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BICOL SAVINGS AND LOAN ASSOCIATION vs. HON.

COURT OF APPEALS, CORAZON DE JESUS, LYDIA DE


JESUS, NELIA DE JESUS, JOSE DE JESUS, AND PABLO DE JESUS
G.R. No. 85302 March 31, 1989
MELENCIO-HERRERA, J.:
Principal: Juan de Jesus
Agent: Jose de Jesus
FACTS:
Juan de Jesus, the owner of a parcel of land situated in Naga City, executed a Special Power of Attorney in
favor of his son, Jose de Jesus, "To negotiate, mortgage my real property in any bank either private or public
entity preferably in the Bicol Savings Bank, Naga City, in any amount that may be agreed upon between the
bank and my attorney-in-fact."
By virtue thereof, Jose de Jesus obtained a loan of P20,000.00 from petitioner bank on 13 April 1976. To
secure payment, Jose de Jesus executed a deed of mortgage on the real property referred to in the Special
Power of Attorney.
Juan de Jesus died in the meantime on a date that does not appear of record.
By reason of his failure to pay the loan obligation even during his lifetime, petitioner bank caused the
mortgage to be extrajudicially foreclosed on 16 November 1978. In the subsequent public auction, the
mortgaged property was sold to the bank as the highest bidder to whom a Provisional Certificate of Sale was
issued.
Private respondents herein filed a Complaint with the then Court of First Instance of Naga City for the
annulment of the foreclosure sale or for the repurchase by them of the property. The trial court ruled in favor
of petitioner bank. The CA, however, reversed the decision, relying on Article 1879 of the Civil Code which
reads:
Art. 1879. A special power to sell excludes the power to mortgage; and a special power to mortgage
does not include the power to sell.
ISSUE:
Whether the agent-son exceeded the scope of his authority in agreeing to a stipulation in the mortgage deed
that petitioner bank could extrajudicially foreclose the mortgaged property.
HELD:
NO.
Article 1879 of the Civil Code, relied on by the Appellate Court in ruling against the validity of the extrajudicial
foreclosure sale is inapplicable in the case at bar.
The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and independent
contract, and not an auction sale resulting from extrajudicial foreclosure, which is precipitated by the default
of a mortgagor. Absent that default, no foreclosure results. The stipulation granting an authority to
extrajudicially foreclose a mortgage is an ancillary stipulation supported by the same cause or consideration
for the mortgage and forms an essential or inseparable part of that bilateral agreement (Perez v. Philippine
National Bank, No. L-21813, July 30, 1966, 17 SCRA 833, 839).
The power to foreclose is not an ordinary agency that contemplates exclusively the representation of the
principal by the agent but is primarily an authority conferred upon the mortgagee for the latter's own
protection. That power survives the death of the mortgagor (Perez vs. PNB, supra). In fact, the right of the
mortgagee bank to extrajudicially foreclose the mortgage after the death of the mortgagor Juan de Jesus,
acting through his attorney-in-fact, Jose de Jesus, did not depend on the authorization in the deed of
mortgage executed by the latter.
FELIX DE VILLA vs. CESARIO A. FABRICANTE, ET AL.
G.R. No. L-13063, April 30, 1959
BAUTISTA ANGELO, J.:
PRINCIPAL: Maria Fabricante
AGENT: Cesario Fabricante
FACTS:
Plaintiff-appellant filed an action before the Court of First Instance of Camarines Sur to foreclose the mortgage
executed by defendants-appellees covering two parcels of land situated in the same province.
As defendants-appelles failed to answer the complaint within the reglementary period, they were declared in
default, and forthwith, plaintiff-appellant presented his evidence. Thereupon, the trial court rendered decision
ordering Cesario A. Fabricante to pay the plaintiff the sum of P16,666.66 (as amended), with interest at the
rate of 6 per cent per annum from April 18, 1944 and, upon his failure to pay the same within the period of 90
days, to have the property covered by Transfer Certificate of Title No. RT-29 (50) sold for the satisfaction of
the judgment.
Plaintiff-appellant claims that the trial court erred in holding that only Cesario A. Fabricante is liable to pay the
mortgage debt and not his wife who is exempt from liability.
The trial court said: "Only the defendant Cesario A. Fabricante is liable for the payment of this amount
because it does not appear that the other defendant Maria G. de Fabricante had authorized Cesario A.
Fabricante to contract the debt also in her name. The power of attorney was not presented and it is to be
presumed that the power was limited to a grant of authority to Cesario A. Fabricante to mortgage the parcel
of land covered by Transfer Certificate of Title in the name of Maria G. de Fabricante."

ISSUE:
Whether Maria Fabricante should also be held liable to pay the mortgage debt as principal of his husband-
agent Cesario Fabricante.

HELD:
NO.
There is nothing in the contents of the deed of mortgage executed by Cesario Fabricante in favor of appellant
on April 18, 1944 that shows that Fabricante was authorized by his wife to contract the obligation in her name.
The deed shows that the authority was limited to the execution of the mortgage insofar as the property of the
wife is concerned. There is a difference between authority to mortgage and authority to contract obligation.
Since the power of attorney was not presented as evidence, the trial court was correct in presuming that the
power was merely limited to a grant of authority to mortgage unless the contrary is shown.
THE DIRECTOR OF PUBLIC WORKS vs. SING JUCO, ET AL.
G.R. No. L-30181, July 12, 1929
STREET, J.:
PRINCIPAL: Tan Toco
AGENT: Mariano dela Rama
FACTS:
In 1921, the Government of the Philippine Islands was planning extensive harbor improvements in this vicinity,
requiring extensive dredging by the Bureau of Public Works in the mouth of said river. The conduct of these
dredging operations made it necessary for the Director of Public Works to find a place of deposit for the dirt
and mud taken from the place, or places, dredged. As the land already referred to was low and easily
accessible to the spot where dredging was to be conducted, it was obviously for the interest of the
Government and the said owners of the land that the material taken out by the dredges should be deposited
on the said property. Accordingly, after preliminary negotiations to this effect have been conducted, a
contract was made between the Director of Public Works, representing the Government of the Philippine
Islands, and the four owners, M. de la Rama, Sing Juco, G. M. Tanboontien, and Seng Bengco
The dredging operation were conducted by the Bureau of Public Works in substantial accomplice and after the
account with the owners were liquidated and the amount due from them determined, demand was made
upon them for the payment of the first installment. No such payment was, however, made. As a consequence
this action was instituted by the Director of Public Works on October 14, 1926, for the purpose of recovering
the amount due to the Government under the contract from the original owners of the property from the
sureties whose names were signed to the contract of suretyship, and to enforce the obligation as a real lien
upon the property. In said action the Philippine National Bank was made a party defendant, as having an
interest under its prior mortgage upon the property, while Enrique Enchaus was made defendant as successor
in interest of M. de la Rama, and Tan Ong Sze, widow of Tan Toco, was also made defendant by reason of her
supposed liability derived from the act of De la Rama in signing the firm "Casa Viuda de Tan Toco" as a surety
on bond.
On the part of Viuda de Tan Toco the defense was interposed that the name "Casa Viuda de Tan Toco" signed
to the contract of suretyship by Mariano de la Rama was signed without authority.
ISSUE:
Whether Tan Ong Sze, widow of Tan Toco, should be liable as surety.
HELD:
NO.
Article 1827 of the Civil Code provides that guaranty shall not be presumed; it must be expressed and cannot
be extended beyond its specified limits. By analogy a power of attorney to execute a contract of guaranty
should not be inferred from vague or general words, especially when such words have their origin and
explanation in particular powers of a wholly different nature. It results that the trial court was in error in giving
personal judgment against Tan Ong Sze upon the bond upon which she was sued in this case.
In the case at bar, the said contract purported to have been signed by Mariano de la Rama, acting for Tan Toco
under the power of attorney has exhibited no power of attorney which would authorize the creation, by the
attorney-in-fact, of an obligation in the nature of suretyship binding upon this principal.
It is true that the Government introduced in evidence 2 documents exhibiting powers of attorney. However,
the clauses relate more specifically to the execution of contracts relating to property; and the more general
words should be interpreted, under the general rule ejusdem generis, as referring to the contracts of like
character. Power to execute a contract so exceptional a nature as a contract of suretyship or guaranty cannot
be inferred from the general words contained in these powers.

Yun Kwan Byung vs. Nograles


G.R. No. 163553, December 11, 2009

FACTS:

PAGCOR launched its Foreign Highroller Marketing Program. The Program aims to invite patrons from foreign
countries to play at the dollar pit of designated PAGCOR-operated casinos under specified terms and conditions
and in accordance with industry practice. The relevant stipulations of the Junket Agreement state:

1. PAGCOR will provide ABS Corporation with separate junket chips. The junket chips will be
distinguished from the chips being used by other players in the gaming tables.
ABS Corporation will distribute these junket chips to its players and at the end of the playing period, ABS
Corporation will collect the junket chips from its players and make an accounting to the casino treasury.
2. ABS Corporation will assume sole responsibility to pay the winnings of its foreign players and settle
the collectibles from losing players.
3. ABS Corporation shall hold PAGCOR absolutely free and harmless from any damage, claim or liability
which may arise from any cause in connection with the Junket Agreement.
5. In providing the gaming facilities and services to these foreign players, PAGCOR is entitled to receive
from ABS Corporation a 12.5% share in the gross winnings of ABS Corporation or 1.5 million US dollars,
whichever is higher, over a playing period of 6 months. PAGCOR has the option to extend the period.

Petitioner, a Korean national, alleges that he came to the Philippines four times to play for high stakes
at the Casino Filipino; that in the course of the games, he was able to accumulate gambling chips worth US$2.1
million. Petitioner contends that when he presented the gambling chips for encashment with PAGCORs
employees or agents, PAGCOR refused to redeem them.

PAGCOR claims that petitioner, who was brought into the Philippines by ABS Corporation, is a junket
player who played in the dollar pit exclusively leased by ABS Corporation for its junket players. PAGCOR alleges
that it provided ABS Corporation with distinct junket chips. ABS Corporation distributed these chips to its junket
players. At the end of each playing period, the junket players would surrender the chips to ABS Corporation.
Only ABS Corporation would make an accounting of these chips to PAGCORs casino treasury.
The Trial Court dismissed the complaint and ruled that the Junket Agreement is void. Since the junket Agreement
is not permitted by PAGCOR’s charter and the mutual rights and obligations of the parties to this case would be
resolved based on agency and estoppel. The CA affirmed the trial court’s decision. It upheld that the Junket
Agreement was void and cannot give rise to an implied agency which the petitioner claims to exist between
PAGCOR and ABS Corporation. The CA explained that it cannot see how the principle of implied agency can be
applied to this case. Article 1883 of the Civil Code applies only to a situation where the agent is authorized by
the principal to enter into a particular transaction, but instead of contracting on behalf of the principal the
agent acts in his own name.

ISSUES:

1. Whether the CA erred in holding that PAGCOR is not liable to petitioner, disregarding the doctrine of implied
agency, or agency by estoppel;

2. Whether the CA erred in using intent of the contracting parties as the test for creation of agency, when such
is not relevant since the instant case involves liability of the presumed principal in implied agency to a third
party;

RULING:

1. No. Article 1869 of the Civil Code states that implied agency is derived from the acts 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 without authority. Implied agency, being an actual agency, is a fact to be proved by deductions or
inferences from other facts.

On the other hand, apparent authority is based on estoppel and can arise from two instances. First, the principal
may knowingly permit the agent to hold himself out as having such authority, and the principal becomes
estopped to claim that the agent does not have such authority. Second, the principal may clothe the agent with
the indicia of authority as to lead a reasonably prudent person to believe that the agent actually has such
authority. In an agency by estoppel, there is no agency at all, but the one assuming to act as agent has apparent
or ostensible, although not real, authority to represent another.

The law makes no presumption of agency and proving its existence, nature and extent is incumbent upon the
person alleging it. Whether or not an agency has been created is a question to be determined by the fact that
one represents and is acting for another.

Acts and conduct of PAGCOR negates the existence of an implied agency or an agency by estoppel

Petitioner’s argument is clearly misplaced. The basis for agency is representation, that is, the agent acts for and
on behalf of the principal 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. On the part of the principal, there must be an actual
intention to appoint or an intention naturally inferable from his words or actions, while on the part of the agent,
there must be an intention to accept the appointment and act on it. Absent such mutual intent, there is generally
no agency.
There is no implied agency in this case because PAGCOR did not hold out to the public as the principal of ABS
Corporation. PAGCOR’s actions did not mislead the public into believing that an agency can be implied from the
arrangement with the junket operators, nor did it hold out ABS Corporation with any apparent authority to
represent it in any capacity. The Junket Agreement was merely a contract of lease of facilities and services.

2. An agency by estoppel, which is similar to the doctrine of apparent authority requires proof of reliance upon
the representations, and that, in turn, needs proof that the representations predated the action taken in
reliance.

There can be no apparent authority of an agent without 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. Such proof is lacking in this case.

In the entire duration that petitioner played in Casino Filipino, he was dealing only with ABS Corporation, and
availing of the privileges extended only to players brought in by ABS Corporation. The facts that he enjoyed
special treatment upon his arrival in Manila and special accommodations in Grand Boulevard Hotel, and that he
was playing in special gaming rooms are all indications that petitioner cannot claim good faith that he believed
he was dealing with PAGCOR. Petitioner cannot be considered as an innocent third party and he cannot claim
entitlement to equitable relief as well.

B.H. Macke vs Camps


G.R. No. 2962, February 27, 1907

FACTS:

B. H. Macke and W. H. Chandler, partners doing business under the firm name of Macke, Chandler & Company,
allege that during the months of February and March, 1905, they sold to the Jose Camps and delivered at his
place of business, known as the "Washington Cafe," various bills of goods amounting to P351.50; and he has
only paid on account of said accounts the sum of P174; that there is still due them on account of said goods the
sum of P177.50.

B. H. Macke testified that on the order of one Ricardo Flores, who represented himself to be agent of the
defendant, he shipped the said goods to the defendants at the Washington Cafe; that Flores later acknowledged
the receipt of said goods and made various payments thereon amounting in all to P174; that on demand for
payment of balance of the account Flores informed him that he did not have the necessary funds on hand, and
that he would have to wait the return of his principal, the defendant, who was at that time visiting in the
provinces.

A written contract dated May 25, 1904, was introduced in evidence, from which it appears that one Galmes, the
former owner of the business now know as the "Washington Cafe," subrented the building wherein the business
was conducted, to the defendant for a period of one year, for the purpose of carrying on that business, the
defendant obligating himself not to sublet or subrent the building or the business without the consent of the
said Galmes. This contract was signed by the defendant and the name of Ricardo Flores appears thereon as a
witness, and attached thereto is an inventory of the furniture and fittings which also is signed by the defendant
with the word "sublessee" (subarrendatario) below the name, and at the foot of this inventory the word
"received" (recibo) followed by the name "Ricardo Flores," with the words "managing agent" (el manejante
encargado) immediately following his name.
ISSUE:

Whether or not Flores is an agent of Camps?

RULING:

Yes. The contract introduced in evidence sufficiently establishes the fact that the defendant was the owner of
business and of the bar, and the title of "managing agent" attached to the signature of Flores which appears on
that contract, together with the fact that, at the time the purchases in question were made, Flores was
apparently in charge of the business, performing the duties usually entrusted to managing agent, leave little
room for doubt that he was there as authorized agent of the defendant. One who clothes another apparent
authority as his agent, and holds him out to the public as such, can not 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 following preassumptions or deductions, which the law expressly directs to be made from particular
facts, are deemed conclusive:

(1) "Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another
to believe a particular thing true, and to act upon such belief, he can not, in any litigation arising out such
declaration, act, or omission, be permitted to falsify it" (subsec. 1, sec. 333, Act no. 190); and unless the contrary
appears, the authority of an agent must be presumed to include all the necessary and usual means of carrying
his agency into effect. (15 Conn., 347; 90 N. C. 101; 15 La. Ann, 247; 43 Mich., 364; 93 N. Y., 495; 87 Ind., 187.)

That Flores, as managing agent of the Washington Cafe, had authority to buy such reasonable quantities of
supplies as might from time to time be necessary in carrying on the business of hotel bar may fairly be presumed
from the nature of the business, especially in view of the fact that his principal appears to have left him in charge
during more or less prolonged periods of absence; from an examination of the items of the account attached to
the complaint, we are of opinion that he was acting within the scope of his authority in ordering these goods
are binding on his principal, and in the absence of evidence to the contrary, furnish satisfactory proof of their
delivery as alleged in the complaint.

Nogales vs. Capitol Medical Center


G.R. No. 142625, December 19, 2006

FACTS:

Pregnant with her fourth child, Corazon Nogales, who was then 37 y/o was under the exclusive prenatal care of
Dr. Oscar Estrada beginning on her fourth month of pregnancy or as early as December 1975. While Corazon
was on her last trimester of pregnancy, Dr. Estrada noted an increase in her blood pressure and development
of leg edemas indicating preeclampsia which is a dangerous complication of pregnancy. Around midnight of May
26, 1976, Corazon started to experience mild labor pains prompting Corazon and Rogelio Nogales to see Dr.
Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate admission to Capitol Medical
Center (CMC). Upon her admission, an internal examination was conducted upon her by a resident-physician.
Based on the doctor’s sheet, around 3am, Dr. Estrada advised for 10mg valium to be administered immediately
by intramuscular injection, he later ordered the start of intravenous administration of syntociron admixed with
dextrose, 5% in lactated ringer’s solution, at the rate of 8-10 micro-drops per minute. When asked if he needed
the services of anesthesiologist, he refused. Corazon’s bag of water ruptured spontaneously and her cervix was
fully dilated and she experienced convulsions. Dr. Estrada ordered the injection of 10g of magnesium sulfate
but his assisting Doctor, Dr. Villaflor, only administered 2.5g. She also applied low forceps to extract Corazon’s
baby. In the process, a 10 x 2.5cm piece of cervical tissue was allegedly torn. The baby came out in an apric,
cyanatic weak and injured condition. Consequently the baby had to be intubated and resuscitated. Corazon had
professed vaginal bleeding where a blood typing was ordered and she was supposed to undergo hysterectomy,
however, upon the arrival of the doctor, she was already pronounced dead due to hemorrhage.

ISSUE:

Whether or not in the conduct of child delivery, the doctors and the respondent hospital is liable for negligence.

RULING:

Yes. In general, a hospital is not liable for the negligence of an independent contractor-physician. There is,
however an exception to this principle. The hospital may be liable if the physician is the ostensible agent of the
hospital. This exception is also known as the doctrine of apparent authority.

Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a
physician providing care at the hospital, regardless of whether the physician is an independent contractor,
unless the patient knows, or should have known, that the physician is an independent contractor.

For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that 1.) the hospital,
or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was
alleged to be negligent was an employee or agent of the hospital; 2.) Where the acts of the agent create the
appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquired in them;
and 3.) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care
and prudence.

Borrowed servant doctrine provides that once a surgeon enters the operating room and takes charge of the acts
or omissions of operating room personnel and any negligence associated with each acts or omissions are
imputable to the surgeon, while the assisting physicians and nurses may be employed by the hospital, or
engaged by the patient, they normally become the temporary servants or agents of the surgeon in charge while
the operation is in progress, and liability may be imposed upon the surgeon for their negligent acts under the
doctrine of respondeat superior.

People vs. Carpo


On 25 August 1996 at about 8:00 o'clock in the evening while Ruben Meriales was in his house, saw the
accused-appellants Jaime Carpo (Barangay Chairman), Oscar Ibao, Warlito Ibao and Roche Ibao near his house.
After a few minutes, there was a loud explosion which prompted Ruben to step out and see what happened.
When he arrived at the scene, he saw Florentino, Norwela, Nissan and Noemi Dulay covered with blood. He
rushed them to the hospital but unfortunately, only Noemi survived. He then testified after the burial of the
victims to the police that he saw the accused-appellants moments before the crime occurred. They were then
arrested and convicted by the lower court, but upon appeal, they argued that they were not at the scene and
proceeded to present their alibis, that they were not at the scene but in their respective houses, supplemented
by the fact that Ruben has a long standing grudge against the accused-appellants regarding the death of one
Delfin Meriales.

After their conviction at the trial court, the civil aspect of their wrongdoings was settled by the defense's
respective counsels namely; Atty. Sanglay and Atty. Rafael, through a compromise agreement with Prosec.
Corpuz ORALLY. The parties agreed to an indemnity of P600,000.00 should the accused-appellants become
convicted of the crime committed. Also, Teresita Dulay as the private complainant agreed and affixed her
signature at the stenographic notes.

ISSUE:

Whether the compromise agreement between the prosecution and defense is valid.

RULING:

No. Article 1878 of the Civil Code and Sec. 23 of Rule 138 of the Rules of Court set forth the attorney's
power to compromise. Under Art. 1878 of the Civil Code, a special power of attorney is necessary "to
compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive
objections to the venue of an action or to abandon a prescription already acquired." On the other hand, Sec.
23, Rule 138 of the Rules of Court provides, "(a)ttorneys have authority to bind their clients in any case by any
agreement in relation thereto made in writing, and in taking appeal, and in all matters of ordinary judicial
procedure, but they cannot, without special authority, compromise their clients' litigation or receive anything
in discharge of their clients' claims but the full amount in cash."

The requirements under both provisions are met when there is a clear mandate expressly given, by the
principal to his lawyer specifically authorizing the performance of an
act.http://sc.judiciary.gov.ph/jurisprudence/2001/apr2001/132676.htm - _edn27 It has not escaped our
attention that in the present case counsel for both parties had no special power of attorney from their clients
to enter into a compromise. However, insofar as Teresita was concerned, she was apprised of the agreement
and in fact had signed her name as instructed by the court, thereby tacitly ratifying the same. As for accused-
appellants, the aforecited dialogue between the court and counsel does not show that they were ever consulted
regarding the proposed settlement. In the absence of a special power of attorney given by accused-appellants
to their counsel, the latter can neither bind nor compromise his clients' civil liability. Consequently, since Atty.
Sanglay and Atty. Rafael had no specific power to compromise the civil liability of all accused-appellants, its
approval by the trial court which did not take the precautionary measures to ensure the protection of the right
of accused-appellants not to be deprived of their property without due process of law, could not legalize it. For
being violative of existing law and jurisprudence, the settlement should not be given force and effect.
Naguiat vs. CA
FACTS:
Queao applied with Naguiat for a loan in the amount of P200,000.00, which Naguiat granted. On 11
August 1980, Naguiat indorsed to Queao Associated Bank Check No. 090990 dated 11 August 1980 for the
amount of P95,000.00, which was earlier issued to Naguiat by the Corporate Resources Financing Corporation.
She also issued her own Filmanbank Check No. 065314, to the order of Queao, also dated 11 August 1980 and
for the amount of P95,000.00. The proceeds of these checks were to constitute the loan granted by Naguiat to
Queao. To secure the loan, Queao executed a Deed of Real Estate Mortgage dated 11 August 1980 in favor of
Naguiat, and surrendered to the latter the owners duplicates of the titles covering the mortgaged properties.
On the same day, the mortgage deed was notarized, and Queao issued to Naguiat a promissory note for the
amount of P200,000.00, with interest at 12% per annum, payable on 11 September 1980. Queao also issued a
Security Bank and Trust Company check, postdated 11 September 1980, for the amount of P200,000.00 and
payable to the order of Naguiat.
Upon presentment on its maturity date, the Security Bank check was dishonored for insufficiency of
funds. On the following day, 12 September 1980, Queao requested Security Bank to stop payment of her
postdated check, but the bank rejected the request pursuant to its policy not to honor such requests if the check
is drawn against insufficient funds.
On 16 October 1980, Queao received a letter from Naguiats lawyer, demanding settlement of the loan.
Shortly thereafter, Queao and Ruebenfeldt met with Naguiat. At the meeting, Queao told Naguiat that she did
not receive the proceeds of the loan, adding that the checks were retained by Ruebenfeldt, who purportedly
was Naguiats agent.
Naguiat applied for the extrajudicial foreclosure of the mortgage with the Sheriff of Rizal Province, who
then scheduled the foreclosure sale on 14 August 1981.Three days before the scheduled sale, Queao filed the
case before the Pasay City RTC, seeking the annulment of the mortgage deed. The trial court eventually stopped
the auction sale.
On 8 March 1991, the RTC rendered judgment, declaring the Deed of Real Estate Mortgage null and void,
and ordering Naguiat to return to Queao the owners duplicates of her titles to the mortgaged lots. Naguiat
appealed the decision before the Court of Appeals, making no less than eleven assignments of error. CA
promulgated the decision now assailed before us that affirmed in toto the RTC decision.

ISSUE:
Whether or not there is the admissibility of various representations and pronouncements of
Ruebenfeldt, invoking the rule on the non-binding effect of the admissions of third persons.
RULING:

The existence of an agency relationship between Naguiat and Ruebenfeldt is supported by ample
evidence. Naguiat instructed Ruebenfeldt to withhold from Queao the checks she issued or indorsed to Queao,
pending delivery by the latter of additional collateral. Ruebenfeldt served as agent of Naguiat on the loan
application of Queaos friend, Marilou Farralese, and it was in connection with that transaction that Queao came
to know Naguiat. It was also Ruebenfeldt who accompanied Queao in her meeting with Naguiat and on that
occasion, on her own and without Queao asking for it, Reubenfeldt actually drew a check for the sum of
P220,000.00 payable to Naguiat, to cover for Queaos alleged liability to Naguiat under the loan agreement.
The Court of Appeals recognized the existence of an agency by estoppel citing Article 1873 of the Civil
Code. Apparently, it considered that at the very least, as a consequence of the interaction between Naguiat and
Ruebenfeldt, Queao got the impression that Ruebenfeldt was the agent of Naguiat, but Naguiat did nothing to
correct Queaos impression. In that situation, the rule is clear. 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. CA is correct in invoking the said rule on agency by estoppel.
More fundamentally, whatever was the true relationship between Naguiat and Ruebenfeldt is irrelevant
in the face of the fact that the checks issued or indorsed to Queao were never encashed or deposited to her
account of Naguiat.

FACTS:

Prior to January 15, 1954, lots Nos. 1226 and 1182 of the Cadastral Survey of Talisay, Negros Occidental,
hadbeen sold by C. N. Hodges to Vicente M. Layson, for the sum of P43,000.90, payable on installments. As
of January 15, 1954, the outstanding balance of Layson's debt, after deducting the installments paid by him
prior thereto, amounted to P15,516.00. In order that he could use said lots as security for a loan he intended to
applyfrom a bank, Layson persuaded Hodges to execute in his (Layson's) favor a deed of absolute sale over
theproperties, with the understanding that he would put up a surety bond to guarantee the payment of
saidbalance. Accordingly, on the date above-
mentioned, Layson executed, in favor of Hodges, a promissory note for P15,516.00, with interest thereon at
the rate of 1% per month, and the sum of P1,551.60, for attorney's feesand costs, in case of default in the
payment of the principal or interest of said note. To guarantee the same, onJanuary 23, 1954, the Central Surety
and Insurance Company through the manager of its branch office in Iloilo,Mrs. Rosita Mesa.
When Layson defaulted in the discharge of his aforesaid obligation, Hodges demanded payment from
theCentral Surety and Insurance Co., which, despite repeated extensions of time granted thereto, at its
request,failed to honor its commitments under the surety bond.
On October 1955, Hodges commenced an action, in the Court of First Instance of Iloilo, against Layson
andCentral Surety and Isurance Co., to recover from them, jointly and severally, the sums of
P17,826.08,representing the principal and interest due up to said date, and P1,551.60, as attorney's fees. In his
answer tothe complaint, Layson admitted the formal allegations and denied the other allegations thereof.
Having failed to file its answer within the reglementary period, the Central Surety was, on January 18,
1956,declared in default. Thereupon, Central Surety filled a motion for reconsideration and a motion for relief
under Rule 38 (Relief from Judgments, Orders or Other Proceedings).

Central Surety disclaimed liability under the surety bond in question, upon the ground

(a) that the same is null and void, it having been issued by Mrs. Rosita Mesa after her authority therefor hadbeen
withdrawn on March 15, 1952;

(b) that even under her original authority Mrs. Mesa could not issue surety bonds in excess of P8,000.00without
the approval of petitioner's main office which was not given to the surety bond in favor of Hodges;

In due course, thereafter, the trial court rendered judgment against Central Surety & Insurance Company
but limited its liability to P8, 000.00.
Hodges appealed to the CA insofar as it limited petitioner’s liability to P8, 000.00. Petitioner, also,
appealed to said Court upon the ground that the trial court had erred: (a) in holding petitioner liable under a
contract entered into by its agent in excess of her authority; (b) in sentencing petitioner to pay Hodges the sum
of P8,000.00with interest thereon, in addition to attorney's fees and the costs; and (c) in "not awarding"
petitioner's counterclaim.

ISSUE:
Whether or not the surety bond issued by Mesa is valid;
Whether or not Art. 1922 applies in the instant case.

RULING:
Yes. Said surety bond is valid. In the first place, there appears to be no showing that the revocation of
authority was made known to the public in general by publication, nor was Hodges notified of such revocation
despite the fact that he was a regular client of the firm. Secondly, some surety bonds issued by Mrs. Mesa in
favor of Hodges after her authority had allegedly been curtailed, were honored by the Central Surety despite
the fact that these were not reported to the main office at the time of their issuance. These accounts were paid
and by these acts, Central Surety ratified Mrs. Mesa's unauthorized acts and as such it is now estopped from
setting forth Mrs. Mesa's lack of authority to issue surety bonds. It has been held that although the agent may
have acted beyond the scope of his authority, or may have acted without authority at all, the principal may yet
subsequently see fit to recognize and adopt the act as his own. Ratification being a matter of assent to and
approval of the act as done on account of the person ratifying any words or acts which show such assent and
approval are ordinarily sufficient. Moreover, the relocation of agency does not prejudice third persons who
acted in good faith without knowledge of the revocation.
Yes. Article 1922 of our Civil Code provides:
"If the agent had general powers, revocation of the agency does not prejudice third persons who acted in good
faith and without knowledge of the revocation. Notice of the revocation in a newspaper of general circulation
is a sufficient warning to third persons."
It is not disputed that petitioner has not caused to be published any notice of the revocation of Mrs.
Mesa's authority to issue surety bonds on its behalf, notwithstanding the fact that the powers of Mrs. Mesa, as
its branch manager in Iloilo, were of a general nature, for she had exclusive authority, in the City of Iloilo, to
represent petitioner herein, not with a particular person, but with the public in general, "in all the negotiations,
transactions, and business wherein the Company may lawfully transact or engage in", subject only to the
restrictions specified in their agreement, copy of which was attached to petitioner's answer as Annex
3.[1] Contrary to petitioner's claim, Article 1922 applies whenever an agent has general powers, not merely when
the principal has published the same, apart from the fact that the opening of petitioner's branch office
amounted to a publication of the grant of powers to the manager of said office. Then, again, by honoring several
surety bonds issued in its behalf by Mrs. Mesa subsequently to March 15, 1952, petitioner induced the public
to believe that she had authority to issue such bonds. As a consequence, petitioner is now estopped from
pleading, particularly against a regular customer thereof, like Hodges, the absence of said authority.

Yun Kwan Byung vs. PAGCOR


FACTS:
PAGCOR is a government-owned and controlled corporation tasked to establish and operate gambling
clubs and casinos as a means to promote tourism and generate sources of revenue for the government. To
achieve these objectives, PAGCOR is vested with the power to enter into contracts of every kind and for any
lawful purpose that pertains to its business. Pursuant to this authority, PAGCOR launched its Foreign Highroller
Marketing Program (Program). The Program aims to invite patrons from foreign countries to play at the dollar
pit of designated PAGCOR-operated casinos under specified terms and conditions and in accordance with
industry practice.
The Korean-based ABS Corporation was one of the international groups that availed of the Program. In
a letter-agreement dated 25 April 1996 (Junket Agreement), ABS Corporation agreed to bring in foreign players
to play at the five designated gaming tables of the Casino Filipino Silahis at the Grand Boulevard Hotel in Manila
(Casino Filipino).
Petitioner brought an action against PAGCOR seeking the redemption of gambling chips valued at US$2.1
million. Petitioner claims that he won the gambling chips at the Casino Filipino, playing continuously day and
night. Petitioner states that he was able to redeem his gambling chips with the cashier during his first few
winning trips. But later on, the casino cashier refused to encash his gambling chips so he had no recourse but to
deposit his gambling chips at the Grand Boulevard Hotels deposit box, every time he departed from Manila.
PAGCOR claims that petitioner, who was brought into the Philippines by ABS Corporation, is a junket
player who played in the dollar pit exclusively leased by ABS Corporation for its junket players. PAGCOR alleges
that it provided ABS Corporation with distinct junket chips. ABS Corporation distributed these chips to its junket
players. At the end of each playing period, the junket players would surrender the chips to ABS Corporation.
Only ABS Corporation would make an accounting of these chips to PAGCORs casino treasury.
PAGCOR argues that petitioner is not a PAGCOR player because under PAGCORs gaming rules, gambling
chips cannot be brought outside the casino. The gambling chips must be converted to cash at the end of every
gaming period as they are inventoried every shift. Under PAGCORs rules, it is impossible for PAGCOR players to
accumulate two million dollars worth of gambling chips and to bring the chips out of the casino premises.
Petitioner alleges that there is an implied agency. Alternatively, petitioner claims that even assuming
that no actual agency existed between PAGCOR and ABS Corporation, there is still an agency by estoppel based
on the acts and conduct of PAGCOR showing apparent authority in favor of ABS Corporation. Petitioner states
that one factor which distinguishes agency from other legal precepts is control and the following undisputed
facts show a relationship of implied agency
ISSUE:
Whether or not there exists an implied agency between ABS corporation and PAGCOR,
RULING:
No. Petitioners argument is clearly misplaced. The basis for agency is representation,[58]that is, the agent
acts for and on behalf of the principal 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.[59]On the part of the principal, there must be
an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of
the agent, there must be an intention to accept the appointment and act on it. [60]Absent such mutual intent,
there is generally no agency.[61]

There is no implied agency in this case because PAGCOR did not hold out to the public as the principal of
ABS Corporation. PAGCORs actions did not mislead the public into believing that an agency can be implied from
the arrangement with the junket operators, nor did it hold out ABS Corporation with any apparent authority to
represent it in any capacity. The Junket Agreement was merely a contract of lease of facilities and services.
The players brought in by ABS Corporation were covered by a different set of rules in acquiring and
encashing chips. The players used a different kind of chip than what was used in the regular gaming areas of
PAGCOR, and that such junket players played specifically only in the third floor area and did not mingle with the
regular patrons of PAGCOR. Furthermore, PAGCOR, in posting notices stating that the players are playing under
special rules, exercised the necessary precaution to warn the gaming public that no agency relationship exists.
B. H. MACKE ET AL V JOSE CAMPS
FACTS:
B. H. Macke and W.H. Chandler, partners doing business under thee firm name of Macke, Chandler And
Company, allege that during the months of February and March 1905, they sold to Jose Camps and delivered
at his place of business, known as the :Washington Café,” various bills of goods amounting to P351.50; that
Camps has only paid on account of said goods the sum of P174; that there is still due them on account of said
goods the sum of P177.50
Plaintiffs made demand for the payment from defendant and that the latter failed and refused to pay
the said balance or any part of it
Macke, one of the plaintiffs, testified that on the order of one Ricardo Flores, who represented himself
to be the agent of Jose Camps, he shipped the said goods to the defendant at the Washington Café; that Flores
(agent) later acknowledged the receipt of the said goods and made various payments thereon amounting in all
to P174; that believes that Flores is still the agent of Camps; and that when he went to the Washington Café for
the purpose of collecting his bill he found Flores, in the absence of Camps, apparently in charge of the business
and claiming to be the business manager of Camps, said business being that of a hotel with a bar and restaurant
annexed.
A written contract was introduced as evidence, from which it appears that one Galmes, the former of
“Washington Café” sub rented the building wherein the business was conducted, to Camps for 1 year for the
purpose of carrying on that business, Camps obligating himself not to sublet or subrent the building or the
business without the consent of the said Galmes. *This contract was signed by Camps and the name of
Ricardo Flores as a witness and attached thereon is an inventory of the furniture and fittings which also is signed
by Camps with the word “sublessee” below the name, and at the foot of this inventory the word “received”
followed by the name “Ricardo Flores” with the words “managing agent” immediately following his name.
ISSUE: W/N Ricardo Flores was the agent of Camps
Ruling: Yes
Evidence is sufficient to sustain a finding that Flores is the agent of Camps in the management of the bar
of the Washington Café with authority to bind Camps, his principal, for the payment of the goods
The contract sufficiently establishes the fact that Camps was the owner of the business and of the bar,
and the title of “managing agent” attached to the signature of Flores which appears on that contract, together
with the fact that at the time the purchases were made, Flores was apparently in charge of the business
performing the duties usually entrusted to a managing agent leave little room for doubt that he was there as
the authorized agent of Camps.
Agency by Estoppel --- 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 persons dealing with such person in good faith and in the honest belief that he is
what he appears to be.
Estoppel---- “Whenever a party has, by his own declaration, act or omission, intentionally and
deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation
arising out of such declaration, act, or omission be permitted to falsify; and unless the contrary appears, the
authority of the agent must be presumed to include all the necessary and usual means of carrying his agency
into effect.
Nograles vs. Capitol Medical Center
Facts:
Pregnant with her fourth child, Corazon Nogales, who was then 37 y/o was under the exclusive prenatal
care of Dr. Oscar Estrada beginning on her fourth month of pregnancy or as early as December 1975. While
Corazon was on her last trimester of pregnancy, Dr. Estrada noted an increase in her blood pressure and
development of leg edemas indicating preeclampsia which is a dangerous complication of pregnancy. Around
midnight of May 26, 1976, Corazon started to experience mild labor pains prompting Corazon and Rogelio
Nogales to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate admission
to Capitol Medical Center (CMC). Upon her admission, an internal examination was conducted upon her by a
resident-physician. Based on the doctor’s sheet, around 3am, Dr. Estrada advised for 10mg valium to be
administered immediately by intramuscular injection, he later ordered the start of intravenous administration
of syntociron admixed with dextrose, 5% in lactated ringer’s solution, at the rate of 8-10 micro-drops per minute.
When asked if he needed the services of anesthesiologist, he refused. Corazon’s bag of water ruptured
spontaneously and her cervix was fully dilated and she experienced convulsions. Dr. Estrada ordered the
injection of 10g of magnesium sulfate but his assisting Doctor, Dr. Villaflor, only administered 2.5g. She also
applied low forceps to extract Corazon’s baby. In the process, a 10 x 2.5cm piece of cervical tissue was allegedly
torn. The baby came out in an apric, cyanatic weak and injured condition. Consequently the baby had to be
intubated and resuscitated. Corazon had professed vaginal bleeding where a blood typing was ordered and she
was supposed to undergo hysterectomy, however, upon the arrival of the doctor, she was already pronounced
dead due to hemorrhage.
Issue:
Whether or not in the conduct of child delivery, the doctors and the respondent hospital is liable for
negligence.
Held:
Yes. In general, a hospital is not liable for the negligence of an independent contractor-physician. There
is, however an exception to this principle. The hospital may be liable if the physician is the ostensible agent of
the hospital. This exception is also known as the doctrine of apparent authority.
Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a
physician providing care at the hospital, regardless of whether the physician is an independent contractor,
unless the patient knows, or should have known, that the physician is an independent contractor.
For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that 1.) the hospital,
or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was
alleged to be negligent was an employee or agent of the hospital; 2.) Where the acts of the agent create the
appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquired in them;
and 3.) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care
and prudence.
Borrowed servant doctrine provides that once a surgeon enters the operating room and takes charge of
the acts or omissions of operating room personnel and any negligence associated with each acts or omissions
are imputable to the surgeon, while the assisting physicians and nurses may be employed by the hospital, or
engaged by the patient, they normally become the temporary servants or agents of the surgeon in charge while
the operation is in progress, and liability may be imposed upon the surgeon for their negligent acts under the
doctrine of respondeat superior.
People’s Aircargo and Warehousing Co. vs. CA and Stefani Sao
Facts:
People's Aircargo and Warehousing Co. Inc. (PAWCI) is a domestic corporation, which was organized in
the middle of 1986 to operate a customs bonded warehouse at the old Manila International
Airport in Pasay City. To obtain a license for the corporation from the Bureau ofCustoms, Antonio
Punsalan Jr., the corporation president, solicited a proposal from Stefani Saño forthe preparation of a feasibility
study. Saño submitted a letter-proposal dated 17 October 1986 ("FirstContract") to Punsalan, for the project
feasibility study (market, technical, and financial feasibility)and preparation of pertinent documentation
requirements for the application, worth P350,000.Initially, Cheng Yong, the majority stockholder of
PAWCI, objected to Saño's offer, as anothercompany priced a similar proposal at only P15,000. However,
Punsalan preferred Saño's servicesbecause of the latter's membership in the task force, which was supervising
the transition of theBureau of Customs from the Marcos government to the Aquino Administration.

On 17 October 1986,PAWCI, through Punsalan, sent Saño a letter confirming their agreement. Accordingly,
Saño prepared a feasibility study for PAWCI which eventually paid him the balance ofthe contract price, although
not according to the schedule agreed upon. On 4 December 1986, uponPunsalan's request, Saño sent PAWCI
another letter-proposal ("Second Contract") formalizing itsproposal for consultancy services in the amount of
P400,000. On 10 January 1987, Andy Villaceren,vice president of PAWCI, received the operations manual
prepared by Saño. PAWCI submitted saidoperations manual to the Bureau of Customs in connection with the
former's application to operate abonded warehouse; thereafter, in May 1987, the Bureau issued to it a license
to operate, enabling itto become one of the three public customs bonded warehouses at the international
airport. Sañoalso conducted, in the third week of January 1987 in the warehouse of PAWCI, a three-day
trainingseminar for the latter's employees.

On 25 March 1987, Saño joined the Bureau of Customs asspecial assistant to then Commissioner Alex
Padilla, a position he held until he became technicalassistant to then Commissioner Miriam Defensor-Santiago
on 7 March 1988. Meanwhile, Punsalansold his shares in PAWCI and resigned as its president in 1987. On 9
February 1988, Saño filed acollection suit against PAWCI. He alleged that he had prepared an operations manual
for PAWCI,conducted a seminar-workshop for its employees and delivered to it a computer program; but
that,despite demand, PAWCI refused to pay him for his services. PAWCI, in its answer, denied that Sañohad
prepared an operations manual and a computer program or conducted a seminar-workshop for its employees.
It further alleged that the letter-agreement was signed by Punsalan without authority,in collusion with Saño
in order to unlawfully get some money from PAWCI, and despite hisknowledge that a group of
employees of the company had been commissioned by the board ofdirectors to prepare an operations manual.
The Regional Trial Court (RTC) of Pasay City, Branch110, rendered a Decision dated 26 October 1990 declared
the Second Contract unenforceable or simulated. However, since Saño had actually prepared the operations
manual and conducted atraining seminar for PAWCI and its employees, the trial court awarded P60,000 to the
former, on theground that no one should be unjustly enriched at the expense of another (Article 2142, Civil
Code).The trial Court determined the amount "in light of the evidence presented by defendant on the
usualcharges made by a leading consultancy firm on similar services." Upon appeal, and on 28 February1994,
the appellate court modified the decision of the trial court, and declared the Second Contractvalid and binding
on PAWCI, which was held liable to Saño in the full amount of P400,000,

representing payment of Saño services in preparing the manual of operations and in the conduct ofa
seminar for PAWCI. As no new ground was raised by PAWCI, reconsideration of the decision wasdenied in the
Resolution promulgated on 28 October 1994. PAWCI filed the Petition for Review.

Issue:

Whether a single instance where the corporation had previously allowed its president to enterinto a
contract with another without a board resolution expressly authorizing him, has clothed itspresident with
apparent authority to execute the subject contract.

Held:

Apparent authority is derived not merely from practice. Its existence may be ascertainedthrough
(1) the general manner in which the corporation holds out an officer or agent as having thepower to act or, in
other words, the apparent authority to act in general, with which it clothes him; or(2) the acquiescence in his
acts of a particular nature, with actual or constructive knowledge thereof,whether within or beyond the scope
of his ordinary powers. It requires presentation of evidence ofsimilar act(s) executed either in its favor or in
favor of other parties. It is not the quantity of similaracts which establishes apparent authority, but the vesting
of a corporate officer with the power tobind the corporation. Herein, PAWCI, through its president Antonio
Punsalan Jr., entered into theFirst Contract without first securing board approval. Despite such lack of board
approval, PAWCI did not object to or repudiate said contract, thus "clothing" its president with the power to
bind the corporation. The grant of apparent authority to Punsalan is evident in the testimony of Yong —
senior vice president, treasurer and major stockholder of PAWCI. The First Contract was
consummated, implemented and paid without a hitch. Hence, Sano should not be faulted for
believing that Punsalan's conformity to the contract in dispute was also binding on petitioner. It is familiar
doctrine that if a corporation knowingly permits one of its officers, or any other agent, to actwithin the scope
of an apparent authority, it holds him out to the public as possessing the power todo those acts; and thus, the
corporation will, as against anyone who has in good faith dealt with itthrough such agent, be estopped from
denying the agent's authority. Furthermore, Saño prepared anoperations manual and conducted a seminar for
the employees of PAWCI in accordance with theircontract. PAWCI accepted the operations manual,
submitted it to the Bureau of Customs andallowed the seminar for its employees. As a result of its
aforementioned actions, PAWCI was givenby the Bureau of Customs a license to operate a bonded warehouse.
Granting arguendo then thatthe Second Contract was outside the usual powers of the president, PAWCI's
ratification of saidcontract and acceptance of benefits have made it binding, nonetheless. The
enforceability ofcontracts under Article 1403(2) is ratified "by the acceptance of benefits under them" under
Article 1405.

LIM PIN vs. LIAO TAN

FACTS:

A compromise agreement entered into between the petitioner, represented by her son, George Hung
and the private respondent Conchita Liao Tan both parties assisted by their respective counsel, during the
October 19, 1977 hearing of Civil Case No. 11716 for unlawful detainer. The complaint for unlawful detainer was
filed in the court a quo on August 12, 1977 by the private respondents against the petitioner.

Spouses Conchita Liao Tan and Tan Cho Hua alleged in their complaint for unlawful detainer that the
plaintiff Conchita Liao Tan, as owner of a parcel of registered land with improvements located at Francisco
Street, Caloocan City, had leased a portion of it, more particularly known as 91 Francisco Street, Caloocan City
to defendant Lim Pin on a month to month basis but that the latter starting April, 1977 had not paid the agreed
rental stipulated for such month and the succeeding months thereafter based on various schedule of payments.
On the scheduled October 19, 1977 hearing, defendant Lim Pin was absent. Her son George Hung who
attended with his mother all the previous hearings was present together with the defendant's counsel. Plaintiff
Conchita Liao Tan together with her counsel was also present. Through the initiative of the court a quo, the
subject compromise agreement was formulated and executed and it finally became the basis of the October 19,
1977 judgment in Civil Case No. 11716.
Petitioner argues that the respondent Judge should not have allowed her son George Hung and her then
counsel, Atty. Pastor Mamaril in her absence to enter into the October 19, 1977 compromise agreement with
the private respondent Conchita Liao Tan assisted by her counsel. She further argues that "... considering that
such compromise agreement would impose onerous obligations upon Petitioner, such as a tremendous increase
of rentals in the premises being leased from Private Respondents from P1,500.00 a month to P5,000.00 a
month," and that said agreement contained admissions by petitioner, the respondent Judge should have
required a written authority and power of attorney from her son and counsel. Her objections to the validity of
the compromise agreement are premised on Article 1878 of the Civil Code and Rule 138, Section 23 of the Rules
of Court.
Defendant argued that 1) she never authorized her son nor her counsel on record (Atty. Pastor Mamaril)
to enter into such compromise agreement and 2) that had she been present when said agreement was prepared,
she would not have acceded thereto.
Issue:
Whether or not the compromise agreement is valid even if the defendant was absent.
Ruling:

Article 1878 is found in Title X of the Civil Code on Agency. It states that a special power of attorney is
necessary to compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment,
to waive objections to the venue of an action or to abandon a prescription already acquired.

Section 23 of Rule 138 on Attorneys and Admission to the Bar governs the authority of attorneys to bind
their clients and provides that "Attorneys have authority to bind their clients in any case by any agreement in
relation thereto made in writing, and in taking appeal, and in an matters of ordinary Judicial Procedure, but they
cannot, without special authority, compromise their clients' litigation or receive anything in discharge of their
clients' claims but the full amount in cash."

The requirements of a special power of attorney in Article 1878 of the Civil Code and of a special
authority in Rule 138 of the Rules of Court refer to the nature of the authorization and not its form. The
requirements are met if there is a clear mandate from the principal specifically authorizing the performance of
the act.

There were other reasons which led the lower court to a finding that George Hung had the full authority
to enter into the compromise. The court itself observed during the earlier hearings and it is not disputed that ...
defendant Lim Pin could not decide on anything without first consulting her son." George Hung's later denial
that he never manifested his authority to represent his mother was rejected by the court. As a matter of fact,
this sudden turnabout of George Hung led the court to cite him for contempt. He was fined Two Hundred Pesos.
The citation for contempt was never appealed.

And finally, even assuming that George Hung and the petitioner's counsel acted without authority, the
compromise agreement itself was not null and void. It would be merely unenforceable, capable of being ratified.
(Dungo v. Lapena, 6 SCRA 1007). The compromise agreement was ratified by the petitioner when, on October
24, 1977, a few days after the promulgation of the questioned judgment and before the filing of a motion for
reconsideration, she filed an "Ex-Parte Motion To Withdraw Deposits" in Civil Case No. 11709, a consignation
case pending before the same court between the same parties.

LOURDES A. VALMONTE and ALFREDO D. VALMONTE, petitioners, vs. THE HONORABLE COURT OF APPEALS,
THIRD DIVISION and ROSITA DIMALANTA, respondents
G.R. No. 108538
January 22, 1996

MENDOZA, J.:

Principal (?): Lourdes Valmonte


Agent (?): Atty. Alfredo Valmonte (Mag-asawa sila)

FACTS:

Lourdes and Alfredo Valmonte are husband and wife, they are residents of Seattle, Washington, USA but Alfredo
is a practicing lawyer in the Philippines. Lourdes is staying in the US to pursue her studies. Alfredo holds office
at Mabini, Ermita, Manila.

On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes A. Valmonte,
filed a complaint for partition of real property and accounting of rentals against petitioners Lourdes A. Valmonte
and Alfredo D. Valmonte before the Regional Trial Court of Manila, Branch 48. The subject of the action is a
three-door apartment located in Paco, Manila.

For purposes of this complaint may be served with summons at Gedisco Center, Unit 304, 1564 A. Mabini St.,
Ermita, Manila where defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmontes spouse holds
office and where he can be found. A letter was sent to Alfredo from Lourdes stating that all communications
regarding such case be sent to her lawyer Atty. Alfredo, who is also her husband.

Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was concerned, but refused to accept the
summons for his wife, Lourdes A. Valmonte, on the ground that he was not authorized to accept the process on
her behalf.

ISSUE:

Whether Atty. Alfredo Valmonte has the authority to represent her wife in litigation.

RULING:

NO.
In the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her attorney-in-fact. Although
she wrote private respondent s attorney that all communications intended for her should be addressed to her
husband who is also her lawyer at the latters address in Manila, no power of attorney to receive summons for
her can be inferred therefrom. In fact the letter was written seven months before the filing of this case below,
and it appears that it was written in connection with the negotiations between her and her sister, respondent
Rosita Dimalanta, concerning the partition of the property in question. As is usual in negotiations of this kind,
the exchange of correspondence was carried on by counsel for the parties. But the authority given to petitioners
husband in these negotiations certainly cannot be construed as also including an authority to represent her in
any litigation.

BPI VS DE COSTER
GR No. L-23181
March 16, 1925

FACTS:

Gabriela Andrea de Coster y Roxas was the wife of the defendant Jean M. Poizat, both of whom were residents
of the City of Manila; that the defendant J. M. Poizat and Co. was a duly registered partnership with its principal
office and place of business in the City of Manila; that the defendant La Orden de Dominicos or PP. Defendant
executed an SPA in favor of her husband, this gave him the power to loan and borrow money in her behalf. The
agent was able to obtain a loan from BPI, secured by a chattel mortgage on the steamers of his company. Poizat
Vegetable Oil Mills and a real mortgage over a property, which is also subject to another mortgage in fvor of La
Orden De Dominicos. Defendant defaulted on their obligations to BPI and La Orden de Dominicos. Thus, both
creditors prayed for the foreclosure of the mortgaged properties.

RTC declared the defendants in default for their failure to appear and ruled in favor of the plaintiffs. De Coster
alleges that she never had any knowledge of the actual facts until she read about her default in the newspapers,
since she was not in the Philippines when the summons were served; ther her husband fled the country; that
the mortgages executed by her agent-husband was without marital consent; and that he did not have any
authority to make her liable as surety on the debt of a third person – it being a personal debt of her husband
and his company.

ISSUE: Whether the prinicipal-wife is liable for the mortgage executed by her agent husband

HELD:
No.

The note and mortage show upon their face that at the time they were excuted, the agent-husband was atty-
in-fact for the defendant-wife, and the bank knew or should have known that nature and extent of his authority
and the limitation upon his power.

Par. 5 if the power of atty authorizes the agent-husband for and in the name of his wife “to loan or borrow any
sums of money or fungible things, etc”

This is taken to mean that he only had the power to loan his wife’s money and to borrow money for or on
account of his wife as her agent and atty-in-fact. It does not carry with it or imply that he had the legal right to
make his wife liable as a surety for the preexisting debt of a third person.

EN BANC

[G.R. No. 30641. December 18, 1929.]

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, Plaintiff-Appellee, v. J. O. WAGNER, ET AL., Defendants-


Appellants.

Manuel Escudero and William F. Mueller, for Appellants.

Attorney-General Jaranilla, for Appellee.

FACTS:

The government of the Philippines rescinded the Contract of Sale with J. O. Wagner and Catherine Cleland
Wagner, the issue is the amount of refund which he Government should make to the defendants as a condition
to rescission.

When these proceedings were initiated, service was made on J. J. Murphy as the owner of a one-half undivided
interest in the property, and on J. J. Murphy as the attorney-in-fact for the Wagners, the owners of the remaining
one-half interest. Counsel was engaged by Murphy, who represented the defendants both in the trial court and
in this court without objection. It was only after the record had been returned to the trial court for the taking of
further evidence that the jurisdiction of the court was impugned.

Murphy as given power to be the true and lawful attorney for us and in our name, place and stead, to use, lease,
sell and convey lot numbered twenty-nine (29) section F, in Baguio townsite, subprovince of Benguet, Mountain
Province, Philippine Islands, of which land Catherine Cleland Wagner is the recorded owner. Giving and granting
unto our said attorney full power and authority to do and perform all and every lawful act and thing whatever
requisite and necessary to be done in and about the premises as fully to all intents and purposes as we might or
could do if personally present hereby ratifying and confirming all that our said attorney shall lawfully do or cause
to be done by virtue of these presents.

All that Wilbur S. Wilson and his counsel presented to offset the authority of Murphy was a cablegram said to
have been sent by the Wagners to Wilson on July 25, 1928, and reading as follows:jgc:chanrobles.com.ph

"We authorize you take all legal means protect our interest lot 29-F, Baguio."cral
ISSUE: Whether or not there was a revocation by the principals of the power of attorney.

J. J. Murphy had, of course, the right to represent his one-half undivided interest in the land in dispute. He also
had the right under the universal power of attorney to represent the Wagners. The intention of the parties,
which, as in all written instruments should prevail, was to give Murphy the same power and authority to deal
with the property which the Wagners might or could have had if personally present. The usual legal means were
adopted to accomplish the object. The most effective way by which Murphy could preserve the ownership and
possession of his principal’s property was by accepting service and by defending the rights of the absent owners
in the courts. Every act of Murphy was taken for the benefit of the Wagners.

RULING:

The cablegram constitutes a very slight basis on which to claim a revocation by the principals of the power of
attorney. Moreover, to set everything aside which has taken place would prove of no benefit to the parties.

The result is to rule against the attempted intervention by sustaining the jurisdiction of the courts, and on the
merits to adhere to the appealed decision in its principal aspects.

In accordance with the foregoing, the intervention will be disallowed, and the judgment appealed from will be
affirmed, with the modification that in lieu of the items of P1,200 and P960.60 mentioned in the judgment,
P4,000 will be substituted. So ordered without special pronouncement as to costs in this instance.