Filipina Life vs Pedroso
liable with Apetrior and Alcantara on the claim of
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
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 Pedroso 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 another without 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.
Rural Bank of Milaor vs Ocfemia
FACTS:
The evidence presented by the respondents through
the testimony of Marife O. Nio, shows that she is the
daughter of Francisca Ocfemia and the late Renato
Ocfemia who died on July 23, 1994. The parents of
her father, Renato Ocfemia, were Juanita Arellano
Ocfemia and Felicisimo Ocfemia.
the bank, showed to it the Deed of Sale, the tax
declaration and receipt of tax payments and
requested the bank for a board resolution so that the
property can be transferred to the name of Renato
Ocfemia the husband of petitioner Francisca Ocfemia
and the father of the other respondents having died
already.
Despite several requests, the bank refused her
request for a board resolution and made many alibis.
She was told that the bank had a new manager and it
had no record of the sale.

Marife O. Nio knows the five (5) parcels of land

which are located in Bombon, Camarines Sur and that
they are the ones possessing them which were
originally owned by her grandparents. During the
lifetime of her grandparents, respondents mortgaged ISSUE:
the said five (5) parcels of land and two (2) others to
the Rural Bank of Milaor. Whether the board of directors of a rural banking
corporation be compelled to confirm a deed of
absolute sale of real property which deed of sale was
executed by the bank manager without prior authority
The spouses Felicisimo Ocfemia and Juanita Arellano of the board of directors of the rural banking
Ocfemia were not able to redeem the mortgaged corporation
properties consisting of 7 parcels of land and so the
mortgage was foreclosed and thereafter ownership
thereof was transferred to the bank. Out of the 7
parcels that were foreclosed, 5 of them are in the HELD:
possession of the respondents because these 5
parcels of land were sold by the bank to the parents
of Marife O. Nio as evidenced by a Deed of Sale
Yes, the board of directors can be compelled to
executed in January 1988.
confirm a deed of absolute sale even though the bank
manager executed such deed without prior authority
from the banking corporation.
The aforementioned 5 parcels of land subject of the
deed of sale, have not been, however transferred in
the name of the parents of Merife O. Nio after they
The Supreme Court ruled that the bank
were sold to her parents by the bank because
acknowledged, by its own acts or failure to act, the
according to the Assessor's Office the five (5) parcels
authority of the manager to enter into binding
of land, subject of the sale, cannot be transferred in
contracts. After the execution of the Deed of Sale,
the name of the buyers as there is a need to have the
respondents occupied the properties in dispute and
document of sale registered with the Register of
paid the real estate taxes due thereon. If the bank
Deeds of Camarines Sur.
management believed that it had title to the property,
it should have taken some measures to prevent the
infringement or invasion of its title thereto and
In view of the foregoing, Marife O. Nio went to the possession thereof.
Register of Deeds of Camarines Sur with the Deed of
Sale in order to have the same registered. The
Register of Deeds, however, informed her that the
In this light, the bank is estopped from questioning the
document of sale cannot be registered without a
authority of the bank manager to enter into the
board resolution of the Bank. Marife Nio then went to
contract of sale. If a corporation knowingly permits
one of its officers or any other agent to act within the
scope of an apparent authority, it holds the agent out
to the public as possessing the power to do those
acts; thus, the corporation will, as against anyone who
has in good faith dealt with it through such agent, be
estopped from denying the agent's authority.
Unquestionably, petitioner has authorized Tena to
enter into the Deed of Sale. Accordingly, it has a clear
legal duty to issue the board resolution sought by
respondents. Having authorized her to sell the
property, it behooves the bank to confirm the Deed of
Sale so that the buyers may enjoy its full use.
Cuison vs CA
FACTS: Kue Cuison is a sole proprietorship engaged
in the purchase and sale of newsprint, bond paper
and scrap.
Valiant Investment Associates delivered various kinds
of paper products to a certain Tan. The deliveries
were made by Valiant pursuant to orders allegedly
placed by Tiac who was then employed in the
Binondo office of petitioner. Upon delivery, Tan paid
for the merchandise by issuing several checks
payable to cash at the specific request of Tiac. In turn,
Tiac issued nine (9) postdated checks to Valiant as
payment for the paper products. Unfortunately, sad
checks were later dishonored by the drawee bank.
Thereafter, Valiant made several demands upon
petitioner to pay for the merchandise in question,
claiming that Tiac was duly authorized by petitioner as
the manager of his Binondo office, to enter into the
questioned transactions with Valiant and Tan.
Petitioner denied any involvement in the transaction
entered into by Tiac and refused to pay Valiant.
Left with no recourse, private respondent filed an
action against petitioner for the collection of sum of
money representing the price of the merchandise.
After due hearing, the trial court dismissed the
complaint against petitioner for lack of merit. On
appeal, however, the decision of the trial court was
modified, but was in effect reversed by the CA. CA
ordered petitioner to pay Valiant with the sum plus
interest, AF and costs.
ISSUE: WON Tiac possessed the required authority
from petitioner sufficient to hold the latter liable for the
disputed transaction
HELD:YES
As to the merits of the case, it is a well-established
rule that one who clothes another with apparent
authority as his agent and holds him out to the public
as such cannot be permitted to deny the authority of
such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in
good faith and in the honest belief that he is what he
appears to be
It matters not whether the representations are
intentional or merely negligent so long as innocent,
third persons relied upon such representations in
good faith and for value. 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.
The above-quoted article is new. It is intended to
protect the rights of innocent persons. In such a
situation, both the principal and the agent may be
considered as joint tortfeasors whose liability is joint
and solidary.
It is evident from the records that by his own acts and
admission, petitioner held out Tiac to the public as the
manager of his store in Binondo. More particularly,
petitioner explicitly introduced to Villanueva, Valiants
manager, as his (petitioners) branch manager as
testified to by Villanueva. Secondly, Tan, who has
been doing business with petitioner for quite a while,
also testified that she knew Tiac to be the manager of
the Binondo branch. Even petitioner admitted his
close relationship with Tiu Huy Tiac when he said that
they are like brothers There was thus no reason for
anybody especially those transacting business with
petitioner to even doubt the authority of Tiac as his
manager in the Binondo branch.
Tiac, therefore, by petitioners own representations
and manifestations, became an agent of petitioner by
estoppel, an admission or representation is rendered
conclusive upon the person making it, and cannot be
denied or disproved as against the person relying
thereon (Article 1431, Civil Code of the Philippines). A
party cannot be allowed to go back on his own acts
and representations to the prejudice of the other party
who, in good faith, relied upon them. Taken in this
light,. petitioner is liable for the transaction entered
into by Tiac on his behalf. Thus, even when the agent
has exceeded his authority, the principal is solidarily
liable with the agent if the former allowed the latter to
fact as though he had full powers (Article 1911 Civil
Code), as in the case at bar.
Finally, although it may appear that Tiac defrauded
his principal (petitioner) in not turning over the
proceeds of the transaction to the latter, such fact
cannot in any way relieve nor exonerate petitioner of
his liability to private respondent. For it is an equitable
maxim that as between two innocent parties, the one
who made it possible for the wrong to be done should
be the one to bear the resulting loss
De Castro vs CA
FACTS: Private respondent Artigo sued petitioners
Constante and Amor De Castro to collect the unpaid
balance of his brokers commission from the De
Castros.
The appellants, De Castros, were co-owners of 4 lots
in Cubao, Quezon City. The appellee, Artigo, was
authorized by appellants to act as real estate broker
in the sale of these properties for the amount of
P23,000,000.00, 5% of which will be given to the
agent as commission. Appellee first found the Times
Transit Corporation and 2 lots were sold. In return, he
received P48,893.76 as commission. Appellee
apparently felt short changed because according to
him, his total commission should be P352,500.00
which is 5% of the agreed price of P7,050,000.00 paid
by Times Transit Corporation to appellants for the 2
lots and that it was he who introduced the buyer to
appellants and unceasingly facilitated the negotiation
which ultimately led to the consummation of the sale.
Hence, he sued to collect the balance of P303,606.24
after having received P48,893.76 in advance.
Appellants argued that appellee is selfishly asking for
more than what he truly deserved as commission to
the prejudice of other agents who were more
instrumental to the consummation of the sale and that
there were more or less 18 others who took active
efforts.
The De Castros argued that Artigos complaint should
have been dismissed for failure to implead
all the co owners of the 2 lots. . The De Castros
contend that failure to implead such indispensable
parties is fatal to the complaint since Artigo, as agent
of all the four co-owners, would be paid with funds co-
owned by the four co-owners. It was shown also that
Constante Amor De Castro signed the authorization
of Artigo as owner and representative of the co-
owners.
ISSUE: Whether or not the complaint merits
dismissal for failure to implead other co-owners as
indispensable parties
HELD:No. The De Castros contentions are devoid of
legal basis. The CA explained that it is not necessary
to implead the co-owners since the action is
exclusively based on a contract of agency between
Artigo and Constante. The rule on mandatory joinder
of indispensable parties is not applicable to the instant
case. Constante signed the note as owner and as
representative of the other co-owners. Under this
note, a contract of agency was clearly constituted
between Constante and Artigo. Whether Constante
appointed Artigo as agent, in Constantes individual or
representative capacity, or both, the De Castros
cannot seek the dismissal of the case for failure to
implead the other co-owners as indispensable parties.
The De Castros admit that the other co-owners are
solidarily liable under the contract of agency, citing
Article 1915 of the Civil Code, which reads: 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. The solidary liability of the four co-
owners, however, militates against the De Castros
theory that the other co-owners should be impleaded
as indispensable parties.
When the law expressly provides for solidarity of the
obligation, as in the liability of co-principals in a
contract of agency, each obligor may be compelled to
pay the entire obligation. The agent may recover the
whole compensation from any one of the co-
principals, as in this case. Indeed, Article 1216 of the
Civil Code provides that a creditor may sue any of the
solidary debtors. This article reads: Art. 1216. The
creditor may proceed against any one of the solidary
debtors or some or all of them simultaneously. The
demand made against one of them shall not be an
obstacle to those which may subsequently be directed
against the others, so long as the debt has not been
fully collected
83. Harry E. Keeler Electric Co. vs. Rodriguez
November 11,1922, Johns, J.***This case involves an
action for the payment of purchase price by plaintiff
Keeler Electric against defendant Rodriguez
Legal Doctrine:
Persons dealing with an assumed agent, whether the
assumed agency be a general or special one, are
bound at theirperil, if they would hold the principal, to
ascertain not only the fact of the agency but the
nature and extent of the authority, and in caseeither is
controverted, the burden of proof is upon them to
establish it.
Facts
Plaintiff is Harry E. Keeler Electric Co., a domestic
corporation based in Manila engaged in the electrical
business, and amongother things in the sale of what
is known as the "Matthews" electric plant.
Defendant is Domingo Rodriguez a resident of
Talisay, Occidental Negros
Montelibano, a resident of Iloilo, went to Keeler
Electric and made arrangement with the latter
wherein:
o
He claimed that he could find purchaser for the
"Matthews" plant
o
Keeler Electric told Montelibano that for any plant that
he could sell or any customer that he could find
he would bepaid a commission of 10%
for his services, if the sale was consummated.
Through Montelibanos efforts, Keeler was able to sell
to Rodriguez
one of the "Matthews" plants
Rodriguez paid Montelibano (the purchase price of
P2,513.55), after the installation of the plant and
without the knowledge ofKeeler Electric,
Keeler Electric filed an action against Rodriguez for
the payment of the purchase price.
Rodriguez: Claimed that he already paid the price of
the plant. In addition, he alleged that:
o
Montelibano sold and delivered the plant to him, and
"was the one who ordered the installation of that
electrical plant"
o
There were evidences: a statement and receipt which
Montelibano signed to whom he paid the money.
o
He paid Montelibano because the latter was the one
who sold, delivered, and installed the electrical plant,
and hepresented to him the account, and assured him
that he was duly authorized to collect the value of the
electrical plant
o
The receipt had the following contents:STATEMENT
Folio No. 2494Mr. DOMINGO RODRIGUEZ,
Iloilo, Iloilo, P.I.
In account withHARRY E. KEELER ELECTRIC
COMPANY, INC.221 Calle Echaque, Quiapo, Manila,
P.I.MANILA, P.I.,
August 18, 1920
.The answer alleges and the receipt shows upon its
face that the plaintiff sold the plant to thedefendant,
and that he bought it from the plaintiff. The receipt is
signed as follows:
Received payment
 HARRY E. KEELER ELECTRIC CO.
Inc.,Recibi(Sgd.) A. C. MONTELIBANO.
Witness (Juan Cenar):
o
Cenar was sent by Keeler Electric to install the plant
in Rodriguezs premises in Iloilo
o Held/Ratio:
He brought with him a statement of account for
Rodriguez but the latter said that he would pay in
Manila.
***Lower Court: In favor of Rodriguez. It held that:
o
Keeler Electric had held out Montelibano to Rodriguez
as an agent authorized to collect
o
Payment to Montelibano would discharge the debt of
Rodriguez
The bill was given to Montelibano for collection
purposes
Keeler Electric appealed. It alleged that:
o
Montelibano had no authority to receive the money.
o
His services were confined to the finding of
purchasers for the "Matthews" plant
o
Montelibano was not an electrician, could not install
the plant and did not know anything about its
mechanism.
Issues:
1. WON Keeler Electric authorized Montelibano to
receive or receipt for money in its behalf2. WON
Rodriguez had a right to assume by any act or deed
of Keeler Electric that Montelibano was authorized to
receive themoney
1. NO, Montelibano was not authorized.
The plant was sold by Keeler Electric to Rodriguez
and was consigned to Iloilo whereit was installed by
Cenar, acting for, and representing, Keeler Electric,
whose expense for the trip is included in, and made
apart of, the bill which was receipted by Montelibano.
a. Montelibano was not an agent of Keeler Electric
o
There is nothing on the face of this receipt to show
that Montelibano was the agent of, or that he was
acting for,Keeler Electric. It is his own personal
receipt and his own personal signature.
o
Outside of the fact that Montelibano received the
money and signed this receipt, there is no evidence
that he had anyauthority, real or apparent, to receive
or receipt for the money.
o
Neither is there any evidence that Keeler Electric ever Article 1162 CC: Payment must be made to the
delivered the statement to Montelibano. (It is very persons in whose favor the obligation is constituted,
apparentthat the statement is the one which was or to anotherauthorized to receive it in his name.
delivered by Keeler Electric to Cenar, and is the one
which Cenar deliveredto Rodriguez)b. It was Juan
Cenar, and not Montelibano who sold the plant to
Rodiguez Article 1727 CC: The principal shall be liable as to
matters with respect to which the agent has exceeded
o hisauthority only when he ratifies the same expressly
or by implication.
The evidence is in direct conflict with

Rodriguezs

own pleadings and the receipt statement which he

offered inevidence. This statement also shows upon
its face that P81.60 of the bill is
round trip fare and machines
transportation costs.
o
This claim must be for the expenses of Cenar in going
to Iloilo from Manila and return, to install the plant,
and isstrong evidence that it was Cenar and not
Montelibano who installed the plant.
o
If Montelibano installed the plant, there would not
have been any necessity for Cenar to make this trip at
the expenseof Rodriguez.
o
After Cenar's return to Manila, Keeler Electric wrote a
letter to Rodriguez requesting the payment of its
account, towhich Rodriguez answered that he already
paid to Montelibano.
Ormachea Tin-Conco vs. Trillana
: The repayment of a debt must be made to the
person in whose favor theobligation is constituted, or
to another expressly authorized to receive the
payment in his name.b. On whether an assumed
authority exist
Certain principles must be considered: (Mechem on
Agency, volume I, section743)
(1) that the law indulges in no bare presumptions that
an agency exists: it must be proved or presumed from
facts;
(2) that the agent cannot establish his own authority,
either by his representations or by assuming to
exercise it;

(3) that an authority cannot be established by mere

rumor or general reputation;
This is in direct conflict with the receipted statement,
which Rodriguez offered in evidence, signed
byMontelibano.
(4)that even a general authority is not an unlimited
o one; and

It will be noted that the receipt which Montelibano

signed is not dated, and it does not show when the
money waspaid.2. NO.a. Relevant laws: (5) that every authority must find its ultimate source in
some act or omission of the principal.Applying the
above rules:

o
Persons dealing with an assumed agent, whether the
assumed agency be a general or special one, are
bound attheir peril, if they would hold the principal, to
ascertain not only the fact of the agency but the
nature and extent of theauthority, and in case either is
controverted, the burden of proof is upon them to
establish it.
o same as a total loss, and to claim from the insurer the
The person dealing with the agent must act with
ordinary prudence and reasonable diligence.
Obviously, if heknows or has good reason to believe
that the agent is exceeding his authority, he cannot
claim protection. So if thesuggestions of probable
limitations be of such a clear and reasonable quality,
or if the character assumed by theagent is of such a
suspicious or unreasonable nature, or if the authority
which he seeks to exercise is of such anunusual or
improbable character, the party dealing with him may
not shut his eyes to the real state of the case,
butshould either refuse to deal with the agent at all, or
should ascertain from the principal the true condition
of affairs.Judgment of the lower court is REVERSED.
Rodriguez should pay Keeler Electric the purchase
price of the plant.
BA Finance vs CA
Under the deed of chattel mortgage, B.A. Finance
Corporation was constituted attorney-in-fact with
full power and authority to file, follow-up,
prosecute, compromise or settle insurance
claims; to sign execute and deliver the
corresponding papers, receipts and documents to
the Insurance Company as may be necessary to
prove the claim, and to collect from the latter the
proceeds of insurance to the extent of its
interests, in the event that the mortgaged car
suffers any loss or damage.
Facts: Spouses Manuel and Lilia Cuady obtained
from Supercars, Inc. bought a Ford Escort 1300, four-
door sedan in installments. To secure the faithful and
prompt compliance of the obligation under the said
promissory note, the Cuady spouses constituted a
chattel mortgage on the aforementioned motor
vehicle. Supercars, Inc. assigned the promissory
note, together with the chattel mortgage, to B.A.
Finance Corporation. The Cuadys made partial
payment leaving an un paid balance.In addition
thereto, the Cuadys owe B.A. Finance .B.A. Finance
Corporation, as the assignee of the mortgage lien
obtained the renewal of the insurance coverage over
the aforementioned motor vehicle for the with Zenith
Insurance Corporation, when the Cuadys failed to
renew said insurance coverage themselves. Under
the terms and conditions of the said insurance
coverage, any loss under the policy shall be payable
to the B.A. Finance Corporation.
The motor vehicle figured in an accident and was
badly damaged. The unfortunate happening was
reported to the B.A. Finance Corporation and to the
insurer, Zenith Insurance Corporation. The Cuadys
asked the B.A. Finance Corporation to consider the
face value of the car insurance policy and apply the
same to the payment of their remaining account and
give them the surplus thereof, if any. But instead of
heeding the request of the Cuadys, B.A. Finance
Corporation prevailed upon the former to just have the
car repaired. Not long thereafter, however, the car
bogged down. The Cuadys wrote B.A. Finance
Corporation requesting the latter to pursue their prior
instruction of enforcing the total loss provision in the
insurance coverage. When B.A. Finance Corporation
did not respond favorably to their request, the Cuadys
stopped paying their monthly installments on the
promissory note. In view of the failure of the Cuadys
to pay the remaining installments on the note, B.A.
Finance Corporation sued them.
B.A. Finance Corporation contended that even if it
failed to enforce the total loss provision in the
insurance policy of the motor vehicle subject of the
chattel mortgage, said failure does not operate to
extinguish the unpaid balance on the promissory note,
considering that the circumstances obtaining in the
case at bar do not fall under Article 1231 of the Civil
Code relative to the modes of extinguishment of
obligations.
Issue: Whether or not BA Finance ca still collect on
the deficiency of the Chattel Mortgage.
Held: In granting B.A. Finance Corporation the
aforementioned powers and prerogatives, the Cuady
spouses created in the formers favor an agency.
Thus, under Article 1884 of the Civil Code of the
Philippines, B.A. Finance Corporation is bound by its
acceptance to carry out the agency, and is liable for
damages which, through its non-performance, the
Cuadys, the principal in the case at bar, may suffer; in
such case, the assignee of the mortgage agreement
is bound by the same stipulation and if the assignee
failed to file and prosecute the insurance claim when
the car was damaged totally, the mortgagor is
relieved from his obligation to pay as he suffered a
loss because of the failure of the mortgagee to file the
claim.
Under the deed of chattel mortgage, B.A. Finance
Corporation was constituted attorney-in-fact with full
power and authority to file, follow-up, prosecute,
compromise or settle insurance claims; to sign
execute and deliver the corresponding papers,
receipts and documents to the Insurance Company as
may be necessary to prove the claim, and to collect
from the latter the proceeds of insurance to the extent
of its interests, in the event that the mortgaged car
suffers any loss or damage.
Yu Eng Cho vs Pan American
FACTS:
Yu Eng Cho is the owner of Young Hardware Co.
and Achilles Marketing. In connection with
hisbusiness, he travels from time to time to Malaysia,
Taipei and Hongkong. On July 10, 1976,petitioners
bought plane tickets from Claudia Tagunicar who
represented herself to be an agent of Tourist World
Services, Inc. (TWSI). The destinations are
Hongkong, Tokyo, San Francisco, U.S.A., forthe
amount of P25,000.00. The purpose of this trip is to
go to Fairfield, New Jersey, U.S.A. to buy to 2lines of
infrared heating system processing textured plastic
article.
On said date, only the passage from Manila to
Hongkong, then to Tokyo, were confirmed. The
flightfrom Tokyo to San Francisco was on RQ
status, meaning on request. Per instruction of
Tagunicar,petitioners returned after a few days for the
confirmation of the Tokyo-San Francisco segment of
thetrip. After calling up Canilao of TWSI, Tagunicar
told petitioners that their flight is now confirmed allthe
way. Thereafter, she attached the confirmation
stickers on the plane tickets.
On July 23, 1978, plaintiffs left for Hongkong and
stayed there for 5 days. Upon their arrival in
Tokyo,they called up Pan-Am office for reconfirmation
of their flight to San Francisco. Said office,
however,informed them that their names are not in
the manifest. Since petitioners were supposed to
leave onthe 29th of July, and could not remain in
Japan for more than 72 hours, they were constrained
toagree to accept airline tickets for Taipei instead, per
advice of Japan Air Lines officials. This is theonly
option left to them because Northwest Airlines was
then on strike, hence, there was no chancefor the
petitioners to obtain airline seats to the United States
within 72 hours. Petitioners paid forthese tickets.
Upon reaching Taipei, there were no flights available
for petitioners, thus, they were forced to returnback to
Manila on August 3, 1978, instead of proceeding to
the United States. Japan Air Linesrefunded the
petitioners the difference of the price for Tokyo-Taipei
and Tokyo-San Francisco.
In view of their failure to reach Fairfield, New Jersey,
Radiant Heat Enterprises, Inc. cancelled Yu EngChos
option to buy the two lines of infra-red heating system.
The agreement was for him to inspectthe equipment
and make final arrangements with the said company
not later than August 7, 1978.From this business
transaction, Yu Eng Cho expected to realize a profit of
P300,000.00 toP400,000.00.
Note: Tagunicar is an independent travel solicitor
(not an agent of Pan Am or TWSI), for thepurchase of
their plane tickets. As such travel solicitor, she helps
in the processing of travel paperslike passport, plane
tickets, booking of passengers and some assistance
at the airport. She is knownto Pan-Am, TWSI/Julieta
Canilao, because she has been dealing with them in
the past years.
CA found Tagunicar not a duly authorized agent or
representative of either Pan Am or TWSI. It heldthat
their business transactions are not sufficient to
consider Pan Am as the principal, and Tagunicarand
TWSI as its agent and sub-agent, respectively. It
further held that Tagunicar was not authorizedto
confirm the bookings of, nor issue validation stickers
to, herein petitioners and hence, Pan Am and TWSI
cannot be held responsible for her actions.
ISSUE:
WON Tagunicar is a sub-agent of TWSI while TWSI is
a duly authorized ticketing agent of PanAm
HELD: No.
By the contract of agency, a person binds himself to
render some service or to do something
inrepresentation or on behalf of another, with the
consent or authority of the latter. The elements of
agency are: (1) consent, express or implied, of the
parties to establish the relationship; (2) the objectis
the execution of a juridical act in relation to a third
person; (3) the agent acts as a representativeand not
for himself; (4) the agent acts within the scope of his
authority. It is a settled rule thatpersons dealing with
an assumed agent are bound at their peril, if they
would hold the principalliable, to ascertain not only the
fact of agency but also the nature and extent of
authority, and incase either is controverted, the
burden of proof is upon them to establish it.
Tagunicar testified that when she pays TWSI, she
already deducts in advance her commission
andmerely gives the net amount to TWSI. From all
sides of the legal prism, the transaction is simply
acontract of sale wherein Tagunicar buys airline
tickets from TWSI and then sells it at a premium toher
clients. There is nothing in the records to show that
respondent Tagunicar has been employed byPan Am
as its agent, except the bare allegation of petitioners
NAPOCOR v. NATIONAL MERCHANDISING Corp.
G.R. Nos. L-33819 and L-33897; October 23, 1982
Ponente: J. Aquino
FACTS:
Plaintiff-appellant National Power Corporation (NPC)
and defendant- appellant National Merchandising
Corporation (NAMERCO), the Philippine
representative of New York-based International
Commodities Corporation, executed a contract of sale
of sulfur with a stipulation for liquidated damages in
case of breach.
Defendant-appellant Domestic Insurance Company
executed a performance bond in favor of NPC to
guarantee the seller's obligation. In entering into the
contract, Namerco, however, did not disclose to NPC
that Namerco's principal, in a cabled instruction,
stated that the sale was subject to availability of a
steamer, and contrary to its principal's instruction,
Namerco agreed that non-availability of a steamer
was not a justification for non-payment of liquidated
damages.
The New York supplier was not able to deliver the
sulfur due to its inability to secure shipping space.
Consequently, the Government Corporate Counsel
rescinded the contract of sale due to the supplier's
non-performance of its obligations, and demanded
payment of liquidated damages from both Namerco
and the surety. Thereafter, NPC sued for recovery of
the stipulated liquidated damages. After trial, the
Court of First Instance rendered judgment ordering
defendants-appellants to pay solidarity to the NPC
reduced liquidated damages with interest.
ISSUE:
Whether NaMerCo exceeded their authority
HELD:
Yes, NaMerCo exceeded their authority.
The Supreme Court held that before the contract of
sale was signed Namerco was already aware that its
principal was having difficulties in booking shipping
space.
It is being enforced against the agent because article
1897 implies that the agent who acts in excess of his
authority is personally liable to the party with whom he
contracted.
Moreover, the rule is complemented by article 1898 of
the Civil Code which provides that "if the agent
contracts in the name of the principal, exceeding the
scope of his authority, and the principal does not ratify
the contract, it shall be void if the party with whom the
agent contracted is aware of the limits of the powers
granted by the principal".
Namerco never disclosed to the Napocor the cabled
or written instructions of its principal. For that reason
and because Namerco exceeded the limits of its
authority, it virtually acted in its own name and not as
agent and it is, therefore, bound by the contract of
sale which, however, is not enforceable against its
principal
Tuazon vs Heirs of Ramos
FACTS:
This case arose from failure of the petitioners to
pay the respondents predecessor-in-interest (
deceased Bartolome Ramos). The check in issue
was indorsed by the petitioner (Tuazon) in favor of
the said predecessor.
The petitioners Leonilo and Maria (Tuazon)
purchased 8,326 cavans of rice from Bartolome
Ramos. Only 4,437 cavans were paid leaving
unpaid 3,889 cavans with value of P 1,211,919.00.
In payment, the spouses issued several checks.
The checks bounced due to insufficiency of funds.
Side of the Petitioner:
Denied the purchase of rice from Bartolome and
alleged that it was Magdalena Ramos (his wife)
owned and traded the merchandise. They also
alleged that Maria Tuazon was merely
Magdalenas agent.
They argued that Evangeline Santos (the one who
issued the checks) was the buyer of the rice, and
the checks were merely turned over by Maria to
Bartolome, without knowing that these were not
funded. They argued that they were mere agents
and should not be held answerable.
They alleged that Santos should be primarily liable
to Ramos because she was the one who had
purchased the merchandise from Bartolome as
evidenced by the checks that had been drawn in
her name.
The petitioners also alleged that their personal
properties were sold because they were meeting
financial difficulties and they were valued in good
faith.
Side of the Defendant:
The Tuazons already knew that they had no
available funds to support the checks, and
anticipated that they will be sued. Thus, they
executed fictitious sales of their properties
(residential house and lot and a Toyota)
RTC Ruling:
In favor of the plaintiffs (Bartolome) and against
the defendants (Tuazon), ordering the defendants
to pay the plaintiffs as follows:
o 1,750,050.00 + interest; 50,000.00
attorneys fees; 20,000.00 moral
damages; and pay the cost of suit.
CA Ruling:
Appeal is DISMISSED and the decision is
AFFIRMED.
ISSUES:
1. WON Maria Tuazon was considered as an
agent of Bartolome Ramos
2. Won Evangeline Santos was an indispensable
party
HELD:
No.
The declarations of agents alone are generally
insufficient to establish the fact or extent of their
authority. The law makes no presumption of
agency; proving its nature and extent is incumbent
upon the person alleging it. The petitioners raise
the fact of agency as an affirmative defense, yet
fail to prove its existence.
Their filing a suit against her in their own names
negates their claim that they acted as mere agents
in selling the rice obtained from Bartolome Ramos.
No.
There is no privity of contract between the
respondents and Santos. Maria Tuazon indorsed
the questioned checks in favor of the respondent,
as indorser, in case the checks were dishonored,
she would pay the corresponding amount. After an
instrument is dishonored by nonpayment,
indorsers cease to be merely secondarily liable;
they become principal debtors whose liability
becomes identical to that of the original obligor.
DOCTRINE:
In a contract of agency, one binds oneself to
render some service or to do something in
representation or on behalf of another, with the
latters consent or authority.
The following are the elements of agency:
o (1) the parties consent, express or
implied, to establish the relationship;
o (2) the object, which is the execution of
a juridical act in relation to a third
person;
o (3) the representation, by which the one
who acts as an agent does so, not for
oneself, but as a representative;
o (4) the limitation that the agent acts
within the scope of his or her authority.
As the basis of agency is representation, there
must be, on the part of the principal, an actual
intention to appoint, an intention naturally inferable
from the principals words or actions. In the same
manner, there must be an intention on the part of
the agent to accept the appointment and act upon
it. Absent such mutual intent, there is generally no
agency.