agency partnership reviewer

7/29/2019 Agency Partnership Reviewer

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AGENCY2009 (PASCUAL)vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain

Afriends mark.eva.jessa.anj.bambi.rex.tope.

I. Nature, Form and Kinds

A. ARTICLE 1868

Art. 1868. By the contract of agency a person bindshimself to render some service or to do somethingin representation or on behalf of another, with theconsent or authority of the latter.

1. Definition2. Nature

Orient Air Services & Hotel Rep. v CA (GEN)May 29, 1991Padilla, J.

FACTS: American Airlines Inc. (AAI) and Orient AirServices and Hotel Representatives (Orient Air)

entered into a General Sales Agency Agreementauthorizing the latter to act as its exclusive generalsales agent within the Philippines for the sale of airpassenger transportation.

Due to the alleged failure of Orient Air to promptlyremit the net proceeds of sales for 6 months, AAIundertook the collection of the proceeds of ticketssold originally by Orient Air and terminated theagency agreement. AAI then instituted suit againstOrient Air with CFI of Manila for Accounting withPreliminary Attachment or Garnishment,Mandatory Injunction and Restraining Order.

The CFI of Manila ruled in favor of Orient Air anddismissed the complaint. It then ordered AAI toreinstated Orient Air as its general sales agent forpassenger transportation in the Philippines. TheIAC affirmed with modifications the findings of CFIof Manila.

ISSUE: WON the lower court may compel AAI toextend its personality to Orient Air?

HELD: NO. It would be violative of the principlesand essence of agency, defined by law as acontract whereby a person binds himself toanother to render some service or to do somethingin representation or on behalf of another WITH THE

CONSENT OR AUTHORITY OF THE LATTER. In anagent-principal relationship, the personality of theprincipal is extended through the facility of theagent. In so doing, the agent, by legal fiction,becomes the principal, authorized to perform allacts which the latter would have him do. Such arelationship can only be effected with the consentof the principal, which must not, in any way, becompelled by law or by any court.

3. Basis

Rallos v. Felix Go Chan (MAI)January 31, 1978Muoz Palma, J.

FACTS: Concepcion and Gerundia Rallos weresisters and registered co-owners of a parcel of landknown as Lot No. 5983. In 1954, they executed aspecial power of attorney in favor of their brother,Simeon Rallos, authorizing him to sell for and intheir behalf the aforementioned parcel of land. OnMarch 1955, Concepcion Rallos died. OnSeptember 1955, Simeon Rallos sold the undividedshares of his sisters in lot 5983 to Felix Go Chanand Sons Realty Corporation. The deed of sale wasregistered and the previous TCT was cancelled.

On May 1956, Ramos Rallos, as administrator of

the Intestate Estate of Concepcion Rallos, filed acomplaint with the CFI of Cebu, praying (1) that thesale of the undivided share of the deceasedConcepcion Rallos be declared unenforceable, andsaid share be reconveyed to her estate; (2) thatthe TCT issued in the name of Felix Go Chan andSons Realty Corporation be cancelled; and (3) thatthe plaintiff be indemnified by way of attorneysfees and payment of costs of suit.

The trial court rendered judgment declaring thedeed of sale null and void, insofar as the one-halfpro-indiviso share of Concepcion Rallos in theproperty in question, and sentencing JuanBorromeo, the administrator of the estate of

Simeon Rallos, to pay Felix Go Chan and SonsRealty Corporation the sum representing the priceof one-half of the lot. The appellate court reversedthe decision and sustained the sale.

ISSUE: Whether or not the sale of the agent of theprincipals property after the latters death is valid

HELD: NO. The general rule in Article 1919 of theNCC is that death is one of the causes for theextinguishment of agency. There being anintegration of the personality of the principal intothat of the agent, it is not possible for therepresentation to continue once the death of eitheris established. There are certain exceptions,however, Article 1931 being one of them. Underthis provision, an act done by the agent after thedeath of the principal is valid and effective if twoconditions concur: (1) the agent acted withoutknowledge of the death of the principal; and (2)that the third person who contracted with theagent acted in good faith. But because it wasestablished that Simeon Rallos had knowledge ofthe death of his principal when he made the sale,Article 1931 will not apply. The general rule shallapply then that any act of an agent after the deathof his principal is void ab initio. Simeon Rallos act

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of selling the share of Concepcion after her deathis therefore null and void.

AGENCY:The relationship of agency is whereby one party,called the principal (mandante), authorizesanother, called the agent (mandatario), to act forand in his behalf in transactions with third persons.The essential elements of agency are: (1) there isconsent, express or implied of the parties toestablish the relationship; (2) the object is theexecution of a juridical act in relation to a thirdperson; (3) the agents acts as a representative andnot for himself, and (4) the agent acts within thescope of his authority.Agency is basically personal representative, andderivative in nature. The authority of the agent toact emanates from the powers granted to him byhis principal; his act is the act of the principal ifdone within the scope of the authority. Qui facit per

alium facit se. "He who acts through another actshimself".

Victoria Milling v. CA (ROG)Bordador v. Luz (TOFF)

Caram v. Laureta (REG)1981

FACTS: In 1945, Mata conveyed a parcel of land infavor of Laureta (first vendee). The deed ofabsolute sale was unregistered because it was notacknowledged before a notary public or anyauthorized officer. However, Mata deliveredpossession to Lauereta, as well as an OwnersDuplicate Original (wth!) certificate of title.

In 1947, the same land was sold by Mata to Caramthrough his representatives Irespe and Aportadera.The deed of sale was acknowledged by Attorney.Aportadera. Aportadera and Arcilla filed with theCFI of Davao a petition for the issuance of a newOwners Duplicate of Original Certificate alleging asground the loss of said title. It was granted. Thesecond sale was later registered in the Registry ofDeeds.

Petitioner contends that Irespe was merely abroker or intermediary with the task to make the

payment to Mata; and that Aportadera merelyacted as a notary public.

ISSUES:1) WON Irespe and Aportadera served as agents

of Caram. (YES)2) WON the two were in bad faith. (YES)3) WON Caram, as principal, is deemed also in

bad faith. (YES)

HELD:

1. The facts of record show that Mata, the vendor,and Caram, the second vendee had never met.

During the trial, Mata testified that he knowsAttorney. Aportadera but did not know Caram.Thus, the sale of the property could have onlybeen through Caram's representatives, Irespeand Aportadera.

2. When Leaning Mansaca narrated to Attorney.Aportadera the circumstances under which hisproperty had been sold to Laureta, he musthave included in the narration the sale of theland of Mata, for the two properties had beensold on the same occassion and under thesame circumstances. Irespe, who was thewitness in most of the cases filed by Attorney.Aportadera in his capacity as Provincial Fiscalof Davao against Laureta, must have known ofthe purchases of lands made by Laureta.

Even if Irespe and Aportadera did not haveactual knowledge of the first sale, still their

actions have not satisfied the requirement ofgood faith. Bad faith is not based solely on thefact that a vendee had knowledge of the defector lack of title of his vendor. Irespe andAportadera had knowledge of circumstanceswhich ought to have put them an inquiry. Bothof them knew that Mata's certificate of titletogether with other papers pertaining to theland was taken by soldiers under the commandof Col. Laureta. Also, at the time of the secondsale, Laureta was already in possession of theland. Irespe and Aportadera should haveinvestigated the nature of Laureta'spossession. Caveat emptor.

3. Applying the principle of agency, Caram asprincipal, should also be deemed to have actedin bad faith.

Effect: as if no there was no registration at all

Air France v CA, Jose Gana (ABBY)Dec. 29, 1983Melencio Herrera

FACTS: The Ganas purchased from Air Francethrough Imperial Travels, a duly authorized agent,9 open dated tickets for aManila/Osaka/Tokyo/Manila. The expiry date was

May 8, 1970. Jose Gana sought the assistance ofTeresita Manucdoc, a secretary of the companywhere Jose Gana worked, to procure the extensionof the validity of their tickets. Manucdoc talkedwith Lee Ella, Manager of the Philippine TravelBureau. She was told that they would have to payfare differentials and that the extension isimpossible. The GANAS scheduled their departurefor May 7 and on May 6, Teresita again asked forLee Ellas help in the revalidation. She was toldthat it would only be valid until May 8 and nolonger valid for the rest of the trip after that.However, Ella attached revalidation stickers on the

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tickets (revalidated by the Philippine TravelBureau), without informing Air France. The Ganasdeparted and but the airlines refused to honortheir tickets at the start of the Osaka/Tokyo leg.The GANAS had to purchase new tickets atreadjusted rates and arrived at Manila on differentdates. TC-Air France. CA- Ganas. SC-Air France

ISSUES:1. WON Ella acted beyond his powers as travel

agent? YES2. WON notice to Manucdoc is notice to the

Ganas? YES

HELD: The GANAS cannot defend by contendinglack of knowledge of those rules since the evidencebears out that Teresita, who handled travelarrangements for the GANAS, was duly informed bytravel agent Ella of the advice of Reno, the OfficeManager of Air France, that the tickets in question

could not be extended beyond the period of theirvalidity without paying the fare differentials andadditional travel taxes brought about by theincreased fare rate and travel taxes.To all legal intents and purposes, Teresita was theagent of the Ganas and notice to her of therejection of the request for extension of the validityof the tickets was notice to Gana as her principal.

The circumstances that AIR FRANCE personnel atthe ticket counter in the airport allowed the GANASto leave is not tantamount to an implied ratificationof travel agent Ella's irregular actuations. Thevalidating stickers that Ella affixed on his ownmerely reflect the status of reservations on thespecified flight and could not legally serve toextend the validity of a ticket or revive an expiredone.The conclusion is inevitable that the GANASbrought upon themselves the predicament theywere in for having insisted on using tickets thatwere due to expire in an effort, perhaps, to beatthe deadline and in the thought that bycommencing the trip the day before the expirydate, they could complete the trip even thereafter.It should be recalled that AIR FRANCE was evenunaware of the validating SAS and JAL. stickersthat Ella had affixed spuriously. Consequently,Japan Air Lines and AIR FRANCE merely acted

within their contractual rights when theydishonored the tickets on the remaining segmentsof the trip and when AIR FRANCE demandedpayment of the adjusted fare rates and travel taxesfor the Tokyo/Manila flight.

4. Purpose

Orient Air Services v CA, supra

5. Essential Elements of Contract of Agency

Rallos v. Felix Chan, supra

6. Characteristics of an Agency Contract

Smith vs. Lopez (EARLA)September 30, 1905Torres, J.

FACTS: Nicasio Lopez, as administrator of thehouse owned by his two daughters, contracted theservices of Philippine Gas Light Company for theinstallation of a water system, urinals, closets,shower baths, and drain pipes in the house at 142Calle Dulumbayan, Santa Cruz Manila. This wasdone pursuant to the order of the Board of Health.

The Company, with Smith and Reyes asproprietors, incurred a total of P4020 Mexicancurrency; P750 of which was already paid, leavinga balance of P3270.Failing to pay, Smith and Reyes instituted an actionto recover the P3270 plus interest, from the sisters,Jacinta and Ignacia Lopez de Pineda. As a defense,the sisters claimed, among others, that they arenot liable for the sum demanded since the worksdone by Smith were done without the authority orconsent of the sisters. The CFI ruled in favor ofSmith and ordered the Lopez sisters to payP2717.40 local currency.

ISSUE: WON Nicasio Lopez is the agent of his two

daughters? Yes.

HELD: Nicasio is the administrator of the propertyof the defendant. Pursuant to the order of theBoard of Health, he contracted the services of thePhil. Gas Light Company for the installation ofcertain fixtures. Accordingly, he did all thesevoluntarily. Thus, although there was no expressconsent given by the sisters, through a valid powerof attorney, there was an IMPLIED power, becausethe sisters did not object to the work being done onthe house, which benefited them in the end. Therewas a quasi-contract which created certainreciprocal obligations between them and the

plaintiffs.

Moreover, it is presumed from their failure toobject to the work being done that they wereapproving it, thereby ratifying the act of theirfather, as though he acted under an express powerfrom them.

It cannot also be denied that they have benefitedfrom the work done by Smith, et al: The house wasnot improved by said work. Likewise, If it were notundertaken by the plaintiffs, the Board of Healthwould have undertaken the same work at the

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expense of the sisters. Thus, it is only just that theybe ordered to pay the cost of the work and thevalue of the materials used.

Thomas v. Pineda (JANCES)

Severino v. Severino (JILL)January 16, 1923Ostrand, J.

FACTS; Melecio Severino owned a land, by whichbrother Guillermo served as administrator. Uponthe death of Melecio, Guillermo continuedoccupation of the land, and in a cadastralproceeding successfully had the land Titled in hisfavor, considering that he has possessed it for 30years. This action now is brought by the naturaldaughter and sole heir of Melecio, FabiolaSeverino, to compel defendant Guillermo to conveythe lands in her favor. Meanwhile, administratrix of

Melecios estate, Felicitas Villanueva, alsointervened so the land will be conveyed in theestates name.

Defendant argues that the land was owned incommon by their father and did not solely belongto Melecio and that his Title is indefeasible underthe Land Registration Act.

ISSUE: WON defendant Guillermo has rights overthe property? NO.

HELD: The relation of an agent to a principal isfiduciary, and the agent is estopped from acquiringor asserting Title adverse to the principal. Hisposition is analogous to a trustee, and thatwhatever he does inures to the benefit of thecestui que vie.

In Gilbert v. Hewetson, a trustee or agent is utterlydisabled from acquiring for his own any propertycommitted in his custody. This is entirelyindependent of the fact whether any fraud hasintervened. No fraud in fact need be show. The rulestands on moral obligation to refrain from placingones self in conflicts of self-interest and integrity.It seeks to remove the temptation that might ariseout of ones relation to serve anothers interest forhis own benefit.

Here, while the legal title of Guillermo is notquestioned, it must be deemed as to inure to thebenefit of the estate of Melecio Severino, as thecestui que vie with superior equitable right.

It must be noted that the property shall inure tothe ESTATES benefit and not to the daughter whobrought the action since it is the estate who willapportion all the claims. Moreover, the legitimacyof Fabiola as a natural child is also beingquestioned.

Dumaguin v. Reynolds (ALAIN)

Palma v Cristobal (GEN)Dec. 11, 1946Perfecto, J.

FACTS: In 1909, after registration proceedings, OCTwas issued in the names of petitioner and his wifeLuisa. After the latters death, a new certificate oftitle was issued only in the name of petitioner.

The parcel of land is a community property held bypetitioner in trust for the real owners (respondent).The registration was made in accordance with anunderstanding between the co-owners of theconfidence they reposed upon the petitioner andhis wife. It was only after the death of Luisa andafter petitioners subsequent marriage that troubleon religious matters arose between petitioner andrespondent.

Petitioner then sought to eject respondent from theland. This was dismissed and another complaintwas filed, wherein the petitioner prays that he bedeclared the owner of the land.

ISSUE: WON petitioner may be declared the ownerof the land?

HELD: NO. The registration of the property in thename of the trustees in possession thereof, mustbe deemed to have been effected for the benefit ofthe cestui que trust. Whether or not there is badfaith or fraud in obtaining a decree with respect toa registered property, the same does not belong tothe person in whose favor it was issued, and thereal owners would be entitled to recover theownership of the property so long as the same hasnot been transferred to a third person who hasacquired it in good faith and for valuableconsideration. Thus, the petitioner, being a trustee,does not acquire the land registered in his name.

Araneta v. del Paterno (MAI)August 22, 1952Tuason, J.

FACTS: Paz Tuason de Paterno is the registeredowner of a parcel of land, which was subdivided

into lots. Most of these lots were occupied bylessees who had contracts of lease that wouldexpire at a certain time, and carried a stipulationgiving the lessees a right of first refusal in case thelots were to be sold.In 1940 and 1941, Paz Tuason obtained from JoseVidal several loans, and constituted a mortgage onthe property to secure the debt. In 1943, sheobtained additional loans upon the same security.She decided to sell the whole property to GregorioAraneta, Inc. The day after the agreement wassigned, Paz Tuason offered to Vidal a check in full

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settlement of her mortgage obligation but Vidalrefused to accept it or cancel the mortgage.Gregorio Araneta instituted the case to compel PazTuason to deliver to the former a clear title of thelots.

One of the objections made against the sale is thatJose Araneta, president of Gregorio Araneta Inc.,was also the agent of Paz Tuason.

ISSUE: Whether or not Gregorio Araneta was theagent of Paz Tuason

HELD: NO. Article 1459 of the Spanish Civil Codeprovides: The following persons cannot take bypurchase, even at a public or judicial auction,either in person or through mediation of another:2. An agent, any property of which themanagement or sale may have been entrusted tohim;

However, in the opinion of Manresa, an agent (inthe sense of Article 1459) is one who acceptsanothers representation to perform in his namecertain acts of more or less transcendency. Theban of paragraph 2 of Article 1459 connotes theidea of trust and confidence. To come under thisprohibition, the agent must be in a fiduciaryrelation with his principal.

Tested by this standard, Jose Araneta was not anagent within the meaning of Article 1459. He wasnothing more than a go-between or middlemanbetween Paz Tuason and Gregorio Araneta, Inc. tobring them together to make the contractthemselves. Jose Araneta was not authorized tomake a binding contract for Paz Tuason. He hadno power or discretion, which he could abuse to hisadvantage and to the owners prejudice.

Allied Free Workers v. Compania Maritima(ROG)

Far Eastern Export v. Lim Tech Suan (TOFF)1955Montemayor, J.

FACTS: FEEIC agent Delizalde went to the store ofSuan to sell textile which offer was thereafter

agreed upon. Delizalde later on returned withbuyers order and a document signifying paymentbe done by Confirmed Irrevocable Letter ofCredit among others. In accordance with this,Suan established a letter of credit in favor ofFrenkel International Corporation. When the textilearrived at Manila, Suan complained to FEEIC of theinferior quality of the textile and had themexamined, where a report was submitted by theexamining body. Upon instructions by FEEIC, Suandeposited goods with the United Warehouse Corp.but subsequently withdrew 15 cases of textile tooffer them for sale. The net direct loss was

P11,476.66. A complaint for damages representingdifference in price between textile ordered andreceived, unrealized profits and cost of suit wasinstituted against FEEIC. FEEIC set up that it onlyacted as broker in the transaction and took nofurther action after placement of order as defense.It averred that the cargo was directly taken bySuan from Frenkel. The trial court acquitted FEEICbut the Court of Appeals reversed decision basedon its ruling on Velasco v. Universal Trading Co.

ISSUE: WON FEEIC could act as agent of both Suanand Frenkel.

HELD: NO. An agent could not serve two masters atthe same time. The same agent could not very wellact as agent for local buyers because the interestof its foreign principal and those of the buyer wouldbe a direct conflict.

FEEIC was clearly an agent of Frenkel. As per thefacts: Suan was merely to be commissioning FEEICto procure for him the merchandise in question.Furthermore, the price of the merchandise boughtwas paid for by Suan by means of an irrevocableletter of credit in favor of Frenkel.

Judgment of Court of Appeals affirmed.

7. Parties/Capacity

Mendoza v. De Guzman*

8. Distinguished from other juridicalrelations

Sevilla v. CA (REG)1998

FACTS: Tourist World Service, Inc. (TWS) leasedthe premises belonging to Noguera for the formersuse as a branch office. Petitioner Sevilla heldherself solidarily liable with the party of the part forthe prompt payment of the monthly rental. Whenthe branch office was opened, it was run by Sevillapayable to TWS by any airline. For any fare broughtin on the efforts of Sevilla, 4% was to go to Lina

Sevilla and 3% was to be withheld by the TWS.Sevilla was paid no salaries. She even shared in theexpenses of maintaining the office, paid for thesalary of an office secretary and other sundryexpenses.

Later Tourist World considered closing down itsoffice because of business losses and news thatSevilla was then connected with a rival firm. Thus,an employee of TWS went to the branch andpadlocked its premises. Sevilla filed a complaintclaiming damages brought about by TWSsrevocation of their relationship.

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ISSUE:1) WON Sevilla was just an employee of TWS, and

as such was bound by the acts of heremployer. (NO)

2) WON Sevilla was an agent of TWS and thusentitled to damages because TWS revokedsuch relationship. (YES)

HELD:1. Sevilla was not subject to control bythe private respondent TWS either as to theresult of the enterprise or as to the meansused in connection therewith.

- Under the contract of lease covering theTourist Worlds Ermita office, she had boundherself in solidum as and for rental payments.A true employee cannot be made to part withhis own money in pursuance of his employer's

business, or otherwise, assume any liabilitythereof.

- Sevilla was not under the control of TWS"as to the means used." Sevilla in pursuing thebusiness, obviously relied on her own gifts andcapabilities.

- She was not in the company's payroll. For herefforts, she retained 4% in commissions fromairline bookings, the remaining 3% going toTourist World. Unlike an employee then, whoearns a fixed salary usually, she earnedcompensation in fluctuating amounts

depending on her booking successes.

2. Sevilla solicited airline fares, but shedid so for and on behalf of her principal, TouristWorld Service, Inc. As compensation, shereceived 4% of the proceeds in the concept ofcommissions.

- An agency that has been created for mutualinterest, of the agent and the principal cannotbe revoked at will. Sevilla is a bona fide travelagent herself, and as such, she had acquiredan interest in the business entrusted to her.Moreover, she had assumed a personalobligation for the operation thereof, holdingherself solidarily liable for the payment ofrentals. She continued the business, using herown name, after Tourist World had stoppedfurther operations. Her interest, obviously, isnot to the commissions she earned as a resultof her business transactions, but one thatextends to the very subject matter of thepower of management delegated to her.

Fressel v Mariano Uy Chaco Sons & Co.(ABBY)March 3, 1916

Trent, J.

FACTS: Merritt undertook and agreed with thedefendant to build for the defendant a costlyedifice in the city of Manila at the corner of CalleRosario and Plaza del Padre Moraga. In the contractit was agreed between the parties thereto, that UyChaco at any time, upon certain contingencies,before the completion of said edifice could takepossession of said edifice in the course ofconstruction and of all the materials in and aboutsaid premises acquired by Merritt for theconstruction of said edifice.Fressel delivered toMerritt at the said edifice in the course ofconstruction certain materials of the value ofP1,381.21Uy Chaco took possession of theincomplete edifice in course of constructiontogether with all the materials on said premisesincluding the materials delivered. Neither Merittnor Uy Chaco paid for the materials even after

extrajudicial demand. The appellants insist that theabove quoted allegations show that Merritt actedas the agent of the defendant in purchasing thematerials in question and that the defendant, bytaking over and using such materials, acceptedand ratified the purchase, thereby obligating itselfto pay for the same.

ISSUE: Fressels allegation That in pursuance ofthe contract between Merritt and the defendant,Merritt acted as the agent for defendant in theacquisition of the materials from plaintiffs. W/NMeritt acted as an agent for Uy Chaco and Sons

Held: NO. Meritt is an independent contractor.Where one party to a contract was authorized to dowork according to his own method and withoutbeing subject to the other partys control, exceptas to the result of the work, he is an independentcontractor and not an agent.

The fact that "the defendant entered into acontract with one E. Merritt, where by the saidMerritt undertook and agreed with the defendantto build for the defendant a costly edifice" showsthat Merritt was authorized to do the workaccording to his own method and without beingsubject to the defendant's control, except as to theresult of the work. He could purchase his materials

and supplies from whom he pleased and at suchprices as he desired to pay. Again, the allegationsthat the "plaintiffs delivered the Merritt . . . .certain materials (the materials in question) of thevalue of P1,381.21, . . . . which price Merritt agreedto pay," show that there were no contractualrelations whatever between the sellers and thedefendant. The mere fact that Merritt and thedefendant had stipulated in their building contractthat the latter could, "upon certain contingencies,"take possession of the incompleted building and allmaterials on the ground, did not change Merrittfrom an independent contractor to an agent. In the

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absence of a statute creating what is known asmechanics' liens, the owner of a building is notliable for the value of materials purchased by anindependent contractor either as such owner or asthe assignee of the contractor.

Victoria Milling v CA, supra

9. Knowledge of agent imputed to principal

Art. 1821. Notice to any partner of any matterrelating to partnership affairs, and the knowledgeof the partner acting in the particular matter,acquired while a partner or then present to hismind, and the knowledge of any other partner whoreasonably could and should have communicated itto the acting partner, operate as notice to orknowledge of the partnership, except in the case offraud on the partnership, committed by or with the

consent of that partner.

B. Article 1869

Art. 1869. Agency may be express, or implied fromthe acts of the principal, from his silence or lack ofaction, or his failure to repudiate the agency,knowing that another person is acting on his behalfwithout authority.

1. Oral, express2. Implied

a. acts or conduct of principal

Gutierrez Hermanos vs. Orense (EARLA)December 4, 1914Torres, J.

FACTS: Engracio Orense is the original owner of aparcel of land in Guinobatan, Albay. On February14, 1907, Jose Duran, the nephew of Orense, soldthe land for P1500 to Gutierrez Hermanos, withOrenses knowledge and consent. The sale wasembodied in a public instrument, and contained aprovision giving Duran a right to repurchase withina period of 4 years. Thereafter, by a contract oflease executed between Gutierrez and Duran,Orense continued occupying the land.

After the lapse of 4 years stipulated for theredemption of the property, Gutierrez asked thatOrense deliver the property to the company andpay rentals for the use of the property. Orensehowever, refused to do so.

Orense claimed that the sale was void for havingbeen done without his authority, either written orverbal. He further alleged that he did notintentionally and deliberately performed acts aswould lead Gutierrez Hermanos that he authorizedhis nephew to enter into the contract of sale.

As a result, the company instituted an estafa caseagainst Duran for allegedly misrepresentinghimself as the owner of the property when he soldthe same to Gutierrez. During trial, the defensepresented Orense as witness, where he stated thatthe sale was done with his knowledge and consent.By virtue of his testimony, confirming that he gavehis nephew authority to convey the subject land,Duran was acquitted of the criminal chargesagainst him.

The Company then demanded that Orense executethe proper deed of conveyance of the propertysold. The CFI thereafter ruled in its favor andordered that a delivery of the property be done,through a public instrument.

ISSUE: WON Duran is the agent of Orense? Yes.

HELD: The sworn statement of Orense during thetrial of the estafa case confirmed and ratified thesale of his property effected by his nephew. Theinitial sale made by Duran was indeed null andvoid, but it became perfectly valid and cured of thedefect of nullity by the confirmation solemnly madeby Orense, upon his stating under oath to thejudge that he himself consented to the making ofthe said sale. Thus, Orenses ratification producedthe effect of an express authorization to make thesaid sale.

Lopez v. Rosario (JANCES)

Mache v. Campos (JILL)February 27. 1907Carson, J.

FACTS: Plaintiffs BH Macke & WH Chandler sold toRicardo Flores, on the alleged order of his principal(defendant Camps), several bills of goods at theWashington Caf. Flores acknowledged receipt ofgoods and made payments; however, he reservedpayment of the balance upon the return of theprincipal Camps. Plaintiffs then investigated thetrue status of Flores and found out that he is thebusiness manager of defendants Caf. That in thecontract of lease of the building where WashingtonCaf is placed, he signed as the managing agent.

Defendant Camps meanwhile alleges that he didnot receive the goods and so will not pay thebalance.

ISSUE: WON Camps is liable for the balance?

HELD: YES. In the absence of proof, SC found thatFlores in the agent of Camps; he even signed asmanaging agent. One who clothes another withapparent authority as his agent, and holds him outto the public as such, cannot be permitted to denythe authority of such person to act as his agent, to

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the prejudice of innocent third persons. Theauthority of the agent must be presumed toinclude all the necessary and usual means ofcarrying his agency into effect. Moreover, there issufficient proof that Flores did receive the goods,thereby making Camps liable.

Linan v. Puno (ALAIN)

Dominion Insurance Corp. v CA (GEN)Feb. 6, 2002Pardo, J.

FACTS: Rodolfo Guevarra claimed to haveadvanced P156, 473.90 in his capacity as amanager of Dominion Insurance Corp. to satisfycertain claims filed by the petitioners clients. Hethen instituted a complaint for sum of moneyagainst the petitioner. The petitioner denied anyliability to plaintiff and asserted a counterclaim of

P249,672.53, representing premium that Guevarrafailed to pay.

The RTC ruled in favor of Guevarra and ordered thepetitioner to pay him the sum he claims. The CAaffirmed the decision of the RTC.

ISSUE: WON Guevarra acted within his authority asagent for petitioner?

HELD: NO. The Special Power of Attorney enteredinto by petitioner and Guevarra would show thatthey intended to enter into a principal-agentrelationship. Despite the word special in thedocument, the contents reveal that what wasconstituted was actually a general agency. Theagency comprises all the business of the principalbut couched in general terms; hence it is limitedonly to acts of administration.

Thus, the general agency constituted does notwarrant the payment or settlement of claims asthey specifically require a Special Power ofAttorney as provided by Art. 1878 of the Civil Code.But as provided by the Memorandum ofManagement Agreement, Guevarra was authorizedto pay the claim but the payment shall come fromthe revolving fund or collection in his possession.

Having deviated from the instructions of theprincipal, the expenses that Guevarra incurred inthe settlement of the claims of the insured may notbe reimbursed from Dominion in accordance withArt. 1918 of the Civil Code.

Nevertheless, under Art. 1236, to the extent thatthe obligation of the petitioner has beenextinguished, Guevarra may demand forreimbursement from his principal.

b. silence or lack of action

Conde v. CA (MAI)December 5, 1982Melencio Herrera, J.

FACTS: 7 April 1938. Margarita Conde, BernardoConde and the petitioner Dominga Conde, as heirsof Santiago Conde, sold with right of repurchase,within ten (10) years from said date, a parcel ofagricultural land to Casimira Pasagui, married toPio for P165.00. "Pacto de Retro Sale" providedthat after 10 yrs. If land is not repurchased a newagreement shall be made between the parties andin no case title and ownership shall be vested inthe hand of the party of the SECOND PART (theAlteras).

Three years after Cadastral Court adjudicated landto the Alteras "subject to the right of redemptionby Dominga Conde, within ten (10) years countingfrom April 7, 1983, after returning the amount of

P165.00 and the amounts paid by the spouses inconcept of land tax

Neither of the vendees-a-retro, Pio Altera norCasimira Pasagui, was a signatory to the deed.Conde maintains that because Pio Altera was veryill at the time, Paciente Cordero executed the deedof resale for and on behalf of his father-in-law.Conde further states that she redeemed theproperty with her own money as her co-heirs werebereft of funds for the purpose.

30 June 1965 Pio Altera sold lot to the Sps RamonConde and Catalina T. Conde (privaterespondents).Dominga contends that land was repurchased in1945 and filed a case against Paciente Cordero andhis wife Nicetas Altera, Ramon Conde and his wifeCatalina T. Conde, and Casimira Pasagui Pio Alterahaving died in 1966), for quieting of title to realproperty and declaration of ownership.

Domingas Evidence: Paciente Cordero signed theMemorandum of Repurchase in representation ofhis father-in-law Pio Altera, who was seriously sickon that occasion, and of his mother-in-law who wasin Manila at the time, and that Cordero receivedthe repurchase price of P65.00.TC: Dominga was ordered to vacate property

CA: Upheld TC-petitionerNeither of the vendees-a-retro signed the"Memorandum of Repurchase", and that there wasno formal authorization from the vendees forPaciente Cordero to act for and on their behalf.

ISSUE: WON there was an implied agency

HELD: Yes. From the execution of the repurchasedocument in 1945, possession, which heretoforehad been with the Alteras, has been in the hands ofDominga. Land taxes have also been paid for byDominga, yearly from 1947 to 1969 inclusive. If, as

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opined by both the TC and the Appellate Court,petitioner had done nothing to formalize herrepurchase, by the same token, neither have thevendees-a-retro done anything to clear their title ofthe encumbrance therein regarding petitioner'sright to repurchase. No new agreement wasentered into by the parties as stipulated in thedeed ofpacto de retro, if the vendors a retro failedto exercise their right of redemption after tenyears. If, as alleged, petitioner exerted no effort toprocure the signature of Pio Altera after he hadrecovered from his illness, neither did the Alterasrepudiate the deed that their son-in-law hadsigned. Thus, an implied agency must be held tohave been created from their silence or lack ofaction, or their failure to repudiate the agency.

Possession of the lot in dispute having beenadversely and uninterruptedly with petitioner from1945 when the document of repurchase was

executed, to 1969, when she instituted this action,or for 24 years, the Alteras must be deemed tohave incurred in laches. That petitioner merelytook advantage of the abandonment of the land bythe Alteras due to the separation of said spouses,and that petitioner's possession was in the conceptof a tenant, remain bare assertions without proof.

Catalina is not buyer in good faith since the ten-year period had lapsed in 1965 and there was noannotation of any repurchase by Domingo, neitherhad the title been cleared of that encumbrance.The purchasers were put on notice that some otherperson could have a right to or interest in theproperty. It behooved Ramon Conde and CatalinaConde to have looked into the right of redemptioninscribed on the title, and particularly the matter ofpossession, which, as also admitted by them at thepre-trial, had been with petitioner since 1945.

Altera and Catalinas must be held bound by theclear terms of the Memorandum of Repurchasethat he had signed wherein he acknowledged thereceipt of P165.00 and assumed the obligation tomaintain the repurchasers in peaceful possessionshould they be "disturbed by other persons".

The imperatives of substantial justice, and theequitable principle of laches brought about by

private respondents' inaction and neglect for 24years, loom in petitioner's favor.

c. failure to repudiate

Dela Rosa v. Hidalgo (ROG)

Naguiat v. CA (TOFF)2003Tinga, J.

FACTS: Queano applied with Naguiat a loan ofP200,000 which was eventually granted. Naguiat

indorsed two checks to Queano amounting toP95,000 each. To secure the loan, Queanoexecuted a Deed of Real Estate Mortgage andsurrendered to Naguiat her duplicates of titlescovering the mortgage. The mortgage wasnotarized and a promissory note for P200,000 withinterest of 12% per annum was given by Queano.She also issued a Security Bank check payable toNaguiat. Upon presentment of the check, theSecurity Bank check was dishonored forinsufficiency of funds. A month after, Queanoreceived a letter from Naguiat demandingsettlement of the loan. Queano and a certainReubenfeldt (who was alleged to be Naguiatsagent) met with Naguiat to manifest that Queanodid not receive the proceeds of the loan as thechecks were retained by Reubenfeldt. Naguiatapplied for extrajudicial foreclosure of themortgage but the same was declared null and void.On appeal, the CA affirmed the decision of the trial

court. Among the issues raised by Naguiat is theadmissibility of the representations ofReubendfeldt insisting that she was not her agent.ISSUE: WON Reubenfeldt was Naguiats agent.

HELD: YES. Evidence showed that Naguiatinstructed Reubenfeldt to withhold the checkspending the delivery of additional collateral byQueano. He served as agent of Naguiat on the loanapplication of Queanos friend as to whom Queanocame to know of Naguiat. Furthermore, she alsodrew a check for the sum of P220,000 payable toNaguiat to cover for Queanos liability.

As a consequence of the interaction betweenNaguiat and Reubenfeldt, Queano was impressedthat she was Nagiats agent and Naguiat did not doanything to correct that. The rule states that onewho clothes another with apparent authority as hisagent and holds him out in the public as suchcannot be permitted to deny the authority of suchperson to act as his agent, to the prejudice of thirdparties dealing in good faith. The CA correctly usedthe rule on agency by estoppel.

Judgment affirmed.

Professional Services v. Agana (REG)

3. Other kinds

a. As to nature- Conventional- Legal

Art. 1803. When the manner of management hasnot been agreed upon, the following rules shall beobserved:

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(1) All the partners shall be considered agents andwhatever any one of them may do alone shall bindthe partnership, without prejudice to the provisionsof Article 1801.

(2) None of the partners may, without the consentof the others, make any important alteration in theimmovable property of the partnership, even if itmay be useful to the partnership. But if the refusalof consent by the other partners is manifestlyprejudicial to the interest of the partnership, thecourt's intervention may be sought.

Art. 1884. The agent is bound by his acceptance tocarry out the agency, and is liable for the damageswhich, through his non-performance, the principalmay suffer.

Art. 1885. In case a person declines an agency, he

is bound to observe the diligence of a good fatherof a family in the custody and preservation of thegoods forwarded to him by the owner until thelatter should appoint an agent or take charge ofthe goods.

Art. 1929. The agent, even if he should withdrawfrom the agency for a valid reason, must continueto act until the principal has had reasonableopportunity to take the necessary steps to meetthe situation.

Art. 1931. Anything done by the agent, without

knowledge of the death of the principal or of anyother cause which extinguishes the agency, is validand shall be fully effective with respect to thirdpersons who may have contracted with him ingood faith.

Art. 1932. If the agent dies, his heirs must notifythe principal thereof, and in the meantime adoptsuch measures as the circumstances may demandin the interest of the latter.

b. As to consideration

- Gratuitous

Art. 1875. Agency is presumed to be for acompensation, unless there is proof to thecontrary.

- Onerous

c. As to extent of transaction

- General

Art. 1876. An agency is either general or special.

- Special

d. As to management

- Couched in general terms

Art. 1877. An agency couched in general termscomprises only acts of administration, even if theprincipal should state that he withholds no poweror that the agent may execute such acts as he mayconsider appropriate, or even though the agencyshould authorize a general and unlimitedmanagement.

- Specific terms

Art. 1878. Special powers of attorney arenecessary in the following cases:

(1) To make such payments as are not usuallyconsidered as acts of administration;(2) To effect novations which put an end toobligations already in existence at the time theagency was constituted;(3) To compromise, to submit questions toarbitration, to renounce the right to appeal from ajudgment, to waive objections to the venue of anaction or to abandon a prescription alreadyacquired;(4) To waive any obligation gratuitously;(5) To enter into any contract by which theownership of an immovable is transmitted oracquired either gratuitously or for a valuableconsideration;

(6) To make gifts, except customary ones forcharity or those made to employees in thebusiness managed by the agent;(7) To loan or borrow money, unless the latter actbe urgent and indispensable for the preservation ofthe things which are under administration;(8) To lease any real property to another person formore than one year;(9) To bind the principal to render some servicewithout compensation;(10) To bind the principal in a contract ofpartnership;(11) To obligate the principal as a guarantor orsurety;(12) To create or convey real rights over

immovable property;(13) To accept or repudiate an inheritance;(14) To ratify or recognize obligations contractedbefore the agency;(15) Any other act of strict dominion.

e. As to manner of appointment- Direct- Indirect, appointment through

another

f. As to nature and effects

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- Ostensible or representative- Simple or commission

4. Forms of Agencya. Contract

Art. 381. When a person disappears from hisdomicile, his whereabouts being unknown, andwithout leaving an agent to administer hisproperty, the judge, at the instance of aninterested party, a relative, or a friend, mayappoint a person to represent him in all that maybe necessary.

b. Articles (see below)

Art. 1874. When a sale of a piece of land or anyinterest therein is through an agent, the authorityof the latter shall be in writing; otherwise, the sale

shall be void.

Art. 1357. If the law requires a document or otherspecial form, as in the acts and contractsenumerated in the following article, the contractingparties may compel each other to observe thatform, once the contract has been perfected. Thisright may be exercised simultaneously with theaction upon the contract.

Art. 1358. The following must appear in a publicdocument:

(1) Acts and contracts which have for their objectthe creation, transmission, modification orextinguishment of real rights over immovableproperty; sales of real property or of an interesttherein a governed by Articles 1403, No. 2, and1405;(2) The cession, repudiation or renunciation ofhereditary rights or of those of the conjugalpartnership of gains;(3) The power to administer property, or any otherpower which has for its object an act appearing or

which should appear in a public document, orshould prejudice a third person;(4) The cession of actions or rights proceeding froman act appearing in a public document.

All other contracts where the amount involvedexceeds five hundred pesos must appear inwriting, even a private one. But sales of goods,chattels or things in action are governed byArticles, 1403, No. 2 and 1405

Art. 1403. The following contracts areunenforceable, unless they are ratified:

(1) Those entered into in the name of anotherperson by one who has been given no authority orlegal representation, or who has acted beyond hispowers;

(2) Those that do not comply with the Statute ofFrauds as set forth in this number. In the followingcases an agreement hereafter made shall beunenforceable by action, unless the same, or somenote or memorandum, thereof, be in writing, andsubscribed by the party charged, or by his agent;evidence, therefore, of the agreement cannot bereceived without the writing, or a secondaryevidence of its contents:(a) An agreement that by its terms is not to beperformed within a year from the making thereof;(b) A special promise to answer for the debt,default, or miscarriage of another;(c) An agreement made in consideration of

marriage, other than a mutual promise to marry;(d) An agreement for the sale of goods, chattels orthings in action, at a price not less than fivehundred pesos, unless the buyer accept andreceive part of such goods and chattels, or theevidences, or some of them, of such things inaction or pay at the time some part of thepurchase money; but when a sale is made byauction and entry is made by the auctioneer in hissales book, at the time of the sale, of the amountand kind of property sold, terms of sale, price,names of the purchasers and person on whoseaccount the sale is made, it is a sufficientmemorandum;

(e) An agreement of the leasing for a longer periodthan one year, or for the sale of real property or ofan interest therein;(f) A representation as to the credit of a thirdperson.

(3) Those where both parties are incapable ofgiving consent to a contract.

5. Presumption of Agencya. General rule

Harry Keeler Electric Co. vs. Rodriguez(EARLA)November 11, 1922

Johns, J.

FACTS: Harry Keeler is engaged in the electricalbusiness and is selling the Matthews plant in thePhilippine Islands. One day, A.C Montelibano wentto the office of Harry Keeler and told him that hecould find purchasers of the Matthews plant.Keeler agreed with the understanding that forevery customer that he could find or any plant thathe could sell, he would be given a 10% commissionif the sale was consummated. Pursuant to thisagreement, Montelibano was able to negotiate thesale of the the Matthews plant between Keeler and

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Rodriguez. After the machine had been installed,Rodriguez paid the purchase price of P2513.55 toMontelibano, without the knowledge of Keeler.Keeler alleged that it was his employee Cenar whoinstalled the equipment in defendants premises.Moreover, Keeler also claimed that it was Cenarwho gave him the statement of account totalingP2563.95. Cenar did not make any effort to collectthe money since he was assured by Rodriguez thathe will pay it in Manila.On the other hand, Rodriguez alleged that he paidthe purchase price to Montelibano, since he wasthe one who sold, delivered and installed theelectrical plant; that he was the one who presentedthe account; that he was assured by Montelibanothat he was authorized to collect the value of theplant.The lower court decided in favor of Rodriguez,holding that Montelibano was an agent authorizedto collect the purchase price.

ISSUE: WON Montelibano was the agent of HarryKeeler.

HELD: No. According to the Court, there is nothingin the receipt issued by Montelibano that wouldindicate that he was authorized by Keeler to collectthe money. Accordingly, what was containedtherein were his personal receipt and personalsignature. There were no more indications of hisauthority.Moreover, the Court also ruled that the receiptpresented in evidence by Rodriguez actually showsthat it was Cenar who gave the statement ofaccounts to him; otherwise, there would have beenno need to incur shipping costs of P81.60 if it wasMontelibano who installed the plant in hispremises.

In sum, there was no evidence that Keeler everdelivered any statement to Montelibano or that hewas ever authorized to receive the money.

It is a settled principle in agency that a persondealing with an agent must be careful inascertaining the fact of the agency and the natureand extent of authority of the agent. Accordingly,In approaching the consideration of the inquirywhether an assumed authority exists in a given

case, there are certain fundamental principleswhich must not be overlooked. Among these are,as has been seen,(1) that the law indulges in no bare presumptionsthat an agency exists: it must be proved orpresumed from facts;(2) that the agent cannot establish his ownauthority, either by the representations or byassuming to exercise it;(3) that an authority cannot be established bymere rumor or general reputation;(4) that even a general authority is not anunlimited one; and

(5) that every authority must find its ultimatesource in some act or omission of the principal.

Thus, when Rodriguez paid to Montelibano, he didso at his own peril. He is therefore, still liable topay Keeler the amount of the electric plant.

b. Exceptions to the rule

Art. 1803. When the manner of management hasnot been agreed upon, the following rules shall beobserved:

(1) All the partners shall be considered agents andwhatever any one of them may do alone shall bindthe partnership, without prejudice to the provisionsof Article 1801.(2) None of the partners may, without the consentof the others, make any important alteration in theimmovable property of the partnership, even if it

may be useful to the partnership. But if the refusalof consent by the other partners is manifestlyprejudicial to the interest of the partnership, thecourt's intervention may be sought

Compana Maritima v. Limson (JANCES)

6. Authority of attorney to appear ispresumed

Sec. 21.Authority of attorney to appear. - Anattorney is presumed to be properly authorized torepresent any cause in which he appears, and nowritten power of attorney is required to authorizehim to appear in court for his client, but thepresiding judge may, on motion of either party andon reasonable grounds therefor being shown,require any attorney who assumes the right toappear in a case to produce or prove the authorityunder which he appears, and to disclose, wheneverpertinent to any issue, the name of the person whoemployed him, and may thereupon make suchorder as justice requires. An attorney wilfullyappearing in court for a person without being

employed, unless by leave of the court, may bepunished for contempt as an officer of the courtwho has misbehaved in his officialtransactions.chan robles virtual law library

Sec. 22.Attorney who appears in lower courtpresumed to represent client on appeal. - Anattorney who appears de parte in a case before alower court shall be presumed to continuerepresenting his client on appeal, unless he files aformal petition withdrawing his appearance in theappellate court.

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Sec. 23.Authority of attorneys to bind clients. -Attorneys have authority to bind their clients in anycase by any agreement in relation thereto made inwriting, and in taking appeals, and in all matters of

ordinary judicial procedure. But they cannot,without special authority, compromise their client'slitigation, or receive anything in discharge of aclient's claim but the full amount in cash.

Air Phil Corp. v. International Business(ALAIN)Panganiban J.

Facts:

APC was in need of the services of abusiness establishment to ferry its B-737airplane. It engaged the services of IBAPSIas its agent to look for and engage, for

APC, a business enterprise to ferry theairplane. IBASPI did engage the services ofUniversal Weather & Aviation, Inc. (UWAI).UWAI sent its Billings to APC, throughIBASPI, in the total amount of US$65,131.55 for its services for the ferryof the airplane. But APC repeatedly failedto pay its account. Exasperated, UWAIblamed IBASPI. IBASPI was impelled to payUWAI. IBASPI demanded refund of theamount advanced to UWAI. But still, nopayment was effected by API. IBASPIdemanded the payment of said amountplus 10% commission.

APC finally made its first partial payment ofP200,000.00 to IBASPI with a simultaneousReceipt/Agreement executed by IBASPIand APC, the latter, through Attorney.Manolito A. Manalo, Officer-in-Charge of theLegal Department of APC. After this partialpayment, no other payments wereexecuted by APC. APC refused to pay itsbalance with IBASPI.

IBASPI sued APC in court. However, thecounsel of APC filed at least three motionsto extend filing of petitioners Answer; didnot appear during the scheduled pretrials;and failed to file petitioners pretrial Brief.

Court ordered IBASPI to pay the balance,the 10% commission and attorneys fees.APC submits that CA erred in upholding theruling of the RTC despite the fact that thegross negligence, incompetence anddishonesty of APCs former counsel,Attorney. Manolito A. Manolo, haveeffectively denied APC of its day in court.APC further contended that Attorney.Manalo was not authorized to execute theReceipt/Agreement in behalf of petitionerAPC.

Thus APC asked for Motion for New Trial.

Issue: W/N the Motion for New Trial should begranted since Attorney. Manalo who was supposedto defend APC effectively denied said petitioner ofits day in court. NO!

Held:

Axiomatic is the rule that "negligence ofcounsel binds the client." The basis is thetenet that an act performed by counselwithin the scope of a "general or impliedauthority" is regarded as an act of theclient.

While the application of this general rulecertainly depends upon the surroundingcircumstances of a given case, there areexceptions recognized by this Court: "(1)where reckless or gross negligence ofcounsel deprives the client of due processof law; (2) when its application will result inoutright deprivation of the clients libertyor property; or (3) where the interests ofjustice so require." Woefully none of theseexceptions apply herein. Thus, the Courtcannot "step in and accord relief" topetitioner, even if it may have suffered byreason of its own arrant fatuity.

The negligence of petitioner and that of itscounsel are concurrent. Attorney. Manalo isan employee, not an outsider hired bypetitioner on a retainer basis. In fact, he isthe officer-in-charge of its LegalDepartment. There is no showing that hewas not authorized to exercise the powers

of the corporation or to transact itsbusiness, particularly the handling of itslegal affairs. Besides, it is presumed thatthe ordinary course of business has beenfollowed. Therefore, counsels corporateacts are supposed to be known andassented to by petitioner.

First, the Receipt/Agreement was enteredinto by respondent and petitioner, whichwas represented by its agent Attorney.Manalo. As an agent, he rendered serviceto, and did something in representation oron behalf of, his principal and with itsconsent and authority. It cannot be denied

that, on its part, there was an actual intentto appoint its counsel; and, on the latterspart, to accept the appointment and "acton it." Thus, the general principles ofagency govern its relationship with itsofficers or agents, subject to the articles ofincorporation, bylaws and other relevantprovisions of law.

Moreover, the Receipt/Agreement is not apromise to pay that "amounts to an offer tocompromise and requires a special powerof attorney or the express consent of

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petitioner." A compromise agreement is "acontract whereby the parties, by makingreciprocal concessions, avoid a litigation orput an end to one already commenced." Nosuch reciprocal concessions were made inthis case. Thus, the Receipt/Agreement isbut an outright admission of petitioner ofits obligation, after making partialpayment, to pay the balance of its account.And even if we were to consider the sameas a compromise, from its nature as acontract, the absence of an SPA does notrender it void, but merely unenforceable.

PETITION DENIED.

Pittsburgh Plate v. Director of Patents (GEN)March 29, 1974Castro, J.

FACTS: On Nov. 5, 1962, the law firm of Lichauco,Picazo and Agcaoili filed with the Philippine PatentOffice a petition for extension of 30 days withinwhich to file in behalf of the petitioner a notice ofopposition to the respondent's application forregistration of "Solex Bluepane" as trademark forits glass products. The plea was made pursuant toa cablegram from Langner, Parry, Card andLangner International Patent and TrademarkAgents, USA, asking that the respondent'sapplication be opposed. The extension wasgranted.

An unverified notice of opposition to the trademarkapplication was filed by Lichauco, Picazo andAgcaoili before the Patent Office which authorizesthe filing of such a notice provided it is verified bythe opposer within 60 days thereafter. On thesame day, the same counsel filed a dulyauthenticated power of attorney executed by thepetitioner on Nov. 12, 1962 in favor of the formerfor the prosecution of its opposition. Thereafterpetitioner's verified opposition to the respondent'sapplication was filed.

The Director of Patents issued a resolutiondismissing the petitioner's opposition on theground that on Nov. 5, 1962 when petitioner'scounsel asked for an extension of time to file a

notice of opposition, the said counsel was not yetauthorized by the petitioner to file the saidpleading as the power of attorney was executedonly on Nov. 12, 1962.

ISSUE: WON the law firm was authorized torepresent the petitioner before the PhilippinePatent Office on Nov. 5, 1962 when the formerpleaded for an extension of time to register thepetitioners opposition to the respondentsapplication?

HELD: YES. Petitioner does not deny, as in fact itasserted in writing, that the said law firm wasauthorized to represent it by virtue of the powers ithad vested upon Langner, et al., a correspondentof Lichauco, Picazo and Agcaoili, to handle allforeign trademark matters affecting the petitioner.It bears emphasis that the relationship betweencounsel and client is strictly a personal one. It is arelationship the creation of which courts andadministrative tribunals cannot but recognize onthe faith of the client's word, especially when nosubstantial prejudice is thereby caused to any thirdparty.

Petitioner, who claims to be adversely affected bythe respondent's trademark application,seasonably informed the Director of Patents thatits counsel had the authority to represent it beforethe latter's office. There is no valid reason tointerpose chevaux-de frise1 upon that claim and

deny the petitioner its basic right to be heard.

C. Articles 1870 to 1872

Art. 1870. Acceptance by the agent may also beexpress, or implied from his acts which carry outthe agency, or from his silence or inactionaccording to the circumstances.

Art. 1871. Between persons who are present, theacceptance of the agency may also be implied ifthe principal delivers his power of attorney to theagent and the latter receives it without anyobjection.

Art. 1872. Between persons who are absent, theacceptance of the agency cannot be implied fromthe silence of the agent, except:

(1) When the principal transmits his power ofattorney to the agent, who receives it without anyobjection;(2) When the principal entrusts to him by letter ortelegram a power of attorney with respect to thebusiness in which he is habitually engaged as anagent, and he did not reply to the letter ortelegram.

1. Acceptance, notcompulsorya. Expressb. Implied

i. from the acts of the agentwhich carry out the agency;

1 Etymology: French, literally, horse from Friesland1 : a defense consisting typically of a timber or an ironbarrel covered with projecting spikes and often strungwith barbed wire2 : a protecting line (as of spikes) on top of a wall usually used in plural

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ii. from his silence or inaction

- where the persons arepresent

Art. 1871. Between persons who are present, theacceptance of the agency may also be implied ifthe principal delivers his power of attorney to theagent and the latter receives it without anyobjection.

- where the persons areabsent

Art. 1872. Between persons who are absent, theacceptance of the agency cannot be implied fromthe silence of the agent, except:(1) When the principal transmits his power ofattorney to the agent, who receives it without anyobjection;(2) When the principal entrusts to him by letter ortelegram a power of attorney with respect to thebusiness in which he is habitually engaged as anagent, and he did not reply to the letter ortelegram.

2. Power of attorney;definition, purpose

- Notarization needed

Strong v. Gutierrez Repide (MAI)February 21, 1912Moreland, J.

FACTS: Prior to October 10, 1903, the plaintiff,Eleanor Erica Strong, was the owner of 800 sharesof the capital stock of the Philippine Sugar EstatesDevelopment Company, Limited, of the par valueof P100 each. On October 10, 1903, the defendant,Francisco Gutierrez Repide, by meanssubsequently found and adjudged to have beenfraudulent, obtained possession of said shares andthereafter alleged to be the owner thereof. The CFIof Manila subsequently held that the sale of theseshares was made without the authority of Mrs.Strong, that she never ratified the sale butrepudiated it as soon as she learned of it, that thissale was induced by fraud on the part of thedefendant, and therefore was a fraudulent sale.

This judgment was, on appeal to the SupremeCourt of the Philippine Islands, reversed, andplaintiff's complaint dismissed on the merits.Thereupon, plaintiff prosecuted an appeal to theSupreme Court of the United States, which court,on the 3rd of May, 1909, rendered its judgment,reversing the decision of the Supreme Court of thePhilippine Islands and affirming the judgment ofthe trial court.

From the 10th day of October, 1903, the date ofthe said fraudulent purchase by the defendant,until the 27th day of July, 1909, the defendantretained said shares in his possession or under hiscontrol and after the rendition of said judgment ofApril 29, 1904, collected the dividends earned bysaid shares for the years 1905, 1906, 1907, and1908 at the rate of 6 per cent per annum,amounting to a total of P19,200, which sum thedefendant retained and refused to pay over to theplaintiff.

ISSUE: Whether or not the agreement entered intobetween him and the plaintiff through her counselreleased him from all responsibility in connectionwith the transaction relating to the stock

HELD: NO. There is nothing in the written dischargewhich could properly be given the legal effectswhich the appellant in this case assigns to it. It is a

discharge of a judgment and nothing more. Beingsuch, it reaches no further than the terms of thejudgment itself. It is to be presumed that aninstrument satisfying a debt or obligationmanifested in another instrument extends nofurther than the terms of the instrumentwhich manifests the obligation to bedischarged, unless, from the terms of theinstrument, it is clear that the partiesintended something more. So far as the recorddiscloses, at the time this satisfaction wasexecuted nothing whatever occurred between theparties relative to the dividends on the stock whichformed the subject-matter of that judgment, nordid anything transpire as to any other relationsbetween the parties than those embraced withinthe judgment itself. There was nothing in theconduct of the parties, or in their relations orattitudes, from which it could be implied orinferred that they were dealing with aughtelse than the judgment itself. There is no basis,then, for the contention of the appellant unless itbe found in the wording of that instrument itself.

A power of attorney is an instrument in writing bywhich one person, as principal, appoints another ashis agent and confers upon him the authority toperform certain specified acts on behalf of theprincipal. Except as may be required by statute, a

power of attorney is valid although no notary publicintervened in its execution.

Lim Pin v. Liao Tan (ROG)

FACTS: A compromise agreement between Lim Pinrepresented by son George Hung and Liao Tan wasmade incident to an unlawful detainer complaintfiled by Tan against Pin. On hearing, Lim Pin wasabsent. Her son George Hung who attended withhis mother all previous hearings was presenttogether with counsel. Liao and counsel were also

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present. Through court's initiative the compromiseagreement was formulated and executed.

A motion for reconsideration was filed by Lim Pinassailing the compromise agreement: 1) that shenever authorized her son nor her counsel on record(Attorney. Pastor Mamaril) to enter into suchcompromise agreement and 2) that had she beenpresent when said agreement was prepared; shewould not have acceded thereto.

Tan filed opposition to MR and prayed that sonGeorge Hung and Attorney. Pastor P. Mamaril becited for contempt" in the event they shouldbelatedly deny that George Hung was dulyauthorized by his mother to enter into thecompromise agreement.TC: MR denied George Hung cited for contempt ofcourt. Writ to execute issued.

Lim Pin: Judge should not have allowed her sonGeorge Hung and her then counsel, Attorney.Pastor Mamaril in her absence to enter intocompromise agreement with Tan. Considering thatsuch compromise agreement would imposeonerous obligations upon her, such as atremendous increase of rentals in the premisesbeing leased from Tan from P1,500.00 a month toP5,000.00 a month and that said agreementcontained admissions by her, the respondent Judgeshould have required a written authority and powerof attorney from her son and counsel.

ISSUE: WON Judge shouldve required writtenauthority and Power of attorney before allowingLim's son and counsel to act on her behalf oncompromise agreement? NOHELD:1) Power of attorney need not be written butauthority must be duly established by evidence.

Art. 1878 NCC: a special power of attorney isnecessary to compromise, to submit questions toarbitration, to renounce the right to appeal from ajudgment, to waive objections to the venue of anaction or to abandon a prescription alreadyacquired.

Section 23 of Rule 138 on Attorneys and Admissionto the Bar governs the authority of attorneys tobind their clients and provides that "Attorneys haveauthority to bind their clients in any case by anyagreement in relation thereto made in writing, andin taking appeal, and in an matters of ordinaryJudicial Procedure, but they cannot, without specialauthority, compromise their clients' litigation orreceive anything in discharge of their clients'claims but the full amount in cash."

The requirements of a special power of attorney inArticle 1878 of the Civil Code and of a specialauthority in Rule 138 of the Rules of Court refer tothe nature of the authorization and not its form.The requirements are met if there is a clearmandate from the principal specifically authorizingthe performance of the act.

Mandate may be oral or written BUT vital that itmust be express. If the special authority is notwritten it must be duly established by evidenceother than mere assertion of counsel.

2) Judge considered evidence before allowing sonto execute agreement on mom's behalf.

Here, it was shown that Judge took necessaryprecautionary measures and acted on the basis ofsatisfactory evidence when he allowed thecompromise agreement to be executed by George

Hung the petitioner's son.

Prior to hearing, Lim Pin had repeatedly askedcourt to approve her proposal for monthly increaseof 500php + that increases be pegged at that ratetill monthly rental reaches 5k. on Dec 1977. But atthe time, Tan not amenable to it, but Tan laterchanged her mind so court later asked George toexecute agreement.

There were other reasons which led the lower courtto a finding that George Hung had the full authorityto enter into the compromise. The court itselfobserved during the earlier hearings and it is notdisputed that ... defendant Lim Pin could not decideon anything without first consulting her son."George Hung's later denial that he nevermanifested his authority to represent his motherwas rejected by the court. As a matter of fact, thissudden turnabout of George Hung led the court tocite him for contempt. He was fined Two HundredPesos. The citation for contempt was neverappealed.

3) Even assuming George acted without authority,agreement would not be void, merelyunenforceable, and capable of being ratified.

The compromise agreement was ratified by the

petitioner when a few days after the promulgationof the questioned judgment and before the filing ofa motion for reconsideration, she filed a Motion ToWithdraw Deposits, a consignation case pendingbefore the same court between the same parties.Such motion's expressly stated purpose was towithdraw deposit made in order implementcompromise agreement.

Lim Pin vs. Liao Tan (ALAIN)15 July 1982

Facts:

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Spouses Conchita Liao Tan and Tan ChoHua alleged in their complaint for unlawfuldetainer that the plaintiff Conchita LiaoTan, as owner of a parcel of registered landwith improvements located at Francisco

Street, Caloocan City, had leased a portionof it, more particularly known as 91Francisco Street, Caloocan City todefendant Lim Pin on a month to monthbasis but that the latter starting April, 1977had not paid the agreed rental stipulatedfor such month and the succeeding monthsthereafter. And that despite demand, thedefendant refused to vacate the leasedpremises.

Defendant Lim Pin, filed her Answerdenying the material allegations of thecomplaint and protesting the alleged highly"unconscionable and unreasonable"increase of rental demanded by plaintiffs.

On the scheduled October 19, 1977hearing, defendant Lim Pin was absent. Herson George Hung who attended with hismother all the previous hearings waspresent together with the defendant'scounsel. Plaintiff Conchita Liao Tantogether with her counsel was also present.Through the initiative of the court a quo,the subject compromise agreement wasformulated and executed and it finallybecame the basis of the October 19, 1977judgment.

The aforesaid judgment was the subject ofa motion for reconsideration filed on

October 28, 1977 by defendant Lim Pin onthe following grounds: 1) that she neverauthorized her son nor her counsel onrecord (Attorney. Pastor Mamaril) to enterinto such compromise agreement and 2)that had she been present when saidagreement was prepared, she would nothave acceded thereto.

Petitioner argues that the respondentJudge should not have allowed her sonGeorge Hung and her then counsel,Attorney. Pastor Mamaril in her absence toenter into the October 19, 1977compromise agreement with the private

respondent Conchita Liao Tan assisted byher counsel. Said agreement containedadmissions by petitioner, the respondentJudge should have required a writtenauthority and power of attorney from herson and counsel. Her objections to thevalidity of the compromise agreement arepremised on Article 1878 of the Civil Codeand Rule 138, Section 23 of the Rules ofCourt.

Issue: Whether the respondent Judge committedgrave abuse of discretion in allowing the October

19, 1977 compromise agreement in the absence ofthe petitioner. NO.

HELD:

Article 1878 is found in Title X of the Civil Code

on Agency. It states that a special power ofattorney is necessary to compromise, to submitquestions to arbitration, to renounce the rightto appeal from a judgment, to waive objectionsto the venue of an action or to abandon aprescription already acquired.

Section 23 of Rule 138 on Attorneys andAdmission to the Bar governs the authority ofattorneys to bind their clients and providesthat "Attorneys have authority to bind theirclients in any case by any agreement inrelation thereto made in writing, and in takingappeal, and in an matters of ordinary JudicialProcedure, but they cannot, without specialauthority, compromise their clients' litigation or

receive anything in discharge of their clients'claims but the full amount in cash."

The requirements of a special power ofattorney in Article 1878 of the Civil Code and ofa special authority in Rule 138 of the Rules ofCourt refer to the nature of the authorizationand not its form. The requirements are met ifthere is a clear mandate from the principalspecifically authorizing the performance of theact. As early as 1906, this Court in Strong v.Gutierrez-Repide (6 Phil. 680) stated that sucha mandate may be either oral or written, theone vital thing being that it shall be express.And more recently, We stated that, if the

special authority is not written, then it must beduly established by evidence:

... the Rules require, for attorneysto compromise the litigation oftheir clients, a special authority.And while the same does not statethat the special authority be inwriting the Court has every reasonto expect that, if not in writing, thesame be duly established byevidence other than the self-serving assertion of counselhimself that such authority was

verbally given him.

Whereupon the following took place: (1)The court asked George Hung whether hewas willing to enter into the compromiseagreement and whether he had theauthority of his mother to enter into such acompromise agreement; (2) Thedefendant's counsel confirmed in opencourt the assurance of George Hung thathe had the full authority of his mother toenter into a compromise agreement: (3)

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After the formulation of the compromiseagreement the Judge explained in Tagalogto both parties, including George Hung itsterms and conditions after which the samewas reduced into writing; (4) George Hungwillingly signed the compromiseagreement, the terms and conditions ofwhich were those originally proposed bythe petitioner herself. Hung was all thewhile assisted by their counsel.

PETITION DISMISSED.

3. General rule in Art.1872; Exceptions

Art. 1872. Between persons who are absent, theacceptance of the agency cannot be implied fromthe silence of the agent, except:(1) When the principal transmits his power of

attorney to the agent, who receives it without anyobjection;(2) When the principal entrusts to him by letter ortelegram a power of attorney with respect to thebusiness in which he is habitually engaged as anagent, and he did not reply to the letter ortelegram.

4. Differentiate Art. 1871to Art. 1872

Art. 1871. Between persons who are present, theacceptance of the agency may also be implied ifthe principal delivers his power of attorney to the

agent and the latter receives it without anyobjection.

Art. 1872. Between persons who are absent, theacceptance of the agency cannot be implied fromthe silence of the agent, except:

(1) When the principal transmits his power ofattorney to the agent, who receives it without anyobjection;(2) When the principal entrusts to him by letter ortelegram a power of attorney with respect to thebusiness in which he is habitually engaged as anagent, and he did not reply to the letter or

telegram.

5. Cases

Calibo v. CA (TOFF)J. Quisumbing

FACTS: Mike Abuella, private respondents sonleased the house of Calibo for residential purposes.Pablo Abuella left the tractor with his son forsafekeeping. Rent and other expenses wereinitially paid but subsequently defaulted inpayment thereof. When confronted by Calibo, Mike

Abuella manifested that hell only stay in the houseuntil end of the year 1986 and offered the tractoras security. In order for him to pay his obligationssooner, he asked Calibo to help him look forbuyers. In January 1987, a new tenant occupied thehouse and Calibo moved the tractor to his fathersgarage also in the same city. Even after demands,Mike failed to pay his arrears; he only assuredCalibo that the tractor would stand as guarantee tohis payment. When Pablo Abuella tried to get thetractor from Calibo, he tried to negotiate with himand offered to write a check in payment of therentals and postdated checks to cover the otherexpenses but still had to verify with Mike. Calibowould only accept the latter if Pablo would executea promissory note in his favor to cover theremaining expenses. The two did not agree. PabloAbuella instituted an action for replevin, claimingownership of the tractor and seeking to recoverpossession thereof from petitioner Both the trial

court and the CA ruled in favor of Abuella. MikeAbuella could not have validly pledged the subjecttractor to petitioner since he was not the ownerthereof, nor was he authorized by its owner topledge the tractor.

ISSUE: WON there was an implied principal-agentrelationship between Pablo and Mike

HELD: No. Pablo Abuella categorically stated thatthe tractor was only left to Mike for safekeeping;not to be pledged or alienated. Mike acted withoutauthority or consent from Pablo. Article 1869 statesthat there would only be implied agency is theperson is acting within the authority granted to himby the principal.Article 1911 mandates that the principal issolidarily liable with the agent if the former allowedthe latter to act as though he had fullpowers. Again, in view of Pablos lack ofknowledge of Mikes pledging the tractor withoutany authority from him, it shows that Pablo couldnot have allowed the Mike to pledge the tractor asif he had full powers to do so.

Petition denied. CA decision affirmed.

Linan v. Puno (REG)Johnson, J.

1915

FACTS: Linan was the owner of a certain parcel ofland. In 1908, he executed a document whichconferred upon Puno the power, duties andobligations to purchase, sell, collect and pay, aswell as sue and be sued before any authority,appear before the courts of justice andadministrative officers in any proceeding orbusiness concerning the good administration andadvancement of his interests. In 1911, Puno, forthe sum of P800, sold and delivered said parcel ofland to the other defendants. Petitioner alleges

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that the said document he executed did not conferupon the Puno the power to sell the land andprayed that the sale be set aside; that the land bereturned to him, together with damages. Lowercourt found for Puno.

ISSUE: WON the document did not give Punoauthority to sell the land.

HELD: YES.There seems to be no good reason forsaying that Puno had authority to administer andnot to sell when "to sell" was as advantageous tothe plaintiff in the administration of his affairs as"to administer." To hold that the power was "toadminister" only when the power "to sell" wasequally conferred would be to give to special wordsof the contract a special and limited meaning tothe exclusion of other general words of equalimport.

Whenever it is possible, effect is to be given toevery word and clause used by the parties. It is tobe presumed that the parties said what theyintended to say and that they used each word orclause with some purpose and that purpose is, ifpossible, to be ascertained and enforced.

Likewise, there was no allegation on proof thatPuno acted in bad faith or fraudulently in sellingthe land. It will be presumed that he acted in goodfaith and in accordance with his power as heunderstood it

D. Article 1873

Art. 1873. If a person specially informs another orstates by public advertisement that he has given apower of attorney to a third person, the latterthereby becomes a duly authorized agent, in theformer case with respect to the person whoreceived the special information, and in the lattercase with regard to any person.

The power shall continue to be in full force until thenotice is rescinded in the same manner in which itwas given.

1. Effects of special information

Macke v. Camps (ABBY)Feb 12, 1907Carson, J.

FACTS: B.H. Macke and W.H. Chandler are partnersand sold to Jose Camps of the Washington Cafvarious bills of goods amounting to P351.50 but heonly received P174. Macke made a demand butCamps failed to pay. Macke said that RicardoFlores the business manager of the hotel barrestaurant signed the receipt and that Flores was

also the one who made the previous payments. Awitness, one Galmes, the lessor of the building saidthat Flores also signed as a witness on thesublease contract as managing agent, which JoseCamps also signed. Camps now says that theforegoing facts are not sufficient to establish thefact that he received the goods for which paymentis demanded.

ISSUE: WoN Camps is estopped from proclaimingthat Ricardo Flores was not his agent

HELD: Yes. Flores was apparently in charge of thebusiness, performing the duties usually entrustedto managing agent, leave little room for doubt thathe was there as authorized agent of the defendant.

One who clothes another apparent authority as hisagent, and holds him out to the public as such,cannot be permitted to deny the authority of such

person to act as his agent, to the prejudice ofinnocent third parties dealing with such person ingood faith and in the following presumptions ordeductions, which the law expressly directs to bemade from particular facts, are deemed conclusive:

"Whenever a party has, by his own declaration, act,or omission, intentionally and deliberately ledanother to believe a particular thing true, and toact upon such belief, he cannot, in any litigationarising out such declaration, act, or omission, bepermitted to falsify it" and unless the contraryappears, the authority of an agent must bepresumed to include all the necessary and usualmeans of carrying his agency into effect.

Rallos vs. Yangco (EARLA)Sept 27, 1911Moreland, J.

FACTS: On November 27, 1907, Teodoro Yangcosent a letter to Florentino Rallos, offering Yangcohis services. Accordingly, he has just opened ashipping and commission department for buyingand selling tobacco leaf and other native productsin his steamship office in Manila. He expresslyindicated in his letter that Florentino Collantes willact for and in his behalf in transacting with Rallos.He further stated that he has given Collantes a

power of attorney, notarized by Mr. Rodriguez.

On February 1909, Rallos sent to Collantes 218bundles of tobacco in the leaf to be sold oncommission. After deducting the commission(P206.96) from the total amount of P1744, Rallos isentitled to P1537.08.

It appears that at the time Rallos gave the tobaccoto Collantes, he was not the agent of Yangcoanymore, Yangco having severed his relationshipwith Collantes. This

agency partnership reviewer

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