DIGESTED CASES

ON AGENCY,
TRUST AND
PARTNERSHIP

SUBMITTED BY:
Ranel De Lara

SUBMITTED TO:
Judge Ampuan

GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO, JR.,

and BENJAMIN T. BACORRO, petitioners,
vs.
HON.
COURT
OF
APPEALS,
SECURITIES
AND
EXCHANGE COMMISSION and JOAQUIN L. MISA,
respondents
G.R. No. 109248
July 3, 1995
FACTS:
Ortega, then a senior partner in the law firm Bito, Misa,
and Lozada withdrew from the said firm. He filed with SEC a
petition for dissolution and liquidation of the partnership.
The SEC en banc ruled that withdrawal of Misa from the firm
had dissolved the partnership. Since it is partnership at will,
the law firm could be dissolved by any partner at anytime,
such as by withdrawal therefrom, regardless of good faith or
bad faith, since no partner can be forced to continue in the
partnership against his will.
ISSUE:
1. Whether or not the partnership of Bito, Lozada and
Misa is a partnership at will.
2. Whether or not withdrawal of Misa dissolved the
partnership regardless of good faith and bad faith.
RULING:
1. Yes. The partnership agreement of the firm provides
that [t]he partnership shall continue so long as
mutually satisfactory and upon the death or legal
incapacity of one of the partners, shall be continued
by the surviving partners.
2. Yes. Any one of the partners may, at his sole
pleasure, dictate a dissolution of the partnership at
will (e.g. by way of withdrawal of a partner). He
must, however, act in good faith, not that the
attendance of bad faith can prevent the dissolution
of the partnership but that it can result in a liability
for damages.
A partnership that does not fix its term is a partnership
at will. It can be dissolved
anytime since no partner can be forced to continue in the
partnership against his will. Doctrine of Delectus Personae
allows them to have the power, although not necessary a
right to dissolve the partnership.

LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and

CARMELITO JOSE, petitioners,
vs.
DONALDO EFREN C. RAMIREZ and Spouses CESAR G.
RAMIREZ JR. and CARMELITA C. RAMIREZ, respondents.
G.R. No. 144214
July 14, 2003
FACTS:
In 1984, Villareal, Carmelito Jose and Jesus Jose formed
a partnership with a capital of P750,000for the operation of a
restaurant and catering business. Respondent Ramirez
joined as a partner in the business with the capital
contribution of P250,000. In 1987, Jesus Jose withdrew from
the partnership and within the same time, Villareal and
Carmelito Jose, petitioners closed the business without prior
knowledge of respondents In March 1987, respondents wrote
a letter to petitioners stating that they were no longer
interested in continuing the partnership and that they were
accepting the latters offer to return their capital
contribution. This was left unheeded by the petitioners, and
by reason of which respondents filed a complaint in the RTC.
RTC ruled that the parties had voluntarily entered into a
partnership, which could be dissolved at any time, and this
dissolution was showed by the fact that petitioners stopped
operating the restaurant. On appeal, CA upheld RTCs
decision that the partnership was dissolved and it added that
respondents had no right to demand the return of their
capital contribution. However since petitioners did not give
the proper accounting for the liquidation of the partnership,
the CA took it upon itself to compute their liabilities and the
amount that is proper to the respondent. The computation of
which was: (capital of the partnership outstanding
obligation) / remaining partners =amount due to private
respondent.
ISSUE:
Whether or not petitioners are liable to respondents his
share in the partnership.
RULING:
No, respondents have no right to demand from
petitioners but partnership is liable instead. The partnership
has a juridical personality separate and distinct from that of
each of the partners. Respondents have no right to demand
from petitioner the return of their equity share. Since the
capital was contributed to the partnership, not to petitioners,

it is the partnership that must refund the equity of the

retiring partners. However, before the partners can be paid
their shares, the creditors of the partnership must first be
compensated. Therefore, the exact amount of refund
equivalent to respondents one-third share in the partnership
cannot be determined until all the partnership assets will
have been liquidated and all partnership creditors have been
paid.

BENJAMIN YU, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JADE
MOUNTAIN PRODUCTS COMPANY LIMITED, WILLY CO,
RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG
and CHEN HO-FU, respondents.
G.R. No. 97212 June 30, 1993
FACTS:
Benjamin Yu used to be the Assistant General Manager
of Jade Mountain, a partnership engaged in marble quarrying
and export business. The majority of the founding partners
sold their interests in said partnership to Willy Co and
Emmanuel Zapanta without Yus knowledge. Said new
partnership continued operating under the same name and
continued the businesss operations. However, it transferred
its main office from Makati to Mandaluyong. Said new
partnership did not anymore availed of the services of Yu.
Thus, he filed a complaint for illegal dismissal, recovery of
unpaid wages and damages.
ISSUE:
Whether or not old partnership of YU and as Assistant
General Manager extinguished and replaced by new
partnership.
RULING:
No. The legal consequences of dissolution of a
partnership do not, however, automatically result in the
determination of the legal personality of the old partnership.
The legal effect of the changes in the membership of the
partnership was the dissolution of the old partnership which
had hired Yu in 1984 and the emergence of a new firm
composed of Willy Co and Emmanuel Zapanta in 1987. The
new partnership simply took over the business enterprise
owned by the preceding partnership, and continued using
the old name of Jade Mountain Products Company Limited,
without winding up the business affairs of the old
partnership, paying off its debts, liquidating and distributing
its net assets, and then re-assembling the said assets or
most of them and opening a new business enterprise. Not
only the retiring partners but also the new partnership itself
which continued the business of the old, dissolved, one, are
liable for the debts of the preceding partnership.

LOURDES
NAVARRO
AND
MENARDO
NAVARRO,
petitioners,
vs.
COURT OF APPEALS, JUDGE BETHEL KATALBASMOSCARDON, Presiding Judge, Regional Trial Court of
Bacolod City, Branch 52, Sixth Judicial Region and
Spouses OLIVIA V. YANSON AND RICARDO B. YANSON,
respondents.
G.R. No. 101847
May 27, 1993
FACTS:
Private respondent Olivia V. Yanson and Petitioner
Lourdes Navarro were engaged in the business of Air Freight
Service Agency. Pursuant to the Agreement which they
entered, they agreed to operate the said Agency; It is the
Private Respondent Olivia Yanson who supplies the
necessary equipment and money used in the operation of
the agency. Her brother in the person of Atty. Rodolfo
Villaflores was the manager thereof while petitioner Lourdes
Navarro was the Cashier; In compliance to her obligation as
stated in their agreement, private respondent brought into
their business certain chattels or movables or personal
properties. However, those personal properties remain to be
registered in her name; Among the provisions stipulated in
their agreement is the equal sharing of whatever proceeds
realized from their business; However, sometime on July 23,
1976, private respondent Olivia V. Yanson, in order for her to
recovery the above mentioned personal properties which she
brought into their business, filed a complaint against
petitioner Lourdes Navarro for "Delivery of Personal
Properties With Damages and with an application for a writ
of replevin. Private respondents' application for a writ of
replevin was later approved/granted by the trial court. For
her defense, petitioner Navarro argue that she and private
respondent Yanson actually formed a verbal partnership
which was engaged in the business of Air Freight Service
Agency. She contended that the decision sustaining the writ
of replevin is void since the properties belonging to the
partnership do not actually belong to any of the parties until
the final disposition and winding up of the partnership.
ISSUE:

Whether or not a partnership exists between the

parties.
RULING:
No. Article 1767 of the New Civil Code defines the
contract of partnership: Art. 1767. By the contract of
partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund,
with the intention of dividing the proceeds among
themselves. A cursory examination of the evidences
presented no proof that a partnership, whether oral or
written had been constituted. In fact, those movables
brought by the plaintiff for the use in the operation of the
business remain registered in her name. While there may
have been co-ownership or co-possession of some items
and/or any sharing of proceeds by way of advances received
by both plaintiff and the defendant, these are not indicative
and supportive of the existence of any partnership between
them. Art. 1769 par. 2 provides: Co-ownership or copossession does not of itself establish a partnership, whether
such co-owners or co-possessors do or do not share any
profits made by the use of the property Besides, the alleged
profit was a difference found after evaluating the assets and
not arising from the real operation of the business.

LILIBETH SUNGA-CHAN and CECILIA SUNGA, petitioners,

vs.
THE
HONORABLE
COURT
OF
APPEALS;
THE
HONORABLE PRESIDING JUDGE, Regional Trial Court,
Branch 11, Sindangan, Zamboanga Del Norte; THE
REGIONAL TRIAL COURT SHERIFF, Branch 11,
Sindangan, Zamboanga Del Norte; THE CLERK OF
COURT OF MANILA, as Ex-Officio Sheriff; and
LAMBERTO T. CHUA, respondents.
G.R. No. 164401
June 25, 2008
FACTS:
On June 22, 1992, respondent Lamberto T. Chua filed a
complaint against petitioners, Lilibeth Sunga Sunga Chan
and Cecilia Sunga, daughter and wife, respectively of the
deceased Jacinto L. Sunga, for winding up of Partnership
Affairs, accounting, appraisal and recovery of Shares and
Damages with Writ of Preliminary Attachment with the
Regional Trial Court, Branch 11, Zamboanga del Norte.
Respondent alleged that in 1977, he verbally entered into a
partnership with Jacinto in the distribution of Shellane
Liquefied Petroleum Gas (LPG) in Manila with initial capital
contribution of Php100,000.00 each, with the intention that
the profits would be equally divided between them. For
business convenience, respondent and Jacinto agreed to
register the business name of their partnership SHELLITE
GAS APPLIANCE CENTER under the name of Jacinto as sole
proprietorship.
ISSUE:
Whether or not respondent Lamberto Chua and Jacinto
L. Sunga has entered into a partnership.
RULING:
Yes. The court ruled that a partnership may be
constituted in any form, except where immovable property
or real rights are contributed thereto, in which case a public
instrument shall be necessary. Also, Article 1772 of the Civil
Code requires that partnership with a capital of Php3,000.00
or more must register with the Securities and Exchange
Commission, however this registration requirement is not
mandatory. Article 1768 of the Civil Code explicitly provides
that the partnership retains its juridical personality even if it
fails register. The failure to register the contract of
partnership does not invalidate the same as among the

partners, so long as the contract has the essential requisites,

because the main purpose of registration is to give notice to
third parties, and it can be assumed that the members
themselves knew of the contents of their contract.
EMILIO EMNACE, petitioner,
vs.
COURT OF APPEALS, ESTATE OF VICENTE TABANAO,
SHERWIN TABANAO, VICENTE WILLIAM TABANAO,
JANETTE TABANAO DEPOSOY, VICENTA MAY TABANAO
VARELA, ROSELA TABANAO and VINCENT TABANAO,
respondents.
G.R. No. 126334
November 23, 2001
FACTS:
Emilio Emnace, Jacinto Divinagracia and Vicente
Tabanao formed a partnership engaged in the fishing
industry. In 1986, Jacinto decided to leave the partnership
hence they agreed to dissolve the partnership. At that time,
the partnership has an estimated asset amounting to
P30,000,000.00.
However, until the death of Vicente Tabanao in 1994,
Emnace never rendered an accounting either to Vicente or
his heirs. Emnace reneged on his promise to turn over
Tabanaos share which is 1/3 of the P30M. The heirs of
Tabanao then sued Emnace. Emnace argued, among others,
that the heirs are barred by prescription hence they can no
longer demand an accounting. He contends that the
partnership was dissolved in 1986 and that was the time
when Tabanaos (and his heirs) right to inquire into the
business affairs accrued; that said right has expired in 1990
or 4 years after. So beyond 1990, they can no longer inquire.
ISSUE:
Whether or not the heirs of
prescription.

Tabano are barred by

RULING:
No. Prescription has not run in this case, it has never
begun. The three final stages of partnership are: a)
dissolution, b) winding up, and c) termination. In this case,
Emnace and his partners dissolved their partnership but
such did not perfect the dissolution because no accounting
took place. The partnership, although dissolved, continues to
exist and its legal personality is retained, at which time it

completes the winding up of its affairs, including the

partitioning and distribution of the net partnership assets to
the partners. For as long as the partnership exists, any of the
partners (or legal representative in this case the heirs of
Tabanao) may demand an accounting of the partnerships
business. Prescription of the said right starts to run only
upon the dissolution of the partnership when the final
accounting is done.
When a final accounting is made, it is only then that
prescription begins to run. In the case at bar, no final
accounting has been made, and that is precisely what the
heirs are seeking in their action before the trial court,
since Emnace has failed or refused to render an accounting
of the partnerships business and assets. Hence, the said
action is not barred by prescription.

JOSEFINA P. REALUBIT, Petitioner,

vs.
PROSENCIO D. JASO and EDEN G. JASO, Respondents.
G.R. No. 178782
September 21, 2011
FACTS:
On 17 March 1994, petitioner Josefina Realubit
(Josefina) entered into a Joint Venture Agreement with
Francis Eric Amaury Biondo (Biondo), a French national, for
the operation of an ice manufacturing business. With
Josefina as the industrial partner and Biondo as the capitalist
partner, the parties agreed that they would each receive
40% of the net profit, with the remaining 20% to be used for
the payment of the ice making machine which was
purchased for the business.5 For and in consideration of the
sum of P500,000.00, however, Biondo subsequently
executed a Deed of Assignment dated 27 June 1997,
transferring all his rights and interests in the business in
favor of respondent Eden Jaso (Eden), the wife of respondent
Prosencio Jaso.6 With Biondos eventual departure from the
country, the Spouses Jaso caused their lawyer to send
Josefina a letter dated 19 February 1998, apprising her of
their acquisition of said Frenchmans share in the business
and formally demanding an accounting and inventory
thereof as well as the remittance of their portion of its
profits.
ISSUE:
Whether or not the court may order Josefina Realubit as
partner in the joint ventureto render an accounting to one
who is not a partner in said joint venture.
RULING:
No. Generally understood to mean an organization
formed for some temporary purpose, a joint venture is
likened to a particular partnership or one which "has for its
object determinate things, their use or fruits, or a specific
undertaking, or the exercise of a profession or vocation."27
The rule is settled that joint ventures are governed by the
law on partnerships28 which are, in turn, based on mutual
agency or delectus personae.29 Insofar as a partners
conveyance of the entirety of his interest in the partnership
is concerned, Article 1813 of the Civil Code provides as
follows:

Art. 1813. A conveyance by a partner of his whole interest in

the partnership does not itself dissolve the partnership, or,
as against the other partners in the absence of agreement,
entitle the assignee, during the continuance of the
partnership,
to
interfere
in
the
management
or
administration of the partnership business or affairs, or to
require any information or account of partnership
transactions, or to inspect the partnership books; but it
merely entitles the assignee to receive in accordance with
his contracts the profits to which the assigning partners
would otherwise be entitled. However, in case of fraud in the
management of the partnership, the assignee may avail
himself of the usual remedies.
In the case of dissolution of the partnership, the assignee is
entitled to receive his assignors interest and may require an
account from the date only of the last account agreed to by
all the partners.

HEIRS OF JOSE LIM, represented

Petitioners,
vs.
JULIET VILLA LIM, Respondent.
G.R. No. 172690
March 3, 2010

by

ELENITO

LIM,

FACTS:
In 1980, the heirs of Jose Lim alleged that Jose Lim
entered into a partnership agreement with Jimmy Yu and
Norberto Uy. The three contributed P50,000.00 each and
used the funds to purchase a truck to start their trucking
business. A year later however, Jose Lim died. The eldest
son of Jose Lim, Elfledo Lim, took over the trucking business
and under his management, the trucking business
prospered. Elfledo was able to but real properties in his
name. From one truck, he increased it to 9 trucks, all trucks
were in his name however. He also acquired other motor
vehicles in his name.
In 1993, Norberto Uy was killed. In 1995, Elfledo Lim died of
a heart attack. Elfledos wife, Juliet Lim, took over the
properties but she intimated to Jimmy and the heirs of
Norberto that she could not go on with the business. So the
properties in the partnership were divided among them.
Now the other heirs of Jose Lim, represented by Elenito Lim,
required Juliet to do an accounting of all income, profits, and
properties from the estate of Elfledo Lim as they claimed
that they are co-owners thereof. Juliet refused hence they
sued her.
The heirs of Jose Lim argued that Elfledo Lim acquired his
properties from the partnership that Jose Lim formed with
Norberto and Jimmy. In court, Jimmy Yu testified that Jose Lim
was the partner and not Elfledo Lim. The heirs testified that
Elfledo was merely the driver of Jose Lim.
ISSUE:
Who is the partner between Jose lim and Elfledo Lim in
a partnership?
RULING:
It is Elfledo Lim based on the evidence presented
regardless of Jimmy Yus testimony in court that Jose Lim was
the partner. If Jose Lim was the partner, then the partnership
would have been dissolved upon his death (in fact, though

the SC did not say so, I believe it should have been dissolved
upon Norbertos death in 1993). A partnership is dissolved
upon the death of the partner. Further, no evidence was
presented as to the articles of partnership or contract of
partnership
between
Jose,
Norberto
and
Jimmy.
Unfortunately, there is none in this case, because the
alleged partnership was never formally organized.
Art. 1769. In determining whether a partnership exists, these
rules shall apply:
(1) Except as provided by Article 1825, persons who are not
partners as to each other are not partners as to third
persons;
(2) Co-ownership or co-possession does not of itself establish
a partnership, whether such co-owners or co-possessors do
or do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a
joint or common right or interest in any property from which
the returns are derived;
(4) The receipt by a person of a share of the profits of a
business is a prima facie evidence that he is a partner in the
business, but no such inference shall be drawn if such profits
were received in payment:
(a) As a debt by installments or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased
partner;
(d) As interest on a loan, though the amount of payment
vary with the profits of the business;
(e) As the consideration for the sale of a goodwill of a
business or other property by installments or otherwise.
Applying the legal provision to the facts of this case, the
following circumstances tend to prove that Elfledo was
himself the partner of Jimmy and Norberto.

Marsman Drysdale Land, INC., petitioner,

vs.
PHILIPPINE GEOANALYTICS, INC.
PROPERTIES, INC., respondents.
G.R. No. 183374. June 29, 2010.

AND

GOTESCO

FACTS:
Marsman Drysdale, Inc. (Marsman) and Gotesco
Properties, Inc. (Gotesco) entered into a joint venture
agreement for the construction and development of an office
building on a land owned by Marsman. They agreed on a 5050 ratio on the proceeds of the project, but did not agree on
how losses would be divided. The joint venture engaged the
services of Philippine Geoanalytics, Inc. (PGI) to provide
subsurface soil exploration, seismic study and geotechnical
engineering. PGI completed its seismic study but failed to
complete its subsurface soil exploration because the area
where drilling was to be made had not been cleared. The
building project was subsequently shelved due to
unfavorable economic conditions. PGI billed the joint venture
for work done, but was not paid despite its repeated
demands. PGI, thus, filed a collection case against Marsman
and Gotesco. Marsman passed the obligation to Gotesco
because under the joint venture agreement, Gotesco was
solely liable for the monetary expenses of the project, and
Marsmans participation was limited to the land. Gotesco, on
the other hand, asserted that PGI had no cause of action
against it as PGI had yet to complete the services in its
contract, and it was Marsmans failure to clear the property
of debris which prevented PGI from completing its work.
ISSUE:
Whether or not a joint venture between Marsman and
Gotesco is a form of partnership.
RULING:
Yes. A joint venture being a form of partnership, it is to
be governed by the laws on partnership. Under the laws on
partnership, particularly Article 1797 of the Civil Code, the

losses and profits shall be distributed in accordance with the

agreement; if only the share of each partner in the profits
has been agreed upon, the share of each in the losses shall
be in the same proportion. In the joint venture agreement,
Marsman and Gotesco agreed on a 50-50 ratio on the
proceeds of the project, but did not provide for the splitting
of losses. Applying Article 1797, the same ratio applies in
splitting the obligation-loss of the joint venture to PGI.
When there are two or more debtors, the obligation is
presumed to be joint unless the law or the obligation
expressly states that the liability is solidary,
or unless the nature of the obligation requires solidary
liability (Articles 1207 and 1208, Civil Code). In this case,
since solidary liability was not required by law, or the
contract, or by the nature of the obligation, the obligation to
PGI was presumed to be joint between Marsman and
Gotesco.

J. TIOSEJO INVESTMENT CORP., petitioner,

Vs.
SPOUSES BENJAMIN AND ELEANOR ANG, respondents.
G.R. No. 174149
FACTS:
On 28 December 1995 petitioner entered into a Joint
Venture Agreement (JVA) with Primetown Property Group,
Inc. (PPGI) for the development of a residential condominium
project to be known as The Meditel on the formers 9,502
square meter property along Samat St., Highway Hills,
Mandaluyong City. With petitioner contributing the same
property to the joint venture and PPGI undertaking to
develop the condominium, the JVA provided, among other
terms and conditions, that the developed units shall be
shared by the former and the latter at a ratio of 17%-83%,
respectively. While both parties were allowed, at their own
individual responsibility, to pre-sell the units pertaining to
them. PPGI further undertook to use all proceeds from the
pre-selling of its saleable units for the completion of the
Condominium Project. On 17 June 1996, the Housing and
Land Use Regulatory Board (HLURB) issued License to Sell
No. 96-06-2854 in favor of petitioner and PPGI as project
owners. By virtue of said license, PPGI executed Contract to
Sell No. 0212 with Spouses Benjamin and Eleanor Ang on 5
February 1997, over the 35.45-square meter condominium
unit denominated as Unit A-1006, for the agreed contract
price of P52,597.88 per square meter or a total
P2,077,334.25.[8] On the same date PPGI and respondents
also executed Contract to Sell No. 0214 over the 12.50
square meter parking space identified as Parking Slot No.
0405, for the stipulated consideration of P26,400.00 square
meters or a total of P313,500.

ISSUE:
Who are liable or the losses incurred by a joint venture
to a third person?
RULING:
Under Article 1824 of the Civil Code of the Philippines,
all partners are solidarily liable with the partnership for
everything chargeable to the partnership, including loss or
injury caused to a third person or penalties incurred due to
any wrongful act or omission of any partner acting in the
ordinary course of the business of the partnership or with the

authority of his co-partners. Whether innocent or guilty, all

the partners are solidarily liable with the partnership itself.
FEDERICO JARANTILLA, JR., Petitioner,
vs.
ANTONIETA JARANTILLA, BUENAVENTURA REMOTIGUE,
substituted by CYNTHIA REMOTIGUE, DOROTEO
JARANTILLA and TOMAS JARANTILLA, Respondents.
G.R. No. 154486
December 1, 2010
FACTS:
The present case stems from the complaintfiled by
Antonieta Jarantilla againstBuenaventura Remotigue, Cynthia
Remotigue, Federico Jarantilla, Jr., Doroteo Jarantilla
andTomas Jarantilla, for the accounting of the assets and
income of the co-ownership, for itspartition and the delivery
of her share corresponding to eight percent (8%), and for
damages. Antonieta claimed that in 1946, she had entered
into an agreement with the defendants toengage in business
through the execution of a document denominated as
"Acknowledgement of Participating Capital. Antonieta also
alleged that she had helped in the management of the
business they co-owned without receiving any salary.
Antonieta further claimed co-ownership of certain properties
(the subject real properties) in the name of the defendants
since the only way the defendants could have purchased
these properties were through the partnership as they had
no other source of income.
ISSUE:
Whether or not a partnership exists between the parties
subject to the Acknowledgement of Participating Capital.
RULING:
Yes, Under Article 1767 of the Civil Code, there are two
essential elements in a contract of partnership:
(a) an agreement to contribute money, property or industry
to a common fund; and (b) intent to divide the profits among
the contracting parties. The first element is undoubtedly
present in the case at bar, for, admittedly, all the parties in
this case have agreed to, and did contribute money and
property to a common fund. Hence, the issue narrows down
to their intent in acting as they did. They have admitted this
fact agreed to its veracity, and even submitted one common

documentary evidence to prove such partnership - the

Acknowledgement of Participating Capital.

Philex Mining
Revenue

Corp.

v.

Commissioner

of

Internal

G.R. No. 148187 April 16, 2008 Ynares-Santiago, J.

FACTS:
Philex Mining Corp. entered into an agreement with
Baguio Gold Mining Co. for the former to manage and
operate the latters mining claim, known as the Sto. Nino
Mine. The parties agreement wasdenominated as Power of
Attorney which provides interalia: Within three (3) years
from
date thereof, the PRINCIPAL (Baguio Gold) shall make availab
le to the MANAGERS (Philex Mining) up to ELEVEN MILLION
PESOS (P11,000,000.00), in such amounts asfrom time to
time may be required by the MANAGERS within the said 3year period, for use in theMANAGEMENT of the STO. NINO
MINE. The said ELEVEN MILLION PESOS (P11,000,000.00)
shall be deemed, for internal audit purposes, as the owners
account in the Sto. Nino PROJECT. Any part of any income of
the PRINCIPAL from the STO. NINO MINE, which is left with
the Sto. Nino PROJECT,shall be added to such owners
account.
Philex Mining
made
advances of cash and property in accordance
with
paragraph 5 of the agreement. However, the mine suffered
continuing losses over the years which resulted to
PhilexMinings withdrawal as manager of the mine and in the
eventual cessation of mine operations. The parties executed
a Compromise with Dation in Payment wherein Baguio
Gold admitted an indebtedness to petitioner in the amount
of P179,394,000.00 and agreed to pay the same in three
segments.
The parties executed an Amendment to Compromise
with Dation in Payment where the partiesdetermined that
Baguio Golds indebtedness to petitioner actually amounted
to P259,137,245.00,which sum included liabilities of Baguio
Gold to other
creditors
that petitioner had
assumed

asguarantor. These liabilities pertained to long-term loans

amounting
to
US$11,000,000.00
contracted
by
Baguio Gold from the Bank of America NT & SA and Citibank
N.A.
This
time,
Baguio
Goldundertook to pay petitioner in two segments by first assi
gning its tangible assets forP127,838,051.00
and
then
transferring its equitable title in its Philodrill assets for
P16,302,426.00. The parties then ascertained that Baguio
Gold had a remaining outstanding indebtedness topetitioner
in the amount of P114,996,768.00.
In its 1982 annual income tax return, Philex Mining deducted
from its gross income the amount of P112,136,000.00 as
loss on settlement of receivables from Baguio Gold against
reserves andallowances. However, the BIR disallowed
the amount as deduction for
bad debt and
assessed
petitioner a deficiency income tax of P62,811,161.39.
Philex Mining protested before the BIR arguing that the
deduction must be allowed since all requisites for a bad debt
deduction were satisfied.
ISSUE:
WON the parties entered into a contract of agency
coupled with an interest which is not revocable at will.
HELD:
No. In this case, the non-revocation or non-withdrawal
under paragraph 5(c) applies to the advances made by
petitioner who is supposedly the agent and not the principal
under
the
contract. Thus, it cannot be inferred from
the stipulation that the parties relation under the agreement
is one of agency coupled with an interest and not
a partnership.
The main object of the Power of Attorney was not to
confer a power in favor of petitioner to contract with third
persons on behalf of Baguio Gold but to create a business
relationship between petitioner and Baguio Gold, in which
the former was to manage and operate the latters mine
through the
parties mutual contribution
of material
resources and industry. The strongest indication that
petitioner was a partner in the Sto. Nino Mine is the fact that
it would receive 50% of the net profits as compensation
under paragraph 12 of the agreement. The entirety of the
parties
contractual
stipulations
simply leads to no other conclusion than that petitioners
compensation is actually its share in the income of the
joint venture. Article 1769 (4) of the Civil Code explicitly

provides that the receipt by a person of a share in the

profits of a businessis prima facie evidence that he is a
partner in the business.

Spouses Fernando and Lourdes Viloria vs. Continental

Airlines, Inc.
G.R. No. 188288 January 16, 2012
FACTS:
In 1997, while the spouses Viloria were in the United
States, they approached Holiday Travel, a travel agency
working for Continental Airlines, to purchase tickets from
Newark to San Diego. The travel agent, Margaret Mager,
advised the couple that they cannot travel by train because
it is fully booked; that they must purchase plane tickets for
Continental Airlines; that if they wont purchase plane
tickets; theyll never reach their destination in time. The
couple believed Magers representations and so they
purchased two plane tickets worth $800.00.
Later however, the spouses found out that the train trip isnt
fully booked and so they purchased train tickets and went to
their destination by train instead. Then they called up Mager
to request for a refund for the plane tickets. Mager referred
the couple to Continental Airlines. As the couple are now in
the Philippines, they filed their request with Continental
Airlines office in Ayala. The spouses Viloria alleged that
Mager misled them into believing that the only way to travel
was by plane and so they were fooled into buying expensive
tickets.
Continental Airlines refused to refund the amount of the
ticket and so the spouses sued the airline company. In its
defense, Continental Airlines claimed that the ticket sold to
them by Mager is non-refundable; that, if any, they are not
bound by the misrepresentations of Mager because theres
no agency existing between Continental Airlines and Mager.
The trial court ruled in favor of spouses Viloria but the Court
of Appeals reversed the ruling of the RTC.
ISSUE:
Whether or not a contract of agency exists between
Continental Airlines and Mager.
HELD:
Yes. All the elements of agency are present, to wit:

there is consent, express or implied of the parties to

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

Sally Yoshizaki vs. Joy Training Center of Aurora, Inc.

GR 174978 Juky 31, 2013
FACTS:
On November 10, 1998, the spouses Richard and Linda
Johnson sold the real properties, a Wrangler jeep, and other
personal properties in favor of the spouses Sally and Yoshio
Yoshizaki. On the same date, a Deed of Absolute Sale and a
Deed of Sale of Motor Vehicle were executed in favor of the
spouses Yoshizaki. The spouses Johnson were members of
Joy Trainings board of trustees at the time of sale. On
December 7, 1998,
TCT No. T-25334 was cancelled and TCT No. T-26052 was
issued in the name of the spouses Yoshizaki.
On December 8, 1998, Joy Training, represented by its
Acting Chairperson Reuben V. Rubio, filed an action for the
Cancellation of Sales and Damages with prayer for the
issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction against the spouses Yoshizaki and the
spouses Johnson before the Regional Trial Court of Baler,
Aurora (RTC).
In the complaint, Joy Training alleged that the spouses
Johnson sold its properties without the requisite authority
from the board of directors. It assailed the validity of a board
resolution dated September 1, 1998 which purportedly
granted the spouses Johnson the authority to sell its real
properties. It averred that only a minority of the board,
composed of the spouses Johnson and Alexander Abadayan,
authorized the sale through the resolution.
After the presentation of their testimonial evidence, the
spouses Yoshizaki formally offered in evidence photocopies
of the resolution and certification, among others. Joy Training
objected to the formal offer of the photocopied resolution
and certification on the ground that they were not the best
evidence of their contents. In an Order dated May 18, 2004,
the RTC denied the admission of the offered copies. The RTC
ruled in favor of the spouses Yoshizaki. It found that Joy
Training owned the real properties. However, it held that the
sale was valid because Joy Training authorized the spouses
Johnson to sell the real properties.
The CA upheld the RTCs jurisdiction over the case but
reversed its ruling with respect to the sale of real properties.

It maintained that the present action is cognizable by the

RTC because it involves recovery of ownership from third
parties.
It also ruled that the resolution is void because it was
not approved by a majority of the board of trustees. It stated
that under Section 25 of the Corporation Code, the basis for
determining the composition of the board of trustees is the
list fixed in the articles of incorporation.
ISSUES:
Whether or not there was a contract of agency to sell
the real properties between Joy Training and the spouses
Johnson.
RULING:
There is no contract of agency between Joy Training and
the spouses Johnson to sell the parcel of land with its
improvements
Article 1868 of the Civil Code defines a contract of agency as
a contract whereby a person binds himself to render some
service or to do something in representation or on behalf of
another, with the consent or authority of the latter. It may
be express, or implied from the acts of the principal, from his
silence or lack of action, or his failure to repudiate the
agency, knowing that another person is acting on his behalf
without authority.
The special power of attorney mandated by law must be one
that expressly mentions a sale or that includes a sale as a
necessary
ingredient
of
the
authorized
act.
We
unequivocably declared in Cosmic Lumber Corporation v.
Court of Appeals that a special power of attorney must
express the powers of the agent in clear and unmistakable
language for the principal to confer the right upon an agent
to sell real estate. When there is any reasonable doubt that
the language so used conveys such power, no such
construction shall be given the document. In the present
case, Sally presents three pieces of evidence which allegedly
prove that Joy Training specially authorized the spouses
Johnson to sell the real properties.

The CAs position that the basis for determining the

board of trustees composition is the trustees as fixed in the
articles of incorporation and not the actual members of the
board. The second paragraph of Section 25 of the
Corporation Code expressly provides that a majority of the
number of trustees as fixed in the articles of incorporation
shall constitute a quorum for the transaction of corporate
business. CA decision affirmed, petition denied.

PURITA PAHUD, SOLEDAD PAHUD, and IAN LEE

CASTILLA (represented by Mother and Attorney-inFact VIRGINIA CASTILLA), Petitioners,
- versus COURT OF APPEALS et. al. , Respondents.
G.R. No. 160346
FACTS:
For our resolution is a petition for review
on certiorari assailing the April 23, 2003 Decision and
October 8, 2003 Resolution of the Court of Appeals (CA) in
CA-G.R. CV No. 59426. The appellate court, in the said
decision and resolution, reversed and set aside the January
14, 1998 Decision of the Regional Trial Court (RTC), which
ruled in favor of petitioners.
The dispute stemmed from the following facts.
During their lifetime, spouses Pedro San Agustin and
Agatona Genil were able to acquire a 246-square meter
parcel of land situated in Barangay Anos, Los Baos, Laguna
and covered by Original Certificate of Title (OCT) No. O(1655) 0-15. Agatona Genil died on September 13, 1990
while Pedro San Agustin died on September 14, 1991. Both
died intestate, survived by their eight (8) children:
respondents Eufemia, Raul, Ferdinand, Zenaida, Milagros,
Minerva, Isabelita and Virgilio.
Sometime in 1992, Eufemia, Ferdinand and Raul executed a
Deed of Absolute Sale of Undivided Shares conveying in
favor of petitioners (the Pahuds, for brevity) their respective
shares from the lot they inherited from their deceased
parents for P525,000.00. Eufemia also signed the deed on
behalf of her four (4) other co-heirs, namely: Isabelita on the
basis of a special power of attorney executed on September
28, 1991, and also for Milagros, Minerva, and Zenaida but
without their apparent written authority. The deed of sale
was also not notarized. On July 21, 1992, the Pahuds
paid P35,792.31 to the Los Baos Rural Bank where the
subject property was mortgaged. The bank issued a release
of mortgage and turned over the owners copy of the OCT to
the Pahuds. Over the following months, the Pahuds made
more payments to Eufemia and her siblings totaling
to P350,000.00.
They
agreed
to
use
the
remaining P87,500.00 to defray the payment for taxes and
the expenses in transferring the title of the property. When

Eufemia and her co-heirs drafted an extra-judicial settlement

of estate to facilitate the transfer of the title to the Pahuds,
Virgilio refused to sign it.
On July 8, 1993, Virgilios co-heirs filed a complaint for judicial
partition of the subject property before the RTC of Calamba,
Laguna. On November 28, 1994, in the course of the
proceedings for judicial partition, a Compromise Agreement
was signed with seven (7) of the co-heirs agreeing to sell
their undivided shares to Virgilio forP700,000.00. The
compromise agreement was, however, not approved by the
trial court because Atty. Dimetrio Hilbero, lawyer for Eufemia
and her six (6) co-heirs, refused to sign the agreement
because he knew of the previous sale made to the Pahuds.
On December 1, 1994, Eufemia acknowledged having
received P700,000.00 from Virgilio. Virgilio then sold the
entire property to spouses Isagani Belarmino and Leticia
Ocampo (Belarminos) sometime in 1994. The Belarminos
immediately constructed a building on the subject property.
Alarmed and bewildered by the ongoing construction on the
lot they purchased, the Pahuds immediately confronted
Eufemia who confirmed to them that Virgilio had sold the
property to the Belarminos. Aggrieved, the Pahuds filed a
complaint in intervention in the pending case for judicial
partition. After trial, the RTC upheld the validity of the sale to
petitioners. The dispositive portion of the decision reads:
Not satisfied, respondents appealed the decision to the
CA arguing, in the main, that the sale made by Eufemia for
and on behalf of her other co-heirs to the Pahuds should
have been declared void and inexistent for want of a written
authority from her co-heirs. The CA yielded and set aside the
findings of the trial court. In disposing the issue, the CA
ruled: Judicial Partition is hereby REVERSED and SET ASIDE,
and a new one entered.
ISSUE:
The focal issue to be resolved is the status of the sale of
the subject property by Eufemia and her co-heirs to the
Pahuds.
Ruling:

We find the transaction to be valid and enforceable.

Also, under
Article 1878, a special power of attorney is necessary for an
agent to enter into a contract by which the ownership of an
immovable property is transmitted or acquired, either
gratuitously or for a valuable consideration.
In several cases, we have repeatedly held that the
absence of a written authority to sell a piece of land is, ipso
jure, void, precisely to protect the interest of an
unsuspecting owner from being prejudiced by the
unwarranted act of another.
Based on the foregoing, it is not difficult to conclude, in
principle, that the sale made by Eufemia, Isabelita and her
two brothers to the Pahuds sometime in 1992 should be valid
only with respect to the 4/8 portion of the subject
property. The sale with respect to the 3/8 portion,
representing the shares of Zenaida, Milagros, and Minerva, is
voidbecause Eufemia could not dispose of the interest of her
co-heirs in the said lot absent any written authority from the
latter, as explicitly required by law. This was, in fact, the
ruling of the CA.
Still, in their petition, the Pahuds argue that the sale
with respect to the 3/8 portion of the land should have been
deemed ratified when the three co-heirs, namely: Milagros,
Minerva, and Zenaida, executed their respective special
power of attorneys authorizing Eufemia to represent them in
the sale of their shares in the subject property.
While the sale with respect to the 3/8 portion is void by
express provision of law and not susceptible to
ratification, we nevertheless uphold its validity on the basis
of the common law principle of estoppel.
Article 1431 of the Civil Code provides: Art. 1431. Through
estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied
or disproved as against the person relying thereon.
True, at the time of the sale to the Pahuds, Eufemia was not
armed with the requisite special power of attorney to dispose
of the 3/8 portion of the property. It is a basic rule in the law
of agency that a principal is subject to liability for loss
caused to another by the latters reliance upon a deceitful

representation by an agent in the course of his employment

(1) if the representation is authorized; (2) if it is within the
implied authority of the agent to make for the principal; or
(3) if it is apparently authorized, regardless of whether the
agent was authorized by him or not to make the
representation.
By their continued silence, Zenaida, Milagros and Minerva
have caused the Pahuds to believe that they have indeed
clothed Eufemia with the authority to transact on their
behalf. Clearly, the three co-heirs are now estopped from
impugning the validity of the sale from assailing the
authority of Eufemia to enter into such transaction.
Accordingly, the subsequent sale made by the seven coheirs to Virgilio was void because they no longer had any
interest over the subject property which they could alienate
at the time of the second transaction.
Yun Kwan Byung vs PAGCOR
December 11, 2009

Facts:
PAGCOR launched its Foreign Highroller Marketing
Program (Program). The Program aims to invite patrons from
foreign countries to play at the dollar pit of designated
PAGCOR-operated casinos under specified terms and
conditions and in accordance with industry practice. The
Korean-based ABS Corporation was one of the international
groups that availed of the Program. In a letter-agreement
dated 25 April 1996 (Junket Agreement), ABS Corporation
agreed to bring in foreign players to play at the five
designated gaming tables of the Casino Filipino Silahis at the
Grand Boulevard Hotel in Manila (Casino Filipino). Petitioner,
a Korean national, alleges that from November 1996 to
March 1997, he came to the Philippines four times to play for
high stakes at the Casino Filipino.
PAGCOR claims that petitioner, who was brought into
the Philippines by ABS Corporation, is a junket player who
played in the dollar pit exclusively leased by ABS Corporation
for its junket players. PAGCOR alleges that it provided ABS
Corporation with distinct junket chips. ABS Corporation
distributed these chips to its junket players. At the end of
each playing period, the junket players would surrender the

chips to ABS Corporation. Only ABS Corporation would make

an accounting of these chips to PAGCORs casino treasury.
PAGCOR argues that petitioner is not a PAGCOR player
because under PAGCORs gaming rules, gambling chips
cannot be brought outside the casino. TC: dismissed the
complaint and counterclaim. CA affirmed.
Issues:
1. WON an implied agency was created
2. Whether the CA erred in failing to consider that PAGCOR
ratified, or at least adopted, the acts of the agent, ABS
Corporation.
Ruling:
1. NO. There is no implied agency in this case because
PAGCOR did not hold out to the public as the principal of ABS
Corporation. PAGCORs actions did not mislead the public
into believing that an agency can be implied from the
arrangement with the junket operators, nor did it hold out
ABS Corporation with any apparent authority to represent it
in any capacity. The Junket Agreement was merely a contract
of lease of facilities and services.
Article 1869 of the Civil Code states that implied
agency is derived from the acts of the principal, from his
silence or lack of action, or his failure to repudiate the
agency, knowing that another person is acting on his behalf
without authority. Implied agency, being an actual agency, is
a fact to be proved by deductions or inferences from other
facts.
The law makes no presumption of agency and proving
its existence, nature and extent is incumbent upon the
person alleging it. Whether or not an agency has been
created is a question to be determined by the fact that one
represents and is acting for another.
2.
NO. The Junket Agreement is void. A void or
inexistent contract is one which has no force and effect from
the very beginning. Hence, it is as if it has never been
entered into and cannot be validated either by the passage
of time or by ratification. 64 Article 1409 of the Civil Code
provides that contracts expressly prohibited or declared void
by law, such as gambling contracts, "cannot be ratified."

(NFA) vs. INTERMEDIATE APPELLATE COURT, SUPERIOR

(SG) SHIPPING CORPORATION
G.R. No. 75640

April 5, 1990

Facts:
On September 6, 1979 Gil Medalla, as commission
agent of the plaintiff Superior Shipping Corporation, entered
into a contract for hire of ship known as "MV Sea Runner"
with defendant National Grains Authority. Under the said
contract Medalla obligated to transport on the "MV Sea
Runner" 8,550 sacks of rice belonging to defendant National
Grains Authority from the port of San Jose, Occidental
Mindoro, to Malabon, Metro Manila.
Upon completion of the delivery of rice at its
destination, plaintiff on October 17, 1979, wrote a letter
requesting defendant NGA that it be allowed to collect the
amount stated in its statement of account.
On November 5, 1979, plaintiff wrote again defendant
NGA, this time specifically requesting that the payment for
freightage and other charges be made to it and not to
defendant Medalla because plaintiff was the owner of the
vessel "MV Sea Runner". In reply, defendant NGA on
November 16, 1979 informed plaintiff that it could not grant
its request because the contract to transport the rice was
entered into by defendant NGA and defendant Medalla who
did not disclose that he was acting as a mere agent of
plaintiff . Thereupon on November 19, 1979, defendant NGA
paid defendant Medalla the sum of P25,974.90, for freight
services in connection with the shipment of 8,550 sacks of
rice (Exhibit "A").
On December 4, 1979, plaintiff wrote defendant
Medalla demanding that he turn over to plaintiff the amount
of P27,000.00 paid to him by defendant NFA. Defendant
Medalla, however, "ignored the demand."
Plaintiff was therefore constrained to file the instant
complaint.
For services rendered, the National Food Authority paid Gil
Medalla P27,000.00 for freightage. Judgment was rendered
in favor of the plaintiff. Defendant National Food Authority
appealed to this court on the sole issue as to whether it is

jointly and severally liable with defendant Gil Medalla for

freightage.
It is contended by petitioner NFA that it is not liable
under the exception to the rule (Art. 1883) since it had no
knowledge of the fact of agency between respondent
Superior Shipping and Medalla at the time when the contract
was entered into between them (NFA and Medalla).

Issue:
Whether or not the instant case falls within the
exception of the general rule provided for in Art. 1883 of the
Civil Code of the Philippines.
Ruling:
Petitioner NFA's contention holds no water. It is an
undisputed fact that Gil Medalla was a commission agent of
respondent Superior Shipping Corporation which owned the
vessel "MV Sea Runner" that transported the sacks of rice
belonging to petitioner NFA. The context of the law is clear.
Art. 1883, which is the applicable law in the case at bar
provides:
Art. 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.

Consequently, when things belonging to the principal

(in this case, Superior Shipping Corporation) are dealt with,
the agent is bound to the principal although he does not
assume the character of such agent and appears acting in
his own name. In other words, the agent's apparent
representation yields to the principal's true representation
and that, in reality and in effect, the contract must be
considered as entered into between the principal and the
third person (Sy Juco and Viardo v. Sy Juco, 40 Phil. 634).
Corollarily, if the principal can be obliged to perform his
duties under the contract, then it can also demand the
enforcement
of
its
rights
arising
from
the
contract.Valenzuela v CA
G.R. No. 83122 October 19, 1990

Facts:
Petitioner Valenzuela, a General Agent respondent
Philamgen, was authorized to solicit and sell all kinds of nonlife insurance. He had a 32.5% commission rate. From 1973
to 1975, Valenzuela solicited marine insurance from Delta
Motors, Inc. in the amount of P4.4 Million from which he was
entitled to a commission of 32%. However, Valenzuela did
not receive his full commission which amounted to P1.6
Million from the P4.4 Million. Premium payments amounting
to P1,946,886.00 were paid directly to Philamgen.
Valenzuelas commission amounted to P632,737.00.
Philamgen wanted to cut Valenzuelas commission to
50% of the amount. He declined.
When Philamgen offered
reiterated his objection.

again,

Valenzuela

firmly

Philamgen took drastic action against Valenzuela. They:

reversed the commission due him, threatened the
cancellation of policies issued by his agency, and started to
leak out news that Valenzuela has a substantial debt with
Philamgen. His agency contract was terminated.
The petitioners sought relief by filing the complaint
against the private respondents. The trial court found that
the principal cause of the termination as agent was his
refusal to share his Delta commission.
The court considered these acts as harassment and
ordered the company to pay for the resulting damage in the

value of the commission. They also ordered the company to

pay 350,000 in moral damages.
The company appealed. The CA ordered Valenzuela to
pay the entire amount of the commission. Hence, this appeal
by Valenzuela.

Issue:
1. WON the agency contract is coupled with interest on the
part of agent Valenzuela.
2. Whether or not Philamgen can be held liable for damages
due to the termination of the General Agency Agreement it
entered into with the petitioners.

Ruling:

Ratio:
1. Yes, agency is one coupled with an interest. In any event
the principal's power to revoke an agency at will is so
pervasive. Records show that the agency is one "coupled
with an interest," and, therefore, should not be freely
revocable at the unilateral will of the company.
The records sustain the finding that the private
respondent started to covet a share of the insurance
business that Valenzuela had built up, developed and
nurtured. The company appropriated the entire insurance
business of Valenzuela. 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 procured, but also Philamgens stipulation
liability against him for unpaid premiums. The respondents
cannot state that the agency relationship between
Valenzuela and Philamgen is not coupled with interest.
There is an exception to the principle that an agency is
revocable at will and that is when the agency has been given
not only for the interest of the principal but also for the
mutual interest of the principal and the agent. The principal

may not defeat the agent's right to indemnification by a

termination of the contract of agency. Also, if a principal
violates a contractual or quasi-contractual duty which he
owes his agent, the agent may as a rule bring an appropriate
action for the breach of that duty.
2. Yes, the principal can be held liable. Hence, if a principal
acts in bad faith and with abuse of right in terminating the
agency, then he is liable in damages. The Civil Code says
that "every person must in the exercise of his rights and in
the performance of his duties act with justice, give everyone
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, Civil Code).
The circumstances of the case, however, require that
the contractual relationship between the parties shall be
terminated upon the satisfaction of the judgment. No more
claims arising from or as a result of the agency shall be
entertained by the courts after that date.

PHILIPPINE NATIONAL BANK, petitioner,

vs.
COURT OF APPEALS AND B.P. MATA AND CO., INC.,
respondents.
G.R. No. 97995 January 21, 1993

FACTS:
Private Respondent B.P. Mata & Co. Inc. (Mata), is a
private corporation engaged in providing goods and services
to shipping companies. Since 1966, it has acted as a
manning or crewing agent for several foreign firms. On
February 21, 1975, Security Pacific National Bank (SEPAC) of
Los Angeles which had an agency arrangement with
Philippine National Bank (PNB), transmitted a cable message
to the International Department of PNB to pay the amount of
US$14,000 to Mata.
On the basis of the cable message dated February 24,
1975 Cashier's Check No. 269522 in the amount of US$1,400
(P9,772.95) representing reimbursement from Star Kist.

However, fourteen days after or on March 11, 1975, PNB

effected another payment through Cashier's Check No.
270271 in the amount of US$14,000 (P97,878.60) purporting
to be another transmittal of reimbursement from Star Kist,
private respondent's foreign principal.
Six years later, or more specifically, on May 13, 1981,
PNB requested Mata for refund of US$14,000 (P97,878.60)
after it discovered its error in effecting the second payment.
On February 4, 1982, PNB filed a civil case for collection and
refund of US$14,000 against Mata arguing that based on a
constructive trust under Article 1456 of the Civil Code.

ISSUE:
Whether or not there is implied trust between the
parties.

RULING:
Yes, while it is true that there is implied trust in the
case. We rule that petitioner's claim cannot prosper since it
is already barred by laches. It is a well-settled rule now that
an action to enforce an implied trust, whether resulting or
constructive, may be barred not only by prescription but also
by laches. While prescription is concerned with the fact of
delay, laches deals with the effect of unreasonable delay.
ABERTO HERBON, MARGARITO HERBON and GABINO
HERBON, petitioners,
vs.
LEOPOLDO
respondents.

T.

G.R. No. 149542

PALAD

and

HELENP.

CAYETANO,

July 20, 2006

FACTS:
Gonzalo Palad in his lifetime was a co-owner of a parcel
of agricultural land located in Poblacion, Bagac, Bataan
known as Lot 421, with an area of 32,944 square meters and
covered by Transfer Certificate of Title (TCT) No. 4408 of the
Register of Deeds of Bataan. Gonzalos share was conjugal
property, having been acquired during his marriage with
Alejandra Nava. Alejandra died in1949, Gonzalo contracted a

second marriage with Remedios Torres, a widow with three

children from her previous marriage, herein petitioners. The
union of Gonzalo and emedios bore no children. On
November 16, 1983, Gonzalo died. Thereafter, petitioners
took possession of a portion of the property and despite
respondents demand to vacate and turnover possession of
the property, petitioners refused to do so.
On July 22, 1997, the RTC rendered its Decision
dismissing the complaint and ordering respondents to pay
petitioners P 3,000.00 as attorneys fees and cost of suit.
The RTC held that the action for recovery of possession
cannot prosper since petitioners proved that they are coowners of the subject property based on the two deeds of
absolute sale while CA set aside the decision of RTC. Hence,
an appeal.

ISSUE:
Whether or not implied trust exist in this case.

RULING:
Yes, the Court finds that on matters of implied trust,
Article 1448 of the Civil Code provides: There is an implied
trust when property is sold\, and the legal estate is granted
to one party but the price is paid by another for the purpose
of having the beneficial interest of the property. The former
is the trustee, while the latter is the beneficiary. However, if
the person whom the title is conveyed is a child, legitimate
or illegitimate, of the one paying the price of the sale, no
trust is implied by law, it being disputably presumed that
there is a gift in favor of the child. The trust created is
sometimes referred to as a purchase money resulting trust,
the elements of which are: a) an actual payment of money,
property or services, or an equivalent, constituting valuable
consideration; and b) such consideration must be furnished
by the alleged beneficiary of a resulting trust.

Spouses ANTHONY and PERCITA OCO, Petitioners,

vs.
VICTOR LIMBARING, Respondent.
G.R. No. 161298

January 31, 2006

FACTS:
Sometime in 1996, Sabas Limbaring subdivided his Lot
2325-D, covered by Transfer Certificate of Title (TCT) No.
5268, into two lots denominated as Lot Nos. 2325-D-1 and
2325-D-2. He then executed in favor of Jennifer Limbaring a
Deed of Sale for Lot 2325-D-2 for P60,000; and, in favor of

Sarah Jane Limbaring, another Deed for Lot 2325-D-1 for

P14,440. Accordingly, TCT No. 5268 was cancelled and TCT
Nos. T-21921 and T-21920 were issued in the names of
Jennifer and Sarah Jane, respectively.
Sensing some irregularities in the transaction, Percita
Oco, the daughter of Sabas Limbaring, left Puerto Princesa
City and went to Ozamis City. She then filed a case of perjury
and falsification of documents against respondent, her uncle
who was the father of Jennifer and Sarah Jane. During the
pre-litigation conference called by City Prosecutor Luzminda
Uy on July 1, 1996, the parties agreed that the two parcels of
land should be reconveyed to Percita, who was to pay
respondent all the expenses that had been and would be
incurred to transfer the titles to her name.

ISSUE:
Was there a trust created between Limbaring when he
purchased the properties in favor of his daughter.

RULING:
No, Under the last sentence of Article 1448,
respondents alleged acts paying the price of the subject
properties and, in the titles, naming his children as owners -raise the presumption that a gift was effected in their favor.
Respondent failed to rebut this presumption. Absent any
clear proof that a trust was created, he cannot be deemed a
real party in interest.49 That he should be deemed a trustor
on the basis merely of having paid the purchase price is
plainly contradicted by the presumption based on Article
1448 of the Civil Code "that there is a gift in favor of the
child," not with parent.

MARLENE CRISOSTOMO
Petitioners,

&

JOSE

G.

vs.
FLORITO M. GARCIA, JR., Respondent.
G.R. No. 164787

January 31, 2006

CRISOSTOMO,

FACTS:
On 24 September 1986, Victoria Garcia Vda. de
Crisostomo, mother of petitioner Jose G. Crisostomo, sold to
him, by way of a Deed of Absolute Sale, the property,
described in the aforesaid TCT including the improvements
and rights thereon, particularly described as TAG No. 84-2051097 (Urban Bliss Level I located at 163 Libis Talisay,
Caloocan City). In the Deed of Sale, petitioner Jose
Crisostomo and his sister Cristina Crisostomo signed as
witnesses in the execution of the instrument. Since they
were distant relatives, respondent allowed Victoria and her
children, petitioner Jose and Cristina, to stay in the subject
property as lessees under a Contract of Lease. By virtue of
the said deed of sale, respondent effected the transfer of the
tax declaration covering the property, under his name from
the City Assessors Office of Caloocan City.
However, before the transfer of title to respondent
could be completed, petitioners-spouses Jose and Marlene
Crisostomo were able to secure a loan from the National
Home Mortgage Finance Corporation using the subject
property as security through bad faith and machinations.
Worse, petitioners were able to transfer the subject property
under their names, obtaining TCT No. 273165, from the
Registry of Deeds of Caloocan City, without the knowledge
and consent of the respondent. Instead of an Answer,
petitioners filed an "Urgent Motion to Dismiss Action,"
alleging that since respondents cause of action is based on
an alleged deed of sale executed on 24 September 1986, the
cause of action of the respondent to enforce and to
implement the instrument arose on 24 September 1986 and
pursuant to Article 11446 of the Civil Code, the action must
be brought within 10 years from the time the right of action
accrues. Thus, from 24 September 1986, respondent had
only up to 24 September 1996 within which to file the action.
Since the complaint was filed only on 20 June 2002, or after
the lapse of more than 16 years, the cause of action is
clearly barred by prescription.
ISSUE:

Whether or not the action filed by the respondent had

already prescribed.

RULING:
No, It is now well-settled that the prescriptive period to
recover property obtained by fraud or mistake, giving rise to
an implied trust under Art. 1456 of the Civil Code, is 10 years
pursuant to Art. 1144. This ten-year prescriptive period
begins to run from the date the adverse party repudiates the
implied trust, which repudiation takes place when the
adverse party registers the land.
Clearly, the applicable prescriptive period is ten years
under Art. 1144 and not four years under Arts. 1389 and
1391. Applying the law and jurisprudential declaration
above-cited to the allegations of fact in the complaint, it can
clearly be seen that respondent has a period of 10 years
from the registration of the title within which to file the
action. Since the title was registered in the name of the
petitioners on 16 November 1993, respondent had a period
of 10 years from the time of the registration within which to
file the complaint. Since the complaint was filed on 20 June
2002, the action clearly has not prescribed and was timelyfiled.

FELOMINA ABELLANA, petitioner,

vs.
SPOUSES ROMEO PONCE and LUCILA PONCE and the
REGISTER OF DEEDS of BUTUAN CITY, respondents.
G.R. No. 160488

September 3, 2004

FACTS:
On July 15, 1981, Felomina, a spinster, pharmacist and
aunt of private respondent Lucila Ponce, purchased from the
late Estela Caldoza-Pacres a 44, 297 square meter
agricultural lot with the intention of giving said lot to her
niece, Lucila. Thus, in the deed of sale, the latter was
designated as the buyer of Lot 3, Pcs-10-000198, covered by
Original Certificate of Title No. P-27, Homestead Patent No. V1551 and located at Los Angeles, Butuan City. The total
consideration of the sale was P16,500.00, but only P4,500.00
was stated in the deed upon the request of the seller.
Subsequently, Felomina applied for the issuance of title in
the name of her niece. On April 28, 1992, Transfer Certificate
of Title (TCT) No. 2874 over the subject lot was issued in the
name of Lucila. Said title, however, remained in the
possession of Felomina who developed the lot through
Juanario Torreon and paid real property taxes thereon.
The relationship between Felomina and respondent
spouses Romeo and Lucila Ponce, however, turned sour. The
latter allegedly became disrespectful and ungrateful to the
point of hurling her insults and even attempting to hurt her
physically. Hence, Felomina filed the instant case for
revocation of implied trust to recover legal title over the
property. Private respondent spouses Lucila, also a
pharmacist, and Romeo, a marine engineer, on the other
hand, claimed that the purchase price of the lot was only
P4,500.00 and that it was them who paid the same. The
payment and signing of the deed of sale allegedly took place
in the office of Atty. Teodoro Emboy in the presence of the
seller and her siblings namely, Aquilino Caldoza and the late
Lilia Caldoza. A year later, Juanario approached Lucila and

volunteered to till the lot, to which she agreed. In 1987, the

spouses consented to Felominas proposal to develop and
lease the lot. They, however, shouldered the real property
taxes on the lot, which was paid through Felomina. When
Lucila learned that a certificate of title in her name had
already been issued, she confronted Felomina who claimed
that she already gave her the title. Thinking that she might
have misplaced the title, Lucila executed an affidavit of loss
which led to the issuance of another certificate of title in her
name.

ISSUE:
Is there an implied trust created between the parties?

RULING:
Yes, While Felomina sought to recover the litigated lot
on the ground of implied trust and not on the invalidity of
donation, the Court is clothed with ample authority to
address the latter issue in order to arrive at a just decision
that completely disposes of the controversy. Since rules of
procedure are mere tools designed to facilitate the
attainment of justice, they must be applied in a way that
equitably and completely resolve the rights and obligations
of the parties.
Finally, in deciding in favor of Felomina, the trial court
ordered respondent spouses to execute a deed of sale over
the subject lot in favor of Felomina in order to effect the
transfer of title to the latter. The proper remedy, however, is
provided under Section 10 (a), Rule 39 of the Revised Rules
of Civil Procedure which provides that " if real or personal
property is situated within the Philippines, the court in lieu of
directing a conveyance thereof may by an order divest the
title of any party and vest it in others, which shall have the
force and effect of a conveyance executed in due form of
law."