JOSE BORDADOR and LYDIA BORDADOR,

petitioners, vs. BRIGIDA D. LUZ, ERNESTO

M.
LUZ
and
NARCISO
DEGANOS,
respondents.

FACTS:
Petitioners were engaged in the business of purchase
and sale of jewelry and respondent Brigida D. Luzwas
their regular customer.
On several occasions, respondent NarcisoDeganos, the
brother of Brigida D. Luz, received several pieces of gold
and jewelry from petitioners amounting to P382,816.00.
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.
Deganos 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 of P725,463.98. Petitioners
eventually filed a complaint in the barangay court to
recover said amount.
In the barangay proceedings, Deganos obligated himself
to pay petitioners, on installment basis, the balance of
his account plus interest thereon. However, he failed to
comply
with
his
aforestated
undertakings.
Hence,petitioners instituted Civil Case against Deganos
and Brigida D. Luz for recovery of a sum of money and
damages,
with
an
application
for
preliminary
attachment.
Deganos admitted that he had an unpaid obligation to
petitioners, he claimed that the same was only in the
sum of P382,816.00 and not P725,463.98. He further
asserted that it was he alone who was involved in the
transaction with the petitioners; that he neither acted as
agent for nor was he authorized to act as an agent by
Brigida D. LuzBrigida, on her part, denied that she had
anything to do with the transactions. She claimed that
she never authorized Deganos to receive any item of
jewelry in her behalf and neither did she actually receive
any of the articles in question.
After trial, the court below found that only Deganos was
liable to petitioners for the amount and damages
claimed.
The trial court also found that it was petitioner Lydia
Bordador who indicated in the receipts that the items
were received by Deganos for Evelyn Aquino and Brigida
D. Luz. Said court was persuaded that Brigida D. Luz
was behind Deganos, but because there was no
memorandum to this effect, the agreement between the
parties was unenforceable under the Statute of Frauds.
Absent the required memorandum or any written
document connecting the respondent Luz spouses with
the subject receipts, or authorizing Deganos to act on

their behalf, the alleged agreement between petitioners

and Brigida D. Luz was unenforceable.
ISSUE:
Whether or not herein respondent spouses are liable to
petitioners for the latters claim for money and damages
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.
HELD:
Petitioners claim is speciously unmeritorious. It should
be emphasized that neither the trial court nor the
appellate court categorically stated that there was such
a contractual relation between these two respondents.
The trial court merely said that if there was such an
agency existing between them, the same is
unenforceable as the contract would fall under the
Statute of Frauds which requires the presentation of a
note or memorandum thereof in order to be enforceable
in court. What was finally proven as a matter of fact is
that there was no such contract between Brigida D. Luz
and NarcisoDeganos, executed or partially executed, and
no delivery of any of the items subject of this case was
ever made to the former.
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 evidence does not 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
xx. 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.
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.
Regina Dizon et al v. CA and Overland Express
Lines, Inc.
G.R. No. 122544 January 28, 1999Martinez, J.

BACKGROUND:
Two consolidated petitions were filed before us seeking
to set aside and annul the decisions and resolutions of
respondent Court of Appeals. What seemed to be a
simple ejectment suit was juxtaposed with procedural
intricacies which finally found its way to this Court.
FACTS:
Overland Express Lines, Inc. entered into a
Contract of Lease with Option to Buy with
petitionersinvolving a 1,755.80 square meter parcel of
land situated at corner MacArthur Highway and SouthH
Street, Diliman, Quezon City. The term of the lease was
for 1 year commencing from May 16,1974 up to May
15, 1975. During this period, Overland Express
Lines was granted an option topurchase for
the amount
of P3,000.00 per
square meter. Thereafter, the lease shall be on
a permonth basis with a monthly rental of P3,000.00.
For failure of Overland Express Lines to pay the
increased rental of P8,000.00 per month effective June
1976, petitioners filed an action for ejectment against it.
The lower court rendered judgmentordering Overland
Express Lines to vacate the leased premises and to pay
the sum of P624,000.00representing rentals in arrears
and/or as damages in the form of reasonable
compensation for theuse and occupation of the premises
during the period of illegal detainer from June 1976 to
November1982 at the monthly rental of P8,000.00, less
payments made, plus 12% interest per annum
fromNovember 18, 1976, the date of fi ling of the
complaint,
until
fully
paid, the
sum of P8,000.00 amonth starting December 1982,
until Overland Express Lines fully vacates the premises,
and to payP20,000.00 as and by way of attorneys fees.
ISSUE:
WON Overland Express Lines actually paid
t h e a l l e g e d P 3 0 0 , 0 0 0 . 0 0 t o Fi d e l a D i z o n , a s
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 theleased property, which petitioners
accepted (through Alice A. Dizon) and for which
an official receiptwas issued, was the operative
act that gave rise to a perfected contract of sale,
and that for failureof petitioners to deny receipt
thereof, Overland Express Lines can therefore
assume that Alice A.Dizon, acting as agent of
petitioners, was authorized by them to receive
the money in their behalf.CA went further by
stating that in fact, what was entered into was a
conditional contract of salewherein ownership
over the leased property shall not pass to the
Overland Express Lines until it hasfully paid the

purchase price. Since Overland Express Lines did

not consign to the court the balanceof the
purchase price and continued to occupy
the subject premises, it had the obligation to
pay theamount of P1,700.00 in monthly rentals until full
payment of the purchase price.

In an attempt to resurrect the lapsed option,

Overland Express Lines gave P300,000.00 to
petitioners(thru Alice A. Dizon) on the erroneous
presumption that the said amount tendered would
constitute aperfected contract of sale pursuant to
the contract of lease with option to buy. There
was no validconsent by the petitioners (as coowners of the leased premises) on the supposed
sale entered intoby Alice A. Dizon, as petitioners
alleged agent, and Overland Express Lines. The
basis for agency isrepresentation and a person
dealing with an agent is put upon inquiry and
must discover upon hisperil the authority of
the agent. As provided in Article 1868 of
the New Civil Code, there was noshowing
that petitioners consented to the act of
Alice A. Dizon nor authorized her to act on
theirbehalf with regard to her transaction
with private respondent. The
most prudent
thing privaterespondent
should have done was to ascertain the extent of
the authority of Alice A. Dizon. Beingnegligent in
this regard, private respondent cannot seek relief on the
basis of a supposed agency.

Every person
dealing with an agent is put upon inq
uiry
and must discover upon his peril the
authority of the agent. If he does not
make such inquiry, he is chargeable with
knowledge of theagents authority, and his
ignorance of that authority will not be
any excuse. Persons dealing with anassumed
agency, whether the assumed agency be a
general or special one, are bound at their peril,if
they would hold the principal, to ascertain not
only the fact of the agency but also the nature
andextent of the authority, and in case
either is controverted, the burden of proof
is upon them to establish it.

June 19, 2000

VICTORIAS
MILLING
CO.,
INC., petitioner,
vs.
COURT OF APPEALS and CONSOLIDATED SUGAR
CORPORATION, respondents.
Facts: St. Therese Merchandising (hereafter STM)
regularly bought sugar from petitioner Victorias Milling
Co., Inc. In the course of their dealings, petitioner issued
several Shipping List/Delivery Receipts to STM as proof
of purchases. Among these was SLDR No. 1214M, which
gave rise to the instant case. SLDR No. 1214M covers
25,000 bags of sugar. The transaction it covered was a
"direct sale."

Thereafter, STM sold to private respondent Consolidated

Sugar Corporation (CSC) its rights in SLDR No. 1214M.
That same day, CSC wrote petitioner that it had been
authorized by STM to withdraw the sugar covered by the
SLDR. However, after 2,000 bags had been released,
petitioner refused to allow further withdrawals of sugar.
CSC thus inquired when it would be allowed to withdraw
the remaining 23,000 bags. In its reply, petitioner said
that it could not allow any further withdrawals of sugar
because STM had already withdrawn all the sugar
covered by the cleared checks. Petitioner also noted that
CSC had represented itself to be STM's agent as it had
withdrawn the 2,000 bags "for and in behalf" of STM.
As a result, CSC filed a complaint for specific
performance. Petitioner's primary defense a quo was
that it was an unpaid seller for the 23,000 bags. Since
STM had already drawn in full all the sugar
corresponding to the amount of its cleared checks, it
could no longer authorize further delivery of sugar to
CSC. Petitioner also contended that it had no privity of
contract with CSC. Furthermore, the SLDRs prescribed
delivery of the sugar to the party specified therein and
did not authorize the transfer of said party's rights and
interests.
The Trial Court rendered its judgment favoring the
private respondent CSC. The appellate court affirmed
said decision but modified the costs against petitioner.
Issue: Whether or not CSC was an agent of STM and
hence, estopped to sue upon SLDR No. 1214M as an
assignee.
Held: No. It is clear from Article 1868 that the basis of
agency is representation. 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
That the authorization given to CSC contained the
phrase "for and in our (STM's) behalf" did not establish
an agency. Ultimately, what is decisive is the intention of
the parties. That no agency was meant to be established
by the CSC and STM is clearly shown by CSC's
communication to petitioner that SLDR No. 1214M had
been "sold and endorsed" to it. The use of the words
"sold and endorsed" means that STM and CSC intended
a contract of sale, and not an agency. Hence, CSC was
not STM's agent and could independently sue petitioner,
and not required to include STM as Co-plaintiff in its
case.
LINTONJUA vs. ETERNIT CORPORATION
The Eternit Corporation (EC) is a corporation duly
organized and registered under Philippine laws engaged
in the manufacture of roofing materials and pipe
products.
Jack
Glanville
is
its
President.
Its
manufacturing operations were conducted on eight
parcels of land. (90%) percent of the shares of stocks of
EC were owned by Eteroutremer S.A. Corporation (ESAC),
a corporation organized and registered under the laws of
Belgium. Claude Frederick Delsaux was the Regional

Director for Asia of ESAC. Both had their offices in

Belgium.
In 1986, ESAC grew concerned about the political
situation in the Philippines and wanted to stop its
operations in the country. ESAC instructed Michael
Adams, a member of ECs Board of Directors, to dispose
of the 8 parcels of land. Adams engaged the services of
realtor/broker Lauro G. Marquez so that the properties
could be offered for sale to prospective buyers.
Marquez thereafter offered the land to Eduardo B.
Litonjua, Jr. of the Litonjua & Company, Inc. In a Letter
Marquez declared that he was authorized to sell the
properties for P27M. Litonjua offered to buy the property
for P20M. Marquez apprised Glanville of offer and
relayed the same to Delsaux. Delsaux said that based
on the "Belgian/Swiss decision," the final offer was
"US$1,000,000.00 and P2,500,000.00 to cover all
existing obligations prior to final liquidation." Litonjua
accepted the counterproposal of Delsaux, and deposited
the amount of US$1M with the Security Bank & Trust
Company and drafted an Escrow Agreement to expedite
the sale.
Meanwhile, Cory Aquino became President and the
political situation in the Philippines improved. Glanville
and Delsaux told Marquez that their respective groups
decided not to proceed with the sale.
When apprised of this development, Litonjua, through
counsel, wrote EC, demanding payment for damages
they had suffered on account of the aborted sale. EC,
however, rejected their demand. The Litonjuas then filed
a complaint for specific performance and damages
against EC. They emphasize that they acted in good
faith. They aver the fact that since ESAC owns 90% of
the shares of stock of respondent EC, a formal resolution
of the Board of Directors would be a mere ceremonial
formality. What is important, petitioners maintain, is that
Marquez was able to communicate the offer of
respondent EC and the petitioners acceptance thereof.
There was no time that they acted without the
knowledge of respondents. In fact, respondent EC never
repudiated the acts of Glanville, Marquez and Delsaux.
In their answer to the complaint, EC and ESAC alleged
that since Eteroutremer was not doing business in the
Philippines, it cannot be subject to the jurisdiction of
Philippine courts; the Board and stockholders of EC
never approved any resolution to sell subject properties
nor authorized Marquez to sell the same.
The Trial Court (TC) dismissed the complaint. It declared
that since the authority of the agents/realtors was not in
writing, the sale is void and not merely unenforceable,

and as such, could not have been ratified by the

principal. In any event, such ratification cannot be given
any retroactive effect. Plaintiffs could not assume that
defendants had agreed to sell the property without a
clear authorization from the corporation concerned, that
is, through resolutions of the Board of Directors and
stockholders. The trial court also pointed out that the
supposed sale involves substantially all the assets of
defendant EC which would result in the eventual total
cessation of its operation.

of prospective buyers of such properties and the

execution of the deed of sale covering such property,
can be performed by the corporation only by officers or
agents duly authorized for the purpose by corporate bylaws or by specific acts of the board of directors. Absent
such valid delegation/authorization, the rule is that the
declarations of an individual director relating to the
affairs of the corporation, but not in the course of, or
connected with, the performance of authorized duties of
such director, are not binding on the corporation.

CA: affirmed TC. The CA ruled that Marquez, who was a

real estate broker, was a special agent within the
purview of Article 1874 of the New Civil Code. Under
Section 23 of the Corporation Code, he needed a special
authority from ECs board of directors to bind such
corporation to the sale of its properties. Delsaux, who
was merely the representative of ESAC, had no authority
to bind the latter. The CA pointed out that Delsaux was
not even a member of the board of directors of EC.

While a corporation may appoint agents to negotiate for

the sale of its real properties, the final say will have to
be with the board of directors through its officers and
agents as authorized by a board resolution or by its bylaws. An unauthorized act of an officer of the corporation
is not binding on it unless the latter ratifies the same
expressly or impliedly by its board of directors. Any sale
of real property of a corporation by a person purporting
to be an agent thereof but without written authority from
the corporation is null and void. The declarations of the
agent alone are generally insufficient to establish the
fact or extent of his/her authority.

ISSUE#1: WON petitioners had established that EC had

contracted Adams, Glanville and Delsaux or Marquez as
its agent to sell the land -NO
HELD: It was the duty of the petitioners to prove that
respondent EC had decided to sell its properties and that
it had empowered Adams, Glanville and Delsaux or
Marquez to offer the properties for sale to prospective
buyers and to accept any counter-offer. They likewise
failed to prove that their counter-offer had been
accepted by respondent EC, through Glanville and
Delsaux. It must be stressed that when specific
performance is sought of a contract made with an agent,
the agency must be established by clear, certain and
specific proof.
Based on the Corporation Code, a corporation is a
juridical person separate and distinct from its members
or stockholders and is not affected by the personal
rights, obligations and transactions of the latter. It may
act only through its board of directors or, when
authorized either by its by-laws or by its board
resolution, through its officers or agents in the normal
course of business. The general principles of agency
govern the relation between the corporation and its
officers or agents, subject to the articles of
incorporation, by-laws, or relevant provisions of law.
A corporation may sell or convey its real properties,
subject to the limitations prescribed by law. The property
of a corporation, however, is not the property of the
stockholders or members, and as such, may not be sold
without express authority from the board of directors.
Physical acts, like the offering of the properties of the
corporation for sale, or the acceptance of a counter-offer

Consent of both principal and agent is necessary to

create an agency. The principal must intend that the
agent shall act for him; the agent must intend to accept
the authority and act on it, and the intention of the
parties must find expression either in words or conduct
between them. An agency may be expressed or implied.
However, to create or convey real rights over immovable
property, a special power of attorney is necessary. Thus,
when a sale of a piece of land or any portion thereof is
through an agent, the authority of the latter shall be in
writing, otherwise, the sale shall be void.
In this case, the petitioners as plaintiffs below, failed to
adduce in evidence any resolution of the Board of
Directors of respondent EC empowering Marquez,
Glanville or Delsaux as its agents, to sell, let alone offer
for sale, for and in its behalf, the eight parcels of land
owned by respondent EC including the improvements
thereon.
The offer of Delsaux emanated only from the
"Belgian/Swiss
decision,"
and
not
the
entire
management or Board of Directors of respondent ESAC.
While it is true that petitioners accepted the counteroffer of respondent ESAC, respondent EC was not a party
to the transaction between them; hence, EC was not
bound by such acceptance.
Glanville, Adams and Delseaux acted for and in behalf of
respondent ESAC, and not as duly authorized agents of
respondent EC; a board resolution evincing the grant of
such authority is needed to bind EC to any agreement

regarding the sale of the subject properties. Such board

resolution is not a mere formality but is a condition sine
qua non to bind respondent EC. Admittedly, respondent
ESAC owned 90% of the shares of stocks of respondent
EC; however, the mere fact that a corporation owns a
majority of the shares of stocks of another, or even all of
such shares of stocks, taken alone, will not justify their
being treated as one corporation.
It bears stressing that 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.
The petitioners cannot feign ignorance of the absence of
any regular and valid authority of respondent EC
empowering Adams, Glanville or Delsaux to offer the
properties for sale and to sell the said properties to the
petitioners. A person dealing with a known agent is not
authorized, under any circumstances, blindly to trust the
agents; statements as to the extent of his powers; such
person must not act negligently but must use reasonable
diligence and prudence to ascertain whether the agent
acts within the scope of his authority. The settled rule is
that, persons dealing with an assumed agent are bound
at their peril, and if they would hold the principal liable,
to ascertain not only the fact of agency but also the
nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to prove
it. In this case, the petitioners failed to discharge their
burden; hence, petitioners are not entitled to damages
from respondent EC.
It appears that Marquez acted not only as real estate
broker for the petitioners but also as their agent. As
gleaned from the letter of Marquez to Glanville, on
February 26, 1987, he confirmed, for and in behalf of the
petitioners, that the latter had accepted such offer to sell
the land and the improvements thereon. However, we
agree with the ruling of the appellate court that Marquez
had no authority to bind respondent EC to sell the
subject properties. A real estate broker is one who
negotiates the sale of real properties. His business,
generally speaking, is only to find a purchaser who is
willing to buy the land upon terms fixed by the owner. He
has no authority to bind the principal by signing a
contract of sale. Indeed, an authority to find a purchaser
of real property does not include an authority to sell.
ISSUE#2: WON EC is estopped to deny the existence of a
principal-agency relationship between it and Glanville or
Delsaux NO.

HELD: For an agency by estoppel to exist, the following

must be established: (1) the principal manifested a
representation of the agents authority or knowlingly
allowed the agent to assume such authority; (2) the third
person, in good faith, relied upon such representation;
(3) relying upon such representation, such third person
has changed his position to his detriment. 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.
Such proof is lacking in this case. In their
communications to the petitioners, Glanville and Delsaux
positively and unequivocally declared that they were
acting for and in behalf of respondent ESAC.
Neither may respondent EC be deemed to have ratified
the transactions between the petitioners and respondent
ESAC, through Glanville, Delsaux and Marquez. The
transactions and the various communications inter se
were never submitted to the Board of Directors of
respondent EC for ratification. Peititon denied.
Dominion Insurance Corp. v CA (GEN)
FACTS:
Rodolfo Guevara claimed to have
advanced P156,473.90 in his capacity as a
manager of Dominion Insurance Corp. to satisfy
certain claims fi les by the petitioners clients. He
then instituted a complaint for sum of money
against the petitioner. The petitioner denied any
liability to plaintiff and asserted a counterclaim
of
249,672.53,
representing
premium
that
Guevarra failed to pay. The RTC rules in favor of
the Guevarra and ordered the petitioner to pay
him the sum he claims. The CA affi rmed the
decision of the PTC.
ISSUE: WON Guevarra acted within his authority as
agent for petitioner?
HELD: No. The Special Power of Attorney entered
into by petitioner and Guevarra would show that
they intended to enter into a principal-agent
relationship. Despite the word special in the
document, the contents reveal that what was
constituted was actually a general agency. The
agency compromises all the business of the
principal but couched in general terms; hence it
is limited only to acts of administration. Thus,
the general agency constituted does not warrant
the payment or settlement of claims as they
specifi cally require a Special Power of Attorney
as provided by Art 1878 of the Civil Code. But as
provided by the Memorandum of Management
Agreement, Guevarra was authorized to pay the
claim but the payment shall come from the
revolving fund or collection in his possession.
Having deviated from the instructions of the
principal, the expenses that Guevarra incurred in
the settlement of the claims of the insured may
not be reimbursed from Dominion in Accordance

with Art 1918 of the Civil Code. Nevertheless,

under Art 1236, to the extent that the obligation
of
the
petitioner
has
been
extinguished,
Guevarra may demand for reimbursement from
his principal.

GR: An indispensable party is one whose interest will be

affected by the courts action in the litigation, and
without whom no final determination of the case can be
had. The joinder of indispensable parties is mandatory
and courts cannot proceed without their presence.

[G.R. No. 115838. July 18, 2002]

EXC: Art. 1915. If two or more persons have

appointed an agent for a common transaction or
undertaking, they shall be solidarily liable to the
agent for all the consequences of the agency.

CONSTANTE AMOR DE CASTRO and CORAZON

AMOR DE CASTRO, petitioners, vs. COURT OF
APPEALS and FRANCISCO ARTIGO, respondents.
The Antecedent Facts
Constante and Corazon (De Castros for brevity) were coowners of four (4) lots (There were 2 other co-owners
but Constante acted as a representative of the coowners). In a letter dated January 24, 1984, Artigo was
authorized by Constante to act as real estate broker in
the sale of these properties, five percent (5%) of which
will be given to the agent as commission. It was Artigo
who first found Times Transit Corporation as prospective
buyer which desired to buy two (2) lots only. Eventually,
sometime in May of 1985, the sale of the 2 lots was
consummated.
Artigo
received
P48,893.76
as
commission.
Artigo apparently felt short changed because according
to him, his total commission should be P352,500.00
which is five percent (5%) of the agreed price of
P7,050,000.00 paid by Times Transit Corporation to the
De Castros for the two (2) lots, and that it was he who
introduced the buyer to them and unceasingly facilitated
the
negotiation
which
ultimately
led
to
the
consummation of the sale. Hence, he sued below to
collect the balance of P303,606.24 after having received
P48,893.76 in advance.
The Court of Appeals ruled in favor of Artigo, affirmed
the decision of the trial court.
Hence, the instant petition.
ISSUE
1.
2.
3.

WON the complaint merits dismissal for failure

to implead other co-owners as indispensable
parties. NO!!!
WON Artigos claim has been extinguished by
full payment, waiver or abandonment. NO!!!
WON the determination of the purchase price
was made in violation of the Rules on Evidence.
NO!!!

HELD
First Issue:
The De Castros argue that Artigos complaint should
have been dismissed for failure to implead all the coowners of the two lots. The De Castros contentions are
devoid of legal basis.

There is no dispute that Constante appointed Artigo in a

handwritten note to sell the properties of the De Castros
at a 5 percent commission. Constante signed the note as
owner and as representative of the other co-owners.
Under this note, a contract of agency was clearly
constituted between Constante and Artigo.
When the law expressly provides for solidarity of the
obligation, as in the liability of co-principals in a contract
of agency, each obligor may be compelled to pay the
entire obligation. The agent may recover the whole
compensation from any one of the co-principals, as in
this case.
Art. 1216. The creditor may proceed against any
one of the solidary debtors or some or all of them
simultaneously. The demand made against one of
them shall not be an obstacle to those which may
subsequently be directed against the others, so
long as the debt has not been fully collected.
Solidarity does not make a solidary obligor
indispensable party in a suit filed by the creditor.

an

Second Issue:
a. Full Payment
The De Castros claim that Artigo was fully paid on June
14, 1985, that is, Artigo was given his proportionate
share and no longer entitled to any balance. According
to them, Artigo was just one of the agents involved in
the sale and entitled to a proportionate share in the
commission. They assert that Artigo did absolutely
nothing during the second negotiation but to sign as a
witness in the deed of sale.
A contract of agency which is not contrary to law, public
order, public policy, morals or good custom is a valid
contract, and constitutes the law between the parties.
The contract of agency entered into by Constante with
Artigo is the law between them and both are bound to
comply with its terms and conditions in good faith.
The mere fact that other agents intervened in the
consummation of the sale and were paid their respective
commissions cannot vary the terms of the contract of
agency granting Artigo a 5 percent commission based on
the selling price. The trial court to observe:
The alleged `second group of agents came into the
picture only during the so-called `second negotiation
and it is amusing to note that these (sic) second group,
prominent among whom are Atty. Del Castillo and Ms.
Prudencio, happened to be employees of Times Transit,

the buyer of the properties. And their efforts were

limited to convincing Constante to part away with the
properties because the redemption period of the
foreclosed properties is around the corner, so to speak.

Appeals, or P3.6 Million as claimed by the De Castros, is

a question of fact and not of law. Inevitably, this calls for
an inquiry into the facts and evidence on record. This
we cannot do.

To accept Constantes version of the story is to open the

floodgates of fraud and deceit. A seller could always
pretend rejection of the offer and wait for some time for
others to renew it who are much willing to accept a
commission far less than the original broker.
The
immorality in the instant case easily presents
itself if one has to consider that the alleged
`second group are the employees of the buyer,
Times Transit and they have not bettered the offer
secured by Mr. Artigo for P7 million.

In petitions for review on certiorari as a mode of appeal

under Rule 45, a petitioner can only raise questions of
law. We find no reason to depart from this principle. The
trial and appellate courts are in a much better position to
evaluate properly the evidence. Hence, we find no other
recourse but to affirm their finding on the actual
purchase price.

b. Waiver
The De Castros also contend that Artigos inaction as
well as failure to protest estops him from recovering
more than what was actually paid him. The De Castros
cite Article 1235 of the Civil Code which reads:
Art. 1235.
When the obligee accepts the
performance, knowing its incompleteness and
irregularity, and without expressing any protest
or objection, the obligation is deemed fully
complied with.
The De Castros reliance on Article 1235 of the Civil Code
is misplaced. Artigos acceptance of partial payment of
his commission neither amounts to a waiver of the
balance nor puts him in estoppel. This is the import of
Article 1235 which was explained in this wise:
The word accept, as used in Article 1235 of the Civil
Code, means to take as satisfactory or sufficient, or
agree to an incomplete or irregular performance. Hence,
the mere receipt of a partial payment is not equivalent
to the required acceptance of performance as would
extinguish the whole obligation.
c. Abandonment
The De Castros further argue that laches should apply
because Artigo did not file his complaint in court until
four years later. Hence, Artigos claim for the balance of
his commission is barred by laches. Actions upon a
written contract, such as a contract of agency, must be
brought within ten years from the time the right of
action accrues.
The Court has ruled, a delay within the prescriptive
period is sanctioned by law and is not considered
to be a delay that would bar relief.
Laches is recourse in equity. Equity, however, is
applied
only
in
the
absence,
never
in
contravention, of statutory law.
Thus, laches,
cannot, as a rule, be used to abate a collection
suit filed within the prescriptive period mandated
by the Civil Code.
Third Issue:
Whether the actual purchase price was P7.05 Million as
found by the trial court and affirmed by the Court of

WHEREFORE, the petition is denied for lack of merit.

The Decision of the Court of Appeals is AFFIRMED in toto.
SO ORDERED.
8. MANILA MEMORIAL PARK CEMETERY, INC. (MMPCI) v.
LINSANGAN
Nature: Petition for Review under Rule 45 of the ROC

FACTS: Florencia Baluyot, an Agency Mgr. of MMPCI

offered to Atty. Pedro Linsangan a lot at the Holy Cross
Memorial Park owned by MMPCI for P95,000. The lot's
former owner was not interested on the lot anymore and
so agreed to sell the lot after he has been reimbursed.
Atty. Linsangan agreed to the offer, gave Baluyot the
reimbursement that would be given to the former owner
and down payment that would be paid to MMCPI, with
Baluyot only handing him handwritten and typewritten
receipts (not O. R.). However, instead of the old contract
with the old owner reformed so that Atty. Linsangan
would become the new owner of the lot, Baluyot offered
a new contract covering the same lot. Atty. Linsangan
protested, but Baluyot assured him that Atty. Linsangan
would still be paying P95,000 instead of the P132,250
price under the new contract. Baluyot even executed a
document confirming the previous arrangement between
her and Atty. Linsangan so that even if the purchase
price under the new contract has increased, Atty.
Linsangan would still be paying the old purchase price.
He signed the new contract with MMPCI and tendered
payment in checks in accordance with the old
agreement between him and Baluyot. It turns out that
MMPCI was not aware of the arrangement, and that
Baluyot was only authorized under her Agency Mgt.
contract to solicit and remit to MMPCI offers to purchase
interment spaces belonging to and sold by MMPCI. So,
even if Atty. Linsangan had cmplied with the agreed
payment, MMPCI cancelled the new contract for nonpayment of arrearages. Atty. Linsangan filed complaint
for Breach of Contract and Damages against Baluyot and
MMPCI. The lower court held that Baluyot was an agent
of MMPCI and the latter was estopped from denying the
agency after having received and encashed the checks
issued by Atty. Linsangan and given it by Baluyot. The
CA affirmed the lower court's decision plus Baluyot's
authority was conferred upon her by habit and custom.
ISSUES:
1. WON the SC could review the findings of fact of CA.
2. WON Baluyot was an agent of MMPCI.
3. WON MMPCI was bound by the contract procured by
Atty. Linsangan and solicited by Baluyot.
4. WON MMPCI was estopped from denying liability to
Atty. Linsangan.
RULING:
1. YES. The findings of fact of CA may be reviewed for
having valid grounds as held by the SC.
2. YES. Baluyot was an agent of MMPCI, having
represented the interest of the latter, and having been

allowed by MMPCI to represent it in her dealings with its

clients/prospective buyers.
3. NO. Baluyot acted in excess of the authority granted
to her by MMPCI. The original agreement between her
and Atty. Linsangan was unknown to MMPCI and thus,
MMPCI was not bound by their agreement. As far as they
were concerned, the contract price was P132,250 and
not P95,000. As for the ratification, there was no
estoppel.
4. NO. There is no indication that MMPCI let the public
nor Atty. Linsangan to believe that Baluyot had the
authority to alter the standard contracts of the company.
Neither is there any showing that prior to signing of the
new contract, MMPCI had any knowledge of Baluyot's
commitment to Atty. Linsangan.
WHEREFORE, the instant petition is GRANTED.
Eurotech Industrial Technologies, Inc. v. Edwin
Cuizon and Erwin Cuizon
G.R. No. 167552 April 23, 2007
FACTS:
Eurotech is engaged in the business of importation and
distribution of various European industrial equipment. It
has as one of its customers Impact Systems Sales which
is a sole proprietorship owned by Erwin Cuizon.
Eurotech sold to Impact Systems various products
allegedly amounting to P91,338.00. Cuizons sought to
buy from Eurotech 1 unit of sludge pump valued at
P250,000.00 with Cuizons making a down payment of
P50,000.00. When the sludge pump arrived from the
United Kingdom, Eurotech refused to deliver the same to
Cuizons without their having fully settled their
indebtedness to Eurotech. Thus, Edwin Cuizon and
Alberto de Jesus, general manager of Eurotech, executed
a Deed of Assignment of receivables in favor of
Eurotech.
Cuizons, despite the existence of the Deed of
Assignment, proceeded to collect from Toledo Power
Company the amount of P365,135.29. Eurotech made
several demands upon Cuizons to pay their obligations.
As a result, Cuizons were able to make partial payments
to Eurotech. Cuizons total obligations stood at
P295,000.00 excluding interests and attorneys fees.
Edwin Cuizon alleged that he is not a real party in
interest in this case. According to him, he was acting as
mere agent of his principal, which was the Impact
Systems, in his transaction with Eurotech and the latter
was very much aware of this fact.
ISSUE:

WON Edwin exceeded his authority when he signed the

Deed of Assignment thereby binding himself personally
to pay the obligations to Eurotech. NO
Rationale:
Edwin insists that he was a mere agent of Impact
Systems which is owned by Erwin and that his status as
such is known even to Eurotech as it is alleged in the
Complaint that he is being sued in his capacity as the
sales manager of the said business venture. Likewise,
Edwin points to the Deed of Assignment which clearly
states that he was acting as a representative of Impact
Systems in said transaction.
Art. 1897. The agent who acts as such is not personally
liable to the party with whom he contracts, unless he
expressly binds himself or exceeds the limits of his
authority without giving such party sufficient notice of
his powers.
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 latters consent. 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. 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.
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.
An agent, who acts as such, is not personally liable to
the party with whom he contracts. There are 2instances
when an agent becomes personally liable to a third
person. The first is when he expressly binds himself to
the obligation and the second is when he exceeds his
authority. In the last instance, the agent can be held
liable if he does not give the third party sufficient notice
of his powers. Edwin does not fall within any of the
exceptions contained in Art. 1897.
In the absence of an agreement to the contrary, a
managing agent may enter into any contracts that he
deems reasonably necessary or requisite for the
protection of the interests of his principal entrusted to
his management.
Edwin Cuizon acted well-within his authority when he
signed the Deed of Assignment. Eurotech refused to
deliver the 1 unit of sludge pump unless it received, in

full, the payment for Impact Systems indebtedness.

Impact Systems desperately needed the sludge pump
for its business since after it paid the amount of
P50,000.00 as downpayment it still persisted in
negotiating with Eurotech which culminated in the
execution of the Deed of Assignment of its receivables
from Toledo Power Company. The significant amount of
time spent on the negotiation for the sale of the sludge
pump underscores Impact Systems perseverance to get
hold of the said equipment. Edwins participation in the
Deed of Assignment was reasonably necessary or was
required in order for him to protect the business of his
principal.
Republic vs Evangelista
Facts:
In Nov. 1999, Calimlimm, Chief of the Intelligence
Service of the Armed Forces of the Philippines (ISAFP)
and the Presidential Security Group(PSG), representing
the Republic of the Philippines, entered into a
Memorandum of Agreement with one Ciriaco Reyes to
hunt for treasure in a land in Bigte, Norzagaray, Bulacan
owned by Dante Legaspi.
Reyes, together with petitioners, started, digging,
tunneling and blasting works on the said land of Legaspi.
Calimlim also allegedly assigned about 80 military
personnel to guard the area and encamp thereon to
intimidate Legaspi and other occupants of the area from
going near the subject land.
On February 15, 2000, Legaspi executed a special power
of attorney (SPA) appointing his nephew, Gutierrez, as
his attorney-in-fact. Gutierrez was given by Legaspi, the
power to manage the treasure hunting activities in the
subject land; to file any case against anyone who enters
the land without authority from Legaspi; to engage the
services of lawyers to carry out the agency; and, to dig
for any treasure within the land and enter into
agreements relative thereto. It was likewise agreed upon
that Gutierrez shall be entitled to 40% of whatever
treasure may be found in the land.
Pursuant to this authority and to protect Legaspis land
from the alleged illegal entry of petitioners, agent
Gutierrez hired the services of Atty. Adaza to prosecute
the case for damages and injunction against petitioners
(case filed at RTC of Quezon City). As payment for legal
services, Gutierrez agreed to assign to Atty. Adaza 30%
of Legaspis share in whatever treasure may be
recovered in the subject land. Gutierrez agreed to pay
Atty. Adaza P5,000.00 as appearance fee per court
hearing and defray all expenses for the cost of the
litigation.
At the RTC:
Upon the filing of the complaint, then Executive Judge
Perlita J. Tria Tirona issued a 72-hour temporary
restraining order (TRO) against petitioners. The case was
subsequently raffled to Judge Evangelista who issued
another 72-hour TRO.

Petitioner-Republic (represented by Calimlim) filed a

Motion to Dismiss contending:
1.
There is no real party-in-interest as the SPA of
Gutierrez to bring the suit was already revoked by
Legaspi, as evidenced by a Deed of Revocation.
2.
Gutierrez failed to establish that the alleged
armed men guarding the area were acting on orders of
petitioners.
Gutierrezs defense: the unilateral revocation is invalid
as his agency is coupled with interest.
Motion to Dismiss and for Inhibition were both denied.
The trial court granted writ of preliminary injunction on
the following grounds:
(1)
the diggings and blastings appear to have been
made on the land of Legaspi, hence, there is an urgent
need to maintain the status quo to prevent serious
damage to Legaspis land; and,
(2) the SPA granted to Gutierrez continues to be valid.
At the the Court of Appeals: decision of RTC affirmed
Issue:
Whether or not the contract of agency between Legaspi
and Gutierrez has been effectively revoked.
Ruling:
Negative.
Generally, the agency may be revoked by the principal
at will. However, an exception to the revocability of a
contract of agency is when it is coupled with interest,
i.e., if a bilateral contract depends upon the agency. The
reason for its irrevocability is because the agency
becomes part of another obligation or agreement. It is
not solely the rights of the principal but also that of the
agent and third persons which are affected. Hence, the
law provides that in such cases, the agency cannot be
revoked at the sole will of the principal.
In the case at bar, the agency granted by Legaspi to
Gutierrez is coupled with interest as a bilateral contract
depends on it.

It is clear that the treasure that may be found in the land

is the subject matter of the agency; that under the SPA,
Gutierrez can enter into contract for the legal services of
Atty. Adaza; and, thus Gutierrez and Atty. Adaza have an
interest in the subject matter of the agency, i.e., in the
treasures that may be found in the land. This bilateral
contract depends on the agency and thus renders it as
one coupled with interest, irrevocable at the sole will of
the principal Legaspi.
When an agency is constituted as a clause in a bilateral
contract, that is, when the agency is inserted in another
agreement, the agency ceases to be revocable at the
pleasure of the principal as the agency shall now follow
the condition of the bilateral agreement. Consequently,
the Deed of Revocation executed by Legaspi has no
effect. The authority of Gutierrez to file and continue
with the prosecution of the case at bar is unaffected.
The Supreme Court also held that Evangelista had
sufficient basis to issue the writ of preliminary injunction
to preserve the rights and interests of private
respondents Legaspi and Gutierrez. There is no
discernible pattern of bias on the rulings of the
respondent judge. Nevertheless, the inhibition of
respondent judge in hearing the case for damages has
become moot and academic in view of the latters death
during the pendency of the case. The main case for
damages shall now be heard and tried before another
judge.
Dispositive portion:
IN VIEW WHEREOF, the impugned Orders of the trial
court in Civil Case No. Q-00-40115, dated March 23 and
April 4, 2000, are AFFIRMED. The presiding judge of the
Regional Trial Court of Quezon City to whom Civil Case
No. Q-00-40115 was assigned is directed to proceed with
dispatch in hearing the main case for damages. No
pronouncement as to costs.