II. Formalities of Agency

LAW ON AGENCY, CHAPTER II ATP&JV DIGESTS 1
Based on the outline of Atty. CLV II. Formalities of Agency
LIM v. COURT OF APPEALS (Mel, C2020) Consequently, when the agent signs her signature on any face of the
February 28, 1996 | Hermosisima, Jr., J. | A contract of agency is valid receipt showing that she receives the jewelry for her to sell on
and enforceable in whatever form it may be entered into. commission, she is bound to the obligations of an agent.
PETITIONER: Rosa Lim
RESPONDENTS: Court of Appeals and People of the Philippines FACTS:
1. An information was filed against petitioner Rosa Lim. It reads:
SUMMARY: Rosa Lim was charged and convicted of estafa for having
failed to return the ring with the bracelet which was given to her by “…accused got and received in trust from said complainant one (1) ring
Victoria Suarez through a sale on commission basis. Lim contends that 3.35 solo worth P169,000.00, Philippine Currency, with the obligation to
she did not agree to the terms of the receipt and so she only signed on the sell the same on commission basis and to turn over the proceeds of the
upper portion thereof and not at the bottom where space is provided for sale to said complainant or to return said jewelry if unsold, but the said
the signature of the person receiving the jewelry. She also said that she accused once in possession thereof and far from complying with her
returned both the bracelet and the ring to Aurelia (her friend who obligation despite repeated demands therefor, misapplied,
introduced her to Suarez) per request of Suarez as she was busy. The misappropriated and converted the same to her own personal use and
issues are the ff: benefit, to the damage and prejudice of the said offended party in the
amount aforementioned and in such other amount as may be awarded
1) What was the real transaction between Lim and Sanchez, a contract of under the provisions of the Civil Code.”
agency on commission basis or a sale on credit? The SC ruled that it was
a contract of agency on commission basis which was established by the 2. Trial court rendered judgment finding Rosa Lim guilty beyond
receipt and with respect to Lim’s contention that having signed on the reasonable doubt of estafa Art. 315 paragraph 1(b) of the RPC.
upper portion of the receipt, she is not bound by it, the Court said that 3. Court of Appeals affirmed the judgment of conviction with
this fact does not have the effect of altering the terms of the transaction modification of penalty. Lim filed a motion for reconsideration but
because a contract of agency on commission basis is valid and enforceable was denied.
in whatever form it may be entered into.
Facts as alleged by the prosecution:
2) Was the ring returned to Sanchez? – No, as it was found by the lower 1. Rosa Lim received from Victoria Suarez the following two pieces
courts that Vicky Suarez did not authorize Lim to return the ring to of jewelry: one 3.35 carat diamond ring worth P169,000.00 and
Nenita. All elements of estafa were present. The receipt marked as one (1) bracelet worth P170,000.00, to be sold on commission
Exhibit “A” proves that Rosa Lim received the pieces of jewelry in trust basis. The agreement was reflected in a receipt
from Vicky Suarez to be sold on commission basis. Lim misappropriated 2. Lim returned the bracelet to Vicky Suarez, but failed to return
or converted the jewelry to her own use; Such misappropriation obviously the diamond ring or to turn over the proceeds thereof if sold. As a
caused damage and prejudice to the Suarez. result, Suarez, aside from making verbal demands, wrote a
demand letter to Lim asking for the return of said ring or the
DOCTRINE: There are legal provisions which require certain proceeds of the sale thereof.
contractual formalities: First, when form is required for the validity of the 3. Lim thru counsel, wrote a letter to Suarez’ counsel alleging that
contract; second, when it is required to make the contract effective as Rosa Lim had returned both ring and bracelet.
against third parties; third, when the form is required for the purpose of 4. Irked, Suarez filed a complaint for estafa under Article 315, par
proving the contract’s existence. A contract of agency to sell on 1(b) of the Revised Penal Code for which Lim herein stands
commission basis does not belong to any of these three categories, hence convicted. 
it is valid and enforceable in whatever form it may be entered into.
Petitioner’s version of the facts jewelry but at the upper portion thereof immediately below the
1. Rosa Lim admitted in court that she arrived in Manila from Cebu, description of the items taken-- The contention is far from
together with one Aurelia Nadera, who introduced Lim to Suarez. meritorious.
2. Lim denied that the transaction was for her to sell the two pieces 2. The receipt establishes a contract of agency to sell on commission
of jewelry on commission basis. She told Mrs. Suarez that she basis between Vicky Suarez and Rosa Lim “THIS IS TO
would consider buying the pieces of jewelry for her own use and CERTIFY, that I received from Vicky Suarez the following
that she would inform the private complainant of such decision. jewelries:  Description: 1 ring 3.35 solo P169,000.00, 1 bracelet
3. Lim took the pieces of jewelry and told Mrs. Suarez to prepare the 170,000.00 Total P339,000.00 in good condition, to be sold in
“necessary paper for me to sign because I was not yet prepare(d) CASH ONLY within . . . days from date of signing this receipt. ‘if
to buy it.” I could not sell, I shall return all the jewelry within the period
4. After the document was prepared, Lim signed it. To prove that mentioned above; if I would be able to sell, I shall immediately
she did not agree to the terms of the receipt regarding the sale on deliver and account the whole proceeds of sale thereof to the
commission basis, Lim insists that she signed the document on owner of the jewelries at his/her residence; my compensation or
the upper portion thereof and not at the bottom where a space is commission shall be the over-price on the value of each jewelry
provided for the signature of the person(s) receiving the jewelry. quoted above. I am prohibited to sell any jewelry on credit or by
5. Before departing for Cebu, Limcalled up Mrs. Suarez to inform installment; deposit, give for safekeeping; lend, pledge or give as
her that she was no longer interested in the ring and bracelet. security or guaranty under any circumstance or manner, any
6. Mrs. Suarez replied that she was busy at the time and so, she jewelry to other person or persons. I sign my name this . . . day of
instructed the Lim to give the pieces of jewelry to Aurelia Nadera . . . 19 . . . at Manila, <Signature of Persons who received
who would in turn give them back to her. Lim did as she was told jewelries>
and gave the two pieces of jewelry to Nadera as evidenced by a 3. Rosa Lim’s signature appears on the upper portion of the receipt
handwritten receipt immediately below the description of the items taken does not
have the effect of altering the terms of the transaction from a
ISSUES: contract of agency to sell on commission basis to a contract of sale.
1. What was the real transaction between Rosa Lim and Vicky Neither does it indicate absence or vitiation of consent thereto on
Suarez—a contract of agency to sell on commission basis as set the part of Rosa Lim which would make the contract void or
out in the receipt or a sale on credit? – CONTRACT OF voidable. The moment she affixed her signature thereon,
AGENCY TO SELL ON COMMISSION BASIS Lim became bound by all the terms stipulated in the
2. Was the subject diamond ring returned to Mrs. Suarez through receipt.
Aurelia Nadera?- NO. 4. This is clear from Article 1356 which provides: “Contracts shall be
obligatory in whatever form they may have been entered into,
RULING: WHEREFORE, the petition is DENIED and the Decision of provided all the essential requisites for their validity are present.”
the Court of Appeals is hereby AFFIRMED. Costs against petitioner. 5. However, there are some provisions of the law which require
certain formalities for particular contracts. The first is when the
RATIO: form is required for the validity of the contract; the second is
1. Lim maintains that she cannot be liable for estafa since she never when it is required to make the contract effective as against third
received the jewelries in trust or on commission basis. The real parties such as those mentioned in Articles 1357 and 1358; and
agreement between her and Suarez was a sale on credit with Mrs. the third is when the form is required for the purpose of proving
Suarez, as indicated by the fact that Lim did not sign on the the existence of the contract, such as those provided in the
blank space provided for the signature of the person receiving the Statute of Frauds in Article 1403.
6. 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.
7. There is only one type of legal instrument where the law strictly
prescribes the location of the signature -- notarial wills found in
Article 805.
8. The parties did not execute a notarial will but a simple
contract of agency to sell on commission basis, thus
making the position of Lim’s signature thereto immaterial.
9. Lim insists that the diamond ring had been returned to Vicky
Suarez through Aurelia Nadera.
10. Both the trial court and the CA gave weight to the testimony of
Vicky Suarez that she did not authorize Rosa Lim to return the
pieces of jewelry to Nadera.
11. All the elements of estafa under Art 315 par 1(b) of RPC are
present:
 That goods/property be received in trust or commission:
The receipt marked as Exhibit “A” proves that Rosa Lim
received the pieces of jewelry in trust from Vicky Suarez
to be sold on commission basis.
 That there be misappropriation or conversion: Lim
misappropriated or converted the jewelry to her own use;
 That such misappropriation/conversion is to the the
prejudice of another: Such misappropriation obviously
caused damage and prejudice to Suarez.
BORDADOR v. LUZ (Emar, C2020) 2. Respodent Deganos (Brigida’s brother) received around P380k
December 15, 1997 | Regalado, J. | Agency worth of pieces of gold and jewelry from the Bordadors. These
PETITIONER: Jose Bordador and Lydia Bordador items and their prices are indicated in the 17 receipts. 11 of these
RESPONDENTS: Brigida D. Luz, Ernesto M. Luz and Narciso Deganos receipts state that they were received for a certain Aquino, niece
of Deganos and the 7 were received for Brigida.
SUMMARY: Brigida is a regular customer of the buy and sell jewelry 3. Deganos was supposed to sell, remit the proceeds and return the
business of the Bordador spouses. Brigida’s brother Deganos received unsold items to the Bordadors.
jewelries from the Bordadors indicated in 17 receipts; 7 of which were 4. Deganos
stated in the receipt as being received for Brigida. Deganos was supposed a. remitted only P53k
to sell, remit and return the unsold items for the petitioner; however, only b. didn’t pay the balance of the sales proceeds and
P53k was remitted and Deganos failed to return the unsold items to the c. didn’t return unsold item to Bordadors.
Bordadors. The unpaid amount totaled P725k. The Bordadors filed a 5. His total unpaid amount reached to P725k.
complaint in the barangay court against Deganos to recover the amount. 6. Bordadors filed a complaint in the barangay court against
All Brigida, Ernesto and Deganos signed a compromise agreement Deganos to recover the amount.
wherein Deganos obligates himself to pay the balance of his account + 7. Brigida appeared as a witness for Deganos. Luz spouses and
interest, on installment basis. Deganos failed to pay so the Bordadors Deganos signed a compromise agreement with Bordadors wherein
filed the case in the RTC. Petitioner claims that Deganos acted as an Deganos obligated himself to pay the balance of his account plus
agent of Brigida in acquiring the items and because he failed to pay, the interest, on installment basis, which he failed to do.
respondent spouses should be solidarily liable with Deganos. Deganos 8. RTC- Bordadors filed a case for the recovery of a sum of money
admitted that he owed the Bordadors, but it is only P380 and that he was and damages, with an application for preliminary attachment.
neither acting as an agent nor an authorized agent of Brigida. Deganos Ernesto was impleaded as husband of Brigida.
never delivered the items to Brigida. The court ruled that (a) Only 9. Four years later: Deganos and Brigida was charged with Estafa in
Deganos was liable to Bordadors for the amount (b) All the transactions the RTC. In the civil aspect of the case, petitioner claims that
between the Bordadors and Brigida have already been paid except for the Deganos acted as an agent of Brigida when he received the
P21k interest of such transactions and (c) It was Lydia herself who subject items of jewelry and, because he failed to pay for
indicated in the receipts that the items were received by Deganos on the same, Brigida, as principal, and her spouse are
behalf of anyone else. The issue before the SC is WON respondent solidarily liable with him therefor.
spouses are liable to Bordadors for the latter’s claim for money and 10. Deganos admitted that he owed the Bordadors but it is only
damages. The court held that no because there is no showing that Brigida P380k and not P725k and that he alone was involved— not
consented to or authorized Deganos’ acts, and therefore, any attempt to acting as agent nor authorized to act as an agent by
foist liability on her through the supposed agency relation with Deganos Brigida and that he never delivered any of the items to her,
is groundless. notwithstanding the fact that six of the receipts indicated that the
items were received by him for the latter.
DOCTRINE: When there is no showing that the principal consented to or 11. Brigida denied that she had anything to do with the said
authorized the agent’s acts, any attempt to foist liability on the principal transaction. She claims that she never authorized Deganos to
through the supposed agency relation with the agent is groundless receive any item of jewelry in her behalf and that she never
actually received any of the articles in question.
FACTS: 12. RTC ruled that…
1. Respondent Brigida is a regular customer of the buy and sell a. Only Deganos was liable to Bordadors for the amount and
jewelry business of the Bordadors. damages claimed.
b. Brigida did have transactions in the past, but they were entrust to Deganos, not once or twice but on at least six
all paid except for the sum of P21k of interest on the occasions as evidenced by receipts, several pieces of
principal account which she had previously paid for. jewelry of substantial value without requiring a written
c. It was petitioner Lydia who indicated in the receipts that authorization from his alleged principal.
the items were received by Deganos for Aquino and 5. Neither an express nor an implied agency was proven to have
Brigida. existed between Deganos and Brigida D. Luz. Evidently,
d. Brigida was behind Deganos but the agreement, not being Bordadors, who were negligent in their transactions with
in writing, was unenforceable under the Statute of Deganos, cannot seek relief from the effects of their negligence by
Frauds.… ordering Deganos to pay Bordadors P725k + conjuring a supposed agency relation between the two
interest; Brigida to pay P21k as interest in her own loan, respondents where no evidence supports such claim.
absolving the respondent spouses from further liability.
13. Bordadors appealed to the CA which affirmed the judgment. MR
was dismissed.
ISSUE: WON respondent spouses are liable to Bordadors for the latter’s
claim for money and damages in the sum of P725,463.98, plus interests
and attorney’s fees, despite the fact that the evidence does not show that
they signed any of the subject receipts or authorized Deganos to receive
the items of jewelry on their behalf – NO.
RULING: WHEREFORE, no error having been committed by the Court

of Appeals in affirming the judgment of the court a quo, its challenged
decision and resolution are hereby AFFIRMED and the instant petition is
DENIED, with double costs against Bordadors.
RATIO:
1. Letters used by the Bordadors to support its contention that
Deganos acted on behalf of Brigida were actually in connection to
the previous obligations of Brigida and has nothing to do with the
transaction of Deganos.
2. Testimony of Brigida admitting to the delivery of gold to her does
not have any showing that the statement referred to the items in
this case.
3. Assuming arguendo that Deganos acted as an agent of Brigida,
the latter never authorized him to act on her behalf with regard to
the transactions subject of this case.
4. Where there is no showing that Brigida consented to or
authorized Deganos’ acts, any attempt to foist liability on
her through the supposed agency relation with Deganos is
groundless. It was grossly negligent of Bordadors to
SALVADOR v. RABAJA (Sarmiento, C2020) presence of Herminia. Gonzales then presented the Special Power
February 4, 2015 |Mendoza | Agency of Attorney (SPA), executed by Rolando Salvador (Rolando).
PETITIONER: SPOUSES ROLANDO AND HERMINIA SALVADOR 3. On the same day, the parties executed the Contract to Sell which
RESPONDENTS: SPOUSES ROGELIO AND ELIZABETH RABAJA stipulated that for a consideration of P5,000,000.00, Spouses
AND ROSARIO GONZALES Salvador sold, transferred and conveyed in favor of Spouses
Rabaja the subject property.
SUMMARY: Petitioner Spouses Salvador was the owner of a lot and 4. Spouses Rabaja made several payments totalling P950,000.00,
Spouses Rabaja wanted to buy said lot. Through Gonzales, the which were received by Gonzales pursuant to the SPA provided
administrator of the land, Spouses Rabaja was able to transact the sale of 5. However, Spouses Salvador complained to Spouses Rabaja that
the land. Spouses Rabaja made several payments totalling P950,000.00, they did not receive any payment from Gonzales.
which were received by Gonzales pursuant to the SPA provided. 6. This prompted Spouses Rabaja to suspend further payment of the
However, Spouses Salvador complained to Spouses Rabaja that they did purchase price; and as a consequence, they received a notice to
not receive any payment from Gonzales. Spouses Salvador instituted an vacate the subject property from Spouses Salvador for non-
action for ejectment against Spouses Rabaja. In turn, Spouses Rabaja payment of rentals.
filed an action for rescission of contract against Spouses Salvador and 7. Thereafter, Spouses Salvador instituted an action for ejectment
Gonzales, the subject matter of the present petition. Spouses Salvador against Spouses Rabaja. In turn, Spouses Rabaja filed an action
contending that there was no meeting of the minds between the parties for rescission of contract against Spouses Salvador and Gonzales,
and that the SPA in favor of Gonzales was falsified. Gonzales filed her the subject matter of the present petition.
answer stating that the SPA was not falsified and that the payments of 8. Spouses Salvador contending that there was no meeting of the
Spouses Rabaja amounting to P950,000.00 were all handed over to minds between the parties and that the SPA in favor of Gonzales
Spouses Salvador. Persons dealing with an agent must ascertain not only was falsified. In fact, they filed a case for falsification against
the fact of agency, but also the nature and extent of the agent’s authority. Gonzales, but it was dismissed because the original of the alleged
The basis for agency is representation and a person dealing with an agent falsified SPA could not be produced. They further averred that
is put upon inquiry and must discover on his own peril the authority of they did not receive any payment from Spouses Rabaja through
the agent. The Court holds that, indeed, Gonzales acted within the scope Gonzales.
of her authority. The SPA precisely stated that she could administer the 9. In her defense, Gonzales filed her answer stating that the SPA
property, negotiate the sale and collect any document and all payments was not falsified and that the payments of Spouses Rabaja
related to the subject property. amounting to P950,000.00 were all handed over to Spouses
Salvador.
10. RTC Ruling: rendered a decision in favor of Spouses Rabaja. It
DOCTRINE: According to Article 1990 of the New Civil Code, insofar as held that the signature of Spouses Salvador affixed in the
third persons are concerned, an act is deemed to have been performed contract to sell appeared to be authentic.
within the scope of the agent's authority, if such act is within the terms of 11. It also held that the contract, although denominated as “contract
the power of attorney, as written. to sell,” was actually a contract of sale because Spouses Salvador,
as vendors, did not reserve their title to the property until the
vendees had fully paid the purchase price. Spouses Rabaja could
FACTS:
not be faulted in dealing with Gonzales who was duly equipped
1. Petitioner Herminia Salvador (Herminia) personally introduced
with the SPA from Spouses Salvador.
Gonzales to Spouses Rajabas as the administrator of the said
12. CA: It ruled that it was a contract of sale and that Gonzales was
property.
armed with an SPA and was, in fact, introduced to Spouses
2. Spouses Rabaja made an initial payment to Gonzales in the
Rabaja by Spouses Salvador as the administrator of the property. persons are concerned, an act is deemed to have been performed
Spouses Rabaja could not be blamed if they had transacted with within the scope of the agent's authority, if such act is within the
Gonzales. Gonzales was not solidarily liable with Spouses terms of the power of attorney, as written.
Salvador. The agent must expressly bind himself or exceed the 5. In this case, Spouses Rabaja did not recklessly enter into a
limit of his authority in order to be solidarily liable. It was not contract to sell with Gonzales. They required her presentation of
shown that Gonzales as agent of Spouses Salvador exceeded her the power of attorney before they transacted with her principal.
authority or expressly bound herself to be solidarily liable. And when Gonzales presented the SPA to Spouses Rabaja, the
latter had no reason not to rely on it.
ISSUE/s: W/N Gonzales was an agent of Spouses Salvador-YES 6. The law mandates an agent to act within the scope of his
authority which what appears in the written terms of the power
RULING: SC affirmed the CA decision. Contract was rescinded. of attorney granted upon him.
o The Court holds that, indeed, Gonzales acted within the scope
RATIO: of her authority. The SPA precisely stated that she could
1. It was contract of sale which could be validly rescinded. administer the property, negotiate the sale and collect any
2. Spouses Salvador insist that they did not receive the payments document and all payments related to the subject property.
made by Spouses Rabaja from Gonzales which totalled o Considering that it was not shown that Gonzales exceeded her
P950,000.00 and that Gonzales was not their duly authorized authority or that she expressly bound herself to be liable, then
agent. These contentions, however, must fail in light of the she could not be considered personally and solidarily liable
applicable provisions of the New Civil Code which state: with the principal, Spouses Salvador.
o Art. 1900. So far as third persons are concerned, an act is 7. Perhaps the most significant point which defeats the petition
deemed to have been performed within the scope of the would be the fact that it was Herminia herself who personally
agent's authority, if such act is within the terms of the power introduced Gonzalez to Spouses Rabaja as the administrator of
of attorney, as written, even if the agent has in fact exceeded the subject property.
the limits of his authority according to an understanding o By their own ostensible acts, Spouses Salvador made third
between the principal and the agent. persons believe that Gonzales was duly authorized to
o Art. 1902. A third person with whom the agent wishes to administer, negotiate and sell the subject property.
contract on behalf of the principal may require the o This fact was even affirmed by Spouses Salvador themselves
presentation of the power of attorney, or the instructions as in their petition where they stated that they had authorized
regards the agency. Private or secret orders and instructions Gonzales to look for a buyer of their property.
of the principal do not prejudice third persons who have relied o It is already too late in the day for Spouses Salvador to
upon the power of attorney or instructions shown them. retract the representation to unjustifiably escape their
o Art. 1910. The principal must comply with all the obligations principal obligation.
which the agent may have contracted within the scope of his 8. As correctly held by the CA and the RTC, considering that there
authority. was a valid SPA, then Spouses Rabaja properly made payments
3. Persons dealing with an agent must ascertain not only the fact of to Gonzales, as agent of Spouses Salvador; and it was as if they
agency, but also the nature and extent of the agent’s authority. paid to Spouses Salvador.
The basis for agency is representation and a person dealing with 9. It is of no moment, insofar as Spouses Rabaja are concerned,
an agent is put upon inquiry and must discover on his own peril whether or not the payments were actually remitted to Spouses
the authority of the agent. Salvador. Any internal matter, arrangement, grievance or strife
4. According to Article 1990 of the New Civil Code, insofar as third between the principal and the agent is theirs alone and should
not affect third persons.

10. If Spouses Salvador did not receive the payments or they wish to
specifically revoke the SPA, then their recourse is to institute a
separate action against Gonzales. Such action, however, is not
any more covered by the present proceeding.
COUNTRY BANKERS INSURANCE CORP. v. KEPPEL CEBU 1. On January 27, 1992, Unimarine Shipping Lines, Inc.
SHIPYARD (See, C2020) (Unimarine), a corporation engaged in the shipping industry,
June 18, 2012 | Leonardo-De Castro, J. | Agency by estoppel contracted the services of Keppel Cebu Shipyard, formerly known
PETITIONER: COUNTRY BANKERS INSURANCE CORPORATION as Cebu Shipyard and Engineering Works, Inc. (Cebu Shipyard),
RESPONDENTS: KEPPEL CEBU SHIPYARD, UNIMARINE for dry docking and ship repair works on its vessel, the M/V
SHIPPING LINES, INC., PAUL RODRIGUEZ, PETER RODRIGUEZ, Pacific Fortune.
ALBERT HONTANOSAS, and BETHOVEN QUINAIN 2. Cebu Shipyard then issued Bill No. 26035 to Unimarine in
consideration for its services which amounted to P4,486,052.00.
SUMMARY: Unimarine contracted the services of Cebu Shipyard to fix Cebu Shipyard and Unimarine engaged in negotiations which led
M/V Pacific Fortune. Cebu Shipyard then issued Bill No. 26035 to to the reduction of the amount to P3,850,000.00. The terms of the
Unimarine in consideration for its services which amounted to agreement were embodied in a letter to the President/GM of
P4,486,052.00. Cebu Shipyard and Unimarine engaged in negotiations Unimarine, Paul Rodriguez.
which led to the reduction of the amount to P3,850,000.00. Unimarine a. 1st installment on May 30, 1992 for P2.35M
obtained security bonds from CBIC and plaridel to guarantee it’s debt. b. 2nd installment on June 30, 1992 for P1.5M
Unimarine failed to pay so Cebu Shipayrd asked the securities to pay but 3. In compliance with the agreement, Rodriguez, in behalf of
they also failed. The security bond taken from CBIC was done through Unimarine, secured from Country Bankers Insurance Corp.
CBIC’s agent, Quinain. CBIC then claims that Quinain exceeded his (CBIC), through CBIC’s agent, Bethoven Quinain, CBIC Surety
authority and so CBIC is not liable. The issue in this case is whether the Bond No. G (16) 29419 in the amount of P3M. The expiration of
principal is liable for the acts of its agent in excess of authority. The SC the bond was extended to January 15, 1993 through Endorsement
held that the Special Power of Attorney accorded to Quinain clearly No. 33152 which was attached to the surety bond.
states the limits of his authority and particularly provides that in case of 4. Unimarine also obtained another bond from Plaridel Surety and
surety bonds, it can only be issued in favor of the Department of Public Insurance Co. (Plaridel), PSIC Bond No. G (16)-00365 in the
Works and Highways, the National Power Corporation, and other amount of P1.62M.
government agencies; furthermore, the amount of the surety bond is 5. Unimarine then failed to remit the first installment on May 30,
limited to P500,000.00 and that Quinain did exceed his authority. CBIC 1992 so Cebu Shipyard was constrained to deposit the check
can’t be bound by estoppel since it wasn't proven that CBIC let the public, corresponding to the initial installment of P2.35M but this check
or specifically Unimarine, believe that Quinain had the authority to issue was dishonored. Cebu Shipyard sent repeated fax messages to
a surety bond in favor of companies other than the Department of Public Unimarine to no avail.
Works and Highways, the National Power Corporation, and other 6. Due to Unimarine’s failure to pay, Cebu Shipyard wrote to CBIC
government agencies. Neither was it shown that CBIC knew of the and Plaridel to ask them to fulfill their obligation as sureties. But
existence of the surety bond before the endorsement extending the life of the 2 sureties failed to pay so a case was filed in the RTC of Cebu.
the bond, was issued to Unimarine. 7. CBIC claims the following:
a. that Cebu Shipyard’s complaint states no cause of action.
DOCTRINE: Agency by estoppel, which is similar to doctrine of apparent CBIC alleged that the surety bond was issued by its agent,
authority, requires proof of reliance upon the representations made by Quinain, in excess of his authority. CBIC claimed that
purported principal, which needs proof that the representations predated Cebu Shipyard should have doubted the authority of
the action taken by the relying third party. Quinain to issue the surety bond based on the following:
i. The nature of the bond undertaking (guarantee
payment), and the amount involved.
FACTS:
ii. The surety bond could only be issued in favor of
the Department of Public Works and Highways, bond it issued in favor of [Cebu Shipyard]” because
as stamped on the upper right portion of the face “although the contract of surety is in essence secondary
of the bond. This stamp was covered by only to a valid principal obligation, his liability to [the]
documentary stamps. creditor is said to be direct, primary[,] and absolute, in
iii. The issuance of the surety bond was not reported, other words, he is bound by the principal.”
and the corresponding premiums were not b. It also found CBIC’s claim that Quinain acted in excess of
remitted to CBIC his authority in issuing the bond untenable.
b. That its liability was extinguished when without its 11. The CA affirmed the decision of the RTC. MR was denied.
knowledge and consent, Cebu Shipyard and Unimarine 12. CBIC, alone, then raised the case to the SC.
novated their agreement.
c. That Cebu Shipyard’s claim had already been paid when ISSUE/s:
Unimarine executed an Assignment of Claims of the 1. W/N the provisions of Article 1911 of the Civil Code is applicable
proceeds of the sale of its vessel M/V Headline in favor of in the present case to hold petitioner liable for the actsdone by its
Cebu Shipyard. agent in excess of authority. –YES
d. CBIC also averred that Cebu Shipyard’s claim had
already prescribed as the endorsement that extended the RULING: WHEREFORE, this petition is hereby GRANTED and the
surety bond’s expiry date, was not reported to CBIC. complaint against CBIC is DISMISSED for lack of merit. The January 29,
e. Finally, CBIC asseverated that if it were held to be liable, 2004 Decision and October 28, 2004 Resolution of the Court of Appeals in
its liability should be limited to the face value of the bond CAG. R. CV No. 58001 is MODIFIED insofar as it affirmed CBIC’s
and not for exemplary damages, attorney’s fees, and costs liability on Surety Bond No. G (16) 29419 and Endorsement No. 33152.
of litigation SO ORDERED.
8. CBIC then filed a Motion to Admit Cross and Third Party
Complaint against Unimarine, as cross-defendant; Rodriguez, RATIO:
Hontanosas, Peter Rodriguez, as signatories to the indemnity 1. CBIC avers that the Court of Appeals erred in interpreting and
agreement they executed in favor of CBIC; and Quinain, as the applying the rules governing the contract of agency. It argued
agent of issued the surety bond and endorsement in excess of his that the Special Power of Attorney granted to Quinain clearly set
authority. forth the extent and limits of his authority with regard to
9. CBIC claimed that Paul Rodriguez, Albert Hontanosas, and Peter businesses he can transact for and in behalf of CBIC. CBIC added
Rodriguez executed an Indemnity Agreement, wherein they that it was incumbent upon Cebu Shipyard to inquire and look
bound themselves, jointly and severally, to indemnify CBIC for into the power of authority conferred to Quinain. CBIC said:
any amount it may sustain or incur in connection with the a. “The authority to bind a principal as a guarantor or
issuance of the surety bond and the endorsement. As for Quinain, surety is one of those powers which requires a Special
CBIC alleged that he exceeded his authority as stated in the Power of Attorney pursuant to Article 1878 of the Civil
Special Power of Attorney, wherein he was authorized to solicit Code. Such power could not be simply assumed or inferred
business and issue surety bonds not exceeding P500,000.00 but from the mere existence of an agency. A person who
only in favor of the Department of Public Works and Highways, enters into a contract of suretyship with an agent without
National Power Corporation, and other government agencies. confirming the extent of the latter’s authority does so at
10. The RTC decided in favor of Cebu Shipyard. his peril. x x x.”
a. That CBIC “in its capacity as surety is bound with its 2. CBIC claims that the foregoing is true even if Quinain was
principal jointly and severally to the extent of the surety granted the authority to transact in the business of insurance in
general, as “the authority to bind the principal in a contract of 10. Neither Unimarine nor Cebu Shipyard was able to repudiate
suretyship could nonetheless never be presumed.” CBIC’s testimony that it was unaware of the existence of Surety
3. The facts that Quinain was the agent was never in issue, the Bond No. G (16) 29419 and Endorsement No. 33152. There were
debate was on the extent of Quinain’s authority. no allegations either that CBIC should have been put on alert
4. In a contract of agency, a person, the agent, binds himself with regard to Quinain’s business transactions done on its behalf.
to represent another, the principal, with the latter’s It is clear, and undisputed therefore, that there can be no
consent or authority. Thus, agency is based on ratification in this case, whether express or implied.
representation, where the agent acts for and in behalf of 11. Art. 1911 states that the principal is solidarily liable with the
the principal on matters within the scope of the authority agent even when the latter exceeded his authority if the following
conferred upon him. Such “acts have the same legal effect requisities exist:
as if they were personally done by the principal. By this a. The principal manifested a representation of the agent’s
legal fiction of representation, the actual or legal absence authority or knowingly allowed the agent to assume such
of the principal is converted into his legal or juridical authority;
presence.” b. The third person, in good faith, relied upon such
5. Our law mandates an agent to act within the scope of his representation; and
authority. The scope of an agent’s authority is what appears in c. Relying upon such representation, such third person has
the written terms of the power of attorney granted upon him. changed his position to his detriment
Under Article 1878(11) of the Civil Code, a special power of 12. This Court cannot agree with the Court of Appeals’
attorney is necessary to obligate the principal as a guarantor or pronouncement of negligence on CBIC’s part. CBIC not only
surety. clearly stated the limits of its agents’ powers in their contracts, it
6. In the case at bar, CBIC could be held liable even if Quinain even stamped its surety bonds with the restrictions, in order to
exceeded the scope of his authority only if Quinain’s act of issuing alert the concerned parties. Moreover, its company procedures,
Surety Bond No. G (16) 29419 is deemed to have been performed such as reporting requirements, show that it has designed a
within the written terms of the power of attorney he was granted. system to monitor the insurance contracts issued by its agents.
7. However, contrary to what the RTC held, the Special CBIC cannot be faulted for Quinain’s deliberate failure to notify it
Power of Attorney accorded to Quinain clearly states the of his transactions with Unimarine. In fact, CBIC did not even
limits of his authority and particularly provides that in receive the premiums paid by Unimarine to Quinain.
case of surety bonds, it can only be issued in favor of the 13. Furthermore, nowhere in the decisions of the lower courts was it
Department of Public Works and Highways, the National stated that CBIC let the public, or specifically Unimarine, believe
Power Corporation, and other government agencies; that Quinain had the authority to issue a surety bond in favor of
furthermore, the amount of the surety bond is limited to companies other than the Department of Public Works and
P500,000.00. Highways, the National Power Corporation, and other
8. The SC finds that Quinain did exceed his scope of government agencies. Neither was it shown that CBIC knew of
authority. the existence of the surety bond before the endorsement
9. Under Articles 1898 and 1910, an agent’s act, even if done beyond extending the life of the bond, was issued to Unimarine. For one
the scope of his authority, may bind the principal if he ratifies to successfully claim the benefit of estoppel on the ground
them, whether expressly or tacitly. It must be stressed though that he has been misled by the representations of another,
that only the principal, and not the agent, can ratify the he must show that he was not misled through his own
unauthorized acts, which the principal must have knowledge of. want of reasonable care and circumspection.
14. In light of the foregoing, this Court is constrained to release CBIC

from its liability on Surety Bond No. G (16) 29419 and
Endorsement No. 33152. This Court sees no need to dwell on the
other grounds propounded by CBIC in support of its prayer.
Relevant provisions:
“Art. 1898. If the agent contracts in the name of the principal, exceeding
the scope of his authority, and the principal does not ratify the contract, it
shall be void if the party with whom the agent contracted is aware of the
limits of the powers granted by the principal. In this case, however, the
agent is liable if he undertook to secure the principal’s ratification.
Art. 1900. So far as third persons are concerned, an act is deemed to have
been performed within the scope of the agent’s authority, if such act is
within the terms of the power of attorney, as written, even if the agent
has in fact exceeded the limits of his authority according to an
understanding between the principal and the agent.
Art. 1902. A third person with whom the agent wishes to contract on
behalf of the principal may require the presentation of the power of
attorney, or the instructions as regards the agency. Private or secret
orders and instructions of the principal do not prejudice third persons
who have relied upon the power of attorney or instructions shown to
them.
Art. 1910. The principal must comply with all the obligations which the
agent may have contracted within the scope of his authority. As for any
obligation wherein the agent has exceeded his power, the principal is not
bound except when he ratifies it expressly or tacitly.
Art. 1911. Even when the agent has exceeded his authority, the principal
is solidarily liable with the agent if the former allowed the latter to act as
though he had full powers.”
REPUBLIC v. BAÑEZ (Siapno, C2020) DOCTRINE: In an agency by estoppel or apparent authority, the
October 14, 2015 | Perez, J. | Doctrine of Apparent Authority principal is bound by the acts of his agent with the apparent authority
PETITIONER: REPUBLIC OF THE PHILIPPINES, REPRESENTED which he knowingly permits the agent to assume, or which he holds the
BY THE PRIVATIZATION AND MANAGEMENT OFFICE (PMO) agent out to the public as possessing.
RESPONDENTS: ANTONIO V. BAÑEZ, LUISITA BAÑEZ VALERA,
NENA BAÑEZ HOJILLA, AND EDGARDO B. HOJILLA, JR. FACTS:
1. Antonio V. Bañez, Luisita Bañez Valera, and Nena Bañez Hojilla
SUMMARY: Bañezs offered for sale a parcel of land to Cellophil (respondents) offered for sale a parcel of land (subject property) in
Resources Corporation (CRC). The Agreement contained that an absolute Abra to Cellophil Resources Corporation (CRC).
deed of sale shall be executed by the respondents in favor of CRC 2. Pursuant to the offer to sell, respondents executed a Letter
provided, that payment shall be made by CRC only upon presentation by Agreement irrevocably giving CRC the option to purchase the
the co-owners to CRC of certificate/s and/or clearances. As respondents subject property, which CRC accepted.
would be staying abroad for a time, they executed a Special Power of 3. The Letter Agreement (Contract) stated:
Attorney in favor of Hojilla. Extrajudicial demands were made which a. That the respondents shall take all necessary steps to
demanded Hojilla to surrender possession of the subject property and cause the CRC Portion to be brought under the operation
demanded Hojilla to produce the title of the subject property. of Republic Act No. 496 (Land Registration Act) and to
Respondents declared afterwards the subject property as Urbano Bañez cause the issuance in CRC’s name of the
property, rented out to third parties the staff houses petitioner corresponding original certificate of title, all of the
constructed, and ordered its guards to prohibit the petitioner from foregoing to be accomplished within a reasonable time
entering the compound. Petitioner filed a complaint for specific from date hereof.
performance, recovery of possession, and damages against respondents, b. It also permitted CRC's entry into the Property.
including Hojilla. Lower courts were saying that the 10-year prescriptive c. An absolute deed of sale shall be executed by the
period of written contracts had already lapsed and that the extrajudicial respondents in favor of CRC or its assignee/s; provided,
demands to respondents did not serve to toll the running of the that payment shall be made by CRC only upon
prescriptive period because petitioner’s demand letters simply called presentation by the co-owners to CRC of
the attention of Hojilla to return the properties and unlock the gates. The certificate/s and/or clearances
issue in this case is whether or not the complaint for specific performance 4. Respondents asked for several cash advances amounting to
was filed beyond the prescriptive period. SC disagreed with lower courts P217,000.00 to be deducted from the purchase price of
and ruled in favor of petitioners saying that Hojilla’s SPA was an express P400,000.00. After paying cash advances to respondents, CRC
agency and so in a contract of agency, the agent acts for and in behalf of constructed staff houses and introduced improvements on the
the principal on matters within the scope of the authority conferred upon subject property.
him, such that, the acts of the agent have the same legal effect as if they 5. As respondents would be staying abroad for a time, they
were personally done by the principal. Assuming further that Hojilla executed a Special Power of Attorney (SPA) in favor of
exceeded his authority, the respondents are still solidarily liable Edgardo B. Hojilla (Hojilla). The SPA authorized Hojilla to
because they allowed Hojilla to act as though he had full powers perform the following:
by impliedly ratifying Hojilla’s actions — through action by a. To take all steps necessary to cause a portion of the lot in
omission. This is the import of the principle of agency by estoppel or the the name of Urbano Bañez which is the subject of the
doctrine of apparent authority. "Offer to Sell" CRC to cause the issuance in our name of
the corresponding original certificate of title.
b. To do all acts and things and to execute all papers and prescriptive period and that there was no act on the part
documents of whatever nature or kind required for the of petitioner to interrupt prescription.
accomplishments of the aforesaid purpose. b. RTC ruled that the addressed letters of petitioner
c. HEREBY GRANTING AND GIVING unto our said to respondents were not demands for compliance of
attorney full power and authority whatsoever requisite or respondent’s obligation and which is not sufficient
necessary or proper to be done in or about the premises as under the law to interrupt the prescriptive period.
fully to all intents and purposes as we might or could c. The failure of either of the parties to demand performance
lawfully do if personally present (with power of of the obligation of the other for an unreasonable length of
substitution and revocation), and hereby ratifying and time renders the contract ineffective.
confirming all that our said attorney shall do or cause to d. The motion for reconsideration was denied
be done under and by virtue of these presents. 10. Ruling of the Court of Appeals:
6. CRC, is now represented by the Republic of the Philippines a. The Court of Appeals affirmed the ruling of the RTC
through the PMO (CRC's equity was turned over to Asset b. CA found that the extrajudicial demand to respondents
Privatization Trust (APT) and an EO transferred the powers, did not serve to toll the running of the prescriptive period
functions, and duties of APT to PMO) because petitioner’s demand letters were not considered
7. Respondents declared afterwards the subject property as Urbano as demand letters since the letters simply called the
Bañez property, rented out to third parties the staff houses attention of Hojilla to return the properties and unlock
petitioner constructed, and ordered its guards to prohibit the the gates.
petitioner from entering the compound, which impelled petitioner c. CA ruled that because the letter was addressed to
to file a complaint for specific performance, recovery of possession, Hojilla, who was only an attorney-in-fact
and damages against respondents, including Hojilla authorized to register the property, it was not
8. The complaint prayed for respondents to surrender and deliver binding upon the respondents.
the title of the subject property, and execute a deed of absolute
sale in favor of petitioner upon full payment. It mentioned three ISSUE: Whether or not the complaint for specific performance was filed
letters sent to respondents on 29 May 1991, 24 October 19911, beyond the prescriptive period – NO, demand letters sent to Hojilla
and 6 July 1999.2 interrupted the prescriptive period
9. Ruling of the RTC:
a. The RTC resolved The RTC resolved that because the RULING: WHEREFORE, the petition is GRANTED. The Decision of
written contract was executed on 7 December 1981 then the Court of Appeals dated 23 August 2005 in C.A.-G.R. CV No. 70137,
the complaint that was filed more 18 years since the affirming the Order of the Regional Trial Court, which ruled that the
contract was executed and thus, beyond the 10-year action has prescribed, is reversed and set aside. Let the records of this
case be REMANDED to the court of origin, which is DIRECTED to
admit the Answer with Counterclaim of the petitioner for further trial on
the merits. The respondents are further ordered to return possession of
1 Letters contained “demand is hereby made upon you and your principals,
the subject property to petitioner. No pronouncement as to costs.
the heirs of Urbano Bañez, to return the properties” to return the
properties, discontinue the construction, repair, demolition and occupancy of
several staff houses, and unlock the gates, which is to enforce respondents’ RATIO:
obligations Hojilla’s SPA was an express agency
2 In petitioner’s letter to Hojilla dated 6 July 1999, petitioner demanded Hojilla to 1. SC does not agree with the lower courts. Lower courts were
produce the title of the subject property. saying that the SPA limited Hojilla’s authority to the registration
of the subject property under the name of his principal, and all ratifying Hojilla’s actions — through action by
the necessary acts for such purpose but nowhere in the SPA was omission. This is the import of the principle of agency by
Hojilla authorized as administrator or agent of respondents with estoppel or the doctrine of apparent authority.
respect to the execution of the Contract 3. In an agency by estoppel or apparent authority, the principal is
2. But to favor the lower court’s interpretation of the scope of bound by the acts of his agent with the apparent authority which
Hojilla’s power is to defeat the juridical tie of the Contract — he knowingly permits the agent to assume, or which he holds the
the vinculum juris of the parties. As no one was authorized to agent out to the public as possessing.
represent respondents in the Contract, then petitioner cannot 4. The respondents’ acquiescence of Hojilla’s acts was made when
enforce the Contract, as it were. This is an absurd interpretation they failed to repudiate the latter’s acts. They knowingly
of the SPA. It renders the Contract ineffective for lack of a party permitted Hojilla to represent them and petitioners were
to execute the Contract. clearly misled into believing Hojilla’s authority. Thus, the
3. Contrary to the findings of the lower court, the present case is a respondents are now estopped from repudiating Hojilla’s
case of an express agency, where, Hojilla, the agent, binds himself authority, and Hojilla’s actions are binding upon the
to represent another, the principal, who are herein respondents, respondents.
with the latter’s express consent or authority.
4. In a contract of agency, the agent acts for and in behalf of the
principal on matters within the scope of the authority conferred
upon him, such that, the acts of the agent have the same legal
effect as if they were personally done by the principal.
5. Because there is an express authority granted upon Hojilla to
represent the respondents as evidenced by the SPA, Hojilla’s
actions bind the respondents.
6. If Hojilla knew that he had no authority to execute the Contract
and receive the letters on behalf of respondents, he should have
opposed petitioner’s demand letters. However, having received
the several demand letters from petitioner, Hojilla continuously
represented himself as the duly authorized agent of respondents,
authorized not only to administer and/or manage the subject
property, but also authorized to register the subject property and
represent the respondents with regard to the latter’s obligations
in the Contract. Hojilla also assured petitioner that petitioner’s
obligation to pay will arise only upon presentation of the title.
The Principle of Agency by estoppel or the Doctrine of Apparent

Authority
1. Clearly, the respondents are estopped by the acts and
representations of their agent.
2. Assuming further that Hojilla exceeded his authority, the
respondents are still solidarily liable because they allowed
Hojilla to act as though he had full powers by impliedly
DOMINION INSURANCE CORPORATION v. COURT OF settling the claims of several insured clients of Dominion
APPEALS (Gail, A2021) Insurance out of his personal money.
06 Feb 2002 | Pardo, J. | SPA to make payments 2. Dominion denied any liability to Guevarra because he did not act
PETITIONER: Dominion Insurance Corporation within his authority as agent for Dominion.
RESPONDENTS: Court of Appeals, Rodolfo S. Guevarra 3. RTC: Ordered Dominion to pay Gueverra the total amount he
advanced in the payment of the claims of Dominion’s clients.
SUMMARY: 4. CA: Affirmed the decision of RTC
Acting as an agent of Dominion Insurance Corp., Rodolfo Guevarra paid
156k in settling the claims of several insured clients of Dominion out of ISSUES:
his personal money. Guevarra filed a civil case for sum of money against 1. Whether respondent Guevarra acted within his authority as
Dominion. However, Dominion denied any liability and alleged that agent for Dominion Insurance Corp.. --- NO. The agency in the
Guevarra did not act within his authority as its agent. present case is a general agency. Article 1878 requires a special
powers of attorney to make such payments not usually considered
The issue in this case is WON respondent Guevarra acted within his as acts of administration. Therefore, SPA is required before
authority as agent for Dominion. Guevarra could settle the insurance claims of the insured clients.
2. Whether respondent Guevarra is entitled to reimbursement of
The Court held that NO because what was constituted between the two amounts he paid out of his personal money in settling the claims
parties was actually a general agency, hence its authority is only limited of several insured. --- YES, under general law on obligations and
to acts of administration. The payment of claims is not an act of contracts (see ratio #5)
administration. Art. 1878 provides that special powers of attorney are
necessary to make such payments that are not usually considered as acts RATIO:
of administration. Therefore, a special power of attorney is required 1. A perusal of the Special Power of Attorney would show that
before respondent Guevarra could settle the insurance claims of Dominion Insurance and Guevarra intended to enter into a
the insured. Respondent Guevarra’s authority is further limited by the principal-agent relationship. Despite the word "special" in the
written standard authority to pay, which states that the payment shall title of the document, the contents reveal that what was
come from respondent Guevarra’s revolving fund or collection. constituted was actually a general agency. The agency
Respondent Guevarra was authorized to pay the claim of the insured, comprises all the business of the principal, but couched in general
BUT the payment shall come from the revolving fund or collection in his terms, it is limited only to acts of administration.
possession. 2. A general power permits the agent to do all acts for which the law
does not require a special power. Article 1878, Civil Code,
DOCTRINE: enumerates the instances when a special power of attorney is
Art. 1878 of the CC provides that a special power of attorney is necessary required The pertinent portion that applies to this case provides
to make such payments as are not usually considered as acts of that:
administration.
"Article 1878. Special powers of attorney are
necessary in the following cases:
FACTS: "(1) To make such payments as are not usually
1. Rodolfo Guevarra instituted a civil case for sum of money against considered as acts of administration;
Dominion Insurance Corporation (Dominion). Acting as an agent xxx xxx xxx "
for petitioner Dominion Insurance, Guevarra paid P156,473.90 in (15) Any other act of strict dominion."
3. The payment of claims is not an act of administration. The

settlement of claims is not included among the acts enumerated
in the Special Power of Attorney, neither is it of a character
similar to the acts enumerated therein. A special power of
attorney is required before respondent Guevarra could
settle the insurance claims of the insured.
4. Respondent Guevarra’s authority is further limited by the written
standard authority to pay, which states that the payment shall
come from respondent Guevarra’s revolving fund or collection.
Respondent Guevarra was authorized to pay the claim of the
insured, but the payment shall come from the revolving fund or
collection in his possession. Having deviated from the instruction
of the principal, the expenses that respondent Gueverra incurred
in the settlement of the claims of the insured may not be
reimbursed from petitioner Dominion.
5. However, while the law on agency prohibits respondent Guevarra
from obtaining reimbursement, his right to recover may still
be justified under the general law on obligations and
contracts. Art. 1236 of civil code provides:
"Whoever pays for another may demand from the debtor
what he has paid, except that if he paid without the
knowledge or against the will of the debtor, he can recover
only insofar as the payment has been beneficial to the
debtor."
PATRIMONIO v. GUTIERREZ (Pat, A2021) not to fill them out without previous notification to and approval
04 June 2014 | Brion, J. | SPA to loan/borrow money of Patrimonio.
PETITIONER: Alvin Patrimonio 3. In 1993, without Patrimonio’s knowledge and consent, Gutierrez
RESPONDENTS: Napoleon Gutierrez and Octavio Marasigan III went to Marasigan to secure a Php 200,000.00 loan for the alleged
construction of Patrimonio’s house.
SUMMARY: 4. Marasigan gave Gutierrez the money and in return, Gutierrez
Patrimonio and Gutierrez were business partners. To answer for the delivered to him one of the blank checks Patrimonio had
expenses of their business, Patrimonio pre-signed several blank checks, entrusted to him. The blank portions were filled out with the
which he entrusted to Gutierrez with the instruction not to fill them out words “Cash,” “Two hundred thousand pesos only,” and
without his approval. Gutierrez then borrowed money from Marasigan on “P200,000.00 dated “May 23, 1994”
the pretext that the money was to be used for the construction of 5. When Marasigan deposited the check, it was dishonored because
Patrimonio’s house. Marasigan agreed and gave Gutierrez Php the account was already closed. Marasigan was not able to
200,000.00 in exchange for one of the checks pre-signed by Patrimonio recover money from Gutierrez.
and now filled out by Gutierrez for the same amount. 6. Marasigan demanded payment of the P200K from Patrimonio but
Patrimonio refused. He then filed a BP 22 case against
When Marasigan deposited the check, it was dishonored since the account Patrimonio.
was already closed. Despite his efforts to recover the money from both 7. Patrimonio filed a complaint for declaration of nullity of loan and
Gutierrez and Patrimonio, he was not able to get back his money. He filed recovery of damages against Gutierrez and Marasigan. He denies
a BP 22 case against Patrimonio and Patrimonio filed a case to declare authorizing the loan or the check’s negotiation.
the contract of loan null and void because he did not authorize the 8. RTC → in favor of Marasigan
borrowing of money nor the check’s negotiation. a. Patrimonio had the intention of issuing a negotiable
instrument in issuing the pre-signed blank checks
The Supreme Court held that the contract of loan was indeed null and b. Marasigan was a holder in due course
void. Gutierrez authority to fill out and use the checks was conditioned on 9. CA → affirmed RTC ruling
Patrimonio’s prior approval, without which Gutierrez acts in excess of his a. Marasigan not a holder in due course since he did not
authority. The Civil Code requires an SPA before an agent can loan or receive the check in good faith
borrow money in behalf of the principal. b. The check had been strictly filled out by Gutierrez in
accordance with Patrimonio’s authority.
DOCTRINE: 10. SC arguments:
Art. 1878 of the CC provides that a special power of attorney is necessary a. There was no loan between Patrimonio and Marasigan
to loan or borrow money, unless the act be urgent and indispensable for since he never authorized the borrowing of money or the
the preservation of the things which are under administration check’s negotiations
b. SPA is necessary for an individual to make a loan or
borrow money in behalf of another
FACTS: c. The check had not been filled out in accordance with his
1. Patrimonio and Gutierrez entered into a business venture under authority since the check was subject to the condition that
the name of Slam Dunk Corporation, a production outfit that it may only be used upon prior approval by him was not
produced mini concerts and shows related to basketball. complied with
2. To answer for the expenses of Slam Dunk, Patrimonio pre-signed
several checks that did NOT have payee’s name, date, or amount. ISSUES:
These were entrusted to Gutierrez with the specific instruction
1. W/N Gutierrez was authorized to borrow money - NO b. While under the law, Gutierrez had prima facie authority
to complete the check, such authority does not extend to
RULING: WHEREFORE, in view of the foregoing, judgment is hereby its use once the check is completed.
rendered GRANTING the petitioner Alvin Patrimonio’s petition for c. Since no evidence shows that Gutierrez secured prior
review on certiorari. The appealed decision and resolution of the Court of approval from Patrimonio, Gutierrez exceed the authority
Appeals are consequently ANNULLED and SET ASIDE. Costs against granted to him when he used it to pay the loan he
respondents. supposedly contracted for Patrimonio’s house.
RATIO:
1. Art. 1878(7) of the Civil Code expressly requires a SPA
before an agent can loan or borrow money in behalf of the
principal.
a. This does not state that the authority must be in writing.
b. As long as the mandate is express, such authority may be
either oral or written.
2. The contract of loan entered into by Gutierrez in behalf of
Patrimonio should be nullified for being void. Patrimonio is not
bound by the contract of loan.
a. Since Patrimonio did not extend an SPA in favor of
Gutierrez, Gutierrez did not have authority to borrow the
money.
b. The fact that Patrimonio entrusted the blank pre-signed
checks to Gutierrez is not legally sufficient because the
authority to enter into a loan can never be presumed.
c. The records show that Marasigan merely relied on the
words of Gutierrez without securing a copy of the
SPA and without verifying from Patrimonio
whether he had authorized the borrowing of money
or release of the check. Marasigan was thus bound
by the risk accompanying his trust on the mere
assurances of Gutierrez.
3. No contract of loan was perfected between Marasigan and
Patrimonio since Patrimonio’s consent was not obtained.
4. The check was not completed strictly under the authority given by
Patrimonio
a. Gutierrez has exceeded the authority to fill up the blanks
and use the check. His authority was limited to the use of
the checks for the operation of their business and on the
condition that Patrimonio’s approval be first secured.
VIRATA v. NG WEE (Sylina, A2021) the agency if its execution would manifestly result or damage to the
July 5, 2017 | Velasco | Main Topic- With Respect to Obligations Due principal
To/From the Principal
PETITIONER: LUIS JUAN L. VIRATA and UEMMARA PHILIPPINES The SPAs, as couched, do not specifically include a provision empowering
CORPORATION (now known as CAVITEXINFRASTRUCTURE Wincorp to excuse Power Merge from repaying the amounts it had drawn
CORPORATION) from its credit line via the Side Agreements. They merely authorize
RESPONDENTS: ALEJANDRO NG WEE, WESTMONT Wincorp "to agree, deliver, sign, execute loan documents" relative to the
INVESTMENT CORP., ANTHONY T. REYES, SIMEON CUA, VICENTE borrowing of a corporate borrower. Otherwise stated, Wincorp had no
CUALOPING, HENRY CUALOPING, MARIZA SANTOSTAN, and authority to absolve Power Merge from the latter's indebtedness to its
MANUEL ESTRELLA lenders. Doing so therefore violated the express terms of the SPAs that
limited Wincorp's authority to contracting the loan.
SUMMARY: Ng Wee was enticed to invest with Wincorp with a “sans
recourse transaction.” He made several money placements in Wincorp. DOCTRINE: Though he may perform acts in a manner more
Special Power of Attorneys (SPAs) are also prepared for the signature of advantageous to the principal than that specified by him, in no
the lender investor. It contained the phrase: To agree, deliver, sign, case shall the agent carry out the agency if its execution would
execute loan documents. Ng Wee's initial investments were matched with manifestly result or damage to the principal.
Hottick but it defaulted in paying its outstanding obligations when the
Asian financial crisis struck. To induce the parties to settle, petitioner
Virata offered to guarantee the full payment of the loan. Upon receiving FACTS:
the news on Wincorps financial condition, Ng Wee confronted Wincorp. 1. Ng Wee, a valued client of Westmont Bank, was enticed to make
Ng Wee was assured that the losses from the Hottick account will be placements with Wincorp, a domestic corporation organised and
absorbed by the company and that his investments would be transferred licensed to operate as an investment house, and one of the bank’s
instead to a new borrower account. Power Merge, in which Virata is the affiliates.
Majority stockholder is Virata, was given a maximum credit limit of 2. Offered to Ng Wee were “sans recourse” transactions. It was
P2.5B. After receiving the promissory notes from Power Merge, Wincorp, summarized by the CA as a corporate borrower who needs
in turn, issued Confirmation Advices to Ng Wee and his trustees, as well financial assistance or funding to run its business or to serve as
as to the other investors who were matched with Power Merge. working capital is screened by Wincorp.
Unknown to Ng Wee, however, was that on the very same dates 3. Lured by representations that the "sans recourse" transactions
the Credit Line Agreement and its subsequent Amendment were are safe, stable, high-yielding, and involve little to no risk, Ng
entered into by Wincorp and Power Merge, additional contracts Wee, sometime in 1998, placed investments thereon under
(Side Agreements) were likewise executed by the two accounts in his own name, or in those of his trustees
corporations absolving Power Merge of liability as regards the 4. Wincorp issued Ng Wee and his trustees Confirmation Advices
Promissory Notes it issued. informing them of the identity of the borrower with whom they
were matched, and the terms under which the said borrower
The issue in this case WON if even as an agent, WINCORP can would repay them.
still be held liable. It was held that Wincorp is still liable. 5. Special Power of Attorneys (SPAs) are also prepared for the
Wincorp exceeded its authority signature of the lender investor. It contained the phrase: To
agree, deliver, sign, execute loan documents
Though he may perform acts in a manner more advantageous to the
principal than that specified by him, in no case shall the agent carry out
6. Ng Wee's initial investments were matched with Hottick but it 16. However, this also meant that if Power Merge subsequently
defaulted in paying its outstanding obligations when the Asian defaults in the payment of its obligations, it would refuse, as it
financial crisis struck did in fact refuse, payment to its investors.
7. Hottick, in consideration of the securities, issued the following 17. Ng Wee was not able to collect Power Merge's outstanding
suretyship agreement in favor of Wincorp namely a.) Virata b.) obligation under the Confirmation Advices in the amount of
Halim Saad, c.) Third Party Real Estate Mortgage by National ₱213,290,410.36.
Steel Corp (NSC).
8. To induce the parties to settle, petitioner Virata offered to ISSUE:
guarantee the full payment of the loan. WON if even as an agent, WINCORP can still be held liable. - YES,
9. Alarmed by the news of Hottick's default and financial distress, for Wincorp exceeded its authority as agent.
Ng Wee confronted Wincorp and inquired about the status of his
investments. RATIO:
10. Wincorp assured him that the losses from the Hottick account will 1. Through the contract of agency, a person binds himself to render
be absorbed by the company and that his investments would be some service or to do something in representation or on behalf of
transferred instead to a new borrower account. Ng Wee then another, with the consent or authority of the latter
continued to make money placements. 2. As the basis of agency is representation, there must be, on the
11. Wincorp resolved to file the collection case against Halim Saad part of the principal, an actual intention to appoint, an intention
and Hottick, and, on even date, approved Power Merge's, a naturally inferable from the principal's words or actions. In the
domestic corporation which Virata is the majority stockholder, same manner, there must be an intention on the part of the agent
application for a credit line, extending a credit facility to the to accept the appointment and act upon it. Absent such mutual
latter in the maximum amount of ₱l,300,000,000.00. intent, there is generally no agency.
12. Wincorp also increased Power Merge's maximum credit limit to 3. There is no dearth of statutory provisions in the New Civil Code
₱2,500,000,000.00 that aim to preserve the fiduciary character of the relationship
13. After receiving the promissory notes from Power Merge, Wincorp, between principal and agent.
in turn, issued Confirmation Advices to Ng Wee and his trustees, 4. Though he may perform acts in a manner more
as well as to the other investors who were matched with Power advantageous to the principal than that specified by him,
Merge. in no case shall the agent carry out the agency if its
14. Unknown to Ng Wee, however, was that on the very same execution would manifestly result or damage to the
dates the Credit Line Agreement and its subsequent principal.
Amendment were entered into by Wincorp and Power 5. In the instant case, the SPAs executed by Ng Wee constituted
Merge, additional contracts (Side Agreements) were Wincorp as agent relative to the borrowings of Power Merge,
likewise executed by the two corporations absolving allegedly without risk of liability on the part of Wincorp.
Power Merge of liability as regards the Promissory Notes 6. The SPAs, as couched, do not specifically include a
it issued provision empowering Wincorp to excuse Power Merge
15. Save for the amount, identical provisions were included in the from repaying the amounts it had drawn from its credit
Side Agreement By virtue of these contracts, Wincorp was able to line via the Side Agreements. They merely authorize
assign its rights to the uncollected Hottick obligations and hold Wincorp "to agree, deliver, sign, execute loan documents"
Power Merge papers instead. relative to the borrowing of a corporate borrower.
Otherwise stated, Wincorp had no authority to absolve
Power Merge from the latter's indebtedness to its lenders.
Doing so therefore violated the express terms of the SPAs

that limited Wincorp's authority to contracting the loan.
7. As far as the investors are concerned, the Side Agreements
amounted to a gratuitous waiver of Power Merge's obligation,
which authority is required under the law to be contained in an
SPA for its accomplishment.
8. In discharging its duties as an alleged agent, Wincorp then
elected to put primacy over its own interest than that of its
principal, in clear contravention of the law
GUTIERREZ HERMANOS v. ORENSE (Maye, A2021) b. He had not executed any written power of attorney or
December 4, 1914 | Torres, J. | SPA – With respect to immovable given any verbal authority to Duran to represent him and
properties sell the property to GH.
PETITIONER: Gutierrez Hermanos c. That his knowledge of the sale was long after the contract
RESPONDENT: Engracio Orense of sale had been executed.
d. That he did not perform any acts that would cause GH to
SUMMARY: Orense’s nephew Duran sold Orense’s property to Gutierrez believe that Duran was authorized.
Hermanos with a right to repurchase. Duran failed to repurchase the 7. CFI ruled in GH’s favor. MR denied. Hence, this petition.
land. Gutierrez Hermanos filed a case to compel Orense to execute a deed
of transfer. Orense refused claiming he owned the property and that he ISSUES:
did not give Duran authority to sell it. SC said Orense is liable because Whether or not Duran was Orense’s agent, and hence the sale is binding?
there was a criminal case against Duran for estafa for false – YES.
representation. During the trial, Orense testified that he gave his consent
to the sale which resulted in Duran’s acquittal. He is bound by his own RATIO:
admission that he consented to the sale. 1. It is important to note that GH also filed a criminal case against
Duran for estafa for having represented himself as the absolute
DOCTRINE: The principal must fulfill all the obligations contracted by owner of the land and improvements.
the agent who acted within his scope of authority.Even if the consent was 2. However, at the trial, Orense was called as a witness. When he
granted subsequent to the sale, Orense approved the action of his nephew was interrogated by the fiscal as to whether he consented
and his ratification produced the effect authorization to make the sale. to Duran's selling the said property under right of
redemption to the firm of Gutierrez Hermanos, he replied
that he had. Because of this, the court acquitted Jose Duran of
FACTS: the charge of estafa.
1. Orense owns a parcel of land with house in Albay. It’s properly 3. Records of the trial show that Orense gave his consent to Duran
registered under his name. Orense has a nephew named Jose to sell the property and that he ratified the sale by means of
Duran. public instrument. The principal must therefore fulfill all
2. Duran, with Orense’s knowledge and consent, executed a the obligations contracted by the agent who acted within
notarized public instrument where he sold the property to his scope of authority.
petitioner Gutierrez Hermanos (GH) for P1,500 with a right to 4. Even if the consent was granted subsequent to the sale,
repurchase in 4 years. Orense approved the action of his nephew and his
3. GH did not occupy the property because it leased it back to ratification produced the effect authorization to make the
Orense and Duran. sale.
4. After the four year redemption period expired, GH wanted Orense 5. Art. 1259 (now Art. 1317) states that “No one can contract in the
to deliver the property and the accrued rentals. Orense refused. name of another without being authorized by him or without his
5. GH went to court praying the judgment be rendered declaring GH legal representation according to law.” A contract under this
as owner and ordernig Orense to execute a deed of transfer, and would be void UNLESS ratified by the person in whose name it
to pay rentals of P30/month. was executed before being revoked by the other contracting party.
6. Orense’s defense: 6. Art. 1313 (now Art. 1396) states that “Ratification cleanses the
a. He is the lawful owner of the property since his ownership contract from all its defects from the moment it was constituted.”
is recorded in the property registry and registered under
proceedings in rem.
Orense’s sworn statement during the criminal case remedies all

defects which the contract may have contained.
7. Art. 1309 (now Art. 1392) states that “Ratification extinguishes
the action to annul a voidable contract.” Orense’s right of action
for nullification became legally extinguished from the moment he
ratified it.
8. Orense also alleged the the contract of sale of the property is void
for violating the Code of Civil Procedure because the authority to
make the sale was not shown to have been and writing and signed
by Orense. But the SC said that the record discloses satisfactory
and conclusive proof that the defendant Orense gave his consent
to the contract of sale executed in a public instrument by his
nephew Jose Duran.
9. The repeated and successive statements made by the defendant
Orense in two actions, wherein he affirmed that he had given his
consent to the sale of his property, meet the requirements of the
law and legally excuse the lack of written authority, and, as they
are a full ratification of the acts executed by his nephew Jose
Duran, they produce the effects of an express power of agency.
Ruling: Petition denied. CFI decision affirmed.

CITY-LITE REALTY CORP. v. COURT OF APPEALS (Pau, A2021)

March 27, 2017 | Leonen, J. | SPA - Authority to Sell a piece of land by (The authority granted was only that of a broker)
Agent
PETITIONER: City-Lite Realty Corp. DOCTRINE:
RESPONDENTS: CA, F.P. Holdings (“principal”), Meldin Roy(“agent”), Art. 1874. When the sale of a piece of land or any interest therein
Metro Drug Inc. is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void.
SUMMARY: FP HOLDINGS (purported Principal) was the registered
owner of a parcel of land in QC denominated as the “Violago Property.” FACTS:
The property was offered for sale to the general public through the 1. Private respondent F.P. HOLDINGS AND REALTY
circulation of a sales brochure which identified Meldin Roy (purported CORPORATION (F.P. HOLDINGS) (purported principal) was
Agent) as the contact person for interested buyers. the registered owner of a parcel of land situated along E.
Rodriguez Avenue, Quezon City, also known as the "Violago
Meldin Roy was able to find a prospective buyer, City-Lite Realty Corp. Property" or the "San Lorenzo Ruiz Commercial Center."
Subsequent negotiations took place between Meldin Roy and officers of 2. The property was offered for sale to the general public through
City-Lite. After negotiations, the two eventually formally agreed upon the the circulation of a sales brochure.
sale of the entire “Violago Property.” a. The brochure advertised that Meldin Roy (purported
agent) of Metro Drug Inc. was the contact person for
For one reason or another, FP HOLDINGS refused to execute the interested purchasers
necessary deed of Sale in favor of City-Lite. Despite repeated demands 3. Respondent Meldin Roy sent a sales brochure, together with the
made by City-Lite to Meldin Roy, FP HOLDINGS still refused to comply. location plan and copy of the Transfer Certificate of Title covering
City-Lite filed a case for specific performance. the subject property to Atty. Gelacio Mamaril, a practicing lawyer
and a licensed real estate broker. Atty. Mamaril in turn passed on
RTC - In favor of City-Lite, held that the sale is valid and enforceable. these documents to Antonio Teng, Executive Vice-President, and
CA - Reversed RTC, held that there was no consummated sale. Atty. Victor P. Villanueva, Legal Counsel, of CITY-LITE.
a. CITY-LITE conveyed its interest to purchase a portion or
ISSUE: W/N Meldin Roy was authorized by F.P. Holdings to sell their one-half (1/2) of the front lot of the "Violago Property”.
(F.P.’s) property to CITY-LITE NO. 4. After a few days, Atty. Mamaril wrote Metro Drug (ATTN:
MELDIN AL ROY) expressing CITY-LITE's desire to buy the
RATIO: entire front lot of the subject property instead of only half thereof,
Art. 1874. When the sale of a piece of land or any interest therein is asking for a price reduction and for payment to be made in
through an agent, the authority of the latter shall be in writing; installments. Meldin Roy made a counter offer providing for: the
otherwise, the sale shall be void. total purchase price of 57, 450, 000, downpayment of 15M,
remaining balance to be paid within 6 months from date of
The instructions of FP HOLDINGS to Meldin Roy was “...please proceed downpayment.
to hold preliminary negotiations with interested buyers and endorse 5. On 26 September 1991 CITY-LITE's officers and Atty. Mamaril
formal offers to us for our final evaluation and appraisal.” This met with Roy at the Manila Mandarin Hotel in Makati to
obviously meant that Meldin Roy was only a contact person with no consummate the transaction. After some discussions, the parties
authority to conclude the sale of the property, the only job being to bring finally reached an agreement and Roy agreed to sell the property
parties together for a possible transaction. to CITY-LITE provided only that the latter submit its acceptance
in writing to the terms and conditions of the sale as contained in

his previous counter offer. RULING: Petition Denied
a. CITY-LITE formally agreed and accepted the terms and
conditions set forth by Roy (hence consummating the RATIO:
sale). 1. We cannot sustain petitioner. On the issue of whether a contract
6. However, despite demand, F.P. HOLDINGS refused to execute of sale was perfected between petitioner CITY-LITE and
the corresponding deed of sale in favor of CITY-LITE of the front respondent F. P. HOLDINGS acting through its agent Meldin Al
lot of the property. G. Roy of Metro Drug, Art. 1874 of the Civil Code provides:
7. LITE's counsel demanded in writing that Metro Drug (ATTN: 2. Art. 1874. When the sale of a piece of land or any interest therein
MELDIN AL G. ROY) comply with its commitment to CITY-LITE is through an agent, the authority of the latter shall be in writing;
by executing the proper deed of conveyance of the property under otherwise, the sale shall be void.
pain of court action 3. Petitioner CITY LITE anchors the purported authority of Metro
8. (This is unimportant, it just explains why another party was Drug and Meldin Al G. Roy on:
impleaded to the case) (a) the testimonies of petitioner's three witnesses and the
a. Upon its claim of protecting its interest as vendee of the admissions of Roy and the lawyer of Metro Drug;
property suit, City-Lite registered an adverse claim to the (b) the sales brochure specifying Meldin Al G. Roy as a
title of the property with the Register of deeds of QC. FP contact person;
Holdings filed a petition for the cancellation of the (c) the guard posted at the property saying that Metro Drug
adverse claim against City Lite, to which City Lite cause was the authorized agent; and,
the annotation of the first notice of lis pendens. (d) the common knowledge among brokers that Metro Drug
b. FP Holdings caused the resurvey and segregation of the through Meldin Al G. Roy was the authorized agent of F.
property and then asked the Register of deeds to issue P. HOLDINGS to sell the property
separate titles. 4. However, The absence of authority to sell can be determined
c. FP Holdings petition was dismissed. City Lite instituted a from the written memorandum issued by respondent F.P.
complaint against FP Holdings for specific performance HOLDINGS' President requesting Metro Drug's assistance in
and damages, which caused the second notice of lis finding buyers for the property. The memorandum in part stated:
pendens on the new TCT. After annotation, the property
was transferred to Viewmaster Construction Corp, to a. “We will appreciate Metro Drug's assistance in referring
which new TCT was issued (notice of lis pendens carried to us buyers for the property. Please proceed to hold
over). preliminary negotiations with interested buyers and
9. A complaint for specific performance was filed by CITY-LITE endorse formal offers to us for our final evaluation and
against F.P. Holdings appraisal.”
10. RTC - Ruled in favor of CITY LITE, ordering F.P. Holdings to 5. This obviously meant that Meldin Al G. Roy and/or Metro Drug
execute a deed of sale. was only to assist F.P. HOLDINGS in looking for buyers and
11. CA - Reversed RTC decision, held that there is no valid sale. referring to them possible prospects whom they were supposed to
endorse to F.P. HOLDINGS. But the final evaluation, appraisal
ISSUE/s: and acceptance of the transaction could be made only by F.P.
1. W/N Meldin Roy was authorized by F.P. Holdings to sell their HOLDINGS.
(F.P.’s) property to CITY-LITE. 6. Meldin Roy and/or Metro Drug was only a contact person with no
NO. authority to conclude a sale of the property. The only job was to
bring parties together for a possible transaction.

a. (basically, Meldin was only a broker)
7. For lack of written authority, the sale in question governing the
property shall be considered null and void in accordance with
Article 1874 of the Civil Code.
ESCUETA v. LIM (Lorena, C2020)

January 24, 2007 | Azcuna, J. | Power of Agent to Appoint a Sub-Agent FACTS
PETITIONER: Corazon Escueta, assisted by her husband Edgar 1. Rufina Lim (Lim) filed an action to remove cloud on, or quiet title
Escueta, Ignacio Rubio, The Heirs of Luz Baloloy, namely, Alejandrino to, real property, with preliminary injunction and issuance of [a
Baloloy and Bayani Baloloy hold-departure order] from the Philippines against Ignacio E.
RESPONDENTS: Rufina Lim Rubio (Rubio).
2. Lim amended her complaint to include specific performance and
SUMMARY: Lim averred that she had bought the hereditary properties damages.
of Rubio and the Baloloys, who executed a Contract of Sale and received a. Lim averred that she bought the hereditary shares of
from Lim a down payment of P102,169.86 and P450,000, respectively, and Rubio and the heirs of Luz Baloloy (Baloloys), namely:
the balance will be paid after the titles are transferred into Lim’s name. Alejandrino, Bayani, and other co-heirs, consisting of 10
Rubio and the Baloloys refused to deliver the title to Lim despite her offer lots
to pay the balance. Despite the existence of a Contract of Sale between b. that said vendors executed a contract of sale dated in her
Lim, and Rubio and the Baloloys, Escueta having knowledge thereof, favor;
executed a simulated sale involving the lots. As for the Baloloys, they c. that Rubio and the Baloloys received a down payment or
argued that they already withdrawn their offer to sell for the reason that earnest money in the amount of P102,169.86 and
Lim failed to pay the balance on time hence the Contract of Sale has no P450,000, respectively;
more force and effect. As to Rubio, he alleged that Lim has no cause of d. that it was agreed in the contract of sale that the vendors
action since, Rubio appointed her daughter Patricia Llamas to be his would secure certificates of title covering their respective
attorney-in-fact, and not in favor of Virginia who represented Rubio in hereditary shares;
the sale with Lim. The RTC declared the Petitioners in default which the e. that the balance of the purchase price would be paid to
CA affirmed with amendments. Hence, this petition. The issue is W/N each heir upon presentation of their individual
Rubio is bound by the contract of sale between Virginia and Lim, thus certificate[s] of [title];
making the sale between him and Lim valid. The SC held in the f. that Rubio refused to receive the other half of the down
affirmative. Applying the Article 1892 of the Civil Code to the special payment which is P[100,000];
power of attorney executed by Rubio in favor of his daughter Patricia g. that Rubio refused and still refuses to deliver to Lim the
Llamas, it is clear that she is not prohibited from appointing a substitute. certificates of title covering his share on the two lots;
By authorizing Virginia to sell the subject properties, Patricia h. that with respect to the heirs of Luz Baloloy, they also
merely acted within the limits of the authority given by her refused and still refuse to perform the delivery of the two
father, but she will have to be “responsible for the acts of the sub- certificates of title covering their share in the disputed
agent,” among which is precisely the sale of the subject lots;
properties in favor of Lim. Moreover, the contract of sale between i. that Lim was and is ready and willing to pay Rubio and
Rubio and Lim holds all elements of a valid contract. Rubio could no the Baloloys upon presentation of their individual
longer sell the subject properties to Escueta, after having sold them to certificates of title, free from whatever lien and
Lim. encumbrance;
j. that in spite of Corazon Escueta’s knowledge that the
DOCTRINE: Art. 1892. The agent may appoint a substitute if the disputed lots have already been sold by Rubio to Lim,
principal has not prohibited him from doing so; but he shall be Rubio allegedly still executed a simulated deed of sale in
responsible for the acts of the substitute: (1) When he was not given the favor of Escueta which raised doubts on Lim’s title over
power to appoint one x x x. the lot;
3. In their separate amended answers, petitioners denied the WoN the contract of sale between Lim and Rubio and the
material allegations of the complaint and alleged Baloloys is valid - Yes
a. For the Baloloys
i. Lim has no cause of action, because the subject RULING: WHEREFORE, the petition is DENIED. The Decision and
contract of sale has no more force and effect as far Resolution of the Court of CA-G.R. CV No. 48282, dated October 26, 1998
as the Baloloys are concerned, since they have and January 11, 1999, respectively, are hereby AFFIRMED. Costs
withdrawn their offer to sell for the reason that against petitioners.
Lim failed to pay the balance of the purchase price
as orally promised on or before May 1, 1990. RATIO:
b. For Rubio and Escueta 1. Rubio is bound by the contract of sale between Virginia
i. Lim has no cause of action, because Rubio has not and Lim
entered into a contract of sale with her a. Applying the Article 18923 of the Civil Code to the
ii. that he has appointed his daughter Patricia special power of attorney executed by Rubio in
Llamas to be his attorney-in-fact and not favor of his daughter Patricia Llamas, it is clear
Virginia Rubio Laygo Lim (Virginia) who that she is not prohibited from appointing a
was the one who represented him in the sale substitute.  
of the disputed lots in favor of Lim b. By authorizing Virginia to sell the subject
iii. that the P100,000 Lim claimed he received as properties, Patricia merely acted within the limits
down payment for the lots is a simple transaction of the authority given by her father, but she will
by way of a loan have to be “responsible for the acts of the sub-
4. The Baloloys failed to appear at the pre-trial. Upon motion of agent,” among which is precisely the sale of the
Lim, the trial court declared the Baloloys in default. They then subject properties in favor of Lim
filed a motion to lift the order declaring them in default, which c. Even assuming that Virginia has no authority to sell the
was denied. subject properties, the contract she executed in favor of
5. Consequently, Lim was allowed to adduce evidence ex parte. Lim is not void, but simply unenforceable, under the
Thereafter, the trial court rendered a partial decision against the second paragraph of Article 13174 of the Civil Code
Baloloys i. Rubio merely denies the contract of sale. He
6. The Baloloys filed a petition for relief from judgment and order claims, without substantiation, that what he
and supplemental petition which was denied by the trial court. received was a loan, not the down payment for the
This was appealed to the CA sale of the subject properties.
7. Trial on the merits ensued between Lim, and Rubio and Escueta. 1. His acceptance and encashment of the
After trial, the trial court rendered its assailed Decision against check, however, constitute ratification of
Lim.
8. On appeal, the CA affirmed the trial court’s order (Baloloys are in 3 Art. 1892. The agent may appoint a substitute if the principal has not prohibited
default) and partial decision him from doing so; but he shall be responsible for the acts of the substitute: (1)
9. (in favor of Lim), but reversed the later decision (the CA decided When he was not given the power to appoint one x x x.
in favor of Lim). Petitioners’ Motion for Reconsideration of the CA 4 Art. 1317. x x x A contract entered into in the name of another by one who has
Decision was denied. Hence, this petition no authority or legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on whose
ISSUE behalf it has been executed, before it is revoked by the other contracting party.
the contract of sale and “produce the a. Applying Article 1544 of the Civil Code, a second buyer of
effects of an express power of agency.” the property who may have had actual or constructive
2. His action necessarily implies that he knowledge of such defect in the seller’s title, or at least
waived his right of action to avoid the was charged with the obligation to discover such defect,
contract, and, consequently, it also implies cannot be a registrant in good faith
the tacit, if not express, confirmation of b. Such second buyer cannot defeat the first buyer’s title. In
the said sale effected” by Virginia Lim in case a title is issued to the second buyer, the first buyer
favor of Lim. may seek reconveyance of the property subject of the sale.
ii. The Baloloys have ratified the contract of sale c. Even the argument that a purchaser need not inquire
when they accepted and enjoyed its benefits. beyond what appears in a Torrens title does not hold
1. “The doctrine of estoppel applicable to water. A perusal of the certificates of title alone will
petitioners here is not only that which reveal that the subject properties are registered in
prohibits a party from assuming common, not in the individual names of the heirs.
inconsistent positions, based on the 5. The contract of sale executed between Rubio and Lim valid
principle of election, but that which a. Elements of a valid contract of sale under Article 1458 of
precludes him from repudiating an the Civil Code are present, such as:
obligation voluntarily assumed after i. consent or meeting of the minds;
having accepted benefits therefrom. To ii. determinate subject matter; and
countenance such repudiation would be iii. price certain in money or its equivalent.
contrary to equity, and would put a b. Rubio, and the Baloloys sold their hereditary shares for a
premium on fraud or misrepresentation.” price certain to which respondent agreed to buy and pay
2. The contract entered into between Lim and Virginia is a contract for the subject properties. “The offer and the acceptance
of sale not a contract to sell are concurrent, since the minds of the contracting parties
a. Not only has the title to the subject properties passed to meet in the terms of the agreement.”
the latter upon delivery of the thing sold, but there is also c. Earnest money has been given by respondent. “[I]t shall
no stipulation in the contract that states the ownership is be considered as part of the price and as proof of the
to be reserved in or “retained by the vendor until full perfection of the contract. It constitutes an advance
payment of the price.” payment to “be deducted from the total price.
3. Lim did not fail to faithfully comply wit her obligations under the d. Article 1477 of the same Code also states that “[t]he
contract to sell thereby warranting the cancellation thereof   ownership of the thing sold shall be transferred to the
a. Nothing in the contract “prevents the obligation of the vendee upon actual or constructive delivery thereof.”
vendor to convey title from becoming effective” or gives i. In the present case, there is actual delivery as
“the vendor the right to unilaterally resolve the contract manifested by acts simultaneous with and
the moment the buyer fails to pay within a fixed period.” subsequent to the contract of sale when
Petitioners themselves have failed to deliver their respondent not only took possession of the subject
individual certificates of title, for which reason it is properties but also allowed their use as parking
obvious that Lim cannot be expected to pay the stipulated terminal for jeepneys and buses. Moreover, the
taxes, fees, and expenses. execution itself of the contract of sale is
4. Escueta did not act in good faith in entering into the contract of constructive delivery.
sale with Rubio
6. Rubio could no longer sell the subject properties to Escueta, after

having sold them to Lim.
a. “In a contract of sale, the vendor loses ownership over the
property and cannot recover it until and unless the
contract is resolved or rescinded x x x.”
b. The records do not show that Ignacio Rubio asked for a
rescission of the contract. What he adduced was a belated
revocation of the special power of attorney he executed in
favor of Patricia Llamas.
c. “In the sale of immovable property, even though it may
have been stipulated that upon failure to pay the price at
the time agreed upon the rescission of the contract shall of
right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for
rescission of the contract has been made upon him either
judicially or by a notarial act.”
PAHUD v. COURT OF APPEALS (Mina, A2021) behalf and the three co-heirs are now estopped from impugning the
Aug. 25, 2009 | Nachura, J. | With respect to immovable properties - validity of the sale from assailing the authority of Eufemia to enter into
estoppel such transaction.
PETITIONER: PURITA PAHUD, SOLEDAD PAHUD, and IAN LEE
CASTILLA DOCTRINE: Article 1878, a special power of attorney is necessary for an
RESPONDENTS: COURT OF APPEALS, SPOUSES ISAGANI agent to enter into a contract by which the ownership of an immovable
BELARMINO and LETICIA OCAMPO ,EUFEMIA SAN AGUSTIN- property is transmitted or acquired. The express mandate required by
MAGSINO, ZENAIDA SAN AGUSTIN-McCRAE, MILAGROS SAN law to enable an appointee of an agency in general terms to sell must be
AGUSTIN-FORTMAN, MINERVA SAN AGUSTIN-ATKINSON, one that expressly mentions a sale. A power of attorney must so express
FERDINAND SAN AGUSTIN, RAUL SAN AGUSTIN, ISABELITA SAN the powers of the agent in clear and unmistakable language. Absence of a
AGUSTIN-LUSTENBERGER and VIRGILIO SAN AGUSTIN written authority to sell a piece of land is, ipso jure, void, precisely to
protect the interest of an unsuspecting owner from being prejudiced by
SUMMARY: the unwarranted act of another. HOWEVER, Through estoppel an
Spouses Pedro San Agustin and Agatona Genil acquired a 246 m 2 land in admission or representation is rendered conclusive upon the person
Brgy. Anos, Los Baños, Laguna. Both died intestate, survived by their making it, and cannot be denied or disproved as against the person
eight (8) children: respondents Eufemia, Raul, Ferdinand, Zenaida, relying thereon.
Milagros, Minerva, Isabelita and Virgilio. Eufemia, Ferdinand and Raul
sold the property to the petitioners, the Pahuds for P525,000.00. Eufemia FACTS:
also signed the deed on behalf of her four (4) other co-heirs, namely: 1. Spouses Pedro San Agustin and Agatona Genil were able to
Isabelita on the basis of a special power of attorney executed on acquire a 246-square meter parcel of land situated in Barangay
September 28, 1991,and also for Milagros, Minerva, and Zenaida but Anos, Los Baños, Laguna
without their apparent written authority. The deed of sale was also not 2. Genil died in 1990 and San Agustin died a year after. Both died
notarized. Pahuds paid the balance of the consideration. Virgilio, intestate, survived by their eight (8) children — the respondents
however, refused to sign in the extra judicial partition. Virgilio’s co-heirs (refer to the summary box).
filed a complaint for judicial partition. In the course of the proceedings, a 3. In 1998, Eufemia, Raul, and Ferdinand executed a Deed of
Compromise Agreement was signed with seven (7) of the co-heirs Absolute Share of Undivided Shares in favor of the Pahuds they
agreeing to sell their undivided shares to Virgilio for P700,000. Eufemia inherited for Php 525,000.
acknowledged having received P700,000.00 from Virgilio. Virgilio then 4. Eufemia also signed the deed on behalf of her four (4) other co-
sold the entire property to spouses (Belarminos) sometime in 1994. The heirs, namely: Isabelita on the basis of a special power of attorney
Belarminos immediately constructed a building on the subject property. executed onSeptember 28, 1991 and also for Milagros, Minerva,
The Pahuds immediately confronted Eufemia who confirmed to them that and Zenaida but without their apparent written authority
Virgilio had sold the property to the Belarminos. Aggrieved, the Pahuds 5. The deed of sale was also not notarized.
filed a complaint in intervention in the pending case for judicial partition. 6. Pahuds paid P35,792.31 to the Los Baños Rural Bank where the
After trial, the RTC upheld the validity of the sale to Pahuds. CA subject property was mortgaged and so bank issued a release of
reversed it and ruled in favor of the heirs. The issue before SC is WON mortgage and turned over the owner's copy of the OCT to them.
the sale of the property by Eufemia to the Pahuds are valid? SC held that 7. Over the following months, the Pahuds made more payments to
YES, the transaction to be valid and enforceable. The initial valid sale Eufemia and her siblings totaling to Php 350,000. The remaining
consists only of 4/8 of the land. However, by their continued silence, Php 87,500 shall be used to defray taxes and title transfer
Zenaida, Milagros and Minerva have caused the Pahuds to believe that expenses.
they have indeed clothed Eufemia with the authority to transact on their
8. When Eufemia and her co-heirs drafted an extra-judicial with respect to the 4/8 portion of the subject property. The sale
settlement of estate to facilitate the transfer of the title to the with respect to the 3/8 portion, representing the shares of
Pahuds, only Virgilio refused to sign it. Zenaida, Milagros, and Minerva, is void because Eufemia could
9. Virgilio’s co-heirs filed a judicial partition of the subject property not dispose of the interest of her co-heirs in the said lot absent
in RTC Calamba. In the course of the proceedings, a Compromise any written authority from the latter, as explicitly required by
Agreement was signed by the seven (7) co-heirs, agreeing to sell law.
the land to Virgilio for Php 700,000. 5. The Pahuds argue that the sale with respect to the 3/8 portion of
10. The agreement not approved by the trial court because Atty. the land should have been deemed ratified when the three co-
Dimetrio Hilbero, lawyer for Eufemia and her six (6) co-heirs, heirs, namely: Milagros, Minerva, and Zenaida, executed their
refused to sign the agreement because he knew of the previous respective special power of attorneys authorizing Eufemia to
sale made to the Pahuds. represent them in the sale of their shares in the subject property
11. Eufemia acknowledged having received P700,000.00 from Virgilio. 6. While the sale with respect to the 3/8 portion is void by express
Virgilio then sold the entire property to spouses Isagani provision of law and not susceptible to ratification, the Court
Belarmino and Leticia Ocampo (Belarminos) -- who immediately uphold its validity on the basis of the common law principle of
constructed a building in the property. estoppel.
12. Alarmed by the construction, the Pahuds immediately confronted 7. Article 1431 states: Through estoppel an admission or
Eufemia who confirmed to them that Virgilio had sold the representation is rendered conclusive upon the person making it,
property to the Belarminos. and cannot be denied or disproved as against the person relying
13. Aggrieved, the Pahuds filed a case of judicial partition in the thereon.
RTC who upheld the sale to petitioners valid. 8. Reviewing the facts, at the time of the sale to the Pahuds,
14. CA sided the respondents who assailed that the sale should have Eufemia was not armed with the requisite special power of
been declared void and inexistent for want of a written authority attorney to dispose of the 3/8 portion of the property. Initially, the
from her co-heirs. sale was denied by Eufemia and the co-owners but this previous
denial was superseded by their subsequent submission.
ISSUES: 9. Moreover, in no instance did the three (3) heirs concerned assail
1. WON the sale of the property by Eufemia to the Pahuds are the validity of the transaction made by Eufemia to the Pahuds on
valid? the basis of want of written authority to sell. They instead
remained silent and left the task of raising the validity of the sale
RATIO: as an issue to their co-heir, Virgilio, who is not privy to the said
1. SC finds the transaction to be valid and enforceable. transaction. They cannot be allowed to rely on Eufemia, their
2. Under Article 1878, a special power of attorney is necessary for attorney-in-fact, to impugn the validity of the fifirst transaction
an agent to enter into a contract by which the ownership of an because to allow them to do so would be tantamount to giving
immovable property is transmitted or acquired, either premium to their sister's dishonest and fraudulent deed.
gratuitously or for a valuable consideration Undeniably, therefore, the silence and passivity of the three co-
3. In several cases, we have repeatedly held that the absence of a heirs on the issue bar them from making a contrary claim
written authority to sell a piece of land is,ipso jure, void to protect 10. It is a basic rule in the law of agency that a principal is subject to
the interest of an unsuspecting owner from being prejudiced by liability for loss caused to another by the latter's reliance upon a
the unwarranted act of another. deceitful representation by an agent in the course of his
4. In this case, the sale made by Eufemia, Isabelita and her two employment
brothers to the Pahuds sometime in 1992 should be valid only a. if the representation is authorized;
b. if it is within the implied authority of the agent to make ● The ponencia cites acts or omissions on the part of the three
for the principal; or sisters which came after the fact such as their "admission" and
c. if it is apparently authorized, regardless of whether the "continued silence" which, however, could not retroact to the time
agent was authorized by him or not to make the of the previous sale as to consider petitioners to have accordingly
representation relied on such admission or representation before buying the
11. By their continued silence, Zenaida, Milagros and Minerva have property from Eufemia. The application of the principle of
caused the Pahuds to believe that they have indeed clothed estoppel is proper and timely in heading off shrewd efforts at
Eufemia with the authority to transact on their behalf. renouncing one's previous acts to the prejudice of another who
12. Clearly, the three co-heirs are now estopped from impugning the had dealt honestly and in good faith
validity of the sale from assailing the authority of Eufemia to ● It is thus erroneous to conclude that Zenaida, Milagros and
enter into such transaction. Minerva have caused petitioners to believe that they have clothed
13. Accordingly, the subsequent sale made by the seven co-heirs to Eufemia with the authority to transact on their behalf.
Virgilio was void because they no longer had any interest over the ● The previous sale being violative of an express mandate of law,
subject property which they could alienate at the time of the such cannot be ratified by estoppel. Estoppel cannot give validity
second transaction. to an act that is prohibited by law or one that is against public
14. Virgilio, however, could still alienate his 1/8 undivided share to policy. Neither can the defense of illegality be waived.
the Belarminos.
15. The Belarminos cannot be considered purchasers in good faith as
they were fully aware that the property was registered not in the
name of the immediate transferor, Virgilio, but remained in the
name of Pedro San Agustin and Agatona Genil. They knew that
the property was still subject of partition proceedings before the
trial court, and that the compromise agreement signed by the
heirs was not approved by the RTC following the opposition of the
counsel for Eufemia and her six other co-heirs.
CARPIO MORALES, J. CONCURRING AND DISSENTING:

● Agrees that Articles 1874 and 1878 of the Civil Code clearly
provide that a special power of attorney is necessary for an agent
to "enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a
valuable consideration" and that specifically in cases of sale of a
piece of land or any interest therein through an agent, "the
authority of the latter shall be in writing; otherwise the sale shall
be void"
● Carpio Morales submits that Article 1431 of the Civil Code does
not apply since it speaks of one's prior admission or
representation, without which the other person could not have
relied on it before acting accordingly.
YOSHIZAKI v. JOY TRAINING CENTER (Tin, A2021) should authorize a general and unlimited management.
31 Jul 2013 | Brion, J.| With respect to immovable properties
PETITIONER: SALLY YOSHIZAKI
RESPONDENTS: JOY TRAINING CENTER OF AURORA, INC.
SUMMARY: Sps. Johnson sold to Sps. Yoshizaki real properties (parcel

of land and a building erected on it) owned by Joy Training Center, a
religious educational institution. Sps. Johnson based their authority to
sell on the resolution issued by the board of trustees, which they are part
of. After finding out about the sale, the Acting Chairperson of Joy
Training filed for the cancellation of sales against. Sps. Johnson and
Yoshizaki. Joy Training alleged that Sps. Johnson had no authority to
sell because only a minority of the board authorized the sale. The
requisite authority from the board of directors and the majority vote of
the board of trustees must first be complied with.
The issue is WON there was a contract of agency to sell the real
properties between Joy Training and the spouses Johnson. The Court
held that there was none.
Sally Yoshizaki presents three pieces of evidence which allegedly prove

that Joy Training specially authorized the spouses Johnson to sell the
real properties: TCT No. T-25334, the resolution, and the certification.
The above documents do not convince the Court of the existence of the
contract of agency to sell the real properties.
DOCTRINE: Article 1874 of the Civil Code provides that the contract of FACTS:
agency must be written for the validity of the sale of a piece of land or any 1. Joy Training is a religious educational institution. It owns a
interest therein. Otherwise, the sale shall be void. A related provision, parcel of land including the building erected on it, located in
Article 1878 of the Civil Code, states that special powers of attorney are Baler, Aurora.
necessary to convey real rights over immovable properties. 2. Spouses Johnson are members of the board of trustees of Joy
The special power of attorney mandated by law must be one that Training, who effected in favor of Sps. Yoshizaki the sale of real
expressly mentions a sale or that includes a sale as a necessary properties, a Wrangler jeep, and other personal properties.
ingredient of the authorized act. 3. The Acting Chairperson of the Joy Training filed an action for the
cancellation of the sales against Sps. Johnson and Sps. Yoshizaki.
Article 1877 of the Civil Code clearly states that "[a]n agency couched in 4. Joy Training alleged that the spouses Johnson sold its properties
general terms comprises only acts of administration, even if the principal without the requisite authority from the board of directors. It
should state that he withholds no power or that the agent may execute assailed the validity of a board resolution dated September 1,
such acts as he may consider appropriate, or even though the agency 1998 which purportedly granted the spouses Johnson the
authority to sell its real properties. It averred that only a 5. The special power of attorney mandated by law must be one that
minority of the board, composed of the spouses Johnson and expressly mentions a sale or that includes a sale as a necessary
Alexander Abadayan, authorized the sale through the resolution. ingredient of the authorized act.
It highlighted that the Articles of Incorporation provides that the 6. The purpose of the law in requiring a special power of attorney in
board of trustees consists of seven members. the disposition of immovable property is to protect the interest of
5. RTC ruled in favor of Sally Yoshizaki. But CA reversed, with an unsuspecting owner from being prejudiced by the unwarranted
respect to the sale of real properties. CA ruled that the resolution act of another and to caution the buyer to assure himself of the
upon which Sps. Johnson based their authority to sell was void specific authorization of the putative agent.
because it was not approved by the majority. Hence, this petition. 7. In the present case, Sally presents three pieces of evidence which
6. Sally Yoshizaki argues that: allegedly prove that Joy Training specially authorized the spouses
a. the Sps. Johnson were authorized to sell the parcel of land Johnson to sell the real properties:
and that she was a buyer in good faith because she merely TCT No. T-25334,
relied on TCT No. T-25334. The title states that the the resolution,
spouses Johnson are Joy Training's representatives. and the certification.
b. it is a basic principle that a party dealing with a 8. The above documents do not convince the Court of the existence of
registered land need not go beyond the certificate of title the contract of agency to sell the real properties.
to determine the condition of the property. 9. The certification is a mere general power of attorney which
comprises all of Joy Training's business.
ISSUES: 10. Article 1877 of the Civil Code clearly states that "[a]n agency
1. WON there was a contract of agency to sell the real properties couched in general terms comprises only acts of administration,
between Joy Training and the spouses Johnson. NONE even if the principal should state that he withholds no power or
that the agent may execute such acts as he may consider
RATIO: appropriate, or even though the agency should authorize a
general and unlimited management.
1. There is no contract of agency between Joy Training and the 11. What is the status of the contract? The contract of sale is
spouses Johnson to sell the parcel of land with its improvements. unenforceable Necessarily, the absence of a contract of agency
2. Article 1868 of the Civil Code defines a contract of agency as a renders the contract of sale unenforceable; Joy Training
contract whereby a person "binds himself to render some service effectively did not enter into a valid contract of sale with the
or to do something in representation or on behalf of another, with spouses Yoshizaki.
the consent or authority of the latter."
3. As a general rule, a contract of agency may be oral. However, it
must be written when the law requires a specific form.
4. Specifically, Article 1874 of the Civil Code provides that the
contract of agency must be written for the validity of the sale of a
piece of land or any interest therein. Otherwise, the sale shall be
void. A related provision, Article 1878 of the Civil Code, states
that special powers of attorney are necessary to convey real rights
over immovable properties.
PINEDA v. CA (Norhen, A2021)

September 27, 1993 | Davide Jr., J | Special Powers of Attorney- ANY DOCTRINE: Although [t]here is nothing in the law which
OTHER ACT OF STRICT DOMINION (INSURANCE CLAIM) mandates a specific or special power of attorney to be executed to
PETITIONER: LUZ PINEDA, MARILOU MONTENEGRO, VIRGINIA collect insurance proceeds, the Court ruled that the intent in
ALARCON, DINA LORENA AYO, CELIA CALUMBAG and LUCIA issuing such SPA should be construed. Here, excludes any intent
LONTOK (Hereinafter Beneficiaries) to grant a general power of attorney or to constitute a universal
RESPONDENTS: HON. COURT OF APPEALS and THE INSULAR agency. Thus, an Insurance claim may be considered as an act of
LIFE ASSURANCE COMPANY, LIMITED (Hereinafter Insular Life) strict dominion.
SUMMARY: Prime Marine procured an insurance group policy from FACTS:

insular life to provide its sea-based crews life insurance. However, one of 1. Crewing outfit Prime Marine procured an insurance group policy
Prime Marine’s vessel, M/V Nemos (Yung isda sa movie hehe) sunk, from Insular Life to provide its sea-based employees life
claiming the lives of six employees of Prime Marine. The beneficiaries of insurance.
the six deceased employees now claim death benefits left by their loved 2. During the effectivity of the insurance, six covered employees of
ones. Thus, they sought the help of Prime Marine’s president, Prime Marine perished at sea when their Greek Cargo Vessel,
Capt. Nuval (Yung street sa UST? P.Nuval hehe) to recover M/V Nemos (As in yung movie, Finding Nemo hehe) sunk in
benefits from the POEA. The beneficiaries were asked by Nuval Morocco. The victims of such tragedy were survived by their
to execute SPAs authorizing Nuval to among others 'follow up, beneficiaries under the policy.
ask, demand, collect and receive' for their benefit indemnities of 3. The beneficiaries sought to claim death benefits due them, thus,
sums of money due them relative to the sinking of M/V Nemos they approached the President of Prime Marine, Captain Nuval
from POEA. The beneficiaries were able to claim their benefits from (Yung street sa UST, P. Nuval? Hehe) to recover Overseas
POEA but little did they know that Prime Marine sneakingly Workers Welfare Administration (OWWA) benefits from
claimed through Capt. Nuval the benefits as well from Insular the POEA and to work for the increase of their
Life (OMG Sketchy si Capt. Nuval!). Insular Life issued six checks PANDIMAN and other benefits arising from the deaths of
payable to order of the beneficiaries (Success yung sketchiness ni Nuval!). their husbands/sons.
Upon learning this, the beneficiaries now sought to recover these benefits 4. The spouses, were made to execute special powers of attorney
from Insular Life. Insular Life argues that their liability to beneficiaries authorizing Nuval to among others 'follow up, ask, demand,
were already extinguished when they issued the six checks (Mike collect and receive' for their benefit indemnities of sums of money
Enriquez: NAKOW PO NALOKO NA). due them relative to the sinking of M/V Nemos (Yung movie
hehe).
The issue now before the court is WON THE NUVAL HAD THE 5. By virtue of these written powers of attorney, beneficiaries were
AUTHORITY TO COLLECT INSURANCE BENEFITS FROM able to receive their respective death benefits.
INSULAR. 6. However, unknown the beneficiaries, Prime Marine filed with
Insular Life formal claims of the life insurance of its
The Court said No. The Court ruled that the execution by the principals deceased workers through Capt. Nuval. (OMG Capt. Nuval
of special powers of attorney, which clearly appeared to be in prepared is sketchyyy)
forms and only had to be filled up with their names, residences, dates of 7. Insular Life drew from its accounts six (6) checks, four for
execution, dates of acknowledgement and others, excludes any intent to P200,000.00 each, one for P50,000.00 and another for
grant a general power of attorney or to constitute a universal agency. P40,000.00, payable to the order of the beneficiaries.
Being special powers of attorney, they must be strictly construed.
8. These checks were released to the treasurer of PMSI upon or to constitute a universal agency. Being special powers
instructions of Capt. Nuval over the phone to Mr. Mariano of attorney, they must be strictly construed.
Urbano, Assistant Department Manager for Group 4. Instrument which grants agent power “To follow-up, ask,
Administration Department of respondent-appellant. Capt. demand, collect and receipt for my benefit indemnities or sum due
Nuval, upon receipt of these checks from the treasurer, who me relative to the sinking of M.V. NEMOS in the vicinity of El
happened to be his son-in-law, endorsed and deposited them in Jadida, Casablanca, Morocco on the evening of February 17,
his account with the Commercial Bank of Manila, now Boston 1986,” are SPAs, and exclude any intent to grant a GPA or to
Bank. constitute a universal agency. Being SPAs, they must be strictly
9. After beneficiaries learned that they were entitled as well to life construed, and cannot be read to give power to the attorney-in-
insurance benefits under a group policy with Insular Life, they fact “to obtain, receive, receipt from” the insurance company the
sought to recover these benefits from Insular Life but the latter proceeds arising from the death of the seaman-insured, especially
denied their claim on the ground that the liability to the when the commercial practice for group insurance of this nature
beneficiaries was already extinguished upon delivery to and is that it is the employer-policyholder who took out the policy who
receipt by PMSI of the six (6) checks issued in their names. is empowered to collect the proceeds on behalf of the covered
(MIKE ENRIQUEZ: NALOKO NA) insured or their beneficiaries Insular Life, however, likewise
10. Pineda and company filed an administrative complaint against recognized Capt. Nuval as the attorney-in-fact of the petitioners.
Insular Life. Unfortunately, through its official, Mr. Urbano, Insular Life acted
imprudently and negligently in the premises by relying without
ISSUES: question on the special power of attorney.
1. WON THE NUVAL HAD THE AUTHORITY TO COLLECT 5. The established principles in the civil law of Europe as
INSURANCE BENEFITS FROM INSULAR - NO well as the common law of America that third persons deal
with agents at their peril and are bound to inquire as to
RATIO: the extent of the power of the agent with whom they
1. The Court agrees with the Insurance Commission that the special contract.
powers of attorney "do not contain in unequivocal and clear terms
authority to Capt. Nuval to obtain, receive, receipt from
respondent company insurance proceeds arising from the death of
the seaman insured.
2. The Court deviated from CA’s ruling that "[t]here is nothing in
the law which mandates a specific or special power of attorney to
be executed to collect insurance proceeds. Such authority is not
included in the enumeration of art. 1878 of the New Civil Code.
Neither do we perceive collection of insurance claims as an act of
strict dominion as to require a special power of attorney.”
3. The Court ruled that the execution by the principals of special
powers of attorney, which clearly appeared to be in prepared
forms and only had to be filled up with their names, residences,
dates of execution, dates of acknowledgement and others,
excludes any intent to grant a general power of attorney

II. Formalities of Agency

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II. Formalities of Agency

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LAW ON AGENCY, CHAPTER II ATP&JV DIGESTS 1

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

6. A contract of agency to sell on commission basis does not

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

RULING: WHEREFORE, no error having been committed by the Court

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

not affect third persons.

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

14. In light of the foregoing, this Court is constrained to release CBIC

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

The Principle of Agency by estoppel or the Doctrine of Apparent

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

3. The payment of claims is not an act of administration. The

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Doing so therefore violated the express terms of the SPAs

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Orense’s sworn statement during the criminal case remedies all

Ruling: Petition denied. CFI decision affirmed.

Based on the outline of Atty. CLV II. Formalities of Agency

CITY-LITE REALTY CORP. v. COURT OF APPEALS (Pau, A2021)

Based on the outline of Atty. CLV II. Formalities of Agency

in writing to the terms and conditions of the sale as contained in

Based on the outline of Atty. CLV II. Formalities of Agency

bring parties together for a possible transaction.

Based on the outline of Atty. CLV II. Formalities of Agency

ESCUETA v. LIM (Lorena, C2020)

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

6. Rubio could no longer sell the subject properties to Escueta, after

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

CARPIO MORALES, J. CONCURRING AND DISSENTING:

Based on the outline of Atty. CLV II. Formalities of Agency

SUMMARY: Sps. Johnson sold to Sps. Yoshizaki real properties (parcel

Sally Yoshizaki presents three pieces of evidence which allegedly prove

Based on the outline of Atty. CLV II. Formalities of Agency

Based on the outline of Atty. CLV II. Formalities of Agency

PINEDA v. CA (Norhen, A2021)

SUMMARY: Prime Marine procured an insurance group policy from FACTS:

Based on the outline of Atty. CLV II. Formalities of Agency

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