Victorias Milling Co., Inc. vs.

Court of Appeals, 333 SCRA 663, June 19, 2000- Not in the syllabus

An authorization given to another containing the phrase “for and in our behalf” does not necessarily establish
an agency, as ultimately, what is decisive is the intention of the parties, and the use of the words “sold and
endorsed” means that the parties intended a contract of sale, and not an agency. -

It appears plain to us that private respondent CSC was a buyer of the SLDFR form, and not an agent of STM.
Private respondent 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. 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, on this score, no error was committed by the
respondent appellate court when it held that CSC was not STM’s agent and could independently sue
petitioner.

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. On
the part of the principal, there must be an actual intention to appoint or an intention naturally inferrable 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.

Dominion Insurance Corporation vs. Court of Appeals, 376 SCRA 239, G.R. No. 129919 February 6, 2002

A perusal of the Special Power of Attorney16 would show that petitioner (represented by third-party defendant
Austria) and respondent Guevarra intended to enter into a principal-agent relationship. Despite the word
“special” in the title of the document, the contents reveal that what was constituted was actually a general
agency.

The agency comprises all the business of the principal,20 but, couched in general terms, it is limited only to
acts of administration.21

A general power permits the agent to do all acts for which the law does not require a special power.22 Thus,
the acts enumerated in or similar to those enumerated in the Special Power of Attorney do not require a
special power of attorney.
Article 1878, Civil Code, enumerates the instances when a special power of attorney is required. The pertinent
portion that applies to this case provides that:

“Article 1878. Special powers of attorney are necessary in the following cases:

“(1)To make such payments as are not usually considered as acts of administration;

“x x x         x x x         x x x

“(15)Any other act of strict dominion.”

The payment of claims is not an act of administration. The settlement of claims is not included among the acts
enumerated in the Special Power of Attorney, neither is it of a character similar to the acts enumerated
therein. A special power of attorney is required before respondent Guevarra could settle the insurance claims
of the insured.

Viloria vs. Continental Airlines, Inc., 663 SCRA 57, G.R. No. 188288 January 16, 2012- NOT IN THE
SYLLABUS

The distinctions between a sale and an agency are not difficult to discern and this Court, as early as 1970, had
already formulated the guidelines that would aid in differentiating the two (2) contracts. In Commissioner of
Internal Revenue v. Constantino, 31 SCRA 779 (1970), this Court extrapolated that the primordial
differentiating consideration between the two (2) contracts is the transfer of ownership or title over the
property subject of the contract. In an agency, the principal retains ownership and control over the property
and the agent merely acts on the principal’s behalf and under his instructions in furtherance of the objectives
for which the agency was established. On the other hand, the contract is clearly a sale if the parties intended
that the delivery of the property will effect a relinquishment of title, control and ownership in such a way that
the recipient may do with the property as he pleases.

Bordador v. Luz and Deganos G.R. No. 13014, December 15, 1997

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. Petitioners' attempt to foist liability on respondent spouses
through the supposed agency relation with Deganos is groundless and ill-advised. It was grossly and
inexcusably negligent of petitioners to entrust to Deganos, on at least six occasions, 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. 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.

MODULE 2: Obligations of the Agent

Domingo vs. Domingo, 42 SCRA 131, October 29, 1971 - NOT

Failure of agent to make full disclosure makes him guilty of breach of his loyalty to the principal.

An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee,
without revealing the same to bis principal is guilty of a breach of his loyalty to the latter and forfeits his right
to collect the commission that may be due him, even if the principal does not suffer any injury by reason of
such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage
or custom allows it; because the rule is to prevent the possibility of any wrong, not to remedy or repair an
actual damage.

Cervantes vs. Court of Appeals

According to CA, the agents acted without authority in confirming the flights of the petitioner. Under
Art. 1898 of the NCC, the acts of an agent beyond the scope of his authority do not bind the principal
unless the latter ratified the same expressly or impliedly. When third person (petitioner) knew that
agent was acting beyond his power or authority, the principal cannot be held liable for the acts of the
agents or if the said third person is aware of the limits of authority of the agents, he is to blame and not
entitled to recover damages from the agent unless the latter undertook to secure the principal’s
ratification. The admission by Cervantes that he was told by PAL’s legal counsel that he had to submit a
letter requesting for an extension of the validity of subject tickets tantamount to knowledge on his part
that PAL employees had no authority to extend the validity of the said tickets and only PAL’s legal
counsel was authorized to do so

IMPORTANT PROVISION

Article 1883. If an agent acts in his own name, the principal has no right of action against the
persons with whom the agent has contracted; neither have such persons against the principal.

In such case the agent is the one directly bound in favor of the person with whom he has contracted,
as if the transaction were his own, except when the contract involves things belonging to the
principal.

The provisions of this article shall be understood to be without prejudice to the actions between the
principal and agent. (1717)

MODULE 3: Obligations of the Principal

Filipinas Life Assurance Co. v. Pedroso G.R. No. 1594489; February 4, 2008

Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle. By the contract of
agency, a person binds himself to render some service or to do something in representation or on behalf
of another, with the consent or authority of the latter. The general rule is that the principal is
responsible for the acts of its agent done within the scope of its authority, and should bear the damage
caused to third persons. When the agent exceeds his authority, the agent becomes personally liable for
the damage. But even when the agent exceeds his authority, the principal is still solidarily liable together
with the agent if the principal allowed the agent to act as though the agent had full powers. In other
words, the acts of an agent beyond the scope of his authority do not bind the principal, unless the
principal ratifies them, expressly or impliedly. Ratification in agency is the adoption or confirmation by
one person of an act performed on his behalf by another without authority.

-ARTICLE 1911. Even when the agent has exceeded his authority, the
principal is solidarily liable with the agent if the former allowed the latter
to act as though he had full powers. (n)

Module 4- Modes of Extinguishment of Agency

1. CMS Logging, Inc. v. Court of Appeals, G.R. No. 41420, [July 10, 1992], 286 PHIL 484-494- IMPLIED
AGENCY

In the case at bar, CMS appointed DRACOR as its agent for the sale of its logs to Japanese firms. Yet,
during the existence of the contract of agency, DRACOR admitted that CMS sold its logs directly to
several Japanese firms. This act constituted an implied revocation of the contract of agency under
Article 1924 of the Civil Code.

DOCTRINE:

The principal may revoke a contract of agency at will, and such revocation may be express, or implied,
and may be availed of even if the period fixed in the contract of agency as not yet expired. As the
principal has this absolute right to revoke the agency, the agent can not object thereto; neither may he
claim damages arising from such revocation, unless it is shown that such was done in order to evade the
payment of

Since the contract of agency was revoked by CMS when its sold its logs to Japanese firms without the
intervention of DRACOR, the latter is no longer entitled to its commission from the proceeds of such sale
and is not entitled to retain whatever moneys it may have received as its commission for said
transactions. Neither would DRACOR be entitled to collect damages from CMS, since damages are
generally not awarded to the agent for the revocation of the agency, and the case at bar is not one
falling under the exception mentioned, which is to evade the payment of the agent’s
commission.agent’s commission.

2. Republic v. Evangelista, G.R. No. 156015, [August 11, 2005], 504 PHIL 115-125

A contract of agency is generally revocable as it is a personal contract of representation based

on trust and confidence reposed by the principal on his agent.
As the power of the agent to act depends on the will and license of the principal he represents,
the power of the agent CEASES when the will or permission is withdrawn by the principal.
Thus, generally, the agency may be revoked by the principal at will.
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, the agency granted by Legaspi to Gutierrez is coupled with interest as a bilateral contract
depends on it. It is clear from the records that Gutierrez was given by Legaspi, inter alia, 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 Legaspi’s 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.
As payment for legal services, Gutierrez agreed to assign to Atty. Adaza 30% of Legaspi’s share in
whatever treasure may be recovered in the subject land. 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.

3.International Exchange Bank v. Spouses Briones, G.R. No. 205657, [March 29, 2017], 808 PHIL 223-
236

FACTS: spouses Jerome and Quinnie Briones took out a loan of ₱3,789,216.00 from iBank to purchase a
BMW Z4 Roadster. Spouses Briones executed a promissory note with chattel mortgage that required
them to take out an insurance policy on the vehicle.

CARNAPPED.

iBank sent them a letter demanding full payment of the lost vehicle.

2nd Resort: Insurance company- submitted a notice of claim – DENIED DUE TO DELAY IN REPORTING

RULING: The agency relationship between spouses Briones and Ibank was not revoked or terminated

The Spouses Briones' claim for loss cannot be seen as an implied revocation of the agency or their way
of excluding petitioner. They did not disregard or bypass petitioner when they made an insurance claim;
rather, they had no choice but to personally do it because of their agent's negligence. This is not the
implied termination or revocation of an agency provided for under Article 1924 of the Civil Code.

NOT RVOCABLE under 1927. – BILATERAL CONTRACT EXISTED.

In the promissory note with chattel mortgage, the Spouses Briones authorized petitioner to claim,
collect, and apply· the insurance proceeds towards the full satisfaction of their loan if the mortgaged
vehicle were lost or damaged. Clearly, a bilateral contract existed between the parties, making the
agency irrevocable. Petitioner was also aware of the bilateral contract; thus, it included the designation
of an irrevocable agency in the promissory note with chattel mortgage that it prepared for the Spouses
Briones to sign.

4. Sevilla v. Court of Appeals, G.R. Nos. L-41182-3, [April 15, 1988], 243 PHIL 340-354
FACTS:

In the said contract the party of the third party held herself(agent) solidarily liable with the party of the
part for the prompt payment of the monthly rental agreed on. When the branch office was opened, the
same was run by the herein appellant Una O. Sevilla payable to Tourist World Service Inc. by any airline
for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be
withheld by the Tourist World Service, Inc. The Tourist World Service, Inc. appears to have been
informed that Lina Sevilla was connected with a rival firm, the Philippine Travel Bureau, and, since the
branch was anyhow losing, the Tourist World Service considered closing down in its office
In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her principal, Touriat
World Servioe, Inc. As compensation, she received 4% of the proceeds in the concept of commissions. And as
we said, Sevilla herself, based on her letter of November 28,1961, presumed her printipaTs authority as owner
of the business undertaking. We are convinced, considering the circumstances and from the respondent
Court’s recital of facts, that the parties had contemplated a principal-agent relationship, rather than a joint
management or a partnership.

8. Civil Law;  Agency; The agency being one coupled with an interest cannot be revoked at will.

But unlike simple grants of a power of attorney, the agency that we hereby declare to be compatible witJb the
intent of the parties, cannot be revoked at will. The reason is that it is one coupled with an interest, the agency
having been created for the MUTUAL INTEREST of the agent and the principal. It appears that Lina Sevilla
is a bona fide travel agent herself, and as such, she had acquired an interest in the business entrusted to her.
Moreover, she had assumed a personal obligation for the operation thereof, holding herself solidarily liable
for the payment of rentals. She continued the business, using her own name, after Tourist World had stopped
further operations. Her interest, obviously, is not limited to the commissions she earned as a result of her
business transactions. but one that extendB to the very subject matter of the power of management delegated
to her. It is an agency that, as we said, cannot be revoked at the pleasure of the principal. Accordingly, the
revocation complained of should entitle the petitioner, Lina Sevilla, to damages.

We rule, therefore, that for its unwarranted revocation of the contract of agency, the private respondent,
Tourist Worid Service, Inc., should be sentenced to pay damages. Under the CivU Code, moral damages may
be awarded for “breaches of contract where the defendant acted ... in bad faith.”

5. Valenzuela v. Court of Appeals, G.R. No. 83122, [October 19, 1990]

FACTS: Petitioner Arturo P. Valenzuela (Valenzuela for short) is a General Agent of private respondent
Philippine American General Insurance Company, Inc. (Philamgen for short) since 1965.
PHILAMGEN: 1/5 nalang yung commission hindi na 32%

Valenzuela firmly reiterated his objection to the proposals of respondents stating that: "It is with great
reluctance that I have to decline upon request to signify my conformity to your alternative proposal
regarding the payment of the commission due me. However, I have no choice for to do otherwise would
be violative of the Agency Agreement executed between our goodselves.".

RULING:

With the termination of the General Agency Agreement, Valenzuela would no longer be entitled to
commission on the renewal of insurance policies of clients sourced from his agency. Worse, despite the
termination of the agency, Philamgen continued to hold Valenzuela jointly and severally liable with the
insured for unpaid premiums. Under these circumstances, it is clear that Valenzuela had an interest in
the continuation of the agency when it was unceremoniously terminated not only because of the
commissions he should continue to receive from the insurance business he has solicited and procured
but also for the fact that by the very acts of the respondents, he was made liable to Philamgen in the
event the insured fail to pay the premiums due. They are estopped by their own positive averments and
claims for damages. Therefore, the respondents cannot state that the agency relationship between
Valenzuela and Philamgen is not coupled with interest. "There may be cases in which an agent has been
induced to assume a responsibility or incur a liability, in reliance upon the continuance of the authority
under such circumstances that, if the authority be withdrawn, the agent will be exposed to personal loss
or liability"
3. Agency;  The agency ceases to be freely revocable by the sole will of the principal when it has been given
not only for the interest of the principal but for the interest of third persons or for the mutual interest of the
principal and the agent.-

When the principal acts in bad faith and with abuse of right in terminating the agency, he shall be
liable for damages. This is in accordance with the precepts in Human Relations enshrined in our Civil Code
that “every person must in the exercise of his rights and in the performance of his duties act with justice, give
every one his due, and observe honesty and good faith” (Art. 19, Civil Code), and every person who, contrary
to law, wilfully or negligently causes damages to another, shall indemnify the latter for the same (Art. 20, id).
“Any person who wilfully causes loss or injury to another in a manner contrary to morals, good customs and
public policy shall compensate the latter for the damages” (Art. 21, id.).

6. National Sugar Trading v. Philippine National Bank, G.R. No. 151218, [January 28, 2003],

FACTS: NASUTRA/SRA has assigned and practically surrendered its rights in favor of PNB for a
substantial consideration. To reiterate, NASUTRA/SRA executed promissory notes in favor of PNB every
time it availed of the credit; line.

RULING: The relationship between NASUTRA/SRA and PNB when the former constituted the latter as its
attorney-in-fact is not a simple agency. The agency established between the parties is one coupled with
interest, which cannot be revoked or cancelled at will by any of the parties.