed the Municipality of Iloilo to file
an action of interpleading against the adverse claimants: the
PNB, Antero Soriano, Mauricio Cruz & Co., Jose Evangelista
and Jose Arroyo, as was done the case being filed in the CFI
of Iloilo as civil case no. 7702. On March 29, 1928 with the
approval of the auditor of the provincial treasurer of Iloilo and
with the Executive Bureau paid the late Antero Soriano the
amount of Php 6,000.00 in part payment of the judgment
mentioned above assigned to him by Tan Boon Tiong acting
as attorney-in-fact of the appellant herein, Tan Ong Sze Vda.
de Tan Toco. On December 18, 1928, the municipal
treasurer of Iloilo deposited with the clerk of the Court of
First Instance of Iloilo the amount of Php 6,000.00 on
account of the judgment rendered in said civil case no. 3514.
In pursuance of the resolution of the court below ordering
that the attorneys lien in the amount of 15% of the judgment
be recorded in favor of Attorney Jose Evangelista.In his own
behalf and as a counsel for the late Jose Ma. Arroyo, the
said clerk of court delivered on the same date to said
Attorney Evangelista the said amount of Php 6,000.00.

At the hearing of the instant case, the co-defendants of
Evangelista agreed not to discuss the payment made to the
latter by the clerk of CFI of Iloilo of the amount Php 6,000.00
mentioned above in consideration of said lawyers waiver of
the remainder of the 15% of said judgment amounting to Php
44.69. With these 2 payments of Php 6,000.00 each making
a total of Php 12,000.00 , the judgment for Php 42,966.44
against the Municipality of Iloilo was reduced to Php
30,966.40 which was adjudicated by said court to Maurice
Cruz & Co. This appeal, then is confined to the claim of
Mauricio Cruz & Co. as alleged assignee of the rights of the
late Soriano by virtue of the said judgment in payment of
professional services rendered by him to the said widow and
her co-heirs.

ISSUE:

Whether or not the assignment made by Tan Boon Tiong as
attorney-in-fact of the appellant Tan Ong Sze Vda. de Tan
Toco to Attorney Antero Soriano, of all the credits, rights and
interests belonging to said appellant entitled Vda. de Tan
Toco v.s. the Municipal of Iloilo adjudicating to said widow
the amount of Php 42,966.40 plus the costs of court against
said municipal council in consideration of the professional
services rendered by said attorney to said widow and her co-
heirs valid?

HELD:

YES. As to whether Tan Boon Tiong as attorney-in-fact of
the appellant was empowered by his principal to make as
assignment of credits, rights and interests, in payment of
debts for professional services rendered by lawyers.Tan
Boon Tiong is authorized to employ and contract for the
services of lawyers upon such conditions as he may deem
convenient. This power necessarily implies the authoirty to
pay the professional services they engaged. In the present
case, for the appellant in favor of Atty. Soriano for
professional services rendered in other cases in the interests
of the appellant and her co-heirs was that credit which had
against the Municipality and such assignment was
equivalent to the payment of amount of said credit to Antero
Soriano for professional services.

Yu Chuck vs. Kong Li Po 46 Phil 608 (1924)

FACTS:

Kong Li Po was a domestic corporation engaged
in the publication of a Chinese newspaper styled Kong Li Po.
Its by-laws stated that it will have a president who will sign
all contracts and other instruments in writing but no
provision for a business manager. In 1919, C.C. or T.C.
Chen was appointed manager.

On December 1919, Chen entered a contract with
Yu Chuck for the printing of the newspaper for Php 580
monthly. Chen was replaced by Tan Tia Hong and dismissed
the plaintiff without explanation on January 31, 1921. The
plaintiff filed an action for specific performance with
damages claiming that in its contract with Kong Li Po is for 3
years. The plaintiff asked for Php 20,880.00 as damages
and they would be given full pay for the unexpired portion of
the term x x x even in bankruptcy. Tan Tia Hong asserted
that Chen had no authority to enter into contract. The trial
court ruled that Chen had authority, taking into consideration
of the notice made by its president, Te Kim Hua that it shall
not sign or recognize any document without the signature of
Chen.

ISSUE:

Whether or not Chen had the authority to bind Kong Li Po
with Yu Chuck?

HELD:

NO. The Court ruled that although officers had an implied
authority if such was not expressly made by certain officer or
director, Chen had no authority to bind because the contract
was not usual and reasonable because the duration of it was
3 years and was onerous for Kong Li Po when it was stated
that the corporation is liable for the unexpired portion despite
insolvency. Plaintiff had no right to presume that any
employee had an implied authority which would bring its ruin.
Further, the president had no knowledge of such contract,
although saw some printing activities in its office and such
contract was neither ratified nor approved by the Board.

Goquiolay v Sycip

Facts:
Tan Sin An and Goquiolay entered into a general
commercial partnership under the partnership name Tan
Sin An and Antonio Goquiolay for the purpose of dealing in
real estate.
The agreement lodged upon Tan Sin An the sole
management of the partnership affairs.
The lifetime of the partnership was fixed at ten years and
theatricals of Co-partnership stipulated that in the event of
death of any of the partners before the expiration of the term,
the partnership will not be dissolved but will be continued by
the heirs or assigns of the deceased partner. But the
partnership could be dissolved upon mutual agreement in
writing of the partners.
Goquiolay executed a GPA in favor of Tan Sin An.
The plaintiff partnership purchased 3 parcels of land which
was mortgaged to La Urbana as payment of P25,000.
Another 46parcels of land were purchased by Tan Sin An in
his individual capacity which he assumed payment of a
mortgage debt for P35K.
A downpayment and the amortization were advanced by
Yutivoand Co.
The two obligations were consolidated in an instrument
executed by the partnership and Tan Sin An, whereby the
entire 49 lots were mortgaged in favor of Banco
Hipotecario
Tan Sin An died leaving his widow, Kong Chai Pin and four
minor children. The widow subsequently became the
administratrix of the estate.
Repeated demands were made by Banco Hipotecario on
the partnership and on Tan Sin An.
Defendant Sing Yee, upon request of defendant Yutivo
Sons, paid the remaining balance of the mortgage debt, the
mortgage was cancelled
Yutivo Sons and Sing Yee filed their claim in the intestate
proceedings of Tan Sin An for advances, interest and taxes
paid in amortizing and discharging their obligations to La
Urbana and Banco Hipotecario
Kong Chai Pin filed a petition with the probate court for
authority to sell all the 49 parcels of land. She then sold it to
Sycip and Lee inconsideration of P37K and of the vendees
assuming payment of the claims filed by Yutivo Sons and
Sing Yee.
Later, Sycip and Lee executed in favor of Insular
Development a deed of transfer covering the 49 parcels of
land.
When Goquiolay learned about the sale to Sycip and Lee,
he filed a petition in the intestate proceedings to set aside
the order of the probate court approving the sale in so far as
his interest over the parcels of land sold was concerned.
Probate court annulled the sale executed by the
administratrix w/respect to the 60% interest of Goquiolay
over the properties
Administratrix appealed.
The decision of probate court was set aside for failure to
include the indispensable parties. New pleadings were filed
The second amended complaint prays for the annulment of
the sale in favor of Sycip and Lee and their subsequent
conveyance to Insular Development.
The complaint was dismissed by the lower court hence this
appeal.

Issue:
1) Did the lower court err in holding that the widow
succeeded her husband Tan Sin An in the sole management
of the partnership upon Tans death?
2) WON the consent of the other partners was necessary to
perfect the sale of the partnership properties to Sycip and
Lee?

Held:
1)
Yes. While in the Articles of Co-Partnership and the power
of attorney executed by Goquiolay conferred upon Tan the
exclusive management of the business, such power
premised as it is upon trust and confidence, was a mere
personal right that terminated upon Tans demise. The
provision in the articles stating that in the event of death of
any one of the partners within the 10 year term of the
partnership, the deceased partner shall be represented by
his heirs could not have referred to the managerial right
given to Tan. The heirs of the deceased, by never
repudiating or refusing to be bound under the said provision
in the articles became individual partners with Goquiolay
upon Tans demise. This is sanctioned under Article 222
under the Code of Commerce. However, the minority of the
heirs is not a bar to the application of that clause in the
articles of co-partnership.
2)
No. Strangers dealing with a partnership have the right to
assume, in the absence of restrictive clauses in the co-
partnership agreement that every general partner has power
to bind the partnership specially those acting with ostensible
authority. Also, in spite of the provision of Art 129 of the
Code of Commerce to the effect that if the management of
the general partnership has not been limited by special
agreement to any of the members, all shall have the power
to take part in the direction and management of the common
business, and the members present shall come to an
agreement for all contracts or obligations which may concern
the association, such obligation is one imposed by law on
the partners among themselves, that does not necessarily
affect the validity of the acts of a partner while acting within
the scope of the ordinary course of business of the
partnership as regards third persons without notice. The
latter may rightfully assume that the contracting partner was
duly authorized to contract for and in behalf of the firm and
that he would not ordinarily act to the prejudice of his co-
partners. Also, the records fail to disclose that Goquiolay
made any opposition to the sale of the partnership realty to
Sycip and Lee. On the contrary, it appears that he only
interposed his objections after the deed of conveyance was
executed and approved by the probate court, and
consequently, his opposition came too late to be effective
(ii) Admission or representation made by any
partner concerning partnership affairs is evidence against
the partnership
(iii) Notice to any partner of any matter relating to
partnership affairs, and the knowledge of the acting in the
particular matter, acquired while a partner or then present to
his mind, and the knowledge of any other partner who
reasonably could and should have communicated it to the
acting partner, operate as notice to or knowledge of the
partnership, except in the case of fraud on the partnership,
committed by or with the consent of that partner
(iv) Where, by any wrongful act or omission of any
partner acting in the ordinary course of the business of the
partnership or with the authority of co-partners, loss or injury
is caused to any person, not being a partner in the
partnership, or any penalty is incurred, the partnership is
liable therefor to the same extent as the partner so acting or
omitting to act.
(v) The partnership is bound to make good the
loss:
(1) Where one partner acting within the scope of
his apparent authority receives money or property
of a third person and misapplies it; and
(2) Where the partnership in the course of its
business receives money or property of a third
person and the money or property so received is
misapplied by any partner while it is in the custody
of the partnership.
d. Mutual obligation of Partners
(i) Partners shall render on demand true and full
information of all things affecting the partnership to
any partner or the legal representative of any
deceased partner or of any partner under legal
disability.
5. Fiduciary Duties
a. Duty of Diligence:
For damages caused to the business

* Every partner is responsible to the partnership
for damages suffered by it through his fault.
* he cannot compensate them with the profits and
benefits which he may have earned for the
partnership by his industry.
* However, the courts may equitably lessen this
responsibility if through the partner's extraordinary
efforts in other activities of the partnership,
unusual profits have been realized.
b. Duty to account:
Full accounting to the partnership for partnership
transactions
* Every partner must account to the partnership for
any benefit and hold as trustee for it any profits
derived by him without the consent of the other
partners from any transaction connected with the
(FCL) formation, conduct, or liquidation of the
partnership or from any use by him of its property.
c. Duty of Loyalty:
* The capitalist partners cannot engage for their
own account in any operation which is of the kind
of business in which the partnership is engaged,
unless there is a stipulation to the contrary.
* Any capitalist partner violating this prohibition
shall bring to the common funds any profits
accruing to him from his transactions ,and shall
personally bear all the losses.

OLAGUER vs PURUGGANAN

FACTS:
Alleges that he was the owner of 60,000 share of stocks
(worth 600k), employed as EVP Business day Corporation,
President of Business day Info System and Services
&Business day Marketing Corp. Active in the political
opposition against Marcos together with respondents Raul
Locsin and Enrique Joaquin. Locsin, Joaquin, and Hector
Holifea had an unwritten agreement that, in the event that
Eduardo was arrested, they would support the Eduardos
family by the continued payment of his salary. Executed a
Special Power of Attorney on 5/26/79 appointing Locsin,
Joaquin and Hofilea for the purpose of selling or
transferring petitioners shares of stock with Business day.
During trial, Eduardo testified that he agreed to execute the
SPA in order to cancel his shares of stock, even before they
are sold, for the purpose of concealing that he was a
stockholder of Business day, in the event of a military
crackdown against the opposition. Parties acknowledged the
SPA before respondent Emilio Purugganan,Jr., who was
then the Corporate Secretary of Business day, and at the
same time, a notary public for Quezon City. By the time he
was released from prison 6 years later, he was no longer a
shareholder in the said bank. According to the respondents,
they were just doing what was accorded in the SPA, given
that the price of theirs plummeted below market value
because of the stigma brought about by Olaguer being a
very prominent oppositionist.

ISSUE:
Whether absence as mentioned in SPA should be
understood as that of NCC 381.

RULING:
NO. If it were, then the very existence of that SPA would be
rendered nugatory. Olaguer has to be a minor or insane for
that SPA to have function. An SPA has to be construed
strictly but its provision has to be construed as to its
existence, i.e. understood in a way that will give more power/
function to that SPA. Since the said SPA executed by
Olaguer gave powers to the respondents to actually dispose
of his share, he cannot therefore assail such now. And even
if the said contract is assailable, it was already ratified by the
reception of the amount 600,000 by Olaguers wife and in-
laws from 1980-1982.

BRAVO-GUERRERO vs. BRAVO

FACTS:
Spouses Mauricio Bravo ("Mauricio") and Simona
Andaya Bravo ("Simona") owned two parcels of land
("Properties") located along Evangelista Street, Makati City,
Metro Manila. They have three children - Roland, Cesar and
Lily, all surnamed Bravo. Cesar died without issue. Lily
Bravo married David Diaz, and had a son, David B. Diaz, Jr.
("David Jr."). Roland had six children, namely, Lily Elizabeth
Bravo-Guerrero ("Elizabeth"), Edward Bravo ("Edward"),
Roland Bravo, Jr. ("Roland Jr."), Senia Bravo, Benjamin
Mauricio Bravo, and their half-sister, Ofelia Bravo ("Ofelia").
Simona executed a General Power of Attorney
("GPA") on 17 June 1966 appointing Mauricio asher
attorney-in-fact. In the GPA, Simona authorized Mauricio to
"mortgage or otherwise hypothecate, sell, assign and
dispose of any and all of my property, real, personal or
mixed, of any kind whatsoever and whosesoever situated, or
any interest therein xxx." Mauricio subsequently mortgaged
the Properties to the Philippine National Bank (PNB) and
Development Bank of the Philippines (DBP) for P10,000 and
P5,000, respectively.
On 25 October 1970, Mauricio executed a Deed of
Sale with Assumption of Real EstateMortgage ("Deed of
Sale") conveying the Properties to "Roland A. Bravo, Ofelia
A. Bravo and Elizabeth Bravo" ("vendees"). However, the
Deed of Sale was not annotated on TCT Nos.58999 and
59000. Neither was it presented to PNB and DBP. The
mortgage loans and the receipts for loan payments issued
by PNB and DBP continued to be in Mauricios name even
after his death on 20 November 1973. Simona died in 1977.
On 23 June 1997, Edward, represented by his
wife, Fatima Bravo, filed an action for the judicial partition of
the Properties. Edward claimed that he and the other
grandchildren of Mauricio and Simona are co-owners of the
Properties by succession. Despite this, petitioners refused to
share with him the possession and rental income of the
Properties.

ISSUE:
Whether Simona validly appointed Mauricio as her attorney-
in-fact to dispose the properties in question.

DECISION:
The SC also agrees with the trial court that
Simona authorized Mauricio to dispose of the Properties
when she executed the GPA. True, Article 1878 requires a
special power of attorney for an agent to execute a contract
that transfers the ownership of an immovable. However, the
Court has clarified that Article 1878 refers to the nature of
the authorization, not to its form. Even if a document is titled
as a general power of attorney, the requirement of a special
power of attorney is met if there is a clear mandate from the
principal specifically authorizing the performance of the act.

In Veloso v. Court of Appeals, the Court explained
that a general power of attorney could contain a special
power to sell that satisfies the requirement of Article 1878,
thus:
While it is true that it was denominated as a
general power of attorney, a perusal thereof revealed that it
stated an authority to sell, to wit:
"2. To buy or sell, hire or lease, mortgage or otherwise
hypothecate lands, tenements and hereditaments or other
forms of real property, more specifically TCT No. 49138,
upon such terms and conditions and under such covenants
as my said attorney shall deem fit and proper."
Thus, there was no need to execute a separate
and special power of attorney since the general power of
attorney had expressly authorized the agent or attorney in
fact the power to sell the subject property. The special power
of attorney can be included in the general power when it is
specified therein the act or transaction for which the special
power is required.
In this case, Simona expressly authorized
Mauricio in the GPA to "sell, assign and dispose of any and
all of my property, real, personal or mixed, of any kind
whatsoever and wheresoever situated, or any interest
therein xxx" as well as to "act as my general representative
and agent, with full authority to buy, sell, negotiate and
contract for me and in my behalf." Taken together, these
provisions constitute a clear and specific mandate to
Mauricio to sell the Properties. Even if it is called a "general
power of attorney," the specific provisions in the GPA are
sufficient for the purposes of Article 1878. These provisions
in the GPA likewise indicate that Simona consented to the
sale of the Properties.

JESUS M. GOZUN, petitioner,vs. JOSE TEOFILO T.
MERCADO a.k.a. DON PEPITO MERCADO, respondent.

FACTS:
In the local elections of 1995, respondent vied for
the gubernatorial post in Pampanga. Upon respondents
request, petitioner, owner of JMG Publishing House, a
printing shop located in San Fernando, Pampanga,
submitted to respondent draft samples and price quotation of
campaign materials.
By petitioners claim, respondents wife had told
him that respondent already approved his price quotation
and that he could start printing the campaign materials,
hence, he did print campaign materials like posters bearing
respondents photograph, leaflets containing the slate of
party candidates, sample ballots, poll watcher identification
cards, and stickers.
Given the urgency and limited time to do the job
order, petitioner availed of the services and facilities of Metro
Angeles Printing and of St. Joseph Printing Press, owned by
his daughter Jennifer Gozun and mother Epifania Macalino
Gozun, respectively.
Meanwhile, on March 31, 1995, respondents
sister -in-law, Lilian Soriano (Lilian) obtained from petitioner
"cash advance" of P253, 000 allegedly for the allowances of
poll watchers who were attending a seminar and for other
related expenses. Lilian acknowledged on petitioners 1995
diary receipt of the amount.

ISSUE:
W/N Lilian R. Soriano was authorized by the respondent to
receive the cash advance from the petitioner in the amount
of P253,000.00.

Held:
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. Contracts entered into in the name of another person
by one who has been given no authority or legal
representation or who has acted beyond his powers are
classified as unauthorized contracts and are declared
unenforceable, unless they are ratified.
Generally, the agency may be oral, unless the law
requires a specific form. However, a special power of
attorney is necessary for an agent to, as in this case, borrow
money, unless it be urgent and indispensable for the
preservation of the things which are under administration.
Since nothing in this case involves the preservation of things
under administration; a determination of whether Soriano
had the special authority to borrow money on behalf of
respondent is in order.
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 not enough merely
that the

ESTATE OF LINO OLAGUER VS. ONGJOCO

Facts:
The plaintiffs are the legitimate children of the spouses
Olaguer. Lino Olaguer died so Special Proceedings for
probate of will was filed and Defendant Olivia P. Olaguer
was appointed as administrator pursuant to the will. In the
order of the probate court some properties of the estate were
authorized to be sold to pay obligations of the estate.A
subdivision agreement was entered into on November 17,
1973, among Domingo Candelaria, Olivia P.
Olaguer,Domingo O. de la Torre and Emiliano M. [Ongjoco].
On January 15, 1976, Jose A. Olaguer claiming to be the
attorney-in-fact of his son Virgilio Olaguer under a general
power of attorney, those lots sold to defendant Emiliano M.
Ongjoco. Thus, they filed an action for the Annulment of
Sales of Real Property and/or Cancellation of Titles by the
CFI.

ISSUE:
Whether or not respondent Ongjoco can be considered an
innocent purchaser for value.

Ruling:
The court hold that respondent Emiliano M. Ongjoco was in
bad faith when he bought Lots Nos. 1 and 2 from Jose
A.Olaguer, as the latter was not proven to be duly authorized
to sell the said properties. However, respondent Ongjoco
was an innocent purchaser for value with regard to Lots Nos.
76-D, 76-E, 76-F and 76-G since it was entirely proper for
him torely on the duly notarized written power of attorney
executed in favor of Jose A. Olaguer

Philippine Aluminum Wheels, Inc. vs FASGI Enterprises,
Inc.

FACTS:
In 1978, FASGI Enterprises Inc. (FASGI), a foreign
corporation organized under the laws of California, USA,
entered into a contract with Philippine Aluminum Wheels,
Inc. (PAWI), a Philippine corporation, whereby the latter
agrees to deliver 8,594 wheels to FASGI. FASGI received
the wheels and so it paid PAWI $216,444.30. Later however,
FASGI found out that the wheels are defective and did not
comply with certain US standards. So in 1979, FASGI sued
PAWI in a California court. In 1980, a settlement was
reached but PAWI failed to comply with the terms of the
agreement. A second agreement was made but PAWI was
again remiss in its obligation. The agreement basically
provides that PAWI shall return the purchase price in
installment and conversely, FASGI shall return the wheel in
installment. PAWI was only able to make two installments
(which were actually made beyond the scheduled date).
FASGI also returned the corresponding number of wheels.
Eventually in 1982, FASGI sought the enforcement of the
agreement and it received a favorable judgment from the
California court. PAWI is then ordered to pay an equivalent
of P252k plus damages but FASGI was not ordered to return
the remaining wheels. PAWI was not able to comply with the
court order in the US. So in 1983, FASGI filed a complaint
for the enforcement of a foreign judgment with RTC-Makati.
Hearings were made and in 1990, the trial judge ruled
against FASGI on the ground that the foreign judgment is
tainted with fraud because FASGI was not ordered to return
the remaining wheels (unjust enrichment) and that PAWIs
American lawyer entered into the agreements without the
consent of PAWI. On appeal, the Court of Appeals reversed
the trial court.

ISSUE: Whether or not the foreign judgment may be
enforced here in the Philippines.

HELD: Yes. The judgment is valid. A valid judgment
rendered by a foreign tribunal may be recognized insofar as
the immediate parties and the underlying cause of action are
concerned so long as it is convincingly shown that there has
been an opportunity for a full and fair hearing before a court
of competent jurisdiction; that trial upon regular proceedings
has been conducted, following due citation or voluntary
appearance of the defendant and under a system of
jurisprudence likely to secure an impartial administration of
justice; and that there is nothing to indicate either a prejudice
in court and in the system of laws under which it is sitting or
fraud in procuring the judgment. A foreign judgment is
presumed to be valid and binding in the country from which it
comes, until a contrary showing, on the basis of a
presumption of regularity of proceedings and the giving of
due notice in the foreign forum.
In this case, PAWI was very well represented in the
California court. PAWIs insistence that its American lawyer
colluded with FASGI; that he entered into the compromise
agreement without PAWIs authority is belied by the fact that
PAWI initially complied with the agreement. It did not
disclaim the agreement. It sent two installments (though
belatedly) but failed to comply on the rest. It cannot now aver
that the agreement is without its authority. Further, it is just
but fair for the California court not to order FASGI to return
the remaining wheels because of PAWIs arrears.

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 claims
over 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 compromise agreement 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 primarily committed 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 does not 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.

Caballero vs. Deiparine

FACTS:
1. This involves a dispute over a parcel of land and the acts
committed by the plaintiff lawyer which were not intended by
his client, the plaintiff.
2. That during the lifetime of Bucao she with her second
husband acquired by joint purchase a parcel of land from the
Talisay-Minglanilla Estate
3. That in 1932 Bucao and Tomas executed jointly a notarial
instrument identified as Annex "B" wherein they
acknowledged that Antonio Caballero had contributed the
amount therein stated for the purchase of the property and
they sold 1/4 of the lot to him; when the title to said lot was
issued, VicentaBucao and Tomas Raga held it in trust for
their co-owner.
4. That the portion mentioned as sold to plaintiff Antonio
Caballero remained unsegregated from Lot 2072 and the
deed of sale, Annex "B" of the Complaint; nor had it been
registered in the Register of Deeds; but he, had been in
occupation of a portion of this lot peacefully until the present.
5. Bucao sold her undivided 1/2 of the above parcel to her
co-owner, Tomas Raga.
6. Defendants Olimpio Raga, Adriano Raga, Magdalena
Raga and Tomas Raga executed an instrument known as
"Declaration and confirmation of sale" without the
participation of plaintiffs Antonio Caballero and Concordia
Caballero, wherein they stated that they are the heirs of
VicentaBucao of the 1/2 of the property to Tomas Raga, a
certified true copy of which document is identified as Annex
"E" in the Complaint.
7. Alma Deiparine acquired in good faith, with a just title and
for a valuable consideration, the whole of Lot 2072 from
Tomas Raga as per deed of absolute sale identified as
Annex "C" in the complaint which cancelled Transfer
Certificate of Title No. RT-2482 (T-17232) and the issuance
in her name of Transfer Certificate of Title No. 9934 on April
1, 1963, a certified true copy of which is identified as Annex
"D" in the complaint;
8. That defendant Alma Deiparine came to know only of
Annex "B" when it was presented by plaintiff Antonio
Caballero at the trial of an ejectment case filed by the former
in the Municipal Court of Talisay.
9. This case was decided in favor of Antonio Caballero but
the decision was appealed by Alma Deiparine to the Court of
First Instance of Cebu which affirmed the decision for
Caballero. The case is now in the Court of Appeals on
appeal by Alma Deiparine.
10. Caballero and the defendant parties entered into a
compromise agreement. And the lawyer of Caballero
admitted to certain facts without the authority of his client,
Caballero.

ISSUE:
Is the compromise valid, considering that the lawyer
admitted to facts which were not authorized by his client to
make? No


RULING:
1. A reading of the stipulation of facts convinced the court
that it is a compromise agreement of the parties. The
stipulation concludes with this prayer: "WHEREFORE, it is
most respectfully prayed that the foregoing Stipulation of
Facts be approved and that a decision be handed down on
the legal issues submitted on the basis of said Stipulation of
Facts." Apparently it is intended to terminate the case.
2. Attorneys have authority to bind their clients in any case
by any agreement in relation thereto made in writing, and in
taking appeals, and in all matters of ordinary judicial
procedure. But they cannot, without special authority,
compromise their client's litigation, or receive anything in
discharge of a client's claim but the full amount in cash
3. It may be true that during the pre-trial hearing held on
February 3, 1968, the parties concerned agreed to execute a
stipulation of facts but it does not mean that the respective
counsels of the contending parties can prepare a stipulation
of facts the contents of which is prejudicial to the interest of
their clients and sign it themselves without the intervention of
their clients.
4. Counsel for plaintiffs-appellants, Atty. Melecio C. Guba,
agreed that defendant-appellee Alma Deiparine bought the
land in question in good faith and for a valuable
consideration; that during the lifetime of their mother Vicenta
Bucao, she, with the conformity of her husband, sold her
undivided of the land in question to her co-owner and son,
Tomas Raga.
5. All these adverse facts were made the basis of the
appealed decision against the plaintiffs. No further evidence
was presented as there was no hearing.
6. The attorney for the plaintiffs in making such admission
went beyond the scope of his authority as counsel and
practically gave away the plaintiffs' case. The admission
does not refer to a matter of judicial procedure related to the
enforcement of the remedy. It related to the very subject
matter of the cause of action, or to a matter on which the
client alone can make the admission binding on him.
7. The broad implied or apparent powers of an attorney with
respect to the conduct or control of litigation are, however,
limited to matters which relate only to the procedure or
remedy.
8. The employment of itself confers upon the attorney no
implied or power or authority over the subject matter of the
cause of action or defense; and, unless the attorney has
expressly been granted authority with respect thereto, the
power to deal with or surrender these matters is regarded as
remaining exclusively in the client.

DUNGO v. LOPENA

FACTS:
Anastacio Dungo and Rodrigo Gonzales purchased 3
parcels of land from Adriano Lopena and Rosa Ramos for
the total price of P269, 804.00. P28.000.00 was given as
down payment with the agreement that the balance of P241,
804.00 would be paid in 6 monthly installments.
To secure the payment of the balance, the Dungo and
Gonzales executed over the same parcels of land Deed of
Real Estate Mortgage in favor of Lopena and Ramos. This
deed was duly registered with the Office of the Register of
Deeds Rizal, with the condition that failure of the vendees to
pay any of the installments on their maturity dates shall
automatically cause the entire unpaid balance to become
due and demandable.
Dungo and Gonzales defaulted on the 1st installment.
Lopena and Ramos filed a complaint for the foreclosure of
the real estate mortgage with the CFI of Rizal
There were 2 other civil cases filed in the same lower
court against the same defendants Dugo and Gonzales.
The plaintiff in one was a certain Dionisio Lopena, and in the
other case, the complainants were Bernardo Lopena and
Maria de la Cruz. All 3 cases arose out of one transaction. In
view of the identical nature of the cases, they were
consolidated by the lower court into just one proceeding.
This present decision refers solely to the interests and
claim of Adriano Lopena against Anastacio Dugo alone.
Before the cases could be tried, a compromise agreement
was submitted to the lower court for approval. It was signed
by Lopena and Ramos on one hand, and Gonzales, on the
other. It was not signed by Dungo. However, Gonzales
represented that his signature was for both himself and the
Dungo. Moreover, Dugo's counsel of record, Atty. Chan,
the same lawyer who signed and submitted for him the
answer to the complaint, was present at the preparation of
the compromise agreement and this counsel affixed his
signature thereto. This compromise agreement was
approved by the lower court on the same day it was
submitted.
Subsequently a so-called Tri-Party Agreement was drawn.
The signatories to it were Dugo and Gonzales as debtors,
Lopena and Ramos as creditors, and, one Emma R. Santos
as payor.
When Dugo and Gonzales failed to pay the balance,
Lopena and Ramos filed a Motion for the Sale of Mortgaged
Property. Although this last motion was filed ex parte, Dugo
and Gonzales were notified of it by the lower court. Neither
of them filed any opposition thereto. The lower court granted
the above motion and ordered the sale of the mortgaged
property.
The 3 parcels of land were sold by the Sheriff at a public
auction where at herein petitioners, together with the
plaintiffs of the other two cases won as the highest bidders.
The said sheriff's sale was later confirmed by the lower
court. Before confirming the sale, the lower court gave due
notice of the motion for the confirmation to the herein
petitioner who filed no opposition therefore.
Dugo filed a motion to set aside all the proceedings on
the ground that the compromise agreement was void
ab initio with respect to him because he did not sign the
same. Consequently, he argued, all subsequent proceedings
under and by virtue of the compromise agreement, including
the foreclosure sale, were void and null as regards him. This
motion to set aside was denied by the lower court
Dugo filed a Notice of Appeal from the order approving
the foreclosure sale, as well as the order denying his motion
to set aside. The approval of the record on appeal however,
was opposed by the respondent spouses who claimed that
the judgment was not appealable having been rendered by
virtue of the compromise agreement. The opposition was
contained in a motion to dismiss the appeal. The lower court
dismissed the appeal.

ISSUES/HELD
A. Was the compromise agreement, the Order of the same
dateapproving the same, and, all the proceedings
subsequent thereto, valid or void insofar as Dungo is
concerned?
YES
Dugo - the Compromise Agreement was void
ab initio and could have no effect whatsoever against him
because he did not sign the same. Furthermore, as it was
void, all the proceedings subsequent to its execution,
including the Order approving it, were similarly void and
could not result to anything adverse to his interest.
It is true that a compromise is, in itself, a contract.
ART. 2028. A compromise is a contract whereby the
parties, by making reciprocal concessions, avoid litigation or
put an end to one already commenced.
Moreover, under Art. 1878 of the Civil Code, a third person
cannot bind another to a compromise agreement unless he,
the third person, has obtained a special power of attorney for
that purpose from the party intended to be bound.
Although the Civil Code expressly requires a special
power of attorney in order that one may compromise an
interest of another; it is neither accurate nor correct to
conclude that its absence renders the compromise
agreement void. In such a case, the compromise is merely
unenforceable. It must be governed by the rules and the law
on contracts.
ART. 1403. The following contracts are unenforceable,
unless they are ratified:
Those entered into in the name of another person by one
who has been given no authority or legal representation, or
who has acted beyond his powers;
B. WON Dugo had ratified the compromise agreement.
YES
The ratification of the compromise agreement was
conclusively established by the Tri-Party Agreement. It is to
be noted that the compromise agreement was submitted to
and approved by the lower court. Now, the Tri-Party
Agreement referred itself to that order.
Rivero v. Rivero - When it appears that the client, on
becoming aware the compromise and the judgment thereon,
fails to repudiate promptly the action of his attorney, he will
not afterwards be heard to contest its validity
This Court has not overlooked the fact that which indeed
Dugo was not a signatory to the compromise agreement,
the principal provision of the said instrument was for his
benefit. Originally, Dugo's obligation matured and became
demandable on October 10, 1959. However, the
compromise agreement extended the date of maturity to
June 30, 1960.More than anything the compromise
agreement operated to benefit of Dungo because it afforded
him more time and opportunity to fulfill his monetary
obligations under the contract. If only for this reason, this
Court believes that the herein petitioner should not be heard
to repudiate the said agreement.
The compromise agreement stated "that, should the
defendants fail to pay the said mortgage indebtedness,
judgment of foreclosure shall thereafter be entered against
the said defendants:" Beyond doubt, this was ratified by the
Tri-Party Agreement when it covenanted that - If the MAYOR
defaults or fails to pay anyone of the installments in the
manner stated above, the MAYOR and the DEBTOR hereby
permit the CREDITOR to execute the order of sale referred
to above (the Judgment of Foreclosure), and they (PAYOR
and DEBTOR) hereby waive any and all objections or
oppositions to the propriety of the public auction sale and to
the confirmation of the sale to be made by the Court.
Dugo - even assuming that the compromise agreement
was valid, it nevertheless could not be enforced against him
because it has been novated by the Tri-Party Agreement
which brought in a third party, Santos, who assumed the
mortgaged obligation of Dungo.
Novation by presumption has never been favored. To be
sustained, it need be established that the old and new
contracts are incompatible in all points, or that the will to
novate appears by express agreement of the parties or in
acts of similar import.
An obligation to pay a sum of money is not novated, in a
new instrument wherein the old is ratified, by changing only
the term of payment and adding other obligations not
incompatible with the old one or wherein the old contract is
merely supplemented by the new one
Dungo claims that when a third party, Santos, came in and
assumed the mortgaged obligation, novation resulted
thereby inasmuch as a new debtor was substituted in place
of the original one.
In this kind of novation, however, it is not enough that the
juridical relation of the parties to the original contract is
extended to a third person; it is necessary that the old debtor
be released from the obligation and the third person or new
debtor take his place in the new relation. Without such
release, there is no novation; the third person who has
assumed the obligation of the debtor merely becomes a co-
debtor or surety. If there is no agreement as to solidarity, the
first and the new debtors are considered obligation jointly.
There was no such release of the original debtor in the Tri-
Party Agreement.
It is a very common thing in the business affairs for a
stranger to a contract to assume its obligations; while this
may have the effect of adding to the number of persons
liable, it does not necessarily imply the extinguishment of the
liability of the first debtor). The mere fact that the creditor
receives a guaranty or accepts payments from a third person
who has agreed to assume the obligation, when there is no
agreement that the first debtor shall be released from
responsibility, do not constitute a novation, and the creditor
can still enforce the obligation against the original debtor .
Tri-Party Agreement was an instrument intended to render
effective the compromise agreement. It merely
complemented and ratified the same. That a third person
was involved in it is inconsequential. Nowhere in the new
agreement may the release of Dungo be even inferred.

PELAYO VS PEREZ, G.R NO. 141323 JUNE 8,2005

FACTS:
David Pelayo sold two parcels of agricultural land located in
Panabo to Melki Perez on January 1988 And the sale is
evidenced by a deed of Absolute Sale and Loreza Pelayo,
wife of David and another one whose signature is illegible
witnessed the execution of the deed. Mrs. Pelayo signed
only the third space in the space provided for the witness,
Perez asked Loreza to sign on the first and second pages
but the latter refused as a result, Mr. Perez instituted an
action for specific performance and Perez countered that the
lots were given to him by defendant Pelayo in consideration
of his services as his attorney-in fact to make the necessary
representation and negotiation with the illegal occupants-
defendants in the ejectment case. Defendant Pelayo said
that the deed was without the consent of Mrs. Perez and
invoked Art 166of the Civil Code to support his argument.

ISSUE:
Did Mrs. Pelayo express her consent in the deed of Sale
executed by Mr. Pelayo?

HELD:
The consent need not be expressed. It can be implied. In the
present case, although it appears on the face of the deed of
sale that Lorenza signed only as an instrumental witness,
circumstances leading to the execution of said document
point to the fact that Lorenza was fully aware of the sale of
their conjugal property and consented to the sale. The
petition of Mr. and Mrs. Pelayo was denied.

St. Marys Farm, Inc. v. Prima Real Properties

Facts:
St. Marys was the registered owner of an
originally 25,598 sqm of land in Las Pinas under TCT S-
1648.
In compliance with a final court decision in another
civil case, St. Marys passed and approved in 1988 a board
resolution authorizing defendant Rodolfo Agana to cede to
T.S. Cruz Subdivision 4,000 sqm of the abovementioned
land.
Agana did not return to plaintiff the said title.
Instead, allegedly forged a board resolution of St. Marys
authorizing Agana to sell the remaining 21,598 sqm of land.
This board resolution was duly notarized. Agana was also
with a Special Power of Attorney when it dealt with T.S. Cruz
and Prima Real Properties.
Eventually, a deed of absolute sale was signed by
Agana and Prima Real Properties transferring ownership of
the land from St. Marys to Prima.
Prima effected the cancellation of TCT S-1648 in
the name of St. Marys and another TCT T-6175 in its name
was issued by the Registry of deeds, Villanueva.
Prima purchased from T.S. Cruz Subdivision the
4,000 sqm portion of the land.
St. Marys filed an action for rescission of the sale
and the reconveyance of the property.

According to St. Marys:
1. Sale of the realty entered into between Agana and
Prima is null and void for lack of authority on the part of
Agana to sell the property.
2. The board resolution allegedly granting Agana the
authority to sell in behalf of the company, as certified by
Corp. Secretary Agcaoili is a forgery as no board meeting
was held on June 27, 1988; the said document was merely
presented to the notary public for notarization without Atty.
Agcaoili appearing before him.
3. Consequently, the deed of absolute sale was void
for being a result of a fraudulent transaction.
Prima contends:
1. It acted in good faith when it relied solely on the
face of the authorization of Agana and paid in full the
purchase price of P2,567,760.00 making it a buyer in good
faitgh and for value.
2. Even assuming that the authorization of Agana
was forged, St. Marys, through its president, accepted and
received part of the purchase price knowing fully well the
same to be the proceeds of the sale of the property, St.
Marys is now estopped from asking for rescission.

FIRST ISSUE:
1. Whether or not Prima was a buyer in bad faith

HELD:
No, Prima was a buyer in good faith and for value.
On the basis of the board resolution, Prima had every
reason to rely on Aganas authority to sell the land.
A buyer for value and in good faith is one who
buys property of another, without notice that some other
person has a right or interest in such property and pays full
and fair price for the same, at the same time of such
purchase, or before he has notice of the said claim or
interest. To prove good faith, a buyer of registered and titled
land need only show that he relied on the face of the title of
the property. Sufficient that the following conditions concur:
a. The seller is the registered owner of the land
b. Owner has possession of the land
c. At the time of the sale, the buyer was not aware of
any claim or interest of some other person in the property, or
of any defect or restriction in the title of the seller or in his
capacity to convey title to the property
All the three conditions are present in the case.
1. Prima exerted efforts to verify the true background
of the subject land
2. Agana presented to Prima the notarized board
resolution, separate Certification by St. Marys president
authorizing Agana to sell the land, and a TCT of the property

SECOND ISSUE: Whether or not Agana was authorized to
sell the subject property

HELD:
Yes, Agana had the authority to sell the subject property by
virtue of the notarized board resolution and the Special
Power of Attorney.
RATIO:
The document under scrutiny is a special power of attorney
that is duly notarized. It is a public document where the
notarial acknowledgement is prima facie evidence of the fact
of its due execution. A buyer presented with such a
document would have no choice between knowing and
finding out whether a forger lurks beneath the signature on it.
The notarial acknowledgment has removed that choice from
him replacing it with a presumption sanctioned by law that
the affiant appeared before the notary public and
acknowledged that he executed the document, understood
its import and signed it. The buyer is given the luxury to rely
on the presumption of regularity of a duly notarized SPA.

Prima also relied on the confirmation and certification of the
Register of Deeds of Las Pinas and Mr. T.S. Cruz. When
Agana first sold the 4,000 sqm portion to T.S. Cruz, he
showed a similar authorization by the petitioner which was
also signed by the corporate secretary, Atty. Agcaoili. Agana
acted as St. Marys authorized agent and had full authority to
bind the company in that first transaction with Cruz.

The board resolution also negates the assertion by St.
Marys that Aganas authority was only limited to negotiate
and not to sell. The resolution further averred that Agana
was authorized and empowered to sign any and all
documents, instruments, papers or writings which may be
required and necessary for this purpose to bind the
corporation in this undertaking. The certification of St.
Marys president also attests to this fact. With this, Agana,
undeniably had the authority to cede the subject property,
carrying with it all the concomitant powers necessary to
implement said transaction.

Hodges v. Salas and Salas

Facts:
On September 2, 1923, the defendants executed a
power of attorney in favor of their brother-in-law Felix S. Yulo
to enable him to obtain a loan and secure it with a mortgage
on the real property described in transfer certificate of title
No. 3335. The power of attorney was registered in the
registry of deeds of the Province of Occidental Negros.
Acting under said power of attorney, Felix S. Yulo, on March
27, 1926, obtained a loan of P28,000 from the plaintiff,
binding his principals jointly and severally, to pay it within ten
(10) years, together with interest thereon at 12 per cent per
annum payable annually in advance, to which effect he
signed a promissory note for said amount and executed a
deed of mortgage of the real property. It was stated in the
deed that in case the defendants failed to pay the stipulated
interest and the taxes on the real property mortgaged and if
the plaintiff were compelled to bring an action to recover his
credit, said defendants would be obliged to pay 10 per cent
more on the unpaid capital, as fees for the plaintiff's
attorneys. The mortgage so constituted was registered in the
registry of deeds of the Province of Occidental Negros and
noted on the back of the transfer certificate of title. The
defendants failed to pay at maturity the interest stipulated
which should have been paid one year inadvance. Plaintiff
therefore brought an action for foreclosure of the mortgage.
The trial court ordered in favor of the defendants and held
that the loan and the mortgage were illegal.

Issue: Whether or not the loan obtained and the mortgage
executed by Yulo was valid and therefore defendants are
bound to pay?

Ruling: Yes. The loan obtained and the mortgage executed
by Yulo was valid and therefore defendants are bound to pay
for it. By virtue of the authority conferred by the defendants
by executing a power of attorney, agent Yulo was authorized
to borrow money and invest it as he wished, without being
obliged to apply it necessarily for the benefit of his principals.

PNB vs. STA. MARIA

FACTS:
In this appeal certified to this Court by the Court of
Appeals as involving purely legal issues, we hold that a
special power of attorney to mortgage real estate is limited to
such authority to mortgage and does not bind the grantor
personally to other obligations contracted by the grantee, in
the absence of any ratification or other similar act that would
estop the grantor from questioning or disowning such other
obligations contracted by the grantee.
Plaintiff bank filed this action on February 10, 1961 against
defendant Maximo Sta. Maria and his six brothers and
sisters, defendants-appellants, Valeriana, Emeteria, Teofilo,
Quintin, Rosario and Leonila, all surnamed Sta. Maria, and
the Associated Insurance & Surety Co., Inc. as surety, for
the collection of certain amounts representing unpaid
balances on two agricultural sugar crop loans due allegedly
from defendants.
The said sugar crop loans were obtained by defendant
Maximo Sta. Maria from plaintiff bank under a special power
of attorney, executed in his favor by his six brothers and
sisters, defendants-appellants herein, to mortgage a 16-odd
hectare parcel of land, jointly owned by all of them.
In addition, Valeriana Sta. Maria alone also executed in
favor of her brother, Maximo, a special power of attorney to
borrow money and mortgage any real estate owned by her.
By virtue of the two above powers, Maximo Sta. Maria
applied for two separate crop loans, for the 1952-1953 and
1953-1954 crop years, with plaintiff bank, one in the amount
of P15,000.00, of which only the sum of P13,216.11 was
actually extended by plaintiff, and the other in the amount of
P23,000.00, of which only the sum of P12,427.57 was
actually extended by plaintiff. As security for the two loans,
Maximo Sta. Maria executed in his own name in favor of
plaintiff bank two chattel mortgages on the standing crops,
guaranteed by surety bonds for the full authorized amounts
of the loans executed by the Associated Insurance & Surety
Co., Inc. as surety with Maximo Sta. Maria as principal. The
records of the crop loan application further disclose that
among the securities given by Maximo for the loans were a
"2nd mortgage on 25.3023 Has. of sugar land, including
sugar quota rights therein" including, the parcel of land jointly
owned by Maximo and his six brothers and sisters herein for
the 1952-1953 crop loan, with the notation that the bank
already held a first mortgage on the same properties for the
1951-1952 crop loan of Maximo, and a 3rd mortgage on the
same properties for the 1953-1954 crop loan.
The trial court rendered judgment in favor of plaintiff and
against defendants: condemning the defendant Maximo R.
Sta. Maria and his co-defendants Valeriana, Quintin,
Rosario, Emeteria, Teofilo, and Leonila all surnamed Sta.
Maria and the Associated Insurance and Surety Company,
Inc., jointly and severally, to pay the plaintiff, the Philippine
National Bank, Del Carmen Branch the sum of P8,500.72
and P14,299.79 .
Defendant Maximo Sta. Maria and his surety, defendant
Associated Insurance & Surety Co., Inc. who did not resist
the action, did not appeal the judgment. This appeals been
taken by his six brothers and sisters, defendants-appellants
who reiterate in their brief their main contention in their
answer to the complaint that under this special power of
attorney, they had not given their brother, Maximo, the
authority to borrow money but only to mortgage the real
estate jointly owned by them; and that if they are liable at all,
their liability should not go beyond the value of the property
which they had authorized to be given as security for the
loans obtained by Maximo. In their answer, defendants-
appellants had further contended that they did not benefit
whatsoever from the loans, and that the plaintiff bank's only
recourse against them is to foreclose on the property which
they had authorized Maximo to mortgage.

ISSUE:
Whether the 6 brothers and sisters are liable for the loan
obtained by Maximo.

RULING:
The authority granted by defendants-appellants (except
Valeriana) unto their brother, Maximo, was merely to
mortgage the property jointly owned by them. They did not
grant Maximo any authority to contract for any loans in their
names and behalf. Maximo alone, with Valeriana who
authorized him to borrow money, must answer for said loans
and the other defendants-appellants' only liability is that the
real estate authorized by them to be mortgaged would be
subject to foreclosure and sale to respond for the obligations
contracted by Maximo. But they cannot be held personally
liable for the payment of such obligations, as erroneously
held by the trial court.
It is not unusual in family and business circles that one
would allow his property or an undivided share in real estate
to be mortgaged by another as security, either as an
accommodation or for valuable consideration, but the grant
of such authority does not extend to assuming personal
liability, much less solidary liability, for any loan secured by
the grantee in the absence of express authority so given by
the grantor.
The outcome might be different if there had been an
express ratification of the loans by defendants-appellants or
if it had been shown that they had been benefited by the
crop loans so as to put them in estoppel. Quintin Sta. Maria
testified that he and his co-defendants executed the
authority to mortgage "to accommodate (my) brother Dr.
Maximo Sta. Maria ... and because he is my brother, I signed
it to accommodate him as security for whatever he may
apply as loan. Only for that land, we gave him as, security"
and that "we brothers did not receive any centavo as
benefit." The record further shows plaintiff bank itself
admitted during the trial that defendants-appellants "did not
profit from the loan" and that they "did not receive any
money (the loan proceeds) from (Maximo)." No estoppel,
therefore, can be claimed by plaintiff as against defendants-
appellants.
Valeriana Sta. Maria's liability to plaintiff. Valeriana stands
liable not merely on the mortgage of her share in the
property, but also for the loans which Maximo had obtained
from plaintiff bank, since she had expressly granted Maximo
the authority to incur such loans. The Court hold that
Valeriana's liability for the loans secured by Maximo is not
joint and several or solidary as adjudged by the trial court,
but only joint, pursuant to the provisions of Article 1207 of
the Civil Code that "the concurrence ... of two or more
debtors in one and the same obligation does not imply that
... each one of the (debtors) is bound to render entire
compliance with the prestation. There is a solidary liability
only when the obligation expressly so states, or when the
law or the nature of the obligation requires solidarity." It
should be noted that in the additional special power of
attorney, executed by Valeriana, she did not grant Maximo
the authority to bind her solidarity with him on any loans he
might secure thereunder.
WHEREFORE, the judgment of the trial court against
defendants-appellants Emeteria, Teofilo, Quintin, Rosario
and Leonila, all surnamed Sta. Maria is hereby reversed and
set aside, with costs in both instances against plaintiff. The
judgment against defendant-appellant Valeriana Sta. Maria
is modified in that her liability is held to be joint and not
solidary.

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, the
Valencia 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 later date.
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
(2) for the discharge 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.

RATIO:
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 been
aware of what she signed 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
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 was not 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.

BA Finance Corporation v. Court of Appeals, G.R. No.
94566 July 3, 1992

Facts: Spouses Manuel and Lilia Cuady obtained from
Supercars, Inc. bought a Ford Escort 1300, four-door sedan
in installments. To secure the faithful and prompt compliance
of the obligation under the said promissory note, the Cuady
spouses constituted a chattel mortgage on the
aforementioned motor vehicle. Supercars, Inc. assigned the
promissory note, together with the chattel mortgage, to B.A.
Finance Corporation. The Cuadys made partial payment
leaving an un paid balance.In addition thereto, the Cuadys
owe B.A. Finance .B.A. Finance Corporation, as the
assignee of the mortgage lien obtained the renewal of the
insurance coverage over the aforementioned motor vehicle
for the with Zenith Insurance Corporation, when the Cuadys
failed to renew said insurance coverage themselves. Under
the terms and conditions of the said insurance coverage, any
loss under the policy shall be payable to the B.A. Finance
Corporation.

The motor vehicle figured in an accident and was
badly damaged. The unfortunate happening was reported to
the B.A. Finance Corporation and to the insurer, Zenith
Insurance Corporation. The Cuadys asked the B.A. Finance
Corporation to consider the same as a total loss, and to
claim from the insurer the face value of the car insurance
policy and apply the same to the payment of their remaining
account and give them the surplus thereof, if any. But
instead of heeding the request of the Cuadys, B.A. Finance
Corporation prevailed upon the former to just have the car
repaired. Not long thereafter, however, the car bogged
down. The Cuadys wrote B.A. Finance Corporation
requesting the latter to pursue their prior instruction of
enforcing the total loss provision in the insurance coverage.
When B.A. Finance Corporation did not respond favorably to
their request, the Cuadys stopped paying their monthly
installments on the promissory note. In view of the failure of
the Cuadys to pay the remaining installments on the note,
B.A. Finance Corporation sued them.

B.A. Finance Corporation contended that even if it
failed to enforce the total loss provision in the insurance
policy of the motor vehicle subject of the chattel mortgage,
said failure does not operate to extinguish the unpaid
balance on the promissory note, considering that the
circumstances obtaining in the case at bar do not fall under
Article 1231 of the Civil Code relative to the modes of
extinguishment of obligations.

Issue: Whether or not BA Finance can still collect on the
deficiency of the Chattel Mortgage.

Held: In granting B.A. Finance Corporation the
aforementioned powers and prerogatives, the Cuady
spouses created in the formers favor an agency. Thus,
under Article 1884 of the Civil Code of the Philippines, B.A.
Finance Corporation is bound by its acceptance to carry out
the agency, and is liable for damages which, through its non-
performance, the Cuadys, the principal in the case at bar,
may suffer; in such case, the assignee of the mortgage
agreement is bound by the same stipulation and if the
assignee failed to file and prosecute the insurance claim
when the car was damaged totally, the mortgagor is relieved
from his obligation to pay as he suffered a loss because of
the failure of the mortgagee to file the claim.

Under the deed of chattel mortgage, B.A. Finance
Corporation was constituted attorney-in-fact with full power
and authority to file, follow-up, prosecute, compromise or
settle insurance claims; to sign execute and deliver the
corresponding papers, receipts and documents to the
Insurance Company as may be necessary to prove the
claim, and to collect from the latter the proceeds of
insurance to the extent of its interests, in the event that the
mortgaged car suffers any loss or damage.

Director of Public Works vs. Sing Juco, 53 Phil. 205
(1929)

FACTS:
The Director of Public Works and Sing Juco
together with Mariano de la Rama, Gonzalo Mariano
Tanboontien and Sing Bengco, owners of a land located at
Point Llorente, at the mouth of Iloilo River, near Iloilo City
agreed to execute the governments plan for extensive
harbor improvements. They signed a contract on January 8,
1924 wherein they signified to the following:
The Bureau of Public Works (BPW) will dredge
within the area and will deposit the agreed materials on Lot
No. 1359.
Owners will pay an amount of Php 0.20 to Php
70.00 per cubic meter in 5 annual installments and failure to
pay any installment, the whole amount thereafter to accrue.
BPW required a bond of Php 150,000.00 and Mariano de la
Rama signed the said bond under the name Casa Viuda de
Tan Toco. The dredging operation was conducted but the
no payment was received by the BPW. The Director of BPW
instituted a case for the recovery of the amount due to the
government and to enforce a real lien upon the property. On
defense, Viuda de Tan Toco said that de la Rama signed
without authority.

ISSUE:
Whether or not Viuda de Tan Toco is not liable for the act
done by de la Rama?

HELD:
NO. The Court ruled that the power of attorney granted to de
la Rama does not give him the power to bind a principal by a
contract of suretyship. In article 1827 of the Civil Code, it is
declared that guaranty shall not be presumed; it must be
expressed and cannot be extended beyond its specified
limits.

BPI v.s. De Coster 47 Phil. 594 (1925)

FACTS:
The Bank of the Philippine Islands (BPI) filed a complaint on
March 10, 1924 against Gabriela Andrea de Coster y Roxas,
her husband Jean M. Poizat and their partnership J.M.
Poizat & Co. for failure to deliver a mortgage on a real
property in Manila. The Court of First Instance (CFI) of
Manila rendered (Civil Case No. 25218) that the defendants
(de Coster, et.al.) be jointly and severally liable for Php
292,000 with an interest of 9% per annum and other
damages. BPI filed later for the immediate possession of the
property and sell the same according to the Chattel
Mortgage Law. On May 3, 1924, the defendants failed to
reply nor appear thus declared on default. Then on June 24,
1924 the Court rendered an opinion that the property should
be sold and the proceeds should be used for the satisfaction
of respective judgments.

August 26, 1924 de Coster filed a suit to absolve her from
the liability and to request for the reopening of the case
because: (1) She resided in Paris from 1908 to April 30,
1924 and was not notified even by her husband regarding
the case; (2) Her husband executed the mortgage
transactions without her consent.

ISSUE:
Whether or not the transactions entered by Poizat, as an
agent of his wife valid?

HELD:
NO. Paragraph 5 of the power of attorney authorizes the
husband for in the name of his wife to loan or borrow any
sums of money or fungible things, etc. This should be
construed to mean that the husband had power only to his
wifes money and not to borrow money for or on account of
his wife as her agent and attorney-in-fact. That does not
carry with it or imply that he had the legal right to make his
wife liable as a surety for the preexisting debt of a third
person.

PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., vs.
POIZAT

FACTS:
1. Appellant, Doa Gabriela Andrea de Coster, executed to
and in favor of her husband, Juan M.Poizat, a general power
of attorney. It authorized him to do "in her name, place and
stead, and making use of her rights and actions"; to loan or
borrow any amount of cash under the conditions he may
deemed convenient, executing and signing private and
public document and making these transactions with or
without mortgage.
2. Poizat obtained from the plaintiff a credit for the sum of
10,000 Pounds Sterling to be drawn on the "Banco Espaol
del Rio de la Plata.
3. To secure payment he executed a mortgage upon the real
property of his wife.
4. Plaintiff then brought an action against the defendant for
failure to pay, to for lose the mortgage. The trial court's
decision issued an order directing the sale of the mortgaged
property to satisfy the judgment. Consequently, the property
was sold to the plaintiff for P100,000.00
5. Appellant personally appeared and objected to the
confirmation of the sale. She alleged that the mortgage in
question was illegally executed thus null and void, because
the agent of the defendant was not authorized to execute it.
That the plaintiff was aware of such fact and that the
mortgage was executed to secure a loan, which was not
made to this defendant or for her benefit but was made to
him personally. Such objections were overruled, which
prompted the appellant to appeal.

ISSUE:
Whether the act of defendant Poizant, in his capacity as
attorney in fact, binds her wife?

HELD:
No. The mortgage is declared null and void ab initio. The
sale is set aside.

RULING:
Juan Poizat may have had the authority to borrow money
and mortgage the real property of his wife, but the law
specifically provided how and in what manner it must be
done. The law requires that a power of attorney to mortgage
or sell real property should be executed with all the
formalities required in a deed. In this case it was not
exercised. His personal signature, standing alone, does not
bind his principal. The deed in its face does not purport to be
the deed of the principal, made and signed by him in his
name and as his deed. The mortgage in question was held
to be executed by him and him only thus it is not binding to
his wife.

RURAL BANK OF BOMBON INC. vs. COURT OF
APPEALS

FACTS:
1. On January 12, 1981, Ederlinda M. Gallardo, married to
Daniel Manzo, executed a special power of attorney in favor
of Rufina S. Aquino authorizing him:
- To secure a loan from any institution for any amount or
mortgage the property at Las Pinas, Rizal
2. On August 26, 1981, a Deed of Real Estate Mortgage was
executed by Rufino S. Aquino in favor of the Rural Bank of
Bombon (Camarines Sur), Inc. The property was secured for
a loan in the total sum of Three Hundred Fifty Thousand
Pesos only (P350,000.00), plus interest at the rate of
fourteen (14%) per annum.
3. Spouses Gallardo filed an action against Rufino Aquino
and Rural Bank. They alleged that Aquino mortgaged the
property to pay for his personal loans, from the same Bank.
- The trial court temporarily restrained the Rural Bank "from
enforcing the real estate mortgage and from foreclosing it
either judicially or extra judicially until further orders from the
court.
4. Aquino, in his answer, alleged that the spouses allowed
him to mortgage the property and use the use the proceeds
thereof to compensate for the pre-existing obligation of
P350,000 that the spouse owed him.
5. The trial court lifted the TRO against the bank and ordered
the foreclosure proceeding against the mortgaged property.
The Spouses Gallardo appealed to the Court of Appeals
(CA). The CA reversed the trial court and held that Rufino
Aquino had no authority to mortgage the land. Thus, this
appeal against the decision.

ISSUE:
Whether or not the Deed of Real Estate Mortgageexecuted
by Rufino S. Aquinoin favor of the Rural Bank of Bombon
(Cam. Sur), Inc. is with authority, thus valid?
NO, it was without authority.

RULING:
Agent who signs a Deed of Mortgage in his name
alone does not validly bind the owner of the real estate
mortgaged.
Aquino's act of signing 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, 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.
The petitioner misapplied Art. 1883. The above
provision of the Civil Code relied upon by the petitioner
Bank, is not applicable to the case at bar. Herein respondent
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. Under these circumstances, we hold that
Gallardo's property is not liable on the real estate mortgage.

Valmonte v. CA

Facts:
Petitioner Lourdes A. Valmonte is a foreign
resident. Petitioners Lourdes and Alfredo are husband and
wife both residents of 90222 Carkeek Drive South Seattle,
Washington, U.S.A. Petitioner Alfredo D. Valmonte, who is a
member of the Philippine bar, however, practices his
profession in the Philippines, commuting for this purpose
between his residence in the state of Washington and
Manila, where he holds office at S-304 Gedisco Centre,
1564 A. Mabini, Ermita, Manila.
Private respondent Rosita Dimalanta, who is the
sister of petitioner filed an action for partition against former
and her husband. She alleged that, the plaintiff is of legal
age, a widow and is at present a resident of 14823 Conway
Road, Chesterfield, Missouri, U.S.A., while the defendants
are spouses but, for purposes of this complaint may be
served with summons at Gedisco Center, Unit 304, 1564 A.
Mabini St., Ermita, Manila where defendant Alfredo D.
Valmonte as defendant Lourdes Arreola Valmontes spouse
holds office and where he can be found. He husband was
also her counsel, who has a law office in the Philippines. The
summons were served on her husband.
Petitioner in a letter, referred private respondents
counsel to her husband as the party to whom all
communications intended for her should be sent. Service of
summons was then made upon petitioner Alfredo at his
office in Manila. Alfredo D. Valmonte accepted his
summons, but not the one for Lourdes, on the ground that he
was not authorized to accept the process on her behalf.
Accordingly the process server left without leaving a copy of
the summons and complaint for petitioner Lourdes A.
Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his
Answer with Counterclaim. Petitioner Lourdes A. Valmonte,
however, did not file her Answer. For this reason private
respondent moved to declare her in default. Petitioner
Alfredo D. Valmonte entered a special appearance in behalf
of his wife and opposed the private respondents motion.
RTC denied the MR of respondents. CA declared petitioner
Lourdes in default. Said decision was received by Alfredo
hence this petition.

Issue: Whether or not petitioner Lourdes A. Valmonte was
validly served with summons.

Held:
NO.
There was no valid service of summons on Lourdes.
1. The action herein is in the nature of an action quasi in
rem. Such an action is essentially for the purpose of
affecting the defendants interest in a specific property and
not to render a judgment against him. As petitioner Lourdes
A. Valmonte is a nonresident who is not found in the
Philippines, service of summons on her must be in
accordance with Rule 14, 17. Such service, to be effective
outside the Philippines, must be made either (1) by personal
service; (2) by publication in a newspaper of general
circulation in such places and for such time as the court may
order, in which case a copy of the summons and order of the
court should be sent by registered mail to the last known
address of the defendant; or (3) in any other manner which
the court may deem sufficient.
2. In the case at bar, the service of summons upon
petitioner Lourdes A. Valmonte was not done by means of
any of the first two modes. This mode of service, like the
first two, must be made outside the Philippines, such as
through the Philippine Embassy in the foreign country where
the defendant resides. The service of summons on
petitioner Alfredo D. Valmonte was not made upon the order
of the court as required by Rule 14, 17 and certainly was
not a mode deemed sufficient by the court which in fact
refused to consider the service to be valid and on that basis
declare petitioner Lourdes A. Valmonte in default for her
failure to file an answer.
3. Secondly, the service in the attempted manner on
petitioner was not made upon prior leave of the trial court as
required also in Rule 14, 17. As provided in 19, such
leave must be applied for by motion in writing, supported by
affidavit of the plaintiff or some person on his behalf and
setting forth the grounds for the application.
4. Finally, and most importantly, because there was no
order granting such leave, petitioner Lourdes was not given
ample time to file her Answer which, according to the rules,
shall be not less than sixty (60) days after notice.

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