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Philpotts vs. Philippine Manufacturing Co. and BerryW.G. Philpotts (Petitioner) , a stockholder in Philippine Manufacturing Company sought to compel respondents to permit plaintiff, a person or by some authorized agent or attorney to inspect and examine the records of the business transacted by said company since January 1, 1918.
Respondent corporation or any of its officials has refused to allow the petitioner himself to examine anything relating to the affairs of the company, and the petitioner prays for an order commanding respondents to place records of all business transactions of the company, during a specific period, at the disposal of the plaintiff or his duly authorized agent or attorney. Petitioner desires to exercise said right through agent or attorney.
Petition is filed originally in the Supreme Court under authority of Section 515 of Code of Civil Procedure, which gives SC concurrent jurisdiction with then Court of First Instance in cases where any corporation or person unlawfully excludes the plaintiff from use and enjoyment and some right he is entitled. ISSUE:
Whether the right which the law concedes to a stockholder to inspect the records can be exercised by a proper agent or attorney of the stockholder as well as by stockholder in person
HELD:
Yes. Right of inspection of records can be exercised by proper agent or attorney of the stockholder as well as by stockholder in person.
The right of inspection / examination into corporate affairs given to a stockholder in section 51 of the Corporation Law which states: “The records of all business transactions of the corporation and the minutes of any meeting shall
be open to the inspection of any director, member, or stockholder of the corporation at reasonable hour” can be exercised either by himself or by any duly authorized representative or attorney in fact, and either with or without the attendance of the stockholder. This is in conformity with the general rule that what a man may do in person he may do through another.
Quiroga v. Parsons
FACTS: Quiroga and Parsons entered into a contract for the exclusive sale of Quiroga beds in the Visayan Islands. They agreed on the following terms: a) Quiroga shall furnish the beds and shall give a 25% discount on the invoiced prices as commission sales and Parsons shall order by the dozen; b) Payment shall be made within 60 days from date of shipment; c) Transportation and shipment expenses shall be borne by Quiroga while freight, insurance, and cost of unloading by Parsons; d) If before an invoice falls due, Quiroga should request payment, payment made shall be prompt payment and a deduction of 2% shall be given; same discount if payment is in cash; e) Notice from Quiroga shall be given at least 15 days before any change in price; f) Parsons binds himself not to sell any other kind of bed; and g) Contract is for an unlimited period.
Parsons violated some of the conditions such as not to sell the beds at higher prices, pay for the advertisement expenses, and to order beds by the dozen. Quiroga alleged that Parsons was his agent and that the obligations are implied in a commercial agency contract.
ISSUE: w/n Parsons, by reason of the contract, was a purchaser or an agent of Quiroga for the sale of the latter’s beds.
HELD: NO, Parsons was not an agent.
In order to classify a contract, due regard must be given to the essential clauses. In this case, there was an obligation on Quiroga’s part to supply beds while an obligations on Parson’s part to pay the price. These are essential features of a contract of purchase and sale. None of the clauses conveys the idea of an agency where an agent received the thing to sell it and
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does not pay the price but delivers to the principal the price he obtains from the sale to a third person, and if he does not sell it, he returns it.The word ‘agency’ used in the contract only expresses that Parsons was the only one who could sell the petitioner’s beds in the Visayan Islands. A contract is what the law defines it to be and not what the parties call it.
Shell Co. v. Firemen’s Insurance Facts:
This is an action for recovery of sum of money, based on alleged negligence of the defendants
A car was brought to a Shell gasoline station owned by dela Fuente for washing and greasing. The car was placed on a hydraulic lifter for greasing. As some parts of the car couldn’t be reached by the greaseman, the lifter was lowered. Unfortunately, for unknown reasons (probably due to mechanical failure or human error), while the lifter was being lowered, the car swung and fell from the platform.
Said car was insured against loss or damage by Firemen's Insurance Company of Newark, New Jersey, and Commercial Casualty Insurance Company jointly for the sum of P10,000
The insurance companies after paying the sum of P1,651.38 for the damage and charging the balance of P100.00 to Salvador Sison in accordance with the terms of the insurance contract, have filed this action together with said Salvador Sison for the recovery of the total amount of the damage from the defendants on the ground of negligence
Issue: WON dela Fuente is merely an agent of Shell Co. Held: Yes
D:
De la Fuente was the operator of the station "by grace" of the Defendant Company which could and did remove him as it pleased; that all the equipments needed to operate the station was owned by the Defendant Company which took charge of their proper care and maintenance, despite the fact that they were loaned to him; that the Defendant company did not leave the fixing of price for gasoline to De la Fuente;
That the service station belonged to the company and bore its tradename and the operator sold only the products of the company; that the equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of their repair and maintenance
As the act of the agent or his employees acting within the scope of his authority is the act of the principal, the breach of the undertaking by the agent is one for which the principal is answerable
The latter was negligent and the company must answer for the negligent act of its mechanic which was the cause of the fall of the car from the hydraulic lifter.
Dela Cruz v Northern Theatrical Enterprises, Inc., et al
Northern Theatrical Enterprises Inc. operated a movie house in Laoag, Ilocos Norte. Domingo Dela Cruz was one of their security guards. He carried a revolver. One day, a Benjamin Martin wanted to enter without a ticket but dela Cruz refused him entrance. Infuriated, Martin attacked him with a bolo and in order to save his life, dela Cruz shot and killed Martin. Martin, thereafter, was charged with homicide which, after re-investigation, was dismissed. A few years later, dela Cruz again figured in a homicide case related to his work as security guard for the theater. He was acquitted for the second charge. In both instances, dela Cruz employed a lawyer. He thereafter demanded reimbursement for his litigation expenses but was refused by the theater. After which, he filed an action for reimbursement plus damages.
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Northern Theater moved for the dismissal of the complaint. The Court found for Northern Theater and dismissed the complaint saying that dela Cruz had no cause of action. Dela Cruz filed present appeal (for the reason that only questions of law are involved).Held: Judgment affirmed. Agency Doctrine
CFI was correct in rejecting the theory of dela Cruz that he was an agent of the defendants and that as such agent he was entitled to reimbursement for the expenses incurred by him in connection with the agency. The relationship between the theater and the plaintiff was not that of principal and agent because the principle of representation was not involved. He was not employed to represent defendant corporation in its dealings with third parties. He was merely an employee hired to guard the cinema.
Issue is primarily one of employer – employee. Whether an employee who in line with the performance of his duty incur expenses caused not directly by his employer or fellow employees but by a third party or stranger, may recover against his employer. In this case, there’s no legal obligation on the part of the employer, it might yet be regarded as a moral obligation. Since employer not legally obligated to give legal assistance, plaintiff naturally cannot recover the amount from defendant.
SC also says that the damage incurred did not flow from the performance of his duties but only indirectly. Filing of the criminal charges was the efficient, intervening cause. As such, plaintiff cannot fix civil responsibility to the defendant.
GUARDEX ENTERPRISES V. NLRC Facts:
A claim for alleged unpaid commissions of an agent is what is basically involved in the action at bar.
The two parties in this case are: Marcelina A. Escandor (engaged in the manufacture and sale of fire-fighting equipment and the building or fabrication
of fire trucks under Guardex Enterprises) and Jumbee Orbeta (a “freelance” salesman).
It appears that Orbeta somehow learned that Escandor had offered to fabricate a fire truck for Rubberworld (Phil) Inc. He wrote to Escandor inquiring about the amount of commission for the sale of a fire truck. Escandor wrote back on the same day to advise that it was P15,000 per unit. Four days later, Orbeta offered to “follow up” Escandor’s pending proposal to sell a fire truck to Rubberworld, and asked for P250 as representation expenses. Escandor agreed and gave him the money. When no word was received by Escandor from Orbeta after 3 days, she herself inquired in writing from Rubberworld about her offer of sale of a fire truck. After 7 months, Escandor finally concluded a contract with Rubberworld for the latter’s purchase of a fire truck. At this point, Orbeta suddenly reappeared and asked for his commission for the sale of the fire truck to Rubberworld. Escandor refused, saying that he had nothing to do with the offer, negotiation and consummation of the sale. Issue:
Whether or not Orbeta (acting as an agent) is entitled to commission as regards the sale of a fire truck to Rubberworld?
Held:
No. He is not entitled to any commission. Ratio:
Even finding that under these circumstances, an agency had indeed been constituted will not save the day for Orbeta, because nothing in the record tends to prove that he succeeded in carrying out its terms or ever as much as attempted to do so. The evidence in fact clearly indicates otherwise. The terms of Escandor’s letter – assuming that it was indeed an “authority to sell,” as Orbeta insists – are to the effect that entitlement to the P15,000 commission is contingent on the purchase by a customer of a fire truck, the implicit condition being that the agent would earn the commission if he was instrumental in bringing the sale about. Orbeta certainly had nothing to do with the sale of the fire truck, and is not therefore entitled to any commission at all.
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Furthermore, even if Orbeta is considered to have been Escandor’s agent for the time he was supposed to “follow up” the offer to sell, such agency would have been deemed revoked upon the resumption of direct negotiations between Escandor and Rubberworld, Orbeta having in the meantime abandoned all efforts (if indeed any were exerted) to secure the deal in Escandor’s behalf.BORDADOR vs. LUZ
FACTS: Petitioners Bordador spouses were engaged in the business of purchase and sale of jewelry, while respondent Brigida Luz was their regular customer. Respondent Narciso Deganos, Luz's brother, received several pieces of jewelry from the Bordadors amounting to P382,816.00, which items were indicated in 17 receipts covering the same--11 of the receipts stated that they were received by Deganos for a certain Evelyn Aquino, while the remaining 6 indicated that they were received by Deganos for Luz. Deganos was supposed to sell the items at a profit and remit the proceeds and return the unsold items to the Bordadors. Deganos remitted only P53,207.00. He neither paid the balance of the sales proceeds, nor did he return any unsold item to the Bordadors, which led them to file an action for recovery of a sum of money and damages against Deganos and Luz with the RTC. The Bordadors claimed that Deganos acted as the agent of Luz when he received the items of jewelry, and because he failed to pay for the same, Luz, as principal, became solidarily liable with him. Deganos asserted that it was he alone who was involved in the transaction with the Bordadors; that he neither acted as agent for nor was he authorized to act as an agent by Luz, notwithstanding the fact that 6 of the receipts indicated that the items were received by him for Luz. He added that he never delivered any of the items to Luz. Luz corroborated the claims of Deganos. The RTC found that only Deganos was liable to the Bordados. It further found that it was petitioner Lydia Bordador who indicated in the receipts that the items were received by Deganos for Evelyn Aquino and for Luz. It said that it 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 Luz with the subject receipts or authorizing Deganos to act on her behalf, the alleged agreement between the Bordadors and Luz was unenforceable. The Bordadors elevated the case to the CA which affirmed said judgment, hence the instant petition.
ISSUE: Whether Luz is liable to the Bordadors for the latter's claim for money and damages despite the fact that Luz did not sign any of the subject receipts or authorized Deganos to receive the items of jewelry on her behalf
HELD: No, Luz is not liable to the Bordadors.
RATIO: THE BASIS FOR AGENCY IS REPRESENTATION. The basis for agency is representation. Here, there is no showing that Luz consented to the acts of Deganos or authorized him to act on her behalf, much less with respect to the particular transactions involved. The Bordadors' attempt to foist liability on Luz through the supposed agency relation with Deganos is groundless and ill-advised. A PERSON DEALING WITH AN AGENT IS PUT UPON INQUIRY AND MUST DISCOVER UPON HIS PERIL THE AUTHORITY OF THE AGENT. Besides, it was grossly and inexcusably negligent of the Bordadors to entrust to Deganos, not once or twice but on at least 6 occasions as evidenced by 6 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.
HAHN VS. CA and BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT (BMW)
266 SCRA 537 Facts
Alfred Hahn is a Filipino citizen doing business under the name and style of “Hahn-Manila.” BMW is a non resident foreign corporation existing under the laws of Germany.
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In March of 1967 Hahn executed in favor of BMW a Deed of Assignment. In February of 1993, Hahn was informed that his exclusive dealership was in danger of being terminated due to deteriorating services and sales. Hahn claimed that the termination of his exclusive dealership would be a breach of the deed of assignment. He then filed for a complaint of specific performance and damages against BMW to compel it to continue with the exclusive dealership.BMW on the other hand filed for a motion to dismiss, contending that the court did not acquire jurisdiction over it because it was a foreign corporation and was not doing business in the Philippines. It further claimed that the execution of the Deed of Assignment was an isolated transaction and that Hahn was not its agent and was merely a middleman transacting business for his own name and for his own account.
Issue
Whether respondent company was doing business in the Philippines? Whether Alfred Hahn was an agent of BMW?
Decision
Yes. Alfred Hahn was an agent of BMW and consequently, respondent company was doing business in the Philippines.
Ratio
The phrase "doing business" includes "appointing representatives or distributors in the Philippines". (Foreign Investments Act of 1991)
The question is whether petitioner Alfred Hahn is the agent or distributor in the Philippines of private respondent BMW. If he is, BMW may be considered doing business in the Philippines and the trial court acquired jurisdiction over it by virtue of the service of summons on the Department of Trade and Industry.
Hahn claimed he took orders for BMW cars and transmitted them to BMW. Upon receipt of the orders, BMW fixed the down payment and pricing charges, notified Hahn of the scheduled production month for the orders, and reconfirmed the orders by signing and returning to Hahn the acceptance sheets. Payment was made by the buyer directly to BMW. Title to cars purchased passed directly to the buyer and Hahn never paid for the purchase price of BMW cars sold in the Philippines. Hahn was credited with a commission equal to 14% of the purchase price upon the invoicing of a vehicle order by BMW. Upon confirmation in writing that the vehicles had been registered in the Philippines and serviced by him, Hahn received an additional 3% of the full purchase price. Hahn performed after-sale services, including, warranty services, for which he received reimbursement from BMW. All orders were on invoices and forms of BMW.
This arrangement shows an agency. An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made.
DE LA PENA V. HIDALGO FACTS:
1887-1893 (1st period) 1893-1902 (2nd period) 1902-1904 (3rd period)
FEDERICO ANTONIO FRANCISCO
Before DE LA PENA went to Spain, he executed a power of attorney in favor of FEDERICO and 3 other people. Their task is to represent him and administer various properties he owned in Manila. FEDERICO took charge in Nov. 1887. After a few years, FEDERICO wrote a letter to DE LA PENA. It contains a request that DE LA PENA assign a person who might substitute FEDERICO in the event that he leaves the Philippines because one of the agents died and the other 2 are unwilling to take charge. DE LA PENA did not answer the letter –
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there was neither approval nor objection on the accounts and no appointment of another person who might substitute FEDERICO. Because of health reasons, FEDERICO went to Spain. Before he departed, he sent another letter to DE LA PENA a summary of accounts and informing that he will be leaving the Philippines and that he turned over the administration to ANTONIO (though FEDERICO stated that if DE LA PENA is not happy with this, DE LA PENA must send ANTONIO a new power of attorney).DE LA PENA files in court for the collection of revenue from his accounts which was handled by FEDERICO. DE LA PENA alleges that FEDERICO has only remitted 1.2k and still owes him roughly 72k. Furthermore, DE LA PENA seeks to hold FEDERICO liable for the administration from the period of 1887 until 1904. FEDERICO asserts that he cannot be liable for the period after he renounced his agency. Furthermore FEDERICO argues that his renunciation and appointment of a substitute was legal for there was no objection on the part of DE LA PENA.
ISSUE:
Whether there was a valid agency in the case of ANTONIO (2nd period) HELD:
There was an implied agency in the case of ANTONIO. DE LA PENA created an implied agency in favor of ANTONIO because of his silence on the matter for a number of years.
There was a valid renunciation in the case of FEDERICO. His reason for leaving the country is legitimate. Furthermore, he gave notice to DE LA PENA about his situation in which the latter failed to give his objection.
Being a valid agency on the part of ANTONIO and a valid renunciation on the party of FEDERICO, it must follow that the liability of FEDERICO only extends up to the point before his renunciation of the agency (1st period).
DOCTRINE:
The implied agency is founded on the lack of contradiction or opposition, which constitutes simultaneous agreement on the part of the presumed principal to the execution of the contract.
The agent and administrator who was obliged to leave his charge for a legitimate cause and who duly informed his principal, is thenceforward released and freed from the results and consequences of the management of the person who substituted him with the consent, even tacit though it be, of his principal.
SIDE NOTE ON POWER OF ATTORNEY:
It was also argued by DE LA PENA that there was no authority on the part of FEDERICO to appoint a substitute. The COURT ruled that the power of attorney given by DE LA PENA to FEDERICO did not include a power to appoint a substitute. Nevertheless, it was pointed out that the appointment made by FEDERICO was not based on the power of attorney of DE LA PENA. The appointment was grounded on a new power of attorney FEDERICO himself executed in favor of ANTONIO. Thus, there was no violation incurred by FEDERICO. And as stated in the case, DE LA PENA was duly informed of this but nevertheless kept his silence on the matter.
CONDE v. RIVERA ( December 15, 1982)
FACTS: 7 April 1938, Dominga Conde, together with her siblings, sold a parcel of land located in Burauen Leyte, to Casimira Pasagui married to Pio Altera (ALTERAS) with a right of repurchase, within 10 years from said date. The “Pacto de retro sale” provided that if the end of 10 years the said land is not repurchased, a new agreement shall be made between the parties and in no case title and ownership shall be vested in the hand of the ALTERAS. On a later date, Paciente Cordero, son-in-law, of the ALTERAS signed a document. In substance, the said document provides that the original document was lost in spite of diligent efforts to locate the same; that the representative of the CONDES, Eusebio Amarille, repurchased the subject lot; that Alteras and Pio Cordero received the payment for the repurchase; and that if Dominga et. al., will be disturbed by other persons, Altera and Pio will defend in behalf of
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Dominga el. Al., because the same was already repurchased by them. To be noted is the fact that the Alteras did not sign the deed and only Pio was the signatory to the deed. On a relevant date, Pio Altera sold the disputed lo to the spouses Ramon Conde and Catalina Conde (their relationship to petitioner was not established). After 24 years, Dominga Conde filed with the CFI of Leyte a civil case for quieting of title against the ALTERAS and the spouses CONDE. Dominga contended that Pio signed the Memorandum in representation of the Pio Aletra, who was very ill on that occasion. Alteras, on the other hand, contended that Pio was not their agent and Pio signed because he has no objection to the repurchase.. The CFI dismissed the complaint which was affirmed by the CA. Hence, this petition.ISSUE: Whether Pio Cordero, in signing the memorandum, acted in representation of the ALTERAS.
HELD: YES! There was an impled agency. The Alteras did not repudiate the deed that Pio Cordero had signed. If, as alleged, Dominga never exerted any effort to procure the signature of Pio Altera after he had recovered from his illness, neither did the Alteras repudiate the deed that Pio executed. Thus, an implied agency must be held to have been created from their silence or lack of action, or their failure to repudiate the agency. Alteras must be held bound by the clear terms of the Memorandum of Repurchase. If the contract is plain and unequivocal in its terms he is ordinarily bound thereby.
(The court also held that the ALTERAS were guilty of laches. They, for 24 years, slept on their right to institute an action for quieting of title against petitioner. Furthermore, the court also ruled that the spouses Conde were not purchasers in good faith. They bought the disputed property despite the notice of the condition in the title that the property was subject to repurchase.)
PNB VS. CA FACTS
The Solomon spouses were the registered owners of a lot located in Davao.
In 1932, the Solomon spouses mortgaged the land in favor of Philippine National Bank to secure a loan of P500.00. For failure to pay the loan, the mortgage was foreclosed, the property was sold at public auction, and a Certificate of Sale was executed in favor of the Bank.
The next day, after the execution of the Certificate of Sale, the Solomon spouses and the Bank, represented by its manager, Cortes, created a "Promesa de Venta" whereby the Bank bound itself to sell to the Solomon spouses for P802.26 payable in eight equal annual amortizations. Possession of the property was likewise turned over to said spouses upon the execution of the contract. Further, it was stipulated that if the Solomon spouses should fail to pay any of the amortizations, the contract shall be automatically rescinded and the Bank shall be free to take possession of the land and sell it to a third person.
Solomon spouses defaulted on the seventh and eighth amortizations. Eventually, both spouses died. Perez as sole heir of the deceased spouses, succeeded into the possession of the land in question.
7 years after default, Perez offered to pay the last two amortizations plus interest, with the request that a Deed of Sale be executed in his favour but was rejected by the bank manager, Lagdameo, on the ground that the "Promesa de Venta" was executed by the Bank in favor of the Solomon spouses. Upon suggestion of Lagdameo, Perez filed an action in Court for a declaration of heirship. Consequently, Perez was judicially declared heir.
Acting on Perez’ notification of such court order, bank manager, Maceda, informed Perez that as soon as he pays the account due of P535.45, they shall cause the release of the mortgage. He also conveyed the comment of the head office as regards his "offer to purchase" which they found too low compared to the market value of the property; therefore he was asked to increase the price. Perez then made several offers to the bank, the last price amounting to P8000.00. However, all these offers were turned down by the Bank.
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De Castro spouses offered to buy the property for P13,500.00. Failing to match the offer, Perez lost the land to the De Castro spouses and the Bank issued a new TCT under their name.Perez filed a complaint, praying among other things, that the Bank be ordered to accept from Perez payment of the outstanding balance and to deliver the property to him.
The court dismissed Perez' complaint. Perez appealed to the Court of Appeals which reversed the trial court's decision. Perez was allowed to redeem or purchase the said property, upon payment of the last two installments and with interest. The Bank and De Castro spouses moved for reconsideration but were denied. Hence, the petitions for review.
ISSUE:
1. Whether the CA erred in holding petitioners in estoppel HELD:
No. Firstly the clear intention of the Bank was to allow the Solomon spouses to reacquire ownership of the property. Thus, the "Promesa de Venta" was primarily created to favor the Solomon spouses giving them 8 years to reacquire their land. During those years, the spouses were allowed to remain in possession of the property. Secondly, the Bank did not register the same until 24 years later nor did it disturb Perez's possession of the property. Thirdly, when Perez offered to pay the balance with the request that a Deed of Sale be executed in his favor, his offer was rejected by Lagdameo not because the "Promesa de Venta " had been automatically rescinded and right to redeem was lost, but on the ground that it was in favor of the Solomon spouses. Maceda, on the other hand, issued a statement of account on the loan and informed Perez that "as soon as (he) could cause full payment of the above account, (they) shall cause the release of the mortgage." Relying on this commitment, Perez made several offers as to the amount but Maceda still asked for an increase in the "price." In other words, Perez was led to believe that he would be allowed to redeem the property.
The "Promesa de Venta" was not essentially a contract to sell real estate on installments but was more of a contract of redemption. Perez justifiably and reasonably relied upon the assurance of the bank managers that he would be allowed to pay the remaining obligation of his deceased parent. The automatic rescission clause contained in it should not be controlling because based on the facts, the bank itself did not strictly adhering to it.
The Bank's argument that it is not bound by the acts of its managers, is not well taken for well settled is the rule that if a private corporation intentionally or negligently clothes its officers or agents with apparent power to perform acts for it, the corporation will be estopped to deny that such apparent authority is real as to innocent third persons dealing in good faith with such officers or agents.
Rallos v Yangco
Facts: Through a letter, Yangco invited Rallos in a consignment arrangement for the business of buying and selling of leaf tobacco and other native products, terms and conditions of which were also included in the letter. In the same letter, Yangco introduced to Rallos the former's agent, Collantes, upon whom Yangco conferred a public power of attorney to perform on Yangco's behalf, all acts necessary for carrying out the business. Rallos accepted the invitation and transacted with Yangco through Collantes; last transaction being the supply of tobacco, the cost of which that belonged to Rallos was misappropriated by Collantes. Apparently, prior to the last delivery of tobacco, Yangco had already terminated his agency relation with Collantes, unknown to Rallos. ISSUE: W/N Rallos, in good faith and without knowledge of the termination of the agency agreement, can recover from Yangco the amount misappropriated by Collantes.
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that Collantes was his (Yangco's) agent and having given him invitation to deal with such agent, it was then the duty of Yangco to give due and timely notice to Rallos regarding the termination of the agency. Failing to do so, Yangco will be held liable to third parties acting in good faith and properly relying upon such agency.Macke v Camps Facts:
The plaintiffs in this action, B. H. Macke and W. H. Chandler, partners doing business under the firm name of Macke, Chandler & Company, allege that during the months of February and March, 1905, they sold to the defendant and delivered at his place of business, known as the "Washington Cafe," various bills of goods amounting to P351.50; that the defendant has only paid on account of said accounts the sum of P174.
Before instituting this action they made demand for the payment thereof; and that defendant had failed and refused to pay the said balance.
B. H. Macke, one of the plaintiffs, testified that on the order of one Ricardo Flores, who represented himself to be agent of the defendant, he shipped the said goods to the defendants at the Washington Cafe; that Flores later acknowledged the receipt of said goods and made various payments.
Flores informed him that he did not have the necessary funds on hand, and that he would have to wait the return of his principal.
Flores, in the absence of the defendant in the provinces, apparently in charge of the business and claiming to be the business manager of the defendant, said business being that of a hotel with a bar and restaurant.
A written contract dated May 25, 1904, was introduced in evidence, from which it appears that one Galmes, the former owner of the business now know as the "Washington Cafe," subrented the building wherein the business was conducted, to the defendant for a period of one year, for the purpose of
carrying on that business, the defendant obligating himself not to sublet or subrent the building or the business without the consent of the said Galmes. This contract was signed by the defendant and the name of Ricardo Flores appears thereon as a witness, and attached thereto is an inventory of the furniture and fittings which also is signed by the defendant with the word "sublessee" (subarrendatario) below the name, and at the foot of this inventory the word "received" (recibo) followed by the name "Ricardo Flores," with the words "managing agent"
Issue:
W/n Flores was an agent of Washington Café. Held:
Flores is an agent of Washington Café Ratio:
In the absence of proof of the contrary we think that this evidence is sufficient to sustain a finding that Flores was the agent of the defendant in the management of the bar of the Washington Cafe with authority to bind the defendant, his principal, for the payment of the goods mentioned in the complaint.
The contract introduced in evidence sufficiently establishes the fact that the defendant was the owner of business and of the bar, and the title of "managing agent" attached to the signature of Flores which appears on that contract, together with the fact that, at the time the purchases in question were made, Flores was apparently in charge of the business, performing the duties usually entrusted to managing agent, leave little room for doubt that he was there as authorized agent of the defendant. One who clothes another apparent authority as his agent, and holds him out to the public as such, can not be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith and in the following preassumptions or deductions, which the law expressly
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directs to be made from particular facts, are deemed conclusive and unless the contrary appears, the authority of an agent must be presumed to include all the necessary and usual means of carrying his agency into effect.
Jimenez vs Rabot
Facts: Gregorio was in need of money to pay off his debts. He instructed his sister, through a letter, to sell one of his two parcels of land so as to come up with cash. Nicolasa, following her brother's request, sold one of his parcels of land to Rabot for 500 pesos. There was proof of payment between Rabot and Nicolasa but there was no proof of the payment ever reaching Gregorio. When Gregorio asked for the parcel of land, Nicolasa refused. Gregorio now sues for the land and learns later on that ownership was already with Rabot. Issue: Whether or not the conveyance between Nicolasa and Pedro Rabot was a valid.
Held: It was valid. Judgement of CA is reversed. Ratio:
The purpose in giving a power of attorney is to substitute the mind and hand of the agent for the mind and hand of the principal; and if the character and extent of the power is so far defined as to leave no doubt as to the limits within which the agent is authorized to act, and he acts within those limits, the principal cannot question the validity of his act. It is not necessary that the particular act to be accomplished should be predestinated by the language of the power. The question to be answered always, after the power has been exercised, is rather this: Was the act which the agent performed within the scope of his authority? In the case before us, if the question is asked whether the act performed by Nicolasa Jimenez was within the scope of the authority which had been conferred upon her, the answer must be obviously in the affirmative.
When the owner, or his agent, comes to make a contract to sell, or a conveyance to effect a transfer, there must be a description of the property which is the subject of the sale or conveyance. This is necessary of course to define the object of the contract
The general rule here applicable is that the description must be sufficiently definite to identify the land either from the recitals of the contract or deed or from external facts referred to in the document, thereby enabling one to determine the identity of the land and if the description is uncertain on its face or is shown to be applicable with equal plausibility to more than one tract, it is insufficient. The principle embodied in these decisions is not, in our opinion, applicable to the present case, which relates to the sufficiency of the authorization, not to the sufficiency of the contract or conveyance. It is unquestionable that the deed which Nicolasa executed contains a proper description of the property which she purported to convey
There is ample authority to the effect that a person may by a general power of attorney an agent to sell "all" the land possessed by the principal, or all that he possesses in a particular city, county, or state.
In the present case the agent was given the power to sell either of the parcels of land belonging to the plaintiff. We can see no reason why the performance of an act within the scope of this authority should not bind the plaintiff to the same extent as if he had given the agent authority to sell "any or all" and she had conveyed only one.
COSMIC LUMBER vs. COURT OF APPEALS (CA)
Petition for review on certiorari of Court of Appeals decision (CA decision: dismissed the case, against Cosmic Lumber)
FACTS:
- Cosmic Lumber Corporation executed a SPA to Villamil-Estrada as attorney in fact, to wit: (1) to initiate, institute and file an ejectment
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case against squatters/third persons on the Lot 9127 and 443, in order for the company to take material possession of the entire lot and (2) to appear at the pre-trial conference and enter into any stipulation of facts and/or compromise agreement so far as to protect the rights and interest of the corporation.- Villamil-Estrada instituted an action for ejectment of private respondent Perez
- Villamil-Estrada entered into a Compromise Agreement which contained:
Perez has been an occupant of a part of the lot for several years
Pays Php 26,640 at Php.80/sqm
Recognizes ownership and possession of Perez over said lot - Compromise Agreement was approved by trial court which became
final without execution within the 5 yr period due to failure of petitioner to produce the owner’s duplicate copy. To wit, Perez filed a complaint to retrieve the judgment
- Cosmic Lumber asserts it did not know about the compromise agreement until summons for the revival of judgment was served. - Cosmic Lumber sought annulment of the decision of the trial court to
CA on the grounds of (1) Villamil-Estrada did not have authority, (2) Villamil-Estrada’s authority was only to file an ejectment case, (3) Villamil-Estrada’s authority was limited, (4) the consideration was never received by Cosmic Lumber, (5) Villamil-Estrada acted in bad faith and (6) disposal of corporate property indispensably requires a Board Resolution.
HELD:
petition granted; CA decision is nullified; Compromise agreement is void; without prejudice to the right of Cosmic Lumber to pursue a complaint against Perez for the recovery of the lot
RATIO:
- SPA was explicit and exclusionary, compromise agreement was coupled with an explicit limitation fixed by Cosmic Lumber that it should only be entered “so far as it shall protect the rights and interest of the corporation in the aforementioned lots”.
- Price of Php.80/sqm is considerably less than its assessed value of Php.250/sqm and that Cosmic Lumber never received the proceeds of the sale.
- Art. 1874 of Civil Code: when a sale of a piece of land or any interest thereon is through an agent, the authority of the latter should be in writing; otherwise the sale is void.
- The express mandate of the law requires of an appointed of an agency couched in general terms, must include an express mention of a sale as a necessary ingredient. The express powers must be clear and unmistakable. When there is reasonable doubt, no such construction shall be given in the document.
- Villamil-Estrada acted without or in obvious disregard of authority. - Sale is ipso jure void and the judgment based thereon is also void. - Cosmic Lumber is not in the position to question the compromise
agreement in the action to revive the compromise agreement, since it was never PRIVY to such agreement.
- Trial court had no jurisdiction to render judgment.
- Villamil-Estrada’s acts constituted extrinsic fraud (any fraudulent act of the prevailing party in a litigation which is committed outside of the trial of the case, whereby the defeated party is prevented from exhibiting fully his side of the case by deception practiced on him by his opponent)
- Villamil-Estrada deliberately concealed from her principal (Cosmic Lumber) that a compromise agreement had been forged with the end result of selling a portion of the property.
- General Rule: principal is chargeable with and bound by the knowledge or notice to his agent (purpose: to protect those who exercise it in good faith)
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- Exception: conduct and dealings of agent are such as to raise a clearpresumption that he will not communicate the facts in controversy (reason: when agent is committing fraud, it is contrary to common sense to expect the agent to communicate the facts to the principal) - Villamil-Estrada’s acts were not for the principal, rather he was acting
for his own benefit.
- The basic tenets of an agency rest on justice, equity and fair play. Agent is not permitted to pervert his authority to do such acts contrary to the interests of the principal.
RAET v. CA Facts
In 1984 Spouses Raet and Spouses Mitra negotiated with Amparu Gatus concerning the possibility of buying his rights to certain units at the Las Villas de Sto. Niño Subdivision, Bulacan, which was developed by Phil-Ville Development and Housing Corporation (PVDHC) primarily for parties qualified to obtain loans from the Government Service Insurance System (GSIS). They paid Gatus P40,000 (Raet) and 35,000 (Mitra), and which Gatus issued receipts in her own name. In 1985, the spouses applied directly with PVDHC, with the condition that their application would be processed upon the approval of the GSIS Loans using policy names of Casidsid (for Raet) and Lim (for Mitra), since the spouses are not GSIS members. They paid P32,653 (Raet) and P27,000 (Mitra) to PVDHC, which would be credited to purchase units upon the loan’s approval. In the meantime, PVDHC had allowed them to occupy certain units. However, the GSIS loans were disapproved, therefore PVDHC told them to seek other sources of financing, while allowing them to stay in the units. Elvira Raet filed an estafa case against Gatus, where the RTC acquitted her. Later in an ejectment case by the PVDHC, the spouses were ordered to surrender possession of the units. Therefore the spouses filed a complaint for specific performances and damages against Gatus and PVDHC. The Housing and Land Use Arbiter ruled in favor of spouses, which the Board of Commissioners of Housing and Land Use Regulatory Board (HLURB) reversed.
Yet, the Office of the President sustained the HLU Arbiter, and the CA dismissed it.
Issue: Whether Gatus was acting as an agent of PVDHC. Held:
NO! Ratio
Gatus was not the agent of private respondent PVDHC. Indeed, the criminal case for estafa against her was dismissed because it was found that she never represented herself to be an agent of private respondent PVDHC. Moreover, Art. 1874 of the Civil Code requires for the validity of a sale involving land that the agent should have an authorization in writing, which Gatus did not possess. Petitioners knew from the beginning that Gatus was negotiating with them in her own behalf, and not as an agent of private respondent PVDHC. There is, therefore, no basis in fact for the finding of the Housing and Land Use Arbiter that Gatus was the agent of private respondent PVDHC with respect to the transactions in question.
Aguna v Larena
Facts
This action is brought to recover the sum of P29,600 on two cause against the administrator. The plaintiff claims the sum of P9,600, the alleged value of the services rendered by him to said deceased as his agent in charge of the deceased's houses situated in Manila.
From the evidence it appears undisputed that from February, 1922, to February, 1930, the plaintiff rendered services to the deceased, consisting in the collection of the rents due from the tenants occupying the deceased's houses in Manila and attending to the repair of said houses when necessary.
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The evidence also shows that during the time the plaintiff rendered his services, he did not receive any compensation. It is, however, a fact admitted that during said period the plaintiff occupied a house belonging to the deceased without paying any rent at all.
Issue
W/n Agency is for compensation. Held
The service rendered by the agent was deemed to be gratuitous Ratio
The plaintiff-appellant insists that, the services having been rendered, an obligation to compensate them must necessarily arise. The trial court held that the compensation for the services of the plaintiff was the gratuitous use and occupation of some of the houses of the deceased by the plaintiff and his family. This conclusion is correct. if it were true that the plaintiff and the deceased had an understanding to the effect that the plaintiff was to receive compensation aside from the use and occupation of the houses of the deceased, it cannot be explained how the plaintiff could have rendered services as he did for eight years without receiving and claiming any compensation from the deceased.
Insular Drug Company VS National Bank Facts:
U.E. Foerster was formerly a salesman of the drug company for the island of Panay and Negros. He also acted as a collector of the company, mainly taking checks from the Iloilo branch of the drug company and depositing them to the company account with Philippine National Bank.
Upon examination of the checks deposited by Foerster with PNB, there were several indorsements guaranteed by the PNB manager Angel Padilla for Carmen E. de Foerster, the wife of U.E. Foerster, which was consequently withdrawn by the couple and a certain V. Bacaldo (stenographer of Foerster). When the Manila office of the drug company investigated and discovered the anomalies, Foerster committed suicide. Although there was no evidence showing that the bank knew that Foerster was misappropriating the funds of his principal, the Insular Drug Co. claims that it never received the face value of the 132 checks in question covering a total of Php 18, 285.92.
The drug company saw fit to stand on the proposition that checks drawn in its favor were improperly and illegally cashed by the bank for Foerster’s personal account.
Issue:
Whether the bank is liable for the amount indorsed and withdrawn by Foerster using company checks even if the latter is an agent of the drug company. Whether the bank is liable for the negligence of its agents when they allowed encashing of the checks without prior authority from the company.
Ratio:
Yes on both issues.
The bank is liable for the amount withdrawn by Foerster and will have to stand the loss occasioned by negligence of its agents.
The right of an agent to indorse commercial paper is a very responsible power and will not be lightly inferred. A salesman with authority to collect money belonging to his principal does not have the implied authority to indorse checks received in payment. Any person taking checks made payable to a corporation, which can [be acted upon] only by agents does so at his peril, and must abide by the consequences if the agent who indorses the same is without authority.
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The fact that the bank acted in good faith does not relieve it from responsibility. The bank could tell by the checks themselves that the money belonged to the Insular Drug Company and not to Foerster, his wife or his clerk. When the bank permitted the withdrawals without the authority from the drug company, the bank made itself responsible to the drug company for the amounts represented by the checks.The bank could have relieved itself from the responsibility had it proven that the money withdrawn by Foerster passed to the drug company but it hasn’t done so.
Municipal Council of Iloilo vs. Evangelista and Tan Toco FACTS:
This is an appeal taken by Tan Toco of the decision of CFI of Iloilo, declaring valid and binding
1. the deed of assignment of the credit executed by Tan Toco's widow, through her attorney-in-fact Tan Buntiong, in favor of late Antero Soriano 2. the assignment executed by the latter during his lifetime in favor of the
defendant Mauricio Cruz & Co., Inc.
The CFI of Iloilo rendered judgment in a case awarding Tan Toco the recovery of the value of a strip of land taken by the municipality of Iloilo from her. After the case was remanded to the court of origin, Atty. Evangelista, in his behalf and as counsel for the administratrix of Jose Ma. Arroyo’s intestate estate, filed a claim in the same case for professional services rendered by him, which the court, acting with the consent of the appellant widow, fixed at 15 per cent of the amount of the judgment.
At the hearing on said claim, the claimants appeared, as did also the Philippine National Bank, which prayed that the amount of the judgment be turned over to it because the land taken over had been mortgaged to it. Antero Soriano
also appeared claiming the amount of the judgment as it had been assigned to him, and by him, in turn, assigned to Mauricio Cruz & Co., Inc.
After hearing all the adverse claims on the amount of the judgment the court ordered that the attorney's lien in the amount of 15 per cent of the judgment, be recorded in favor of Attorney Jose Evangelista, in his own behalf and as counsel for the administratrix of the deceased Jose Ma .Arroyo, and directed the municipality of Iloilo to file an action of interpleading against the adverse claimants, the Philippine National Bank, Antero Soriano, Mauricio Cruz & Co., Jose Evangelista and Jose Arroyo, as was done, the case being filed in the Court of First Instance of Iloilo.
Then municipal treasurer of Iloilo deposited with the clerk of the Court of First Instance of Iloilo the amount of P6,000 on account of the judgment rendered in said civil case No. 3514. In pursuance of the resolution of the court below ordering that the attorney's lien in the amount of 15 per cent of the judgment be recorded in favor of Attorney Jose Evangelista, in his own behalf and as counsel for the late Jose Ma. Arroyo, the said clerk of court delivered on the same date to said Attorney Jose Evangelista the said amount of P6,000. At the hearing of the instant case, the codefendants of Attorney Jose Evangelista agreed not to discuss the payment made to the latter by the clerk of the Court of First Instance of Iloilo of the amount of P6,000 mentioned above in consideration of said lawyer's waiver of the remainder of the 15 per cent of said judgment amounting to P444.69. With these two payments of P6,000 each making a total of P12,000, the judgment for P42,966.44 against the municipality of Iloilo was reduced to P30,966.40, which was adjudicated by said court to Mauricio Cruz & Co.
This appeal, then, is confined to the claim of Mauricio Cruz & Co. as alleged assignee of the rights of the late Attorney Antero Soriano by virtue of the said judgment in payment of professional services rendered by him to the said widow and her coheirs.
ISSUE: Whether the deeds of assignment in this case are null and void HELD: NO.
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Tan Toco contends, in the first place, that said assignments was notmade in consideration of professional services by Attorney Antero Soriano, for they had already been satisfied before the execution of said deed of assignment, but in order to facilitate the collection of the amount of said judgment in favor of the appellant, for the reason that, being Chinese, she had encountered many difficulties in trying to collect. In support of her contention on this point, the appellant alleges that the payments admitted by the court in its judgment, as made by Tan Toco's widow to Attorney Antero Soriano for professional services rendered to her and to her coheirs, amounting to P2,900, must be added to the P700, on the ground that they were considered as payments made for professional services rendered, not by Antero Soriano personally, by the firm of Soriano & Arroyo.
An agent of attorney-in -fact empowered to pay the debts of the principal, and to employ lawyers to defend the latter's interests, is impliedly empowered to pay the lawyer's fees for services rendered in the interests of said principal, and may satisfy them by an assignment of a judgment rendered in favor of said principal
When a person appoints two attorneys-in-fact independently, the consent of the one will not be required to validate the acts of the other unless that appears positively to have been the principal's attention
The assignment of the amount of a judgment made by a person to his attorney, who has not taken any part in the case wherein said judgment was rendered, made in payment of professional services in other cases, does not contravene the prohibition of article 1459, case 5, of the Civil Code.
Municipal Council of Iloilo vs. Evangelista and Tan Toco (widow) FACTS:
1924:
- CFI awarded to Tan Toco 42K++ for the value of a strip of land taken by the municipality to widen a public street
- Atty. Evangelista (Atty. E)(as counsel of Jose Maria’s intestate estate) filed a claim in the same case for professional services rendered by him
o He acted with Tan Toco’s consent
o And the court fixed at 15% of the amount of judgment as payment for his professional services
- Other claimants also appeared: PNB and Atty. Antero Soriano (Atty. S) (pero he died diba?)
- So the court judged in favour of Atty. E and ordered Municipality of Iloilo to file an action of interpleading against the claimants
- CFI then rendered the following decision:
1. That the deed of assignment executed by Tan Toco’s widow thru Atty. BoonTiong in favour of Atty. S is valid and binding
2. That the deed of assignment by Atty. S in favour of Mauricio Cruz & Co. Inc is valid and binding
3. Municipal of Iloilo should pay Mauricio Cruz & Co Inc 30K++
- But Tan Toco appealed and said that #1 and #2 were null and void and the balance of 30K++ should be given to her instead of Mauricio Cruz and Co Inc.
1928
- Iloilo paid Atty. S the 6K
- The Court also delivered 6K to Atty. E, but Atty. E waived the remaining amount that should be given to him
- So from the 42K – 12K, the 30K was awarded to Mauricio Cruz and Co. Inc.
- So Mauricio claimed the remaining amount since he is the assignee of the rights of Atty. S
ISSUE:
Whether the assignment made by Tan BoonTiong to Atty. S of all the credits and rights of belonging to Tan Toco (from the “strip of land case”) is valid as payment for the professional services rendered by Atty. S to Tan Toco
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YES. VALID. Tan Toco (widow) contended the following:
1. That the said assignment was not in consideration of the professional services by Atty. S, since:
a. The payment was already satisfied even before the execution of the deed of assignment
b. The they only “hired” Atty. S to collect the amount of judgment, since Tan Toco is Chinese, she cannot make transactions properly (HAHA)
c. She already paid Atty. S for professional services rendered by the firm of “Soriano & Arroyo”, evidenced by receipts 2. That the deed of assignment was drawn up in contravention of the
prohibition that lawyers cannot acquire even by assignment (Article 1491 (5))
BUT THE COURT SAID THAT TAN TOCO’S CONTENTIONS ARE UNTENABLE:
1. Tan Toco still wired Atty. S money for his services in 1928 after the deed of assignment was executed
2. Atty. S appeared as counsel for Tan Toco many times and won several times too for them. The payment he received for his services is inadequate (10K)
3. INDIRECTLY: the assignment made to Atty. S and determined in the previous judgment was made in consideration of the professional services rendered by Atty. S to Tan Toco
4. Atty. S was NOT counsel for Tan Toco in the case regarding the recovery of value of the strip of land
5. The lawyers who represented her were Arroyo and Evangelista who filed a claim for professional fees!!
6. When the assignment was made to Atty. S – this was already decided! Because the rights, credit, etc., in that “strip of land case” was payment for his professional services rendered in connection with the other cases (client still Tan Toco)—so the only thing left to do is to COLLECT!
7. Atty. BoonTiong is authorized to employ and contract for the services of lawyers upon such conditions as he may deem convenient AND take charge of any actions necessary or expedient for the interests of his principal and defend suits brought against her [AGENCY!]
Implied power: authority to pay for professional services thus engaged by the principal
The assignment made by Atty. BoonTiong was VALID as payment for professional services rendered by Atty. S. DOCTRINES:
An agent of attorney-in -fact empowered to pay the debts of the principal, and to employ lawyers to defend the latter's interests, is impliedly empowered to pay the lawyer's fees for services rendered in the interests of said principal, and may satisfy them by an assignment of a judgment rendered in favor of said principal
When a person appoints two attorneys-in-fact independently, the consent of the one will not be required to validate the acts of the other unless that appears positively to have been the principal's attention
Apparently, 2 ang attorney-in-fact ni Tan Toco. Atty. Montano did not consent to the assignment. But they had different and separate letters of attorney, so it was not the principal’s intention that they should act jointly in order to make their acts valid.
The assignment of the amount of a judgment made by a person to his attorney, who has not taken any part in the case wherein said judgment was rendered, made in payment of professional services in other cases, does not contravene the prohibition of article 1491, case 5, of the Civil Code.
Rural Bank of Caloocan vs CA
Maxima Castro with Severino Valencia went to the Rural Bank of Caloocan in order to apply for an industrial loan. Valencia personally took care of all the requirement in order for Castro to secure said loan. The loan of 3000 was
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approved and Castro, accompanied by Valencia spouses, signed a promissory note. On the same day Valencia spouses also secured a loan of 3000 and was also signed by castro as co-maker. The two loans were secured by a real estate mortgage on castro’s house and lot.Sheriff informed Castro that her property will be sold at a public aution which shall cover the promissory note plus interest and attorney’s fee. Castro claims that she has no knowledge of the mortgage contract up until a notice from the sheriff was given.
Castro filed a case against the bank. Bank argues that they were led to believe that Valencia was Castro’s agent
Issue: Whether the bank believed Valencia to be Castro’s agent
Whether the promissory note is invalid insofar as they affect Castro and the Bank ?
Held: SC affirmed the CA decision.
Ratio: the authority of the Valencias was only up to follow up Castro’s loan application. But they were never authorized to borrow for her. If her acts had been understood by the bank to be a grant of authority to the Valencia’s it should have required a special power of attorney. Since the bank did not, it can be assumed that it did not entertain the notion that the Valencia spouses were in any manner acting as the agent of Castro
Valencia defrauded Castro by making her sign the promissory note and the mortgage contract, they also misrepresented to the bank Castro’s qualifications in order to secure the Bank’s consent and grant the loan. As a result , both Castro and the bank committed mistake in giving their consents. Such mistake is deemed substantial thereby rendering such consents, vitiated. For if Castro has been aware of what she signed and the bank of the true qualifications of the loan applicants, they would not have given their consents. They PN in effect may also be invalidated because of substantial mistake
mutually committed by the Bank and Castro, as a consequence of the fraud and misrepresentation (respectively) employed by the Valencias. In the case at bar, the PN is valid only up to the amount of 3000 pesos
VDA. DE CHUA VS. INTERMEDIATE APPELLATE COURT FACTS
Herrera executed a Contract of Lease in favor of Sy whereby Herrera leased her lots in Cebu. Sy erected a residential building in the leased premises & w/in 4 years from the execution of the contract, he sold the said building to Chua for P8,000. The Deed of Absolute Sale contained provisions where Sy assigned all his rights and privileges on the leased lot with the corresponding obligations. The sale was made with the knowledge and consent of Herrera who is represented by her attorney-in-fact, Reynes.
Chua & his family resided in the said building and when the lease contract expired, Chua and Herrera through her attorney-in-fact executed another Contract of Lease wherein & will lease the said lots for a period of 5 years for a monthly rental of P60 w/ Chua having an option to buy the said premises if he is qualified & when Herrera decides to sell the same. Chua is also given the option to renew the contract. It also contained a stipulation that should the property leased be sold to any other party, the terms & conditions of the contract will continue for the duration of the contract.
After the expiration of the contract of lease, Chua’s successor-in-interest (Chua having died) continued the possession of the premises with an adjusted rental rate of P1000. Herrera through her attorney-in-fact, Reynes sold the lot to the Go spouses. This was registered with the RD and the lots were transferred in spouses’ names. Chua’s successors-in-interest filed a suit claiming that the sale violated their right of option to buy the said lots. The RTC dismissed the complaint and ordered Chua’s heirs to vacate the premises & remove the building. Herrera was ordered to reimburse them for attorney’s fees and damages. Both Chua’s heirs and Herrera appealed to the CA. The CA removed the award of moral damages but affirmed all other respects. The CA in
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declaring their contract of lease void noted that Reynes was not armed w/ a SPA to enter into a lease contract for a period of more than 1 year.ISSUE
W/N the lease contract entered into by Chua and Reynes is valid. RULING
NO. In order for a contract of lease executed by an agent to be valid, the law requires the agent to be armed with a special power of attorney to lease the premises. According to Art. 1878 of the NCC, “Special Powers of Attorney are necessary to lease any real property to a person for more than 1 year.” Therefore, the contract entered into by Reynes and Chua was invalid because Reynes did not have a Special power of Attorney to enter into the contract. It is true that respondent Herrera allowed petitioners to occupy the leased premises after the expiration of the lease contract. This is a tacit renewal of the lease. A tacit renewal is limited only to the terms of the contract w/c are germane to the lessee’s right of continued enjoyment of the property and does not extend to alien matters like the option to buy the lease premises.
Veloso v CA
Applicable Provision: Art. 1878 Facts:
Petitioner Francisco Veloso was the sole owner of a registered parcel of land in Tondo, Manila, which he acquired in 1957.
His wife Irma, armed with a general power of attorney, sold said lot to the respondent spouses Escario in 1987.
Petitioner filed an action for annulment of the deed of sale and reconveyance of property
Issue:
Whether a general power of attorney may authorize an agent to sell real property.
Held/Ratio:
Yes.
Although sale of real property requires a special power of attorney, if a general power of attorney expressly grants the power to sell to the agent, there is no need to execute a separate special power of attorney.
The assailed power of attorney had the following provision: “To buy or sell land, more specifically TCT No. 49138”
Thus, said power of attorney sufficiently authorized the wife to sell the property.
Therefore, the sale is valid.
RODRIGUEZ vs. PAMINTUAN and DE JESUS Facts:
March 21, 1903, the defendant de Jesus, the owner of the three parcels of land and sugar mill, executed power of attorney in favor of her husband Pamintuan, authorizing him (1) to borrow money in such amount and upon such terms and conditions as he might deem proper, and (2) to secure payment of the loan by a mortgage on her property. June 1, 1903, the husband executed in favor of Rodriguez ( deceased, leaving the plaintiffs as his testamentary heirs) an notarized instrument purporting on its face to be a deed of sale of the lands stated, for the sum of P5,000 with a reserved right in the vendor to repurchase any time within ten years from the date of the deed, and to continue occupying them under as annual rental of 120 pilones of sugar. September 2, 1914, this action was instituted to recover possession of the land and payment of the annual rental due thereon. The defendant husband admitted the execution of the document purporting to be a deed of sale, but alleged that the real purpose and intent of the parties in the execution of the document was to secure payment of the indebtedness by a mortgage upon the lands mentioned therein, and that the instrument would not be enforced as a deed of sale. The