DOMINION INSURANCE CORPORATION vs. COURT OF APPEALS, RODOLFO S.

GUEVARRA, and FERNANDO AUSTRIA

FACTS:
Rodolfo Guevarra (Guevarra) filed a civil case for sum of money against Dominion Insurance
Corp. (Dominion) for the amount advanced by Guevarra in his capacity as manager of
defendant to satisfy certain claims filed by defendants client.
The pre-trial was always postponed, and during one of the pre-trial conference dominion
failed to arrive therefore the court declared them to be in default. Dominion filed several
Motions to Lift Order of Default but was always denied by the court. The RTC rendered its
decision making Dominion liable to repay Guevarra for the sum advanced and other damages
and fees. Dominion appealed but CA affirmed the decision of RTC and denied the appeal of
Dominion.
ISSUE:
(a) W/N Guevarra acted within his authority as agent of petitioner.
(b) W/N Guevarra must be reimbursed for the amount advanced.
HELD:
(a) NO. Even though the contact entered into by Guevarra and Dominion was with the word
special the contents of the document was actually a general agency. A general power
permits the agent to do all acts for which the law does not require a special power and the
contents in the document did not require a special power of attorney.
Art 1878 of the civil code provides instances when a special power of attorney is required.:
1) To make such payment as are not usually considered as acts of administration.
15) any other act of dominion
The payment of claims is not an act of administration which requires a special power of
attorney before Guevarra could settle the insurance claims of the insured.
Also Guevarra was instructed that the payment for the insured must come from the revolving
fund or collection in his possession, Gueverra should not have paid the insured through his
own capacity. Under 1918 of civil code an agent who acted in contravention of the principals
instruction the principal will not be liable for the expenses incurred by the agent.
(b) YES. Even if the law on agency prohibits Gueverra from obtaining reimbursement his
right to recover may be justified under the article 1236 of the civil code. [1] Thus Guevarra
must be reimbursed but only to the extent that Dominion has benefited without interest or
demand for damages.

Doctrine:
Good faith consists in the belief of the builder that he land he is building on is his and
hisignorance of any defect or flaw in his title. The burden of proving bad faith belongs
to the one asserting it.
Facts:
Edith Robillo purchased from Pleasantville Development Corporation, herein
petitioner a parcel ofland at Pleasantville Subdivision, Bacolod City.
The property was designated as Lot 9, Phase II. In 1975,herein respondent Eldred
Jardinico bought the said subject lot from the former purchaser.
Eldred later discovered that the property he purchased had improvements introduced
therein by respondent WilsonKee.Kee on the other hand bought on installments Lot
8 of the same subdivision from C.T. TorresEnterprises, Inc. (CTTEI) which is the
exclusive real estate agent of the petitioner.
Under the contract Keewas allowed to take possession of the property even before
full payment of the price. CTTEI through an
employee, Zenaida Octaviano accompanied Kees wife Donabelle to inspec
t Lot No. 8. Octavianohowever mistakenly pointed towards Lot 9. Hence spouses
Kee had their residence, an auto repair shop,a store and other improvements
constructed on the wrong lot.
Upon discovery of the blunder both Kee and Jardinico tried to reach an amicable
settlement butthey failed. Jardinico demanded that the improvements be removed
but as Kee refused, Jardinico filed acomplaint for ejectment with damages against
Kee at the Municipal Trial Court in Cities (MTCC) ofBacolod City.
Kee filed a third-party complaint against herein petitioner and CTTEI.The MTCC
found that the error was attributable to CTTEI also since at present the contract with
Kee has rescinded for Kees failure to pay installments. Kee no longer had
any right over the subjectproperty and must pay rentals for its use.
The Regional Trial Court (RTC) of Bacolod City ruled thatpetitioner and CTTEI were
not at fault or were not negligent. It argued that Kee was a builder in bad faith.Even if
assuming that he was in good faith, he was no longer so and must pay rentals from
the time thathe was given notice to vacate the lot. The Court of Appeals ruled that
Kee was a builder in good faith ashe was unaware of the mix-up when he
constructed the improvements. It was in fact due to thenegligence and wrongful
delivery of CTTEI which included its principal the herein petitioner. It furtherruled that
the award of rental was without basis.Pending the resolution of the case at the Court
of Appeals Jardinico and Kee entered into a deedof sale, wherein Lot 9 was sold
to Kee. In the said deed a provision stating that regardless of the outcomeof the
decision, such shall not be pursued by the parties and shall be considered dismissed
and withouteffect. The appellate court was not informed of this deal.
Issue:
Whether or not a lot buyer who constructs improvements on the wrong property
erroneously

delivered by the owners agent, a builder in good faith?

Held:
Yes. Article 527 of the Civil Code provides the presumption that petitioner has the
burden ofproving that Kee was a builder in bad faith. Kee may be made liable for the
violation of the contract withCTTEI but this may not be used as a basis of bad faith
and as a sufficient ground to negate thepresumption of good faith. Jardinico is
presently only allowed to file a complaint for unlawful detainer.Good faith is based on
the belief of the builder that the land he is building on is his and his ignorance ofany
flaw or defect in is title. Since at the time when Kee constructed his improvements on
Lot 8, he wasnot aware that it was actually Lot 9 that was delivered to him. Petitioner
further contends that Kee wasnegligent as a provision in the Contract of Sale on
Installment stated that the vendee must have
THE MANILA REMNANT CO., INC vs. THE HONORABLE COURT OF APPEALS,
OSCAR VENTANILLA, JR. and CARMEN GLORIA DIAZ
FACTS:
Petitioner Manila Remnant Co., Inc. is the owns parcels of land situated in
Quezon City and constituting the Capital Homes Subdivision Nos. I and II. Manila
Remnant and A.U. Valencia & Co. Inc. entered into a contract entitled "Confirmation
of Land Development and Sales Contract" to formalize a prior verbal agreement
whereby A.U. Valencia and Co., Inc. was to develop the aforesaid subdivision for a
consideration of 15.5% commision. At that time the President of both A.U. Valencia
and Co. Inc. and Manila Remnant Co., Inc. was Artemio U. Valencia. Manila
Remnant thru A.U. Valencia and Co. executed two "contracts to sell" covering Lots 1
and 2 of Block 17 in favor of Oscar C. Ventanilla and Carmen Gloria Diaz. Ten days
after the signing of the contracts with the Ventanillas, Artemio U. Valencia, without
the knowledge of the Ventanilla couple, sold Lots 1 and 2 of Block 17 again, to Carlos
Crisostomo, one of his sales agents without any consideration. Artemio Valencia then
transmitted the fictitious Crisostomo contracts to Manila Remnant while he kept in
his files the contracts to sell in favor of the Ventanillas. All the amounts paid by the
Ventanillas were deposited in Valencia's bank account. Upon orders of Artemio
Valencia, the monthly payments of the Ventanillas were remitted to Manila Remnant
as payments of Crisostomo for which the former issued receipts in favor of
Crisostomo.
General Manager Karl Landahl, wrote Artemio Valencia informing him that Manila
Remnant was terminating its existing collection agreement with his firm on account
of the considerable amount of discrepancies and irregularities. As a consequence,
Artemio Valencia was removed as President by the Board of Directors of Manila
Remnant. Therefore, Valencia stopped transmitting Ventanilla's monthly
installments. A.U. Valencia and Co. sued Manila Remnant to impugn the abrogation
of their agency agreement. The court ordered all lot buyers to deposit their monthly
amortizations with the court. But A.U. Valencia and Co. wrote the Ventanillas that it
was still authorized by the court to collect the monthly amortizations and requested
them to continue remitting their amortizations with the assurance that said
payments
would
be
deposited
later
in
court.

Thereafter, the trial court issued an order prohibiting A.U. Valencia and Co. from
collecting the monthly installments. Valencia complied with the court's order of
submitting the list of all his clients but said list excluded the name of the Ventanillas.
Manila Remnant caused the publication in the Times Journal of a notice cancelling
the contracts to sell of some lot buyers. To prevent the effective cancellation of their
contracts, Artemio Valencia filed a complaint for specific performance with damages
against Manila Remnant
The Ventanillas, believing that they had already remitted enough money went
directly to Manila Remnant and offered to pay the entire outstanding balance of the
purchase price. Unfortunately, they discovered from Gloria Caballes that their names
did not appear in the records of A.U. Valencia and Co. as lot buyers. Also, Manila
Remnant refused the offer of the Ventanillas to pay for the remainder of the contract
price. The Ventanillas then commenced an action for specific performance,
annulment of deeds and damages against Manila Remnant, A.U. Valencia and Co.
and Carlos Crisostomo.
The trial court found that Manila Remnant could have not been dragged into this suit
without the fraudulent manipulations of Valencia. Subsequently, Manila Remnant
and A.U. Valencia and Co. elevated the lower court's decision to the Court of Appeals
through separate appeals. On October 13, 1987, the Appellate Court affirmed in
toto the decision of the lower court. Reconsideration sought by petitioner Manila
Remnant was denied, hence the instant petition.
ISSUE:
Whether or not petitioner Manila Remnant should be held solidarily liable
together with A.U. Valencia and Co. and Carlos Crisostomo for the payment of moral,
exemplary damages and attorney's fees in favor of the Ventanillas
HELD:
YES. In the case at bar, the Valencia realty firm had clearly overstepped the
bounds of its authority as agent and for that matter, even the law when it
undertook the double sale of the disputed lots. Such being the case, the principal,
Manila Remnant, would have been in the clear pursuant to Article 1897 of the Civil
Code which states that "(t)he agent who acts as such is not personally liable to that
party with whom he contracts, unless he expressly binds himself or exceeds the limits
of his authority without giving such party sufficient notice of his powers." However,
the unique relationship existing between the principal and the agent at the time of
the dual sale must be underscored. Bear in mind that the president then of both
firms was Artemio U. Valencia, the individual directly responsible for the sale scam.
Hence, despite the fact that the double sale was beyond the power of the agent,
Manila Remnant as principal was chargeable with the knowledge or constructive
notice of that fact and not having done anything to correct such an irregularity was
deemed to have ratified the same. More in point, we find that by the principle of
estoppel, Manila Remnant is deemed to have allowed its agent to act as though it had

plenary

powers.

Article 1911 of the Civil Code provides: "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." In
such a situation, both the principal and the agent may be considered as joint feasors
whose liability is joint and solidary (Verzosa vs. Lim, 45 Phil. 416). In essence,
therefore, the basis for Manila Remnant's solidary liability is estoppel which, in turn,
is rooted in the principal's neglectfulness in failing to properly supervise and control
the affairs of its agent and to adopt the needed measures to prevent further
misrepresentation. As a consequence, Manila Remnant is considered estopped from
pleading the truth that it had no direct hand in the deception employed by its agent.
That the principal might not have had actual knowledge of the agent's misdeed is of
no moment.

De Castro vs CA
Art. 1915. If two or more persons have appointed an agent for a common transaction
or undertaking, they shall be solidarily liable to the agent for all the consequences of
the agency.
Art. 1216. The creditor may proceed against any
oneo f t h e s o l i d a r y d e b t o r s o r s o m e o r a l l o f t h e m simultaneously
. The demand made against one of them shall not be an obstacle to those
which maysubsequently be directed against the others, so longas the debt has not
been fully collected

Filipinas Life Assurance Co. (now Ayala Life Assurance, Inc.) v.

Clemente Pedrosa, TeresitaPedrosa and Jennifer Palacio
G.R. No. 159489, February 04, 2008Quisumbing, J.
FACTS:

Teresita Pedroso is a policyholder of a 20-year endowment life insurance

issued by Filipinas LifeAssurance Co. Pedroso claims Renato Valle was her
insurance agent since 1972 and Valle collectedher monthly premiums. In
the first week of January 1977, Valle told her that the Filipinas Life
EscoltaOffice was holding a promotional investment program for
policyholders. It was offering 8% prepaidinterest a month for certain
amounts deposited on a monthly basis. Enticed, she initially investedand

issued a post-dated check for P10,000. In return, Valle issued Pedroso his
personal check forP800 for the 8% prepaid interest and a Filipinas Life
Agent receipt.

Pedroso called the Escolta office and talked to Francisco Alcantara, the
administrative assistant, whoreferred her to the branch manager,
Angel Apetrior. Pedroso inquired about the promotionalinvestment and
Apetrior confirmed that there was such a promotion. She was even told
she couldpush through with the check she issued. From the records, the
check, with the endorsement of Alcantara at the back, was deposited in
the account of Filipinas Life with the Commercial Bank and Trust Company,
Escolta Branch.

Relying on the representations made by Filipinas Lifes duly authorized

representatives Apetrior andAlcantara, as well as having known agent
Valle for quite some time, Pedroso waited for the maturityof her initial
investment. A month after, her investment of P10,000 was returned to her
after shemade a written request for its refund. To collect the amount,
Pedroso personally went to the Escoltabranch where Alcantara gave her
the P10,000 in cash. After a second investment, she made 7 to 8more
investments in varying amounts, totaling P37,000 but at a lower rate of
5% prepaid interest amonth. Upon maturity of Pedrosos subsequent
investments, Valle would take back from Pedroso thecorresponding
agents receipt he issued to the latter.

Pedroso told respondent Jennifer Palacio, also

a Filipinas Life insurance policyholder, about theinvestment plan. Palacio
made a total investment of P49,550 but at only 5% prepaid
interest.However, when Pedroso tried to withdraw her investment, Valle
did not want to return some P17,000worth of it. Palacio also tried to
withdraw hers, but Filipinas Life, despite demands, refused to returnher
money.
ISSUE:
WON Filipinas Life is jointly and severally liable with Apetrior and
Alcantara on the claim of Pedroso and Palacio or WON its agent Renato
Valle is solely liable to Pedroso and Palacio
HELD:


Pedroso and Palacio had invested P47,000 and P49,550, respectively.
These were received by Valleand remitted to Filipinas Life, using Filipinas
Lifes official receipts. Valles authority to solicit
andreceive investments was also established by the parties. When Pedros
o and Palacio soughtconfirmation, Alcantara, holding a supervisory
position, and Apetrior, the branch manager, confirmedthat Valle had
authority. While it is true that a person dealing with an agent is put upon
inquiry andmust discover at his own peril the agents authority, in this
case, Pedroso and Palacio did exercisedue diligence in removing all doubts
and in confirming the validity of the representations made byValle.

Filipinas Life, as the principal, is liable for obligations contracted by its

agent Valle. By the contract of agency, a person binds himself to render
some service or to do something in representation or onbehalf of another,
with the consent or authority of the latter. The general rule is that the
principal isresponsible for the acts of its agent done within the scope of its
authority, and should bear
thedamage caused to third persons. When the agent exceeds his authority
, the agent becomespersonally liable for the damage. But even when the
agent exceeds his authority, the principal is stillsolidarily liable together
with the agent if the principal allowed the agent to act as though the
agenthad full powers. The acts of an agent beyond the scope of his
authority do not bind the principal,unless the principal ratifies them,
expressly or impliedly.

Ratification
adoption or confirmation by one person of an act performed on his
behalf by anotherwithout authority

Even if Valles representations were beyond his authority as a

debit/insurance agent, Filipinas Lifethru Alcantara and Apetrior expressly
and knowingly ratified Valles acts. Filipinas Life benefited fromthe
investments deposited by Valle in the account of Filipinas Life.