Woodchild v.

Roxas

Respondent Roxas Electric and Construction Company owned two parcels of land in
Antipolo, Rizal. The Board of Directors approved a resolution authorizing the
corporation to sell a Lot( 491) at a price advantageous to the corporation. Woodchild
wanted to buy the lot which it planned to construct its warehouse building. In which the
parties executed a contract to sell in which respondent bound itself to sell to
petitioners.
WBI was asked to construct the warehouse building however was unable to do so
because of the squatters in the area. In the meantime, WHI complained to Roberto
Roxas that the vehicles of RECCI were parked on a portion of the property over which
WHI had been granted a right of way. Dy and Roxas discussed the need of the WHI to
buy a 500-square-meter portion of Lot No. 491-A-3-B-1 covered by TCT No. 78085 as
provided for in the deed of absolute sale. However, Roxas died soon thereafter. the
WHI requested respondent to purchase a portion of the said lot as provided for in the
deed of absolute sale, and complained about the latters failure to eject the squatters
within the three-month period agreed upon in the said deed.
The WHI demanded that the RECCI sell a portion of Lot No. 491-A-3-B-1 covered by
TCT No. 78085 for its beneficial use within 72 hours from notice otherwise the
appropriate action would be filed against it. RECCI rejected the demand of WHI. There
was no response from RECCI. WHI filed a complaint against RECCI w/ RTC for specific
performance and damages

Agency; apparent authority of an agent based on estoppel; concept. In Woodchild
Holdings, Inc. v. Roxas Electric and Construction Company, Inc. the Court stated that
persons dealing with an assumed agency, whether the assumed agency be a general or
special one, are bound at their peril, if they would hold the principal liable, to ascertain
not only the fact of agency but also the nature and extent of authority, and in case
either is controverted, the burden of proof is upon them to establish it. In other words,
when the petitioner relied only on the words of respondent Alejandro without securing
a copy of the SPA in favor of the latter, the petitioner is bound by the risk accompanying
such trust on the mere assurance of Alejandro.
The same Woodchild case stressed that apparent authority based on estoppel can arise
from the principal who knowingly permit the agent to hold himself out with authority
and from the principal who clothe the agent with indicia of authority that would lead a
reasonably prudent person to believe that he actually has such authority. Apparent
authority of an agent arises only from acts or conduct on the part of the principal and
such acts or conduct of the principal must have been known and relied upon in good
faith and as a result of the exercise of reasonable prudence by a third person as
claimant and such must have produced a change of position to its detriment. In the
instant case, the sale to the Spouses Lajarca and other transactions where Alejandro
allegedly represented a considerable majority of the co-owners transpired after the sale
to the petitioner; thus, the petitioner cannot rely upon these acts or conduct to believe
that Alejandro had the same authority to negotiate for the sale of the subject property
to him. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R. No.182349,
July 24, 2013.
GUINHAWA v PEOPLE
FACTS:
* Jaime Guinhawa was engaged in the business of selling brand new motor vehicles,
including Mitsubishi vans, under the business name of Guinrox Motor Sales. His office
and display room for cars were located along Panganiban Avenue, Naga City. He
employed Gil Azotea as his sales manager. Guinhawa purchased a brand new Mitsubishi
L-300 Versa Van from the Union Motors Corporation (UMC) in Paco, Manila. The van
bore Plate no. DLK 406. Guinhawas driver, Olayan, drove the van from Manila to Naga
City. However, while the van was traveling along the highway in Daet, Camarines Norte,
Olayan suffered a heart attack. The van went out of control, traversed the highway onto
the opposite lane, and was ditched into the canal parallel to the highway. The van was
damaged, and the left front tire had to be replaced.
* The van was repaired and later offered for sale in Guinhawas showroom. Spouses
Ralph and Josephine Silo wanted to buy a new van for their garment business; they
purchased items in Manila and sold them in Naga City.Unaware that the van had been
damaged and repaired on account of the accident in Daet, the couple decided to
purchase the van for 591k. Azotea, sales manager, suggested that the couple make a
downpayment of 118,200, and pay the balance of the purchase price by installments via
a loan from the United Coconut Planters Bank (UCPB), with the van as collateral. Azotea
offered to make the necessary arrangements with UCPB for the consummation of the
loan transaction wherein the couple agreed. The spouses executed a Promissory Note
for the amount of 692,676 as payment of the balance on the purchase price, and as
evidence of the chattel mortgage over the van in favor of UCPB.
* The couple arrived in Guinhawas office to take delivery of the van. The latter
executed the deed of sale, and the couple paid the 161,470 downpayment, for they
were issued a receipt. They were furnished a Service Manual which contained the
warranty terms and conditions. Azotea instructed the couple on how to start the van
and to operate its radio. Ralph Silo no longer conducted a test drive; he and his wife
assumed that there were no defects in the van as it was brand new.
* Josephine Silo, accompanied by Glenda Pingol, went to Manila on board the van, with
Glendas husband as the driver. On their return trip to Naga from Manila, the driver
heard a squeaking sound, which seemed to be coming from underneath the van. The
squeaking sound persisted and upon examination at the Shell gasoline station, it was
found out that some parts underneath the van had been welded.
* Guinhawa insisted that the defects were mere factory defects. As the defects
persisted, the spouses requested that Guinhawa replace the van with 2 Charade-
Daihatsu vehicles within a week or two, with the additional costs to be taken from their
downpayment. The spouses brought the car to Rx Auto Clinic for examination wherein
the mechanic discovered that it was the left front stabilizer that was producing the
annoying sound, and that it had been repaired. Josephine Silo filed for rescission of the
sale and refund of their money. They instituted also a criminal complaint for other
deceits made by Guinhawa by making fraudulent representations about the car being
brand new and that it never encountered an accident.
ISSUE: W/N THERE WERE FRAUDULENT REPRESENTATIONS MADE BY THE SELLER,
GUINHAWA BY VIRTUE OF THE CONTRACT OF SALE EXECUTED BETWEEN HIM AND THE
COUPLE
RULING: YES
Article 1389 of NCC provides that failure to disclose
facts when there is a duty to reveal them constitutes fraud. In a contract of sale, a buyer
and seller do not deal from equal bargaining positions when the latter has knowledge, a
material fact which, if communicated to the buyer , would render the grouns
unacceptable or , at least, substantially less desirable.
If, in a contract of sale, the vendor knowingly allowed the vendee to be deceived as to
the thing sold in a material matter by failing to disclose an intrinsic circumstance that it
vital to the contract, knowing that the vendee is acting upon the presumption that no
such fact exists, deceit is accomplished by the suppression of the truth.
In this case, Guinhawa and Azotea knew that the van had figured in an accident, was
damaged and had to be repaired. Nevertheless, the van was placed in the showroom,
thus making it appear to the public that it was a brand new unit. Guinhawa was
mandated to reveal the foregoing facts to Silos but they even obdurately declared when
they testified that the court did not figure in an accident, nor had it been repaired.
Even when Guinhawa was apprised that Silos had discovered the vans defects, the
former agreed to replace the van, but changed his mind and insisted that it must be first
sold.
Guinhawa is not relieved of his criminal liability for deceitful concealment of material
facts, even if Silos made a visual inspection of the vans interior and exterior before she
agreed to buy and failed to inspects its under chassis.





















BRITISH AIRWAYS, petitioner, vs. COURT OF APPEALS, GOP MAHTANI, and PHILIPPINE
AIRLINES, respondents.
D E C I S I O N
ROMERO, J.:

In this appeal by certiorari, petitioner British Airways (BA) seeks to set aside the decision
of respondent Court of Appeals[1] promulgated on September 7, 1995, which affirmed
the award of damages and attorneys fees made by the Regional Trial Court of Cebu, 7th
Judicial Region, Branch 17, in favor of private respondent GOP Mahtani as well as the
dismissal of its third-party complaint against Philippine Airlines (PAL).[2]

The material and relevant facts are as follows: On April 16, 1989, Mahtani decided to
visit his relatives in Bombay, India. In anticipation of his visit, he obtained the services
of a certain Mr. Gumar to prepare his travel plans. The latter, in turn, purchased a ticket
from BA where the following itinerary was indicated:[3]

CARRIER FLIGHT DATE TIME STATUS

MANILA MNL PR 310Y 16 APR 1730 OK
HONGKONG HKG BA 20 M 16 APR 2100 OK
BOMBAY BOM BA 19 M 23 APR 0840 OK
MANILA MNL"

Since BA had no direct flights from Manila to Bombay, Mahtani had to take a flight to
Hongkong via PAL, and upon arrival in Hongkong he had to take a connecting flight to
Bombay on board BA. Prior to his departure, Mahtani checked in at the PAL counter in
Manila his two pieces of luggage containing his clothings and personal effects, confident
that upon reaching Hongkong, the same would be transferred to the BA flight bound for
Bombay.

Unfortunately, when Mahtani arrived in Bombay he discovered that his luggage was
missing and that upon inquiry from the BA representatives, he was told that the same
might have been diverted to London. After patiently waiting for his luggage for one
week, BA finally advised him to file a claim by accomplishing the Property Irregularity
Report.*4+ Back in the Philippines, specifically on June 11, 1990, Mahtani filed his
complaint for damages and attorneys fees*5+ against BA and Mr. Gumar before the trial
court, docketed as Civil Case No. CEB-9076.

On September 4, 1990, BA filed its answer with counter claim[6] to the complaint
raising, as special and affirmative defenses, that Mahtani did not have a cause of action
against it. Likewise, on November 9, 1990, BA filed a third-party complaint[7] against
PAL alleging that the reason for the non-transfer of the luggage was due to the latters
late arrival in Hongkong, thus leaving hardly any time for the proper transfer of
Mahtanis luggage to the BA aircraft bound for Bombay.

On February 25, 1991, PAL filed its answer to the third-party complaint, wherein it
disclaimed any liability, arguing that there was, in fact, adequate time to transfer the
luggage to BA facilities in Hongkong. Furthermore, the transfer of the luggage to
Hongkong authorities should be considered as transfer to BA.[8]

After appropriate proceedings and trial, on March 4, 1993, the trial court rendered its
decision in favor of Mahtani,[9] the dispositive portion of which reads as follows:

WHEREFORE, premises considered, judgment is rendered for the plaintiff and against
the defendant for which defendant is ordered to pay plaintiff the sum of Seven
Thousand (P7,000.00) Pesos for the value of the two (2) suit cases; Four Hundred U.S.
($400.00) Dollars representing the value of the contents of plaintiffs luggage; Fifty
Thousand (P50,000.00) Pesos for moral and actual damages and twenty percent (20%)
of the total amount imposed against the defendant for attorneys fees and costs of this
action.

The Third-Party Complaint against third-party defendant Philippine Airlines is DISMISSED
for lack of cause of action.

SO ORDERED. Dissatisfied, BA appealed to the Court of Appeals, which however,
affirmed the trial courts findings. Thus: WHEREFORE, in view of all the foregoing
considerations, finding the Decision appealed from to be in accordance with law and
evidence, the same is hereby AFFIRMED in toto, with costs against defendant-appellant.
SO ORDERED.*10+ BA is now before us seeking the reversal of the Court of Appeals
decision. In essence, BA assails the award of compensatory damages and attorneys
fees, as well as the dismissal of its third-party complaint against PAL.[11]

Regarding the first assigned issue, BA asserts that the award of compensatory damages
in the separate sum of P7,000.00 for the loss of Mahtanis two pieces of luggage was
without basis since Mahtani in his complaint[12] stated the following as the value of his
personal belongings: 8. On said travel, plaintiff took with him the following items
and its corresponding value, to wit:

1. personal belonging - - - - - - - - - - - - - - P10,000.00
2. gifts for his parents and relatives - - - - - $5,000.00

Moreover, he failed to declare a higher valuation with respect to his luggage, a
condition provided for in the ticket, which reads:*13+ Liability for loss, delay, or damage
to baggage is limited unless a higher value is declared in advance and additional charges
are paid: 1. For most international travel (including domestic corporations of
international journeys) the liability limit is approximately U.S. $9.07 per pound (U.S.
$20.00) per kilo for checked baggage and U.S. $400 per passenger for unchecked
baggage.

Before we resolve the issues raised by BA, it is needful to state that the nature of an
airlines contract of carriage partakes of two types, namely: a contract to deliver a cargo
or merchandise to its destination and a contract to transport passengers to their
destination. A business intended to serve the travelling public primarily, it is imbued
with public interest, hence, the law governing common carriers imposes an exacting
standard.*14+ Neglect or malfeasance by the carriers employees could predictably
furnish bases for an action for damages.[15] In the instant case, it is apparent that the
contract of carriage was between Mahtani and BA. Moreover, it is indubitable that his
luggage never arrived in Bombay on time. Therefore, as in a number of cases[16] we
have assessed the airlines culpability in the form of damages for breach of contract
involving misplaced luggage.

In determining the amount of compensatory damages in this kind of cases, it is vital that
the claimant satisfactorily prove during the trial the existence of the factual basis of the
damages and its causal connection to defendants acts.[17] In this regard, the trial court
granted the following award as compensatory damages:

Since plaintiff did not declare the value of the contents in his luggage and even failed to
show receipts of the alleged gifts for the members of his family in Bombay, the most
that can be expected for compensation of his lost luggage (2 suit cases) is Twenty U.S.
Dollars ($20.00) per kilo, or a combined value of Four Hundred ($400.00) U.S. Dollars for
Twenty kilos representing the contents plus Seven Thousand (P7,000.00) Pesos
representing the purchase price of the two (2) suit cases. However, as earlier stated, it
is the position of BA that there should have been no separate award for the luggage and
the contents thereof since Mahtani failed to declare a separate higher valuation for the
luggage,[18] and therefore, its liability is limited, at most, only to the amount stated in
the ticket.

Considering the facts of the case, we cannot assent to such specious argument.
Admittedly, in a contract of air carriage a declaration by the passenger of a higher value
is needed to recover a greater amount. Article 22(1) of the Warsaw Convention,[19]
provides as follows: x x x x x x x x x

(2) In the transportation of checked baggage and goods, the liability of the carrier
shall be limited to a sum of 250 francs per kilogram, unless the consignor has made, at
the time the package was handed over to the carrier, a special declaration of the value
at delivery and has paid a supplementary sum if the case so requires. In that case the
carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that
the sum is greater than the actual value to the consignor at delivery.

American jurisprudence provides that an air carrier is not liable for the loss of baggage
in an amount in excess of the limits specified in the tariff which was filed with the
proper authorities, such tariff being binding on the passenger regardless of the
passengers lack of knowledge thereof or assent thereto.*20+ This doctrine is recognized
in this jurisdiction.[21]

Notwithstanding the foregoing, we have, nevertheless, ruled against blind reliance on
adhesion contracts where the facts and circumstances justify that they should be
disregarded.[22] In addition, we have held that benefits of limited liability are subject to
waiver such as when the air carrier failed to raise timely objections during the trial when
questions and answers regarding the actual claims and damages sustained by the
passenger were asked.[23]

Given the foregoing postulates, the inescapable conclusion is that BA had waived the
defense of limited liability when it allowed Mahtani to testify as to the actual damages
he incurred due to the misplacement of his luggage, without any objection. In this
regard, we quote the pertinent transcript of stenographic notes of Mahtanis direct
testimony:[24]

Q - How much are you going to ask from this court?

A - P100,000.00.

Q - What else?

A - Exemplary damages.

Q - How much?

A - P100,000.00.

Q - What else?

A - The things I lost, $5,000.00 for the gifts I lost and my

personal belongings, P10,000.00.

Q - What about the filing of this case?

A - The court expenses and attorneys fees is 30%.

Indeed, it is a well-settled doctrine that where the proponent offers evidence deemed
by counsel of the adverse party to be inadmissible for any reason, the latter has the
right to object. However, such right is a mere privilege which can be waived.
Necessarily, the objection must be made at the earliest opportunity, lest silence when
there is opportunity to speak may operate as a waiver of objections.[25] BA has
precisely failed in this regard.

To compound matters for BA, its counsel failed, not only to interpose a timely objection,
but even conducted his own cross-examination as well.[26] In the early case of Abrenica
v. Gonda,[27] we ruled that: x x x (I)t has been repeatedly laid down as a rule of
evidence that a protest or objection against the admission of any evidence must be
made at the proper time, and that if not so made it will be understood to have been
waived. The proper time to make a protest or objection is when, from the question
addressed to the witness, or from the answer thereto, or from the presentation of
proof, the inadmissibility of evidence is, or may be inferred. Needless to say, factual
findings of the trial court, as affirmed by the Court of Appeals, are entitled to great
respect.[28] Since the actual value of the luggage involved appreciation of evidence, a
task within the competence of the Court of Appeals, its ruling regarding the amount is
assuredly a question of fact, thus, a finding not reviewable by this Court.[29] As to the
issue of the dismissal of BAs third-party complaint against PAL, the Court of Appeals
justified its ruling in this wise, and we quote:*30+ Lastly, we sustain the trial courts
ruling dismissing appellants third-party complaint against PAL.

The contract of air transportation in this case pursuant to the ticket issued by appellant
to plaintiff-appellee was exclusively between the plaintiff Mahtani and defendant-
appellant BA. When plaintiff boarded the PAL plane from Manila to Hongkong, PAL was
merely acting as a subcontractor or agent of BA. This is shown by the fact that in the
ticket issued by appellant to plaintiff-appellee, it is specifically provided on the
Conditions of Contract, paragraph 4 thereof that: 4. x x x carriage to be
performed hereunder by several successive carriers is regarded as a single operation.

The rule that carriage by plane although performed by successive carriers is regarded as
a single operation and that the carrier issuing the passengers ticket is considered the
principal party and the other carrier merely subcontractors or agent, is a settled issue.
We cannot agree with the dismissal of the third-complaint.

In Firestone Tire and Rubber Company of the Philippines v. Tempengko,[31] we
expounded on the nature of a third-party complaint thus: The third-party complaint is,
therefore, a procedural device whereby a third party who is neither a party nor privy to
the act or deed complained of by the plaintiff, may be brought into the case with leave
of court, by the defendant, who acts as third-party plaintiff to enforce against such
third-party defendant a right for contribution, indemnity, subrogation or any other
relief, in respect of the plaintiffs claim. The third-party complaint is actually
independent of and separate and distinct from the plaintiffs complaint. Were it not for
this provision of the Rules of Court, it would have to be filed independently and
separately from the original complaint by the defendant against the third-party. But the
Rules permit defendant to bring in a third-party defendant or so to speak, to litigate his
separate cause of action in respect of plaintiffs claim against a third-party in the original
and principal case with the object of avoiding circuitry of action and unnecessary
proliferation of law suits and of disposing expeditiously in one litigation the entire
subject matter arising from one particular set of facts.

Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view
of their contract of carriage. Yet, BA adamantly disclaimed its liability and instead
imputed it to PAL which the latter naturally denies. In other words, BA and PAL are
blaming each other for the incident.

In resolving this issue, it is worth observing that the contract of air transportation was
exclusively between Mahtani and BA, the latter merely endorsing the Manila to
Hongkong leg of the formers journey to PAL, as its subcontractor or agent. In fact, the
fourth paragraph of the Conditions of Contracts of the ticket*32+ issued by BA to
Mahtani confirms that the contract was one of continuous air transportation from
Manila to Bombay. 4. x x x carriage to be performed hereunder by several
successive carriers is regarded as a single operation.

Prescinding from the above discussion, it is undisputed that PAL, in transporting
Mahtani from Manila to Hongkong acted as the agent of BA. Parenthetically, the Court
of Appeals should have been cognizant of the well-settled rule that an agent is also
responsible for any negligence in the performance of its function[33] and is liable for
damages which the principal may suffer by reason of its negligent act.[34] Hence, the
Court of Appeals erred when it opined that BA, being the principal, had no cause of
action against PAL, its agent or sub-contractor. Also, it is worth mentioning that both BA
and PAL are members of the International Air Transport Association (IATA), wherein
member airlines are regarded as agents of each other in the issuance of the tickets and
other matters pertaining to their relationship.[35] Therefore, in the instant case, the
contractual relationship between BA and PAL is one of agency, the former being the
principal, since it was the one which issued the confirmed ticket, and the latter the
agent.

Our pronouncement that BA is the principal is consistent with our ruling in Lufthansa
German Airlines v. Court of Appeals.[36] In that case, Lufthansa issued a confirmed
ticket to Tirso Antiporda covering five-leg trip aboard different airlines. Unfortunately,
Air Kenya, one of the airlines which was to carry Antiporda to a specific destination
bumped him off.

An action for damages was filed against Lufthansa which, however, denied any liability,
contending that its responsibility towards its passenger is limited to the occurrence of a
mishap on its own line. Consequently, when Antiporda transferred to Air Kenya, its
obligation as a principal in the contract of carriage ceased; from there on, it merely
acted as a ticketing agent for Air Kenya.

In rejecting Lufthansas argument, we ruled: In the very nature of their contract,
Lufthansa is clearly the principal in the contract of carriage with Antiporda and remains
to be so, regardless of those instances when actual carriage was to be performed by
various carriers. The issuance of confirmed Lufthansa ticket in favor of Antiporda
covering his entire five-leg trip aboard successive carriers concretely attest to this.
Since the instant petition was based on breach of contract of carriage, Mahtani can only
sue BA alone, and not PAL, since the latter was not a party to the contract. However,
this is not to say that PAL is relieved from any liability due to any of its negligent acts. In
China Air Lines, Ltd. v. Court of Appeals,[37] while not exactly in point, the case,
however, illustrates the principle which governs this particular situation. In that case,
we recognized that a carrier (PAL), acting as an agent of another carrier, is also liable for
its own negligent acts or omission in the performance of its duties. Accordingly, to deny
BA the procedural remedy of filing a third-party complaint against PAL for the purpose
of ultimately determining who was primarily at fault as between them, is without legal
basis. After all, such proceeding is in accord with the doctrine against multiplicity of
cases which would entail receiving the same or similar evidence for both cases and
enforcing separate judgments therefor. It must be borne in mind that the purpose of a
third-party complaint is precisely to avoid delay and circuity of action and to enable the
controversy to be disposed of in one suit.[38] It is but logical, fair and equitable to allow
BA to sue PAL for indemnification, if it is proven that the latters negligence was the
proximate cause of Mahtanis unfortunate experience, instead of totally absolving PAL
from any liability.

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-G.R. CV
No. 43309 dated September 7, 1995 is hereby MODIFIED, reinstating the third-party
complaint filed by British Airways dated November 9, 1990 against Philippine Airlines.
No costs.

SO ORDERED. Narvasa C.J., (Chairman), Melo, Francisco, and Panganiban, JJ., concur.















Araneta v. De Paterno(1952) Tuason, J.
FACTS:
Paz Tuason de Paterno is the registered owner of certain portions (approximately
40,703square meters) of a big block of residential land in the district of Santa Mesa,
Manila. The land was subdivided into city lots most of which were occupied by lessees
who had contracts of lease which were to expire on December 31, 1952. A salient
stipulation in the contracts was that in the event the owner and lessor should decide to
sell the property the lessees were to be given priority over other buyers if they should
desire to buy their leaseholds. Smaller lots were occupied by tenants without formal
contract. In 1940 and 1941 Paz De Paterno obtained from Jose Vidal several loans
amounting toP90,098 and constituted a first mortgage on the aforesaid property to
secure the debt. In January and April, 1943, she obtained
additional loans of P30,000 and P20,000 upon the same security. In each of these two,
the previous contract of mortgage was renewed and the amounts received were
consolidated. In the first novated contract the time of payment was fixed at two years
and in the second and last at four years.1943- Paz decided to sell the entire property for
P400,000 and entered into negotiations with Gregorio Araneta, Inc.
They executed a contract called " Promesa de Compra y Venta" or Promise to Buy and
Sell (Exhibit 1). The contract indicated that subject to the preferred right of the lessees
and that of Jose Vidal as mortgagee, Paz De Paterno would sell to Gregorio Araneta, Inc.
and the latter would buy for the said amount of P400,000 the entire estate under these
terms. Letters were sent the lessees giving them until August 31, 1943, an option to buy
the lots they occupied. Some of the lessees bought their part of the property and were
given their deeds of conveyance. De Paterno and Araneta executed a deed of absolute
deed of sale (Exhibit A)over Lots 1, 8-16 and 18 which have an aggregate area of
14,810.20 square meters with the exclusion of the lots sold to tenants and those which
were mortgaged to Vidal .A day before the execution of the said deed of absolute sale, a
day after the signing of the agreement to buy and sell between De Paterno and Araneta,
De Paterno had offered to Vidal the check for P143,150 to settle her mortgage
obligation. Vidal refused to receive that check or to cancel the mortgage, contending
that by the separate agreement before, payment of mortgage was not to be effected
totally or partially before the end of four years from April, 1943. This prompted De
Paterno to file an action against Vidal but this never came to trial and the recordand the
checks were destroyed during the war operations
.
Araneta then, filed an action against De Paterno to compel the latter to deliver to him
aclear title to the lots and a deed of cancellation of Vidals mortgage. Vidal filed a cross-
claim against De Paterno for the foreclosure of the mortgage.
ISSUE: Whether or not there had been an absolute deed of sale between Araneta and
DePaterno
HELD: Yes. There was an absolute sale between Paterno and Araneta. Exhibit A (Deedof
Sale) is valid and enforceable.
RATIO: The contemplated execution of an absolute deed of sale was not contingent on
the cancellation of Vidal's mortgage therefore, there was no need to settle the
mortgage first. The agreement only provided that such deed of absolute sale should be
executed upon the determination of the specific lots to be sold to Araneta. The said lots
became definite when the tenants option to buy expired. Vidal's mortgage was not an
obstacle to the sale. An amount had been set aside to takecare of it, and the parties, it
would appear, were confident that the suit against the mortgagee would succeed. The
charge that Araneta was in a rush in the sale of the lands cannot be gleaned from the
facts.
The fact that simultaneously with the agreement with Araneta, similar deeds were
given the lessees who had elected to buy their leaseholds, which comprise an area
about twice as big as the lots described in said agreement, and the further fact that the
sale to the lessees have never been questioned and the proceeds thereof have been
received by the defendant, should add to dispel any suspicion of bad faith on the part of
the plaintiff. If anyone was in a hurry it could have been the defendant. De Paterno was
pressed for cash and that the payment of the mortgage was only an incident, or a
necessary means to effectuate the sale. She could have settled her mortgage obligation
merely by selling a portion of her estate. Araneta and de Paterno were at perfect liberty
to make a new agreement different from or even contrary to the provisions of the
promise to buy and sell. The validity of the subsequent sale must of necessity depend on
what it said and not on the provisions of the promise to buy and sell.
ISSUE: Whether or not De Paterno can claim fraud as defense.
Held: No. De Paterno alleges that her attorneys, Attorneys Salvador Araneta and J.
Antonio Araneta who had drawn Exhibit A (deed of sale), did not inform her or had
misinformed her about the contents of the deed and that it was in English, thats why
she did not read it. She would not have affixed her signature in a one-sided contract.
She alleges that the discrepancies in Exhibit 1and Exhibit A are evidence of fraud.SC:
there were two documents involved in the case. One was the Promise to Buy and Sell
(Exhibit1) and the Absolute Deed of Sale (Exhibit A). The first provision which was not in
Exhibit 1 but was in Exhibit A: The provision that 10 per cent of the purchase price
should be paid only after Vidal's mortgage should have been cancelled is not onerous or
unusual.
The stipulation that a vendee should withhold a relatively small portion of the
purchase price before all the impediments to the final consummation of the sale had
been removed is valid. The tenants who had bought their lots had been granted the
privilege to deduct as much as 40 per cent of the stipulated price pending discharge of
the mortgage, although his percentage was later reduced to 10 as in the case of
Gregorio Araneta, Inc. It has also been that the validity of the sales to the tenants has
not been contested; that these sales embraced in the aggregate 24,245.40 square
meters for P260,916.68as compared to 14,811.20 square meters sold to Gregorio
Araneta, Inc. for P139,083.32. The second stipulation in Exhibit A which had no
counterpart in Exhibit 1 was that by which Gregorio Araneta Inc. would hold Paz Tuason
liable for the lost checks and which, as stated, appeared to be at the root of the whole
trouble between the plaintiff and the defendant.In view of the foregoing liquidation,
the Vendor acknowledges fully and unconditionally, having received the sum of
P125,174.99 of the present legal currency and hereby expressly declares that she will
not hold the Vendee responsible for any loss that she might suffer due to the fact that
two of the checks paid to her by the Vendee were used in favor of Jose Vidal and the
latter has, up to the present time, not yet collected the same.SC: It is difficult to believe
that the defendant was deceived into signing Exhibit A. Intelligent and well educated
who had been managing her affairs, she had an able attorney who was assisting her in
the suit against Vidal, a case which was instituted precisely to carry into effect Exhibit A
or Exhibit 1, and a son who is leading citizen and a business-man and knew the English
language very well if she did not. If the defendant signed Exhibit A without being
apprised of its import, it can hardly be conceived that she did not have her attorney or
her son read it to hera fterward. She denied the existence of Exhibit A at first and
afterwards, alleged fraud in its execution. It would look as if she gambled on the chance
that no signed copy of the deed had been saved from the war.
RELEVANT ISSUE: Whether or not there was an agent-principal relationship between
Jose Araneta (president of Gregorio Araneta, Inc.) and de Paterno.
Held: No. Jose Araneta was not an agent within the meaning of article 1459. He was
nothing more than a go-between or middleman between the defendant and the
purchaser, bringing them together to make the contract themselves. Exhibit 1 is decisive
of the defendant's assertion. In paragraph 8 of Exhibit 1 Jose Araneta was referred to as
defendant's agent or broker "who acts in this transaction" and who as such was to
receive a commission of 5 per cent although the commission was to be charged to the
purchasers. In in paragraph 13 the defendant promised, in consideration of Jose
Araneta's services rendered to her, to assign to him all her right, title and interest to and
in certain lots not embraced in the sales to Gregorio Araneta, Inc. or the tenants.
However, there is no denying that Gregorio Araneta, Inc. entered into the contract for
itself and for its benefit as a corporation. There is no pretense, nor is there reason to
suppose, that if Paz Tuason had known Jose Araneta to Gregorio Araneta, Inc' s
president, which she knew, she would not have gone ahead with the deal. .

From her point of view and from the point of view of public interest, it would have
made no difference, except for the brokerage fee, whether Gregorio Araneta, Inc. or
Jose Araneta was the purchaser. Assuming that Jose Araneta and Gregorio Araneta, Inc.
were identical and that the acts of one where the acts of the other, the relation
between the defendant and Jose Araneta did not fall within the purview of article 1459
of the Spanish Civil Code. In Article 1709, an agent is one who accepts another's
representation to perform in his name certain acts of more or less transcendency.
Another interpretation says that the agent's incapacity to buy his principal's property
rests in the fact that the agent and the principal form one juridicial person.
To come under the prohibition, the agent must be in a fiduciary with his principal.
Jose Araneta was not authorized to make a binding contract for the defendant. He was
not to sell and he did not sell the defendant's property. He was to look for a buyer and
the owner herself was to make, and did make, the sale. Furthermore, the fact that Attys.
Salvador and Araneta and J. Antonio Araneta drew Exhibits 1 and A, undertook to write
the letters to the tenants and the deeds of sale to the latter ,and charged the defendant
the corresponding fees for all this work, did not themselves prov ethat they were the
seller's attorneys.

These letters and documents were wrapped up with the contemplated sale in which
Gregorio Araneta, Inc. was interested, and could very well have been written by
Attorneys Araneta and Araneta in furtherance of Gregorio Araneta's own interest.
Granting that Attorney Araneta and Araneta were attorneys for the defendant, yet they
were not forbidden to buy the property in question. Attorneys are only prohibited from
buying their client's property which is the subject of litigation. (Art. 1459, No. 5, Spanish
Civil Code.) The questioned sale was effected before the subject thereof became
involved in the present action. There was already at the time of the sale a litigation over
this property between the defendant and Vidal, but Attys. Salvador Araneta and J.
Antonio Araneta were not her attorneys in that case.(the other issues are not relevant
to agency).

The Court dispensed with all the issues as follows: The contract of sale Exhibit A was
valid and enforceable, but the loss of the checksfor P143,150 and P12,932.61 and
invalidation of the corresponding deposit is to be borne by the buyer. Gregorio Araneta,
Inc. the value of these checks as well as the several payments made by Paz Tuason to
Gregorio Araneta, Inc. shall be deducted from the sum of P190,000 which the buyer
advanced to the seller on the execution of Exhibit1. The buyer shall be entitled to the
rents on the land which was the subject of the sale, rents which may have been
collected by Paz Tuason after the date of the sale.
Paz Tuason shall pay Jose Vidal the amount of the mortgage and the stipulated
interest up to October 20,1943, plus the penalty of P30,000, provided that the loans
obtained during the Japanese occupation shall be reduced according to the Ballantyne
scale of payment, and provided that the date basis of the computation as to the penalty
is the date of the filing of the suit against Vidal.
Paz Tuason shall pay the amount that shall have been found due under the contracts
of mortgage within 90 days from the time the court's judgment upon the liquidation
shall have become final, otherwise the property mortgaged shall be ordered sold
provided by law. mortgage is superior to the purchaser's right under Exhibit A, which is
hereby declared subject to said mortgage. Should Gregorio Araneta, Inc. be forced to
pay the mortgage, it will be subrogated to the right of the mortgagee.
This case will be remanded to the court of origin with instruction to hold a rehearing
for the purpose of liquidation as herein provided. The court also shall hear and decide
all other controversies relative to the liquidation which may have been overlooked at
this decision, in a manner not inconsistent with the above findings and judgment

SECOND DIVISION [G.R. No. 192085 : June 18, 2012] CARIDAD SEGARRA SAZON v.
LETECIA VASQUEZ-MENANCIO, REPRESENTED BY ATTORNEY-IN-FACT EDGAR S.
SEGARRA.

Sirs/Mesdames: Please take notice that the Court, Second Division, issued a Resolution
dated 18 June 2012 which reads as follows:cralaw
G.R. No. 192085 (Caridad Segarra Sazon v. Letecia Vasquez-Menancio, represented by
attorney-in-fact Edgar S. Segarra). For consideration is the Partial Motion for
Reconsideration (MR) filed by Caridad Segarra Sazon (petitioner) arguing that the issue
of the amount of salary she is entitled to as the administrator of the properties of
Letecia Vasquez-Menancio (respondent) should be included in the issues to be
remanded to the regional trial court (RTC).
It is argued by petitioner that this Court erred in applying the equitable principle of
quantum meruit in determining the amount to be awarded as salary in her favor,
because this principle should only be applied when there is no contract between the
parties. In this case however, the parties already had an agreement that petitioner
would fix her own salary. Petitioner further submits that an administrator's salary
should be considered as an expense. Since this Court ordered the RTC to receive
evidence to determine the amount of the expenses incurred, she contends that she
should be given a chance to present evidence to prove the amount she is entitled to as
salary. Ultimately, she aims to prove that she is entitled to a salary more than the P1
,000 per month for 15 years granted to her by the RTC. This Court maintains its ruling
and denies the instant Partial Motion for Reconsideration.
There is no doubt that petitioner should be compensated for the services she rendered.
However, even though the parties agreed that petitioner had the power to fix her own
salary, she failed to do so within the appropriate time. Thus, the RTC correctly applied
the doctrine of quantum meruit. This Court also finds that the amount of P1,000 per
month for 1 5 years is a just, reasonable, and fair valuation of the services rendered by
petitioner. The salary of the administrator should be considered as an expense on
respondent's part. We find it unnecessary to order the trial court to receive evidence to
determine the exact amount of this particular expense, when the records at hand are
sufficient to determine its value.cralaw
WHEREFORE, the instant Partial Motion for Reconsideration is hereby DENIED with
FINALITY. Basic issues raised have already been passed upon in the Decision and no
substantial arguments have been raised here to warrant the reversal of the questioned
Decision. No further pleadings shall be entertained. Entry of Judgment shall be made in
due course.

Agency; Accounting. Article 1891 of the Civil Code contains a few of the obligations
owed by an agent to his principal Every agent is bound to render an account of his
transactions and to deliver to the principal whatever he may have received by virtue of
the agency, even though it may not be owing to the principal. Every stipulation
exempting the agent from the obligation to render an account shall be void.

It is evident that the reason behind the failure of petitioner to render an accounting to
respondent is immaterial. What is important is that the former fulfill her duty to render
an account of the relevant transactions she entered into as respondents agent. Caridad
Segarra Sazon vs. Letecia Vasquez-Menancio, G.R. No. 192085. February 22, 2012.
Agency; Fruits. Every agent is bound to deliver to the principal whatever the former may
have received by virtue of the agency, even though that amount may not be owed to
the principal. Caridad Segarra Sazon vs. Letecia Vasquez-Menancio, G.R. No. 192085.
February 22, 2012.


Metropolitan Bank & Trust Company vs. Court of Appeals
G.R. No. 88866 February 18, 1991
-negotiability

FACTS:
Eduardo Gomez opened an account with Golden Savings and Loan Association and
deposited over a period of two months 38 treasury warrants with a total value of
P1,755,228.37. All these warrants were subsequently indorsed by Gloria Castillo as
Cashier of Golden Savings and deposited to its savings account in the Metrobank branch
in Calapan, Mindoro. They were then sent for clearing by the branch office to the
principal office of Metrobank, which forwarded them to the Bureau of Treasury for
special clearing. Before they were cleared, petitioner decided to allow Golden Savings
to withdraw from the proceeds of the warrants. Golden Savings in turn subsequently
allowed Gomez to make withdrawals from his own account. Subsequently, Metrobank
informed Golden Savings that 32 of the warrants had been dishonored by the Bureau of
Treasury and demanded the refund by Golden Savings of the amount it had previously
withdrawn, to make up the deficit in its account. Metrobank contends that by indorsing
the warrants in general, Golden Savings assumed that they were "genuine and in all
respects what they purport to be," in accordance with Section 66 of the Negotiable
Instruments Law.

ISSUE: Whether petitioner can hold Golden Savings liable as an indorser of the treasury
warrants based on the predication that the treasury warrants involved in this case are
negotiable instruments.

RULING:
Clearly stamped on the face of the treasury warrants is the word "non-negotiable." It is
also indicated that they are payable from a particular fund, to wit, Fund 501. The
indication of Fund 501 as the source of the payment to be made on the treasury
warrants makes the order or promise to pay "not unconditional" and the warrants
themselves non-negotiable. Petitioner cannot hold Golden Savings liable as an indorser
under Section 66 of the NIL for the simple reason that this law is not applicable to the
non-negotiable treasury warrants.



Prieto vs. CA G .R. No.: G.R. No. 158597Date: June 18, 2012Petitioner: Marcos V. Prieto
Respondents: The Hon. Court of Appeals (Former Ninth Division), Hon. Rose Mary R.
Molina-Alim, In her Capacity as Pairing Judge of Branch 67 of the RTC, First Judical
Region, Buang, La Union, Far East Bank and Trust Company, now the Bank of the
Philippine Islands, through Atty. Edilberto B. Tenefrancia, and spouses Antonio and
Monette Prieto

FACTS: The petitioner/plaintiff Marcos V. Prieto with his spouse and Susan Prieto
executed a Special Power of Attorney (SPA) to spouses Antonio and Monette Prieto to
use their real property in La Union. The real property with the Transfer Certificate of
Title (TCT) No. T-40223was used as collateral for a loan of P 5,000,000 from Far Eastern
Bank and Trust Company(FEBTC). The defendants spouses Antonio and Monette Prieto
obtained the load evidenced by promissory notes and real estate mortgage contracts
were in the name of the defendants, which later on was extra-judicially foreclosed by
FEBTC because of the defendant failed to pay their loans.The petitioner/plaintiff Marcos
Prieto filed Temporary Restraining Order (TRO) against the bank with the RTC, which
was granted, contending that the real estate mortgage and promissory notes was in the
name of the defendant spouses thus it should be null and void ab initio. The RTC
dismissed the application for the writ of preliminary injunction stating that although the
name of the petitioner/plaintiff Marcos as a registered owner, did not appear in thereal
estate contracts, the petitioner/plaintiff cannot be absolved from liability because he
ratified the contract by acknowledging the contract. Such acknowledgement was sent
through a said letter of acknowledgement and was found as a document of adhesion. As
a principal, the contracts entered into by his agent on his behalf even if assuming that
the agent has exceeded his authority. Thus, the petitioner/plaintiff Marcos Prieto filed
an appeal with the CA, which was dismissed because of the delay in filing and this
petition was sought oncertiorari.
ISSUE:1) Whether or not the ratification by the petitioner/plaintiff would validate the
real estatemortgage and promissory notes and such ratification in letter of
acknowledgment could be treated as a contract of adhesion.HELD:Yes, the Supreme
Court held that the petitioner/plaintiff had precisely granted thedefendant Antonio as
his agent the authority to borrow money, and to transfer and convey the property by
way of mortgage to FEBTC; to sign, execute and deliver promissory notes; and to


receive the proceeds of the loans on the formers behalf. In other words, the mortgage
contracts were valid and enforceable against petitioner/plaintiff, who is fully bound by
their terms. It is stipulated under Article 1898 of the Civil Code, the acts of an agent
done beyond the scope of his authority do not bind the principal unless the latter
expressly or impliedly ratifies the same. As to the ratification by the contract of
adhesion, although his agent, the defendant, had exceeded the express authority, the
petitioner/plaintiff is liable by virtue of the expressed ratification. In agency, ratification
is the adoption or confirmation by one person of an act performed on his behalf by
another without authority. The substance of ratification is the confirmation after the
act, amounting to a substitute for a prior authority. The court held that the
petitioner/plaintiff was a lawyer that he is aware of the import and consequences of the
letter of acknowledgment. It is not a contract of adhesion for the petitioner/plaintiff is
not the weaker party because he is fully aware of the meaning of every phrase and
letter of the letter of acknowledgment as well as the legal effect of his confirmation of
the act of his agent. Thus, the court affirms the decision of the CA.

Beaumont v. Prieto41 Phil 670Araullo, J:
Facts:
Benito Legarda owns a parcel of land known as the Nagtajan Hacienda which he wanted
to sell through his agent Benito Valdez; who is also his attorney in fact. Negotiations as
to the purchase of land has been had between Benito Valdez and W. Borck. However,
the parties eventually had a misunderstanding as to the three (3) month period which
the agent Benito Valdez gave to Borck. It is an option period to buy the property.

Issue: Whether the agreement between the parties constitutes a mere offer to sell or an
actual contract of option?
Held: There was not contract because there was no concurrence of the offer and
acceptance of the thing and the cause which are to constitute a contract. An option is an
accepted offer. It states the terms and conditions on which the owner is willing to sell or
lease his land, if the holder elects to accept them within the time limited. As there can
be no contract without the concurrence of the requisites of consent of the parties and
cause of consideration of the obligation created, in order that a proposition or offer for
sale may acquire the character of a contract it is necessary that there appear the
expression of the will of the offeror and that of the offeree and the consent of both as
well as the fact that there was a cause or consideration for the obligation which is the
object of what was agreed upon. Promises being binding when and so long as they are
accepted in the exact terms in which they are made it not being legally proper to
modify the conditions imposed by the promisor without his consent then in order that
the acceptance of a proposition or offer may be efficacious and the option be perfect
and binding upon the parties thereto, it is necessary that such acceptance should be
unequivocal and unconditional and the acceptance and proposition shall be without any
variation whatsoever, so that whatever modifications or deviation from the terms of the
offer annuls the latter and frees the offeror.



Filipinas Life Assurance Co. (now Ayala Life Assurance, Inc.) v. Clemente Pedrosa,
TeresitaPedrosa and Jennifer Palacio
G.R. No. 159489, February 04, 2008Quisumbing, J.
FACTS:
Teresita Pedroso is a policyholder of a 20-year endowment life insurance issued by
Filipinas Life Assurance Co. Pedroso claims Renato Valle was her insurance agent since
1972 and Valle collected her monthly premiums. In the first week of January 1977, Valle
told her that the Filipinas Life Escolta Office was holding a promotional investment
program for policyholders. It was offering 8% prepaid interest a month for certain
amounts deposited on a monthly basis. Enticed, she initially invested and 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, who referred her
to the branch manager, Angel Apetrior. Pedroso inquired about the promotional
investment and Apetrior confirmed that there was such a promotion.
She was even told she could push 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 and Alcantara, as well as having known agent Valle for quite some time,
Pedroso waited for the maturity of her initial investment. A month after, her investment
of P10,000 was returned to her after she made a written request for its refund. To
collect the amount, Pedroso personally went to the Escolta branch 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 a month. Upon maturity of Pedrosos subsequent investments, Valle would take
back from Pedroso the corresponding agents receipt he issued to the latter.

Pedroso told respondent Jennifer Palacio, also a Filipinas Life insurance policyholder,
about the investment 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 return her money.
ISSUE: WON Filipinas Life is jointly and severally liable with Apetrior and Alcantara on
the claim of Pedroso and Palacio or WON its agent Renato Valle is solely liable to
Pedroso and Palacio
HELD: Pedroso and Palacio had invested P47,000 and P49,550, respectively. These were
received by Valle and remitted to Filipinas Life, using Filipinas Lifes official receipts.
Valles authority to solicit and receive investments was also established by the parties.
When Pedroso and Palacio sought confirmation, Alcantara, holding a supervisory
position, and Apetrior, the branch manager, confirmed that Valle had authority. While it
is true that a person dealing with an agent is put upon inquiry and must discover at his
own peril the agents authority, in this case, Pedroso and Palacio did exercise due
diligence in removing all doubts and in confirming the validity of the representations
made by Valle . 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 on behalf of another, with the consent or
authority of the latter. The general rule is that the principal is responsible for the acts of
its agent done within the scope of its authority, and should bear the damage caused to
third persons. When the agent exceeds his authority, the agent becomes personally
liable for the damage. But even when the agent exceeds his authority, the principal is
still solidarily liable together with the agent if the principal allowed the agent to act as
though the agent had 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 from the investments deposited
by Valle in the account of Filipinas Life.

MANILA MEMORIAL PARK CEMETERY, INC. V. LINSANGAN
G.R. No. 94050 TINGA, November 21. 1991
NATURE
Petition for Review under Rule 45 of the ROC
FACTS
-Florencia Baluyot, an Agency Manager of MMPCI, offered to Atty. Pedro Linsangan a lot
at the Holy Cross Memorial Park owned by MMPCI for P95,000. The lots former owner
was not interested on the lot anymore and so agreed to sell the lot after he has been
reimbursed. Atty. Linsangan agreed to the offer, gave Baluyot the reimbursement that
would be given to the former owner and down payment that would be paid to MMPCI,
with Baluyot only handing him handwritten and typewritten receipts (not O.R.).-
However, instead of the old contract with the old owner reformed so that Atty.
Linsangan would become the new owner of the lot, Baluyot offered a new contract
covering the same lot. Atty. Linsangan protested, but Baluyot assured him that that
Atty. Linsangan would still be paying P95,000 instead of the P132,250 price under the
new contract.
Baluyot even executed a document confirming the previous arrangement between
her and Atty. Linsangan so that even if the purchase price under the new contract has
increased, Atty. Linsangan would still be paying the old purchase price. Atty. Linsangan
signed the new contract with MMPCI and tendered payment in checks in accordance
with the old agreement between him and Baluyot.-It turns out that MMPCI was not
aware of the arrangement between Baluyot and Atty. Linsangan, and that Baluyot was
only authorized under her Agency Management contract to
solicit and remit to MMPCI offers to purchase interment spaces belonging to and sold by
MMPCI. So, even if Atty. Linsangan had complied with the agreed payment, MMPCI
cancelled the new contract for non-payment of arrearages.-Atty. Linsangan filed
complaint for Breach of Contract and Damages against Baluyot and MMPCI.LC: Baluyot
was an agent of MMPCI; MMPCI was estopped from denying the agency after having
received and encashed the checks issued by Atty. Linsangan and given it by Baluyot.CA:
affirmed LC + Baluyots authority was conferred upon her by habit and custom
ISSUES
1. WON the SC could review the findings of fact of CA2. WON Baluyot was an agent of
MMPCI3. WON MMPCI was bound by the contract procured by Atty. Linsangan and
solicited by Baluyot4. WON MMPCI was estopped from denying liability to Atty.
Linsangan
HELD1. YES There are instances when the findings of fact of the trial court and/or Court
of Appeals may be reviewed by the Supreme Court, such as (1) when the conclusion is a
finding grounded entirely on speculation, surmises and conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3) where there is a grave
abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5)
when the findings of fact are conflicting; (6) when the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is contrary to the admissions
of both appellant and appellee; (7) when the findings are contrary to those of the trial
court; (8) when the findings of fact are conclusions without citation of specific evidence
on which they are based; (9) when the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the respondents; and (10) the
findings of fact of the Court of Appeals are premised on the supposed absence of
evidence and contradicted by the evidence on record.2. YES
Ratio. By the contract of agency, 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. Thus, the
elements of agency
are (i) consent, express or implied, of the parties to establish the relationship; (ii) the
object is the execution of a juridical act in relation to a third person; (iii) the agent acts
as a representative and not for himself; and (iv) the agent acts within the scope of his
authority.
Reasoning.
Baluyot was an agent of MMPCI, having represented the interest of the latter, and
having been allowed by MMPCI to represent it in her dealings with its
clients/prospective buyers.3. NO
Ratio.
The acts of the agent beyond the scope of his authority do not bind the principal unless
the latter ratifies the same. It also bears emphasis that when the third person knows
that the agent was acting beyond his power or authority, the principal cannot beheld
liable for the acts of the agent. If the said third person was aware of such limits of
authority, he is to blame and is not entitled tor ecover damages from the agent, unless
the latter undertook to secure the principals ratification.-on RATIFICATION:
Ratification
in agency is the adoption or confirmation by one person of an act performed on his
behalf by another without authority. The substance of the doctrine is confirmation after
conduct, amounting to a substitute for a prior authority. Ordinarily, the principal must
have full knowledge at the time of ratification of all the material facts and circumstances
relating to the unauthorized act of the person who assumed to act as agent. Thus, if
material facts were suppressed or unknown, there can be no valid ratification and this
regardless of the purpose or lack thereof in concealing such facts and regardless of the
parties between whom the question of ratification may arise. Nevertheless, this
principle does not apply if the principals ignorance of the material facts and
circumstances was willful, or that the principal chooses to act in ignorance of the facts.
However, in the absence of circumstances putting a reasonably prudent man on inquiry,
ratification cannot be implied as against the principal who is ignorant of the facts.
Reasoning.
Baluyot acted in excess of the authority granted to her by MMPCI. The original
agreement between her and Atty.Linsangan was unknown to MMPCI and thus, MMPCI
was not bound by their agreement. As far as they were concerned, the contract price
was P132,250 and not P95, 000. As for the ratification, see estoppel.4. NO.
Ratio.
The
essential elements of estoppel
are (i) conduct of a party amounting to false representation or concealment of material
facts or at least calculated to convey the impression that the facts are otherwise than,
and inconsistent with, those which the party subsequently attempts to assert; (ii) intent,
or at least expectation, that this conduct shall be acted upon by, or at least influence,
the other party; and (iii) knowledge, actual or constructive, of the real facts.


-One who claims the benefit of an estoppel on the ground that he has been misled by
the representations of another must not have been misled through his own want of
reasonable care and circumspection.-Estoppel must be intentional and unequivocal, for
when misapplied, it can easily become a most convenient and effective means of
injustice.
Reasoning.
There is no indication that MMPCI let the public nor Atty. Linsangan to believe that
Baluyot had the authority to alter the standard contracts of the company. Neither is
there any showing that prior to signing of the new contract, MMPCI had any knowledge
of Baluyots commitment to Atty. Linsangan.-Even assuming that Atty. Linsangan was
misled by MMPCIs actuations, he still cannot invoke the principle of estoppel, as he was
clearly negligent in his dealings with Baluyot, and could have easily determined, had he
only been cautious and prudent, whether said agent was clothed with the authority to
change the terms of the principals written contract.
Disposition.
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals
dated 22 June 2001 and its Resolution dated 12 December 2001 in CA- G.R. CV No.
49802, as well as the Decision in Civil Case No. 88-1253 of the Regional TrialCourt,
Makati City Branch 57, are hereby REVERSED and SET ASIDE. The Complaint in Civil Case
No. 88-1253 is DISMISSED for lack of cause of action. No pronouncement as to costs.

RURAL BANK of MILAOR v. OCFEMIA

FACTS:
Several parcels of land were mortgaged by the respondents during the lifetime of the
respondents grandparents to the Rural bank of Milaor as shown by the Deed of Real
Estate Mortgage and the Promissory Note. Spouses Felicisimo Ocfemia and Juanita
Ocfemia, one of the respondents, were not able to redeem the mortgaged properties
consisting of seven parcels of land and so the mortgage was foreclosed and thereafter
ownership was transferred to the petitioner bank. Out of the seven parcels of land that
were foreclosed, five of them are in the possession of the respondents because these
five parcels of land were sold by the petitioner bank to the respondents as evidenced by
a Deed of Sale. However, the five parcels of land cannot be transferred in the name of
the parents of Merife Nino, one of the respondents, because there is a need to have the
document of sale registered. The Register of deeds, however, said that the document of
sale cannot be registered without the board resolution of the petitioner bank confirming
both the Deed of sale and the authority of the bank manager, Fe S. Tena, to enter such
transaction.

The petitioner bank refused her request for a board resolution and made many alibis.
Respondents initiated the present proceedings so that they could transfer to their
names the subject five parcel of land and subsequently mortgage said lots and to use
the loan proceeds for the medical expenses of their ailing mother.


ISSUE: May the Board of Directors of a rural banking corporation be compelled to
confirm a deed of absolute sale of real property owned by the corporation which deed
of sale was executed by the bank manager without prior authority of the board of
directors of the rural banking corporation?


HELD: YES. The bank acknowledges, by its own acts or failure to act, the authority of Fe
S. Tena to enter into binding contracts. After the execution of the Deed of Sale,
respondents occupied the properties in dispute and paid the real estate taxes. If the
bank management believed that it had title to the property, it should have taken
measured to prevent the infringement and invasion of title thereto and possession
thereof. Likewise, Tena had previously transacted business on behalf of the bank, and
the latter had acknowledged her authority. A bank is liable to innocent third persons
where representation is made in the course of its normal business by an agent like
Manager Tena even though such agent is abusing her authority. Clearly, persons dealing
with her could not be blamed for believing that she was authorized to transact business
for and on behalf of the bank.

The bank is estopped from questioning the authority of the bank to enter into 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 agents
authority.


CUISON vs. CA and Valiant G.R. No. 88539 October 26, 1993
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
tZo 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