Rallos v. Felix Go Chan (MAI) January 31, 1978Muñoz Palma, J.F A C T S :   C o n c e p c i o n   a n d   G e r u n d i a   R a l l o s   w e r e sisters 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,S imeon Ra l l os , au tho r i z i ng h im to se l l f o r and i n their behalf the aforementioned parcel of land. OnM a r c h   1 9 5 5 ,   C o n c e p c i o n   R a l l o s   d i e d .   O n September 1955, Simeon Rallos sold the undividedsha res o f h i s s i s t e r s i n l o t 5983 t o Fe l i x Go Chan and 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 thes a l e   o f   t h e   u n d i v i d e d   s h a r e   o f   t h e   d e c e a s e d Concepcion Rallos be declared unenforceable, andsa id sha re be reconveyed t o he r es ta te ; ( 2 ) t ha t the TCT issued in the name of Felix Go Chan andSons Realty Corporation be cancelled; and (3) thatt he p la i n t i f f be i ndemn i f i ed by way o f a t t o rney ’ s fees and payment of costs of suit.  The   t r i a l   cou r t   r ende red   j udgmen t   dec la r i ng   t he deed of sale null and void, insofar as the one-half  p ro - i nd i v i so sha re o f Concepc ion Ra l l os   i n t he p r o p e r t y   i n   q u e s t i o n ,   a n d   s e n t e n c i n g   J u a n B o r r o m e o ,  t h e   a d m i n i s t r a t o r   o f   t h e   e s t a t e   o f   S i m e o n   R a l l o s ,   t o   p a y   F e l i x   G o  C h a n   a n d   S o n s Realty 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 theprincipal’s property after the latter’s death is validHELD: NO. The general rule in Article 1919 of theN C C   i s t h a t d e a t h   i s   o n e   o f t h e   c a u s e s   f o r   t h e e x t i n g u i s h m e n t   o f   a g e n c y .   T h e r e   b e i n g  a n integration of the personality of the principal intot h a t   o f   t h e   a g e n t ,   i t   i s   n o t   p o s s i b l e   f o r   t h e representation to continue once the death of eitheri s   e s t a b l i s h e d .   T h e r e   a r e   c e r t a i n   e x c e p t i o n s , howeve r , A r t i c l e 1931 be ing one o f t hem. Unde r this provision, an act done by the agent after thedeath of the principal is valid and effective if twocond i t i ons   concu r :   ( 1 )   t he  agen t   ac ted  w i t hou t know ledge o f t he dea th o f t he p r i nc ipa l ; and (2 ) t h a t   t h e   t h i r d   p e r s o n   w h o   c o n t r a c t e d   w i t h   t h e a g e n t   a c t e d   i n  g o o d   f a i t h .   B u t   b e c a u s e   i t   w a s established that Simeon Rallos had knowledge of the 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 voidab initio.Simeon Rallos’ actof selling the share of Concepcion after her death is therefore null and void. AGENCY: The relationship of agency is whereby one party,c a l l e d   t h e   p r i n c i p a l   ( m a n d a n t e ) ,   a u t h o r i z e s another, called the agent (mandatario), to act forand in his behalf in transactions with third persons. The essential elements of agency are: (1) there isc o n s e n t ,   e x p r e s s   o r   i m p l i e d   o f   t h e   p a r t i e s   t o es tab l i sh   t he  re l a t i onsh ip ;   ( 2 )   t he  ob jec t i s   t heexecu t i on o f a j u r i d i ca l ac t i n r e l a t i on t o a t h i r d person; (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 by h i s

p r i nc ipa l ; h i s ac t i s t he ac t o f t he p r i nc ipa l i f   done within the scope of the authority. Qui facit peralium facit se. "He who acts through another actshimself".ORIENT AIR SERVICESvs.CAFACTS:•American Airlines and Orient Air Services and Hotel Representatives entered into a General Sales Agency Agreement whereby Americanauthorized the latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation (services:solicit and promote passenger traffic, servicing and supervising agents etc.)oIt was stipulated that neither Orient nor its sub-agents perform services for any other air carrier similar to those to be performedhereunder for American without the prior written consent of AmericanoRemittances- ticket stock or exchange orders LESS commissionsoAmerican will pay Orient sales agency commission and an overriding commission – 3% of the tariff fares and charges for allsales of transportation over American’s service by Orient or its sub-agentsoIn case of default (remittance) American may terminate the agreement; otherwise either party may terminate without cause bygiving 30 days’ notice•American alleged that Orient failed to promptly remit the net proceeds of sales – terminated the Agreement – filed suit for accounting with preliminary attachment or garnishment, mandatory injunction and restraining order •Orient denied allegations contending that after the application to the commission due it , plaintiff in fact still owed Orient a balance inunpaid overriding commissions•TC: in favor of Orient – termination was illegal and improper- ORDERED PLAINTIFF TO REINSTATE DEFENDANT AS ITSGENERAL SALES AGENT•CA: affirmed TC with some modifications with respect to the monetary awards•AMERICAN claims overriding commission should be based only on ticketed sales-to be entitled to the 3% overriding commission, the salemust be made by Orient Air and the sale must be done with the use of American’s ticket stocks•ORIENT: contractual stipulation of 3% overriding commission covers the total revenue of American not merely from the ticketed sales,invoking its designation as the EXCLUSIVE General sales agent of americanISSUE: extent of Orient Air’s right to the 3% overriding commissionHELD: basis should be TOTAL REVENUE (in favor of Orient)•2 commissions; a) sales agency commission; b) overriding commission of 3% of tariff fares and charges for all sales of passenger transpoover American air services. The latter type of commissions would accrue for sales of American made not on its ticket stock but on theticket stock of other air carriers sold by such carriers or other authorized ticketing facilities or travel agents. To rule otherwise would eraseany distinction between the 2 types of commissions

•American air was the party responsible for the preparation of the agreement (contract of adhesion)•Since the American was still obligated to Orient for the said commission, Orient was justified in refusing to remit the sums demanded. Thetermination was therefore WITHOUT cause and basis•(AGENCY PART) – Appellate court erred in ordering American air to reinstate the defendant as its general sales agentoCompelling American to extend its personality to Orient would be violative of the principles and essence of AGENCYoAGENCY- contract whereby "a person binds himself to render some service or to do something in representation or on behalf of another, WITH THE CONSENT OR AUTHORITY OF THE LATTER oIn an agent-principal relationship, the personality of the principal is extended through the facility of the agentoThe agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such arelationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by anycourt.Eduardo Litonjua, Jr. and Antonio Litonjua v. Eternit Corp. (now Eterton Multi-ResourcesCorp.), Eteroutremer, S.A. and Far East Bank & Trust Co.G.R. No. 144805 June 8, 2006Callejo, Sr.FACTS:E t e r n i t   C o r p .   i s   e n g a g e d   i n   t h e   m a n u f a c t u r e   o f   r o o f i n g   m a t e r i a l s  a n d   p i p e   p r o d u c t s .   I t s manufacturing operations were conducted on 8 parcels of land located in Mandaluyong City, coveredby TCTs with Far East Bank & Trust Company, as trustee. 90% of the shares of stocks of Eternit Corp.were owned by Eteroutremer S.A. Corporation (ESAC), a corporation organized and registered underthe laws of Belgium. Jack Glanville, an Australian citizen, was the General Manager and President of Eternit Corp., while Claude Frederick Delsaux was the Regional Director for Asia of ESAC.In 1986, the management of ESAC grew concerned about the political situation in the Philippines andwanted to stop its operations in the country. The Committee for Asia of ESAC instructed MichaelAdams, a member of Eternit Corp.’s Board of Directors, to dispose of the eight parcels of land.Adams engaged the services of realtor/broker Lauro G. Marquez so that the properties could beoffered for sale to prospective buyers.Marquez offered the parcels of land and the improvements thereon to Eduardo B. Litonjua, Jr. of theL i t on jua  &  Company ,   I nc .  Marquez  dec la red   t ha t   he  was au tho r i zed   t o   se l l   t he  p rope r t i es   f o r P27,000,000.00 and that the terms of the sale were subject to negotiation.Eduardo Litonjua, Jr. responded to the offer. Marquez showed the property to Eduardo Litonjua, Jr.,a n d   h i s   b r o t h e r   A n t o n i o   K .   L i t o n j u a .   T h e   L i t o n j u a   s i b l i n g s  o f f e r e d   t o   b u y   t h e   p r o p e r t y   f o r P20,000,000.00 cash. Marquez apprised Glanville

of the Litonjua siblings’ offer and relayed the sameto Delsaux in Belgium, but the latter did not respond. Glanville telexed Delsaux in Belgium, inquiringon his position/ counterproposal to the offer of the Litonjua siblings. Delsaux sent a telex to Glanvillestating that, based on the “Belgian/Swiss decision,” the final offer was “US$1,000,000.00 andP2,500,000.00 to cover all existing obligations prior to final liquidation.L i t on jua ,   J r .   accep ted   t he   coun te rp roposa l   o f  De l saux .  Marquez   con fe r red  w i t h  G lanv i l l e ,   and confirmed that the Litonjua siblings had accepted the counter-proposal of Delsaux. He also statedthat the Litonjua siblings would confirm full payment within 90 days after execution and preparationof all documents of sale, together with the necessary governmental clearances. The Litonjua brothers deposited the amount of US$1,000,000.00 with the Security Bank & TrustCompany, Ermita Branch, and drafted an Escrow Agreement to expedite the sale.With the assumption of Corazon Aquino as President of RP, the political situation in the Philippineshad improved. Marquez received a telephone call from Glanville, advising that the sale would nolonger proceed. Glanville followed it up with a letter, confirming that he had been instructed by hisprincipal to inform Marquez that the decision has been taken at a Board Meeting not to sell theproperties on which Eternit Corp. is situated.When apprised of this development, the Litonjuas, through counsel, wrote Eternit Corp., demandingpayment for damages they had suffered on account of the aborted sale. EC, however, rejected theirdemand.ISSUE:WON Marquez, Glanville, and Delsaux were authorized by respondent Eternit Corp. to act as itsagents relative to the sale of the properties of Eternit Corp., and if so, what are the boundaries of theirauthority as agentsHELD:No.A corporation is a juridical person separate and distinct from its members or stockholders and is notaffected by the personal rights, obligations and transactions of the latter. It may act only through itsboard of directors or, when authorized either by its by-laws or by its board resolution, through itsofficers or  agents in the normal course of business. The general principles of agency govern therelation between the corporation and its officers or agents, subject to the articles of incorporation, by-laws, or relevant provisions of law. The property of a corporation is not the property of the stockholders or members, and as such, maynot be sold without express authority from the board of directors. Physical acts, like the offering of theproperties of the corporation for sale, or the acceptance of a counter-offer of prospective buyers of such properties and the execution of the deed of sale covering such property, can be performed by thecorporation only by officers or agents duly authorized for the purpose by corporate by-laws or byspecific acts of the board of directors. Absent such valid delegation/authorization, the rule is that thedeclarations of an individual director relating to the affairs of the corporation, but not in the course of,or connected with, the performance of authorized duties of such director, are not binding on thecorporation.

While a corporation may appoint agents to negotiate for the sale of its real properties, the final say willhave to be with the board of directors through its officers and agents as authorized by a boardresolution or by its by-laws.30 An unauthorized act of an officer of the corporation is not binding on itunless the latter ratifies the same expressly or impliedly by its board of directors. Any sale of realproperty of a corporation by a person purporting to be an agent thereof but without written authorityfrom the corporation is null and void.An agency may be expressed or implied from the act of the principal, from his silence or lack of action,or his failure to repudiate the agency knowing that another person is acting on his behalf withoutauthority.  Acceptance by the agent may be expressed, or implied from his acts which carry out theagency, or from his silence or inaction according to the circumstances. Agency may be oral unless thelaw requires a specific form. However, to create or convey real rights over immovable property, a special power of attorney is necessary. The Litonjuas failed to adduce in evidence any resolution of the Board of Directors of Eternit Corp.empowering Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for sale, for and in itsbehalf, the 8 parcels of land owned by Eternit Corp. including the improvements thereon. The bare factthat Delsaux may have been authorized to sell to Ruperto Tan the shares of stock of respondent ESACcannot be used as basis for Litonjua’s claim that he had likewise been authorized by Eternit Corp. tosell the parcels of land.While Glanville was the President and General Manager of Eternit Corp., and Adams and Delsaux weremembers of its Board of Directors, the three acted for and in behalf of respondent ESAC, and not asduly authorized agents of Eternit Corp.; a board resolution evincing the grant of such authority isneeded to bind Eternit Corp. to any agreement regarding the sale of the subject properties. Such boardresolution is not a mere formality but is a condition sine qua non to bind Eternit Corp.Requisites of an agency by estoppels: (1) the principal manifested a representation of the agent’sauthority or knowingly allowed the agent to assume such authority; (2) the third person, in good faith,relied upon such representation; (3) relying upon such representation, such third person has changedhis position to his detriment.ocelyn B. Doles vs. Ma. Aura Tina AngelesG.R. No. 149353. June 26, 2006. Facts:Petitioner executed a Deed of Absolute Sale ceding a parcel of land in favor of respondent to satisfy thealleged indebtedness of the former in the amount of P405,430.00. Since the said land was mortgaged tothe National Home Mortgage Finance Corporation, they further agreed that respondent assume theremaining balance of the loan. Learning that the petitioner still has arrearages, respondent demanded thatthe arrearages be paid first. Petitioner did not heed, thus a case was filed by the respondent.In answer, the petitioner alleged that sale was void for lack of consideration and that she was not indebtedto the respondent as she only referred her friends to respondent whom she knew to be engaged in the business of lending money in exchange for personal checks through her capitalist Arsenio Pua. Further petitioner contended that since the respondent is also an agent, she does not have the capacity to sue her.It is an admitted fact by both petitioner and defendant, based on their testimonies, that respondent knewthat the money will be used by the friends of the petitioner; that the respondent was merely representingArsenio Pua; and that before the supposed friends of the petitioner defaulted in payment, each issued their personal checks in the name of Arsenio Pua for the payment of their debt.Issue/s:Whether or not petitioner and respondent were acting on their personal capacity or as mere agents.Ruling:

The question whether an agency has been created is ordinarily a question which may be established in thesame was as any other fact, either by direct or circumstantial evidence. Agency may be implied from thewords and conduct of the parties and the circumstances of the particular case. Though the fact or extent ofauthority of the agents may not, as a general rule, be established from the declarations of the agents alone,if one frofessed to act as agent for another, she may be stopped to deny her agency both as against theasserted principal and the third persons interested in the transaction in which he or she is engaged.In this case, petitioner knew that the financier of the respondent is Pua, and respondent knew that the borrowers are friends of petitioner. It is sufficient that petitioner disclosed to respondent that the formerwas acting in behalf of her principals, her friends. For an agency to arise, it is not necessary that the principal personally encounter the third person with whom the agent interacts.Here, both petitioner and respondent have undeniably disclosed to each other that they are representingsomeone else and so both of them are estopped to deny the same.That both parties acted as mere agents is shown by the undisputed fact that the friends of the petitionerissued checks in payment of the loan in the name of Arsenio Pua.Eurotech Industrial Technologies, Inc. v. Edwin Cuizon and Erwin CuizonG.R. No. 167552 April 23, 2007Chico-Nazario, J.FACTS:Eurotech is engaged in the business of importation and distribution of various European industrialequipment. It has as one of its customers Impact Systems Sales which is a sole proprietorship ownedby Erwin Cuizon.Eurotech sold to Impact Systems various products allegedly amounting to P91,338.00. Cuizonssought to buy from Eurotech 1 unit of sludge pump valued at P250,000.00 with Cuizons making adown payment of P50,000.00. When the sludge pump arrived from the United Kingdom, Eurotechrefused to deliver the same to Cuizons without their having fully settled their indebtedness toEurotech. Thus, Edwin Cuizon and Alberto de Jesus, general manager of Eurotech, executed a Deedof Assignment of receivables in favor of Eurotech.Cuizons, despite the existence of the Deed of Assignment, proceeded to collect from Toledo PowerCompany the amount of P365,135.29. Eurotech made several demands upon Cuizons to pay theirobligations. As a result, Cuizons were able to make partial payments to Eurotech. Cuizons’ totalobligations stood at P295,000.00 excluding interests and attorney’s fees.Edwin Cuizon alleged that he is not a real party in interest in this case. According to him, he wasacting as mere agent of his principal, which was the Impact Systems, in his transaction with Eurotechand the latter was very much aware of this fact.ISSUE:WON Edwin exceeded his authority when he signed the Deed of Assignment thereby bindinghimself personally to pay the obligations to EurotechHELD:No.Edwin insists that he was a mere agent of Impact Systems which is owned by Erwin and that hisstatus as such is known even to Eurotech as it is alleged in the Complaint that he is being sued in hiscapacity as the sales manager of the said business venture. Likewise, Edwin points to the Deed of Assignment which clearly states that he was acting as a representative of Impact Systems in saidtransaction.

Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts,unless he expressly binds himself or exceeds the limits of his authority without giving such partysufficient notice of his powers.In acontract of agency, a person binds himself to render some service or to do something inrepresentation or on behalf of another with the latter’s consent. Its purpose is to extend thepersonality of the principal or the party for whom another acts and from whom he or she derives theauthority to act. The basis of agency is representation, that is, the agent acts for and on behalf of theprincipal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal.elements of the contract of agency: (1) consent, express or implied, of the parties to establish therelationship; (2) the object is the execution of a juridical act in relation to a third person; (3) theagen t   ac t s  as  a   rep resen ta t i ve  and  no t f o r   h imse l f ; ( 4 )   t he agen t   ac t s  w i t h i n   t he scope  o f   h i sauthorityAn agent, who acts as such, is not personally liable to the party with whom he contracts. There are 2instances when an agent becomes personally liable to a third person. The first is when he expresslybinds himself to the obligation and the second is when he exceeds his authority. In the last instance,the agent can be held liable if he does not give the third party sufficient notice of his powers. Edwindoes not fall within any of the exceptions contained in Art. 1897.In the absence of an agreement to the contrary, a managing agent may enter into any contracts thathe deems reasonably necessary or requisite for the protection of the interests of his principalentrusted to his management.Edwin Cuizon acted well-within his authority when he signed the Deed of Assignment. Eurotechrefused to deliver the 1 unit of sludge pump unless it received, in full, the payment for ImpactSystems’ indebtedness. Impact Systems desperately needed the sludge pump for its business sinceafter it paid the amount of P50,000.00 as downpayment it still persisted in negotiating with Eurotechwhich culminated in the execution of the Deed of Assignment of its receivables from Toledo PowerCompany. The significant amount of time spent on the negotiation for the sale of the sludge pumpunderscores Impact Systems’ perseverance to get hold of the said equipment. Edwin’s participationin the Deed of Assignment was “reasonably necessary” or was required in order for him to protectthe business of his principal.Philex Mining Corporation vs. CIR [G.R. No. 148187 (April 16, 2008)]Post under case digests, Civil Law at Tuesday, February 21, 2012 Posted by Schizophrenic Mind

Facts: Petitioner Philex entered into an agreement with Baguio Gold Mining Corporation for the

former to manage the latter’s mining claim know as the Sto. Mine. The parties’ agreement was

denominated as “Power of Attorney”. The mine suffered continuing losses over the years, which

resulted in petitioners’ withdrawal as manager of the mine. The parties executed a “Compromise

Dation in Payment”, wherein the debt of Baguio amounted to Php. 112,136,000.00. Petitioner

deducted said amount from its gross income in its annual tax income return as “loss on

the settlement ofreceivables from Baguio Gold against reserves and allowances”. BIR

disallowed the amount as deduction for bad debt. Petitioner claims that it entered a contract of

agency evidenced by the “power of attorney” executed by them and the advances made by

petitioners is in the nature of a loan and thus can be deducted from its gross income. Court of

Tax Appeals (CTA) rejected the claim and held that it is a partnership rather than an agency. CA

affirmed CTA 

Issue: Whether or not it is an agency. 

Held: No. The lower courts correctly held that the “Power of Attorney” (PA) is the instrument

material that is material in determining the true nature of the business relationship between

petitioner and Baguio. An examination of the said PA reveals that a partnership or joint venture

was indeed intended by the parties. While a corporation like the petitioner cannot generally

enter into a contract of partnership unless authorized by law or its charter, it has been held that

it may enter into a joint venture, which is akin to a particular partnership. The PA indicates that

the parties had intended to create a PAT and establish a common fund for the purpose. They

also had a joint interest in the profits of the business as shown by the 50-50 sharing of income

of the mine. 

Moreover, in an agency coupled with interest, it is the agency that cannot be revoked or

withdrawn by the principal due to an interest of a third party that depends upon it or the mutual

interest of both principal and agent. In this case the non-revocation or non-withdrawal under the

PA applies to the advances made by the petitioner who is the agent and not the principal

under the contract. Thus, it cannot be inferred from the stipulation that it is an agency. Regina Dizon et al v. CA and Overland Express Lines, Inc.G.R. No. 122544 January 28, 1999Martinez, J.FACTS:Overland Express Lines, Inc. entered into a Contract of Lease with Option to Buy with petitionersinvolving a 1,755.80 square meter parcel of land situated at corner MacArthur Highway and South“H” Street, Diliman, Quezon City. The term of the lease was for 1 year commencing from May 16,1974 up to May 15, 1975. During this period, Overland Express Lines was granted an option topurchase for the amount of P3,000.00 per square meter. Thereafter, the lease shall be on a permonth basis with a monthly rental of P3,000.00.

For failure of Overland Express Lines to pay the increased rental of P8,000.00 per month effective June 1976, petitioners filed an action for ejectment against it. The lower court rendered judgmentordering Overland Express Lines to vacate the leased premises and to pay the sum of P624,000.00representing rentals in arrears and/or as damages in the form of reasonable compensation for theuse and occupation of the premises during the period of illegal detainer from June 1976 to November1982 at the monthly rental of P8,000.00, less payments made, plus 12% interest per annum fromNovember 18, 1976, the date of filing of the complaint, until fully paid, the sum of P8,000.00 amonth starting December 1982, until Overland Express Lines fully vacates the premises, and to payP20,000.00 as and by way of attorney’s fees.ISSUE:WON  Ove r l and  Exp ress  L ines  ac tua l l y   pa id   t he  a l l eged  P300 ,000 .00   t o  F ide la  D i zon ,   as representative (agent) of petitioners in consideration of the optionHELD:No.CA opined that the payment by Overland Express Lines of P300,000.00 as partial payment for theleased property, which petitioners accepted (through Alice A. Dizon) and for which an official receiptwas issued, was the operative act that gave rise to a perfected contract of sale, and that for failureof petitioners to deny receipt thereof, Overland Express Lines can therefore assume that Alice A.Dizon, acting as agent of petitioners, was authorized by them to receive the money in their behalf.CA went further by stating that in fact, what was entered into was a “conditional contract of sale”wherein ownership over the leased property shall not pass to the Overland Express Lines until it hasfully paid the purchase price. Since Overland Express Lines did not consign to the court the balanceof the purchase price and continued to occupy the subject premises, it had the obligation to pay theamount of P1,700.00 in monthly rentals until full payment of the purchase price.In an attempt to resurrect the lapsed option, Overland Express Lines gave P300,000.00 to petitioners(thru Alice A. Dizon) on the erroneous presumption that the said amount tendered would constitute aperfected contract of sale pursuant to the contract of lease with option to buy. There was no validconsent by the petitioners (as co-owners of the leased premises) on the supposed sale entered intoby Alice A. Dizon, as petitioners’ alleged agent, and Overland Express Lines. The basis for agency isrepresentation and a person dealing with an agent is put upon inquiry and must discover upon hisperil the authority of the agent. As provided in Article 1868 of the New Civil Code, there was noshowing that petitioners consented to the act of Alice A. Dizon nor authorized her to act on theirbehalf  with regard to her transaction with private respondent. The most prudent thing privaterespondent should have done was to ascertain the extent of the authority of Alice A. Dizon. Beingnegligent in this regard, private respondent cannot seek relief on the basis of a supposed agency.Every  pe rson dea l i ng  w i t h  an  agen t   i s   pu t   upon   i nqu i r y and  mus t   d i scove r   upon  h i s   pe r i l   t he authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of theagent’s authority, and his ignorance of that authority will not be any excuse. Persons dealing with anassumed agency, whether the assumed agency be a general or special one, are bound at their peril,if they would hold the principal, to ascertain not only the fact of the agency but also the nature andextent of the authority, and in case either is controverted, the burden of proof is upon them toestablish it.DOMINION INSURANCE CORPORATION V. COURT OF APPEALSG.R. No. 129919. February 6, 2002PARDO, J.

FACTS:Private Respondent, Rodolfo Guevarra filed a complaint for sum of money againstthe petitioner Dominion Insurance Corporation (DIC), seeking to recover the sum ofP 156,473.90, which he claimed to have advanced in his capacity as manager of thepetitioner to satisfy the claims filed by their clients.DIC however stated that they are not liable to pay respondent because he had notacted within his authority as an agent for Dominion. They have instructed therespondent that the payment for the claims of the insured should be taken from therevolving fund, not from respondents’ personal money.ISSUES:Whether respondent have acted within his duties as the agent of petitionerWhether petitioner is liable to reimburse respondent.RULING:The court held that by contract of agency, a person a person binds himself to rendersome service or to do something in representation or on behalf of another, with theconsent or authority of the latter. The basis for agency is representation. On the partof the principal, there must be an actual intention to appoint or an intentionnaturally inferrable from his words or actions; and on the part of the agent, theremust be an intention to accept the appointment and act on it, and in the absence ofsuch intent, there is generally no agency.In the case at bar, the respondent Guevarra was only given a general power in theacts of administration, the payment of claims is not part of the general powergranted to him by DIC, hence under Article 1878 a Special Power of Attorney isrequired to make such payments.Also, respondents actions is limited by the written standard authority to pay, wheresuch payment must be taken from the revolving fund, which the respondent failed todo so. Hence the petitioner is not liable for the expenses incurred by the agent.However, while the law on agency prohibits respondent Guevarra from obtainingreimbursement, his right to recover may still be justified under the general law onobligations and contracts.Article 1236, second paragraph, Civil Code, provides:"Whoever pays for another may demand from the debtor what he has paid, exceptthat if he paid without the knowledge or against the will of the debtor, he canrecover only insofar as the payment has been beneficial to the debtor."In this case, when the risk insured against occurred, petitioner's liability as insurerarose. This obligation was extinguished when respondent Guevarra paid the claimsand obtained Release of Claim Loss and Subrogation Receipts from the insured whowere paid.Thus, to the extent that the obligation of the petitioner has been extinguished,respondent Guevarra may demand for reimbursement from his principal. To ruleotherwise would result in unjust enrichment of petitioner.CONSTANTE AMOR DE CASTRO v. CA(GR 115838, July 8 2002)FACTS:Appellantswere co-owners of four (4) lots located atEDSA corner New York and Denver Streets in Cubao, QuezonCity. In a letter dated January 24, 1984, appelleewasauthorized by appellants to act as real estate broker in the saleof these properties for the amount of P23,000,000.00, five percent(5%) of which will be given to the agent as commission. It wasappellee who first found Times Transit Corporation, representedby its president Mr. Rondaris, as prospective buyer which desiredto buy two (2) lots only, specifically lots 14 and 15. Eventually,sometime in May of 1985, the sale of lots 14 and 15 wasconsummated. Appellee received from appellants P48,893.76 ascommission.It was then that the rift between the contending parties soonemerged. Appellee apparently felt short changed becauseaccording to him, his total commission should be P352,500.00which is five percent (5%) of the agreed price of P7,050,000.00paid by Times Transit Corporation to appellants for the two (2)lots, and that it was he who introduced the buyer to appellantsand unceasingly facilitated the negotiation which ultimately ledto the consummation of the sale. Hence, he sued below tocollect the balance of P303,606.24 after having receivedP48,893.76 in advance.On the other hand, appellants completely traverseappellee's claims and essentially argue that appellee is selfishlyasking for more than what he truly deserved as commission tothe prejudice of other agents who were more instrumental in theconsummation of the sale. Although appellants readily concedethat it was appellee who first introduced Times Transit Corp. tothem, appellee was not designated by

them as their exclusivereal estate agent but that in fact there were more or lesseighteen (18) others whose collective efforts in the long rundwarfed those of appellee's, considering that the firstnegotiation for the sale where appellee took active participationfailed and it was these other agents who successfully brokered inthe second negotiation. But despite this and out of appellants'"pure liberality, beneficence and magnanimity", appelleenevertheless was given the largest cut in the commission(P48,893.76), although on the principle ofquantum meruithewould have certainly been entitled to less. So appellee shouldnot have been heard to complain of getting only a pittancewhen he actually got the lion's share of the commission andworse, he should not have been allowed to get the entirecommission. Furthermore, the purchase price for the two lots wasonly P3.6 million as appearing in the deed of sale and not P7.05million as alleged by appellee. Thus, even assuming thatappellee is entitled to the entire commission, he would only begetting 5% of the P3.6 million, or P180,000.00."Private respondent Francisco Artigo ("Artigo" for brevity)sued petitioners Constante A. De Castro ("Constante" for brevity)and Corazon A. De Castro ("Corazon" for brevity) to collect theunpaid balance of his broker's commission from the De Castros.The Trial Court finds defendants Constante and Corazon Amor de Castro jointly and solidarily liable to plaintiff.The Court of Appeals affirmed in toto the decision ofthe RTC. Hence, this petition.ISSUE:Whether the complaint merits dismissal for failure toimplead other co-owners as indispensable partiesHELD:The De Castros argue that Artigo's complaint shouldhave been dismissed for failure to implead all the co-owners ofthe two lots. The De Castros claim that Artigo always knew thatthe two lots were co-owned by Constante and Corazon withtheir other siblings Jose and Carmela whom Constante merelyrepresented. The De Castros contend that failure to impleadsuch 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.The De Castros' contentions are devoid of legal basis.An indispensable party is one whose interest will beaffected by the court's action in the litigation, and withoutwhom no final determination of the case can be had.7The joinder of indispensable parties is mandatory and courts cannotproceed without their presence.8Whenever it appears to thecourt in the course of a proceeding that an indispensable partyhas not been joined, it is the duty of the court to stop the trialand order the inclusion of such party.9 However, the rule on mandatory joinder of indispensable partiesis not applicable to the instant case.There is no dispute that Constante appointed Artigo in ahandwritten note dated January 24, 1984 to sell the properties ofthe De Castros for P23 million at a 5 percent commission. Theauthority was on a first come, first serve basis.Constante signed the note as owner and asrepresentative of the other co-owners. Under this note, acontract of agency was clearly constituted between Constanteand Artigo. Whether Constante appointed Artigo as agent, inConstante's individual or representative capacity, or both, theDe Castros cannot seek the dismissal of the case for failure toimplead the other co-owners as indispensable parties.The DeCastros admit that the other co-owners are solidarily liable under the contract of agency,10citing Article 1915 of the Civil Code,which reads:Art. 1915. If two or more persons have appointed anagent for a common transaction or undertaking, theyshall be solidarily liable to the agent for all theconsequences of the agency.The solidary liability of the four co-owners, however, militatesagainst the De Castros' theory that the other co-owners shouldbe impleaded as indispensable parties.When the law expressly provides for solidarity of theobligation, as in

the liability of co-principals in a contract ofagency, each obligor may be compelled to pay the entireobligation.12The agent may recover the whole compensationfrom any one of the co-principals, as in this case.Indeed, Article 1216 of the Civil Code provides that acreditor may sueany of the solidary debtors. This article reads:Art. 1216. The creditor may proceed against any one ofthe solidary debtors or some or all of themsimultaneously. The demand made against one ofthem shall not be an obstacle to those which maysubsequently be directed against the others, so long asthe debt has not been fully collected.Thus, the Court has ruled inOperators Incor porated vs. American Biscuit Co., Inc.that"x x x solidarity does not make a solidary obligor anindispensable party in a suit filed by the creditor . Article 1216 ofthe Civil Code says that the creditor `may proceed againstanyone of the solidary debtors or some or all of themsimultaneously'." (Emphasis supplied)

J-PHIL MARINE, INC. v. NLRCG.R. No. 175366; August 11, 2008

Ponente: J. Carpio-Morales

FACTS: Warlito E. Dumalaog (respondent), who served as cook aboard vessels plying overseas, filed on March 4, 2002 before the National Labor Relations Commission (NLRC) a pro-forma complaint against petitioners — manning agency J-Phil Marine, Inc. (J-Phil), its then president Jesus Candava, and its foreign principal Norman Shipping Services — for unpaid money claims, moral and exemplary damages, and attorney's fees.

Respondent's total claim against petitioners was P864,343.30 plus P117,557.60 representing interest and P195,928.66 representing attorney's fees

By Decision of August 29, 2003, Labor Arbiter Fe Superiaso-Cellan dismissed respondent's complaint for lack of merit. 

On appeal, the NLRC, by Decision of September 27, 2004, reversed the Labor Arbiter's decision.

During the pendency of the case before the Supreme Court, respondent, against the advice of his counsel, entered into a compromise agreement with petitioners. He thereupon signed a Quitclaim and Release subscribed and sworn to before the Labor Arbiter.

ISSUE: Whether the act of Dumalaog in entering into a compromise agreement without the assistance of a counsel is proper

HELD: Yes, the act of Dumalaog in entering into a compromise agreement without a lawyer is proper.

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

Dumalaog has undoubtedly the right to compromise a suit without the intervention of his lawyer cannot be gainsaid, the only qualification being that if such compromise is entered into with the intent of defrauding the lawyer of the fees justly due him, the compromise must be subject to the said fees. 

In the case at bar, there is no showing that respondent intended to defraud his counsel of his fees.

Mindanao Dev’t Authority v CA:A landowner, in selling his property to another, made a written promise to work for the titling of the land, but it was not done. The land was later sold to the government, which tried to claim it after 28 years. The court ruled that there was no express trust, because the written promise did not categorically create an obligation on the part of the landowner to hold the property in trust for the other. Neither was the subject matter of the supposed trust clearly described.There might have been an implied trust created, because the land was registered in the landowner’s name though it belonged to another. An implied trust, however, prescribes in 10 years, and 28 years had lapsed by the time the local government tried to claim the land.**dissent: prescription does not run against the government.SOLEDAD CAÑEZO vs. CONCEPCION ROJASG.R. No. 148788, November 23, 2007 NACHURA, J. FACTS:The subject property is an unregistered land with an area of 4,169 square meters situatedat Naval, Biliran. In a complaint on 1997, petitioner Soledad Cañezo alleged that she boughtsuch parcel of land in 1939 from Crisogono Limpiado, although the sale was not reduced intowr i t i ng . The rea f t e r , she immed ia te l y t ook possess ion o f t he p rope r t y . I n 1948 , she and he r   husband left for Mindanao and entrusted the said land to her father, Crispulo Rojas, who took   p o s s e s s i o n   o f ,   a n d   c u l t i v a t e d   t h e   p r o p e r t y .   I n   1 9 8 0 ,   s h e  f o u n d   o u t   t h a t   t h e   r e s p o n d e n t , Concepcion Rojas, her stepmother, was in possession of the property and was cultivating thesame. She also discovered that the tax declaration over the property was already in the name of  his father.Respondent asserted that it was her husband who bought the property from Limpiado,which accounts for the tax declaration being in Crispulo’s name.After the hearing, MTC rendered a decision in favor of the petitioner, making her the realand lawful owner of the land. Respondent appealed to the RTC of Naval, Biliran, which reversedt h e   M T C   d e c i s i o n   o n   t h e   g r o u n d   t h a t   t h e   a c t i o n   h a d   a l r e a d y  p r e s c r i b e d   a n d   a c q u i s i t i v e  prescription had set in. However, acting on petitioner’s motion for reconsideration, the RTCamended its original decision and held that the action had not yet prescribed considering that the petitioner merely entrusted the

property to her father. The ten-year prescriptive period for therecove ry o f a p rope r t y he ld i n t r us t wou ld commence t o r un on l y f r om the t ime t he t r us tee repudiates the trust.  The RTC found no evidence on record showing that Crispulo Rojas ever ousted the petitioner from the property.Petitioner filed a petition for review with the CA, which reversed the amended decisionof the RTC. The CA held that, assuming that there was a trust between the petitioner and her  f a t h e r o v e r t h e p r o p e r t y , h e r r i g h t o f a c t i o n t o r e c o v e r t h e s a m e w o u l d s t i l l b e b a r r e d b y  prescription since 49 years had already lapsed since Crispulo adversely possessed the contested property in 1948.Hence, this petition for review.ISSUE:Whe the r o r no t t he re i s an ex i s tence o f t r us t ove r t he p rope r t y – exp ress o r imp l i ed –    between the petitioner and her father HELD:  N O N E .   A   t r u s t   i s   t h e   l e g a l   r e l a t i o n s h i p   b e t w e e n   o n e  p e r s o n   h a v i n g   a n   e q u i t a b l e ownership of property and another person owning the legal title to such property, the equitableownership of the former entitling him to the performance of certain duties and the exercise of  certain powers by the latter. Trusts are either express or implied. Express trusts are those whichare created by the direct and positive acts of the parties, by some writing or deed, or will, or bywords evincing an intention to create a trust.  Implied trusts are those which, without beingexpressed, are deducible from the nature of the transaction as matters of intent or, independently,of the particular intention of the parties, as being superinduced on the transaction by operation of law basically by reason of equity.As a ru l e , t he bu rden o f p rov ing t he ex i s tence o f a t r us t i s on t he pa r t y asse r t i ng i t s existence, and such proof must be clear and satisfactorily show the existence of the trust and itselements. The presence of the following elements must be proved: (1) a trustor or settlor whoexecutes the instrument creating the trust; (2) a trustee, who is the person expressly designated tocarry out the trust; (3) thetrust res, consisting of duly identified and definite real properties; and(4 ) t hecestui que trust,or beneficiaries whose identity must be clear.  Accordingly, it wasincumbent upon petitioner to prove the existence of the trust relationship.  And petitioner sadlyfailed to discharge that burden.The existence of express trusts concerning real property may not be established by parolevidence. It must be proven by some writing or deed. In this case, the only evidence to support the claim that an express trust existed between the petitioner and her father was the self-servingtestimony of the petitioner.Although no particular words are required for the creation of an express trust, a clear  intention to create a trust must be shown; and the proof of fiduciary relationship must be clear and convincing. The creation of an express trust must be manifested with reasonable certaintyand cannot be inferred from loose and vague declarations or from ambiguous circumstancessusceptible of other interpretations.In the case at bench, an intention to create a trust cannot be inferred from the petitioner’stestimony and the attendant facts and circumstances. The petitioner testified only to the effect t ha t he r ag reemen t w i t h he r f a the r was t ha t she w i l l be g i ven a sha re i n t he p roduce o f t he  property. This allegation, standing alone as it does, is inadequate to establish the existence of atrust because profit-sharing per se, does not necessarily translate to a trust relation.In light of the disquisitions, we hold that there was no express trust or resulting trustestablished between the petitioner and her father. Thus, in the absence of a trust relation, we canonly conclude that Crispulo’s uninterrupted possession of the subject property for 49 years, coupled with the

performance of acts of ownership, such as payment of real estate taxes, ripenedinto ownership.Petition denied. Decision of the CA affirmed.RAMOS VS. RAMOS 61 SCRA 284 

FACTS: Spouses Martin Ramos and Candida Tanate died on October 4, 1906 and October 26, 1880, respectively. They were survived by their 3 children. Moreover, Martin was survived by his 7 natural children. In December 1906, a special proceeding for the settlement of the intestate estate of said spouses was conducted. Rafael Ramos, a brother of Martin, administered the estate for more than 6 years. Eventually, a partition project was submitted which was signed by the 3 legitimate children and 2 of the 7 natural children. A certain Timoteo Zayco signed in representation of the other 5 natural children who were minors. The partition was sworn to before a justice of peace. 

The conjugal hereditary estate was appraised at P74,984.93, consisting of 18 parcels of land, some head of cattle and the advances to the legitimate children. ½ thereof represented the estate of Martin. 1/3 thereof was the free portion or P12,497.98. The shares of the 7 natural children were to be taken from that 1/3 free portion. Indeed, the partition was made in accordance with the Old Civil code. Thereafter, Judge Richard Campbell approved the partition project. The court declared that the proceeding will be considered closed and the record should be archived as soon as proof was submitted that each he3ir had received the portion adjudicated to him. 

On February 3, 1914, Judge Nepumoceno asked the administrator to submit a report showing that the shares of the heirs had been delivered to them as required by the previous decision. Nevertheless, the manifestation was not in strict conformity with the terms of the judge’s order and with the partition project itself. 8 lots of the Himamaylan Cadastre were registered in equal shares in the names of Gregoria (widow of Jose Ramos) and her daughter, when in fact the administrator was supposed to pay the cash adjudications to each of them as enshrined in the partition project. Plaintiffs were then constrained to bring the suit before the court seeking for the reconveyance in their favor their corresponding participations in said parcels of land in accordance with Article 840 of the old Civil Code. Note that 1/6 of the subject lots represents the 1/3 free portion of martin’s shares which will eventually redound to the shares of his 7 legally acknowledged natural children. The petitioners’ action was predicated on the theory that their shares were merely held in trust by defendants. Nonetheless, no Deed of Trust was alleged and proven. Ultimately, the lower court dismissed the complaint on the grounds of res judicata, prescription and laches. 

ISSUE: Whether or not the plaintiffs’ action was barred by prescription, laches and res judicata to the effect that they were denied of their right to share in their father’s estate. 

RULING: YES, there was inexcusable delay thereby making the plaintiffs’ action unquestionably barred by prescription and laches and also by res judicata. Inextricably interwoven with the questions of prescription and res judicata is the question on the existence of a trust. It is noteworthy that the main thrust of plaintiffs’ action is the alleged holding of their shares in trust

by defendants. Emanating from such, the Supreme Court elucidated on the nature of trusts and the availability of prescription and laches to bar the action for reconveyance of property allegedly held in trust. It is said that trust is the right, enforceable solely in equity to the beneficial enjoyment of property, the legal title to which is vested in another. It may either be express or implied. The latter ids further subdivided into resulting and constructive trusts. Applying it now to the case at bar, the plaintiffs did not prove any express trust. Neither did they specify the kind of implied trust contemplated in their action. Therefore, its enforcement maybe barred by laches and prescription whether they contemplate a resulting or a constructive trust. 20. SPOUSES SHEIKDING BOOC and BILY BOOC, petitioners, vs. FIVE STARMARKETING CO., INC., respondent [G.R. No. 157806. November 22, 2007.]FACTSThe petitioners are present occupants of the third floor of the building apparently owned by FiveStar marketing. They were allowed to live there for free. However, on March 15, 1999 theplaintiff notified all building occupants that it had withdrawn the privilege granted (rental free) tothem coupled with a notice of rental rates in each premises concerned, and further required toany interested occupants to negotiate and sign a lease agreement with plaintiff. The defendantsfailed and refused to lease and vacate the premises. They claim that they are co-owners of thesaid building and that the respondent is merely holding the property in trust for them. An unlawful detainer case was filed by the respondents which were decided in favor of thepetitioners in the lower courts but was overturned by the CA finding in favor of Five StarMarketing hence this appeal.ISSUEWhether the petitioners are co-owners of the building and therefore have a right of materialpossession over the sameRULINGNo. The court affirms the ruling of the CA that the petitioners fail to prove that petitioners Booc,purchased the lot and constructed the building with their own money.The petitioners claim that the subject property was being held in trust for them by Five StarMarketing and as a rule, the burden of proving the existence of a trust is on the party assertingits existence and such proof must be clear and satisfactorily show the existence of the trust andits elements.The petitioners were unable to present competent evidence to support their allegation ofownership of the lot in question. And the preponderance of evidence lies in favor ofrespondent's claim of ownership. Surely, the Deed of Sale, TCT, Tax Declarations and OfficialReceipts of tax payments in the name of respondent are more convincing than the evidencesubmitted by petitioners