RALLOS v FELIX GO CHAN & REALTY COPR.
, Munoz-Palma Essential Elements:
Plaintiff: Ramon Rallos
Defendant: Felix Go Chan & Sons Realty Corporation
Facts:
• Concepcion and Gerundia Rallos were sisters and registered
co-owners of a parcel of land known as Lot No. 5983 of the
Cadastral Survey of Cebu covered by Transfer Certificate of
Title No. 11116 of the Registry of Cebu.
• They executed a special power of attorney in favor of their
brother, Simeon Rallos, authorizing him to sell such land for
and in their behalf.
• After Concepcion died, Simeon Rallos sold the undivided
shares of his sisters Concepcion and Gerundia to Felix Go
Chan & Sons Realty Corporation for the sum of P10,686.90.
New TCTs were issued to the latter.
• Petitioner Ramon Rallos, administrator of the Intestate
Estate of Concepcion filed a complaint praying (1) that the
sale of the undivided share of the deceased Concepcion
Rallos in lot 5983 be unenforceable, and said share be
reconveyed to her estate; (2) that the Certificate of 'title
issued in the name of Felix Go Chan & Sons Realty
Corporation be cancelled and another title be issued in the
names of the corporation and the "Intestate estate of
Concepcion Rallos" in equal undivided and (3) that plaintiff
be indemnified by way of attorney's fees and payment of
costs of suit.
CFI: [Plaintiff’s Complaint]
• Sale of land was null and void insofar as the one-half pro-
indiviso share of Concepcion Rallos
• Ordered the issuance of new TCTs to respondent
corporation and the estate of Concepcion in the proportion of
½ share each pro-indiviso and the payment of attorney’s
fees and cost of litigation
[Respondent filed cross claim against Simon Rallos(*Simon and
Gerundia died during pendency of case)]
• Juan T. Borromeo, administrator of the Estate of Simeon
Rallos was ordered to pay defendant the price of the ½
share of the land (P5,343.45) plus attorney’s fees
[Borromeo filed a third party complaint against Josefina Rallos, special
administratrix of the Estate of Gerundia]
• Dismissed without prejudice to filing either a complaint
against the regular administrator of the Estate of Gerundia
Rallos or a claim in the Intestate-Estate of Cerundia Rallos,
covering the same subject-matter
CA: CFI Decision reversed, upheld the sale of Concepcion’s share.
MR: denied.
Issues:
WON sale was valid although it was executed after the death of the
principal, Concepcion.
1. WON sale fell within the exception to the general rule that
death extinguishes the authority of the agent
2. WON agent’s knowledge of the principal’s death is a material
factor.
3. WON petitioner must suffer the consequence of failing to
annotate a notice of death in the title (thus there was good
faith on the part of the Respondent vendee)
4. WON good faith on the part of the respondent in this case
should be treated parallel to that of an innocent purchaser
for a value of a land.
Held/Ratio:
(Court discussed relevant principles first)
Relationship of Agency (concept arising from principles under Art 1317
and 1403 )- one party, caged the principal (mandante), authorizes
another, called the agent (mandatario), to act for and in his behalf in
transactions with third persons.
-derivative in nature, power emanating from principal
-agent’s acts are acts of the principal
1. there is consent, express or implied of the parties to
establish the relationship;
2. the object is the execution of a juridical act in relation to a
third person;
3. the agents acts as a representative and not for himself, and
4. the agent acts within the scope of his authority.
• Extinguishment
O Generally: among others , By the death,
civil interdiction, insanity or insolvency of the
principal or of the agent
- death of the principal effects
instantaneous and absolute revocation
of the authority of the agent
O Exceptions:
(Art. 1930) if it has been
constituted in the common interest of
the latter and of the agent, or in the
interest of a third person who has
accepted the stipulation in his favor.
(Art. 1931) agent acted
without knowledge of the pricipal’s death
and that the third person was in good
faith (both these reqs should be present)
IN THE CASE AT BAR:
1) Sale was void.
• No one may contract in the name of another
without being authorized by the latter, or unless he has by
law a right to represent him (Art. 1317 of the Civil Code).
• Simon’s authority as agent was extinguished upon
Concolacion’s death
2) The sale did not fall under the exceptions to the general rule
that death ipso jure extinguishes the authority of the agent
O Art. 1930 inapplicable: SPA in favor of
Simon Rallos was not coupled with
interest
O Art. 1931 inapplicable:
Simon Rallos knew (as can be
inferred from his pleadings) of
principal Concepcion’s death
For Art 1931 to apply, both
requirements must be present
.
3) Yes, agent’s knowledge of principal’s death is
material.
Respondent asserts that: there is no provision in
the Code which provides that whatever is done by an agent
having knowledge of the death of his principal is void even
with respect to third persons who may have contracted with
him in good faith and without knowledge of the death of the
principal
Court says: this contention ignored the ignores the
existence of the general rule enunciated in Article 1919 that
the death of the principal extinguishes the agency. Article
1931, being an exception to the general rule, is to be strictly
construed.
4) NO, the Civil Code does not impose a duty upon
the heirs to notify the agent or others of the death of the
principal.
• If revocation was by the act of the principal: a general power
which does not specify the persons to whom represents' on
should be made, it is the general opinion that all acts,
executed with third persons who contracted in good faith,
Without knowledge of the revocation, are valid.
• BUT, if revocation was due to death of the principal:
extinguishment, by operation of law, is instantaneous without
the need for notification to the parties concerned.
5) No.
• Laws on agency, the terms of which are clear and
unmistakable leaving no room for an interpretation contrary
to its tenor, should apply, the law provides that death of the
principal ipso jure extinguishes the authority of the agent to
sell rendering the sale to a third person in good faith
unenforceable unless at the agent had no knowledge of the
principal’s death at that time (exception under Art. 1931)

Dispositive: CA Decision reversed, CFI decision affirmed. Sale was
null and void.
ORIENT AIR SERVICES v. CA
Facts:
American Air, an air carrier offering passenger and air cargo
transportation, entered into a General Sales Agency Agreement with
Orient Air, authorizing the latter to act as its exclusive general sales
agent for the sale of air passenger transportation. Orient air failed to
remit the net proceeds of sales for several months prompting American
Air to undertook the collection of the proceeds of tickets sold originally
by Orient Air and terminating their agreement. American air instituted
suit against Orient Air for the settlement of past outstanding funds in
possession of the latter. Orient Air contended that because of the
unpaid overriding commissions it retained the sales proceeds before
remitting the balance to American Air. American Air contended that the
sale must be made by Orient Air and the sale must be done with the
use of American Air's ticket stocks in order for it to be entitled to the
overriding commission. On the other hand, Orient Air contends that the
contractual stipulation of a 3% overriding commission covers the total
revenue of American Air and not merely that derived from ticketed
sales undertaken by Orient Air because it was an exclusive General
Sales Agent. CA held that Orient Air is entitled to commissions and
ordered American Air to reinstate Orient Air as its General Sales
Agent.
Issue:
Whether or not Orient Air is entitled to commissions.
Whether CA is correct in ordering reinstatement of Orient Air as an
agent.
Held:
1. Yes. Orient Air was entitled to an overriding commission
based on total flown revenue. American Air's perception that Orient Air
was remiss or in default of its obligations under the Agreement was, in
fact, a situation where the latter acted in accordance with the
Agreement—that of retaining from the sales proceeds its accrued
commissions before remitting the balance to American Air. Since the
latter was still obligated to Orient Air by way of such commissions.
Orient Air was clearly justified in retaining and refusing to remit the
sums claimed by American Air. The latter's termination of the
Agreement was, therefore, without cause and basis, for which it should
be held liable to Orient Air.
2. No. CA in effect compels American Air to extend its
personality to Orient Air. Such would be violative of the principles and
essence of agency, defined by law as a contract whereby "a person
binds himself to render some service or to do something in
representation or on behalf of another, WITH THE CONSENT OR
AUTHORITY OF THE LATTER. In an agent-principal relationship, the
personality of the principal is extended through the facility of the agent.
In so doing, the agent, by legal fiction, becomes the principal,
authorized to perform all acts which the latter would have him do. Such
a relationship can only be effected with the consent of the principal,
which must not, in any way, be compelled by law or by any court.
Eurotech Industrial Technologies vs Cuizon
Facts:
Edwin Cuizon, general manager of Impact Systems Sales
owned by Erwin Cuizon, bought one equipment from Petitioner
Eurotech valued at Php 250,000.00, paying Php 50,000.00 as
downpayment. When the equipment arrived, petitioner refused to
deliver it to the respondent without paying the balance.
Edwin and a general manager of Eurotech signed a deed of
assignment, whereby Impact Systems assigns its outstanding
receivable amounting to Php 365,000.00 to Eurotech, which delivered
the equipment thereafter.
But Erwin, the proprietor, still collected the receivables
despite the assignment. After partial payments made, Eurotech made
a final demand of Php 295,000.00, excluding interest and attorney's
fees.
For failure to meet the demand, Eurotech filed a complaint
for sum of money, damages, with application for preliminary
attachment.
Edwin alleged that he is not a real party in interest in the
case for he merely acted as an agent of his principal, Impact Systems.
RTC dropped respondent as a party defendant of the case.
The CA affirmed the order, hence the appeal was made.
Issue:
Whether or not respondent, as sales manager, is acting
merely as an agent for the sole proprietorship
Held:
Respondent Edwin merely acted as an agent.
In a contract of agency, a person binds himself to render
some service or to do something in representation or on behalf of
another with the latter’s consent.
The underlying principle of the contract of agency is to
accomplish results by using the services of others – to do a great
variety of things like selling, buying, manufacturing, and transporting.
Its purpose is to extend the personality of the principal or the
party for whom another acts and from whom he or she derives the
authority to act.
It is said that the basis of 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.
By this legal fiction, the actual or real absence of the
principal is converted into his legal or juridical presence – qui facit per
alium facit per se.
The elements of the contract of agency are:
(1) consent, express or implied, of the parties to establish
the relationship;
(2) the object is the execution of a juridical act in relation to a
third person;
(3) the agent acts as a representative and not for himself;
(4) the agent acts within the scope of his authority
In this case, the parties do not dispute the existence of the
agency relationship between respondents ERWIN as principal and
EDWIN as agent. The only cause of the present dispute is whether
respondent EDWIN exceeded his authority when he signed the Deed
of Assignment thereby binding himself personally to pay the obligations
to petitioner.
Article 1897 reinforces the familiar doctrine that an agent,
who acts as such, is not personally liable to the party with whom he
contracts.
The same provision, however, presents two instances when
an agent becomes personally liable to a third person:
(1) When he expressly binds himself to the obligation; and,
(2) When he exceeds his authority.
In the last instance, the agent can be held liable if he does
not give the third party sufficient notice of his powers.
We hold that respondent EDWIN does not fall within any
of the exceptions contained in this provision.
"...the position of manager is unique in that it presupposes the grant of
broad powers with which to conduct the business of the principal."
The powers of an agent are particularly broad in the case of
one acting as a general agent or manager; such a position
presupposes a degree of confidence reposed and investiture with
liberal powers for the exercise of judgment and discretion in
transactions and concerns which are incidental or appurtenant to the
business entrusted to his care and management. In the absence of an
agreement to the contrary, a managing agent may enter into any
contracts that he deems reasonably necessary or requisite for the
protection of the interests of his principal entrusted to his management.
A real party in interest is one who "stands to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of
the suit."
BORDADOR V. LUZ
FACTS:
 Petitioners(Bordadors) were engaged in the business of
purchase and sale of jewelry and respondent (Brigida D. Luz, also
known as Aida D. Luz), was their regular customer.
On several occasions, respondent Narciso Deganos, the brother
of Brigida D. Luz, received several pieces of gold and jewelry from
petitioners amounting to P382,816.00. [1]
These items and their prices were indicated in seventeen
receipts covering the same. Eleven of the receipts stated that they
were received for a certain Evelyn Aquino, a niece of Deganos, and
the remaining six indicated that they were received for Brigida D.
Luz. [2]
Deganos was supposed to sell the items at a profit and
thereafter remit the proceeds and return the unsold items to
petitioners.
Deganos remitted only the sum of P53,207.00. He neither paid
the balance of the sales proceeds, nor did he return any unsold item to
petitioners.
The total of his unpaid account to petitioners, including interest,
reached the sum ofP725,463.98. [3]
ISSUE:
The primary issue in the instant petition is whether or not herein
respondent spouses are liable to petitioners for the latter’s claim for
money and damages in the sum of P725,463.98, plus interests and
attorney’s fees, despite the fact that the evidence does not show that
they signed any of the subject receipts or authorized Deganos to
receive the items of jewelry on their behalf.
RULING:
No error having been committed by the Court of Appeals in
affirming the judgment of the court a quo, its challenged decision and
resolution are hereby AFFIRMED and the instant petition is
DENIED, with double costs against petitioners
HELD:
No evidence support the theory of petitioners that Deganos was
an agent of Brigida D. Luz and that the latter should consequently be
held solidarily liable with Deganos in his obligation to
petitioners. While the quoted statement in the findings of fact of the
assailed appellate decision mentioned that Deganos ostensibly acted
as an agent of Brigida, the actual conclusion and ruling of the Court of
Appeals categorically stated that, “(Brigida Luz) never authorized her
brother (Deganos) to act for and in her behalf in any transaction with
Petitioners x x x.”[15] It is clear, therefore, that even
assuming arguendo that Deganos acted as an agent of Brigida, the
latter never authorized him to act on her behalf with regard to the
transactions subject of this case.
The Civil Code provides:
Art. 1868. 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 basis for agency is representation. Here, there is no
showing that Brigida consented to the acts of Deganos or authorized
him to act on her behalf, much less with respect to the particular
transactions involved. Petitioners’ attempt to foist liability on
respondent spouses through the supposed agency relation with
Deganos is groundless and ill-advised.
Besides, it was grossly and inexcusably negligent of petitioners
to entrust to Deganos, not once or twice but on at least six occasions
as evidenced by six receipts, several pieces of jewelry of substantial
value without requiring a written authorization from his alleged
principal. A person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent.[16]
The records show that neither an express nor an implied agency
was proven to have existed between Deganos and Brigida D.
Luz. Evidently, petitioners, who were negligent in their transactions
with Deganos, cannot seek relief from the effects of their negligence by
conjuring a supposed agency relation between the two respondents
where no evidence supports such claim.
What was finally proven as a matter of fact is that there was no
such contract between Brigida D. Luz and Narciso Deganos, executed
or partially executed, and no delivery of any of the items subject of this
case was ever made to the former.
Regina Dizon et al v. CA and Overland Express Lines, Inc.
G.R. No. 122544 January 28, 1999
FACTS:
 Overland Express Lines, Inc. entered into a Contract of Lease with
Option to Buy with petitioners involving a 1,755.80 square meter
parcel of land situated at corner MacArthur Highway and South “H”
Street, Diliman, Quezon City. The term of the lease was for 1 year
commencing from May 16, 1974 up to May 15, 1975. During this
period, Overland Express Lines was granted an option to purchase
for the amount of P3,000.00 per square meter. Thereafter, the lease
shall be on a per month basis with a monthly rental of P3,000.00.
 For failure of Overland Express Lines to pay the increased rental of
P8,000.00 per month effective June 1976, petitioners filed an action
for ejectment against it. The lower court rendered judgment ordering
Overland Express Lines to vacate the leased premises and to pay
the sum of P624,000.00 representing rentals in arrears and/or as
damages in the form of reasonable compensation for the use and
occupation of the premises during the period of illegal detainer from
June 1976 to November 1982 at the monthly rental of P8,000.00,
less payments made, plus 12% interest per annum from November
18, 1976, the date of filing of the complaint, until fully paid, the sum
of P8,000.00 a month starting December 1982, until Overland
Express Lines fully vacates the premises, and to pay P20,000.00 as
and by way of attorney’s fees.
ISSUE: WON Overland Express Lines actually paid the alleged
P300,000.00 to Fidela Dizon, as representative (agent) of petitioners in
consideration of the option
HELD: No.
 CA opined that the payment by Overland Express Lines of
P300,000.00 as partial payment for the leased property, which
petitioners accepted (through Alice A. Dizon) and for which an
official receipt was issued, was the operative act that gave rise to a
perfected contract of sale, and that for failure of petitioners to deny
receipt thereof, Overland Express Lines can therefore assume that
Alice A. Dizon, acting as agent of petitioners, was authorized by
them to receive the money in their behalf. CA went further by stating
that in fact, what was entered into was a “conditional contract of
sale” wherein ownership over the leased property shall not pass to
the Overland Express Lines until it has fully paid the purchase price.
Since Overland Express Lines did not consign to the court the
balance of the purchase price and continued to occupy the subject
premises, it had the obligation to pay the amount of P1,700.00 in
monthly rentals until full payment of the purchase price.
 In an attempt to resurrect the lapsed option, Overland Express Lines
gave P300,000.00 to petitioners (thru Alice A. Dizon) on the
erroneous presumption that the said amount tendered would
constitute a perfected contract of sale pursuant to the contract of
lease with option to buy. There was no valid consent by the
petitioners (as co-owners of the leased premises) on the supposed
sale entered into by Alice A. Dizon, as petitioners’ alleged agent,
and Overland Express Lines. The basis for agency is representation
and a person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent. As provided in
Article 1868 of the New Civil Code, there was no showing that
petitioners consented to the act of Alice A. Dizon nor authorized her
to act on their behalf with regard to her transaction with private
respondent. The most prudent thing private respondent should have
done was to ascertain the extent of the authority of Alice A. Dizon.
Being negligent in this regard, private respondent cannot seek relief
on the basis of a supposed agency.
 Every person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent. If he does not
make such inquiry, he is chargeable with knowledge of the agent’s
authority, and his ignorance of that authority will not be any excuse.
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, to ascertain not only the fact of the agency
but also the nature and extent of the authority, and in case either is
controverted, the burden of proof is upon them to establish it.
VICTORIAS MILLING CO., INC., vs. COURT OF APPEALS and
CONSOLIDATED SUGAR CORPORATION
Facts:
St. Therese Merchandising (STM), who regularly bought
sugar from Victorias Milling Co. (VMC), was issued Shipping
List/Delivery Receipts (SLDRs) by the latter as proof of purchases for
bags of sugar. Thereafter, STM sold to Consolidated Sugar Co. (CSC)
its rights in one of the SLDRs. CSC communicated to VMC that it had
been authorized by STM to withdraw the sugar covered by SLDR.
Enclosed in the letter were a copy of SLDR and a letter of authority
from STM authorizing CSC "to withdraw for and in our behalf the
refined sugar covered by SLDR”. CSC surrendered the SLDR to
VMC’s warehouse and was allowed to withdraw sugar but after several
bags were released, it was later on refused to allow further withdrawals
of sugar. CSC communicated to VMC to allow it to withdraw sugar
because the SLDR had been “sold and endorsed” to it by STM. VMC
contended that it could not allow any further withdrawals of sugar
against SLDR because STM had already withdrawn sugar covered by
cleared checks. CSC filed complaint against VMC. VMC contended
that it had no privity of contract with CSC, the dealings between it and
STM were part of a series of transactions involving only one account or
one general contract of sale because CSC was an agent of STM. CSC
countered that the sugar purchases involving SLDR were separate and
independent transactions.
Issue:
Whether or not CSC was an agent of STM.
Held:
No. CSC was a buyer of the SLDR form, and not an agent of
STM. CSC was not subject to STM's control. The question of whether
a contract is one of sale or agency depends on the intention of the
parties as gathered from the whole scope and effect of the language
employed. That the authorization given to CSC contained the phrase
"for and in our (STM's) behalf" did not establish an agency. CSC
communicated to VMC that the SLDR had been “sold and endorsed” to
it by STM. The use of the words "sold and endorsed" means that STM
and CSC intended a contract of sale, and not an agency.
The basis of agency is representation. On the part of the
principal, there must be an actual intention to appoint or an intention
naturally inferable from his words or actions; and on the part of the
agent, there must be an intention to accept the appointment and act on
it, and in the absence of such intent, there is generally no agency. One
factor which most clearly distinguishes agency from other legal
concepts is control; one person - the agent - agrees to act under the
control or direction of another - the principal. Indeed, the very word
"agency" has come to connote control by the principal. The control
factor, more than any other, has caused the courts to put contracts
between principal and agent in a separate category.
MARIA TUAZON, ALEJANDRO P. TUAZON, MELECIO P. TUAZON,
Spouses ANASTACIO and MARY T. BUENAVENTURA vs. HEIRS
OF BARTOLOME RAMOS
Stripped of nonessentials, the present case involves the collection of a
sum of money. Specifically, this case arose from the failure of
petitioners to pay respondents’ predecessor-in-interest. This fact was
shown by the non-encashment of checks issued by a third person, but
indorsed by herein Petitioner Maria Tuazon in favor of the said
predecessor. Under these circumstances, to enable respondents to
collect on the indebtedness, the check drawer need not be impleaded
in the Complaint. Thus, the suit is directed, not against the drawer, but
against the debtor who indorsed the checks in payment of the
obligation.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court,
challenging the July 31, 2002 Decision2 of the Court of Appeals (CA) in
CA-GR CV No. 46535. The decretal portion of the assailed Decision
reads:
"WHEREFORE, the appeal is DISMISSED and the appealed decision
is AFFIRMED."
On the other hand, the affirmed Decision3 of Branch 34 of the Regional
Trial Court (RTC) of Gapan, Nueva Ecija, disposed as follows:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs
and against the defendants, ordering the defendants spouses Leonilo
Tuazon and Maria Tuazon to pay the plaintiffs, as follows:
"1. The sum of P1,750,050.00, with interests from the filing of the
second amended complaint;
"2. The sum of P50,000.00, as attorney’s fees;
"3. The sum of P20,000.00, as moral damages
"4. And to pay the costs of suit.
x x x x x x x x x"4
The Facts
The facts are narrated by the CA as follows:
"[Respondents] alleged that between the period of May 2, 1988 and
June 5, 1988, spouses Leonilo and Maria Tuazon purchased a total of
8,326 cavans of rice from [the deceased Bartolome] Ramos
[predecessor-in-interest of respondents]. That of this [quantity,] x x x
only 4,437 cavans [have been paid for so far], leaving unpaid 3,889
cavans valued at P1,211,919.00. In payment therefor, the spouses
Tuazon issued x x x [several] Traders Royal Bank checks.
xxxxxxxxx
[B]ut when these [checks] were encashed, all of the checks bounced
due to insufficiency of funds. [Respondents] advanced that before
issuing said checks[,] spouses Tuazon already knew that they had no
available fund to support the checks, and they failed to provide for the
payment of these despite repeated demands made on them.
"[Respondents] averred that because spouses Tuazon anticipated that
they would be sued, they conspired with the other [defendants] to
defraud them as creditors by executing x x x fictitious sales of their
properties. They executed x x x simulated sale[s] [of three lots] in favor
of the x x x spouses Buenaventura x x x[,] as well as their residential
lot and the house thereon[,] all located at Nueva Ecija, and another
simulated deed of sale dated July 12, 1988 of a Stake Toyota
registered with the Land Transportation Office of Cabanatuan City on
September 7, 1988. [Co-petitioner] Melecio Tuazon, a son of spouses
Tuazon, registered a fictitious Deed of Sale on July 19, 1988 x x x over
a residential lot located at Nueva Ecija. Another simulated sale of a
Toyota Willys was executed on January 25, 1988 in favor of their other
son, [co-petitioner] Alejandro Tuazon x x x. As a result of the said
sales, the titles of these properties issued in the names of spouses
Tuazon were cancelled and new ones were issued in favor of the [co-
]defendants spouses Buenaventura, Alejandro Tuazon and Melecio
Tuazon. Resultantly, by the said ante-dated and simulated sales and
the corresponding transfers there was no more property left registered
in the names of spouses Tuazon answerable to creditors, to the
damage and prejudice of [respondents].
"For their part, defendants denied having purchased x x x rice from
[Bartolome] Ramos. They alleged that it was Magdalena Ramos, wife
of said deceased, who owned and traded the merchandise and Maria
Tuazon was merely her agent. They argued that it was Evangeline
Santos who was the buyer of the rice and issued the checks to Maria
Tuazon as payments therefor. In good faith[,] the checks were received
[by petitioner] from Evangeline Santos and turned over to Ramos
without knowing that these were not funded. And it is for this reason
that [petitioners] have been insisting on the inclusion of Evangeline
Santos as an indispensable party, and her non-inclusion was a fatal
error. Refuting that the sale of several properties were fictitious or
simulated, spouses Tuazon contended that these were sold because
they were then meeting financial difficulties but the disposals were
made for value and in good faith and done before the filing of the
instant suit. To dispute the contention of plaintiffs that they were the
buyers of the rice, they argued that there was no sales invoice, official
receipts or like evidence to prove this. They assert that they were
merely agents and should not be held answerable."5
The corresponding civil and criminal cases were filed by respondents
against Spouses Tuazon. Those cases were later consolidated and
amended to include Spouses Anastacio and Mary Buenaventura, with
Alejandro Tuazon and Melecio Tuazon as additional defendants.
Having passed away before the pretrial, Bartolome Ramos was
substituted by his heirs, herein respondents.
Contending that Evangeline Santos was an indispensable party in the
case, petitioners moved to file a third-party complaint against her.
Allegedly, she was primarily liable to respondents, because she was
the one who had purchased the merchandise from their predecessor,
as evidenced by the fact that the checks had been drawn in her name.
The RTC, however, denied petitioners’ Motion.
Since the trial court acquitted petitioners in all three of the consolidated
criminal cases, they appealed only its decision finding them civilly
liable to respondents.
Ruling of the Court of Appeals
Sustaining the RTC, the CA held that petitioners had failed to prove the
existence of an agency between respondents and Spouses Tuazon.
The appellate court disbelieved petitioners’ contention that Evangeline
Santos should have been impleaded as an indispensable party.
Inasmuch as all the checks had been indorsed by Maria Tuazon, who
thereby became liable to subsequent holders for the amounts stated in
those checks, there was no need to implead Santos.
Hence, this Petition.6
Issues
Petitioners raise the following issues for our consideration:
"1. Whether or not the Honorable Court of Appeals erred in ruling that
petitioners are not agents of the respondents.
"2. Whether or not the Honorable Court of Appeals erred in rendering
judgment against the petitioners despite x x x the failure of the
respondents to include in their action Evangeline Santos, an
indispensable party to the suit."7
The Court’s Ruling
The Petition is unmeritorious.
First Issue:
Agency
Well-entrenched is the rule that the Supreme Court’s role in a petition
under Rule 45 is limited to reviewing errors of law allegedly committed
by the Court of Appeals. Factual findings of the trial court, especially
when affirmed by the CA, are conclusive on the parties and this Court. 8
Petitioners have not given us sufficient reasons to deviate from this
rule.
In a contract of agency, one binds oneself to render some service or to
do something in representation or on behalf of another, with the latter’s
consent or authority.9 The following are the elements of agency: (1) the
parties’ consent, express or implied, to establish the relationship; (2)
the object, which is the execution of a juridical act in relation to a third
person; (3) the representation, by which the one who acts as an agent
does so, not for oneself, but as a representative; (4) the limitation that
the agent acts within the scope of his or her authority. 10 As the basis of
agency is representation, there must be, on the part of the principal, an
actual intention to appoint, an intention naturally inferable from the
principal’s words or actions. In the same manner, there must be an
intention on the part of the agent to accept the appointment and act
upon it. Absent such mutual intent, there is generally no agency.11
This Court finds no reversible error in the findings of the courts a quo
that petitioners were the rice buyers themselves; they were not mere
agents of respondents in their rice dealership. The question of whether
a contract is one of sale or of agency depends on the intention of the
parties.12
The declarations of agents alone are generally insufficient to establish
the fact or extent of their authority.13 The law makes no presumption of
agency; proving its existence, nature and extent is incumbent upon the
person alleging it.14 In the present case, petitioners raise the fact of
agency as an affirmative defense, yet fail to prove its existence.
The Court notes that petitioners, on their own behalf, sued Evangeline
Santos for collection of the amounts represented by the bounced
checks, in a separate civil case that they sought to be consolidated
with the current one. If, as they claim, they were mere agents of
respondents, petitioners should have brought the suit against Santos
for and on behalf of their alleged principal, in accordance with Section
2 of Rule 3 of the Rules on Civil Procedure.15 Their filing a suit against
her in their own names negates their claim that they acted as mere
agents in selling the rice obtained from Bartolome Ramos.
Second Issue:
Indispensable Party
Petitioners argue that the lower courts erred in not allowing Evangeline
Santos to be impleaded as an indispensable party. They insist that
respondents’ Complaint against them is based on the bouncing checks
she issued; hence, they point to her as the person primarily liable for
the obligation.
We hold that respondents’ cause of action is clearly founded on
petitioners’ failure to pay the purchase price of the rice. The trial court
held that Petitioner Maria Tuazon had indorsed the questioned checks
in favor of respondents, in accordance with Sections 31 and 63 of the
Negotiable Instruments Law.16 That Santos was the drawer of the
checks is thus immaterial to the respondents’ cause of action.
As indorser, Petitioner Maria Tuazon warranted that upon due
presentment, the checks were to be accepted or paid, or both,
according to their tenor; and that in case they were dishonored, she
would pay the corresponding amount.17 After an instrument is
dishonored by nonpayment, indorsers cease to be merely secondarily
liable; they become principal debtors whose liability becomes identical
to that of the original obligor. The holder of a negotiable instrument
need not even proceed against the maker before suing the indorser. 18
Clearly, Evangeline Santos -- as the drawer of the checks -- is not an
indispensable party in an action against Maria Tuazon, the indorser of
the checks.
Indispensable parties are defined as "parties in interest without whom
no final determination can be had."19 The instant case was originally
one for the collection of the purchase price of the rice bought by Maria
Tuazon from respondents’ predecessor. In this case, it is clear that
there is no privity of contract between respondents and Santos. Hence,
a final determination of the rights and interest of the parties may be
made without any need to implead her.
WHEREFORE, the Petition is DENIED and the assailed Decision
AFFIRMED. Costs against petitioners.
Alvin Patrimonio v. Napoleon Gutierrez , et. al. G.R. No. 187769
June 04, 2014
FACTS: The petitioner and the respondent Gutierrez entered into a
business venture under the name of Slam Dunk Corporation, a
production outfit that produced mini-concerts and shows related to
basketball.
Patrimonio pre-signed several checks to answer for the expenses of
Slam Dunk. Although signed, these checks had no payee’s name, date
or amount. The blank checks were entrusted to Gutierrez with the
specific instruction not to fill them out without previous notification to
and approval by the petitioner.
Without the petitioner’s knowledge and consent, Gutierrez went to
Marasigan to secure a loan in the amount of P200,000.00 on the
excuse that the petitioner needed the money for the construction of his
house. In addition to the payment of the principal, Gutierrez assured
Marasigan that he would be paid an interest of 5% per month.
Marasigan acceded to Gutierrez’ request and gave him P200,000.00.
Gutierrez simultaneously delivered to Marasigan one of the blank
checks the petitioner pre-signed with Pilipinas Bank with the blank
portions filled out with the words “Cash” “Two Hundred Thousand
Pesos Only”, and the amount of “P200,000.00.”
Marasigan deposited the check but it was dishonored for the reason
“ACCOUNT CLOSED.” It was later revealed that petitioner’s account
with the bank had been closed.
Marasigan sought recovery from Gutierrez, to no avail. He thereafter
sent several demand letters to the petitioner asking for the payment of
P200,000.00, but his demands likewise went unheeded. Consequently,
he filed a criminal case for violation of B.P. 22 against the petitioner.
RTC— in favor of Marasigan. It found that the petitioner, in issuing the
pre-signed blank checks, had the intention of issuing a negotiable
instrument, albeit with specific instructions to Gutierrez not to negotiate
or issue the check without his approval. RTC declared Marasigan as a
holder in due course and accordingly dismissed the petitioner’s
complaint for declaration of nullity of the loan. It ordered the petitioner
to pay Marasigan the face value of the check with a right to claim
reimbursement from Gutierrez. CA— affirmed the RTC ruling.
ISSUE: Whether or not Marasigan is a holder in due course thus may
hold Patrimonio liable
HELD: No. Section 14 of the Negotiable Instruments Law provides for
when blanks may be filled. This provision applies to an incomplete but
delivered instrument. Under this rule, if the maker or drawer delivers a
pre-signed blank paper to another person for the purpose of converting
it into a negotiable instrument, that person is deemed to have prima
facie authority to fill it up. It merely requires that the instrument be in
the possession of a person other than the drawer or maker and from
such possession, together with the fact that the instrument is wanting
in a material particular, the law presumes agency to fill up the blanks.
In order however that one who is not a holder in due course can
enforce the instrument against a party prior to the instrument’s
completion, two requisites must exist: (1) that the blank must be filled
strictly in accordance with the authority given; and (2) it must be filled
up within a reasonable time. If it was proven that the instrument had
not been filled up strictly in accordance with the authority given and
within a reasonable time, the maker can set this up as a personal
defense and avoid liability.
Section 52(c) of the NIL states that a holder in due course is one who
takes the instrument “in good faith and for value.” It also provides in
Section 52(d) that in order that one may be a holder in due course, it is
necessary that at the time it was negotiated to him he had no notice of
any infirmity in the instrument or defect in the title of the person
negotiating it.
Acquisition in good faith means taking without knowledge or notice of
equities of any sort which could beset up against a prior holder of the
instrument. It means that he does not have any knowledge of fact
which would render it dishonest for him to take a negotiable paper. The
absence of the defense, when the instrument was taken, is the
essential element of good faith.
In order to show that the defendant had “knowledge of such facts that
his action in taking the instrument amounted to bad faith,” it is not
necessary to prove that the defendant knew the exact fraud that was
practiced upon the plaintiff by the defendant’s assignor, it being
sufficient to show that the defendant had notice that there was
something wrong about his assignor’s acquisition of title, although he
did not have notice of the particular wrong that was committed. In the
present case, Marasigan’s knowledge that the petitioner is not a party
or a privy to the contract of loan, and correspondingly had no obligation
or liability to him, renders him dishonest, hence, in bad faith.
Yet, it does not follow that simply because he is not a holder in due
course, Marasigan is already totally barred from recovery.
Notably, Gutierrez was only authorized to use the check for business
expenses; thus, he exceeded the authority when he used the check to
pay the loan he supposedly contracted for the construction of
petitioner’s house. This is a clear violation of the petitioner’s instruction
to use the checks for the expenses of Slam Dunk. It cannot therefore
be validly concluded that the check was completed strictly in
accordance with the authority given by the petitioner.
Sally Yoshizaki, Petitioner, vs. Joy Training Center of Aurora,
Inc., Respondents
G.R. No. 174978; July 31, 2013
Facts: Richard and Linda Johnson were members of Joy Training’s
Board of Trustees who sold the real properties, a wrangler jeep, and
other personal properties in favor of the spouses Sally and Yoshio
Yoshizaki. Joy Training filed an action for cancellation of sales alleging
that the spouses Johnson is without the requisite authority from the
Board of Directors. The RTC ruled in favor of the spouses Yoshizaki. It
found that Joy Training owned the real properties and it authorized he
spouses Johnson to sell the real properties. It recognized that there
were only five actual members of the board of trustees; consequently,
a majority of the board of trustees validly authorized the sale. It also
ruled that the sale of personal properties was valid because they were
registered in the spouses Johnson’s name. The CA upheld the RTC’s
jurisdiction over the case but reversed its ruling with respect to the sale
of real properties. It also ruled that the resolution is void because it was
not approved by a majority of the board of trustees.
Issue: Was there a contract of agency to sell the real properties
between Joy Training and the spouses Johnson?
Ruling: The SC ruled that there was no contract of agency between
Joy Training and the spouses Johnson to sell the parcel of land with its
improvements. Art. 1868 of the Civil Code defines a contract of agency
as a contract whereby a person “binds himself to render some service
or to do something in representation or on behalf of another, with the
consent or authority of the latter.” It may be express, or implied 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. In this case, the presented evidence did not
convince the SC of the existence of the contract of agency to sell the
real properties. The certification is a mere general power of attorney
which comprises all of Joy training. Art. 1877 of CC clearly states that
an agency couched in general terms comprises only acts of
administration, even if the principal should state that he withholds no
power or that the agent may execute such acts as he may authorize as
general and unlimited management.
JUSAYAN, ET. AL v. SOMBILLA
The Court resolves whether a lease of agricultural land between the
respondent and the predecessor of the petitioners was a civil law lease
or an agricultural lease. The resolution is determinative of whether or
not the Regional Trial Court (RTC) had original exclusive jurisdiction
over the action commenced by the predecessor of the petitioners
against the respondent.
The Case
Under review on certiorari is the decision promulgated on October 20,
2003,1 whereby the Court of Appeals (CA) reversed the judgment in
favor of the petitioners rendered on April 13, 1999 in CAR Case No.
17117 entitled Timoteo Jusayan, Manuel Jusayan, Alfredo Jusayan
and Michael Jusayan v. Jorge Sombilla by the RTC, Branch 30, in Iloilo
City.
Antecedents
Wilson Jesena (Wilson) owned four parcels of land situated in New
Lucena, Iloilo. On June 20, 1970, Wilson entered into an agreement
with respondent Jorge Sombilla (Jorge),3 wherein Wilson designated
Jorge as his agent to supervise the tilling and farming of his riceland in
crop year 1970-1971. On August 20, 1971, before the expiration of the
agreement, Wilson sold the four parcels of land to Timoteo Jusayan
(Timoteo).4 Jorge and Timoteo verbally agreed that Jorge would retain
possession of the parcels of land and would deliver 110 cavans of
palay annually to Timoteo without need for accounting of the cultivation
expenses provided that Jorge would pay the irrigation fees. From 1971
to 1983, Timoteo and Jorge followed the arrangement. In 1975, the
parcels of land were transferred in the names of Timoteo’s sons,
namely; Manuel, Alfredo and Michael (petitioners). In 1984, Timoteo
sent several letters to Jorge terminating his administration and
demanding the return of the possession of the parcels of land. 5
Due to the failure of Jorge to render accounting and to return the
possession of the parcels of land despite demands, Timoteo filed on
June 30, 1986 a complaint for recovery of possession and accounting
against Jorge in the RTC (CAR Case No. 17117). Following Timoteo’s
death on October 4, 1991, the petitioners substituted him as the
plaintiffs.
In his answer,6 Jorge asserted that he enjoyed security of tenure as the
agricultural lessee of Timoteo; and that he could not be dispossessed
of his landholding without valid cause.
Ruling of the RTC
In its decision rendered on April 13, 1999,7 the RTC upheld the
contractual relationship of agency between Timoteo and Jorge; and
ordered Jorge to deliver the possession of the parcels of land to the
petitioners.
Judgment of the CA
Jorge appealed to the CA.
In the judgment promulgated on October 20, 2003,8 the CA
reversed the RTC and dismissed the case, declaring that the
contractual relationship between the parties was one of agricultural
tenancy; and that the demand of Timoteo for the delivery of his share
in the harvest and the payment of irrigation fees constituted an
agrarian dispute that was outside the jurisdiction of the RTC, and well
within the exclusive jurisdiction of the Department of Agriculture (DAR)
pursuant to Section 3(d) of Republic Act No. 6657 (Comprehensive
Agrarian Reform Law of 1988).
Issues
The petitioners now appeal upon the following issues, namely:
a.) Whether or not the relationship between the petitioners and
respondent is that of agency or agricultural leasehold; and
b.) Whether or not RTC, Branch 30, Iloilo City as Regional Trial Court
and Court of Agrarian Relations, had jurisdiction over the herein
case.9
Ruling of the Court
The petition for review lacks merit.
To properly resolve whether or not the relationship between Timoteo
and Jorge was that of an agency or a tenancy, an analysis of the
concepts of agency and tenancy is in order.
In agency, the agent binds himself to render some service or to do
something in representation or on behalf of the principal, with the
consent or authority of the latter.10 The basis of the civil law
relationship of agency is representation,11 the elements of which are,
namely: (a) the relationship is established by the parties’ consent,
express or implied; (b) the object is the execution of a juridical act in
relation to a third person; (c) the agent acts as representative and not
for himself; and (d) the agent acts within the scope of his
authority.12 Whether or not an agency has been created is determined
by the fact that one is representing and acting for another.13 The law
does not presume agency; hence, proving its existence, nature and
extent is incumbent upon the person alleging
it.14chanRoblesvirtualLawlibrary
The claim of Timoteo that Jorge was his agent contradicted the verbal
agreement he had fashioned with Jorge. By assenting to Jorge’s
possession of the land sans accounting of the cultivation expenses and
actual produce of the land provided that Jorge annually delivered to
him 110 cavans of palay and paid the irrigation fees belied the very
nature of agency, which was representation. The verbal agreement
between Timoteo and Jorge left all matters of agricultural production to
the sole discretion of Jorge and practically divested Timoteo of the
right to exercise his authority over the acts to be performed by Jorge.
While in possession of the land, therefore, Jorge was acting for himself
instead of for Timoteo. Unlike Jorge, Timoteo did not benefit whenever
the production increased, and did not suffer whenever the production
decreased. Timoteo’s interest was limited to the delivery of the 110
cavans of palay annually without any concern about how the cultivation
could be improved in order to yield more produce.
On the other hand, to prove the tenancy relationship, Jorge presented
handwritten receipts15 indicating that the sacks of palay delivered to
and received by one Corazon Jusayan represented payment of rental.
In this regard, rental was the legal term for the consideration of the
lease.16 Consequently, the receipts substantially proved that the
contractual relationship between Jorge and Timoteo was a lease.
Yet, the lease of an agricultural land can be either a civil law or an
agricultural lease. In the civil law lease, one of the parties binds himself
to give to another the enjoyment or use of a thing for a price certain,
and for a period that may be definite or indefinite.17 In the agricultural
lease, also termed as a leasehold tenancy, the physical possession of
the land devoted to agriculture is given by its owner or legal possessor
(landholder) to another (tenant) for the purpose of production through
labor of the latter and of the members of his immediate farm
household, in consideration of which the latter agrees to share the
harvest with the landholder, or to pay a price certain or ascertainable,
either in produce or in money, or in both.18 Specifically, in Gabriel v.
Pangilinan,19 this Court differentiated between a leasehold tenancy and
a civil law lease in the following manner, namely: (1) the subject matter
of a leasehold tenancy is limited to agricultural land, but that of a civil
law lease may be rural or urban property; (2) as to attention and
cultivation, the law requires the leasehold tenant to personally attend to
and cultivate the agricultural land; the civil law lessee need not
personally cultivate or work the thing leased; (3) as to purpose, the
landholding in leasehold tenancy is devoted to agriculture; in civil law
lease, the purpose may be for any other lawful pursuits; and(4) as to
the law that governs, the civil law lease is governed by the Civil Code,
but the leasehold tenancy is governed by special laws.
The sharing of the harvest in proportion to the respective contributions
of the landholder and tenant, otherwise called share tenancy, 20 was
abolished on August 8, 1963 under Republic Act No. 3844. To date,
the only permissible system of agricultural tenancy is leasehold
tenancy,21 a relationship wherein a fixed consideration is paid instead
of proportionately sharing the harvest as in share tenancy.
In Teodoro v. Macaraeg,22 this Court has synthesized the elements of
agricultural tenancy to wit: (1) the object of the contract or the
relationship is an agricultural land that is leased or rented for the
purpose of agricultural production; (2) the size of the landholding is
such that it is susceptible of personal cultivation by a single person
with the assistance of the members of his immediate farm household;
(3) the tenant-lessee must actually and personally till, cultivate or
operate the land, solely or with the aid of labor from his immediate farm
household; and (4) the landlord-lessor, who is either the lawful owner
or the legal possessor of the land, leases the same to the tenant-
lessee for a price certain or ascertainable either in an amount of
money or produce.
It can be gleaned that in both civil law lease of an agricultural land and
agricultural lease, the lessor gives to the lessee the use and
possession of the land for a price certain. Although the purpose of the
civil law lease and the agricultural lease may be agricultural cultivation
and production, the distinctive attribute that sets a civil law lease apart
from an agricultural lease is the personal cultivation by the lessee. An
agricultural lessee cultivates by himself and with the aid of those of his
immediate farm household. Conversely, even when the lessee is in
possession of the leased agricultural land and paying a consideration
for it but is not personally cultivating the land, he or she is a civil law
lessee.
The only issue remaining to be resolved is whether or not Jorge
personally cultivated the leased agricultural land.
Cultivation is not limited to the plowing and harrowing of the land, but
includes the various phases of farm labor such as the maintenance,
repair and weeding of dikes, paddies and irrigation canals in the
landholding. Moreover, it covers attending to the care of the growing
plants,23 and grown plants like fruit trees that require watering,
fertilizing, uprooting weeds, turning the soil, fumigating to eliminate
plant pests24 and all other activities designed to promote the growth
and care of the plants or trees and husbanding the earth, by general
industry, so that it may bring forth more products or fruits. 25 In Tarona
v. Court of Appeals,26 this Court ruled that a tenant is not required to be
physically present in the land at all hours of the day and night provided
that he lives close enough to the land to be cultivated to make it
physically possible for him to cultivate it with some degree of
constancy.
Nor was there any question that the parcels of agricultural land with a
total area of 7.9 hectares involved herein were susceptible of
cultivation by a single person with the help of the members of his
immediate farm household. As the Court has already observed, an
agricultural land of an area of four hectares,27 or even of an area as
large as 17 hectares,28 could be personally cultivated by a tenant by
himself or with help of the members of his farm household.
It is elementary that he who alleges the affirmative of the issue has the
burden of proof.29 Hence, Jorge, as the one claiming to be an
agricultural tenant, had to prove all the requisites of his agricultural
tenancy by substantial evidence.30 In that regard, his knowledge of and
familiarity with the landholding, its production and the instances when
the landholding was struck by drought definitely established that he
personally cultivated the land.31 His ability to farm the seven hectares
of land despite his regular employment as an Agricultural Technician at
the Municipal Agriculture Office32 was not physically impossible for him
to accomplish considering that his daughter, a member of his
immediate farm household, was cultivating one of the parcels of the
land.33 Indeed, the law did not prohibit him as the agricultural lessee
who generally worked the land himself or with the aid of member of his
immediate household from availing himself occasionally or temporarily
of the help of others in specific jobs.34 In short, the claim of the
petitioners that the employment of Jorge as an Agricultural Technician
at the Municipal Agriculture Office disqualified him as a tenant lacked
factual or legal basis.
Section 7 of Republic Act No. 3844 provides that once there is an
agricultural tenancy, the agricultural tenant’s right to security of tenure
is recognized and protected. The landowner cannot eject the
agricultural tenant from the land unless authorized by the proper court
for causes provided by law. Section 36 of Republic Act No. 3844, as
amended by Republic Act No. 6389, enumerates the several grounds
for the valid dispossession of the tenant.35It is underscored, however,
that none of such grounds for valid dispossession of landholding was
attendant in Jorge’s case.
Although the CA has correctly categorized Jorge’s case as an agrarian
dispute, it ruled that the RTC lacked jurisdiction over the case based
on Section 50 of Republic Act No. 6657, which vested in the
Department of Agrarian Reform (DAR) the primary jurisdiction to
determine and adjudicate agrarian reform matters and the exclusive
original jurisdiction over all matters involving the implementation of
agrarian reform except disputes falling under the exclusive jurisdiction
of the Department of Agriculture and the Department of Environment
and Natural Resources.
We hold that the CA gravely erred. The rule is settled that the
jurisdiction of a court is determined by the statute in force at the time of
the commencement of an action.36 In 1980, upon the passage of Batas
Pambansa Blg. 129 (Judiciary Reorganization Act), the Courts of
Agrarian Relations were integrated into the Regional Trial Courts and
the jurisdiction of the Courts of Agrarian Relations was vested in the
Regional Trial Courts.37 It was only on August 29, 1987, when
Executive Order No. 229 took effect, that the general jurisdiction of the
Regional Trial Courts to try agrarian reform matters was transferred to
the DAR. Therefore, the RTC still had jurisdiction over the dispute at
the time the complaint was filed in the RTC on June 30, 1986.
WHEREFORE, the Court GRANTS the petition for review
on certiorari by PARTIALLY AFFIRMING the decision of the Court of
Appeals to the extent that it upheld the tenancy relationship of the
parties; DISMISSES the complaint for recovery of possession and
accounting; and ORDERS the petitioners to pay the costs of suit.
The parties are ordered to comply with their undertakings as
agricultural lessor and agricultural lessee.
SO ORDERED.
ROSA LIM vs. CA
FACTS:
Lim, who arrived from Cebu, received from Suarez 2 pieces of jewelry:
a diamond ring and a bracelet to be sold on commission basis. Lim
returned the bracelet to Suarez, but failed to return the diamond ring or
to turn over the proceeds thereof if sold. Suarez wrote a demand letter
asking for the return of the ring or the proceeds of the sale thereof.
Lim, however, alleges that she had returned both the ring and the
bracelet, hence she no longer has any liability.
Lim has a different version of the facts. She denies the transaction was
for her to sell the 2 pieces of jewelry on commission basis. She told
Suarez that she would consider buying the pieces of jewelry for her
own use. Lim took the pieces of jewelry and asked Suarez to prepare
the necessary papers for her to sign because she was not yet
prepared to buy it. The document was prepared, and Lim signed it, but
she claims that she didn’t agree to the terms of the receipt regarding
the sale on commission basis. Her ‘proof’ is that she signed the
document on the upper portion and not at the bottom where a space is
provided for the signature of the persons receiving the jewelry.
ISSUE:
Was the real transaction between Lim & Suarez a real contract of
agency to sell on commission basis as set out in the receipt or a sale
on credit?
HELD:
The transaction between them was a contract of agency to sell on
commission basis. Lim’s signature indeed appears on the upper
portion of the receipt below, but this fact doesn’t have the effect of
altering the terms of the transaction form a contract of agency to sell
on commission basis to a contract of sale. The moment she affixed her
signature thereon, Lim became bound by all the terms stipulated in the
receipt.
Contracts shall be obligatory in whatever form they may have been
entered into, provided all the essential requisites for their validity are
present. However there are some provisions in law w/c require certain
formalities for particular contracts. The 1st is when the form is required
for the validity of the contract; the 2nd is when it is required to make the
contract effective as against 3rd parties; and the 3rd is for the purpose of
proving the existence of the contract, e.g. those included in the Statute
of Frauds. A contract of agency to sell on commission basis doesn’t
belong to any of these 3 categories, hence it is valid and enforceable in
whatever form they may be entered into.
There is only 1 type of legal instrument where the law strictly
prescribes the location of the signature of the parties thereto. This is in
case of notarial wills. But in the case at bar, the parties didn’t execute a
notarial will but a simple contract of agency to sell on commission
basis, thus making the position of Lim’s signature immaterial.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACTS
ARE OBLIGATORY IN WHATEVER FORM ENTERED; PLACE
OF SIGNATURE IMMATERIAL; PARTY BOUND THEREON
THE MOMENT SHE AFFIXED HER SIGNATURE. - Rosa Lims
signature indeed appears on the upper portion of the receipt
immediately below the description of the items taken. We find
that this fact does not have the effect of altering the terms of the
transaction from a contract of agency to sell on commission
basis to a contract of sale. Neither does it indicate absence or
vitiation of consent thereto on the part of Rosa Lim which would
make the contract void or voidable. The moment she affixed her
signature thereon, petitioner became bound by all the terms
stipulated in the receipt. She, thus, opened herself to all the legal
obligations that may arise from their breach. This is clear from
Article 1356 of the New Civil Code which provides: Contracts
shall be obligatory in whatever form they may have been entered
into, provided all the essential requisites for their validity are
present. In the case before us, the parties did not execute a
notarial will but a simple contract of agency to sell on
commission basis, thus making the position of petitioners
signature thereto immaterial.
2. ID.; ID.; CONTRACT OF AGENCY; NO FORMALITIES
REQUIRED. - There are some provisions of the law which
require certain formalities for particular contracts. The first is
when the form is required for the validity of the contract; the
second is when it is required to make the contract effective as
against the third parties such as those mentioned in Articles
1357 and 1358; and the third is when the form is required for the
purppose of proving the existence of the contract, such as those
provided in the Statute of Frauds in Article 1403. A contract of
agency to sell on commission basis does not belong to any of
these three categories, hence, it is valid and enforceable in
whatever form it may be entered into.
3. REMEDIAL LAW; EVIDENCE; WEIGHT THEREOF NOT
DETERMINED BY SUPERIORITY IN NUMBERS OF
WITNESSES. - Weight of evidence is not determined
mathematically by the numerical superiority of the witnesses
testifying to a given fact. It depends upon its practical effect in
inducing belief on the part of the judge trying the case.
4. ID.; ID.; CREDIBILITY; FINDINGS OF THE TRIAL AND
APPELLATE COURTS GENERALLY NOT INTERFERED WITH
ON APPEAL. - In the case at bench, both the trial court and the
Court of Appeals gave weight to the testimony of Vicky Suarez
that she did not authorize Rosa Lim to return the pieces of
jewelry to Nadera. We shall not disturb this finding of the
respondent court. It is well settled that we should not interfere
with the judgment of the trial court in determining the credibility of
witnesses, unless there appears in the record some fact or
circumstances of weight and influence which has been
overlooked or the significance of which has been
misinterpreted. The reason is that the trial court is in a better
position to determine questions involving credibility having heard
the witnesses and having observed their deportment and manner
of testifying during the trial.
5. CRIMINAL LAW; ESTAFA WITH ABUSE OF CONFIDENCE;
ELEMENTS. - The elements of estafa with abuse of confidence
under this subdivision are as follows: (1) That money, goods, or
other personal property be received by the offender in trust, or
on commission, or for administration, or under any other
obligation involving the duty to make delivery of, or to return, the
same; (2) That there be misappropriation or conversion of such
money or property by the offender or denial on his part of such
receipt; (3) That such misappropriation or conversion or denial is
to the prejudice of another; and (4) That there is a demand made
by the offended party to the offender (Note: The 4th element is
not necessary when there is evidence of misappropriation of the
goods by the defendant).
6. ID.; ID.; ID.; PRESENT IN CASE AT BAR. All the elements of
estafa under Article 315, Paragraph 1(b) of the Revised Penal
Code, are present in the case at bench. First, the receipt marked
as Exhibit A proves that petitioner Rosa Lim received the pieces
of jewelry in trust from Vicky Suarez to be sold on commission
basis. Second, petitioner misappropriated or converted the
jewelry to her own use; and, third, such misappropriation
obviously caused damaged and prejudice to the private
respondent.
EQUITABLE PCI BANK, formerly EQUITABLE BANKING
CORPORATION, petitioner,
vs.
ROSITA KU, respondent.
KAPUNAN, J.:
Can a person be evicted by virtue of a decision rendered in an
ejectment case where she was not joined as a party? This was the
issue that confronted the Court of Appeals, which resolved the issue in
the negative. To hold the contrary, it said, would violate due process.
Given the circumstances of the present case, petitioner Equitable PCI
Bank begs to differ. Hence, this petition.
On February 4, 1982, respondent Rosita Ku, as treasurer of Noddy
Dairy Products, Inc., and Ku Giok Heng, as Vice-President/General
Manager of the same corporation, mortgaged the subject property to
the Equitable Banking Corporation, now known as Equitable PCI Bank
to secure Noddy Inc.’s loan to Equitable. The property, a residential
house and lot located in La Vista, Quezon City, was registered in
respondent’s name.
Noddy, Inc. subsequently failed to pay the loan secured by the
mortgage, prompting petitioner to foreclose the property extrajudicially.
As the winning bidder in the foreclosure sale, petitioner was issued a
certificate of sale. Respondent failed to redeem the property. Thus, on
December 10, 1984, the Register of Deeds canceled the Transfer
Certificate of Title in the name of respondent and a new one was
issued in petitioner’s name.
On May 10, 1989, petitioner instituted an action for ejectment before
the Quezon City Metropolitan Trial Court (MeTC) against respondent’s
father Ku Giok Heng. Petitioner alleged that it allowed Ku Giok Heng to
remain in the property on the condition that the latter pay rent. Ku Giok
Heng’s failure to pay rent prompted the MeTC to seek his ejectment.
Ku Giok Heng denied that there was any lease agreement over the
property.1âwphi1.nêt
On December 8, 1994, the MeTC rendered a decision in favor of
petitioner and ordered Ku Giok Heng to, among other things, vacate
the premises. It ruled:
x x x for his failure or refusal to pay rentals despite proper
demands, the defendant had not established his right for his
continued possession of or stay in the premises acquired by
the plaintiff thru foreclosure, the title of which had been duly
transferred in the name of the plaintiff. The absence of lease
agreement or agreement for the payment of rentals is of no
moment in the light of the prevailing Supreme Court ruling on
the matter. Thus: "It is settled that the buyer in foreclosure
sale becomes the absolute owner of the property purchased
if it is not redeemed during the period of one (1) year after
the registration of the sale is as such he is entitled to the
possession of the property and the demand at any time
following the consolidation of ownership and the issuance to
him of a new certificate of title. The buyer can, in fact,
demand possession of the land even during the redemption
period except that he has to post a bond in accordance with
Section 7 of Act No. 3155 as amended. Possession of the
land then becomes an absolute right of the purchaser as
confirmed owner. Upon proper application and proof of title,
 the issuance of a writ of possession becomes a ministerial
duty of the court. (David Enterprises vs. IBAA[,] 191 SCRA
116).1
Ku Giok Heng did not appeal the decision of the MeTC. Instead, he
and his daughter, respondent Rosita Ku, filed on December 20, 1994,
an action before the Regional Trial Court (RTC) of Quezon City to
nullify the decision of the MeTC. Finding no merit in the complaint, the
RTC on September 13, 1999 dismissed the same and ordered the
execution of the MeTC decision.
Respondent filed in the Court of Appeals (CA) a special civil action
for certiorari assailing the decision of the RTC. She contended that she
was not made a party to the ejectment suit and was, therefore,
deprived of due process. The CA agreed and, on March 31, 2000,
rendered a decision enjoining the eviction of respondent from the
premises.
On May 10, 2000, Equitable PCI Bank filed in this Court a motion for
an extension of 30 days from May 10, 2000 or until June 9, 2000 to file
its petition for review of the CA decision. The motion alleged that the
Bank received the CA decision on April 25, 2000. 2 The Court granted
the motion for a 30-day extension "counted from the expiration of the
reglementary period" and "conditioned upon the timeliness of the filing
of [the] motion [for extension]."3
On June 13, 2000,4 Equitable Bank filed its petition, contending that
there was no need to name respondent Rosita Ku as a party in the
action for ejectment since she was not a resident of the premises nor
was she in possession of the property.
The petition is meritorious.
Generally, no man shall be affected by any proceeding to which he is a
stranger, and strangers to a case are not bound by judgment rendered
by the court.5 Nevertheless, a judgment in an ejectment suit is binding
not only upon the defendants in the suit but also against those not
made parties thereto, if they are:
a) trespassers, squatters or agents of the defendant fraudulently
occupying the property to frustrate the judgment;
b) guests or other occupants of the premises with the permission of the
defendant;
c) transferees pendente lite;
d) sub-lessees;
e) co-lessees; or
f) members of the family, relatives and other privies of the defendant.6
Thus, even if respondent were a resident of the property, a point
disputed by the parties, she is nevertheless bound by the judgment of
the MeTC in the action for ejectment despite her being a non-party
thereto. Respondent is the daughter of Ku Giok Heng, the defendant in
the action for ejectment.
Respondent nevertheless claims that the petition is defective. The
bank alleged in its petition that it received a copy of the CA decision
on April 25, 2000. A Certification dated June 6, 2000 issued by the
Manila Central Post Office reveals, however, that the copy "was duly
delivered to and received by Joel Rosales (Authorized Representative)
on April 24, 2000."7 Petitioner’s motion for extension to file this petition
was filed on May 10, 2000, sixteen (16) days from the petitioner’s
receipt of the CA decision (April 24, 2000) and one (1) day beyond the
reglementary period for filing the petition for review (May 9, 2000).
Petitioner however maintains "its honest representation of having
received [a copy of the decision] on April 25, 2000." 8 Appended as
Annex "A" to petitioner’s Reply is an Affidavit 9 dated October 27, 2000
and executed by Joel Rosales, who was mentioned in the Certification
as having received the decision. The Affidavit states:
(1) I am an employee of Unique Industrial & Allied Services,
Inc. (Unique) a corporation duly organized and existing
under Philippine laws with principal place of business at
1206 Vito Cruz St., Malate, Manila, and I am assigned with
the Equitable PCI Bank, Mail and Courier Department,
Equitable PCI Bank Tower II, cor. Makati Avenue and H.V.
dela Costa St., Makati City, Metro Manila;
(2) Under the contract of services between the Bank and
Unique, it is my official duty and responsibility to receive and
pick-up from the Manila Central Post Office (CPO) the
various mails, letters, correspondence, and other mail
matters intended for the bank’s various departments and
offices at Equitable Bank Building, 262 Juan Luna St.,
Binondo, Manila. This building, however, also houses
various other offices or tenants not related to the Bank.
(3) I am not the constituted agent of "Curato Divina Mabilog
Niedo Magturo Pagaduan Law Office" whose former address
is at Rm. 405 4/F Equitable Bank Bldg., 262 Juan Luna St.,
Binondo, Manila, for purposes of receiving their incoming
mail matters; neither am I any such agent of the various
other tenants of the said Building. On occasions when I
receive mail matters for said law office, it is only to help them
receive their letters promptly.
(4) On April 24, 2000, I received the registered letter sent by
the Court of Appeals, covered by Registry Receipt No.
125234 and Delivery No. 4880 (copy of envelope attached
as Annex "A") together with other mail matters, and brought
them to the Mail and Courier Department;
(5) After sorting out these mail matters, on April 25, 2000, I
erroneously recorded them on page 422 of my logbook as
having been received by me on said dated April 25, 2000
(copy of page 422 is attached as Annex "B").
(6) On April 27, 2000, this letter was sent by the Mail and
Courier Department to said Law Office whose receiving clerk
Darwin Bawar opened the letter and stamped on the "Notice
of Judgment" their actual date of receipt: "April 27, 2000"
(copy of the said Notice with the date so stamped is attached
as Annex "C").
(7) On May 8, 2000, Atty. Roland A. Niedo of said law office
inquired from me as to my actual date of receipt of this letter,
and I informed him that based on my logbook, I received it
on April 25, 2000.
(8) I discovered this error only on September 6, 2000, when I
was informed by Atty. Niedo that Postmaster VI Alfredo C.
Mabanag, Jr. of the Central Post Office, Manila, issued a
certification that I received the said mail on April 24, 2000.
(9) I hereby confirm that this error was caused by an honest
mistake.
Petitioner argues that receipt on April 25, 2000 by Joel Rosales, who
was not an agent of its counsel’s law office, did not constitute notice to
its counsel, as required by Sections 210 and 10,11 Rule 13 of the Rules
of Court. To support this contention, petitioner cites Philippine Long
Distance Telephone Co. vs. NLRC.12 In said case, the bailiff served the
decision of the National Labor Relations Commission at the ground
floor of the building of the petitioner therein, the Philippine Long
Distance Telephone Co., rather than on the office of its counsel, whose
address, as indicated in the notice of the decision, was on the ninth
floor of the building. We held that:
 x x x practical considerations and the realities of the situation
dictate that the service made by the bailiff on March 23,
1981 at the ground floor of the petitioner’s building and not at
the address of record of petitioner’s counsel on record at the
9th floor of the PLDT building cannot be considered a valid
service. It was only when the Legal Services Division
actually received a copy of the decision on March 26, 1981
that a proper and valid service may be deemed to have been
made. x x x.
Applying the foregoing provisions and jurisprudence, petitioner submits
that actual receipt by its counsel was on April 27, 2000, not April 25,
2000. Following the argument to its logical conclusion, the motion for
extension to file the petition for review was even filed two (2) days
before the lapse of the 15-day reglementary period. That counsel
treated April 25, 2000 and not April 27, 2000 as the date of receipt was
purportedly intended to obviate respondent’s possible argument that
the 15-day period had to be counted from April 25, 2000.
The Court is not wholly convinced by petitioner’s argument. The
Affidavit of Joel Rosales states that he is "not the constituted agent of
‘Curato Divina Mabilog Nedo Magturo Pagaduan Law Office.’" An
agency may be express but it may also be implied 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.13 Likewise, acceptance by the agent may also be express,
although it may also be implied from his acts which carry out the
agency, or from his silence or inaction according to the
circumstances.14 In this case, Joel Rosales averred that "[o]n
occasions when I receive mail matters for said law office, it is only to
help them receive their letters promptly," implying that counsel had
allowed the practice of Rosales receiving mail in behalf of the former.
There is no showing that counsel had objected to this practice or took
steps to put a stop to it. The facts are, therefore, inadequate for the
Court to make a ruling in petitioner’s favor.
Assuming the motion for extension was indeed one day late, petitioner
urges the Court, in any event, to suspend its rules and admit the
petition in the interest of justice. Petitioner invokes Philippine National
Bank vs. Court of Appeals,15 where the petition was filed three (3) days
late. The Court held:
It has been said time and again that the perfection of an
appeal within the period fixed by the rules is mandatory and
jurisdictional. But, it is always in the power of this Court to
suspend its own rules, or to except a particular case from its
operation, whenever the purposes of justice require it.
Strong compelling reasons such as serving the ends of
justice and preventing a grave miscarriage thereof warrant
the suspension of the rules.
The Court proceeded to enumerate cases where the rules on
reglementary periods were suspended. Republic vs. Court of
Appeals16 involved a delay of six days; Siguenza vs. Court of
Appeals,17 thirteen days; Pacific Asia Overseas Shipping Corporation
vs. NLRC,18 one day; Cortes vs. Court of Appeals,19 seven
days; Olacao vs. NLRC,20 two days; Legasto vs. Court of
Appeals,21 two days; and City Fair Corporation vs. NLRC,22 which also
concerned a tardy appeal.1âwphi1.nêt
The Court finds these arguments to be persuasive, especially in light of
the merits of the petition.
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED.
The decision of the Court of Appeals is REVERSED.
DOMINGA CONDE vs. CA
FACTS:
On 7 April 1938, Margarita Conde, Bernardo Conde and
Dominga Conde, as heirs of Santiago Conde, sold with right to
repurchase, within 10 years from said date, a 1 hectare parcel of
agricultural land situated in Burauen, Leyte to Casimira Pasagui and
Pio Altera for P165. Three years later, Original Certificate of Title No.
N-534 covering the land in question was issued in the name of the
Alteras subject to the stipulated right of repurchase by the Condes. On
28 November 1945, Paciente Cordero, son-in-law of the Alteras and
their representative, signed a document in Bisaya stating that the
Memorandum of Repurchase got lost during World War II despite all
diligent searches being made; that the two parcels of land were
inherited by the Condes; that Eusebio Amarille was authorized by the
Condes to repurchase the land; that they received P165 in
consideration of the sale; and that the Condes, by virtue of the
repurchase, shall repossess the said parcels of land. Neither the
vendees-a-retro, Pio Altera nor Casimira Pasagui, were signatories to
that document. Many years later, the pacto de retro document was
found. In June 1965, Pio Altera sold the disputed lot to Ramon and
Catalina Conde, whose relationship to Dominga does not appear on
record. Consequently, in 1969, Dominga filed with the CFI of Leyte a
complaint for quieting of title and declaration of ownership against all
the respondents. The trial court dismissed the complaint and ordered
Dominga to vacate the premises and to deliver the disputed land to
respondents. The Court of Appeals affirmed the decision and ruled that
Dominga failed to validly exercise her right to repurchase because the
Memorandum of Repurchase was not signed by the Alteras but by
Paciente, who was not authorized to sign for the said vendees-a-retro.
ISSUE:
Whether or not there was an implied agency when Cordero
signed the Memorandum of Repurchase.
HELD:
Yes. Although the contending parties were legally wanting in
their respective actuations, for example Dominga did nothing to
formalize her repurchase while the Alteras did nothing to clear their title
of the encumbrance therein regarding Dominga’s right to repurchase,
the repurchase by Dominga is supported by her admission that she
had been in possession since 1945, the date of the repurchase, and
has been paying land taxes thereon since then. No new agreement
was entered into by the parties as stipulated in the deed of pacto de
retro, if the vendors-a-retro failed to exercise their right of redemption
within 10 years. If, as alleged, Dominga did not exert an effort to
procure Pio Altera’s signature after he had recovered from illness,
neither did the Alteras repudiate the deed signed by their son-in-law for
24 years, from which the Alteras are deemed to have incurred in
laches. Thus, an implied agency must have been held to have been
created by their silence or lack of action, or their failure to repudiate the
agency created. (Art. 1869, New Civil Code). Wherefore, Dominga is
declared the owner of the land in question.
Spouses Fernando Viloria and Lourdes Viloria vs Continental
Airlines, Inc.
In 1997, while the spouses Viloria were in the United States, they
approached Holiday Travel, a travel agency working for Continental
Airlines, to purchase tickets from Newark to San Diego. The travel
agent, Margaret Mager, advised the couple that they cannot travel by
train because it was already fully booked; that they must purchase
plane tickets for Continental Airlines; that if they won’t purchase plane
tickets; they’ll never reach their destination in time. The couple
believed Mager’s representations and so they purchased two plane
tickets worth $800.00.
Later however, the spouses found out that the train trip wasn’t really
fully booked and so they purchased train tickets and went to their
destination by train instead. Then they called up Mager to request for a
refund for the plane tickets. Mager referred the couple to Continental
Airlines. As the couple were now in the Philippines, they filed their
request with Continental Airline’s office in Ayala. The spouses Viloria
alleged that Mager misled them into believing that the only way to
travel was by plane and so they were fooled into buying expensive
plane tickets.
Continental Airlines refused to refund the amount of the tickets and so
the spouses sued the airline company. In its defense, Continental
Airlines claimed that the tickets sold to them by Mager were non-
refundable; that, if any, they were not bound by the misrepresentations
of Mager because there’s no contract of agency existing between
Continental Airlines and Mager.
The trial court ruled in favor of spouses Viloria but the Court of Appeals
reversed the ruling of the RTC.
ISSUE: Whether or not a contract of agency exists between
Continental Airlines and Mager.
HELD: Yes. All the elements of agency are present, to wit:

1. there is consent, express or implied of

the parties to establish the relationship;
2. the object is the execution of a juridical
act in relation to a third person;
3. the agent acts as a representative and
not for himself, and
4. the agent acts within the scope of his
authority.

The first and second elements are present as Continental Airlines does
not deny that it concluded an agreement with Holiday Travel to which
Mager is part of, whereby Holiday Travel would enter into contracts of
carriage with third persons on the airlines’ behalf. The third element is
also present as it is undisputed that Holiday Travel merely acted in a
representative capacity and it is Continental Airlines and not Holiday
Travel who is bound by the contracts of carriage entered into by
Holiday Travel on its behalf. The fourth element is also present
considering that Continental Airlines has not made any allegation that
Holiday Travel exceeded the authority that was granted to it.
Continental Airlines also never questioned the validity of the
transaction between Mager and the spouses. Continental Airlines is
therefore in estoppel. Continental Airlines cannot be allowed to take an
altogether different position and deny that Holiday Travel is its agent
without condoning or giving imprimatur to whatever damage or
prejudice that may result from such denial or retraction to Spouses
Viloria, who relied on good faith on Continental Airlines’ acts in
recognition of Holiday Travel’s authority. Estoppel is primarily based on
the doctrine of good faith and the avoidance of harm that will befall an
innocent party due to its injurious reliance, the failure to apply it in this
case would result in gross travesty of justice.