Agency Digests: Block B 2016

BLOCK B
2016
AGENCY DIGESTS
Memorable quotes from Atty. Cochingyan(well, so far):
…Tries? That’s a good thing, There’s no points for effort? Is that how
you think of all gentlemen? ...Moral lesson: Do you punish your Compiled by: Gil Arandia
boyfriend for trying? You punish him for not keeping his promise! Temporary photo muna yan! Lets take a digest group picture
Always ” A” for effort! someday haha
BLOCK B 2016
AGENCY DIGESTS BLOCK B
2016
Table of Contents SERONA VS. CA .......................................................................34
Week 3 ........................................................................................4 Municipal Council of Iloilo v. Evangelista ..................................36
Dominion Insurance v. Court of Appeals .....................................4 Smith, Bell & Co. vs CA ............................................................38
Home Insurance v United States Lines Co. et al...........................5 Chemphil Export and Import Corporation v. CA ........................39
ESTATE OF LINO OLAGUER V. ONGJOCO.....................................6 Uy v. CA..................................................................................41
Pineda v. Court of Appeals (2011) ..............................................8 ANGELES v. PHILIPPINE NATIONAL RAILWAYS ...........................43
City-Lite Reality Corporation v. Court of Appeals.......................11 BA Finace v. CA (1992).............................................................44
Cosmic Lumber vs CA ..............................................................13 National Power Corporation v. National Merchandising Corp. ...45
GUTIERREZ HERMANOS vs. ENGRACIO ORENSE ........................14 DBP v CA ................................................................................46
SHOPPER’S PARADISE REALTY & DEVELOPMENT CORPORATION Eugenio v. CA..........................................................................48
vs. EFREN ROQUE....................................................................16
Toyota Shaw Inc. v. CA ............................................................50
Vda. De Chua v. IAC.................................................................17
BACALTOS COAL MINES v. COURT OF APPEALS .........................51
LINTONJUA v. FERNANDEZ ......................................................19
Yu Eng Cho v. Pan American World Airways, Inc........................53
BA Finance vs CA.....................................................................20
Manila Memorial Park Cemetery, Inc. vs Linsangan ...................55
British Airways v CA ................................................................21
Week 5 ......................................................................................57
Pacific Rehouse Corp. V. EIB Securities .....................................22
Green Valley v. IAC..................................................................57
Cervantes v. CA.......................................................................24
Panlilio v. Citibank...................................................................58
Borja Sr. v. Sulyap Inc. .............................................................25
AIR FRANCE v CA.....................................................................60
GOZUN VS MERCADO..............................................................26
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Cuison vs. CA ..........................................................................62

Week 4 ......................................................................................28
PLEASANTVILLE DEVELOPMENT CORPORATION vs CA ...............63
Sazon v. Vasquez-Menacio ......................................................28
Rural Bank of Milaor v Ocfemia................................................65
Cornelia M. Hernandez v. Cecilio F. Hernandez .........................31
FILIPINAS LIFE INSURANCE VS. PEDROSO............................67
ESCUETA V. LIM ......................................................................33
Professional Service Inc. v. CA (2008) .......................................70
Altavas, Arandia, Avila, Bautista, Catacutan-Estabillo, Cayetano, Cocabo, Dantes, Diego, Ducepec, Elamparo, Flores, Galang, Geraldez, Guiyab, Henares, Hizon, Lee,
Mendoza, Morales, Ong, Santos, Sarmiento, Tantoco, Yap 2
2016
Professional Services, Inc. v. CA ...............................................73 Amparo G. Perez v. PNB ........................................................ 112
Sargasso Construction & Dev Corp v. Philippine Ports Authority 74 TERRADO V COURT OF APPEALS ............................................ 113
Banate v. PCRB .......................................................................76 Trusts- Week 7 ......................................................................... 115
Manila Remnant v. CA .............................................................79 MORALES V. CA .................................................................... 115
COUNTRY BANKERS INSURANCE CORPORATION VS KEPPEL CEBU Lina Peñalber v. Quirino Ramos, Leticia Peñalber, Bartex, Inc. . 118
SHIPYARD...............................................................................82 TORBELA v. SPOUSES ROSARIO, BANCO FILIPINO SAVINGS AND
MANOTOK BROTHERS INC. V. CA .............................................84 MORTAGE BANK (2011)......................................................... 121
Hahn v. Court of Appeals.........................................................86 Julio v. Dalandan................................................................... 122
Albaladejo y Cia vs Philippine Refining Co.................................87 Canezo v. Rojas (Yori’s version) .............................................. 123
DE CASTRO v CA......................................................................89 PNB v. AZNAR, et al............................................................... 126
Petron v. Cudilla .....................................................................90 Heirs of Tranquilino Labiste v. Heirs of Jose Labiste................. 127
GARCIA v. DE MANZANO .........................................................93 Pacheco v Arro...................................................................... 129
CMS LOGGING INC v. CA..........................................................95 Goyanko, Jr. v. UCPB (2013)................................................... 130
Buncio v. Ong Guan Can ..........................................................97 GAMBOA v. GAMBOA ........................................................... 132
REPUBLIC OF THE PHILIPPINES VS EVANGELISTA .......................98 Ty v. Ty................................................................................. 133
Sevilla v. CA ............................................................................99 Tan Senguan &Co. vs Philippine Trust Company...................... 135
Week 6 .................................................................................... 100 Government v. Abadilla......................................................... 137
Valenzuela v Court of Appeals ............................................... 100 Cristobal v. Gomez................................................................ 140
NATIONAL SUGAR TRADING v PNB......................................... 102 Development Bank of the Philippines vs. Commission on Audit142
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CHING V. BANTOLO............................................................... 103 CAÑEZO v. ROJAS (Gillian’s Version) ....................................... 144

Bacaling v. Muya (2011) ........................................................ 106 Ramos v. Ramos.................................................................... 146
COLEONGCO V. CLAPAROLS................................................... 108 Diaz v. Gorricho .................................................................... 149
LUSTAN v. CA........................................................................ 110 Pasino v. Monterroya............................................................ 150
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Gayondato v Treasurer.......................................................... 153 Week 3
Escobar vs. Locsin ................................................................. 154
Dominion Insurance v. Court of Appeals
Cavile v. Litania-Hong............................................................ 156 GR No. 129919 / February 6, 2002 / Pardo, J. as ponente
Estrella Tiongco Yared v. Jose Tiongco.................................... 157
Summary/Memory Aid:
PNB v. Jumamoy ................................................................... 159
-Manager of Dominion Insurance seeks for reimbursement for a
Vda. De Ouano v. Republic .................................................... 160
sum of money he allegedly advanced to satisfy the claims of some
Lopez v. Court of Appeals ...................................................... 162 of Dominion's clients
Salao v. Salao........................................................................ 164
-When a special power of attorney is required for the agent to do a
Municipality of Victorias v. CA ............................................... 166 certain act, the agent, in the performance of such act, must comply
PNB v. CA ............................................................................. 167 with the specifications embodied in the special power of attorney
giving him authority to do such
PARINGIT v. BAJIT ................................................................. 169
Heirs of Candelaria v. Romero ............................................... 171 FACTS:
ADAZA VS COURT OF APPEALS............................................... 173 -Guevarra instituted a Civil Case for a sum of money against
SING JUCO and SING BENGCO vs. ANTONIO SUNYANTONG and Dominion Insurance. Plaintiff sought to recover thereunder the sum
his wife VICENTA LLORENTE DE SUNYANTONG .................. 175 of P156,473.90 which he claimed to have advanced in his capacity
as manager of defendant to satisfy certain claims filed by
FIGURACION VS FIGURACION-GERILLA................................... 176
Dominion's clients
-Dominion denied any liability to Guevarra and asserted a

counterclaim for premiums allegedly unremitted by the latter
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-On the merits of the case, the RTC ruled that Dominion was to pay
Guevarra P156,473.90 as the total amount advanced by the latter in
the payment of the claims of Dominion's clients. The CA affirmed.
ISSUES:
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1. W/N Guevarra acted within his authority as agent for Dominion - Memorandum showed the instruction of Dominion that payment of
NO claims shall come from a revolving fund. Having deviated from the
instructions of the principal, the expenses that Guevarra incurred in
2. W/N Guevara is entitled to reimbursement of amounts-YES the settlement of the claims of the insured may not be reimbursed
HELD/RATIO: from Dominion.
1. A perusal of the “Special Power of Attorney” would show 2. However, while the law on agency prohibits Guevarra from
that Dominion and Guevarra intended to enter into a principal- obtaining reimbursement, his right to recovery may still be justified
agent relationship. Despite the word “special,” the contents of the under the general law on Obligations and Contracts, particularly,
document reveal that what was constituted was a general agency. Art. 1236. 1 In this case, when the risk insured against occurred,
The agency comprises all the business of the principal, but, couched Dominion’s liability as insurer arose. This obligation was
in general terms, is limited only to acts of administration. extinguished when Guevarra paid such claims. Thus, to the extent
that the obligation of Dominion had been extinguished, Guevarra
A general power permits the agent to do all acts for which the law may demand reimbursement from his principal. To rule otherwise
does not require a special power. would result in unjust enrichment of Dominion.
Art. 1878 enumerates the instances when a special power RULING:

of attorney is required, including (1) to make such payments as are
not usually considered as acts of administration; (15) any other act Dominion is ordered to pay Guevarra P112,6762.11, representing
of strict dominion. the total amount advanced by the latter in the payment of the
claims of the former’s clients, minus the amount in the revolving
The payment of claims is not an act of administration. The fund and the outstanding balance and remittance
settlement of claims is not included among the acts enumerated in
the Special Power of Attorney, neither is it of a character similar to
the acts enumerated therein. A special power of attorney would
Home Insurance v United States Lines Co. et al
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have been required before Guevarra could settle the insurance

GR No. 25593 November 15, 1967
claims of the insured.
Guevarra’s authority to settle claims is embodied in the

1
Memorandum of Management Agreement which enumerated the Article 1236, second paragraph: Whoever pays for another may demand
fro m the debtor what he has paid, except that if he paid without the
scope of Guevarra’s duties and responsibilities. However, the knowledge or against the will of the debtor, he can recover only insofar as
the payment has been beneficial to the debtor.
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J. JP BENGZON The case was dismissed for failure of PLAINTIFF to APPEAR in pre
trial.
Home Insurance, plaintiff-appellant
Issue:
United States Lines, defendants-appellee
W/N the dismissal of the pre-trial was proper?
(Carbonized machine rolls, dismissal of pre trial due to non-
appearance of party, special authority, Rules of Court) Held:
Facts: The dismissal was proper. The Revised Rules of Court states that in
Pre Trial, “The court shall direct the PARTIES and their ATTORNEYS
In 1964, SS Pioneer Moon arrived in Manila and discharged unto the to APPEAR before it for a conference. A party who fails to appear at
custody of the Bureau of Customs 200 cartons of CARBONIZED a pre trial conference may be non-suited or considered in default.”
ADDING MACHINE ROLLS consigned to Burroughs, Limited. Upon
It is true that the counsel had VERBAL authority to compromise the
delivery to consignee, several cartons were damaged. Consignee case. However, SECTION 23, Rule 138, Rules of Court requires
claimed damages (2.6 k) from the BOC, United Lines (owner of the attorneys to procure a “SPECIAL AUTHORITY”. The court has every
vessel) and Home Insurance which insured the goods. Home reason to expect that if it is not in writing, the same shall be duly
Insurance paid the claim and demanded REIMBURSMENT from BOC ESTABLISHED by EVIDENCE other than a self serving assertion of a
or the United Lines. Both rejected the claim which prompted Home
verbally conferred authority by a client. Authority to compromise
Insurance to file an action against the Republic of the Philippines, cannot be lightly PRESUMED. If judge is not satisfied that said
the BOC and United States Lines. authority exists, dismissal of the suit for non appearance of plaintiff
United States Lines disclaimed liability on the ground that the is SANCTIONED by the RULES.
damage was incurred while goods were in the possession of the
BOC. The RP and the BOC answered and alleged its non-suability
and non-compliance as according to ACT 3083 which required
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money claims directed to the Auditor General.

ESTATE OF LINO OLAGUER V. ONGJOCO
On December 7, 1965, a pre trial was conducted. Only the counsel GR 173312 Aug. 26, 2008
for the PLAINTIFF appeared who upon being asked for authority to
COMPROMISE stated that he had such authority given VERBALLY. J. Chico-Nazario
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Petitioner: Estate of Lino Olaguer namely Sor Mary Edith o JOSE sold them to VIRGILIO (son of Jose Olaguer)
Olaguer, Aurora de Guzman, Clarissa Trinidad, Lina Olaguer, Linda
Montayre (legitimate children of Lino Olaguer) o VIRGILIO sold to ONGJOCO (respondent)
Respondent: Emiliano M. Ongjoco (buyer of properties)  Under a general power of attorney given by
Virgilio, JOSE sold Lots 1 & 2 to EMILIANO
Memory Aid: buyer in good faith; special power of atty. can be ONGJOCO (this alleged general power of
included in general power of atty. atty was never presented in court)
Facts  On succeeding dates, JOSE, under general

power of attorney sold Lots 76-D, Lots 76-E
 Action for annulment of Sales of Real Property and/or and 76-F, Lot 76-G to Ongjoco. All of these
Cancellation of titles lots had 2 deeds of sale because they were
sold TWICE but still to Ongjoco.
 The heirs of Lino Olaguer wanted to annul the sale of the
properties belonging to the Estate. They allege that the  Defense of Olivia and Eduardo in selling the lots to
properties sold to ESTANISLAO Olaguer were void for being Estanislao – They are VALID because they were judicially
absolutely simulated or fictitious approved!
 Background: So how did the estate of Lino Olaguer fall into RTC:
the hands of ESTANISLAO and eventually to ONGJOCO???
 Ruled in favor of plaintiffs – sale of lots to Pastor Bacani and
o When Lino Olaguer died, OLIVIA & EDUARDO Estanislao Olaguer were absolutely simulated for lack of
became administrators. consideration. Approval of court did not make a void sale
o OLIVIA & EDUARDO sold 12 parcels of land to valid
PASTOR BACANI  RTC also ruled that Ongjoco cannot claim good faith
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o BACANI sold the lots back to OLIVIA & EDUARDO because it protects only those who purchased from
registered owners. Having bought only from an agent, it
o OLIVIA & EDUARDO sold the land to ESTANISLAO was his responsibility to investigate on the principal’s title
and agent’s authority.
o ESTANISLAO sold them to JOSE Olaguer
CA:
2016
 RTC Decision was MODIFIED: Sales of properties to Ongjoco o When the sale of a piece of land is through an agent
are VALID while the rest are still null and void. – authority must be in writing & with special power
of attorney; otherwise, it is void. (Art. 1874, CC)
 Why did it become valid? CA ruled that when the sale of
property is made through an agent, buyer need not o Even if a document is designated as a general
investigate the principal’s title. Law merely requires that the power of attorney, the requirement of a special
agent’s authority be in writing. power of attorney is met if there is a clear mandate
from the principal specifically authorizing the
ISSUE: W/N Ongjoco was a buyer in good faith/innocent purchaser performance of the act. The special power of
for value attorney can be included in the general power
Held/Ratio when the act or transaction for which the special
power is required is specified therein.
1. For Lots Nos. 1 & 2 – Ongjoco was in BAD FAITH
Petition PARTIALLY GRANTED. Lots 1 & 2 reverted back to the estate
 The power of attorney purportedly issued by Virgilio of Lino Olaguer
authorizing Jose Olaguer to sell the lots to Ongjoco was
never presented in court. Pineda v. Court of Appeals (2011)
GR No. 127094 (February 6, 2002)
2. For Lots Nos. 76-D to 76-G – Ongjoco was an INNOCENT
Ponente: Pardo
PURCHASER for value
Petitioner: Pineda – owner of a house in California
 The fact that the said lots were sold to Ongjoco twice does
not mean he was a buyer in bad faith or that he knew of any Respondent: Spouses Banez – owner of White Plains lot mortgaged
defect in the title with GSIS.
 Ongjoco was able to present a general power of attorney Summary/Memory Aid:
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executed by Virgilio Olaguer. While the law requires a

special power of attorney, the general power of attorney White Plains/ California Exchange
was sufficient in this case, as Jose Olaguer was expressly
Spouses Banez and Pineda executed an “Agreement to
empowered to sell any of Virgilio’s properties.
Exchange Real Properties” to clear the mortgages over their
 DOCTRINE: respective properties. The Sps Banez were allowed to occupy or
2016
lease to a tenant the house of Pineda in California while Pineda was made through an agent, a special power of attorney is essential.
authorized to occupy the White plains property. Eventually, Pineda This authority must be in writing, otherwise, the sale shall be void.
sold the White Plains lot to Duque; included in the agreement was
the down payment of Php 450K in exchange for Pineda’s obligation Facts:
to release the property from mortgage. After, Pineda requested the Appellees Nelson and Mercedes Banez are the original
Sps Banez written authority for the release of the title from the GSIS owners of a parcel of land, together with the improvements thereon
mortgage. Such was given to Pineda with the understanding that (house), located at 32 Sarngaya St., White Plains, Quezon City. This
Pineda would personally deliver the title to them. land was subject to a mortgage in favor of the Government
When Pineda returned from the US, she discovered that Duque was Insurance System (GSIS). Alejandria Pineda is the owner of a house,
located at 5224 Buchanan St., Los Angeles California. This house was
already occupying the White Plains house. It was only that time that
the Sps were informed about the interest of Duque to purchase the subject to an $84,000 mortgage obligation.
White plains property. Consequently, the exchange agreement was On January 11, 1983, spouses Banez and Pineda, together
rescinded due to pineda’s failure to clear the mortgage obligation of with her spouse Caldona, executed an “Agreement to Exchange Real
her California property. Sps Banez eventually found out that their Properties” over their respective properties. In the document, the
TCt was cancelled, and a new one was issued in favor of Pineda parties agreed to exchange properties and to consummate the
(issued with forged signatures of the Sps). Sps Banez filed a exchange not later than June 1983. In the same agreement, Pineda
complaint. RTC ruled in favor the spouses declaring them as undertook to pay earnest money amounting to $12,000 on or
absolute owners. CA affirmed the decision. SC affirms the CA before the first week of February 1983. Moreover, the parties
decision. SC held that Sps Banez were the real owners and Pineda mutually undertook to clear the mortgages over their respective
could not sell the property because they did not have a special properties.
power of attorney to sell. A special power of attorney is necessary
to enter into any contract by which the ownership of an immovable Meanwhile, prior to the consummation of the exchange,
is transmitted or acquired for a valuable consideration. Without an the spouses Banez were allowed to occupy Pineda’s California
authority in writing, Pineda could not sell the property to the property, or to lease the said property to a third person. Conversely,
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Duques. Any sale in favor of the Duques is void. Pineda was allowed to occupy the spouses’ White Plains property.
Doctrine: On December 18, 1984, Pineda executed an “Agreement to

Sell” over the White Plains property in favor of appellant spouses
• Special Power of Attorney, when essential: The Civil code Adeodato Duque Jr. and Evangeline Duque. In the agreement to sell,
provides that in the sale of a parcel of land or any interest therein Pineda sold the property to the Duques for P 1.6M. The agreement
2016
stipulated the payment of P 450,000 as down payment in exchange Consequently, the exchange agreement between spouses Banez
for Pineda’s obligation to release the property from any and Pineda was rescinded due to Pineda’s failure to clear the
encumbrances and to deliver the title of the property to the mortgage obligation of her California property.
Duques. The agreement further stipulated that the balance be paid
to Pineda on or before the end of January 1985 and that upon full Negotiations relative to the purchase of the White Plains
payment, Pineda shall be bound to deliver to the Duques a deed of property continued between spouses Banez and the Duques. When
the negotiations failed, the spouses demanded that the Duques
absolute sale signed by the registered owner. Out of the down
payment given by the Duques, Pineda settled the GSIS mortgage. vacate the property.
The entire agreement between Pineda and the Duques were Spouses Banez claim that upon inquiry with the Register of
unknown to the Banez spouses. Deeds, they discovered that their title over the White Plains
After the settlement of the mortgage, Pineda requested a property was cancelled in favor of a new one issued in the name of
written authority from the Banez spouses so that the title of the Pineda. The issuance of the new title was facilitated by fictitious
White Plains property may be released from the GSIS. The Banez deed of sale bearing their forged signatures. They informed the
spouses gave Pineda authority with the understanding that the title Duques about this in a meeting in the U.S. In the same meeting, the
parties agreed to the sale of the property. However, the records are
would be delivered to them personally. Meanwhile, the Duques
started occupying the White Plains property some time in June or silent as to the outcome of the said agreement.
July of 1985. Thus, the Banez spouses filed this present complaint before
the RTC of Quezon City. Pineda was declared in default due to
Upon the Banez spouses’ return to the Philippines in March
1985, they discovered that the Duques were already occupying the failure to respond to summonses, while the Duques filed their
White Plains property. It was then when Adeodato Duque informed answer.
the Banez spouses of his interest to buy the property, also The trial court rendered a decision in favor of the Banez
mentioning that they had given Pineda money to facilitate the spouses, declaring them to be the absolute owners of the White
redemption of her property in the U.S. When the spouses Banez Plains property in fee simple. The fictitious deed of sale between
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confronted Pineda, she informed them that the title of the White the spouses and Pineda was declared void ab initio, invalidating all
Plains property was already with the Duques. The spouses did not the subsequent agreements it facilitated, including the agreement
insist on getting the title from the Duques since they already to sell between Pineda and the Duques. The Duques were declared
expressed interest in buying the property. purchasers in bad faith and were required to vacate the subject
2016
property. On appeal, the CA affirmed the RTC’s decision. Hence, this Petitioner: City Lite Realty Corporation
appeal via certiorari.
Respondent: FP Holdings Realty Corporation
Issue:
Memory aid: Vialogo Property/ sales brochure
W/N the petitioners Pineda and spouses Duque validly acquired the
White Plains property. FACTS
Held/Ratio: Respondent, FP Holdings Realty Corporation (FP Holdings)

was the registered owner of a parcel of land along E. Rodriguez Ave,
NO, the petitioners did not validly acquire the White Plains Quezon City, also known as “Violago Property” or the "San Lorenzo
property. Ruiz Commercial Center." It has an area of 71, 754 sq. m. (9,192 sq.
m. in front, 23,332 sq. m. in the middle and 39,230 sq. m. in the
The issue is factual and may not be raised via certiorari.
back). The property was offered for sale to the general public
Nevertheless, upon examination it can be seen that the Banez through the circulation of a sales brochure. The brochure indicates
spouses were the original owners of the property and remained to an asking price of P6,250/sq. m. with terms of payment negotiable.
be the owners because the exchange agreement between Pineda The contact person written on the brochure was Meldin Al G. Roy of
and the Banez spouses was never consummated. Thus, at the time Metro Drug Inc.
the Duques executed the agreement to sell with Pineda could not
sell the property because he was not the owner, neither did he have Roy sent a sales brochure together with a location plan and copy of
authority to sell on behalf of the real owners, the Banez spouses. TCT to Atty. Mamaril (lawyer and licensed real estate broker) who
Adeodato Duque in fact confirmed that Pineda was not equipped passed the documents on to Teng (EVP) and Atty. Villanueva (Legal
with a special power of attorney to sell. Counsel) of City Lite.
A special power of attorney is necessary to enter into any contract City Lite sent a letter to Roy and conveyed its interest to
by which the ownership of an immovable is transmitted or purchase 1⁄2 of the front lot. Roy said that FP Holdings was not
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acquired for a valuable consideration. Without an authority in receptive to the purchase of only half of the front lit. After a few
writing, Pineda could not sell the property to the Duques. Any sale days, Atty. Mamaril wrote “Metro Drug (Attn: Meldin Al Roy)” and
in favor of the Duques is void. said it wanted to buy the entire front lot instead. It asked for the
price to be reduced. Roy made a counter offer subject to a couple of
City-Lite Reality Corporation v. Court of Appeals terms. The next day, City Lite’s officers and Atty. Mamaril met with
GR 138639. February 10, 2000. Bellosillo. Roy the Mandarin Hotel in Makati to consummate the transaction.
2016
Later the same day, petitioner conveyed its formal acceptance to No, he was not. The absence of authority can be determined from
the terms and conditions set forth by Roy, which was made in the written memorandum issued by FP Holdings requesting Metro
writing. Drug’s assistance in finding buyers for the property. It read, “We will
appreciate Metro Drug's assistance in referring to us buyers for the
However, FP Holdings refused to execute the corresponding property. Please proceed to hold preliminary negotiations with
deed of sale of the front lot of the property. Upon its claim of interested buyers and endorse formal offers to us for our final
protecting its interest as vendee of the property in suit, City Lite
evaluation and appraisal.”
registered an adverse claim to the title of the property with the
Register of Deeds of Quezon City. This meant that Meldin Al G. Roy and/or Metro Drug was
only to assist FP Holdings in getting prospective buyers who they
FP Holdings filed a petition for the cancellation of the
were to indorse to FP Holdings. Final evaluation, appraisal and
adverse claim against City Lite. The President of FP Holdings offered acceptance of the transaction could be made ONLY by FP Holdings.
it other properties as a substitute for the property but City Lite Roy was only a contact person with no authority to conclude a sale
refused, as it did not suit their business needs. City Lite then caused of the property.
the annotation of the first notice of lis pendens in the TCT.
Article 1874 of the Civil Code states, “When the sale of a
FP Holdings caused the resurvey and segregation of the piece of land or any interest therein is through an agent, the
property and asked the Register of Deeds to issue separate titles, to
authority of the latter shall be in writing; otherwise the sale shall
which it did. City Lite then caused the annotation of the second be void.”
notice of lis pendens in the TCT. After which the property was
transferred through the issuance of a new TCT to Viewmaster For lack of written authority to sell the property, the sale between
Construction Corporation (Viewmaster). Roy and City Lite is null and void.
The RTC ruled in favor of City Lite. Viewmaster filed a Additional information:
motion of reconsideration, which was denied. The CA reversed
Petitioner anchors the authority of Metro Drug and Roy on the
decision of the RTC and ruled in favor of FP Holdings.
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following:
ISSUE: W/N Roy was authorized to sell the property of FP Holdings?
1. Testimonies of 3 witnesses, admissions of Roy and the lawyer of
HELD Metro Drug
2. Sales brochure specifying Roy as contact person
2016
3. Guard posted at property saying Roy was authorized agent Villamil-Estrada at P80.00/ square meter (26k). Although the
decision by the RTC, which followed their compromise agreement,
4. Common knowledge among brokers became final the judgement was never executed because Villamil-
Cosmic Lumber vs CA Estrada was not able to produce the duplicate copy of the title of
G.R. No. 114311 the lot needed in order to segregrate the portion that Perez bought
from Villamil-Estrada. Subsequently, Perez filed a case to revive the
November 29, 1996 judgment.
Ponente: Bellosillo When summons was issued, it was the first time that
Cosmic Lumber found out about the said compromise agreement.
Summary/Memory Aid:
Cosmic Lumber then seeked the annulment of the decision before
Cosmic Lumber executed a SPA for Villamil-Estrada the CA on the ground that the compromise agreement was void for
authorizing her to institute ejectment cases against informal settlers the ff reasons:
occupying the land of Cosmic Lumber. Instead, she entered into a
1. atty-in-fact had no authority to dispose of, sell,
compromise agreement SELLING a portion of the land to Isidro encumber or divest Cosmic Lumber of its
Perez (an informal settler). The agreement was never executed.
ownership of the real property in question.
Cosmic Lumber subsequently found out about the compromise
agreement and seeked to annul the RTC judgment before the CA. 2. Authority of atty-in-fact was limited to
CA dismissed, SC reversed the decision of the CA by saying that the instituting actions for ejectment and to evict
SPA was explicit and nowhere in the SPA does it confer upon the informal settlers therein.
Villamil-Estrada the authority to dispose of the real property of
Cosmic Lumber. In disposition of real property a written document 3. The authority to enter into compromise
explicitly granting authority is necessary. agreements was in connection with and limited
to the eviction of the third-party informal
Facts: settlers in order to enable the corporation to
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take material possession of the land.

Cosmic Lumber Corporation executed a Special Power of
Attorney appointing Villamil-Estrada as attorney-in-fact. By virtue of 4. The 26k was never received by Cosmic Lumber.
this power, Villamil-Estrada filed an action for ejectment against
Isidro Perez. They subsequently entered into a compromise 5. Private defendant acted in bad faith
agreement wherein Perez bought the land they occupied through
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6. Disposal of corporate property needs a that the language so used conveys such power, no such
resolution of the board of directors of the construction shall be given the document.
corporation.
Therefore, the compromise agreement entered into by
CA dismissed the complaint. Hence this petition. Cosmic Lumber Villamil-Estrada was done without authority from Cosmic Lumber.
claims that because the Compromise Agreement entered into which This being the case, a judgment based on a compromise entered
was the basis of the decision of the court was void it necessarily into by an attorney without specific authority from the client is void.
follows that the judgment itself was void.
GUTIERREZ HERMANOS vs. ENGRACIO ORENSE
Issue: G.R. 9188 December 4, 1914
W/N the special power of attorney granted to Villamil- Torres, J.

Estrada granted her the power to dispose of the land.
Petitioner/Plaintiff/Appellee: Gutierrez Hermanos
Held:
Respondent/Defendant/Appellant: Engracio Orense
NO. The authority granted to Villamil-Estrada was explicit
and exclusionary. Nowhere in this authorization was Villamil-Estrada Summary/Memory Aid: nephew/ratification as express agency
granted expressly or impliedly any power to sell the subject Orense allegedly gave his nephew Duran consent to sell his property
property nor a portion thereof. There was the explicit limitation to Hermanos Gutierrez with the right of repurchase. When the
fixed by the grantor that the compromise entered into shall only be redemption period lapsed, Hermanos Gutierrez then demanded
"so far as it shall protect the rights and interest of the corporation in Orense to execute a Deed of Conveyance which Orense refused to
the aforementioned lots." Alienation of the land at a rate that was do because he never really gave his consent to the sale of the
well below the market price of the land DOES NOT protect the rights property. Hermanos then filed a case of estafa against Duran
and interests of Cosmic Lumber. however, during the trial, Orense admitted that he gave his consent
and thus Duran was acquitted. The SC held that Orense’s admission
BLOCK B 2016
A special power of attorney is necessary to enter into any

contract by which the ownership of an immovable is transmitted or in the criminal case constituted as ratification and cured ALL the
acquired either gratuitously or for a valuable consideration. For the defects of the Deed of Sale INCLUDING the lack of written authority
principal to confer the right upon an agent to sell real estate, a for the sale of land through an agent.
power of attorney must so express the powers of the agent in clear Facts:
and unmistakable language. When there is any reasonable doubt
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 The defendant Engracio Orense was the owner of a parcel o However, during the trial Orense testified that he
of land located in Guinobatan, Albay. Orense, allegedly, consented to the sale when he was being
then gave to his nephew, Jose Duran, consent to sell the interrogated by the fiscal.
subject property to the plaintiff Gutierrez Hermanos for
 Because of Orense’s statement, the court
P1,500 which was executed in a public instrument. (Note:
acquitted Jose Duran from the charge of
Deed of Sale was notarized however, Duran’s authority
estafa.
was not in writing and I assumed it to be verbal since the
case never said explicitly!) Issue(s):
o It is however stipulated that there was a right of 1. W/N Orense’s admission in the criminal case of estafa
repurchase in favor of Durance for a period of four against Duran constituted as confirmation and ratification
years. to the sale made by Hermanos Gutierrez and Duran.
o Hermanos Gutierrez could not enter into possession 2. W/N the instrument of sale executed between Hermanos
of the property owing to the contract of lease Gutierrez and Duran is null and void since the authority
entered by the plaintiff company and Duran. given to Duran was not in writing and not signed Orense.
 The defendant failed to redeem such property after the four Ratio/Held:
year redemption period has elapsed. Therefore, Gutierrez
Hermanos demanded Orense to execute in legal form a 1. YES, the sworn statement made by Orense while testifying
deed of conveyance of the subject property on the strength as a witness at Duran’s trial confirms and ratifies the sale
of the instrument of sale executed by Duran. effected by his nephew to Hermanos Gutierrez.
o Engracio Orense however refused, claiming that he a. Under Article 1313 of the Civil Code, the
never executed any written power of attorney nor ratification made by Orense cured all the defects
gave any verbal authority to Duran to sell said the contract may have contained from its execution
BLOCK B 2016
property to plaintiff company.

o The Court held that justice would not be served if
 Gutierrez Hermanos then filed a criminal case of estafa Orense would be permitted to deny that he gave
against Jose Duran for having represented himself to be the consent in his case against the plaintiff company for
absolute owner of the subject land when in fact it did not the conveyance of the subject property.
belong to him.
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 Because had it not been for the consent building complex on the property, to which SP issued another P250k
given by Orense, Duran would have been check.
convicted of estafa. (Note: Basically, the
court did not allow Orense to flip-flop his The contract of lease and the agreement was never annotated in
statement at his convenience! ) the TCT of Felipe’s land because of Felipe’s untimely demise. His
death forced SP to deal with Efren Roque (respondent), son of
2. NO, the instrument of sale executed by Duran in favor of Felipe, but negotiations broke down.
Hermanos Gutierrez is VALID. Although it is not shown that
the authority Orense gave to Duran was in writing, the fact Efren filed a case to annul the contract of lease and the
that Orense gave his consent to the instrument of sale memorandum agreement on the allegation that his parents
donated the subject land to him while he was still alive, therefore
constituted as ratification for the lack of written authority as
required by law. And as such, it has the effects of an express Felipe had no authority to enter into the assailed agreements with
power of agency. SP.
The donation was made in a public instrument by the donor-

SHOPPER’S PARADISE REALTY & DEVELOPMENT
spouses before a notary public and duly accepted on the same day
CORPORATION vs. EFREN ROQUE
by Efren before the notary public in the same instrument of
G.R. No. 148775 January 13, 2004
donation. The title to the property, however, remained in the name
DECIS ION of Felipe, and it was only transferred to and in the name of Efren
sixteen years later.
VITUG, J.:
Efren, while he resided in the US, delegated to his father the mere
Memory Aid (Father leased land he donated to his son, unregistered administration of the property. Respondent came to know of the
deed of donation) assailed contracts with petitioner only after retiring to the
Philippines upon the death of his father.
Facts:
BLOCK B 2016
RTC
Shopper’s Paradise (SP) as lessee, represented by its president,
Atienza, entered into a 25-year lease with Felipe Roque. SP issued a Ruled for SP on the basis that since the deed of donation was not
check for P250k to Felipe as reservation payment. SP and Felipe registered, it could not bind SP, a third party. Also, RTC said that
entered into a memorandum of agreement for the construction of a since contracts take effect not only between the parties themselves
but also between their assigns and heirs (Article 1311, Civil Code)
2016
therefore, the lease contract together with the memorandum of (Personal Note: SC did not anymore expound on the agency issue. I
agreement would be conclusive on plaintiff Efren. lifted these underlined ruling from the original, this is the only
mention of agency in the whole case, but it seems that the
CA implication is, if Felipe was an agent of Efren, then the lease Felipe
Reversed on the basis that although the deed of donation could not entered into with SP without a special power cannot bind Efren to
bind third parties because it was not registered, it is binding upon the lease.)
SP because, as it turns out from Atienza’s testimony, SP knew of the
Vda. De Chua v. IAC
donation prior to the contract of lease and the agreement.
G.R. No. 70909 // January 5 1994 // J. Quiason
Issue:
Petitioner: Family of Chua Bok, to whom the residential house in
W/N the contract of lease and the agreement is binding upon SP – question was sold and who became the subsequent lessees of the
Yes. lot in question.
Respondent: Herminigilda Herrera, owner of the lot where the
Held:
residential house is built; Spouses Go to whom the lots were sold
Yes. Although an unregistered deed of donation does not bind third
parties, SP’s prior knowledge of such donation would have the Summary/Memory Aid: Lessee’s option to buy the leased premises;
effect of registration as regards to him (in short it binds him). Special Power of Attorney required if contract of lease entered into
by agent is for more than a year, otherwise the contract will be
It was not shown that Felipe had been an authorized agent of Efren. unenforceable [Art 1878 (8)]
In a contract of agency, the agent acts in representation or in behalf

of another with the consent of the latter. Article 1878 of the Civil Facts
Code expresses that a special power of attorney is necessary to
lease any real property to another person for more than one year. [Contract 1] In 1950, Herrera, the owner of the land and lessor,
BLOCK B 2016
The lease of real property for more than one year is considered not executed a Contract of Lease in favour of Tian On over 2 lots in
merely an act of administration but an act of strict dominion or of Cebu for a term of 10 years, renewable for another 5 years. The
ownership. A special power of attorney is thus necessary for its Contract contains a stipulation giving the lessee (Tian On) an option
execution through an agent. to buy the leased property and also to leave the possession of the
property to Tian On for 10 years or as long as he is faithful to the
2016
contract. In accordance with the contract, Tian On built a residential claiming that they had the option to buy the leased premises as
house on the leased property. provided in the lease contracts.
Trial Court: DISMISSED; ordered the plaintiffs to VACATE the lot and
[Contract 2] Four years after the execution of the contract of lease,
REMOVE the building at their expense; ordered Herrera to pay
Tian On executed a Deed of Absolute Sale of Building in favour of plaintiffs MORAL DAMAGES
Chua Bok where the residential house was sold for P 8,000. Tian On
assigned his rights and privileges as lessee of the lot, as well as the Court of Appeals: AFFIRMED but removed the moral damages.
corresponding obligations, to Chua Bok. The sale was made with the
knowledge and express consent of Herrera, who was represented
by her attorney-in-fact, Vicenta de Reynes. Issue/s
W/N the CA erred in ordering the Chuas to vacate the premises
(Note: they gave up their demand for nullification of the sale of the
[Contract 3] In 1960, when the original Contract of Lease expired, lots)
Chua Bok and Herrera, through her alleged attorney-in-fact Reynes,
executed another Contract of Lease with a term of 5 years. It also
Held/Ratio
contained a stipulation giving Chua Bok an option to buy the leased
premises and also that if the property leased be sold to any other No. Petitioners rely on the Contract of Lease (Contract 3) entered
party, the terms and conditions of this contract shall be valid until into by Chua Bok and Vicenta Reynes. It should be noted that
its duration. After the expiration of this second Contract, Chua Bok Reynes was not armed with a special power of attorney to enter
and his family remained in possession of the land until 1978. into a lease contract for a period of more than one year. In cases
Herrera let them stay despite the expiration of the contract. where a contract of lease for more than a year is entered into by
the agent of the lessor and not the lessor himself, Art 1878 (8) of
BLOCK B 2016
the Civil Code requires that the agent must be armed with an SPA.
[Contract 4] In 1977, Herrera through her attorney-in-fact Luz As a consequence, the provisions of the contract of lease, including
Tormis, who was authorized with and SPA, sold the lots in question the grant of an option to purchase to the lessee, would be
to defendant-spouses Go, to whom the title to the lots were then unenforceable.
transferred. Later on, Chua Bok’s successors-in-interest filed a case
seeking the annulment of sale between Herrera and spouses Go,
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Although Herrera granted a tacit renewal to respondents after the was encountering problems with the tenants and was trying to
expiration of the contract of lease, such renewal is only limited to settle with them. Petitioners demanded from Fernandez that the
the terms of the contract which are germane to the lessee’s right of transaction be finalized and that the properties be turned over to
continued enjoyment of the property (rentals, care of property, them. Upon receipt of the demand letter, Fernandez wrote the
responsibility for repairs, etc) and does not extend to alien matters, petitioners and denied having agreed on what the petitioners are
like the option to buy the leased premises (Art 1670). claiming. She also informed the petitioners that she and her cousin
decided not to push through with the sale because of the
appearance of "alleged tenants" demanding share in the subject
LINTONJUA v. FERNANDEZ parcels of land.
G.R. No. 148116 Petitioners, then, filed a complaint for specific performance with
April 14, 2006 damages against Fernandez and the registered owners of the
property, claiming unjustified breach of their obligations under their
[insert SUMMARY/MEMORY AID here] agreement/meeting of the minds during their first meeting.
Fernandez, on the other hand, claimed that while petitioners
Facts:
offered to buy the property, she did not accept the offer and thus,
Respondents Fernandez and Eleosida are representatives of the no verbal contract to sell was perfected.
heirs/owners of two parcels of land in San Pablo City. Brokers Issue:
Alimario and Fisico offered to sell the said parcels of land to
petitioners Antonio Litonjua and Aurelio Litonjua, Jr. They said that W/N there was a perfected contract of sale
they were authorized to offer the properties for sale by
respondents. Petitioners then met with respondents at the Held:
petitioners' office in Mandaluyong. Petitioners claim that during No. There is no documentary evidence that the owners authorized
that meeting, they agreed that the petitioners would buy the Fernandez to sell their properties. Any sale of real property by one
BLOCK B 2016
property for P5,098,500 and that they would meet again on a purporting to be the agent of the registered owner without any
certain date to finalise the sale. It was also agreed that upon next authority therefor in writing from the said owner is null and void.
meeting, Fernandez would present a special power of attorney The declarations of the agent alone are generally insufficient to
executed by the owners of the property, authorizing her to sell for establish the fact or extent of authority. In this case, the only
and in their behalf. However, only broker Fisico attended the evidence adduced by the petitioners to prove that Fernandez was
scheduled meeting and informed the petitioners that Fernandez authorized by the owners is their testimony that Fernandez openly
2016
represented herself to be the representative and promised to Unfortunately, the motor vehicle figured an accident & was badly
present a written authority to sell the properties. The failure of damaged. The Cuadys asked BA Finance to consider the same as a
Fernandez to object to parol evidence did not and should not total loss, and to claim from the insurer the face value of the car
prejudice the owners. insurance policy and apply the same to the payment of their
remaining and give them the surplus if any. BA Finance did not heed
BA Finance vs CA their request but instead, advised them to just have the car
201 SCRA 157 (1991) J. Paras repaired. The car, shortly thereafter, bogged down. The spouses
Petitioner: BA Finance wrote a letter to BA Finance requesting the latter to pursue their
prior instruction of enforcing the total loss provision in the
Respondent: CA, RTC, Spouses Cuady insurance coverage. When BA Finance did not respond favorably,
they stopped paying their monthly installments on the promissory
Memory Aid: Ford Escort, Insurance Claim note.
FACTS: BA Finance argument: Failure to enforce the total loss provision
Cuady spouses obtained from Supercars a credit of ~P40K, which does not operate to extinguish the unpaid balance on the
covered the cost of 1 Ford Escort 1300, four-door sedan. The promissory note; it’s not one of the modes of extinguishment of
spouses executed a promissory note in favor of Supercars, payable obligations under Article 1231 of the Civil Code
on monthly installments. A penalty of P10 has also been stipulated Cuady spouses argument: Failure to enforce the total loss provision,
for every month of late installment payment. To secure this
BA Finance not only lost its opportunity to collect the insurance
obligation, the spouses constituted a chattel mortgage on the said proceeds but also the remaining balance on the promissory note
car. Supercars then assigned the promissory note with the chattel
mortgage to BA Finance. The spouses paid a total of ~P37K to BA ISSUE:
Finance, thus leaving an unpaid balance and penalty of ~P3K.
W/N BA Finance has waived its right to collect the unpaid balance of
BA Finance, as assignee of the mortgage lien, obtained the renewal the Cuady spouses on the promissory note for failure of the former
BLOCK B 2016
of the insurance coverage over the motor vehicle w/ Zenith to enforce the total loss provision in the insurance coverage of the
Insurance Corporation when the Cuadys failed to renew said motor vehicle subject of the chattel mortgage.
insurance coverage themselves. Under the terms & Conditions, any
loss under the policy shall be payable to BA Finance. RULING:
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YES. BA Finance was deemed subrogated to the rights & obligations Unquestionably, the Cuadys suffered pecuniary loss in the form of
of Supercars when the latter assigned the promissory note, together salvage value of the motor vehicle when BA Finance steadfastly
w/ the chattel mortgage constituted on the car in favor of BA refused and refrained from proceeding against the insurer for the
Finance. BA Finance is therefore bound by the terms and conditions payment of a clearly valid insurance claim, and continued to ignore
of the chattel mortgage executed between the Cuadys and the yearning of the Cuadys to enforce the total loss provision,
Supercars. despite the undeniable fact that Rea Auto Center, the auto repair
shop chosen by the insurer itself to repair the motor vehicle,
Under the deed of chattel mortgage, BA Finance acted as an
misrepaired and rendered it completely useless and unserviceable
attorney-in-fact w/ full power & authority to file, follow-up,
compromise and or settle insurance claims. It was authorized to British Airways v CA
sign, execute and deliver the corresponding papers, receipts & GR No 121824, January 29, 1998, Romero
documents to the Insurance company as may be necessary to prove
the claim & to collect from the latter the proceeds of insurance to Petitioner: British Airways
the extent of its interests.
Respondent: CA, Ghop Mahtani, PAL
In granting BA Finance such powers, there existed an agency. Under
Memory Aid:
Article 1884 of the Civil Code, BA Finance is bound by its acceptance
to carry out the agency & is liable for damages w/c through its non- It is a well-settled rule that an agent is also responsible for any
performance, the Cuadys, the principal may suffer. negligence in the performance of its function and is liable for
damages which the principal may suffer by reason of its negligent
ADDITIONAL FACTS
act.
RTC dismissed the case due to procedural reasons which was Facts:
affirmed by CA.
Mahtani wanted to go to Bombay, India to visit his family. Since
oPetitioner was granted motion for postponement (its "handling" British Airways did not have direct flights from Manila to Bombay,
BLOCK B 2016
counsel was temporarily assigned in Cebu City) and was required to he had to take a connecting flight from Manila-HongKong via PAL
adduce evidence in the form of counter-affidavits of its witnesses. and then HongKong-India via British Airways. He checked in his 2
BA Finance, however, never complied with the above-mentioned pieces of luggage with PAL in Manila, confident that these would be
order, paving the way for the trial court to dismiss the case. transferred to his BA flight in HongKong.
2016
Upon arrival at India, he discovered that his luggage was missing. BA was one of continuous air transportation from Manila to Bombay
representatives told him that his luggage may have been diverted to and regarded as a single operation. PAL was merely an agent when
London. After patiently waiting for his luggage for a week, he was it transported Mahtani to HongKong.
told by the BA to file a claim by accomplishing the “Property
Irregularity Report”. Since PAL is merely an agent and it was not a party to the contract,
Mahtani can only sue BA alone. This does not however leave PAL
Back in the Philippines, Mahtani filed a complaint against BA who in without any liability from its negligent act. It is a well-settled rule
turn filed a third-party complaint against PAL stating that it was due that an agent is also responsible for any negligence in the
to PALs late arrival in HongKong which caused the non-transfer of performance of its function and is liable for damages which the
the luggage. PAL argued that on the contrary, there was sufficient principal may suffer by reason of its negligent act. If its negligence is
time to transfer the luggage and that it was merely an agent of BA. the proximate cause of loss of the luggage, BA has a right to sue PAL
for indemnification.
The RTC awarded Mahtani damages and dismissed the third-party
complaint against PAL for lack of cause of action. This was affirmed More Information:
by the CA.
Nature of airline’s contract of carriage partakes of two types: A
Issue: contract to deliver cargo merchandise to its destination and a
contract to transport passengers to their destination.
w/n the CA was correct in dismissing the BA’s third-party suit
against PAL Third-party complaint: a procedural device whereby a ‘third party’
who is neither a party nor privy to the act or deed complained of by
Held: the plaintiff, may be brought into the case with leave of court, by
No. It is well-settled rule that carriage by plane although performed the defendant, who acts as third-party plaintiff to enforce against
by successive carriers is regarded as a single operation and that the such third-party defendant a right for contribution, indemnity,
carrier issuing the passenger’s ticket is considered the principal and subrogation or any other relief, in respect of the plaintiff’s
claim. The third-party complaint is actually independent of and
BLOCK B 2016
the other carrier as merely its agent.

separate and distinct from the plaintiff’s complaint.
The contract of carriage in this case was exclusive between Mahtani
and BA based on the ticket issued to Mahtani. BA merely endorsed Pacific Rehouse Corp. V. EIB Securities
the Manila-Hongkong leg of Mahtani’s journey to PAL. The ticket’s Petitioners: Pacific Rehouse Corp. (A company which owned stock)
“Conditions of Contracts” issued to Mahtani stated that the contract
2016
Respondent: EIB Securities (A company engaged in stock between Pacific and EIB to the effect that any property of Pacific’s
brokerage, affiliated with Export and Industry Bank. under the custody of EIB has a lien attached thereunto, such that
EIB may dispose of the same in order to discharge any obligations
Facts: Pacific has with EIB. This agreement is what EIB relied upon in order
Petitioners engage in the buying and selling of stocks through their to sell the DMCI shares.
broker, EIB Securities. In the course of its business, Pacific Rehouse Pacific, upon discovering what transpired, demanded the DMCI
obtained 60,000,000 shares of stock of Kuok Properties (hereafter shares back from EIB. Naturally, EIB was unable to comply, hence
‘KPP’), these were obtained at the average price of P0.22 a share. this instant petition.
Similarly, Petitioner has also been able to obtain roughly 32,000,000
shares of stock of DM Consunji Inc. (hereafter ‘DMCI’), half through Issue (only the one relevant to Agency):
EIB, and the other half through Westlink Global Equities. These
1) W/N THE TRIAL COURT WAS CORRECT IN HOLDING THAT
were purchased at the average share price of P0.38 per share.
RESPONDENT
Thereafter, Pacific and EIB entered into an agreement to sell the 60
million shares of KPP to any party, for a price of P0.14 per share, EIB COULD NOT INVOKE SECTION 7 OF THE SECURITIES DEALINGS
subject to the option that within 30 days, Pacific may buy back the ACCOUNT AGREEMENT AS BASIS FOR THE SALE OF PETITIONERS’
KPP shares at the price of P0.18 per share. The collateral for this
transaction was the very KPP shares themselves. This is where the DMCI SHARES -Yes
problem occurred. Pacific believed it had an ‘option’ to redeem
Held
the shares, whereas EIB believed it was obligated to redeem the
shares. 1) Yes, the SDA would not justify the actions of EIB. By the
express wording of the SDA, the properties of Pacific under
The period for redemption having expired, the parties once more
EIB’s custody may be disposed in order to pay off Pacific’s
agreed to an extension of the period, because Pacific was undecided
obligation to EIB. The purchase and redemption of the KPP
over whether it wanted to exercise its right of redemption. Pacific
BLOCK B 2016
stocks is clearly not an obligation of Pacific to EIB, hence it

eventually decided not to redeem the shares. Nevertheless, and
clearly exceeded its authorization when it sold the same in
unknown to Pacific, EIB sold its 32 million DMCI shares at a price of
order to purchase KPP stocks. Besides, there is ambiguity in
P0.24 per share, and thereafter applied the proceeds thereto in
the wording of the SDA when it states that there is a lien on
order to repurchase the KPP shares. Note that there is an
all of Pacific’s ‘property’. Such cannot clearly determine
agreement (Securities Dealing and Accounts Agreement ‘SDA’)
which property is determined, and this ambiguity must not
2016
be construed in EIB’s favour. Sale by EIB is thus NULL and However, when he learned that his same flight was making a stop-
VOID. over at San Francisco, he made arrangements with PAL to board
there instead of in LA.
April 2, 1990: PAL refused to let him on board, on the grounds of an

Cervantes v. CA expired ticket.
G.R. No. 125138.
Cervantes then sued PAL, which was dismissed at the RTC. The
Ponente: PURISIMA, J. dismissal was affirmed by the CA, hence the instant case.
Petitioner: NICHOLAS Y. CERVANTES, Issue:
Respondent: COURT OF APPEALS AND THE PHILIPPINE 1) W/N The act of the PAL agents in confirming subject ticket
AIR LINES, INC extended the period of validity of petitioner’s ticket: Did not
extend ticket validity.
Summary: Complaint for damages, this case was dismissed.
Memory Aid: PAL flight. Tickets. Ticket Agent. MNL-HNL-LA-SAN 2) W/N The defense of lack of authority was correctly ruled
Francisco flight. Expired ticket. upon: Correctly ruled upon.
Facts: 3) W/N The denial of the award for damages was proper: No
damages.
Philippine Airlines (PAL) issued to Nicholas Cervantes a round trip
plane ticket for the Manila-Honolulu-LA-Honolulu-Manila route, Held:
valid one year from its issuance on May 27, 1990. This was given as 1) Regarding the first issue, no it did not. Neither of the PAL ticket
a compromise agreement to settle two previous civil cases between agents had any authority in order to extend the validity of the
the same parties. ticket. Further, the express terms of the ticket are quite clear,
BLOCK B 2016
March 23, 1990: Cervantes used the ticket four days before expiry. that it would expire on a particular date. Cervantes was well
aware on this, and nevertheless decided to use it with only four
He reached LA as per the ticket agreement. He booked the return
flight with the PAL office, the flight was confirmed for April 2. days left before the date of expiry. There was a risk he was
aware of.Furthermore, to request an extension of the ticket, he
knew he must file a written request to the Manila office of PAL,
which he did not do. The PAL ticket agents were not aware of
2016
the terms of the compromise agreement between PAL and Memory Aid: if agent exceeded his authority in binding his principal
Cervantes, he cannot use what they did to his advantage. Note to a penalty clause it VOIDABLE not void and may be subject to
that when an agent acts beyond the scope of his authority, ratification.
and the person with whom the agent was dealing with is
aware of this lack of authority, the acts of the agent do NOT Facts:
bind the principal. If this is the case, damages may not be Petitioner Borja Sr. (lessor) and respondent Sulyap Inc.
recovered. (lessee) entered into a contract of lease involving a one-storey
2) (No longer Agency issue): The failure of the respondent to allege building owned by Borja located at New Manila, QC. Pursuant to the
lack of authority as a defense was cured when the matter was contract of lease, Sulyap Inc. paid, among others, advanced rentals,
association dues and deposit for electrical and telephone expenses.
litigated upon with the implied consent of both parties. This
occurred when petitioner offered When the lease expired, Borja refused to return the
abovementioned expenses to Sulyap and thus a complaint for sum
3) testimony on the subject in court. Further, Cervantes’ admission of money was filed by Sulyap. The parties however, entered into a
that he knew about the necessity of a written request compromise agreement and the RTC rendered a decision based on
functioned as an admission that he knew only the PAL legal such agreement. The compromise agreement stipulated that Borja
counsel was empowered to grant extensions. will return the amounts P30k and P50k and in case the amounts
were not paid, Borja will be liable for 2% interest per month until it
4) No award for damages allowed. There was a failure to prove is fully paid and 25% attorney’s fees.
PAL acted in bad faith, which is necessary for a
Borja failed to pay the amounts stipulated by the judicial
5) claim of moral damages for breach of contract in cases of
compromise and hence, Sulyap filed a motion for the issuance of a
contracts of carriage. Not only that, Cervantes was the one in writ of execution as stipulated by the terms of the compromise
Bad Faith. He never suffered any damage from being denied agreement. Borja however, filed a motion to quash stating that his
access to the flight in San Francisco, because he carried a failure to pay the amounts was due to respondent’s fault. Borja filed
backup ticket on himself for another flight the whole time, since
BLOCK B 2016
another motion to quash and now claims that there was fraud in the
he was anticipating whether or not PAL would honour the
execution of the compromise agreement because his former
ticket. In short, he just took advantage of the PAL ticket agent’s counsel, a certain Atty. Cruz, removed the page of the genuine
negligence in order to find an opportunity to sue PAL.
compromise agreement where he affixed his signature and
Borja Sr. v. Sulyap Inc. fraudulently attached the same to the compromise agreement
GR. 150718 March 26, 2003
2016
submitted to the court, making it appear that he agreed to the Moreover, Borja failed to substantiate his claims of fraud in
penalty clause of 2% per month and 25% attorney’s fees. the instant case. He never presented evidence to support his claims
other than his bare allegations that his former counsel fraudulently
Sulyap vehemently denied Borja’s allegations and even attached the page of the genuine compromise agreement where he
presented Atty. Cruz who declared that Borja did give his consent to affixed his signature to the compromise agreement submitted to
the disputed penalty clause. Atty. Cruz said that Borja actually the court. The SC noted that the petitioner is a doctor of medicine
signed the compromise agreement inside the courtroom before it
and should have read and understood the contents of the judgment
was submitted for approval and that the petitioner chose the on compromise.
disputed penalty clause among more other burdensome penalty
clauses.
RTC denied Borja’s motion to quash the writ of execution GOZUN VS MERCADO
and gave credence to Atty. Cruz’s testimony. CA affirmed the RTC [insert SUMMARY/MEMORY AID here]
decision.
Facts:
Issue(s):
Jose Mercado a.k.a Don Pepito Mercado vied for the gubernatorial
1. W/N Borja is bound by the penalty clause in their post in Pampanga. Upon Don Mercado's request, his compadre
agreement. Jesus Gozun, who is the owner of JMG Publishing House, submitted
to him draft samples and quotation price of campaign materials.
Ratio/Held:
Gozun claims that Mrs. Mercado, wife of Don Mercado, told him
YES, even assuming that Atty. Cruz exceeded his authority that Don Mercado already approved the price and sphe should start
in inserting the penalty clause the status of the said is clause is printing the campaign materials. In order to deliver the materials on
NOT VOID but merely voidable and may be ratified. Petitioner’s time he availed the services of Metro Angeles Printing, owned by his
failure to question such penalty clause despite having several daughter Jennifer Gozun and of St. Joseph Printing Press, owned by
his mother Epifania Macalino Gozun. Gozun delivered the materials
BLOCK B 2016
opportunities to do so was tantamount to ratification. Hence, Borja

is estopped from assailing the penalty clause. Furthermore, to Don Mercado's headquarters in Pampanga. Later on, Lilian
petitioner acknowledged the validity of the penalty clause when Soriano, the sister-in-law of Don Mercado, obtained a cash advance
Borja refused to pay the amounts to the collector sent by Sulyap of 253k for allowance of poll watchers who will attend a seminar
because he (collector) did not have an SPA authorizing him to and similar expenses. Lilian akniwledged the amount received in a
receive payment. receipt. Gozun sent a statement of account to Don Mercado in the
2016
total amount of P2,177,906 itemized as follows: P640,310 for JMG No. Nowhere in the receipt can it be inferred that Don Mercado nor
Publishing House; P837,696 for Metro Angeles Printing; P446,900 Mrs. Mercado was connected with the cash advance transaction.
for St. Joseph Printing Press; and P253,000, the "cash advance" Generally, the agency may be oral, unless the law requires a specific
obtained by Lilian in behalf of Mrs. Mercado. Mrs. Mercado paid form. A special power of attorney is necessary for an agent to, as in
1million but the balance was not paid despite repeated demands for this case, borrow money, unless it is so urgent, special and
more than 3 years. So Gozun filed a complaint to collect. Don indispensable for the preservation of the things which are under
Mercado claims that he never transacted with Gozun for the administration. This case does not involve the preservation of things
printing of campaign materials and that his wife was not authorized under administration. So now it is important to determine if Lilian
to enter such transaction in his behalf. He claims that the materials had a SPA to borrow money on behalf of Mercado. Since there was
were donated by family and friends. He denied that he gave no written authorization, the SPA should be duly established by
authority to Lilian to collect sum of money. He also claim that the evidence. In this case, Gozun failed to prove that Lilian is an agent of
1million paid by his wife is not a payment but a gesture of goodwill Mercado with the SPA to borrow money. His self- serving assertion
to those who helped them. is not enough. The statement of account that Gozun sent to
Mercado states that the amount was received by Lilian "in behalf of
Trial court decided in favor of Gozun. It ordered Don Mercado to Mrs. Annie Mercado." However, there was no such indication in the
pay the balance for the printing materials and the cash advance. note. It only indicated that Lilian received the money without saying
The court of appeals reversed the decision in favor of Don Mercado for what reason and in what capacity. It is a general rule in agency
on the ground that Lilian was not authorized to cash advance for that for the agent to bind the prinicpal, the contract must be, upon
Don Mercado and since the two owners of the printing
its face, purport to be made, signed and sealed in the name of the
establishments are not impleaded, Gozun can’t collect for them. principal, Since a person cannot be bound by contracts he did not
Moreover, the 1 million payment of Mrs. Mercado already accounts authorize to be entered into his behalf, Don Mercado is not liable to
for the payment for JMG Printing press of Gozun. pay for the cash advance. Contracts entered into in the name of
Issue: another person by one who has been given no authority or legal
representation or who has acted beyond his powers are classified as
BLOCK B 2016
WON Lilias's cash advance was made in behalf of Mercado? unauthorized contracts and are declared unenforceable, unless they
are ratified.
WON Don Mercado is liable for the balance of the cost of printing
the campaign materials? Yes, the SC ruled that Mercado should pay the balance including the
payment for St. Joseph and metro angels printing press because
Held:
2016
Gozun is the real party in interest in so far as recovery of cost for Week 4
the campaign materials made by his mother and sister.
Sazon v. Vasquez-Menacio
(the court did not discuss how on Earth did the wife obtain an GR No. 192085 | February 12, 2012 | Ponente: Sereno, J.
authorization to enter the contract or if she really had it. Basta sabi
bayaran daw. The judge didn’t say if the payment is for unjust The present case stems from a Complaint for Recovery of Possession
enrichment. Wala talaga. God help us. Correct me if I am mistaken.) of Real Properties, Accounting and Injunction.
Note: Petitioner: Caridad Sazon (administrator)
The requirement of a special power of attorney refers to the nature Respondent: Leticia Vasquez-Menancio (owner)
of the authorization and not to its form.
FACTS:
The parties to a contract are the real parties in interest in an action
Respondent is a resident of the US. Sometime in 1979, she
upon it, as consistently held by the Court. Only the contracting
entrusted the management, administration, care and preservation
parties are bound by the stipulations in the contract; they are the
of her properties (Lots I-IX) to the petitioner.
ones who would benefit from and could violate it. Thus, one who is
not a party to a contract, and for whose benefit it was not expressly Respondent avers that Lots I to IX are productive, and that
made, cannot maintain an action on it. One cannot do so, even if the petitioner, as the administrator has collected and received all
the contract performed by the contracting parties would the fruits and income accruing therefrom. Petitioner on the other
incidentally inure to one's benefit. hand, claims that several of the properties do not produce any fruit
or generate any income at all, and that any supposed income
In light thereof, petitioner is the real party in interest in this case.
derived from them is not sufficient to answer for all the expenses
The trial court’s findings on the matter were affirmed by the
incurred to maintain them.
appellate court. It erred, however, in not declaring petitioner as a
real party in interest insofar as recovery of the cost of campaign According to respondent, petitioner never rendered full
BLOCK B 2016
materials made by petitioner’s mother and sister are concerned, accounting of the fruits and income derived, but instead
upon the wrong notion that they should have been, but were not, appropriated these for her own use and benefit. Denying the
impleaded as plaintiffs. allegation, petitioner presented 5 letters which had been sent to
respondent as proof of accounting. Furthermore, petitioner denies
receipt of any letter asking her to make an accounting or to remit
the fruits collected. She further avers that, since the start of their
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agency agreement, the respondent never answered any of the The RTC ordered respondent to pay Sazon the amount of P 180,000
communications she had sought to initiate. as compensation for administering subject properties.
Respondent revoked in writing all the powers and authority Petitioner filed her MR questioning the RTC's decision to
of administration granted to petitioner effective March 1997. rely on the computation made by respondent's attorney-in-fact.
Respondent demanded that petitioner return possession and Realizing that it should have considered the Certifications issued by
administration of the properties. Respondent made repeated verbal the NFA and the PCA for the prices of palay, corn and copra, the RTC
and written demands upon petitioner to render an accounting and ruled in favor of respondent and partly reversed its first decision. In
to remit the owner's share of the fruits. However, petitioner refused its new decision, the RTC ordered petitioner to turn over the
to perform her obligation and continued to hold on to the properties and to render a full, accurate and complete accounting of
properties and the management thereof. She also continues to all the fruits and proceeds of the properties during the period of her
collect and keep all the income generated by the properties. administration. The petitioner appealed to the CA which dismissed
her appeal.
On October 30, 1997, respondent filed a Complaint with the
RTC, praying that the RTC order petitioner to render an accounting ISSUES +HELD/RATIO (I combined them as not to confuse the class,
and to remit all the fruits and income received. In her Answer, the since we have 7 issues)
petitioner alleges that the respondent has no cause of action for the
1. Is the petitioner obliged to turn over the possession of Lots I-III
ff. reasons: Lots I-III are under valid lease agreements, Lots V-VI can
no longer be given as they have been transferred to petitioner's to the defendant even if these lots are subject of valid lease
agreements? -YES
mother through a Deed of Redemption, and that Lots IV and VII-IX
are already in respondent's possession. By way of compulsory The lease agreements covering Lots I-III should be
counterclaim, petitioner is asking that respondent be ordered to respected. When the petitioner entered into these agreements, she
return the 1/3 portion of Lot IV which was allegedly sold to acted within her authority as respondent's agent. However,
petitioner's mother, plus the fruits collected therefrom. In its petitioner must turn over the administration of the leases to
decision, the RTC ordered the petitioner to turn over the respondent, since respondent has already revoked the authority of
BLOCK B 2016
possession, management and administration of all the properties, to petitioner as administrator. Hence, the petitioner no longer has the
remit to the respondent the total sum of P1,265,493.75 right to administer the properties or to receive the income
representing the unremitted fruits and income of the properties, generated.
less the amount of P150,000 by way of administration expenses
incurred, to pay moral damages, attorney's fees and costs of suit.
2016
2. Is defendant obliged to return the 1/3 portion of Lot IV capacity as attorney-in-fact of Leticia, and not in her personal
to petitioner's mother who allegedly already owns that part of the capacity. (Note: before Caridad Sazon became the administrator, her
property?-YES mother, Ana Sazon was the administrator of the properties. Ana
Sazon redeemed the properties when she was still the
The sale of the 1/3 of this lot to petitioner's mother should administrator.) In fact, records disclosed that the said parcels of
be respected. Lot IV has been in the latter's possession since 1997. land were declared for taxation purposes in the name of respondent
Since it is not controverted that 1/3 of the lot is now owned by
Vasquez-Menancio.
petitioner's mother by virtue of a deed of sale, respondent should
turn over the possession of the corresponding 1/3 and remit the 5. Was petitioner entitled to a 20% commission for the sale of
fruits collected therefrom since 1997. respondent's properties?-NO
3. Did the petitioner fulfill her duty to render an account of Petitioner failed to prove that they entered into such
the relevant transactions she entered into as respondent's agent agreement. No other evidence was presented except for her
with compliance to Article 1891 2? -NO testimony.
Petitioner claims that in the course of her administration of 6. How should the value of the fruits and proceeds be determined?
the properties, the letters she sent to respondent should be
considered as a fulfillment of her obligation. Both the RTC and the Petitioner does not deny that she never remitted to
CA found these letters insufficient. The Court agrees. Petitioner was respondent any of the fruits or income derived. Every agent is
the administrator of respondent's properties for 18 years, and 4 or 5 bound to deliver to the principal whatever the former may have
letters (the 5th letter was undated) within 18 years can hardly be received by virtue of the agency, even though that amount may not
be owed to the principal.
considered as sufficient to keep the principal informed and updated
of the condition and status of the latter's properties. The Certifications of the NFA and PCA should have been
4. Was the ownership of Lots V and VI validly transferred to given weight as they are documentary evidence issued by the
government offices responsible for determining the price of the
petitioner's mother by way of a Deed of Redemption? -NO
BLOCK B 2016
products. The Court is left with no other choice but to order both
Findings by the RTC and CA show that when petitioner's parties to present their evidence in support of their respective
mother redeemed the property, she only redeemed such in her claims considering that no evidence was submitted to prove the
quantity and quality of harvests for the relevant period. Aside from
2
Art. 1891. Every agent is bound to render an account of his transactions rendering an account of all the fruits and proceeds, petitioner is also
and to deliver to the principal whatever he may have received by virtue of
the agency, even though it may not be owing to the principal.
2016
ordered to present all her evidence regarding the alleged transpo DPWH offered to purchase a land in Sto. Tomas Batangas
expenses, attorney's fees, real property taxes paid, etc. owned pro-indiviso by Cornelia, Atty Jose (father of Cecilio) and
Mena Hernandez. DPWH offered P35.00 per square meter initially
7. Is petitioner entitled to compensation? -YES which jumped to P70.00 per square meter. The Hernandezes did
Petitioner argues that since the expenses for the not accept the offers which forced DPWH to file an EXPROPRIATION
maintenance of the properties exceeded the income generated, CASE which also included other families affected by the DPWH
whatever is left of the income should belong to her as project.
compensation. Such is not acceptable considering that neither of The Hernandezes property executed a SIGNED LETTER
the parties was able to prove how much the properties earned. indicating Cecilio as their representative and a compensation
Also, petitioner repeatedly claims that all income derived was
arrangement. (A. 20% of any amount in excess of P70.00 as success
insufficient to cover the expenses. Thus, how can there be a fee, B. whatever excess beyond P300.00 per square meter as
"remaining income"? additional incentive, C. P8,500.00 for preparation of the pleading).
Since there was no amount agreed upon, the doctrine of
During the course of the expropriation proceeding, RTC
quantum meruit should be applied. The amount of recovery should ordered the appointment of COMMISSIONERS to help determine
only be the reasonable value of the thing or services rendered. In just compensation for the case. In this case, Cecilip was appointed
the instant case, the amount of P1000 per month appears to be just,
as one.
reasonable and fair.
An irrevocable SPA was made by the Hernandezes
Cornelia M. Hernandez v. Cecilio F. Hernandez appointing Cecilio as their true and lawful attorney with respect to
GR. 158576- March 9, 2011 the expropriation case. There was no mention for any
Justice Perez compensation scheme.
Memory Aid: DPWH Expropriation, Commissioner, Fiduciary Aspect On January 7,1998 the RTC pegged the value of the land at
P1500.00 per square meter. The value of the Hernandez lot is
BLOCK B 2016
of Agency, Vices of Consent

P21,964,500 as just compensation. More than a year after, Cornelia
A Petition for Review of the Decision of the CA which reversed the executed a revocation of the SPA granted to Cecilio and moved to
decision of the RTC of Makati declaring the quitclaim signed by withdraw her share (1/3) amounting to P7,321,500. Judge granted
Cornelia Hernandez is valid. motion of Cornelia but with the condition that the money shall be
released ONLY to CECILIO. He received the whole sum of 21.9 M.
Facts:
2016
Cornelia received from Cecilio 2 things: 1) Receipt and Quitclaim present. At the time when they made the letter, Hernandezes have
stating release of Cecilio from any action for damages, claims and just rejected the P70.00 per square meter. Clearly, the base price of
demands regarding the expropriation case and 2)A 1,123,000 check. P70.00 and the ceiling price of P300.00 are the conditions that
Cornelia received it with a heavy heart and claims that she was moved the parties to enter to the contract. An obvious mistake was
forced to receive it for her medical expenses. made. The trial court deviated that the price of land should be
based at the time of the filing of the petition. It resolved the case by
Upon learning from her niece that she was entitled for
setting the price to be at the 1998 value due to the following
P7,321,500 from the case, she addressed a letter to Cecilio reasons: property value in Batangas has skyrocketed in the past two
demanding accounting of all the proceeds from the expropriation
years. If the letter is followed, Cecilio should claim P6,081,726.00
case. It was unanswered and prompted her to file an annulment of and Cornelia receives only P1,113,320.4. (Big difference)
the quitclaim and recovery of sum and damages before the RTC of
Makati. With Cecilio in default, the RTC nullified the quitclaim. The It is also on record that Cornelia asked for accounting of the
lower court ordered also the payment of 6.1 M plus 12% interest to proceeds of the expropriation case. It was left unanswered which
Cornelia. violated the fiduciary nature of the agency. The relationship of an
agent and principal is fiduciary. In regard to the subject matter of
The CA reversed the RTC decision on appeal.
the agency, the agent is stopped from acquiring or asserting a title
Issue: adverse to that of the principal. His position is analogous to that of a
trustee and he cannot, with the principles of good faith be allowed
1. W/N the CA erred in holding the validity of the receipt to have an interest in opposition of that of his principal. Instead of
quitclaim? an accounting, Cecilio gave a receipt and quitclaim. Due to her frail
condition, Cornelia was forced to receive the documents. Instead of
Held:
disclosing the truth of the amounts, he issued a quitclaim barring
Yes. The quitclaim is not valid. Cornelia from any claims to recover and sum of money from the
sale of her property amounting to FRAUD on Cecilio’s part.
As to the expropriation case, each pro-indiviso owner is
BLOCK B 2016
entitled to P7,321,500. The division of proceeds is contested by The SPA (second document) is the last source of authority
Cecilio as he was the AGENT of the owners of the property. He of Cecilio. It didn’t stipulate any compensation. It must be
insists that he be given the compensation due to him as stated in appreciated in light of Cecilio’s appointment as a commissioner. As
the LETTER in 1993. A contract is voidable where any one of stated in Sec. 5, Rule 67 of the Rules of Court, a commissioner must
mistake, fraud, violence, intimidation and undue influence is be free from bias, prejudice or partiality. When Cecilio accepted the
position as commissioner and proceeded with the duties, it created
2016
a barrier preventing his performance of his duties under the SPA. As Memory Aid: sale through a sub-agent, receipt of earnest money is
an officer of the court, he acted for the expropriation court. He considered as ratification of sale
cannot be allowed to consider such action as an act for or in behalf
of the defendants of the case at the same time. Indeed, Cecilio Facts:
foisted fraud on both the Court and the Hernandezes. As Respondent Rufina Lim bought the hereditary shares (10
completion of the his appointment as commissioner, Hernandez is lots) of Ignacio Rubio & heirs of Baloloy. They executed a contract of
directed to pay Cecilio the corresponding COMMISSIONER’s fees of sale and respondent gave Rubio P102,169.86 and the heirs
P4,000.00. P450,000 as downpayment. It was agreed in the contract that upon
The decision of the lower court ordered Cecilio to pay the paying the balance, the vendors would secure certificates of title to
Lim. Later on, however, the vendors refused to deliver the
amount of P6.1 M to Cornelia at 12% per annum interest until fully
paid. However, it is a fact that Cecilio breached an obligation that is certificates of title even if Lim was ready and willing to pay them.
neither a loan or forbearance of money. It should have been 6% not According to the Baloloys, the contract of sale had no more
12%. The decision of the RTC is reinstated with the interest be force since they had withdrawn their offer to sell because Lim failed
modified from 12% to 6% per annum from the time of the filing of to pay the balance on or before May 1, 1990. As for Rubio, he
the complaint. denies that he entered into a contract of sale with Lim since he has
appointed his daughter Patricia Llamas to be his attorney-in-fact
and not Virginia Lim(who represented him in the sale in favor of
ESCUETA V. LIM Rufina Lim). Also, he alleges that the P100k was not a
GR No. 137162 January 24,2007 downpayment/earnest money, but merely a payment of
respondent’s debt.
J. Azcuna
RTC: Judgment in favor of Rufina Lim. Rubio and the Baloloys were
Petitioners: Corazon L. Escueta (second buyer) ordered to execute the Deeds of Sale.
BLOCK B 2016
Ignacio E. Rubio (vendor) CA: Affirmed the trial court’s order

Heirs of Luz Baloloy – Alejandrino & Bayani Baloloy Issue:
(vendor)
W/N the contract of sale between petitioners and respondent is
Respondent: Rufina Lim (vendee) valid
2016
Held/Ratio: YES, the contract of sale was valid. accepted and enjoyed its benefits. Therefore, they are estopped
form questioning the validity of the sale. Thus, having a valid sale,
It appears that Patricia Llamas actually authorized Virginia Lim Rubio could no longer sell the same properties to Corazon Escueta.
to sell the properties as her sub-agent. According to Art. 1892,
although she is not prohibited from appointing a substitute, she will Petition DENIED.
have to be responsible for its acts, as in this case, the sale of the
properties in favor of respondent.
“Art. 1892. The agent may appoint a substitute if the SERONA VS. CA
principal has not prohibited him from doing so; but he GR NO. 130423, November 18, 2002
shall be responsible for the acts of the substitute: (1)
Petitioner: Virgie Serona
When he was not given the power to appoint one.”
Respondent: CA, Leonida Quilatan
Even assuming that Virginia Lim has no authority to sell the subject
properties, the contract she executed in favor of respondent is not (Sub-agent: Labrador)
void, but simply unenforceable under Art. 1317
Memory Aid:
“A contract entered into in the name of another by one
Estafa, Sub-agent
who has no authority or legal representation, or who
has acted beyond his powers, shall be unenforceable,  Appointment by an agent of a substitute or sub-agent in the
unless it is ratified, expressly or impliedly, by the person absence of an express agreement to the contrary between
on whose behalf it has been executed, before it is the agent and the principal is VALID.
revoked by the other contracting party.”
 An agent who receives jewelry for sale or return cannot be
Rubio’s acceptance and encashment of the downpayment charged for estafa for there was no misappropriation as
proven by the ff:
BLOCK B 2016
constitute ratification of the contract of sale and "produce the

effects of an express power of agency." His action necessarily
o Serona (agent) delivered the jewelry to a sub-agent
implies that he waived his right of action to avoid the contract, and,
(Labrador) under the sale terms, which the agent
consequently, it also implies the tacit, if not express, confirmation of
received it. Meaning, there is no conversion as to
the said sale effected by Virginia Lim in favor of respondent.
the purpose of agency.
Similarly, the Baloloys have ratified the contract of sale when they
2016
o There was no condition or limitation imposed on RTC: Serona is guilty of estafa. She misappropriated Php 424, 750.
the mode or manner by which Serona was to effect
the sale. CA: Affirmed RTC’s decision
o It is a usual practice for the seller to necessarily part Petitioner argues that the prosecution failed to establish the
elements of estafa under Art 315 of RPC: “In particular, she submits
with the valuables in order to find a buyer and allow
inspection of the items for sale. that she neither abused the confidence reposed upon her by
Quilatan nor converted or misappropriated the subject jewelry; that
Facts: her giving the pieces of jewelry to a sub-agent for sale on
commission basis did not violate her undertaking with Quilatan.
Quilatan delivered to Serona several pieces of jewelry to be
sold on commission basis. By oral contract both agreed to remit Issue:
payment or return the jewelry if not sold, both within thirty days
from receipt of the items. Serona’s failure to pay/return prompted 1. W/N all the elements of estafa were established (if there
Quilatan to require the former to execute an acknowledgment was really misappropriation).
receipt evidencing her debt of Php 567,750. Unknown to Quilatan, 2. W/N Serona shall be civilly liable.
Serona delivered the jewelries to Marichu Labrador to sell on
commission basis. Serona failed to collect from Labrador, which Held/Ratio:
caused Serona’s failure to pay.
1. NO.
Quilatan, then, filed action for estafa against Serona. The
The elements of estafa through misappropriation or conversion
complaint alleged that Serona misappropriated the jewelries and its
as defined in Article 315, par. 1(b) of the Revised Penal Code are: (1)
proceeds. Serona pleaded not guilty but admitted the fact that she
that the money, good or other personal property is received by the
failed to pay/return the jewelries to Quilatan because she failed to
offender in trust, or on commission, or for administration, or under
collect from Labrador. Labrador also testified stating that jewelries
any other obligation involving the duty to make delivery of, or to
were indeed delivered to her for selling, and that she sold the
BLOCK B 2016
return, the same; (2) that there be misappropriation or conversion

jewelries to a certain person who absconded without paying her.
of such money or property by the offender or denial on his part of
(Serona was able to remit Php100K and returned 43K of the such receipt; (3) that such misappropriation or conversion or denial
Jewelries. The amount now subject of the litigation is the remaining is to the prejudice of another; and (4) that there is a demand made
Php 424, 750) by the offended party on the offender.
2016
While the first, third and fourth elements are concededly evidence so warrant. Then too, an agent who is not prohibited
present, the second element of misappropriation or conversion is from appointing a sub-agent but does so without express
lacking in the case at bar. Serona delivered the jewelry to Labrador authority is responsible for the acts of the sub-agent. Virgie Serona
under the same terms upon which it was originally entrusted to is ACQUITTED of the crime charged, but is held civilly liable in the
her. It was established that petitioner had not derived any personal amount of P424,750.00 as actual damages, plus legal interest,
benefit from the loss of the jewelry. Consequently, it cannot be said without subsidiary imprisonment in case of insolvency.
that she misappropriated or converted the same.
Municipal Council of Iloilo v. Evangelista
The law on agency in our jurisdiction allows the G.R. No. L-32977. November 17, 1930
appointment by an agent of a substitute or a sub-agent in the
absence of an agreement to the contrary between the agent and Ponente: Villa-real
the principal. It cannot be said that petitioner’s act of entrusting the Petitioner: Municipal Council of Iloilo
jewelry to Labrador is characterized by abuse of confidence because
such an act was not proscribed and is, in fact, legally sanctioned. Respondent: Evangelista, De Tan Toco
Also, Labrador testified that she obligated herself to sell the jewelry
Memory aid: Widow, attorney’s fees, 2 attorneys-in-facts
in behalf of Serona also on commission basis or to return the same
if not sold. In other words, the pieces of jewelry were given by FACTS:
Serona to Labrador to achieve the very same end for which they
were delivered to her in the first place. There was no conversion On March 20, 1924, the CFI of Iloilo City rendered judgment
since the pieces of jewelry were not devoted to a purpose or use in favor of Tan Ong Sze Viuda de Tan Toco (widow of Tan Toco) to
different from that agreed upon. recover the value of a strip of land belonging to her taken by
Municipal Council of Iloilo to widen a public street. She was able to
The essence of misappropriation is the disposal of a thing, recover P42, 966.40 for its value.
without right, as if it were one’s own. It cannot be said that Serona
has no right because it was not prohibited in the agreement and Atty. Jose Evangelista filed a claim in the same case for his
BLOCK B 2016
selling through sub-agents is consistent with the usual industry attorney’s fees as the administratrix of Jose Arroyo’s intestate
practice. estate. With the consent of the widow, 15% of the amount was
granted to him.
2. YES. Serona is not entirely free from any liability towards
Quilatan. The rule is that an accused acquitted of estafa may After the hearing about this claim, adverse claimants appeared
nevertheless be held civilly liable where the facts established by the
2016
1. PNB claiming that land was mortgaged to it 1. W/N the assignment made by Tan Buntiong (attorney-in-fact of
the widow), to Atty. Soriano, of all the credits, rights and interests
2. Atty. Antero Soriano claiming that the amount had been assigned belonging to the widow plus the costs of the professional services
to him by the widow’s attorney-in-fact and, in turn, he is assigning it rendered by Soriano to the widow is valid.
to Mauricio Cruz & Co., Inc.
2. W/N the other attorney-in-fact’s consent (Tan Montano) is
After hearing all the adverse claims for the amount of the required to validate the acts of Tan Butiong, who assigned the
judgment, the court ordered that the 15% of the amount be amount as payment to Soriano.
granted to Atty. Evangelista as counsel for the administratrix of the
deceased Jose Ma. Arroyo. The court directed the Municipal Council HELD:
of Iloilo to file an action of interpleading against the adverse
claimants. 1. YES. An agent of attorney-in-fact empowered to pay the debts
of the principal, and to employ lawyers to defend the latter's
The court declared the deed of assignment of the credit interests, is impliedly empowered to pay the lawyer's fees for
executed by the widow’s attorney-in-fact (Tam Buntiong) in favor of services rendered in the interests of said principal, and may satisfy
Soriano valid and likewise the assignment of Soriano to Mauricio them by an assignment of a judgment rendered in favor of said
Cruz & Co., Inc. So, the remaining P30, 966.40 (P42, 966.40 less 15% principal. In the present case, the assignment made by Tan
attorney’s fee) will be paid by the Municipal Council of Iloilo to Buntiong, as attorney-in-fact for the widow, in favor of Soriano for
Mauricio Cruz & Co. Inc. professional services rendered for other cases he served the widow
and coheirs, was that credit which she had against the municipality
Municipal treasurer of Iloilo paid the late Soriano P6, 000 as of Iloilo, and assignment was equivalent to the payment of the
partial payment of the judgment. Afterwards, another P6, 000 was
amount of said credit to Soriano.
delivered to Evangelista for his attorney’s lien. With the payment of
a total of P12, 000, remaining P30, 966.40 must go to Mauricio Cruz 2. NO. When a person appoints two attorneys-in-fact
& Co. independently, the consent of the one will not be required to
validate the acts of the other unless that appears positively to have
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The appeal is confined to the claim of Mauricio Cruz & Co. been the principal's attention. The fact that different letters of
as the alleged assignee of the rights of the late Atty. Soriano. This is attorney were given to each of these two representatives shows
by virtue of the judgment allowing the payment of his professional that it was not the principal's intention that they should act jointly
fees (as given to him by the widow and her coheirs). in order to make their acts valid.
ISSUES:
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Smith, Bell & Co. vs CA secured the services of a cargo suveyor who reported that out of
GR No. 110668 the 1250 bags that were transported, 600 were in bad condition.
The contents were found out to be 18,546kg short. Chua then filed
February 6, 1997 a claim with Smith, Bell & Co for $7.3k who then coveyed the claim
Ponente: Panganiban its principal who, in turn, only offered 50% of the claim ($3.6k)
allegedly because of the discrepancy between the supposed
Summary/Memory Aid: amounts of the products contained in the shipping. Chua refused
the offer and said that the discrepancy was a result of the loss from
Chua bought some goods from Taiwan and had it shipped to
the vessel to the arrastre to the consignee and was covered within
Manila. It was insured against First Insurance, a foreign company. the ‘all risk’ insurance cover. There was no settlement, hence a case
Smith, Bell & Co was the claim agent of First Insurance in the
was filed for the recovery of the supposed losses.
Philippines. When the goods came, there were damages to said
goods. Chua made a claim to Smith, Bell & Co. Upon conveyance of First Insurance was impleaded, it did not file an answer and
the claim, First Insurance instructed Smith, Bell & Co to deny the was declared in default. Smith, Bell & Co claimed that it was only a
claim and make a counter offer which was half of the original claim. claim agent of First Insurance and that they should not be held
Chua refused and sued both companies. First Insurance was personally/solidarily liable. It then alleged that Chua had no cause of
declared in default and Chua went after Smith, Bell & Co, seeking to action against them. The lower court held that Chua did suffer
declare it solidarily liable with First Insurance. SC reversed RTC and losses and that it had fully established the liability of the insurance
CA by ruling that as a claim agent acting within the scope of its company. The lower court also held that since Smith, Bell & Co. is
authority, Smith, Bell & Co was not personally liable to Chua. admittedly a claim agent of the foreign insurance firm (First
Insurance) doing business in the Philippines justice is better served
Facts: if said agent is made liable without prejudice to its right of action
Chua (private respondent) was doing business under the against its principal (First Insurance). CA, in affirming the decision,
style of Tic Hin Chiong. He bought and imported to the Philippines, stated that Smith, Bell & Co. authorized to settle claims against its
principal. Its defense that its authority excluded personal liability
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50 metric tons of Dicalcium Phosphate valued at $13k. It was

shipped from Taiwan to Manila. This shipment was insured by First must be proven satisfactorily.
Insurance Co for $19.5k against all risks payable in US Currency at Issue:
Manila. Smith, Bell and Co. was stamped as the “claim agent”.
When the cargo arrived in Manila, it was received by the local 1. W/N a local settling or claim agent (Smith, Bell & Co.) of a
arrastre operator but some of its content were in bad order. Chua disclosed principal (a foreign insurance company) can be
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held jointly and severally liable with said principal under the Third, being a mere agent and representative, petitioner is
latter‘s marine cargo insurance policy, given that the agent also not the real party-in-interest in this case. An action is brought
is not a party to the insurance contract. for a practical purpose, that is, to obtain actual and positive relief. If
the party sued is not the proper party, any decision that may be
Held: rendered against him would be futile, for the decision cannot be
No. Smith, Bell & Co is not liable for 3 reasons. First, enforced or executed.
Petitioner, undisputedly a settling agent acting within the scope of
Chemphil Export and Import Corporation v. CA
its authority, cannot be held personally/solidarily liable for the
Petitioner: Chemphil Export & Import Corporation
obligations of its disclosed principal. They are no different from any
other agent from the point of view of their responsibility, for Respondent: Jaime Gonzales, BPI, RCBC, LBP, PCIB and PISO
petitioner also acts in a representative capacity. The function of the (hereinafter referred to as “consortium”)
petitioner is merely to settle and adjusts claims in behalf of his
principal if those claims are proven and undisputed, and if the claim Summary/Memory Aid: legal tug-of-war/subrogation/consortium
is disputed or is disapproved by the principal, like in the instant Facts:
case , the agent does not assume any personal liability. The only
“involvement” of petitioner in the subject contract of insurance was  Dynetics Inc. and Antonio Garcia filed a complaint for
having its name stamped at the bottom left portion of the policy as declaratory relief and preliminary injunction against the
“Claim Agent”. There is no privity of contract, and correspondingly Consortium seeking the judicial declaration of the validity of
there can be no obligation or liability, and thus no cause of action the surety agreement that Dynetics and Garcia had entered
against petitioner attaches (Contracts are only binding upon the into with the Consortium and to enjoin the latter from
parties, assigns and heirs). claiming/collecting on the obligations they entered. (Note:
this is the first case Dynetics&Garcia filed)
Second, Article 1207 of the Civil Code clearly provides that
“there is a solidary liability only when the obligation expressly so o The RTC denied the complaint and granted the
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states, or when the law or the nature of the obligation requires Consortium’s prayer for preliminary attachment
solidarity.” Therefore, it must be clearly stipulated that there is thus garnishing Dynetics and Garcia’s share
solidary liability. It is not lightly inferred. Nowhere in the contract (including the disputed shares).
was it stated that petitioner would be solidarily liable with First
Insurance. o The Consortium appealed to the CA but during the
pendency of the appeal, Garcia and the Consortium
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entered into a compromise agreement where  Garcia then failed to comply with the terms of the
Garcia was dropped as a party to the appeal. compromise agreement he entered with the Consortium
and thus the latter filed a motion of execution which levied
 Dynetics, Garcia and Matrix Management also filed a 1.7m shares in Chemphil (Note: this is disputed shares
complaint for declaratory relief against Security Bank & being referred to in the case) that was previously garnished
Trust Co. (SBTC).(Note: this is the second case Dynetics &
in the SBTC case.
Garcia filed)
o The Consortium acquired the disputed shares at the
o The RTC granted SBTC’s prayer for the issuance of a public auction and hence, a Certificate of Sale was
preliminary attachment and a notice of garnishment issued in favor of the Consortium.
covering Garcia’s shares (including the disputed
shares) was served on Chemphil through its  Now CEIC is opposing the Consortium’s ownership of the
president. The garnishment was annotated in the disputed shares because it was assigned to them by FCI on
stock and transfer books of Chemphil. June 26, 1989. Naturally, the Consortium opposed this by
claiming that their attachment lien must prevail over CEIC’s
 On July 15, 1988 Garcia sold to Ferro Chemicals Inc. the claim because the disputed shares were garnished in their
disputed shares and other properties for P79m which shall favor on July 19, 1985.
be paid by FCI directly to SBTC for whatever judgment
credits that may be adjudged in the SBTC case (refers to the  RTC ruling: GRANTED CEIC’s Motion stating that since the
2nd case). Consortium’s attachment was not recorded in Chemphil’s
stock and transfer book(Note: which means it cannot be
o FCI then issued a check in favor of SBTC in the
levied upon in execution to satisfy judgment debts) hence,
amount of P35m but SBTC refused claiming that it is
CEIC had a better right to it.
not sufficient to discharge the debt.
 CA ruling: REVERSED the RTC and gave ownership of the
 Antonio then consigned the check with the
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disputed shares to the Consortium stating that no law

RTC as payment of their judgment debt in
requires the recording of assignments of shares of stock to
the SBTC case.
be binding against third persons (Note: this gives the
o FCI then assigned around 4 million shares in Consortium a better right to the disputed stock since they
Chemphil (including the disputed shares) to got it first).
petitioner CEIC.
Issue(s):
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1. W/N CEIC was subrogated to the rights of SBTC’s 2. YES, the Consortium has a valid claim over the attachment
attachment lien over the disputed share. lien over the disputed shares since both the Revised Rules
of Court and the Corporation Code do not require the
2. W/N the attachment lien acquired by the Consortium is annotation in the corporation’s stock and transfer book for
valid the attachment of shares to be valid.
a. SUB-ISSUE: W/N the writ of attachment was null a. Chemphil’s claim that it was never served the notice
and void since a notice of garnishment was never of garnishment must fail since Thelly Ruiz, secretary
served to Chemphil’s designated officers. of the President of Chemphil received the notice on
Ratio/Held: July 19, 1985.
1. NO, when Garcia sold the disputed shares to FCI for P79m i. The secretary of the president must be
there was a stipulation in the Deed of Sale that states considered as an agent of the corporation
whoever bought the disputed shares has an obligation to therefore binding upon Chemphil.
deliver part of the of the purchase price to SBTC. (Note: In
Uy v. CA
other words, when FCI bought the shares from Garcia,
G.R. No. 120465 September 9, 1999
they have to pay directly to SBTC instead of Garcia).
Ponente: Kapunan, J
a. FCI cannot be considered as third party payor under
Article 1302(2) but must be instead considered as Petitioners: William Uy and Rodel Roxas
an agent under Article 1868.
Respondents: CA and NHA
b. When the buyer (CEIC) pursuant to the terms of the
deed of sale, effects payment of part of the Summary / Memory Aid:
purchase price to one of the seller’s creditors Uy and Roxas are agents of the owners of 8 parcels of land.
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(SBTC), then there is NO SUBROGATION that takes They sold the lands to NHA. However, upon receipt of a report from
place, as the buyer (CEIC) merely acts as an agent of DENR that 3 of said lands were located in an active landslide area
the seller (Garcia) effecting payment of the money and therefore not suitable for housing development, NHA did not
that was due to the seller in favor of a third-party pay for the 3 lands.
creditor.
RTC ruled for NHA but awarded damages to Uy and Roxas.
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CA reversed the award of damages as CA saw no basis for it. 2394, subsequently offered the amount of P1.225 million to the
landowners as daños perjuicios.
SC held that Uy and Roxas have no legal standing and cannot be
awarded damages because they are merely agents of the real Petitioners filed before the Regional Trial Court (RTC) of
parties-in-interest, the owners of the lands in question. Also, Quezon City a Complaint for Damages against NHA and its General
assuming arguendo that they have standing, there is no basis for Manager Robert Balao.
damages because NHA was justified in not pursuing the sale of the 3
lands because the cause of the contract (for housing development) RTC Ruling
does not exist. RTC rendered a decision declaring the cancellation of the
Facts: contract to be justified, and awarded damages to the petitioners.
Petitioners William Uy and Rodel Roxas are agents CA Ruling

authorized to sell eight parcels of land by the owners thereof. By CA reversed the decision of the trial court and entered a
virtue of such authority, petitioners offered to sell the lands, located new one dismissing the complaint. It held that since there was
in Benguet to respondent National Housing Authority (NHA) to be “sufficient justifiable basis” in cancelling the sale, “it saw no reason”
utilized and developed as a housing project. for the award of damages. The CA also noted that petitioners were
mere attorneys-in-fact and, therefore, not the real parties-in-
The NHA Board passed Resolution No. 1632 approving the
acquisition of said lands at the cost of P23.867 million, pursuant to interest in the action before the trial court.
which the parties executed a series of Deeds of Absolute Sale Petitioners’ argument
covering the subject lands.
Petitioners claim that they lodged the complaint not in
Of the eight parcels of land, however, only five were paid behalf of their principals but in their own name as agents directly
for by the NHA because of the report it received from the Land damaged by the termination of the contract. The damages prayed
Geosciences Bureau of DENR that the remaining area is located at for were intended not for the benefit of their principals but to
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an active landslide area and therefore, not suitable for development indemnify petitioners for the losses they themselves allegedly
into a housing project. incurred as a result of such termination. These damages consist
mainly of "unearned income" and advances.
The NHA issued Resolution No. 2352 cancelling the sale
over the three parcels of land. The NHA, through Resolution No. Issue:
2016
1. W/N petitioners, agents who merely represent the parties- principal, or (2) if they are beneficiaries of a stipulation pour autrui
in-interest (owners of the land), can claim damages – No. under the second paragraph of Article 1311 of the Civil Code.
2. W/N the cancellation was justified – Yes. There is no showing that either of the exceptions are
present in this case.
Held:
(2) Yes. NHA did not rescind the contract pursuant to Article 1191’s
(1) No. Sec. 2, Rule 3 of the Rules of Court requires that every action
implied power to rescind. They cancelled the contract based on the
must be prosecuted and defended in the name of the real party-in- negation of the cause arising from the realization that the lands,
interest. The real party-in-interest is the party who stands to be which were the object of the sale, were not suitable for housing. SC
benefited or injured by the judgment or the party entitled to the held that because of this, the contract was rendered inexistent
avails of the suit. because of the absence of the element of “cause” in the elements
Interest, within the meaning of the rule, means material of a contract (consent, object, cause).
interest, an interest in the issue and to be affected by the decree, as
ANGELES v. PHILIPPINE NATIONAL RAILWAYS
distinguished from mere interest in the question involved, or a mere
G.R. No. 150128. August 31, 2006.
incidental interest.
Facts:
Petitioners are not parties to the contract of sale between
their principals and NHA. They are mere agents of the owners of the Romualdez, President of San Juanico Enterprises, bought on
land subject of the sale. As agents, they only render some service or an "AS IS, WHERE IS" basis PNR's scrap/unserviceable rails in
do something in representation or on behalf of their principals. The Pampanga. After paying the purchase price, Romualdez sent a letter
rendering of such service did not make them parties to the to Atty. Dizon, PNR's Acting Purchasing Agent. The letter stated
contracts of sale executed in behalf of the latter. Since a contract Romualdez' authorization of Lizette Wijangco, deceased wife of
may be violated only by the parties thereto as against each other, petitioner Angeles, to be his "lawful representative in the
the real parties-in-interest, either as plaintiff or defendant, in an withdrawal of the scrap/unserviceable rails awarded" to him. The
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action upon that contract must, generally, either be parties to said letter also stated that "For this reason, I have given her the original
contract. copy of the award...which will indicate my waiver of rights, interest
and participation in favor of Lizette Wijangco."
The two exceptions to this rule are: (1) if the agents are
assignees to the rights under the contract entered into by their Instead of conducting withdrawal in Pampanga, Lizette was
allowed to withdraw the rails in Tarlac because those which were in
2016
Pampanga were not ready for hauling. However, PNR suspended apparent that Lizette was to act just as a "representative" of
the withdrawal due to documentary discrepancies and reported Romualdez in the "withdrawal of rails," and not an assignee.
pilferages. Spouses Angeles demanded refund of the purchase Romualdez intended to limit Lizette's role in the scrap transaction to
price, but PNR refused alleging that as per delivery receipt duly being the representative of his interest therein. All that Lizette was
signed by Lizette, rails were already withdrawn in excess of the authorized to do was to withdraw rails. Allowing her to sue
amount being claimed for refund. therefor, especially in her own name, would be to read something
not intended, let alone written in the Romualdez letter.
The spouses then filed a complaint against PNR for specific
performance and damages. The RTC dismissed the complaint, which Note: A power of attorney is only but an instrument in writing by
was affimed by CA, for lack of cause of action. It was held that which one person, as principal, appoints another as his agent and
Lizette was merely a representative of Romualdez in the withdrawal confers him the authority to perform certain specified acts on
of the scraps awarded to him and not an assignee. behalf of the principal. Its primary purpose is not to define the
authority of the agent as between himself and the principal but to
Issue: evidence the authority of the agent to third parties with whom the
1. W/N the letter of Romualdez authorized Lizette as a mere agent deals.
agent and not an assignee
BA Finace v. CA (1992)
Held: GR 94566 // July 3, 1992 // Medialdea, J.
Yes. Lizette is a mere agent. Where agency exists, the third Memory Aid:
party's (in this case PNR) liability on a contract is to the principal and
Facts:
not to the agent. Normally, the agent has neither rights nor
liabilities as against the third party. He cannot thus sue or be sued The Gaytano spouses, doing business under the name
on the contract. On the other hand, if an agent is constituted as an Gebbs Intl. (Gebbs) was granted a loan by the respondent Traders
assignee, he may, in his own behalf, sue on a contract made for his Royal Bank (TRB) for the amount of P60k.The Gaytano spouses
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principal. The rule requiring every action to be prosecuted in the executed a suretyship where they agreed to be solidarily liable to
name of the real party-in- interest recognizes the assignment of TRB for the amount of the loan. Philip Wong, the credit
rights of action. administrator of BA Finance also undertook to guarantee the loan of
the Gaytano spouses.
The letter under consideration is sufficient to constitute a
power of attorney*. Upon scrutiny of the letter, it is at once
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The Gaytano spouses refused to pay the remaining balance
of the loan amounting to around P85k hence, TRB filed suit in the
RTC. National Power Corporation v. National Merchandising
Corp.
The RTC ruled in favor of TRB but held the Gaytano spouses GR. L-33819 & GR. L-33897 October 23, 1982
solely liable for the whole amount dismissing the case against BA
Finance. The CA modified the RTC decision holding BA Finance Memory Aid:
solidarily liable with the Gaytano spouses.
Facts:
Hence, this petition.
National Merchandising Corp. (NAMERCO), agent of
Issue(s): International Commodities Corp. (ICC), entered into a contract with
National Power Corporation (NPC) for the purchase of 4 thousand
1. W/N the guarantee extended by Philip Wong is made long tons of crude sulfur from ICC (a NY company) for the amount of
outside his scope of authority and thus unenforceable. around P450k. A performance bond in the sum of around P90k was
executed by Domestic Insurance Company (DIC) in favor of NPC to
Ratio/Held:
guarantee the seller’s (NAMERCO/ICC) obligations.
YES, Philip Wong did exceed his authority by granting the
However, the New York supplier was not able to deliver the
guarantee in favor of the Gaytano spouses. The memorandum
sulfur due to its inability to secure shipping space and also its
which allegedly gave Wong “authorization” to issue guarantees did
inability to produce sulfur. NPC then reminded NAMERCO and DIC
not expressly state this power and only gave him power to “approve
that the contract stipulated that the non-availability of vessels
and grant loans up to P350k.
would still hold NAMERCO/DIC liable for liquidated damages
It is well settled that a power of attorney of an agent should according to Articles 4 and 15 of the contract.
not be inferred from the use of vague or general words. Neither can
The Government Corporate Counsel for NPC sent letters to
the power to issue guarantees be presumed and must be expressly
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Sycip, the president of NAMERCO and a similar letter to DIC a notice

stated. It is also well-settled that persons dealing with an assumed
of the rescission of the contract because of non-performance and
agent are bound at their own peril and it is incumbent upon them to
demanded the payment of P360k as liquidated damages.
establish the extent of the agent’s authority. In the case at bar, this
burden is on TRB to satisfactorily prove that BA Finance gave Wong The RTC dismissed the case insofar as the NEW YORK
the power to issue guarantees. Company is involved for lack of jurisdiction but otherwise held
2016
NAMERCO liable since they acted beyond the scope of its authority  The agent who acts in excess of his authority is
as an agent of ICC. CA affirmed the RTC decision. personally liable to the party whom he contracted.
 If the agent contracts in the name of the principal,
Issue(s): exceeding the scope of its authority and the principal
does NOT ratify the contract, it shall be void if the party
1. W/N NAMERCO is liable for the liquidated damages to whom the agent contracted is aware of the limits of
the powers granted by the principal.
Held/Ratio:
As mentioned above, the NPC was unaware of the limitations on the
YES, the evidence presented clearly showed that
powers granted by the New York firm to NAMERCO and that the
NAMERCO exceeded its authority when it entered the contract
latter never disclosed to the former the cabled instructions issued
with NPC. IIC sent several cabled instructions to NAMERCO that
by the principal and thus the NAMERCO must be held personally
they are having difficulties securing a vessel for shipment and
liable.
clearly advised NAMERCO to, “…not sign the contract unless
NAMERCO wished to assume sole responsibility for the shipment.”
The IIC also cabled NAMERCO that the NY firm would not consider
itself bound by the contract and that NAMERCO signed the contract DBP v CA
on its own responsibility. NAMERCO never disclosed to the NPC the GR NO. L-109937 March 21, 1994, Quiason
cabled instructions of its principal and thus it acted in its own name
Petitioner: DBP
and not as an agent and is therefore bound by the contract of sale
and therefore is not enforceable against the principal. It follows, Respondent: CA, estate of Juan Dans
logically, that NAMERCO is liable for the stipulated liquidation
damages. Summary:
NAMERCO cannot contend that the contract is merely Article 1897 – The agent who acts as such is not personally liable to
unenforceable since they exceeded their authority with respect to the party with whom he contracts, unless he expressly binds himself
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Article 1403 because it refers to the unenforceability of the contract or exceeds the limits of his authority. The rule that the agent is
against the principal. In the case at bar, the stipulation for liable when he acts without authority is founded upon the
liquidated damages is being enforced not against the principal but supposition that there has been some wrong or omission on his part
against the agent and its surety. This is further complemented by either in misrepresenting, or in affirming, or concealing the
Articles 1897 & 1898 of the Civil Code which respectively provides authority under which he assumes to act.
that:
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Inasmuch as the non-disclosure of the limits of the agency That same year Dans died of cardiac arrest. DBP relayed the
carries with it the implication that a deception was perpetrated on information to the MRI pool.
the unsuspecting client, the provisions of Articles 19, 20 and 21 of
the Civil Code of the Philippines come into play. TheMRI pool denied Dans’ application for the MRI, claiming
that there is a 60 years age limit for applicants. DBP informed
Article 19 – Every person must, in the exercise of his rights and in Candida of the rejected application. To remedy the situation, DBP
the performance of his duties, act with justice give everyone his due offered to refund the P1,476 premium paid by Juan Dans, but
and observe honesty and good faith. Candida refused, and demanded the payment of the MRI or an
amount equivalent. She also rejected a P30k offered by DBP as
Article 20 – Every person who, contrary to law, willfully or settlement.
negligently causes damage to another, shall indemnify the latter for
the same. Candida filed a complaint against DBP and DBP MRI pool for
a collection of sum and damages. They allege that DBP, by
Article 21 – Any person, who willfully causes loss or injury to deducting the MRI premium from the loan despite knowledge of
another in a manner that is contrary to morals, good customs or
Juan’s age, the deceased Dans became insured by the insurance
public policy shall compensate the latter for the damage. pool.
FACTS: RTC decided in favor of Candida Dans. The DBP was
In 1987, Juan Dans and his family applied for a P500k loan declared in estoppel for leading Juan Dans to believe he was eligible
with DBP Basilan. DBP advised Dans, who was already 76 years old, for their MRI pool. The DBP MRI pool, however, was absolved
to obtain a Mortgage Redemption Insurance (MRI) with their DBP because the trial court found no existing contract between it and
MRI pool. the deceased Juan. CA affirmed the trial court’s decision.
Later on DBP approved a smaller loan (P300k) and released ISSUE:

it to the Dans. DBP also deducted from the proceeds of the loan an 1.w/n there was a perfected insurance contract between Juan and
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amount of P1,476 in payment for the MRI premium. Dans also MRI pool to be held liable.
accomplished the required paperwork forapplication of the MRI. On
August 20, the DBP credited the MRI premium, less 10% service fee, 2.w/n DBP can be held liable acting as the MRI pool’s insurance
to the account of the DBP MRI pool. agent.
HELD/RATIO:
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1. None. There was no perfected insurance contract because Juan full amount from the DBP. Juan Dans, being of advanced age, has a
Dans application was never approved by the insurance pool. The smaller chance that he will be granted an insurance coverage by
application form filled up by Dans required two (2) conditions to another company.
concur:
Eugenio v. CA
1.The insurance pool has to approve the application, Ponente: Regalado, J.
2.the full premium be paid (the P1,476 deducted from Dans’ loan.) Petitioner: Nora Eugenio (Dealer of Pepsi’s soft drinks)
The power to approve applications is lodged within the insurance Respondent: Pepsi-Cola Bottling Company of the Philippines (major
pool, not the DBP itself. And despite crediting the premium to the food and beverage manufacturer)
MRI pool’s account, there was never any proof shown that they Memory Aid: Pepsi Cola, purchase on credit, four TPRs.
accepted the amount and approved Dans’ application.
Facts:
2. YES. DBP is liable for compelling Juan Dans to apply with the MRI
pool instead of looking for another insurance company, the DBP Nora Eugenio is a small business owner who is the
acted as an insurance agent. This can be proven by the actions of proprietor of one small store, which distributes the products of
the DBP: Pepsi Corporation. She has two charge accounts with Pepsi, the first
under the name ‘Nora Store’ and the second under the name of
--deducting the premium from the loan ‘Abigail Minimart’. On March 17, 1982, Pepsi filled a complaint for
sum of money against Eugenio for her outstanding obligations to
--making Dans sign the application forms and later on submitting it
the company. This was because Eugenio maintained an
to the MRI pool
arrangement with Pepsi, wherein she obtained its products on
--and eventually collecting a 10% service fee for the services credit. Pepsi alleged that Eugenio was indebted to them in the
rendered for Dans amount of P94,000.
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These are the duties of the MRI pool. Article 1897 provides In their defence, the Eugenios presented as evidence four
that “an agent is liable when he expressly binds himself or exceeds (4) Trade Provisional Receipts (TPRs) issued to them by Pepsi’s route
his authority without notice to the principal.” The DBP, knowing manager, Jovencito Estrada, showing their payments in the amount
that Dans was 76 years old, should have precluded itself from of P80,500. They state that if this sum of money was credited to
offering the MRI pool which had a 60 years old age limit. This act them, they would not be in debt at all to Pepsi. Further, a Sales
showed a clear excess of the authority. Candida cannot claim the
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invoice to hem in the amount of P5,600 which contained Eugenio’s has been paid. The purpose of presumptions in law is to relieve the
signature was stated by them to be a forgery. party of the burden of proving a particular fact, and the lack of a
confirmation by the cashier is insufficient to remove the
When trial on the merits commenced at the RTC, Pespi won presumption of regularity enjoyed by the Eugenios.
and the Eugenios were sentenced to pay back P74,000 as their
obligation. On appeal to the RTC, the case was remanded because it Besides, even assuming arguendo that the cashier truly
was stated that the first decision was in violation of Constitutional never received the money, nevertheless the Supreme Court stated
protections (specifically, Section 14, Article VIII of the 1987 that
Constitution states that decisions of courts should clearly and
distinctly state the facts and the law on which they are based). …in so far as the private respondent's customers are concerned, for
as long as they pay their obligations to the sales representative of
When the case was remanded, the RTC then rendered a second
decision that stated that the Eugenios still needed to pay, but with the private respondent using the latter's official receipt, said
the lower liability of P64,000. payment extinguishes their obligations." Otherwise, it would
unreasonably cast the burden of supervision over its employees
Hence, the instant case was filed, in order to determine from respondent corporation to its customers.
whether the amounts mentioned on the TPRs should be credited to
the Eugenios. The substantive law is that payment shall be made to the
person in whose favor the obligation has been constituted, or his
Issue: successor-in-interest or any person authorized to receive it. As far
as third persons are concerned, an act is deemed to have been
Should the value of the four TPRs be credited to the Eugenio performed within the scope of the agent's authority, if such is
spouses?
within the terms of the power of attorney, as written, even if the
Held: YES agent has in fact exceeded the limits of his authority according to
an understanding between the principal and his agent. In fact,
The Nature of a TPR is that it serves as a record and receipt Atty. Rosario, private respondent's own witness, admitted that "it is
BLOCK B 2016
of the transactions of a company; a booklet of these is provided to the responsibility of the collector to turn over the collection.
each of the company’s sales representatives (such as Jovencito
Estrada). Although they are ‘provisional’ in the sense that they must Thus, the Supreme Court ruled that the TPRs should be
be confirmed by the cashier within 15 days of receipt (the ones credited to the Eugenios. The forged note however, was found
possessed by the Eugenios was not), they also possess a already to have been deducted from the total liability of petitioners.
presumption juris tanto as evidence that the debt shown therein Consequently, with the new assessment of liability and crediting of
2016
the TPRs, it was found that the Eugenios had actually overpaid, and Terms” were not filled up. Quirante, the sales supervisor of
Pepsi was the one order to pay them P5,000. Bernardo, checked and approved the VSP.
The day of reckoning came when Bernardo called Sosa that

the vehicle would not be available for pick-up at the
Toyota Shaw Inc. v. CA aforementioned time but rather at 2pm the same day. When Sosa
GR. 116650 May 23, 1995 went to Toyota Shaw at 2pm and after waiting for an hour,
Memory Aid: Bernardo informed them that the vehicle could not be delivered
because “nasulot ang unit ng ibang malakas.”
Facts:
Toyota contends however, that the Lite Ace was not
The private respondent, Sosa wanted to buy a Toyota Lite delivered because BA Finance disapproved Sosa’s application for
Ace but experienced difficulty in finding a dealer with available units credit. Toyota further alleged that the vehicle was already
for sale because of the prevailing market conditions at the time earmarked for Sosa but could not release it since BA rejected the
(there was a shortage in supply). When they contacted the Toyota credit application.
Shaw Inc (Toyota) he was told that they had an available unit and so
Sosa met with Popong Bernardo, a sales representative of Toyota. Sosa then demanded the refund of his downpayment which
Toyota complied with. Sosa, however, made a reservation that his
Sosa emphatically emphasized to Bernardo that he needs acceptance of the refund is, “without reservation for future claims
the car no later than June 17, 1989 because he needs it for a trip to for damages.” Sosa then filed a complaint against Toyota under
Marinduque. Bernardo then assured Sosa that the unit would be Articles 19 and 21 of the Civil Code. RTC ruled in favor of Sosa which
available for pick up at 10am June 17, 1989 and signed an the CA, in turn, affirmed.
agreement entitled, “AGREEMENTS BETWEEN MR. SOSA & POPONG
BERNARDO OF TOYOTA SHAW, INC.” wherein it was stipulated that Issue(s):
the unit will be picked0up and released on the 17th of June. (Note: 1. W/N the agreement between Sosa and Bernardo was a
BLOCK B 2016
the agreement was not signed by Sosa) perfected contract of sale binding upon Toyota Shaw, Inc.
Sosa then made a downpayment of P100k and the parties Held/Ratio:
also agreed that the balance of the purchasing price would be paid
by BA Financing. Sosa then met with Bernardo to accomplish a NO, the agreement between Sosa and Bernardo cannot be
Vehicle Sales Proposal (VSP) however, the spaces for “Delivery construed as a perfected contract of sale binding upon Toyota
2016
because there was no obligation on the part of Toyota to transfer Respondents.HON. COURT OF APPEALS and SAN MIGUEL
ownership of the vehicle to Sosa and no correlative obligation on CORPORATION
the part of the latter to pay a price certain. The downpayment
Summary/Memory Aid:
cannot be considered as the price because it made no reference to
the sale of the vehicle and nothing was mentioned about the full
Savellon was authorized to use the coal operating contract
purchase price and the manner the installments were to be paid. of Bacaltos Coal Mines for any legitimate purpose that it may serve.
Moreover, the VSP was merely a proposal which was subsequently Bacaltos Coal Mines through Savellon entered a Trip Charter
aborted since BA Finance denied Sosa’s credit application. Thus it Agreement with San Miguel Corporation to demise M/V Premship II
follows that, the aborted VSP created no demandable right in favor for 3 round trips to Davao. SMC issued a check for full payment
of Sosa for the delivery of the vehicle and its non-delivery created worth 650,000php, payable to Rene Savellon in trust for Bacaltos
Coal Mines. The vessel was only able to make 1 trip. SMC filed a
no legally indemnifiable injury.
case for specific performance against Bacaltos Coal Mines.
The agreement between Bernardo and Sosa did not However, Bacaltos claim that Savellano is not authorized to enter
such agreement. Supreme Court reversed the decision of RTC and
constitute as a meeting of the minds because for one thing, Sosa
CA. SC decided that the Authorization only allowed Savellano to use
never signed it and that from the title of the agreement clearly the Coal Operating Contract which does not include the demise of
shows that Sosa was NOT dealing with Toyota but with Popong the vessel, which Bacaltos does not even own.
Bernardo. Sosa knew that Bernardo was merely a sales
representative of Toyota and hence an agent of the latter. It was Facts:
incumbent upon Sosa to act with prudence to know the extent of
Bernardo’s authority as an agent. Therefore, Sosa must discover German Bacaltos the proprietor of Bacaltos Coal Mines
executed an Authorization in favor of Rene Savellon to use the coal
upon his own peril the extent of Bernardo’s authority as an agent.
operating contract of Bacaltos Coal Mines for any legitimate
purpose that it may serve. The pertinent provision of the
Authorization provides:
BACALTOS COAL MINES v. COURT OF APPEALS
I, German A. Bacaltos xxx do hereby authorize Rene Savellon, xxx to
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use the coal operating contract of Bacaltos Coal Mines of which I am

G.R. No. 114091 June 29, 1995;
the proprietor, for any legitimate purpose that it may serve.
Namely, but not by way of limitation, as follows: (2) To engage in
Ponente: DAVIDE, JR. J
trading under the style of Bacaltos Coal Mines/Rene Savellon; (3) To
collect all receivables due or in arrears from people or companies
Petitioners: BACALTOS COAL MINES and GERMAN A. BACALTOS
having dealings under Bacaltos Coal Mines/Rene Savellon.
2016
Savellon offered shipping services to San Miguel Issue:
Corporation (SMC). Bacaltos Coal Mines, represented by its Chief
Operating Officer, Rene Rosell Savellon entered a Trip Charter Party WON Bacaltos is liable to SMC for the Triple Charter Party entered
with San Miguel Corporation. Savellon claimed that Bacaltos Coal into by Savellon?
Mines is the owner of the vessel M/V Premship II. The contract lets
demise the vessel to SMC for 3 round trips to Davao for 650,000php Held:
to be paid within 7 days after execution of contract. SMC issued a
check payable to "payable to Rene Savellon in trust for Bacaltos No. The agency of Savellon is based on a written document
Coal Mines "for which Savellon issued a receipt under the heading so the extent and scope of his powers must be determined on the
of Bacaltos Coal Mines. The vessel was able to make only one trip. basis thereof. The language of the Authorization is clear. One
After SMC’s demand to comply with the contract has been express power was granted to Savellon which is to use the coal
unheeded, SMC filed against the petitioners and Rene Savellon the operating contract for any legitimate purpose it may serve. The coal
complaint for specific performance and damages. However, the operating contract only provides the power to undertake, manage
petitioners alleged that Savellon was not their Chief Operating and execute coal operations. The clause "but not by way of
Officer and that the powers granted to him are only those clearly limitation" which precedes the enumeration could only refer to
expressed in the Authorization which does not include the power to other prerogatives which must exclusively pertain or relate or be
enter into any contract with SMC. They further claimed that if it is germane to the power to use the coal operating contract. Shipping
true that SMC entered into a contract with them, it should have service is not germane to coal operations. Moreover, Bacaltos does
issued the check in their favor. not own a ship.
RTC ruled in favor of SMC reasoning that the Authorization The Authorization in this case is not a general power of
given by German Bacaltos necessarily included the power to enter attorney. It is a special power of attorney for it refers to a clear
into the Trip Charter Party, SMC appears to be an innocent party mandate specifically authorizing the performance of a specific
which has no knowledge of the real intent of the parties to the power and of express acts subsumed therein.
Authorization and has reason to rely on the written Authorization
and the "Notice of Readiness" is written on a paper with the Moreover, every person dealing with an agent is put upon
letterhead "Bacaltos Coal Mines". Court of Appeals affirmed RTC’s inquiry and must discover upon his peril the authority of the agent.
decision on the ground that SMC was not negligent when it issued If he does not make such inquiry, he is chargeable with knowledge
BLOCK B 2016
the check in the name of Savellon in trust for Bacaltos Coal Mines of the agent's authority, and his ignorance of that authority will not
because the Authorization clearly provides that collectibles of the be any excuse. The principal may act on the presumption that third
petitioners can be coursed through Savellon as the agent and it persons dealing with his agent will not be negligent in failing to
includes the power to enter into the Trip Charter Party because the ascertain the extent of his authority.
"five prerogatives" enumerated in the former is prefaced by the
phrase "but not by way of limitation”
2016
Since the principal subject of the Authorization is the coal Notice of Readiness has no probative value as to the
operating contract, SMC should have required its presentation ownership of the vessel. There is also no proof that the petitioners
which SMC did not. It is obvious that a scrutiny of the coal operating received the consideration of the Trip Charter Party
contract of Bacaltos Coal Mines would have provided SMC
knowledge of the activities which are germane, related, or incident Yu Eng Cho v. Pan American World Airways, Inc
to the power to use it. But it did not even require Savellon to G.R.123560, March 27, 2000, Puno, J
produce it. SMC's negligence was further compounded by its failure
to verify if Bacaltos Coal Mines owned a vessel. A party desiring to
Sps Yu Eng Cho and Francisco Tao Yu - Petitioner
charter a vessel must satisfy itself that the other party is the owner
of the vessel or is at least entitled to its possession with power to Pan American World Svcs Inc, Julieta Canilao and Claudia Tagunicar -
lease or charter the vessel.The Authorization itself does not state Respondent
that Bacaltos Coal Mines owns any vessel, and since it is clear that it Airline ticket not confirmed; Persons dealing with assumed agent
is not engaged in shipping but in coal mining or in coal business, are bound at their peril
SMC should have required the presentation of pertinent Facts
documentary proof of ownership of the vessel to be chartered.
Yu Eng Cho and his family bought tickets from Tagunicar who
represented herself to be an agent of Tourist World Svcs Inc. (TWSI).
SMC committed negligence in drawing the check in favor of
payable to Rene Savellon in trust for Bacaltos Coal Mines. It even The tickets were for HK, Tokyo and San Francisco. They were
disregarded the request of Savellon that it be drawn in favor of supposed to go to Fairfield, NJ, USA to buy infrared heating system.
Bacaltos Coal Mines/Rene Savellon. On the date of departure, only the passage from MLA-HK-Tokyo was
confirmed. The Tokyo-SF leg was still marked RQ or “on request”.
SMC then made possible the wrong done. There is an They returned a few days after per instructions of Tagunicar and she
equitable maxim that between two innocent parties, the one who
allegedly told them that her contact, Canilao, told her that their
made it possible for the wrong to be done should be the one to bear
flight was confirmed that the flight was confirmed. She even placed
the resulting loss. For this rule to apply, the condition precedent is
that both parties must be innocent. In the present case, however, confirmation stickers (that may only be used by airlines) on the
SMC is guilty of not ascertaining the extent and limits of the plane tickets. However, upon reaching Tokyo, they called the
authority of Savellon. PanAm office to confirm their flight to SF, the office told them that
BLOCK B 2016
their names aren’t part of the manifest. Because they are only
If the Authorization has some obscurity or ambiguity then transient passengers and couldn’t stay for more than 72 hours, and
there will be more reason to place SMC on guard and for it to
they couldn’t find available slots due to the scarcity of seats because
exercise due for that was part of its duty to discover upon its peril
the nature and extent of Savellon's written agency. of the strike of Northwest Airlines, they bought tickets to Taipei and
because they could get a flight to SF, they returned to Mla. The
2016
supposed purchase in SF did not transpire. Yu Eng Cho now seeks to  Petitioners rely only on the affidavit signed by Tagunicar
collect damages against respondents claiming that they incurred stating that she is an agent. The affidavit cannot hold water
expenses because of their being bumped off in the flight from Tokyo because Tagunicar claims she only signed it upon the
to SF. The RTC ruled in favor of the petitioners. CA modified the assurance that she would not be held liable and upon the
decision and held Tagunicar solely liable and they held that prodding of the lawyer of the son of Yu. Also, she testified in
Tagunicar is not a duly authorized agent of either PanAM or TWSI, court contrary to said affidavit.
and they further held that Tagunicar was not authorized to confirm
bookings or issue validation stickers to petitioners. o She also claims that the petitioner wanted to file
the case against PanAm and TWSI because
Issue/s Tagunicar may not be able to pay the damages
WON Tagunicar should be held solely liable for damages  Existence of agency, even if the affidavit was given weight,
cannot be based solely on the insistence of Tagunicar.
Held/Ratio
 It can be seen that after Tagunicar sells the tickets, she
Yes. takes her money and gives the net to TWSI. She is basically
buying the tickets from TWSI and selling them at a premium
 RTC ruling holding PanAm liable is not valid because it did
to her customers.
not state the facts on which the decision is based.
 Since they did not take actions to demand from PanAM and
 Agency: persons dealing with assumed agent are bound at
there is showing that they knew that their ticket might not
their peril, must ascertain not only the fact of agency but
be confirmed (consistent calls to PanAM). It is also against
also the nature and extent of authority. Burden of proof is
normal behavior that they didn’t insist on getting on the
upon them to establish it.
plane to SF. It shows that they may have hidden motives
o Consent against PanAm.
BLOCK B 2016
o Object is the execution of a juridical act in relation  The tickets were on RQ status, not confirmed, so there was
to a third person no obligation on the part of PanAM
o Agent acts as a representative, not for himself  Tagunicar acted on her own in confirming the tickets as
relayed by Canilao because she did not confirm the flight,
o He acts within the scope of his authority
2016
and Tagunicar said “bahala na” and confirmed the tickets P132,250 but to convince him, Baluyot executed a
anyway. document confirming that while the contract price is P132k,
Linsangan would pay only the P95k. He issued PDCs for the
Manila Memorial Park Cemetery, Inc. vs Linsangan monthly instalments to Baluyot for 2 yrs.
GR 151319 Nov. 22, 2004
3. In 1987, Baluyot advised him that the contract was
Tinga, J cancelled. Atty Linsangan insisted that the same contract be
Petitioner Manila Memorial Park Cemetery; Respondent Atty. Pedro executed despite other offers of equal value. He then sued
both Baluyot and the company for breach of contract.
Linsangan
Facts: 4. MMPCI on its defense says that the contract was

terminated because of failure to pay its arrearages. Further
1. Sometime in 1984, Florencia Baluyot offered Atty. Pedro saying that Baluyot was not their agent and only an
Linsangan a lot called the Garden Estate at the Holy Cross independent contractor. It also averred that Atty Linsangan
Memorial Park owned by MMPCI. According to Baluyot, the can’t belatedly and unilaterally change the term of the
former owner is no longer interested in the lot and opted to contract without the consent and knowledge of MMPCI. It
sell his rights subject to reimbursement of the amounts also alleges that Baluyot exceeded her scope of authority
already paid. The contract was or P95,000. She assured hence it’s not binding upon them as they did not ratify her
Atty. Linsangan that once the reimbursement is made the acts nor acted as if she had full powers as to transact with
contract shall be transferred to his name. He gave Baluoyt Linsangan. It further allege that Linsangan was dealing with
P35,295 representing the amount to be given to the original an agent hence was negligent in not determining the
buyer and to MMPCI to complete the down payment. limitation of such agent’s authority.
Baluyot issued handwritten and typewritten receipts.
 RTC held that MMPCI and Baluyot shall be solidarily liable
2. In March 1985, Baluyot informed him that he will be issued concluding that Baluyot is an agent of MMPCI.
BLOCK B 2016
a new contract into which Linsangan protested but agreed

in the end when Baluyot assured him that he will still be  CA affirmed the decision of the trial court saying that
paying P95,000 and the down payment he gave will still be MMPCI is considered estopped when it allowed Baluyot to
credited in full. After that, Baluyot brought an offer to act and represent MMPCI even beyond her authority.
purchase lot and an official receipt for the down payment.
Issue:
Linsangan at first objected to the new contract price of
2016
1. WON MMPCI can be held liable for the actions of its agent? ratification can be implied in the instant case. It shows that the
agreement between Linsangan and Baluyot was Atty.L was to pay
Held: the P1,800 and Baluyot was to pay the rest (the difference between
NO. As properly found out by the lower courts, Baluyot is the original price and the 95,000). Baluyot, however, failed to pay
indeed an agent of MMPCI however the court held that the latter her part of the instalments hence the contract suffered arrearages
can’t be bound by the contract procured by Linsangan and solicited and was later cancelled. Atty.L failed to show that MMPCI had
by Baluyot. As an agent, she was authorized to solicit and remit to knowledge of this arrangement because as far as MMPCI is
MMPCI offers to purchase with forms provided by MMPCI. The concerned, the contract price was for the full P132k.
terms of the offer are contained in such forms that when signed by There was also no estoppel. There was no indication that
the buyer and an authorized office of MMPCI, becomes binding on
MMPCI let the public believe that Baluyot had the authority to alter
both parties. the standard contracts of the company. One who claims the benefit
The offer to purchase duly signed by both parties showed a of estoppels on the ground that he has been misled by the
price of P132k and it clearly states in the offer that “…there are no representations of another must not have been misled through his
covenants, conditions, warranties or representations other that own want of reasonable care and circumspection. Further, it was
those contained herein.” Any agreement outside between Baluyot not a habit or a long standing custom of the company to allow its
and Linsangan should not affect MMPCI as it was outside the scope agents to lower the prices of its interment spaces nor to assume
of authority of Baluyot. She is only allowed to solicit purchasers and part of its purchase price.
had no authority to alter terms of written contract.
When the third person knows that the agent was acting
Settled rule that persons dealing with an agent are bound at beyond his power or authority, the principal can’t be held liable for
their peril. The principal on the other hand, may act on the the acts of the agent. If the said third party was aware of such limit
presumption that the third persons dealing with his agent will not of authority, he is to blame and is not entitled to recover damages
be negligent in failing to ascertain the extent of his authority as well from the agent unless the latter undertook to secure the principal’s
as the existence of his agency. Linsangan never bothered to inquire ratification. The cancellation of the contract was merely an
BLOCK B 2016
as to the limit of authority of Baluyot and blindingly relied on the enforcement of MMPCI’s rights under the said contract. At best, the
representation of the latter. He is bound to accept responsibility for “agreement” between Baluyot and Atty. L bound only the two of
his negligence. them. Consequently, Baluyot can’t be held for damages under the
contract between MMPCI and Atty. L as she had not undertook to
Ratification (requisites): 1. only a principal can ratify and; 2. secure the former’s ratification but this does not preclude Atty. L to
the principal must have knowledge of the facts he is to ratify. No
2016
recover damages from Baluyot, not as an agent of MMPCI, but in E.R. Squibb & Sons Philippine Corporation (Squibb)
view of the latter’s breach of their separate agreement. appointed Green Valley Poultry & Allied Products, Inc. as a non-
exclusive distributor for Squibb Veterinary Products, as
recommended by Dr. Leoncio D. Rebong, Jr. and Dr. J.G. Cruz. As a
distributor Green Valley was entitled to the following discounts:
Week 5 Feed Store (Catalogue) Less 10% Wholesale Price Less 10%
Distributor Price. The exceptions are Afsiliin Improved (40lbs) 8% off
P120 & Narrow – Spectrum Injectible Antibiotics – Invoiced at Net
Green Valley v. IAC Price per Vial. Deals and Special Offer are not subject to the above
GR 49395 December 26, 1984, J. Abad Santos structure. A 5% distributor commission is allowed for each sale of a
complete deal or special offer to a feedstore, drugstore or other
Petitioner , Green Valley Poultry Allied Products, Inc.
type of account. Green Valley Poultry & Allied Products, Inc. win
Respondent, Intermediate Appellate Court & E.R. Squibb & Sons distribute only for the Central Luzon and Northern Luzon including
Philippine Corporation Cagayan Valley areas. The maximum discount for direct and
turnover accounts will not go beyond 10%. Squibb will advise Green
Summary/Memory Aid: valley of any price changes. Payment for Purchases of Squibb
Products will be due 60 days from date of invoice or the nearest
ER Squibb assigned Green Valley as a non-exclusive
business day thereto. No payment win be accepted in the form of
distributor of Squibb Veterinary Products. Green Valley delivered
post-dated checks. Payment by check must be on current dating. It
the products but it was unpaid. Squibb files a suit to collect. Squibb
is mutually agreed that non-exclusive distribution agreement can be
contends it’s a contract of sale. Green Valley says it’s a contract of
terminated by either Green Valley Poultry & Allied Products, Inc. or
agency to sell. The RTC and CA ruled that it was a sales contract but
Squibb Philippines on 30 days notice.
the SC contends that either way Green Valley is liable to pay.
Squibb filed a case against Green Valley for goods delivered
Facts:
and unpaid. Green Valley that the contract was a contract of agency
BLOCK B 2016
This is a petition to review decision of CA ordering Green to sell; that it never purchased goods from Squibb; that the goods
Valley to pay ER Squibb P48,374.74 plus P96.00 with interest at 6% received were on consignment only with the obligation to turn over
per annum from the filing of this action; plus attorney's fees in the the proceeds, less its commission, or to return the goods if not sold,
amount of P5,000.00 and to pay the costs. and since it had sold the goods but had not been able to collect
from the purchasers thereof, the action was premature. On the
2016
other hand, Squibb claimed that the contract was one of sale so that Petitioners: Spouses Raul and Amalia Panlilio
Green Valley was obligated to pay for the goods received upon the
expiration of the 60-day credit period. The trial court and CA ruled Respondents: Citibank
in favor of Squibb. Summary / Memory Aid:
Issue: The DIMA, Directional Letter, TIA and COIs, read together,
establish the agreement between the parties as an investment
1. Whether or not Green Valley is liable to Squibb
management agreement, which created a principal-agent
Held/Ratio: relationship between petitioners as principals and respondent as
agent for investment purposes. The agreement is not a trust or an
Both courts below upheld the claim of Squibb that the
ordinary bank deposit; hence, no trustor-trustee-beneficiary or even
agreement between the parties was a sales contract. We do not borrower-lender relationship existed between petitioners and
have to categorize the contract. Whether viewed as an agency to respondent with respect to the DIMA account. Respondent
sell or as a contract of sale, the liability of Green Valley is purchased the LTCPs only as agent of petitioners; thus, the latter
indubitable. Adopting Green Valley's theory that the contract is an assumed all obligations or inherent risks entailed by the
agency to sell, it is liable because it sold on credit without authority
transaction under Article 1910 of the Civil Code, which provides:
from its principal. The Civil Code has a provision exactly in point. It
reads: The principal must comply with all the obligations which the agent
may have contracted within the scope of his authority.
Art. 1905. The commission agent cannot, without the express or
implied consent of the principal, sell on credit. Should he do so, the The Facts:
principal may demand from him payment in cash, but the
commission agent shall be entitled to any interest or benefit, which In October 1997, petitioner Amalia Panlilio deposited P1M
may result from such sale. in the respondent bank's "Citihi" account, a fixed-term savings
account with a higher-than-average interest. Amalia also opened
BLOCK B 2016
Petition is dismissed. The decision of CA is affirmed. the accounts as ITF (in trust for) accounts to benefit her minor
children in case she would meet an untimely death. Respondent
assigned one of its employees, Jinky Suzara Lee (Lee), to personally
Panlilio v. Citibank transact with Amalia and to handle the accounts. (Note: these
G.R. No. 156335 investments are not really significant with regard to the main issue)
2016
More than a month later (November 28, 1997), Amalia week after the investment was made. Respondent claims that other
wanted to place an additional investment with Citibank in the succeeding COIs were sent to and received by petitioners.
amount of P3M. Again, she spoke on the phone with Lee who
introduced her to Citibank's various investment offerings. Amalia Amalia claims to have called Lee when she received the first
went to Citibank bringing a PCIBank check in the amount of P3M. COI and demanded that the investment in LTCP be withdrawn and
During the visit, Amalia instructed Lee on what to do with said placed in a PRPN instead. Respondent denies this, claiming that
Amalia merely called to clarify certain matters and did not demand
money.
a withdrawal.
On that day, to formalize the investment, Amalia signed the
following documents: On August 6, 1998, petitioners met with another Citibank
employee (Lizza Colet) because they wanted to preterminate the
Directional Investment Management Agreement (DIMA), LTCP and their other investments. Petitioners were told that as to
Term Investment Application (TIA), and a Directional Letter with the LTCP, liquidation could be made only if there is a willing buyer,
specific instructions to Citibank which was difficult at that time because of the economic crisis.
The DIMA and the Directional Letter contain provisions that On August 18, 1998, Amalia, through counsel, sent her first
essentially clear Citibank of any obligation to guarantee the formal, written demand to respondent for a withdrawal of her
principal and interest of the investment, absent fraud or negligence investment as soon as possible. In answer to the letters, respondent
on the latter's part. The provisions likewise state that all risks are to noted that the investment had a 2003 maturity, was not a deposit,
be assumed by the petitioner. and so its return to the investor cannot guaranteed by Citibank.
Respondents state that despite efforts to sell the LTCP, they were
Later, she learned that out of the said amount,
not able to find willing buyers.
P2,134,635.87 was placed by Citibank in a Long-Term Commercial
Paper (LTCP), a debt instrument that paid a high interest, issued by Thus, petitioners filed with the RTC demanding a return of
the corporation Camella and Palmera Homes (C&P Homes). The their investment, alleging that Amalia's instructions were to invest
rest of the money was placed in two PRPN (Peso Repriceable the money in a "trust account" and not an LTCP. The RTC upheld all
BLOCK B 2016
Promissory Note) accounts. the allegations of petitioners and concluded that Amalia never
instructed Citibank to invest the money in an LTCP. Thus Citibank is
Following this, respondent claims to have regularly sent liable to the petitioners. Respondent appealed to the CA and
confirmations of investment (COIs) to petitioners. A COI is a reversed the previous ruling of the RTC.
document informing the customer of the investment earlier made
with the bank. The first of these COIs was received by petitioners a The Issue (related to Agency):
2016
WON petitioners Panlilio can oblige respondent Citibank to return assumed all obligations or inherent risks entailed by the
the money invested by the former to the latter upon their demand transaction under Article 1910 of the Civil Code, which provides:
prior to maturity.
The principal must comply with all the obligations which the agent
Held: may have contracted within the scope of his authority.
1. NO. As for any obligation wherein the agent has exceeded his
power, the principal is not bound except when he ratifies it
The DIMA, Directional Letter and COIs are evidence of the expressly or tacitly.
contract between the parties and are binding on them. In particular,
petitioner Amalia affixed her signatures on the aforementioned Amalia’s proper recourse is against C&P Homes and only
documents. Thus, she cannot deny absent any evidence of mistake, upon maturity. As principals, they are bound by the provisions of
violence, intimidation, undue influence or fraud. the contracts entered into by their agents absent any proof that
the latter acted beyond its authority. It’s the principal who
It is important to note that under Section 4 of the DIMA, the assumes the risks that may arise from the transaction.
following provision appears: THIS AGREEMENT IS AN AGENCY AND
NOT A TRUST AGREEMENT. AIR FRANCE v CA
Doctrines:
Also, under Section 6 of the DIMA, the investment manager
(in this case, Citibank), is absolved of any liability in the absence of - Knowledge of the agent is considered knowledge of the
fraud, bad faith, or gross or willful negligence on its part. Principal
The DIMA, Directional Letter, TIA and COIs, read together, Facts:
establish the agreement between the parties as an investment
management agreement, which created a principal-agent -Sometime in February, 1970, the late Jose G. Gana and his
relationship between petitioners as principals and respondent as family, numbering nine (the GANAS), purchased from AIR FRANCE,
through a travel agent, air passage tickets for the
BLOCK B 2016
agent for investment purposes. The agreement is not a trust or an

ordinary bank deposit; hence, no trustor-trustee-beneficiary or even Manila/Osaka/Tokyo/Manila route.
borrower-lender relationship existed between petitioners and - Later, AIR FRANCE exchanged or substituted the
respondent with respect to the DIMA account. Respondent aforementioned tickets with other tickets for the same route, valid
purchased the LTCPs only as agent of petitioners; thus, the latter until 8 May 1971
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- At the time of the exchange, the Ganas were already - the Ganas departed on May 7, but encountered difficulties
schedule to depart on May 8, 1970, but it didn’t push through going from Osaka to Tokyo and from Tokyo to Manila as the airline
refused to honor their expired tickets.
- A few months later, Jose Gana sought the assistance of
Teresita, for the extension of the validity of their tickets. -Upon returning home, Gana filed a case against Air FRANCE
-Teresita in turn, enlisted the help of Lee Ella, a Manager of Issue :

the Philippine Travel Bureau
W/N Air FRANCE is liable for breach of contract of carriage
- Ella contacted the Office Manager of AIR FRANCE. Ella
was informed that extension was not possible unless the fare Held: No
differentials resulting from the increase in fares triggered by an -AIR FRANCE cannot be faulted for breach of contract when
increase of the exchange rate of the US dollar to the Philippine peso it dishonored the tickets of the GANAS after 8 May 1971 since those
and the increased travel tax were first paid. Ella then informed tickets expired on said date; nor when it required the GANAS to buy
Teresita of the impossibility of extension. new tickets or have their tickets re-issued for the Tokyo/Manila
- In the meantime, the GANAS had scheduled their segment of their trip.
departure on 7 May 1971 or one day before the expiry date. In the -GANAS cannot defend by contending lack of knowledge of
morning of the very day of their scheduled departure on the first leg those rules since the evidence bears out that Teresita, who handled
of their trip, Teresita requested travel agent Ella to arrange the travel arrangements for the GANAS was duly informed by Ella, who
revalidation of the tickets. in turn was advice by the Office Manager of Air FRANCE, that the
tickets in question could not be extended beyond the period of their
- Ella gave the same negative answer and warned her that
although the tickets could be used by the GANAS if they left on 7 validity without paying the fare differentials and additional travel
May 1971, the tickets would no longer be valid for the rest of their taxes brought about by the increased fare rate and travel taxes.
trip because the tickets would then have expired on 8 May 1971. - Knowledge of the agent is considered knowledge of the
BLOCK B 2016
- Teresita assured Ella that the Ganas will be making their Principal
own arrangements. - Ganas cannot contend lack of knowledge since it is clear
that their travel agent was duly informed by the airline company
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Cuison vs. CA Huy Tiac who was then employed in the Binondo office of Kue
G.R. No. 88539 October 26, 1993 Bidin Cuison. It was likewise pursuant to Tiac's instructions that the
merchandise was delivered to Lilian Tan. Upon delivery, Lilian Tan
PETITIONER: KUE CUISON, doing business under the firm name and paid for the merchandise by issuing several checks payable to cash
style"KUE CUISON PAPER SUPPLY," at the specific request of Tiu Huy Tiac. In turn, Tiac issued 9
RESPONDENT: THE COURT OF APPEALS, VALIANT INVESTMENT postdated checks to Valiant as payment for the paper products.
Unfortunately, said checks were later dishonored by the drawee
SUMMARY: bank.
Kue Cuison’s Binondo branch Manager Tiu Huy Tiac ordered Thereafter, Valiant made several demands upon Kue Cuison
various kinds of paper products amounting to P297,486.30 from to pay for the merchandise in question, claiming that Tiu Huy Tiac
Valiant and had it delivered to Lilian Tan of LT Trading. Upon was duly authorized by Cuison as the manager of his Binondo office,
delivery, Lilian Tan paid for the merchandise and Tiu Huy Tiac issued to enter into the questioned transactions with Valiant and Lilian
9 postdated checks to Valiant as payment for the paper products Tan. Cuison denied any involvement in the transaction entered into
but the checks bounced. Upon demand by Valiant, Kue Cuison by Tiu Huy Tiac and refused to pay Valiant the amount of
denies having any involvement with Tiu Huy Tiac’s business with P297,487.30 for the selling price of the subject merchandise.
Valiant.
Valiant then went to court to recover the sum of money but
FACTS: the trial court dismissed the complaint against Cuison for lack of
merit. On appeal, however, the decision of the trial court was
Petitioner Kue Cuison is a sole proprietorship engaged in reversed by the Court of Appeals.
the purchase and sale of newsprint, bond paper and scrap, under
the name of "Kue Cuison Paper Supply" with places of business at ISSUE:
Baesa, Quezon City, and Sto. Cristo, Binondo, Manila. Private
respondent Valiant Investment Associates, on the other hand, is a 1. Whether or not Tiu Huy Tiac possessed the required
authority from petitioner sufficient to hold the latter liable
BLOCK B 2016
partnership with business address at Kalookan City.

for the disputed transaction?
From December 4, 1979 to February 15, 1980, Valiant
delivered various kinds of paper products amounting to HELD:
P297,487.30 to a certain Lilian Tan of LT Trading. The deliveries YES. Tiu Huy Tiac possessed the authority because he is an
were made by Valiant pursuant to orders allegedly placed by Tiu agent of Kue Cuison. As to the merits of the case, it is a well-
2016
established rule that one who clothes another with apparent Moreover Article 1911 of the Civil Code provides:
authority as his agent and holds him out to the public as such
cannot be permitted to deny the authority of such person to act as "Even when the agent has exceeded his authority, the principal is
his agent, to the prejudice of innocent third parties dealing with solidarily liable with the agent if the former allowed the latter to
such person in good faith and in the honest belief that he is what he act as though he had full powers."
appears to be.
It is evident from the records that by his own acts and PLEASANTVILLE DEVELOPMENT CORPORATION vs CA
admission, petitioner held out Tiu Huy Tiac to the public as the
[G.R. No. 79688. February 1, 1996]
manager of his store in Sto. Cristo, Binondo, Manila. More
particularly, petitioner explicitly introduced Tiu Huy Tiac to Is a lot buyer who constructs improvements on the wrong
Bernardino Villanueva, respondent's manager, as his (petitioner's) property erroneously delivered by the owner’s agent, a builder in
branch manager as testified to by Bernardino Villanueva. Secondly, good faith?
Lilian Tan, who has been doing business with Cuison for quite a
while, also testified that she knew Tiu Huy Tiac to be the manager of Facts:
petitioner's Sto. Cristo, Binondo branch. This general perception of Robillo purchased a parcel of land , Lot 9, in Pleasantville
Tiu Huy Tiac as the manager of petitioner's Sto. Cristo store is even subdivision. In 1975, respondent Jardinico bought the rights of the
made manifest by the fact that Tiu Huy Tiac is known in the lot from Robillo. At this time Lot 9 is vacant.
community to be the "kinakapatid" (godbrother) of petitioner. In
fact, even petitioner admitted his close relationship with Tiu Huy 1978, upon securing his Title and completing all payments,
Tiac when he said that they are "like brothers". There was thus no he discovered that improvements have been introduced on Lot 9 by
reason for anybody especially those transacting business with respondent Wilson Kee. Apparently, in 1974, kee bought on Lot 8
petitioner to even doubt the authority of Tiu Huy Tiac as his from CTTEI Inc, the exclusive real estate agent of petitioner,
manager in the Sto. Cristo Binondo branch. Pleasantville. Under the contract, Kee could possess the lot even
before completion of installment. On Jan 20 and 27,1975, Kee paid
BLOCK B 2016
By his representations, petitioner is now estopped from CTTEI the relocation fee for preparation of the lot plan. After
disclaiming liability for the transaction entered by Tiu Huy Tiac on preparation of the lot plan , CTTEI employee Octaviano,
his behalf. It matters not whether the representations are accompanied by Kee’s wife, inspected lot 8. Unfortunately,
intentional or merely negligent so long as innocent, third persons Octaviano pointed Lot 9 instead of Lot 8. Thereafter, Kee proceeded
relied upon such representations in good faith and for value.
2016
to construct his residence, a store and an auto repair shop along B) If jardinco lets kee buy the land, the amount kee will
with other improvements. pay.
3. Litigation expenses of this trial will be shouldered by the

two above.
While Jardinico and Kee tried to settle, they failed so Jardinico
brought kee to court. Kee, in turn filed a 3rd party complaint against 4. Rental fees are dispensed with.
CTTEI..
Hence this petition.
MTCC held that Kee ordered to vacate and pay rentals to
the rightful owner. CTTEI should also pay for damages. Here, we Issues:
find out that Kee was not paying his installments so CTTEI rescinded 1) Was Kee in good faith?
the contract giving him no right of ownership over the land.
2) Petitioner’s liability through agent’s negligence is legally
RTC on the other hand absolved CTTEI of any negligence sound?
saying that they did not directly participated in the delivery of lot 9
to kee. It ruled that Kee is in bad faith and even if he was in good 3) Was the extent of liability given to petitioner correct?
faith, he unlawfully usurped the right of Jardinico over lot 9 hence
Held:
he should be liable for rental.
1) Yes
Reconsideration was denied and upon filing to the SC it was
referred back to CA. 2) Yes
CA reversed: 3) No
1. Kee is builder in good faith Ratio:
BLOCK B 2016
2. CTTEI and Pleasantville are solidarly liable if: 1) Good faith presumed. It is up to petitioner to prove bad faith. At
the time he built improvements on Lot 8, Kee believed that said lot
A) If Jardinico decided to remove the structures, liability
was what he bought from petitioner. He was not aware that the lot
for demolition expense.
delivered to him was not Lot 8. Thus, Kee’s good faith. Petitioner
failed to prove otherwise.
2016
2) contends that if the above holding would be carried out, Kee would
be unjustly enriched at its expense because Kee would be able to
a) There was a waiver in the contract of sale: “13. The Vendee buy the lot without paying anything. The SC agrees.
hereby declares that prior to the execution of his contract he/she
has personally examined or inspected the property made subject- While it was proper to award damages, It was error for the
matter hereof, as to its location, contours, as well as the natural Court of Appeals to make a “slight modification” in the application
condition of the lots and from the date hereof whatever of such law, on the ground of “equity”. At any rate, as it stands
consequential change therein made due to erosion, the said Vendee now, Kee and Jardinico have amicably settled through their deed of
shall bear the expenses of the necessary fillings, when the same is sale their rights and obligations with regards to Lot 9. Thus, we
so desired by him/her.” Such waiver would be contrary to public delete items 2 (a) and (b) of the dispositive portion of the Court of
policy and cannot be allowed. “Rights may be waived, unless the Appeals’ Decision [as reproduced above] holding petitioner and
waiver is contrary to law, public order, public policy, morals, or good CTTEI solidarily liable.
customs, or prejudicial to a third person with a right recognized by
law.” ( Part of 1st issue in the case but I think it fits here better.)
b) Petitioner does not dispute the fact that CTTEI was its agent. But Rural Bank of Milaor v Ocfemia
it contends that the erroneous delivery of Lot 9 to Kee was an act GR 137686 // February 8, 2000 // Panganiban, J.
which was clearly outside the scope of its authority, and
Memory Aid/Doctrine:
consequently, CTTEI alone should be liable. It asserts that “while
[CTTEI] was authorized to sell the lot belonging to the herein When a bank, by its acts and failure to act, has clearly
petitioner, it was never authorized to deliver the wrong lot to Kee.” clothed its manager with apparent authority to sell an acquired
asset in the normal course of business, it is legally obliged to
Petitioner’s contention is without merit.
confirm the transaction by issuing a board resolution to enable the
The rule is that the principal is responsible for the acts of buyers to register the property in their names. It has a duty to
the agent, done within the scope of his authority, and should bear perform necessary and lawful acts to enable the other parties to
BLOCK B 2016
the damage caused to third persons. [14] On the other hand, the enjoy all benefits of the contract which it had authorized.
agent who exceeds his authority is personally liable for the damage.
Facts:
3) The CA ruled that if Jardinco would allow Kee to buy the lot for
Several parcels of land were mortgaged by the respondents
him, Pleasantville and CTTEI would be solidarily liable for the
during the lifetime of the respondent’s grandparents to the Rural
amount Kee would pay Jardinco to purchase the lot. Petitioner
2016
bank of Milaor as shown by the Deed of Real Estate Mortgage and subsequently mortgage said lots and to use the loan proceeds for
the Promissory Note. Spouses Felicisimo Ocfemia and Juanita the medical expenses of their ailing mother.
Ocfemia, one of the respondents, were not able to redeem the
mortgaged properties consisting of seven parcels of land and so the Issue:
mortgage was foreclosed and thereafter ownership was transferred 1. May the board of directors of a rural banking corporation be
to the petitioner bank. Out of the seven parcels of land that were compelled to confirm a deed of absolute sale of real
foreclosed, five of them are in the possession of the respondents property owned by the corporation which deed of sale was
because these five parcels of land were sold by the petitioner bank executed by the bank manager without prior authority of
to the respondents as evidenced by a Deed of Sale. However, the the board of directors of the rural banking corporation?
five parcels of land cannot be transferred in the name of the
parents of Merife Nino, one of the respondents, because there is a
need to have the document of sale registered. The Register of
Held.
deeds, however, said that the document of sale cannot be
registered without the board resolution of the petitioner bank YES. The bank acknowledges, by its own acts or failure to
confirming both the Deed of sale and the authority of the bank act, the authority of Fe S. Tena to enter into binding contracts. After
manager, Fe S. Tena, to enter such transaction. the execution of the Deed of Sale, respondents occupied the
properties in dispute and paid the real estate taxes. If the
The petitioner bank refused her request for a board resolution and bank management believed that it had title to the property, it
made many alibis: should have taken measured to prevent the infringement and
invasion of title thereto and possession thereof. Likewise, Tena had
 She was told that the that the bank had a new manager and it
previously transacted business on behalf of the bank, and the latter
had no record of the sale
had acknowledged her authority. A bank is liable to innocent third
 She was asked to give documents evidencing the payment persons where representation is made in the course of its normal
business by an agent like Manager Tena even though such agent is
BLOCK B 2016
 After submitting all the document, they told her that she would abusing her authority. Clearly, persons dealing with her could not be
have to wait for two weeks cos the “bank will study the matter” blamed for believing that she was authorized to transact business
Respondents initiated the present proceedings so that they for and on behalf of the bank. The bank is estopped from
could transfer to their names the subject five parcel of land and questioning the authority of the bank to enter into contract of sale.
If a corporation knowingly permits one of its officers or any other
agent to act within the scope of an apparent authority, it holds the
2016
agent out to the public as possessing the power to do those acts; RBoM, being a hurdle in Marife’s quest, denied her pleas
thus, the corporation will, as against anyone who has in good faith because apparently they now have a new Manager and that they
dealt with it through such agent, be estopped from denying the had no record of such sale. After complying with all of RBoM’s
agent’s authority. requirements (permission from her parents, receipts of payment
etc.) The bank told her to wait for 2 weeks so they can “study” the
Alternative version of Facts: matter. However, this was all in vain because they had no records
Seven parcels of land located in Camarines Sur owned from the old manager and thus no board resolution in favor of
Juanita and Felicisimo Ocfemia (the grandparents of the private Marife was ever issued.
respondent) were mortgaged to petitioner Rural Bank of Milaor Marife needed the board resolution badly because they
(RBoM) as shown by a Deed of Real Estate Mortgage and a
want to mortgage the property so that they can pay for the medical
Promissory Note. expenses of her mother Francisca Ocfemia who is now in a serious
The grandparents were not able to redeem the mortgaged condition. Hence, Marife was constrained filed suit against RBoM.
properties so it was obviously foreclosed and ownership thereof
FILIPINAS LIFE INSURANCE VS. PEDROSO
transferred to RBoM. Renato (the son of the grandparents
mentioned above) and Francisca Ocfemia was able to purchase 5
out of the 7 parcels of land from RBoM as evidenced by a Deed of FACTS:
Sale. However, ownership never transferred to the Renato and
Francisco Ocfemia because there was a need to have the Deed of Pedroso is a policyholder of a 20-year endowment life insurance
Sale registered in the Register of Deeds in CamSur. issued by Filipinas
So Marife Nino (daughter of Renato and the grandchild of  Valle was her insurance agent since 1972 and Valle
the gramdparents) went on an adventure to the Register of Deeds collected her monthly premiums
in CamSur equipped with Deed of Sale to have it registered. The
 After 5 years, Valle told her that the Filipinas Escolta Office
Register of Deeds being the jerks they are, told Marife that they
BLOCK B 2016
had a promotional investment program for policyholders

couldn’t register it because she needs to acquire a Board Resolution
offerring 8% prepaid interest a month
from RBoM. Marife then set sail towards RBoM to obtain such
resolution and requested the RBoM to give her the goddamn board Pedroso initially invested 10K as post-dated check
resolution.
 Valle issued Pedroso his personal check for P800 for the 8%
prepaid interest and a Filipinas “Agent’s Receipt”
2016
 Then talked to Alcantara, the administrative assistant and  They went to the Escolta Office to collect their respective
branch manager Apetrior to Inquire about the promotional investments, and to inquire why they had not seen Valle for
investment a while but to no avail (assume Valle absconded? - case
does not say what happened to Valle or the money)
 Apetrior confirmed that there was a promotion and was
even told she could “push through with the check” Hence, Pedroso and Palacio filed an action for the recovery of a sum
money against agents and Filipinas
 The check, with the endorsement of Alcantara, was
deposited in the account of Filipinas  Contend that Filipinas authorized Valle to solicit
investments from them
 Relying on the representations made by Filipinas' duly
authorized representatives, and having known Valle for 5  Filipinas official documents and facilities were used in
years, she waited for maturity consummating the transactions
 After a month, she got her 10K from Alcantara after writing  Transactions were confirmed by its duly authorized
a request for its refund officers Apetrior and Alcantara
 Formal written request was written on an inter-office  They exercised all the diligence required of them in
memorandum form of Filipinas prepared by Alcantara ascertaining the authority of petitioner’s agents
Pedrosa then made 7 to 8 more investments totaling P37,000 Filipinas contends
 Upon maturity, Valle would take back from Pedroso the  It was a life insurance company and was not engaged in the
corresponding yellow-colored agent’s receipt he issued business of collecting investment money
Pedroso told Palacio, also a policyholder, about the investment plan  The investment scheme offered to respondents by Valle,
who thereafter invested 49.5K Apetrior and Alcantara was outside the scope of their
BLOCK B 2016
authority as agents so it should no be held liable

 However, when Pedroso tried to withdraw her investment,
Valle did not want to return some 17K RTC held Flipinas, Valle, and authorized representatives jointly and
solidarily liable; CA affirmed.
 Palacio also tried to withdraw hers, but Filipinas Life refused
to return her money ISSUE:
2016
W/N Filipinas should be held jointly and solidarily liable with Valle -  Ratification in agency is the adoption or confirmation by
YES one person of an act performed on his behalf by another
without authority
HELD:
 Even if Valle’s representations were beyond his authority as
Filipinas as PRINCIPAL IS LIABLE FOR OBLIGATIONS contracted by its
a debit/insurance agent, Filipinas Life thru Alcantara and
agent Valle
Apetrior expressly and knowingly ratified Valle’s acts
1868: By the contract of agency, a person binds himself to render
 Filipinas Life benefited from the investments deposited by
some service or to do something in representation or on behalf of
Valle in the account of Filipinas Life
another, with the consent or authority of the latter.
1911: Even when the agent exceeds his authority, the principal is
 GR - The principal is responsible for the acts of its agent
still solidarily liable together with the agent if the principal
done within the scope of its authority, and should bear the
allowed the agent to act as though the agent had full powers.
damage caused to third persons.
 Filipinas Life had clothed Valle with apparent authority -
 EXC - When the agent exceeds his authority, the agent
estopped to deny said authority
becomes personally liable for the damage
 Innocent third persons should not be prejudiced if the
1910: The acts of an agent beyond the scope of his authority do
principal failed to adopt the needed measures to prevent
not bind the principal, unless the principal ratifies them, expressly
misrepresentation
or impliedly
 “He who does a thing by an agent is considered as doing it
 Pedroso (47K) and Palacio (49.5) invested and Valle received
himself.”
and remitted to Filipinas amounts using Filipinas official
receipts whose authenticity were not disputed  While a person dealing with an agent is put upon inquiry
BLOCK B 2016
and must discover at his own peril the agent’s authority, in

 Established Valle’s authority to solicit and receive
this case, Pedroso and Palacio proved they exercised due
investments
diligence in removing all doubts and in confirming the
 When Pedroso snd Palaco sought confirmation, Alcantara, validity of the representations made by Valle
holding a supervisory position, and Apetrior, the branch
manager, CONFIRMED Valle's authority
2016
ostensible agency, and (3) under the doctrine of corporate
responsibility, PSI is liable for the supervision of their staff.
Professional Service Inc. v. CA (2008)
Feb. 11, 2008, J. Sandoval-Gutierrez Facts:
Petitioner 1: Professional Service, Inc. In 1984, Natividad was admitted at the Medical City General
Hospital and was diagnosed by Dr. Ampil as suffering from “cancer
Respondent 1: CA & Natividad and Enrique Gana of the sigmoid.” She had a hysterectomy performed by Dr. Ampil
Memory Aid: 2 gauzes in the vagina. and Dr. Fuentes (Dr. Ampil obtained the consent of Atty. Enrique,
husband of Natividad, to allow Dr. Fuentes to perform the
Doctrine: hysterectomy). Dr. Fuentes performed and completed the
hysterectomy. Afterwards, Dr. Ampil took over, completed the
It must be stressed that under the doctrine of apparent
operation and closed the incision. After the operation, attending
authority, the question in every case is whether the principal has by nurses remarked that 2 sponges were missing.
his voluntary act placed the agent in such a situation that a person
of ordinary prudence, conversant with business usages and the After a couple of days, Natividad complained of excruciating
nature of the particular business, is justified in presuming that such pain in her anal region. She consulted the doctors, and was told that
agent has authority to perform the particular act in question. it was a natural consequence of the operation. She was also told to
consult an oncologist to treat some cancerous nodes that were not
Recit-ready version: removed. As a consequence she went to the U.S. for consultation,
Natividad had a hysterectomy performed by Dr. Ampil and and there she was told she was free of cancer. When she came back
Dr. Fuentes at the Medical City General Hospital. After the to the Phil. still suffering from pains, her daughter found a piece of
operation, the nurses remarked that 2 sponges/gauzes were gauze protruding from her vagina. Then Dr. Ampil went to
missing. It was later found in the vagina of Natividad. This gauzes Natividad’s house and removed from Natividad a gauze measuring
badly infected her vagina that she underwent another surgery. She 1.5 in. Natividad pains intensified, despite the assurance of Dr.
BLOCK B 2016
filed a complaint for damages with the RTC against PSI (owner of Ampil that the pain would soon go away. So, Natividad went to
Medical City) and Dr. Ampil. She died during the pendency of the Polymedic General Hospital, where the doctor found another piece
case. RTC & CA ruled in her favor. SC ruled that PSI is liable for the of gauze measuring 1.5 inches in width. The gauze had badly
acts of Dr. Ampil because: (1) there was an employer-employee infected her vaginal vault. A recto-vaginal fistula had formed in her
relationship, (2) Dr. Ampil was an agent under the doctrine of reproductive organ, which forced stool to excrete through the
vagina. Therefore Natividad underwent another surgery.
2016
Natividad filed with the RTC, a complaint for damages • Doctrine of corporate negligence is misplaced because the
against PSI (owner of Medical City), Dr. Ampil and Dr. Fuentes. proximate cause of Natividad’s injury was Dr. Ampil’s negligence.
During the pendency of the case Natividad died and was substituted
by her children. Issue:
1. Was there an employee-employer relationship between PSI

The Aganas won in the RTC and CA.
and Dr. Ampil under the principle of respondeat superior? Yes.
SC, First Division, Ruling:
2. Was Dr. Ampil an agent of PSI under the doctrine of
• Relied on Ramos v. CA: for the purpose of apportioning ostensible agency? Yes.
responsibility in medical negligence cases, an employer-employee
3. Is PSI was liable to Natividad under the doctrine of
relationship in effect exists between hospitals and their attending
and visiting physicians. corporate negligence? Yes.
• PSI’s act of publicly displaying in the lobby of the Medical Held:

City the names and specializations of its accredited physicians, 1. YES, there existed between PSI and Dr. Ampil an employer-
including Dr. Ampil, estopped it from denying the existence of an employee relationship as contemplated in Ramos v. Court of
employer-employee relationship between them under the doctrine Appeals that "for purposes of allocating responsibility in medical
of ostensible agency or agency by estoppel. negligence cases, an employer-employee relationship exists
between hospitals and their consultants." Where an employment
• PSI’s failure to supervise Dr. Ampil and its resident
physicians and nurses and to take an active step in order to remedy relationship exists, the hospital may be held vicariously liable under
Article 2176 in relation to Article 2180 of the Civil Code or the
their negligence rendered it directly liable under the doctrine of
corporate negligence. principle of respondeat superior. Although the Court in Ramos later
issued a Resolution clarifying its earlier finding on the existence of
PSI: an employment relationship between hospital and doctor, a similar
BLOCK B 2016
reversal was not warranted in the present case because the defense
• No employer-employee relationship. raised by PSI consisted of a mere general denial of control or
• Doctrine of ostensible agency does not apply because responsibility, maintaining that consultants, like Dr. Ampil, are
Aganas failed to establish that Natividad relied on the independent contractors, not employees of the hospital. Even
representation of the hospital in engaging the services of Dr. Ampil. assuming that Dr. Ampil is not an employee of Medical City, but an
2016
independent contractor, still the said hospital is liable to the The responsibility treated of in this article shall cease when the
Aganas. persons herein mentioned prove that they observed all the
diligence of a good father of a family to prevent damage.
• The private hospitals also hire, fire, and exercise real control
over their attending and visiting “consultant” staff. 2. YES, Dr. Ampil was an agent of PSI, because PSI is estopped
from passing the blame solely to Dr. Ampil. Its act of displaying his
• Respondeat superior: legal doctrine which states that, in name and those of the other physicians in the public directory at
may circumstances an employer is responsible for the actions of the lobby of the hospital amounts to holding out to the public that it
employees performed within the course of their employment. offers quality medical service through the listed physicians. This
i. Article 2176: Whoever by act or omission causes damage to justifies Atty. Aganas belief that Dr. Ampil was a member of the
another, there being fault or negligence, is obliged to pay for the hospitals staff (He categorically testified that one of the reasons
damage done. Such fault or negligence, if there is no pre-existing why he chose Dr. Ampil was that he knew him to be a staff member
contractual relation between the parties is called a quasi-delict and of Medical City). It must be stressed that under the doctrine of
is governed by the provisions of this Chapter. apparent authority, the question in every case is whether the
principal has by his voluntary act placed the agent in such a
ii. Art. 2180. The obligation imposed by article 2176 is situation that a person of ordinary prudence, conversant with
demandable not only for one's own acts or omissions, but also for business usages and the nature of the particular business, is
those of persons for whom one is responsible… justified in presuming that such agent has authority to perform the
particular act in question.
The owners and managers of an establishment or enterprise are
likewise responsible for damages caused by their employees in the 3. YES, under the Doctrine of Corporate Responsibility, PSI is
service of the branches in which the latter are employed or on the responsible for the proper supervision of the members of its
occasion of their functions. medical staff. Accordingly, the hospital has the duty to make a
reasonable effort to monitor and oversee the treatment prescribed
Employers shall be liable for the damages caused by their
and administered by the physicians practicing in its premises. PSI
BLOCK B 2016
employees and household helpers acting within the scope of their

committed aserious breach of its corporate duty when it failed to
assigned tasks, even though the former are not engaged in any
conduct an immediate investigation into the reported missing
business or industry…
gauzes.
2016
Professional Services, Inc. v. CA employer-employee relationship between doctor and
February 2, 2010, J. Corona hospital under which the hospital could be held vicariously
liable to a patient in medical negligence cases is a requisite
Petitioner: PSI fact to be established by preponderance of evidence. Here,
Respondent: CA & Natividad and Enrique Agana there was insufficient evidence that PSI exercised the power
of control or wielded such power over the means and the
This is the second motion for reconsideration. Manila Medical details of the specific process by which Dr. Ampil applied his
Services, Inc. (MMSI), Asian Hospital, Inc. (AHI), and Private Hospital skills in the treatment of Natividad. Consequently, PSI
Association of the Philippines (PHAP) all sought to intervene in cannot be held liable for the negligence of Dr. Ampil under
these case invoking the common ground that, unless modified, the the principle of respondeat superior.
assailed decision and resolution will jeopardize the financial viability
of private hospitals and jack up the cost of health care. 2. YES, the hospital (PSI) held out to the patient (Natividad)
that the doctor (Dr. Ampil) was its agent. Present are the
two factors that determine apparent authority: first, the
hospital's implied manifestation to the patient which led the
Facts: Same facts as before.
latter to conclude that the doctor was the hospital's agent;
Issue: and second, the patient’s reliance upon the conduct of the
hospital and the doctor, consistent with ordinary care and
1. Was there an employee-employer relationship between PSI prudence. It was Dr. Ampil, after the first meeting, who
and Dr. Ampil? No. asked Natividad to go to Medical City to be examined by Dr.
Ampil there. The decision made by Enrique for Natividad to
2. Was Dr. Ampil an agent of PSI under the doctrine of
consult Dr. Ampil was significantly influenced by the
ostensible agency? Yes.
impression that Dr. Ampil was a staff member of Medical
3. Was PSI liable to Natividad under the doctrine of corporate City General Hospital. Enrique looked upon Dr. Ampil not as
independent of but as integrally related to Medical City. It is
BLOCK B 2016
negligence? Yes.
of record that PSI required a "consent for hospital care" to
Held: be signed preparatory to the surgery of Natividad.
1. NO, the Court holds that, the concurrent finding of the RTC The form reads:
and the CA that PSI was not the employer of Dr. Ampil is
correct. Control as a determinative factor in testing the
2016
Permission is hereby given to the medical, nursing and its inaction, therefore, PSI failed its own standard of
laboratory staff of the Medical City General Hospital to perform hospital care. It committed corporate negligence.
such diagnostic procedures and to administer such medications and
treatments as may be deemed necessary or advisable by the
physicians of this hospital for and during the confinement of xxx. Sargasso Construction & Dev Corp v. Philippine Ports
(emphasis supplied)
Authority
By such statement, PSI reinforced the public impression that Dr. July 5, 2010
Ampil was a physician of its hospital, rather than one independently
Petitioner: Sargasso, Pick&Shovel and Atlantic Erectors.
practicing in it; that the medications and treatments he prescribed
Respondent: PPA
were necessary and desirable; and that the hospital staff was
prepared to carry them out. Memory aid: reclamation project, GM agent of PPA
3. Yes, PSI admitted that, Natividad only complained to Drs. Ponente: Mendoza
Ampil and Fuentes, and if only she "informed the hospital of
her discomfort and pain, the hospital would have been Facts:
obliged to act on it.", by such admission, PSI defined the 1. Sargasso, Pick&Shovel and Altlantic Erectors, a joint
standards of its corporate conduct under the circumstances venture, was awarded for the construction of Pier 2 and
of this case, specifically: (a) that it had a corporate duty to rock causeway for the port of San Fernando, after a public
Natividad even after her operation to ensure her safety as a bidding conducted by the PPA. Adjacent to Pier 2 is
patient; (b) that its corporate duty was not limited to having intended for the reclamation project as part of the overall
its nursing staff note or record the two missing gauzes and port devt.
(c) that its corporate duty extended to determining Dr.
Ampil's role in it, bringing the matter to his attention, and 2. Go (Executive Director of the consortium) wrote to PPA Asst
correcting his negligence. PSI violated its standard of Gen Manager an offer to undertake the reclamation as an
BLOCK B 2016
conduct, by not reviewing what happened in the operation extra work to its existing construction for P36M. PPA replied
in connection with the gauzes, Rather, it evaded its that it may favorably award the contract to them if they
responsibility and passed it on to others – to Dr. Ampil would lower the price to P30M subject to the approval of
whom it expected to inform Natividad, and to Natividad higher authority. A Notice of Award was sent to Sargasso
herself to complain before it took any meaningful step. By signed by GM Dayan and instructing it to enter into and
execute the contract agreement with this Office and to
2016
furnish he documents representing performance security contract maybe entered into shall be subject to prior approval of
and credit line. The purpose was to save on cost already heads of agencies within their limits of approving authority.
provided for in the first contract. Then GM Agustin
presented the proposal to the PPA BOD. The BOD, however, Revised administrative Code - contracts in behalf of political
rejected the proposal saying that there is no strong legal subdivision and corporate agencies and instrumentalities shall be
basis for it to award the supplemental contract through approved by their respective governing boards or councils and
executed by their respective executive heads.
negotiation as the two projects are completely different.
3. Sargasso then filed a complaint for specific performance A government contract is perfected only upon approval by a
and damage. competent authority, where such approval is required. The
contracting officer functions as agent of the Philippine government
Rtc- in favour Sargasso for the purpose of making the contract. The agent, in contemplation
of law, possesses only actual agency authority. This is to say that his
CA – Reversed in favour of PPA (no perfected contract) contracting power exists, where it exists at all, only because and by
Issue: WON there was a perfected contract between the parties for virtue of a law or by authority of law, creating and conferring it. And
the reclamation project (which is dependent on WON the general it is well settled that he may make only such contracts as he is so
manager is vested with authority to enter into a contract for and on authorized to make. The government is only bound to the extent
behalf of PPA? the power it has actually given its officer agents.
NO. A government or public contract has been defined as a contract Power given to BOD – reclaim any part of the land vested in the
entered into by state officers acting on behalf of the state in which authority and exercise all corporate powers
the entire people of the state are directly interested. It is essentially Power given to GM – to sign contracts and perform such duties as
similar to a private contract as contemplated in the civil code.
the Board may assign.
Authority needed for governing board’s approval in negotiated Therefore, unless the Board validly authorizes its GM the latter can’t
BLOCK B 2016
contracts – bind PPA to a contract.

EO 380 – not more than P50M, Further, Sargasso also failed to present competent evidence to
amended – three instances (1. Emergencies; 2. Failure of bidding prove that the GM possessed actual authority as in any contract
and 3. Related projects wit same contractors) wherein a negotiated must proceed from an express provision of law or valid delegation
of authority. Without actual authority there could be no real
2016
consent, much less a perfected contract. It is of no moment that all FACTS:
of these are not written in the notice of award as in contracts the
law is read into the contract. On July 22, 1997, spouses Maglasang obtained subject loan from
PCRB for P1,070,000.00 covered by a promissory note. To secure
Doctrine of apparent authority (government) – is NOT bound by the payment of the subject loan, the spouses Maglasang executed,
unauthorized acts of its agents even though within the apparent in favor of PCRB a real estate mortgage over the subject properties
scope of their authority which were owned by spouses Cortel (the spouses Maglasang’s
daughter and son-in-law). Aside from the subject loan, the spouses
Apparent authority maybe ascertained through 1. General manner Maglasang obtained two other loans from PCRB which were
in which the corporation holds out an officer or agent as having the covered by separate promissory notes and secured by mortgages on
power to act or in other words, the apparent authority to act in
their other properties.
general, with which it clothes him and 2. The acquiescence in his
acts of a particular nature, with actual or constructive knowledge Subsequently, the spouses Maglasang and the spouses Cortel
thereof, whether within or beyond the scope of his ordinary asked PCRB’s permission to sell the subject properties. They
powers. Therefore, apparent authority is determined only by the requested that the subject properties be released from the
acts of the principal and not of the agent. The principal is not mortgage since the two other loans were adequately secured by the
responsible where the agent’s own conduct and statements have other mortgages. PCRB's Branch Manager, Pancrasio Mondigo,
created the apparent authority. In this case, not a single acts of PPA verbally agreed to their request but required first the full payment
through its BOD was cited as having clothed the GM with apparent of the subject loan. The spouses Maglasang and the spouses Cortel
authority to execute the contract. thereafter sold to petitioner Violeta Banate the subject properties
for P1,750,000.00. They used the amount to pay the subject loan
with PCRB. After settling the subject loan, PCRB gave the owner’s
duplicate certificate of title of the property to Banate, who was able
Banate v. PCRB
G.R. No. 163825 | July 13, 2010 | Ponente: Brion to secure a new title in her name. The title, however, carried the
mortgage lien in favor of PCRB, prompting the petitioners to
BLOCK B 2016
Memory-Aid: request from PCRB a Deed of Release of Mortgage. As PCRB refused

to comply with the petitioners’ request, the petitioners instituted an
In the absence of authority from the board of directors, no person, action for specific performance before the RTC to compel PCRB to
not even its officers, can validly bind a corporation. Apparent execute the release deed.
authority is determined only by the acts of the principal and not by
the acts of the agent
2016
PCRB countered the petitioners’ allegations by invoking the 1. Whether the purported agreement between the petitioners
cross-collateral stipulation in the mortgage deed which states the and Mondigo novated the mortgage contract over the subject
subject properties would serve as security, not only for the payment properties and is thus binding upon PCRB. -NO
of the subject loan, but also for “such other loans or advances
already obtained, or still to be obtained.” 2. If the first issue is resolved negatively, whether Banate can
demand restitution of the amount paid for the subject properties on
Accordingly, PCRB claimed that full payment of the three the theory that the new agreement with Mondigo is deemed
loans, obtained by the spouses Maglasang, was necessary before rescinded. -NO
any of the mortgages could be released; the settlement of the
subject loan merely constituted partial payment of the total HELD:
obligation. Thus, the payment does not authorize the release of the 1. The purported agreement did not novate the mortgage
subject properties from the mortgage lien. contract, particularly the cross- collateral stipulation thereon.
The petitioners argue that their claims are consistent with In the present case, the mortgage contract indisputably
their agreement with PCRB; they complied with the required full provides that the subject properties serve as security, not only
payment of the subject loan to allow the release of the subject for the payment of the subject loan, but also for “such other loans
properties from the mortgage. Having carried out their part of the or advances already obtained, or still to be obtained.” After agreeing
bargain, the petitioners maintain that PCRB must honor its to such stipulation, the petitioners cannot insist that the subject
commitment to release the mortgage over the subject properties. properties be released from mortgage since the security covers not
The petitioners disregard the cross-collateral stipulation in the only the subject loan but the two other loans as well.
mortgage contract, claiming that it had been novated by the
subsequent agreement with Mondigo. Even assuming that the The petitioners, however, claim that their agreement with
cross-collateral stipulation subsists for lack of authority on the part Mondigo must be deemed to have novated the mortgage contract.
of Mondigo to novate the mortgage contract, the petitioners Novation presupposes not only the extinguishment or modification
contend that PCRB should nevertheless return the amount paid to of an existing obligation but, more importantly, the creation of a
BLOCK B 2016
settle the subject loan since the new agreement should be deemed valid new obligation. For the consequent creation of a new
rescinded. contractual obligation, consent of both parties is, thus, required.
Where either or both parties involved are juridical entities, proof
ISSUES: that the second contract was executed by persons with the proper
authority to bind their respective principals is necessary.
2016
Section 23 of the Corporation Code expressly provides that claimant, and such acts or conduct must have produced a change of
the corporate powers of all corporations shall be exercised by the position to the third party’s detriment.
board of directors. The power and the responsibility to decide
whether the corporation should enter into a contract that will bind No proof of the course of business, usages and practices of
the corporation are lodged in the board, subject to the articles of the bank about, or knowledge that the board had or is presumed to
incorporation, bylaws, or relevant provisions of law. In the absence have of, its responsible officers’ acts regarding bank branch affairs,
was ever adduced to establish the branch manager’s
of authority from the board of directors, no person, not even its
officers, can validly bind a corporation. apparent authority to verbally alter the terms of mortgage
contracts. Neither was there any allegation, much less proof, that
Notably, the petitioners’ action for specific performance is PCRB ratified Mondigo’s act or is estopped to make a contrary
premised on the supposed actual or apparent authority of the claim.
branch manager, Mondigo, to release the subject properties from
the mortgage, although the other obligations remain unpaid. The It is a settled rule that persons dealing with an agent are
petitioners make no claim that Mondigo had actual authority from bound at their peril, if they would hold the principal liable, to
PCRB, whether express or implied. Rather, the petitioners posited ascertain not only the fact of agency but also the nature and extent
of the agent’s authority, and in case either is controverted, the
that PCRB should be held liable for Mondigo’s commitment, on the
basis of the latter’s apparent authority. burden of proof is upon them to establish it. As parties to the
mortgage contract, the petitioners are expected to abide by its
The Court disagrees with this position. Under the doctrine terms. The subsequent purported agreement is of no moment, and
of apparent authority, acts and contracts of the agent, as are within cannot prejudice PCRB, as it is beyond Mondigo’s actual or apparent
the apparent scope of the authority conferred on him, although no authority, as above discussed.
actual authority to do such acts or to make such contracts has been
conferred, bind the principal. The principal’s liability, however, is 2. Rescission has no legal basis; there can be no restitution of the
limited only to third persons who have been led reasonably to amount paid.
believe by the conduct of the principal that such actual authority Even if we were to assume that the purported agreement
BLOCK B 2016
exists, although none was given. In other words, apparent has been sufficiently established, since it is not binding on the bank
authority is determined only by the acts of the principal and not by for lack of authority of PCRB’s branch manager, then the prayer for
the acts of the agent. There can be no apparent authority of an restitution of the amount paid would have no legal basis.
agent without acts or conduct on the part of the principal; such acts
or conduct must have been known and relied upon in good faith as
a result of the exercise of reasonable prudence by a third party as
2016
Notwithstanding the payment made by Banate, she is not entitled At that time the President of both A.U. Valencia and Co. Inc.
to recover anything from PCRB under Article 2154. There could not and Manila Remnant Co., Inc. was Artemio U. Valencia. On March 3,
have been any payment by mistake to PCRB, as the check which 1970, Manila Remnant thru A.U. Valencia and Co. executed two
Banate issued as payment was to her co-petitioner Mary Melgrid "contracts to sell" covering Lots 1 and 2 of Block 17 in favor of the
Cortel (the payee), and not to PCRB. The same check was simply Ventanillas for the combined contract price of P66,571.00 payable
endorsed by the payee to PCRB in payment of the subject loan that monthly for ten years. As thus agreed in the contracts to sell, the
the Maglasangs owed PCRB. Ventanillas paid the down payments.
Ten (10) days after the signing of the contracts with the
Ventanillas, Artemio Valencia, as President of Manila Remnant, and
Manila Remnant v. CA without the knowledge of the Ventanilla couple, sold Lots 1 and 2 of
GR No. 82978 | November 22, 1990 | Ponente: Fernan Block 17 again, this time in favor of Carlos Crisostomo, one of his
Memory-Aid: sales agents without any consideration. Artemio Valencia then
transmitted the fictitious Crisostomo contracts to Manila Remnant
Authority by estoppel has arisen in the instant case because while he kept in his files the contracts to sell in favor of the
by its negligence, the principal, Manila Remnant, has permitted its Ventanillas. All the amounts paid by the Ventanillas were deposited
agent, A.U. Valencia and Co., to exercise powers not granted to it. In in Valencia's bank account. And subsequently, the monthly
such a situation, both the principal and the agent may be considered payments of the Ventanillas were remitted to Manila Remnant as
as joint feasors whose liability is joint and solidary. payments of Crisostomo for which the former issued receipts in
favor of Crisostomo.
FACTS:
Subsequently, the harmonious business relationship
Manila Remnant Co., Inc. is the owner of the parcels of land between Artemio Valencia and Manila Remnant ended. On May 30,
situated in Quezon City, constituting the subdivision known as 1973, Manila Remnant, through its General Manager Karl Landahl,
Capital Homes Subdivision. On July 25, 1972, Manila Remnant and
wrote Artemio Valencia informing him that Manila Remnant was
BLOCK B 2016
A.U. Valencia & Co. Inc. entered into a written agreement whereby terminating its existing collection agreement with his firm on
for a consideration of 17.5% fee, including sales commission and
account of the considerable amount of discrepancies and
management fee, A.U. Valencia and Co., Inc. was to develop the irregularities discovered in its collections and remittances. As a
aforesaid subdivision with authority to manage the sales thereof, consequence, on June 6, 1973, Artemio Valencia was removed as
execute contracts to sell to lot buyers and issue official receipts.
President by the Board of Directors of Manila Remnant. Therefore,
from May of 1973, Valencia stopped transmitting Ventanilla's
2016
monthly installments which at that time had already amounted to thereby leaving a balance of P13,531.58 for Lot 1 and P13,540.22
P17,925.40 for Lot 1 and P18,141.95 for Lot 2, (which appeared in for Lot 2, went directly to Manila Remnant and offered to pay the
Manila Remnant's record as credited in the name of Crisostomo). entire outstanding balance of the purchase price. They were
shocked to found out that their names did not appear in the records
On June 8, 1973, A.U. Valencia and Co. sued Manila of A.U. Valencia and Co. as lot buyers. Manila Remnant refused the
Remnant before the CFI to impugn the abrogation of their agency offer of the Ventanillas to pay for the remainder of the contract
agreement. On June 10 and July 10, 1973, said court ordered all lot
price because they did not have the personality to do so.
buyers to deposit their monthly amortizations with the court. But
on July 17, 1973, A.U. Valencia and Co. wrote the Ventanillas that it The Ventanillas subsequently filed a case in court, where
was still authorized by the court to collect the monthly the trial court rendered a decision 1) declaring the contracts to sell
amortizations and requested them to continue remitting their issued in favor of the Ventanillas valid and subsisting and annulling
amortizations with the assurance that said payments would be the contracts to sell in Crisostomo's favor; 2) ordering Manila
deposited later in court. On May 22, 1974, the trial court issued an Remnant to execute in favor of the Ventanillas an Absolute Deed of
order prohibiting A.U. Valencia and Co. from collecting the monthly Sale free from all liens and encumbrances; and 3) condemning
installments. The court subsequently ordered the Valencia firm to defendants A.U. Valencia and Co. Inc., Manila Remnant and Carlos
furnish the court with a complete list of all lot buyers who had Crisostomo jointly and severally to pay the Ventanillas the amount
already made down payments to Manila. Valencia submitted a list of P100,000.00 as moral damages, P100,000.00 as exemplary
which excluded the name of the Ventanillas. damages, and P100,000.00 as attorney's fees. The lower court also
added that if, for any legal reason, the transfer of the lots could no
Since A.U. Valencia and Co. failed to forward its collections longer be effected, the defendants should reimburse jointly and
after May 1973, Manila Remnant caused on August 20, 1976 the
severally to the Ventanillas the total amount of P73,122.35
publication in the Times Journal of a notice cancelling the contracts representing the total amount paid for the two lots plus legal
to sell of some lot buyers including that of Carlos Crisostomo in
interest thereon from March 1970 plus damages as aforestated.
whose name the payments of the Ventanillas had been credited.
ISSUE:
BLOCK B 2016
It was not until March 1978 when the Ventanillas, after

learning of the termination of the agency agreement between 1. W/N petitioner Manila Remnant should be held solidarily
Manila Remnant and A.U. Valencia & Co., decided to stop paying liable together with A.U. Valencia and Co. and Carlos
their amortizations to the latter. The Ventanillas, believing that they Crisostomo for the payment of moral, exemplary damages
had already remitted P37,007.00 for Lot 1 and P36,911.00 for Lot 2 and attorney's fees in favor of the Ventanillas-YES
or a grand total, inclusive of interest, of P73,122.35 for the two lots,
2016
HELD: Firstly, Manila Remnant literally gave carte blanche to its
agent A.U. Valencia and Co. in the sale and disposition of the
In the case at bar, the Valencia realty firm had clearly subdivision lots. Indeed, once Manila Remnant had been furnished
overstepped the bounds of its authority as agent. Such being the with the usual copies of the contracts to sell, its only participation
case, the principal, Manila Remnant, would have been in the clear then was to accept the collections and pay the commissions to the
pursuant to Article 1897 of the Civil Code.3 However, the unique agent. The latter had complete control of the business
relationship existing between the principal and the agent at the
arrangement.
time of the dual sale must be underscored. Bear in mind that the
president then of both firms was Artemio U. Valencia, the individual Secondly, it is evident from the records that Manila
directly responsible for the sale scam. Hence, despite the fact that Remnant was less than prudent in the conduct of its business as a
the double sale was beyond the power of the agent, Manila subdivision owner. Even assuming that Manila Remnant was as
Remnant as principal was chargeable with the knowledge or much a victim as the other innocent lot buyers, it cannot be gainsaid
constructive notice of that fact and not having done anything to that it was precisely its negligence and laxity in the day to day
correct such an irregularity was deemed to have ratified the same. operations of the real estate business which made it possible for the
agent to deceive unsuspecting vendees like the Ventanillas. In
More in point, we find that by the principle of estoppel,
essence, therefore, the basis for Manila Remnant's solidary liability
Manila Remnant is deemed to have allowed its agent to act as is estoppel which, in turn, is rooted in the principal's neglectfulness
though it had plenary powers. The above-quoted article is new. It is in failing to properly supervise and control the affairs of its agent
intended to protect the rights of innocent persons. In such a and to adopt the needed measures to prevent further
situation, both the principal and the agent may be considered as misrepresentation. As a consequence, Manila Remnant is
joint feasors whose liability is joint and solidary. Authority by
considered estopped from pleading the truth that it had no direct
estoppel has arisen in the instant case because by its negligence, hand in the deception employed by its agent.
the principal, Manila Remnant, has permitted its agent, A.U.
Valencia and Co., to exercise powers not granted to it. That the Consequently, no right to recover accrues in Banate’s favor
principal might not have had actual knowledge of the agent's as PCRB never dealt with her. The borrowers-mortgagors, on the
BLOCK B 2016
misdeed is of no moment. other hand, merely paid what was really owed.
3
Art. 1897- "(t)he agent who acts as such is not personally liable to that party
with whom he contracts, unless he expressly binds himself o r exceeds the
limits of h is authority without giving such party sufficient notice of his
powers."
2016
COUNTRY BANKERS INSURANCE CORPORATION VS Plaridel Surety and Insurance Co a PSIC Bond in the amount of
KEPPEL CEBU SHIPYARD Php1.62M. Consequently, Unimarine executed a Contract of
GR No. 166044/ June 18, 2012 Undertaking in favor of Keppel to guarantee that they would make
punctual payment and such contract would be binding upon its
Petitioner: Country Bankers Insurance Corp (CBIC) heirs, executors, administrators, successors, and assigns.
Respondent: Keppel Cebu (Cebu Shipyard), Unimarine – a Unimarine defaulted in paying its debt. Keppel demanded
corporation engaged in shipping industry payment and confirmed the promise Paul Rodriguez with regard to
the full payment of the debt. Still, Unimarine did not comply. As
Memory Aid:
such, Keppel, through its counsel, wrote the sureties CBIC and
 It has a settled rule that persons dealing with an assumed Plaridel to inform them of Unimarine’s nonpayment and to ask
agent are bound at their peril, and if they would hold the them to fulfill their obligations as sureties. However, the sureties
principal liable, to ascertain not only the fact of agency but failed to discharge their obligations. Consequently, a case was filed
also the nature and extent of authority. in the RTC.
 Surety Agreement by agent CBIC contended that Keppel has no cause of action because
the surety bond was issues by its agent, Quinain, in excess of his
Facts: authority. CBIC claimed that Keppel should have doubted the
authority of Quinain to issue the surety bond based on the ff:
Unimarine Shipping Lines (Unimarine) contracted the
services of Keppel Cebu for dry docking and ship repair works on its 1. nature of the bond undertaking and the amount
vessel (M/V Pacific Fortune). The services, after negotiation, involved
amounted to Php 3.850M (1st installment – Php 2.35M and 2nd
installment – Php 1.5M). It was agreed upon that Unimarine would 2. surety bond could only be issued in favor of the DPWH
deposit post-dated checks and in consideration of the credit terms
3. issuance of the surety bond was not reported and the
extended by Keppel and the release of the vessel before the full
BLOCK B 2016
corresponding premiums were not remitted to CBIC

payment of the debt, Unimarine agreed to present surety bonds.
CBIC also asserted that the liability was extinguished because
In compliance with the agreement, Unimarine, through Paul
Keppel and Unimarine had novated their agreement. Keppel’s claim
Rodriguez, secured from Country Bankers Insurance Corp (CBIC),
had already been paid or extinguished when Unimarine executed an
through the latter’s agent, Quinain, CBIC Surety Bond in the amount
Assignment of Claims of the proceeds of the sale of its vessel M/V
of Php 3M. In addition, Unimarine obtained another bond from
2016
Headline in favor of Keppel. CBIC also contended that the claim has Art 1900 - So far as third persons are concerned, an act is deemed
already prescribed as the endorsement was not reported to CBIC. to have been performed within the scope of the agent's authority, if
Lastly, CBIC asserted that its liability should be limited to the face such act is within the terms of the power of attorney, as written,
value of the bond and not for exemplary damages, attorney’s fees even if the agent has in fact exceeded the limits of his authority
and costs of litigation. according to an understanding between the principal and the agent.
(n
RTC: CBIC as a surety is bound by the surety bond issued by its agent
who acted within the limits of his authority. Decision was based on Art 1902 - A third person with whom the agent wishes to contract
Article 1900 and 1911 of the Civil Code. CBIC was negligent in on behalf of the principal may require the presentation of the
conducting its insurance business for its failure to supervise and power of attorney, or the instructions as regards the agency. Private
monitor the acts of its agents. or secret orders and instructions of the principal do not prejudice
third persons who have relied upon the power of attorney or
CA: Unimarine was liable to Keppel. CBIC was held liable as a surety. instructions shown them
CBIC could not disclaim liability on the ground that Quinain
exceeded his authority because third persons had relied upon Art 1910 - The principal must comply with all the obligations which
Quinain’s representation, as CBIC’s agent Quinain was held the agent may have contracted within the scope of his authority.
solidarily liable.
As for any obligation wherein the agent has exceeded his power,
ISSUE: the principal is not bound except when he ratifies it expressly or
tacitly.
W/N CBIC is liable as a surety.
Art 1911 - Even when the agent has exceeded his authority, the
HELD/RATIO: No principal is solidarily liable with the agent if the former allowed the
Pertinent provisions in this case: latter to act as though he had full powers.
Art 1898 -If the agent contracts in the name of the principal, Law mandates an agent to act within the scope of his
BLOCK B 2016
exceeding the scope of his authority, and the principal does not authority. A special power of attorney is necessary to obligate the
ratify the contract, it shall be void if the party with whom the agent principal as a guarantor or surety. In the case at bar, CBIC could be
contracted is aware of the limits of the powers granted by the held liable even if Quinain exceeded the scope of his authority
principal. In this case, however, the agent is liable if he undertook to because the latter’s act is deemed to have been performed within
secure the principal's ratification the written terms of the SPA. However, the SPA clearly states that
the limits of his authority and particularly provides that in the case
2016
of surety bonds, it can only be issued in favor of DPWH, the NPC, bonds with the restrictions in order to alert the concerned parties.
and other governmental agencies. Also, the amount of the surety There was also a designed system to monitor insurance contracts
bond is limited to Php 500K. issued by its agents. CBIC could not be faulted for Quinain’s
deliberate failure to notify it of his transactions with Unimarine. In
Under art 1898 and 1910, an agent’s act, even if done fact, CBIC did not even receive the premiums paid by Unimarine. It
beyond the scope of his authority, may bind the principal if the is thus apparent that Unimarine had been negligent or less prudent
latter ratifies them, whether expressly or impliedly. The principal
in its dealings with Quinain. Unimarine failed to establish that it
must have the full knowledge at the time of the ratification of all even bothered to inquire if Quinaine was authorized to afree to
the material facts and circumstances relating to unauthorized act of
terms beyond the limits indicated in his SPA. It was not also shown
the agent. Thus, if material facts were suppressed, there can be no that the Paul Rodriguez (agent of Unimarine) was misled by CBIC as
valid ratification. Neither Unimarine nor Keppel was able to to Quinain’s scope of authority.
repudiate CBIC’s testimony that it was unaware of the existence of
Surety Bond and Endorsement. It has a settled rule that persons dealing with an assumed
agent are bound at their peril, and if they would hold the principal
With regard to Art 1911, estoppel, the following must be liable, to ascertain not only the fact of agency but also the nature
established:
and extent of authority.
1. prinicipal manifested a representation of the agent’s
authority or knowingly allowed the agent to assume
such authority MANOTOK BROTHERS INC. V. CA
GR 94753 April 7, 1993
2. 3rd person, in good faith, relied upon such
representation J. Campos Jr.
3. replying upon such representation, such 3rd person has Petitioner: Manotok Brothers, Inc. (owner of land/principal)
changed his position to his detriment.
BLOCK B 2016
Respondent: CA
There was no clear proof of the existence of the requisites of
estoppel. RTC of Manila
CBIC was not negligent because it clearly stated the limits of Salvador Saligumba (agent)
its agent’s powers in their contracts. It even stamped its surety
DOCTRINE:
2016
When there is a close and proximate causal connection CA: Judgment affirmed
between the agent’s efforts and labor and the principal’s sale of his
property, the agent is entitled to commission. ISSUE:
FACTS: 1. W/N Saligumba is entitled to 5% agent’s commission
HELD/RATIO:
 Manotok is the owner of of a parcel of land and building
formerly leased by the City of Manila and used buy the Yes.
Claro M. Recto High School. He authorized Saligumba to
negotiate with the City of Manila the sale of the said Saligumba was the efficient procuring cause of the sale and
property for not less than P425,000, with 5% commission if it was only because of his efforts that the purchase actually
the sale is consummated and paid. materialized. When there is a close and proximate causal
connection between the agent’s efforts and labor and the
 About a year after, Rufino Manotok (President of Manotok principal’s sale of his property, the agent is entitled to commission.
Brothers Inc.) authorized Saligumba to finalize the sale for
not less that P410,000 with another extension of 180 days. Although the Municipal Ordinance 6603 was signed and the
Deed of Sale was executed when the agent’s authority had already
 Through Ordinance 6603, the Municipal Board if the City of expired, it is to be noted that the ordinance was approved when
Manila appropriated P410,816 to purchase the property. agent’s authorization was still in force. Moreover, the approval of
However, it was only signed by the City Mayor on May 17, the City Mayor came only 3 days after the expiration of authority.
1968 (183 days after the last letter of authorization)
It is also worth emphasizing that he was the only party given
 Petitioner refused to give Saligumba any commission saying a written authority by the petitioner to negotiate the sale. Even
that (1) he was only entitled to commission if the sale was though Huelgas followed up the matter to Councilor Magsalin and
consummated and paid within the period given in the Mayor Villegas, his intervention came only after the ordinance had
letters of authority and (2) Saligumba was not the person already been passed – when the buyer has already agreed to the
BLOCK B 2016
responsible for the negotiation, instead it was Filomeno E. purchase and the price for which said property is to be paid. Hence,
Huelgas, the PTA President of Claro M. Recto School. he should be amply compensated.
Consequently, Saligumba sued Manotok.
SC: Decision of CA AFFIRMED.
RTC: Judgment in favor of Saligumba. Petitioner to pay P20,540
(commission fees)
2016
Hahn v. Court of Appeals not, it would terminate petitioner's exclusive dealership effective
GR 113074. January 22, 1997. June 30, 1993.
Mendoza Because of Hahn's insistence on the former business

relation, BMW withdrew on March 26, 1993 its offer of a "standard
Petitioner: Alfred Hahn importer contract" and terminated the exclusive dealer relationship
Defendant: Court of Appeals and BMW effective June 30, 1993. At a conference of BMW Regional
Importers held on April 26, 1993 in Singapore, Hahn was surprised
Memory aid: exclusive dealership, agent vs. broker to find Alvarez among those invited from the Asian region. BMW
proposed that Hahn and CMC jointly import and distribute BMW
Facts
cars and parts.
Petitioner Alfred Hahn is a Filipino citizen doing business
Hahn found the proposal unacceptable. He filed a complaint
under the name and style "Hahn- Manila." While respondent for specific performance and damages against BMW to compel it to
Bayerische Motoren Werke Aktiengesellschaft (BMW) is a
continue the exclusive dealership. Later he filed an amended
nonresident foreign corporation existing under the laws of complaint to include an application for temporary restraining order
Germany.
and for writs of preliminary, mandatory and prohibitory injunction
On March 7, 1967, petitioner executed in favor of private to enjoin BMW from terminating his exclusive dealership.
respondent a "Deed of Assignment with Special Power of Attorney" On July 1, 1993, BMW moved to dismiss the case,
wherein Hahn will be the exclusive dealer of BMW. On February 16, contending that it was not doing business in the Philippines. It said
1993, in a meeting with a BMW representative and the president of
that Hahn was not its agent because he assembled and sold BMW
Columbia Motors Corporation (CMC), Jose Alvarez, petitioner was cars and products without the participation of BMW. They argued
informed that BMW was arranging to grant the exclusive dealership
that Hahn was a “middleman” transacting business in his own name
of BMW cars and products to CMC, which had expressed interest in and for his own account.
acquiring the same. On February 24, 1993, petitioner received a
BLOCK B 2016
letter from BMW in which it expressed dissatisfaction with various Hahn on the other hand argued that BMW was doing
aspects of petitioner's business, mostly on its failure to comply with business in the Philippines through him as its agent.
the standards for an exclusive BMW dealer. Nonetheless, BMW
expressed willingness to continue business relations with the 1. BMW invoices and order forms were used to document his
petitioner on the basis of a "standard BMW importer" contract. If transactions
2016
2. He gave warranties as exclusive BMW dealer 4. Upon confirmation in writing that the vehicles had been
registered in the Philippines and serviced by him, Hahn
3. BMW officials periodically inspected standards of service received an additional 3% of the full purchase price.
rendered by him
5. Hahn performed after-sale services, including, warranty
4. Was described in service booklets and international
services, for which he received reimbursement from BMW.
publications of BMW as a "BMW Importer" or "BMW
Trading Company" in the Philippines 6. All orders were on invoices and forms of BMW .
Issue This shows an agency. An agent receives a commission upon

the successful conclusion of a sale. On the other hand, a broker
1. W/N Hahn is an agent of BMW
earns his pay merely by bringing the buyer and the seller together,
Held even if no sale is eventually made.
Yes. Hahn is an agent and not merely a broker. The fact that Hahn invested his own money to put up these
service centers and showrooms does not necessarily prove that he
Hahn took orders for BMW cars and transmitted them to is not an agent of BMW. The facts show that BMW exercised
BMW. Upon receipt of the orders, BMW fixed the down payment control over Hahn's activities as a dealer and made regular
and pricing charges, notified Hahn of the scheduled production inspections of Hahn's premises to enforce compliance with BMW
month for the orders, and reconfirmed the orders by signing and standards.
returning to Hahn the acceptance sheets.
Instances that show that Hahn was an agent of BMW:

Albaladejo y Cia vs Philippine Refining Co.
1. Payment was made by the buyer directly to BMW. Facts:
2. Title to cars purchased passed directly to the buyer and Albaladejo instituted an action for recovery of a sum of
BLOCK B 2016
Hahn never paid for the purchase price of BMW cars sold in money against Philippine Refining Co as successor to the Visayas
the Philippines. Refining Co. There were 2 causes of action, the first one was
dismissed while, in the second cause, plaintiff was allowed to
3. Hahn was credited with a commission equal to 14% of the
recover P49.6k. Alabaladejo (a company) is engaged in the buying
purchase price upon the invoicing of a vehicle order by
and selling of products of the country such as copra. Visayan
BMW.
2016
Refining Co is engaged in the manufacture of coconut oil. They with regard to the dispatch of the boats used for its contract with
entered into a contract with one another because in the Albaladejo and the dispatch of other boats for other purposes. It
manufacture of coconut oil, copra is needed. The period of the noted that there was no substantial difference and as such, there
contract is for one year wherein Visayas Refining Co will have to buy was no negligence that can be imputed to the act of Visayas
copra from Alabaladejo. Price will be determined by the market Refining Co. Also, the computation of the shrinkage of the copra
price minus costs of transportation. It was also agreed upon that showed that it was about average to the normal shrinkage that
Visayas Refining will not appoint any other agent for the purchase copra experiences due to its drying.
of copra in Legaspi, nor buy any copra from any vendor in Legaspi.
With regard to the second cause of action, plaintiff seeks to recover
During the first year, things went well for both companies and they
were satisfied with the arrangement and they continued by tacit P110k, which is the alleged amount that was expended by
consent to govern their future relations by the same agreement. Albaladejo in maintaining and extending its organization at the
This continued until Visayas Refining closed down and withdrew request, or requirement of the defendant, in conjunction with
from the copra market. repeated assurances that the defendant would resume activity as a
purchaser of copra. Trial Court: It found that the allegations of
Upon the last account rendered by Visayas Refining, it Albaladejo was indeed accurate but it only granted 30% of the
showed a balance of P288 in favor of Defendant. Albaladejo then requested amount because that was the percentage of sales. The
wrote Philippine Refining (by this time they were already there as court explained that this was the percentage that is attributable to
the successor of Visayas Refining) expressing their approval of said Visayas Refining Co. based on the previous transactions that they
accounting. Some short time after, the present action was begun. As have had.
provided in their contract, Visayas Refining was obliged to provide
Issue:
transportation by sea for the copra which should be delivered by
Albaladejo. W/N the plaintiff's expenses in maintaining and extending
Albaladejo is now complaining under his first cause of action that its organization for the purchase of copra in the period between
July, 1920, to July, 1921, were incurred at the instance and request
the negligent failure of the Visayan Refining Co. to provide
BLOCK B 2016
opportune transportation for the copra collected by the plaintiff of the defendant, or upon any promise of the defendant to make
and deposited for shipment at various places cause diminishment that expenditure good.
in the value of the copra. For this cause of action, they claim that Held:
they have been damaged to the tune of P201.6k. Trial Court: For its
part, they said that there was no negligence on the part of Visayas No, the supposed liability DOES NOT EXIST. By reason of
Refining in dispatching its boats. It compared the conduct of Visayas their contract, Visayas Refining obliged itself to appraise Albaladejo
2016
of the prevailing prices paid for Copra in the Cebu market. In of the contract cannot dominate the real nature of the agreement
compliance with this duty, the manager of Visayas Refining sent out as revealed in other clauses, no less than in the caption of the
trade letters which informed the plaintiff of the status of the agreement itself. In some of the trade letters also the various
market. A perusal of the letter will show that, clearly, Visayas instrumentalities used by the Visayan Refining Co. for the collection
Refining Co. advised Albaladejo that the market continued to grow of copra are spoken of as agents. But this designation was
weaker and even said that practically no business is being done at evidently used for convenience; and it is very clear that in its
the present and they do not wish to buy copra at that point in time. activities as a buyer the plaintiff was acting upon its own account
It was also quite obvious that there is nothing in these letters on and not as agent, in the legal sense, of the Visayan Refining Co. The
which to hold the defendant liable for the expenses incurred by the title to all of the copra purchased by the plaintiff undoubtedly
plaintiff in keeping its organization intact during the period now remained in it until it was delivered by way of subsequent sale to
under consideration. said company.
In the appellant's brief the contention is advanced that the

contract between the plaintiff and the Visayan Refining Co. created
the relation of principal and agent between the parties, and this DE CASTRO v CA
relation requires the principal to indemnify the agent for damages G.R 115838 // July 18, 2002 // Carpio, J.
incurred in carrying out the agency. Attentive perusal of the Memory Aid/ Summary: the whiny ass broker
contract is, however, convincing to the effect that the relation
between the parties was not that of principal and agent in so far Facts:
as relates to the purchase of copra by the plaintiff. It is true that
The respondent Artigo sued the petitioners, Constante and
the Visayan Refining Co. made the plaintiff one of its instruments
for the collection of copra; but it is clear that in making its Corazon De Castro to collect an unpaid balance of his (Artigo’s)
commission from the De Castro.
purchases from the producers the plaintiff was buying upon its
own account and that when it turned over the copra to the Visayan The De Castro’s were co-owners of 4 lots located at EDSA.
Refining Co., pursuant to that agreement, a second sale was
BLOCK B 2016
Artigo was then authorized by the De Castros to act as their real

effected. In paragraph three of the contract it is declared that during estate broker in the sale of these properties for the amount of
the continuance of this contract the Visayan Refining Co. would not P23m and Artigo was set to receive 5% of that amount as his
appoint any other agent for the purchase of copra in Legaspi; and commission. Artigo then found a buyer, Times Transit Corp.
this gives rise indirectly to the inference that the plaintiff was represented by its president Mr. Rondaris, who desired to buy 2 lots
considered its buying agent. But the use of this term in one clause
2016
only. The sale was then consummated and Artigo received around Ratio/Held:
P48k as commission.
NO, the SC ruled that a mandatory joinder of indispensible
Artigo was aggrieved because he only received around parties is not applicable to the instant case because Constante
P48k, when he should be receiving around P352k because the signed the authorization note appointing Artigo as their real estate
agreed price for the sale of the 2 lots was for around P7m. Artigo broker in his capacity as a co-owner and as a representative of the
then sued for the balance of the remaining amount of ~P300k. other co-owners. Article 1915 of the Civil Code states that, “If two
or more persons have appointed and agent for a common
The De Castros contend that Artigo was being selfish transaction or undertaking they shall be solidarily liable to the agent
because he didn’t truly deserve getting the whole commission since for all the consequences of the agency.”
he didn’t contribute that much to the actual consummated sale. But
despite this the De Castros, out of their pure liberality, beneficence The solidarity of the co-owners arise from their common
and magnanimity decided to award Artigo with the largest share of interest and not from the act constituting the agency. By virtue of
the commission which was P48k. De Castro contended that if the this solidarity, the agent can recover from any of the co-owners for
principle of quantum meruit was applied Artigo would have the whole amount of his commission.
definitely received less. Basically, De Castro suggested that Artigo
should stop acting like a bitch and just take the goddamned P48k. The SC also cited Operators Incorporated v. American Biscuit
Co., Inc. which stated that solidarity does not make a solidary
(Sorry, couldn’t help it ) The De Castros also contend by parol
evidence that the purchase price of the said lots was only P3.6m obligor an indispensable party in a suit filed by the creditor. The
creditor may proceed against anyone of the solidary debtors or
and not P7.05m as contended by Artigo.
some of them or all of them simultaneously.
The RTC however, ruled in favor of Artigo and ordered the
De Castros to pay Artigo the balance of his supposed commission of
around P300k. The CA affirmed the RTC decision stating that there Petron v. Cudilla
was a contract of agency between Artigo and De Castro and since a G.R. No. 151038 January 18, 2012
BLOCK B 2016
sale was consummated Artigo became entitled to 5% of the

commission. Summary/Memory Aid: Petron gas station accident, conflagration,
negligence of agent’s employees makes the principal liable to
Issue(s):
injured 3rd parties.
1. W/N the complaint should be dismissed for the failure to Facts:
implead the other co-owners as indispensible parties
2016
Rubin Uy leased the property of Cesar J. Jovero located at E. exclusively for the hauling requirements of Petron for the delivery
Reyes Ave., Estancia, Iloilo for the purpose of operating a gasoline of the latter’s products. Delivery "includes not only transportation
station for a period of five (5) years. but also proper loading and unloading and delivery." The parties
also agreed that Villaruz shall save Petron from any and all claims
Petron entered into a Retail Dealer Contract with Rubin Uy of third persons arising out of, but not necessarily limited to, his
as dealer for a period from May 1, 1984 to April 30, 1989. performance of the terms and conditions of the contract.
Terms of Dealership Contract between Petron and Rubin Furthermore, Villaruz obligated himself to be answerable to
Petron for damage to its plant, equipment and facilities, including
Under the dealership contract, Petron sold its products in those of its employees, dealers and customers, resulting from his
quantities as ordered by the dealer. It likewise obligated itself to negligence and/or lack of diligence.
deliver the products to the dealer at the places agreed upon by the
parties. The dealer, meanwhile, obligated himself to exclusively The Incident
maintain Petron’s trademarks and brand names in his gasoline On January 3, 1991 (contract of dealership has now
station. The parties also agreed that the dealer shall make good,
expired), around ten o’clock in the morning, Ronnie Allanaraiz, an
settle and pay, and hold Petron harmless against all losses and employee of the gasoline station, ordered from Petron various
claims including those of the parties, their agents and employees – petroleum products. Petron then requested the services of Villaruz
for death, personal injury or property damage arising out of any
for the delivery of the products to the gasoline station in Estancia,
use or condition of the dealer’s premises or the equipment and Iloilo. He, however, used a tank truck different from the trucks
facilities thereon, regardless of any defects therein; the dealer’s
specifically enumerated in the hauling contract executed with
non-performance of the contract; or the storage and handling of Petron. Petron nevertheless allowed the transport and delivery of
products on the premises. its products to Estancia in the tank truck driven by Pepito Igdanis.
In order to comply with its obligation to deliver the During the unloading of the petroleum from the tank truck
petroleum products to the dealer, Petron contracted the hauling into the fill pipe that led to the gasoline station’s underground tank,
services of Jose Villaruz, who did business under the name Gale
BLOCK B 2016
for reasons unknown, a fire started in the fill pipe and spread to the
Freight Services.
rubber hose connected to the tank truck. During this time, driver
Terms of Hauling Contract between Petron and Villaruz Pepito Igdanis was nowhere to be found. Bystanders then tried to
put out the flames. It was then that Igdanis returned to the
Under the hauling contract, Villaruz specifically assigned gasoline station with a bag of dried fish in hand. Seeing the fire, he
three (3) units of tank trucks (with specified plate numbers) got into the truck without detaching the rubber hose from the fill
2016
pipe and drove in reverse, dragging the burning fuel hose along CA affirmed in toto. It upheld the findings of the RTC that
the way. As a result, a conflagration started and consumed the petitioner Petron was negligent for having allowed the operation of
nearby properties of herein defendants, spouses Cesar J. Jovero and the gasoline station absent a valid dealership contract. Thus, the CA
Erma Cudilla-Jovero (respondents). considered the gasoline station as one run by Petron itself, and the
persons managing the gasoline station as petitioner’s mere agents.
Respondents alleged that the negligence of Petron and its Even if a valid dealership contract existed, petitioner was still liable
co-defendants in the conduct of their businesses caused the fire
for damages, because there was as yet no complete delivery of its
that destroyed the former’s properties. products. The fire had broken out while petroleum was being
Petron alleged that the petroleum products were already unloaded from the tank truck to the storage tank.
paid for and owned by Rubin Uy and Dortina Uy. Moreover, it
The CA further held that petitioner was also negligent in
alleged that Villaruz was responsible for the safe delivery of the allowing Villaruz to use an unaccredited tank truck for the transport
products by virtue of the hauling contract. Thus, Petron asserted, and delivery of the petroleum at the time of the incident.
liability for the damages caused by the fire rested on Rubin Uy and
Villaruz. Issues:
RTC W/N Petron should be liable for the damages – Yes.
The RTC held that Igdanis, as the driver of the tank truck, Held:
was negligent in the performance of his work when he left the tank
truck while it was in the process of unloading the petroleum. He Yes. SC affirms CA decision.
was also negligent when he drove the truck in reverse without
detaching the burning fuel hose. The trial court stated that
defendant Villaruz failed to convince the court that he had exercised Liability based on dealership
due diligence in the hiring and supervision of his employees.
Neither party can claim that it is no longer bound by the
BLOCK B 2016
The RTC likewise held that Petron was negligent in allowing terms of the contract and the expiration thereof because As far as
Villaruz to use a tank truck that was not included among the trucks the parties to the dealership contract were concerned, the rights
specifically enumerated under the hauling contract. and obligations as to them still subsisted, since they continued to
mutually benefit from the agreement.
CA Ruling
2016
The contracts shows that, Petron owns the equipment Therefore, as far as the dealer was concerned with regard to the
relevant to the handling and storage of gasoline, including the terms of the dealership contract, acts of Villaruz and his
gasoline pumps and the underground tank. It is also responsible for employees are also acts of petitioner.
the delivery of the petroleum to the dealer. The incident occurred
at the time the petroleum was being unloaded to the underground Petron maintains that by virtue of the hauling contract,
tank petitioner owned. Aside from failing to show the actual cause Villaruz must be held responsible for the acts of Igdanis, the driver
of the tank truck. In this aspect, Petron is correct. While it may be
of the fire, it also failed to rebut the presumption that it was
negligent in the maintenance of its properties and in the conduct of vicariously liable to third persons for damages caused by Villaruz,
the latter is nevertheless liable to petitioner by virtue of the non-
its business.
liability clause in the hauling contract. Under this provision, he
Clause for Non-Liability saved Petron from any and all claims of third persons arising out of,
but not necessarily limited to, his performance of the terms and
Petron contends that based on their contract with Rubin, conditions of this agreement.
Petron is freed from any liability. This is untenable.
However, considering that it did not implead Villaruz in the
While both parties to the contract have the right to provide present case, nor did it assail the Decision of the CA in dismissing
a clause for non-liability, Petron admits that they both share the the cross-claim, petitioner can no longer go after him based on that
maintenance of its equipment. Petron states that its responsibility
cross-claim. As the employer of Igdanis, Villaruz was impleaded by
extended to "the operating condition of the gasoline station, e.g. herein respondents in the lower court and was found to be
whether the fuel pumps were functioning properly."
solidarily liable with his other co-defendants. Absent an appeal
Moreover, it cannot be denied that Petron likewise before this Court assailing the ruling of the lower court and the CA,
obligated itself to deliver the products to the dealer. When the Villaruz remains to be solidarily liable with petitioner and co-
incident occurred, Petron, through Gale Freight Services, was still in defendants Rubin Uy and Dortina Uy.
the process of fulfilling its obligation to the dealer.
BLOCK B 2016
Thus, with regard to the delivery of the petroleum, Villaruz

GARCIA v. DE MANZANO
was acting as the agent of petitioner Petron. For a fee, he
G.R. No. L-13414 February 14, 1919
delivered the petroleum products on its behalf. Notably, Petron
even imposed a penalty clause in instances when there was a Plaintiff: Juan Garcia Y Palicio
violation of the hauling contract, wherein it may impose a penalty
ranging from a written warning to the termination of the contract.
2016
Defendant: Josefa de Manzano, as administratrix of the estate of It was also alleged that the power-of-attorney of the wife revoked
her husband Narciso Lopez Manzano the power-of- attorney of Angel and that the latter was not
authorized to sell the boat.
Facts:
Issue:
Narciso Manzano was a merchant in Atimonan, Tayabas. In
May 1910 he went to Spain and died there on September 1913. He 1. W/N Angel had authority to sell the half interest of Narciso
gave a general power-of-attorney to his son, Angel Manzano, in in the San Nicholas steamer
February 1910, and a second general power-of-attorney to his wife,
Josefa Samson, in March 1910. Held:
Yes. Art. 1735 of the Civil Code provides that "The

Under a partnership agreement, Narciso and Ocejo, Perez &
Co. owned and ran the San Nicolas, a small steamer. Upon appointment of a new agent for the same business produces a
expiration of the agreement, Ocejo demanded that Narciso buy or revocation of the previous agency from the day on which notice was
sell. Since Narciso did not want to sell at the price offered and could given to the former agent..." It is necessary under the law to prove
not buy, plaintiff Juan Garcia bought the half interest of Ocejo in that the former agent had notice of the second power-of-attorney.
There was no proof that the son, Angel, knew of the power-of-
October 1910. Angel, acting under his power-of-attorney, sold the
other half of the boat to Juan in July 1911. A year after, Angel attorney to his mother. Therefore, it must be considered that Angel
executed a contract wherein Juan agreed to extend a credit to acted under a valid power-of-attorney from his father.
Narciso in the sum of P12,000, secured by a mortgage of 3 parcels Moreover, Angel had the authority to sell the half-interest
of land plus improvements in Atimonan. The registrar refused to of the boat. The power-of-attorney given to Angel authorizes the
register the mortgage. sale of real property, the buying of real property and mortgaging
the same the borrowing of money and in fact is general and
Defendant Josefa was appointed as administratix of the
property of Narciso. There being no claims presented, the CFI complete. The power does not expressly state that the agent may
sell the boat, but a power so full and complete authoring the sale of
ordered the partition of the property in July 1915 amongst the heirs
BLOCK B 2016
of Narciso. In May 1915, Juan filed an action to foreclose the real property, must necessarily carry with it the right to sell a half
mortgage. The defendant denied the efficacy and legal effect of the interest in a small boat. The record further shows the sale was
contract executed by Angel, alleging that Juan took advantage of necessary in order to get money or a credit without which it would
the inexperience of Angel by falsely and maliciously making him be impossible to continue the business which was being conducted
in the name of Narciso L. Manzano and for his benefit.
believe that he had authority to sell the half interest of San Nicolas.
2016
representative or liaison officer in selling CMS's logs in Japan for
which Shinko earned a commission of U.S. $1.00 per 1,000 board
CMS LOGGING INC v. CA feet from the buyer of the logs, or around U.S. $77,000.
G.R. No. L-41420, 1992 July 10, J. Nocon
CMS claimed that this commission paid to Shinko was in
Petitioner – CMS Logging Inc, a forest concessionaire engaged in the violation of the agreement and that CMS is entitled to this amount
logging business as part of the proceeds of the sale of the logs. CMS contended that
Respondent – CA and D.R. Aguinaldo Corporation (DRACOR), since DRACOR had been paid the 5% commission under the
agreement, it is no longer entitled to the additional commission
engaged in the business of exporting and selling logs and lumber
paid to Shinko as this tantamount to DRACOR receiving double
Memory aid: sale of logs in Japan, implied revocation compensation for the services it rendered.
FACTS After this discovery, CMS sold and shipped logs valued at
approx. U.S. $740,000 or P2.8M, directly to several firms in Japan
CMS & DRACOR entered into a contract of agency whereby
without the aid or intervention of DRACOR.
CMS appointed DRACOR as its exclusive export & sales agent for all
logs that the former may produce, for a period of 5 years. By virtue CMS sued DRACOR for the commission received by Shinko
of the agreement, CMS was able to sell through DRACOR a total of and for moral and exemplary damages.
77million board feet of logs in Japan. Pertinent portion of the
agreement: DRACOR counterclaimed for its commission, amounting to
approx. P144,000, from the sales made by CMS of logs to Japanese
9. It is expressly agreed by the parties hereto that DRACOR firms.
shall receive five (5%) per cent commission of the gross sales
of logs of SISON [CMS] based on F.O.B. invoice value which In its reply, CMS averred as a defense to the counterclaim
commission shall be deducted from the proceeds of any and/or all that DRACOR had retained a sum of money as part of its
commission for the sales made by CMS and demanded that DRACOR
moneys received by DRACOR for and in behalf and for the account
BLOCK B 2016
of SISON; return the said amount. DRACOR later filed an amended

counterclaim, alleging that the balance of its commission on the
About 6 months prior to the expiration of the agreement, sales made by CMS was P42,630, thus impliedly admitting that it
while on a trip to Tokyo, Japan, CMS's president Atty. Sison and retained the amount alleged by CMS.
general manager & legal counsel Atty. Dominguez discovered that
DRACOR had used Shinko Trading Co (Shinko) as agent,
2016
The trial court dismissed the complaint stating that there Moreover, even if it was shown that Shinko did in fact
was no evidence showing that Shinko directly received the receive the commissions in question, CMS is not entitled thereto
commission of U.S. $77,000 from the sale of CMS’s logs in Japan. It since these were apparently paid by the buyers to Shinko for
also dismissed the counterclaim as it was shown that DRACOR arranging the sale. This is therefore not part of the gross sales of
waived the rights to the commission in a letter to the president of CMS's logs.
CMS. The CA affirmed the decision of the trial court.
2 & 3) AGENCY PART
ISSUE
The principal may revoke a contract of agency at will, and
1. W/N Shinko directly received the commission of U.S. $77,000 such revocation may be express, or implied, and may be availed of
from the sale of CMS’s logs in Japan – NO even if the period fixed in the contract of agency has not yet
expired. As the principal has this absolute right to revoke the
2. W/N the agency relationship of CMS and DRACOR is extinguished
agency, the agent cannot object thereto; neither may he claim
– YES damages arising from such revocation, unless it is shown that such
3. W/N DRACOR is still entitled to its commission from the sales was done in order to evade the payment of agent's commission.
directly made by CMS to Japanese firms – NO
RULING
In the case at bar, CMS appointed DRACOR as its agent for
1) While it is true that the evidence adduced establishes the fact the sale of its logs to Japanese firms. Yet, during the existence of the
that Shinko is DRACOR's agent or liaison in Japan, there is no contract of agency, DRACOR admitted that CMS sold its logs
evidence which established the fact that Shinko did receive the directly to several Japanese firms. This act constituted an implied
amount of U.S. $77,000 as commission arising from the sale of revocation of the contract of agency under Article 1924 of the Civil
CMS's logs to various Japanese firms. Code, which provides:
The testimony of Atty. Dominguez that Shinko's president Art. 1924 The agency is revoked if the principal directly manages the
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and director told him that Shinko received a commission was not business entrusted to the agent, dealing directly with third persons.
considered by the Court, treating it as hearsay. Similarly, the letter Since the contract of agency was revoked by CMS when it
of Mr. Shibata of Toyo Menka (one of their buyers in Japan) was
sold its logs to Japanese firms without the intervention of DRACOR,
also considered hearsay since Mr. Shibata was not presented to the latter is no longer entitled to its commission from the proceeds
testify on his letter.
of such sale and is not entitled to retain whatever moneys it may
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have received as its commission for said transactions. Neither After trial the CFI of Capiz held that the deed was invalid and
would DRACOR be entitled to collect damages from CMS, since that the property was subject to the execution which has been
damages are generally not awarded to the agent for the revocation levied on said properties by the judgment creditor of the owner.
of the agency, and the case at bar is not one falling under the Defendants Juan Tong and Pua Giok bring this appeal and insist that
exception mentioned, which is to evade the payment of the agent's the deed of the 31st of July, 1931, is valid.
commission.
The first recital of the deed is that Ong Guan Can, Jr., as
agent of Ong Guan Can, the proprietor of the commercial firm of
Ong Guan Can & Sons, sells the rice-mill and camarin for P13,000
Buncio v. Ong Guan Can and gives as his authority a particular power of attorney. However,
G.R. No. L-40681 October 2, 1934 he (Jr.) signed it in his name without any mention of the principal.
The receipt of money was also addressed to him.
DY BUNCIO & COMPANY, INC., plaintiff-appelle,
vs. Aside from this irregularity, the Supreme Court ruled that it
ONG GUAN CAN, ET AL., defendants. was immediately apparent that the power of attorney was a limited
JUAN TONG and PUA GIOK ENG, appellants. one, and not a specific one which would include the power to
alienate.
NOTE: THIS CASE WAS PROMULGATED IN 1934, SO THE
APPLICABLE CIVIL CODE IS NOT THE PRESENT ONE OF 1950, AND Appellants claim that this defect is cured by what is
THE ARTICLES BELOW DON’T REFER TO THE NCC. BUT IT’S THE supposedly a general power of attorney given to the same agent in
DOCTRINE THAT MATTERS 1920. Article 1732 of the Civil Code is silent over the partial
termination of an agency. The making and accepting of a new
Facts:
power of attorney, whether it enlarges or decreases the power of
This suit involves ownership over two particular pieces of the agent under a prior power of attorney, must be held to
property in Dao, Province of Capiz. The properties in question are a supplant and revoke the latter when the two are inconsistent. If
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rice mill and a camarin (a type of chapel). The contention is that the the new appointment with limited powers does not revoke the
property belongs to its judgment debtor, Ong Guan Can, while general power of attorney, the execution of the second power of
defendants Juan Tong and Pua Giok Eng claim as owner and lessee attorney would be a mere futile gesture.
of the owner by virtue of a deed dated July 31, 1931, by Ong Guan
ISSUE: WAS THE SALE VALID?
Can, Jr.
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HELD: No, there was no appropriate power of attorney. Hence it a MOA with Ciriaco Reyes. The MOA granted Reyes a permit to
may be the subject of execution. hunt for treasure in a land in Bulacan. Diciano signed the MOA as a
witness. It was alleged that Reyes, Calimlim and Diciano started,
What to take away from this case: When a new power of attorney digging, tunneling and blasting works on the land of Legaspi. It was
is accepted, and it is inconsistent with an earlier one, it revokes the also alleged that Calimlim assigned about 80 military personnel to
earlier one. guard the area and encamp thereon to intimidate Legaspi and other
occupants from going near it. Legaspi executed a special power of
attorney (SPA) appointing his nephew, Gutierrez, as his attorney-in-
REPUBLIC OF THE PHILIPPINES VS EVANGELISTA fact. Gutierrez was given the power to deal with the treasure
G.R. No. 156015. August 11, 2005 hunting activities on Legaspi’s land and to file charges against those
who may enter it without the Legaspi’s authority. Legaspi agreed to
Petitioner: REPUBLIC OF THE PHILIPPINES, represented by LT. GEN. give Gutierrez 40% of the treasure that may be found in the land.
JOSE M. CALIMLIM, in his capacity as former Chief of the Gutierrez hired the legal services of Atty. Adaza. Their contract
Intelligence Service, Armed Forces of the Philippines (ISAFP), and
provided that as legal fees, Atty. Adaza shall be entitled to 30% of
former Commanding General, Presidential Security Group (PSG), Legaspi’s share in whatever treasure may be found. Gutierrez also
and MAJ. DAVID B. DICIANO, in his capacity as an Officer of ISAFP
agreed to pay Atty. Adaza P5,000.00 as appearance fee per court
and former member of the PSG, hearing and defray all expenses for the cost of the litigation. Legaspi
Defendant: HON. VICTORINO EVANGELISTA, in his capacity as filed a case against for damages and injunction against petitioners
Presiding Judge, Regional Trial Court, Branch 223, Quezon City, and for illegally entering Legaspi’s land. Executive Judge Tirona issued a
DANTE LEGASPI, represented by his attorney-in-fact, Paul Gutierrez, 72-hour temporary restraining order (TRO) against petitioners. The
respondents. casewas subsequently raffled to Judge Victorino Evangelista who
issued another 72-hour TRO.
Ponente: PUNO, J.
Calimlim, Diciano and Reyes filed a Motion to Dismiss
Memory Aid: contending: first, there is no real party-in-interest as the SPA of
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Gutierrez to bring the suit was already revoked by Legaspi on March

Facts:
2000, as evidenced by a Deed of Revocation and, second, Gutierrez
Dante Legaspi is the owner of a land located in Bulacan. failed to establish that the alleged armed men guarding the area
Calimlim, representing the RP, and as then head of the Intelligence were acting on orders of petitioners. They also filed a Motion for
Service of the AFP and the Presidential Security Group, entered into Inhibition against Judge Evangelista for alleged partiality.
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Trial Court granted respondent’s application for a writ of It was held that there is sufficient basis to issue the writ of
preliminary injunction on the following grounds: (1) the diggings preliminary injunction. It was established, prima facie, that Legaspi
and blastings appear to have been made on the land of Legaspi so has a right to peaceful possession of his land, pendente lite. Also,
there is an urgent need to maintain the status quo to prevent there is no sufficient basis to hold that respondent judge should
serious damage to Legaspi’s land; and, (2) the SPA granted to have recused himself from hearing the case. There is no discernible
Gutierrez continues to be valid. CA affirmed the decision. pattern of bias on the rulings of the respondent judge.
Issue:
1. WON the agency of Legaspi is still valid? Sevilla v. CA

G.R. No. L-41182-3 | April 16, 1988 | Ponente: Sarmiento
Held:
Facts
Yes! Legaspi’s unilateral revocation of Gutierrez’s agency is
invalid as his agency is coupled with interest. Generally, the agency Tourist World Services Inc. represented by Eliseo Canlas, together
may be revoked by the principal at will since it depend on the will with Lina Sevilla entered into a lease agreement with Segundina
and license of the principal represented, the power of the agent Norguera for the place to be used as branch office of TWS. Sevilla
ceases when the will or permission is withdrawn by the principal. An bound herself to be solidarily liable in this contract. She was also
exception is when the agency is coupled with interest. It is clear given the title branch manager for the said branch. She sold tickets
that the treasure that may be found in the land is the subject matter to clients and the commission she got was 4% and the 3% was given
of the agency. Pursuant to SPA given to Gutierrez with a promise of to TWS. However, TWS found out that Sevilla was allegedly working
40% of whatever treasure may be found in the land and the 30% of for Philippine Travel Bureau, a rival. The company claims that it was
Legaspi’s share that Atty. Adaza is entitled by virtue of his legal already losing money and they decided to cease operations,
services, both of them have an interest in the subject matter of terminate lease contract and authorize Canlas to receive the
agency. When an agency is constituted as a clause in a bilateral properties in the office. The office was padlocked and in effect,
contract, that is, when the agency is inserted in another agreement, Sevilla was not given the opportunity to gather the equipment that
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the agency ceases to be revocable at the pleasure of the principal as belongs to her, and she was also not informed of the termination of
the agency shall now follow the condition of the bilateral the lease. Canlas claims this is because he could not find Sevilla at
agreement. So the Deed of Revocation executed by Legaspi has no the time he padlocked the office to protect the interests of TWS.
effect and Gutierrez can continue with the prosecution of the case. The trial court dismissed the claims of Norguera and Sevilla. Sevilla
claims she TWS is liable for damages because they terminated the
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lease without her consent though the relationship between her and the lease. Also, the agency was constituted for mutual benefit
TWS is joint venture while TWS claims that she was a mere because Sevilla is a bona fide travel agent herself.
employee of TWS. CA held that she is an employee and is not
entitled to damages. The padlocking of the premises is unjust because she is a lawful
occupant of the place,she should have been notified of this. Hence,
Issue she is entitled to damages.
1. WON Sevilla is an employee of TWS
2. WON the evidence supports the contention that TWS unilaterally 2. Yes. Did not ask for reconnection. Malevolent design since they
disconnected the phone lines allegedly discovered that Sevilla works for the rival company.
Held
1. No. Though there is no fixed test to determine if there is an Week 6
employer-employee relationship, the circumstances of the case may
be considered. First, Sevilla bound herself solidarily in the lease, an Valenzuela v Court of Appeals
act which a mere employee would not have done. Second, Sevilla GR No. 83122 | Oct 19, 1990 | Guttierez, Jr., J.
was not in the payroll of TWS. She merely takes commission from
the sale she makes. Third, Sevilla was not subject to the control of Petitioners: Arturo Valenzuela and Hospitalita Valenzuela
TWS, either in the final output or the manner in which she does her
Respondents: Court of Appeals, Bienvenido Aragon (President),
work. Lastly, the mere title of branch manager does not make
Robert Parnell, Carlos Catolico, The Philippine American General
Sevilla an employee.
Insurance Company, Inc. (Philamgen)
However, Sevilla's contention that it was a joint venture is also of no Memory Aid: Philamgen terminated agency for Valenzuela’s refusal
moment. A joint venture requires equal powers over the enterprise, to share commission
which is not present in this case because Sevilla herself recognizes
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the power of TWS over the branch. What she entered into was a Facts:
principal-agent relationship where she is an agent.
Petitioner Arturo Valenzuela is a General Agent of
Philamgen. He was authorized to solicit and sell in behalf of
The agency relationship is not revocable by will of the principal,
Philamgen all kinds of non-life insurance, and in consideration of
however,because it is an agency coupled with interest, namely, the
services rendered was entitled to receive the full agent's
interest of Sevilla where she bound herself to be solidarily liable in
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commission of 32.5% from Philamgen. Valenzuela solicited marine RTC: The trial court found that the Philamgen tried to justify
insurance from one of his clients, the Delta Motors, Inc. in the termination by making it appear that Valenzuela had a substantial
amount of P4.4 Million from which he was entitled to a commission account with Philamgen particularly Delta Motors, Inc.’s account,
of 32%. However, Valenzuela did not receive his full commission thereby prejudicing Philamgen’s interest. The records show,
which amounted to P1.6 Million from the P4.4 Million insurance however that the principal cause of the termination of Valenzuela
coverage of the Delta Motors. From 1976 to 1978, premium as General Agent was his refusal to share his Delta commission. That
payments were paid directly to Philamgen and Valenzuela's since Philamgen is not justified in the termination of Valenzuela as
commission to which he is entitled amounted to P632,737.00. one of their General Agents, Philamgen shall be liable for the
resulting damage and loss of business of Valenzuela. The RTC also
In 1977, Philamgen started to become interested in and ordered that Valenzuela be reinstated as General Agent.
expressed its intent to share in the commission due Valenzuela on a
fifty-fifty basis. Valenzuela refused. CA: Philamgen appealed to the CA. The CA ruled in favor of
Philamgen and ordered Valenzuela to pay Philamgen. The CA
Philamgen and its President, Aragon, insisted on the sharing observed that in any event the principal's power to revoke an
of the commission with Valenzuela. Valenzuela firmly reiterated his agency at will is so pervasive, that the SC has consistently held that
objection, stating that: "It is with great reluctance that I have to
termination may be effected even if the principal acts in bad faith,
decline upon request to signify my conformity to your alternative subject only to the principal's liability for damages
proposal regarding the payment of the commission due me.
However, I have no choice for to do otherwise would be violative of Issues:
the Agency Agreement executed between our goodselves."
1. W/N there was bad faith in the termination of the agency
Because of Valenzuela’s refusal, Philamgen and officers: (a)
reversed the commission due him by not crediting in his account the 2. W/N the agency is one coupled with an interest
commission earned from the Delta Motors, Inc.; (b) placed agency 3. W/N Valenzuela is liable to Philamgen for uncollected
transactions on a cash and carry basis; (c) threatened the premiums
BLOCK B 2016
cancellation of policies issued by his agency; and (d) started to leak

out news that Valenzuela has a substantial account with Philamgen. Held:
All of these acts resulted in the decline of his business as insurance
1. YES. The SC affirmed the RTC's findings and ruled that the
agent. Later on, Philamgen terminated the General Agency
principal cause of the termination of Valenzuela as General
Agreement of Valenzuela. Petitioners filed a complaint against
Agent of Philamgen arose from his refusal to share his Delta
Philamgen.
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commission. The records sustain the conclusions of the RTC is evident that the agency ceases to be freely revocable by the sole
on the apparent bad faith of the private respondents in will of the principal.
terminating the General Agency Agreement. The SC took
into account the pressures (enumerated above) that were 3. The CA erred in holding Valenzuela liable. The non-payment
exerted by Philamgen on Valenzuela for the latter’s refusal of premium does not merely suspend but puts an end to an
to share the commission. insurance contract since the time of the payment is
peculiarly of the essence of the contract. Unless premium is
2. YES. The SC concluded that the agency was one “coupled paid, an insurance contract does not take effect. Since
with an interest” and therefore, should not be freely admittedly the premiums have not been paid, the insurance
revocable at the unilateral will of the latter. Philamgen, by coverage did not go into effect or did not continue and the
terminating the General Agency Agreement, appropriated obligation of Philamgen as insurer ceased. Furthermore, the
the entire insurance business of Valenzuela. With the audit report presented by Philamgen showing that
termination of the General Agency Agreement, Valenzuela Valenzuela owed Philamgen an amount of around P1.5M
would no longer be entitled to commission on the renewal was unverified and merely supplied by officers of
of insurance policies of clients sourced from his agency. Philamgen. Records also show that Valenzuela in fact
Worse, despite the termination of the agency, Philamgen overpaid Philamgen an amount of P530k.
continued to hold Valenzuela jointly and severally liable
with the insured for unpaid premiums. Under these Philamgen is therefore liable for damages. A principal can be
circumstances, it is clear that Valenzuela had an interest in held liable for damages in cases of unjust termination of agency.
the continuation of the agency when it was Where no time for the continuance of the contract is fixed by its
terms, either party is at liberty to terminate it at will, subject only to
unceremoniously terminated not only because of the
commissions he should continue to receive from the the ordinary requirements of good faith. The right of the principal to
terminate his authority is absolute and unrestricted, except only
insurance business he has solicited and procured but also
for the fact that by the very acts of the respondents, he that he may not do so in bad faith. The SC also ruled that the
was made liable to Philamgen in the event the insured fail contractual relationship between the parties shall be terminated
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to pay the premiums due. upon the satisfaction of the judgment.
There is an exception to the principle that an agency is revocable at NATIONAL SUGAR TRADING v PNB
will and that is when the agency has been given not only for the [G.R. No. 151218. January 28, 2003]
interest of the principal but for the interest of third persons or for Ponente: Justice Ynares-Santiago
the mutual interest of the principal and the agent. In these cases, it
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Petitioners: National Sugar Trading NASUTRA said that PNB cannot apply the debts. PNB said that there
is legal compensation.
Respondents: PNB
ISSUE:
Mem.Aid: sugar! Haha sorry sabaw ng facts eh!
1. w/n PNB can apply the remittances to the debts.
FACTS:
HELD:
Marcos established the Philippine Sugar Commission
(PHILSUCOM) as the sole buying and selling agent of sugar. The YES. SC said that there was not legal compensation.
Philippine Exchange Company (PHILEXCHANGE) was also However, the PN states that PNB has the power to negotiate, sell,
established as the marketing agent of PHILSUCOM. All of the transfer any moneys, etc and apply the proceeds thereof as
transactions of PHILEXCHANGE will be financed by PNB. PHILEX shall payments for NASUTRA’s debts in case NASUTRA defaulted. SC said
pay PNB from its sugar proceeds. PHILEX failed to pay PNB. PHILEX that PNB merely followed the stipulation in the PN. SC also said that
was then replaced by National Sugar Trading Corp (NASUTRA). To the relationship between NASUTRA/SRA and PNB when the former
finance its operations, NASUTRA applied for a credit line from PNB. constituted the latter as its attorney-in-fact is not a simple
Every time it takes out a loan, its president gives a Promissory Note agency. NASUTRA/SRA has assigned and practically surrendered
to PNB. The PN states: its rights in favor of PNB for a substantial consideration (the credit
line). To reiterate, NASUTRA/SRA executed promissory notes in
“In the event that this note is not paid at maturity … we favor of PNB every time it availed of the credit line. The agency
appoint PNB as our attorney in fact to negotiate, sell and transfer established between the parties is one coupled with INTEREST
any moneys, securities and things of value which it may hold, by which cannot be revoked or cancelled at will by any of the parties.
public or private sale and apply the proceeds thereof to the
payment of this note”
However, NAUTRA were not able to pay PNB. CHING V. BANTOLO

BLOCK B 2016
G.R. No. 177086 December 5, 2012 J. Del Castillo

When Cory assumed power, she replaced PHILSUCOM with Sugar
Regulatory Administration (SRA). In the meantime, PNB received Albert M. Ching And Romeo J. Bautista, Petitioners,
remittances from foreign banks coming from the NASUTRA’s sugar v.
exports. PNB applied the remittances to NASUTRA’s debts. Felix M. Bantolo, Antonio O. Adriano And Eulogio Sta. Cruz Jr.,
2016
Substituted By His Children, Represented By Raul Sta. Cruz interest over the said parcels as technically described in and
Jr., Respondents. covered by the aforementioned original certificates of title in favor
of any bank or financial institution of their choice, judgment and
Summary / Memory Aid: discretion subject to the usual conditions or such other terms which
- SPA executed in favor of Ching allowing him to obtain loans may be imposed by said bank or financial institutions, in order to
and use principal’s (Bantolo) properties as collateral. secure and ensure the repayment of any loan indebtedness or
obligation which our herein attorneys-in-fact may obtain by virtue
FACTS: of this power and authority with the further authority to receive the
proceeds of such loan whether in cash, check or other bills of
Bantolo and other respondents own parcels of land in
exchange with the corresponding obligation on the part of the
Tagaytay City. They executed an SPA authorizing Ching and fellow
attorney-in-fact to account for or render an accounting of the loan
petitioner to obtain loans and use the said parcel of lands as
proceeds to us or in our favor;
collateral. Text of SPA:
2. To sign, execute, and deliver any deed or deeds of real estate
1. To borrow money and apply for and secure a loan on
mortgage over the aforestated parcels of land and the certificates of
their account with any bank or financial institution in
title covering the same in favor of the lending bank or financial
such sum or sums which the herein Attorney-in-fact shall
institution or to secure any surety agreement, bond or undertaking
[deem] fit and advisable and the maximum extent of
with any Surety Company who may issue a surety or performance
which shall be the loanable value of our real properties
bond to ensure the repayment of any loan taken or obtained by our
based on the attached appraisal report of Asian
herein Attorneys-in-fact pursuant to the herein special power of
Appraisal Co., Inc. dated March 24, 1995 on the "Fair
attorney;
Market Value Appraisal" of said realties and/or parcels of
land registered in our names respectively in the Registry 3. To do and perform any or all acts which may be necessary to
of Deeds of Tagaytay City and located thereat, to wit: carry out and/or implement the foregoing powers and authority
vested by us unto aforenamed attorney-in-fact.
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(ENUMERATION OF LOTS OMITTED)

4. GIVING and GRANTING, as well as ratifying and confirming all acts
the photocopies of which certificates of title are hereto attached
and things which our said Attorney-in-fact will do and perform or
and made integral parts hereof, and we hereby authorize and/or
has done and performed in or about the premises which acts and
vest authority unto the herein attorney-in-fact to deed, convey, and
things done or performed or still to be done or performed are, for
transfer by way of first mortgage all our rights of ownership and
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all legal intents and purpose are our own as if we ourselves were reimbursement because they failed to show that the receipts
personally present.8 presented in evidence were incurred in relation to the loan
application. As to the award of exemplary damages, the CA deleted
However, without informing Ching, Bantolo et. al revoked the same because respondents did not act in a wanton, fraudulent,
the SPA. One day after, Phil. Veterans Bank (PVB) granted Ching’s reckless, oppressive or malevolent manner.
application for a loan. When Ching found out that the SPA had been
revoked, Ching sought to have Bantolo honor the SPA. When ISSUE/S:
Bantolo refused, Ching filed complaint with RTC , alleging that SPA is
irrevocable bec. it is an agency contract involving interest and that 1. W/N CA ERRED IN RULING IN FAVOR OF BANTOLO ET. AL.
Ching et. al agreed to shoulder and defray expenses because of the HELD:
agreement that they may take half of the proceeds of the loan.
Bantolo claimed that there was no cause of action bec original YES, IN PART. Contract was indeed one of agency coupled
agreement was that Ching would get a loan of p50M and p30M with interest and cannot be revoked through the sole will of the
would go to Bantolo, but it turns out at Ching only obtained a loan principal.
of p25M and Bantolo will only get p6M. As this was contrary to
Ching entitled to damages for amount advanced to Bantolo
agreement, Bantolo et. al revoked the SPA
(p500k) in order to posess the titles to the lots. This must be
RTC Ruling: Upheld validity of SPA but it is no longer returned to him and not dependent on a conditional event (in this
enforceable bec. circumstances are no longer the same. Bantolo case, the granting of the loan as agreed upon).
liable for damages and must also give ½ of the properties to Ching
However, Ching is not entitled to ½ of the properties.
A certain First Alaska Dev’t Inc. and a certain Watanabe filed Against human nature for someone who barely knows another to
a petition-for-intervention claiming that the contract with Ching just give his land to him. Agreement shows that Ching and Bantolo
prejudiced them as they had a valid and irrevocable SPA with only agreed to share in the proceeds of the loan, but not in the
Bantolo. Petition denied as it was filed out of time. ownership of the properties.
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On appeal with CA: CA modified the Decision of the RTC. Ching also not entitled reimbursement of expenses incurred
The CA ruled that petitioners are not entitled to one-half of the as testimony shows that he admitted to incur such at a risk and did
subject properties because it is contrary to human experience for a not expect to be repaid.
person to give one-half of his property to someone he barely
Ching also not entitled to exemplary damages. No bad faith,
knows The CA likewise ruled that petitioners are not entitled to
etc. on part of Bantolo et. al in revocation of SPA.
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developing the said property into a low-cost residential community
(Bacaling-Moreno Subdivision).
Bacaling v. Muya (2011)
GR No. 148404-05/ April 11,2002 In 1957, a P600,000 real estate loan from GSIS was granted
to Bacaling with a mortgage on the 110 sub-lots. Only P240,000 was
Petitioners: 1) Nelita Bacaling, represented by her atty in fact Jose released to Bacaling. Bacaling was unable to complete the project
Juan Tong and 2) Jose Juan Tong, in his personal capacity due to the immensity of the project cost. GSIS foreclosed the 110
Respondent : Muya, etal sub-lots.
Memory Aid: In 1964, respondents Muya, etal claimed they were legally
instituted by Bacaling’s administrator/overseer as tenant-tillers of
110 sub-lots, IRREVOCABLE SPA the 110 sub-lots on a sharing basis. In 1972, the Office of the
President (OP) released findings that Muya, etal clandestinely
• Art. 1927. An agency cannot be revoked (1) if a bilateral entered and occupied the entire 110 sub-lots. They took advantage
contract depends upon it, or (2) if it is the means of fulfilling an
of the problematic peace and order situation at the onset of Martial
obligation already contracted, or (3) if a partner is appointed Law and the GSIS foreclosure. They also sowed the lots, altered
manager of a partnership and his removal from the management is
roads, drainages, boundaries, and monuments, as if the lots were
unjustifiable
their own. In 1974, Muya, etal claimed their relationship with the
• The agency, to stress, is one coupled with interest, which is landowner changed from tenant- tillers to leasehold and they
explicitly irrevocable religiously delivered rental payments to Bacaling as agricultural-
lessor.
Facts:
In 1977, the City Council of Iloilo enacted Zoning Ordinance
Bacaling owned three 9.96 hectares of land in Barangay 212 declaring the 110 sublots as “residential” and “non-
Cubay, Jaro, Iloilo City, which was subdivided to 110 sub-lots as agricultural”, consistent with the NUPC and BoL decisions.
BLOCK B 2016
registered in the Registry of Deeds in Iloilo. On May 16, 1955, the

landholding was processed and approved as "residential" or In 1978, Bacaling registered 110 sub-lots as Bacaling-
"subdivision" by the National Urban Planning Commission (NUPC). Moreno Subdivision with the National Housing Authority (NHA) and
obtained a license to sell the sub-lots pursuant to the development
On May 24, 1955 the Bureau of Lands (BOL) approved the plan.
subdivision of the property into 110 sub lots for purposes of
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In 1980, Muya, etal secured certificates of land transfer 4. To negotiate, cause and effect a settlement of occupation
(CLTs) in their names for the 110 sub-lots. They made various and tenants on the aforesaid lots; 5. To cause and effect the
payments to Landbank as amortizing owners-cultivators of their transfer of the aforesaid lots in the name of the VENDEES;
respective tillage.
6. To execute and deliver document/s or instrument of
In 1989, after a decision of the Supreme Court in a prior whatever nature necessary to accomplish the foregoing acts and
case regarding the same 110 sublots, Bacaling eventually deeds.
repurchased the 110 sub-lots from GSIS.
Before September 19, 1997, Tong filed for cancellation of
In 1990, petitioner Tong, together with Juan and Siady the CLTs of Muya, etal to the Department of Agricultural Reform
bought the 110 sub-lots from Bacaling for P1,700,000. (DAR). DAR dismisses the petition. MR to DAR also fails.
In 1992, to secure performance of the contracts of absolute sale and On September 19, 1997, the Office of the President (OP)
facilitate the transfer of the title of the lots, Bacaling appointed reverses the DAR decision. On July 22, 1999, the MR to the OP
Tong as her attorney-in-fact under and irrevocable Special Power of decision is denied. Before December 2, 1999, Muya, etal appealed
Attorney (I-SPA) with the following mandate: the OP decision to the CA under Rule 43.
1. To file, defend and prosecute any case/cases involving On December 2, 1999 Bacaling revokes the I-SPA, and
lots nos. 1 to 110 covered by TCT Nos. T-10664 to T-10773 of the admits the status of J-MART as her tenants to the 110 sub-lots,
Register of Deeds of the City of Iloilo; which she now alleges as agricultural lands.
2. To assume full control, prosecute, terminate and enter On January 1, 2001, the Court of Appeals reversed the OP
into an amicable settlement and compromise agreement of all cases decision. On June 5, 2001, without reference to Bacaling’s
now pending before the DARAB, Region VI, Iloilo City, which repudiation of Tong’s acts, denies the MR.
involved portion of Lots 1 to 110, covered by TCT Nos. T-10664 to T-
10773 of the Register of Deeds of Iloilo City, which were purchased Issue:
BLOCK B 2016
by Jose Juan Tong, Vicente Juan Tong and Victoria Siady; 1. W/N Tong has the material interest to litigate case
3. To hire a lawyer/counsel which he may deem fit and necessary to (Agency)
effect and attain the foregoing acts and deeds; handle and 2. W/N Muya, etal are agricultural lessees
prosecute the aforesaid cases;
3. W/N the 110 sub-lots are residential
2016
Held/Ratio: with GSIS, which was the owner of the lots during the alleged period
(note: properties were foreclosed).
1. YES. “Substantively, we rule that Bacaling cannot revoke at
her whim and pleasure the irrevocable special power of attorney 3. YES. SC rules that the 110 sub lots are residential pursuant
which she had duly executed in favor of petitioner Jose Juan Tong to the ruling in Natalia Realty Inc. vs DAR where the court held that
and duly acknowledged before a notary public. The agency, to “where we excluded lands not devoted to agricultural activity, i.e.,
stress, is one coupled with interest, which is explicitly irrevocable lands previously converted to non-agricultural or residential uses
since the deed of agency was prepared and signed and/or prior to the effectivity of the 1988 agrarian reform law (R.A. No.
accepted by petitioner Tong, and Bacaling with a view to 6657) by agencies other than the DAR, from the coverage of
completing the performance of the contract of sale of the one agrarian reform.” Also, the SC rules on the validity of the charter of
hundred ten (110) sub-lots. It is for this reason that the mandate of the NUPC.
the agency constituted Tong as the real party in interest to remove
all clouds on the title of Bacaling and that, after all these cases are
resolved, to use the irrevocable special power of attorney to COLEONGCO V. CLAPAROLS
ultimately "cause and effect the transfer of the aforesaid lots in the No. L-18616 March 31, 1964
name of the vendees [Tong with two (2) other buyers] and execute
and deliver document/s or instrument of whatever nature J. JBL Reyes
necessary to accomplish the foregoing acts and deeds." The
fiduciary relationship inherent in ordinary contracts of agency is Petitioner: Vicente Coleongco (agent)
replaced by material consideration which in the type of agency Respondent: Eduardo Claparols (principal)
herein established bars the removal or dismissal of petitioner Tong
as Bacaling's attorney-in-fact on the ground of alleged loss of trust Memory Aid: Nail plant, bad faith agent, Power of attorney coupled
and confidence. with interest revocable for cause.
Furthermore, Bacaling’s allegations of fraud on the constitution of Facts:

BLOCK B 2016
the I-SPA is not supported by evidence.”

Claparols operated “Claparols Steel and Nail Plant” which
2. NO. SC rules that the 110 sub-lots are not agricultural land manufactured nails. Its raw materials had to be imported from
because it does not satisfy all the 6 requisites to a valid agricultural Belgium. In 1953, losses in the company compelled him to look for
lease. Requisites #1,3, and 6 are lacking. Muya, etal could not claim someone to finance the imports of nail wires. At first, Kho To, the
that they are legitimate tenants because they agreement was not person handling his marketing, agreed to do the financing but later
2016
on introduced Coleongco, recommending him to be his financier  He proposed to Agsam, machinery superintendent, to pour
instead. acid on the machinery to paralyze the factory
They executed a contract whereby Coleongco undertook to  He owed that factory P87,387.
finance and put up the funds required for the importation of the
nail wire, which Claparols bound himself to convert into nails at his  He prosposed to Kho that he should cut its monthly
plant. Claparols also executed in favor of Coleongco, a special power advances from P2,000 to P1,000 further saying that “I think
of attorney to open and negotiate letters of credit, to sign contracts, it is time that we do our plan to take advantage of the
bills of lading, invoices, and papers covering transactions; to difficulties of Eddie with the banks. If we play well our
represent appellee and the nail factory; and to accept payments and cards, we might yet own his factory”
cash advances from dealers and distributors. Thereafter, Coleongco
 Illegal diversion of profits of the factory for his own benefit
also became the assistant manager of the factory, and took over its
business transactions, while Claparols devoted most of his time to Coleongco for his part filed this suit for damages and lost profits
the nail manufacture processes. due to the discontinuance of the financing agreement.
During the course of the agency, Claparols got an alias writ ISSUE:
of execution to enforce judgment against him by PNB despite
having submitted an amortization plan to settle his account there. 1. W/N the power of attorney given to Coleongco, which is
When he went to check, he learned that Coleongco wrote 2 letters coupled with interest, is revocable
to the bank with some derogatory information against him. (1) “for
HELD/RATIO:
the acquisition of the whole interest of Mr. Eduardo L. Claparols in
the Calaparols Steel and Nail Plant” (2) “I presume that Mr. YES
Claparols is not serious in meeting his obligations with your bank,
otherwise he had not taken machines and equipemntes a sign of Coleongco alleged that his power of attorney was made to
bad faith since the factory is making a satisfactory profit of my protect his interest under the financing agreement and was one
BLOCK B 2016
administration. coupled with an interest that the appellee Claparols had no legal
power to revoke. This point cannot be sustained. The financing
Because of this, Claparols revoked the power of attorney of agreement itself already contained clauses for the protection of
Coleongco and dismissed him as assistant manager of the plant. He appellant's interest, and did not call for the execution of any power
also found out about other acts of Coleongco unbecoming of an of attorney in favor of Coleongco. But granting appellant's view, it
agent: must not be forgotten that a power of attorney can be made
2016
irrevocable by contract only in the sense that the principal may Memory Aid: SPOA to secure loans, mortgage of land to PNB by an
not recall it at his pleasure; but coupled with interest or not, the agent
authority certainly can be revoked for a just cause, such as when
the attorney-in-fact betrays the interest of the principal, as FACTS
happened in this case. It is not open to serious doubt that the Petitioner Lustan is the registered owner of a property in
irrevocability of the power of attorney may not be used to shield Calinog, Iloilo. On February 25, 1969, Lustan leased the said
the perpetration of acts in bad faith, breach of confidence, or property to private respondent Nicolas Parangan for a term of 10
betrayal of trust, by the agent for that would amount to holding years and an annual rent of P1K. During the period of lease,
that a power coupled with an interest authorizes the agent to Parangan was regularly extending loans in small amounts to
commit frauds against the principal. petitioner to defray her daily expenses and to finance her
Our new Civil Code, in Article 1171, expressly provides the daughter's education.
contrary in prescribing that responsibility arising from fraud is On July 29, 1970, Lustan executed a SPOA in favor of
demandable in all obligations, and that any waiver of action for Parangan to secure an agricultural loan from PNB with the
future fraud is void. It is also on this principle that the Civil Code, in aforesaid lot as collateral. A 2nd second SPOA was executed, by
its Article 1800, declares that the powers of a partner, appointed as virtue of which, Parangan was able to secure four 4 additional
manager, in the articles of co-partnership are irrevocable without loans. The last three loans were without the knowledge of Lustan
just or lawful cause; and an agent with power coupled with an and all the proceeds therefrom were used by Parangan for his own
interest can not stand on better ground than such a partner in so far benefit.
as irrevocability of the power is concerned.
On April 16, 1973, Lustan signed a Deed of Pacto de
The acts of Coleongco are indicative of a deliberate Retro Sale in favor of Parangan which was followed by a Deed of
sabotage made by an agent which fully justifies the revocation of Definite Sale dated May 4, 1979 which petitioner signed upon
the power of attorney. Parangan's representation that the same merely evidences the
loans of Lustan to Parangan.
BLOCK B 2016
For fear that her property might be prejudiced by the

LUSTAN v. CA
continued borrowing of Parangan, Lustan asked for the return of
Petioner – Adoracion Lustan
her certificate of title. Parangan refused. He asserted his rights as
Respondent – CA, Nicolas & Soledad Parangan, PNB owner of property by virtue of the Deed of Definite Sale.
2016
Aggrieved, petitioner filed an action for cancellation of liens, A SPOA is a continuing authority and absent a valid
quieting of title, recovery of possession and damages against revocation duly furnished to the mortgagee, the same continues to
Parangan and PNB. have force and effect as against third persons who had no
knowledge of such lack of authority.
RTC ruled in favour of Lustan ordering the cancellation of
the TCT, declaring the Deed of Pacto de Retro Sale and the Deed of Art. 1921. If the agency has been entrusted for the purpose of
Definite Sale null and void, and Paragan to return possession of the contracting with specified persons, its revocation shall not
land to Lustan. Upon appeal, the CA reversed the decision. Hence, prejudice the latter if they were not given notice thereof.
this appeal.
The SPOA executed by petitioner in favor of Parangan duly
ISSUE authorized the latter to represent and act on behalf of the
former. Lustan clothed Parangan with authority to deal with PNB
1. W/N the Deed of Definite Sale is in reality an equitable mortgage?
on her behalf and in the absence of any proof that the bank had
YES knowledge that the last three loans were without the express
2. W/N petitioner's property is liable to PNB for the loans authority of petitioner, it cannot be prejudiced thereby.
contracted by Parangan by virtue of the SPOA? YES
As far as third persons are concerned, an act is deemed to
RULING have been performed within the scope of the agent's authority if
such is within the terms of the power of attorney as written even if
1. YES. The Deed of Definite Sale is in reality an equitable mortgage the agent has in fact exceeded the limits of his authority according
as it was shown beyond doubt that the intention of the parties was to the understanding between the principal and the agent
one of a loan secured by petitioner's land.
In the case at bar, the SPOA particularly provides that the
Petitioner had no knowledge that the contract she signed is same is good not only for the principal loan but also for subsequent
a deed of sale. The contents of the same were not read nor commercial, industrial, agricultural loan or credit accommodation.
explained to her. Petitioner is illiterate and her condition
BLOCK B 2016
constrained her to merely rely on Parangan's assurance that the However, Lustan has an unquestionable right to demand
contract only evidences her indebtedness to the latter. proportional indemnification from Parangan with respect to the
sum paid to PNB from the proceeds of the sale of her property in
2. YES. The mortgage can be enforced against Lustan. case the same is sold to satisfy the unpaid debts.
2016
SC declared the Deed of Definite sale as an equitable and corresponding interest on the mortgage. The widow of Perez
mortgage, ordered Parangan to return the land to Lustan upon instituted Special Proceedings on CFI of Occidental Negros
latter’s payment of his debt to Parangan, and declared the for settlement of the estate of the deceased. The widow (Amparo)
mortgage in favour of PNB valid. was appointed Administratrix and notice was duly published
to creditors. PNB did not file a claim. The property was partitioned
and thereafter distributed accordingly.
Amparo G. Perez v. PNB It appears also that the Amparo inquired by letter from the
(basis from 4B digest with modification/additional info) Bank the status of her husband's account; and she was informed
GR NO. L-21813 July 30, 1996 JBL Reyes J. that there was an outstanding balance thereon of P2,758.84 earning
a daily interest of P0.4488. She was furnished a copy of the
Petitioner: Amparo Perez mortgage and a copy of the Tax Declaration.
Respondent: Philippine National Bank The Bank afterwards caused for the extrajudicial foreclosure
of the mortgaged properties, which was sold at auction and
Summary subsequently bought by the bank. After the lapse of the year of
 The power of foreclosure is not an ordinary agency that redemption, the Certificate of Title was also transferred in the name
contemplates exclusively the representation of the principal of the Bank.
by the agent but is primarily an authority conferred upon The widow and heirs of Perez then filed a complaint against
the mortgagee for the latter’s own protection. It is, in fact, the Bank seeking to annul the extrajudicial foreclosure sale and the
an ancillary stipulation supported by the same cause or TCT. The petitioner’s argument is that the Bank under its power of
consideration for the mortgage and forms an essential and sale is barred upon death of the debtor, because agency is
inseparable part of that bilateral agreement. extinguished by the death of the principal, under Article 1732 of the
Civil Code of 1889 and Article 1919 of the Civil Code of the
 The power to foreclose extra judicially survives the death of
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the mortgagor. Philippines.
Facts: The trial court rendered judgment favorable to the

former holding that, according to the doctrine of Pasco v. Ravina (54
Vicente Perez mortgaged a lot to PNB to secure payment of a loan
Phil. 382), the Bank should have foreclosed its mortgage in court;
of P2,500 plus interest. He died intestate survived by his wife and
children, during which there was an outstanding balance of P1,917 that the power to sell contained in the deed of mortgage had
2016
terminated upon the death of the mortgagor. Trial court declared mortgagor as an ordinary claim; (2) to foreclose the mortgage
the sale null and void. The Bank appealed to SC. judicially and prove any deficiency as an ordinary claim; and (3)
to rely on the mortgage exclusively, foreclosing the same at any
Issues: time before it is barred by prescription, without right to file a claim
1. W/N the power to sell (extra judicially) contained in a deed of for any deficiency.
mortgage terminates upon the death of the mortgagor.
Pasno ruled that #3 should not be applied for equitable
Held/Ratio: purposes. Dissent on same case ruled otherwise. BOTH decisions
NO, the power to foreclose is not an ordinary agency that acknowledged the fact that the power to foreclose extra judicially
contemplates exclusively the representation of the principal by the survives the death of the mortgagor. SC relied on the dissenting
agent but is primarily an authority conferred upon the mortgagee opinion in its ruling.
for the latter's own protection. It is, in fact, an ancillary stipulation
supported by the same cause or consideration for the mortgage and
forms an essential and inseparable part of that bilateral agreement. TERRADO V COURT OF APPEALS
GR L-58794 August 24, 1984
Nevertheless, Bank was late in foreclosing property (Bank
was informed of death since 1947; property partitioned in 1956; Petitioner: Spouses Lydia Terrrado and Martin Rosario and Domingo
Bank foreclosed in 1962). SC ruled: “it is our view that both justice Fernandez Respondent: Geruncio Lacuesta. Ponente: Guerrero
and equity would be served by permitting herein appellees to
redeem the foreclosed property within a reasonable time, by paying Memory aid:
the capital and interest of the indebtedness up to the time of Ordinance 8 awarded the exclusive fishing privilege to
redemption, plus foreclosure and useful expenses, less any rents Lacuesta and appointed him as manager-administrator but was
and profits obtained by the Bank from and after the same entered subsequently disapproved by the DANR Secretary. The contract was
into its possession.” later awarded to Terrado, Rosario and Fernandez in a public
BLOCK B 2016
NOTE: bidding. After a long legal battle between the parties, the SC
Pasno v. Ravina relied on Sec. 7, Rule 87, of the original Rules of declared the resolution awarding the contract as void and the death
Court (Sec. 7, Rule 86 of Revised Rules of Court) which presented of Lacuesta as extinguishing the agency between the Municipal and
three ways wherein a creditor may hold a claim against a Lacuesta.
deceased when secured by a mortgage, to wit: (1) to waive the Facts:
mortgage and claim the entire debt from the estate of the
2016
1. Fisheries situated in Mangabul were reserved and the Granted to the highest bidder; and 2. ) Shall only be valid and
usufruct thereof ceded to the Municipality of Bayambang. enforceable if approved by the Secretary upon recommendation by
City ordinance 8 was passed by the Sangguniang Bayamn the Director
establishing the Bayambang Fishery and Hunting Park and
Municipal Watershed and designated, appointed and According to the Revised Administrative Code, municipal
constituted Geruncio Lacuesta as Manager-Administrator council may lease fishery privileges for a period of not exceeding
five years to the highest bidder. It can’t extend the lease period
for a period of 25 years, renewable for another 25 years.
once it has been fixed. Further if the lease does not exceed 5 years,
2. The resolution was however disapproved by the Secretary the board’s approval is not necessary. If it the lease is more than 5
of DANR because it was granted to Lacuesta without the years but not exceeding 10 years, the provincial board’s approval is
benefit of competitive public hearing. Lacuesta was asked to necessary. And lastly if the lease exceeds 10 years but not more
refrain from his duties but he refused. than 25 years the secretary’s approval is needed. In all cases, the
lease must be based on a competitive bidding
3. The Sanggunian then resolved to advertise for public
bidding of the Mangabul area for four years. Terrado, Based on this, the court held that the ordinance is void ab
Rosario and Fernandez were among the winning bidders initio hence the contract of management and administration
who were immediately placed in possession of the between the municipality and Lacuesta is likewise null and void. All
Managabul fisheries. The privilege was fixed at four years. prohibition for the leasing filed by Lacuesta was then ordered to be
dismissed because of lack of legal basis.
4. The case of who is the rightful beneficiary of the fisheries
ensued between Lacuesta, the winning bidders and the A contract of management and administration between the
municipality. municipality and Lacuesta is one of agency whereby a person binds
himself to render some service or to do something in representation
Issue: WON Ordinance 8 awarding to Lacuesta the privilege is valid? or on behalf of another, with the consent or authority of the latter.
NO Under article 1919, New Civil Code, agency is extinguished by the
BLOCK B 2016
Held: death of the agent. His rights and obligations arising from the
contracts are not transmissible to his heirs. Despite this, the winning
All ordinances regarding fishing shall be submitted to the bidders can’t enjoy their fishing privilege anymore as the period of
Secretary for approval and shall have full force and effect unless four years has already lapsed and extension of lease is not
notice in writing of their disapproval is communicated by the authorized.
secretary. PD 704 provides that fishing privileges shall be 1.)
2016
Morales assured them that he will vacate the premises as soon as
his uncle will notify him to do so. Thus, they paid the purchase price
and Deed of Absolute Sale was executed in their favor.
Trusts- Week 7
Despite due notice from his uncle to vacate the premises in
question, Morales refused to vacate or demolish the beauty shop
MORALES V. CA unless he is reimbursed P35,000.00 for it although it was valued at
GR. 117228 June 19, 1997 less than P5,000.00.
J. Davide, Jr. As the Ortiz spouses were about to undertake urgent
Petitioner: Rodolfo Morales , represented by heirs and Priscila repairs on the dilapidated residential building, they saw that
Morales Morales had already occupied the same, taking in paying boarders
and claiming already ownership of the premises in question, thus
Respondent: CA, Ranulfo Ortiz Jr., Erlinda Ortiz they filed this case
FACTS: Petitioner’s version:
Respondent’s version: A certain piece of land was originally owned by the spouses,
Rosendo Avelino and Juana Ricaforte. They bought it from the
Celso Avelino purchased a lot from Alejandra Mendiola and
Mendiolas through their son, Celso Avelino. After the purchase, the
Celita Bartolome. Then, he caused the transfer of the tax
couple occupied it as owners until they died. Upon their demise,
declarations of the two parcels in his name and caused the survey of
their children: Trinidad A. Cruz, Concepcion A. Peralta, Priscila A.
the premises. He also built his residential house therein. When the
Morales and Aurea Avelino succeeded as owners thereof, except
two-storey residential house was finished, he took his parents,
Celso Avelino who did not reside in the premises because he was
Rosendo Avelino and Juana Ricaforte, and his sister, Aurea, who
out of Calbayog until his death in Cebu City.
took care of the couple, to live there until their deaths. When Celso
BLOCK B 2016
became a Judge of the CFI in Cebu, Rodolfo Morales (nephew of The premises in question was acquired by Celso Avelino
Celso), without the knowledge and consent of the former, who was entrusted by Rosendo with the money to buy it. Rosendo
constructed a small beauty shop in the said land. let Celso buy it being the only son. The property is in the name of
Celso Avelino.
When Celso offered the land for sale, Private respondents
(Ortiz spouses) examined the premises and saw Morales. However,
2016
Rodolfo Morales constructed beside the 2-storey house a 3. It is a relationship with respect to property, not one
beauty shop for his wife with the consent of Celso and the latter's involving merely personal duties;
sisters. Priscila Morales was aware that the premises in question
was surveyed in the name of Celso but she did not make any 4. It involves the existence of equitable duties imposed
attempt, not even her father, to change the muniment of title to upon the holder of the title to the property to deal with
Rosendo Avelino. it for the benefit of another; and
It is their contention that the sale of the subject premises to 5. It arises as a result of a manifestation of intention to
the Ortiz spouses is fraudulent because it included their share and create the relationship.
the beauty shop of her son, the petitioner. Trusts are either express or implied. Express trusts are
ISSUES: created by the intention of the trustor or of the parties, while
implied trusts come into being by operation of law. Implied trusts
1. Did Celso Avelino purchase the land in question from the are either resulting or constructive trusts. Resulting trusts are based
Mendiolas as a mere trustee for his parents and siblings or, simply on the equitable doctrine that valuable consideration and not legal
put, was the property acquired a trust property? NO title determines the equitable title or interest and are presumed
always to have been contemplated by the parties. They arise from
2. Was Rodolfo Morales a builder in good faith? NO the nature or circumstances of the consideration involved in a
***Note: Doctrine-heavy case so sorry if this is long, Sir might ask transaction whereby one person thereby becomes invested with
eh. If you know the doctrines, skip this part and go to HELD*** legal title but is obligated in equity to hold his legal title for the
benefit of another. On the other hand, constructive trusts are
A trust is the legal relationship between one person having created by the construction of equity in order to satisfy the
an equitable ownership in property and another person owning the demands of justice and prevent unjust enrichment. They arise
legal title to such property, the equitable ownership of the former contrary to intention against one who, by fraud, duress or abuse of
entitling him to the performance of certain duties and the exercise confidence, obtains or holds the legal right to property which he
BLOCK B 2016
of certain powers by the latter. The characteristics of a trust are: ought not, in equity and good conscience, to hold.
1. It is a relationship; A resulting trust is exemplified by Article 1448 of the Civil

Code, which reads: “There is an implied trust when property is sold,
2. It is a relationship of fiduciary character;
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
2016
property. The former is the trustee, while the latter is the surveyed) proved that he considered it as his exclusive
beneficiary. However, if the person to whom the title is conveyed property. Furthermore, the burden of proving the existence
is a child, legitimate or illegitimate, of the one paying the price of of a trust is on the party asserting its existence and that
the sale, no trust is implied by law, it being disputably presumed such proof must be clear and satisfactory. However, court
that there is a gift in favor of the child.” failed to discharge this burden of proof. There is valid and
cogent reason why Priscila and her sisters did not do
The trust created under the first sentence of Article 1448 is
anything to have their respective shares in the property
sometimes referred to as a purchase money resulting trust. To give
conveyed to them after the death of Rosendo Avelino in
rise to a purchase money resulting trust, it is essential that there be:
1980. Neither is there any evidence that during his lifetime
1. an actual payment of money, property or services, or an Rosendo demanded from Celso that the latter convey the
equivalent, constituting valuable consideration; land to the former. This omission was mute and eloquent
proof of Rosendo's recognition that Celso was the real
2. and such consideration must be furnished by the alleged buyer of the property in 1948 and the absolute and
beneficiary of a resulting trust. exclusive owner thereof.
Exceptions to the establishment of implied resulting trust:
1. If the person to whom the title is conveyed is a child of the 2. No, Rodolfo Morales knew from the very beginning that he
one paying the price of the sale – not an implied trust since was not the owner of the land. The court also rejected his
it is presumed that it is a gift in favor of the child. claim that he asked for Celso Avelino’s consent. First, it was
clearly self-serving and inconsistent and the circumstances
2. If actual contrary intention is proved
of when and where allegedly the consent was given are
3. If purchase is made in violation of a statute, no trust can unclear. Second, only Celso Avelino could have rebutted it;
result in favor of the party who is guilty of the fraud. but the testimony was given after Avelino's death, thus
forever sealing his lips. Finally, having insisted with all vigor
BLOCK B 2016
HELD: that the land was acquired by Rosendo Avelino and Juanita
Ricaforte, it would be most unlikely that Rodolfo would
1. No, it is not a trust property since this case falls within the
have taken the trouble of securing Celso's consent, who had
first exception in that there is no implied trust if title is
been "continuously away from Calbayog City for more than
conveyed to a child. The positive acts of Celso Avelino (tax
30 years," for the construction of the shop building.
declaration in his name, paying taxes, had the land
2016
Bartex – respondent corporation who bought one of the two
properties (in the first cause of action) from the Spouses Ramos
Lina Peñalber v. Quirino Ramos, Leticia Peñalber,
Bartex, Inc. A. FIRST CAUSE OF ACTION
G.R. No. 178645. January 30, 2009.
Lina owned a parcel of land with a warehouse and a
Chico-Nazario. residential house in Ugac, Tugegarao (Ugac Properties). She
discovered that her TCT for the land was cancelled and a new one
Petitioner: Lina Peñalber was issued in favor of spouses Ramos. Upon verification, petitioner
learned that the basis for the cancellation of her title was a Deed of
Respondent: Spouses Ramos and Bartex, Inc.
Donation of a Registered Land, Residential House and Camarin,
Memory Aid: Family members, hardware store, express trust, parol which petitioner purportedly executed in favor of respondent
evidence spouses Ramos. Petitioner insisted that her signature on the said
Deed of Donation was a forgery as she did not donate any property
Doctrine: to respondent spouses Ramos. When she confronted the spouses
In its technical legal sense, a trust is defined as the right, they offered to pay her 1M for the property and she agreed to this.
enforceable solely in equity, to the beneficial enjoyment of However, the spouses did not give the money. Petitioner, in the
property, the legal title to which is vested in another; but the word meantime, learned that the spouses were planning to sell the
“trust” is frequently employed to indicate duties, relations, properties to Bartex. She sent her son, Johnson, to notify Bartex
responsibilities which are not strictly technical trusts. that the Ramoses were not the lawful owners of the properties.
Petitioner executed an Affidavit of Adverse Claim over the Ugac
FACTS Properties and caused the same to be annotated on the TCT on the
same day. However, despite petitioner’s warnings, respondent
The court ruled on two causes of action in this case.
spouses Ramos still executed in favor of respondent Bartex, Inc. a
Lina Peñalber – petitioner, owner of a parcel of land and a Deed of Absolute Sale. Petitioner prayed that the sale be annulled
BLOCK B 2016
hardware store, mother of Leticia and mother-in-law of Quirino as the spouses Ramos did not have ownership over the lands and
that Bartex was a buyer in bad faith.
Leticia Peñalber – respondent, daughter of Lina
The Trial Court ruled that the testimony of Lina Peñalber
Quirino Ramos – husband of Leticia denying her execution of the deed of donation over the Ugac
property in favor of the spouses Ramos insufficient to support the
2016
said cause of action. Peñalber failed to prove her ownership over In accordance with the above agreement, respondent spouses
the properties in question. The deed of donation which Peñalber Ramos allegedly entered into a contract of sale with Mendoza over
purportedly executed was notarized and thus it was entitled to full the Bonifacio property. A TCT was then issued in favor of the
faith and credit. A high degree of proof is needed to overthrow the spouses. The spouses then returned the management of the
presumption of its regularity. Peñalber failed to overthrow the hardware to Peñalber. On the bases of receipts and disbursements,
presumption. The decision regarding this matter was not appealed. petitioner asserted that the Bonifacio property was fully paid out of
the funds of the store and if respondent spouses Ramos had given
B. SECOND CAUSE OF ACTION: any amount for the purchase price of the said property, they had
Petitioner operated a hardware store in a building she already sufficiently reimbursed themselves from the funds of the
owned along Bonifacio St., Tuguegarao, Cagayan. However, the store. She then asked for reconveyance of title over the lots. She
commercial lot (Bonifacio property) upon which the building stood insisted that the spouses were merely trustees of the properties
is owned by and registered in the name of Maria Mendoza, from and therefore they are under a moral and legal obligation to
whom petitioner rented the same. Petitioner allowed the spouses convey the title to her.
Ramos to manage the hardware. In 1984, Mendoza decided to sell The spouses contended that Peñalber not only ceded
the lot.
management of the hardware to them but also full ownership of the
As petitioner did not have any available cash to buy the hardware store by the petitioner, on the condition that the stocks
property, she allegedly entered into a verbal agreement with the and merchandise of the store will be inventoried. And out of the
respondents: proceeds of the sales, the spouses shall pay petitioner’s
outstanding obligations and liabilities. After settling and paying the
1. The lot would be bought by the spouses Ramos for and in obligations and liabilities of petitioner, the spouses bought the
behalf of petitioner. Bonifacio property from Mendoza out of their own funds. The
spouses also asserted that, even if petitioner and respondent
2. The consideration of P80,000.00 for said lot would be paid
spouses Ramos belonged to the same family, the petitioner for
by Ramos from the accumulated earnings of the store
failing to exert efforts to arrive at an amicable settlement of their
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3. Since the spouses Ramos have the better credit standing, dispute.
they would be made to appear in the Deed of Sale as the
RTC decided in favor of Peñalber stating that the evidence
vendees so that the title to be issued in their names could
presented proved that there is a difference of Php 116, 946 from
be used by them to secure a loan with which to build a
the present value of the stocks. The RTC said that the only reason
bigger building and expand the business of petitioner.
for an inventory having been made when the hardware store was
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turned over to the spouses was, to the mind of the Court, for the property, the legal title to which is vested in another, but the word
latter to account for the sales of such stocks. And this difference "trust" is frequently employed to indicate duties, relations, and
was applied as part of the payment for the lot.4 Respondents Ramos responsibilities which are not strictly technical trusts.
filed a motion for reconsideration stating that oral evidence should
not be admitted to prove express trusts. RTC denied the motion. Trusts are either express or implied. Express trusts are
created by the intention of the trustor or of the parties. Implied
The CA ruled in favor of respondent spouses. According to trusts come into being by operation of law. Express trusts are those
them, the claim of the RTC that the difference was applied as part of which are created by the direct and positive acts of the parties, by
the purchase price has no basis. Petitioner alleges that there was an some writing or deed, or will, or by words either expressly or
express trust between her and the respondents. She maintains that impliedly evincing an intention to create a trust. No particular
it was clearly intended from their verbal agreement that she is a words are required for the creation of an express trust, it being
trustor when she entrusted the lot to the trustees (spouses) for her sufficient that a trust is clearly intended. However, in accordance
benefit. with Article 1443 of the Civil Code, when an express trust concerns
an immovable property or any interest therein, the same may not
ISSUE be proved by parol or oral evidence.
W/N the existence of a trust agreement between Peñalber and the
spouses Ramos was clearly established
The case concerns an immovable property and therefore, trusts
HELD regarding the matter cannot be proven by parol evidence.
NO. In its technical legal sense, a trust is defined as the Petitioner maintains that she was able to prove the existence of a
right, enforceable solely in equity, to the beneficial enjoyment of trust agreement between her and respondent spouses Ramos and
as the spouses did not deny the existence of the Php 116,946.15
difference, the burden of proof was on them. Spouses were deemed
4
“That the petitioner and the respondents agreed that the amount due from to have waived their objection to the parol evidence as they failed
the proceeds of the sales of her stocks in the hardware store would be
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to timely object when petitioner testified on the said verbal

applied to the purchase price of the Bonifacio property is supported by the
agreement. Oral evidence of the contract will be excluded upon
fact that [petitioner] did not ever ask for an accounting of said proceeds,
despite the fact that as early as September, 1984 (sic) she already knew that timely objection. Because respondents’ objections were brought up
her stocks left by her in March, 1982 (sic) was already sold by [respondent late, it amounted to a waiver.
spouses Ramos] and that there was a difference of P116,000.00 plus which
was due to her.”
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Nevertheless, while admissibility of evidence is an affair of then Banco Filipino, which were also secured by a mortgage
logic and law, determined as it is by its relevance and competence, including that of Lot A. Banco Filipino later paid the balance of the
the weight to be given to such evidence, once admitted, still loan from PNB. However, spouses Rosario failed to pay their loan
depends on judicial evaluation. The resulting inventories might with Banco Filipino, thus the latter extrajudicially foreclosed the
have been caused by other factors and the same is capable of other mortgages and in a public auction became the lone bidder for the
interpretations. Petitioner failed to prove the existence of trust. foreclosed properties.
As a result, Torbela siblings filed a case in order to redeem

Lot A from Banco Filipino.
TORBELA v. SPOUSES ROSARIO, BANCO FILIPINO
SAVINGS AND MORTAGE BANK (2011) ISSUES:
1. Whether there was an express trust between the Torbela

FACTS: siblings and Dr. Rosario - YES
The controversy stems from Lot No. 356-A, which is part of RULING:
a larger parcel of land in the name of Valeriano who then gave such
The Court agrees with the RTC and CA that Dr. Rosario only
lot to his sister Marta, married to Torbela. Upon the death of
holds Lot A in trust for the Torbela siblings. Trust is the right to the
spouses Torbela, Lot A was adjudicated in equal shares among their
beneficial enjoyment of property, the legal title to, which is vested
children (Torbela siblings) who later executed a Deed of Absolute
in another. It is a fiduciary relationship that obliges the trustee to
Claim in favor of Dr. Rosario, their nephew, transferring and
deal with the property for the benefit of the beneficiary. Trust
conveying title under his name for the purposes of obtaining a loan.
relations between parties may either be express or implied. An
Dr. Rosario subsequently executed another quitclaim
express trust is created by the intention of the trustor or of the
acknowledging that he only borrowed Lot A and was returning the
parties, while an implied trust comes into being by operation of law.
same for P1.00, the same was notarized but not immediately
annotated.
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Under Article 1444, no particular words are required for the

creation of an express trust, it being sufficient that a trust is clearly
Following the issuance of the TCT, Dr. Rosario obtained a
intended. It is possible to create a trust without using the word
loan from DBP, secured by a mortgage constituted on Lot A, which
“trust” or “trustee.” Conversely, the mere fact that these words are
was annotated in the title. He used the proceeds of the loan for the
used does not necessarily indicate an intention to create a trust.
construction of improvements including a hospital on said lot. After
The question in each case is whether the trustor manifested an
paying the first loan, he acquired two more loans from PNB and
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intention to create the kind of relationship which to lawyers is Petition GRANTED. Banco Filipino ordered to reconvey Lot A to the
known as trust. It is immaterial whether or not he knows that the Torbela siblings.
relationship which he intend to create is called a trust, and whether
or not he knows the precise characteristics of the relationship which
is called a trust. Julio v. Dalandan
In Tamayo v. Callejo, the Court recognized that a trust may GR. L-19012 // October 30, 1967 // Sanchez, J.
have a constructive or implied nature in the beginning, but the Summary/Memory Aid:
registered owner’s subsequent express acknowledgement in a
public document of a previous sale of the property to another party, Facts:
had the effect of imparting to the aforementioned trust the nature
of an express trust. The same situation exists in this case. Clemente Dalandan, the deceased father of defendants
Emiliano and Maria Dalandan executed a Statement-Affidavit
When Dr. Rosario was able to register Lot No. 356-A in his acknowledging that a four-hectare piece of Riceland in Las Pinas,
name under TCT No. 52751 on December 16, 1964, an implied trust Rizal which he posted as security, belonged to Victoriana Dalandan
was initially established between him and the Torbela siblings under which was foreclosed for his failure to comply with his obligations.
Article 1451, which provides: When land passes by succession to any The Salaysay/Statement provided that:
person and he causes the legal title to be put in the name of
another, a trust is established by implication of law for the benefit of  Clemente acknowledges that Victoria Dalandan was the
the true owner. owner of the land he posted as security for his personal
obligations which he failed to fulfill.
Dr. Rosario’s execution of the Deed of Absolute Quitclaim  Clemente holds himself liable to Dalandan for the
on December 28, 1964, containing his express admission, that he foreclosure of her land and promises to replace the lost
only borrowed Lot A from the Torbela siblings, eventually land with another land.
transformed the nature of the trust to an express one. The express  That Dalandan may not force Clemente’s children to give up
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trust continued despite Dr. Rosario stating in his Deed of Absolute the harvest of said land.
Quitclaim that he was already returning Lot A to the Torbela siblings  That Dalandan would not immediately demand such land.
as Lot A remained registered in Dr. Rosario’s name under TCT No.
52751 and Dr. Rosario kept possession of said property, together When Clemente died, Victoria Julio requested from Clemente’s
with the improvements thereon. heirs to deliver the subject lots covered by the Salaysay. However,
the heirs refused the request claiming that neither the delivery of
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the land nor its fruits could be immediately demanded relying on also supported by Art 1444 of the Civil Code which provides that,
the provisions of the Salaysay. “No particular words are required for the creation of an express
trusts, it being sufficient that a trust is clearly intended.” What is
The lower court denied Julio’s prayer on the ground that the important is whether the trustor manifested an intention to create
latter suit for specific performance or for the fixing of a period had the trust relationship. In the case at bar, a trust was created with
already prescribed since 10 years had already gone by since the the heirs as trustee in favor of the beneficiary, Victoria Julio.
execution of the Salaysay. Hence, this appeal.
Canezo v. Rojas (Yori’s version)
Issue(s):
G.R. No. 148788
W/N the provisions of the Salaysay intended for a trust to be
November 23, 2007
created with his heirs as trustee and Julio as the beneficiary.
Facts:
Ratio/Held:
Soledad Canezo (Canezo) filed a complaint to recover a
The SC interpreted the Salaysay to express the purpose of
certain parcel of land against her father’s second wife, Concepcion
delivering the naked ownership of the land to Victoria Julio. And
Rojas (Rojas).
since the document provided that Julio cannot immediately demand
the possession nor the fruits from Clemente’s heirs, the SC held that Canezo’s allegations
Clemente’s heirs are usufructuaries for an undetermined period of
time. By virtue of the Salaysay, Clemente cannot transmit to his Canezo alleges that she bought the said land from Limpiado
heirs ownership of the land and such is binding to the heirs. in 1939, although the transaction was not in writing. Thereafter, she
took possession of the land but later on entrusted it to her father,
The heirs of Clemente aver that according to Article 1443, Crispulo Rojas (Crispulo), because Canezo and her husband had to
“no express trusts concerning an immovable or any interest therein leave for Mindanao in 1948. However, sometime in 1980, she found
may be proved by parol evidence.”(Note: medyo di ko gets why the out that Rojas was in possession of the property and was cultivating
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heirs stated this provision ) The SC stated that the no oral the same, and that the tax declaration was being paid under Rojas’
evidence is necessary because the Salaysay itself already provides name.
for an express trust in favor of Julio. Although, the Salaysay did not
use definitive words to indicate that the heirs are trustees, the Rojas’s defense
document imposed upon the heirs a duty to deliver the possession Rojas, on the other hand, contends that Crispulo was the
of the property to Victoria Julio when the proper time comes. This is one who bought the property from Limpiado in 1948, as evidenced
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by the 1948 tax declaration in Crispulo’s name. Also, that when action, Rojas was already in adverse possession of the land for 49
Crispulo died in 1978, the said land was included in his estate and years.
that Canezo even received her share in the produce of the estate;
Lastly, she contends that since Canezo filed this complaint only in Issue:
1997, she is barred by laches. W/N there was a trust between Canezo and Crispulo (her father),
MTC either express or resulting – No.
MTC ruled for Canezo by giving credence to Canezo’s Held:

testimony despite Rojas’ objection that the verbal sale cannot be No. First, A trust is the legal relationship between one
proved without infringing the Statute of Frauds. person having an equitable ownership of property and another
RTC person owning the legal title to such property, the equitable
ownership of the former entitling him to the performance of certain
RTC reversed the ruling by holding that the action had duties and the exercise of certain powers by the latter.
already prescribed (10 years for recovery of land) and that
acquisitive prescription had already set in. However, upon MR, RTC The burden of proving the existence of a trust is on the party
reversed itself holding that since the land was entrusted to alleging its existence. Such party must prove the following
elements:
Crispulo, prescription could not have set in because prescription in
trusts starts to run only from the moment the trustee repudiates 1. a trustor or settlor who executes the instrument creating
the trust. There being no evidence of such repudiation by Crispulo, the trust;
the prescription has yet to run.
2. a trustee, who is the person expressly designated to carry
CA out the trust;
CA reversed the amended decision of RTC holding that 3. the trust res, consisting of duly identified and definite real
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Canezo’s discovery of the adverse possession of Rojas over the properties; and
property started the running of the prescriptive period. Therefore,
since the action was filed 17 years later, the action has prescribed. 4. the cestui que trust, or beneficiaries whose identity must be
Also, assuming that there was an implied trust between Canezo and clear.
her father, her action is still barred because at the time she filed her
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Canezo has failed to discharge such burden. The existence of the right to transfer the tax declaration in his name and to
express trusts concerning real property may not be established by pay the taxes on the property.
parol evidence. It must be proven by some writing or deed.
Third, neither was there a resulting trust. Although implied
In this case, the only evidence to support the claim that an trusts may be proved by oral evidence, the evidence must be
express trust existed between the her and her father was her self- trustworthy and received by the courts with extreme caution.
serving testimony.
In this case, Canezo’s evidence are vague and inconclusive
Second, although no particular words are required for the proof. There was no evidence of any transaction between the her
creation of an express trust, a clear intention to create a trust must and her father from which it can be inferred that a resulting trust
be shown; and the proof of fiduciary relationship must be clear and was intended.
convincing. The creation of an express trust must be manifested
Fourth, assuming that such a relation existed, it terminated
with reasonable certainty and cannot be inferred from loose and
vague declarations or from ambiguous circumstances susceptible of upon Crispulo’s death in 1978. A trust terminates upon the death of
the trustee where the trust is personal to the trustee in the sense
other interpretations.
that the trustor intended no other person to administer it. If
In this case, an intention to create a trust cannot be inferred Crispulo was indeed appointed as trustee of the property, it cannot
from the Canezo’s testimony and the attendant facts and be said that such appointment was intended to be conveyed to the
circumstances: respondent or any of Crispulo’s other heirs. Hence, after Crispulo’s
death, the respondent had no right to retain possession of the
1. She testified only to the effect that her agreement with her property.
father was that she will be given a share in the produce of
the property – Such agreement does not necessarily give At such point, a constructive trust would be created over the
rise to a trust. property by operation of law. However, the rule that a trustee
cannot, by prescription, acquire ownership over property entrusted
2. She alleged in her complaint that the tax declaration of the
to him until and unless he repudiates the trust, applies only to
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land was transferred to the name of Crispulo without her express trusts and resulting implied trusts, therefore, the action
consent – Had it been her intention to create a trust and would have already prescribed.
make Crispulo her trustee, she would not have made an
issue out of this because in a trust agreement, legal title is Finally, Canezo is estopped because she participated in the
vested in the trustee. The trustee would necessarily have estate proceedings of her father without protesting to the inclusion
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of the land in the estate. She is also barred by laches because she characterized as a loan secured by a lien on the subject properties.
slept on her right for 17 years. Thus, it directed PNB to pay the respondents their contributions
plus legal interest.
Issue: W/N there was an express trust created over the subject
PNB v. AZNAR, et al. properties
G.R. No. 171805. May 30, 2011.
Held:
Facts:
No. There was only a loan by the respondents to RISCO
In 1958, Rural Insurance and Surety Co. (RISCO) ceased which was secured by "lien or interest" over the properties. The
operation due to business reverses. Respondents Aznar, et al, in properties merely served as a collateral or security to the loan
desire to rehabilitate RISCO, contributed more than P200k to contributed by the respondents. There was no express trust.
purchase 3 parcels of land located in Cebu. The titles to the said
properties were issued in the name of RISCO. The amount Trust is the right to the beneficial enjoyment of property,
contributed by the respondents were annotated on such titles as the legal title to which is vested in another. It is a fiduciary
liens and encumbrances to the properties, pursuant to the relationship that obliges the trustee to deal with the property for
approved Minutes of a special meeting of the Board of Directors of the benefit of the beneficiary. Trust relations between parties may
RISCO in 1961, "until such time their respective contributions are either be express or implied. An express trust is created by the
refunded to them completely." Subsequently, notices of attachment intention of the trustor or of the parties. An implied trust comes
and writs of execution were also annotated on said titles in favor of into being by operation of law.
petitioner PNB. Being the lone and highest bidder, a certificate of
Express trusts, sometimes referred to as direct trusts, are
title, and later on final deed of sale and a new certificate of title
intentionally created by the direct and positive acts of the settlor or
were issued in favor of PNB. Thus, in 1998, the respondents filed a
the trustor - by some writing, deed, or will or oral declaration. It is
case to quiet their titles on the subject properties.
created not necessarily by some written words, but by the direct
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The trial court ruled in favor of the respondents, stating that and positive acts of the parties. This is in consonance with Article
there was an express trust created over the subject properties 1444 of the Civil Code, which states that "[n]o particular words are
wherein RISCO was the trustee and stockholders/respondents required for the creation of an express trust, it being sufficient that
Aznar, et al were the beneficiaries. On appeal, the CA reversed the a trust is clearly intended."
trial court's decision, stating that there was no express trust and
that the monetary contributions of the respondents can only be
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A careful scrutiny of the plain and ordinary meaning of the After full payment of the purchase price but prior to the issuance of
terms used in the Minutes does not offer any indication that the the deed of conveyance, Epifanio executed an Affidavit in Spanish
parties thereto intended that Aznar, et al., become beneficiaries affirming that he, as one of the heirs of Jose, and his uncle and
under an express trust and that RISCO serve as trustor. At most, the petitioners predecessor-in-interest, Tranquilino Labiste
respondents only have a right to be repaid with the amount they (Tranquilino), then co-owned the lot because the money that was
contributed. paid to the government came from the two of them. Tranquilino
and the heirs of Jose continued to hold the property jointly.
However, their right to seek repayment was already barred
by prescription. The 1961 Minutes is considered as the written In 1928, the Deputy Public Land Surveyor, subdivided Lot
contract between RISCO and the respondents to reimburse the No. 1054 into two lots: Lot No. 1054-A for Tranquilino and Lot No.
latter's contribution. As such, respondents had 10 years to enforce 1054-B for Epifanio; both with an area of 6,664 sqm each. The
the written contract, but they only filed a case in 1998. Their action subdivision plan prepared by Engr. Bunagan was afterwards
for reimbursement or refund of their contributions has prescribed in approved.
1971.
Subsequently, the heirs of Tranquilino purchased the one-
Heirs of Tranquilino Labiste v. Heirs of Jose Labiste half (1/2) interest of the heirs of Jose over the lot for P300.00. The
G.R. No. 162033, May 8, 2009, J. Tinga parties executed a Calig-onan sa Panagpalit in Visayan dialect. The
heirs of Tranquilino immediately took possession of the entire lot.
Petitioners: Heirs of Tranquilino Labiste
When WW2 broke out, the heirs of Tranquilino fled but
Respondents: Heirs of Jose Labiste upon return they found their homes and possessions destroyed.
(If you’re interested, see the complete list of heirs in the original Public records in the government offices were also destroyed during
case. It’s quite a handful!) the war. Squatters have also overrun the entire property, such that
neither petitioners nor respondents possess it.
Memory Aid:
Petitioners learned that one of the respondents, Asuncion
BLOCK B 2016
FACTS Labiste, had filed a petition for reconstitution of title over Lot No.
1054. At first, they opposed the petition but both parties eventually
Epifanio Labiste (Epifanio), on his own and on behalf of his reached a compromise agreement. Under the agreement,
brothers and sisters who were the heirs of Jose Labiste (Jose), petitioners were to be given time to file a complaint so that the
purchased from the Bureau of Lands (BoL) Lot No. 1054 of the
issues could be litigated in an ordinary action and the reconstituted
Banilad Friar Lands Estate, located at Guadalupe, Cebu City for P36.
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title was to be deposited with the Clerk of Court to allow petitioners file the action constitutes neglect on petitioners’ part so the
to file an action for reconveyance and to annotate a notice of lis principle of laches is applicable.
pendens. The Register of Deeds issued the reconstituted title in the
name of Epifanio Labiste, his brothers and sisters, heirs of Jose ISSUE:
Labiste on 14 December 1994. However, respondents did not honor W/N petitioners cause of action has prescribed – NO
the compromise agreement.
RATIO:
Petitioners filed a complaint for annulment of title seeking
the reconveyance of property and damages. Respondents claimed What is involved in the present case is an EXPRESS TRUST.
that the Affidavit of Epifanio and the Calig-onan sa Panagpalit were Petitioners are declared as the absolute owners of the lot. The
forgeries and that petitioners action had long prescribed or barred genuineness and authenticity of the Affidavit of Epifanio and the
by laches. Calig-onan sa Panagpalit are beyond cavil.
RTC – ruled in favour of the petitioners. It found that they Express trusts are created by direct and positive acts of the
are genuine and authentic as ancient documents and that they are parties, by some writing or deed, or will, or by words either
valid and enforceable. Moreover, it held that the action had not expressly or impliedly evincing an intention to create a trust. The
prescribed as the complaint was filed about a year after the Affidavit of Epifanio is in the nature of a trust agreement. Epifanio
reconstitution of the title by respondents. The period of affirmed that the lot brought in his name was co-owned by him, as
prescription that applies is actually 10 years. The RTC further held one of the heirs of Jose, and his uncle Tranquilino. And by
that the reconstituted title did not give any more right to agreement, each of them has been in possession of half of the
respondents than what their predecessors-in-interest actually had property. Their arrangement was corroborated by the subdivision
as it is limited to the reconstitution of the certificate as it stood at plan prepared by Engr. Bunagan and approved by Acting Director of
the time of its loss or destruction. Lands.
CA – ruled in favour of the respondents. The CA, while Prescription and laches will run only from the time the
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affirming petitioners’ right to the property, nevertheless held that express trust is repudiated. The rule requires a clear repudiation of
the action had already prescribed. Citing Article 1144 of the Civil the trust duly communicated to the beneficiary. The only act that
Code, the action must have been brought within 10 years from the can be construed as repudiation was when respondents filed the
time the right of action accrues upon the written contract which in petition for reconstitution in October 1993. And since petitioners
this case was when petitioners’ predecessors-in-interest lost filed their complaint in January 1995, their cause of action has not
possession over the property after WWII. Also, the lapse of time to yet prescribed, laches cannot be attributed to them.
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rendered in 1939 by the CFI of Negros Occidental, ordering Jose
Yulo to execute deeds of assignment in favor of the plaintiffs for
Pacheco v Arro each and every lot claimed by them.
GR No. 48090 February 16, 1950 Padilla J.
Arro et al. demanded that the lots allegedly donated
Petitioner: Dolores Pacheco, in her capacity as guardian of the (escritura de donacion/deed of donation) to them by Jose Yulo be
minors, children of Jose Yulo given to them. Yulo for his part says that the complaint against him
Respondents: Santiago Arro et. al. did not constitute grounds for action and the time to pursue it has
already elapsed. He also demanded that Arro and the others be
Summary: sentenced to vacate the premises. Pending litigation, Jose Yulo died.
Arro et.al filed their answers claiming lots as their property and
 The juridical concept of a trust, which in a broad sense presented evidence before a referee appointed by the court in
involves, arises from, or is the result of, a fiduciary relation support of their respective claims. Upon the assurance and promise
between the trustee and the cestui que trust as regards made in open court by Dr. Mariano Yulo, who represented the late
certain property — real, personal, funds or money, or predecessor-in-interest (Jose Yulo) of the petitioners in the
chooses in action — must not be confused with an action cadastral case, the latter would convey and assign the lots to the
for specific performance. When the claim to the lots in this claimants, Arro et al. withdrew their claims, and the cadastral court
cadastral case was withdrawn by the respondents relying confirmed the title to the lots and decreed their registration in the
upon the assurance and promise made in open court by Dr. name of the defendant Jose Yulo.
Mariano Yulo in behalf of Jose Yulo, the predecessor-in-
interest of the petitioners, a trust or a fiduciary relation There was partial fulfillment of the promise whereby some
between them arose, or resulted therefrom, or was created of the lots were transferred in the favor of some of the claimants
thereby. but Yulo refused to transfer the other lots to the other claimants
(because they were ungrateful to him and did not favor his
Facts: candidate in an election – wag niyo na sabihin to kay Sir, just in case
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In 1947, the Court declared the record of cadastral case tanong niya lang, nasa Spanish part ito).
reconstituted. As reconstituted it shows that on January 1941, a CFI: The claimants then brought the case to CFI to compel
petition for a writ of certiorari was filed by Dolores Pacheco, as defendant and his heirs to respect the agreement between them
guardian of the minors Concepcion, Alicia and Herminia Yulo for the and surrender to them their respective lots (deed of assignment).
review of a judgment rendered by the CA which affirmed the one The trial court concluded that the title of those lots had been issued
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to the defendant in his concept of trustee and, therefore, he is performance. When the claim to the lots in the cadastral case was
bound to transfer the same in favor of the claimants (pertinent part withdrawn by the respondents relying upon the assurance and
of the case found in the Spanish portion, fucker)5. CA affirmed the promise made in open court by Dr. Mariano Yulo in behalf of Jose
decision of the lower court. The case was brought to the SC. Yulo, the predecessor-in-interest of the petitioners, a trust or a
fiduciary relation between them arose, or resulted therefrom, or
SC: Counsel of petitioners asserts that a trustee does not was created thereby. 6
have title to the property which is the subject of the trust, because
title to such property is vested in the cestui que trust. Hence — he
argues — if the predecessor-in-interest of the petitioners was a
trustee, he or his successors-in-interest could not and cannot be Goyanko, Jr. v. UCPB (2013).
compelled in an action for specific performance to convey or assign
the property — the subject of the trust — because in an action for Facts:
specific performance — counsel contends — the party to be
compelled to perform is the owner or has the title to the property Goyanko, Jr. sues in his capacity as administrator of the
sought to be conveyed or assigned. estate of his father, Joseph Goyanko, Sr. In 1995, Goyanko, Sr.
invested P2M in the Philippine Asia Lending Investors, Inc. (PALII).
Issue: w/n the predecessors-in-interest are trustees His illegitimate family presented conflicting claims to PALII for the
Ruling: release of the amount. Pending investigation of such conflicting
claims, PALII deposited the proceeds of the investment—
They are trustees. The juridical concept of a trust, which in a P1,509,318.76 pesos—with UCPB under the name “Phil Asia: In
broad sense involves, arises from, or is the result of, a fiduciary
6
relation between the trustee and the cestui que trust as regards Also invoked as a defense by the peti tioners , s tatute of limi ta tion. But the court
certain property — real, personal, funds or money, or chooses in said: The trus tee cannot invoke the s tatute of limi ta tions to ba r the a ction and
defea t the ri ght of the cestui que trust. If the pretense of counsel for the peti tioners
action — must not be confused with an action for specific
tha t the promise adverted to cannot prevail over the final decree of the cadas tral
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court holding the predecessor-in-interes t of the peti tioners to be the owner of the
5
To ma ke things clea rer: Technicall y the ca dastral court decreed tha t the ti tles be lots (because i t was registered in the name of Jose Yulo) claimed by the
registered in the name of Jose Yulo. The CFI s tated tha t the ca dastral court did this respondents were to be sus tained and upheld, then a ctions to compel a pa rty to
because Ma riano made a promise in open court to execute the deeds of dona tion, assign or convey the undi vided sha re in a pa rcel of land registered in his name to
so i t was to be registered under the name of Jose Yulo wi th a n unders tanding tha t his co-owner or co-hei r could no longer be brought a nd could no l onger succeed
he is a trus tee of the claimants and bound to surrender to them the properties and prosper.
la ter on (deeds of dona tion).
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Trust For the Heirs of Joseph Goyanko, Sr.” On Dec, 1997, UCPB 6) There must be some power of administration other than a
allowed PALII to withdraw P1.5M from the account. Goyanko, Jr. mere duty to perform a contract although the contract is for
demanded that they restore it with legal interest from the date of a third party beneficiary
withdrawal. When UCPB refused, Goyanko, Jr. sued before the RTC
of Cebu City. His theory was that UCPB held the money in trust for 7) A declaration of the terms of the trust, “stated with
the Heirs of Goyanko, Sr., and the bank violated that trust by reasonable certainty in order that the trustee may
administer”
allowing PALII to make the withdrawal. The RTC rejected the theory,
and the CA affirmed the RTC’s finding on appeal. Additionally, the Court held in the present case, “the intention to
create an express trust must be firmly established.”
Issue: Was a trust constituted, with the Heirs of Goyanko, Sr. as Such intention was not established in this case. PALII’s
letters and UCPB’s records showed that UCPB’s participation was
beneficiaries?
merely as a depositary of the proceeds of the investment. PALII
never relinquished any right or claim over the proceeds in UCPB’s
favor as the trustee. The words “in trust for” created an impression
Held:
that a trust was established, but closer scrutiny revealed it to be an
There was no trust. Every element of an express trust must be ordinary savings account. “Mere use of these words do not
established; “if any one of them is missing, it is fatal to the trust”. automatically reveal an intention to create a trust. If at all, these
According to Rizal Surety v. CA, the following elements must concur: words showed a trustee-beneficiary relationship between PALII and
the HEIRS.”
1) A competent trustor and trustee
A bank does not become a trustee by the mere opening of a
2) An ascertainable trust res (the trust property or object) deposit account with it, despite the highly fiduciary nature of the
relationship between banks and their depositors. A bank’s primary
3) Sufficiently certain beneficiaries
obligation remains to pay upon demand and only upon the
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4) A present and complete disposition of the trust property depositor’s order. In releasing the funds upon withdrawal by PALII,
UCPB merely performed its contractual obligation under their
5) The purpose of the trust must be an active one to prevent savings deposit agreement. There was no negligence nor bad faith,
the trust from being executed into a legal estate or interest and hence UCPB cannot be held liable.
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GAMBOA v. GAMBOA has not been satisfied and (2) Modesta and Feliciana entered a
G.R. No. L-29556; December 22, 1928 written document of partition of the lands where it is stated that
the deferred installments had been "totally paid by the other
Ponente: Street, J. purchaser, Modesta". It may be inferred that it is common
Plaintiff: Petrona Gamboa, et al. knowledge to the family that the balance has already been paid to
Regino.The sisters has been continuously in possession of the lands
Respondent: Modesta Gamboa, et al. since the property was conveyed by Javier except for the two years
1912 and 1913 when, by some arrangement , one of her brothers
Memory aid: 10 parcels of land. Juan Gamboa. Sale is an
had charge as manager.
unconditional transfer.
The plaintiffs are the children of Juan Gamboa. They filed an
Facts: action to enforce partition of the subject 10 parcels of land. The
Juan Gamboa and his wife, Ana Manago, own the subject plaintiffs asserted that they are co-owners of the land together with
parcels of land. They sold the lands except the parcel identified by Modesta, Pedro and Rafael. They also claim that Modesta should
tax assessment no 6247 under a contract of sale with pacto de retro render an accounting of the Plaintifffs share in the land's proceeds.
for 2 years to Felipe Javier. However, the vendors remained in Modesta generally denied the plaintiff's assertion and claimed that
possession of the lands in the character of lessees. The period of the lands are solely hers except that covered by the tax no. 6247
redemption have expired and the lands were constituted in Felipe which is a common property with the plaintiffs who are her coheirs.
Javier's name. The family of Juan and Ana continued the possession
of the lands after their death. Meanwhile, Felipe Javier sold the lots
to the sisters, Feliciana and Modesta Gamboa for 1.7k. Feliciana The trial court ruled in favor of the plaintiffs and ordered the
and Modesta paid 300 each in cash, the remaining 1.1k balance was partition of all the properties to the portion: "To Petrona, Feliciana,
to be paid in 4 installments. Also, the lots were mortgaged by the Serapion and Balbina Gamboa, and widow of Marcelo Gamboa, 1/9
sisters to secure the balance. 3 years after, their brother Regino each; to Andres, Francisco, Juan, Africa and Regino, children of
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Gamboa paid the 1.1k to Javier. Regino received the document Regino Gamboa, conjointly, another ninth, or the one forty-fifth
transferring all Javier's interest to the mortgage and subrogating part each; and to Modesta Gamboa, 3/9, in view of the fact that
him in the credit owed by his sisters. Modesta claim to have paid Pedro and Rafael had admitted her right". The court also ordered
the 1.1k to Regino when he was still alive. The widow of Regino Gamboa to account the plaintiffs respective shares of the produce
testified that Modesta has not paid the 1.1k. However, this is obtained from the property based on an income of P1.4k per
untenable by the fact that (1) nobody claimed that Regino's credit annum. " In this partition his Honor ordered that the lot identified
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as tax No. 6502 should be alloted to Modesta, in view of the fact Note: I highly recommend that you read this very short case. I find
that she had already sold this lot." (Di ko din gets why that lot is for difficulty in digesting it because there are so many unexplained
Modesta while she had sold it. Walang sinabi.swear) things. The issue is so implied.haha. I really tried to find its
connection with Trust. Notice that some of the latter part of my
Issue: WON Modesta purchased the property from Javier in trust for digest were copied and pasted. This is due to the absence of any
her sibblings? ( if you do not think this is the issue, say it in the explanation which make it risky to interpret. Goodluck.
groups)
Held:
Ty v. Ty
No! The trial court's reasoning that Modesta purchased the
property as redemption from a sale with pacto de retro entered into
by Juan Gamboa is untenable. The sale of the property by Javier to Summary:
the 2 sisters was an unconditional transfer of title to them. The
nature of the title held by the sisters and the inconclusive character Alexander Ty, the son of Alejandro Ty, died of cancer and
of the proof of trusteeship refute the theory that it was bought in upon the inventory of his properties in the Philippines (the
trust. The SC gave little importance to the form in which the properties in the US like the condo unit it LA was already
property was assessed for taxation, in view of the explanation adjudicated to his wife and daughter), the administratrix of the
Modesta gave of the obstructions which she encountered in property, his wife, Sylvia Ty decided to sell some properties to be
straightening that matter out. The court found that "Modesta was able to pay off the taxes assessed by the BIR. The father, Alejandro
surrounded by kinsfolk who were anxious to insinuate themselves Ty, filed a motion to oppose claiming that the properties belong to
into a coownership of the property, and this litigation was him because there was an implied trust in his favor. He claims that
undoubtedly promoted chiefly by her brother Serapion. " he is the one who paid the purchase price of the properties, and
that they agreed that in case something happens to Alejandro,
It is not necessary for Modesta to have adversely possessed Alexander would partition it among his siblings. He claims that
the property because Modesta, either cojointly with her sister or Alexander is financially dependent on him and could not have
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exclusively, has held the legal title since 1910. the fact that her purchased the properties on his own. The RTC ruled in favor of
brother and sisters may have questioned her right during the ten Alejandro, holding that Alexander did not have sufficient income to
years next preceding the institution of this action does not have the pay the price of the properties and that he is financially dependent
effect of impairing her right. on his father. The CA overturned the ruling and held that Alexander
could have had sufficient properties to buy the properties based on
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his income tax returns and various job holdings, also, they held that financially dependent on him. He claims that Sylvia acted in bad
Art 1448 of the Civil Code, even if successfully invoked in that it was faith because she knew that it was owned by Alejandro. Sylvia
Alejandro who paid the price, would still have the effect of making denies the allegations and she claims that it cannot be admitted
Alexander the lawful owner of the properties because it says that if into evidence because it is contrary to the Dead Man’s Statute and
the trust is in favor of the child, no presumption of implied trust is that trust cannot be proven through parol evidence. Also, she claims
created and that it is deemed to be a donation. The SC affirmed the that it was already barred by laches. Angelina Piguing-Ty filed a
decision of the CA and held that it is a donation. The plaintiff- motion for intervention as she claims she is also an owner because
appellee is the one who invoked the said article. Also, the court held the properties were purchased during her marriage with Alejandro.
that upon Alejandro’s death, Sylvia should collate into the mass of Plaintiff adduced evidence such as the income tax returns of
the estate of the petitioner the EDSA property as an advance of Alejandro, the TCTs, and also presented testimony of witnesses
Alexander’s share in the estate of his father, to the extent that claiming that Alejandro was the one who purchased the properties.
petitioner provided a part of its purchase price. With regards to the On the other hand, Defendant presented CCTs, TCTs and
Wack Wack and Meridien property, the court held that there is no testimonies claiming that it was actually Alexander who purchased
proof that Alejandro paid for the purchase price and it was possible the properties. Based on said evidence and testimonies, the RTC
that Alexander had sufficient income to pay for it. held that the lawful owner was Alejandro because as can be gleaned
from the income tax returns, Alexander has no financial sources to
FACTS purchase the said properties. The lower court held that there is an
Alexander Ty, the son of Alejandro Ty, died of cancer at the implied trust based on Art 1448. Upon appeal to CA, Sylvia
age of 34. He is survived by his wife and his daughter, Sylvia Ty and presented additional evidence such as the tax receipts paid by them
Krizia Ty. A few months after his death, a petition for the settlement from1987-2004. The court admitted the evidence and held that
of his intestate estate was filed by Sylvia Ty in the Regional Trial there was no violation of the dead man’s statute because there was
Court of Quezon City. The properties he owned in US was no objection from the defendant’s counsel upon presentation of
distributed to his wife and daughter without a problem. On the said testimony. The CA also held that there was no laches because
other hand, when Sylvia filed for the mortgage or selling the the elements are: (1) the conduct of the defendant or one under
BLOCK B 2016
properties in the Philippines to pay off the taxes, Alejandro filed an whom he claims, gave rise to the situation complained of; (2) there
objection claiming that he is the lawful owner of the property was delay in asserting a right after knowledge defendant’s conduct
because there was a trust between him and Alexander, of which he and after an opportunity to sue; (3) defendant had no knowledge or
is the beneficiary. The three properties (EDSA Property, Meridien notice that the complainant would assert his right; and (4) there is
Property, Wack Wack Property), he claims, was paid by him and that injury or prejudice to the defendant in the event relief is accorded
Alexander could not have purchased them himself as he is to the complainant. In this case, there was no unreasonable delay.
2016
The decision of the RTC was reversed and the CA held that there is father, to the extent that petitioner provided a part of its purchase
no proof sufficient to show that Alexander was financially price.
dependent and that there is no implied trust, but possibly a
donation because Alexander is the child of the person claiming to be b) Wack Wack and Meridien Property
the trustor. There was no sufficient proof that the money came from Alejandro.
Issue Since this is a factual finding, the Court cannot overturn the same
without showing of a gross misappreciation of facts or grave abuse.
Whether or not a trust, express or implied, was established by the
plaintiff--appellee in favor of his late son and name-- sake Alexander Note, just in case he asks: A dead man statute is a statute designed
Ty. to prevent perjury in a civil case by prohibiting a witness who is an
interested party from testifying about communications or
Held transactions with a deceased person (a "decedent") against the
decedent's estate unless there is a waiver.
No.
This prohibition applies only against a witness who has an interest in
a) EDSA Property the outcome of the case and applies only where that witness is
Art. 1448. There is an implied trust when property is sold, and the testifying for his own interests and against the interests of the
legal estate is granted to one party but the price is paid by another decedent. Furthermore, the restriction only exists in civil cases,
for the purpose of having the beneficial interest of the property. never in criminal cases.
The former is the trustee, while the latter is the beneficiary. (Source: Wikipedia)
However, if the person to whom the title is conveyed is a child,
legitimate or illegitimate, of 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.” Tan Senguan &Co. vs Philippine Trust Company
GR No. L-38810 November 6, 1933
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Hence, even if it is admitted that part of the purchase price is paid

by Alejandro, no trust is created as it is considered a donation in Facts:
favor of Alexander, his son. However, upon Alejandro’s death, Sylvia 1. Agreement between Tan Senguan and Philippine Trust
should collate into the mass of the estate of the petitioner the EDSA Company summarized below:
property as an advance of Alexander’s share in the estate of his
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a. Tan Senguan secured a judgment of P21, 426 against absolved the defendant holding that only a portion of
Mindoro Sugar Co. of which PhilTrust is the trustee Mindoro Sugar was sold.
b. Tan desires to convey such amount to PhilTrust Issues:
c. Tan assigns, convey, transfers and sells to PhilTrust, 1. WON the defendant is not personally responsible for the
Trustee the full amount of said judgment claim of the plaintiff based on the deed of assignment
because eof having executed the same in its capacity as
d. Stipulations: trustee of the properties of the Mindoro Sugar?
1. PhilTrust shall pay Tan P5000 2. WON all the properties of the Mindoro Sugar were sold at
2. Should Mindoro Sugar be sold, assigned or its public auction to the RomanCatholic Archbishop of Manila?
ownership transferred, PhilTrust shall pay Tan an
Held:
additional sum of P10,000 to be paid immediately
at the perfection of said sale. 1. The Phil Trust Company in its individual capacity is
responsible for the contract as there was no express
3. In case any other creditor of Mindoro shall be paid
stipulation that the trust estate and not the trustee should
in greater proportion to what is received by Tan en be held liable on the contract in question. Not only is there
Guan (which is 70%) PhilTrust company shall pay no express stipulation that the trustee should not be held
whatever sum may be necessary to equal both
responsible but the ‘Wherefore’ clause of the contract
claims states the judgment was expressly assigned in favor of Phil
4. If the other creditors receive payment of amount Trust Company and not Phil Trust Company, the trustee.
equal to 70% or less, Phil Trust shll only pay the It therefore follows that appellant had a right to proceed
additional P10,000 as mentioned above. directly against the Phil Trust on its contract and has no
claim against either Mindoro Sugar or the trust estate.
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2. Exhibit D (the certificate of sale to Roman Catholic

2. Mindoro Sugar was later sold at a public auction to the Archbishop) shows that all properties to Phil Trust as
Roman Catholic Arcbishop of Manila and based on that, Tan Trustee were included in the sale. The only thing reserved
sued PhilTrust for the additional P10,000. The lower court from the sale was the standing crops, and it is reasonable to
presume that they had also been sold between the date of
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the sale and the institution of this action. Where the real December 3, 1896
estate, the personal property including animals, and all the
bills receivable are sold, it would be a forced construction of - Palad died (hindi sya napalad), without descendants.
the contract of agreement to hold that the assets of the However, he had a widow, Dorotea Lopez (one of the
Mindoro Sugar Company had not been sold. appellants).
July 27, 1987
- CFI of Tayabas ordered the protocolization of the will over

Government v. Abadilla
the opposition of Leonardo and Policarpio Palad, who were
the collateral heirs of the deceased, and were the ancestors
G.R. 21334 // December 10, 1924 // Ostrand of the current Palad appellants.
FACTS 1900-1904
Parties to the Case: - Dorotea (who had kept possession of the land) married
Calixto Dolento.
Municipality of Tayabas
- April 20, 1903: The Palad boys (the collateral heirs) brought
Province of Tayabas and its Governor an action against Dorotea for the partition of the lands.
Maria, Eufemio, Eugenia, Felix, Caridad, Segunda, and Emilia Palad Their reason: By reason of her second marriage, she had
lost the right to the exclusive use and possession.
Dorotea Lopez
- In the same action, the Municipality of Tayabas intervened,
Narration of Facts: claiming the land under the clause of the Palad will, which
stated that, if Dorotea marries, the land will be donated to a
1892-1894
secondary college.
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- Jan 25, 1982: Luis Palad, a schoolteacher, executed a - During the pendency of the action, an agreement was
holographic will (partly in Spanish, partly in Tagalog) arrived at by the parties:
- 1894: Palad obtained three parcels of land entitled lots a. Lots 3464 and 3469 will be turned over to the
3464, 3469, and 3470 through composicion gratuita.
municipality as its share of inheritance under the will.
2016
b. The remaining portion, Lot 3470, was left in the be delivered by my wife and the executors to the Ayuntamiento of
possession of Dorotea. this town, should there be any, and if not, to the civil governor of
this province in order to cause the manager thereof to comply with
c. Pursuant to this agreement, the action was dismissed, my wishes for the good of many and the welfare of the town.”
reserving the right to the heirs to bring another action.
Even though the SC admitted that the clause of the will is
- CFI of Tayabas ordered the registration of the three lots in “unskillfully drawn”, that its language is “ungrammatical”, they said
the name of the governor of the Province of Tayabas in that it still sufficiently reveals the purpose of the testator.
trust for a secondary school to be established in its
municipality. the heirs take exception, and appeal. It is a well-known rule that testamentary dispositions must
Claimants Palad and Lopez appealed. be liberally construed so as to give effect to the intention of the
testator as revealed by the will itself. Applying that rule of
ISSUE
construction, it is evident that the testator, Luis Palad, proposed to
W/N the trial court was correct in ordering the registration of the create a trust for the benefit of a secondary school in Tayabas,
three lots in the name of the governor of the Province of Tayabas. naming as trustee the ayuntamiento (termed a municipal
corporation) of the town, and if there be no ayuntamiento, then the
YES, for lots 3464/3468. NO, for lot 3470. civil governor of the Province of Tayabas.
RULING The appellants Palad argue that in order for a trust to be

effective, there must be a trustee and a cestui que trust, and they
The clause of the will reads as follows:
say that in this case, there is neither. They say that there is no
“That the cocoanut land in Colongcolong, which I have put ayuntamiento, no Governor Civil of the province, and no secondary
under cultivation, be used by my wife after my death during her life school in the town of Tayabas.
or until she marries, which property is referred to in the inventory
The SC however rebutted this argument that saying that the
under No. 5, but from this cocoanut land shall be taken what is to
governor of the Province of Tayabas, as the successor of the civil
BLOCK B 2016
be lent to the persons who are to plant cocoanut trees and that
governor of the province under the Spanish regime, may act as
which is to be paid to them as their share of the crop if any should
trustee in the present case.
remain; and that she try to earn with the product of the cocoanut
trees of which those bearing fruit are annually increasing; and if the They also said that, in regard to private trust, it is not
times aforementioned should arrive, I prepare and donate it to always necessary that the cestui que trust should be named, or
secondary college to be erected in the capital of Tayabas; so this will
2016
even be in esse (in existence) at the time the trust is created in his The argument of the Palad heirs that they should be
favor. This principle is in harmony with Ar. 788 of the Civil Code: entitled to the income of the land until the cestui que trust is
actually in esse must likewise fail. The SC stated that if the trustee
Any disposition which imposes upon an heirs the obligation holds the legal title and the devise is valid, then the natural heirs
of periodically investing specified sums in charitable works, such as of the deceased have no remaining interest in the land except
dowries for poor maidens or scholarships for students, or in favor of their right to the reversion in the event the devise for some reason
the poor, or any charitable public educational institution, shall be
should fail, and event which has not yet taken place.
valid under the following conditions:
From the clause, it is evident that the intention of the
If the charge is imposed on real property and is temporary, testator was to have income of the property accumulate for the
the heir or heirs may dispose of the encumbered estate, but the lien
benefit of the proposed school until the same should be
shall continue until the record thereof is canceled. established.
If the charge is perpetual, the heir may capitalize it and For Lot 3470, the SC stated that though the Statute of
invest the capital at interest, fully secured by first mortgage.
Limitations does not run as between a trustee and cestui que trust
The capitalization and investment of the principal shall be as long as the truest relations subsist, it may run as between the
made with the intervention of the civil governor of the province after trust and third persons. Dorotea Lopez had possession of said lot,
hearing the opinion of the prosecuting officer. which was a share of the community property, and had acquired the
title by prescription. For the other lots, the judgment of the lower
In any case, if the testator should not have laid down any court was affirmed.
rules for the management and application of the charitable legacy,
it shall be done by the executive authorities upon whom this duty DISSENT of Justice Malcolm:
devolves by law.
Lot 3470 should be turned over to the municipality of
The general principle, though there are minor distinctions, Tayabas. The clause was clear that upon remarriage of Dorotea, the
property would be turned over. Thus, her possession has been in
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is the same between the case and the stated article. There the
trustee, who holds the legal title, as distinguished from the contravention of the terms of the trust and in bad faith.
beneficial title resting in the cetui que trust, must be considered the TERMS:
heirs.
Composicion Gratuita – “free composition”
2016
Cestui Que trust – beneficiary of the trust / “one who trusts” Bañas would advance the sum of P7,000 upon the personal credit of
Marcelino and Telesfora and that this money should be used to
(pronounced: ses-tee kay) repurchase in the name of Marcelino and Telesfora, who should
Esse - existence hold and administer the property until the capital advanced by
Bañas should be paid off, after which the property would be
Cocoanut – an old spelling convention of the word, “Coconut” returned to Epifanio. Marcelino and Telesfora created a “private
partnership in participation” for that purpose, which contains that:
(1) the property shall be placed in the name of Marcelino and
Cristobal v. Gomez Telesfora and Marcelino will be the manager, (2) as soon as the
GR No. L-27014 | October 5, 1927 | Street, J. capital and all other expenses shall have been covered, said
properties shall be returned to their brother Epifanio or his children
Plaintiffs- appellees: Paulina Cristobal, et. al. (Paulina, wife of and (3) it is essential that Epifanio shall manifest good behavior in
Epifanio, their children) the opinion of Marcelino and Telesfora jointly.
Defendant-appellant: Marcelino Gomez Yangco conveyed to Marcelino and Telesfora the 3 pieces of
property which he had obtained from Epifanio. A year after,
Memory Aid: Epifanio entered into sale with pacto de retro, but
Epifanio died.
couldn’t repurchase his property, “Private Partnership in
Participation” of Marcelino and Telesfora Marcelino meanwhile entered into possession of the
property. For 20 years, Marcelino improved the larger parcel by
(Sorry fact-heavy case)
extending the salt beds constructed upon it and by converting them
Facts: from Filipino form to the Chinese style which resulted to its increase
in value.
The property concerned formerly belonged to Epifanio
Gomez, husband of Paulina Cristobal. Epifanio sold the property Telesfora wanted to be free of the responsibility she
BLOCK B 2016
under contract of sale with pacto de retro to Yangco. Gomez assumed to Bañas so she conveyed to Marcelino her interest and
couldn’t repurchase the property himself and so he asked the help share in the 3 properties redeemed from Yangco. They declared
of a kinsman, Bañas. Bañas said that he would agree to lend the dissolved the “private partnership in participation” that they
money on the condition that Epifanio’s brother and sister, created.
Marcelino and Telesfora, would make themselves responsible for
the loan. The parties came to an agreement which provided that
2016
In order to secure the indebtedness, Bañas required Marcelino claims that the trust agreement was kept secret
Marcelino to execute a contract of sale for the 3 parcels, with pacto from Epifanio and therefore he could not have accepted it before
de retro. Eventually, Marcelino was able to pay to Bañas the sum the stipulation was revoked. This is not true since Bañas admitted
required for full satisfaction of the entire claim and received a that Epifanio was present when the agreement for the repurchase
reconveyance of the 3 parcels. of the property from Yangco was discussed.
The plaintiffs now seek to recover from Marcelino the The SC also rejected the claim that if Epifanio had any right
parcels of land and to compel him to pay the income received by in the property, such right could only be derived as a donation. The
him from said property. partnership agreement should not be viewed in the light of an
intended donation, but as an express trust.
Issue: W/N Marcelino should reconvey the property to the plaintiffs
The SC also denied the assertion that the subsequent
Held:
repurchase of the property by Marcelino under the sale of pacto de
YES. The trial court committed no error in ordering retro vested an indefeasible title in him free from the original trust.
Marcelino to surrender the property to plaintiffs and execute an The purchase effected was really a repurchase, consequent upon
appropriate deed of transfer. The “private partnership in the extension of the time of redemption by Bañas, and Gomez must
participation” between Marcelino and Telesfora created a trust for be considered to be holding in the same right as before, that is,
the express purpose of rescuing the property of Epifanio, and now subject to the trust in favour of Epifanio.
that the purpose has been accomplished, the property should be Furthermore, since he was merely a trustee in possession
returned to Epifanio’s children. under a continuing and subisisting trust, prescription is not effective
The SC cited Martinez v. Graño, wherein the Court ruled in favor of such holder.
that a person who, before consolidation of property in the
Johns, J., with whom concurs Villa-Real, J., dissenting:
purchaser under a contract of sale with pacto de retro, agrees with
the vendors to buy the property and administer it till all debts Epifanio was a man of dissolute habits and more or less
BLOCK B 2016
constituting an encumbrance thereon shall be paid, after which the spendthrift. He was squandering his property and was unreliable in
property shall be turned back to the original owner, is bound by money matters. It is for this reason that Marcelino and Telesforo
such agreement; and upon buying the property under these specified the condition that Epifanio manifest good behavior before
circumstances, such person becomes in effect a trustee and is the property can be returned to him. On the other hand, Marcelino
bound to administer the property in this character. was a prudent businessman and he was able to acquire title and pay
for the property with his own money and through his personal
2016
attention. The effect of the majority decision is to penalize  The trustee appointed DBP Trust Services Department as the
defendant and take the property away from him without any investment manager thru an Investment Management
compensation for his 20 years of service. There is no evidence that Agreement, with the end in view of making the income and
Marcelino acted as trustee or that he ever recognized a trust or that principal of the Fund sufficient to meet the liabilities of the DBP
during the 20 years he ever rendered any accounting or that anyone under the Gratuity Plan.
ever requested him to make an accounting. At all times he acted,
dealt with and treated the property as his own.  In 1983, the bank established a Special Loan Program (SLP)
availed thru faculties of DBP Provident Fund and funded by
placements from the Fund. The said program was adopted as
part of the benefit program to provide financial assistance to
Development Bank of the Philippines vs. Commission qualified members to enhance and protect the value of the
on Audit their gratuitu benefits because Philippine retirement laws do
GR no. 144516 February 11, 2004 not allow partial payment of retirement benefits. The said
Petitioner: Development Bank of the Philippines program was suspended in 1986 but was revived in 1981.
Under the said program
Respondent: Commission on Audit
 prospective retiree would have the option to utilize in the form
Memory aid: gratuity plan; special loan program of loan a portion of his "outstanding equity" in the Fund and to
invest it in profitable investment or undertaking.
Facts:
 The earnings shall be applied to pay for the interest due on the
 In 1980, DBP Board of Governors adopted a resolution creating loans and the excess or balance of intest earnings would be
a DBP Gratuity Plan and authorizing a setting up of a retirement
distributed to the investor-members.
fund to cover the benefits due to the DBP retiring officials and
employees under Commonwealth Act No. 186, as amended by  Pursuant to the investment scheme, DBP-TSD paid to investor-
RA 1616. members a total amount of 11,626,414.25 representing net
BLOCK B 2016
earnings of the investments for years 1991 anmd 1992.

 a trust indenture was entered into by and between the DBP
and the Board of Trustees of the Gratuity Plan Fund (Fund)  The payments were disallowed by the Auditor under an Audit
whereby the latter would have the control and admjnistration Observation Memorandum (AOM) on the ground that the said
of the Fund. distribution is irregular and constituted the use of public funds
2016
for private purposes which is specifocally proscribed under sec. entanglement of its resources under the loan program in the
4 of PD 1445. guise of giving financial assistance to the availing employees.
 AOM does not question authprity of bank to set up the plan  retirement benefits may only be availed upon retirement.
and have it invested in the DBPTSD.
 SLP was actually a supplementary retirement benefit as
 It recommends that, aside from requiring recipients to refund proscribed under sec. 28 of Comm. Act 186 in the guise of
dividends, the bank record in its books the income of the Fund "financial assistance".
as miscellaneous income because the Fund is still owned by the
Issues:
bank:
 WON DBP is the actual owner of the Fund and its income
 Board of Trustees=mere administrator of the Fund
 TSD=mere investor  WON the disallowance is valid
Held:
 employees still have inchoate interest on the Fund.
 The Agreement indisputably transferred legal title over the
 Abovementioned cannot be deemed owners of the Fund.
income and properties of the Fund to the Fund’s trustees.
 Former DBP chairman Alfredo Antonio requested COA
chairman to reconsider the AOM alleging that an express trust  the DBP Board of Governors’ (now Board of Directors)
Resolution No. 794 and the Agreement executed cr eated an
was created for the benefit of the qualified DBP employees
express trust, specifically, an employees’ trust.
under the Trust agreement gave the Fund a separate legal
personality.  An employees’ trust is a trust maintained by an employer to
provide retirement, pension or other benefits to its
 COA's ruling: Request for reconsideration DENIED.
employees.[29] It is a separate taxable entity established for
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 separate personality concept has been effectively eliminated the exclusive benefit of the employees.
when the SLP was adopted.
 the principal anad income of the Fund would be separate and
 program grossly disadvatageous to govt because it deprived the distinct from the DBP funds as mentioned in the resolution.
Fund of higher investment earnings by unwarranted
 e.g. " income and principal of said contributions would be
sufficient to meet the required payments of benefits as officials
2016
and employees of the Bank retire under the Gratuity Plan";  Contrary to RA1616 which requires retirement in order to be
"whereby the Bank provides contributions to a separate trust entitled. Gratuity Plan provides that the gratuity benefit of a
fund, which shall be exclusively used to meet its liabilities to qualified DBP employee shall only be released “upon
retiring officials and employees" retirement under the Plan".
 DBP is the trustor who vested in the trustees the legal title as  Gratuity plan will lose its tax exempt status if there is partial
well as control over the investment. The powers and duties release of the benefits.
were clearly granted under the Agreement:
 DBP Resolution No. 794 creating the Gratuity Plan expressly
 e.g. "BANK hereby vests the control and administration of the provides that “since the gratuity plan will be tax qualified under
Fund in the TRUSTEES"; "TRUSTEES shall receive and hold legal the National Internal Revenue Code xxx, the Bank’s periodic
title to the money and/or property comprising the Fund"... contributions thereto shall be deductible for tax purposes and
the earnings therefrom tax free.” If DBP insists that its
 The principal and income of the Fund will not revert to DBP employees may receive the P11,626,414.25 dividends, the
even if the trust is subsequently modified or terminated. The necessary consequence will be the non-qualification of the
Agreement states that the principal and income must be used
Gratuity Plan as a tax-exempt plan .
to satisfy all of the liabilities to the beneficiary officials and
employees under the Gratuity Plan
2. COA is correct in the disallowance of the dividends. CAÑEZO v. ROJAS (Gillian’s Version)
G.R. No. 148788, November 23, 2007, J. Nachura
 Neither the Gratuity Plan nor our laws on retirement allow the
partial payment of retirement benefits ahead of actual Petitioners: Soledad Canezo, substituted by William Canezo &
retirement. Victoriano Canezo
 According to the resolution it allows a prospective retiree the Respondent: Concepcion Rojas
BLOCK B 2016
option to utilize in the form of a loan, a portion of his standing

equity in the Gratuity Fund and to invest it in a profitable Memory Aid: stepmom, express trust
investment or undertaking. Apparently, no law nor the plan Doctrine:
supports partial payment of retirement benefits ahead of the
actual retirement. Although no particular words are required for the creation
of an express trust, a clear intention to create a trust must be
2016
shown and proof of fiduciary relationship must be clear and had little significance considering that during that time the country
convincing. The creation of an express trust must be manifested was rehabilitating itself from Second World War and that the
with reasonably certainty and cannot be inferred from loose and government was more interested in the increase in tax collection
vague declarations. than the observance of the niceties of law.
FACTS RTC Decision: Ruled in favour of Concepcion, on the ground

that the action had already prescribed and acquisitive prescription
Soledad Canezo filed an action for the recovery of real had set in. However, upon Motion for Reconsideration, RTC
property plus damages from her father’s second wife Concepcion amended its decision and held that the action had not yet prescribed
Rojas. She claims that she bought the said land in 1939, although since Soledad merely entrusted the property to her father. The 10yr
the transaction was not reduced in writing. When Canezo and her
prescriptive period for the recovery of a property held in trust
husband left for Mindanao in 1948, she entrusted the land to her would commence to run only from the time the trustee repudiates
father, Crispulo Rojas. He took possession and cultivated the the trust. RTC found no evidence showing that Crispulo ever ousted
property. In 1980, she found out that Concepcion was in possession Soledad from the property.
of the property and that the tax declaration over the property was
already in the name of Crispulo. She instituted the action for CA Decision: Ruled in favour of Concepcion, on grounds of
recovery only in 1997. laches and prescription and for lack of merit. Soledad’s inaction for
17 years casts a serious doubt on her claim of ownership over the
Concepcion contends that it was her husband Crispulo who parcel of land. Also during the probate proceedings, Soledad did not
bought the land, which accounts for the tax declaration being in
even contest the inclusion of the property in the estate of Crispulo.
Crispulo’s name. Upon his death in 1978, the property was included CA further held that, assuming that there was an implied trust
in his estate and Soledad, as heir, even received her share in the between Soledad and her father, her right of action to recover the
produce of the estate. Concepcion further contends that Soledad same would still be barred by prescription since 49 years had
ought to have impleaded all of the heirs as defendants, otherwise already lapsed since Crispulo adversely possessed the contested
the complaint should be dismissed. Lastly, Soledad‘s action was
property in 1948.
BLOCK B 2016
already barred by laches, having been instituted 17 years after

knowledge that respondent was in possession of said land. ISSUE:
MTC Decision: Ruled in favour of Soledad. MTC gave 1. W/N a trust over the property (express or implied) between the
credence to the testimony of Soledad’s witnesses that she bought petitioner and her father exist – NO
the land from Limpiado. The 1948 tax declaration in Crispulo’s name
2016
2. W/N the action for recovery of real property was already barred Accordingly, it was incumbent upon Soledad to prove the
by prescription and laches – YES existence of the trust relationship; however she sadly failed to
discharge that burden.
RATIO:
Although no particular words are required for the creation
According to the Court, the resolution of the issue hinges on
of an express trust, a clear intention to create a trust must be
the determination of the existence of a trust over the property shown; and the proof of fiduciary relationship must be clear and
(express or implied) between the petitioner and her father. convincing. The creation of an express trust must be manifested
A TRUST is the legal relationship between one person with reasonable certainty and cannot be inferred from loose and
having an equitable ownership of property and another person vague declarations or from ambiguous circumstances susceptible of
owning the legal title to such property, the equitable ownership of other interpretations.
the former entitling him to the performance of certain duties and
In the case at bar, the intention to create a trust cannot be
the exercise of certain powers by the latter. inferred from the petitioner’s testimony and the attendant facts
As a rule, the burden of proving the existence of a trust is and circumstances. The petitioner testified only to the effect that
on the party asserting its existence, and such proof must be clear her agreement with her father was that she will be given a share in
and satisfactorily show the existence of the trust and its elements. the produce of the property. Profit-sharing per se, does not
necessarily translate to a trust relation. It could also be present in
The presence of the following ELEMENTS must be proved: other relations, such as in deposit.
(1) a trustor or settlor who executes the instrument creating the Thus, in the absence of a trust relation, Crispulo’s
trust; uninterrupted possession of the property for 49 years, coupled
with the performance of acts of ownership, such as payment of real
(2) a trustee, who is the person expressly designated to carry out
estate taxes, ripened into ownership.
the trust;
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(3) the trust res, consisting of duly identified and definite real
properties; and Ramos v. Ramos
G.R. No. L-19872 December 3, 1974
(4) the cestui que trust, or beneficiaries whose identity must be
clear.
2016
EMILIANO B. RAMOS, ET AL., plaintiffs-appellants, them (~P1,783 for the illegitimate children). A receipt was signed by
vs. the three legit children, while the illegitimate children were
GREGORIA T. RAMOS, ET AL., defendants-appellants. presumed to have received their share from the administrator.
Memory Aid: dispute among family members, two haciendas, According to plaintiffs, all the children of Martin Ramos lived as a
registered in his wife’s name and not of the heirs, bad faith guy wins happy family in his home in Hacienda Ylaya, and this continued to
for once. be the case even after Ramos’ death. During this time, Rafael
Ramos, the brother of Martin, took care of the administration of the
Important Person in this case: Jose Ramos, the guy who registered Hacienda and continued to give each of the children their share in
the entire Hacienda in his wife’s name instead of the heirs’ the profits of the crops produced by the Hacienda, until Rafael
(Gregoria, the widow, substituted him in this case because he died).
decided one day to return administration of the properties to the
Memory Aid/Summary: Haciendero died. One heir of a Hacienda children, with Hacienda Calaza going to Jose and Hacienda Ylaya
got made administrator of that estate, and decided to register the going to Agustin.
whole thing to his wife and daughter. Other heirs tried to assail it
The plaintiffs in this case continually received support from Jose,
by saying he held it in trust, but their cause of action got barred by who provided for them from the income of the Hacienda. There was
prescription. never any accounting made to plaintiffs by Jose Ramos, plaintiffs
Facts: reposing confidence in their elder brother, Nor was any accounting
Martin Ramos died intestate in October 4, 1906, and he was made by his widow, defendant Gregoria Ramos, upon his death,
survived by his ten children; 3 of whom were legitimate and the plaintiff Manuel Ramos moreover having confidence in her.
rest, natural (illegitimate). He left behind a substantial sum of real
Thereafter, the Cadastral Court decided to survey the property, and
property, particularly two Haciendas in Himamaylan, Negros plaintiff Modesto Ramos was informed by the Surveying
Occidental with a land area of 400 hectares: the Hacienda Calaza Department of that fact. Plaintiffs then went to see their elder
and the Hacienda Ylaya. From December 10, 1906 to March 4, 1914, brother Jose to inform him that there was a card issued to them
intestate proceedings were conducted to distribute the estate of
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regarding the survey and gave him 'a free hand to do something as
Ramos to his children, to total value of which was determined to be
an administrator'. They therefore did not intervene in the said
P74,984.93 (the rule where illegitimate children get ½ of that cadastral proceedings because they were promised that they
pertaining to legitimate children was followed). The partition
(defendants Jose and Agustin) would 'be the ones responsible to
project was duly approved by the judge and considered closed upon have it registered in the names of the heirs'. Plaintiffs did not file
proof that all the children had receive the share that pertained to and cadastral answer because defendants Jose and Agustin told
2016
them 'not to worry about it as they have to answer for all the 1444; Tuason de Perez vs. Caluag, 96 Phil. 981; Julio vs. Dalandan, L-
heirs'. Plaintiffs were 'assured' by defendant’s brothers. 19012, October 30, 1967, 21 SCRA 543, 546). "Express trusts are
those which are created by the direct and positive acts of the
"Plaintiffs did not know that intestate proceedings were instituted parties, by some writing or deed, or will, or by words either
for the distribution of the estate of their father. Neither did expressly or impliedly evincing an intention to create a trust" (89
plaintiffs Modesto, Manuel, Emiliano and Maria know (that) C.J.S. 722).
Timoteo Zayco, their uncle and brother-in-law of defendant widow
Gregoria was appointed their guardian. "Plaintiffs did not know of "Implied trust are those which, without being expressed, are
any proceedings of Civil Case No. 217. They never received any sum deducible from the nature of the transaction as matters of intent, or
of money in cash — the alleged insignificant sum of P1,785.35 each which are super induced on the transaction by operation of law as
— from said alleged guardian as their supposed share in the estate matters of equity, independently of the particular intention of the
of their father under any alleged project of partition. parties" (89 C.J.S. 724). They are ordinarily subdivided into resulting
and constructive trusts (89 C.J.S. 722).
In short, they claimed never to have received or even heard of the
proceedings to settle Martin’s estate, and unknown to them, Jose Issue: W/N the Hacienda titled to Gregoria was actually being held
Ramos, the administrator, registered the Hacienda in his wife’s in trust for the heirs of Ramos.
name instead of the name of the heirs of Ramos, after he promised
Important The plaintiffs did not prove any express trust in this case.
them he’d take care of it during the cadastral survey. “Plaintiffs
only discovered later on that the property administered by their The expediente of the intestate proceeding, Civil Case No. 217,
particularly the project of partition, the decision and the
elder brother Jose had a Torrens Title in the name of his widow”.
Basically, he took advantage of the cadastral survey to register the manifestation as to the receipt of shares negatives the existence of
property to his wife and daughter. Naturally, the heirs were an express trust. Those public documents prove that the estate of
aggrieved and brought the action to recover their share of the Martin Ramos was settled in that proceeding and that adjudications
Hacienda. were made to his seven natural children. A trust must be proven by
clear, satisfactory, and convincing evidence. It cannot rest on
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At this point, the Supreme Court decided to cite a LOT of vague and uncertain evidence or on loose, equivocal or indefinite
jurisprudence (please refer to original). But these two are declarations (De Leon vs. Peckson, 62 O. G. 994). As already noted,
important: an express trust cannot be proven by parol evidence:
"No particular words are required for the creation of an express Held: No. Immediately after the settlement of the intestate
trust, it being sufficient that a trust is clearly intended" (Ibid, Art. proceedings of Martin Ramos and during the cadastral surveying,
2016
Jose and Gregoria Ramos claimed the property entirely, to the to them. They claim that they are the rightful owners since Gorricho
exclusion of the other heirs of Ramos. It is quite clear then, that had has no title thereto because she was only entitled to ½ interest.
there ever been an implied trust created in favour of the other Gorricho claims that there is already laches. The plaintiffs claims
heirs, Jose and Gregoria had clearly and categorically repudiated that there can be no prescription or laches because Gorricho is
that same trust. holding it in trust for them, and hence, prescription cannot run. The
trial court held that the claim is already barred by laches, though
Further, implied trusts may be subject to laches and prescription. In
there is a constructive trust when Gorricho took advantage of the
this case, the action to annul the partition of the estate done many mistake of the sheriff.
years ago could have been done as early as 1914, because some of
the heirs were already of majority age, or 1917, when the rest Issue: WON the claim of Diaz can be barred by laches
reached majority age. Their right of action had already accrued by
this time. Instead, they waited until 1957 to file the case, which Held
resulted in it being barred by prescription (the prescriptive period in No, not able to prove unfair injury if the action is given due course,
this case being only 10 years). In fact, the SC even said that they however, prescription has set in.
would have had a good chance to annul the anomalous partition,
were it not for the fact that they slept on their rights. “Art 1456. If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an
Diaz v. Gorricho implied trust for the benefit of the person from whom the property
comes.”
Facts: Express trusts are different from implied trusts because in express
trusts, the beneficiary has a right to expect the faithfulness of the
The lots in question belonged to the conjugal property of
trustee. The latter has no right to acquire title adverse to that of the
Francisco Diaz and Maria Sevilla registered under and OCT. They had
beneficiary unless he expressly repudiates the trust. Therefore,
3 children, Manuel, Lolita and Constancia. Gorricho filed an action
laches cannot apply. On the other hand, constructive trusts can be
against Sevilla and a writ of attachment was issued upon the share
BLOCK B 2016
barred by laches because the parties do not have an expectation of

of Sevilla in the property (1/2). It was sold at a public auction and it
a fiduciary relationship with each other, and repudiation is not
was bought by Gorricho. Sevilla failed to redeem. However, the
sheriff made a mistake and adjudicated to Gorricho the whole
property instead of only the half interest of Sevilla. On 1951, Sevilla
died and the heirs now filed a case to reconvey the other ½ interest
2016
required unless there is a concealment of facts giving rise to the But the decision should not be reversed because the longest
trust7. period of time to bring an action, or extinctive prescription is only
10 years.
However, the person invoking laches must prove a)
unjustified inaction and b)damage to him if the action is given due
course. The defendant failed to prove the latter.
Pasino v. Monterroya
7
SEC. 580. In Case of Express Trust. — In the case of an express trust, a cestui que
trust is entitled to rely upon the f idelity of the trustee. Laches does not apply until
the lapse of time is great, or until the activ e duties of the trustee are terminated G.R. 159494 // July 31, 2008 // Carpio
except f or turning, ov er the trust property or funds to the benef iciaries, the claim of the
trustee in respect of the trust estate is held adv ersely to the benef iciary , the trustee
openly denies or repudiates the trust or commits acts in breach thereof , or in FACTS
hostility to, or f raud of , the benef iciaries, and the benef iciary is notif ied, or is
chargeable with constructiv e notice, thereof , or is otherwise plainly put on guard
against the trustee. No laches exists until a reasonable time after a benef iciary is
Individuals in the Case:
notif ied of a breach or other cause of suit against the trustee. Laches does exist,
howev er, where suit is not commenced within such reasonable time. Long delay is not
Jose Pasino – father of petitioners and their attorney-in-fact
excused where the trustee put the benef iciary of f rom time to time with a promise
to settle the trusteeship, or where the trustee was a lawy er and related by affinity to
the benef iciaries, who were all women. Laureano Pasino – father of Jose, the original owner of the Lot 2139
SEC. 581. In case of Constructiv e or Resulting Trust. — Laches constitutes a def ense to
a suit to declare and enf orce a constructiv e trust for the purpose of the rule,
Rogelio, George, Lolita, Rosalinda, and Josephine Pasino
repudiation of the constructiv e trust is not required, and time runs f rom the moment
that the law creates the trust, which is the time when the cause of action arises. But Rufo Larumbe – one who bought Lot 2139 from Pasino
laches does not exist while the trusted, f raudulently and successf ully conceals the
f acts giv ing rise to the trust, although the concealment must be adequately pleaded
by the plaintiff in a suit to declare a trust where the delay is apparent on the f ace of Dr. Teofilo Eduardo, Romualdo, Maria Teresa, and Stephen
his pleading.
Monterroya
Laches may constitute a bar to an action to declare and enf orce a resulting trust, but
lapse of time is only one of the many circumstances f rom which the conclusion of laches Narration of Facts:
in the enf orcement of such a trust must be drawn, and each case must be determined in,
the light of the particular f acts shown. No laches exists in respect of failure to assert a
BLOCK B 2016
resulting trust of which a benef iciary has no knowledge or of which he is not Petitioner’s Side:
chargeable with knowled ge. Continuous recognition of a resulting trust precludes any
def ense of laches in a suit to declare and enf orce the trust. It has been held that the
benef iciary of a resulting trust may, without prejudice to his right to enf orce the trust, 1933-1941
pref er the trust to persist and demand no conv ey ance f rom the trustee. On the other
hand, it has been held that the one who permits a claim to establish a resulting trust to
lie dormant for an unreasonable length of time, land until the alleged trustee, has died,
- Laureano Pasino occupied, cultivated, and cleared a 24-
will not be aided by a court of equity to establish his trust. hectare land located in Panul-ira, Abuno, Iligan City (which
was later declared alienable and disposable).
2016
- Laureano filed a homestead application over the land. Later Petitioners allege that their possession of Lot 2139 was
on, the Director of Lands issued an order approving the interrupted on Jan 3, 1993 when the respondents forcibly took
application and stated that it was recorded in Laureano’s possession of the property.
name for the land applied for by him.
Respondent’s Side:
1950-1954
- March 24,1950: Laureano died.

- July 10, 1949: Rufo Larumbe sold Lot 2139 to Petra Teves.
- April 15, 1952: The Director of Lands issued an Order for the
issuance of a homestead patent in favor of Laureano. He - 1984-1985: Petra executed a deed of sale over the lot in
favor of Vicente Teves, who, about a year later, executed a
was married to Graciana Herbito.
pacto de retro sale over the land in favor of Arturo Teves.
- The heirs did not receive that order, and due to that, the
land was not registered under Laureano’s name or under - 1992: Arturo sold the lot in favor of respondents’ father Dr.
that of his heirs. Monterroya, by virtue of an oral contract.
- Jan 5, 1995: Arturo executed a Deed of Confirmation of

- 1953: The property was covered by Tax Declaration 11102
in the name of Laureano with Graciana as administrator. Absolute Sale of Unregistered Land in favor of Dr.
Monterroya’s heirs.
- Between 1949-1954: A cadastral survey conducted in Iligan
City revealed that a small creek divided the 24-hectare Respondents allege that Jose was not the owner of Lot 2139, so
parcel of land into two portions. (Lot 2138 and Lot 2139) he could not sell the land to his children. They allege that the OCTs
owned by petitioners’ were null and void for having been procured
Laureano’s heirs (the petitioners), headed by his son Jose, in violation of the Public Land Act. They also allege that the Land
continuously possessed and cultivated both lots. The co-heirs of Management Bureau had no authority to issue the free patent titles
Jose renounced their rights and interest over the land in favor of because Lot 2139 was private land.
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Jose, who secured a title in his name for Lot 2138. Lot 2139 was
Ruling of the Trial Court
alienated to Jose’s children, who in 1994 simultaneously filed
applications for grant of Free Patent Titles over their respective The trial court dismissed the complaint. They said that Lot
shares before the Land Management Bureau of DENR. DENR 2139 had acquired the character of private land due to operation of
granted the applications and issued OCTs. the law. Since the lot had ceased to be public land, Land
2016
Management Bureau had been divested of its jurisdiction to dispose being another person, impresses upon the title so acquired the
of it by issuing free patent titles. character of a constructive trust for the real owner. This would
justify an action for reconveyance.
The trial court said that the order for the issuance of the
patent in favor of Laureano lapsed when it was not registered with In the present case, the respondents were able to establish
the Director of Deeds. Laureano had ceded the right to possession that they have a better right to Lot 2139, since they had long been
over half of the property to Rufo Larumbe sometime in 1947. in possession of the property in the concept of owners, by
Tenant Gavino Quinaquin started to deliver the owner’s share of the themselves and through their predecessors-in-interest.
harvest to Larumbe, without objection by Laureano.
The SC stressed that it is the act of registration that shall be
Petitioners were adjudged to have committed actual fraud the operative act to affect and convey the land. (as stated, the non-
when they misrepresented in their free patent that they were in registration of Laureano’s homestead patent had rendered it
possession of the property continuously and publicly. functus officio).
Ruling of the Court of Appeals Though the Torrens title was issued in their name, and
despite the fact that they are the registered owners under the
Court of Appeals affirmed the ruling of the trial court.
Torrens system, the petitioners may still be compelled under the
ISSUE law to reconvey the property to the respondents.
W/N the Court of Appeals erred in sustaining the trial court’s In the end, the Supreme Court said “no”, to Pasino.
decision declaring respondents as the rightful owners and TERMS:
possessors of Lot 2139.
Action for Reconveyance – the decree of registration is respected as
NO.
incontrovertible but what is sought instead is the transfer of the
RULING property wrongfully or erroneously registered in another’s name to
BLOCK B 2016
it’s rightful owner or to one with a better right.

(Trusts issue)
Functus officio - of no further official authority or legal efficacy;
The Supreme Court said that the principle of constructive used of an officer no longer in office or of an instrument, power, or
trust applies. Under that principle, registration of property by one agency that has fulfilled the purpose of its creation. (Webster)
person in his name, whether by mistake or fraud, the real owner
2016
Gayondato v Treasurer Rosario brought the present case to recover damages for
G.R. No. L-24597 | August 25, 1926 | Ostrand, J. the erroneous registration of the 3 parcels of land in the name of
Adela, which Rosario claims were owned by her at the time of
Plaintiff-appellant: Rosario Gayondato (Rosario) registration. The trial court rendered judgment in favor of the
Defendant-appellee: Treasurer of the Philippine Island (Treasurer), plaintiff Rosario, ordering the defendants Adela and Cuachon jointly
Adela Gasataya (Adela), Domingo Cuachon (Cuachon), Francisco and severally to indemnify said plaintiff. The Insular Treasurer and
Rodriguez Rodriguez were absolved from the complaint. From this judgment
Rosario appealed.
Memory Aid: Land owned by Rosario was erroneously registered in
the name of her mother alone. She is suing the Treasurer for Issues:
damages. Treasurer is liable. 1. W/N the trial court erred in absolving the Insular Treasurer
Facts: 2. W/N there was a trust in the technical sense
This case involves 3 parcels of land which were formerly Held:
owned by Domingo Gayondato (Domingo) who inherited it from his
mother. Domingo married Adela and they had a child, plaintiff 1. YES. Section 101 of the Land Registration Act states that any
Rosario. Domingo died and so Adela's father, Gabino Gasataya took person who is wrongfully deprived of any land or any interest
charge of the 3 parcels of land. Later on, Adela married Cuachon therein, without negligence on his part, sustains loss or damage
and so Gabino turned over the possession of the land to them. through any omission, mistake, or misfeasance of the clerk, or
register of deeds, or of any examiner of titles, or of any deputy or
The parcels of land were included in a cadastral case and clerk of the register of deeds in the performance of their respective
Cuachon appeared on behalf of Adela and Rosario and filed claims duties under the provisions of this Act, may bring in any court of
for the lots, stating that the parcels of land belonged to him, Adela competent jurisdiction an action against the Treasurer of the
and their daughter Rosario who was then 15 years old. The CFI Philippine Archipelago for the recovery of damages to be paid, out
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erroneously decreed the registration of the lots in the name of of the assurance fund.
Adela alone. Subsequently, Adela mortgaged the lot to National
Bank and later sold it to defendant Rodriguez who assumed the 2. NO. The SC rejected the claim of the Attorney-General that
liability of the mortgage. Cuachon and Adela prior to the registration must be considered to
have held the property in trust and for the benefit of the Rosario;
that the relation of trustee and cestui que trust was thus created;
2016
and that the case therefore falls under Section 106 of the Land administration in her daughter's estate and was nothing but a
Registration Act, which provides that "the assurance fund shall not mere trespasser.
be liable to pay for any loss or damage or deprivation occasioned by
a breach of trust, whether express, implied, or constructive, by any The judgment appealed from is reversed, and it is hereby
registered owner who is a trustee, or by the improper exercise of ordered that the defendants Cuachon and the estate of Adela
any sale in mortgage-foreclosure proceedings." (Adela died before the trial of the case) be held jointly and severally
liable.
The SC said that if this is the kind of constructive trust
referred to in Section 106, it must be conceded that the Rosario Escobar vs. Locsin
cannot recover damages from the assurance fund. But that such is GR no. L-48309 January 30, 1943
not the case, becomes quite apparent upon an examination of Plaintiff-appellant: Eusebia Escobar
Section 101, in which the right of recovery from the assurance fund
in cases of registration through fraud or wrongful acts is expressly Defendant-appellee: Ramon Locsin, in his capacity as special
recognized. This clearly show that the term trust as used in Section administrator of the intestate estate of Juana Ringor
106 must be taken in its technical and more restricted sense.
Memory aid: land registration act/torrens system, WON decree of
Indeed, if it were to be regarded in its broadest sense, the
assurance fund would, under the conditions here prevailing, be of registration would bar remedy to enforce trust?
little or no value. Facts:
Bouvier defines a trust in its technical sense as "a right of  Escobar filed a complaint for reconveyance of lot no. 692 of the
property, real or personal, held by one party for the benefit of Cuyapo cadastre in Nueva Ecija. Escobar is alleging that:
another." The plaintiff was a minor at the time of the registration of
the land and had no legal guardian. It is true that her mother in  he is the owner of the lot.
whose name the land was registered was the natural guardian of
her person, but that guardianship did not extend to the property  in the course of the cadastral proceeding, because he was
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of the minor and conferred no right to the administration of the illiterate, he asked Domingo Sumangil to claim the lot for her.
same and the plaintiff, being a minor and under disability, could  but Sumangil committed a breach of trust by claiming the lot
not create a technical trust of any kind. Applying Bouvier's for himself. Thus, the lot was adjudicated in favor of Sumangil.
definition, it is clear that there was no trust in its technical
signification. The mother had no right of property or
2016
 The lot was thereafter assigned by the partition in the intestate decree of registration. On the contrary, sec. 70 and sect.
estate of Sumangil and one Honorata Duque to Juana Ringor. 102*
Locsin is the special administrator of Ringor's estate.
 A trust — such as that which was created between the
 In the CFI: plaintiff and Domingo Sumangil — is sacred and inviolable.
The Courts have therefore shielded fiduciary relations against
 it found out that the real owner is Escobar by virtue of the every manner of chicanery or detestable design cloaked by
donation proper nuptias from Pablo Ringor and had since legal technicalities. The Torrens system was never calculated
been the possessor of the land to foment betrayal in the performance of a trust.
 However, while recognizing the equitable title of Escoba, it *sec. 70 -Registered lands and ownership therein, shall in all
still dismissed the complaint for failure to avail the respects be subject to the same burdens and incidents attached by
remendy within a period of 1 year provided in sec. 38 of law to unregistered land. Nothing contained in this Act shall in any
Land Registration Act (Act 496). way be construed to relieve registered land or the owners thereof
from any rights incident to the relation of husband and wife, or
Issue: WON Escobar can still recover the lot despite the lapse of 1
from liability to attachment on mesne process or levy on execution,
year to file for a review of the said decree?
or from liability to an y lien of any description established by law on
Held: Yes, land and the buildings thereon, or the interest of the owner in such
land or buildings, or to change the laws of descent, or the rights of
 sec. 38 of act 496 does not apply. partition between coparceners, joint tenants and other cotenants,
or the right to take the same by eminent domain, or to relieve such
 Escobar did not seek review of the decree or reopening of
land from liability to be appropriated in any lawful manner for the
the case but the enforcement of a trust.
payment of debts, or to change or affect in any other way any other
 the estate of Juana Ringor as the successor-in-interest of the rights or liabilities created by law and applicable to unregistered
trustee, Sumangil, is equity bound to execute a deed of land, except as otherwise expressly provided in this Act or in the
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conveyance of this lot to the cestui que trust, Escobar. amendments hereof.
Remedy has been upheld in previous cases such as Severino vs.
SEC. 102 of the Act, after providing for actions for damages in which
Severino.
the Insular Treasurer, as the custodian of the Assurance Fund is a
 Severino case: no indication in LRA there of an intention to party, contains the following proviso:Provided, however, That
cutoff the equitable rights or remedies by the issuance of aa nothing in this Act shall be construed to deprive the plaintiff of any
2016
action which he may have against any person for such loss or Facts:
damage or deprivation of land or of any estate or interest therein
without joining the Treasurer of the Philippine Archipelago as a The heirs of Bernardo and Tranquilina Cavile executed a
defendant therein. Deed of Partition over several parcel of lands in Tolong, Negros
Occidental. The lands were divided into 2 parts. The first part
consisting of Bernardo’s share was divided into 6 equal shares
among 6 heirs. The second part, compromising of Tranquilina’s
Cavile v. Litania-Hong share was subdivided into 3 shares.
Gr No 179540, March 13, 2009, J. Chico Nazario
Of particular interest in this case, are the lots covered by
Petitioners, Perfecta Cavile, Jose De la Cruz, and Rural Bank of Tax Declaration 7143, 7421 and 7956. The said property was sold by
Bawayan Inc. the heirs to Castor Caville.
Respondent, Justina Litania-Hong, Leopoldo Hong and Genoveva On August 5, 1960, Castor and Susana executed a
Litania Confirmation of Extrajudicial Partition whereby Castor recognized
Summary/Memory Aid: Heirs of Bernardo and Tranquilina Caville and confirmed that the said lot were the just and lawful shares of
executed a Deed of Partition. The subject in this case is the property Susana Caville. After this, Susana obtained a loan from Rural Bank of
of Castor Caville, which was sold to him by the heirs. Castor Bayawan Inc, mortgaging the subject lots.
thereafter sold the land to his daughter Perfecta who registered it in In 1962, Castor sold the property to petitioner Perfecta
her name in 1962. Prior to this, in 1960, Castor entered into a Caville. Perfecta took possession of the land. She registered the land
Confirmation of Extrajudicial Partition with her sister, Susana in in the Bureau of Lands. On October 9, 1962, OCTs FV 4976, 4977
order to accommodate the latter in securing a loan. Heirs of Susana and 4978 were issued in her name.
claim ownership over the parcel of land. Perfecta answered that the
contract between Castor and Susana was simulated. The TC ruled in 14 years after the execution of this Confirmation of
favor of Perfecta. CA reversed. SC ruled in favor of Perfecta stating Extrajudicial Confirmation, the respondents, Justina and Genova,
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that her evidence has more evidentiary weight. Moreover, heirs of heirs of Susana filed a complaint for reconveyance of the property
Susana filed the action for reconveyance a little too late. 12 years in the RTC against Perfecta Caville, daughter of Castor, Jose de la
after the issuance of OCT to Perfecta. The rule is that an action for Cruz, husband of Perfecta, and the Rural Bank of Bayawan Inc.
reconveyance to assail title based on constructive and implied trust
can be done in 10 years.
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In their answer, Perfecta said that the Confirmation of Herein, the respondents brought the action for reconveyance
Extrajudicial Confirmation in 1960 was a nullity. It was simulated before the RTC only on December 23, 2004 or more than 12 years
merely to accommodate Susana in securing a loan. after the Torrens title was issued in favor of Perfecta. The remedy is
already time-barred.
RTC ruled in favor of Perfecta stating that Perfecta’s
evidence was more worthy of credence. The court also ruled that
the Confirmation of Extrajudicial Confirmation was a simulated
contract which was void and without any legal effect. Estrella Tiongco Yared v. Jose Tiongco
October 19, 2011
CA reversed.
Summary / Memory Aid:
Issue: Who among the parties (Perfecta-petitioner vs Heirs of
Susana-respodents) herein have the better right over the subject Although an action for reconveyance based on implied or
lots? constructive trust must perforce prescribe in ten (10) years from the
issuance of the Torrens title over the property, there is one an
Held: exception to this rule: when the plaintiff is in possession of the
land to be reconveyed.
The Supreme Court ruled in favor of Perfecta. The Deed of
Partition in 1937 was not directly assailed in this case. Thus, the In this case, petitioner never lost possession of the said
heirs clearly sold the land to Castor, Perfecta’s father. Respondents, properties, and as such, she is in a position to file the complaint
base their claim of ownership on the execution of Confirmation of with the court a quo to protect her rights and clear whatever doubts
Extrajudicial Partition, which put a cloud on Castor’s ownership. has been cast on her title by the issuance of TCTs in respondent
Other than this, respondents also presented tax declarations in the Jose’s name.
name of Susana. The SC ruled that respondent’s evidence is
insufficient as id did not clearly show how Susana inherited the Facts:
property. On the other hand, Perfecta applied for and was granted
The case involves three parcels of land located in Iloilo City,
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by the Bureau of Lands OCT’s on October 1962. A Torrens titles is covered by titles in the names of four siblings (Matilde, Jose,
indefeasible. Vicente, and Felipe). The siblings are the heirs of Maria Luis de
AGENCY ISSUE: An aggrieved party may still file an action for Tiongco; they inherited the land from the latter, their deceased
reconveyance based on implied or constructive trust. The action mother. When all of the siblings died, they were survived by their
prescribes in 10 years from the date of the issuance of the title. children and descendants. Among the legitimate children of one of
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the deceased siblings were petitioner and the father of respondent adjudication on May 10, 1974. According to the lower courts, an
Jose B. Tiongco. action for reconveyance based on an implied or constructive trust
prescribes in ten (10) years from the date of issuance of the original
Sometime in 1965, petitioner built her house and stayed certificate of title or transfer certificate of title.
on one of the lots, sustaining herself by collecting rentals. In 1983,
respondent Jose prohibited petitioner from collecting rentals from Issue:
tenants and filed a suit for recovery of possession with preliminary
injunction. Respondent’s legal attempts were all unsuccessful and WON prescription has set in, barring the petitioner to assert that
petitoner conitnued to remain in possession of the subject land. respondent has become a trustee by way of constructive trust
because of the latter’s fraudulent acts
However, in 1988, petitioner discovered that respondent
Jose had executed an Affidavit of Adjudication declaring that he is Held / Ratio:
the only surviving heir of the registered owners and adjudicating NO, the action has not prescribed.
unto himself the subject land. Because of this affidavit, the OCTs of
the subject lots were cancelled, and in place thereof, the Register of Although an action for reconveyance based on implied or
Deeds of Iloilo City issued TCTs in favor of respondent Jose. Based constructive trust must perforce prescribe in ten (10) years from the
on the records with the Register of Deeds, it also appears that issuance of the Torrens title over the property, there is an exception
respondent Jose sold the said lots to a buyer (Torre) who in turn to this rule: when the plaintiff is in possession of the land to be
sold it to another person (Doronila). reconveyed.
When petitioner discovered this, she filed a complaint Prescription does not run against the plaintiff in actual
before the court a quo against her nephew respondent Jose arguing possession of the disputed land because such plaintiff has a right to
that respondent Jose knowingly and wilfully made untruthful wait until his possession is disturbed or his title is questioned before
statements in the Affidavit of Adjudication because he knew that initiating an action to vindicate his right. His undisturbed possession
there were still other living heirs entitled to the said properties. gives him the continuing right to seek the aid of a court of equity to
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Petitioner also posited that respondent Jose became a trustee by determine the nature of the adverse claim of a third party and its
constructive trust of the property for the benefit of the petitioner. effect on his title. The Court held that where the plaintiff in an
action for reconveyance remains in possession of the subject land,
The lower courts ruled that prescription has set in since the the action for reconveyance becomes in effect an action to quiet
complaint was filed only on October 2, 1990 or some sixteen (16) title to property, which is not subject to prescription.
years after respondent Jose caused to be registered the affidavit of
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In this case, petitioner never lost possession of the said Ciriaco claims that Pace cannot validly mortgage the lot as it
properties, and as such, she is in a position to file the complaint belongs to him pursuant to the RTC decision. He also claims that
with the court a quo to protect her rights and clear whatever doubts PNB is not a mortgagee/purchaser for value as the land as it already
has been cast on her title by the issuance of TCTs in respondent had notice of the litigation over the said lot. RTC ruled in favor of
Jose’s name. Ciriaco. CA affirmed.
In the Supreme Court, PNB claims that Ciriaco’s complaint is

barred by prescription. PNB claims that an action for reconveyance
PNB v. Jumamoy prescribes in four years if based on fraud, or, 10 years if based on an
G.R. No. 169901 August 3, 2011 implied trust, both to be counted from the issuance of the Original
PHILIPPINE NATIONAL BANK, Petitioner, Cerificate of title to Pace.
vs. Issue: W/N Ciriaco’s complaint is barred by Prescription
CIRIACO JUMAMOY and HEIRS OF ANTONIO GO PACE, represented
by ROSALIA PACE, Respondents. Held: No
Facts: - A property acquired through mistake or fraud creates

implied Trust
RTC of Davao rendered a decision ordering that a part be
excluded from the land registered to Pace under an Original - The person acquiring becomes a Trustee
Certificate of Title. The RTC found out that such part actually
- The person from whom the property comes is the
pertains to Ciriaco and his predecessor in interest, Jumamoy. Pace’s
beneficiary
application for an OCT erroneously included such lot. The RTC then
ordered Pace to reconvey the land to Ciriaco. - An action for reconveyance based on implied trust,
therefore prescribes in 10 years as it is an obligation created
Such decision became final and executor but the deed for
by law to be counted from the date of issuance of the
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reconveyance cannot be annotated on the title since the title was

Torrens title over the property.
found out to be cancelled already. The reason for this is that PNB
foreclosed the land after Pace mortgaged the lot in return for a - This rule, however, applies only when the person enforcing
series of loans which they later on failed to pay. Title was eventually the trust is not in possession of the property.
transferred to PNB. Ciriaco filed a complaint against PNB
2016
- there is no prescription when in an action for reconveyance, by such expansion that they could repurchase their respective lands
the claimant is in actual possession of the property because should the Lahug Airport expansion project not push through or
this in effect is an action for quieting of title once the Lahug Airport closes or its operations transferred to
Mactan-Cebu Airport. Some of the landowners accepted the
- The reason for this is that one who is in actual possession of assurance and executed deeds of sale with a right of repurchase.
a piece of land claiming to be the owner thereof may wait Others, however, refused to sell because the purchase price offered
until his possession is disturbed or his title is attacked
was way below market. This forced the Republic to file a complaint
before taking steps to vindicate his right, for expropriation, which was granted by the court. In view of the
- Ciriaco’s complaint is an action for quieting of title and adverted buy-back assurance made by the government, the owners
hence cannot prescribe. of the lots no longer appealed the decision of the trial court.
However, at the end of 1991, Lahug Airport completely ceased

operations as Mactan Airport opened to accommodate incoming
Vda. De Ouano v. Republic and outgoing commercial flights. The expropriated lots were never
GR. 168770 Feb. 9, 2011 utilized for the purpose they were taken as no expansion of Lahug
Airport was undertaken. This prompted the former lot owners to
J. Velasco Jr. formally demand from the government that they be allowed to
Note: There are actually 2 petitions, but they have the same facts so exercise their promised right to repurchase. The demands went
court simply consolidated them unheeded. Civil suits followed.
Case 1: Petitioner: The Ouanos (landowners); Respondent: Republic Ruling of RTC in Inocian Case: Reconvey the lots back to the
& MCIAA landowners
Case 2: Petitioner: MCIAA; Respondent: The Inocians (landowners) Ruling of CA in Ouano Case: Republic won and case was dismissed –
CA reasoned that the Ouanos, parted with their property not
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FACTS: through expropriation but via a sale and purchase transaction
In 1949, The National Airport Corporation (NAC), Mactan- ISSUE:

Cebu International Airport Authority’s (MCIAA) predecessor agency,
pursued a program to expand the Lahug Airport in Cebu City. The 1. W/N the alleged verbal assurance of the government that
government negotiated with the landowners who will be affected the landowners can reacquire is barred by the Statute of
Frauds
2016
2. W/N the lot owners are entitled to reconveyance of the lots in favor of the MCIAA, the latter obliging itself to use
properties simply on the basis of the verbal promise or the realties for the expansion of Lahug Airport; failing to
assurance of the NAC officials that the subject properties keep its end of the bargain, MCIAA can be compelled by the
woll be returned if the airport project would be abandoned. former landowners to reconvey the parcels of land to them,
(where doctrine of TRUSTS is applicable) otherwise, they would be denied the use of their properties
upon a state of affairs that was not conceived nor
HELD:
contemplated when the expropriation was authorized. In
1. NO. MCIAA’s invocation of the Statute of Frauds is effect, the government merely held the properties
misplaced primarily because the statute applies only to condemned in trust until the proposed public use or
executory and not to completed, executed, or partially purpose for which the lots were condemned was actually
consummated contracts. The agreement between the consummated by the government. Since the government
government and the private lot owners was already partially failed to perform the obligation that is the basis of the
performed by the government through the acquisition of transfer of the property, then the lot owners Ouanos and
the lots. The parties, however, failed to accomplish the Inocians can demand the reconveyance of their old
more important condition in the CFI decision decreeing the properties after the payment of the condemnation price.
expropriation of the lots litigated upon: the expansion of Constructive trusts are fictions of equity that courts use as
the Lahug Airport. The project––the public purpose behind devices to remedy any situation in which the holder of the legal
the forced property taking––was, in fact, never pursued title, MCIAA in this case, may not, in good conscience, retain the
and, as a consequence, the lots expropriated were beneficial interest. We add, however, as in Heirs of Moreno, that
abandoned. Hence, the two groups of landowners can, in an
the party seeking the aid of equity––the landowners in this
action to compel MCIAA to make good its oral undertaking instance, in establishing the trust––must himself do equity in a
to allow repurchase, adduce parol evidence to prove the
manner as the court may deem just and reasonable.
transaction.
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2. YES. The Ouanos and the Inocians’ right to repurchase is

what in the case of Heirs of Moreno was referred to as Equity and justice demand the reconveyance by MCIAA of the
constructive trust, one that is akin to the implied trust litigated lands in question to the Ouanos and Inocians. In the same
expressed in Art. 1454 of the Civil Code, the purpose of token, justice and fair play also dictate that the Ouanos and Inocian
which is to prevent unjust enrichment. In the case at bench, return to MCIAA what they received as just compensation for the
the Ouanos and the Inocians parted with their respective expropriation of their respective properties plus legal interest.
2016
for her paraphernal properties, denominated as Fideicomiso de
Juliana Lopez Manzano (Fideicomiso), to be administered by her
Lopez v. Court of Appeals husband. If her husband were to die or renounce the obligation, her
G.R. No. 157784. December 16, 2008. nephew, Enrique Lopez, was to become administrator and executor
Ponente: Tinga of the Fideicomiso. As to her conjugal properties, Juliana
bequeathed the portion that she could legally dispose to her
Petitioner: Richard Lopez, in his Capacity as Trustee of the Trust husband, and after his death, said properties were to pass to her
Estate of the late Juliana Lopez-Manzano great grandchildren (biznietos).
Defendant: Court of Appeals, Corazon Lopez, Fernando Lopez, Juliana initiated the probate of her will five (5) days after its
Roberto Lopez, represented by Luzviminda Lopez, etc. execution, but she died on August 12, 1968, before the petition for
probate could be heard. The petition was pursued instead in Special
Memory aid: paraphernal properties, implied trusts, prescription 10
Proceeding (SP) 706 by her husband, Jose, who was the designated
years executor in the will. On October 7, 1968, the probate court
FACTS admitted the will to probate and issued the letters testamentary to
Jose. Jose then submitted an inventory of Juliana's real and personal
The instant petition stemmed from an action for properties with their appraised values, which was approved by the
reconveyance instituted by petitioner Richard B. Lopez in his probate court.
capacity as trustee of the estate of the late Juliana Lopez Manzano
(Juliana) to recover from respondents several large tracts of lands Thereafter, Jose filed a Report on August 16, 1969 which
allegedly belonging to the trust estate of Juliana. included a proposed project of partition. In the report, Jose
explained that as the only compulsory heir of Juliana, he was
The decedent, Juliana, was married to Jose Lopez Manzano entitled by operation of law to one-half (1/2) of Juliana's
(Jose). Their union did not bear any children. Juliana was the owner paraphernal properties as his legitime, while the other one-half
of several properties, among them, the properties subject of this (1/2) was to be constituted into the Fideicomiso. At the same time,
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dispute. The disputed properties totaling more than 1,500 hectares Jose alleged that he and Juliana had outstanding debts totaling
consist of six parcels of land, which were all located in Batangas. P816,000, excluding interests, and that these debts were secured by
They were the exclusive paraphernal properties of Juliana. real estate mortgages. He noted that if these debts were liquidated,
the "residuary estate available for distribution would, value-wise, be
On 23 March 1968, Juliana executed a notarial will,2
very small."
whereby she expressed that she wished to constitute a trust fund
2016
Then, Jose listed those properties which he alleged were Petitioner's father, Enrique Lopez, assumed the trusteeship
registered in both his and Juliana’s names, totaling 13 parcels in all. of Juliana's estate. On August 30, 1984, the RTC of Batangas
On August 25, 1969, the probate court issued an order approving appointed the petitioner as trustee of Juliana's estate. On
the project of partition. As to the properties to be constituted into December 11, 1984, petitioner instituted an action for
the Fideicomiso, the probate court ordered that the certificates of reconveyance of parcels of land with sum of money before the RTC
title thereto be cancelled, and, in lieu thereof, new certificates be of Batangas against respondents.
issued in favor of Jose as trustee of the Fideicomiso covering one-
half (1/2) of the properties listed on the project of partition and The complaint alleged that Jose was able to register in his
name the disputed properties, which were the paraphernal
regarding the other half, to be registered in the name of Jose as heir
of Juliana. The properties which Jose had alleged as registered in his properties of Juliana, either during their conjugal union or in the
and Juliana's names, including the disputed lots, were adjudicated course of the performance of his duties as executor of the testate
to Jose as heir, subject to the condition that Jose would settle the estate of Juliana and that upon the death of Jose, the disputed
obligations charged on these properties. The probate court, thus, properties were included in the inventory as if they formed part of
Jose's estate when in fact Jose was holding them only in trust for
directed that new certificates of title be issued in favor of Jose as
the registered owner thereof in its Order dated September 15, the estate of Juliana.
1969. On even date, the certificates of title of the disputed On September 10, 1990, the RTC rendered a summary
properties were issued in the name of Jose. judgment, dismissing the action on the ground of prescription of
The Fideicomiso was constituted in SP No. 706 action. Hence, this petition.
encompassing one-half (1/2) of the Abra de Ilog lot on Mindoro, the ISSUE
1/6 portion of the lot in Antorcha St. in Balayan, Batangas and all
other properties inherited ab intestate by Juliana from her sister, Whether the action for reconveyance has prescribed
Clemencia (in accordance with the order of the probate court in S.P.
HELD
No. 706.) The disputed lands were excluded from the trust.
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YES. The resolution of this issue calls for a determination of

Jose died on July 22, 1980. Pursuant to Jose's will,
whether or not that there was an implied trust constituted over the
December 20, 1983 the RTC ordered the transfer of the disputed
disputed properties when Jose, the trustee, registered them in his
properties to the respondents as the heirs of Jose. Consequently,
name. If there was an implied trust, then it will be subject to
the certificates of title of the disputed properties were cancelled
extinctive prescription of 10 years. The Court found that there was
and new ones issued in the names of respondents.
indeed an implied, constructive trust when the court, by an
2016
apparent mistake, excluded the disputed properties in the erroneous and Jose's possession would be that of a trustee in an
Fideicomiso and subsequently adjudicated the same to be implied trust. Implied trusts are those which, without being
registered under Jose’s name as heir. The reckoning point of the expressed, are deducible from the nature of the transaction as
prescription was September 15, 1969. This period is reckoned from matters of intent or which are superinduced on the transaction by
the date of the issuance of the original certificate of title or TCT. operation of law as matters of equity, independently of the
Such issuance operates as a constructive notice to the whole world, particular intention of the parties. The facts of the case are
the discovery of the fraud is deemed to have taken place at that governed by Article 14562.
time.
The rule that a trustee cannot acquire by prescription ownership
Petitioner insists that an express trust was constituted over property entrusted to him until and unless he repudiates the
over the disputed properties, thus the registration of the disputed trust applies only to express trusts and resulting implied trusts.
properties in the name of Jose as trustee cannot give rise to
prescription of action to prevent the recovery of the disputed RESULTING TRUST vs. CONSTRUCTIVE TRUST
properties by the beneficiary against the trustee. Juliana did indeed A resulting trust is presumed to have been contemplated
intend to constitute an express trust, but the disputed properties by the parties, the intention as to which is to be found in the
were expressly excluded from the Fideicomiso. nature of their transaction but not expressed in the deed itself.
The probate court adjudicated the disputed properties to A constructive trust is created, not by any word evincing a
Jose as the sole heir of Juliana. If a mistake was made in excluding direct intention to create a trust, but by operation of law in order
the disputed properties from the Fideicomiso and adjudicating the to satisfy the demands of justice and to prevent unjust
same to Jose as sole heir, the mistake was not rectified as no one enrichment. It is raised by equity in respect of property, which has
appeared to oppose or the exclusion of the disputed properties been acquired by fraud, or where although acquired originally
from the Fideicomiso. Moreover, the exclusion of the disputed without fraud, it is against equity that it should be retained by the
properties from the Fideicomiso bore the approval of the probate person holding it.
court. The issuance of the probate court's order adjudicating the
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disputed properties to Jose as the sole heir of Juliana enjoys the Salao v. Salao
presumption of regularity. Facts:
On the premise that the disputed properties were the This litigation is about a 47 hectare fishpond (Calunuran
paraphernal properties of Juliana, which should have been included fishpond). Manuel Salao and Valentina Ignacio had 4 children
in the Fideicomiso, their registration in the name of Jose would be (Patricio, Alejandra, Juan(Banli), and Ambrosia). Manuel Salao died
2016
first, followed by the eldest son, Patricio. After some time, Valentina Trial Court dismissed the complaint. It found that there
also died and her estate was administered by Ambrosia. There were were no community of property among Juan Salao Sr., Ambrosia,
4 legal heirs (Alejandra, Juan(Banli), Ambrosia and, the son of and Valentin when the Calunuran fishpond was acquired. It said that
Patricio, Valentin). Basically, the lands that were adjudicated were Valentin’s omission during his lifetime to assail the Torrent titles of
mostly fishponds and ricelands. After the partition of the estate, it Juan and Ambrosia signified that he was not a co-owner of the
was shown that Banli and Ambrosia were able to obtain new fishponds. No strong evidence supported the contentions of Benita.
fishponds which were both registered under the Torrens System.
One of those fishponds is the Calunuran fishpond. Take note that Both appealed. Benita, because the reconveyance was
denied. Juan Jr., because the claim for damages was denied.
the person bringing this suit is the daughter of Valentin, named
Benita. This was after Valentin had died. His estate was partitioned
between his two daughters, Benita and Victorina. Benita is claiming
that in obtaining the Calunuran fishpond, funds from the estate of Issue:
Manuel Salao were used and as such, Valentin Salao and Alejandra
W/N the Calunuran fishpond was held in trust for Valentin
Salao were also included in that venture/acquisition of the
Salao by Juan Salao Sr. and Ambrosia.
Calunuran fishpond. There was no documentary evidence to
support this claim by Benita. Also, there were no mention of such
interest made in the extrajudicial partition of Valentin’s estate.
Another thing to take into account is that, Ambrosia donated the Held:
fishpond in contention to Banli’s son Juan Salao Jr. So to recap, the
NO. sTrusts are either express or implied. Express trusts are
parties in this case is Benita (daughter of Valentin) against Juan Jr.
created by the intention of the trustor or of the parties. Implied
(Son of Banli and Nephew of Ambrosia). Benita is claiming a share in
trusts come into being by operation of law. Express trusts – cannot
the Calunuran fishpond because it claims that her father had a share
prove using parol evidence. Implied trusts may be proven by oral
in acquiring the said Calunuran fishpond. Juan Jr, disagrees and
evidence. In this case, plaintiff’s pleadings and evidence cannot be
contends that the sole owner is his father and aunt, Ambrosia as
relied upon to prove an implied trust. The trial court’s firm
BLOCK B 2016
clearly indicated in the certificate of title. There was an action for

conclusion that there was no community of property between the
the annulment of the donation to Juan Jr and for the reconveyance
parties is substantiated by documentary evidence. The fact that
of their share in the Calunuran fishpond. Juan Jr subsequently died
Valentin Salao and his successors-in-interest never bothered for a
and was substituted by his widow and six children.
period of nearly forty years to procure any documentary evidence
to establish his supposed interest of participation in the two
2016
fishponds is very suggestive of the absence of such interest. There six-month old daughter named Norma Leuenberger. (Note: Norma
was also no evidence that shows Valentin’s participation in the is Isabel’s child)
Calunuran fishpond. All in all, the plaintiffs utterly failed to measure
up to the yardstick that a trust must be proven by clear, satisfactory  Norma married Francisco Soliva and inherited from Simeona
and convincing evidence. It cannot rest on vague and uncertain the whole of Lot 140 and subsequently donated a portion
evidence or on loose, equivocal or indefinite declarations. A trust (~3 hectares) of it to petitioner Municipality in 1952 for the
cannot be established, contrary to the recitals of a Torrens title, construction of a certain high school. She intended to
upon vague and inconclusive proof. There was no resulting trust convert a portion (~4 hectares) of the lot into a subdivision.
because there was never any intention on the part of Juan Sr., In 1963, Norma discovered that petitioner Municipality was
Ambrosia and Valentin to create any trust. There was no using the land she donated as a cemetery and was encroaching
constructive trust because the registration of the fishpond in the upon her property, identified as Lot 76. When Norma inquired upon
names of Juan and Ambrosia was not vitiated by fraud or mistake. the matter with the mayor of the municipality, the latter told
This is not a case where to satisfy the demands of justice it is Norma that the municipality already bought the land. Norma then
necessary to consider the Calunuran fishpond as being held in trust demanded that she be shown the papers evidencing the sale,
by the heirs of Juan Y Salao, Sr. for the heirs of Valentin Salao. And however, the mayor asked Norma to ask the municipal treasurer,
EVEN IF there was an implied trust, it was clearly barred by who refused to do the same.
prescription or laches.
Norma then filed a complaint with the CFI of Negros Occidental
for recovery of possession of the disputed parcel of land occupied
Municipality of Victorias v. CA by the municipality. The latter interposed the defense of ownership
over the lot having bought it from Norma’s grandmother Simeona.
GR. L-31189 // March 31, 1987 // Paras, J.
The CFI decided in favor of petitioner Municipality which the CA
Summary/ Memory Aid: subsequently reversed. Hence, this petition for review by way of
certiorari.
Facts:
BLOCK B 2016
Issue(s):
Gonzalo Ditching owned a 27.246 hectare sugar land which
is part of Cadastral Lot 140 in Mandaniog Victorias, Negros W/N Norma is the lawful owner of the disputed lot.
Occidental. Gonzalo died and was survived by his spouse Simeona
and a daughter named Isabel, who (both?) died in 1928 leaving a Ratio/Held:
2016
The SC held that Norma held the disputed property in trust Neither can Norma deprive the Municipality of possession over the
for the Municipality of Victorias since Art. 1456 provides that if a disputed lot nor be made to pay rentals thereof.
property is acquired through mistake or fraud the person who
obtained it is considered by the law a trustee of an implied trust
for the benefit of the person from who the property comes. PNB v. CA
Although petitioner Municipality could not present the
original Deed of Sale covering the said lot, they produced however a G.R. No. 97995 January 21, 1993
notarial report which showed the following:
PHILIPPINE NATIONAL BANK, petitioner,  vs. COURT OF APPEALS
 Nature of the instrument – a deed of sale
AND B.P. MATA AND CO., INC., respondents.
 Subject of the sale – two parcels of land (Lot 140-A and 140-
B) Romero, J (ponente)
 Parties of the contract – Simeona and the Mayor of the
Facts:
Municpality
 Consideration - P750 Mata is a manning/crewing agent of several firms, one of
which is Star Kist. As part of their agreement, Mata makes advances
Under the best evidence rule, if the original writing is lost or
for the crew's necessary expenses such as medical expenses,
destroyed, the concerned party may present either a copy, an
Seaman’s Welfare Fund, etc. Mata bills Star Kist, who reimburses it
authentic copy reciting its contents or by recollection of a witness.
for the same.
Hence, the notarial report of Notary Aragorn was sufficient to
substantiate the Municipalities claim that it acquired the land One day, Security Pacific National Bank (SEPAC) of Los
through a sale. Angeles, under the orders of Star Kist, transmitted a cable message
to the International Department of PNB to pay the amount of
Unfortunately, the Municipality failed to register the
US$14,000 to Mata by crediting the latter's account with the Insular
BLOCK B 2016
original Deed of Sale and when Simeona died, Norma mistakenly

Bank of Asia and America (IBAA). Upon receipt, PNB noticed an
claimed to have inherited the disputed land and had it titled under
error and messaged SEPAC. The latter replied acknowledging that
her name although the lot had already been sold to petitioner
the amount should be $1,400 for the crew’s expenses instead of
Municipality. The SC cited Article 1456 and decreed that Norma was
$14,000.
a trustee of an implied trust for the benefit of the Municipality and
is duty bound to execute a deed of reconveyance to the latter.
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PNB followed the instructions and credited the same. is named a trustee for the benefit of another who is called the cestui
However, 14 days later or on March 11, 1975, PNB credited another que trust, respecting property which is held by the trustee for the
payment of $14,000. Six years later or on May 13, 1981, PNB benefit of the cestui que trust. A constructive trust, unlike an
requested Mata for the refund of the said amount. On February 4, express trust, does not emanate from, or generate a fiduciary
1982, PNB filed a case to collect the amount. relation. While in an express trust, a beneficiary and a trustee are
linked by confidential or fiduciary relations, in a constructive trust,
PNB alleges that the case is a trust therefore the action has
there is neither a promise nor any fiduciary relation to speak of and
not yet prescribed (10year prescription) the so-called trustee neither accepts any trust nor intends holding
RTC dismissed the case holding that it was a case of solution the property for the beneficiary. 14
indebiti. Being a quasi-contract, the action on it has already
In this case, Mata, in receiving the US$14,000 in its account,
prescribed (6 years). had no intent of holding the same for a supposed beneficiary or
CA affirmed in toto. cestui que trust, namely PNB. But under Article 1456, the law
construes a trust, namely a constructive trust, for the benefit of the
Issue: person from whom the property comes, in this case PNB, for
reasons of justice and equity.
w/n the case is one of solution indebiti or constructive trust – can
be both (2) No. Although only 7 years has passed, being well within the 10
year prescriptive period, PNB still cannot claim because it is barred
w/n PNB can still collect the refund – No.
by laches.
Held:
While prescription is concerned with the fact of delay,
(1) SC held that solution indebiti is also applicable in the case at bar, laches deals with the effect of unreasonable delay. It is amazing that
however, since PNB cannot choose that “path” anymore as the it took PNB almost seven years before it discovered that it had
action will have prescribed (6years), it is forced to choose the option erroneously paid private respondent. PNB would attribute its
BLOCK B 2016
of “constructive trust”. mistake to the heavy volume of international transactions handled

by the Cable and Remittance Division of the International
Constructive Trust Department of PNB. Such specious reasoning is not persuasive. It is
unbelievable for a bank, and a government bank at that, which
Article 1456 reveals that it is not a trust in the technical
regularly publishes its balanced financial statements annually or
sense for in a typical trust, confidence is reposed in one person who
more frequently, by the quarter, to notice its error only seven years
2016
later. As a universal bank with worldwide operations, PNB cannot price that the former can compel conveyance of the property from
afford to commit such costly mistakes. Moreover, as between the latter.
parties where negligence is imputable to one and not to the other,
the former must perforce bear the consequences of its neglect. FACTS
Hence, PNB should bear the cost of its own negligence. Julian sought the help of his children so he can buy the
property but only his son Felipe and wife Josefa had the financial
resources he needed at that time. To bring about the purchase,
PARINGIT v. BAJIT Julian executed a deed of assignment of leasehold right in favor of
G.R. No. 181844, September 29, 2010, J. Abad Felipe and his wife that would enable them to acquire the lot. Felipe
and Josefa then purchased the property from Terocel for
Php55,500. A Deed of Absolute Sale was executed in their favour
Petitioners: Sps Felipe and Josefa Paringit and title was turned over to them in 1984.
In 1985, due to issues among Julian's children regarding the

Respondents: Marciana Paringit Bajit, Adolio Paringit and Rosario
Paringit Ordoa ownership of the lot, Julian executed an affidavit clarifying the
nature of Felipe and his wife's purchase of the lot. He claimed that it
Memory Aid: Implied trust, a property was bought by 1 sibling was bought for the benefit of all his children. The affidavit stated:
supposedly for the benefit of all; the other siblings now want to
recover their share in the property by reimbursing their brother for Terocel Realty, Inc., owners of the lots in Sampaloc, gave a
their share in the purchase price limited period to occupants like us within which to purchase the
lands occupied and as I had no funds at that time, I asked all my
Doctrine: children and their respective spouses to contribute money with
which to purchase the lot and thereafter to divide the lot among
Implied trust under Article 1450 presupposes a situation themselves but only my son Felipe Paringit and his wife Josefa
where a person, using his own funds, buys property on behalf of
answered my plea and so, in order that they could purchase the
BLOCK B 2016
another, who in the meantime may not have the funds to purchase land, I assigned to my son and his wife my right to the whole
it. Title to the property is for the time being placed in the name of
property and with this assignment, the couple purchased the parcel
the trustee, the person who pays for it, until he is reimbursed by the of land from the Terocel Realty, Inc. for the sum of Fifty Five
beneficiary, the person for whom the trustee bought the land. It is Thousand Five Hundred Pesos (P55,500.00) Philippine currency.
only after the beneficiary reimburses the trustee of the purchase
……
2016
the same must be divided equally among my five children at 15 sq. For their part, Marciana, et al insisted that the agreement
m. each; but each of them should reimburse their brother Felipe and was that Felipe and his wife would acquire the lot for the benefit of
his wife, Josefa the proportional amount advanced by them as I also all the siblings. They even tried to reimburse the spouses for their
will reimburse him the sum of P30,000.00 or one half of the amount shares in the lot's price but the spouses avoided them. Marciana, et
that the couple advanced. al denied pressuring Josefa into signing the document in question
and in fact, it was Josefa herself who caused the drafting of the
The siblings Marciana, Rosario and Adolio (Marciana, et al)
affidavit.
signed their concurrence to the affidavit. Josefa, Felipe’s wife signed
the affidavit for Felipe who was in Saudi Arabia. Only Florencio did RTC – ruled in favour of Felipe and Josefa, finding the evidence of
not sign. Marciana, et al insufficient to prove that Felipe and his wife bought
the subject lot for all of the siblings.
Although the lot was registered under the name of Felipe
and his wife, they moved into a different house on the same street CA – ruled in favour of Marciana, et al,
where the subject property is situated, while the three other
Issues:
siblings occupied the house. This was the situation when their
father Julian died in 1994. 1. W/N Felipe and his wife purchased the subject lot under an
After Julian died, Felipe sent demand letters for rentals to implied trust for the benefit of all the children of Julian –
his siblings who were occupying the lot. Marciana, et al refused to YES
pay rent contending that they all inherited the land from their 2. W/N Marciana, et al’s right of action was barred by
father. Felipe succeeded in securing an ejectment against his prescription or laches – NO
siblings and thereafter moved into the house with his wife.
RATIO:
Marciana and the other siblings filed the present action for
annulment of title and reconveyance of the property. In his answer, 1. YES, there was indeed an implied trust over the subject property
Felipe denied knowledge of any agreement that the property would under Article 1450 of the Civil Code in favor of Marciana, et al.
BLOCK B 2016
be purchased for all of them. Josefa, Felipe’s wife who signed the They must reimburse Felipe of their corresponding share in the
affidavit said she only signed because if she did not, everyone would purchase price.
be mad at her. She further says she merely signed to admit having
Article 1450 presupposes a situation where a person, using
received such affidavit.
his own funds (Felipe in this case), buys property on behalf of
another, who in the meantime may not have the funds to purchase
2016
it (his father Julian for the benefit of the 5 siblings). Title to the not incompatible with implied trust. It was understood that they did
property is for the time being placed in the name of the trustee, the this for the benefit of Julian and all the children.
person who pays for it (Felipe), until he is reimbursed by the
beneficiary, the person for whom the trustee bought the land (the Felipe and his wife also claim that Marciana and the others’
other siblings). action was barred by laches. There is no basis for such claim. They
had no reason to file an earlier suit against Felipe and his wife since
The circumstances of this case are exactly what implied the latter had not bothered them in their possession for so long.
trust is about. Although no express agreement covered Felipe and There was repudiation only when Felipe sent demand letters after
his wife's purchase of the lot for the siblings and their father, it which Marciana, et al immediately took legal action.
came about by operation of law and is protected by it. The nature of
the transaction established the implied trust.
Furthermore, Felipe and his wife demanded rent from Heirs of Candelaria v. Romero
Marciana and the others only a year after Julian's death in 1994. G.R. No. L-12149 September 30, 1960
This shows that from 1984 when they bought the lot to 1995, when HEIRS OF EMILIO CANDELARIA, ETC., plaintiff-appellant,
they made their demand on the occupants to leave, or for over 10 vs.
years, Felipe and his wife respected the right of the siblings to LUISA ROMERO, ET AL., defendants-appellees.
reside on the property. This is incompatible with their claim that
they bought the house and lot for themselves back in 1984. Vicente P. Fernando for appellants.
P.L. Meer for appellees.
2. NO. The action of Marciana and the other siblings is not barred by
prescription nor by laches. GUTIERREZ DAVID, J.:
An implied trust prescribes within 10 years from the time Nature of Case: Case for Recoveyance of Real Property.
the right of action accrues. The beneficiary's cause of action arises
Memory Aid: Candelaria Brothers. Good guy brother.
when the trustee repudiates the trust, and not when the trust was
BLOCK B 2016
created as Felipe and his wife contend. The spouses registered the Facts:
lot in their names in January 1987 but they could not be said to
have repudiated the implied trust by that registration. Their Lucas and Emilio Candelaria each bought a lot of property in
purchase of the land and registration of its title in their names are the Solokan Subdivision on an installment basis. Lucas was initially
able to pay the first two payments, but sadly fell sick and became
2016
bedridden. Thus, he made an agreement with his brother Emilio W/N the action to have the property held in trust has
wherein he sold his interest in the lot, and who paid the remaining prescribed.
instalment payments on Lucas’ lot and reimbursed him for the first
two payments he already made. However, despite there being no The trust alleged to have been created, in our opinion, is an
more interest of Lucas in the property, the payment was still made implied trust. As held, in effect, by this Court in the case of Martinez
in his name. In 1918, the corresponding Torrens title was issued in vs. Graño (42 Phil., 35), where property is taken by a person under
an agreement to hold it for, or convey it to another or the grantor, a
Lucas’ name.
resulting or implied trust arises in favor of the person for whose
It was understood between them that Lucas would merely benefit the property was intended. This rule, which has been
hold the title in trust for Emilio, and that Emilio merely tolerated the incorporated in the new Civil Code in Art. 1453 thereof, is founded
possession by Lucas of the land, and that he even let Lucas collect upon equity. It is also the rule there that an implied trust arises
all the rent due from the land as a form of financial aid to him where a person purchases land with his own money and takes a
because he was bedridden and had many kids to support (such a conveyance thereof in the name of another.
good guy this guy Emilio). When Emilio died of Leprosy in 1936,
Lucas continued to give a portion of the rents to Emilio’s wife, In such a case, the property is held on a resulting trust in
favor of the one furnishing the consideration for the transfer, unless
pursuant to his last wishes.
a different intention or understanding appears. The trust which
Subsequently in 1942, Lucas also died. The lot however, results under such circumstances does not arise from contract or
continued to be in the possession of Luisa Romero (Lucas’ wife) and agreement of the parties, but from the facts and circumstances,
his children. The heirs of Emilio now wanted to recover the that is to say, it results because of equity and arises by implication
property. Naturally, the heirs of Lucas Candelaria didn’t want that, or operation of law. (See 89 C.J.S. 964-968.)
hence the instant case.
In the present case, the complaint expressly alleges that
At the RTC Level: The case was dismissed. This was because the RTC "although Lucas Candelaria had no more interest over the lot, the
concluded that the facts attempted to prove the existence of an subsequent payments made by Emilio Candelaria until fully paid
BLOCK B 2016
express trust, and such type of trust is unenforceable without were made in the name of Lucas Candelaria, with the understanding
writing. It also ruled that since the cause of action accrued in 1918, that the necessary documents of transfer will be made later, the
bringing the case only in 1956 means the action has long prescribed. reason that the transaction being brother to brother." From this
allegation, it is apparent that Emilio Candelaria who furnished the
Issue: W/N the trust created was an express or implied trust. consideration intended to obtain a beneficial interest in the
property in question. Having supplied the purchase money, it may
2016
naturally be presumed that he intended the purchase for his own ADAZA VS COURT OF APPEALS
benefit. Indeed, it is evident from the above-quoted allegation in G.R. No. 47354; March 21, 1989
the complaint that the property in question was acquired by Lucas
Candelaria under circumstances which show it was conveyed to Ponente: Feliciano, J.
him on the faith of his intention to hold it for, or convey it to the Petitioner: Horacio G. Adaza and Felicidad Murandan
grantor, the plaintiff's predecessor in interest.
Respondent: The Honorable Court of Appeals and Violeta G. Adaza
Constructive or implied trusts may, of course, be barred by
lapse of time. The rule in such trusts is that laches constitutes a bar Memory Aid:
to actions to enforce the trust, and repudiation is not required,
Land donated in favour of Violeta alone but the Father
unless there is a concealment of the facts giving rise to the trust.
(Diaz, et al. vs. Gorricho, et al., 103 Phil., 261; 54 Off. Gaz. [37] intended to donate it to both Violeta and Horacio. Implied trust.
Defense of laches is precluded by recognition of existence of Trust
8429.) Continuous recognition of a resulting trust, however,
precludes any defense of laches in a suit to declare and enforce the in the 2 letters.
trust. (See 581, 54 Am Jur. pp. 448-450.) The beneficiary of a Facts:
resulting trust may, therefore, without prejudice to his right to
enforce the trust, prefer the trust to persist and demand no Victor Adaza has 6 children: petitioner Horacio, Homero,
conveyance from the trustee. Demosthenes, respondent Violeta, Teresita and Victor, Jr. Before
Victor died, he executed a deed of donation of a parcel of land in
What we can take away here: Sinonok, Zamboanga Del Norte in favour of Violeta, when she was
still single. The donation was accepted in the same instrument and
Generally: Constructive or implied trusts can be affected by laches.
notarized. Since the land was still part of the public domain, Violeta
Exception: Continuous recognition of the trust, however, will with aid of Horacio filed a homestead application. The Original
prevent laches from setting in. Certificate of Title was issued in Violeta’s name alone and she
declared it under her name for tax declaration. Violeta and her
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In this case, the continuing recognition by the heirs of Emilio of the husband obtained a loan from PNB and secured it with a mortgage
trust relationship (it was hypothetically admitted in court) of the land. After many years, Horacio asked Violeta to sign a Deed
prevented laches from taking effect. Thus, the Supreme Court of Waiver which stated that the Sinonok property was owned in
remanded the case back to lower courts to receive more evidence. common by Violeta and Horacio, even though the certificate of title
had been issued in her name only. It also provided for the waiver,
2016
transfer and conveyance by Violeta in favor of Horacio of 1/2 of the unconditionally donated to Violeta, while the waiver has no cause
Sinonok property, together with all improvements existing in that or consideration. CA thinks that if there was indeed an informal
1/2 portion. Violeta signed this Deed of Waiver: the Deed was also agreement during the donor’s lifetime to donate the land to both
signed by Horacio and Homero Adaza as witnesses. However, few Violeta and Horacio, it has been rendered useless by the donation
months later, Violeta with her husband filed a complaint for solely in favour to Violeta which superseded.
annulment of the Deed of Waiver claiming that Violeta is the sole
Issues:
owner as evidenced by the OCT and that she signed it because of
Horacio’s fraud, misrepresentation and undue influence. Moreover, (1) WON the donated parcel of land is owned in common by
Violeta claim that Horacio's alleged 1 / 2 share was barred by Violeta and Horacio?
laches, if not by prescription because of his long delay and inaction
in taking any steps for reconveyance of the 1/2 share. 12 years had (2) WON the defense of laches could bar Horacio’s claim for
passed since OCT was issued in Violata’s name and more than 19 reconveyance?
years since the Deed of Donation was executed.
Held:
On the other hand, Horacio claims that Violeta had
(1) Yes! Their father Victor execution of the Deed of Donation
executed the Deed of Waiver freely and voluntarily. He contend that
of 10 June 1953 by respondent Violeta's father created an
Violeta's ownership was subject to Horacio's rights as co-owner and
implied trust in favor of Horacio in respect of half of the
to the obligation to keep or use the property for the benefit of their
property donated. According to Art. 1449. There is also an
parents while either of them was still alive. The Deed includes a
implied trust when a donation is made to a person but it
crossed-out provision which stated that the done shall share ½ of
appears that although the legal estate is transmitted to the
the entire property to one of her brother or sister after the donor’s
donee, he nevertheless is either to have no beneficial
death. Horacio himself crossed it out with his father’s consent in
interest or only a part thereof.
order to have the land titled to Violeta alone, although they are co-
owners. Allegedly, their father’s real intent was to donate it to both The critical question is the real intent of the donor which must
of them.
BLOCK B 2016
be respected and implemented in whatever medium available in

our civil law. Their parents for some reason made it a practice to put
RTC ruled that the Deed of Waiver is valid and binding to
the land in the name of only one child but intended to be shared
Violeta. So ½ of the land should go to Horacio.
with another .The intent was evidenced by (1) the Deed of Waiver
CA agreed that the Waiver was signed voluntarily, if which was found by the RTC and CA to have been signed voluntarily
reluctantly but the lot belongs solely to Violeta because it has been and ion the presence of her other brothers and sister ; (2) on the
2016
same occasion when the Waiver was signed another brother Victor SING JUCO and SING BENGCO vs. ANTONIO
Adaza, Jr. had also executed a similar Deed of Waiver covering ½ SUNYANTONG and his wife VICENTA LLORENTE DE
share of another piece of property at, Dapitan City, titled solely in SUNYANTONG
Victor, Jr.'s name, in favor of his sister Teresita and (3) the property
was administered by Homero but the proceeds of the land were
used for the expenses of their bedridden mother and Violeta when FACTS
she was studying. Horacio also waived his share of the income in
Sing Juco and Sing Bengco were the employers of Antonio.
favour of Violeta and husband since at that time they were having a
They trusted him and reposed confidence in him regarding matters
financial difficulty since their child suffers from brain ailment and to
pertaining to a planned purchase of property owned by Maria Gay.
finance the expenses of his bedridden mother.
This was the San Antonio Estate where they had an option to buy.
These circumstances show that the land was held by Violeta in Such option expired but the parties agreed verbally to extend such
trust for Horacio. agreement. Antonio advised the plaintiffs not to communicate to
Maria Gay right away their desire to purchase the property so that
(2) No! the continued recognition of the existence of the trust she would not think that they coveted the property. He then
precludes the defense of laches. The 2 letters sent by accompanied De los Santos to look at the property per instructions
Violeta to Horacio show that Violeta as late as 1971 had of the plaintiffs but he instructed De los Santos not to tell the
recognized the trust imposed on her by law. Also, the plaintiffs because he (delos Santos) might be blamed if his
doctrine of laches is not to be applied mechanically as assessment is flawed. After this, on the day that the option was
between near relatives; the fact that the parties in the about to expire, Antonio called Maria Gay and told her that he
instant case are brother and sister tends to explain and would purchase at the amount offered by Maria Gay and that it was
excuse what would otherwise appears as long delay. to be placed under the name of his wife. This is clearly prejudicial to
Horacio relied upon his blood relationship with his sister plaintiffs. Maria Gay called Sotelo, the broker of the plaintiffs, to tell
and the trust and confidence normally connoted in our him this. Sing Bengco told her something to the effect that if she is
culture by that relationship. not willing to wait until 12oclock, then “ewan ko sayo”. This could
BLOCK B 2016
be construed in different ways such as Sing Bengco waiving their

right or threatening her to file an action. Maria Gay construed it as
the former and closed the sale.
ISSUE
2016
WON the property could be returned to plaintiffs Also, in Camacho v. Baliuag invoked by the majority, the undisclosed
principal made an instruction to the agent to acquire the property
HELD and put it in their name. They also furnished the funds. Such is not
Yes. true in this case.
Without the intervention of Antonio, the sale would have

pushed through and it could have been closed to the advantage of
FIGURACION VS FIGURACION-GERILLA
the plaintiffs. “It is an illicit act committed with culpa and,
GR NO. 151334 FEBRUARY 13, 2013
therefore, its agent is liable (art. 1089, Civil Code), for the
damage caused.” In American Law, there is an equitable trust Petitioners: Carolina VDA. Figuracion, heirs of Elena - Leoncio, heirs
where the trustee is held to be holding the property only for the of Hilaria – Felipa, Mary, Emilia and heirs of quintin – Linda,
benefit of his principal. Thus, this could be considered as such and Leandro, Allan Respondent: Emilia Figuracion-Gerilla
that Antonio acquired it and is only holding it in trust for his
principals, the plaintiffs. Memory Aid:
Villamor, dissenting Lot 707 was inherited by Carolina and Agripina; the latter
executed an Affidavit of Quitclaim in favour of Emilia over eastern
The decision was more moral, than judicial. There was no half of the land. Carolina in turn, sold the whole lot to Hilaria and
damage shown to have been caused to plaintiffs as they could have Felipa who had it transferred to their names. The court held that an
exercised the option before it expired, which they did not do. Also, implied trust is created by fore of aw and Hilaria and Felipa were
Sing Bengco made a statement which led Maria Gay to believe that considered a trustee of Emilia’s undivided share.
they are waiving their right. Also, the doctrine laid down by the
majority decision regarding agents cannot be applied to this case
because the plaintiffs are engaged in the buy and sell of dry goods, Should they negotiate without this authorization, the prof its of the negotiation shall be f or
the principal and the losses f or the account of the f actor.
not real properties, hence, Antonio cannot be held to be their agent
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in this case, nor is he a manager of any business of the plaintiffs8. If the principal has granted the f actor authorization to make transactions f or his
own account or in union with other persons, the f ormer shall not be entitled to the
prof its, nor shall he participate in the losses which may be suffered.
8
article 288 of the Code of Commerce which say s:
If the principal has permitted the f actor to hav e an interest in some transaction, the
Factors can not transact business f or their own account, nor interest themselv es in participation of the latter in the prof its shall be, unless there is an agreement to the
their own name or in that of another person, in negotiations of the same character contrary , in proportion to the capital he may hav e contributed and should he not hav e
as those they are engaged in f or their principals, unless the latter expressly authorize contributed any capital, he shall be considered a working partner.
them thereto.
2016
Facts: Issue: WON Emilia has the right to the land and can compel
partition? Yes
1. The main focus of the case is Lot 707 because the partition
of Lot 2299 and Lot 705 was deemed premature because Held:
pending estate settlement proceeding. Lot 707, originally
Issue of invalidity raised first time on appeal and the validity of the
owned by EULALIO whom begot AGRIPINA with his first wife
Marcela and CAROLINA with his second wife Faustina. In quitclaim is a question of fact.
1961, Agripina executed a Deed of Quitclaim over the OWNERSHIP. Emilia is the owner of the eastern portion of Lot 707
eastern half of Lot 707 in favor of Emilia (One of Leandro by virtue of the quitclaim. It can’t be rendered ineffective by the
and Carolina’s daughter). TCT in the name of Felipa and Hilaria. Mere issuance of certificate of
2. In 1962, Carolina executed an Affidavit of Self Adjudication title in the name of any person does not foreclose the possibility
that the real property may be under co-ownership with person not
which names her as the sole and exclusive heir of her
parents and the owner of Lot 707. She then executed a named in the certificate or that the registrant may only be a trustee
or that other parties may have acquired interest over the property
Deed of Absolute Sale in favour of Hilaria and Felipa (also L
and C’s daughters) who in turn had the property registered subsequent to the issuance of the certificate of title. Co-ownership
in their names. was successfully established by Emilia. The Affidavit of Self
Adjudication did not prejudice the share of Agripina because it not
3. In 1971, Emilia and her family went to the US and returned legally possible for one to adjudicate unto himself an entire
only in 1981. Relying on the Deed of Quitclaim, she built a property he was not the sole owner of. Each of them only had the
house on the eastern half of Lot 707. The problem started right to alienate the lot but only in so far as the extent of her
when Hilaria threatened to demolish the house of Emilia portion was affected. Being the successor in interest of Agripina’s
who petitioned the partition of the three subject lots. share in Lot 707, Emilia took the former’s place in the co-ownership
and as such, has the right to compel partition anytime.
4. RTC decision: dismissed the petition of Emilia for partition,
reconveyance, quieting of title and damages. Further, the PRESCRIPTION. Co-heirs and co-owners can’t acquire by
BLOCK B 2016
affidavit of self adjudication, deed of sale and TCT involving acquisitive prescription the share of the other co-heirs or co-owners
Lot 707 were declared void. On appeal to the CA, it ruled absent a clear repudiation of the co-ownership. The act of
that the RTC erred in refusing to partition Lot 707, as when repudiation, as a mode of terminating co-ownership is subject to
Carolina sold the entire lot, in effect she only sold her share. certain conditions: 1.) co-owner repudiates the co-ownership; 2.)
such an act of repudiation is clearly made known to the other co-
2016
owners; 3.) the evidence thereon is clear and conclusive; and 4.) he share and usufructuary rights were merged with Carolina’s naked
has been in possession through open, continuous, exclusive and ownership. Hence Agripina is entitled to 5/8 portion of the lot while
notorious possession of the property required by law. In this case the remaining 3/8 pertains to Carolina. Thus when Carolina sold Lot
this was not proven. 707 to Hilaria and Felipa, the sale only affected only that portion.
Since the quitclaim only bequeathed only half of the eastern portion
IMPLIED TRUST. Implied trust by force of law was created of the lot in favour of Emilia, the remaining 1/8 of the lot shall be
when Hilaria and Felipa registered the lot in their names to the
inherited by Carolina, her closest collateral relative.
exclusion of Emilia and the two of them were considered a trustee
of Emilia’s undivided share. As trustees they can’t be permitted to
repudiate the trust by merely relying on the registration.
Prescription can only produce all of its effects when acts of
ownership, or in this case, possession, do not evince any doubts as
to ouster of the rights of the other co-owners. The express
disavowal of co-ownership did not happen during the issuance of
the TCT but happened in 1994 when the sisters attempted to
demolish Emilia’s house. On the same year, Emilia instituted the
action for partition thus the period required by law for acquisitive
period to set in was not met.
OWNERSHIP OF LOT 707. Under the Old Civil Code (when

Eulalio and Marcela married), the lot was their conjugal property.
When Marcela died, ½ of the lot was reserved to Eulalio and the
other half to Agripina and Eulalio. Eulalio was entitled only to the
usufruct while the naked ownership belonged to Agripina. When he
remarried, his half portion of the lot and his usufructuary right over
BLOCK B 2016
the other half were brought into his second marriage with Faustina.
When Eulalio died ¼ of the lot was reserved for Faustina.

The remaining ¼ were transmitted equally to Faustina, Carolina and
Agripina. The usufructuary of Eulaiio was then merged with
Agripina’s naked ownership. Upon death of Faustina, her conjugal
2016
BLOCK B 2016

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BLOCK B

Memorable quotes from Atty. Cochingyan(well, so far):

Cuison vs. CA ..........................................................................62

CHING V. BANTOLO............................................................... 103 CAÑEZO v. ROJAS (Gillian’s Version) ....................................... 144

-Dominion denied any liability to Guevarra and asserted a

Art. 1878 enumerates the instances when a special power RULING:

have been required before Guevarra could settle the insurance

Guevarra’s authority to settle claims is embodied in the

money claims directed to the Auditor General.

Facts  On succeeding dates, JOSE, under general

executed by Virgilio Olaguer. While the law requires a

Doctrine: On December 18, 1984, Pineda executed an “Agreement to

Held/Ratio: Respondent, FP Holdings Realty Corporation (FP Holdings)

2. Sales brochure specifying Roy as contact person

take material possession of the land.

W/N the special power of attorney granted to Villamil- Torres, J.

A special power of attorney is necessary to enter into any

property to plaintiff company.

The donation was made in a public instrument by the donor-

In a contract of agency, the agent acts in representation or in behalf

the other carrier as merely its agent.

stocks is clearly not an obligation of Pacific to EIB, hence it

April 2, 1990: PAL refused to let him on board, on the grounds of an

opportunities to do so was tantamount to ratification. Hence, Borja

Note: Petitioner: Caridad Sazon (administrator)

of Agency, Vices of Consent

Ignacio E. Rubio (vendor) CA: Affirmed the trial court’s order

constitute ratification of the contract of sale and "produce the

return, the same; (2) that there be misappropriation or conversion

50 metric tons of Dicalcium Phosphate valued at $13k. It was

disputed shares to the Consortium stating that no law

Petitioners William Uy and Rodel Roxas are agents CA Ruling

Sycip, the president of NAMERCO and a similar letter to DIC a notice

Later on DBP approved a smaller loan (P300k) and released ISSUE:

The day of reckoning came when Bernardo called Sosa that

use the coal operating contract of Bacaltos Coal Mines of which I am

Facts: 4. MMPCI on its defense says that the contract was

a new contract into which Linsangan protested but agreed

agent for investment purposes. The agreement is not a trust or an

-Teresita in turn, enlisted the help of Lee Ella, a Manager of Issue :

partnership with business address at Kalookan City.

3. Litigation expenses of this trial will be shouldered by the

had a promotional investment program for policyholders

Pedrosa then made 7 to 8 more investments totaling P37,000 Filipinas contends

authority as agents so it should no be held liable

and must discover at his own peril the agent’s authority, in

1. Was there an employee-employer relationship between PSI

• PSI’s act of publicly displaying in the lobby of the Medical Held:

employees and household helpers acting within the scope of their

contracts – bind PPA to a contract.

Memory-Aid: request from PCRB a Deed of Release of Mortgage. As PCRB refused

It was not until March 1978 when the Ventanillas, after

corresponding premiums were not remitted to CBIC

FACTS: 1. W/N Saligumba is entitled to 5% agent’s commission

Mendoza Because of Hahn's insistence on the former business

Issue This shows an agency. An agent receives a commission upon

Instances that show that Hahn was an agent of BMW:

In the appellant's brief the contention is advanced that the

Artigo was then authorized by the De Castros to act as their real

sale was consummated Artigo became entitled to 5% of the

RTC W/N Petron should be liable for the damages – Yes.

Thus, with regard to the delivery of the petroleum, Villaruz

Yes. Art. 1735 of the Civil Code provides that "The