AGENCY Case Digests

AGENCY
CASES
LYCEUM NORTHWESTERN UNIVERSITY
Dagupan City, Pangasinan
COLLEGE OF LAW
AGENCY
CASES
(Case Digests)
Prepared by:
Fuclan, Kariska B.
Gamboa, Joy C.
Alcantara, Carlita
Briones, Jessica
Carlos, Cherry E.
Claustro, Agnetha
Dela Cruz, Sheena
Estacio, Ruth
Fernandez, Eliza Mae
Lopez, Dawn
Nilo, Maribeth
Pacquing, Gayle
Palma, Anabelle
Quintero, Lorein
Relosa, Liza
Tolentino, Cecille
Submitted to:
Atty. NOAH SIAPNO
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TABLE OF CONTENTS
NATURE, ELEMENTS
● NIELSON & COMPANY V. LEPANTO G.R. NO. L-21601

DECEMBER 28,
1968……………………………………………………………………6
● INTERNATIONAL EXCHANGE BANK (UNION BANK OF THE
PHILIPPINES) V. SPOUSES JEROME AND QUINNIE BRIONES G.R.
NO. 205657 MARCH 29,
2017………………………………………………………………………..8
● JESUS M. GOZUN V. JOSE TEOFILO T. MERCADO a.k.a. ‘DON
PEPITO MERCADO G.R. NO. 167812 DECEMBER 19, 2006…………11
● SPOUSES ROLANDO AND HERMINIA SALVADOR V. SPOUSES
ROGELIO AND ELIZABETH RABAJA AND ROSARIO GONZALES
G.R. NO. 199990 FEBRUARY 4, 2015……………..................................14
● SAN MIGUEL CORPORATION V. LEONARA*FRANCISCO VDA. DE
TRINIDAD, SPS. TEODORICO F. TRINIDAD AND SUSANA COSME-
TRINIDAD, SPS. GEMMA F. TRINIDAD-GANDIONGCO* AND
ALFREDO M. GANDIONCO,**JR., SPS. MANUEL F. TRINIDAD AND
RUBI REMIGIO TRINIDAD AND SPS. GRACE F. TRINIDAD-
MALOLOS AND BISMARK D. MALOLOS, ROBERTO N.
GANDIONCO G.R. NO. 237506 JULY 28, 2020……………………….16
FORMS AND KINDS
● ALVIN PATRIMONIO V. NAPOLEON GUTIERREZ AND OCTAVIO

MARASIGAN III G.R. NO. 187769 JUNE 4, 2014…………………….20
● SAN MIGUEL CORPORATION V. LEONARA*FRANCISCO VDA. DE
TRINIDAD, SPS. TEODORICO F. TRINIDAD AND SUSANA COSME-
TRINIDAD, SPS. GEMMA F. TRINIDAD-GANDIONGCO* AND
ALFREDO M. GANDIONCO,**JR., SPS. MANUEL F. TRINIDAD AND
RUBI REMIGIO TRINIDAD AND SPS. GRACE F. TRINIDAD-
MALOLOS AND BISMARK D. MALOLOS, ROBERTO N.
GANDIONCO G.R. NO. 237506 JULY 28, 2020……………………….23
● FLORENTINA BAUTISTA-SPILLE REPRESENTED BY HER
ATTORNEY-IN-FACT, MANUEL B. FLORES, JR., V. NICORP
MANAGEMENT AND DEVELOPMENT CORPORATION, BENJAMIN
G. BAUTISTA AND INTERNATIONAL EXCHANGE BANK G.R. NO.
214057 OCTOBER 19, 2015……………………………………………..26
● V-GENT, INC. V. MORNING STAR TRAVEL AND TOURS, INC. G.R.
NO. 186305 JULY 22,
2015……………………………………………………………………….29
● PNB-REPUBLIC BANK (MAYBANK PHILIPPINES,
INCORPORATED) V. REMEDIOS SIAN-LIMSIACO G.R. NO. 196323
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FEBRUARY 8,
2021……………………………………………………………………….33
OBLIGATIONS OF THE AGENT

NO. 205657 MARCH 29,
2017……………………………………………………………………….35
● SPOUSES MAY S. VILLALUZ AND JOHNNY VILLALUZ, JR. V.
LAND BANK OF THE PHILIPPINES AND THE REGISTER OF DEEDS
FOR DAVAO CITY G.R. NO. 192602 JANUARY 18,
2017…………............38
OBLIGATIONS OF THE PRINCIPAL
● SPOUSES ROLANDO AND HERMINIA SALVADOR V. SPOUSES

ROGELIO AND ELIZABETH RABAJA AND ROSARIO GONZALES
G.R. NO. 199990 FEBRUARY 4, 2015………………………………….41
● CITYSTATE SAVINGS BANK V. TERESITA TOBIAS AND
SHELLIDIE VALDEZ G.R. NO. 227990 MARCH 7,
2018…………………………..43
MODES OF EXTINGUISHMENT

NO. 205657 MARCH 29,
2017……………………………………………………………………..…46
● LILLIAN N. MERCADO, CYNTHIA M. FEKARIS, AND JULIAN
MERCADO, JR., REPRESENTED BY THEIR ATTORNEY-IN-FACT,
ALFREDO M. PEREZ V. ALLIED BANKING CORPORATION G.R.
NO. 171460 JULY 24,
2007…………………………………………………….48
● REPUBLIC OF THE PHILIPPINES, REPRESENTED BY LT. GEN.
JOSE M. CALIMLIM, IN HIS CAPACITY AS FORMER CHIEF OF THE
INTELLIGENCE SERVICE, ARMED FORCES OF THE PHILIPPINES
(ISAFP), AND FORMER COMMANDING GENERAL, PRESIDENTIAL
SECURITY GROUP (PSG), AND MAJ. DAVID B. DICIANO, IN HIS
CAPACITY AS AN OFFICER OF ISAFP AND FORMER MEMBER OF
THE PSG V. HON. VICTORINO EVANGELISTA, IN HIS CAPACITY
AS PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 223,
QUEZON CITY, AND DANTE LEGASPI, REPRESENTED BY HIS
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COLLEGE OF LAW
ATTORNEY-IN-FACT, PAUL GUTIERREZ G.R. NO. 156015 AUGUST

11, 2005……………………………………………………………………52
● CECILIA YULO LOCSIN SUBSTITUTED BY MR. LEANDRO Y.
LOCSIN V. PUERTO GALERA RESORT HOTEL, INC. ALSO
REPRESENTED BY LUISITO B. PADILLA AND LUISITO B.
PADILLA, IN HIS OWN CAPACITY G.R. NO. 233678. JULY 27,
2022………………………………………………………………………..54
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COLLEGE OF LAW
NATURE, ELEMENTS
NIELSON & COMPANY, INC., V. LEPANTO

CONSOLIDATED MINING COMPANY
G.R. NO. L-21601, 28 DECEMBER 1968
DOCTRINE OF THE CASE:
Agency is a preparatory contract, as agency "does not stop with the

agency because the purpose is to enter into other contracts." The most
characteristic feature of an agency relationship is the agent's power to
bring about business relations between his principal and third persons.
"Theagent is destined to execute juridical acts (creation, modification or
extinction of relations with third parties).
FACTS:
On January 30, 1937, Lepanto and Nielson entered into a Management

Contract, where Nielson agreed, for a period of five years, with the right to
renew for a like period, to explore, develop and operate the mining claims
of Lepanto, and to mine, or mine and mill, such pay ore as may be found
therefrom which may prove to be marketable, as well as to render for
Lepanto other services specified in the contract.
However, in February 1942, the mine, original mill, original power plant,
supplies and equipment, and all installations at the Mankayan mine so
Lepanto were destroyed upon order of the United States Army to prevent
their utilization by the Japanese troops.
After the mining properties were liberated from the Japanese forces,
Lepanto took possession thereof and embarked in rebuilding and
reconstructing the mines and mill. The restoration lasted for nearly three
years and the mines have resumed their operation under the exclusive
management of Lepanto.
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Shortly after the mines were liberated from the Japanese invaders in 1945, a
disagreement arose between NIELSON and LEPANTO over the status of
the operating contract in question which was renewed in 1947.
ISSUE:
Whether or not the Management Contract is a contract of agency or a

contract of lease.
RULING:
Under the law, both agency and lease of services one of the parties binds
himself to render some service to the other party. Agency, however, is
distinguished from the lease of work or services in that the basis of agency
is representation, while in the lease of work or services the basis is
employment. The lessor of services does not represent his employer, while
the agent represents his principal. Further, agency is a preparatory contract,
as agency "does not stop with the agency because the purpose is to enter
into other contracts." The most characteristic feature of an agency
relationship is the agent's power to bring about business relations between
his principal and third persons. "The agent is destined to execute juridical
acts (creation, modification or extinction of relations with third parties).
Lease of services contemplate only material (non-juridical) acts."
Therefore, it was held that the Management Contract entered into by and
between the parties is not a contract of agency, but a contract of lease.
Based on the statements in the annual report for 1936 and from the
provision of paragraph XI of the Management Contract, the employment by
Lepanto of Nielson to operate and manage its mines was principally in
consideration of the know-how and technical services that Nielson offered
Lepanto. By express stipulation of the parties, the Management Contract is
not revocable at the will of Lepanto.
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NATURE, ELEMENTS
INTERNATIONAL EXCHANGE BANK (UNION BANK OF

THE PHILIPPINES) V. SPOUSES JEROME AND QUINNIE
BRIONES, AND JOHN DOE
G.R. NO. 205657, 29 MARCH 2017
An acceptance of the relationship of agency whereby one party, called the

principal (mandante), authorizes another, called the agent (mandatario),
to act for and on his behalf in transactions with third persons. The
essential elements of agency are: (1) there is consent, express or implied,
of the parties to establish the relationship; (2) the object is the execution
of a juridical act in relation to a third person; (3) the agent acts as a
representative and not for himself; and (4) the agent acts within the scope
of his authority.
FACTS:
Spouses Briones took out a loan of Php3,789,216.00 from IBank to

purchase a BMW 24 Roadster. The monthly amortization for 2 years was
Php78,942.00. Spouses Briones executed a promissory note with chattel
mortgage that required them to take out an insurance policy on the vehicle.
The promissory note also gave IBank, as the Spouses Briones’ attorney-in-
fact, irrevocable authority to file an insurance claim in case of loss or
damage to the vehicle. The insurance proceeds were to be made payable to
IBank. The mortgaged BMW Z4 Roadster was carnapped by 3 armed men.
Jerome Briones immediately reported the incident to the Philippine
National Police Traffic Management Group.
Spouses Briones declared the loss to IBank, which instructed them to

continue paying the next three (3) monthly installments “as a sign of good
faith”, a directive they complied with. After the spouses Briones finished
paying the 3-month installment, IBank sent a letter demanding for full
payment of the lost vehicle. The Spouses Briones submitted a notice of
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claim with their insurance company but IBank filed a complaint for replevin
and sum of money against the spouses and a person named John Doe. The
complaint alleged that the Spouses Briones defaulted in paying the monthly
amortizations of the mortgaged vehicle.
RTC dismissed the complaint and ruled that as the duly constituted
attorney-in-fact of the Spouses Briones, IBank had the obligation to
facilitate the filing of the notice of claim and then to pursue the release of
the insurance proceeds.
ISSUE:
Whether or not an agency relationship existed between the parties.
RULING:
The Petition is devoid of merit.
In a contract of agency, "a person binds himself to render some service or to

do something in representation or on behalf of another, with the consent or
authority of the latter."44 Furthermore, Article 1884 of the Civil Code
provides that "the agent is bound by his acceptance to carry out the agency,
and is liable for the damages which, through his non-performance, the
principal may suffer."45
Rallos v. Felix Go Chan & Sons Realty Corporation 46 lays down the
elements of agency:
Out of the above given principles, sprung the creation an acceptance

of the relationship of agency whereby one party, called the principal
(mandante), authorizes another, called the agent (mandatario), to act
for and in his behalf in transactions with third persons. The essential
elements of agency are: (1) there is consent, express or implied, of
the parties to establish the relationship; (2) the object is the execution
of a juridical act in relation to a third person; (3) the agent acts as a
representative and not for himself; and (4) the agent acts within the
scope of his authority.47 (Emphasis in the original, citation omitted)
All the elements of agency exist in this case. Under the promissory note
with chattel mortgage, Spouses Briones appointed iBank as their attorney-
in-fact, authorizing it to file a claim with the insurance company if the
mortgaged vehicle was lost or damaged.48 Petitioner was also authorized to
collect the insurance proceeds as the beneficiary of the insurance policy. 49
Sections 6 and 22 of the promissory note state:
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6. The MORTGAGOR agrees that he will cause the mortgaged

property/ies to be insured against loss or damage by accident, theft
and fire . . . with an insurance company/ies acceptable to the
MORTGAGEE ... ; that he will make all loss, if any, under such
policy/ies payable to the MORTGAGEE or its assigns ... [w]ith the
proceeds thereon in case of loss, payable to the said MORTGAGEE
or its assigns ... shall be added to the principal indebtedness hereby
secured ... [M]ortgagor hereby further constitutes the MORTGAGEE
to be its/his/her Attorney-in-Fact for the purpose of filing claims with
insurance company including but not limited to apply, sign, follow-up
and secure any documents, deeds . . . that may be required by the
insurance company to process the insurance claim ...
22. In case of loss or damage, the MORTGAGOR hereby irrevocably

appoints the MORTGAGEE or its assigns as his attorney-in-fact with
full power and authority to file, follow-up, prosecute, compromise or
settle insurance claims; to sign, execute and deliver the corresponding
papers, receipt and documents to the insurance company as may be
necessary to prove the claim, and to collect from the latter the
proceeds of insurance to the extent of its interest. 50 (Emphasis
supplied, citation omitted)
Article 1370 of the Civil Code is categorical that when "the terms of a
contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control."
The determination of agency is ultimately factual in nature and this Court

sees no reason to reverse the findings of the Regional Trial Court and the
Court of Appeals. They both found the existence of an agency relationship
between the Spouses Briones and iBank, based on the clear wording of
Sections 6 and 22 of the promissory note with chattel mortgage, which
petitioner prepared and respondents signed.
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COLLEGE OF LAW
NATURE, ELEMENTS
JESUS M. GOZUN V. JOSE TEOFILO T. MERCADO a.k.a.

‘DON PEPITO MERCADO
G.R. No. 167812 December 19, 2006
The court affirmed the principle that unauthorized contracts are

unenforceable unless ratified. It emphasized the importance of clear
authority or special power of attorney when one acts on behalf of another
person. Additionally, the court reiterated the rule that only the
contracting parties are bound by the stipulations in a contract, and a
person who is not a party to the contract cannot maintain an action on it.
FACTS:
In the 1995 local elections, Jose Teofilo T. Mercado ran for the
gubernatorial position in Pampanga. Jesus M. Gozun, the petitioner,
presented draft samples and price quotations for campaign materials to Jose
Teofilo T. Mercado during the same elections. Relying on the claim that the
respondent's wife had informed him of the respondent's approval of the
price quotation, the petitioner printed campaign materials, such as posters,
leaflets, sample ballots, poll watcher identification cards, and stickers.
Lilian Soriano, respondent's sister-in-law, obtained a cash advance of

P253,000 from petitioner for allowances of poll watchers and other related
expenses.
Petitioner delivered the campaign materials to respondent's headquarters.
Despite partial payment of P1,000,000, the respondent failed to settle the

remaining balance of his account with the petitioner. Respondent denied
having transacted with the petitioner or entering into any contract for the
printing of campaign materials. He alleged that the various campaign
materials delivered to him were represented as donations from his family,
friends, and political supporters. He added that all contracts involving his
personal expenses were coursed through and signed by him to ensure
compliance with pertinent election laws.
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The petitioner filed a complaint against the respondent to collect the

outstanding amount at the Regional Trial Court.
The RTC rendered a decision in favor of the petitioner, ordering respondent

to pay the remaining amount, with interest and attorney's fees.
The Court of Appeals reversed the RTC's decision, dismissing the

complaint for lack of cause of action.
Petitioner filed a petition for review on certiorari with the Supreme Court.
ISSUE:
Whether or not Lilian Soriano had the proper authority to borrow money on
behalf of the respondent, and if her actions in signing the receipt for the
cash advance bind her personally or as an agent of the respondent.
RULING:
No. Lilian Soriano did not have the proper authority to borrow money on
behalf of the respondent, and her actions in signing the receipt for the
cash advance bind her personally, not as an agent of the respondent.
Article 1868 of the Civil Code provides that the contract of agency involves
one person rendering service or doing something on behalf of another with
their consent or authority. Unauthorized contracts, made without proper
authority, are unenforceable unless ratified.
Article 1873 of the Civil Code states that generally, the agency may be oral,
unless the law requires a specific form. However, a special power of
attorney is necessary for an agent to.
In Lim Pin v. Liao Tian, et al. concluded that the necessity of a special
power of attorney pertains to the nature of the authorization and not its
format. The stipulations are met if there exists a distinct authorization from
the principal, specifically sanctioning the execution of the action. As far
back as 1906, the court in Strong v. Gutierrez-Repide (6 Phil. 680) stated
that this mandate could be oral or written, with the key requirement being
its explicitness. Recently, it was also noted that if the special authority is
not in writing, it must still be validly proven:
"…the Rules demand, for attorneys to settle their clients' litigation, a special
authority. And while it doesn't dictate that the special authority must be in
writing, the Court anticipates that if not in writing, it should be adequately
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demonstrated through means other than the attorney's own statement that
they were verbally granted such authority."
Article 1317 of the Civil Code establishes that this authorization can be
either oral or written but must be explicit and substantiated with evidence.
Only the actual parties involved in a contract are bound by its terms, and
someone who is not a party to the contract cannot initiate legal action based
on it, even if they incidentally reap benefits from it.
In Oco v. Limbaring, this Court ruled: The parties to a contract are the real
parties in interest in an action upon it, as consistently held by the Court.
Only the contracting parties are bound by the stipulations in the contract;
they are the 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
made, cannot maintain an action on it. One cannot do so, even if the
contract performed by the contracting parties would incidentally inure to
one's benefit.
Applied in this case, the court analyzed whether Lilian Soriano had the
special authority from respondent to borrow money on his behalf. The
receipt signed by Lilian did not specify the purpose or capacity in which the
money was received. Without clear evidence of authorization, the claim for
the cash advance was considered unenforceable.
Petitioner's argument lacks persuasion as the evidence presented does not

establish a connection between the defendant-appellant and the receipt of
Two Hundred Fifty-Three Thousand Pesos (P253,000.00) on March 31,
1995. According to Article 1317 of the New Civil Code, a person cannot be
bound by contracts that they did not authorize on their behalf. Lilian R.
Soriano signed the receipt in her name alone, without indicating that she
was acting on behalf of the respondent. Therefore, she bound herself
personally and not as an agent of the respondent.
The law of agency stipulates that to bind the principal to a mortgage on real
property, the mortgage must be made, signed, and sealed in the name of the
principal. Otherwise, it will only bind the agent. Since there is no indication
that Lilian acted in the name of the respondent, the mortgage can only bind
her as the agent.
As a result, the claim for the cash advance is considered unenforceable due
to the lack of clear evidence of authorization.
The Supreme Court GRANTED the petition, reversed the Court of Appeals'
decision, and reinstated the decision of the Regional Trial Court.
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NATURE, ELEMENTS
SPOUSES ROLANDO AND HERMINIA SALVADOR V.

SPOUSES ROGELIO AND ELIZABETH RABAJA AND
ROSARIO GONZALES
G.R. NO. 199990, 4 FEBRUARY 2015
Persons dealing with an agent must ascertain not only the fact of agency,
but also the nature and extent of the agent’s authority. A third person
with whom the agent wishes to contract on behalf of the principal may
require the presentation of the power of attorney, or the instructions as
regards the agency. The basis for agency is representation and a person
dealing with an agent is put upon inquiry and must discover on his own
peril the authority of the agent.
In this case, Spouses Rabaja did not recklessly enter into a contract to sell
with Gonzales. They required her presentation of the power of attorney
before they transacted with her principal. And when Gonzales presented
the Special Power of Attorney to Spouses Rabaja, the latter had no reason
not to rely on it.
FACTS:
The spouses Rolando and Herminia Salvador entered into a contract to sell
agreement for a property with spouses Rogelio and Elizabeth Rabaja and
Rosario Gonzales acting as their agent. Gonzales received the Rabajas’
payments to the Salvadors as agent. Their payments have reached
950,000.00 already but the spouses Salvador stated that they never received
the payments which made the Rabajas suspend their payment.
The Salvadors then gave a notice to the Rabajas to vacate the property for
non -payment of rentals, they also filed an action for ejection against the
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Rabajas and the latter in turn filed an action for rescission of contract
against the Salavdors.
The MeTC ruled in favor of the Salvadors in the ejectment case, the RTC
reversed the ruling because it found that there was no lease agreement
between the two parties but the CA reversed the ruling of the RTC.
The decision of the CA was not appealed therefore it became final and
executory.
In the rescission case the RTC ruled in favor of the Rabajas and the CA
affirmed the said ruling.
ISSUE:
Whether or not the contract could be rescinded and the Rabajas are entitled
to the return of the 950,000.00
RULING:
Yes. Rabaja’s are entitled to the return.
The Supreme Court ruled in favor of the Rabajas stating that they are
entitled to 950,000.00. The Salvadors in their defense stated that they did
not receive any money from the Rabajas through Gonzales and that the
latter was not their duly authorized agent. The Court disagrees with this, it
applied the provisions of the Civil Code which states that:
Art. 1900. So far as third persons are concerned, an act is deemed to have
been performed within the scope of the agent's authority, if such act is
within the terms of the power of attorney, as written, even if the agent has
in fact exceeded the limits of his authority according to an understanding
between the principal and the agent. x x x
Art. 1902. A third person with whom the agent wishes to contract on behalf
of the principal may require the presentation of the power of attorney, or the
instructions as regards the agency. Private or secret orders and instructions
of the principal do not prejudice third persons who have relied upon the
power of attorney or instructions shown to them. x x x
Art. 1910. The principal must comply with all the obligations which the
agent may have contracted within the scope of his authority. The spouses
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Rabaja required the presentation of the power of attorney, Gonzales

complied with them and the spouses had no reason not to rely on it. The
Salvadors also introduced Gonzales as the administrator of the property
therefore they cannot say that Gonzales was not their agent. x x x
Thus, for any obligation wherein the agent has exceeded his power the
principal is not bound except when he ratifies it expressly or tacitly
NATURE, ELEMENTS
SAN MIGUEL CORPORATION V. LEONARA*FRANCISCO

VDA. DE TRINIDAD, SPS. TEODORICO F. TRINIDAD AND
SUSANA COSME-TRINIDAD, SPS. GEMMA F. TRINIDAD-
GANDIONGCO* AND ALFREDO M. GANDIONCO,**JR.,
SPS. MANUEL F. TRINIDAD AND RUBI REMIGIO
TRINIDAD AND SPS. GRACE F. TRINIDAD-MALOLOS AND
BISMARK D. MALOLOS, ROBERTO N. GANDIONCO
G.R. NO. 237506, 28 JULY 2020
The doctrine of apparent authority is based on estoppel and can arise

from two instances: first, the principal may knowingly permit the agent to
so hold himself out as having such authority, and in this way, the
principal becomes estopped to claim that the agent does not have such
authority; second, the principal may so clothe the agent with the indicia
of authority as to lead a reasonably prudent person to believe that he
actually has such authority. There can be no apparent authority of an
agent without acts or conduct on the part of the principal and such acts
or conduct of the principal must have been known and relied upon in
good faith and as a result of the exercise of reasonable prudence by a
third person as claimant and such must have produced a change of
position to its detriment. The apparent power of an agent is to be
determined by the acts of the principal and not by the acts of the agent.
FACTS:
Respondents Leonara Francisco Vda. De Trinidad, Teodorico F. Trinidad,

Gemma Trinidad-Gandionco, Manuel F. Trinidad, and Grace F. Trinidad
(collectively, Trinidad, et al.,) are the registered co-owners of two parcels
of land covered by Transfer Certificate of Title (TCT) Nos. T-6346 and T-
6347, while respondent Gemma Trinidad-Gandionco (Gemma) is the
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registered owner of two parcels of land covered by TCT Nos. T-5433 and
T-52796, all located at Pamplona, Las Pinas City.
Respondent Roberto N. Gandionco (Roberto), Gemma's brother-in-law,

opened a beer dealership for Masbate City with SMC and required to
submit sufficient collateral, to secure the beer stocks to be taken out.
Roberto approached Gemma and asked for help with the submission of the
collateral requirement. Gemma lent the four (4) lots and allowed Roberto to
offer them as collateral.
Gemma and Trinidad, et al., executed the corresponding special power of

attorney (SPA) in favor of Roberto. However, using the SPAs, Roberto
executed REMs over the properties covered by TCT Nos. T-6347 and T-
5433, both in favor of SMC.
In August 2007, 18 successive post-dated cheques issued by Roberto were

dishonored, leaving unpaid obligations amounting to about Seven Million
Pesos (P7,000,000.00). Failure to collect, SMC undertook to extra-
judicially foreclose the REMs.
Gemma and Trinidad, et al., learned about the foreclosure proceedings,

consequently, they executed four revocations of the SPAs wherein they
canceled all the SPAs issued in favor of Roberto. They also informed SMC
that the SPAs had been revoked, however, no reply was given. Then they
filed a complaint for the annulment of mortgage and foreclosure sale and
for the recovery of their titles.
However, SMC argued that the revocations of the SPAs were belatedly
made as the REMs were already constituted over the properties and the
SPAs were still valid and constituted sufficient authority for Roberto to
enter into the mortgage contract.
The RTC rendered its Decision voiding the REMs, and, consequently, the
extra-judicial foreclosure over the properties. According to RTC, Roberto's
authority is only to offer the subject properties as collateral and that SMC
should have been placed on guard by the fact that the SPAs were long
executed before the REMs were entered into. It also directed SMC to return
to Gemma and Trinidad, et al., their Owner's Duplicate copies of TCTs and
pay moral damages, attorney's fees, and costs of suit.
SMC appealed and argued that the RTC erred in finding that the SPAs in
favor of Roberto did not include the authority to mortgage or encumber the
property, however it was dismissed. The CA held that a power of attorney
must be strictly construed. The subject SPAs merely authorized Roberto to
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offer the subject properties as collateral, but not to enter into a mortgage
contract. According to the CA, to interpret the SPAs as likewise giving
Roberto the power to mortgage the property is to unduly enlarge the term
"to offer." Because Roberto exceeded his authority, the CA concluded that
no valid mortgage was constituted over the properties, and, as such, the
ensuing extra-judicial foreclosures by SMC are likewise void. Hence, this
petition.
ISSUE:
Whether or not Gemma and Trinidad, et al. are bound by the mortgages
entered by Roberto under the doctrine of apparent authority.
RULING:
YES. According to the case of Woodchild Holdings, Inc. v. Roxas Electric

and Construction Co., Inc., which provides that “it bears stressing that
apparent authority is based on estoppel and can arise from two instances:
first, the principal may knowingly permit the agent to so hold himself out as
having such authority, and in this way, the principal becomes estopped to
claim that the agent does not have such authority; second, the principal may
so clothe the agent with the indicia of authority as to lead a reasonably
prudent person to believe that he actually has such authority. There can be
no apparent authority of an agent without acts or conduct on the part of the
principal and such acts or conduct of the principal must have been known
and relied upon in good faith and as a result of the exercise of reasonable
prudence by a third person as claimant and such must have produced a
change of position to its detriment. The apparent power of an agent is to be
determined by the acts of the principal and not by the acts of the agent.”
For the principle of apparent authority to apply, the petitioner was burdened
to prove the following: (a) the acts of the respondent justifying belief in the
agency by the petitioner; (b) knowledge thereof by the respondent which is
sought to be held; and, (c) reliance thereon by the petitioner consistent with
ordinary care and prudence
In this case, in addition to executing similarly worded SPAs expressly

authorizing Roberto to offer specific properties as collateral and to do all
things necessary in furtherance of said purpose, Gemma and Trinidad, et.al.,
delivered their original owner's duplicate TCTs to Roberto. This happened
not only once, but even on four separate occasions, and this made possible
the execution of the mortgages on two of the properties, their registration,
and the delivery by SMC of beer stocks to Roberto.
18
COLLEGE OF LAW
The Court finds that Roberto's possession of the SPAs and the owner's
duplicates of the TCTs made it appear to SMC that he had the requisite
authority to execute the REMs, and to register the same with the register of
deeds.
Furthermore, Gemma and Trinidad, et al. did not exercise even the slightest
diligence to ascertain the whereabouts of their owner's duplicate TCTs, but
instead relied on Roberto's explanation that the titles were still in SMC's
possession which has yet to decide which title to accept as collateral when
asked about the status of the certificates of title. They only revoked the
SPAs executed in favor of Roberto upon receiving news that Roberto's
business had closed down, and that Roberto was able to mortgage two of
their properties. Again, assuming that Roberto exceeded his authority under
the SPAs, Gemma and Trinidad, et al., must be bound by the mortgages
executed by the former, for "as between two innocent persons, one of whom
must suffer the consequences of a breach of trust, the one who made it
possible by his act of confidence must bear the loss.
Thus, a reversal of the assailed C A ruling is in order.
19
COLLEGE OF LAW
FORMS AND KINDS
ALVIN PATRIMONIO V. NAPOLEON GUTIERREZ AND

OCTAVIO MARASIGAN III
G.R. NO. 187769, 4 JUNE 2014
It is a general rule in the law of agency that, in order to bind the principal
by a mortgage on real property executed by an agent, it must upon its face
purport to be made, signed and sealed in the name of the principal,
otherwise, it will bind the agent only. It is not enough merely that the
agent was in fact authorized to make the mortgage, if he has not acted in
the name of the principal.
FACTS:
Petitioner Patrimonio and Respondent Gutierrez entered into a business

venture under the name Slam Dunk Corporation. In the course of their
business, the Petitioner pre-signed several checks for the expenses of Slam
Dunk. Although signed, however, there was no payee’s name, date or
amount indicated in the said checks. The blank checks were entrusted to
Gutierrez with the instruction that he cannot fill them out without previous
notification to and approval by the petitioner.
Sometime in 1993, without petitioner’s knowledge and consent, Gutierrez

went to secure a loan from Co-Respondent Marasigan on the excuse that
Petitioner Patrimonio needed the money for the construction of his house.
The latter acceded to Gutierrez’ request and gave him the amount. Gutierrez
simultaneously delivered to Marasigan one of the blank checks pre-signed
by the Petitioner. However, the same was dishonored by the bank on the
reason of closed account.
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COLLEGE OF LAW
Marasigan sought recovery from Gutierrez, but to no avail. He thereafter

sent several demand letters to the, but his demands likewise went unheeded.
Consequently, he filed a criminal case for violation of B.P. 22 against the
Petitioner. On the other hand, Petitioner filed with the Regional Trial Court
a Complaint for Declaration of Nullity of Loan and Recovery of Damages
against the Respondents, invoking that he was not privy to the parties’ loan
agreement.
The trial court ruled in favor of Marasigan and found that the Petitioner, in
issuing the pre-signed blank checks, had the intention of issuing the check
even without his approval. The appellate court affirmed the decision of the
RTC.
ISSUE:
1. Whether the contract of loan in the amount of ₱200,000.00 granted by

respondent Marasigan to petitioner, through respondent Gutierrez, may be
nullified for being void; and
2. Whether there is basis to hold the petitioner liable for the payment of the
₱200,000.00 loan.
RULING:
1. The petition is impressed with merit. The Contract of Loan entered into
by Gutierrez on behalf of the Petitioner should be nullified for being void.
Article 1878 paragraph 7 of the Civil Code expressly requires a special

power of authority before an agent can loan or borrow money on
behalf of the principal.
A review of the records reveals that Gutierrez did not have any authority to
borrow money on behalf of the petitioner. Records did not show that the
Petitioner executed any special power of attorney (SPA) in favor of
Gutierrez. In fact, the Petitioner’s testimony confirmed that he never
authorized Gutierrez, whether verbally or in writing, to borrow money on
his behalf, nor was he aware of any such transaction. In the absence of any
showing of any agency relations or special authority to act for and on behalf
of the petitioner, the loan agreement Gutierrez entered into with Marasigan
is null and void.
21
COLLEGE OF LAW
2. No, the Petitioner cannot be held liable for the payment of loan on the
ground that the contract lacked the essential element of consent.
Article 1318 of the Civil Code14 enumerates the essential requisites for a
valid contract, which includes: a. consent of the contracting parties; b.
object certain which is the subject matter of the contract; and c. cause
of the obligation which is established.
Gutierrez did not have the petitioner’s written/verbal authority to

enter into a contract of loan. While there may be a meeting of the minds
between Gutierrez and Marasigan, such agreement cannot bind the
Petitioner whose consent was not obtained and who was not privy to the
loan agreement. Hence, only Gutierrez is bound by the contract of loan.
22
COLLEGE OF LAW
FORMS AND KINDS
SAN MIGUEL CORPORATION V. LEONARA*FRANCISCO

VDA. DE TRINIDAD, SPS. TEODORICO F. TRINIDAD AND
SUSANA COSME-TRINIDAD, SPS. GEMMA F. TRINIDAD-
GANDIONGCO* AND ALFREDO M. GANDIONCO,**JR.,
SPS. MANUEL F. TRINIDAD AND RUBI REMIGIO
TRINIDAD AND SPS. GRACE F. TRINIDAD-MALOLOS AND
BISMARK D. MALOLOS, ROBERTO N. GANDIONCO
G.R. NO. 237506, 28 JULY 2020
The “plain meaning rule” is the intent of the parties to an instrument is

"embodied in the writing itself, and when the words are clear and
unambiguous the intent is to be discovered only from the express
language of the agreement.
FACTS:
Respondents Leonara Francisco Vda. De Trinidad, Teodorico F. Trinidad,

Gemma Trinidad-Gandionco, Manuel F. Trinidad, and Grace F. Trinidad
(collectively, Trinidad, et al.,) are the registered co-owners of two parcels
of land covered by Transfer Certificate of Title (TCT) Nos. T-6346 and T-
6347, while respondent Gemma Trinidad-Gandionco (Gemma) is the
registered owner of two parcels of land covered by TCT Nos. T-5433 and
T-52796, all located at Pamplona, Las Pinas City.
Respondent Roberto N. Gandionco (Roberto), Gemma's brother-in-law,

opened a beer dealership for Masbate City with SMC and required to
submit sufficient collateral, to secure the beer stocks to be taken out.
Roberto approached Gemma and asked for help with the submission of the
23
COLLEGE OF LAW
collateral requirement. Gemma lent the four (4) lots and allowed Roberto to
offer them as collateral.
Gemma and Trinidad, et al., executed the corresponding special power of

attorney (SPA) in favor of Roberto. However, using the SPAs, Roberto
executed REMs over the properties covered by TCT Nos. T-6347 and T-
5433, both in favor of SMC.
In August 2007, 18 successive post-dated cheques issued by Roberto were

dishonored, leaving unpaid obligations amounting to about Seven Million
Pesos (P7,000,000.00). Failure to collect, SMC undertook to extra-
judicially foreclose the REMs.
Gemma and Trinidad, et al., learned about the foreclosure proceedings,

consequently, they executed four revocations of the SPAs wherein they
canceled all the SPAs issued in favor of Roberto. They also informed SMC
that the SPAs had been revoked, however, no reply was given. Then they
filed a complaint for the annulment of mortgage and foreclosure sale and
for the recovery of their titles.
However, SMC argued that the revocations of the SPAs were belatedly
made as the REMs were already constituted over the properties and the
SPAs were still valid and constituted sufficient authority for Roberto to
enter into the mortgage contract.
The RTC rendered its Decision voiding the REMs, and, consequently, the
extra-judicial foreclosure over the properties. According to RTC, Roberto's
authority is only to offer the subject properties as collateral and that SMC
should have been placed on guard by the fact that the SPAs were long
executed before the REMs were entered into. It also directed SMC to return
to Gemma and Trinidad, et al., their Owner's Duplicate copies of TCTs and
pay moral damages, attorney's fees, and costs of suit.
SMC appealed and argued that the RTC erred in finding that the SPAs in
favor of Roberto did not include the authority to mortgage or encumber the
property, however it was dismissed. The CA held that a power of attorney
must be strictly construed. The subject SPAs merely authorized Roberto to
offer the subject properties as collateral, but not to enter into a mortgage
contract. According to the CA, to interpret the SPAs as likewise giving
Roberto the power to mortgage the property is to unduly enlarge the term
"to offer." Because Roberto exceeded his authority, the CA concluded that
no valid mortgage was constituted over the properties, and, as such, the
ensuing extra-judicial foreclosures by SMC are likewise void. Hence, this
petition.
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COLLEGE OF LAW
ISSUE:
Whether or not the SPAs include the authority to mortgage or encumber the
property belonging to Gemma and Trinidad, et al..
RULING:
YES. According to Article 1878 of the Civil Code which requires an SPA
in cases where real rights over immovable property are created or
conveyed. In the instant case, the SPAs specifically authorized Roberto to
"offer as collateral" to SMC the subject properties.
The language of the subject SPAs are clear and unambiguous. Contrary to
the CA's ruling, the phrase "to offer" the subject properties "as collateral,
security or property bond with SMC," coupled with the "full power and
authority" to do all that is necessary for all intents and purposes of the
contract, is a specific and express authority to mortgage the subject
properties in favor of SMC. This is so considering that the presentation of
the TCTs by Roberto to SMC was for the purpose of complying with the
collateral requirement for the dealership.
Therefore, the SPAs were still valid and constituted sufficient authority for
Roberto to enter into the mortgage contract.
25
COLLEGE OF LAW
FORMS AND KINDS
FLORENTINA BAUTISTA-SPILLE V. NICORP

MANAGEMENT AND DEVELOPMENT CORPORATION,
BENJAMIN G. BAUSTISTA AND INTERNATIONAL BANK
G.R. NO. 214057, 19 OCTOBER 2015
A special power of attorney is necessary to enter into any contract by

which the ownership of an immovable is transmitted or acquired
either gratuitously or for a valuable consideration.
FACTS:
Petitioner Florentina Bautista-Spille is the registered owner of a parcel of

land covered by TCT No. T-197. Florentina executed a general power of
attorney in favor of her brother Benjamin Bautista, authorizing him to
administer all her businesses and properties in the Philippines.
In August 2004, Benjamin and NICORP Management and Development

Corporation entered into a contract to sell the parcel of land covered by
TCT No. T-197 for Php15,000,000.00 agreeing that NICORP shall give a
down payment of 20% of the purchase price and pay the remaining balance
in 8 months and that upon payment of down payment, the TCT of the
property shall be deposited with the International Exchange Bank and put in
escrow until payment of full amount. Benjamin Bautista was required to
submit a special power of attorney covering the sale, otherwise the balance
would be suspended and a penalty of Php150,000.00 shall be imposed.
Upon discovery of the sale, petitioner’s lawyer immediately sent letter of

demand to Benjamin Bautista, NICORP, and IE informing them of
petitioner’s opposition to the sale that Benjamin was not clothed with the
26
COLLEGE OF LAW
authority to sell, and demanding the return of the TCT to her attorney-in-
fact, Atty. Flores Benjamin, NICORP, and IE Bank. However, failed and
refused to return the title of the subject property, resulting in the complaint
filed by petitioner before the RTC against Benjamin. NICORP and IE Bank
for declaration of nullity of the contract, recovery of possession and
damages with the prayer for the issuance of a temporary restraining order
and preliminary injunction because NICORP was starting the development
of the subject [property into a residential subdivision and was planning to
sell the lost to prospective buyer.
In May 2010, the RTC rendered its judgment declaring the contract to sell
is null and void, explaining that the general power of attorney only
pertained to acts of administration as well as acts of dominion over the
subject property. The motion for reconsideration filed by the petitioner was
subsequently denied, hence the petition for review of certiorari, contending
that the honorable CA erred in ruling that the general power of attorney
executed by petitioner Benjamin with the authority to enter into a contract
to sell the property because it only retained to the power to buy, sell,
negotiate, and contract over the business and personal property.
ISSUE:
Whether or not Benjamin Bautista was authorized to sell the subject

property.
RULING:
The Court finds the petition meritorious.
The Civil Code of the Philippines provides that “when a sale of a piece of
land or any interest therein is through an agent, the authority of the latter
shall be in writing, otherwise, the sale shall be void and that a special power
of attorney is necessary to enter into any contract by which the ownership
of an immovable is transmitted or acquired either gratuitously or for a
valuable consideration. Jurisprudence further explains that the express
mandate required by that includes a sale as a necessary ingredient of the act
mentioned. For the principal to confer the right upon an agent to sell real
estate, a power of attorney must express the powers of an agent in clear and
unmistakable language.
Doubtless, there was no perfected contract to sell between petitioner and

NICORP. Nowhere in the General Power of Attorney was Benjamin
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COLLEGE OF LAW
granted, expressly or impliedly, any power to sell the subject property or a

portion thereof. The authority expressed in the General Power of
Attorney was couched in very broad terms covering the petitioner's
businesses and properties. Time and again, this Court has stressed that the
power of administration does not include acts of disposition, which are acts
of strict ownership. As such, an authority to dispose cannot proceed from an
authority to administer, and vice versa, for the two powers may only be
exercised by an agent by following the provisions on agency of the Civil
Code.
In the same vein, NICORP cannot be considered a purchaser in good faith.
The well-settled rule is that a person dealing with an assumed agent is
bound to ascertain not only the fact of agency but also the nature and extent
of the agent's authority. The law requires a higher degree of prudence from
one who buys from a person who is not the registered owner. He is
expected to examine all factual circumstances necessary for him to
determine if there are any flaws in the title of the transferor, or in his
capacity to transfer the land. In ascertaining good faith, or the lack of it,
which is a question of intention, courts are necessarily controlled by the
evidence as to the conduct and outward acts by which alone the inward
motive may, with safety, be determined. Good faith, or want of it, is not a
visible, tangible fact that can be seen or touched, but rather a state or
condition of mind which can only be judged by actual or fancied token or
signs the Court agrees with the RTC that NICORP was fully aware that
Benjamin was not properly authorized to enter into any transaction
regarding the sale of petitioner's property. In fact, in the contract to sell,
NICORP required Benjamin to secure the SPA from the petitioner within
ninety (90) days from the execution of the contract and even imposed a
substantial amount of penalty in the amount of P150,000.00 a month in case
of non-compliance plus suspension of payment of the balance of the
contract price.
NICORP is a real estate company which is familiar with the intricacies of
the realty business.
The consent of the petitioner in the contract to sell was not obtained, hence,
not enforceable. Furthermore, because NICORP is considered a builder in
bad faith, it has no right to be refunded the value of... whatever
improvements it introduced on the subject property.
WHEREFORE, the petition is GRANTED. The March 19, 2014 Decision
and the August 18, 2014 Resolution of the Court of Appeals in CA-G.R.
CV No. 97682 are REVERSED and SET ASIDE. The May 24, 2010
28
COLLEGE OF LAW
Decision of the Regional Trial Court, Branch 90, Dasmariñas, Cavite, is

REINSTATED.
FORMS AND KINDS
V-GENT, INC. V. MORNING STAR TRAVEL AND TOURS,

INC.
G.R. NO. 186305, 22 JULY 2015
An agent may sue or be sued solely in its own name and without joining
the principal when the following elements concur: (1) the agent acted in
his own name during the transaction; (2) the agent acted for the benefit
of an undisclosed principal; and (3) the transaction did not involve the
property of the principal. When these elements are present, the agent
becomes bound as if the transaction were its own.
FACTS:
Sometime in June and in September 1998, the petitioner V-Gent, Inc. (V-
Gent) bought twenty-six (26) two-way plane tickets (Manila-Europe-
Manila) from the respondent Morning Star Travel and Tours, Inc. (Morning
Star).
On June 24, 1998 and September 28, 1998, V-Gent returned a total of
fifteen (15) unused tickets worth $8,747.50 to the defendant. Of the 15,
Morning Star refunded only six (6) tickets worth $3,445.62, Morning Star
refused to refund the remaining nine (9) unused tickets despite repeated
demands.
On December 15, 2000, petitioner V-Gent filed a money claim against

Morning Star for payment of the unrefunded $5,301.88 plus attorney's fees.
29
COLLEGE OF LAW
The complaint was raffled to Branch 2 of the Metropolitan Trial Court

(MeTC) of Manila.
Morning Star countered that V-Gent was not entitled to a refund because
the tickets were bought on the airline company's "buy one, take one"
promo. It alleged that there were only fourteen (14) unused tickets and only
seven (7) of these were refundable; considering that it had already refunded
six (6) tickets (which is more or less 50% of 14), then there was nothing
else to refund.
Morning Star also questioned V-Gent's personality to file the suit. It

asserted that the passengers, in whose names the tickets were issued, are the
real parties-in-interest.
On January 27, 2006, after due proceedings, the MeTC dismissed the
complaint for lack of a cause of action. Citing Rule 3, Section 3 of the
Rules of Court, the MeTC declared that, as agent of the passengers who
paid for the tickets, V-Gent stood as the real party-in-interest.
V-Gent appealed to the Regional Trial Court (RTC) and granted the appeal.
Morning Star filed a petition for review with the CA. The CA granted the
petition for review and dismissed V-Gent's complaint ruling that V-Gent is
not a real party-in-interest because it merely acted as an agent of the
passengers who bought the tickets from Morning Star with their own
money.
ISSUE:
Whether V-GENT, the agent, has legal standing to file the complaint.
RULING:
V-Gent admits that it purchased the plane tickets on behalf of the

passengers as the latter's agent. The tickets were issued in the name of the
passengers and paid for with the passengers' money. No dispute or
conclusion in the lower courts' minds on this point; hence, both the MeTC
and the CA commonly found that V-Gent acted as an agent of the
passengers when it purchased the passengers' plane tickets.
Every action must be prosecuted or defended in the name of the real party-
in-interest - the party who stands to be benefited or injured by the judgment
in the suit. In suits where an agent represents a party, the principal is the
30
COLLEGE OF LAW
real party-in-interest; an agent cannot file a suit in his own name on behalf
of the principal.
Rule 3, Section 3 of the Rules of Court provides the exception when an

agent may sue or be sued without joining the principal.
Section 3. Representatives as parties. - Where the action is allowed to be

prosecuted and defended by a representative or someone acting in a
fiduciary capacity, the beneficiary shall be included in the title of the case
and shall be deemed to be the real party-in-interest. A representative may be
a trustee of an express trust, a guardian, an executor or administrator, or a
party authorized by law or these Rules. An agent acting in his own name
and for the benefit of an undisclosed principal may sue or be sued without
joining the principal except when the contract involves things belonging to
the principal. (Emphasis supplied.)
Thus, an agent may sue or be sued solely in its own name and without
joining the principal when the following elements concur: (1) the agent
acted in his own name during the transaction; (2) the agent acted for the
benefit of an undisclosed principal; and (3) the transaction did not involve
the property of the principal.
When these elements are present, the agent becomes bound as if the
transaction were its own.
This rule is consistent with Article 1883 of the Civil Code which says:
Art. 1883. If an agent acts in his own name, the principal has no right of
action against the persons with whom the agent has contracted; neither have
such persons against the principal.
In such a case, the agent is the one directly bound in favor of the person
with whom he has contracted, as if the transaction were his own, except
when the contract involves things belonging to the principal.
The provisions of this article shall be understood to be without prejudice to

the actions between the principal and agent.
In the present case, only the first element is present; the purchase order and
the receipt were in the name of V-Gent. However, the remaining elements
are absent because: (1) V-Gent disclosed the names of the passengers to
Morning Star, in fact the tickets were in their names; and (2) the transaction
was paid using the passengers' money. Therefore, Rule 3, Section 3 of the
Rules of Court cannot apply.
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COLLEGE OF LAW
To define the actual factual situation, V-Gent, the agent, is suing to recover
the money of its principals, it is the passengers’ who are the real parties-in-
interest because they stand to be injured or benefited in case Morning Star
refuses or agrees to grant the refund because the money belongs to them.
From this perspective, V-Gent evidently does not have a legal standing to
file the complaint.
The power to collect and receive payments on behalf of the principal is an

ordinary act of administration covered by the general powers of an agent.
On the other hand, the filing of suits is an act of strict dominion.
Under Article 1878 (15) of the Civil Code, a duly appointed agent has no
power to exercise any act of strict dominion on behalf of the principal
unless authorized by a special power of attorney. An agent's authority to file
suit cannot be inferred from his authority to collect or receive payments; the
grant of special powers cannot be presumed from the grant of general
powers. Moreover, the authority to exercise special powers must be duly
established by evidence, even though it need not be in writing.
By granting the initial refund, Morning Star recognized V-Gent's authority

to buy the tickets and collect refunds on behalf of the passengers. However,
Morning Star's recognition of V-Gent's authority to collect a refund for the
passengers is not equivalent to recognition of V-Gent's authority to initiate
a suit on behalf of the passengers. Morning Star therefore, is not estopped
from questioning V-Gent's legal standing to initiate the suit.
32
COLLEGE OF LAW
FORMS AND KINDS
PNB-REPUBLIC BANK (MAYBANK PHILIPPINES,

INCORPORATED) V. REMEDIOS SIAN-LIMSIACO
G.R. NO. 196323, 8 FEBRUARY 2021
An agent acting in his own name and for the benefit of an undisclosed
principal may sue or be sued without joining the principal except when
the contract involves things belonging to the principal.
FACTS:
This petition for Certiorari seeks to set aside the 2010 decision of the CA
denying the appeal of petitioner PNB Republic Bank as well as its 2010
Resolution denying Maybank’s motion for reconsideration. The antecedents
from the assailed CA decision preclude that in 1979, respondent obtained a
P 142, 500 sugar crop loan from Maybank payable within one year.
Through a Special Power of Attorney, respondent executed a Real Estate
Mortgage on some parcels of land. Subsequently in 1982, Sian-Limsiaco &
her son Roy obtained another sugar crop loan for P307, 700 also due after
one year. Another REM was executed by Roy through a SPA for a new set
of parcels of land. In 1984, Sian-Limsiaco obtained another sugar crop loan
for P 110, 000 also secured by REM. Maybank never demanded payment of
33
COLLEGE OF LAW
the above sugar crop loans nor filed a case to collect or foreclose the
mortgage. Then on June 29, 2001 after a lapse of 17 years the respondents
filed a petition before the Regional Trial Court Branch 56 of Himamaylan,
Negros Occidental to cancel the liens annotated on the titles of the
mortgaged properties on grounds of prescription & extinction of their loan
obligations.
ISSUE:
Whether or not the CA erred when it affirmed in toto the RTC’s judgment
canceling the mortgage liens of Maybank / PNB despite the non-inclusion
of an indispensable party, the BSP.
RULING:
Petitioner raised questions of law which may be reviewed by this Court.

Respondent acted on behalf of the mortgagors-principals when she initiated
the action to cancel the mortgages. There was no need to join such
principals as the subject mortgage contracts were merely accessory
contracts that were entered into for the purpose of securing respondent’s
loans & merely involved the right to foreclose upon the lands specified
herein upon the fulfillment of certain contingencies. The authority to
encumber one’s land title naturally includes the authority to perform such
acts to disencumber such title. Article 1882 of the Civil Code provides that,
“The limits of the agent’s authority shall not be considered exceeded should
it have been performed in a manner more advantageous to the principal than
that specified by him.”
Wherefore, the petition for review on Certiorari is denied.
34
COLLEGE OF LAW

BRIONES AND JOHN DOE
G.R. NO. 205657, 29 MARCH 2017
Upon accepting an agency, the agent becomes bound to carry out the
agency and shall be held liable for the damages, which the principal may
incur due to the agent's non-performance
FACTS:
Souses Briones took out a loan of Php3,789,216.00 from IBank to purchase

a BMW 24 Roadster. The monthly amortization for 2 years was
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COLLEGE OF LAW


ISSUE:
Whether or not the agency relationship was revoked or terminated
RULING:
Petitioner asserts that the Spouses Briones effectively revoked the agency
granted under the promissory note when they filed a claim with the
insurance company.52
Petitioner is mistaken.
Revocation as a form of extinguishing an agency under Article 192453 of the

Civil Code only applies in cases of incompatibility, such as when the
principal disregards or bypasses the agent in order to deal with a third
person in a way that excludes the agent.54
In the case at bar, the mortgaged vehicle was camapped on November 5,

2003 and the Spouses Briones immediately informed petitioner about the
loss.55 The Spouses Briones continued paying the monthly installment for
the next three (3) months following the vehicle's loss to show their good
faith.56
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COLLEGE OF LAW
However, on March 26, 2004, petitioner demanded full payment from

Spouses Briones for the lost vehicle. 57 The Spouses Briones were thus
constrained to file a claim for loss with the insurance company on April 30,
2004, precisely because petitioner failed to do so despite being their agent
and being authorized to file a claim under the insurance policy. 58 Not
surprisingly, the insurance company declined the claim for belated filing.
The Spouses Briones' claim for loss cannot be seen as an implied revocation
of the agency or their way of excluding petitioner. They did not disregard or
bypass petitioner when they made an insurance claim; rather, they had no
choice but to personally do it because of their agent's negligence. This is not
the implied termination or revocation of an agency provided for under
Article 1924 of the Civil Code.
While a contract of agency is generally revocable at will as it is primarily

based on trust and confidence,59 Article 1927 of the Civil Code provides the
instances when an agency becomes irrevocable:
Article 1927. An agency cannot be revoked if a bilateral

contract depends upon it, or if it is the means of fulfilling an
obligation already contracted, or if a partner is appointed
manager of a partnership in the contract of partnership and his
removal from the management is unjustifiable.
A bilateral contract that depends upon the agency is considered an agency

coupled with an interest, making it an exception to the general rule of
revocability at will.60 Lim v. Saban61 emphasizes that when an agency is
established for both the principal and the agent, an agency coupled with an
interest is created and the principal cannot revoke the agency at will.62
In the promissory note with chattel mortgage, the Spouses Briones

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

JR., V. LAND BANK OF THE PHILIPPINES AND THE
REGISTER OF DEEDS FOR DAVAO CITY
G.R. NO. 192602, 18 JANUARY 2017
The Civil Code sets the default rule that an agent may appoint a
substitute if the principal has not prohibited him from doing so.
FACTS:
Agbisit, mother of May, requested May to provide her with collateral for a
loan for the expansion of her backyard cut flowers business. At the time,
Agbisit was the chairperson of Milflores Cooperative. May convinced her
38
COLLEGE OF LAW
husband, Johnny (Spouses Villaluz), to allow Agbisit to use their land as

collateral.
The Spouses Villaluz executed a Special Power of Attorney in favor of

Agbisit authorizing her to, among others, "negotiate for the sale mortgage,
or other forms of disposition a parcel of land and "sign in our behalf all
documents relating to the sale, loan or mortgage, or other disposition of the
aforementioned property. " The one-page power of attorney neither
specified the conditions under which the special powers may be exercised
nor stated the amounts for which the subject land may be sold or
mortgaged.
Agbisit executed her own Special Power of Attorney, appointing Milflores

Cooperative as attorney-in-fact in obtaining a loan from and executing a
real mortgage in favor of Land Bank. Milflores Cooperative, in a
representative capacity, executed a Real Estate Mortgagein favor of Land
Bank in consideration of the ₱3,000,000 loan to be extended by the latter.
Milflores Cooperative also executed a Deed of Assignment of the
Produce/Inventory as additional collateral for the loan.
Land Bank partially released one-third of the total loan amount, to Milflores
Cooperative. Agbisit borrowed the amount of ₱604,750 from Milflores
Cooperative. Land Bank released the remaining loan to Milflores
Cooperative.
Unfortunately, Milflorcs Cooperative was unable to pay its obligations to

Land Bank. Thus, Land Bank filed a petition for extra-judicial foreclosure
sale. The Spouses Villaluz learned that an auction sale covering their land
had been set. Land Bank won the auction sale as the sole bidder.
The Spouses Villaluz filed a complaint with the Regional Trial Court
seeking the annulment of the foreclosure sale.
Spouses Villaluz argue that the Real Estate Mortgage was void because
there was no loan yet when the mortgage contract was executed and that the
Special Power of Attorney was extinguished when Milflores Cooperative
assigned its produce and inventory to Land Bank as additional collateral.
Land Bank maintains that the CA and RTC did not err in applying Article
1892, that the Real Estate Mortgage can only be extinguished after the
amount of the secured loan has been paid, and that the additional collateral
was executed because the deed of assignment was meant to cover any
deficiency in the Real Estate Mortgage.
39
COLLEGE OF LAW
ISSUE:
Whether the mortgage contract executed by the substitute is valid and

binding upon the principal
RULING:
YES. The law creates a presumption that an agent has the power to appoint
a substitute. Although the law presumes that the agent is authorized to
appoint a substitute, it also imposes an obligation upon the agent to exercise
this power conscientiously. To protect the principal, Article 1892 allocates
responsibility to the agent for the acts of the substitute when the agent was
not expressly authorized by the principal to appoint a substitute; and, if so
authorized but a specific person is not designated, the agent appoints a
substitute who is notoriously incompetent or insolvent. In these instances,
the principal has a right of action against both the agent and the substitute if
the latter commits acts prejudicial to the principal.
In the present case, the Special Power of Attorney executed by the Spouses
Villaluz contains no restrictive language indicative of an intention to
prohibit Agbisit from appointing a substitute or sub-agent. Thus, the
Supreme Court agrees with the findings of the CA and the RTC that
Agbisit's appointment of Milflores Cooperative was valid.
Absent such express limitations, the law recognizes Land Bank's right to
rely on the terms of the power of attorney as written. "Courts cannot follow
one every step of his life and extricate him from bad bargains, protect him
from unwise investments, relieve him from one-sided contracts, or annul
the effects of [unwise] acts." The remedy afforded by the Civil Code to the
Spouses Villaluz is to proceed against the agent and the substitute in
accordance with Articles 1892 and 1893.
40
COLLEGE OF LAW
SPOUSES ROLANDO AND HERMINIA SALVADOR V.

SPOUSES ROGELIO AND ELIZABETH RABAJA AND
ROSARIO GONZALES
G.R. NO. 199990, 4 FEBRUARY 2015
A third person with whom the agent wishes to contract on behalf of the
principal may require the presentation of the power of attorney, or the
instructions as regards the agency. Private or secret orders and
instructions of the principal do not prejudice third persons who have
relied upon the power of attorney or instructions shown to them.
Moreover, the principal must comply with all the obligations which the
agent may have contracted within the scope of his authority.
FACTS:
41
COLLEGE OF LAW
Spouses Rabaja learned that Spouses Salvador were looking for a buyer of
the subject property. Herminia personally introduced Gonzales as the
administrator of the said property. Spouses Rabaja an initial payment of
48,000.00 to Gonzales in the presence of Herminia. Gonzales then
presented the SPA executed by Rolando Salvador.
Spouses Rabaja made several payments which were received by Gonzales

pursuant to the SPA as evidenced by the check vouchers signed by
Gonzales and the improvise receipts signed by Herminia.
However, Spouses Salvador complained to the Rabajas that they did not
receive any payment from Gonzales. This prompted the Rabajas to suspend
further payment; and as a consequence, they received a notice to vacate the
property from the Spouses Salvador for non-payment of rentals.
Thereafter, the Salvadors instituted an action for ejectment against Spouses

Rabajas. In turn, the Rabajas filed an action for rescission of contract
against the Spouses Salvador and
Gonzales.
ISSUE:
Whether or not Gonzales as agent of the Spouses Salvador could validly

receive the payment of Spouses Rabaja
RULING:
Yes, Gonzales as agent of the Spouses Salvador could validly receive the
payment of Spouses Rabaja.
As stated under the law, a third person with whom the agent wishes to
contract on behalf of the principal may require the presentation of the
power of attorney, or the instructions as regards the agency. Private or
secret orders and instructions of the principal do not prejudice third persons
who have relied upon the power of attorney or instructions shown to them.
Moreover, the principal must comply with all the obligations which the
agent may have contracted within the scope of his authority.
Thus, considering there was a valid Special Power of Attorney that Spouses
Rabaja property made payments to Gonzales as agent of Spouses Salvador
as if they paid to Spouses Salvador. In this case, Spouses Rabaja did not
recklessly entered into a contract to sell with Gonzales, they required her
presentation of the power of attorney before they transacted with her
principal and when Gonzales presented the Special Power of Attorney to
Spouses Rabaja, the latter had no reason not to rely on it.
42
COLLEGE OF LAW
CITYSTATE SAVINGS BANK V. TERESITA TOBIAS AND

SHELLIDIE VALDEZ
G.R. NO. 227990, 7 MARCH 2018
The bank may also be adjudged liable under the doctrine of apparent
authority in its capacity as principal. The principal’s liability in this case
is solidary with that of his employee. The doctrine of apparent authority
or what is sometimes referred to as the “holding out” theory, or the
doctrine of ostensible agency, imposes liability, not “as the result of the
reality of a contractual relationship, but rather because of the actions of a
principal or an employer in somehow misleading the public into believing
that the relationship or the authority exists.”
43
COLLEGE OF LAW
FACTS:
Rolando Robles (Robles), a CPA, has been employed with petitioner

Citystate Savings Bank (CSB) since July 1998. Eventually, Robles was
promoted as branch manager for petitioner’s Bulacan Branch. Sometime in
2002, Robles was introduced to Teresita Tobias, a meat vendor at the
Baliuag Public Market, by the latter’s youngest son. Thereafter, Robles
persuaded Tobias to open an account with CSB and to place her money in
some high interest rate mechanism, to which the latter yielded. Robles later
offered Tobias to sign-up in CSB’s back-to-back scheme which is
supposedly offered only to the bank’s most valued clients; wherein under
this scheme, the depositors authorize the bank to use their bank deposits and
invest the same in different business ventures that yield high interest.
Robles assured Tobias that the interest she previously earned would be
doubled, so the latter signed the pertinent documents without reading its
contents and invested a total of Php 1,800,000. 00 to petitioner through
Robles.
In 2005, Tobias became sickly, thus, she included her daughter and
Shellidie Valdez as co-depositor in her accounts with CSB. Unfortunately,
Robles then failed to remit to Tobias and Valdez the interest as scheduled.
They tried to reach Robles, but he cannot be found anymore. The siblings of
Robles disclosed to them that Robles withdrew the money and appropriated
the money for his personal use. Robles promised to return the money by
installments, but he failed to comply with his promise. CSB also refused to
decide for the return of Tobias’ money despite several demands.
On January 8, 2007, the respondents filed a complaint for sum of money

was filed against Robles and CSB alleging that Robles committed fraud in
the performance of duties as branch manager when he lured Tobias in
signing several pieces of blank documents under the assurance, as bank
manager of CSB, that everything was in order.
The Regional Trial Court ruled in favor of respondents and ordered Robles
to pay Tobias the sum of money and absolved the bank of any liability. The
matter was elevated to the Court of Appeals; however, the CA reversed the
decision of the lower court and ruled that CSB and Robles are jointly and
severally liable to pay Tobias the sum of money set forth. CSB argued that
Robles acted in his personal capacity in dealing with Tobias and denied its
liability. CSB also alleged that the doctrine of apparent authority is not
applicable in this case.
ISSUE:
44
COLLEGE OF LAW
Whether or not CSB can be held liable for the transactions entered into by
Robles, as its bank manager, with Tobias, as depositor?
RULING:
YES, CSB can be held liable for the transactions entered into by Robles, as
its bank manager, with Tobias, as depositor. CSB is solidarily liable to
Tobias and Valdez for the damages caused by the acts of Robles as its
employer. The business of banking is one imbued with public interest,
hence, banking institutions are obliged to exercise the highest degree of
diligence and high standards of integrity and performance in all its
transactions. The law expressly imposes upon the banks a fiduciary duty
towards its clients and to treat in this regard the accounts of its depositors
with meticulous care.
Under the doctrine of apparent authority, the bank, in its capacity as

principal, may be solidarily liable with that of his employee. The said
doctrine imposes liability because of the actions of a principal or an
employer in somehow misleading the public into believing that the
relationship or the authority exists. The liability of a bank to 3rd persons for
acts done by its agents or employees is limited to the consequences of the
latter’s acts which it has ratified, or those that resulted in the performance
of acts within the scope of actual or apparent authority it has vested.
In the present case, the proximate cause of the loss of Tobias is the
misappropriation of Robles, but CSB is still liable under Art. 1911 of the
NCC; which provides that “Even when the agent has exceeded his
authority, the principal is solidarily liable with the agent if the former
allowed the latter to act as though he had full powers.” CSB is estopped in
denying Robles’ authority. As the branch manager, Robles is recognized
within his field as to third persons as the general agent and is in general
charge of the corporation, with apparent authority commensurate with the
ordinary business entrusted him and the usual course and conduct thereof.
Furthermore, the bank admitted the authority of its branch manager to
transact outside of the bank premises. The act of honoring the accounts of
Tobias so opened is an acknowledgement by CSB of the authority of
Robles.
45
COLLEGE OF LAW

BRIONES AND JOHN DOE
G.R. NO. 205657, 29 MARCH 2017
Revocation as a form of extinguishing an agency under Article 1924[53]

of the Civil Code only applies in cases of incompatibility, such as when
46
COLLEGE OF LAW
the principal disregards or bypasses the agent in order to deal with a third
person in a way that excludes the agent.
FACTS:
Spouses Briones took out a loan of Php3,789,216.00 from IBank to

purchase a BMW 24 Roadster. The monthly amortization for 2 years was

ISSUE:
Whether or not the petitioner is entitled to the return of the mortgaged

vehicle or, in the alternative, payment of the outstanding balance of the loan
taken for the mortgaged vehicle.
RULING:
Petitioner asserts that the insurance coverage is only an alternative available

to the Spouses Briones; and with the denial of the insurance claim, the
47
COLLEGE OF LAW
Spouses Briones are obligated to pay the remaining balance plus interest of
the mortgaged vehicle.
The petitioner is again mistaken.
As the agent, petitioner was mandated to look after the interests of the
Spouses Briones. However, instead of going after the insurance proceeds, as
expected of it as the agent, petitioner opted to claim the full amount from
the Spouses Briones, disregard the established principal-agency
relationship, and put its own interests before those of its principal.
The facts show that the insurance policy was valid when the vehicle was
lost, and that the insurance claim was only denied because of the belated
filing.1âwphi1
Having been negligent in its duties as the duly constituted agent, petitioner
must be held liable for the damages suffered by the Spouses Briones
because of non-performance of its obligation as the agent, and because it
prioritized its interests over that of its principal.
Furthermore, petitioner's bad faith was evident when it advised the Spouses
Briones to continue paying three (3) monthly installments after the loss,
purportedly to show their good faith. A principal and an agent enjoy a
fiduciary relationship marked with trust and confidence, therefore, the agent
has the duty "to act in good faith [to advance] the interests of [its]
principal."
If petitioner was indeed acting in good faith, it could have timely informed
the Spouses Briones that it was terminating the agency and its right to file
an insurance claim, and could have advised them to facilitate the insurance
proceeds themselves. Petitioner's failure to do so only compounds its
negligence and underscores its bad faith. Thus, it will be inequitable now to
compel the Spouses Briones to pay the full amount of the lost property.
LILLIAN N. MERCADO, CYNTHIA M. FEKARIS, AND

JULIAN MERCADO, JR., REPRESENTED BY THEIR
ATTORNEY-IN-FACT, ALFREDO M. PEREZ V. ALLIED
BANKING CORPORATION
G.R. NO. 171460, 24 JULY 2007
48
COLLEGE OF LAW
Thus, while it is true, x x x that a person dealing with registered lands

need not go beyond the certificate of title, it is likewise a well-settled rule
that a purchaser or mortgagee cannot close his eyes to facts which should
put a reasonable man on his guard, and then claim that he acted in good
faith under the belief that there was no defect in the title of the vendor or
mortgagor.
FACTS:
Petitioners are heirs of Perla N. Mercado (Perla). Who during her lifetime,
owned several pieces of real property situated in different provinces of the
Philippines while Respondent, Allied Banking Corporation, is a banking
institution duly authorized as such under the Philippine laws.
Sometime in May 28, 1992, Perla executed a Special Power of Attorney

(SPA) in favor of his husband, Julian D. Mercado (Julian) over several
pieces of real property registered under her name authorizing the latter to
perform some acts including the mortgaging over the different parcels of
land inclusive of the properties in question.
On the strength of the SPA, Julian was able to obtain a loan on December
12, 1996 secured by a real estate mortgage constituted on TCT No. RT-
18206 (106338) which covers a parcel of land located in Quezon City
which is the subject property. Still using the subject property Julian
obtained an additional loan from the respondent which he executed on
February 5, 1997 as another real estate mortgage (REM).
It appears, however, that there was no property identified in the SPA as

TCT No. RT- 18206 (106338) registered with the Registry of Deeds of
Quezon City. What was identified in the SPA instead was the property
covered by TCT No. RT-106338 registered with the Registry of Deeds of
Pasig.
Subsequently, Julian defaulted on the payment of his loan obligations.

Thus, respondent initiated extra-judicial foreclosure proceedings over the
subject property.
Petitioners filed an action for the annulment of the REM constituted over
the subject property with the RTC, on the ground that the same was not
49
COLLEGE OF LAW
covered by SPA and that the said SPA, at the time of contracting the loans
were no longer had force and effect since it was previously revoked by
Perla on March 10, 1993 which was evidenced by the Revocation of SPA
signed by the latter. Petitioners also alleged that Perla also had notified the
Registry of Deeds of Quezon City that any attempt to mortgage or sell the
subject property must be with her full consent documented in the form of a
SPA duly authenticated before the Philippine Consulate General of New
York on a letter dated January 23, 1996.
Respondent, in its Answer with Compulsory Counterclaim averred that the

discrepancy in the designation of the Registry of Deeds in the SPA was
merely an error that must not prevail over the clear intention of Perla to
include the subject property in the said SPA. In sum, the property referred
to in the SPA Perla executed in favor of Julian as covered by TCT No.
106338 of the Registry of PAsig (now Makati) and the subject property in
the case at bar, covered by RT-18206 (106338) of the Registry of Deeds of
Quezon City is one and the same.
On September 23, 2003, the RTC rendered a Decision declaring the REM
constituted over the subject property null and void, for Julian was not
authorized by the terms of the SPA to mortgage the same. The court a quo
likewise ordered that the foreclosure proceedings and the auction sale
conducted pursuant to the void REM, be nullified.
Respondent appealed the adverse Decision before the Court of Appeals.
The Court of Appeals reversed the RTC decision on October 12, 2005 and
upheld the validity of the REM constituted over the subject property on the
strength of the SPA. The appellate court declared that Perla intended the
subject property to be included in the SPA she executed in favor of Julian,
and that her subsequent revocation of the said SPA, not being contained in a
public instrument, cannot bind third persons.
The petitioners filed a Motion for Reconsideration but was denied by the
Court of Appeals in its Resolution on February 15, 2006.
ISSUES:
1. Whether or not there was a valid mortgage constituted over subject

property.
2. Whether or not the agency is extinguished by the revocation of the SPA.
50
COLLEGE OF LAW
RULING:
On the first issue, No. The Court found that the real estate mortgages
constituted over the subject property are unenforceable and not null and
void, as ruled by the RTC. It is reiterated that the said mortgage was entered
into by Julian on behalf of Perla without the latter's authority and
consequently, unenforceable under Article 1403(1) of the Civil Code.
Although Julian was clothed with SPA on May 28, 1992 and the latter was
conferred with the authority to "sell, alienate, mortgage, lease and deal
otherwise" the different pieces of real and personal property registered in
Perla's name and was likewise authorized "to exercise any or all acts of
strict dominion or ownership" over the identified properties, and rights and
interest therein, he, however extends his authority to the subject property
covered by TCT No. RT - 18206 (106338) registered with the Registry of
Deeds of Quezon City, considering that the SPA executed in favor of Julian
contained an exclusive enumeration of the pieces of property over which
Julian had authority. Consequently, the act of Julian of constituting a
mortgage over the subject property is unenforceable for having been done
without authority. Thus, it is without prejudice to the right of the respondent
to proceed against Julian, in his personal capacity, for the amount of the
loan
Equally relevant is the rule that a power of attorney must be strictly

construed and pursued. The instrument will be held to grant only those
powers which are specified therein, and the agent may neither go beyond
nor deviate from the power of attorney. Where powers and duties are
specified and defined in an instrument, all such powers and duties are
limited and are confined to those which are specified and defined, and all
other powers and duties are excluded. This is but in accord with the
disinclination of courts to enlarge the authority granted beyond the powers
expressly given and those which incidentally flow or derived therefrom as
being usual and reasonably necessary and proper for the performance of
such express powers.
On the second issue, YES. An agency is extinguished, among others, by its

revocation (Article 1999, New Civil Code of the Philippines). The principal
may revoke the agency at will, and compel the agent to return the document
evidencing the agency. Such revocation may be express or implied (Article
1920, supra).
In this case, the revocation of the agency or Special Power of Attorney is

expressed by a public document executed on March 10, 1993.
51
COLLEGE OF LAW
The Register of Deeds of Quezon City was even notified that any attempt to
mortgage or sell the property covered by TCT No. [RT-18206] 106338
located at No. 21 Hillside Drive, Blue Ridge, Quezon City must have the
full consent documented in the form of a special power of attorney duly
authenticated at the Philippine Consulate General, New York City, N.Y.,
U.S.A. It thus developed that at the time the first loan transaction with
defendant Bank was effected on December 12, 1996, there was on record at
the Office of the Register of Deeds of Quezon City that the special power of
attorney granted to Julian, Sr. by Perla had been revoked. That notice,
works as constructive notice to third parties of its being filed, effectively
rendering Julian, Sr. without authority to act for and in behalf of Perla as of
the date the revocation letter was received by the Register of Deeds of
Quezon City on February 7, 1996.
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY LT.

GEN. JOSE M. CALIMLIM, IN HIS CAPACITY AS FORMER
CHIEF OF THE INTELLIGENCE SERVICE, ARMED
52
COLLEGE OF LAW
FORCES OF THE PHILIPPINES (ISAFP), AND FORMER

COMMANDING GENERAL, PRESIDENTIAL SECURITY
GROUP (PSG), AND MAJ. DAVID B. DICIANO, IN HIS
CAPACITY AS AN OFFICER OF ISAFP AND FORMER
MEMBER OF THE PSG, PETITIONERS,
VS.
HON. VICTORINO EVANGELISTA, IN HIS CAPACITY AS
PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH
223, QUEZON CITY, AND DANTE LEGASPI, REPRESENTED
BY HIS ATTORNEY-IN-FACT, PAUL GUTIERREZ
G.R. NO. 156015, 11 AUGUST 2005
If a bilateral contract is dependent upon an agency, the agency cannot be

revoked by the sole will of the principal.
FACTS:
Private respondent Dante Legaspi- owner of a land in Bigte,

Norzagaray,Bulacan.
Petitioner Gen. Jose Calimlim- representing the Republic of the Philippines

and head of Intelligence Service of the Armed Forces and Presidential
Security Group Calimlim entered into a Memorandum Agreement with one
Ciriaco Reyes which granted Reyes a permit to hunt for treasure in a land in
Bigte,Norzagaray, Bulacan.
Reyes, with petitioners, started digging, tunneling and blasting works on the
said land of Legaspi. It was also alleged that Calimlim assigned about 80
military personnel to guard the area and intimidate Legaspi and other
occupants of the area from going near the subject land.
Legaspi executed an SPA appointing his nephew, private respondent

Gutierrez, as his attorney-in-fact. Gutierrez was given the power to deal
with the treasure hunting activities on Legaspi's land and to file charges
against those who may enter it without the latter's authority. Legaspi agreed
to give Gutierrez 40% of the treasure that may be found in the land.
Gutierrez filed a case against petitioners for illegally entering Legaspi's

land. He hired the legal services of Atty. Adaza (as legal fees, Atty. Adaza
shall be entitled to 30% of Legaspi's share in whatever treasure may be
found in the land). Upon the filing of the complaint, a 72-hour TRO was
53
COLLEGE OF LAW
issued against petitioners. The case was then raffled to the court of Judge
Evangelista, who then granted an extension to the TRO.
Petitioners filed a Motion to Dismiss contending. One issue they raised was
that there is no real party-in-interest as the SPA of Gutierrez to bring the
suit was already revoked by Legaspi as evidenced by a Deed of Revocation.
RTC ruled in favor of the private respondents. CA affirmed the decision.
ISSUE:
Whether the contract of agency between Legaspi and Gutierrez has been
effectively revoked by Legaspi.
RULING:
NO. CA decision is Affirmed. A contract of agency is generally revocable

as it is a personal contract of representation based on trust and confidence
reposed by the principal on his agent.
An exception to the revocability of a contract of agency is when it is
coupled with interest, i.e., if a bilateral contract depends upon the agency.
The reason for its irrevocability is because the agency becomes part of
another obligation or agreement. It is not solely the rights of the principal
but also that of the agent and third persons which are affected. Hence, the
law provides that in such cases, the agency cannot be revoked at the sole
will of the principal.
CECILIA YULO LOCSIN SUBSTITUTED BY MR. LEANDRO

Y. LOCSIN V. PUERTO GALERA RESORT HOTEL, INC.
54
COLLEGE OF LAW
ALSO REPRESENTED BY LUISITO B. PADILLA AND

LUISITO B. PADILLA, IN HIS OWN CAPACITY
G.R. NO. 233678, 27 JULY 2022
A contract of agency is generally revocable because it is a personal

contract of representation based on trust and confidence reposed by the
principal on his agent. As the power of the agent to act depends on the
will and license of the principal he or she represents, the power of the
agent ceases when the will or permission is withdrawn by the principal.
Thus, generally, the agency may be revoked by the principal at will.
FACTS:
The case involves a claim by respondent for damages which the CA

granted. Respondents made improvements in the property. Petitioner said
there was no contract of lease. SC said this was evidenced by security
deposits and rental payments. Petitioner said, respondent was not a party-in-
interest. The Supreme Court said he is because he invested a huge sum in
the resort.
The case stemmed from a Complaint for actual, moral and exemplary
damages with prayer for attorney’s fees and cost of suit filed by Padilla, in
his personal capacity and in behalf of Quinto, the hotel owner and PGRHI
against Cecilia for allegedly looting and gutting the hotel’s fixtures,
appliances and other movables.
Petitioner Cecilia’s contention that the Court of Appeals (CA) incorrectly

ruled that the 2007 SPA is irrevocable because it is supposedly coupled
with interest.
ISSUE:
1. Whether the SPA or the contract of agency between Padilla and Quinto
had been effectively revoked by Quinto.
2. Whether Padilla is a real party-in-interest.
3. Whether Cecilia is entitled to attorney's fees and litigation expenses.
RULING:
55
COLLEGE OF LAW
1.Agency between Quinto and Padilla is one coupled with interest, hence,
irrevocable.
2.Padilla is a real party-in-Interest with the substantial amount he authored

for the hotel’s improvements.
3. Cecilia is not entitled to attorney’s fees and litigation expenses as she

failed both to satisfy her claim for damages and to show that Padilla’s
complaint was tainted with fraud, malice or was filed in bad faith.
56

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AGENCY

Atty. NOAH SIAPNO

● NIELSON & COMPANY V. LEPANTO G.R. NO. L-21601

FORMS AND KINDS

● ALVIN PATRIMONIO V. NAPOLEON GUTIERREZ AND OCTAVIO

OBLIGATIONS OF THE AGENT

● INTERNATIONAL EXCHANGE BANK (UNION BANK OF THE

OBLIGATIONS OF THE PRINCIPAL

● SPOUSES ROLANDO AND HERMINIA SALVADOR V. SPOUSES

● INTERNATIONAL EXCHANGE BANK (UNION BANK OF THE

ATTORNEY-IN-FACT, PAUL GUTIERREZ G.R. NO. 156015 AUGUST

NIELSON & COMPANY, INC., V. LEPANTO

DOCTRINE OF THE CASE:

Agency is a preparatory contract, as agency "does not stop with the

On January 30, 1937, Lepanto and Nielson entered into a Management

Whether or not the Management Contract is a contract of agency or a

INTERNATIONAL EXCHANGE BANK (UNION BANK OF

DOCTRINE OF THE CASE:

An acceptance of the relationship of agency whereby one party, called the

Spouses Briones took out a loan of Php3,789,216.00 from IBank to

Spouses Briones declared the loss to IBank, which instructed them to

Whether or not an agency relationship existed between the parties.

The Petition is devoid of merit.

In a contract of agency, "a person binds himself to render some service or to

Out of the above given principles, sprung the creation an acceptance

6. The MORTGAGOR agrees that he will cause the mortgaged

22. In case of loss or damage, the MORTGAGOR hereby irrevocably

The determination of agency is ultimately factual in nature and this Court

JESUS M. GOZUN V. JOSE TEOFILO T. MERCADO a.k.a.

DOCTRINE OF THE CASE:

The court affirmed the principle that unauthorized contracts are

Lilian Soriano, respondent's sister-in-law, obtained a cash advance of

Petitioner delivered the campaign materials to respondent's headquarters.

Despite partial payment of P1,000,000, the respondent failed to settle the

The petitioner filed a complaint against the respondent to collect the

The RTC rendered a decision in favor of the petitioner, ordering respondent

The Court of Appeals reversed the RTC's decision, dismissing the

Petitioner's argument lacks persuasion as the evidence presented does not

SPOUSES ROLANDO AND HERMINIA SALVADOR V.

DOCTRINE OF THE CASE:

Yes. Rabaja’s are entitled to the return.

Rabaja required the presentation of the power of attorney, Gonzales

SAN MIGUEL CORPORATION V. LEONARA*FRANCISCO

DOCTRINE OF THE CASE:

The doctrine of apparent authority is based on estoppel and can arise

Respondents Leonara Francisco Vda. De Trinidad, Teodorico F. Trinidad,

Respondent Roberto N. Gandionco (Roberto), Gemma's brother-in-law,

Gemma and Trinidad, et al., executed the corresponding special power of

In August 2007, 18 successive post-dated cheques issued by Roberto were

Gemma and Trinidad, et al., learned about the foreclosure proceedings,

YES. According to the case of Woodchild Holdings, Inc. v. Roxas Electric

In this case, in addition to executing similarly worded SPAs expressly

Thus, a reversal of the assailed C A ruling is in order.

FORMS AND KINDS

ALVIN PATRIMONIO V. NAPOLEON GUTIERREZ AND

DOCTRINE OF THE CASE:

Petitioner Patrimonio and Respondent Gutierrez entered into a business

Sometime in 1993, without petitioner’s knowledge and consent, Gutierrez

Marasigan sought recovery from Gutierrez, but to no avail. He thereafter